Exhibit 10.22
SECURED
DEBTOR-IN-POSSESSION CREDIT AND SECURITY AGREEMENT
Dated as of December 22, 2004
ATA AIRLINES INC.,
a Debtor and Debtor-in-Possession
under Chapter 11 of the Bankruptcy Code, as the Borrower,
ATA HOLDINGS CORP., as Guarantor
CERTAIN OF THE SUBSIDIARIES OF
ATA HOLDINGS CORP. PARTY HERETO,
as Guarantors,
and
SOUTHWEST AIRLINES CO.,
as Lender
Dec. 22, 2004
SECURED
DEBTOR-IN-POSSESSION CREDIT AGREEMENT
This SECURED DEBTOR-IN-POSSESSION CREDIT AND SECURITY AGREEMENT (this
"Credit Agreement") is entered into as of December 22, 2004 by and among ATA
AIRLINES INC., an Indiana corporation and a debtor and debtor-in-possession in a
case pending under Chapter 11 of the Bankruptcy Code (as hereinafter defined)
(the "Borrower"), ATA HOLDINGS CORP. (the "Parent"), each of the Subsidiaries of
the Parent (as hereinafter defined) of from time to time party hereto, and
SOUTHWEST AIRLINES CO., a Texas corporation (the "Lender").
PRELIMINARY STATEMENTS
1. On October 26, 2004 (the "Petition Date"), the Borrower and each of the
Guarantors (as hereinafter defined) in existence on the Petition Date filed
voluntary petitions in the United States Bankruptcy Court for the Southern
District of Indiana (such court, together with any other court having
jurisdiction over the Cases from time to time, the "Bankruptcy Court") for
relief, and commenced cases (the "Cases"), under the Bankruptcy Code (as
hereinafter defined) and have continued in the possession of their assets and in
the management of their businesses pursuant to Sections 1107 and 1108 of the
Bankruptcy Code.
2. The Borrower has requested that the Lender enter into a term credit
facility in an aggregate principal amount not to exceed: (i) forty million
dollars ($40,000,000) plus (ii) the Closing Fee (as defined in Section 2.05),
and to provide a guaranty of up to seven million eighty eight thousand two
hundred and ten dollars ($7,088,210) (in addition to the $40,000,000 term loan)
of certain Borrower's obligations, on terms and conditions set forth herein, all
of the Borrower's obligations under which are to be jointly and severally
guaranteed by the Guarantors.
3. To provide guarantees and security for the repayment of the Loans (as
hereinafter defined), and the payment of the other Obligations (as hereinafter
defined) of the Borrower and the Guarantors hereunder and under the other Loan
Documents (as hereinafter defined), the Borrower and the Guarantors will provide
the Lender the following, each as more fully described herein:
A. a joint and several guaranty from the Guarantors of the due and punctual
payment and performance of the Obligations of the Borrower hereunder as set
forth in Section 10 of this Credit Agreement; and
B. priority Liens (as hereinafter defined) on the Primary Collateral (as
hereinafter defined) and best priority Liens on the Secondary Collateral (as
hereinafter defined) as set forth in Section 2.10 and Section 9 of this Credit
Agreement.
4. On December 21, 2004, the Bankruptcy Court entered the Interim Order (as
hereinafter defined), pursuant to which the Borrower was authorized to borrow up
to $47,000,000 and pay all fees and expenses payable to or on behalf of the
Lender, pending entry of a final order by the Bankruptcy Court.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto covenant and agree as follows:
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ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.01 Defined Terms. As used in this Credit Agreement, the following terms
shall have the meanings set forth below:
"Account Collateral" has the meaning specified in Section 9.01(e).
"Adjusted EBITDARR" means, for any period, for the Borrower and its
Subsidiaries, an amount equal to (i) Consolidated EBITDARR less (ii) Capital
Expenditures.
"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. "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. Without limiting the generality
of the foregoing, a Person shall be deemed to be Controlled by another Person if
such other Person possesses, directly or indirectly, power to vote 10% or more
of the securities having ordinary voting power for the election of directors,
managing general partners or the equivalent.
"After-Acquired Intellectual Property" has the meaning specified in Section
9.04(h)(vi).
"Agent" has the meaning specified in Section 9.06(b).
"Air Transportation Stabilization Act" means the Air Transportation Safety
and System Stabilization Act, P.L. 107-42, and any regulations issued pursuant
thereto as the same may be amended from time to time.
"AIR-21 Slots" shall mean those Slots at LGA and DCA which pursuant to the
Wendell H. Ford Aviation Investment and Reform Act for the 21st Century
("AIR-21") and the orders of the DOT pursuant thereto cannot be freely
transferred by the Loan Parties.
"Asset Acquisition Agreement" shall mean an Asset Acquisition Agreement for
the sale of a portion of the Loan Parties' assets to be entered into between the
Lender and the Borrower on or about December 21, 2004.
"ATSB" means the Air Transportation Stabilization Board, created pursuant
to Section 102(b) of the Air Transportation Stabilization Act.
"ATSB Cash Use Order" means the "Second Interim and Final Order Authorizing
Debtors' Use of Cash Collateral and Use, Sale and Lease of Other Pre-Petition
Collateral dated December 10, 2004" (Docket No. 718) entered by the Bankruptcy
Court with respect to the Cases as such order may be extended, amended or
modified from time to time.
"ATSB Collateral" shall have the meaning specified in Section 9.01 hereof.
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"ATSB Loan" means the loan in the aggregate principal amount as of the date
hereof of approximately $139,900,000 under the Loan Agreement dated as of
November 20, 2002 among the Borrower, American Trans Air, Inc., Citibank, N.A.,
as agent for itself and the lenders named therein and the ATSB, pursuant to the
Air Transportation Stabilization Act as the same may be amended, restated,
amended and restated, supplemented or modified from time to time.
"ATSB Lender Parties" has the meaning assigned to such term in the ATSB
Cash Use Order.
"Attorney Costs" means and includes all reasonable fees, expenses and
disbursements of any law firm or other external counsel.
"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,
(b) in respect of any operating leases of any Person, an amount equal to seven
times the rental payments thereunder scheduled to be paid during the 12 months
following such date and (c) 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 the Borrower, the Parent and its Subsidiaries for the fiscal year ended
December 31, 2003, and the related consolidated statements of income or
operations, shareholders' equity and cash flows for such fiscal year of the
Borrower and its Subsidiaries, including the notes thereto.
"Authority" means the Indiana Transportation Finance Authority and the
Indianapolis Airport Authority.
"Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as codified in
title 11 of the United States Code, 11 U.S.C. Sections 101-1330, as now in
effect or hereafter amended.
"Bankruptcy Court" has the meaning specified in Preliminary Statement 1 to
this Credit Agreement.
"Base Rate" means the higher of: (i) 8% per annum or (ii) LIBOR Rate + 5%
per annum.
"Bid Proposal" means the Bid Proposal dated as of December 15, 2004,
together with all schedules, annexes and attachments thereto, submitted by the
Lender to the Bankruptcy Court, pursuant to which the Lender agreed to provide
the Commitment, on the terms and conditions described therein and herein, as may
be amended or supplemented prior to the effective time of the Interim Order.
"Bid Procedures Order" means the Order (a) Establishing Procedures for
Approval of one or more Transactions, (b) Approving and Authorizing a Break-Up
Fee and Expense Reimbursement and (c) Approving a Form of Notice dated November
19, 2004.
"Borrower" has the meaning specified in the introductory paragraph hereto.
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"Borrower's Projections" means the financial projections of the Borrower
dated as of December 22, 2005 and accepted by the Lender.
"Borrowing" means a Term Borrowing.
"Business Day" means any day other than a Saturday, Sunday or day on which
banks in Dallas, Texas, Indianapolis, Indiana or New York, New York are
authorized or required by law to close.
"Capital Expenditures" means, with respect to any Person for any period,
any expenditure in respect of the purchase or other acquisition of any fixed or
capital asset (excluding normal replacements and maintenance which are properly
charged to current operations). For purposes of this definition, the purchase
price of equipment that is purchased simultaneously with, or within three months
after, the trade-in of existing equipment or with insurance proceeds shall be
included in Capital Expenditures only to the extent of the gross amount by which
such purchase price exceeds the credit granted by the seller of such equipment
for the equipment being traded in at such time or the amount of such insurance
proceeds, as the case may be.
"Card Receivables" means credit card receivables of any of the Loan Parties
to the extent and for so long as such credit card receivables are subject to a
security interest in favor of any credit card receivables processor.
"Carve-Out" means the following amounts: (i) quarterly fees required to be
paid to the United States Trustee pursuant to 28 U.S.C. ss. 1930(a)(6) and any
fees payable to the Clerk of the Bankruptcy Court, (ii) prior to the occurrence
of an Event of Default (a) the reasonable expenses of any member of the
Creditors Committee which are allowed by the Bankruptcy Court and (b) unpaid
professional fees and disbursements incurred prior to the occurrence of an Event
of Default by the professionals retained, pursuant to Sections 327 or 1103(a) of
the Bankruptcy Code, the Loan Parties and the Creditors Committee which shall be
allowed by the Bankruptcy Court (before or after the Event of Default), provided
that such fees and disbursements payable after an Event of Default do not to
exceed, the amounts included in the Borrower's Projections for the term of the
Facility, and (iii) following the occurrence of an Event of Default, the
reasonable expenses of any member of the Committee and unpaid professional fees
and disbursements by the professionals retained pursuant to Sections 327 or
1103(a) of the Bankruptcy Code, by the Loan Parties and the Creditors Committee
incurred after the occurrence of an Event of Default which shall be allowed by
the Bankruptcy Court not to exceed five hundred thousand dollars ($500,000) in
the aggregate; provided, however that the Carve-Out shall not include any fees
or expenses incurred by any party in connection with the investigation
(including discovery proceedings), initiation or prosecution of any claims,
causes of action, adversary proceedings or other litigation against the Lender.
"Cases" has the meaning specified in Preliminary Statement 1 to this Credit
Agreement.
"Change of Control" means an event or series of events by which constitute
a "change of control" under the Codeshare Agreement.
"Chicago Construction Loan" means two separate loans made to the Borrower
by the City of Chicago to fund a jet bridge extension at MDA evidenced by a Loan
Agreement, dated as of March 17, 2003 by and among the City of Chicago and the
Borrower.
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"Chicago Gates" means all of the Loan Parties' right, title, and interest
in and to the Chicago Midway Airport Lease, solely with respect to all of the
Loan Parties' right, title and interest thereunder in and to the eight (8) gates
identified at Chicago Midway Airport as Gates 4a, 4b, 10, 12, 14, 16, 18 and 19
in Concourse A, including such gates' associated ramp space and service
facilities at Chicago Midway Airport.
"Chicago Guaranty" means a limited guaranty of up to seven million eighty
eight thousand two hundred and ten dollars ($7,088,210) by the Lender of the
Borrower's obligations under the Chicago Construction Loan, such guaranty in the
form (of a guaranty delivered by the Lender or a letter of credit delivered for
the account of the Lender) and substance acceptable to the Lender and the City
of Chicago, as the same may be amended, restated, supplemented or modified from
time to time.
"Chicago Guaranty Fee" has the meaning specified in Section 2.05(b).
"Chicago Midway Facilities Lease" means the Chicago Midway Airport Amended
and Restated Airport Use Agreement and Facilities Lease, dated with an effective
date of January 1, 1997, as amended and supplemented as of December 10, 2004, as
the same may be amended or supplemented from time to time.
"Closing" means the closing of the transactions contemplated by this Credit
Agreement.
"Closing Date" means December 22, 2004 or any other date that may be agreed
to in writing by the Borrower and the Lender. "Closing Fee" has the meaning
specified in Section 2.05(a).
"Code" means the Internal Revenue Code of 1986.
"Codeshare Agreement" the Codeshare Agreement to be entered into between
the Borrower, its Subsidiaries and the Lender, as the same may be amended,
restated, amended and restated, modified or supplemented from time to time.
"Collateral" means all of the "Primary Collateral," the "Secondary
Collateral" and the "Collateral" referred to in the Collateral Documents and all
of the other property and assets that are or are intended under the terms of the
Collateral Documents to be subject to Liens in favor of the Lender, which
property and assets shall not include the Excluded Assets and the Section 1110
Assets.
"Collateral Documents" means, collectively, the provisions of Article X of
this Credit Agreement, security agreements, slot, gate and route security
agreements, aircraft mortgages, mortgages, pledge agreements or other similar
agreements delivered to the Lender pursuant to Section 6.12, and each of the
other agreements, instruments, supplements or documents that creates or purports
to create a Lien in favor of the Lender for the benefit of the Lender.
"Commitment" means (i) a Term Commitment and/or (ii) the Chicago Guaranty,
as the context may require.
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"Committee" means any statutory committee appointed in the Cases.
"Compliance Certificate" means a certificate substantially in the form of
Exhibit B.
"Computer Software" has the meaning specified in Section 9.01(f)(iv) .
"Consolidated EBITDARR" means, for any period, for the Parent, the Borrower
and its Subsidiaries on a consolidated basis, an amount equal to (i)
Consolidated Net Income for such period plus, (ii) without duplication, the
following to the extent deducted in calculating such Consolidated Net Income:
(a) Consolidated Interest Charges for such period, (b) the provision for
federal, state, local and foreign income taxes payable by the Borrower and its
Subsidiaries for such period, (c) the amount of depreciation and amortization
expense, (d) administrative expenses (including restructuring charges) incurred
in connection with the Cases in the amount provided in the Borrower's
Projections, and (e) the aggregate amount of any aircraft rental payments.
"Consolidated Interest Charges" means, for any period, for the Parent, the
Borrower and its Subsidiaries on a consolidated basis, the sum of (a) all
interest expense (net of interest income), premium payments, debt discount, fees
(including, without limitation, amortization of deferred financing costs related
to the Cases), charges and related expenses of the Borrower, the Parent and its
Subsidiaries in connection with borrowed money (including capitalized interest)
or in connection with the deferred purchase price of assets, in each case to the
extent treated as interest in accordance with GAAP, and (b) the portion of rent
expense of the Borrower, the Parent and its Subsidiaries with respect to such
period under capital leases that is treated as interest in accordance with GAAP,
it being understood that rent expense that is treated as an operating expense in
accordance with GAAP is not included this calculation.
"Consolidated Net Income" means, for any period, for the Borrower, the
Parent and its Subsidiaries on a consolidated basis, the net income of the
Borrower, the Parent and its Subsidiaries (excluding extraordinary gains and
extraordinary losses, in each case, incurred in connection with the Cases) for
that period.
"Contractual Obligation" means, as to any Person, any provision of any
security issued by such Person or of any indenture, mortgage, deed of trust,
contract, agreement, instrument or other undertaking to which such Person is a
party or by which it or any of its property is bound.
"Control" has the meaning specified in the definition of "Affiliate".
"Controlled Account" means a deposit account of any Loan Party maintained
with a depositary bank acceptable to the Lender.
"Copyrights" has the meaning specified in Section 9.01(f)(iii).
"Credit Extension" means each of the following: (a) a Borrowing and (b) the
issuance of the Chicago Guaranty and any drawing thereunder.
"Creditors Committee" means the official committee of unsecured creditors
of the Loan Parties appointed in the Cases by the United States Trustee on or
about November 1, 2004.
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"DCA" shall mean Ronald Reagan Washington National Airport. ---
"Debtor Relief Laws" means the Bankruptcy Code, and all other liquidation,
conservatorship, bankruptcy, assignment for the benefit of creditors,
moratorium, rearrangement, receivership, insolvency, reorganization, or similar
debtor relief Laws of the 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 Base Rate plus 3.0% per
annum.
"DIP Financing Orders" means the Interim Order or the Final Order or both,
as the context may require.
"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; provided, however, that a Slot trade shall not
constitute a Disposition if accomplished in a transaction where the traded Slot
is intended to be returned to the applicable Loan Party within 30 days after
such trade is consummated (a "Temporary Slot Disposition").
"Dollar" and "$" mean lawful money of the United States.
"DOT" means the United States Department of Transportation, or any
successor authority established in replacement thereof.
"Environmental Action" means any action, suit, demand, demand letter,
claim, notice of non-compliance or violation, notice of liability or potential
liability, investigation, proceeding, consent order or consent agreement
relating in any way to any Environmental Law, Environmental Permit or Hazardous
Materials or arising from alleged injury or threat of injury to health, safety
or the environment, including, without limitation, (a) by any governmental or
regulatory authority for enforcement, cleanup, removal, response, remedial or
other actions or damages and (b) by any governmental or regulatory authority or
any third party for damages, contribution, indemnification, cost recovery,
compensation or injunctive relief.
"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 those related to
hazardous substances or wastes, noise, 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 the Borrower, any other Loan Party or any of their
respective 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.
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"Environmental Permit" means any permit, approval, identification number,
license or other authorization required under any Environmental Law.
"Equipment" has the meaning specified in Section 9.01(B)(a).
"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, without limitation, 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, as
amended from time to time, and any successor statute.
"ERISA Affiliate" means any trade or business (whether or not incorporated)
under common control with any Loan Party 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 any Loan Party 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 any Loan Party 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 Section 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 the Borrower
or any ERISA Affiliate.
"Eurocurrency Reserve Requirements" for any day as applied to a LIBOR Loan
shall mean the aggregate (without duplication) of the rates (expressed as a
decimal rounded upward to the nearest 1/100th of (%)) of reserve requirements in
effect on such day (including, without limitation, basic, supplemental, marginal
and emergency reserves under any regulations of the Board of Governors of the
Federal Reserve System of the United States or other Governmental Authority, or
any successor thereto, having jurisdiction with respect thereto) prescribed for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of such Board) maintained by a member bank of the Federal Reserve
System.
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"Event of Default" has the meaning specified in Section 8.01.
"Excluded Assets" means (i) any retainers paid or deposited before the
Petition Date by the Loan Parties to or with their professionals for
professional services and expense reimbursement in connection with the Cases;
provided, however, that the security interests attach automatically to any
reversionary or residual interest any Loan Party may have in such retainer; (ii)
any Trust Funds; (iii) Loan Parties' avoidance actions and proceeds thereof
under Sections 544-550 of the Bankruptcy Court or similar applicable State law,
and (iv) Card Receivables (but only to the extent the ATSB Lender Parties do not
hold a security interest therein).
"Existing Indebtedness" means Indebtedness of each Loan Party existing on
the Petition Date.
"Exit Facility" means the Exit Facility described in the Exit Facility Term
Sheet.
"Exit Facility Term Sheet" means the Exit Facility Term Sheet in form
of Annex A hereto.
"FAA" means the Federal Aviation Administration.
"Facility" means the Term Loan.
"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 Board of Governors of the Federal Reserve System of the United
States arranged by Federal funds brokers on such day, as published by the
Federal Reserve Bank 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 the Lender.
"Final Order" means a final order of the Bankruptcy Court approving the
terms and conditions of the Loan Documents substantially in the form of and
containing, among other things, the provisions present in the Interim Order
(including, without limitation, the granting of Liens and the superpriority
status referred to in the Loan Documents), which final order shall be in form
and substance satisfactory to the Lender in its sole discretion and shall not
have been reversed, amended, supplemented, modified, stayed or vacated.
"First Day Orders" means all orders entered by the Bankruptcy Court
granting the relief requested in the motions filed with the Bankruptcy Court on
the Petition Date or within two Business Days thereafter.
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"GAAP" means generally accepted accounting principles in the United States
in effect from time to time as applied by a significant segment of the
accounting profession in the United States.
"Gate Leaseholds" means all of the right, title, privilege, interest, and
authority now or hereafter acquired or held by the Borrower or, if applicable, a
Guarantor in connection with the right to use or occupy space in any airport or
terminal at which the Borrower conducts scheduled operations.
"Governmental Authority" means any nation or government, any state or other
political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, administrative tribunal, central bank or other entity
exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.
"Guarantee" means, as to any Person, (a) any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness 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, (ii)
to purchase or lease property, securities or services for the purpose of
assuring the obligee in respect of such Indebtedness of the payment or
performance of such Indebtedness, (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 (iv) entered into for the purpose of assuring in
any other manner the obligee in respect of such Indebtedness 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 of any other Person, whether or not such Indebtedness 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. The term "Guarantee" as a verb has a corresponding meaning.
"Guaranty" has the meaning specified in Section 10.01.
"Guaranteed Obligations" has the meaning specified in Section 10.01.
"Guarantor" means the Parent, Ambassadair Travel Club, Inc., ATA Leisure
Corp., Amber Travel, Inc., --------- American Trans Air Execujet, Inc., ATA
Cargo, Inc., and Chicago Express Airlines, Inc. and any other Subsidiary of the
Parent.
"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 substances or wastes of any nature regulated pursuant to any
Environmental Law.
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"Indebtedness" means, as to any Person at a particular time, without
duplication, all of the following, whether or not included as indebtedness or
liabilities in accordance with GAAP:
(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;
(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 not past due for more than 60 days after the date on which each
such trade payable or 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, operating 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 Interests in such Person or
any other Person or any warrants, rights or options to acquire such Equity
Interests, valued, in the case of redeemable preferred interests, at the greater
of its voluntary or involuntary liquidation preference plus accrued and unpaid
dividends;
(h) as to any Loan Party, the obligation to purchase Property from the
Authority under the Indiana DIP Orders; and
(i) 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. The amount of any capital lease, operating 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. The amount of
Indebtedness of any Person at any date shall be the outstanding balance at such
date of all unconditional obligations as described above and the maximum
liability, upon the occurrence of the contingency giving rise to the obligation,
of any contingent obligations at such date; provided, that the amount
outstanding at any time of any Indebtedness issued with the original issue
discount is the face amount of such Indebtedness less the remaining unamortized
portion of the original issue discount of such Indebtedness at such time as
determined in conformity with GAAP.
11
"Indemnitees" has the meaning set forth in Section 11.05.
"Indiana Collateral" means the property of the loan parties in which a Lien
is granted to the Authority under the Indiana DIP Orders.
"Indiana DIP Orders" means the Interim Order Granting Emergency Motion For
Order (I) Authorizing Debtors To Obtain Postpetition Financing Pursuant To 11
U.S.C. ss.ss. 105, 362 364(c)(1), 364(c)(2), 364(c)(3) And 507; And To Sell,
Lease And Purchase Assets Pursuant To 11 U.S.C. ss.ss. 105 And 363; and (II)
Scheduling Interim And Final Hearings Pursuant To Fed. R. Bankr. P. 4001(c) and
(d) And 6004(a)(2) dated November 16, 2004 and the Final Order Granting DIP
Finance/Sale Motion dated December 17, 2004, as such orders may be extended,
modified or amended and which shall not have been reversed, amended,
supplemented, modified, stayed or vacated.
"Intellectual Property Collateral" has the meaning specified in Section
9.01(f).
"Interest Payment Date" means the last Business Day of each month and the
Maturity Date.
"Interest Rate Determination Date" shall mean the date for determining a
LIBOR Rate.
"Interim Order" has the meaning specified in Section 4.02(i).
"Inventory" has the meaning specified in Section 9.01(b).
"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 incurs
debt of the type referred to in clause (h) of the definition of "Indebtedness"
set forth in this Section 1.01 in respect of such 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 or all or a substantial part of
the business of, such Person; provided, however, that deposits made by any Loan
Party in the ordinary course of business in connection with the acquisition of
aircraft, airframes or engines or the entry into contracts (but excluding
deposits to secure Indebtedness) shall not be considered an "Investment". For
purposes of covenant 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.
"Investment Agreement" means the Investment Agreement described in the
Investment Agreement Term Sheet.
"Investment Agreement Term Sheet" means that certain Investment Agreement
Term Sheet enclosed hereto as Annex B.
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"IP Agreements" has the meaning specified in Section 9.02(f)(viii).
"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, any Governmental Authority, in each case whether
or not having the force of law.
"LGA" shall mean New York's LaGuardia Airport.
"LIBOR Rate" shall mean a rate of interest equal to (i) the rate per annum
(rounded upwards to the nearest 1/100th of 1%) equal to the offered rate for
deposits of Dollars for a three month period as displayed in the Bloomberg
Financial Markets system (or other authoritative source selected by the Lender
in its sole discretion) as of 11:00 A.M. (London time) on the applicable
Interest Rate Determination Date, divided by (ii) 1.00 minus the Eurocurrency
Reserve Requirements in effect on the applicable Interest Rate Determination
Date. The LIBOR Rate shall be adjusted with respect to any LIBOR Loan
outstanding on the effective date of any change in the Eurocurrency Reserve
Requirements as of such effective date.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge, or preference,
priority, privilege or other security interest or preferential arrangement of
any kind or nature whatsoever intended for security (including any conditional
sale 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).
"Liquidity" means, on any given date with respect to the Borrower, the
Parent and its Subsidiaries, the aggregate amount of all cash held by the
Borrower, the Parent and its Subsidiaries.
"Loan" means an extension of credit by the Lender to the Borrower under
Article II in the form of a Term Loan or the issuance and delivery of the
Chicago Guaranty and any reimbursement obligations thereunder.
"Loan Documents" means, collectively, (a) this Credit Agreement, (b) the
Term Note, and (c) the Collateral Documents.
"Loan Parties" means, collectively, the Borrower and each Guarantor.
"Material Adverse Change" means a material adverse change in the business,
condition (financial or otherwise), operations, performance, properties or
prospects of the Borrower, the Parent and its Subsidiaries taken as a whole from
and after the Petition Date, other than any change (a) of the type which
customarily occurs as a result of events leading up to and following the
commencement of a case under Chapter 11 of the Bankruptcy Code and the
commencement of the Cases or (b) disclosed in (i) the annual report on Form 10-K
for the year ended December 31, 2003
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filed by the Borrower or the Parent, (ii) in the quarterly reports on Form 10-Q
for the quarters ended June 30, 2003 and September 30, 2003 filed by the
Borrower or the Parent or (iii) in any report on Form 8-K filed by the Borrower
or the Parent after December 31, 2003 and are listed and available on the SEC's
"EDGAR" website; provided that deferrals of payments to aircraft or engine
lessors with respect to grounded aircraft and other aircraft or engines in the
Borrower's fleet (and any associated ratings downgrade) shall not in and of
themselves constitute a Material Adverse Change.
"Material Adverse Effect" means (a) a material adverse effect upon the
business, condition (financial or otherwise), operations, performance,
properties or prospects of the Borrower, the Parent and its Subsidiaries taken
as a whole, other than any effect of the type which customarily occurs as a
result of events leading up to and following the commencement of a case under
chapter 11 of the Bankruptcy Code and the commencement of the Cases; (b) a
material impairment of the rights and remedies of the Lender under any Loan
Document, or of the ability of any Loan Party to perform its obligations under
any Loan Document to which it is a party; (c) a material adverse effect upon the
legality, validity, binding effect or enforceability against any Loan Party of
any Loan Document to which it is a party; or (d) a material impairment of the
Collateral taken as a whole.
"Maturity Date" means the earliest of (a) September 30, 2005, (b) the date
of termination in whole of the Commitments, pursuant to Section 2.06 or 8.02(b),
and (c) the effective date of a Reorganization Plan.
"Maximum Rate" has the meaning specified in Section 11.10.
"MDW" shall mean Chicago's Midway Airport.
"Midway Hangar Property" has the meaning specified in the Asset Acquisition
Agreement.
"Monthly Payment Date" has the meaning specified in Section 2.05(b)
"Multiemployer Plan" means any employee benefit plan of the type described
in Section 4001(a)(3) of ERISA, to which the 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.
"Net Cash Proceeds" means: (a) with respect to the sale of any asset by any
Loan Party, the excess, if any, of (i) the sum of cash and Cash Equivalents
received in connection with such sale (including any cash or Cash Equivalents
received by way of deferred payment pursuant to, or by monetization of, a note
receivable or otherwise, but only as and when so received) over (ii) the sum of
(A) the principal amount of any Indebtedness that is secured by such asset and
that is required to be repaid in connection with the sale thereof (other than
Indebtedness under the Loan Documents), (B) the reasonable and customary
out-of-pocket fees and expenses (including reasonable and customary brokerage
and legal counsel fees) incurred by such Loan Party in connection with such sale
and (C) taxes reasonably estimated by the Borrower to be actually payable within
two years of the date of the relevant asset sale as a result of any gain
recognized in connection therewith documented in form and substance reasonably
satisfactory to the Lender; and
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(b) with respect to the issuance of any capital stock or other Equity
Interest by Loan Party or the issuance of any Indebtedness by any Loan Party,
the excess of (i) the sum of the cash and Cash Equivalents received in
connection with such sale or issuance over (ii) the underwriting discounts and
commissions, and other out-of-pocket expenses, incurred by such Loan Party in
connection with such sale or issuance.
"Obligations" means all advances to, and debts, liabilities, obligations,
covenants and duties of, any Loan Party 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 any Loan Party or any Affiliate 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. Without limiting the generality of the foregoing, the
Obligations of the Loan Parties under the Loan Documents include (a) the
obligation to pay principal, interest, charges, expenses, fees, attorneys' fees
and disbursements, indemnities and other amounts payable by any Loan Party under
any Loan Document, (b) the obligation of any Loan Party to reimburse any amount
in respect of any of the foregoing obligations under the Loan Documents that the
Lender, in its sole discretion, may elect to pay or advance on behalf of such
Loan Party, and (c) the obligation to reimburse any amount in respect of any of
the foregoing obligations resulting from any draw under the Chicago Guaranty.
"Orders" means the DIP Financing Orders, the Procedures Order or any other
order of the Bankruptcy Court in connection with the Cases.
"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 Taxes" has the meaning specified in Section 3.01(b).
"Outstanding Amount" means on any date, the aggregate outstanding principal
amount thereof after giving effect to any borrowings and prepayments or
repayments of the Term Loan, occurring on such date.
"Patents" has the meaning set forth in Section 9.01(f)(i).
"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 any Loan Party or
any ERISA Affiliate or to which any Loan Party 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.
15
"Permitted Sale/Leaseback" means any transaction pursuant to which a Loan
Party sells "equipment" described in Section 1110(a)(3) of the Bankruptcy Code
(as in effect on the date hereof) that is subject to a mortgage, conditional
sale or security interest on the date hereof (such equipment, the "Subject
Equipment") and leases the Subject Equipment back from the buyer or its
designee.
"Permitted Senior Liens" means (a) Liens permitted under Section 7.01 which
have priority by operation of law or as provided herein over the Liens granted
to the Lender and (b) Liens permitted under Section 7.01(i), (p) or (q).
"Person" means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.
"Petition Date" has the meaning specified in Preliminary Statement 1 to
this Credit Agreement.
"Plan" means any "employee benefit plan" (as such term is defined in
Section 3(3) of ERISA) established by any Loan Party or, with respect to any
such plan that is subject to Section 412 of the Code or Title IV of ERISA, any
ERISA Affiliate.
"Pledged Debt" has the meaning specified in Section 9.01(d)(ii).
"Pledged Equity" has the meaning specified in Section 9.01(d)(i).
"Post-Petition", when used with respect to any agreement or instrument, any
claim or proceeding or any other matter, shall refer to an agreement or
instrument that was entered into or became effective, a claim or proceeding that
first arose or was first instituted, or another matter that first occurred,
after the commencement of the Cases.
"Pre-Petition", when used with respect to any agreement or instrument, any
claim or proceeding or any other matter, shall refer to an agreement or
instrument that was entered into or became effective, a claim or proceeding that
arose or was instituted, or another matter that occurred, prior to the Petition
Date.
"Pre-Petition Payment" means a payment (by way of adequate protection or
otherwise) of principal or interest or otherwise on account of any Pre-Petition
Indebtedness or trade payables or other Pre-Petition claims against the Borrower
or any Guarantor.
"Primary Collateral" has the meaning specified in Section 9.01(B).
"Principal Balance" shall mean the outstanding principal balance of the
Loans or any specified portion thereof.
"Receivables" has the meaning specified in Section 9.01(c).
16
"Regulations" means the regulations for the Air Carrier Guarantee Loan
Program issued pursuant to the Air Transportation Stabilization Act, 14 C.F.R.
Part 1300, as the same may be amended from time to time.
"Released Parties" has the meaning specified in Section 2.11.
"Releasing Parties" has the meaning specified in Section 2.11.
"Related Contracts" has the meaning specified in Section 9.01(c).
"Relevant Labor Unions" means the Association of Flight Attendants,
Airline Pilots Association, International, International Association of
Machinists and Aerospace Workers and the Communications Workers of America.
"Reorganization Plan" means a chapter 11 plan of reorganization filed in
any Case by the Borrower and/or any of the Guarantors.
"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.
"Responsible Officer" means, (i) the chief executive officer, president,
chief financial officer, executive vice president, treasurer or assistant
treasurer of a Loan Party, and (ii) with respect to each Loan Party (other than
the Borrower), any person authorized by the Board of Directors or shareholders
of such Loan Party to execute documents in connection with the Loan Documents on
behalf of such Loan Party. Any document delivered hereunder that is signed by a
Responsible Officer of a Loan Party shall be conclusively presumed to have been
authorized by all necessary corporate, partnership and/or other action on the
part of such Loan Party and such Responsible Officer shall be conclusively
presumed to have acted on behalf of such Loan Party.
"Restricted Payment" means any dividend or other distribution (whether in
cash, securities or other property) with respect to any capital stock or other
Equity Interest of any Loan Party, or any payment (whether in cash, securities
or other property), including any sinking fund or similar deposit, on account of
the purchase, redemption, retirement, defeasance, acquisition, cancellation or
termination of any such capital stock or other Equity Interest, or on account of
any return of capital to the Borrower's stockholders, partners or members (or
the equivalent Persons thereof).
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc. and any successor thereto.
"SEC" means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.
"Secondary Collateral" has the meaning specified in Section 9.01(B).
"Section 1110 Agreement" shall mean any agreement of any Loan Party related
to Section 1110 Assets, including, without limitation, security agreements,
mortgages, trusts, leases, conditional sale agreements or other instruments
applicable to such Section 1110 Assets.
17
"Section 1110 Assets" means, (i) any "aircraft", "aircraft engine",
"propeller", "appliance" or "spare part" of any Loan Party (as defined in
Section 40102 of Title 49) as those terms are used in Section 1110(a)(3)(A)(i)
of the Bankruptcy Code, (ii) all parts substitutions, renewals and replacements
of, improvements, accessions and accumulations incident to each such aircraft,
aircraft engine, appliance or spare part and all documents related to any of the
foregoing to the extent any such asset constitutes equipment within the scope of
section 1110(a) of the Bankruptcy Code; (iii) any other assets with respect to
which the granting of any such security interests would cause a default,
directly or indirectly, of any Section 1110 Agreement, other than a default
arising from a negative pledge or similar provision in any such Section 1110
Agreement with respect to otherwise unencumbered property, and (iv) any deposit
or reserve delivered by a Loan Party to a Section 1110 Beneficiary (as defined
below) in connection with the purchase, financing or lease of a Section 1110
Asset; or reserve upon the satisfaction of the obligations secured thereby.
"Section 1110 Beneficiary" shall mean all counterparties with any of the
Loan Parties to any such Section 1110 Agreements.
"Secured Obligations" has the meaning specified in Section 9.01.
"Security Collateral" has the meaning specified in Section 9.01(d).
"Slot" means the right and operational authority of a Loan Party to conduct
one Instrument Flight Rules (as defined under the FAA regulations) landing or
takeoff operation during a specific hour or other periods at LGA, MDW and DCA
pursuant to FAA regulations.
"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
the Borrower.
"Superpriority Claim" shall mean a claim against the Borrower or any
Guarantor in any of the Cases pursuant to Section 364(c) (1) of the Bankruptcy
Code having priority over any or all administrative expenses and other claims
(other than allowed expenses and claims granted to the Authority under the
Indiana DIP Orders) of the kind specified in, or otherwise arising or ordered
under, any Sections of the Bankruptcy Code (including, without limitation,
Sections 105, 326, 328, 330, 331, 503(b), 507, 546(c) and/or 726 thereof),
whether or not such claim or expenses may become secured by a judgment lien or
other non-consensual lien, levy or attachment.
"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
18
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.
"Synthetic Lease Obligation" means the monetary obligation of a Person
under (a) a so-called synthetic, off-balance sheet or lease in which the lessee
is contractually entitled to the tax benefits of ownership of the leased assets,
or (b) an agreement for the use or 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"
has the meaning specified in Section 3.01(a).
"Temporary Slot Disposition" has the meaning set forth in the definition of
"Disposition" set forth in this Section 1.01.
"Term Borrowing" means a borrowing consisting of the Term Loan.
"Term Commitment" means, the Lender's obligation to make the Term Loan to
the Borrower pursuant to Section 2.01.
"Term Loan" means an advance made by the Lender under the Term Note.
"Term Note" means a promissory note of the Borrower payable to the order of
the Lender, in substantially the form of Exhibit A, evidencing the aggregate
indebtedness of the Borrower to the Lender resulting from the Term Loan and the
Closing Fee accrued to the Principal Balance.
"Title 49" means Title 49 of the United States Code, as amended and in
effect from time to time, and the regulations promulgated pursuant thereto.
"Trademarks" has the meaning specified in Section 9.02(f)(ii).
"Transactions" means, collectively, (a) the consummation of transactions
contemplated by the Asset Acquisition Agreement, the Codeshare Agreement and the
Loan Documents and (b) the payment of the fees and expenses incurred in
connection with the consummation of the foregoing.
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"Trust Funds" has the meaning specified in the ATSB Cash Use Order.
"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 as of the most recent valuation date 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.
"United States Citizen" has the meaning specified in Section 5.01.
"Use or Lose Rule" means with respect to the Slots, the terms of 14 C.F.R.
ss. 93.227.
"UST/Clerk Fees" has the meaning set forth in the Interim Order.
1.02 Other Interpretive Provisions. With reference to this Credit Agreement
and each other Loan Document, unless otherwise specified herein or in such other
Loan Document:
(a) The meanings of defined terms are equally applicable to the
singular and plural forms of the defined terms.
(b) (i) The words "herein," "hereto," "hereof" and "hereunder" and
words of similar import when used in any Loan Document shall refer to such
Loan Document as a whole and not to any particular provision thereof.
(ii) Article, Section, Exhibit and Schedule references are to the Loan
Document in which such reference appears.
(iii) The term "including" is by way of example and not limitation.
(iv) The term "documents" includes any and all instruments, documents,
agreements, certificates, notices, reports, financial statements and other
writings, however evidenced, whether in physical or electronic form.
(c) 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."
(d) Section headings herein and in the other Loan Documents are
included for convenience of reference only and shall not affect the
interpretation of this Credit Agreement or any other Loan Document.
1.03 Accounting Terms.
(a) 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 Credit Agreement shall be prepared in conformity with,
GAAP, 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.
20
(b) If at any time any change in GAAP or the application thereof would
affect the computation of any financial ratio or requirement set forth in
any Loan Document, and either the Borrower or the Lender shall so request,
the Lender and the Borrower shall negotiate in good faith to amend such
ratio or requirement to preserve the original intent thereof in light of
such change in GAAP (subject to the approval of the Lender); provided that,
until so amended, (i) such ratio or requirement shall continue to be
computed in accordance with GAAP prior to such change therein and (ii) the
Borrower shall provide to the Lender financial statements and other
documents required under this Credit 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 in GAAP.
1.04 Rounding. Any financial ratios required to be maintained by the
Borrower pursuant to this Credit 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).
1.05 References to Agreements and Laws. Unless otherwise expressly provided
herein, (a) references to Organization Documents, agreements (including the Loan
Documents) and other contractual instruments shall be deemed to include all
subsequent amendments, restatements, extensions, supplements and other
modifications thereto, but only to the extent that such amendments,
restatements, extensions, supplements and other modifications are not prohibited
by any Loan Document; and (b) references to any Law shall include all statutory
and regulatory provisions consolidating, amending, replacing, supplementing or
interpreting such Law.
1.06 Times of Day. Unless otherwise specified, all references herein to
times of day shall be references to Central time (daylight or standard, as
applicable).
ARTICLE II
THE COMMITMENT AND CREDIT EXTENSIONS
2.01 The Loans.
(a) Subject to the terms and conditions set forth in Article IV of
this Credit Agreement the Lender shall make the Term Loan to the Borrower
in the amount equal to forty million dollars ($40,000,000). Amounts repaid
with respect to the Term Loan may not be reborrowed.
(b) Subject to the terms and conditions set forth in Article IV of
this Credit Agreement, the Lender shall issue and deliver to the City of
Chicago the Chicago Guaranty.
2.02 Prepayments.
(a) Optional. The Borrower may, upon notice to the Lender, at any time
or from time to time voluntarily prepay the Loans in whole or in part
without premium or penalty; provided that
21
(i) such notice must be received
by the Lender not later than 11:00 a.m. (A) three Business Days prior to
any date of prepayment of any portion of the Loans; (ii) any prepayment of
the Loans shall be in a principal amount of $500,000 or a whole multiple of
$50,000 in excess thereof; and if less, the entire principal amount thereof
then outstanding. Each such notice shall specify the date and amount of
such prepayment and the type of Loans to be prepaid. If such notice is
given by the Borrower, the Borrower shall make such prepayment and the
payment amount specified in such notice shall be due and payable on the
date specified therein.
(b) Mandatory. (i) If any Loan Party Disposes of any Chicago Gates,
the Borrower shall prepay an aggregate principal amount of the Term Loan
equal to: (A) 100% of all Net Cash Proceeds received therefrom immediately
upon receipt thereof by any Loan Party, less (B) any required repayments of
the Indebtedness under the ATSB Loan or the Indiana DIP Orders.
(ii) Upon the issuance by any Loan Party of any of its capital
stock or other Equity Interests to any Person other than another Loan
Party or the Lender pursuant to the terms of the Investment Agreement
(or the receipt of any capital contribution by any Loan Party from any
Person other than another Loan Party), the Borrower shall prepay an
aggregate principal amount of Loans equal to 100% of all Net Cash
Proceeds received therefrom immediately upon receipt thereof by any
Loan Party.
(iii) Upon the incurrence or issuance by any Loan Party of any
Indebtedness to any Person other than another Loan Party (other than
Indebtedness expressly permitted to be incurred or issued pursuant to
Section 7.03(c)), the Borrower shall prepay an aggregate principal
amount of Loans equal to 100% of all Net Cash Proceeds received
therefrom immediately upon receipt thereof by any Loan Party.
(c) Prepayments to Include Accrued Interest, Etc. All prepayments
under this Section 2.02 shall be made together with accrued and unpaid
interest to the date of such prepayment on the principal amount so prepaid.
2.03 Repayment of Loans.
(a) Term Loan. The Borrower shall repay to the Lender on the Maturity
Date the aggregate principal amount of the Term Loan outstanding on such
date.
(b) Chicago Guaranty. On Maturity Date, if the Chicago Guaranty
remains outstanding, and if the Lender is not required to provide any
replacement thereof in connection with the Exit Facility, the Borrower
shall provide to the Lender a letter of credit issued by a bank approved by
the Lender to secure in full all of the Lender's obligations under the
Chicago Guaranty.
2.04 Interest.
(a) Interest Rate. Subject to the provisions of subsections (b) and
(c) below, the Term Loan and the amounts drawn under the Chicago Guaranty
shall bear interest on the outstanding principal amount thereof from the
applicable borrowing date at a rate per annum equal to the Base Rate.
22
(b) Default Rate. Upon the occurrence and during the continuance of an
Event of Default, the Borrower shall pay interest on (i) the unpaid
principal amount of each Loan owing to the Lender, payable in arrears on
the dates referred to in clause (a) above and on demand, at a rate per
annum equal at all times to the Default Rate and (ii) to the fullest extent
permitted by law, the amount of any interest, fee or other amount payable
under the Loan Documents that is not paid when due, from the date such
amount shall be due until such amount shall be paid in full, payable in
arrears on the date such amount shall be paid in full and on demand, at a
rate per annum equal at all times to the Default Rate required to be paid.
(c) In the event that the Loan shall bear a LIBOR Rate, the Lender
shall determine (which determination shall, absent manifest error, be
presumptively correct) the LIBOR Rate applicable to the Principal Balance
on the applicable Interest Rate Determination Date.
(d) Payment Dates. 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.
2.05 Fees.
(a) Closing Fee. The Borrower shall pay to the Lender, a closing fee
equal to two and a half percent (2.50%) of the Commitment on the Closing
Date (the "Closing Fee"). The Closing Fee shall be deemed fully earned and
payable on the date of disbursement of any Loan and shall be added to the
Principal Balance.
(b) Guaranty Fee. The Borrower shall pay to Lender a guaranty fee in
the amount of three percent (3.00%) of the amounts guarantied under the
Chicago Guaranty (the "Chicago Guaranty Fee"). The Chicago Guaranty Fee
shall be deemed fully earned and payable on the date of delivery of the
Chicago Guaranty and shall be paid monthly in arrears on the first Business
Day of each calendar month (the "Monthly Payment Date") for so long as the
Chicago Guaranty shall remain in effect.
(c) Payment of Fees. All fees to be paid by any Loan Party pursuant to
this Credit Agreement and any other Loan Document shall be paid upon the
funding pursuant to the Investment Agreement.
2.06 Computation of Interest and Fees. All 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. Each
determination by the Lender of an interest rate or fee hereunder shall be
conclusive and binding for all purposes, absent manifest error.
2.07 Evidence of Indebtedness.
(a) The Loans shall be evidenced by one or more accounts or records
maintained by the Lender in the ordinary course of business. The accounts
or records maintained by the Lender shall
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be conclusive absent manifest
error of the amount of the Credit Extensions made by the Lender to or on
behalf of the 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 the Borrower hereunder to pay any amount
owing with respect to the Obligations.
2.08 Payments Generally.
(a) All payments to be made by the Borrower shall be made without
condition or deduction for any counterclaim, defense, recoupment or setoff.
Except as otherwise expressly provided herein, all payments by the Borrower
hereunder shall be made to the Lender in Dollars and in immediately
available funds not later than 2:00 p.m. on the date specified herein.
(b) If any payment to be made by the 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.
2.09 Approval of Interest. Approval of this Credit Agreement by the
Bankruptcy Court shall constitute approval of the rates of interest and other
amounts payable hereunder and a ruling that they are exempt from any otherwise
applicable limitation.
2.10 Superpriority Nature of Obligations; No Priming Lien.
(a) Except as set forth in this paragraph, subject to the Carve-Out,
the Obligations shall be secured by:
(i) an allowed superpriority administrative expense claim
pursuant to Section 364(c)(1) of the Bankruptcy Code in each of the
Cases having priority, subject only to the allowed administrative
expense claims granted to the Authority under the Indiana DIP Orders
and the Carve-Out, over all administrative expense, claims and
unsecured claims against the Loan Parties, now existing or hereafter
arising, of any kind or nature whatsoever, including, without
limitation, administrative expenses of the kinds specified in, or
ordered pursuant to sections 105, 326, 328, 330, 331, 503(b), 507,
546(c), 726 or 1114 of the Bankruptcy Code whether or not such claims
or expenses may become secured by a judgment lien or other
non-consensual lien, levy or attachment, and shall at all times be
senior to the rights of any Loan Party, any Loan Party's estate, and
any successor trustee or estate representative in the Cases or any
subsequent proceeding or case under the Bankruptcy Code.
(ii) a continuing first priority Lien and security interest in
and to all Primary Collateral (as herein defined) of the Loan Parties,
subject only to (i) valid and perfected Liens in existence on the
Petition Date and junior to such valid and perfected Liens; (ii)
valid, enforceable and nonavoidable Liens existing as of the Petition
Date, but perfected after the Petition Date pursuant to section 546(b)
of the Bankruptcy Code only to the extent such post-petition
perfection is expressly permitted under the Bankruptcy Code; (iii) the
Carve-Out; and (iv) Permitted Senior Liens (including liens granted
pursuant to the ATSB Cash Use Order and the Indiana DIP Orders); and
(iii) pursuant to section 364(c)(3) of the Bankruptcy Code, Liens
and security interests in and to all Secondary Collateral (as herein
defined) of the Loan Parties subject only to (i) valid and perfected
Liens in existence on the Petition Date and junior to such valid and
perfected Liens; (ii) valid, enforceable and nonavoidable Liens
existing as of the Petition Date, but perfected after the Petition
Date pursuant to section 546(b) of the Bankruptcy Code only to the
extent such post-petition perfection is expressly permitted under the
Bankruptcy Code; (iii) the Carve-Out; and (iv) Permitted Senior Liens
(including Liens granted under the Indiana DIP Orders and ATSB Cash
Use Order).
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(b) Notwithstanding the foregoing, the Loan Parties shall be permitted
to pay, as the same may become due and payable, subject to the provisions
of the Orders and this Section 2.10 the fees and expenses provided for in
the definition of the Carve-Out. Except for the Carve-Out, no costs or
expenses of administration shall be imposed against the Lenders or the
Collateral under Sections 105, 506(c) or 552 of the Bankruptcy Code, or
otherwise.
2.11 Release. The Borrower and the other Loan Parties each hereby
acknowledge, effective as of the date of the Interim Order, that the Borrower,
the other Loan Parties, or any of their Subsidiaries, have no defense,
counterclaim, offset, recoupment, cross-complaint, claim or demand of any kind
or nature whatsoever that can be asserted to reduce or eliminate all or any part
of the Borrower's, the other Loan Parties', or their Subsidiaries' liability to
repay the Lender as provided in this Credit Agreement or to seek affirmative
relief or damages of any kind or nature from the Lender. The Borrower and the
other Loan Parties, each in its own right and on behalf of its bankruptcy
estate, all its successors, assigns, Subsidiaries and any Affiliates and any
Person acting for and on behalf of, or claiming through it (collectively, the
"Releasing Parties"), hereby fully, finally and forever release and discharge
the Lender and all of its past and present officers, directors, servants,
agents, attorneys, assigns, heirs, parents, subsidiaries, and each Person acting
for or on behalf of any of them (collectively, the "Released Parties") of and
from any and all past and present actions, causes of action, demands, suits,
claims, liabilities, Liens, lawsuits, adverse consequences, amounts paid in
settlement, costs, damages, debts, deficiencies, diminution in value,
disbursements, expenses, losses and other obligations of any kind or nature
whatsoever, whether in law, equity or otherwise (including, without limitation,
those arising under Sections 541 through 550 of the Bankruptcy Code and interest
or other carrying costs, penalties, legal, accounting and other professional
fees and expenses, and incidental, consequential and punitive damages payable to
third parties), whether known or unknown, fixed or contingent, direct, indirect,
or derivative, asserted or unasserted, foreseen or unforeseen, suspected or
unsuspected, now or existing against any of the Released Parties, whether held
in a personal or representative capacity, and which are based on any act, fact,
event or omission or other matter, cause or thing occurring at or from any time
prior to and including the date hereof in any way, directly or indirectly
arising out of, connected with or relating to this Credit Agreement, the Interim
Order, the Final Order and the debtor in possession financings contemplated or
ordered therein, and all other agreements, certificates, instruments and other
documents and statements (whether written or oral) related to the debtor in
possession financings; provided, however, that nothing herein shall affect the
rights of any party to the agreements to be executed in connection with the
Closing and the closing of the Transactions, including, without limitation, the
Asset Acquisition Agreement, the Codeshare Agreement and the other Loan
Documents.
2.12 Waiver of any Priming Rights. Upon the Closing Date, and on behalf of
themselves and their estates, and for so long as any Obligation shall be
outstanding, the Borrower and the other Loan Parties hereby irrevocably waive
any right, pursuant to Sections 364(c) or 364(d) of the Bankruptcy Code or
otherwise, (a) to grant any Lien of equal or greater priority than the Lien
securing the Obligations, or (b) to approve or incur a claim of equal or greater
priority than the Obligations other than as provided in the Indiana DIP Orders
and the ATSB Cash Use Order.
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2.13 Payment of Obligations. Upon the Maturity Date (whether by
acceleration or otherwise) of any of the Obligations under this Credit Agreement
or any of the other Loan Documents, Lender shall be entitled to immediate
payment of such Obligations without further application to or order of the
Bankruptcy Court.
2.14 No Discharge; Survival of Claims. Borrower and each of the other Loan
Parties agrees that (a) the Obligations hereunder shall not be discharged by the
entry of an order confirming a Reorganization Plan (and Borrower and each of the
other Loan Parties, pursuant to Section 1141(d)(4) of the Bankruptcy Code,
hereby waives any such discharge) and (b) the superpriority administrative claim
granted to the Lender pursuant to the Interim Order and Final Order and
described in Section 2.10 and the Liens granted to Lender pursuant to the
Interim Order and Final Order and described in Section 9.01 shall not be
affected in any manner by the entry of an order confirming a Reorganization Plan
in any Cases.
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.01 Taxes.
(a) Except as otherwise provided in this Section 3.01, any and all
payments by the Borrower to or for the account of the Lender under any Loan
Document shall be made free and clear of and without deduction for any and
all present or future taxes, duties, levies, imposts, deductions,
assessments, fees, withholdings or similar charges, and all liabilities
with respect thereto, excluding, in the case of the Lender, taxes imposed
on or measured by its overall net income, and franchise taxes imposed on it
(in lieu of net income taxes), by the jurisdiction (or any political
subdivision thereof) under the Laws of which the Lender, is organized or is
otherwise a resident or doing business (other than a jurisdiction in which
the Lender is deemed to be doing business solely as a result of entering
into, or performing its obligations under, any Loan Document); (all such
non-excluded taxes, duties, levies, imposts, deductions, assessments, fees,
withholdings or similar charges, and liabilities being hereinafter referred
to as ("Taxes"). If the Borrower shall be required by any Laws to deduct
any Taxes from or in respect of any sum payable under any Loan Document,
then, except as otherwise provided in this Section 3.01, (i) the sum
payable shall be increased as necessary so that after making all required
deductions with respect to Taxes (including deductions applicable to
additional sums payable under this Section), the Lender receives an amount
equal to the sum it would have received had no such deductions been made,
(ii) the Borrower shall make such deductions, (iii) the Borrower shall pay
the full amount deducted to the relevant taxation authority or other
authority in accordance with applicable Laws, and (iv) within 30 days after
the date of such payment, the Borrower shall furnish to the Lender the
original or a certified copy of a receipt evidencing payment .thereof to
the extent such a receipt is issued therefor, or other written proof of
payment thereof that is reasonably satisfactory to the Lender.
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(b) In addition, the Borrower agrees to pay any and all present or
future stamp, court or documentary taxes and any other excise or property,
intangible, mortgage recording taxes or similar charges or similar levies
which arise from any payment made under any Loan Document or from the
execution, delivery, performance, enforcement or registration of, or
otherwise with respect to, any Loan Document (hereinafter referred to as
"Other Taxes").
(c) If the Borrower shall be required to deduct or pay any Taxes or
Other Taxes from or in respect of any sum payable under any Loan Document
to the Lender, the Borrower shall also pay to the Lender at the time
interest is paid, such additional amount that the Lender specifies is
necessary to preserve the after-tax yield (after factoring in all taxes,
including taxes imposed on or measured by net income) that the Lender would
have received if such Taxes or Other Taxes had not been imposed.
(d) The Borrower agrees to indemnify the Lender for (i) the full
amount of Taxes and Other Taxes (including any Taxes or Other Taxes imposed
or asserted by any jurisdiction on amounts payable under this Section) paid
by the Lender, (ii) amounts payable under Section 3.01(c) without
duplication and (iii) any liability (including additions to tax, penalties,
interest and expenses) arising therefrom or with respect thereto, in each
case whether or not such Taxes or Other Taxes were correctly or legally
imposed or asserted by the relevant Governmental Authority; but excluding
amounts resulting from the failure to comply with the requirements of
Section 11.05. Payment under this subsection (d) shall be made within 30
days after the date the Lender makes a demand therefor.
(e) If the Lender determines, in its sole discretion, that is has
actually received or realized any refund of tax, any reduction of, or
credit against, its withholding or payment of any additional amount by the
Borrower pursuant to this Section 3.01, the Lender shall reimburse the
Borrower in an amount equal to the net benefit, after tax, and net of all
expenses incurred by the Lender in connection with such refund, reduction,
credit or recovery; provided that nothing in this Section 3.01(e) shall
require the Lender to make available its tax returns (or any other
information relating to its taxes which it deems to be confidential or
interfere with the Lender's right to arrange its tax affairs in whatever
manner it deems fit or to obligate the Lender to claim any credit). The
Borrower shall return such amount to the Lender in the event that such
Person is required to repay such refund of tax or is not entitled to such
reduction of, or credit against its tax liabilities.
3.02 Matters Applicable to All Requests for Compensation. A certificateof
the Lender claiming compensation under this Article III and setting forth the
additional amount or amounts to be paid to it hereunder and the basis therefor
shall be conclusive in the absence of manifest error. In determining such
amount, the Lender may use any reasonable averaging and attribution methods.
3.03 Survival. All of the Borrower's obligations under this Article III
shall survive termination of the Commitment and repayment of all other
Obligations hereunder.
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ARTICLE IV
CONDITIONS PRECEDENT TO CREDIT EXTENSIONS
4.01 Conditions to Closing. This Credit Agreement shall become effective on
and as of the first date on which all of the following conditions precedent
shall have been satisfied or waived by the Lender:
(a) The Lender's receipt of the following, each of which shall be
originals or facsimiles (followed promptly by originals) unless otherwise
specified, each properly executed by a Responsible Officer of the signing
Loan Party, and each in form and substance reasonably satisfactory to the
Lender and its respective legal counsel:
(i) counterparts of this Credit Agreement, sufficient in number
for distribution to the Lender and the Borrower, duly executed by the
appropriate Loan Parties;
(ii) the Term Note duly executed by the Borrower;
(iii) a copy of the Interim Order certified by the clerk of the
Bankruptcy Court, which Interim Order shall be in the form acceptable
to the Lender and shall not have been reversed, amended, supplemented,
modified, stayed or vacated;
(iv) a copy of the Bid Procedures Order certified by the clerk of
the Bankruptcy Court, which Bid Procedures Order shall not have been
reversed, amended, supplemented, modified, stayed or vacated;
(v) the Codeshare Agreement, duly executed and delivered by the
parties thereto;
(vi) the Asset Acquisition Agreement, duly executed and delivered
by the parties thereto;
(vii) such certificates of resolutions or other action,
incumbency certificates and/or other certificates of Responsible
Officers of each Loan Party as the Lender may reasonably require
evidencing the identity, authority and capacity of each Responsible
Officer thereof authorized to act as a Responsible Officer in
connection with this Credit Agreement and the other Loan Documents to
which such Loan Party is a party or is to be a party;
(viii) a certificate of a Responsible Officer of each Loan Party
either (A) listing all consents, licenses and approvals required in
connection with the execution, delivery and performance by such Loan
Party and the validity against such Loan Party of the Loan Documents
to which it is a party, 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;
(ix) such documents and certifications as the Lender may
reasonably require to evidence that each Loan Party is duly organized
or formed, and that each of the Loan Parties is validly existing and
in good standing in its jurisdiction of organization; and
28
(x) a favorable opinion of Baker & Daniels, counsel to the Loan
Parties, addressed to the Lender, in the form and substance acceptable
to the Lender and its counsel;
4.02 Conditions to Term Loan and the Chicago Guaranty. The obligation of
the Term Lender to make the Term Loan and to issue and deliver the Chicago
Guaranty shall become effective on the first date on which all of the following
conditions precedent shall have been satisfied:
(a) The Closing Date shall have occurred.
(b) [RESERVED].
(c) [RESERVED].
(d) The Lender shall have received satisfactory opinions of counsel to the
Loan Parties (which shall cover, among other things, authority, legality,
validity, binding effect, unenforceability of the Loan Documents and the
granting of a security interest and perfection of the Lender's interest in the
Collateral) as the Lender may reasonably request, in addition to the opinion
identified in Section 4.01(a)(x).
(e) No material adverse change in the business, condition (financial or
otherwise), operations, performance, properties or prospects of the Borrower,
the Parent and its Subsidiaries, taken as a whole, since the Petition Date other
than any change (x) of the type which customarily occurs as a result of events
leading up to and following the commencement of a proceeding under chapter 11 of
the Bankruptcy Code and the commencement of the Cases or (y) disclosed in (A)
the annual report on Form 10-K for the year ended December 31, 2003 filed by the
Borrower; (B) in the quarterly report on Form 10-Q for the quarters ended March
31, June 30 and September 30, 2004, filed by the Borrower or (C) in any report
on Form 8-K filed by the Borrower after December 31, 2003 and prior to the date
hereof; provided that deferrals of payments to aircraft lessors/lenders with
respect to grounded aircraft and other aircraft in the Obligated Parties' fleet
(and any associated ratings downgrade) shall not in and of themselves constitute
a material adverse change.
(h) The Lender shall have received satisfactory evidence that the Loan
Parties shall have complied in full with the notice and other requirements of
the Bankruptcy Code in a manner acceptable to the Lender and its counsel.
(i) The entry of an enforceable order of the Court approving the terms and
conditions of the Facility (including without limitation, (a) the finding that
the Lender is extending the credit under the Facility in "good faith" within the
meaning of Section 364(e) of the Bankruptcy Code, (b) pursuant to Sections
364(c)(2) and (c)(3) of the Bankruptcy Code, authorizing and granting the
security interests and liens upon all property of the Borrower's estate defined
under Section 541 of the Bankruptcy Code and otherwise described above, and (c)
pursuant to Section 364(c)(1) of the Bankruptcy Code, the granting of the
superpriority status and liens referred to herein, and (d) the automatic
perfection of all liens referred to herein, the payment of all fees referred to
herein, the first priority line referred to herein and the approval of the
Escrow Arrangement), such order to be in the form and substance satisfactory to
the Lender in its sole discretion and which shall not have been reversed,
modified, amended or stayed without the prior written consent of the Lender (the
"Interim Order"). Such order shall also (a) approve the Loan Parties' waiver of
any and all claims and causes of action against the Lender (and its respective
affiliates) directly related to the Facility or the negotiation of the terms
thereof, and (b) prohibit subsequent granting of liens or priority status
superior to, or pari passu with, those provided in connection with the Facility.
29
(j) Lender's reasonable determination that all motions, orders, and other
pleadings or related documents to be filed or submitted to the Bankruptcy Court
in connection with the Facility shall be consistent with the terms of the
proposed Facility.
(k) The Lender's reasonable determination that all other related orders
entered by the Bankruptcy Court in the Cases, including without limitation any
and all cash collateral orders and related orders, are not inconsistent with the
terms of the Facility.
(k) No material lien shall exist in connection with any ERISA plan of the
Loan Parties.
(l) The Loan Parties shall have obtained all necessary third party
approvals (except for the approval of the City of Chicago Council which shall be
obtained prior to January 31, 2005).
(m) The completion of searches for existing liens on the Loan Parties'
assets and the Lender shall have a valid and perfected lien on and security
interest in the Collateral.
(n) The Borrower hereby notifies the Lender that the conditions precedent
to the Term Loan and the issuance of the Chicago Guaranty have been satisfied,
and agrees to deliver after the Closing Date such evidence with respect thereto
as the Lender may reasonably request.
(o) The representations and warranties of the Borrower and each other Loan
Party 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 in all material respects on and as of the
date of such Credit Extension, except to the extent that such representations
and warranties specifically refer to an earlier date, in which case they shall
be true and correct in all material respects 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.
(p) No material work disruptions or stoppages by employees of any of the
Loan Parties shall have occurred and be continuing.
(q) Other than for the making of the Loans on the Closing Date, the Interim
or Final Order shall be in full force and effect, and shall not have been
reversed, amended, supplemented, modified, stayed or vacated.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lender that:
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5.01 Existence, Qualification and Power; Compliance with Laws; "Air Carrier
Status". Each Loan Party (a) is a corporation, partnership or limited liability
company duly organized or formed, validly existing and (except for ATA Cargo,
Inc.) in good standing under the Laws of the jurisdiction of its incorporation
or organization, (b) subject to the entry of the DIP Financing Orders has all
requisite power and authority and all requisite governmental licenses,
authorizations, consents and approvals to (i) own or lease its assets and carry
on its business and (ii) execute, deliver and perform its obligations under the
Loan Documents and, subject to the entry of the Bid Procedures Order, the Asset
Acquisition Agreement and the Codeshare Agreement and (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; except in each case referred to in
clause (b)(i) or to the extent that failure to do so could not reasonably be
expected to have a Material Adverse Effect. The Borrower is an "air carrier"
within the meaning of Section 40102 of Title 49 and holds a certificate under
Section 41102 of Title 49 or a commuter air carrier authorization. Each such
Person holds an air carrier operating certificate issued pursuant to Chapter 447
of Title 49. The Borrower and each Subsidiary that is an "air carrier" are each
a "citizen of the United States" as defined in Section 40102(a)(15) of Title 49
(a "United States Citizen"). The Borrower and each Subsidiary that is an "air
carrier" possess all necessary certificates, franchises, licenses, permits,
rights, authorizations and concessions and consents which are material to the
operation of the routes flown by it and the conduct of its business and
operations as currently conducted.
5.02 Authorization; No Contravention. Following the entry of, and giving
effect to, the DIP Financing Orders (in the case of the Loan Documents) and the
Bid Procedures Order (in the case of the Asset Acquisition Agreement), the
execution, delivery and performance by each Loan Party of each Loan Document to
which such Person is or is to be a party and, the consummation of the
Transaction, are within such Loan Party's corporate or other powers, have been
duly authorized by all necessary corporate or other organizational action, and
do not and will not (a) contravene the terms of any of such Person'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 Post-Petition Contractual Obligation to which such Person
is a party or affecting such Person or the properties of such Person or (ii) any
order, injunction, writ or decree of any Governmental Authority or any arbitral
award to which such Person or its property is subject; or (c) violate any Law.
No Loan Party is in breach of any such Contractual Obligation, the breach of
which could be reasonably likely to have a Material Adverse Effect.
5.03 Governmental Authorization; Other Consents. Following the entry of,
and giving effect to, the DIP Financing Orders (in the case of the Loan
Documents) and the Bid Procedures Order (in the case of the Asset Acquisition
Agreement), 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 (i) the execution, delivery or
performance by, or enforcement against, any Loan Party of this Credit Agreement
or any other Loan Document or for the consummation of the Transaction, (ii) the
grant by any Loan Party of the Liens granted by it pursuant to the Collateral
Documents or (iii) the perfection or maintenance of the Liens created under the
Collateral Documents (including the requisite priority set forth in the DIP
Financing Orders) except in each case for such consents, exemptions,
authorizations, approvals, actions, notices and filings listed on Schedule 5.03
hereto, all of which have been duly obtained, taken, given or made and are in
full force and effect. All applicable waiting periods in connection with the
Transaction have expired without any action having been taken by any competent
authority restraining, preventing or imposing materially adverse conditions upon
the Transaction or the rights of the Loan Parties freely to transfer or
otherwise dispose of, or to create any Lien on, any properties now owned or
hereafter acquired by any of them.
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5.04 Binding Effect. This Credit Agreement has been, and each other Loan
Document, when delivered hereunder, will have been, duly executed and delivered
by each Loan Party that is party thereto. This Credit Agreement constitutes, and
each other Loan Document when so delivered will constitute, subject to the entry
of the Interim Order or Final Order by the Bankruptcy Court, as applicable, a
legal, valid and binding obligation of such Loan Party, enforceable against each
Loan Party that is party thereto 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 the Borrower, the Parent 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 the Borrower, the Parent and its
Subsidiaries as of the date thereof required to be disclosed by GAAP, including
liabilities for taxes, material commitments and Indebtedness.
(b) The unaudited consolidated financial statements of the Borrower, the
Parent 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
otherwise expressly noted therein, and (ii) fairly present the financial
condition of the Borrower, the Parent 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) Except for the filing of the Cases, since the Closing Date, 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 Change.
(d) The consolidated forecasted balance sheets, statements of income and
statements of cash flows of the Borrower, the Parent and its Subsidiaries
delivered to the Lender in connection with this Credit Agreement were prepared
in good faith on the basis of the assumptions stated therein, which assumptions
were fair in light of the conditions existing at the time of delivery of such
forecasts, and represented, at the time of delivery, the Borrower's best
estimate of its future financial performance.
5.06 Litigation. Other than the Cases, except as has been publicly
disclosed in any filing made by the Borrower or any other Loan Party with the
SEC between December 31, 2003 and the date of this Credit Agreement, there are
no actions, suits, proceedings, claims or disputes pending or, to the knowledge
of the Borrower after due and diligent investigation, threatened or
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contemplated, at law, in equity, in arbitration or before any Governmental
Authority, by or against the Borrower, the Parent or any of its Subsidiaries or
against any of their properties or revenues that either individually or in the
aggregate could reasonably be expected to have a Material Adverse Effect. The
performance of any action by any Loan Party required or contemplated by any of
the Loan Documents, the Asset Acquisition Agreement, the Codeshare Agreement or
the Transaction is not restrained or enjoined (either temporarily, preliminary
or permanently). There are no actions, suits or proceedings pending that
challenge the validity of any Loan Document or the applicability or
enforceability of any Loan Document or any of the Orders or which seek to void,
avoid, limit, or otherwise adversely affect the security interest created by or
in any Loan Document or any of the Orders or any payment made pursuant thereto.
5.07 No Default. Neither the Borrower nor any other Loan Party is in
default under or with respect to, or a party to, any Post Petition Contractual
Obligation that could, 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 execution, delivery or performance of this
Credit Agreement or any other Loan Document or the transactions contemplated
hereby or thereby.
5.08 Ownership of Property. (a) Each Loan Party and each of its
Subsidiaries has a valid leasehold or subleasehold interests in all real
property necessary to or used in the ordinary conduct of its business.
(b) Set forth on Schedule 5.08(b) hereto is a complete and accurate list of
all Liens on Collateral, showing as of the date hereof the lienholder thereof,
the principal amount of the obligations secured thereby and the Collateral
subject thereto. The Collateral is subject to no Liens, other than Liens set
forth on Schedule 5.08(b), and as otherwise permitted by Section 7.01.
(c) Set forth on Schedule 5.08(c) hereto is a complete and accurate list of
all Slots held by any Loan Party on the date hereof.
(d) Set forth on Schedule 5.08(d) hereto is a complete and accurate list of
all Gate Leaseholds contracted or licensed to any Loan Party on the date hereof
located at the airports at which the Loan Parties conduct operations.
5.09 Environmental Compliance. The Loan Parties 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 the Borrower has reasonably concluded that, such effects of
Environmental Laws and claims could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on any of the Loan
Parties.
5.10 Insurance. All policies of insurance of any kind or nature owned by or
issued to the Loan Parties, including, without limitation, policies of life,
fire, theft, product liability, public liability, property damage, other
casualty, employee fidelity, workers' compensation, employee health and welfare,
title, property and liability insurance, are in full force and effect, are
issued by financially sound and reputable insurance companies not Affiliates of
the Borrower and are of a nature and provide such coverage, including, without
limitation, war risk and terrorism liability insurance, that is in an amount
that is no less than the greater of (i) the maximum amount available to the
Borrower and the Loan Parties from the DOT under the Federal Aviation Insurance
33
Program, as amended by the Air Transportation Stabilization Act and further
amended by the Homeland Security Act of 2002 and the maximum (to the extent
requested by the Lender) amount available under programs established pursuant to
the Terrorism Risk Insurance Act of 2002 and (ii) such amount as is customarily
carried by major United States air carriers in the United States domestic
airline industry; and the Borrower and the Loan Parties maintain other insurance
that is in their judgment sufficient and in such amounts as is customary in the
United States domestic airline industry for major United States air carriers.
5.11 Taxes. Except as otherwise set forth on Schedule 5.11(a), (a) the Loan
Parties have filed all Federal, state and other material tax returns and reports
required to be filed, and have paid or made adequate provision for payment of
all Federal, state and other material taxes, assessments, fees and other
governmental charges levied or imposed upon them or their properties, income or
assets that are due and payable, except, in each case, 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; (b) there is
no proposed tax assessment against any Loan Party that would, if made, have a
Material Adverse Effect; and (c) no Loan Party is party to any tax sharing
agreement with any Person other than another Loan Party, other than tax
indemnity agreements in leasing transactions.
5.12 ERISA Compliance.
(a) Each Plan is in compliance with the applicable provisions of ERISA, the
Code and other Federal or state Laws, except for events that could not
reasonably be expected to result in a Material Adverse Effect. 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 has been
filed with the IRS with respect thereto and, to the best knowledge of the Loan
Parties, nothing has occurred which would prevent, or cause the loss of, such
qualification. As of the date of this Credit Agreement, each Loan Party and each
ERISA Affiliate has 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 the Loan Parties,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan that could be reasonably be expected to result in a
Material Adverse Change. There has been no prohibited transaction or violation
of the fiduciary responsibility rules with respect to any Plan that has resulted
or could reasonably be expected to result in a Material Adverse Change.
(c) (i) Other than the filing of the Cases and events related to such
filing, no ERISA Event has occurred or is reasonably expected to occur; (ii)
neither any Loan Party 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
(iii) neither any Loan Party nor any ERISA Affiliate has engaged in a
transaction that could be subject to Sections 4069 or 4212(c) of ERISA.
34
5.13 Subsidiaries; Equity Interests. As of the Closing Date, each Loan
Party has no Subsidiaries other than the other Loan Parties and those
specifically disclosed in Part (a) of Schedule 5.13 and all of the outstanding
Equity Interests in such Subsidiaries have been validly issued, are fully paid
and non-assessable and are owned by a Loan Party in the amounts specified on
Part (a) of Schedule 5.13 free and clear of all Liens except those created under
the Collateral Documents. Set forth in Part (b) of Schedule 5.13 is a complete
and accurate list of all Investments (other than (i) Cash Equivalents and (ii)
those Investments set forth in Part (a) of Schedule 5.13) held by any Loan Party
on the date hereof, showing as of the date hereof the amount, obligor or issuer
and maturity, if any, thereof. Each Loan Party has no equity investments in any
other corporation or entity other than those specifically disclosed in Part (a)
or Part (b) of Schedule 5.13.
5.14 Margin Regulations; Investment Company Act; Public Utility Holding
Company Act.
(a) The 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 Board of Governors of
the Federal Reserve System of the United States), or extending credit for the
purpose of purchasing or carrying margin stock and no proceeds of any Borrowings
will be used to purchase or carry any margin stock or to extend credit to others
for the purpose of purchasing or carrying any margin stock.
(b) None of the Borrower, any Person Controlling the 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. Neither the making of any
Loan, nor the issuance of the Chicago Guaranty, nor the application of the
proceeds or repayment thereof by the Borrower, nor the consummation of the other
transactions contemplated by the Loan Documents, will violate any provision of
any such Act or any rule, regulation or order of the SEC thereunder.
5.15 Disclosure. (a) All written information that has been made available
to the Lender by the Borrower or any of its representatives in connection with
the transactions contemplated hereby is, taken as a whole, complete and correct
in all material respects and does not contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
contained therein not misleading in light of the circumstances under which such
statements were made and (b) all financial projections, if any, that have been
prepared by the Borrower and made available to the Lender have been prepared in
good faith based upon assumptions that were reasonable as of the date of the
preparation of such financial projections, it being understood that no assurance
is given that the results forecasted in the projections will in fact be achieved
and that the projections are subject to uncertainties and contingencies, many of
which are beyond the control of the Borrower, the Parent and its Subsidiaries.
5.16 Compliance with Laws. Each Loan Party 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, could
not reasonably be expected to have a Material Adverse Effect.
35
5.17 Intellectual Property Licenses, Etc.
(a) The Loan Parties own all right, title and interest in and to, or
possess the right to use, the Intellectual Property Collateral (as defined in
Section 9.01(f)) that are reasonably necessary for the operation of their
respective businesses.
(b) To the best knowledge of the Loan Parties, the operation of their
respective businesses as currently conducted, or as contemplated to be conducted
and the use of the Intellectual Property Collateral in connection therewith do
not infringe, misappropriate, conflict with, or otherwise violate the rights of
any other Person. The Intellectual Property Collateral is subsisting and has not
been adjudicated invalid or unenforceable in whole or in part, and to the best
knowledge of the Loan Parties, is valid and enforceable.
(c) Except as specifically disclosed in Schedule 5.17(c), no claim or
litigation has been asserted or is pending or, to the best knowledge of the Loan
Parties, threatened, that, either individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect, alleging that the Loan
Parties' rights in or use of the Intellectual Property Collateral or the
operation of the businesses of the Loan Parties infringe, misappropriate, or
otherwise violate the rights of any other Person. To the best knowledge of the
Loan Parties, no Person is engaging in any activity that infringes,
misappropriates, or otherwise violates the Intellectual Property Collateral.
5.18 Security/Priority.
(a) The Cases were commenced on the Petition Date in accordance with
applicable Law and proper notice thereof and the proper notice for the hearing
for the approval of the Interim Order and the Final Order has been given.
(b) On and after the Closing Date and the entry of the DIP Financing Orders
and after giving effect thereto, the provisions of the Loan Documents and the
DIP Financing Orders are effective to create in favor of the Lender, legal,
valid and perfected Liens on and security interests (having the priority
provided for herein and in the DIP Financing Orders) in all right, title and
interest in the Collateral, enforceable against each Loan Party that owns an
interest in such Collateral.
(c) On and after the entry of the DIP Financing Orders and after giving
effect thereto, all Obligations owing by the Borrower under the Facility and by
the Guarantors in respect thereof will be secured by:
(i) subject to the Carve-Out and Permitted Senior Liens, first priority
liens granted to the Lender pursuant to Section 364(c)(2) of the Bankruptcy Code
on all Primary Collateral, other than Excluded Assets, that is not subject to
valid and perfected liens on the Petition Date or to valid liens in existence on
the Petition Date that subsequently are perfected pursuant to Section 546(b) of
the Bankruptcy Code; and
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(ii) subject to the Carve-Out and Permitted Senior Liens, pursuant to
Section 364(c)(3) of the Bankruptcy Code, best priority liens granted to the
Lender on all Secondary Collateral (other than Excluded Assets and Section 1110
Assets) that is subject to valid and perfected liens in existence on the
Petition Date or to valid liens in existence on the Petition Date that
subsequently are perfected pursuant to Section 546(b) of the Bankruptcy Code,
subject only to such existing or subsequently perfected liens.
(d) On and after the entry of the DIP Financing Orders and after giving
effect thereto, all Obligations owing by the Borrower under the Facility and by
the Guarantors in respect thereof will be, subject to the Carve-Out, an allowed
administrative expense claim pursuant to Section 364(c)(1) of the Bankruptcy
Code in each of the Cases having priority over all administrative expenses of
the kind specified in, or arising under, any sections of the Bankruptcy Code
(including, without limitation, Sections 105, 326, 328, 330, 331, 503(b), 507,
546(c), 726 or 1114 thereof) whether or not such claims or expenses may become
secured by a judgment lien or other non-consensual lien, levy or attachment.
5.19 Entry of the Orders. The Interim Order was entered by the Bankruptcy
Court on December 21, 2004 and has not have been stayed, amended, vacated,
reversed or rescinded in any respect. On the date of the making of any Loan, the
Interim Order or the Final Order, as the case may be, will have been entered and
will not have been amended, stayed, vacated or rescinded in any respect that is
adverse to the Lender. Upon the maturity (whether by the acceleration or
otherwise) of any of the Obligations of the Borrower and each Guarantor
hereunder and under the other Loan Documents, the Lender shall, subject to the
provisions of Section 8.02, be entitled to immediate payment of such
Obligations, and to enforce the remedies provided for hereunder, without further
application to or order by the Bankruptcy Court.
5.20 Slot Utilization. The Borrower, the Parent and its Subsidiaries are
utilizing their Slots at DCA and LGA, other than the AIR-21 Slots, in a manner
consistent with applicable regulations and contracts in order to preserve the
value of such Slots, taking into account any waivers or other relief granted to
the Borrower, Parent and/or its Subsidiaries by the FAA. None of the Borrower,
the Parent or any of its Subsidiaries has received any notice from the FAA, or
is aware of any other event or circumstance, that would be reasonably likely to
impair such Slots or the value thereof.
5.21 Representations and Warranties as to Collateral. (a) Each Loan Party's
exact legal name, as defined in Section 9-503(a) of the Uniform Commercial Code,
is correctly set forth on the signature pages hereto. Each Loan Party is located
(within the meaning of Section 9-307 of the Uniform Commercial Code) and has its
chief executive office in the state or jurisdiction set forth on the signature
pages hereto.
(b) Each Loan Party is the legal and beneficial owner of the Collateral of
such Loan Party free and clear of any Lien of others, except for Permitted
Liens.
(c) Except for possessory interests of landlords and warehousemen, each
Loan Party has exclusive possession and control of the Equipment. In the case of
Equipment located on leased premises or in warehouses, no lessor or warehouseman
of any premises or warehouse upon or in which such Equipment is located has (i)
issued any warehouse receipt or other receipt in the nature of a warehouse
receipt in respect of any Equipment, (ii) to the best knowledge of any Loan
Party, issued any document for any of any Loan Party's Equipment and (iii) to
the best knowledge of any Loan Party, received notification of any secured
party's interest (other than the security interest granted hereunder) in any
Loan Party's Equipment.
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(d) The Pledged Equity of any Subsidiary of any Loan Party pledged by each
Loan Party hereunder has been duly authorized and validly issued and is fully
paid and non-assessable. If any Loan Party is an issuer of Pledged Equity, such
Loan Party confirms that it has received notice of such security interest. To
the best of such Loan Party's knowledge, the Pledged Debt pledged by each Loan
Party hereunder has been duly authorized, authenticated or issued and delivered,
is the legal, valid and binding obligation of the issuers thereof, is evidenced
by one or more promissory notes and is not in default.
(e) The Pledged Equity of any Subsidiary of any Loan Party pledged by each
Loan Party constitutes the percentage of the issued and outstanding Equity
Interests of the issuers thereof indicated on Schedule 5.21 hereto. The Pledged
Debt constitutes all of the outstanding indebtedness owed to each Loan Party by
the issuers thereof and, as of the Closing Date, is outstanding in the principal
amount indicated on Schedule 5.21 hereto.
ARTICLE VI
AFFIRMATIVE COVENANTS
So long as the Lender shall have any Commitment hereunder, any Loan or
other Obligation hereunder which is accrued and payable shall remain unpaid or
unsatisfied, the Parent and the Borrower shall, and shall (except in the case of
the covenants set forth in Sections 6.01, 6.02, 6.03, 6.11 and 6.24) cause each
Loan Party to:
6.01 Financial Statements. Deliver to the Lender, in form and detail
consistent with comparable reports delivered to the Lender or otherwise
reasonably satisfactory to the Lender:
(a) as soon as available, but in any event within 90 days after the end of
each fiscal year of the Borrower, a consolidated balance sheet of the Borrower,
the Parent 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 and accompanied by a report of an independent
certified public accountant of nationally recognized standing reasonably
acceptable to the Lender, which report shall be prepared in accordance with
generally accepted auditing standards and shall not be qualified in any material
respect except with respect to the Cases or a "going concern" or like
qualification or exception;
(b) as soon as available, but in any event within 45 days after the end of
each of the first three fiscal quarters of each fiscal year of the Borrower, a
consolidated balance sheet of the Borrower, the Parent 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 the 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 and certified by the Chief
Executive Officer or the Chief Financial Officer of the Borrower as fairly
presenting the financial condition, results of operations, shareholders' equity
and cash flows of the Borrower, the Parent and its Subsidiaries in accordance
with GAAP, subject only to normal year-end audit adjustments and the absence of
footnotes;
38
(c) as soon as available, but in any event within 30 days after the end of
each month, a consolidated balance sheet of the Borrower, the Parent and its
Subsidiaries as of the end of such month and consolidated statements of income
and a consolidated statement of cash flows of the Borrower, the Parent and its
Subsidiaries for the period commencing at the end of the previous month and
ending with the end of such month and a consolidated statement of income and a
consolidated statement of cash flows of the Borrower, the Parent and its
Subsidiaries for the period commencing at the end of the previous fiscal year
and ending with the end of such month, setting forth in each case in comparative
form the corresponding figures for the corresponding month of the preceding
fiscal year, all in reasonable detail and duly certified by the Chief Executive
Officer or the Chief Financial Officer of the Borrower;
(d) as soon as available, but no more than five (5) Business Days after the
end of each calendar week (i) the operating metrics for such week for the
Borrower, the Parent and its Subsidiaries and (ii) an updated 13 week rolling
cash flow forecast, together with a reconciliation of such cash flows to actual
results reporting against the Borrower's Projections within twenty (20) days
against the Borrower's Projections;
(e) as soon as available, but no more than five (5) Business Days after the
end of each calendar week a cash balance report for such calendar week, which
report shall show, among other things, the aggregate amount of cash and Cash
Equivalents that any of the Loan Parties has unrestricted access to on each day
of such calendar week, and the aggregate amount of cash that the Loan Parties
are restricted from accessing on each day of such calendar week, (ii) a flash
cash report as of the day preceding such report;
(f) as soon as available, but in any event within 30 (thirty) days after
the end of each month, a report that shall demonstrate the computations used by
the Borrower in determining compliance with the covenant contained in Section
7.11 for such month; and
(g) as soon as available, but in any event within 30 (thirty) days
after the end of each month, a report, in form and substance acceptable to the
Lender, that contains a detail of the invoiced and unpaid professional fees and
expenses and UST/Clerk Fees.
6.02 Certificates; Other Information. Deliver to the Lender, in form and
detail consistent with comparable reports previously delivered to the Lender or
otherwise reasonably satisfactory to the Lender:
(a) [RESERVED];
(b) concurrently with the delivery of the financial statements referred to
in Sections 6.01(a), (b) and (c), a duly completed Compliance Certificate signed
by a Responsible Officer of the Borrower;
39
(c) promptly after any request by the Lender, copies of any detailed audit
reports, management letters or recommendations submitted to the board of
directors (or the audit committee of the board of directors) of any Loan Party
by independent accountants in connection with the accounts or books of any Loan
Party, or any audit of any of them;
(d) promptly after the same are available, copies of each annual report,
proxy or financial statement or other report or communication sent to the
stockholders of the Borrower, and copies of all annual, regular, periodic and
special reports and registration statements which the Borrower may file or be
required to file with the SEC under Section 13 or 15(d) of the Securities
Exchange Act of 1934, or with any Governmental Authority that may be substituted
therefor, or with any national securities exchange, and in any case not
otherwise required to be delivered to the Lender pursuant hereto;
(e) promptly after the furnishing thereof, copies of any statement or
report furnished to any holder of debt securities of any Loan Party pursuant to
the terms of any indenture, loan or credit or similar agreement and not
otherwise required to be furnished to the Lender pursuant to any other clause of
this Section 6.02;
(f) as soon as available and in any event within thirty (30) days after the
end of each fiscal quarter, a report summarizing the insurance coverage
(specifying type, amount and carrier) in effect for each Loan Party and
containing such additional information as the Lender may reasonably specify;
(g) promptly and in any event within five Business Days after receipt
thereof by any Loan Party, copies of each notice or other correspondence
received from the SEC (or comparable agency in any applicable non-U.S.
jurisdiction) concerning any investigation or possible investigation or other
inquiry by such agency regarding financial or other operational results of any
Loan Party;
(h) promptly upon request of the Lender, copies of all notices, requests,
pleadings and other documents received by any Loan Party (and not otherwise
distributed to the Lender) under or pursuant to any instrument, indenture, loan
or credit or similar agreement and, from time to time upon request by the
Lender, such information and reports regarding such instruments, indentures and
loan and credit and similar agreements as the Lender may reasonably request;
(i) promptly after the assertion or occurrence thereof, notice of any
Environmental Action against or of any noncompliance by any Loan Party with any
Environmental Law or Environmental Permit that could (i) reasonably be expected
to have a Material Adverse Effect or (ii) cause any property described in the
Mortgages to be subject to any restrictions on ownership, occupancy, use or
transferability under any Environmental Law.
(j) [RESERVED];
(k) [RESERVED];
(l) promptly after the same is available, copies of all pleadings, motions,
applications, judicial information, financial information and other documents
filed by or on behalf of the Loan Parties with the Bankruptcy Court in the
Cases, or distributed on behalf of any of the Loan Parties to any Committee,
providing copies of the same to the Lender;
40
(m) promptly, such additional information regarding the business,
financial or corporate affairs of any Loan Party, or compliance with the terms
of the Loan Documents, as the Lender may from time to time reasonably request;
and
(n) promptly upon receipt thereof, copies of any material correspondence or
orders from the City of Chicago regarding the Chicago Gates.
6.03 Notices. Promptly notify the Lender:
(a) of the occurrence of any Default;
(b) of any matter that has resulted or could reasonably be expected to
result in a Material Adverse Effect, including (i) breach or non-performance of,
or any default under, a material Post-Petition Contractual Obligation of any
Loan Party; (ii) any dispute, litigation, investigation, proceeding or
suspension between any Loan Party and any Governmental Authority; or (iii) the
commencement of, or any material development in, any litigation or proceeding
affecting any Loan Party, including pursuant to any applicable Environmental
Laws;
(c) of the occurrence of any ERISA Event;
(d) of any material change in accounting policies or financial reporting
practices by any Loan Party or any Subsidiary;
(e) of the (A) occurrence of any Disposition of property or assets for
which the Borrower is required to make a mandatory repayment pursuant to Section
2.03(b), (B) occurrence of any sale of capital stock or other Equity Interests
for which the Borrower is required to make a mandatory repayment pursuant to
Section 2.02(b)(ii), (C) incurrence or issuance of any Indebtedness for which
the Borrower is required to make a mandatory repayment pursuant to Section
2.02(b)(iii); and
(f) of a material breach of the Use or Lose Rule.
Each notice pursuant to this Section shall be accompanied by a statement of
a Responsible Officer of the Borrower setting forth details of the occurrence
referred to therein and stating what action the 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 Credit Agreement and
any other Loan Document that have been breached.
6.04 Payment of Obligations. Pay, discharge or satisfy promptly when due,
but no later than within 30 days after the same shall become due and payable,
all its obligations and liabilities of whatever nature that constitute
administrative expenses under Section 503(b) of the Bankruptcy Code, including
(a) all tax liabilities, assessments and governmental charges or levies upon it
or its properties or assets attributed to the period after the Petition Date to
the extent permitted or required by the Bankruptcy Code or the Bankruptcy Court
to be paid, (b) all lawful claims which, if unpaid, would by law become a Lien
upon its property; and (c) all Indebtedness, within 30 days after the same shall
become due and payable, but subject to any subordination provisions contained in
any instrument or agreement evidencing such Indebtedness unless, in each case,
41
(i) the Bankruptcy Code or an order of the Bankruptcy Court precludes making
such payment or (ii) the same are being contested in good faith by appropriate
proceedings diligently conducted and adequate reserves in accordance with GAAP
are being maintained by the Loan Party.
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 organization except in a transaction permitted by
Section 7.05 or 7.06; (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 could
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 could reasonably be expected to have a
Material Adverse Effect.
6.06 Maintenance of Properties. (a) Maintain, preserve and protect 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; and (b)
make all necessary repairs thereto and renewals and replacements thereof except
where the failure to do so could not reasonably be expected to have a Material
Adverse Effect; and (c) use 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 the requirements of
Section 6.07(b), (i) keep its insurable properties insured at all times, against
such risks, including fire and other risks insured against by extended coverage,
as is customary with companies of the same or similar size in the same or
similar businesses (including, without limitation, casualty insurance or
reinsurance on its aircraft at the appraised value) and which is reasonably
satisfactory to the Lender; and maintain in full force and effect public
liability insurance against claims for personal injury or death or property
damage occurring upon, in, about or in connection with the use of any Property
(including aircraft) owned, occupied or controlled by the Borrower or any Loan
Party, as the case may be, in such amounts (giving effect to self-insurance) and
with such deductibles as are required pursuant to Section 5.10; and (ii)
maintain such other insurance or self insurance as may be required by law.
(b) The Borrower and each Loan Party shall maintain in full force and
effect war risk and terrorism insurance on all its property in an amount that is
the greater of (x) the maximum amount available to the Borrower and the Loan
Parties from the DOT under the Federal Aviation Insurance Program, as amended by
the Air Transportation Stabilization Act and further amended by the Homeland
Security Act of 2002 and (y) thereafter, such amount as is then customary for
major United States air carriers in the United States domestic airline industry.
(c) The Borrower and each Loan Party shall continue to maintain in full
force and effect business interruption insurance on the Loan Parties' property
in an amount not less than an amount of such insurance in effect as of the date
hereof for such property.
(d) The Borrower and each Loan Party shall promptly deliver to the Lender
copies of any notices received from its insurers with respect to insurance
programs required by the Terrorism Risk Insurance Act of 2002 and, if so
requested by the Lender, procure and maintain in force the insurance that is
offered in such programs.
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6.08 Compliance with Laws. Comply in all material respects with the
requirements of all Laws (including, without limitation, ERISA) and all orders,
writs, injunctions and decrees applicable to it or to its business or property.
6.09 Books and Records. (a) Maintain proper books of record and account, in
which full, true and correct entries consistent with GAAP shall be made of all
financial transactions and matters involving the assets and business of the
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 the Borrower or
such Subsidiary, as the case may be.
6.10 Inspection Rights. Permit representatives, agents, advisors and
independent contractors of the Lender, at the expense of the Borrower, to (a)
visit and inspect any of its properties, to examine its corporate, financial and
operating records, and make copies thereof or abstracts therefrom, and to
discuss its affairs, finances and accounts with its directors, officers, and
independent public accountants (with the Borrower having the right to have a
representative present at all such communications) and at such reasonable times
during normal business hours and as often as may be reasonably desired, upon
reasonable advance notice to the Borrower and (b) conduct semi-annual (and, with
respect to parts, quarterly in the discretion of the Lender) field examinations
of the Collateral; provided, however, that when an Event of Default exists the
Lender (or any of their respective representatives or independent contractors)
may do any of the foregoing at the expense of the Borrower at any time during
normal business hours and without advance notice.
6.11 Use of Proceeds. Use the proceeds of the Credit Extensions to provide
general working capital and to pay ordinary operating costs and expenses of the
Loan Parties, including payments to third parties that are necessary to cure
defaults, to the extent permitted by the Bankruptcy Code or the Bankruptcy
Court.
6.12 Covenant to Give Security; Governmental Authorizations. Except where
prohibited by Applicable Laws, upon the request of the Lender following the
occurrence and during the continuance of an Event of Default, and without
further order or application to the Bankruptcy Court: (i) within 10 days after
such request (and the delivery by the Lender of the requested form of
documentation), duly execute and deliver to the Lender pledges or other security
agreements covering the stock and assets of each Subsidiary of the Borrower to
the extent such stock and assets are not already pledged to the Lender and in
all assets acquired by any of the Loan Parties after the Closing Date to the
extent such assets are not already pledged to the Lender, in each case, as
specified by and in form and substance reasonably satisfactory to the Lender,
securing payment of all the Obligations under the Loan Documents of the
applicable Loan Party executing such pledge or security agreement, and (ii) use
best efforts to obtain, and cooperate with the Lender in obtaining, all
authorizations, consents, orders and approvals of any Governmental Authority in
connection with the exercise by the Lender of any of the Lender's rights under
this Credit Agreement, including rights and remedies to which the Lender is
entitled under this Credit Agreement and under any applicable Laws following an
Event of Default.
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6.13 Compliance with Environmental Laws. Comply, and cause all lessees and
other Persons operating or occupying its properties to comply, in all material
respects, with all applicable Environmental Laws and Environmental Permits;
obtain and renew all Environmental Permits necessary for its operations and
properties; and conduct any investigation, study, sampling and testing, and
undertake any cleanup, removal, remedial or other action necessary to remove and
clean up all Hazardous Materials from any of its properties, in accordance with
the requirements of all Environmental Laws; provided, however, that neither the
Borrower, the Parent nor any of its Subsidiaries shall be required to undertake
any such cleanup, removal, remedial or other action to the extent that its
obligation to do so is being contested in good faith and by proper proceedings
and appropriate reserves are being maintained with respect to such
circumstances.
6.14 Preparation of Environmental Reports. At the request of the Lender
from time to time, provide to the Lender within sixty (60) days after such
request, at the expense of the Borrower, an environmental site assessment report
for any of its properties described in such request, prepared by an
environmental consulting firm reasonably acceptable to the Lender, indicating
the presence or absence of Hazardous Materials and the estimated cost of any
compliance, removal or remedial action in connection with any Hazardous
Materials on such properties; without limiting the generality of the foregoing,
if the Lender determines at any time that a material risk exists that any such
report will not be provided within the time referred to above, the Lender may
retain an environmental consulting firm to prepare such report at the expense of
the Borrower, and the Borrower hereby grants and agrees to cause any Subsidiary
that owns any property described in such request to grant at the time of such
request to the Lender, such firm and any agents or representatives thereof an
irrevocable non-exclusive license, subject to the rights of tenants, to enter
their respective properties to undertake such an assessment.
6.15 Further Assurances. Promptly upon request, (a) correct any material
defect or error that may be discovered in any Loan Document or in the execution,
acknowledgment, filing or recordation thereof, and (b) do, execute, acknowledge,
deliver, record, re-record, file, re-file, register and re-register any and all
such further acts, deeds, certificates, assurances and other instruments as the
Lender may reasonably require from time to time in order to (i) carry out more
effectively the purposes of the Loan Documents, (ii) to the fullest extent
permitted by applicable Laws, subject any Loan Party's or any of its
Subsidiaries' properties, assets, rights or interests to the Liens now or
hereafter intended to be covered by any of the Collateral Documents or the
Orders, (iii) perfect and maintain the validity, effectiveness and priority of
any of the Collateral Documents and any of the Liens intended to be created
thereunder and under the Orders and (iv) assure, convey, grant, assign,
transfer, preserve, protect and confirm more effectively unto the Lender the
rights granted or now or hereafter intended to be granted to the Lender under
any Loan Document, the Orders or under any other instrument executed in
connection with any Loan Document to which any Loan Party or any of its
Subsidiaries is or is to be a party, and cause each of its Subsidiaries to do
so.
6.16 Compliance with Terms of Leaseholds. Make all Post-Petition payments
and otherwise perform all obligations in respect of all leases of real property
(including, without limitation, arrangements with respect to Gate Leaseholds to
which the Borrower, the Parent or any of its Subsidiaries is a party), to the
extent necessary to keep such leases in full force and effect and not allow such
leases to lapse or be terminated or any rights to renew such leases to be
forfeited or cancelled, notify the Lender of any default by any party with
respect to such leases and cooperate with the Lender in all respects to cure any
such default, and cause each of the Parent's Subsidiaries to do so.
44
6.17 Cash Management System; Controlled Accounts. Maintain and cause each
of its Subsidiaries to maintain (a) a cash management system reasonably
acceptable to the Lender and (b) from and after the date of the Final Order, all
cash in Controlled Accounts; provided that (i) the Loan Parties shall be
permitted to maintain up to an aggregate amount of $1,000,000 in accounts that
are not Controlled Accounts but that have been disclosed to the Lender; (ii) the
Loan Parties shall be permitted to maintain cash in Trust Funds, to the extent
consistent with current practices; (iii) to the extent consistent with
agreements with U.S. Bank N.A., the Loan Parties shall be permitted to hold
accounts with such Persons so long as the amounts on deposit in such accounts
are intended solely to cash collateralize holdback obligations and other
obligations in connection with payments of credit card processing or
clearinghouse services to U.S. Bank N.A.; and (iv) the Loan Parties shall be
permitted to maintain cash in accounts that are not Controlled Accounts to the
extent that such accounts are subject to a Lien permitted by Section 7.01(b)
(but only to the extent any such Lien was cash collateralized on the Petition
Date), Section 7.01(e), Section 7.01(f) (except with respect to any cash
collateralization in respect of Swap Contracts), Section 7.01(1), and Section
7.01(q).
6.18 FAA and DOT Matters; Citizenship. (a) Maintain at all times its status
at the DOT, as applicable, as an "air carrier" within the meaning of Section
40102(a) (2) of Title 49, hold a certificate under Section 41102 of Title 49, or
a commuter air carrier authorization, as applicable; (b) at all times hereunder
be a citizen of the United States as defined by Section 40102(a)15 of Title 49
and as that statutory provision has been interpreted by the DOT pursuant to its
policies; (c) maintain at all times its status at the FAA as an air carrier and
hold air carrier operating certificates and other operating authorizations
issued by the FAA pursuant to 14 C.F.R. Sections 119, 121 or 135 as currently in
effect or as may be amended or recodified from time to time; and (d) possess and
maintain, and cause each other Loan Party to possess and maintain, all necessary
consents, franchises, licenses, permits, rights, concessions, authorizations and
consents which are material to the operation of the routes flown by it and the
conduct of its business and operations as currently conducted except in any case
described in this clause (d), where the failure to do so, either individually or
in the aggregate, could not be reasonably likely to have a Material Adverse
Effect.
6.19 Slot Preservation. Each Loan Party shall utilize its Slots, other than
Air-21 Slots, for each airport in a manner sufficient to comply with the
applicable FAA regulations.
6.20 ATSB Information Requests. Comply with any reasonable request from the
ATSB for information in connection with the ATSB Loan.
6.21 Gate Utilization. Utilize all of its Gate Leaseholds in a manner
sufficient to comply with applicable lease provisions governing such Gate
Leaseholds.
6.22 Disclosure Statement and Plan of Reorganization. File with the
Bankruptcy Court the disclosure statement (with a the Reorganization Plan
attached as an exhibit thereto) in substantially the form described in the term
sheet delivered by the Borrower and accepted by the Lender describing such
Reorganization Plan for all of the Cases, in each case on terms satisfactory to
the Lender and obtain approval of such disclosure statement and confirmation of
the Reorganization Plan on or prior to September 30, 2005.
45
6.23 Loading of Schedules. Complete the loading the Lender's code sharing
schedule into the Loan Parties' reservation system in accordance with the terms
of the Codeshare Agreement.
6.24 Management Search. By no later than (a) December 31, 2004 retain a
Co-Chief Restructuring Officer whose employment shall be in consultation with
the Lender and (b) July 31, 2005 a Chief Executive Officer, subject to the
approval of the Creditors Committee and the ATSB.
6.25 [RESERVED]
6.26 Investment Agreement and Exit Facility. On or prior to the effective
date of the Reorganization Plan, execute and deliver an Exit Facility agreement
and an Investment Agreement containing all of the terms and conditions set forth
in the Exit Facility Term Sheet and the Investment Agreement Term Sheet.
6.27 Covenant for Post-Closing Deliveries.
(a) Deliver as soon as available and in any event not later than the
earlier of (x) the day before the hearing for the Final Order and (y) 45 days
after the Closing Date (or such later date as may be approved by the Lender):
(i) acknowledgment copies or stamped receipt copies of proper
financing statements, duly filed on or before the date which is 15 days
after the Closing Date under the Uniform Commercial Code of all
jurisdictions that the Lender may deem necessary or desirable in order to
perfect and protect the first priority liens and security interests created
hereunder, covering the Collateral described in Article X;
(ii) evidence that appropriate filings in the United States Patent and
Trademark Office and the United States Copyright Office have been made in
order to perfect and protect the second priority liens and security
interests in the Intellectual Property Collateral; and
(iii) evidence that appropriate filings required by the Loan Documents
have been made in order to perfect and protect the liens and security
interests described therein, and
(iv) deliver the Schedules identified on the List of Schedules
attached hereto as "to be provided by the Loan Parties";
(b) [RESERVED].
(c) Deliver to the Lender, as soon as available, and in any event not later
than the Maturity Date, the consent of the City of Chicago Council, in form and
substance satisfactory to the Lender, permitting the Loan Parties to transfer
the Loan Parties' assets at the Chicago Midway Airport to the Lender pursuant to
the terms of the Asset Acquisition Agreement.
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ARTICLE VII
NEGATIVE COVENANTS
So long as the Lender shall have any Commitment hereunder, any Loan or
other Obligation hereunder which is accrued and payable shall remain unpaid or
unsatisfied the Borrower shall not, nor shall it permit any other Loan Party 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, or
sign or file or suffer to exist under the Uniform Commercial Code of any
jurisdiction a financing statement that names the Borrower, the Parent or any of
its Subsidiaries as debtor, or sign or suffer to exist any security agreement
authorizing any secured party thereunder to file such financing statement, or
assign any accounts or other right to receive income, other than the following:
(a) Liens pursuant to any Loan Document;
(b) Liens existing on the Petition Date;
(c) Liens for taxes, assessments or governmental charges or claims not
delinquent for a period of more than 30 days or which are being contested in
good faith and by appropriate proceedings diligently conducted, if adequate
reserves with respect thereto are maintained on the books of the applicable
Person in accordance with GAAP;
(d) Liens of landlords, carriers', warehousemen's, mechanics',
materialmen's, repairmen's or other like Liens arising in the ordinary course of
business which are not overdue for a period of more than 30 days or which are
being contested in good faith and by appropriate proceedings diligently
conducted, if adequate reserves with respect thereto are maintained on the books
of the applicable Person;
(e) Liens incurred or pledges or deposits in the ordinary course of
business made in connection with workers' compensation, unemployment insurance
and other social security legislation, other than any Lien imposed by ERISA;
(f) Liens incurred or deposits made to secure the performance of tenders,
bids, trade contracts, leases (real and personal) (other than Indebtedness),
statutory obligations, surety bonds (other than bonds related to judgments or
litigation), performance and return of money (but not borrowed money) bonds,
reimbursement obligations and chargeback rights of Persons performing credit
card processing services for a Loan Party and other obligations of a like nature
incurred in the ordinary course of business;
(g) easements, rights-of-way, restrictions, minor defects, encroachments or
irregularities of title and other similar charges or encumbrances affecting real
property which do not materially detract from the value of the property subject
thereto or materially interfere with the ordinary conduct of the business of the
applicable Person;
(h) [RESERVED];
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(i) Liens securing judgments and attachments not constituting an Event of
Default under Section 8.01(g) or securing appeal or other surety bonds related
to such judgments; Liens securing Indebtedness permitted under Section
7.03(c)(v); provided that (i) such Liens do not at any time encumber any
property other than the property financed by such Indebtedness and (ii) with
respect to capital leases, such Liens do not at any time extend to or cover any
Collateral or assets other than the assets subject to such capital leases;
(j) Liens in favor of customs and revenue authorities arising as a matter
of law to secure payment of customs duties in connection with the importation of
goods;
(k) operating leases or subleases of real or personal property granted
to others not interfering in any material respect with the business of the Loan
Parties, taken as a whole;
(1) Liens in favor of collecting or payor banks and credit card processors
having a right of setoff, revocation, refund or chargeback with respect to money
or instruments of any Loan Party on deposit with or in possession of such bank;
(m) any renewal of or substitution for any Lien on any "equipment"
described in Section 1110(a)(3) of the Bankruptcy Code (as in effect on the date
hereof) permitted by any of the preceding clauses; provided that the debt
secured is not increased nor the Lien extended to any additional assets;
(n) Liens of creditors of any Person to whom any Loan Party's assets are
consigned for sale in the ordinary course of business;
(o) [RESERVED];
(p) Liens securing obligations under Permitted Sale/Leasebacks; and
(q) Liens securing Indebtedness permitted under Section 7.03(c) (vii) and
(viii) and Section 7.03(c)(xi).
7.02 Investments. Make or hold any Investments, except:
(a) Investments held by any Loan Party in the form of Cash Equivalents;
(b) [RESERVED];
(c) equity Investments of the Parent in the Borrower and in any Guarantor
and Investments of any Guarantor in the Borrower or in another Guarantor;
(d) Investments in accounts, contract rights and chattel paper (each as
defined in the UCC), notes receivable and similar items arising or acquired in
the ordinary course of business and Investments received in settlement of
amounts due to any Loan Party effected in the ordinary course of business
(including as a result of Dispositions not prohibited by Section 7.06);
(e) [RESERVED];
48
(f) Guarantees permitted by Section 7.04;
(g) [RESERVED]
(h) Investments consisting of intercompany debt permitted under Section
7.03; and
(i) payments of fees to any fuel consortium in the ordinary course of
business, consistent with past practices and consistent with industry standards;
and
(j) Investments in the Trust Funds.
7.03 Indebtedness. Create, incur, assume or suffer to exist any
Indebtedness, except:
(a) in the case of the Parent, Indebtedness owed to a Guarantor, which
Indebtedness shall constitute Pledged Debt pursuant to the terms of Article X;
(b) in the case of any Loan Party (other than the Borrower), Indebtedness
owed to the Borrower or the Parent, which Indebtedness shall constitute Pledged
Debt pursuant to the terms of Article X; and
(c) in the case of the Loan Parties,
(i) Indebtedness under the Loan Documents;
(ii) Existing Indebtedness and, in the case of financings secured
directly or indirectly by "equipment" described in Section 1110(a)(3)(A)(i)
of the Bankruptcy Code (as in effect on the date hereof), refinancings and
replacements thereof, provided that (i) the principal amount of such
Existing Indebtedness shall not be increased above the principal amount
thereof outstanding immediately prior to such refinancing or replacement,
(ii) the maturity of such Existing Indebtedness shall not be shortened as a
result of such refinancing or replacement, (iii) the weighted average life
to maturity of such Existing Indebtedness shall not be reduced as a result
of such refinancing or replacement, and (iv) the direct and contingent
obligors therefor shall not be changed, as a result of or in connection
with such refinancing or replacement;
(iii) Indebtedness incurred after the Petition Date consisting of
Guarantees permitted by Section 7.04;
(iv) Indebtedness under the Chicago Construction Loan in an amount not
to exceed $6,990,362;
(v) debt securities, rent deferral notes and capital expenditure notes
for the modification or improvement of aircraft, in each case issued to
existing aircraft lessors and/or Lender in connection with the modification
of existing lease or financing arrangements;
(vi) [RESERVED];
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(vii) Indebtedness under the ATSB Loan in an amount not to exceed
$139,900,000 plus interest and fees payable under the ATSB Loan;
(viii) Indebtedness under the Indiana DIP Orders in an amount not to
exceed $15,500,000 plus interest and fees payable under the Indiana DIP
Orders;
(ix) Indebtedness in connection with retained aircraft and lease cure
payment related thereto; and
(x) letters of credit issued by banks reasonably acceptable to the
Lender to the extent that (i) the Loan Party requesting the issuance of any
such letter of credit pledges to and deposits with the issuer of such
letter of credit cash collateral in an amount not less than 100% of the
face amount of such letter of credit and not in excess of 105% of the face
amount of such letter of credit, (ii) in the event of a drawing under any
such letter of credit, the issuer of such letter of credit looks first to
the cash collateral for reimbursement of such drawing and (iii) after
giving effect to the issuance of each such letter of credit, the sum of any
obligations under such letters of credit shall not exceed $40,000,000.
7.04 Guarantees and Other Liabilities. Purchase or repurchase (or agree,
contingently or otherwise, so to do) the Indebtedness of, or assume, guarantee
(directly or indirectly or by an instrument having the effect of assuring
another's payment or performance of any obligation or capability of so doing, or
otherwise), endorse or otherwise become liable, directly or indirectly, in
connection with the Indebtedness, stock or dividends of any Person, except (a)
for any guaranty of Indebtedness or other obligations of the Borrower or any
Guarantor if the Borrower or such Guarantor could have incurred such
Indebtedness or obligations under this Credit Agreement, (b) by endorsement of
negotiable instruments for deposit or collection in the ordinary course of
business, (c) Indebtedness or other obligations of any Loan Party arising from
agreements of any Loan Party providing for indemnification, adjustment of
purchase price, earn-out or other similar obligations, in each case incurred or
assumed in connection with the disposition of any business or assets and (d)
customary indemnities in favor of officers, employees, directors, consultants,
attorneys, accountants or other advisors.
7.05 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) the Borrower, provided that the
Borrower shall be the continuing or surviving Person, or (ii) any one or more
other Subsidiaries, provided that when any Guarantor is merging with another
Subsidiary, the Guarantor 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 the Borrower or to another
Guarantor.
7.06 Dispositions. Make any Disposition of Collateral, except:
50
(a) Dispositions of unused, obsolete or worn out property and surplus
aircraft, engines and parts related thereto, 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) Dispositions of property by the Borrower to any Subsidiary or by any
Subsidiary to the Borrower or to a wholly-owned Subsidiary; provided that if the
transferor of such property is a Guarantor, the transferee thereof must either
be the Borrower or a Guarantor;
(e) Dispositions permitted by Section 7.05;
(f) Dispositions by the Borrower and its Subsidiaries not otherwise
permitted under this Section 7.06; provided that (i) at the time of such
Disposition, no Default shall exist or would result from such Disposition, (ii)
the aggregate book value of all property Disposed of in reliance on this clause
(f) in any fiscal year shall not exceed $15,000,000; (iii) the purchase price
for such asset shall be paid to the Borrower or such Subsidiary in cash equal to
not less than 93% of the purchase price; and (iv) such Disposition shall not be
a Disposition of any Gate Leaseholds.
(g) abandonment of Intellectual Property Collateral pursuant to Section
9.04;
(h) licensing and sublicensing of Intellectual Property Collateral
consistent with the Borrower's past practices in the ordinary course of
business;
(i) Dispositions of cash for purposes not otherwise prohibited under this
Credit Agreement or under any other Loan Document;
(j) so long as no Event of Default shall occur and be continuing, to the
extent permitted by applicable law, the Loan Parties may consummate transfers of
Slots having an aggregate appraised value of not more than 5% of the aggregate
appraised value of the Slots provided, however, that in the event any such Slot
is returned to a Loan Party, the transfer of such Slot shall be deemed not to
have occurred for purposes hereof;
(k) the termination or rejection of any lease or the return, surrender or
abandonment of any property subject thereto;
(l) Dispositions permitted by the Collateral Documents;
(m) Permitted Sale/Leasebacks; and
provided, however, that any Disposition pursuant to this Section 7.06 shall
be for fair market value.
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Notwithstanding any provisions of this Credit Agreement to the contrary,
(i) the Parent shall not be permitted to dispose of its Equity Interest in
Chicago Express Airlines, Inc. and Chicago Express Airlines, Inc. shall not be
permitted to dispose of any of its owned property.
7.07 Restricted Payments. Declare or make, directly or indirectly, any
Restricted Payment, or incur any obligation (contingent or otherwise) to do so,
or issue or sell any Equity Interests or accept any capital contributions,
except that, so long as no Default shall have occurred and be continuing at the
time of any action described below or would result therefrom:
(a) each Loan Party may make Restricted Payments to any Loan Party which is
its direct parent;
(b) each Loan Party may declare and make dividend payments or other
distributions payable solely in the common stock or other common Equity
Interests of such Person; and
(c) any Loan Party may issue Equity Interests, or make capital
contributions, to another Loan Party.
7.08 Change in Nature of Business. Engage in any material line of business
substantially different from those lines of business conducted by the Borrower,
the Parent and its Subsidiaries on or prior to the Petition Date or any business
related or incidental thereto.
7.09 Transactions with Affiliates. Enter into any transaction of any
kind with any Affiliate of the Borrower, whether or not in the ordinary course
of business, other than on fair and reasonable terms substantially as favorable
to the Borrower or such Loan Party as would be obtainable by the Borrower or
such Loan Party at the time in a comparable arm's length transaction with a
Person other than an Affiliate, provided that the foregoing restriction shall
not apply to (a) transactions between or among the Borrower and any of the
Guarantors or between and among any of the Guarantors; (b) reasonable and
customary fees and compensation paid to, and indemnity provided on behalf of,
officers, directors or employees of any Loan Party; (c) any Restricted Payments
not prohibited by Section 7.07; (d) any payments or other distributions by a
Subsidiary to its direct or indirect parent to enable such parent to pay its
liabilities for taxes attributable to such Subsidiary; (e) transactions between
any Loan Party with any employee labor unions or other employee groups of any
Loan Party; and (f) the Loan Documents and the transactions contemplated
thereby.
7.10 Use of Proceeds. Use the proceeds of any Credit Extension, whether
directly or indirectly, and whether immediately, incidentally or ultimately, to
purchase or carry margin stock (within the meaning of Regulation U of the Board
of Governors of the Federal Reserve System of the United States) or to extend
credit to others for the purpose of purchasing or carrying margin stock or to
refund Indebtedness originally incurred for such purpose.
7.11 Financial and Performance Covenants.
(a) Minimum Consolidated EBITDARR. Permit Consolidated EBITDARR for
each calendar month beginning on January 1, 2005 and ending with September 30,
2005 to be less than 75% of the projected EBITDARR for each such month as set
forth the in the Borrower's Projections; nor (ii) permit cumulative Consolidated
EBITDARR for each month beginning on January 1, 2005 and ending on September 30,
52
2005 to be less than 80% of the cumulative Consolidated EBITDARR for each such
calendar month as set forth in the Borrower's Projections (provided that the
first such cumulative EBITDARR of the Borrower, the Parent and its Subsidiaries
shall be tested for the period beginning on January 1, 2005 and ending on March
31, 2005).
(b) Minimum Adjusted EBITDARR. (i) Permit Adjusted EBITDARR for each month
beginning on January 1, 2005 and ending with September 30, 2005 to be less than
75% of the projected Adjusted EBITDARR for each such month as set forth the in
the Borrower's Projections; nor (ii) permit cumulative Adjusted EBITDARR for
each month beginning on January 1, 2005 and ending on September 30, 2005 to be
less than 80% of the cumulative Adjusted EBITDARR for each such month as set
forth in the Borrower's Projections (provided that the first such cumulative
Adjusted EBITDARR of the Borrower, the Parent and its Subsidiaries shall be
tested for the period beginning on January 1, 2005 and ending on March 31,
2005).
(c) Liquidity. (i) Permit Liquidity on any day during the calendar months
beginning on January 1, 2005 through July 30, 2005 to be less than 75% of the
projected Liquidity for each such calendar month as set forth in the Borrower's
Projections nor (ii) permit Liquidity on any day during the calendar months
beginning on August 1, 2005 through September 30, 2005 to be less than one
hundred million dollars ($100,000,000).
7.12 Amendments of Organization Documents. Amend any of its Organization
Documents other than for amendments which in the aggregate have no Material
Adverse Effect.
7.13 Changes in Fiscal Year. Make any change in fiscal year.
7.14 Prepayments Etc. of Indebtedness. Prepay, redeem, purchase,
defease or otherwise satisfy prior to the scheduled maturity thereof in any
manner, or make any payment in violation of any subordination terms of, any
Indebtedness, except (a) the prepayment of the Credit Extensions in accordance
with the terms of this Credit Agreement, (b) regularly scheduled or required
repayments or redemptions of Existing Indebtedness, and (c) refinancing or
replacement of Existing Indebtedness permitted by Section 7.03(c) (ii).
7.15 Partnerships, Etc. Become a general partner in any general or limited
partnership or joint venture.
7.16 Speculative Transactions. Engage in any transaction involving
commodity options or futures contracts or any similar speculative transactions.
7.17 Formation of Subsidiaries. Organize or invest in any new Subsidiary.
7.18 Chapter 11 Claims. Incur, create, assume, suffer to exist or permit
any Superpriority Claim that is pari passu with or senior to any of the claims
of the Lender against the Borrower and the Guarantors except with respect to the
Indiana DIP Orders and the Carve-Out to the extent of any contingent indemnity
claims.
7.19 Limitation on Prepayments and Pre-Petition Obligations. Except as
otherwise allowed pursuant to the DIP Financing Orders or any other order of the
Bankruptcy Court, (a) make any payment or prepayment on or redemption or
acquisition for value (including, without limitation, by way of depositing with
the trustee with respect thereto money or securities before the due date for the
purpose of paying when due) of any Pre-Petition Indebtedness or other
53
Pre-Petition obligations of the Borrower or any Guarantor, (b) pay any interest
on any Pre-Petition Indebtedness of the Borrower or any Guarantor (whether in
cash, in kind securities or otherwise), or (c) make any payment or create or
permit any Lien pursuant to Section 361 of the Bankruptcy Code (or pursuant to
any other provision of the Bankruptcy Code authorizing adequate protection), or
apply to the Bankruptcy Court for the authority to do any of the foregoing;
provided, however, that notwithstanding the foregoing, the Borrower and the
Guarantors may (and may file motions seeking to) (i) make payments in respect of
Indebtedness or obligations under any security agreement, lease or conditional
sale contract relating to "equipment" (as that term is defined in Section
1110(a)(3) of the Bankruptcy Code as in effect on the date hereof), (ii) pay
cure costs with respect to executory contracts or unexpired leases that the
Borrower or Guarantors have been allowed by the Bankruptcy Court to assume under
Section 365 of the Bankruptcy Code, (iii) make or pay accrued payroll and
related expenses and employee benefits as of the Petition Date, (iv) pay sales
and use taxes, (v) pay other Pre-Petition Payments in an amount not to exceed
the amounts, if any, specified in the DIP Financing Orders in the aggregate,
(vi) pay all obligations required to be paid pursuant to Section 6.04 and other
provisions of this Credit Agreement, (vii) make payments for administrative
expenses that are allowed and payable under Sections 330 and 331 of the
Bankruptcy Code, (viii) make payments permitted by the First Day Orders, (ix)
make adequate protection payments to the ATSB Lender Parties and other secured
creditors as may be required by the ATSB Cash Use Order, make payments to the
Authority provided for in the Indiana DIP Orders and payments under other orders
of the Bankruptcy Court relating to the Cases, and (x) make payments to such
other claimants and in such amounts as may be consented to by the Lender and
approved by the Bankruptcy Court.
7.20 Change in Capital Structure. Make any material change in its equity
capital structure as in existence on the Petition Date except as provided in the
Investment Agreement.
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. The Borrower or any other Loan Party fails to pay (i) when
and as required to be paid herein, any amount of principal of any Loan, or (ii)
within three days after the same becomes due, any interest on any Loan, or any
commitment or other fee due hereunder, or (iii) within five days after the same
becomes due, any other amount payable hereunder or under any other Loan
Document; or
(b) Specific Covenants. (i) The Borrower or any Loan Party fails to perform
or observe any term, covenant or agreement contained in any of Section 6.03
(Notices), 6.05 (Preservation of Existence), 6.10 (Inspection Rights), 6.11 (Use
of Proceeds), 6.12 (Covenant to Give Security), 6.17 (Cash Management) or 6.20
(FAA Matters), 6.19 (Slot Utilization) and 6.20(Gate Utilization) or Article VII
or (ii) the Borrower fails to perform or observe any term, covenant or agreement
contained in any of Section 6.01 or 6.02 (provided, however, that the Loan
Parties' failure to obtain a consent of the City of Chicago to transfer to the
Lender the Midway Hangar Property pursuant to the Asset Acquisition Agreement
54
shall not constitute a Default or an Event of Default under this Credit
Agreement, notwithstanding any other provision of this Credit Agreement to the
contrary) and such failure continues for ten (10) Business Days after the
earlier of the date on which (A) a Responsible Officer becomes aware of such
failure or (B) written notice thereof shall have been given to the Borrower by
the Lender; or
(c) Other Defaults. Any Loan Party fails to perform or observe any
other covenant or agreement (not specified in subsection (a) or (b) above or (t)
below) contained in any Loan Document on its part to be performed or observed
and such failure continues unremedied for 60 days (in the case of the Mortgages,
so long as the applicable Loan Party is using commercially reasonable efforts to
cure such default) and ten (10) Business Days (in the case of any other Loan
Document) after the earlier of the date on which (A) a Responsible Officer
becomes aware of such failure or (B) written notice thereof shall have been
given to the Borrower by the Lender; or
(d) Representations and Warranties. Any representation, warranty,
certification or statement of fact made or deemed made by or on behalf of the
Borrower or any other Loan Party herein, in any other Loan Document, or in any
document delivered in connection herewith or therewith shall be incorrect or
misleading in any material respect when made or deemed made; or
(e) Cross-Default. (i) Any Loan Party or any Subsidiary (A) fails to make
any payment when due (whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise) in respect of the facilities pursuant to the
Indiana DIP Orders, the Chicago Construction Loan, or any Post-Petition
Indebtedness or Post-Petition Guarantee (other than Indebtedness hereunder)
having an aggregate principal amount (including undrawn committed or available
amounts and including amounts owing to all creditors under any combined or
syndicated credit arrangement) of more than $1,000,000, or (B) fails to observe
or perform any other agreement or condition relating to the Indiana DIP Orders,
the Chicago Construction Loan, or any such Post-Petition Indebtedness or
Post-Petition Guarantee or contained in any instrument or agreement evidencing,
securing or relating thereto, or any other event occurs, in each case 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 the 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 the
Borrower or any Subsidiary is an Affected Party (as so defined) and, in either
event, the Swap Termination Value owed by the Loan Party or such Subsidiary as a
result thereof is greater than $1,000,000; or
(f) Judgments. There is entered against any Loan Party or any Subsidiary
(i) a final judgment or order for the payment of money in an aggregate amount
exceeding $500,000, as an administrative expense of the kind specified in
Section 503(b) of the Bankruptcy Code (to the extent not covered by independent
third-party insurance as to which the insurer is rated at least "A" by A.M. Best
Company, has been notified of such claim and does not dispute coverage), or (ii)
any one or more non-monetary final judgments that have, or could reasonably be
55
expected to have, individually or in the aggregate, a Material Adverse Effect
and, in either case, there is a period of ten (10) consecutive Business Days
during which a stay of enforcement of such judgment, by reason of a pending
appeal or otherwise, is not in effect; or
(g) 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 any Loan Party under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount in excess of $500,000 or
(ii) any Loan Party 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 where such withdrawal liability is in an aggregate amount in excess of
$500,000; or
(h) Invalidity of Loan Documents. Any provision of any Loan Document, 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 valid and binding on or enforceable against any Loan
Party intended to be a party to it; any Loan Party files a motion or other
pleading seeking to challenge the validity of any Loan Document or the
applicability or enforceability of any Loan Document or any of the Orders or
which seeks to void, avoid, limit, or otherwise adversely affect the security
interest created by or in any Loan Document or any of the Orders or any payment
made pursuant thereto; or any Loan Party denies that it has any or further
liability or obligation under any Loan Document, or purports to revoke,
terminate or rescind any Loan Document; or
(i) Change of Control. There occurs any Change of Control; or
(j) Collateral Document. Any Collateral Document after delivery thereof
pursuant to Section 4.01 or 6.12 shall for any reason (other than pursuant to
the terms thereof) cease to create a valid and perfected lien on and security
interest in the Collateral purported to be covered thereby having the priority
contemplated by the Loan Documents and the DIP Financing Orders; or
(k) Conversion of the Cases. Any of the Cases concerning the Borrower
or any Guarantors shall be dismissed or converted to a case under chapter 7 of
the Bankruptcy Code or any Loan Party shall file a motion or other pleading or
support a motion or other pleading filed by any other Person seeking the
dismissal or conversion to chapter 7 of the Bankruptcy Code of any of the Cases
concerning the Borrower or any Guarantors under Section 1112 of the Bankruptcy
Code or otherwise; a trustee appointed pursuant to section 1104 of the
Bankruptcy Code or otherwise under chapter 7 or chapter 11 of the Bankruptcy
Code, a responsible officer or an examiner with enlarged powers relating to the
operation of the business (powers beyond those set forth in Section 1106(a)(3)
and (4) of the Bankruptcy Code) under Section 1106(b) of the Bankruptcy Code
shall be appointed in any of the Cases and the order appointing such trustee,
responsible officer or examiner shall not be reversed or vacated within 30 days
after the entry thereof; or an application shall be filed by the Borrower or any
Guarantor for the approval of any other claim or Superpriority Claim (other than
the Carve-Out) in any of the Cases which is pari passu with or senior to any of
the claims (including, without limitation, the Superpriority Claim) of the
Lender against the Borrower or any Guarantor hereunder, or there shall arise or
be granted any such pari passu or senior to any such claims (including, without
limitation, a Superpriority Claim); or
56
(1) Relief from Automatic Stay. The Bankruptcy Court shall enter an order
or orders granting relief from the automatic stay applicable under Section 362
of the Bankruptcy Code to the holder or holders of any security interest to
permit foreclosure (or the granting of a deed in lieu of foreclosure or the
like) on any assets of any of the Borrower or the Guarantors (other than Section
1110 Assets or Excluded Assets); or
(m) Modification of Orders. An order of the Bankruptcy Court shall be
entered reversing, amending, supplementing or staying for a period in excess of
ten (10) Business Days, vacating or otherwise modifying in a manner that is
adverse to the Lender any of the DIP Financing Orders; or
(n) Pre-Petition Payment. Except as permitted by the Orders or the First
Day Orders, the Borrower, any Guarantor or any of their Subsidiaries (including
all present and future debtors) shall make any Pre-Petition Payment in violation
of Section 7.19; or
(o) Material Adverse Change. (i) Except for the filing of the Cases, there
occurs any event or circumstance that would give rise to a Material Adverse
Change since the Closing Date (ii) there shall be a change or modification in
the ATSB Cash Use Order which has a Material Adverse Effect on the Borrower or
any other Loan Party; or
(p) Defaults Under Orders. The Borrower or any Guarantor fails to perform
or observe any term or condition contained in the DIP Financing Orders, the ATSB
Cash Use Order and the Indiana DIP Orders; or
(q) Final Order. The entry of the Final Order shall not have occurred
within 60 days after the entry of the Interim Order; or
(r) Bankruptcy Court Motions. Any Loan Party shall bring or consent to a
motion in the Cases: (i) to obtain working capital financing from any Person
other than Lender under Section 364(d) of the Bankruptcy Code, other than in
connection with any Indebtedness permitted under Section 7.03; or (ii) to obtain
financing from any Person other than the Lender under Section 364(c) of the
Bankruptcy Code other than (x) with respect to a financing used, in whole or
part, to repay in full the Obligations or (y) in connection with any
Indebtedness permitted by Section 7.03; or (iii) to grant any Lien other than
those permitted under Section 7.01 upon or affecting any Collateral; or (iv) to
recover from any portions of the Collateral any costs or expenses of preserving
or disposing of such Collateral under Section 506(c) of the Bankruptcy Code; or
(v) to grant a Superpriority Claim pari passu or senior to the Superpriority
Claim granted to the Lender other than that granted in the DIP Financing Orders
and other than with respect to the Carve-Out; provided, however, that
notwithstanding the foregoing, nothing shall preclude any Loan Party from
bringing or consenting to any motion that seeks approval of a payment, Lien or
other transaction expressly permitted under the Loan Documents; or
(s) Reorganization Plan. An order shall be entered by the Bankruptcy Court
confirming a plan of reorganization or liquidation in any of the Cases (or any
Loan Party shall propose a plan of reorganization or liquidation in any of the
Cases) that does not contain a provision for termination of all of the
Commitments and indefeasible payment in full in cash of the Obligations on or
before the effective date of such plan; or
57
(t) Order for Termination. An order shall be entered by the Bankruptcy
Court, or any Loan Party shall make a motion for an order of the Bankruptcy
Court, dismissing any of the Cases that does not contain a provision for
termination of all of the Commitments and indefeasible payment in full in cash
of the Obligations on the date any such order is entered.
8.02 Remedies upon Event of Default. If any Event of Default occurs and is
continuing, the Lender may take any or all of the following actions without
further order of or application to the Bankruptcy Court:
(a) declare the Commitment of the Lender to make any Loans to be
terminated, whereupon such Commitments 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 the Borrower and the Loan Parties; and
(c) subject only to the giving of an "Enforcement Notice" under and as
defined in the Interim Order to the parties entitled under the Interim Order to
receive such notice, (i) exercise all rights and remedies available to it in
respect of the collateral; or (ii) exercise all rights and remedies available to
it and the Lender under the Loan Documents, the DIP Financing Orders or
applicable Laws.
8.03 Application of Funds. After the exercise of remedies provided for in
Section 8.02 and subject to the Carve-Out, any amounts received on account of
the Obligations shall be applied by the Lender in the following order:
First, to payment of that portion of the Obligations constituting fees,
indemnities, expenses and other amounts;
Second, to payment of that portion of the Obligations constituting accrued
and unpaid interest on the Loans;
Third, to payment of that portion of the Obligations constituting unpaid
principal of the Loans;
Fourth, to the payment of all other Obligations of the Loan Parties owing
under or in respect of the Loan Documents that are due and payable to the
Lender; and
Last, the balance, if any, after all of the Obligations have been
indefeasibly paid in full, to the Borrower or as otherwise required by Law.
58
ARTICLE IX
SECURITY
9.01 Grant of Security. To induce the Lender to make the Loans to implement
the DIP Financing Orders without in any way diminishing or limiting the effect
of the DIP Financing Orders or the security interest, pledge and lien granted
thereunder, the Borrower, the Parent and each other Loan Party hereby grants to
the Lender, as security for the full and prompt payment when due of the
Obligations of such Loan Party under the Loan Documents (the "Secured
Obligations"):
(A) a continuing first priority Lien and security interest in and to
all Primary Collateral (as defined below) of such Loan Party (subject only to
(i) valid and perfected Liens in existence on the Petition Date and junior to
such valid and perfected Liens, (ii) valid, enforceable and nonavoidable Liens
existing as of the Petition Date, but perfected after the Petition Date pursuant
to section 546(b) of the Bankruptcy Code, only to the extent such Post-Petition
perfection is expressly permitted under the Bankruptcy Code, (iii) the Carve-Out
and (iv) Permitted Senior Liens) in accordance with subsection 364(c)(2) of the
Bankruptcy Code; and
(B) continuing second best priority Lien and security interest in and to
all Secondary Collateral (as defined below) of such Loan Party (subject only to
(i) valid and perfected Liens in existence on the Petition Date and junior to
such valid and perfected Liens, (ii) valid, enforceable and nonavoidable Liens
existing as of the Petition Date, but perfected after the Petition Date,
pursuant to Section 546(b) of the Bankruptcy Code, only to the extent such
Post-Petition perfection is expressly permitted under the Bankruptcy Code, (iii)
the Carve-Out; (iv) Permitted Senior Liens; and (v) first priority Liens).
With respect to all real property the title to which is held by the
Borrower, the Parent or any of the Loan Parties, or the possession of which is
held by the Borrower or any of the Loan Parties pursuant to leasehold interest,
the Borrower and each Loan Party hereby assigns and conveys as security, grants
a security interest in, hypothecates, mortgages, pledges and sets over unto the
Lender all of the right, title and interest of the Borrower and such Loan
Parties in all of such owned real property and in all such leasehold interests,
together in each case with all of the right, title and interest of the Borrower
and such Loan Parties in and to all buildings, improvements, and fixtures
related thereto, any lease or sublease thereof, all General Intangibles relating
thereto and all proceeds thereof. The Borrower and each Loan Party acknowledges
that, pursuant to the Orders, the Liens in favor of the Lender in all of such
real property and leasehold instruments, including any Gate Leasehold (limited,
in the case of Chicago Gates, only to the interests described in clause (i)
below) shall be perfected without the recordation of any instruments of mortgage
or assignment. The Borrower and each Loan Party further agrees that, upon the
request of the Lender, the Borrower and such Loan Party shall enter into
separate fee or leasehold mortgages in recordable form with respect to such
properties on terms reasonably satisfactory to the Lender.
"Primary Collateral" means, except as otherwise specified in the DIP
Financing Orders and in the definition of Collateral set forth in Section
1.01,
59
(i) (1) all property owned or leased (except as provided
below in this clause (i)(1)) by any of the Loan Parties as of the
date hereof at the Chicago Midway Airport in which the Lender
does not already hold a valid, enforceable and perfected lien or
security interest and the proceeds therefrom; provided, however,
that the Lender shall not receive any Liens, security interests
or operational rights in, or any revisionary interests or any
right to control or use the Chicago Midway Airport terminal
facilities which are the subject of the Chicago Midway Facilities
Lease themselves or in the Chicago Midway Facilities Lease for
such airport terminal facilities, and (2) any interest the Loan
Parties have in the right to receive the proceeds, if any, from
any assumption and assignment, to any person engaged in the air
transportation business, and no other person, of Chicago Midway
Facilities Lease for any Chicago Midway Airport terminal
facilities, as approved by the Bankruptcy Court and subject to
any and all City of Chicago consents as are required; provided,
further, that any such City of Chicago consent shall be absolute,
exclusive and not subject to challenge by the Lender and the Loan
Parties regardless of any adverse effect that the lack of, or
conditions to, any such consent may have or be claimed on the
amount of proceeds resulting from lack of consent to such an
assumption and assignment. In connection with such consent of the
City of Chicago, the Lender waives any and all purported legal or
equitable claims or causes of action it may have against the Loan
Parties and any third party, including but not limited to the
City of Chicago, whose consent is required arising from any lack
of, or conditions to, such a consent, including any claims based
upon assignment under 11 U.S.C. 365, and covenants not to sue in
furtherance thereof;
(ii) any assets of the Loan Parties if and to the extent
constituting the collateral pledged to the Authority
pursuant to the Indiana DIP Orders, other than assets
identified in clause (i) above, if such financing by the
Authority has been repaid at any applicable time and such
collateral pledged to the Authority has been released;
(iii) all of the rights, title and interest of the Loan
Parties under airport facility leases and any related contracts
and agreements at all out-stations of the Loan Parties, except
for (A) the out-stations at Honolulu International Airport, (B)
out-stations at airports outside of the United States and (C)
assets identified in clause (i) above, provided, however, that if
any such airport facility leases and related contracts and
agreements prohibit the granting of security interest in any such
facilities, the Lender's interest shall be limited to the
proceeds thereof until the Loan Parties (using commercially
reasonable efforts) shall have obtained appropriate consents to
pledge and assignment from relevant lessors of facilities;
(iv) all of the property and assets of each Loan Party, of the
types identified in this Section 9.01 below under clauses
(a) through (h), but excluding assets identified in clause
(i) above, that have not otherwise been pledged or which do
not constitute the Secondary Collateral; and all proceeds of,
collateral for, income, royalties and other payments
60
now or hereafter due and payable with respect to, and supporting
obligations relating to, any and all of the Primary Collateral
and, to the extent not otherwise included, all (A) payments
under insurance (whether or not the Lender is the loss payee
thereof), or any indemnity, warranty or guaranty, payable by
reason of loss or damage to or otherwise with respect to any of
the foregoing Primary Collateral, (B) tort claims, including,
without limitation, all commercial tort claims and (C) cash.
"Secondary Collateral" means, except as otherwise specified in the DIP
Financing Orders and in the definition of Collateral set forth in Section 1.01,
all of the property and assets of each Loan Party and its estate, real and
personal, tangible and intangible, whether now owned or hereafter acquired or
arising and regardless of where located, including but not limited to:
(a) all equipment in all of its forms, including, without limitation, all
machinery, tools, motor vehicles, vessels, aircraft, aircraft engines, aircraft
propellers, furniture and fixtures, and all parts thereof and all accessions
thereto and all software related thereto, including, without limitation,
software that is embedded in and is part of the equipment (any and all such
property being the "Equipment");
(b) all inventory in all of its forms, including, without limitation, (i)
all raw materials, work in process, finished goods and materials used or
consumed in the manufacture, production, preparation or shipping thereof, (ii)
goods in which such Loan Party has an interest in mass or a joint or other
interest or right of any kind (including, without limitation, goods in which
such Loan Party has an interest or right as consignees) and (iii) goods that are
returned to or repossessed or stopped in transit by such Loan Party), and all
accessions thereto and products thereof and documents therefore, and all
software related thereto, including, without limitation, software that is
embedded in and is part of the inventory (any and all such property being the
"Inventory");
(c) all accounts (including, without limitation, health-care-insurance
receivables), chattel paper (including, without limitation, tangible chattel
paper and electronic chattel paper), instruments (including, without limitation,
promissory notes), deposit accounts, letter-of-credit rights, general
intangibles (including, without limitation, payment intangibles) and other
obligations of any kind, whether or not arising out of or in connection with the
sale or lease of goods or the rendering of services and whether or not earned by
performance, and all rights now or hereafter existing in and to all supporting
obligations and in and to all security agreements, mortgages, Liens, leases,
letters of credit and other contracts securing or otherwise relating to the
foregoing property (any and all of such accounts, chattel paper, instruments,
deposit accounts, letter-of-credit rights, general intangibles and other
obligations, to the extent not referred to in clause(d), (e) or (f) below, being
the "Receivables", and any and all such supporting obligations, security
agreements, mortgages, Liens, leases, letters of credit and other contracts to
the extent not referred to in clause (d), (e) or (f) below being the "Related
Contracts");
(d) the following (the "Security Collateral"):
(i) all shares of stock and other Equity Interests from time to time
acquired by such Loan Party in any manner (the "Pledged Equity"), and the
certificates, if any, representing such additional shares or other Equity
Interests, and all dividends, distributions, return of capital, cash,
instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such shares
or other Equity Interests and all subscription warrants, rights or options
issued thereon or with respect thereto;
61
(ii) all indebtedness from time to time owed to such Loan Party (such
indebtedness being the "Pledged Debt") and the instruments, if any, evidencing
such indebtedness, and all interest, cash, instruments and other property from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of such indebtedness; and
(iii) all other investment property (including, without limitation, all (A)
securities, whether certificated or uncertificated, (B) security entitlements,
(C) securities accounts, (D) commodity contracts and (E) commodity accounts) in
which such Loan Party has now, or acquires from time to time hereafter, any
right, title or interest in any manner, and the certificates or instruments, if
any, representing or evidencing such investment property, and all dividends,
distributions, return of capital, interest, distributions, value, cash,
instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such
investment property and all subscription warrants, rights or options issued
thereon or with respect thereto;
(e) the following (collectively, the "Account Collateral"):
(i) all deposit and other bank accounts and all funds and financial assets
from time to time credited thereto (including, without limitation, all cash
equivalents), all interest, dividends, distributions, cash, instruments and
other property from time to time received, receivable or otherwise distributed
in respect of or in exchange for any or all of such funds and financial assets,
and all certificates and instruments, if any, from time to time representing or
evidencing such accounts;
(ii) all promissory notes, certificates of deposit, deposit accounts,
checks and other instruments from time to time delivered to or otherwise
possessed by the Lender for or on behalf of such Loan Party, including, without
limitation; those delivered or possessed in substitution for or in addition to
any or all of the then existing Account Collateral; and
(iii) all interest, dividends, distributions, cash, instruments and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the then existing Account
Collateral;
(f) the following (collectively, the "Intellectual Property Collateral"):
(i) all patents, patent applications, utility models and statutory
invention registrations, all inventions claimed or disclosed therein and
all improvements thereto ("Patents");
(ii) all trademarks, service marks, domain names, trade dress, logos,
designs, slogans, trade names, business names, corporate names and other
source identifiers, whether registered or unregistered (provided that no
security interest shall be granted in United States intent-to-use trademark
applications to the extent that, and solely during the period in which, the
grant of a security interest therein would impair the validity or
enforceability of such intent-to-use trademark applications under
applicable federal law), together, in each case, with the goodwill
symbolized thereby ("Trademarks");
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(iii) all copyrights, including, without limitation, copyrights in
Computer Software, internet web sites and the content thereof, whether
registered or unregistered ("Copyrights");
(iv) all computer software, programs and databases (including, without
limitation, source code, object code and all related applications and data
files), firmware and documentation and materials relating thereto, together
with any and all maintenance rights, service rights, programming rights,
hosting rights, test rights, improvement rights, renewal rights and
indemnification rights and any substitutions, replacements, improvements,
error corrections, updates and new versions of any of the foregoing
("Computer Software");
(v) all confidential and proprietary information, including, without
limitation, know-how, trade secrets, manufacturing and production processes
and techniques, inventions, research and development information, databases
and data, including, without limitation, technical data, financial,
marketing and business data, pricing and cost information, business and
marketing plans and customer and supplier lists and information
(collectively, "Trade Secrets"), and all other intellectual, industrial and
intangible property of any type, including, without limitation, industrial
designs and mask works;
(vi) all registrations and applications for registration for any of
the foregoing, executed by such Loan Party to the Lender from time to
time), together with all reissues, divisions, continuations,
continuations-in- part, extensions, renewals and reexaminations thereof;
(vii) all tangible embodiments of the foregoing, all rights in the
foregoing provided by international treaties or conventions, all rights
corresponding thereto throughout the world and all other rights of any kind
whatsoever of such Loan Party accruing thereunder or pertaining thereto;
(viii) all agreements, permits, consents, orders and franchises
relating to the license, development, use or disclosure of any of the
foregoing to which such Loan Party, now or hereafter, is a party or a
beneficiary ("IP Agreements"); and
(ix) any and all claims for damages and injunctive relief for past,
present and future infringement, dilution, misappropriation, violation,
misuse or breach with respect to any of the foregoing, with the right, but
not the obligation, to sue for and collect, or otherwise recover, such
damages;
(g) all books and records (including, without limitation, customer lists,
credit files, printouts and other computer output materials and records) of such
Loan Party pertaining to any of the Collateral; and
(h) all proceeds of, collateral for, income, royalties and other
payments now or hereafter due and payable with respect to, and supporting
obligations relating to, any and all of the Secondary Collateral (including,
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without limitation, proceeds, collateral and supporting obligations that
constitute property of the types described in clauses (a) through (g) of this
Section 9.01 and this clause (h)) and, to the extent not otherwise included, all
(A) payments under insurance (whether or not the Lender is the loss payee
thereof), or any indemnity, warranty or guaranty, payable by reason of loss or
damage to or otherwise with respect to any of the foregoing Collateral, (B) tort
claims, including, without limitation, all commercial tort claims and (C) cash.
Notwithstanding anything to the contrary in this Credit Agreement the Loan
Documents or the DIP Financing Order, the Collateral shall not include: (i) any
assets or property of the Loan Parties pledged by the Loan Parties Pre-Petition
to the ATSB Lender Parties to secure the Loan Parties' Indebtedness under the
ATSB Loan and (ii) any assets or property of the Loan Parties upon which the
Bankruptcy Court shall have granted to the ATSB Lender Parties a replacement
lien pursuant to the ATSB Cash Use Order to secure the Loan Parties' use of cash
collateral under section 363 of the Bankruptcy Code (the "ATSB Collateral"),
provided, however, that in the event that any ATSB Collateral shall be released
by the ATSB Lender Parties, the Lender shall have the best priority interest in
such released ATSB Collateral (subject only to any continuing Lien granted to
the Authority under the Indiana DIP Orders) and each Loan Party hereby grants to
the Lender, as security for the full and prompt payment when due of the
Obligations of such Loan Party under the Loan Documents the best priority
interest in such released ATSB Collateral (subject only to any continuing Lien
granted to the Authority under the Indiana DIP Orders); or (iii) the Section
1110 Assets.
9.02 Further Assurances.
(a) Each Loan Party agrees that from time to time, at the expense of such
Loan Party, such Loan Party will promptly execute and deliver, or otherwise
authenticate, all further instruments and documents, and take all further action
that may be necessary or desirable, or that the Lender may reasonably request,
in order to perfect and protect any pledge or security interest granted or
purported to be granted by such Loan Party hereunder or to enable the Lender to
exercise and enforce its rights and remedies hereunder with respect to any
Collateral of such Loan Party. Without limiting the generality of the foregoing,
each Loan Party will within a commercially reasonable time with respect to
Collateral of such Loan Party: (i) at the request of the Lender, mark
conspicuously each document included in Inventory, each chattel paper included
in Receivables, each Related Contract, and each of its records pertaining to
such Collateral with a legend, in form and substance reasonably satisfactory to
the Lender, indicating that such document, chattel paper, Related Contract, or
Collateral is subject to the security interest granted hereby; (ii) execute or
authenticate and file such financing or continuation statements, or amendments
thereto, and such other instruments or notices, as may be necessary or
desirable, or as the Lender may reasonably request, in order to perfect and
preserve the security interest granted or purported to be granted by such Loan
Party hereunder; (iii) at the request of the Lender, deliver to the Lender
certificates representing Security Collateral that constitutes certificated
securities, accompanied by undated stock or bond powers executed in blank; (iv)
at the request of the Lender, take all action reasonably necessary to ensure
within the time required hereunder that the Lender has control of Collateral
consisting of deposit accounts, electronic chattel paper, investment property,
letter-of-credit rights and transferable records as provided in Sections 9-104,
9-105, 9-106 and 9-107 of the Uniform Commercial Code and in Section 16 of the
Uniform Electronics Transactions Act, as in effect in the jurisdiction governing
such transferable record; (v) at the request of the Lender, take all action
reasonably necessary to ensure that the Lender's security interest is noted on
any certificate of ownership related to any Collateral evidenced by a
certificate of ownership; (vi) at the reasonable request of the Lender, cause
the Lender to be the beneficiary under all letters of credit that constitute
Collateral, with the exclusive right to make all draws under such letters of
credit, and with all rights of a transferee under Section 5-114(e) of the
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Uniform Commercial Code; and (viii) deliver to the Lender evidence that all
other action that the Lender may deem reasonably necessary or desirable in order
to perfect and protect the security interest created by such Loan Party in the
Collateral under this Credit Agreement has been taken.
(b) Each Loan Party hereby authorizes the Lender to file one or more
financing or continuation statements, and amendments thereto, including, without
limitation, one or more financing statements indicating that such financing
statements cover all assets or all personal property (or words of similar
effect) of such Loan Party, in each case without the signature of such Loan
Party, and regardless of whether any particular asset described in such
financing statements falls within the scope of the Uniform Commercial Code or
the granting clause of this Credit Agreement. A photocopy or other reproduction
of this Credit Agreement or any financing statement covering the Collateral or
any part thereof shall be sufficient as a financing statement where permitted by
Law. Each Loan Party ratifies its authorization for the Lender to have filed
such financing statements, continuation statements or amendments filed prior to
the date hereof.
(c) Each Loan Party will furnish to the Lender from time to time statements
and schedules further identifying and describing the Collateral of such Loan
Party and such other reports in connection with such Collateral as the Lender
may reasonably request, all in reasonable detail.
(d) Notwithstanding subsections (a) and (b) of this Section 9.02, or any
failure on the part of any Loan Party or the Lender to take any of the actions
set forth in such subsections, the Liens and security interests granted herein
shall be deemed valid, enforceable and perfected by entry of the Interim Order
and the Final Order, as applicable. No financing statement, notice of lien,
mortgage, deed of trust or similar instrument in any jurisdiction or filing
office need be filed or any other action taken in order to validate and perfect
the Liens and security interests granted by or pursuant to this Credit
Agreement, the Interim Order or the Final Order.
9.03 Rights of Lender; Limitations on Lender's Obligations.
(a) Subject to each Loan Party's rights and duties under the Bankruptcy
Code (including Section 365 of the Bankruptcy Code), and anything herein to the
contrary notwithstanding, (i) each Loan Party shall remain liable under the
contracts and agreements included in such Loan Party's Collateral to the extent
set forth therein to perform all of its duties and obligations thereunder to the
same extent as if this Credit Agreement had not been executed (including paying
cure costs if such contracts or agreements are assumed), (ii) the exercise by
the Lender of any of the rights hereunder shall not release any Loan Party from
any of its duties or obligations under the contracts and agreements included in
the Collateral, and (iii) no Secured Party shall have any obligation or
liability under the contracts and agreements included in the Collateral by
reason of this Credit Agreement or any other Loan Document, nor shall any
Secured Party be obligated to perform any of the obligations or duties of any
Loan Party thereunder or to take any action to collect or enforce any claim for
payment assigned hereunder.
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(b) Except as otherwise provided in this subsection (b), each Loan Party
will continue to collect, at its own expense, all amounts due or to become due
such Loan Party under the Receivables and Related Contracts. In connection with
such collections, such Loan Party may take (and, at Lender's direction, will
take) such action as such Loan Party or the Lender may reasonably deem necessary
or advisable to enforce collection of the Receivables and Related Contracts;
provided, however, that, subject to any requirement of notice provided in the
Orders or in Section 8.02, the Lender shall have the right at any time, upon the
occurrence and during the continuance of an Event of Default, to notify the
obligors, under any Receivables and Related Contracts of the assignment of such
Receivables and Related Contracts to the Lender and to direct such obligors to
make payment of all amounts due or to become due to such Loan Party thereunder
directly to the Lender and, upon such notification and at the expense of such
Loan Party, to enforce collection of any such Receivables and Related Contracts,
to adjust, settle or compromise the amount or payment thereof, in the same
manner and to the same extent as such Loan Party might have done, and to
otherwise exercise all rights with respect to such Receivables and Related
Contracts, including, without limitation, those set forth in Section 9-607 of
the Uniform Commercial Code. Upon and during the exercise by the Lender of any
of the remedies described in the proviso of the immediately preceding sentence,
(i) any and all amounts and proceeds (including, without limitation,
instruments) received by such Loan Party in respect of the Receivables and
Related Contracts of such Loan Party shall be received in trust for the benefit
of the hereunder, shall be segregated from other funds of such Loan Party and
shall be forthwith paid over to the Lender in the same form as so received (with
any necessary endorsement) to be deposited in a collateral account maintained
with the and applied as provided in Section 9.07(b) and (ii) such Loan Party
will not adjust, settle or compromise the amount or payment of any Receivable or
amount due on any Related Contract, release wholly or partly any obligor
thereof, or allow any credit or discount thereon. No Loan Party will permit or
consent to the subordination of its right to payment under any of the
Receivables and Related Contracts to any other indebtedness or obligations of
the obligor thereof.
(c) The Lender shall have the right to make test verification of the
Receivables in any manner and through any medium that it considers advisable in
its reasonable discretion, and each Loan Party agrees to furnish all such
assistance and information as the Lender may reasonably require in connection
therewith.
9.04 Covenants of the Loan Parties with Respect to Collateral. Each Loan
Party hereby covenants and agrees with the Lender that from and after the date
of this Credit Agreement and until the Secured Obligations (other than
contingent indemnification obligations which are not then due and payable) are
fully satisfied:
(a) Delivery and Control of Pledged Equity.
(i) All certificates or instruments representing or evidencing Pledged
Equity shall be delivered to the Lender (or, in the event that the Pledged
Equity constitutes Secondary Collateral to a Person to whom the Loan
Parties have granted a first lien in the Pledged Equity, subject to the
terms of this Credit Agreement) and held by or on behalf of the Lender
pursuant hereto at the request of the Lender, and shall be in suitable form
for transfer by delivery, or shall be accompanied by duly executed
instruments of transfer or assignment in blank, all in form and substance
reasonably satisfactory to the Lender.
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(ii) With respect to any Pledged Equity in which any Loan Party has
any right, title or interest and that constitutes an uncertificated
security, such Loan Party will cause the issuer thereof either (i) to
register the Lender as the registered owner of such security or (ii) to
agree in an authenticated record with such Loan Party and the Lender that
such issuer will comply with instructions with respect to such security
originated by the Lender without further consent of such Loan Party, such
authenticated record to be in form and substance reasonably satisfactory to
the Lender. With respect to any Security Collateral in which any Loan Party
has any right, title, or interest and that is not an uncertificated
security, upon the request of the Lender, such Loan Party will notify each
such issuer of Pledged Equity that such Pledged Equity is subject to the
security interest granted hereunder.
(iii) Except as provided in Section 9.07, such Loan Party shall be
entitled to receive all cash dividends paid in respect of the Pledged
Equity with respect to the Pledged Equity.
(iv) Except as provided in Section 9.07 and subject to Article VII,
such Loan Party will be entitled to exercise all voting, consent and
corporate rights with respect to the Pledged Equity.
(b) Maintenance of Records. Such Loan Party will keep and maintain, at its
own cost and expense, satisfactory and complete records of the Collateral, in
all material respects, including, without limitation, a record of all payments
received and all credits granted with respect to the Collateral and all other
dealings concerning the Collateral in each case in accordance with its normal
business practice.
(c) Indemnification with Respect to Collateral. In any suit, proceeding or
action brought by the Lender relating to any Collateral for any sum owing
thereunder or to enforce any provision of any Collateral in each case, brought
by the Lender in accordance with this Credit Agreement, such Loan Party will
save, indemnify and keep the Lender harmless from and against all expense, loss
or damage suffered by the Lender by reason of any defense, setoff, counterclaim,
recoupment or reduction of liability whatsoever of the obligor thereunder,
arising out of a breach by such Loan Party of any obligation thereunder or
arising out of any other agreement, indebtedness or liability at any time owing
to, or in favor of, such obligor or its successors from such Loan Party, and all
such obligations of such Loan Party shall be and remain enforceable against and
only against such Loan Party and shall not be enforceable against the Lender.
(d) Limitation on Liens on Collateral. Such Loan Party will defend the
Collateral against and take such other action as is necessary to remove, any
Lien on the Collateral except Liens permitted under Section 7.01 and will defend
the right, title and interest of the Lender in and to all of such Loan Party's
rights under the Collateral against the claims and demands of all Persons
whomsoever other than claims or demands arising out of Liens permitted under
Section 7.01.
(e) Limitations on Modifications of Receivables. Except with respect to
intercompany Receivables among the Loan Parties, such Loan Party will not,
without the Lender's prior written consent, grant any extension of the time of
payment under or in respect of any of the Receivables or Related Contracts,
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compromise, compound or settle the same for less than the full amount thereof,
release, wholly or partly, any Person liable for the payment thereof, or allow
any credit or discount whatsoever thereon other than any of the foregoing which
are done in the ordinary course of business, consistent with past practices, and
trade discounts granted in the ordinary course of business of such Loan Party.
(f) Notices. Such Loan Party will advise the Lender, the Creditors
Committee and the ATSB promptly after it obtains knowledge thereof, in
reasonable detail, (i) of any Lien asserted against any of the Collateral other
than Liens permitted under Section 7.01, and (ii) of the occurrence of any other
event which would result in a material adverse change with respect to the
aggregate value of the Collateral or on the security interests created
hereunder.
(g) Maintenance of Equipment. Such Loan Party will keep and maintain the
Equipment in good operating condition sufficient for the continuation of the
business conducted by such Loan Party on a basis consistent with past practices,
ordinary wear and tear excepted.
(h) As to Intellectual Property Collateral.
(i) With respect to each item of its Intellectual Property Collateral,
each Loan Party agrees to take, at its expense, all necessary steps,
including, without limitation, in the US. Patent and Trademark Office, the
U.S. Copyright Office and any other applicable U.S. Governmental Authority,
to (A) maintain the validity and enforceability of such Intellectual
Property Collateral and maintain such Intellectual Property Collateral in
full force and effect, and (B) pursue the registration and maintenance of
each patent, trademark, or copyright registration or application, now or
hereafter included in such Intellectual Property Collateral of such Loan
Party, including, without limitation, the payment of required fees and
taxes, the filing of responses to office actions issued by the U.S. Patent
and Trademark Office, the U.S. Copyright Office or other applicable U.S.
Governmental Authorities, the filing of applications for renewal or
extension, the filing of affidavits under Sections 8 and 15 of the U.S.
Trademark Act, the filing of divisional, continuation,
continuation-in-part, reissue and renewal applications or extensions, the
payment of maintenance fees and the participation in interference,
reexamination, opposition, cancellation, infringement and misappropriation
proceedings. No Loan Party shall, without the written consent of the
Lender, discontinue use of or otherwise abandon any Intellectual Property
Collateral, or abandon any right to file an application for patent,
trademark, or copyright, unless such Loan Party shall have determined prior
to such cessation of use or abandonment that such use or the pursuit or
maintenance of such Intellectual Property Collateral is no longer desirable
in the conduct of such Loan Party's business and that the loss thereof
would not be reasonably likely to have a Material Adverse Effect, in which
case, such Loan Party will give prompt notice of any such abandonment to
the Lender.
(ii) Each Loan Party agrees promptly to notify the Lender if such Loan
Party becomes aware (A) that any material item of the Intellectual Property
Collateral has become abandoned, placed in the public domain, invalid or,
unenforceable, or of any adverse determination or development regarding
such Loan Party's ownership of any of the material Intellectual Property
Collateral or its right to register the same or to keep and maintain and
enforce the same, or (B) of any adverse determination or the institution of
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any proceeding (including, without limitation, the institution of any
proceeding in the U.S. Patent and Trademark Office or any court) regarding
any material item of the Intellectual Property Collateral.
(iii) In the event that any Loan Party becomes aware that any item of
the Intellectual Property Collateral that is material to such Loan Party's
business is being infringed or misappropriated by a third party, such Loan
Party shall promptly notify the Lender and shall take such actions, at its
expense, as such Loan Party or the Lender deems reasonable and appropriate
under the circumstances to protect or enforce such Intellectual Property
Collateral, including, without limitation, suing for infringement or
misappropriation and for an injunction against such infringement or
misappropriation.
(iv) Each Loan Party shall use proper statutory notice (where
necessary) in connection with its use of each item of its Intellectual
Property Collateral. No Loan Party shall do or permit any act or knowingly
omit to do any act whereby any of its Intellectual Property Collateral may
lapse or become invalid or unenforceable or placed in the public domain
except to the extent that it is commercially reasonable to do so.
(v) Each Loan Party shall take all reasonable steps which it or the
Lender deems appropriate under the circumstances to preserve and protect
each item of its Intellectual Property Collateral, including, without
limitation, maintaining the quality of any and all products or services
used or provided in connection with any of the Trademarks, consistent with
the quality of the products and services as of the date hereof, and taking
all steps necessary to ensure that all licensed users of any of the
Trademarks use such consistent standards of quality.
(vi) Each Loan Party agrees that should it obtain an ownership
interest in any item of the type set forth in Section 9.01(f) that is not
on the date hereof a part of the Intellectual Property Collateral
("After-Acquired Intellectual Property") (i) the provisions of this Credit
Agreement shall automatically apply thereto, and (ii) any such
After-Acquired Intellectual Property and, in the case of trademarks, the
goodwill symbolized thereby, shall automatically become part of the
Intellectual Property Collateral subject to the terms and conditions of
this Credit Agreement with respect thereto. At the end of each month, each
Loan Party shall give prompt written notice to the Lender identifying the
After-Acquired Intellectual Property acquired during such month (if any),
and such Loan Party shall execute and deliver to the Lender with such
written notice, or otherwise authenticate, an IP Security Agreement
Supplement covering such After-Acquired Intellectual Property which shall
be recorded with the U.S. Patent and Trademark Office, the U.S. Copyright
Office and any other applicable Governmental Authorities necessary to
perfect the security interest hereunder in such After-Acquired Intellectual
Property.
9.05 Performance by Lender of the Loan Parties' Obligations.
(a) Lender Appointed Attorney-in-Fact. Each Loan Party hereby irrevocably
appoints the Lender such Loan Party's attorney-in-fact, with full authority in
the place and stead of such Loan Party and in the name of such Loan Party or
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otherwise, from time to time, in the Lender's discretion after the occurrence
and during the continuance of an Event of Default, and after the Lender has
complied with the notice provisions of the Interim Order or the Final Order, to
take any action and to execute any instrument that the Lender may deem necessary
or advisable to accomplish the purposes of this Credit Agreement, including,
without limitation:
(i) to obtain and adjust insurance required to be paid to the Lender
pursuant to this Credit Agreement,
(ii) to ask for, demand, collect, sue for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become due
under or in respect of any of the Collateral,
(iii) to receive, indorse and collect any drafts or other instruments,
documents and chattel paper, in connection with clause (i) or (ii) above,
and
(iv) to file any claims or take any action or institute any
proceedings that the Lender may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of
the Lender with respect to any of the Collateral; provided that the Lender
shall not exercise any such rights under this Section 9.05(a) except upon
occurrence and during the continuance of an Event of Default and after
complying with the notice provisions of the Interim Order or the Final
Order.
(b) Lender May Perform. If any Loan Party fails to perform any agreement
contained herein, the Lender may, as the Lender deems necessary to protect the
security interest granted hereunder in the Collateral or to protect the value
thereof, but without any obligation to do so after the occurrence and during the
continuance of an Event of Default, and after the Lender has complied with the
notice provisions of the Interim Order or the Final Order, itself perform, or
cause performance of, such agreement, and the expenses of the Lender incurred in
connection therewith shall be payable by such Loan Party under Section 11.04.
(c) Lender Not Liable. The Lender shall in no way be responsible for the
payment of any costs incurred in connection with preserving or disposing of
Collateral pursuant to Section 506(c) of the Bankruptcy Code (excluding the
Carve-Out) and the Collateral may not be charged for the incurrence of any such
cost.
9.06 The Lender's Duties.
(a) The powers conferred on the Lender hereunder are solely to protect the
Lender's interest in the Collateral and shall not impose any duty upon it to
exercise any such powers. Other than the exercise of reasonable care to assure
the safe custody of the Collateral while being held by the Lender pursuant to
the terms of the Loan Documents, the Lender shall have no duty or liability to
preserve rights pertaining thereto, it being understood and agreed that the
grantor of such Collateral shall be responsible for preservation of all rights
in the Collateral, and the Lender shall be relieved of all responsibility for
the Collateral upon surrendering it or tendering the surrender of it to such
grantor. The Lender shall be deemed to have exercised reasonable care in the
custody and preservation of the Collateral in its possession if the Collateral
is accorded treatment substantially equal to that which the Lender accords its
own property, which shall be no less than the treatment employed by a reasonable
and prudent agent in the industry, it being understood that the Lender shall not
have responsibility for taking any necessary steps to preserve rights against
any parties with respect to any of the Collateral. In the event of a public or
private sale of Collateral pursuant to the terms of the Loan Documents, the
Lender shall have no obligation to clean-up, repair or otherwise prepare the
Collateral for sale.
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(b) Anything contained herein to the contrary notwithstanding, the Lender
may from time to time, when the Lender deems it to be necessary, appoint one or
more agent (each an "Agent") for the Lender hereunder with respect to all or any
part of the Collateral. In the event that the Lender so appoints any Agent with
respect to any Collateral, (i) the assignment and pledge of such Collateral and
the security interest granted in such Collateral by each Loan Party hereunder
shall be deemed for purposes of this Security Agreement to have been made to
such Subagent, in addition to the Lender, for the benefit of the Lender, as
security for the Secured Obligations of such Loan Party, (ii) such Agent shall
automatically be vested, in addition to the Lender, with all rights, powers,
privileges, interests and remedies of the Lender hereunder with respect to such
Collateral, and (iii) the term "Lender" when used herein in relation to any
rights, powers, privileges, interests and remedies of the Lender with respect to
such Collateral, shall include such Agent; provided, however, that no such Agent
shall be authorized to take any action with respect to any such Collateral
unless and except to the extent expressly authorized in writing by the Lender.
9.07 Remedies. If any Event of Default shall have occurred and be
continuing:
(a) The Lender may, subject only to compliance with the notice provisions
of the Interim Order or the Final Order, exercise in respect of the Collateral,
in addition to other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party upon default
under the Uniform Commercial Code (whether or not the Uniform Commercial Code
applies to the affected Collateral) and also may: (i) require each Loan Party
to, and each Loan Party hereby agrees that it will at its expense and upon
request of the Lender forthwith, assemble all or part of the Collateral as
directed by the Lender and make it available to the Lender at a place and time
to be designated by the Lender that is reasonably convenient to such Loan Party
and the Lender; (ii) without notice except as specified below or in the Orders,
sell the Collateral or any part thereof in one or more parcels at public or
private sale, at any of the Lender's offices or elsewhere, for cash, on credit
or for future delivery, and upon such other terms as are commercially
reasonable; (iii) occupy any premises owned or leased by any of the Loan Parties
where the Collateral or any part thereof is assembled or located for a
reasonable period in order to effectuate its rights and remedies hereunder or
under law, without obligation to such Loan Party in respect of such occupation;
and (iv) exercise any and all rights and remedies of any of the Loan Parties
under or in connection with the Collateral, or otherwise in respect of the
Collateral, including, without limitation, (A) any and all rights of such Loan
Party to demand or otherwise require payment of any amount under, or performance
of any provision of, the Receivables, the Related Contracts and the other
Collateral, (B) withdraw, or cause or direct the withdrawal, of all funds with
respect to the Account Collateral and (C) exercise all other rights and remedies
with respect to the Receivables, the Related Contracts and the other Collateral,
including, without limitation, those set forth in Section 9-607 of the Uniform
Commercial Code. Each Loan Party agrees that, to the extent notice of sale shall
be required by law, at least 10 days' notice to such Loan Party of the time and
place of any public sale or the time after which any private sale is to be made
shall constitute reasonable notification. The Lender shall not be obligated to
make any sale of Collateral regardless of notice of sale having been given. The
Lender may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned.
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(b) Subject to the Carve-Out, any cash held by or on behalf of the Lender
and all cash proceeds received by or on behalf of the Lender in respect of any
sale of, collection from, or other realization upon all or any part of the
Collateral shall be applied against the Secured Obligations, in the manner set
forth in Section 8.03. Any surplus of such cash or cash proceeds held by the
Lender and remaining after payment in full of the Secured Obligations shall be
paid over to the applicable Loan Party or to whomever may be lawfully entitle to
receive such surplus.
(c) Subject to the Carve-Out, all payments received by any Loan Party under
or in connection with the Collateral shall be received in trust for the benefit
of the Lender, shall be segregated from other funds of such Loan Party and shall
be forthwith paid over to the Lender in the same form as so received (with any
necessary endorsement).
(d) The Lender may, without notice to any Loan Party except as required by
law, the Orders or Section 8.02 and at any time or from time to time, charge,
set off and otherwise apply all or any part of the Secured Obligations against
any funds held with respect to the Account Collateral or in any other deposit
account.
(e) In the event of any sale or other disposition of any of the
Intellectual Property Collateral of any Loan Party, the goodwill symbolized by
any Trademarks subject to such sale or other disposition shall be included
therein, and such Loan Party shall supply to the Lender or its designee such
Loan Party's know-how and expertise, and documents and things relating to any
Intellectual Property Collateral subject to such sale or other disposition, and
such Loan Party's customer lists and other records and documents relating to
such Intellectual Property Collateral and to the manufacture, distribution,
advertising and sale of products and services of such Loan Party.
(f) The Lender is authorized, in connection with any sale of the Security
Collateral pursuant to this Section 10.07, to deliver or otherwise disclose to
any prospective purchaser of the Security Collateral any information in its
possession relating to such Security Collateral.
9.08 Modifications.
The Liens, lien priority, administrative priorities and other rights and
remedies granted to the Lender pursuant to this Credit Agreement, the Interim
Order and/or the Final Order (specifically, including, but not limited to, the
existence, perfection and priority of the Liens provided herein and therein and
the administrative priority provided herein and therein) shall not be modified,
altered or impaired in any manner by any other financing or extension of credit
or incurrence of Indebtedness by any of the Loan Parties (pursuant to Section
364 of the Bankruptcy Code or otherwise), or by any dismissal or conversion of
any of the Cases, or by any other act or omission whatsoever. Without
limitation, notwithstanding any such order, financing, extension, incurrence,
dismissal, conversion, act or omission:
(i) except for the Carve-Out having priority over the Secured
Obligations, no costs or expenses of administration which have been or may
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be incurred in any of the Cases or any conversion of the same or in any
other proceedings related thereto, and no priority claims, are or will be
prior to or on a parity with any claim of the Lender or the Lender against
the Loan Parties in respect of any Obligation;
(ii) the liens and security interests granted herein and in the Orders
shall constitute valid and perfected first priority liens and security
interest in the Primary Collateral and second best priority liens and
security interest in the Secondary Collateral (subject only to (A) the
Carve-Out, (B) valid and perfected liens in existence on the Petition Date
and junior to such valid and perfected Liens and (C) only to the extent
such post-petition perfection is expressly permitted by the Bankruptcy
Code, valid, nonavoidable and enforceable Liens existing as of the Petition
Date, but perfected after the Petition Date, in accordance with sections
364(c) (2) and (3) of the Bankruptcy Code, and shall be prior (or second
best with respect to liens in the Secondary Collateral) to all other Liens
and security interests, now existing or hereafter arising, in favor of any
other creditor or any other Person whatsoever; and
(iii) the liens and security interests granted hereunder shall
continue valid and perfected security interest without the necessity that
financing statements or Mortgages be filed or that any other action be
taken under applicable nonbankruptcy law.
9.09 Release; Termination.
(a) Upon any sale, lease, transfer or other disposition of any item of
Collateral of any Loan Party in accordance with the terms of the Loan Documents,
such Collateral shall be released from the assignment and security interest
granted hereby, and in connection therewith, the Lender will, at such Loan
Party's expense, execute and deliver to such Loan Party such documents as such
Loan Party shall reasonably request to evidence the release of such item of
Collateral (other than Inventory sold in the ordinary course of business) from
the assignment and security interest granted hereby; provided, however, that (i)
at the time of such request and such release no Default shall have occurred and
be continuing, (ii) the proceeds of any such sale, lease, transfer or other
disposition required to be applied, or any payment to be made in connection
therewith, in accordance with Section 2.02, shall, to the extent so required, be
paid or made to, or in accordance with the instructions of, the Lender when and
as required under Section 2.02, and (iii) in the case of Collateral sold or
disposed of, the release of a Lien created hereby will not be effective until
the receipt by the Lender of the Net Cash Proceeds arising from the sale or
disposition of such Collateral.
(b) Upon the latest of (i) the payment in full in cash of the Secured
Obligations (other than contingent indemnification obligations which are not
then due and payable), (ii) the Maturity Date and (iii) the termination or
expiration of the Chicago Guaranty, the pledge and security interest granted
hereby shall terminate and all rights to the Collateral shall revert to the
applicable Loan Party. Upon any such termination, the Lender will, at the
applicable Loan Party's expense, execute and deliver to such Loan Party such
documents as such Loan Party shall reasonably request to evidence such
termination.
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ARTICLE X
GUARANTY
10.01 Guaranty. Each Guarantor, severally, unconditionally and irrevocably
guarantees (the undertaking by each Guarantor under this Article X being the
"Guaranty") the punctual payment when due, whether at scheduled maturity or on
any date of a required prepayment or by acceleration, demand or otherwise, of
all of the Obligations of each of the other Loan Parties now or hereafter
existing under or in respect of the Loan Documents (including, without
limitation, any extensions, modifications, substitutions, amendments or renewals
of any or all of the foregoing Obligations), whether direct or indirect,
absolute or contingent, and whether for principal, interest, premium, fees,
indemnification payments, contract causes of action, costs, expenses or
otherwise (such Obligations being the "Guaranteed Obligations"), and agrees to
pay any and all expenses (including, without limitation, reasonable fees and
expenses of counsel) incurred by the Lender solely in enforcing any rights under
this Guaranty or any other Loan Document.
10.02 Guaranty Absolute. Each Guarantor guarantees that the Guaranteed
Obligations will be paid strictly in accordance with the terms of the Loan
Documents, regardless of any law, regulation or order now or hereafter in effect
in any jurisdiction affecting any of such terms or the rights of the Lender with
respect thereto. The Obligations of each Guarantor under this Guaranty are
independent of the Guaranteed Obligations or any other Obligations of any Loan
Party under the Loan Documents, and a separate action or actions may be brought
and prosecuted against such Guarantor to enforce this Guaranty, irrespective of
whether any action is brought against any other Loan Party or whether any other
Loan Party is joined in any such action or actions. The liability of each
Guarantor under this Guaranty shall be absolute, unconditional and irrevocable
irrespective of, and such Guarantor hereby irrevocably waives any defenses it
may now or hereafter have in-any way relating to, any and all of the following:
(a) any lack of validity or enforceability of any Loan Document or any
other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any other
term of, all or any of the Guaranteed Obligations or any other Obligations of
any Loan Party under the Loan Documents, or any other amendment or waiver of or
any consent to departure from any Loan Document, including, without limitation,
any increase in the Guaranteed Obligations resulting from the extension of
additional credit to any Loan Party or any of its Subsidiaries or otherwise;
(c) any taking, exchange, release or nonperfection of any Collateral, or
any taking, release or amendment or waiver of or consent to departure from this
Guaranty or any other guaranty, for all or any of the Guaranteed Obligations;
(d) any manner of application of Collateral, or proceeds thereof, to all or
any of the Guaranteed Obligations, or any manner of sale or other disposition of
any Collateral for all or any of the Guaranteed Obligations or any other
Obligations of any Loan Party under the Loan Documents, or any other property
and assets of any other Loan Party or any of its Subsidiaries;
(e) any change, restructuring or termination of the corporate structure or
existence of any other Loan Party or any of its Subsidiaries;
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(f) any failure of the Lender to disclose to any Loan Party any information
relating to the business, condition (financial or otherwise), operations,
performance, properties or prospects of any other Loan Party now or hereafter
known to the Lender, as the case may be (such Guarantor waiving any duty on the
part of the Lender to disclose such information);
(g) the failure of any other Person to execute this Credit Agreement or any
other guarantee or agreement of the release or reduction of the liability of any
of the other Loan Parties or any other guarantor or surety with respect to the
Guaranteed Obligations; or (h) any other circumstance (including, without
limitation, any statute of limitations or any existence of or reliance on any
representation by the Lender) that might otherwise constitute a defense
available to, or a discharge of, such Guarantor, any other Loan Party or any
other guarantor or surety.
This Guaranty shall continue to be effective or be reinstated, as the case
may be, if at any time any payment of any of the Guaranteed Obligations is
rescinded or must otherwise be returned by the Lender or by any other Person
upon the insolvency, bankruptcy or reorganization of any other Loan Party or
otherwise, all as though such payment had not been made. 10.03 Waivers and
Acknowledgments.
(a) Each Guarantor hereby unconditionally and irrevocably waives
promptness, diligence, notice of acceptance, presentment, demand for
performance, notice of nonperformance, default, acceleration, protest or
dishonor and any other notice with respect to any of the Guaranteed Obligations
and this Guaranty, and any requirement that the Lender protect, secure, perfect
or insure any Lien or any property or assets subject thereto or exhaust any
right or take any action against any other Loan Party or any other Person or any
Collateral.
(b) Each Guarantor hereby unconditionally waives any right to revoke this
Guaranty, and acknowledges that this Guaranty is continuing in nature and
applies to all Guaranteed obligations, whether existing now or in the future.
(c) Each Guarantor hereby unconditionally and irrevocably waives (i) any
defense arising by reason of any claim or defense based upon an election of
remedies by the Lender which in any manner impairs, reduces, releases or
otherwise adversely affects the subrogation, reimbursement, exoneration,
contribution or indemnification rights of such Guarantor or other rights to
proceed against any of the other Loan Parties, any other guarantor or any other
Person or any Collateral, and (ii) any defense based on any right of setoff or
counterclaim against or in respect of the Obligations of such Guarantor
hereunder.
(d) Each Guarantor acknowledges that the Lender may, without notice (except
to the extent required by the notice provisions of the Interim Order or the
Final Order) to or demand upon such Guarantor and without affecting the
liability of such Guarantor under this Guaranty, foreclose under any Mortgage by
nonjudicial sale, and such Guarantor hereby waives any defense to the recovery
by the Lender against such Guarantor of any deficiency after such nonjudicial
sale and any defense or benefits that may be afforded by applicable Laws.
(e) Each Guarantor hereby unconditionally and irrevocably waives any duty
on the part of Lender to disclose to such Guarantor any matter, fact or thing
relating to the business, condition (financial or otherwise), operations,
performance, properties or prospects of any other Loan Party or any of its
Subsidiaries now or hereafter known by Lender.
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(f) Each Guarantor acknowledges that it will receive substantial direct and
indirect benefits from the financing arrangements contemplated by the Loan
Documents and that the waivers set forth in Section 10.02 and this Section 10.03
are knowingly made in contemplation of such benefits.
10.04 Subrogation. Each Guarantor hereby unconditionally and irrevocably
agrees not to exercise any rights that it may now have or may hereafter acquire
against any other Loan Party or any other insider guarantor that arise from the
existence, payment, performance or enforcement of its Obligations under this
Guaranty or under any other Loan Document, including, without limitation, any
right of subrogation, reimbursement, exoneration, contribution or
indemnification and any right to participate in any claim or remedy of the
Lender against such other Loan Party or any other insider guarantor or any
Collateral, whether or not such claim, remedy or right arises in equity or under
contract, statute or common law, including, without limitation, the right to
take or receive from such other Loan Party or any other insider guarantor,
directly or indirectly, in cash or other property or by set-off or in any other
manner, payment or security on account of such claim, remedy or right, until
such time as all of the Guaranteed Obligations and all other amounts payable
under this Guaranty shall have been paid in full in cash terminated or been
cancelled and the Commitments shall have expired or terminated. If any amount
shall be paid to any Guarantor in violation of the immediately preceding
sentence at any time prior to the latest of (a) the payment in full in cash of
all of the Guaranteed Obligations and all other amounts payable under this
Guaranty, and (b) the Maturity Date, such amount shall be received and held in
trust for the benefit of the Lender (in the same form as so received) and shall
forthwith be paid to the Lender (without any necessary endorsement or
assignment) to be credited and applied to the Guaranteed Obligations and all
other amounts payable under this Guaranty, whether matured or unmatured, in
accordance with the terms of the Loan Documents, or to be held as Collateral for
any Guaranteed Obligations or other amounts payable under this Guaranty
thereafter arising. If (i) any Guarantor shall pay to the Lender all or any part
of the Guaranteed Obligations, (ii) all of the Guaranteed Obligations and all
other amounts payable under this Guaranty shall have been paid in full in cash,
and (iii) the Maturity Date shall have occurred, the Lender will, at such
Guarantor's request and expense, execute and deliver to such Guarantor
appropriate documents, without recourse and without representation or warranty,
necessary to evidence the transfer by subrogation to such Guarantor of an
interest in the Guaranteed Obligations resulting from the payment made by such
Guarantor pursuant to this Guaranty.
10.05 Subordination. Each Guarantor agrees that any and all present and
future debts and obligations of the Borrower or any other Guarantor to such
Guarantor hereby are subordinated to the claims of the Lender and hereby are
assigned by such Guarantor to the Lender as security for the payment and
performance of such Guarantor's Guaranteed Obligations.
10.06 Continuing Guarantee; Assignments. This Guaranty is a continuing
guaranty and each Guarantor agrees that the Guaranteed Obligations of such
Guarantor under this Guaranty shall be primary obligations of such Guarantor,
shall not be subject to any counterclaim, set-off, abatement, deferment or
defense based upon any claim that such Guarantor may have against the Lender,
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the Borrower, any other Guarantor or any other Person and shall (a) remain in
full force and effect until the latest of (i) the payment in full in cash of all
of the Guaranteed Obligations and all other amounts payable under this Guaranty,
and (ii) the Maturity Date, (b) be binding upon each Guarantor and its
successors and assigns and (c) inure to the benefit of, and be enforceable by,
the Lender and its successors, transferees and assigns. Without limiting the
generality of clause (c) of the immediately preceding sentence, the Lender may
assign or otherwise transfer all or any portion of its rights and obligations
under this Credit Agreement to any other Person, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to the
Lender under this Article X.
10.07 No Reliance. Each Guarantor has, independently and without reliance
upon the Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Guaranty and each other Loan Document to which it is or is to be a party, and
such Guarantor has established adequate means of obtaining from each other Loan
Party on a continuing basis information pertaining to, and is now and on a
continuing basis will be completely familiar with, the business, condition
(financial or otherwise), operations, performance, properties and prospects of
such other Loan Party.
ARTICLE XI
MISCELLANEOUS
11.01 Amendments, Etc. No amendment or waiver of any provision of this
Credit Agreement or any other Loan Document, and no consent to any departure by
the Borrower or any other Loan Party therefrom, shall be effective unless in
writing signed by the Lender and the Borrower (and with the consent of the
Creditors Committee and the ATSB) or the applicable Loan Party, and each such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given. No amendment or waiver of any provision of
this Credit Agreement or any other Loan Document affecting the ATSB or the ATSB
Collateral or the Indiana Collateral and the ranking of the security interest of
the ATSB Lender Parties and the Authority shall be effective unless in writing
signed by the Lender, the Borrower, the applicable Loan Party, the ATSB Lender
Parties (with respect to any amendments affecting the ATSB Lender Parties or the
ATSB Collateral), and the Authority (with respect to any amendments affecting
the Authority or the Indiana Collateral)and each such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
11.02 Notices and Other Communications; Facsimile Copies.
(a) General. Unless otherwise expressly provided in Section 2.02 or
otherwise, all notices and other communications provided for hereunder or any
other Loan Document shall be in writing (including by facsimile transmission).
All such written notices shall be mailed, faxed or delivered to the applicable
address, facsimile number or (subject to subsection (c) below) electronic mail
address, and all notices and other communications expressly permitted hereunder
to be given by telephone shall be made to the applicable address, facsimile
number, electronic mail address or telephone number specified for such Person on
the signature page hereto or to such other address, facsimile number, electronic
mail address or telephone number as shall be designated by such party in a
notice to the other parties.
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(b) Effectiveness of Facsimile Documents and Signatures. Loan Documents may
be transmitted and/or signed by facsimile. The effectiveness of any such
documents and signatures shall, subject to applicable Law, have the same force
and effect as manually signed originals and shall be binding on all Loan
Parties, and the Lender. The Lender may also require that any such documents and
signatures be confirmed by a manually-signed original thereof; provided,
however, that the failure to request or deliver the same shall not limit the
effectiveness of any facsimile document or signature.
(c) Limited Use of Electronic Mail. Electronic mail and Internet and
intranet websites may be used only to distribute routine communications, such as
financial statements and other information as provided in Section 6.02, and to
distribute Loan Documents for execution by the parties thereto, and may not be
used for any other purpose as effective notice under this Credit Agreement.
(d) Reliance by Lender. The Lender shall be entitled to rely and act upon
any notices purportedly given by or on behalf of the 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. The Borrower shall indemnify the Lender from all losses, costs,
expenses and liabilities resulting from the reliance by such Person on each
notice purportedly given by or on behalf of the Borrower.
(e) Copies of Notices. Copies of all notices delivered under this Credit
Agreement shall be provided to: (i) the ATSB in accordance with the notice
provisions of the DIP Financing Order (with a copy to Curtis Mallet-Prevost,
Colt & Mosle LLP, 101 Park Avenue, New York, New York 10178, Fax: (212) 696-6065
Attention: Steven, J. Reisman, Esq., (ii) the Creditors Committee in accordance
with the notice provisions of the DIP Financing Orders, (iii) the United States
Department of Justice, Commercial Litigation Branch, Civil Division, P.O. Box
875, Ben Franklin Station, Washington, DC 20044, Attention: Attention: Andrea
Horowitz Handel, Esq.
11.03 No Waiver; Cumulative Remedies. No failure by the Lender to exercise,
and no delay by any such Person in exercising, any right, remedy, power or
privilege hereunder or any other Loan Document 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 herein provided, and provided under each other Loan
Document, are cumulative and not exclusive of any rights, remedies, powers and
privileges provided by law.
11.04 Attorney Costs, Expenses and Taxes. The Borrower agrees (a) to pay or
reimburse the Lender for all reasonable out-of-pocket costs and expenses
incurred in connection with the development, preparation, negotiation and
execution of this Credit Agreement and the other Loan Documents and any
amendment, waiver, consent or other modification of the provisions hereof and
thereof (whether or not the transaction contemplated hereby or thereby are
consummated), and the consummation and administration of the transactions
contemplated hereby and thereby, including all Attorney Costs (including,
without limitation, specialty and local counsel), in addition to any other
expenses described in paragraph 3 of the Bid Proposal, shall not to exceed
$1,000,000 in the aggregate and shall be paid upon the funding pursuant to the
terms of the Investment Agreement, and (b) to pay or reimburse the Lender for
all costs and expenses incurred in connection with the enforcement of any rights
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or remedies under this Credit Agreement or the other Loan Documents (including
all such costs and expenses incurred during any legal proceeding, including any
proceeding under any Debtor Relief Law), including all Attorney Costs. The
foregoing costs and expenses shall include all search, filing, recording, title
insurance and appraisal charges and fees and taxes related thereto, and other
out-of-pocket expenses incurred by the Lender and the cost of independent public
accountants and other outside experts retained by the Lender. All amounts due
under this Section 11.04(b) shall be payable within ten Business Days after
demand therefor. The agreements in this Section shall survive the termination of
the Commitments and repayment of all other Obligations. If any Loan Party fails
to pay when due any costs, expenses or other amounts payable by it hereunder or
under any Loan Document, including, without limitation, Attorney Costs and
indemnities, such amount may be paid on behalf of such Loan Party by the Lender,
in its sole discretion.
11.05 Indemnification by the Loan Parties. Whether or not the transactions
contemplated hereby are consummated, each Loan Party shall defend (with counsel
satisfactory to Lender), protect, indemnify and hold harmless Lender, each
affiliate or subsidiary of Lender, and each of their respective shareholders,
members, officers, directors, managers, employees, attorneys, advisors and
agents (collectively, the "Indemnitees") from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, expenses and disbursements of any kind or nature (including,
without limitation, the disbursements and the Attorney Costs in connection with
any investigative, administrative or judicial proceeding, whether or not the
Indemnified Party shall be designated a party thereto), which may be imposed on,
incurred by, or asserted against, any Indemnified Party (whether direct,
indirect or consequential and whether based on any federal, state or local laws
or regulations, including, without limitation, securities laws and regulations,
environmental laws and commercial laws and regulations, under common law or in
equity, or based on contract or otherwise) in any manner relating to or arising
out of this Credit Agreement, the Transaction, or any act, event or transaction
related or attendant thereto, the making or issuance and the management of the
Loan or the use or intended use of the proceeds of the Loan; except to the
extent that direct damages (as opposed to special) indirect, consequential or
punitive damages (including, without limitation, any loss of products, business
or anticipated savings) are determined in a final non-appealable judgment by a
court of competent jurisdiction to have resulted from the willful misconduct or
gross negligence of such Indemnified Party. To the extent that the undertaking
to indemnify set forth in the preceding sentence may be unenforceable because it
is violative of any law or public policy, Borrower shall satisfy such
undertaking to the maximum extent permitted by applicable Laws. Any liability,
obligation, loss, damage, penalty, cost or expense covered by this indemnity
shall be paid to each Indemnified Party on demand, and, failing prompt payment,
shall, together with interest thereon at the highest rate then applicable to
Loans hereunder from the date incurred by each Indemnified Party until paid by
Loan Parties, be added to the Liabilities of Borrower and be secured by the
Collateral. The provisions of this Section 11.05 shall survive the satisfaction
and payment of the Obligations and the termination of this Credit Agreement
conclusive agreements.
11.06 Payments Set Aside. To the extent that any payment by or on behalf of
the Borrower is made to the Lender, or the 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 the Lender in
its discretion) to be repaid to a trustee, receiver or any other party, in
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connection with any proceeding under any Debtor Relief Law or otherwise, then 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.
11.07 Successors and Assigns.
(a) The provisions of this Credit Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that the Borrower may not assign or otherwise transfer
any of its rights or obligations hereunder without the prior written consent of
the Lender. Nothing in this Credit Agreement, expressed or implied, shall be
construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby, to the extent expressly
contemplated hereby, the Indemnitees) any legal or equitable right, remedy or
claim under or by reason of this Credit Agreement.
11.08 Confidentiality. The Lender agrees to maintain the confidentiality of
the Information (as defined below), except that Information may be disclosed (a)
to its and its Affiliates' directors, officers, employees and agents, including
accountants, legal counsel and other advisors (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; (c) to
the extent required by applicable Laws or regulations or by any subpoena or
similar legal process; (d) to any other party to this Credit Agreement; (e) to
the extent reasonably required in connection with the exercise of any remedies
hereunder or any suit, action or proceeding relating to this Credit Agreement or
the enforcement of rights hereunder; (f) subject to an agreement containing
provisions substantially the same as those of this Section, to (i) any assignee
of, or any prospective assignee of, any of its rights or obligations under this
Credit Agreement or (ii) any direct or indirect contractual counterparty or
prospective counterparty (or such contractual counterparty's or prospective
counterparty's professional advisor) to any credit derivative transaction
relating to obligations of the Loan Parties; (g) with the consent of the
Borrower; (h) to the extent such Information (i) becomes publicly available
other than as a result of a breach of this Section or (ii) becomes available to
the lender on a nonconfidential basis from a source other than the Borrower. For
the purposes of this Section, "Information" means all information received from
any Loan Party relating to any Loan Party or its business, other than any such
information that is available to the Lender on a nonconfidential basis prior to
disclosure by any Loan Party; provided that, in the case of information received
from a Loan Party after the date hereof, such information is clearly identified
in writing 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.
11.09 Setoff. In addition to any rights and remedies of the Lender provided
by law, subject to any notice or other requirement contained in the DIP
Financing Orders and after complying with the notice provisions of the Interim
Order or the Final Order, upon the occurrence and during the continuance of any
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Event of Default and the making of the request or the granting of the consent
specified by Section 8.02 to authorize the Lender to declare the Loans due and
payable pursuant to the provisions of Section 8.02, the Lender and each of its
Affiliates is authorized at any time and from time to time, without (i) further
order of or application to the Bankruptcy Court and (ii) prior notice to the
Borrower or any other Loan Party, any such notice being waived by the Borrower
(on its own behalf and on behalf of each Loan Party) to the fullest extent
permitted by law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held by, and other
indebtedness at any time owing by, such Lender to or for the credit or the
account of the respective Loan Parties against any and all Obligations owing to
the Lender hereunder or under any other Loan Document, now or hereafter
existing, irrespective of whether or not the Lender shall have made demand under
this Credit Agreement or any other Loan Document and although such Obligations
may be contingent or unmatured or denominated in a currency different from that
of the applicable deposit or indebtedness. The Lender agrees promptly to notify
the Borrower after any such setoff and application made by the Lender; provided,
however, that the failure to give such notice shall not affect the validity of
such setoff and application. The rights of the Lender and its Affiliates under
this Section are in addition to other rights and remedies (including, without
limitation, other rights of setoff) that the Lender and its Affiliates may have.
11.10 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 the 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 the Borrower. In determining whether the interest
contracted for, charged, or received by the Lender exceeds the Maximum Rate,
such Person may, to the extent permitted by applicable Laws, (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.
11.11 Counterparts. This Credit Agreement and each other Loan Document may
be executed in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument. Delivery by telecopier of an executed counterpart of a signature
page to this Credit Agreement and each other Loan Document shall be effective as
delivery of an original executed counterpart of this Credit Agreement and such
other Loan Document.
11.12 Integration. This Credit Agreement, together with the DIP Financing
Orders and the other Loan Documents, comprises the complete and integrated
agreement of the parties on the subject matter hereof and thereof and supersedes
all prior agreements, written or oral, on such subject matter. In the event of
any conflict between the provisions of this Credit Agreement and those of any
other Loan Document, the provisions of this Credit Agreement shall control;
provided that the inclusion of supplemental rights or remedies in favor of the
Lender in any other Loan Document shall not be deemed a conflict with this
Credit Agreement. In the event of any conflict between this Credit Agreement or
any other Loan Document and the DIP Financing Orders, the DIP Financing Orders
shall control. Each Loan Document was drafted with the joint participation of
the respective parties thereto and shall be construed neither against nor in
favor of any party, but rather in accordance with the fair meaning thereof.
81
11.13 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 the Lender,
regardless of any investigation made by the Lender or on its behalf and
notwithstanding that the Lender may have had notice or knowledge of any Default
at the time of any Credit Extension, and shall continue in full force and effect
as long as any Loan or any other Obligation hereunder shall remain unpaid or
unsatisfied or the Chicago Guaranty shall remain outstanding.
11.14 Severability. If any provision of this Credit 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 Credit
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.
11.15 Governing Law.
(a) THIS CREDIT AGREEMENT AND EACH OTHER LOAN DOCUMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK AND, TO
THE EXTENT APPLICABLE, THE BANKRUPTCY CODE.
(b) EACH PARTY TO THIS CREDIT AGREEMENT HEREBY IRREVOCABLY AND
UNCONDITIONALLY SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS CREDIT AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS,
OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE
JURISDICTION OF THE BANKRUPTCY COURT. THE BORROWER AND THE LENDER IRREVOCABLY
WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON
THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY LOAN
DOCUMENT OR OTHER DOCUMENT RELATED THERETO. THE BORROWER AND THE LENDER WAIVES
PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE
BY ANY OTHER MEANS PERMITTED BY APPLICABLE LAW.
11.16 Waiver of Right to Trial by Jury. EACH PARTY TO THIS CREDIT AGREEMENT
HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION
OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM
82
WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH
CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT
OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY, AND THAT ANY PARTY TO THIS CREDIT AGREEMENT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
11.17 Binding Effect. This Credit Agreement shall become effective when it
shall have been executed by the Borrower and the Lender and thereafter shall be
binding upon and inure to the benefit of the Borrower, and the Lender and their
respective successors and assigns, except that the Borrower shall not have the
right to assign its rights hereunder or any interest herein without the prior
written consent of the Lender.
[signatures on following pages]
83
IN WITNESS WHEREOF, the parties hereto have caused this Credit
Agreement to be duly executed as of the date first above written.
LENDER:
SOUTHWEST AIRLINES CO., a Texas corporation
By: /s/ Gary C. Kelly
Name: Gary C. Kelly
Title: Chief Executive Officer
Address: 2702 Love Field Drive
Dallas, Texas 75235
Facsimile: (214) 792-5151
Attention: Deborah Ackerman, Esq.
BORROWER:
ATA AIRLINES, INC., an Indiana corporation
By: /s/ Gilbert F. Viets
Name: Gilbert F. Viets
Title: Executive Vice President and
Chief Restructuring Officer
Address: 7337 W. Washington Street
Indianapolis, Indiana 46231-1328
Facsimile: (317) 282-7091
Tax ID: 35-1305077
Jurisdiction of Incorporation: Indiana
GUARANTORS:
ATA HOLDINGS CORP., an Indiana corporation
By: /s/ Gilbert F. Viets
Name: Gilbert F. Viets
Title: Executive Vice President and
Chief Restructuring Officer
Address: 7337 W. Washington Street
Indianapolis, Indiana 46231-1328
Facsimile: (317) 282-7091
Tax ID: 35-1617970
Jurisdiction of Incorporation: Indiana
84
AMBASSADAIR TRAVEL CLUB, INC., an Indiana corporation
By: /s/ Gilbert F. Viets
Name: Gilbert F. Viets
Title: Executive Vice President and
Chief Restructuring Officer
Address: 7337 W. Washington Street
Indianapolis, Indiana 46231-1328
Facsimile: (317) 282-7091
Tax ID: 35-1543699
Jurisdiction of Incorporation: Indiana
ATA LEISURE CORP., an Indiana corporation
By: /s/ Gilbert F. Viets
Name: Gilbert F. Viets
Title: Executive Vice President and
Chief Restructuring Officer
Address: 7337 W. Washington Street
Indianapolis, Indiana 46231-1328
Facsimile: (317) 282-7091
Tax ID: 35-1707490
Jurisdiction of Incorporation: Indiana
AMBER TRAVEL, INC., an Indiana corporation
By: /s/ Gilbert F. Viets
Name: Gilbert F. Viets
Title: Executive Vice President and
Chief Restructuring Officer
Address: 7337 W. Washington Street
Indianapolis, Indiana 46231-1328
Facsimile: (317) 282-7091
Tax ID: 35-1764784
Jurisdiction of Incorporation: Indiana
85
AMERICAN TRANS AIR EXECUJET, INC.,
an Indiana corporation
By: /s/ Gilbert F. Viets
Name: Gilbert F. Viets
Title: Executive Vice President and
Chief Restructuring Officer
Address: 7337 W. Washington Street
Indianapolis, Indiana 46231-1328
Facsimile: (317) 282-7091
Tax ID: 35-1768031
Jurisdiction of Incorporation: Indiana
ATA CARGO, INC., a California corporation
By: /s/ Gilbert F. Viets
Name: Gilbert F. Viets
Title: Executive Vice President and
Chief Restructuring Officer
Address: 7337 W. Washington Street
Indianapolis, Indiana 46231-1328
Facsimile: (317) 282-7091
Tax ID: 35-1829498
Jurisdiction of Incorporation: California
CHICAGO EXPRESS AIRLINES, INC., a Georgia corporation
By: /s/ Gilbert F. Viets
Name: Gilbert F. Viets
Title: Executive Vice President and
Chief Restructuring Officer
Address: 7337 W. Washington Street
Indianapolis, Indiana 46231-1328
Facsimile: (317) 282-7091
Tax ID: 58-2036179
Jurisdiction of Incorporation: Georgia
86
EXHIBIT A
FORM OF TERM NOTE
$40,000,000.00
December 22, 2004
FOR VALUE RECEIVED, ATA AIRLINES INC., an Indiana corporation (the
"Borrower") promises to pay to the order of SOUTHWEST AIRLINES CO., a Texas
corporation ("Payee") (i) the principal amount of Forty Million AND NO/100THS
DOLLARS ($40,000,000.00) plus (ii) the full amount of the accrued and unpaid
Closing Fee.
Borrower also promises to pay interest on the unpaid principal amount
hereof, from the date hereof until paid in full, at the rates and at the times
that shall be determined in accordance with the provisions of that certain
Secured Debtor-in Possession Credit and Security Agreement dated as of the date
hereof, as the same may be amended, supplemented, restated, amended and
restated, or otherwise modified from time to time (the "Credit Agreement"), by
and among Borrower, Borrower's Parent and its Subsidiaries as Guarantors, and
Payee, as lender. Capitalized terms used but not defined herein shall have the
meanings assigned to such terms in the Credit Agreement.
Except as provided below, Borrower shall make principal payment on this
Term Note, together with all accrued and unpaid interest and fees in the manner
set forth in Section 2.03(a) of the Credit Agreement.
This Term Note is issued pursuant to and entitled to the benefits of the
Credit Agreement, to which reference is hereby made for a more complete
statement of the terms and conditions under which the Term Loan evidenced hereby
were made and are to be repaid.
All payments of principal and interest of this Term Note and any fees
hereunder shall be made in lawful money of the United States of America in same
day funds at the office of the Payee at 2702 Love Field Drive, Dallas, Texas or
at such other place as shall be designated in writing for such purpose in
accordance with the terms of the Credit Agreement.
Whenever any payment on this Term Note shall be stated to be due on a day
that is not a Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in the computation of
the payment of interest on this Term Note.
This Term Note is subject to mandatory prepayment as provided in Section
2.02(b) of the Credit Agreement and to prepayment at the option of the Borrower
as provided in Section 2.02(a) of the Credit Agreement.
1
THIS TERM NOTE AND THE RIGHTS AND OBLIGATIONS OF BORROWER AND PAYEE
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT
LIMITATION SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE
STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS-OF-LAWS PRINCIPLES.
Upon the occurrence and during the continuation of an Event of Default, the
unpaid balance of the principal amount of this Term Note, together with all
accrued and unpaid interest thereon, may become, or may be declared to be, due
and payable in the manner, upon the conditions, and with the effect provided in
the Credit Agreement.
The terms of this Term Note are subject to amendment only in the manner
provided in the Credit Agreement.
This Term Note is guaranteed pursuant to the provisions of the Credit
Agreement and is also secured by the other Collateral Documents, as more fully
set forth in the Credit Agreement.
No reference herein to the Credit Agreement and no provision of this Term
Note or the Credit Agreement shall alter or impair the obligations of Borrower,
which are absolute and unconditional, to pay the principal of and interest on
this Term Note at the place, at the respective times, and in the currency herein
prescribed.
Borrower promises to pay all costs and expenses, including reasonable
attorneys' fees, all as provided in Section 11.04 of the Credit Agreement,
incurred in the collection and enforcement of this Term Note. Borrower and any
endorsers of this Term Note hereby consent to renewals and extensions of time at
or after the maturity hereof, without notice, and hereby waive diligence,
presentment, protest, demand and notice of every kind and, to the full extent
permitted by law, the right to plead any statute of limitations as a defense to
any demand hereunder.
Borrower hereby waives presentment for payment, protest and demand and
notice of protest, demand, dishonor and nonpayment of this Term Note, and
expressly agrees that this Term Note, or any payment hereunder, may be extended
from time to time before, at or after maturity, without in any way affecting the
liability of the Borrower hereunder or any guarantor hereof.
Time for the performance of the Borrower's obligations under this Term Note
is of the essence.
[Remainder of Page Intentionally Left Blank]
2
IN WITNESS WHEREOF, Borrower has caused this Term Note to be duly executed
and delivered by its officer thereunto duly authorized as of the date and at the
place first written above.
BORROWER:
ATA AIRLINES INC., an Indiana corporation
By:
Name:
Title:
3
LIST OF SCHEDULES
Schedule 5.03 - Required Approvals - No exceptions
Schedule 5.08(b) - Liens on Collateral [to be provided by the Loan Parties
in accordance with Section 6.27(a)(iv) - Schedule will specify only Liens
permitted under Section 7.01 - any other Liens in this Schedule 5.08(b) will
have to be approved by the Lender in its sole discretion]
Schedule 5.08(c) - Slots [to be provided in accordance with Section
6.27(a)(iv)]
Schedule 5.08(d) - Gate Leaseholds [to be provided Loan Parties in
accordance with Section 6.27(a)(iv)]
Schedule 5.11 - Taxes - No exceptions
Schedule 5.13(a) - Subsidiaries [to be provided Loan Parties in accordance
with Section 6.27(a)(iv) - Schedule will list all Guarantors, other than the
Parent]
Schedule 5.13(b) - Investments [to be provided Loan Parties in accordance
with Section 6.27(a)(iv)]
Schedule 5.17 - Intellectual Property - No exceptions
Schedule 5.21 - Pledge of Equity; Pledge of Debt [to be provided Loan
Parties in accordance with Section 6.27(a)(iv)]
LIST OF ANNEXES
Annex A - Exit Facility Term Sheet (appended to the execution copy)
Annex B- Investment Agreement Term Sheet (appended to the execution copy)