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EXECUTION COPY
Exhibit 10.40
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LOAN AGREEMENT
(Direct Loans)
(CH-282SK)
between
CHAUTAUQUA AIRLINES, INC.
and
AGENCIA ESPECIAL DE FINANCIAMENTO INDUSTRIAL - FINAME
Dated as of December 27, 2001
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Certain portions of this exhibit have been omitted pursuant to a request for
confidential treatment under Rule 406 of the Securities Act of 1933. The
omitted materials have been filed separately with the Securities and Exchange
Commission.
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TABLE OF CONTENTS
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PAGE
SECTION 1. DEFINITIONS.....................................................................1
1.1 Definitional Provisions.........................................................1
1.2 Bankruptcy Default..............................................................2
SECTION 2. AMOUNT AND TERMS OF LOAN........................................................2
2.1 Procedure for Borrowing.........................................................2
2.2 Terms of Repayment of the Loan; Interest; Evidence of Debt......................2
2.3 Mutilated, Destroyed, Lost or Stolen Notes......................................4
2.4 Optional Prepayments............................................................4
2.5 Mandatory Prepayment............................................................4
2.6 Taxes...........................................................................5
2.7.1 Certain Tax Related Agreements.................................................14
2.7.2 Increased Costs................................................................14
2.8 Termination of Security Agreement..............................................15
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE BORROWER.................................15
3.1 Corporate Existence; Compliance with Law.......................................15
3.2 Corporate Authorization........................................................15
3.3 No Violation...................................................................15
3.4 Approvals......................................................................15
3.5 Valid and Binding Agreements...................................................16
3.6 Litigation.....................................................................16
3.7 Financial Condition............................................................16
3.8 Chief Executive Office.........................................................16
3.9 No Default.....................................................................16
3.10 No Event of Loss...............................................................16
3.11 Compliance With Laws...........................................................16
3.12 Title; Security Agreement......................................................17
3.13 Section 1110...................................................................17
3.14 No Withholding.................................................................17
3.15 ERISA..........................................................................17
3.16 Broker's Fees..................................................................17
SECTION 4. CONDITIONS PRECEDENT TO THE LENDER'S OBLIGATIONS...............................17
4.1 Operative Agreements, etc......................................................18
4.2 Recordation and Filing.........................................................18
4.3 Closing Certificates...........................................................18
4.4 Legal Opinions.................................................................19
4.5 Insurance......................................................................20
4.6 Violation of Law...............................................................20
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4.7 Representations and Warranties of the Borrower.................................20
4.8 No Termination of Commitments..................................................20
4.9 Purchase Agreement Amendments..................................................20
4.10 Acceptance of Aircraft.........................................................20
4.11 Section 1110...................................................................21
4.12 No Default; No Event of Loss; No Other Defaults................................21
4.13 Title..........................................................................21
4.14 Security Trustee Certificate...................................................21
4.15 Airworthiness; Type............................................................21
4.16 Aircraft Price; Manufacturer's Invoice.........................................21
4.17 No Material Adverse Change; Code-Share Agreements..............................21
4.18 No Proceedings.................................................................21
4.19 Governmental Action............................................................21
4.20 No Sales Tax...................................................................22
4.21 Origination Fee................................................................22
4.22 Bridge Loan Release............................................................22
SECTION 5. CONDITIONS PRECEDENT TO THE BORROWER'S OBLIGATIONS.............................22
5.1 Operative Agreements...........................................................22
5.2 Recordation....................................................................22
5.3 Registration...................................................................22
5.4 Closing Certificates...........................................................22
5.5 Legal Opinions.................................................................23
5.6 Security Trustee Certificate...................................................23
5.7 Representations and Warranties of the Lender...................................23
5.8 Agent for Service of Process...................................................23
5.9 Violation of Law...............................................................23
5.10 No Proceedings.................................................................24
5.11 Governmental Action............................................................24
5.12 Acceptance of Aircraft.........................................................24
5.13 No Event of Loss...............................................................24
SECTION 6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE LENDER........................24
6.1 Existence; Compliance with Law.................................................24
6.2 Power; Authorization; Enforceable Obligations..................................24
6.3 No Legal Bar...................................................................25
6.4 No Immunities..................................................................25
6.5 Quiet Enjoyment................................................................25
6.6 Agreement Regarding Engines....................................................25
6.7 ERISA..........................................................................25
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SECTION 7. COVENANTS OF THE BORROWER......................................................26
7.1 Financial Statements...........................................................26
7.2 Recordation Opinion............................................................26
7.3 Perfection.....................................................................27
7.4 Conduct of Business and Maintenance of Existence...............................27
7.5 Maintenance of Process Agent...................................................27
7.6 Further Assurances.............................................................27
7.7 Consolidation and Merger.......................................................27
SECTION 8. EVENTS OF DEFAULT..............................................................30
8.1 Events of Default..............................................................30
8.2 Rescission of Acceleration.....................................................31
SECTION 9. MISCELLANEOUS..................................................................31
9.1 Amendments and Waivers.........................................................31
9.2 Notices........................................................................32
9.3 No Waiver; Cumulative Remedies.................................................33
9.4 Survival of Representations and Warranties.....................................33
9.5 Successors and Assigns.........................................................33
9.6 [omitted]......................................................................39
9.7 Contractual Currency...........................................................39
9.8 Severability...................................................................40
9.9 Integration....................................................................40
9.10 GOVERNING LAW..................................................................40
9.11 Submission to Jurisdiction; Waivers............................................40
9.12 Waiver of Immunities...........................................................41
9.13 WAIVERS OF JURY TRIAL..........................................................41
9.14 Confidentiality................................................................42
9.15 Payment of Expenses and Costs..................................................42
9.16 General Indemnity..............................................................43
9.17 Instruction to Security Trustee................................................48
9.18 Notices, Instructions, Consents, Execution and Waiver..........................48
9.19 Execution of Financing Statements..............................................48
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SCHEDULES
Schedule 1: Payment Dates and Amounts
ANNEXES
Annex A: Defined Terms
Annex B-1: Form of Note A
Annex B-2: Form of Note B
Annex C: [omitted]
Annex D-1: Form of Certificate of the Borrower as to Representations and Warranties
Annex D-2: Form of Certificate of the Lender as to Representations and Warranties
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LOAN AGREEMENT (CH-282SK), dated as of December 27, 2001, between
CHAUTAUQUA AIRLINES, INC., a New York corporation (the "BORROWER"), and AGENCIA
ESPECIAL DE FINANCIAMENTO INDUSTRIAL, a Brazilian Federal public company, with
its main offices in the City of Rio de Janeiro, State of Rio de Janeiro, at
Avenida Republica do Chile, No. 100-18 andar, registered in the General Register
of Taxpayers under the number 33.660.564/0001-00 (the "LENDER" or "FINAME").
WHEREAS, Solitair and Embraer-Empresa Brasileira de Aeronautica S.A. (the
"MANUFACTURER") have entered into the Purchase Agreement pursuant to which the
Manufacturer has agreed to manufacture and sell to Solitair, and Solitair has
agreed to purchase and take delivery, of, among other things, an EMB-145LR jet
aircraft, bearing U.S. registration No. 145409 and equipped with two Allison
AE3007A1P engines, and Solitair has assigned its rights to purchase the Aircraft
to the Borrower and the Borrower has purchased such aircraft;
WHEREAS, reference is hereby made to the recitals of the Funding Agreement
for the purposes of this Agreement; and
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
SECTION 1. DEFINITIONS
1.1 DEFINITIONAL PROVISIONS. (a) Unless otherwise specified herein or
therein, all capitalized terms used in this Agreement, the Notes or any
certificate or other document made or delivered pursuant hereto shall have the
meanings set forth in Annex A hereto.
(b) As used herein and in the Notes, and any certificate or other
document made or delivered pursuant hereto, accounting terms relating to the
Borrower (and its Subsidiaries, if applicable), to the extent not otherwise
defined, shall have the respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
subsection, Annex, Schedule and Exhibit references are to this Agreement unless
otherwise specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
(e) References to any Person shall include such Person's
successors and assigns subject to any limitations provided for herein or in the
other Operative Agreements.
(f) References to agreements shall include such agreements as
amended, modified or supplemented.
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1.2 BANKRUPTCY DEFAULT.
For purposes of each Operative Agreement, the occurrence and
continuance of a Bankruptcy Event shall not be deemed to prohibit the Borrower
from taking any action or exercising any right that is conditioned on no
Bankruptcy Default, Default or Event of Default having occurred and be
continuing if such Bankruptcy Default, Default or Event of Default consists of
the institution of reorganization proceedings with respect to Borrower under
Chapter 11 of the Bankruptcy Code and the trustee or debtor-in-possession in
such proceedings shall have entered into a Section 1110 Agreement and thereafter
shall have continued to perform such obligations so that it is entitled to
retain possession of the Aircraft in accordance with Section 1110.
SECTION 2. AMOUNT AND TERMS OF LOAN
2.1 [*]
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2.3 MUTILATED, DESTROYED, LOST OR STOLEN NOTES. If a Note becomes
mutilated, destroyed, lost or stolen, the Borrower shall, upon the written
request of the Lender, execute and deliver in replacement thereof, a new Note,
in the same principal amount, dated the date of the Note being replaced and
designated as issued under this Agreement and the Security Agreement. If the
Note being replaced has become mutilated, such Note shall be surrendered to the
Borrower. If the Note being replaced has been destroyed, lost or stolen, the
Lender shall furnish to the Borrower and the Security Trustee such security or
indemnity as may be required by the Borrower or the Security Trustee to save the
Borrower harmless and evidence satisfactory to the Borrower and the Security
Trustee of the destruction, loss or theft of such Note.
2.4 OPTIONAL PREPAYMENTS. The Borrower may, at any time, prepay the
Loan, in whole (but not in part, except as permitted in the Security Agreement,
as agreed in any Operative Agreement or as otherwise agreed by the Lender),
without premium or penalty, upon at least 30 days' revocable written notice to
the Lender and the Security Trustee specifying the date of such prepayment. If
any such notice is given, an amount equal to (i) the outstanding principal
amount of the Loan plus (ii) interest accrued on such amount to the date of
prepayment shall be due and payable on the date specified therein (subject, in
the case of Loan B, to Section 2.2(h)).
2.5 MANDATORY PREPAYMENT. The Loan shall be prepaid by the Borrower
(subject, in the case of Loan B, to Section 2.2(h)) in whole (but not in part)
without premium or penalty, at a prepayment price equal to the outstanding
principal amount of the Loan plus interest accrued thereon to the date of
prepayment (x) in connection with an Event of Loss with respect to the Airframe
(unless pursuant to Section 3.4(c) of the Security Agreement a Replacement
Aircraft or Replacement Airframe shall have been substituted for the Airframe
subject to such Event of
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Loss) on the Loss Payment Date and (y) on such other date on which a sale of the
Aircraft occurs which sale is permitted by the terms of an Operative Agreement.
Amounts prepaid pursuant to this Section 2.5 may not be reborrowed.
2.6 TAXES
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2.7 2. INCREASED COSTS. If (1) the adoption, after the date hereof, of
any applicable Law, rule or regulation regarding capital adequacy, (2) any
change, after the date hereof, in the interpretation or administration of any
such law, rule or regulation by any central bank or other Government Entity
charged with the interpretation or administration thereof or (3) compliance by a
Lender or any corporation or bank controlling a Lender with any applicable
guidelines or requests of general applicability, issued after the date hereof,
by any central bank or other Government Entity (whether or not having the force
of law) that constitutes a change of the nature described in clause (2), has the
effect of (x) requiring an increase in the amount of capital required to be
maintained by a Lender or any corporation or bank controlling a Lender or (y)
reducing the rate of return on assets or capital of such Lender (or such
corporation or bank) and such adoption, change or compliance, as the case may
be, relates to a category of claims or assets that includes such Lender's Loans,
the Borrower shall pay to such Lender from time to time such additional amount
or amounts as are necessary to compensate such Lender for such portion of such
increase or reduction as shall be reasonably allocable to such Lender's Loans or
obligations to the Borrower hereunder; PROVIDED, that no such amounts shall be
payable by the Borrower to any Lender pursuant to this Section unless such
Lender certifies to the Borrower that, such Lender is assessing to its other
borrowers (of loans similar to the Loans) comparable allocable costs, PROVIDED,
FURTHER, that the Borrower shall have no obligations under this Section after
consummation of any Assignment of the Loans, in whole or in part, except with
respect to any part retained by a Brazilian Lender.
Each Lender will notify the Borrower of any event occurring after the
date of this Agreement that will entitle such Lender to compensation pursuant to
this Section as promptly as practicable but in any event within 90 days, after
such Lender obtains Actual Knowledge thereof; PROVIDED, HOWEVER, that if any
Lender fails to give such notice within 90 days after it obtains Actual
Knowledge of such an event, such Lender shall, with respect to compensation
payable pursuant to this Section in respect of any costs resulting from such
event, be entitled to payment under this Section only for costs incurred from
and after the date 90 days prior to the date that such Lender does give such
notice. Such notice shall describe in reasonable detail the calculation of the
amounts owed under this Section. Determinations by a Lender for purposes of this
Section of the effect of any increase in the amount of capital required to be
maintained by the bank and of the amount allocable to such Lender's obligations
to the Borrower hereunder shall be PRIMA FACIE evidence of the amounts owed
under this Section.
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2.8 TERMINATION OF SECURITY AGREEMENT. Upon payment in full of the
principal of, and interest on, the Note A and all other amounts then due and
owing under any Operative Agreement (excluding amounts with respect to the Loan
B), the Lender shall direct the Security Trustee to release the Collateral from
the Lien of the Security Agreement pursuant to Section 11.1 of the Security
Agreement.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE BORROWER
To induce the Lender to enter into this Agreement and to make the Loan, the
Borrower hereby represents and warrants to the Lender that:
3.1 CORPORATE EXISTENCE; COMPLIANCE WITH LAW. Borrower is a
corporation duly incorporated, validly existing and in good standing under the
Laws of the State of New York and has the corporate power and authority to
conduct the business in which it is currently engaged and to own or hold under
lease its properties and to enter into and perform its obligations under the
Operative Agreements to which it is a party. Borrower is duly qualified to do
business as a foreign corporation in good standing in each jurisdiction in which
the nature and extent of the business conducted by it, or the ownership of its
properties, requires such qualification, except where the failure to be so
qualified would not give rise to a Material Change to it.
3.2 CORPORATE AUTHORIZATION. Borrower has taken, or caused to be
taken, all necessary corporate action to authorize the execution and delivery of
the Operative Agreements and the performance of its obligations thereunder.
3.3 NO VIOLATION. The execution and delivery by Borrower of the
Operative Agreements to which it is a party, the performance by Borrower of its
obligations thereunder and the consummation by Borrower on the Borrowing Date of
the transactions contemplated thereby, do not and will not (a) violate any
provision of its Certificate of Incorporation or By-Laws, (b) violate any Law
applicable to or binding on Borrower or (c) violate or constitute any default
under (other than any violation or default that would not result in a Material
Change to it), or result in the creation of any Lien (other than as permitted
under the Security Agreement) upon the Aircraft or the other Collateral under,
any indenture, mortgage, chattel mortgage, deed of trust, conditional sales
contract, lease, loan or other material agreement, instrument or document to
which Borrower is a party or by which Borrower or any of its properties is
bound.
3.4 APPROVALS. The execution and delivery by Borrower of the Operative
Agreements to which it is a party, the performance by Borrower of its
obligations thereunder and the consummation by Borrower on the Borrowing Date of
the transactions contemplated thereby do not and will not require the consent or
approval of, or the giving of notice to, or the registration with, or the
recording or filing of any documents with, or the taking of any other action in
respect of, (a) any trustee or other holder of any Debt of Borrower and (b) any
Government Entity, other than the filings and recordings referred to in Section
3.12 (and Uniform Commercial Code continuation statements periodically) and (y)
filings, recordings, notices or other ministerial actions pursuant to any
routine recording, contractual or regulatory requirements applicable to
Borrower.
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3.5 VALID AND BINDING AGREEMENTS. The Operative Agreements to which it
is a party have been duly authorized, executed and delivered by Borrower and,
assuming the due authorization, execution and delivery thereof by the other
party or parties thereto, constitute the legal, valid and binding obligations of
the Borrower and are enforceable against Borrower in accordance with the
respective terms thereof, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, receivership, moratorium and other
similar Laws affecting the rights of creditors generally and general principles
of equity, whether considered in a proceeding at law or in equity.
3.6 LITIGATION. Except as disclosed in the financial statements
referred to in Section 3.7, no action, claim or proceeding is now pending or, to
the Actual Knowledge of Borrower, threatened, against Borrower, before any
court, governmental body, arbitration board, tribunal or administrative agency,
which is reasonably likely to be determined adversely to Borrower and if
determined adversely to Borrower would result in a Material Change to Borrower.
3.7 FINANCIAL CONDITION. The audited balance sheet of Borrower as of
December 31, 2000, and the related statements of operations and cash flows for
the period ended have been prepared in accordance with GAAP and fairly present
in all material respects the financial condition of Borrower as of such date and
the results of its operations and cash flows for such period, and since the date
of such balance sheet, there has been no Material Change to the Borrower.
3.8 CHIEF EXECUTIVE OFFICE. The chief executive office (as such term
is defined in Article 9 of the UCC) of Borrower is
located at 2500 S. High School Road, Indianapolis, Indiana.
3.9 NO DEFAULT. No event which constitutes a Default or an Event of
Default has occurred and is continuing.
3.10 NO EVENT OF LOSS. No Event of Loss has occurred with respect to
the Airframe or any Engine, and, to the Actual Knowledge of the Borrower, no
circumstance, condition, act or event has occurred that, with the giving of
notice of lapse of time or both gives rise to or constitutes an Event of Loss
with respect to the Airframe or any Engine.
3.11 COMPLIANCE WITH LAWS. (a) Borrower is a Citizen of the United
States, a U.S. Air Carrier, and a Section 1110 Air Carrier.
(b) Borrower holds all licenses, permits and franchises from the
appropriate Government Entities necessary to authorize it to lawfully engage in
air transportation and to carry on scheduled commercial passenger service as
currently conducted, except where the failure to so hold any such license,
permit or franchise would not give rise to a Material Change to it.
(c) Borrower is not an "investment company" or a company
controlled by an "investment company" required to be registered under the
Investment Company Act of 1940, as amended.
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3.12 TITLE; SECURITY AGREEMENT. Except for (a) the registration of the
Aircraft with the FAA pursuant to the Federal Aviation Code, (b) the filing for
recordation (and recordation) pursuant to the Federal Aviation Code of the FAA
Bill of Sale and the Security Agreement (with the Security Agreement Supplement
covering the Aircraft attached) and the Bridge Loan Release, (c) the filing of a
financing statement in respect of such security interest under Article 9 of the
Uniform Commercial Code as in effect in the State of New York and the filing of
continuation statements with respect thereto under such Uniform Commercial Code
and the filing of termination statements relating to the UCC financing
statements for the Bridge Loan, (d) the affixation of the nameplates referred to
in Section 3.3(c) of the Security Agreement, no further filing or recording of
any document (including, without limitation, any financing statement in respect
thereof under Article 9 of the Uniform Commercial Code of any applicable
jurisdiction) is necessary under the laws of the United States or any State
thereof as of the Borrowing Date in order to establish and perfect the security
interest in the Aircraft created under the Security Agreement in favor of the
Security Trustee as against the Borrower and any third parties in any applicable
jurisdiction in the United States. On the Borrowing Date, the Security Agreement
will have created in favor of the Lender a valid and duly perfected security
interest in the Aircraft and the other Collateral, subject to no Liens other
than Permitted Liens.
3.13 SECTION 1110. The Security Trustee, on behalf of the Lender, is
entitled to the benefits of Section 1110 (as currently in effect) including to
the right to take possession of the Airframe and Engines in compliance with the
Security Agreement in the event of a case under Chapter 11 of the Bankruptcy
Code in which the Borrower is a debtor.
3.14 NO WITHHOLDING. Absent a Change in U.S. Tax Law, or being
requested to do so by any appropriate Governmental Entity, and subject to the
receipt of an IRS Form W-8EXP, the Borrower has no present intention to withhold
(or cause to be withheld) Taxes on payments of interest on the Loan A.
3.15 ERISA. (a) No condition exists with respect to any Plan
maintained, sponsored or contributed (or required to be contributed) to by
Borrower or any Commonly Controlled Entity which could result in a Material
Change to Borrower.
(b) No part of the funds to be used by the Borrower in connection
with any payment under the Operative Agreements directly or indirectly
constitutes assets of a Plan.
3.16 BROKER'S FEES. No Person acting on behalf of the Borrower is or
will be entitled to any broker's fee, commission or finder's fee in connection
with the transactions contemplated by this Agreement and the other Operative
Agreements (other than The Seabury Group LLC).
SECTION 4. CONDITIONS PRECEDENT TO THE LENDER'S OBLIGATIONS
The agreement of the Lender to make the Loan requested to be made by it to
the Borrower on the Borrowing Date is subject to the satisfaction, or waiver by
the Lender, of the following conditions precedent prior to or concurrently with
the making of the Loan:
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4.1 OPERATIVE AGREEMENTS, ETC. On or before the Borrowing Date, the
Lender shall have received (a) an originally executed copy, duly authorized and
delivered by the respective party or parties thereto (other than the Lender), of
(i) this Agreement and the Security Agreement and Security Agreement Supplement
No. 1 each covering the Aircraft, and (ii) the Notes to evidence the Loan
conforming to the requirements hereof, (b) a copy, certified by the Manufacturer
of any amendments to the Purchase Agreement since the date of the Funding
Agreement that have not previously been delivered to Lender, except for any
amendments which are not requested by Lender after being informed of their
substance, and (c) a copy of (i) the FAA Bill of Sale and the Warranty Bill of
Sale, (ii) the FAA Application for Aircraft Registration covering the Aircraft,
(iii) the Purchase Agreement Assignment, (iv) the Engine Warranty Agreement, and
(v) the Airframe Warranty Agreement.
4.2 RECORDATION AND FILING. The Security Agreement, Security Agreement
Supplement No.1, and the FAA Bill of Sale relating to the Aircraft will have
been duly filed for recordation (or shall be in the process of being so duly
filed) pursuant to and in accordance with the Federal Aviation Code. Application
for registration of the Aircraft in the name of the Borrower shall have been
duly made with the FAA. A Uniform Commercial Code financing statement or
statements covering the security interest created by the Security Agreement
shall have been executed and delivered by the Borrower, as debtor, and by the
Security Trustee, as secured party, and such financing statement or statements
shall have been duly filed in all places necessary within the State of New York
(and all other applicable jurisdictions, if any) (and evidence thereof,
reasonably satisfactory to the Lender, shall have been provided to the Lender).
On the Borrowing Date, the Aircraft shall have been duly certified as to
airworthiness by the Brazilian aviation authority.
4.3 CLOSING CERTIFICATES. The Lender shall have received executed
counterparts of the following instruments, certificates or documents, and such
counterparts (i) shall have been duly authorized, executed and delivered by the
respective party or parties thereto, (ii) shall be reasonably satisfactory in
form and substance to the Lender and (iii) shall be in full force and effect:
(a) an Officer's Certificate of the Borrower, dated as of the
Borrowing Date, stating that: (i) its representations and warranties contained
in Section 3 are true and accurate on and as of the Borrowing Date (unless such
representation and warranty shall have been made with reference to a specified
date, in which case such representation and warranty shall be true and accurate
as of such specified date); (ii) all covenants and conditions required to be
performed or fulfilled by it prior to or on the Borrowing Date have been
performed or fulfilled; (iii) as of the Borrowing Date, both before and after
giving effect to the transactions contemplated by this Agreement, no Event of
Default shall have occurred and be continuing; (iv) absent a Change in U.S. Tax
Law, or being requested to do so by any appropriate Governmental Entity, and
subject to the receipt of an IRS form W8-EXP, and subject to Section 2.7.1
hereof, the Borrower has no present intention to withhold (or cause to be
withheld) Taxes on payments of interest on the Loan A; and (v) no event has
occurred and is continuing that constitutes a Material Adverse Change with
respect to the Borrower;
(b) a certificate of the Secretary or an Assistant Secretary of
the Borrower, dated as of the Borrowing Date, (A) stating that the copy of the
resolutions of the Board of
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Directors of the Borrower (attached to the certificate) authorizing the
execution, delivery and performance of this Agreement and the other Operative
Agreements to which the Borrower is a party or will be a party as contemplated
by this Agreement is true and accurate, and that the resolutions thereby
certified have not been amended, modified, revoked or rescinded; (B) stating
that the copies of the certificate of incorporation and by-laws of the Borrower
(which are attached to the certificate), are true and complete copies thereof,
(C) stating that the copy of the long-form good standing certificate (attached
to the certificate and certified as of a recent date by the Secretary of State
of the Borrower's jurisdiction of incorporation) is a true and complete copy
thereof, and (D) certifying to the incumbency and signature of the officers of
the Borrower executing this Agreement;
(c) a certificate of the Secretary or an Assistant Secretary of
the Borrower, dated as of the Borrowing Date that certifies to the following:
(A)(i) that attached to the certificate are accurate and true copies of each
Code-Share Agreement and amendment to a Code-Share Agreement entered into by the
Borrower since the most recent advance of a Direct Loan under the Funding
Agreement or, if no Direct Loan has been advanced under the Funding Agreement,
since the Financial Closing Date (as defined in the Funding Agreement), or (ii)
that Borrower has not entered into any Code-Share Agreement or amendment to a
Code-Share Agreement since the most recent advance of a Direct Loan under the
Funding Agreement or, if no Direct Loan has been advanced under the Funding
Agreement, since such Financial Closing Date, and (B) listing all Code-Share
Agreements which are in effect and further indicating any Code-Share Agreement
which is in effect but not listed in Schedule III to the Funding Agreement as
well as any Code-Share Agreement which is listed in Schedule III to the Funding
Agreement but has terminated;
(d) a certificate of the Manufacturer, representing and
warranting to and for the benefit of the Borrower, the Lender and Security
Trustee that title to the Aircraft, free and clear of all Liens arising from,
through or under the Manufacturer, has been conveyed to the Borrower pursuant to
the Warranty Bill of Sale, and agreeing to defend such title forever against the
claims and demands of all Persons; and
(e) the certificate of the Borrower referred to in Section 5.3 of
the Funding Agreement.
4.4 LEGAL OPINIONS. The Lender and the Security Trustee shall have
received the following executed legal opinions in each case in form and
substance satisfactory to them:
(a) the executed legal opinion of Inside Counsel to Borrower;
(b) the executed legal opinion of Hughes Hubbard & Reed LLP,
special counsel for Borrower ;
(c) the executed legal opinion of Daugherty, Fowler, Peregin &
Haught, P.C.;
(d) the executed legal opinion of Simpson Thacher & Bartlett,
special counsel to the Lender;
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(e) the executed legal opinion of Pinheiro Neto, Advogados,
counsel to the Lender;
(f) the executed legal opinion of special counsel to the Security
Trustee; and
(g) the executed legal opinion of counsel to Manufacturer.
4.5 INSURANCE. The Lender shall have received an independent insurance
broker's report and the related certificate of insurance in form and substance
reasonably satisfactory to it that all requirements of Section 3.3(k) of the
Security Agreement shall have been satisfied.
4.6 VIOLATION OF LAW. No change shall have occurred after the date of
this Agreement in any applicable Law that makes it a violation of Law for any
party to this Agreement to execute, deliver and perform this Agreement and any
other Operative Agreements to which any of them is a party.
4.7 REPRESENTATIONS AND WARRANTIES OF THE BORROWER. The
representations and warranties of the Borrower made, in each case, in this
Agreement and in any other Operative Agreements to which it is a party, shall be
true and accurate in all material respects as of the Borrowing Date (unless such
representation and warranty shall have been made with reference to a specified
date, in which case such representation and warranty shall be true and accurate
as of such specified date) and the Borrower shall have performed and observed,
in all material respects, all of its covenants, obligations and agreements in
this Agreement and in any other Operative Agreements to which it is a party to
be observed or performed by it as of the Borrowing Date.
4.8 NO TERMINATION OF COMMITMENTS. No Commitment Termination Event (as
defined in the Funding Agreement) shall have occurred and be continuing.
4.9 PURCHASE AGREEMENT AMENDMENTS. The Lender shall be satisfied that
none of the amendments to the Purchase Agreement delivered pursuant to Section
4.1 could reasonably be expected to result in any material increase in the
Lender's obligations or material diminution in the Lender's rights hereunder or
under any other Operative Agreements.
4.10 ACCEPTANCE OF AIRCRAFT. (a) The Manufacturer shall have delivered
the Aircraft under the Purchase Agreement, the Aircraft shall have been
unconditionally and irrevocably accepted by or on behalf of the purchaser or its
assignee under the Purchase Agreement in Fly-Away-Factory Condition, and copies
of the acceptance certificate evidencing such delivery and acceptance, shall
have been furnished to the Lender.
(b) In connection with such delivery and acceptance the Lender
shall have received by 7:00 p.m. Rio de Janeiro time on the first day prior to
the Closing a copy of the printout of the screen of the Register of Credit
Operation - RC, and of the Register of Export - RE, both obtained through the
SISCOMEX (Bureau of Foreign Trade) System, evidencing the authorization for
export of the Aircraft, and indicating the Lender as lender/creditor under this
Agreement.
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4.11 SECTION 1110. The Lender is entitled to the benefits of Section
1110 (as currently in effect) with respect to the right to take possession of
the Airframe and Engines in the event of a case under Chapter 11 of the
Bankruptcy Code in which the Borrower is a debtor.
4.12 NO DEFAULT; NO EVENT OF LOSS; NO OTHER DEFAULTS. (a) No Default
or Event of Default shall have occurred and be continuing.
(b) No Event of Loss shall have occurred.
(c) The Borrower shall not be in payment default or other
material default under any loan or lease made under the Funding Agreement or in
any other agreement with the Lender or BNDES.
4.13 TITLE. The Borrower shall hold title to the Aircraft, free and
clear of all Liens, other than Permitted Liens.
4.14 SECURITY TRUSTEE CERTIFICATE. The Lender shall have received a
certificate from the Security Trustee dated the Borrowing Date signed by an
authorized officer of the Security Trustee certifying that no Security Trustee
Liens exist and further certifying as to the correctness of the matters stated
in Section 7.3 of the Security Agreement.
4.15 AIRWORTHINESS; TYPE. (a) The Borrower shall have received an FAA
certificate of airworthiness for any jet aircraft financed pursuant to the
Funding Agreement 30 or more days prior to the Borrowing Date. Such certificate
shall be delivered by the later of (i) the Borrowing Date and (ii) 30 days after
the import of such aircraft into the United States.
(b) The Lender shall have received evidence that the Aircraft has
been certified as to type by the FAA.
4.16 AIRCRAFT PRICE; MANUFACTURER'S INVOICE. (a) The principal amount
of the Loan shall not exceed the amount permitted by Section 2.1 of the Funding
Agreement.
(b) The Lender shall have received a copy (certified as to
accuracy by the Manufacturer) of the Manufacturer's Invoice for the Aircraft.
4.17 NO MATERIAL ADVERSE CHANGE; CODE-SHARE AGREEMENTS. On the
Borrowing Date, no Material Adverse Change shall have occurred with respect to
the Borrower (including, without limitation, with respect to Code-Share
Agreements).
4.18 NO PROCEEDINGS. No action or proceeding shall have been
instituted, nor shall any action be threatened in writing, before any Government
Entity, nor shall any order, judgment or decree have been issued or proposed to
be issued by any Government Entity, to set aside, restrain, enjoin or prevent
the completion and consummation of this Agreement or any other Operative
Agreement or the transactions contemplated hereby or thereby.
4.19 GOVERNMENTAL ACTION. All appropriate action required to have been
taken prior to the Borrowing Date by the FAA or any other Government Entity of
the United States or Brazil, in connection with the transactions contemplated by
this Agreement shall have been
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taken, and all orders, permits, waivers, authorizations, exemptions and
approvals of such Government Entities required to be in effect on the Borrowing
Date in connection with the transactions contemplated by this Agreement shall
have been issued.
4.20 NO SALES TAX. The Lender shall be satisfied that no sales, use,
value added, goods, services or like Tax, and no stamp duty, is payable with
respect to the delivery of any Aircraft to the Borrower either on the Date of
Actual Delivery or, if different, on the Borrowing Date.
4.21 ORIGINATION FEE. The Borrower shall have paid to the Lender the
Origination Fee.
4.22 BRIDGE LOAN RELEASE. The Lender shall have received the Bridge
Loan Release, in form and substance satisfactory to it, and related UCC
termination statements.
SECTION 5. CONDITIONS PRECEDENT TO THE BORROWER'S OBLIGATIONS
The agreement of the Borrower to borrow the amount of the Loan from the
Lender is subject to the satisfaction, or waiver by the Borrower, on or prior to
the Borrowing Date of the following conditions precedent prior to or
concurrently with the making of the Loan (such satisfaction or waiver to be
evidenced by the Borrower's execution and delivery of the Notes):
5.1 OPERATIVE AGREEMENTS. On or before the Borrowing Date, the
Borrower shall have received an originally executed copy, duly authorized,
executed and delivered by the respective party or parties thereto (other than
the Borrower) of (i) this Agreement, (ii) the Security Agreement and Security
Agreement Supplement No.1 covering the Aircraft, (iii) FAA Bill of Sale, (iv)
the Warranty Bill of Sale, (v) the Purchase Agreement Assignment, (vi) the
Engine Warranty Agreement, (vii) the Airframe Warranty Agreement, and (viii)
each other Operative Agreement, if any.
5.2 RECORDATION. The FAA Bill of Sale, the Security Agreement and
Security Agreement Supplement No. 1 covering the Aircraft shall have been duly
filed for recordation (or shall be in the process of being so duly filed for
recordation) with the FAA pursuant to the Federal Aviation Code.
5.3 REGISTRATION. Application for registration of the Aircraft in the
name of the Borrower shall have been duly made with the FAA.
5.4 CLOSING CERTIFICATES. The Borrower shall have received executed
counterparts of the following instruments, certificates or documents, and such
counterparts (i) shall have been duly authorized, executed and delivered by the
respective party or parties thereto, (ii) shall be reasonably satisfactory in
form and substance to the Borrower and (iii) shall be in full force and effect:
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(1) an Officer's Certificate of the Lender, dated as of the
Borrowing Date, stating that its representations and warranties
contained in Section 6 are true and accurate on and as of the
Borrowing Date and (ii) all covenants and conditions required to be
performed or fulfilled by it prior to or on the Borrowing Date have
been performed or fulfilled; and
(2) a certificate of the Secretary or an Assistant or Attesting
Secretary (or the equivalent) of the Lender, dated as of the Borrowing
Date, (A) stating that the copy of the resolutions of the Board of
Directors of the Lender (attached to the certificate) authorizing the
execution, delivery and performance of this Agreement and the other
Operative Agreements to which the Lender is a party or will be a party
as contemplated by this Agreement is true and accurate, and that the
resolutions thereby certified have not been amended, modified, revoked
or rescinded and (B) certifying to the incumbency and signature of the
officers of the Lender executing this Agreement.
5.5 LEGAL OPINIONS. The Borrower shall have received (a) the executed
legal opinion of special FAA counsel in Oklahoma City, Oklahoma, in form and
substance satisfactory to it, and (b) the executed legal opinion of special
counsel to the Security Trustee, in form and substance satisfactory to it, each
addressed to the Borrower or accompanied by a letter from the counsel rendering
such opinion authorizing the Borrower to rely on such opinion as if it were
addressed to the Borrower.
5.6 SECURITY TRUSTEE CERTIFICATE. The Borrower shall have received a
certificate from the Security Trustee, dated the Borrowing Date, signed by an
authorized officer of the Security Trustee, certifying that no Security Trustee
Liens exist, and further certifying as to the correctness of the matters stated
in Section 7.3 of the Security Agreement.
5.7 REPRESENTATIONS AND WARRANTIES OF THE LENDER. The representations
and warranties of the Lender made, in each case, in this Agreement and in any
other Operative Agreements to which it is a party, shall be true and accurate in
all material respects as of the Borrowing Date (unless such representation and
warranty shall have been made with reference to a specified date, in which case
such representation and warranty shall be true and accurate as of such specified
date) and the Lender shall have performed and observed, in all material
respects, all of its covenants, obligations and agreements in this Agreement and
in any other Operative Agreements to which it is a party to be observed or
performed by it as of the Borrowing Date.
5.8 AGENT FOR SERVICE OF PROCESS. The Borrower shall have received a
letter from National Registered Agents, Inc, substantially in the form of
Exhibit D to the Funding Agreement, confirming its agreement to act as the agent
for service of process of the Lender.
5.9 VIOLATION OF LAW. No change shall have occurred after the date of
this Agreement in any applicable Law that makes it a violation of Law for any
party to this Agreement to execute, deliver and perform this Agreement and any
other Operative Agreements to which any of them is a party.
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5.10 NO PROCEEDINGS. No action or proceeding shall have been
instituted, nor shall any action be threatened in writing, before any Government
Entity, nor shall any order, judgment or decree have been issued or proposed to
be issued by any Government Entity, to set aside, restrain, enjoin or prevent
the completion and consummation of this Agreement or any other Operative
Agreements or the transactions contemplated hereby or thereby.
5.11 GOVERNMENTAL ACTION. All appropriate action required to have been
taken prior to the Borrowing Date by the FAA or any other Government Entity of
the United States or Brazil, in connection with the transactions contemplated by
this Agreement shall have been taken, and all orders, permits, waivers,
authorizations, exemptions and approvals of such entities required to be in
effect on the Borrowing Date in connection with the transactions contemplated by
this Agreement shall have been issued.
5.12 ACCEPTANCE OF AIRCRAFT. The Manufacturer shall have delivered the
Aircraft under the Purchase Agreement and the purchaser or its assignee under
the Purchase Agreement shall have unconditionally and irrevocably accepted the
Aircraft in Fly-Away-Factory Condition.
5.13 NO EVENT OF LOSS. No Event of Loss shall have occurred.
SECTION 6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE LENDER
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SECTION 7. COVENANTS OF THE BORROWER
The Borrower hereby agrees that, so long as the Loan A is owing to the
Lender hereunder, the Borrower shall:
7.1 FINANCIAL STATEMENTS. Furnish to the Lender and to the Security
Trustee:
(a) within 120 days after the end of each fiscal year of the
Borrower, a copy of its audited balance sheet (consolidated, if applicable) and
related statements of operations, stockholders' equity and cash flows as of the
end of and for such year, setting forth in each case in comparative form the
figures for the previous fiscal year, all reported on by the Borrower's
independent public accountants of recognized national standing to the effect
that such financial statements present fairly in all material respects the
financial condition and results of operations of the Borrower (on a consolidated
basis, if applicable) in accordance with GAAP;
(b) within 90 days after the end of each of the first three
fiscal quarters of each fiscal year of the Borrower, its balance sheet
(consolidated, if applicable) and related statements of operations and cash
flows as of the end of and for such fiscal quarter (in the case of the statement
of operations) and the then elapsed portion of the fiscal year, setting forth in
each case in comparative form the figures for the corresponding period or
periods of (or, in the case of the balance sheet, as the end of) the previous
fiscal year, prepared in accordance with GAAP, subject to normal year-end audit
adjustments and the absence of footnotes;
(c) concurrently with any delivery of financial statements under
clause (a) above, a certificate of an officer of the Borrower certifying (i)
that he is familiar with or has reviewed the relevant terms of this Agreement
and has made, or caused to be made under his supervision, a review of the
transactions and conditions of the Borrower during the preceding year and (ii)
as to whether the Borrower has Actual Knowledge that an Event of Default has
occurred and is continuing and, if so, specifying the details thereof and any
action taken or proposed to be taken with respect thereto;
(d) if requested by Lender in connection with a Securitization at
any time when the Borrower is not subject to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, such other additional information
with respect to the Borrower that would be within the scope of Rule 144A(d)(4)
under the Securities Act of 1933 assuming for this purpose only that the
securities issued in the Securitization were deemed to be issued by the
Borrower; and
(e) promptly following any request therefor, such other
nonconfidential information regarding the Aircraft, the operations, business
affairs and financial condition of the Borrower or any Subsidiary, or compliance
with the terms of the Operative Agreements, as Lender or Security Trustee from
time to time reasonably request.
7.2 RECORDATION OPINION. Promptly upon the registration of the
Aircraft and the recording of the Security Agreement covering the Aircraft with
the FAA, the Borrower will deliver to the Lender and the Security Trustee an
opinion of special FAA counsel in Oklahoma City, Oklahoma, reasonably acceptable
to the Lender, as to the due registration of the Aircraft in
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the name of the Borrower, and the due recording of the FAA Bill of Sale for the
Aircraft and the Security Agreement.
7.3 PERFECTION. Borrower, at its sole cost and expense, will promptly
cause each of the documents listed in Section 4.2, any subsequent Security
Agreement Supplements, amendments to the Security Agreement or Permitted Leases
required to be recorded pursuant to the Security Agreement, all Uniform
Commercial Code continuation statements, all Uniform Commercial Code financing
statement amendments (necessitated by any combination, consolidation or merger
of the Borrower, any relocation of its chief executive office, or any change in
its corporate name or jurisdiction of incorporation) and any additional
recordings, filings, re-recordings or refilings necessary to maintain the
perfection of the Liens created thereby to be prepared and, subject only to the
execution and delivery thereof by the Security Trustee, duly and timely filed
and recorded or filed for recordation, to the extent permitted under the Federal
Aviation Code (with respect to FAA-filed documents) or the Uniform Commercial
Code of any applicable jurisdiction (with respect to such other documents) and
except to the extent that any such acts or filings are necessitated by the
combination, consolidation or merger of the Security Trustee. Borrower will give
Security Trustee timely written notice (but in any event within 30 days prior to
the expiration of the period of time specified under applicable Law to prevent
lapse of perfection) of any relocation of its chief executive office (as such
term is defined in Article 9 of the UCC) from its then present location, or of
any change in its corporate name, or of any change in its jurisdiction of
incorporation (and will provide in such notice, if applicable, the
identification number assigned to it by the new jurisdiction).
7.4 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE. Maintain its
corporate existence, except as otherwise permitted pursuant to Section 7.7 and
Section 9.5 hereof, and at all times remain a U.S. Air Carrier. Borrower shall
at all times be certificated and registered to the extent necessary to entitle
the Security Trustee to the benefits of Section 1110 (as currently in effect)
including the right to take possession of the Airframe and Engines in compliance
with the Security Agreement in the event of a case under Chapter 11 of the
Bankruptcy Code in which the Borrower is a debtor.
7.5 MAINTENANCE OF PROCESS AGENT. Maintain in New York City a Person
acting as agent to receive on its behalf service of process.
7.6 FURTHER ASSURANCES. Upon the reasonable request of the Lender,
promptly perform or cause to be performed any and all acts and execute or cause
to be executed any and all documents (including, without limitation, financing
statements and continuation statements) for filing under the provisions of the
Federal Aviation Code, the Uniform Commercial Code or any other Law which are
necessary to maintain in favor of the Security Trustee, for the benefit of the
Lender, Liens required to be maintained under the Security Agreement on the
Collateral that are duly perfected in accordance with all applicable
requirements of Law; PROVIDED, that any documentation or act requested hereunder
shall not expand any obligation or limit any rights of the Borrower.
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SECTION 8. EVENTS OF DEFAULT
8.1 EVENTS OF DEFAULT. If any of the following events shall occur and
be continuing (an "EVENT OF DEFAULT"):
(a) (i) the Borrower shall fail to make any payment of principal
of or interest on the Loan A within 5 Business Days after the same shall become
due; or (ii) the Borrower shall fail to make any payment when the same shall
become due of any other amount due under this Agreement or the Security
Agreement and such failure shall continue unremedied for 10 Business Days after
the receipt by the Borrower of written notice from the Lender or the Security
Trustee, as the case may be, of the failure to make such payment when due; or
(b) the Borrower shall fail to carry and maintain or cause to be
carried and maintained insurance on or with respect to the Aircraft in
accordance with the provisions of Section 3.3(k) of the Security Agreement; or
(c) the Borrower shall fail to perform or observe any other
covenant or agreement to be performed or observed by it under this Agreement or
any other Operative Agreements, and, in any such case, such failure shall
continue unremedied for a period of 30 days after receipt by the Borrower of
written notice thereof by the Lender or the Security Trustee, as the case may
be; PROVIDED, HOWEVER, that if such failure is capable of being remedied, no
such failure shall constitute an Event of Default for a period of 120 days after
such notice so long as the Borrower is diligently proceeding to remedy such
failure; or
(d) any representation or warranty made or deemed made by the
Borrower in, or pursuant to, any Operative Agreements shall prove to have been
incorrect in any material respect on or as of the time made or deemed made, and
such incorrectness shall continue to be material to the transactions
contemplated hereby and unremedied for a period of 30 days after receipt by the
Borrower of written notice thereof by the Lender or the Security Trustee, as the
case may be; or
(e) a Bankruptcy Event shall have occurred and be continuing with
respect to the Borrower; or
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(f) the Borrower shall default in making any payment when due of
any principal or interest or other amount under any Loan A (other than the Loan
A) made pursuant to the Funding Agreement which is held in Substantial Part by a
Brazilian Lender and as a result of such default such Loan A may be accelerated,
unless both (i) such loan is no longer cross-collateralized by being included as
a Secured Obligation under the Security Agreement and (ii) a Brazilian Lender no
longer holds a Substantial Part of the Loan A; or
(g) with respect to a Leveraged Leasing Loan, the Borrower shall
default in the making of any payment when due of any Rent (as defined in any
Relevant Lease Agreement under any Leveraged Leasing Loan) or other amount under
any lease entered into pursuant to the Funding Agreement so long as such lease
is collateral for a loan made under the Funding Agreement, which loan is then
held in whole or in part by a Brazilian Lender and as a result of such default
the loan secured by such lease may be accelerated and so long as a Brazilian
Lender holds a Substantial Part of the Loan.
then, and in any such event, (A) if such event is an Event of Default specified
in clause (e) of this Section 8.1, the Loan (with accrued interest thereon) and
all other amounts owing under this Agreement and the Notes shall immediately
become due and payable, and (B) if such event is another Event of Default, the
Lender may, by written notice to the Borrower, declare the Loan (with accrued
interest thereon) and all other amounts owing under this Agreement and the Notes
to be due and payable forthwith, whereupon the same shall immediately become due
and payable and the Lender and/or the Security Trustee may exercise the rights
and remedies provided in the Security Agreement and the other Operative
Agreements. Except as expressly provided above in this Section 8.1, presentment,
demand, protest and all other notices of any kind are hereby expressly waived.
Notwithstanding anything to the contrary contained in this Section 8.1, any
failure of the Borrower to perform or observe any covenant, condition or
agreement shall not constitute an Event of Default if such failure or error is
caused solely by reason of an event referred to in the definition of Event of
Loss so long as the Borrower is continuing to comply with all of the terms of
Section 3.4 of the Security Agreement.
8.2 RESCISSION OF ACCELERATION. At any time after the Lender has
declared the unpaid principal amount of the Notes to be due and payable and
prior to the sale of any part of the Collateral pursuant to Section 5 of the
Security Agreement, the Lender, by written notice to the Borrower and the
Security Trustee, may rescind and annul such declaration and its consequences
if: (i) there has been paid to or deposited with the Security Trustee an amount
sufficient to pay all overdue installments of principal of, and interest on, the
Notes and all other amounts owing by the Borrower under the other Operative
Agreements, that have become due otherwise than by such declaration of
acceleration, and (ii) all other Events of Default, other than nonpayment of
principal or interest on the Notes that have become due solely because of such
acceleration, have been cured or waived.
SECTION 9. MISCELLANEOUS
9.1 AMENDMENTS AND WAIVERS. This Agreement or any terms hereof may
only be amended, supplemented or modified with the prior written consent of
Borrower and the Lender and, to the extent such amendment affects the interests
of the Security Trustee, the
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Security Trustee. The Lender or the Security Trustee (acting at the direction of
the Lender) may, from time to time, waive, on such terms and conditions as the
Lender or the Security Trustee, as the case may be, may specify in such
instrument, any of the requirements of this Agreement or any Event of Default
and its consequences. In the case of any waiver the Borrower and the Lender
shall be restored to their former positions and rights hereunder, and any Event
of Default waived shall be deemed to be cured and not continuing; no such waiver
shall extend to any subsequent or other Event of Default or impair any right
consequent on such subsequent or other Event of Default. Any amendment or waiver
effected in accordance with this Section 9.1 shall be binding upon the Lender
and any subsequent Lender, the Security Trustee and the Borrower.
9.2 NOTICES. (a) Any notice or communication of any kind in respect of
this Agreement shall be deemed to have been received:
(i) if made by airmail letter, ten days after the relevant letter
has been dispatched by registered airmail (postage prepaid) or on the
date shown in the relevant receipt, whichever is earlier;
(ii) if made by fax, upon receipt by the sender of transmission
confirmation; or
(iii) if sent by overnight delivery service, courier or in person
(and a signed acknowledgment of receipt is obtained), when delivered.
(b) Any such notice or communication to a party hereto shall be
made in English, in writing, by registered mail, fax, telex or cable, as
permitted under applicable Law, and shall be given as follows:
Borrower: Chautauqua Airlines, Inc.
2500 S. High School Road
Suite 160 Indianapolis, IN 46241-4943 Attention:
Tel: (317) 484-6000
Fax: (317) 484-6040
with a copy to: Wexford Capital LLC
411 West Putnam Avenue, Suite 125
Greenwich, CT 06830
Attention: Jay Maymudes
Tel: (203) 862-7050
Fax: (203) 862-7350
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Lender: [*]
with a copy to
the Manufacturer: Embraer - Empresa Brasileira de Aeronautica S.A.
Av. Brigadeiro Faria Lima, 2170
12227-901 Sao Jose do Campos, SP
Brazil
Attention: Senior Manager - Contracts
Tel: (011) 5512-345-1410
Fax: (011) 5512-345-1257
Security Trustee: JPMorgan Chase Bank
Institutional Trust Services
450 West 33rd Street, 15th Floor
Attention: Carol Ng
Tel: (212) 946-7711
Fax: (212) 946-8158/8159/8160
(c) Any party listed above may change its address and the
transmission numbers for notices by notice in the manner provided in this
Section 9.2.
9.3 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no
delay in exercising, on the part of any party, any right, remedy, power or
privilege hereunder 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
are cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
9.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made hereunder and in any document or certificate delivered
pursuant hereto or in connection herewith shall survive the execution and
delivery of this Agreement and the making of the Loan hereunder.
9.5 SUCCESSORS AND ASSIGNS. (a) (1) This Agreement shall be binding
upon and inure to the benefit of the Borrower, the Lender and their respective
successors and permitted assigns. Neither the Borrower nor the Lender shall
assign or transfer (by operation of law or otherwise, directly or indirectly,
including by merger, consolidation, or conveyance of substantially all of its
assets) their respective rights or obligations under this Agreement or the
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Notes, including any participation in the Notes involving the transfer by the
Lender of voting rights to, or the creation of contractual privity between the
Borrower and any such participant in the Notes.
(2) Nothwithstanding the foregoing, the Borrower may assign or
transfer (as aforesaid) all (but not less than all) of its rights and
obligations under this Agreement and the other Operative Agreements in
connection with a transaction of merger, consolidation or transfer of all or
substantially all its assets made in compliance with all of the conditions set
forth in Section 7.7 hereof.
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9.7 CONTRACTUAL CURRENCY. (a) This is an international transaction in
which the specification of the currency of payments is of the essence. Except as
otherwise provided herein, each payment under this Agreement will be made in
Dollars (the "CONTRACTUAL CURRENCY"). Any obligation to make payments under this
Agreement or any other Operative Agreements in the Contractual Currency will not
be, to the extent permitted by applicable Law, discharged or satisfied by any
tender in any currency other than the Contractual Currency (unless otherwise
specified herein or therein).
(b) To the extent permitted by applicable Law, rule or regulation,
if any judgment or order expressed in a currency other than the Contractual
Currency is rendered for the payment of any amount owing in respect of this
Agreement or any other Operative Agreements or in respect of a judgment or order
of another court for the payment of any amount owing in respect of this
Agreement or any other Operative Agreements, the party to which such payment is
owed, after recovery in full of the aggregate amount to which such party is
entitled pursuant to the judgment or order, will be entitled to receive
immediately from the other party the amount of any shortfall of the Contractual
Currency received by such party as a consequence of sums paid in such other
currency (and will refund promptly to the other party any excess of the
Contractual Currency received by such party) if such shortfall (or such excess)
arises or results from any variation between (i) the rate of exchange at which
the currency of the judgment or order is converted into the Contractual Currency
on the date of entry of such judgment or order and (ii) the rate of exchange at
which such party is able to purchase the Contractual Currency with the amount of
the currency of the judgment or order actually received by such party. The term
"rate of exchange" includes any premiums and costs of exchange payable in
connection with the purchase of or conversion into the Contractual Currency.
- -------
* Confidential
<Page>
40
9.8 SEVERABILITY. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, to the
extent permitted by law, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
9.9 INTEGRATION. This Agreement and the other Operative Agreements
represent the agreement of the Borrower and the Lender with respect to the
subject matter hereof, and there are no promises, undertakings, representations
or warranties by the Borrower or the Lender relative to the subject matter
hereof not expressly set forth or referred to herein or in the other Operative
Agreements.
9.10 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
9.11 SUBMISSION TO JURISDICTION; WAIVERS. (a) Each of the Borrower and
the Lender hereby irrevocably and unconditionally:
(i) submits for itself and its property in any legal action
or proceeding relating to this Agreement and the other Operative
Agreements to which it is a party to the jurisdiction of the Courts of
the State of New York sitting in the City of New York, the courts of
the United States of America for the Southern District of New York,
and appellate courts from any thereof;
(ii) agrees that any suit, action or proceeding with respect
to this Agreement or the transactions contemplated hereby may be
brought only in such courts and waives any objection that it may now
or hereafter have to the jurisdiction or venue of any such action or
proceeding in any such court or that such action or proceeding was
brought in an inconvenient court and agrees not to plead or claim the
same by way of motion as a defense or otherwise;
(iii) agrees that nothing herein shall affect the right to
effect service of process in any manner permitted by law in addition
to the provisions of Section 9.11(b);
(iv) waives, to the maximum extent not prohibited by law,
any right it may have to claim or recover in any legal action or
proceeding with respect to this Agreement or the transactions
contemplated hereby any special, exemplary, punitive or consequential
damages; and
(v) agrees that, to the fullest extent permitted by
applicable law, a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit
on the judgment or in any other manner provided by law.
<Page>
41
(b) The Lender hereby irrevocably and unconditionally appoints,
at the Borrower's expense, National Registered Agents, Inc. (the "LENDER PROCESS
AGENT"), located at 440 9th Avenue, 5th Floor, New York, New York 10001, as its
agent to receive on behalf of the Lender and its property service of copies of
the summons and complaint and any other process which may be served in any
action or proceeding in any court of the State of New York sitting in the City
of New York or court of the United States of America for the Southern District
of New York and, if for any reason such Lender Process Agent (or any successor
Lender Process Agent) is unable to act as such, will promptly notify the
Borrower and will within 30 days appoint a successor Lender Process Agent in the
City of New York (which successor Lender Process Agent shall accept such
appointment in a writing reasonably satisfactory to the Borrower prior to the
termination for any reason of the appointment of the predecessor Lender Process
Agent). In any action or proceeding in any court of the State of New York
sitting in the City of New York or court of the United States of America for the
Southern District of New York, such service may be made on the Lender by
delivering a copy of such process to the Lender in care of the appropriate
Lender Process Agent at such Lender Process Agent's address. The Lender hereby
also irrevocably and unconditionally authorizes and directs such Lender Process
Agent to accept such service on its behalf.
(c) The Borrower hereby irrevocably and unconditionally agrees
that service of process upon it in any such action or proceeding may be effected
by mailing a copy thereof by registered or certified mail (or any substantially
similar form of mail), postage prepaid, to the Borrower at its address set forth
in Section 9.2 hereof or at such other address of which the Lender shall have
been notified pursuant thereto.
9.12 WAIVER OF IMMUNITIES. The Lender agrees that, to the extent that
the Lender or any of its property is or becomes entitled at any time to any
immunity on the grounds of sovereignty or otherwise from (a) any legal action,
suit, arbitration proceeding or other proceeding, (b) set-off or counterclaim,
(c) the jurisdiction of any court of competent jurisdiction, (d) service of
process, (e) relief by way of injunction, order for specific performance or for
recovery of property, (f) attachment of its assets prior to judgment or after
judgment, (g) attachment in aid of execution or levy, (h) execution or
enforcement of any decree or judgment, (i) judgment or jurisdiction or from any
other legal process in any jurisdiction, the Lender, for itself and its
property, does, to the full extent permitted by applicable law, rule or
regulation, hereby irrevocably and unconditionally waive all rights to, and
agrees not to plead or claim, any such immunity with respect to its obligations,
liabilities or any other matter under or arising out of or in connection with
this Agreement or the other Operative Agreements, or the subject matter hereof
or thereof. Such agreement shall be irrevocable and not subject to withdrawal in
any and all jurisdictions or under any statute, including the Foreign Sovereign
Immunities Act of 1976 of the United States of America. The foregoing waiver
shall constitute a present waiver of immunity at any time any action is
initiated against the Lender with respect to this Agreement.
9.13 WAIVERS OF JURY TRIAL. THE BORROWER AND THE LENDER HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER OPERATIVE AGREEMENTS AND FOR
ANY COUNTERCLAIM THEREIN.
<Page>
42
9.14 CONFIDENTIALITY. Each of the Borrower and the Lender agrees to
keep confidential all non-public information provided to it pursuant to or in
connection with this Agreement, the other Operative Agreements and the
transactions contemplated hereby or thereby ("CONFIDENTIAL INFORMATION");
PROVIDED that nothing herein shall prevent either party hereto from disclosing
any such information (i) to its employees, directors, agents, attorneys,
accountants and other professional advisors in which case such persons will be
advised of the confidential nature of the information so disclosed and will be
required to keep such information confidential; (ii) to the Manufacturer,
Security Trustee, or BNDES, following the occurrence of an Event of Default or
as otherwise provided in the Operative Agreements, (iii) upon the demand of any
Government Entity having jurisdiction over such party, or in response to any
order of any court or other Government Entity or as may otherwise be required
pursuant to any requirement of Law, after providing the other party with prompt
notice of such request, demand, order or other requirement so that such party
may seek an appropriate protective order and after making reasonable efforts to
resist disclosure, (iv) in connection with the exercise of any remedy hereunder
or under the other Operative Agreements, (v) as permitted in Section 9.5(b) in
connection with an Assignment or Securitization, (vi) in the situations foreseen
in article 38 of Law 4,595 of December 31, 1964 of Brazil or at the request of
the Federal Public Administration or the Accounting Court of Brazil (TRIBUNAL DE
CONTAS DA UNITAO), in which case the requesting entities will be advised of the
confidential nature of the information so disclosed, (vii) if required by the
terms of any Operative Agreements or (viii) if the other party gives its prior
written consent.
9.15 PAYMENT OF EXPENSES AND COSTS. Except as provided in Section
9.5(b), the Borrower agrees (a) to pay or reimburse the Lender and the Security
Trustee for all their reasonable out-of-pocket costs and expenses incurred in
connection with the preparation, negotiation, execution and delivery of this
Agreement and the other Operative Agreements, and any amendment, supplement or
modification of this Agreement or any other Operative Agreements requested by
the Borrower, including, without limitation, the reasonable fees and
disbursements of counsel to the Lender and the Security Trustee and translation
and registration fees, and (b) to pay or reimburse the Lender and the Security
Trustee on demand for all their reasonable and documented costs and expenses
incurred in connection with the enforcement of any rights under this Agreement
and the other Operative Agreements to which the Borrower is a party, including,
without limitation, any translation and registration costs necessary for the
enforcement of any Operative Agreements to which the Borrower is a party, and
the reasonable fees and disbursements of counsel to the Lender and of counsel to
the Security Trustee and (c) to pay, indemnify, and hold the Lender and the
Security Trustee harmless from any and all United States recording and filing
fees and any and all liabilities with respect to, or resulting from any delay in
paying, such United States recording and filing fees, if any, which may be
payable or determined to be payable in connection with the execution and
delivery of, or consummation of any of the transactions contemplated by, or any
amendment, supplement or modification of, or any waiver or consent under or in
respect of, this Agreement and the other Operative Agreements to which the
Borrower is a party. Anything in this Section 9.15 notwithstanding, if any loan
fails to be disbursed as a result of the failure of the Lender to act in good
faith to fulfill its obligations or otherwise to comply with the terms of this
Agreement or any other Operative Agreements, the Lender shall bear and pay its
own fees, costs and expenses (including, without limitation, the fees and
expenses of its counsel) relating to such loan.
<Page>
43
9.16 [*]
- --------
* Confidential
<Page>
44
[*]
- ------
* Confidential
<Page>
45
[*]
(c) SEPARATE AGREEMENT. This Agreement constitutes a separate
agreement with respect to each Indemnitee and is enforceable directly by each
such Indemnitee.
(d) NOTICE. If a claim for any Expense that an Indemnitee shall
be indemnified against under this Section 9.16 is made, such Indemnitee shall
give prompt written notice thereof to Borrower. Notwithstanding the foregoing,
the failure of any Indemnitee to notify Borrower as provided in this Section
9.16 shall not release Borrower from any of its obligations to indemnify such
Indemnitee hereunder, except to the extent that such failure results in an
additional Expense to Borrower (in which event Borrower shall not be responsible
for such additional Expense) or materially impairs Borrower's ability to contest
such claim.
(e) Notice of Proceedings; Defense of Claims; Limitations.
(i) In case any action, suit or proceeding shall be brought
against any Indemnitee for which Borrower is responsible under this
Section 9.16, such Indemnitee shall notify Borrower of the
commencement thereof and Borrower may, at its expense, participate in
and to the extent that it shall wish (subject to the provisions of the
following paragraph), assume and control the defense thereof and,
subject to Section 9.16(e)(iii), settle or compromise the same.
(ii) Borrower or its insurer(s) shall have the right, at its
or their expense, to investigate or, if Borrower or its insurer(s)
shall agree in writing not to
- --------
* Confidential
<Page>
46
dispute liability to the Indemnitee giving notice of such action, suit
or proceeding under this Section 9.16 for indemnification hereunder or
under any insurance policies pursuant to which coverage is sought,
control the defense of, any action, suit or proceeding, relating to
any Expense for which indemnification is sought pursuant to this
Section 9.16, and each Indemnitee shall cooperate with Borrower or its
insurer(s) with respect thereto; PROVIDED, that Borrower shall not be
entitled to control the defense of any such action, suit, proceeding
or compromise any such Expense (i) during the continuance of any Event
of Default (except during the Section 1110 Period), (ii) if such
proceedings would entail a material risk of the sale, forfeiture or
loss of the Aircraft, (iii) if such proceedings would entail a risk of
criminal liability or greater than de minimis risk of material civil
penalties being imposed on such Indemnitee, or (iv) if an actual or
potential material conflict of interest exists making it advisable in
the good faith opinion of such Indemnitee (on the basis of prevailing
standards of professional responsibility) for such Indemnitee to be
represented by separate counsel In connection with any such action,
suit or proceeding being controlled by Borrower, such Indemnitee shall
have the right to participate therein, at its sole cost and expense,
with counsel reasonably satisfactory to Borrower; PROVIDED, that such
Indemnitee's participation does not, in the reasonable opinion of the
independent counsel appointed by the Borrower or its insurers to
conduct such proceedings, interfere with the defense of such case.
(iii) In no event shall any Indemnitee enter into a
settlement or other compromise with respect to any Expense without the
prior written consent of Borrower, which consent shall not be
unreasonably withheld or delayed, unless such Indemnitee waives its
right to be indemnified with respect to such Expense under this
Section 9.16.
(iv) In the case of any Expense indemnified by the Borrower
hereunder which is covered by a policy of insurance maintained by
Borrower pursuant to the Security Agreement, at Borrower's expense,
each Indemnitee agrees to cooperate with the insurers in the exercise
of their rights to investigate, defend or compromise such Expense as
may be required to retain the benefits of such insurance with respect
to such Expense.
(v) If an Indemnitee is not a party to this Agreement,
Borrower may require such Indemnitee to agree in writing to the terms
of this Section 9.16 prior to making any payment to such Indemnitee
under this Section 9.16.
(vi) Nothing contained in this Section 9.16 shall be deemed
to require an Indemnitee to contest any Expense or to assume
responsibility for or control of any judicial proceeding with respect
thereto.
(f) INFORMATION. Borrower will provide the relevant Indemnitee
with such information not within the control of such Indemnitee, as is in
Borrower's control or is reasonably available to Borrower, which such Indemnitee
may reasonably request and will otherwise cooperate with such Indemnitee so as
to enable such Indemnitee to fulfill its
<Page>
47
obligations under Section 9.16. The Indemnitee shall supply Borrower with such
information not within the control of Borrower, as is in such Indemnitee's
control or is reasonably available to such Indemnitee, which Borrower may
reasonably request to control or participate in any proceeding to the extent
permitted by Section 9.16.
(g) EFFECT OF OTHER INDEMNITIES; SUBROGATION; FURTHER ASSURANCES.
Upon the payment in full by Borrower of any indemnity provided for under this
Agreement, Borrower, without any further action and to the full extent permitted
by Law, will be subrogated to all rights and remedies of the person indemnified
(other than with respect to any of such Indemnitee's insurance policies) in
respect of the matter as to which such indemnity was paid. Each Indemnitee will
give such further assurances or agreements and cooperate with Borrower to permit
Borrower to pursue such claims, if any, to the extent reasonably requested by
Borrower and at Borrower's expense.
(h) EXPENSES. For the purposes of this Section 9.16, "EXPENSES"
shall mean any and all liabilities, obligations, losses, damages, penalties,
claims, actions, suits, costs or expenses of whatsoever kind and nature and
shall include all reasonable out-of-pocket costs, disbursements and expenses
(including reasonable fees and disbursements of legal counsel, accountants,
appraisers, inspectors or other professionals, and costs of investigation).
(i) INDEMNITEE DEFINED. For the purposes of this Section 9.16,
"INDEMNITEE" means the Lender, BNDES, the Security Trustee and their respective
successors and permitted assigns, officers, employees and directors.
(j) PRIMARY OBLIGOR. The Borrower's obligations under this
Section 9.16 shall be those of a primary obligor whether or not the Person
indemnified shall also be indemnified with respect to the same matter under the
terms of this Loan Agreement, or any other document or instrument, and the
Person seeking indemnification from the Borrower pursuant to any provision of
this Loan Agreement may proceed directly against the Borrower without first
seeking to enforce any other right of indemnification.
(k) WAIVER OF CERTAIN CLAIMS. The Borrower hereby waives and
releases any Expense now or hereafter existing against any Indemnitee arising
out of death or personal injury to personnel of the Borrower, loss or damage to
property of the Borrower, or the loss of use of any property of the Borrower,
which results from or arises out of the condition, use or operation of the
Aircraft, including, without limitation, any latent or patent defect whether or
not discoverable.
(l) [*]
- ------
* Confidential
<Page>
48
[*]
9.17 INSTRUCTION TO SECURITY TRUSTEE. The Lender hereby acknowledges
that it is familiar with and agrees to all the terms and provisions of the
Security Agreement and directs the Security Trustee to enter into and deliver
the Security Agreement and to perform its obligations thereunder.
9.18 NOTICES, INSTRUCTIONS, CONSENTS, EXECUTION AND WAIVER. Whenever
the provisions of this Agreement or any Operative Agreements require or permit
notice from or to, instructions from, consent of, execution of any amendment,
supplement, modification, instrument, certificate or other document by, or a
waiver by, the Lender, the notice from or to, instruction from, consent of,
execution by or waiver by, the holders on the date of such notice, instruction,
consent, execution or waiver of more than 50% in interest of the principal
amount of the Note A then outstanding shall be considered notice from or to,
instruction from, consent of, execution by or waiver by, the Lender and shall be
binding upon any present or subsequent Lender; PROVIDED, however, that without
the consent of each holder at the time thereof affected thereby, no amendment,
supplement, consent or waiver shall:
(1) change the final maturity of any Notes, or change the dates
or amounts of payment of any installment of the principal of or
interest on any Notes, or reduce the principal of or interest on any
Notes, or change to a location outside the United States of America
the place of payment where, or the coin or currency in which, the
principal amount of any Notes is payable; or
(2) create any Lien with respect to the Collateral except such as
are permitted by the Security Agreement, or deprive any such holder of
the benefit of the Lien on the Collateral created by the Security
Agreement; or
(3) modify the provisions of this Section 9.18; or
(4) adversely affect any indemnities in favor of such holder.
9.19 EXECUTION OF FINANCING STATEMENTS. Pursuant to any applicable
Law, the Borrower authorizes the Security Trustee (which shall be deemed a
permissive right and not an obligation) to file or record financing statements
and other filing or recording documents or instruments with respect to the
Collateral without the signature of the Borrower in such form and in such
offices as the Security Trustee and the Lender determine appropriate to perfect
the security interests of the Security Trustee under this Agreement and the
other Operative Agreements.
- ---------
* Confidential
<Page>
49
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
CHAUTAUQUA AIRLINES, INC.
By:
----------------------------------
Name:
Title:
AGENCIA ESPECIAL DE FINANCIAMENTO
INDUSTRIAL - FINAME
By:
----------------------------------
Name:
Title:
By:
----------------------------------
Name:
Title:
WITNESS:
- -------------------------
- -------------------------
<Page>
SCHEDULE I
TO LOAN AGREEMENT
PAYMENT DATES AND AMOUNTS
NOTE A AND NOTE B
[attached hereto]
<Page>
ANNEX B-1
TO LOAN AGREEMENT
[Form of] PROMISSORY NOTE
NOTE A
THIS NOTE A HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE
DISPOSED OF EXCEPT WHILE SUCH A REGISTRATION IS IN
EFFECT OR PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER SAID ACT
THIS NOTE A IS SUBJECT TO CERTAIN ADDITIONAL
RESTRICTIONS ON TRANSFER SET FORTH IN
SECTION 9.5 OF THE LOAN AGREEMENT
REFERRED TO BELOW.
ISSUED IN CONNECTION WITH
ONE EMBRAER EMB-145 LR AIRCRAFT WITH
MANUFACTURER'S SERIAL NUMBER 145409
AND INITIALLY BEARING UNITED STATES
FEDERAL AVIATION ADMINISTRATION
REGISTRATION NO. N282SK
AND TWO ALLISON AE3007A1P-SERIES ENGINES
[*] New York, New York
January 17, 2002
FOR VALUE RECEIVED, the undersigned, Chautauqua Airlines, Inc., a New York
corporation (the "BORROWER"), hereby unconditionally promises to pay to Agencia
Especial de Financiamento Industrial-Finame (the "LENDER") in lawful money of
the United States of America and in immediately available funds, the principal
amount of [*], or, if less, the unpaid principal amount of Loan A made by the
Lender pursuant to Section 2.1 of the Loan Agreement, as hereinafter defined.
The principal amount of Loan A, and accrued interest thereon, shall be paid
in installments consisting of principal and interest payable on each Payment
Date in the amount in Dollars set forth in Schedule 1 to the Loan Agreement
for such Payment Date, as provided in Section 2.2 of the Loan Agreement (as
amended, supplemented or otherwise modified from time to time, the "LOAN
AGREEMENT"), (CH-282SK) dated as of December 27, 2001, between the Borrower
and the Lender.
- --------
* Confidential
<Page>
2
The holder of this Note A is authorized to endorse on the schedules annexed
hereto and made a part hereof or on a continuation thereof which shall be
attached hereto and made a part hereof the date and amount of the Loan and the
date and amount of each payment or prepayment of principal and each payment of
interest with respect thereto. The failure to make any such endorsement shall
not affect the obligations of the Borrower in respect of the Loan.
This Note A (a) is the Note A referred to in the Loan Agreement, (b) is
subject to the provisions of the Loan Agreement and (c) is subject to optional
and mandatory prepayment in whole or in part as provided in the Loan Agreement.
This Note A is secured as provided in the Operative Agreements. Reference is
hereby made to the Operative Agreements for a description of the properties and
assets in which a security interest has been granted, the nature and extent of
the security provided, the terms and conditions upon which the security
interests were granted and the rights of the holder of this Note A in respect
thereof.
Upon the occurrence of any one or more of the Events of Default, all
amounts then remaining unpaid on this Note A may be declared to be, or under
certain circumstances shall become, immediately due and payable, all as provided
in the Loan Agreement.
Unless otherwise defined herein, terms defined in the Loan Agreement and
used herein shall have the meanings given to them in the Loan Agreement.
Each holder hereof, by its acceptance of this Note A, agrees to be bound by
and to observe the provisions of the Loan Agreement and the other Operative
Agreements applicable to the Lender.
The Lender may not sell, assign, pledge or otherwise transfer all or any
portion of this Note A or any interest in this Note A including any
participation in this Note A except in connection with an assignment of the Loan
Agreement in accordance with the terms thereof.
<Page>
3
THIS NOTE A SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
CHAUTAUQUA AIRLINES, INC.
Witnesses: By:
--------------------------------
- ------------------------ Name:
-----------------------------
- ------------------------ Title:
-----------------------------
<Page>
Schedule A
TO PROMISSORY NOTE
THE LOAN AND REPAYMENT OF THE LOAN
<Table>
<Caption>
- --------------------------------------------------------------------------------------------------------------------
Payment Date Amount of Loan Amount of Unpaid Principal Amount of Notation
No. Principal Repaid Balance of Loan Interest Paid Made By
- --------------------------------------------------------------------------------------------------------------------
(1)
- --------------------------------------------------------------------------------------------------------------------
(2)
- --------------------------------------------------------------------------------------------------------------------
(3)
- --------------------------------------------------------------------------------------------------------------------
(4)
- --------------------------------------------------------------------------------------------------------------------
(5)
- --------------------------------------------------------------------------------------------------------------------
(6)
- --------------------------------------------------------------------------------------------------------------------
(7)
- --------------------------------------------------------------------------------------------------------------------
(8)
- --------------------------------------------------------------------------------------------------------------------
(9)
- ---------------- ------------- ----------------- ----------------- ------------------ ---------------- -------------
(10)
- --------------------------------------------------------------------------------------------------------------------
(11)
- --------------------------------------------------------------------------------------------------------------------
(12)
- --------------------------------------------------------------------------------------------------------------------
(13)
- --------------------------------------------------------------------------------------------------------------------
(14)
- --------------------------------------------------------------------------------------------------------------------
(15)
- --------------------------------------------------------------------------------------------------------------------
(16)
- --------------------------------------------------------------------------------------------------------------------
(17)
- --------------------------------------------------------------------------------------------------------------------
(18)
- --------------------------------------------------------------------------------------------------------------------
(19)
- --------------------------------------------------------------------------------------------------------------------
(20)
- --------------------------------------------------------------------------------------------------------------------
(21)
- --------------------------------------------------------------------------------------------------------------------
(22)
- --------------------------------------------------------------------------------------------------------------------
(23)
- --------------------------------------------------------------------------------------------------------------------
(24)
- --------------------------------------------------------------------------------------------------------------------
(25)
- --------------------------------------------------------------------------------------------------------------------
(26)
- --------------------------------------------------------------------------------------------------------------------
(27)
- --------------------------------------------------------------------------------------------------------------------
(28)
- --------------------------------------------------------------------------------------------------------------------
(29)
- --------------------------------------------------------------------------------------------------------------------
(30)
- --------------------------------------------------------------------------------------------------------------------
(31)
- --------------------------------------------------------------------------------------------------------------------
(32)
- --------------------------------------------------------------------------------------------------------------------
</Table>
<Page>
ANNEX B-2
TO LOAN AGREEMENT
[Form of] PROMISSORY NOTE
NOTE B
THIS NOTE B HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE
DISPOSED OF EXCEPT WHILE SUCH A REGISTRATION IS IN
EFFECT OR PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER SAID ACT
THIS NOTE B IS SUBJECT TO CERTAIN ADDITIONAL
RESTRICTIONS ON TRANSFER SET FORTH IN
SECTION 9.5 OF THE LOAN AGREEMENT
REFERRED TO BELOW.
ISSUED IN CONNECTION WITH
ONE EMBRAER EMB-145 LR AIRCRAFT WITH
MANUFACTURER'S SERIAL NUMBER 145409
AND INITIALLY BEARING UNITED STATES
FEDERAL AVIATION ADMINISTRATION
REGISTRATION NO. N282SK
AND TWO ALLISON AE3007A1P-SERIES ENGINES
[*] New York, New York
January 17, 2002
FOR VALUE RECEIVED, the undersigned, Chautauqua Airlines, Inc., a New York
corporation (the "BORROWER"), hereby unconditionally promises to pay (subject to
the next sentence) to Agencia Especial de Financiamento Industrial-Finame (the
"Lender") in lawful money of the United States of America and in immediately
available funds, the principal amount of [*] dated as of December 27, 2001,
between the Borrower and the Lender (as amended, supplemented or otherwise
modified from time to time, the "LOAN AGREEMENT"). [*]
- --------
* Confidential
<Page>
[*]
The holder of this Note B is authorized to endorse on the schedules annexed
hereto and made a part hereof or on a continuation thereof which shall be
attached hereto and made a part hereof the date and amount of Loan B and the
date and amount of each payment or prepayment of principal and each payment of
interest with respect thereto. The failure to make any such endorsement shall
not affect the obligations of the Borrower in respect of the Loan.
This Note B (a) is the Note B referred to in the Loan Agreement, (b) is
subject to the provisions of the Loan Agreement and the Security Deposit
Agreement and (c) is subject to optional and mandatory prepayment in whole or in
part as provided in the Loan Agreement. This Note B is secured as provided in
the Operative Agreements. Reference is hereby made to the Operative Agreements
for a description of the properties and assets in which a security interest has
been granted, the nature and extent of the security provided, the terms and
conditions upon which the security interests were granted and the rights of the
holder of this Note B in respect thereof.
Upon the occurrence of any one or more of the Events of Default, all
amounts then remaining unpaid on this Note B may be declared to be, or under
certain circumstances shall become, immediately due and payable, all as provided
in the Loan Agreement.
Unless otherwise defined herein, terms defined in the Loan Agreement and
used herein shall have the meanings given to them in the Loan Agreement.
Each holder hereof, by its acceptance of this Note B, agrees to be bound by
and to observe the provisions of the Loan Agreement and the other Operative
Agreements applicable to the Lender.
The Lender may not sell, assign, pledge or otherwise transfer all or any
portion of this Note B or any interest in this Note B including any
participation in this Note B except in connection with an assignment of the Loan
Agreement in accordance with the terms thereof.
- ---------
* Confidential
<Page>
THIS NOTE B SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
CHAUTAUQUA AIRLINES, INC.
Witnesses: By:
---------------------------------
- ------------------------ Name:
-------------------------------
- ------------------------ Title:
------------------------------
<Page>
ANNEX D-1
TO LOAN AGREEMENT
[Form of] CERTIFICATE OF THE BORROWER AS TO
REPRESENTATIONS AND WARRANTIES
Pursuant to Section 5.4 of the Loan Agreement (CH-282SK), dated as of
December 27, 2001 (as the same may be amended, supplemented or otherwise
modified from time to time, the "LOAN AGREEMENT"), between Chautauqua Airlines,
Inc., a New York corporation (the "BORROWER"), and Agencia Especial de
Financiamento Industrial (the "LENDER"), the undersigned officer of the Borrower
hereby certifies in such capacity as follows:
1. The representations and warranties made by the Borrower in Section 3 of
the Loan Agreement are true and correct in all material respects on and as of
the date hereof, before as well as after giving effect to the Loan, with the
same effect as if made on the date hereof (except to the extent that such
representations and warranties are expressly stated to relate to an earlier
date, in which case such representations and warranties are true and correct in
all material respects on and as of such earlier dates).
2. All covenants and conditions required to be performed or fulfilled by it
under the Operative Agreements on or prior to the Borrowing Date have been
performed or fulfilled.
Unless otherwise defined herein, capitalized terms which are defined in the
Loan Agreement and used herein are so used as so defined.
IN WITNESS WHEREOF, the undersigned has hereunto set his name.
CHAUTAUQUA AIRLINES, INC.
By:
-----------------------------
Name:
Title:
Date:
<Page>
ANNEX D-2
TO LOAN AGREEMENT
[Form of] CERTIFICATE OF THE LENDER AS TO
REPRESENTATIONS AND WARRANTIES
Pursuant to Section 5.4 of the Loan Agreement (CH-282SK), dated as of
December 27, 2001 (as the same may be amended, supplemented or otherwise
modified from time to time, the "LOAN AGREEMENT"), between Chautauqua Airlines,
Inc., a New York corporation (the "BORROWER"), and Agencia Especial de
Financiamento Industrial (the "LENDER"), the undersigned officer of the Lender
hereby certifies in such capacity as follows:
1. The representations and warranties made by the Lender in Section 6 of
the Loan Agreement are true and correct in all material respects on and as of
the date hereof, before as well as after giving effect to the Loan, with the
same effect as if made on the date hereof (except to the extent that such
representations and warranties are expressly stated to relate to an earlier
date, in which case such representations and warranties are true and correct in
all material respects on and as of such earlier dates).
2. All covenants and conditions required to be performed or fulfilled by it
under the Operative Agreements on or prior to the Borrowing Date have been
performed or fulfilled.
Unless otherwise defined herein, capitalized terms which are defined in the
Loan Agreement and used herein are so used as so defined.
IN WITNESS WHEREOF, the undersigned has hereunto set his name.
AGENCIA ESPECIAL DE FINANCIAMENTO
INDUSTRIAL
By:
-----------------------------
Name:
Title:
Date:
<Page>
ANNEX A
TO LOAN AGREEMENT
AND TO SECURITY AGREEMENT
FINANCING OF ONE
EMBRAER EMB-145 LR AIRCRAFT
DEFINITIONS RELATING TO LOAN AGREEMENT (CH-282SK)
AND SECURITY AGREEMENT
(CH-282SK)
"ACTUAL KNOWLEDGE": with respect to any party, except as provided in
Section 6.1 of the Security Agreement, actual knowledge of a President, Vice
President, Director or more senior officer thereof, or any other officer of a
party having responsibility for the transactions contemplated by the Operative
Agreements; PROVIDED that each party shall be deemed to have "Actual Knowledge"
of any matter as to which it has received notice in accordance with Section 9.2
of the Loan Agreement.
"ADDITIONAL COMMITMENT PERIOD" means the period, if any, during which the
Lender is committed by written agreement between Chautauqua and Lender to
provide financing to the Borrower with respect to EMB aircraft to be delivered
under the Purchase Agreement (other than aircraft covered by the Funding
Agreement).
"AFFILIATE": with respect to a specified Person, means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such Person. For the purpose of this definition, "CONTROL"
when used with respect to any specified Person, means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise, and the terms
"CONTROLLING" and "CONTROLLED" have meanings correlative to the foregoing.
"AFTER-TAX BASIS": with respect to any payment to be received or accrued by
any Person, the amount of such payment adjusted, if necessary, so that such
payment, after taking into account all Taxes payable to any taxing authority as
a result of the receipt or accrual of such payments and any savings in Taxes
with respect to the indemnified Taxes or other liability in respect of which
such payment is due, shall be equal to the payment to be received or accrued.
"AIRCRAFT": means, collectively, the Airframe and Engines.
"AIRCRAFT DOCUMENTS": means all technical data, manuals and log books, and
all inspection, modification and overhaul records and other service, repair,
maintenance and technical records that are required by the FAA (or the relevant
Aviation Authority) to be maintained with respect to the Aircraft, Airframe,
Engines or Parts; and such term shall include all additions, renewals, revisions
and replacements of any such materials from time to time made, or required to be
made, by the FAA (or other Aviation Authority) regulations, and in each case in
whatever form and by whatever means or medium (including, without limitation,
microfiche, microfilm, paper or computer disk) such materials may be maintained
or retained by
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or on behalf of the Borrower; PROVIDED that all such materials shall be
maintained in the English language.
"AIRCRAFT WARRANTY AGREEMENT": means the Aircraft Warranty Agreement, dated
as of December 27, 2001, between the Manufacturer and the Lender, relating to
each Aircraft listed in Schedule II to the Funding Agreement.
"AIRFRAME": means (A) the Embraer EMB-145 LR aircraft (except the Engines
or engines from time to time installed thereon) listed by manufacturer's serial
number and subjected to the Lien of the Security Agreement pursuant to the
Security Agreement Supplement originally executed and delivered under the
Security Agreement; and (B) any and all Parts so long as the same shall be
incorporated or installed in or attached to such aircraft, or so long as the
same shall be subject to the Lien of the Security Agreement in accordance with
the terms of Section 3.4 thereof after removal from such aircraft. The term
"AIRFRAME" shall include any Replacement Airframe which may from time to time be
substituted pursuant to Section 3.4 of the Security Agreement. At such time as a
Replacement Airframe shall be so substituted and the Airframe for which the
substitution is made shall be released from the Lien of the Security Agreement,
such replaced Airframe shall cease to be an Airframe under the Security
Agreement.
"AIRFRAME INTERCHANGE AGREEMENT" means an agreement between the Borrower
(or a Permitted Lessee) and another air carrier which qualifies as a Permitted
Air Carrier pursuant to which they agree to provide passenger service to
multiple destinations under circumstances where the Airframe may be operated by
and in the possession of such other air carrier for a period not to exceed seven
consecutive days (subject to extension in the event of unforeseen
circumstances).
[*]
[*]
"ASSIGNEE": has the meaning specified in Section 9.6 of the Loan Agreement.
"ASSIGNMENT": has the meaning specified in Section 9.5(b)(2) of the Loan
Agreement.
"AVIATION AUTHORITY": means the FAA or, if the Aircraft is permitted to be,
and is, registered with any other Government Entity under and in accordance with
Section 3.3 of the Security Agreement, such other Government Entity.
"BANKRUPTCY CODE": means the United States Bankruptcy Code, 11 U.S.C.
Section 101 et seq.
"BANKRUPTCY DEFAULT": a Default under Section 8.1(e) of the Loan Agreement.
"BANKRUPTCY EVENT": with respect to any Person, any of the following
events:
(a) such Person shall consent to the appointment of or the taking of
possession by the receiver, trustee or liquidator of itself or of substantially
all of its property, or such Person shall admit in writing its inability to pay
its debts generally as they come due, or
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does not pay its debts generally as they become due or shall make a general
assignment for the benefit of creditors; or
(b) such Person shall file a voluntary petition in bankruptcy or a
voluntary petition or an answer seeking reorganization, liquidation or other
relief in a proceeding under the Bankruptcy Code (as in effect at such time) or
such Person shall seek relief by voluntary petition, answer, or consent under
the provisions of any other bankruptcy or other similar Law providing for the
reorganization or winding-up of corporations (as in effect at such time) or such
Person's board of directors shall adopt a resolution authorizing any of the
foregoing; or
(c) an order, judgment or decree shall be entered by any court of
competent jurisdiction appointing, without the consent of such Person, a
receiver, trustee or liquidator of such Person or of substantially all of its
property, or sequestering substantially all of the property of such Person, and
any such order, judgment or decree of appointment or sequestration shall remain
in force undismissed, unstayed or unvacated for a period of 60 days after the
date of entry thereof; or
(d) a petition against such Person in a proceeding under the
Bankruptcy Code (as in effect at such time) or any other bankruptcy laws or
other insolvency laws shall be filed and shall not be withdrawn or dismissed
within 60 days thereafter, or, under the provisions of any Law providing for
reorganization or winding-up of corporations which may apply to such Person, any
court of competent jurisdiction shall assume jurisdiction, custody or control of
such Person or of substantially all of its property and such jurisdiction,
custody or control shall remain in force unrelinquished, unstayed or
unterminated for a period of 60 days.
"BFE": means all buyer furnished equipment, if any, installed on the
Aircraft on the Date of Actual Delivery or to be installed thereafter, and
listed in an attachment to the BFE Bill of Sale.
"BFE BILL OF SALE": means a Bill of Sale, if there is any BFE, dated
the Delivery Date executed by the Borrower in favor of the Manufacturer and
covering the BFE for the Aircraft.
"BILLS OF SALE": means the FAA Bill of Sale and the Warranty Bill of Sale.
"BNDES": means Banco Nacional de Desenvolvimento Economico e Social, a
Brazilian Federal public company with its principal place of business in
Brasilia, Distrito Federal, Federative Republic of Brazil, and main offices in
the City of Rio de Janeiro, at Avenida Republica do Chile, No. 100 CEP 20139-900
- - Rio de Janeiro - RJ, Brazil 20-139-900 registered in the General Register of
Taxpayers under the number 33.657.248/0001-89.
"BORROWER": means Chautauqua Airlines, Inc., a New York corporation.
"BORROWING DATE": means the date the Loan is initially made by the Lender
to the Borrower.
"BRAZIL": means the Federative Republic of Brazil.
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4
"BRAZILIAN CURRENCY EQUIVALENT": has the meaning set forth in Section 2.1
of the Loan Agreement.
[*]
[*]
"BREAKAGE COST": as defined in Section 9.1 of the Funding Agreement.
"BRIDGE AIRCRAFT": the four EMB-145 LR Aircraft listed on Schedule II of
the Funding Agreement.
"BRIDGE LOAN": means in the case of each Bridge Aircraft, the loan by
Manufacturer to Chautauqua made on the Delivery Date to finance Chautauqua's
purchase of such Bridge Aircraft.
"BRIDGE LOAN RELEASE": means the release of the Aircraft from the security
interest with respect to the Bridge Loan.
"BROAD BASED OFFERING": has the meaning specified in Section 9.5(b)(2) of
the Loan Agreement.
"BUSINESS DAY": means any day other than a Saturday, Sunday or other day on
which commercial banks are authorized or required by law to close in New York,
New York, Indianapolis, Indiana, Rio de Janeiro, Brazil or the city and state in
which the Corporate Trust Department is located.
"CHANGE IN CONTROL" and "CONTROL": as defined in Section 7.7(c) of the Loan
Agreement.
[*]
"CHAUTAUQUA" means Chautauqua Airlines, Inc., a New York corporation.
"CHAUTAUQUA MERGER TRANSACTION": as defined in Section 7.7(a) of the Loan
Agreement.
"CHAUTAUQUA SUCCESSOR": as defined in Section 7.7(a) of the Loan Agreement.
"CITIZEN OF THE UNITED STATES": is defined in Section 40102(a) (15) of the
Federal Aviation Code and in the FAA Regulations.
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"CLOSING": has the meaning set forth in Section 2.1 of the Loan Agreement.
"CODE": means the United States Internal Revenue Code of 1986, as amended
from time to time.
"CODE-SHARE AGREEMENT" means an agreement of the Borrower pursuant to which
it is entitled to fly under another carrier's Designator Code.
"COLLATERAL": has the meaning specified in Section 2.1 of the Security
Agreement.
"COMMITMENT PERIOD": has the meaning provided in Section 1.1 of the Funding
Agreement.
"COMMITMENT TERMINATION EVENT": as defined in Section 7 of the Funding
Agreement.
"COMMONLY CONTROLLED ENTITY" means an entity, whether or not incorporated,
that is under common control with the Borrower within the meaning of Section
4001 of ERISA or is part of a group that includes the Borrower and that is
treated as a single employer under Section 414 of the Code.
"CONFIDENTIAL INFORMATION": has the meaning set forth in Section 9.14 of
the Loan Agreement.
"CONTRACTUAL CURRENCY": has the meaning set forth in Section 9.7 of the
Loan Agreement.
"CONTRACTUAL OBLIGATION": means, as to any Person, any provision of any
agreement, instrument or other undertaking to which such Person is a party or by
which it or any of its property is bound.
"CORPORATE TRUST DEPARTMENT" or "Trust Department": means the Corporate
Trust Department of the Security Trustee located at the principal corporate
trust office of the Security Trustee as specified in Security Trustee's address
for notices under the Relevant Loan Agreement (Direct Loans) (initially, 450
West 33rd Street, New York, New York), or such other department or office at
which the Security Trustee's corporate trust business shall be administered
which the Security Trustee shall have specified by written notice to the
Borrower and the Lender.
"CRAF": means the Civil Reserve Air Fleet Program authorized under 10
U.S.C.Section 9511 ET SEQ. or any substantially similar program under the laws
of the United States.
"DEBT": means any liability for borrowed money, or any liability for the
payment of money in connection with any letter of credit transaction or any
other liabilities evidenced or to be evidenced by bonds, debentures, notes or
other similar instruments.
"DEBT RATE": has the meaning set forth in Section 2.2(b) of the Loan
Agreement.
"DEFAULT": means an event that, with the giving of notice or the lapse of
time or both, would become an Event of Default.
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"DEFAULT RATE": means the Debt Rate plus [*] basis points.
[*]
"DEPARTMENT OF TRANSPORTATION": means the U.S. Department of Transportation
and any agency or instrumentality of the U.S. Government succeeding to its
functions.
"DESIGNATOR CODE" means the airline designations originally allotted and
administered pursuant to Agreements CAB 24606 and 26056.
"DIRECT LOANS": as defined in the Funding Agreement.
"DOLLARS", "UNITED STATES DOLLARS" or "$": means the lawful currency of the
United States.
"ELIGIBLE ACCOUNT": means an account established by and with an Eligible
Institution acting at the request of the Security Trustee, which institution
agrees, for all purposes of the UCC including Article 8 thereof, that (a) such
account shall be a "securities account" (as defined in Section 8-501 of the
UCC), (b) all property (other than cash) credited to such account shall be
treated as a "financial asset" (as defined in Section 8-102(9) of the UCC), (c)
the Security Trustee shall be the "entitlement holder" (as defined in Section
8-102(7) of the UCC) in respect of such account, (d) it will comply with all
entitlement orders issued by the Security Trustee to the exclusion of the
Borrower, and (e) the "securities intermediary jurisdiction" (under Section
8-110(e) of the UCC) shall be the State of New York.
"ELIGIBLE INSTITUTION": means the corporate trust department of (a)
JPMorgan Chase Bank, acting solely in its capacity as a "securities
intermediary" (as defined in Section 8-102(14) of the UCC), or (b) a depository
institution organized under the laws of the United States of America or any one
of the states thereof or the District of Columbia (or any U.S. branch of a
foreign bank), which has a long-term unsecured debt rating from Moody's and
Standard & Poor's of at least A-3 or its equivalent.
"ENGINE": means (a) the two Allison AE3007A1P-series engines listed by
manufacturer's serial numbers and subjected to the Lien of the Security
Agreement pursuant to the Security Agreement Supplement originally executed and
delivered under the Security Agreement, whether or not from time to time
installed on the Airframe or installed on any other airframe or on any other
aircraft; and (b) any Replacement Engine that may from time to time be
substituted for an Engine pursuant to Section 3.3 or Section 3.4 of the Security
Agreement; together, in each case, with any and all Parts so long as the same
shall be incorporated or installed in or attached thereto or so long as the same
shall be subject to the Lien of the Security Agreement in accordance with the
terms of Section 3.3 thereof after removal from any such engine. At such time as
a Replacement Engine shall be so substituted and the Engine for which
substitution is made shall be released from the Lien of the Security Agreement,
such replaced Engine shall cease to be an Engine under the Security Agreement.
"ENGINE MANUFACTURER": means Rolls-Royce Company, formerly known as Allison
Engine Company, Inc., a Delaware corporation.
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"ENGINE WARRANTY ASSIGNMENT AGREEMENT AND CONSENT" OR "ENGINE WARRANTY
AGREEMENT": means the Engine Warranty Assignment Agreement and Consent, dated as
of December 27, 2001, among Solitair, Borrower and the Engine Manufacturer.
"EQUIPMENT": means the Aircraft, the Airframe, any Engine and/or any Part.
"ERISA": means the Employee Retirement Income Security Act of 1974, as
amended.
"EVENT OF DEFAULT": has the meaning set forth in Section 8.1 of the Loan
Agreement.
"EVENT OF LOSS": means, with respect to the Aircraft, Airframe or any
Engine, any of the following circumstances, conditions or events with respect to
such property, for any reason whatsoever.
(a) the destruction of such property, damage to such property beyond
economic repair or rendition of such property permanently unfit for normal use
by Borrower;
(b) the actual or constructive total loss of such property or any
damage to such property, or requisition of title or use of such property, which
results in an insurance settlement with respect to such property on the basis of
a total loss or constructive or compromised total loss;
(c) any theft, hijacking or disappearance of such property for a
period of 90 consecutive days or more;
(d) any seizure, condemnation, confiscation, taking or requisition
(including loss of title) of such property by any Government Entity or purported
Government Entity (other than a requisition of use by the U.S. Government) for a
period exceeding 90 consecutive days; or
(e) as a result of any law, rule, regulation, order or other action by
the Aviation Authority or by any Government Entity of the government of registry
of the Aircraft, or by any Government Entity otherwise having jurisdiction over
the operation or use of the Aircraft, the use of such property in the normal
course of Borrower's business of passenger air transportation is prohibited for
a period of 90 consecutive days, unless Borrower, prior to the expiration of
such 90 day period, shall have undertaken and shall be diligently carrying
forward such steps as may be necessary or desirable to permit the normal use of
such property by Borrower, but in any event if such use shall have been
prohibited for a period of 365 days, provided that no Event of Loss shall be
deemed to have occurred if such prohibition has been applicable to Borrower's
(or a Permitted Lessee's) entire U.S. fleet of such property and Borrower (or a
Permitted Lessee), prior to the expiration of such 365-day period, shall have
conformed at least one unit of such property in its fleet to the requirements of
any such law, rule, regulation, order or other action and commenced regular
commercial use of the same in such jurisdiction and shall be diligently carrying
forward in a manner which does not discriminate against such property in so
conforming such property, steps which are necessary or desirable to permit the
normal use of such property by Borrower, but in any event if such use shall have
been prohibited for a period of three years.
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"FAA": means the U.S. Federal Aviation Administration and any agency or
instrumentality of the U.S. Government succeeding to its functions.
"FAA APPLICATION FOR AIRCRAFT REGISTRATION": means an application for
registration of the Aircraft in the name of the Borrower on AC Form 8050-1 or
such other form approved by the FAA.
"FAA BILL OF SALE": means the bill of sale for the Aircraft on AC Form
8050-2 or such other form approved by the FAA executed by the Manufacturer in
favor of the Borrower.
"FAA REGULATIONS" means the Federal Aviation Regulations issued or
promulgated pursuant to the Federal Aviation Code from time to time.
"FEDERAL AVIATION CODE": means the sections of Title 49 of the United
States Code relating to aviation, as amended from time to time, or any similar
legislation of the United States enacted in substitution or replacement
therefor.
"FINAME": as defined in the recitals to the Loan Agreement.
"FLY-AWAY-FACTORY CONDITION": with respect to any Aircraft, that such
Aircraft is or was accepted by Borrower from the Manufacturer on the Delivery
Date as new and in compliance with the Purchase Agreement, subject to
unsatisfied delivery discrepancies that Manufacturer agrees or agreed to remedy.
"FUNDING AGREEMENT": means the Funding Agreement, dated as of December 27,
2001, between the Lender and Chautauqua.
"GAAP": means generally accepted accounting principles as set forth in the
statements of financial accounting standards issued by the Financial Accounting
Standards Board of the American Institute of Certified Public Accountants, as
such principles may at any time or from time to time be varied by any applicable
financial accounting rules or regulations issued by the SEC and, with respect to
any Person, shall mean such principles applied on a basis consistent with prior
periods except as may be disclosed in such Person's financial statements.
"GOVERNMENT ENTITY": means (a) any national, federal, state, provincial or
similar government, and any body, board, department, commission, court,
tribunal, authority, agency or other instrumentality of any such government or
otherwise exercising any executive, legislative, judicial, administrative or
regulatory functions of such government or (b) any other government entity
having jurisdiction over any matter contemplated by the Operative Agreements or
relating to the observance or performance of the obligations of any of the
parties to the Operative Agreements.
"INDEMNITEE": has the meaning set forth in Section 9.16(i) of the Loan
Agreement.
[*]
[*]
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[*]
"INSPECTING PARTIES": has the meaning specified in Section 3.8 of the
Security Agreement.
"IRS": means the United States Internal Revenue Service or any agency or
instrumentality of the U.S. Government succeeding to its functions.
"LAW": means (a) any constitution, treaty, statute, law, decree,
regulation, order, rule or directive of any Government Entity, and (b) any
judicial or administrative interpretation or application of, or decision under,
any of the foregoing.
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"LEASE": means any lease of the Aircraft, including any subsequent
Permitted Lease.
"LEASE ASSIGNMENT": means an assignment of a Permitted Lease substantially
in the form of Exhibit B to the Security Agreement.
"LENDER": has the meaning set forth in the introductory paragraph of the
Loan Agreement.
"LENDER LIENS" means any Lien attributable to the Lender with respect to
the Aircraft, any interest therein, or any other portion of the Collateral,
arising as a result of (I) claims against the Lender not related to its interest
in the Aircraft or the administration of the Loan under the Loan Agreement, (II)
acts of the Lender not permitted by, or failure of the Lender to take any action
required by, the Operative Agreements, (iii) Taxes against such Person or any of
its Affiliates not required to be indemnified by Borrower under the Loan
Agreement, or (iv) claims against such Person arising out of any transfer by
such Person of its interest in the Loan, any Note and its interests in the
Operative Agreements.
"LEVERAGED LEASING LOAN": has the meaning specified in the Funding
Agreement.
[*]
"LIEN": means any mortgage, pledge, lien, charge, claim, encumbrance, lease
or security interest affecting title to or any interest in property.
"LOAN": Loan A and Loan B, collectively.
"LOAN A": means that portion of the Loan evidenced by Note A.
"LOAN A MATURITY DATE": means the [*] anniversary of the Borrowing Date.
"LOAN AGREEMENT": means the Loan Agreement (CH-282SK) dated as of December
27, 2001 between the Borrower and the Lender.
"LOAN B": means that portion of the Loan evidenced by Note B.
"LOAN B MATURITY DATE": means the first Payment Date.
"LOSS PAYMENT DATE": has the meaning set forth in Section 3.4(b)(i) of the
Security Agreement.
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"MAINTENANCE PROGRAM": has the meaning set forth in Section 3.3(g) of the
Security Agreement.
"MANDATORY MODIFICATION": has the meaning set forth in Section 3.3(j) of
the Security Agreement.
"MANUFACTURER": means Embraer - Empresa Brasileira de Aeronautica S.A., and
its successors and permitted assigns.
"MANUFACTURER INVOICE": means the invoice of the Manufacturer setting forth
the purchase price of the Aircraft (which shall be the Net Aircraft Cost).
"MATERIAL ADVERSE CHANGE": has the meaning set forth in the Funding
Agreement.
"MATERIAL CHANGE": means, with respect to any Person, any event, condition
or circumstance that materially and adversely affects such Person's business or
consolidated financial condition, or its ability to observe or perform its
obligations, liabilities and agreements under, or affect the validity or
enforceability of the Operative Agreements.
"NET AIRCRAFT COST": means, for the Aircraft, the Relevant Net Aircraft
Cost (as defined in the Funding Agreement) for the Aircraft.
"NOTE A": means the promissory note substantially in the form of Annex B-1
to the Loan Agreement, dated the Borrowing Date and executed by the Borrower.
"NOTE B": means the promissory note substantially in the form of
Annex B-2 to the Loan Agreement, dated the Borrowing Date and executed by the
Borrower.
"NOTES": means the Note A and Note B.
"OBSOLETE PARTS": has the meaning set forth in Section 3.3(j) of the
Security Agreement.
"OFFICER'S CERTIFICATE": means, in respect of any Person, a certificate
signed by the Chairman, the President, any Vice President (including those with
varying ranks such as Executive, Senior, Assistant or Staff Vice President), any
Director, the Treasurer or the Secretary of such Person.
"OPERATIVE AGREEMENTS": means the Bills of Sale, Loan Agreement, the Notes,
the Security Agreement, each Security Agreement Supplement, any amendment to the
Security Agreement, any Permitted Lease, any Lease Assignment, the Purchase
Agreement Assignment, the Engine Warranty Assignment Agreement and Consent, the
Aircraft Warranty Agreement, the Security Deposit Agreement, the Security
Account Control Agreement, and any other agreement or instrument specifically
identified therein with the consent of the Borrower as a "Operative Agreements"
for purposes hereof.
"OPTIONAL MODIFICATION": has the meaning set forth in section 3.3(j) of the
Security Agreement.
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"ORIGINATION FEE": has the meaning set forth in Section 2.1 of the Loan
Agreement.
"PARTS": means all appliances, parts, components, avionics, landing gear,
instruments, appurtenances, accessories, furnishings, seats and other equipment
of whatever nature (other than (a) Engines or engines, and (b) any Removable
Parts leased by Borrower from a third party or subject to a security interest
granted to a third party), that may from time to time be installed or
incorporated in or attached or appurtenant to the Airframe or any Engine.
[*]
"PAYMENT DEFAULT": means the failure of the Borrower to pay any amount of
principal of or interest on the Loan when due.
"PERMITTED AIR CARRIER": means (i) any Permitted Foreign Air Carrier, (ii)
any other Person approved in writing by Lender and Security Trustee or (iii) any
U.S. Air Carrier.
"PERMITTED COUNTRY" means any country listed on Annex D to the Security
Agreement.
"PERMITTED FOREIGN AIR CARRIER": means any air carrier with its principal
executive offices in any Permitted Country and which is authorized to conduct
commercial airline operations and to operate jet aircraft similar to the
Aircraft under the applicable Laws of such Permitted Country.
"PERMITTED INVESTMENTS": means the following securities (which shall mature
within 90 days of the date of purchase thereof): (a) direct obligations of the
U.S. Government; (b) obligations fully guaranteed by the U.S. Government; and
(c) certificates of deposit issued by, or bankers' acceptances of, or time
deposits or a deposit account with, Security Trustee or any bank, trust company
or national banking association incorporated or doing business under the laws of
the United States or any state thereof having a combined capital and surplus and
retained earnings of at least $500,000,000 and having a rate of "C" or better
from the Thomson BankWatch Service.
"PERMITTED LEASE": means a lease or a sublease permitted under Section 3.2
of the Security Agreement (Direct Loans).
"PERMITTED LESSEE": means the lessee or sublessee under a Permitted Lease.
"PERMITTED LIENS": has the meaning set forth in Section 3.1 of the Security
Agreement (Direct Loans).
"PERSON OR "PERSON": means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority or other entity of whatever
nature.
"PLAN": means any employee benefit plan within the meaning of Section 3(3)
of ERISA or any plan within the meaning of Section 4975(e)(1) of the Code.
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"PURCHASE AGREEMENT": the EMB-145 Purchase Agreement Number GCT-025/98
dated as of November 12, 1998 between the Manufacturer and Solitair Corp., to
the extent assigned pursuant to the Purchase Agreement Assignment.
"PURCHASE AGREEMENT ASSIGNMENT": means the Purchase Agreement Assignment
dated as of the applicable Delivery Date, between Solitair and the Borrower.
"REGISTER": has the meaning specified in Section 9.5(d)(v) of the Loan
Agreement.
"RELATED LOANS B": means the loans identified as "Loan B" made under the
Related Operative Agreements.
"RELATED OPERATIVE AGREEMENTS": means all "OPERATIVE AGREEMENTS" as defined
in each loan agreement for Direct Loans (other than the Loan Agreement) entered
into pursuant to the Funding Agreement.
"RELATED NOTES A": means notes issued under the Related Operative
Agreements evidencing the "Loan A" as defined therein.
"REMOVABLE PART": has the meaning set forth in Section 3.3(j) of the
Security Agreement.
"REPLACEMENT AIRCRAFT": means the Aircraft of which a Replacement Airframe
is part.
"REPLACEMENT AIRFRAME": means an airframe that shall have been subjected to
the Lien of the Security agreement pursuant to Section 3.4 thereof.
"REPLACEMENT ENGINE": means an engine which shall have been subjected to
the Lien of the Security Agreement pursuant to Section 3.3 or Section 3.4
thereof.
"REQUIREMENT OF LAW": means as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Government Entity, in each case applicable to or
binding upon such Person or any of its property or to which such Person or any
of its property is subject.
"SEC": means the Securities and Exchange Commission of the United States,
or any Government Entity succeeding to the functions of such Securities and
Exchange Commission.
"SECTION 1110": means 11 U.S.C. Section 1110 of the Bankruptcy Code or any
successor section of the federal bankruptcy Law in effect from time to time.
"SECTION 1110 AGREEMENT": means a written agreement of the debtor to
perform referred to in Section 1110(a)(2)(A) of the Bankruptcy Code that,
without further review or modification, qualifies under Section 1110 to keep the
automatic stay provided by Section 362 of the Bankruptcy Code in effect with
respect to the Aircraft.
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"SECTION 1110 AIR CARRIER": means a Person holding an air carrier operating
certificate issued pursuant to chapter 447 of Title 49 of the United States Code
for aircraft capable of carrying 10 or more individuals or 6,000 pounds or more
of cargo.
"SECTION 1110 PERIOD": means the continuous period of (i) 60 days specified
in Section 1110(a)(2)(A) of the Bankruptcy Code (or such longer period, if any,
agreed to under Section 1110(b) of the Bankruptcy Code), plus (ii) an additional
period, if any, commencing with the trustee or debtor-in-possession in such
proceeding entering into with court approval a Section 1110 Agreement within
such 60 days (or longer period as agreed) and continuing until such time as such
trustee or debtor-in-possession ceases to fully perform its obligations
thereunder with the result that the period during which the Security Trustee is
prohibited from repossessing the Aircraft under the Security Agreement comes to
an end; PROVIDED that, at all times on and after such 60 day period, all cures
specified in Section 1110(a)(2)(B) have been timely and fully made and
performed.
"SECURED OBLIGATIONS": has the meaning set forth in Section 2.1 of the
Security Agreement.
"SECURITIES ACCOUNT CONTROL AGREEMENT": means the Securities Account
Control Agreement (CH-282SK) dated as of December 27, 2001 among the Borrower,
FINAME and JPMorgan Chase Bank.
"SECURITY DEPOSIT AGREEMENT": means the Security Deposit Agreement
(CH-282SK) dated as of December 27, 2001 among the Borrower, FINAME and JPMorgan
Chase Bank.
"SECURITIZATION": has the meaning specified in Section 9.5(b)(2) of the
Loan Agreement.
"SECURITY AGREEMENT": means the Security Agreement (CH-282SK) dated as of
the date of the Loan Agreement, substantially in the form of Exhibit C-2 to the
Funding Agreement, between the Borrower and the Security Trustee, including all
annexes, schedules, exhibits, appendices, amendments and supplements thereto.
"SECURITY AGREEMENT SUPPLEMENT": means (A) the Security Agreement
Supplement No. 1 (CH-282SK) substantially in the form of Exhibit A-1 to the
Security Agreement, dated the Borrowing Date, which shall describe with
particularity the Airframe and the Engines and which creates a security interest
in the Airframe and Engines and (B) any other supplement to the Security
Agreement from time to time executed and delivered.
"SECURITY TRUSTEE": has the meaning set forth in the introductory paragraph
of the Security Agreement.
"SECURITY TRUSTEE LIENS": means any Lien attributable to the Security
Trustee with respect to the Aircraft, any interest therein, or any other portion
of the Collateral, arising as a result of (I) claims against the Security
Trustee in its individual capacity not related to its interest in the Aircraft
or the administration of the Collateral pursuant to the Security Agreement, (II)
acts of the Security Trustee not permitted by, or failure of the Security
Trustee to take any action required by, the Operative Agreements, (III) Taxes
against the Security Trustee or any of its Affiliates not required to be
indemnified by Borrower under the Loan Agreement, or (iv) claims
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15
against the Security Trustee arising out of the transfer by the Security Trustee
of all or any portion of its interest in the Collateral, other than a transfer
permitted by the terms of the Operative Agreements or pursuant to the exercise
of remedies set forth in Section 5 of the Security Agreement.
"SOLITAIR": Solitair Corp., a Delaware corporation and an affiliate of the
Borrower.
"SPV": has the meaning specified in Section 9.5(b)(2) of the Loan
Agreement.
"SPV SECURITIES": has the meaning specified in Section 9.5(b)(2) of the
Loan Agreement.
"SUBSIDIARY": means, as to any Person, a corporation, partnership or other
entity of which shares of stock or other ownership interests having ordinary
voting power (other than stock or such other ownership interests having such
power only by reason of the happening of a contingency) to elect a majority of
the board of directors or other managers of such corporation, partnership or
other entity are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries, or both,
by such Person.
"SUBSTANTIAL PART": for any Loan A or Leveraged Leasing Loan, 90% or more
of the then remaining cash flow scheduled to be paid under such Loan A or
Leveraged Leasing Loan.
"TAX" and "TAXES": means all governmental or quasi-governmental fees
(including, without limitation, license, filing and registration fees) and all
taxes (including, without limitation, franchise, excise, stamp, value added,
income, gross receipts, sales, use, property, personal and real, tangible and
intangible taxes and mandatory contributions), withholdings, assessments,
levies, imposts, duties or charges, of any nature whatsoever, together with any
penalties, fines, additions to tax or interest thereon or other additions
thereto imposed, withheld, levied or assessed by any country, taxing authority
or governmental subdivision thereof or therein or by any international
authority, including any taxes imposed on any Person as a result of such Person
being required to collect and pay over withholding taxes.
[*]
"THRESHOLD AMOUNT": means [*]
"UNITED STATES" and "U.S.": each means the United States of America.
"U.S. AIR CARRIER": means any United States air carrier that is a Citizen
of the United States holding an air carrier operating certificate issued
pursuant to chapter 447 of title 49 of the United States Code for aircraft
capable of carrying 10 or more individuals or 6000 pounds or more of cargo, and
as to which there is in force an air carrier operating certificate issued
pursuant to Part 121 of the FAA Regulations, or which may operate as an air
carrier by certification or otherwise under any successor or substitute
provisions therefore or in the absence thereof.
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"U.S. GOVERNMENT": means the federal government of the United States, or
any instrumentality or agency thereof the obligations of which are guaranteed by
the full faith and credit of the United States.
[*]
"U.S. WITHHOLDING TAX": any Tax imposed by way of deduction or withholding
by the United States federal government, including the federal income tax
imposed under Sections 881(a) and 1442 of the Code, on payments to a person who
is not a U.S. Person within the meaning of Section 7701(a)(30) of the Code.
"WET LEASE" means any arrangement whereby Borrower or a Permitted Lessee
agrees to furnish the Aircraft, Airframe or any Engine to a third party pursuant
to which the Aircraft, Airframe or Engine shall at all times be in the
operational control of Borrower or a Permitted Lessee, provided that Borrower's
obligations under the Operative Agreements shall continue in full force and
effect notwithstanding any such arrangement.
"WARRANTY BILL OF SALE": means the full warranty bill of sale covering the
Aircraft (together with the FAA Bill of Sale collectively called "Bills of
Sale"), executed by Manufacturer in favor of the Borrower, and specifically
referring to each Engine, as well as to the Airframe, constituting a part of the
Aircraft.
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