EXHIBIT 10.3.1
[Execution]
LOAN AND SECURITY AGREEMENT
by and among
ATLAS AIR, INC.
POLAR AIR CARGO, INC.
as Borrowers
and
ATLAS AIR WORLDWIDE HOLDINGS, INC.
AIRLINE ACQUISITION CORP I
as Guarantors
CONGRESS FINANCIAL CORPORATION
as Agent
WACHOVIA BANK, NATIONAL ASSOCIATION
as Lead Arranger
and
THE LENDERS FROM TIME TO TIME PARTY HERETO
as Lenders
Dated: November 30, 2004
TABLE OF CONTENTS
PAGE
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SECTION 1. DEFINITIONS ..................................................... 1
SECTION 2. CREDIT FACILITIES ............................................... 31
2.1 Loans ........................................................... 31
2.2 Letter of Credit Accommodations ................................. 32
2.3 Commitments ..................................................... 35
2.4 Joint and Several Liability ..................................... 36
2.5 Reduction of Maximum Credit ..................................... 37
SECTION 3. INTEREST AND FEES ............................................... 37
3.1 Interest ........................................................ 37
3.2 Fees ............................................................ 38
3.3 Changes in Laws and Increased Costs of Loans .................... 39
SECTION 4. CONDITIONS PRECEDENT ............................................ 41
4.1 Conditions Precedent to Initial Loans and Letter of Credit
Accommodations .................................................. 41
4.2 Conditions Precedent to All Loans and Letter of Credit
Accommodations .................................................. 44
SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST ....................... 45
5.1 Grant of Security Interest ...................................... 45
5.2 Perfection of Security Interests ................................ 47
5.3 No Assumption ................................................... 51
SECTION 6. COLLECTION AND ADMINISTRATION ................................... 51
6.1 Borrowers' Loan Accounts ........................................ 51
6.2 Statements ...................................................... 51
6.3 Collection of Accounts .......................................... 51
6.4 Payments ........................................................ 53
6.5 Authorization to Make Loans ..................................... 54
6.6 Use of Proceeds ................................................. 55
6.7 Appointment of Administrative Borrower as Agent for Requesting
Loans and Receipts of Loans and Statements ...................... 55
6.8 Pro Rata Treatment .............................................. 56
6.9 Sharing of Payments, Etc ........................................ 56
6.10 Settlement Procedures ........................................... 57
6.11 Obligations Several; Independent Nature of Lenders' Rights ...... 59
(i)
SECTION 7. COLLATERAL REPORTING AND COVENANTS .............................. 59
7.1 CNS/CASS and Collateral Reporting ............................... 59
7.2 Accounts Covenants .............................................. 61
7.3 Engines, Spare Parts and Inventory Covenants .................... 62
7.4 Aircraft Covenants .............................................. 63
7.5 Power of Attorney ............................................... 64
7.6 Right to Cure ................................................... 65
7.7 Access to Premises .............................................. 65
SECTION 8. REPRESENTATIONS AND WARRANTIES .................................. 66
8.1 Corporate Existence, Power and Authority ........................ 66
8.2 Name; State of Organization; Chief Executive Office; Collateral
Locations ....................................................... 66
8.3 Financial Statements; No Material Adverse Change ................ 67
8.4 Priority of Liens; Title to Properties .......................... 67
8.5 Tax Returns ..................................................... 67
8.6 Litigation ...................................................... 67
8.7 Compliance with Other Agreements and Applicable Laws ............ 68
8.8 Air Carrier Operations .......................................... 68
8.9 Slot and Route Utilization ...................................... 69
8.10 CASS/IATA Operations ............................................ 69
8.11 Environmental Compliance ........................................ 70
8.12 Employee Benefits ............................................... 70
8.13 Bank Accounts ................................................... 71
8.14 Intellectual Property ........................................... 71
8.15 Subsidiaries; Affiliates; Capitalization; Solvency .............. 72
8.16 Interrelated Businesses ......................................... 72
8.17 Labor Disputes .................................................. 73
8.18 Restrictions on Subsidiaries .................................... 73
8.19 Material Contracts .............................................. 73
8.20 Payable Practices ............................................... 73
8.21 Accuracy and Completeness of Information ........................ 73
8.22 Inactive Subsidiaries ........................................... 74
8.23 EETC Documents .................................................. 74
8.24 Survival of Warranties; Cumulative .............................. 74
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS .............................. 74
9.1 Maintenance of Existence ........................................ 74
9.2 New Collateral Locations ........................................ 75
9.3 Compliance with Laws, Regulations, Etc .......................... 75
9.4 Payment of Taxes and Claims ..................................... 76
9.5 Insurance ....................................................... 77
9.6 Financial Statements and Other Information ...................... 77
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc ......... 79
9.8 Encumbrances .................................................... 82
9.9 Indebtedness .................................................... 84
(ii)
9.10 Loans, Investments, Etc ......................................... 92
9.11 Dividends and Redemptions ....................................... 97
9.12 Transactions with Affiliates .................................... 99
9.13 Compliance with ERISA ........................................... 99
9.14 End of Fiscal Years; Fiscal Quarters ............................ 99
9.15 Change in Business .............................................. 100
9.16 Limitation of Restrictions Affecting Subsidiaries ............... 100
9.17 EBITDAR ......................................................... 100
9.18 Excess Availability ............................................. 100
9.19 Capital Expenditures ............................................ 100
9.20 License Agreements............................................... 101
9.21 Slot Utilization; Route Utilization; Leasehold Utilization ...... 102
9.22 Costs and Expenses .............................................. 103
9.23 Dissolution of Inactive Subsidiaries ............................ 104
9.24 Further Assurances .............................................. 104
SECTION 10. EVENTS OF DEFAULT AND REMEDIES .................................. 104
10.1 Events of Default ............................................... 104
10.2 Remedies ........................................................ 106
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS;
GOVERNING LAW ................................................... 110
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial
Waiver .......................................................... 110
11.2 Waiver of Notices ............................................... 1ll
11.3 Amendments and Waivers .......................................... 1ll
11.4 Waiver of Counterclaims ......................................... 113
11.5 Indemnification ................................................. 113
SECTION 12. THE AGENT ....................................................... 114
12.1 Appointment, Powers and Immunities .............................. 114
12.2 Reliance by Agent ............................................... 114
12.3 Events of Default ............................................... 115
12.4 Congress in its Individual Capacity ............................. 115
12.5 Indemnification ................................................. 115
12.6 Non-Reliance on Agent and Other Lenders ........................ 116
12.7 Failure to Act .................................................. 116
12.8 Additional Loans ................................................ 116
12.9 Concerning the Collateral and the Related Financing Agreements .. 117
12.10 Field Audit, Examination Reports and other Information;
Disclaimer by Lenders ........................................... 117
12.11 Collateral Matters .............................................. 118
12.12 Agency for Perfection ........................................... 119
12.13 Successor Agent ................................................. 119
12.14 Lead Arranger ................................................... 120
(iii)
SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS ................................ 120
13.1 Term ............................................................ 120
13.2 Interpretative Provisions ....................................... 121
13.3 Notices ......................................................... 123
13.4 Partial Invalidity .............................................. 123
13.5 Confidentiality ................................................. 124
13.6 Successors ...................................................... 125
13.7 Assignments; Participations ..................................... 125
13.8 Entire Agreement ................................................ 127
13.9 USA Patriot Act ................................................. 127
13.10 Counterparts, Etc ............................................... 127
(iv)
LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement dated November 30, 2004 is entered into
by and among Atlas Air, Inc., a Delaware corporation ("Atlas Air"), Polar Air
Cargo, Inc., a California corporation ("Polar", and together with Atlas Air,
each individually, a "Borrower" and collectively, "Borrowers"), Atlas Air
Worldwide Holdings, Inc., a Delaware corporation ("Atlas Holdings"), Airline
Acquisition Corp I, a Delaware corporation ("AACI", and together with Holdings,
each individually, a "Guarantor" and collectively, "Guarantors"), the parties
hereto from time to time as lenders, whether by execution of this Agreement or
an Assignment and Acceptance (each individually, a "Lender" and collectively,
"Lenders"), Congress Financial Corporation, a Delaware corporation, in its
capacity as agent for Lenders (in such capacity, "Agent") and Wachovia Bank,
National Association, as Lead Arranger (in such capacity, "Lead Arranger").
WITNESSETH:
WHEREAS, Borrowers and Guarantors have requested that Agent and Lenders
enter into financing arrangements with Borrowers pursuant to which Lenders may
make loans and provide other financial accommodations to Borrowers; and
WHEREAS, each Lender is willing to agree (severally and not jointly) to
make such loans and provide such financial accommodations to Borrowers on a pro
rata basis according to its Commitment (as defined below) on the terms and
conditions set forth herein and Agent is willing to act as agent for Lenders on
the terms and conditions set forth herein and the other Financing Agreements;
NOW, THEREFORE, in consideration of the mutual conditions and agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. DEFINITIONS
For purposes of this Agreement, the following terms shall have the
respective meanings given to them below:
1.1 "1998 Class A Certificates" means the 7.38% Atlas Air Initial Pass
Through Certificates, Series 1998-1A and 7.38% Atlas Air Exchange Pass Through
Certificates, Series 1998-1A issued by that certain Atlas Air Pass Through Trust
1998-1A-S formed pursuant to that certain Pass Through Trust Agreement dated as
of February 9, 1998 between Atlas Air and Wilmington Trust Company, as Trustee,
as amended by that certain 1998 Class A Pass Through Trust Supplement dated as
of July 27, 2004.
1.2 "1999 Class A Certificates" means the 7.20% Atlas Air Pass Through
Certificates, Series 1999-1A-1 and the 6.88% Atlas Air Pass Through
Certificates, Series 1999-1A-2 issued by that certain Atlas Air Pass Through
Trust 1999-1 A-1 formed pursuant to that certain Pass Through Trust Agreement
dated as of April 1, 1999, as supplemented by that certain Trust Supplement No.
1999 1A-1 dated as of April 1, 1999, and as amended by that certain Amendment to
1999 Class A-1 Pass Through Trust Supplement dated as of July 27, 2004, in
each case between Atlas Air and Wilmington Trust Company, as Trustee, and that
certain Atlas Air Pass Through Trust 1999-1A-2 formed pursuant to that certain
Pass Through Trust Agreement dated as of April 1, 1999, as supplemented by that
certain Trust Supplement No. 1999 1A-2 dated as of April 1, 1999, in each case
between Lessee and Wilmington Trust Company, as Trustee, respectively.
1.3 "2000 Class A Certificates" means the 8.707% Atlas Air Initial Pass
Through Certificates, Series 2000-1A and the 8.707% Atlas Air Exchange Pass
Through Certificates, Series 2000-1A issued by that certain Atlas Air Pass
Through Trust 2000-1A formed pursuant to that certain Pass Through Trust
Agreement dated as of January 28, 2000, as supplemented by that certain Trust
Supplement No. 2000-1A dated as of January 28, 2000 between Atlas Air and
Wilmington Trust Company, as Trustee, as amended by that certain Amendment to
2000 Class A Pass Through Trust Supplement dated as of July 27, 2004.
1.4 "Accounts" shall mean, as to each Borrower and Guarantor, all present
and future rights of such Borrower and Guarantor to payment of a monetary
obligation, whether or not earned by performance, which is not evidenced by
chattel paper or an instrument, (a) for property that has been or is to be sold,
leased, licensed, assigned, or otherwise disposed of, (b) for services rendered
or to be rendered, (c) for a secondary obligation incurred or to be incurred, or
(d) arising out of the use of a credit or charge card or information contained
on or for use with the card including, as to any of the foregoing, any right to
receive payment arising from the rendition of any charter or scheduled cargo
transportation services or other services by any Borrower or Guarantor or any
right to receive payment arising from any ACMI Contract.
1.5 "ACMI Contracts" shall mean, collectively, (a) each contract at any
time entered into by a Borrower pursuant to which such Borrower furnishes to its
customers an Aircraft, crew, maintenance and insurance and its customer bears
all of the operating expenses associated with the use thereof and (b) any
similar contract in which the customer provides the flight crew, all in
accordance with such Borrower's historical practices; each sometimes being
referred to herein individually as an "ACMI Contract".
1.6 "Adjusted Eurodollar Rate" shall mean, with respect to each Interest
Period for any Eurodollar Rate Loan, the rate per annum (rounded upwards, if
necessary, to the next one-thousandth (1/1000) of one (1%) percent) determined
by dividing (a) the Eurodollar Rate for such Interest Period by (b) a percentage
equal to: (i) one (1) minus (ii) the Reserve Percentage. For purposes hereof,
"Reserve Percentage" shall mean the reserve percentage, expressed as a decimal,
prescribed by any United States or foreign banking authority for determining the
reserve requirement which is or would be applicable to deposits of United States
dollars in a non-United States or an international banking office of Reference
Bank used to fund a Eurodollar Rate Loan or any Eurodollar Rate Loan made with
the proceeds of such deposit, whether or not the Reference Bank actually holds
or has made any such deposits or loans. The Adjusted Eurodollar Rate shall be
adjusted on and as of the effective day of any change in the Reserve Percentage.
1.7 "Administrative Borrower" shall mean Atlas Air, Inc., a Delaware
corporation in its capacity as Administrative Borrower on behalf of itself and
the other Borrower pursuant to Section 6.7 hereof and its successors and assigns
in such capacity.
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1.8 "Affiliate" shall mean, with respect to a specified Person, any other
Person which directly or indirectly, through one or more intermediaries,
controls or is controlled by or is under common control with such Person, and
without limiting the generality of the foregoing, includes (a) any Person which
beneficially owns or holds ten (10%) percent or more of any class of Voting
Stock of such Person or other equity interests in such Person, (b) any Person of
which such Person beneficially owns or holds ten (10%) percent or more of any
class of Voting Stock or in which such Person beneficially owns or holds ten
(10%) percent or more of the equity interests and (c) any director or executive
officer of such Person. For the purposes of this definition, the term "control"
(including with correlative meanings, the terms "controlled by" and "under
common control with"), as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of Voting
Stock, by agreement or otherwise.
1.9 "AFL III Equipment" means (i) thirteen (13) Boeing 747-200 aircraft
(including the engines attached thereto) with registration numbers N505MC,
N509MC, N512MC, N517MC, N522MC, N523MC, N524MC, N526MC, N527MC, N528MC, N534MC,
N808MC and N809MC, (ii) nine General Electric CF6-50E2 engines, and (iii) three
General Electric CF6-80C2 engines.
1.10 "AFL III Financing Agreement" means that certain Credit Agreement
dated as of April 25, 2000, and amended and restated as of July 27, 2004, by and
among Atlas Freighter Leasing III, Inc., the lenders party thereto and Deutsche
Bank Trust Company Americas, as administrative agent, as such agreement may be
amended, amended and restated, modified and/or supplemented from time to time in
accordance with the terms thereof.
1.11 "Agent" shall mean Congress Financial Corporation, in its capacity as
agent on behalf of Lenders pursuant to the terms hereof and any replacement or
successor agent hereunder.
1.12 "Agent Payment Account" shall mean account no. 5000000030279 of Agent
at Wachovia Bank, National Association, or such other account of Agent as Agent
may from time to time designate to Administrative Borrower as the Agent Payment
Account for purposes of this Agreement and the other Financing Agreements.
1.13 "Air Carrier Certificates" shall mean, collectively, the Air Carrier
Certificate No. UIEA784E issued by the FAA (as hereinafter defined) in the name
of Atlas Air dated effective on February 23, 2003 and the Air Carrier
Certificate No. P5CA067Y issued by the FAA in the name of Polar dated effective
on July 4, 1999 and reissued on March 3, 2003, all other certificates, permits,
approvals, licenses, maintenance programs and other documents required by the
FAA, the DOT (as hereinafter defined) and the Federal Aviation Laws, including
Section 44705 of Title 49 of the United States Code, for the air transportation
of passengers and/or cargo, including mail, by Borrowers and each Airworthiness
Certificate issued by the FAA for each Aircraft, as the same now exist or may
hereafter be amended, modified, supplemented, extended, renewed, reissued or
replaced.
3
1.14 "Aircraft" shall mean all aircraft of Borrowers and Guarantors now or
hereafter owned, leased or used in their respective businesses for the
transportation of passengers and/or cargo, including mail, wherever located.
1.15 "Aircraft Credit Facility Agreement" means that certain Fifth Amended
and Restated Credit Agreement dated as of July 27, 2004 among Atlas Air, Inc.,
the lenders party thereto and Deutsche Bank Trust Company Americas, as
administrative agent, as the same now exists or hereafter may be amended,
modified, supplemented, extended, renewed, restated or replaced.
1.16 "Airport Leaseholds" shall mean all of the right, title, privilege,
interest, and authority now or hereafter acquired or held by any Borrower or, if
applicable a Guarantor in connection with the right to use or occupy space in
any airport at which any Borrower or such Guarantor conducts scheduled
operations and in any airport terminal, hanger, warehouse or other building,
facility or area at any such airport.
1.17 "Applicable Margin" means, at any time, as to the interest rate for
Prime Rate Loans and the interest rate for Eurodollar Rate Loans the applicable
percentage (on a per annum basis) set forth below if the Monthly Average Excess
Availability for the immediately preceding calendar month is at or within the
amounts indicated for such percentage:
Applicable Applicable Unused
Monthly Average Prime Eurodollar Line
Tier Excess Availability Rate Margin Rate Margin Fee
- ----- ------------------------- ----------- ----------- ------
1 $40,000,000 or more -1/4% 1 3/4% 1/2%
2 Greater than or equal to 1/4% 2 1/4% 3/8%
$25,000,000 and less than
$40,000,000
3 Less than $25,000,000 3/4% 2 3/4% 1/4%
PROVIDED, THAT, the Applicable Margin shall be calculated and established once
each calendar month on the first Business Day thereof and shall remain in effect
until adjusted thereafter as of the first Business Day of the next month.
1.18 "Aircraft Security Agreement" shall mean collectively, each Aircraft
Security Agreement, dated of even date herewith, with respect to each Secured
Aircraft, duly executed and delivered by Polar, as debtor, in favor of Agent, as
secured party, granting to Agent, as secured party for itself and the benefit of
Lenders, a lien upon and security interest in the Secured Aircraft, as the same
now exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
1.19 "Assignment and Acceptance" shall mean an Assignment and Acceptance
substantially in the form of Exhibit A attached hereto (with blanks
appropriately completed) delivered to Agent in connection with an assignment of
a Lender's interest hereunder in accordance with the provisions of Section 13.7
hereof.
4
1.20 "Bankruptcy Code" shall mean the United States Bankruptcy Code, being
Title 11 of the United States Code, as the same now exists or may from time to
time hereafter be amended, modified, recodified or supplemented, together with
all official rules, regulations and interpretations thereunder or related
thereto.
1.21 "Bankruptcy Court" shall mean the United States Bankruptcy Court for
the Southern District of Florida.
1.22 "Blocked Accounts" shall have the meaning set forth in Section 6.3
hereof.
1.23 "Borrowers" shall have the meaning set forth in the preamble hereto;
each sometimes being referred to herein individually as a "Borrower".
1.24 "Borrowing Base" shall mean, at any time, the amount equal to:
(a) the sum of:
(i) eighty-five (85%) percent of Eligible Domestic Accounts, PLUS
(ii) the lesser of (A) the sum of (1) seventy-five (75%) percent of
Eligible Preferred Foreign Accounts, PLUS (2) the lesser of (x) twenty-five
(25%) percent of all other Eligible Foreign Accounts or (y) $7,500,000, or (B)
$30,000,000, MINUS
(b) Reserves.
1.25 "Borrowing Base Certificate" shall mean a certificate substantially
in the form of Exhibit B hereto, as such form may from time to time be modified
by Agent, which is duly completed (including all schedules thereto) and executed
by the chief executive officer or chief financial officer, vice president of
finance, treasurer or controller of Administrative Borrower and delivered to
Agent.
1.26 "Business Day" shall mean any day other than a Saturday, Sunday, or
other day on which commercial banks are authorized or required to close under
the laws of the State of New York or the State of North Carolina, and a day on
which Agent is open for the transaction of business, except that if a
determination of a Business Day shall relate to any Eurodollar Rate Loans, the
term Business Day shall also exclude any day on which banks are closed for
dealings in dollar deposits in the London interbank market or other applicable
Eurodollar Rate market.
1.27 "Capital Expenditures" shall mean, for any period of time with
respect to which a determination thereof is to be made, all expenditures for any
fixed or capital assets (including Aircraft and related Equipment and other
fixed or capital assets that in accordance with GAAP are or should be included
in "property, plant and equipment" or a similar fixed asset balance sheet
category), whether such expenditures are paid in cash or financed and including
the direct or indirect acquisition of such assets by way of increased service
charges, offset items or otherwise.
5
1.28 "Capital Leases" shall mean, as applied to any Person, any lease of
(or any agreement conveying the right to use) any property (whether real,
personal or mixed) by such Person as lessee which in accordance with GAAP, is
required to be reflected as a liability on the balance sheet of such Person.
1.29 "Capital Stock" shall mean, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated) of
such Person's capital stock or partnership, limited liability company or other
equity interests at any time outstanding, and any and all rights, warrants or
options exchangeable for or convertible into such capital stock or other
interests (but excluding any debt security that is exchangeable for or
convertible into such capital stock).
1.30 "Cargo Agency Agreement" shall mean an agreement between an IATA
member and a Cargo Agent pursuant to which such IATA member appoints the Cargo
Agent to act as its representative for the promotion and sale of international
air cargo transportation within the country specified in such agreement with
respect to the handling and delivery of cargo consignments within such country
and the specified airports that are adjacent thereto.
1.31 "Cargo Agent" shall mean a Person which has applied for and been
awarded qualification in accordance with all applicable regulations and
procedures of IATA to act as a cargo agent on behalf of IATA members.
1.32 "Cash Equivalents" shall mean, at any time, (a) any evidence of
Indebtedness with a maturity date of one hundred eighty (180) days or less
issued or directly and fully guaranteed or insured by the United States of
America or any agency or instrumentality thereof; PROVIDED, THAT, the full faith
and credit of the United States of America is pledged in support thereof; (b)
certificates of deposit or bankers' acceptances with a maturity of one hundred
eighty (180) days or less of any financial institution that is a member of the
Federal Reserve System having combined capital and surplus and undivided profits
of not less than $250,000,000; (c) commercial paper (including variable rate
demand notes) with a maturity of one hundred eighty (180) days or less issued by
a corporation (except an Affiliate of any Borrower or Guarantor) organized under
the laws of any state of the United States of America or the District of
Columbia and rated at least A-2 by Standard & Poor's Ratings Service, a division
of The McGraw-Hill Companies, Inc. or at least P-2 by Moody's Investors Service,
Inc.; (d) repurchase obligations with a term of not more than thirty (30) days
for underlying securities of the types described in clause (a) above entered
into with any financial institution having combined capital and surplus and
undivided profits of not less than $250,000,000; (e) repurchase agreements and
reverse repurchase agreements relating to marketable direct obligations issued
or unconditionally guaranteed by the United States of America or issued by any
governmental agency thereof and backed by the full faith and credit of the
United States of America, in each case maturing within one hundred eighty (180)
days or less from the date of acquisition; PROVIDED, THAT, the terms of such
agreements comply with the guidelines set forth in the Federal Financial
Agreements of Depository Institutions with Securities Dealers and Others, as
adopted by the Comptroller of the Currency on October 31, 1985; and (f)
investments in money market funds and mutual funds which invest substantially
all of their assets in securities of the types described in clauses (a) through
(e) above.
6
1.33 "CASS" shall mean the Cargo Accounts Settlement System developed by
IATA (as hereinafter defined) with respect to cargo sales reporting and accounts
settlement.
1.34 "Certificated Air Carrier" shall mean, as to any Person, an air
carrier holding a certificate issued by the FAA pursuant to Section 44705 of
Title 49 of the United States Code or any other Federal Aviation Laws.
1.35 "Change of Control" shall mean (a) the transfer (in one transaction
or a series of transactions) of all or substantially all of the assets of
Borrowers and Guarantors, taken as a whole, to any Person or group (as such term
is used in Section 13(d)(3) of the Exchange Act), other than as permitted in
Section 9.7 hereof; (b) the liquidation or dissolution of Atlas Holdings or the
adoption of a plan by the stockholders of Atlas Holdings relating to the
dissolution or liquidation of Atlas Holdings; (c) the acquisition by any Person
or group (as such term is used in Section 13(d)(3) of the Exchange Act), of
beneficial ownership, directly or indirectly, of a majority of the voting power
of the total outstanding Voting Stock of Atlas Holdings or the Board of
Directors of Atlas Holdings; (d) during any period of twelve (12) consecutive
months, individuals who at the beginning of such period constituted the Board of
Directors of Atlas Holdings (together with any new directors whose nomination
for election by the stockholders of Atlas Holdings, as the case may be, was
approved by a vote of at least fifty-one (51%) percent of the directors then
still in office who were either directors at the beginning of such period or
whose election or nomination for election was previously so approved) cease for
any reason to constitute a majority of the Board of Directors of Atlas Holdings
then still in office; or (e) the failure of Atlas Holdings to own directly or
indirectly one hundred (100%) percent of the voting power of the total
outstanding Voting Stock of each Borrower and each other Guarantor (other than
directors' qualifying shares).
1.36 "Chapter 11 Cases" shall mean the Chapter 11 Cases of Chapter 11
Debtors under the Bankruptcy Code referred to as In re Atlas Air Worldwide
Holdings, Inc., et al., Case Nos. 04-10792-BKC-RAM through 04-10796-BKC-RAM,
Jointly Administered under Case No. 04- 10792-BKC-RAM, which were pending in the
Bankruptcy Court.
1.37 "Chapter 11 Debtors" shall mean, collectively, Atlas Air, Inc., as
debtor and debtor-in-possession, Polar Air Cargo, Inc., as debtor and
debtor-in-possession, Atlas Worldwide Holdings, Inc., as debtor and
debtor-in-possession, Airline Acquisition Corp. I, as debtor-in-possession and
Atlas Worldwide Aviation Logistics, Inc., as debtor and debtor-in-possession;
each sometimes being referred to hereinafter individually as a "Chapter 11
Debtor".
1.38 "Clearing Bank" shall mean Citibank, N.A., a national banking
association, together with its successors and assigns, or such other bank as
shall perform the clearing and settlement function for CNS and/or CASS pursuant
to the Clearinghouse Agreements or interclearance functions with IATA or its
members.
1.39 "Clearinghouse Agreements" shall mean, collectively, the agreements
of Polar with each of CNS and IATA related to the collection, clearing,
settlement and payment of funds, including utilizing CASS, with respect to sales
of transportation services for which air carrier members or associate member air
carriers have provided inter-airline transportation services, and
7
any other agreements and documents related to the foregoing; each sometimes
being referred to herein individually as a "Clearinghouse Agreement".
1.40 "CNS" shall mean Cargo Network Services Corporation, a Delaware
corporation, together with its successors and assigns.
1.41 "Code" shall mean the Internal Revenue Code of 1986, as the same now
exists or may from time to time hereafter be amended, modified, recodified or
supplemented, together with all rules, regulations and interpretations
thereunder or related thereto.
1.42 "Collateral" shall have the meaning set forth in Section 5 hereof.
1.43 "Collateral Access Agreement" shall mean an agreement in writing, in
form and substance satisfactory to Agent, from any lessor of premises to any
Borrower or Guarantor, or any other person to whom any Collateral is consigned
or who has custody, control or possession of any such Collateral or is otherwise
the owner or operator of any premises on which any of such Collateral is
located, in favor of Agent with respect to the Collateral at such premises or
otherwise in the custody, control or possession of such lessor, consignee or
other person.
1.44 "Commitment" shall mean, at any time, as to each Lender, the
principal amount set forth below such Lender's signature on the signatures PAGEs
hereto designated as the Commitment or on Schedule 1 to the Assignment and
Acceptance Agreement pursuant to which such Lender became a Lender hereunder in
accordance with the provisions of Section 13.7 hereof, as the same may be
adjusted from time to time in accordance with the terms hereof; sometimes being
collectively referred to herein as "Commitments".
1.45 "Confirmation Order" shall mean the Order and Judgment Confirming the
Final Modified Second Amended Joint Plan of Reorganization of Chapter 11 Debtors
issued by the Bankruptcy Court and entered on July 16, 2004 in the Chapter 11
Cases.
1.46 "Congress" shall mean Congress Financial Corporation, a Delaware
corporation, in its individual capacity, and its successors and assigns.
1.47 "Consolidated Net Income" shall mean, with respect to any Person for
any period, the aggregate of the net income (loss) of such Person and its
Subsidiaries, on a consolidated basis, for such period (excluding to the extent
included therein any extraordinary and/or one time or unusual and non-recurring
gains or any non-cash losses) after deducting all charges which should be
deducted before arriving at the net income (loss) for such period and, without
duplication, after deducting the Provision for Taxes for such period, all as
determined in accordance with GAAP; PROVIDED, THAT, (a) the net income of any
Person that is not a Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid or payable to such Person or a Subsidiary of such Person; (b)
except to the extent included pursuant to the foregoing clause, the net income
of any Person accrued prior to the date it becomes a Subsidiary of such Person
or is merged into or consolidated with such Person or any of its Subsidiaries or
that Person's assets are acquired by such Person or by its Subsidiaries shall be
excluded; and (c) the net income (if positive) of any Subsidiary (other than a
Borrower or an Obligor) to the extent that the declaration or payment of
dividends or similar distributions by such Subsidiary to such Person or to any
other wholly-
8
owned Subsidiary of such Person is not at the time permitted by operation of the
terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to such Subsidiary shall be
excluded. For the purposes of this definition, net income excludes any gain or
non-cash loss, together with any related Provision for Taxes for such gain or
non-cash loss, realized upon the sale or other disposition of any assets that
are not sold in the ordinary course of business (including, without limitation,
dispositions pursuant to sale and leaseback transactions) or of any Capital
Stock of such Person or a Subsidiary of such Person and any net income realized
or loss incurred as a result of changes in accounting principles or the
application thereof to such Person.
1.48 "Credit Facility" shall mean the Loans and Letter of Credit
Accommodations provided to or for the benefit of any Borrower pursuant to
Sections 2.1 and 2.2 hereof.
1.49 "Default" shall mean an act, condition or event which with notice or
passage of time or both would constitute an Event of Default.
1.50 "Defaulting Lender" shall have the meaning set forth in Section
6.10(d) hereof.
1.51 "Deposit Account Control Agreement" shall mean an agreement in
writing, in form and substance satisfactory to Agent, by and among Agent, any
Borrower or Guarantor with a deposit account at any bank and the bank at which
such deposit account is at any time maintained which provides that such bank
will comply with instructions originated by Agent directing disposition of the
funds in the deposit account without further consent by such Borrower or
Guarantor and has such other terms and conditions as Agent may reasonably
require.
1.52 "Domestic Account" shall mean an Account with respect to which Agent
determines that either (a) the billing office of the account debtor with respect
thereto is located in the United States of America and such account debtor
otherwise has its chief executive office or equivalent in the United States of
America or (b) the billing office of the account debtor with respect thereto is
located in Canada and such account debtor otherwise has its chief executive
office or equivalent in Canada.
1.53 "Domestic Cash Reserve" shall mean cash or Cash Equivalents
maintained by Borrowers and Guarantors in one or more investment accounts,
depository accounts or other accounts at banks or other financial or depository
institutions located in the United States of America and in an amount not to
exceed at any time the aggregate sum of $50,000,000.
1.54 "Domestic Slot" shall mean the rights and operational authority of
any Borrower and, if applicable, any Guarantor, now held or hereafter acquired,
to conduct an Instrumental Flight Rule (as defined under FAA regulations)
take-off or landing operation, as allocated pursuant to 14 C.F.R. Part 93,
Subpart S, during a specific hour or half-hour period at a specific High Density
Traffic Airport (as defined under FAA regulations), excluding such rights and
operational authority provided on a non-allocated basis for the conduct of
international operations pursuant to 14 C.F.R. 93.217.
9
1.55 "DOT" shall mean the United States Department of Transportation and
any successor or replacement governmental department, agency or other entity
having the same or similar authority and responsibility.
1.56 "EBITDAR" shall mean, as to any Person, with respect to any period,
an amount equal to: (a) the Consolidated Net Income of such Person and its
Subsidiaries for such period (without giving effect to extraordinary or
non-recurring gains or extraordinary or non-recurring non-cash charges), PLUS
(b) depreciation, amortization, rent and other non-cash charges (including, but
not limited to, imputed interest, deferred compensation, the actual
restructuring, relocation and reorganization costs incurred through December 31,
2004 in connection with the Reorganization Plan, together with any additional
restructuring, relocation and reorganization costs not to exceed $15,000,000 in
the aggregate on a cumulative basis incurred from and after December 31, 2004
(to the extent deducted in the computation of Consolidated Net Income of such
Person), all in accordance with GAAP, PLUS (c) Interest Expense for such period
(to the extent deducted in the computation of Consolidated Net Income of such
Person), PLUS (d) the Provision for Taxes for such period (to the extent
deducted in the computation of Consolidated Net Income of such Person).
1.57 "EETC Aircraft" shall mean, collectively, nine (9) Boeing 747-400
freighter aircraft (including the engines attached thereto) bearing U.S.
registration numbers N408MC, N492MC, N493MC, N496MC, N497MC, N498MC, N499MC,
N409MC and N412MC and (ii) three (3) Boeing 747-400 freighter aircraft
(including the engines attached thereto) bearing registration numbers U.K.
registration marks G-GSSA (formerly bearing U.S. registration mark N495MC),
G-GSSB (formerly bearing U.S. registration mark N491MC), and G-GSSC (formerly
bearing U.S. registration mark N494MC).
1.58 "EETC Certificates" shall mean, collectively, the 1998 Class A
Certificates, the 1999 Class A Certificates and the 2000 Class A Certificates,
each as defined in the Reorganization Plan.
1.59 "EETC Certificate Holders" shall mean, collectively, the Persons who
beneficially hold through The Depository Trust Company, the EETC Certificates,
together with their respective successors and assigns; each sometimes being
referred to herein individually as an "EETC Certificate Holder".
1.60 "EETC Documents" shall mean, collectively, the following: (a) the
EETC Lease Agreements; (b) the EETC Trust Indentures; (c) the EETC Restructure
Agreements, (d) the EETC Security Agreements and (e) the other principal
agreements, documents and instruments executed or delivered in connection with
or related to the foregoing; each sometimes being referred to herein
individually as an "EETC Document".
1.61 "EETC Effective Date" shall mean the date upon which all of the
conditions precedent to the effectiveness of the amendments to certain of the
EETC Documents (as set forth in the EETC Restructure Agreements) shall have
occurred and the EETC Intercreditor Agreement shall have become a valid, binding
and enforceable agreement in accordance with its terms.
10
1.62 "EETC Intercreditor Agreement" shall mean an Intelcreditor and
Subordination Agreement in the form of Exhibit G attached hereto, duly
authorized, executed and delivered to Agent by the Owner Trustees (as such term
is defined in the Reorganization Plan) and each Indenture Trustee (as such term
is defined in the Reorganization Plan) in respect of the EETC Transactions.
1.63 "EETC Lease Agreements" shall mean the lease agreements, executed in
connection with the EETC Transactions, to which Atlas Air is a party as lessee,
in each case as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced; each sometimes being
referred to herein individually as an "EETC Lease Agreement".
1.64 "EETC Restructure Agreements" shall mean the Restructure Agreements,
dated as of July 27, 2004 and effective as of the EETC Effective Date, by and
among Atlas Air, the EETC Trustee and Wells Fargo Bank Northwest N.A., in its
capacity as the Owner Trustee (as defined in the Reorganization Plan), pursuant
to which certain of the EETC Documents have been amended, in each case as the
same now exist or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced; each sometimes being referred to herein
individually as an "EETC Restructure Agreement".
1.65 "EETC Security Agreements" shall mean, collectively, each Security
Agreement between Atlas Air, as debtor and EETC Owner Trustees, as secured
parties, with respect to the grant by Atlas Air in favor of the EETC Trustee in
connection with the EETC Transactions, in each case as the same now exist or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced; each sometimes being referred to herein individually as an "EETC
Security Agreement".
1.66 "EETC Transactions" shall mean, collectively, the enhanced equipment
trust certificate financing transactions consummated by Atlas in 1998, 1999 and
2000 and pursuant to which the EETC Aircraft are leased or financed, as further
defined in the Reorganization Plan.
1.67 "EETC Trustee" shall mean Wilmington Trust Company, in its capacity
as Pass Through Trustee with respect to the EETC Transactions and evidenced by
the EETC Documents, together with its successors and assigns in such capacity.
1.68 "EETC Trust Indentures" shall mean, collectively, each Trust
Indenture and Mortgage executed by Atlas Air, as mortgagor, in favor of the EETC
Trustee, as mortgagee, in connection with the EETC Transactions, in each case as
the same now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced; each sometimes being referred to herein
individually as an "EETC Trust Indenture".
1.69 "Effective Date" shall mean a date after July 27,2004 (when the
Confirmation Order became a Final Order) on which all of the conditions
precedent to the effectiveness of the Reorganization Plan shall have been
satisfied as determined by Agent in good faith, or with the consent of Agent,
waived in accordance with the terms thereof.
1.70 "Eligible Accounts" shall mean Accounts constituting Collateral
created by a Borrower which are and continue to be acceptable to Agent based on
the criteria set forth below and which consist, in the case of Accounts created
by Polar, of Accounts arising from the
11
rendition of any charter or scheduled cargo transportation services and which
consist, in the case of Accounts of Atlas, of Accounts arising under an ACMI
Contract. In general, without limitation upon the preceding sentence, such
Accounts shall be Eligible Accounts if:
(a) such Accounts arise from the actual and BONA FIDE rendition of
services by such Borrower consisting (i) of the leasing of Aircraft and related
assets and rights pursuant to ACMI contracts or (ii) of air transportation of
cargo, including mail, in each case in the ordinary course of such Borrower's
business and which transactions are completed in accordance with the terms and
provisions contained in any documents related thereto including the applicable
Clearinghouse Agreements;
(b) such Accounts are not unpaid more than ninety (90) days after the date
of the original invoice for them or more than sixty (60) days after the due date
for them;
(c) such Accounts comply with the terms and conditions contained in
Section 7.2(b) of this Agreement;
(d) such Accounts do not arise from sales on consignment, guaranteed sale,
sale and return, sale on approval, or other terms under which payment by the
account debtor may be conditional or contingent;
(e) such Accounts do not consist of (i) progress billings (such that the
obligation of the account debtors with respect to such Accounts is conditioned
upon such Borrower's satisfactory completion of any further performance under
the agreement giving rise thereto), (ii) bill and hold invoices or retainage
invoices, except as to bill and hold invoices, if Agent shall have received an
agreement in writing from the account debtor, in form and substance satisfactory
to Agent, confirming the unconditional obligation of the account debtor to take
the goods related thereto and pay such invoice, or (iii) advance billings
(including, in the case of any Accounts arising under an ACMI Contract, payments
due for lease periods that have not yet transpired);
(f) the account debtor with respect to such Accounts has not asserted a
counterclaim, defense or dispute and is not owed or does not claim to be owed
any amounts that may give rise to any right of setoff or recoupment against such
Accounts including, with respect to any ACMI Contract, any entitlement by such
account debtor with respect thereto to prospective performance by a Borrower or
Guarantor (but the portion of the Accounts of such account debtor in excess of
the amount at any time and from time to time owed by such Borrower to such
account debtor or claimed owed by such account debtor may be deemed Eligible
Accounts);
(g) if such Accounts are Accounts of Polar, notwithstanding anything to
the contrary set forth herein, (i) the rendition of air transportation services
is evidenced by bills of lading, exchange orders or other applicable cargo
transportation documents covering such transportation as completed by Polar and,
if settled under Clearinghouse Agreements, settled and cleared through CNS or
IATA, which transportation documents have been separated into batches and
submitted to and received by CNS or CASS in accordance with the requirements and
procedures set forth in the Clearinghouse Agreements and identified in the form
of the Recap
12
Sheet required to be delivered to Agent pursuant to Section 7.1 hereof, (ii) if
settled under Clearinghouse Agreements any applicable Cargo Agent with respect
thereto has (A) been duly appointed to act as an agent on behalf of Polar for
the promotion and sale to the general public of international air cargo
transportation within the country of origin of the shipment giving rise to such
Account under the terms of a Cargo Agency Agreement substantially in the form of
the agreement included as Resolution 801(a)(ii) of the Cargo Agency Conference
Resolutions Manual, 25th edition, effective October 1, 2002, issued by IATA, (B)
no notice of irregularity has been issued in respect of the Cargo Agent
obligated on such Account and (C) such Cargo Agent is not in default under the
Cargo Agency Agreement by which it is bound and is in compliance with all rules
and procedures of CASS applicable to such Cargo Agent, (iii) without
limitation, upon any other provision hereof, such Accounts are not unpaid after
the date of the bi-monthly settlement next following the date the applicable
transportation service has been completed, as provided in the applicable
Clearinghouse Agreements and (iv) there are no proceedings or actions which are
threatened or pending against the account debtors with respect to such Accounts
or the Clearing Bank which might result in any material adverse change in any
such account debtor's financial condition or the ability of CNS or CASS, as
applicable, to effectuate timely settlement and payment to Polar with respect
thereto;
(h) if such Accounts are Accounts arising under an ACMI Contract, the
applicable ACMI Contract shall have been pledged to Agent in accordance with
Section 5.2(b) hereof in a manner satisfactory to Agent;
(i) there are no facts, events or occurrences which would impair the
validity, enforceability or collectability of such Accounts or reduce the amount
payable or delay payment thereunder;
(j) such Accounts are subject to the first priority, valid and perfected
security interest of Agent, for itself and the benefit of Lenders, under the
laws of the United States of America, its states and political subdivisions, and
any goods giving rise thereto are not, and were not at the time of the sale
thereof, subject to any liens except those permitted in this Agreement that are
subject to an intercreditor agreement in form and substance satisfactory to
Agent between the holder of such security interest or lien and Agent;
(k) neither the account debtor nor any officer or employee of the account
debtor with respect to such Accounts is an officer, employee, agent or other
Affiliate of any Borrower or Guarantor;
(l) the account debtors with respect to such Accounts are not any foreign
government, the United States of America, any state, political subdivision,
department, agency or instrumentality thereof, unless, if the account debtor is
the United States of America, any state, political subdivision, department,
agency or instrumentality thereof, upon Agent's request, the Federal Assignment
of Claims Act of 1940, as amended or any similar state or local law, if
applicable, has been complied with in a manner satisfactory to Agent; PROVIDED,
HOWEVER, that at any time or times that Excess Availability equals or exceeds
$20,000,000 (assuming that the determination of Excess Availability only for
purposes of this clause 1.70(1) includes all otherwise Eligible Accounts as to
which the account debtor is the United States of America or any state, political
subdivision, department, agency or instrumentality thereof (collectively, "US
13
Government Accounts") to the extent that such US Government Accounts do not
constitute more than fifty (50%) percent of all Eligible Accounts for purposes
of this clause 1.70(1), and no Default or Event of Default exists or has
occurred and is continuing, Agent shall not request or require that Borrowers
comply with the Federal Assignment of Claims Act of 1940 with respect to
Accounts which satisfy all of the other eligibility criteria set forth in this
definition and as to which the account debtor is the United States of America,
any state, political subdivision, department, agency or instrumentality thereof;
(m) without limitation upon subsection 1.70(g)(iv) above, there are no
proceedings or actions which are threatened or pending against the account
debtors with respect to such Accounts which might result in any material adverse
change in any such account debtor's financial condition (including, without
limitation, any bankruptcy, dissolution, liquidation, reorganization or similar
proceeding);
(n) the aggregate amount of such Accounts owing by a single account debtor
do not constitute twenty-five (25%) percent of the aggregate amount of all
otherwise Eligible Accounts (but the portion of the Accounts not in excess of
such percentage may be deemed Eligible Accounts);
(o) such Accounts are not owed by an account debtor who has Accounts
unpaid more than ninety (90) days after the original invoice date for them or
more than sixty (60) days after the due date for them which constitute more than
fifty (50%) percent of the total Accounts then owed by such account debtor;
(p) the account debtor is not located in a state requiring the filing of a
Notice of Business Activities Report or similar report in order to permit such
Borrower to seek judicial enforcement in such state of payment of such Account,
unless such Borrower has qualified to do business in such state or has filed a
Notice of Business Activities Report or equivalent report for the then current
year or such failure to file and inability to seek judicial enforcement is
capable of being remedied without any material delay or material cost;
(q) such Accounts are owed by account debtors whose total indebtedness to
such Borrower does not exceed the credit limit with respect to such account
debtors as determined by such Borrower from time to time, to the extent such
credit limit as to any account debtor is established consistent with the current
practices of such Borrower as of the date hereof and such credit limit is
acceptable to Agent (but the portion of the Accounts not in excess of such
credit limit may be deemed Eligible Accounts); and
(r) such Accounts are owed by account debtors deemed creditworthy at all
times by Agent in good faith.
In general, criteria for Eligible Accounts set forth above may only be changed
and any new criteria for Eligible Accounts may only be established by Agent in
good faith based on either: (i) an event, condition or other circumstance
arising after the date hereof, or (ii) an event, condition or other circumstance
existing on the date hereof to the extent Agent has no written notice thereof
from a Borrower prior to the date hereof, in either case under clause (i) or
(ii) which adversely affects or could reasonably be expected to adversely affect
in any manner the Accounts
14
or the security interest therein of Agent, for itself and the benefit of
Lenders, in the good faith determination of Agent. Any Accounts constituting
Collateral that are not Eligible Accounts shall nevertheless be part of the
Collateral.
1.71 "Eligible Domestic Accounts" shall mean Domestic Accounts that are in
all other respects Eligible Accounts as determined by Agent. Without limiting
the generality of the foregoing, with respect to Domestic Accounts that Agent
determines in good faith that the validity, perfection, priority or enforcement
of Agent's security interest in such Account shall be governed by the laws of
Canada, then at any time, promptly upon Agent's request, the Borrower to which
such Domestic Account is owed or owing shall satisfy the following conditions as
determined by Agent:
(A) if requested by Agent, Agent shall have received an original of
a Deposit Account Control Agreement with respect to the deposit accounts of such
Borrower maintained in such Province of Canada on terms and conditions
acceptable to Agent, duly executed and delivered by such Borrower and such
depository bank;
(B) Agent shall have received, in form and substance satisfactory to
Agent, the originals of all Financing Agreements that Agent determines in its
good faith judgment is necessary to perfect and enforce its security interest or
lien upon such Domestic Account under the applicable laws of Canada, duly
executed and delivered by such Borrower;
(C) Agent shall have received evidence, in form and substance
satisfactory to Agent, that Agent has valid perfected and first priority
security interests in and liens upon any such Domestic Accounts under the
applicable laws of Canada, subject only to the security interests and liens (if
any) permitted herein; and
(D) at Agent's request, such Borrower shall deliver to Agent, in
form and substance satisfactory to Agent, evidence of the subsistence of
corporate authorizing resolutions and an opinion of counsel to such Borrower
with respect to the Financing Agreements and the transactions contemplated
thereby, and such other matters as Agent shall reasonably require.
1.72 "Eligible Foreign Accounts" shall mean Foreign Accounts with respect
to which the billing office of the account debtor with respect thereto is
located in a country other than a Preferred Foreign Jurisdiction, the United
States of America or Canada (each such country herein referred to as a
"Non-Preferred Foreign Jurisdiction") and such account debtor otherwise has its
chief executive office or equivalent located in a Non-Preferred Foreign
Jurisdiction, but shall in all events be Accounts with respect to which the
validity, perfection, priority and enforcement of Agent's security interest in
such Accounts shall be governed by the laws of a Non-Preferred Foreign
Jurisdiction, as determined by Agent in good faith and which are in all respects
Eligible Accounts except that Agent's security interest in such Accounts shall
not be required to be valid, perfected and/or enforceable under the laws of such
Non-Preferred Foreign Jurisdiction.
1.73 "Eligible Preferred Foreign Accounts" shall mean Foreign Accounts
with respect to which the billing office of the account debtor with respect
thereto is located in a country that is a Preferred Foreign Jurisdiction, and
such account debtor otherwise has its chief executive office or equivalent
located in a country that is a Preferred Foreign Jurisdiction, but shall in all
events
15
be an Account with respect to which the validity, perfection, priority and
enforcement of Agent's security interest in such Account shall be governed by
the laws of a Preferred Foreign Jurisdiction as determined by Agent in good
faith and are in all respects Eligible Accounts.
1.74 "Eligible Transferee" shall mean (a) any Lender; (b) the parent
company of any Lender and/or any Affiliate of such Lender which is at least
fifty (50%) percent owned by such Lender or its parent company; (c) any person
(whether a corporation, partnership, trust or otherwise) that is engaged in the
business of making, purchasing, holding or otherwise investing in bank loans and
similar extensions of credit in the ordinary course of its business and is
administered or managed by a Lender or with respect to any Lender that is a fund
which invests in bank loans and similar extensions of credit, any other fund
that invests in bank loans and similar extensions of credit and is managed by
the same investment advisor as such Lender or by an Affiliate of such investment
advisor, and in each case is approved by Agent; and (d) any other commercial
bank, financial institution or "accredited investor" (as defined in Regulation D
under the Securities Act of 1933) approved by Agent; PROVIDED, THAT, (i) neither
any Borrower nor any Guarantor or any Affiliate of any Borrower or Guarantor
shall qualify as an Eligible Transferee and (ii) no Person to whom any
Indebtedness which is in any way subordinated in right of payment to any other
Indebtedness of any Borrower or Guarantor shall qualify as an Eligible
Transferee, except as Agent may otherwise specifically agree.
1.75 "Engines" shall mean goods of a Borrower or Guarantor consisting of
aircraft engines having the equivalent of 750 or more rated take off shaft
horsepower and that are owned by a Borrower or Guarantor and used in connection
with the operation of its Aircraft, whether now owned or hereafter acquired and
wherever located.
1.76 "Engine Security Agreement" shall mean the Aircraft Engines Security
Agreement, dated of even date herewith, duly executed and delivered by Borrowers
and Guarantors, as debtors, granting to Agent, as secured party for itself and
the benefit of Lenders, a lien upon and security interest in certain of the
Engines, as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
1.77 "Environmental Laws" shall mean all foreign, federal, state and local
laws (including common law), legislation, rules, codes, licenses, permits
(including any conditions imposed therein), authorizations, judicial or
administrative decisions, injunctions or agreements between any Borrower or
Guarantor and any Governmental Authority, (a) relating to pollution and the
protection, preservation or restoration of the environment (including air, water
vapor, surface water, ground water, drinking water, drinking water supply,
surface land, subsurface land, plant and animal life or any other natural
resource), or to human health or safety, (b) relating to the exposure to, or the
use, storage, recycling, treatment, generation, manufacture, processing,
distribution, transportation, handling, labeling, production, release or
disposal, or threatened release, of Hazardous Materials, or (c) relating to all
laws with regard to recordkeeping, notification, disclosure and reporting
requirements respecting Hazardous Materials. The term "Environmental Laws"
includes (i) the Federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Federal Superfund Amendments and Reauthorization Act,
the Federal Water Pollution Control Act of 1972, the Federal Clean Water Act,
the Federal Clean Air Act, the Federal Resource Conservation and Recovery Act of
1976 (including the Hazardous and Solid Waste Amendments thereto), the
16
Federal Solid Waste Disposal and the Federal Toxic Substances Control Act, the
Federal Insecticide, Fungicide and Rodenticide Act, and the Federal Safe
Drinking Water Act of 1974, (ii) applicable state counterparts to such laws and
(iii) any common law or equitable doctrine that may impose liability or
obligations for injuries or damages due to, or threatened as a result of, the
presence of or exposure to any Hazardous Materials.
1.78 "Equipment" shall mean, as to each Borrower and Guarantor, all of
such Borrower's and Guarantor's now owned and hereafter acquired equipment,
wherever located, including machinery, data processing and computer equipment
(whether owned or licensed and including embedded software), Aircraft, Engines,
flight simulators, Spare Parts, vehicles, tools, furniture, fixtures, all
attachments, accessions and property now or hereafter affixed thereto or used in
connection therewith, and substitutions and replacements thereof, wherever
located.
1.79 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, together with all rules, regulations and interpretations thereunder or
related thereto.
1.80 "ERISA Affiliate" shall mean any person required to be aggregated
with any Borrower, any Guarantor or any of its or their respective Subsidiaries
under Sections 414(b), 414(c), 414(m) or 414(o) of the Code.
1.81 "ERISA Event" shall mean (a) any "reportable event", as defined in
Section 4043(c) of ERISA or the regulations issued thereunder, with respect to a
Plan; (b) the adoption of any amendment to a Plan that would require the
provision of security pursuant to Section 401(a)(29) of the Code or Section 307
of ERISA; (c) the existence with respect to any Plan of an "accumulated funding
deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA),
whether or not waived; (d) the filing pursuant to Section 412 of the Code or
Section 303(d) of ERISA of an application for a waiver of the minimum funding
standard with respect to any Plan; (e) the occurrence of a "prohibited
transaction" with respect to which any Borrower, Guarantor or any of its or
their respective Subsidiaries is a "disqualified person" (within the meaning of
Section 4975 of the Code) or with respect to which any Borrower, Guarantor or
any of its or their respective Subsidiaries could otherwise be liable; (f) a
complete or partial withdrawal by any Borrower, Guarantor or any ERISA Affiliate
from a Multiemployer Plan or a cessation of operations which is treated as such
a withdrawal or notification that a Multiemployer Plan is in reorganization; (g)
the filing of a notice of intent to terminate, the treatment of a Plan amendment
as a termination under Section 4041 or 4041A of ERISA, or the commencement of
proceedings by the Pension Benefit Guaranty Corporation to terminate a Plan; (h)
an event or condition which might reasonably be expected to constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan; (i) the imposition of any liability under Title
IV of ERISA, other than the Pension Benefit Guaranty Corporation premiums due
but not delinquent under Section 4007 of ERISA, upon any Borrower, Guarantor or
any ERISA Affiliate in excess of $250,000 and (j) any other event or condition
with respect to a Plan including any Plan subject to Title IV of ERISA
maintained, or contributed to, by any ERISA Affiliate that could reasonably be
expected to result in liability of any Borrower in excess of $250,000.
1.82 "Eurodollar Rate" shall mean with respect to the Interest Period for
a Eurodollar Rate Loan, the interest rate per annum equal to the arithmetic
average of the rates of interest per
17
annum (rounded upwards, if necessary, to the next one-thousandth (1/1000th) of
one (1%) percent) at which Reference Bank is offered deposits of United States
dollars in the London interbank market (or other Eurodollar Rate market selected
by a Borrower or Administrative Borrower on behalf of such Borrower and approved
by Agent) on or about 9:00 a.m. (New York time) two (2) Business Days prior to
the commencement of such Interest Period in amounts substantially equal to the
principal amount of the Eurodollar Rate Loans requested by and available to such
Borrower in accordance with this Agreement, with a maturity of comparable
duration to the Interest Period selected by or on behalf of a Borrower.
1.83 "Eurodollar Rate Loans" shall mean any Loans or portion thereof on
which interest is payable based on the Adjusted Eurodollar Rate in accordance
with the terms hereof.
1.84 "Event of Default" shall mean the occurrence or existence of any
event or condition described in Section 10.1 hereof.
1.85 "Excess Availability" shall mean the amount, as determined by Agent
in good faith, calculated at any date, equal to: (a) the amount of Qualified
Cash of Borrowers and Guarantors, PLUS (b) the lesser of: (i) the Borrowing Base
and (ii) the Maximum Credit (in each case under (i) or (ii) after giving effect
to any Reserves other than any Reserves in respect of Letter of Credit
Accommodations), MINUS (c) the sum of: (i) the amount of all then outstanding
and unpaid Obligations of Borrowers (but not including for this purpose
Obligations of such Borrower arising pursuant to any guarantees in favor of
Agent and Lenders of the Obligations of any other Borrowers or any outstanding
Letter of Credit Accommodations), PLUS (ii) the amount of all Reserves then
established in respect of Letter of Credit Accommodations, PLUS (iii) the
aggregate amount of all then outstanding and unpaid trade payables and other
obligations of Borrowers which are outstanding more than forty-five (45) days
past the due date for them as of such time based on such reports as Agent may
from time to time specify (other than trade payables or other obligations being
contested or disputed by a Borrower in good faith), PLUS (iv) without
duplication, the amount of checks issued by Borrowers and Atlas Holding to pay
trade payables and other obligations which are more than forty-five (45) days
past the due date for them as of such time based on such reports as Agent may
from time to time specify (other than trade payables or other obligations being
contested or disputed by a Borrower or any Guarantor in good faith or which are
subject to extended payment terms as of the date hereof as disclosed by
Borrowers to Agent in writing), but not yet sent.
1.86 "Exchange Act" shall mean the Securities Exchange Act of 1934,
together with all rules, regulations and interpretations thereunder or related
thereto.
1.87 "Excluded Property" shall have the meaning set forth in Section
5.1(b).
1.88 "Existing Aircraft Financings" shall mean, collectively, the
financing arrangements other than the EETC Transactions and the transactions
under the Aircraft Credit Facility Agreement, of certain of Borrowers,
Guarantors and/or their affiliates with respect to the acquisition by them of
rights in and to Aircraft and related Equipment, including pursuant to Capital
Leases, as more fully described on Schedule 1.88 hereto and pursuant to the
agreements, documents and instruments listed on such Schedule, in each case as
the same now exist or may
18
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced; each sometimes being referred to herein individually as an "Existing
Aircraft Financing".
1.89 "Existing Letters of Credit" shall mean, collectively, the letters of
credit issued for the account of a Borrower or a Guarantor or for which such
Borrower or Guarantor is otherwise liable listed on Schedule 1.89 to the
Information Certificate, as the same now exist or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced.
1.90 "FAA" shall mean the Federal Aviation Administration of the DOT, and
any successor or replacement administration, governmental agency or other entity
having the same or similar authority and responsibility.
1.91 "Federal Aviation Laws" shall mean Title 49 of the United States
Code, as the same now exists or may hereafter from time to time be amended,
modified, recodified or supplemented, together with all rules, regulations,
directives, special directives and interpretations thereunder or related
thereto.
1.92 "Fee Letter" shall mean the letter agreement, dated of even date
herewith, by and among Borrowers, Guarantors and Agent, setting forth certain
fees payable by Borrowers to Agent for the benefit of itself and Lenders, as the
same now exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
1.93 "Fifth Freedom Rights" shall mean the operational right and authority
(including "behind/beyond rights") to enplane either passenger traffic and/or
cargo or both, including mail, in a foreign country and deplane it in another
foreign country.
1.94 "Final Order" shall mean an order (a) that has been duly entered by
the Bankruptcy Court, (b) that has not been modified, vacated, reversed,
revoked, rescinded, stayed, or appealed from, (c) with respect to which no
petition, application or motion for reversal, stay or modification thereof or
for a writ of certiorari with respect thereto has been filed or granted, and (d)
as to which the applicable time period in which to appeal, petition for
certiorari, or move for reargument or rehearing has expired.
1.95 "Financing Agreements" shall mean, collectively, this Agreement and
all notes, guarantees, security agreements (including the Aircraft Security
Agreement, Engine Security Agreement, Spare Parts Agreement and Slots
Agreement), deposit account control agreements, investment property control
agreements, intercreditor agreements and all other agreements, documents and
instruments now or at any time hereafter executed and/or delivered by any
Borrower or Obligor in connection with this Agreement, as the foregoing now
exist or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced; PROVIDED, THAT, in no event shall any Financing Agreement
be deemed to include any Interest Rate Protection Agreement.
1.96 "Foreign Account" shall mean an Account with respect to which Agent
determines the billing office of the account debtor with respect thereto is
located in a country other than the United States of America or Canada and such
account debtor otherwise has its chief executive office or equivalent located in
a country other than the United States of America or Canada.
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1.97 "Foreign Aviation Authorities" means any foreign governmental,
regulatory or public entity, or other agency or agencies or quasi-governmental
corporate entity which exercises jurisdiction over the issuance or authorization
to serve any foreign point on any of the Routes and/or operations related to any
of the Routes or the Foreign Slots.
1.98 "Foreign Cash Reserve" shall mean cash or Cash Equivalents maintained
by Borrowers and Guarantors in one or more investment accounts, depository
accounts or other accounts at banks or other financial or depository
institutions located outside the United States of America and in an amount not
to exceed at any time the aggregate sum of $12,500,000.
1.99 "Foreign Slot" shall mean the rights and operational authority, of
any Borrower and, if applicable, any Guarantor, now held or hereafter acquired,
to conduct take-off or landing operations during a specific hour or other time
period at the New Tokyo Narita International Airport located in Narita, Japan,
as necessary to operate a Route, and at any other airport not located in the
United States of America for which any Borrower or, if applicable, any
Guarantor, holds or hereafter acquires such rights and operational authority for
a period of not less than twelve (12) consecutive months, excluding the two
slots held by Federal Express Corporation that are on loan to Polar on a
temporary and fully-revocable basis.
1.100 "GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time as set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Board which are applicable to the
circumstances as of the date of determination consistently applied, except that,
for purposes of Section 9.17 hereof, GAAP shall be determined on the basis of
such principles in effect on the date hereof and consistent with those used in
the preparation of the most recent audited financial statements delivered to
Agent prior to the date hereof.
1.101 "Governmental Authority" shall mean any nation or government, any
state, province, or other political subdivision thereof, any central bank (or
similar monetary or regulatory authority) thereof, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
1.102 "Guarantors" shall have the meaning set forth in the preamble
hereto; each sometimes being referred to herein individually as a "Guarantor".
1.103 "GSS" shall mean Global Supply Systems Limited, a private company
organized under the laws of England and Wales, and its successors and assigns.
1.104 "Hazardous Materials" shall mean any hazardous, toxic or dangerous
substances, materials and wastes, including hydrocarbons (including naturally
occurring or man-made petroleum and hydrocarbons), flammable explosives,
asbestos, urea formaldehyde insulation, radioactive materials, biological
substances, polychlorinated biphenyls, pesticides, herbicides and any other kind
and/or type of pollutants or contaminants (including materials which include
hazardous constituents), sewage, sludge, industrial slag, solvents and/or any
other similar substances, materials, or wastes and including any other
substances, materials or wastes that are
20
or become regulated under any Environmental Law (including any that are or
become classified as hazardous or toxic under any Environmental Law).
1.105 "IATA" shall mean the International Air Transportation Association,
together with its successors and assigns, or such other replacement trade
association or other Person performing the same or similar functions with
respect to the airline industry.
1.106 "Inactive Subsidiaries" shall mean, collectively, Airline
Acquisition Corp II, a Delaware corporation, Airline Acquisition Corp III, a
Delaware corporation, Atlas Air Global Services, Inc., a Delaware corporation,
Atlas Worldwide Aviation Logistics, Inc., a Florida corporation, and Liege
Global Cargo (Sales Co), a private company organized under the laws of Belgium,
each sometimes being referred to herein individually as an "Inactive
Subsidiary".
1.107 "Indebtedness" shall mean, with respect to any Person, any
liability, whether or not contingent, (a) in respect of borrowed money (whether
or not the recourse of the lender is to the whole of the assets of such Person
or only to a portion thereof) or evidenced by bonds, notes, debentures or
similar instruments; (b) representing the balance deferred and unpaid of the
purchase price of any property or services (except any such balance that
constitutes an account payable to a trade creditor (whether or not an Affiliate)
created, incurred, assumed or guaranteed by such Person in the ordinary course
of business of such Person in connection with obtaining goods, materials or
services that is not overdue by more than ninety (90) days, unless the trade
payable is being contested in good faith); (c) all obligations as lessee under
leases which have been, or should be, in accordance with GAAP recorded as
Capital Leases; (d) any contractual obligation, contingent or otherwise, of such
Person to pay or be liable for the payment of any indebtedness described in this
definition of another Person, including, without limitation, any such
indebtedness, directly or indirectly guaranteed, or any agreement to purchase,
repurchase, or otherwise acquire such indebtedness, obligation or liability or
any security therefor, or to provide funds for the payment or discharge thereof,
or to maintain solvency, assets, level of income, or other financial condition;
(e) all obligations with respect to redeemable stock and redemption or
repurchase obligations under any Capital Stock or other equity securities issued
by such Person; (f) all reimbursement obligations and other liabilities of such
Person with respect to surety bonds (whether bid, performance or otherwise),
letters of credit, banker's acceptances, drafts or similar documents or
instruments issued for such Person's account; (g) all indebtedness of such
Person in respect of indebtedness of another Person for borrowed money or
indebtedness of another Person otherwise described in this definition which is
secured by any consensual lien, security interest, collateral assignment,
conditional sale, mortgage, deed of trust, or other encumbrance on any asset of
such Person, whether or not such obligations, liabilities or indebtedness are
assumed by or are a personal liability of such Person, all as of such time; (h)
all obligations, liabilities and indebtedness of such Person (marked to market)
arising under swap agreements, cap agreements and collar agreements and other
agreements or arrangements designed to protect such person against fluctuations
in interest rates or currency or commodity values; (i) all obligations owed by
such Person under License Agreements with respect to non-refundable, advance or
minimum guarantee royalty payments; and (j) the principal and interest portions
of all rental obligations of such Person under any synthetic lease or similar
off-balance sheet financing where such transaction is considered to be borrowed
money for tax purposes but is classified as an operating lease in accordance
with GAAP.
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1.108 "Information Certificate" shall mean the Information Certificate of
Borrowers and Guarantors constituting Exhibit C hereto containing material
information with respect to Borrowers and Guarantors, their respective
businesses and assets provided by or on behalf of Borrowers and Guarantors to
Agent in connection with the preparation of this Agreement and the other
Financing Agreements and the financing arrangements provided for herein.
1.109 "Intellectual Property" shall mean, as to each Borrower and
Guarantor, such Borrower's and Guarantor's now owned and hereafter arising or
acquired: patents, patent rights, patent applications, copyrights, works which
are the subject matter of copyrights, copyright applications, copyright
registrations, trademarks, servicemarks, trade names, trade styles, trademark
and service mark applications, and licenses and rights to use any of the
foregoing and all applications, registrations and recordings relating to any of
the foregoing as may be filed in the United States Copyright Office, the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any state thereof, any political subdivision thereof or in any
other country or jurisdiction, together with all rights and privileges arising
under applicable law with respect to any Borrower's or Guarantor's use of any of
the foregoing; all extensions, renewals, reissues, divisions, continuations, and
continuations-in-part of any of the foregoing; all rights to sue for past,
present and future infringement of any of the foregoing; inventions, trade
secrets, formulae, processes, compounds, drawings, designs, blueprints, surveys,
reports, manuals, and operating standards; goodwill (including any goodwill
associated with any trademark or servicemark, or the license of any trademark or
servicemark); customer and other lists in whatever form maintained; trade secret
rights, copyright rights, rights in works of authorship, domain names and domain
name registration; software and contract rights relating to computer software
programs, in whatever form created or maintained.
1.110 "Interest Expense" shall mean, for any period, as to any Person, as
determined in accordance with GAAP, the total interest expense of such Person,
whether paid or accrued during such period (including the interest component of
Capital Leases for such period), including, without limitation, discounts in
connection with the sale of any Accounts and bank fees, commissions, discounts
and other fees and charges owed with respect to letters of credit, banker's
acceptances or similar instruments.
1.111 "Interest Period" shall mean for any Eurodollar Rate Loan, a period
of approximately one (1), two (2), or three (3) months duration as any Borrower
(or Administrative Borrower on behalf of such Borrower) may elect, the exact
duration to be determined in accordance with the customary practice in the
applicable Eurodollar Rate market; PROVIDED, THAT, such Borrower (or
Administrative Borrower on behalf of such Borrower) may not elect an Interest
Period which will end after the last day of the then-current term of this
Agreement.
1.112 "Interest Rate" shall mean,
(a) Subject to clauses (b) and (c) of this definition below:
(i) as to Prime Rate Loans, a rate equal to one quarter of one
(1/4%) percent per annum in excess of the Prime Rate,
22
(ii) as to Eurodollar Rate Loans, a rate equal to two and one
quarter (2 1/4%) percent per annum in excess of the Adjusted Eurodollar Rate (in
each case, based on the Eurodollar Rate applicable for the Interest Period
selected by a Borrower, or by Administrative Borrower on behalf of such
Borrower, as in effect three (3) Business Days after the date of receipt by
Agent of the request of or on behalf of such Borrower for such Eurodollar Rate
Loans in accordance with the terms hereof, whether such rate is higher or lower
than any rate previously quoted to any Borrower or Guarantor).
(b) Subject to clause (c) of this definition below, effective as of the
first (1st) day of the second calendar month after the date hereof, the Interest
Rate payable by each Borrower shall be increased or decreased, as the case may
be, (i) as to Prime Rate Loans, to the rate equal to the Applicable Margin for
Prime Rate Loans on a per annum basis plus the Prime Rate, and (ii) as to
Eurodollar Rate Loans, to the rate equal to the Applicable Margin for Eurodollar
Rate Loans on a per annum basis in excess of the Adjusted Eurodollar Rate.
(c) Notwithstanding anything to the contrary contained in clauses (a)
and (b) of this definition, the Applicable Margin otherwise used to calculate
the Interest Rate for Prime Rate Loans and Eurodollar Rate Loans shall be the
otherwise applicable percentage set forth in the definition of the term
Applicable Margin for each category of Loans, PLUS two (2%) percent per annum,
at Agent's option, (i) for the period (A) from and after the effective date of
termination or non-renewal hereof until Agent and Lenders have received full and
final payment of all outstanding and unpaid Obligations which are not contingent
and cash collateral or letter of credit, as Agent may specify, in the amounts
and on the terms required under Section 13.1 hereof for contingent Obligations
(notwithstanding entry of a judgment against any Borrower or Guarantor) and (B)
from and after the date of the occurrence of an Event of Default and for so long
as such Event of Default is continuing and (ii) on Loans to a Borrower at any
time outstanding in excess of the Borrowing Base of such Borrower (whether or
not such excess(es) arise or are made with or without the knowledge or consent
of Agent or any Lender and whether made before or after an Event of Default).
1.113 "Interest Rate Protection Agreements" shall mean, collectively, any
agreements between any Borrower or Guarantor and any Affiliate of Agent or any
other financial institution reasonably acceptable to Agent that is a rate swap
agreement, basis swap, forward rate agreement, commodity swap, fuel hedging
agreement or derivative, interest rate option, forward foreign exchange
agreement, spot foreign exchange agreement, rate cap agreement rate, floor
agreement, rate collar agreement, currency swap agreement, cross-currency rate
swap agreement, currency option, any other similar agreement (including any
option to enter into any of the foregoing or a master agreement for any the
foregoing together with all supplements thereto) for the purpose of protecting
against or managing exposure to fluctuations in interest or exchange rates,
currency valuations, commodity prices or aviation fuel prices; sometimes being
referred to herein individually as an "Interest Rate Protection Agreement".
1.114 "Inventory" shall mean, as to each Borrower and Guarantor, all of
such Borrower's and Guarantor's now owned and hereafter existing or acquired
goods, wherever located, which (a) are leased by such Borrower or Guarantor as
lessor; (b) are held by such Borrower or Guarantor for sale or lease or to be
furnished under a contract of service; (c) are furnished by
23
such Borrower or Guarantor under a contract of service; or (d) consist of raw
materials, work in process, finished goods or materials used or consumed in its
business.
1.115 "Investment Property Control Agreement" shall mean an agreement in
writing, in form and substance satisfactory to Agent, by and among Agent, any
Borrower or Guarantor (as the case may be) and any securities intermediary,
commodity intermediary or other person who has custody, control or possession of
any investment property of such Borrower or Guarantor acknowledging that such
securities intermediary, commodity intermediary or other person has custody,
control or possession of such investment property on behalf of Agent, that it
will comply with entitlement orders originated by Agent with respect to such
investment property, or other instructions of Agent, and has such other terms
and conditions as Agent may require.
1.116 "Lenders" shall mean the financial institutions who are signatories
hereto as Lenders and other persons made a party to this Agreement as a Lender
in accordance with Section 13.7 hereof, and their respective successors and
assigns; each sometimes being referred to herein individually as a "Lender".
1.117 "Letter of Credit Accommodations" shall mean, collectively, the
letters of credit, merchandise purchase or other guaranties which are from time
to time either (a) issued or opened by Agent or any Lender for the account of
any Borrower or Obligor or (b) with respect to which Agent or Lenders have
agreed to indemnify the issuer or guaranteed to the issuer the performance by
any Borrower or Obligor of its obligations to such issuer; sometimes being
referred to herein individually as "Letter of Credit Accommodation".
1.118 "License Agreements" shall have the meaning set forth in Section
8.14 hereof.
1.119 "Loan Limit" shall mean, as to each Borrower, at any time, the
amount equal to the Maximum Credit minus the then outstanding principal amount
of the Loans and Letter of Credit Accommodations provided to the other Borrower.
1.120 "Loans" shall mean the loans now or hereafter made by or on behalf
of any Lender or by Agent for the account of any Lender on a revolving basis
pursuant to the Credit Facility (involving advances, repayments and readvances)
as set forth in Section 2.1 hereof.
1.121 "Material Adverse Effect" shall mean a material adverse effect on
(a) the financial condition, business, performance or operations of Borrowers
and Guarantors (taken as a whole); (b) the legality, validity or enforceability
of this Agreement or any of the other Financing Agreements; (c) the legality,
validity, enforceability, perfection or priority of the security interests and
liens of Agent upon the Collateral; (d) the Collateral or its value; (e) the
ability of Borrowers and Guarantors (taken as a whole) to repay the Obligations
or to perform their obligations under this Agreement or any of the other
Financing Agreements as and when to be performed; or (f) the ability of Agent or
any Lender to enforce the Obligations or realize upon the Collateral or
otherwise with respect to the rights and remedies of Agent and Lenders under
this Agreement or any of the other Financing Agreements.
1.122 "Material Contract" shall mean (a) the contracts and agreements
listed on Schedule 1.122 hereto, as each now exists and may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced and (b)
any other contract or other agreement (other than
24
the Financing Agreements), whether written or oral, to which any Borrower or
Guarantor is a party as to which the breach, nonperformance, cancellation or
failure to renew by any party thereto would have a Material Adverse Effect.
1.123 "Maximum Credit" shall mean the amount of $60,000,000, subject to
reduction in accordance with Section 2.5 hereof.
1.124 "Monthly Average Excess Availability" shall mean, at any time, the
average of the aggregate amount of the Excess Availability of Borrowers during
the immediately preceding calendar month as calculated by Agent in good faith
based on the information received by Agent as set forth in any applicable
Borrowing Base Certificate delivered to Agent, or otherwise, with respect to the
components of the Borrowing Base during such month.
1.125 "Multiemployer Plan" shall mean a "multi-employer plan" as defined
in Section 4001(a)(3) of ERISA which is or was at any time during the current
year or the immediately preceding six (6) years contributed to by any Borrower,
Guarantor or any ERISA Affiliate.
1.126 "Net Cash Proceeds" shall mean, with respect to any sale or other
disposition of assets permitted under Section 9.7(b), the aggregate amount of
cash received from time to time by a Borrower or Guarantor in connection with
such sale or other disposition after deducting therefrom only (a) legal fees,
finder's fees and other similar fees and other commissions and direct marketing
costs, (b) the amounts paid from cash proceeds at the time of the sale or other
disposition thereof in respect of Indebtedness (other than the Obligations)
secured by a security interest permitted under Section 9.8 hereof on the assets
subject to such sale or other disposition and (c) the amount of income taxes
reasonably estimated to be actually payable by such Borrower or Guarantor (or
the direct or indirect equity holders of such Borrower or Guarantor) in
connection with or as a result of such sale or other disposition.
1.127 "Obligations" shall mean (a) any and all Loans, Letter of Credit
Accommodations and all other obligations, liabilities and indebtedness of every
kind, nature and description owing by any or all of Borrowers and Guarantors to
Agent or any Lender or any of Agent's or such Lender's Affiliates and arising
under this Agreement or any other Financing Agreements, including principal,
interest, charges, fees, costs and expenses, however evidenced, whether as
principal, surety, endorser, guarantor or otherwise, whether now existing or
hereafter arising, whether arising before, during or after the initial or any
renewal term of this Agreement or after the commencement of any case with
respect to such Borrower under the United States Bankruptcy Code or any similar
statute (including the payment of interest and other amounts which would accrue
and become due but for the commencement of such case, whether or not such
amounts are allowed or allowable in whole or in part in such case and including
loans, interest, fees, charges and expenses related thereto and all other
obligations of any Borrower or its successors to Agent or any Lender under this
Agreement, the Loan Agreement or any other Financing Agreement arising after the
commencement of such case), whether direct or indirect, absolute or contingent,
joint or several, due or not due, primary or secondary, liquidated or
unliquidated, or secured or unsecured and (b) for purposes only of Section 5.1
hereof and subject to the priority in right of payment set forth in Section 6.4
hereof, all obligations of Borrowers or Guarantors to a Lender or an Affiliate
of a Lender, or another financial institution acceptable to Agent, arising under
or pursuant to an Interest Rate Protection Agreement in each case
25
acceptable to Agent; PROVIDED, THAT, upon Agent's request, Agent shall have
entered into an agreement, in form and substance satisfactory to Agent, with
such Lender, Affiliate or other Person that is a counterparty to such Interest
Rate Protection Agreement, as acknowledged and agreed to by Borrowers and
Guarantors, providing for the delivery to Agent by such counterparty of
information with respect to the amount of such obligations and providing for the
other rights of Agent and such Lender, Affiliate or other Person, as the case
may be, in connection with such arrangements. In no event shall the party to
such Interest Rate Protection Agreement to whom such obligations are owed be
deemed a Lender for purposes hereof to the extent of and as to such obligations
other than for purposes of Section 5.1 hereof and other than for purposes of
Sections 12.1, 12.2, 12.3(b), 12.5, 12.6, 12.7 and 12.12 hereof.
1.128 "Obligor" shall mean any guarantor, endorser, acceptor, surety or
other person liable on or with respect to the Obligations or who is the owner of
any property which is security for the Obligations (including, without
limitation, Guarantors), other than Borrowers.
1.129 "Participant" shall mean any financial institution that acquires and
holds a participation in the interest of any Lender in any of the Loans and
Letter of Credit Accommodations in conformity with the provisions of Section
13.7 of this Agreement governing participations.
1.130 "Person" or "person" shall mean any individual, sole proprietorship,
partnership, corporation (including any corporation which elects subchapter S
status under the Code), limited liability company, limited liability
partnership, business trust, unincorporated association, joint stock
corporation, trust, joint venture or other entity or any government or any
agency or instrumentality or political subdivision thereof.
1.131 "Plan" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which any Borrower or Guarantor sponsors, maintains, or to which it
makes, is making, or is obligated to make contributions, or in the case of a
Multiemployer Plan has made contributions at any time during the immediately
preceding six (6) plan years.
1.132 "Preferred Foreign Jurisdictions" shall mean (i) for the first
one-hundred eighty (180) days after the date hereof, those foreign countries
described on Exhibit E hereto, and (ii) any other foreign countries (other than
Canada) as to which each of the following conditions shall have been satisfied
(including, without limitation, any of the foreign countries described on
Exhibit E hereto at any time after the date that is one hundred-eighty (180)
days after the date hereof), as determined by Agent in good faith:
(a) Agent shall have received, in form and substance satisfactory to
Agent, the originals of all Financing Agreements that Agent determines are
necessary to perfect and enforce its security interest and lien in any such
Foreign Account, duly executed and delivered by Borrowers or Guarantors as the
case may be;
(b) Agent shall have received, in form and substance satisfactory to
Agent, evidence that (i) Agent has a valid, perfected and first priority
security interests in and liens (or equivalent, in the determination of Agent,
pledge, charge, lien or assignment) upon any such Foreign Accounts, subject only
to the security interests and liens (if any) permitted herein;
26
(c) if requested by Agent, Agent shall have received an original of a
Deposit Account Control Agreement with respect to the deposit accounts of such
Borrower maintained in such foreign country on terms and conditions acceptable
to Agent, duly executed and delivered by such Borrower and such depository bank;
and
(d) Borrowers shall deliver to Agent, in form and substance
satisfactory to Agent, evidence of the subsistence of corporate authorizing
resolutions and an opinion of counsel to Borrowers with respect to the Financing
Agreements and the transactions contemplated thereby, and such other matters as
Agent shall reasonably require.
1.133 "Prime Rate" shall mean the rate from time to time publicly
announced by Wachovia Bank, National Association, or its successors, as its
prime rate, whether or not such announced rate is the best rate available at
such bank.
1.134 "Prime Rate Loans" shall mean any Loans or portion thereof on which
interest is payable based on the Prime Rate in accordance with the terms
thereof.
1.135 "Pro Rata Share" shall mean as to any Lender, the fraction
(expressed as a percentage) the numerator of which is such Lender's Commitment
and the denominator of which is the aggregate amount of all of the Commitments
of Lenders, as adjusted from time to time in accordance with the provisions of
Section 13.7 hereof; PROVIDED, THAT, if the Commitments have been terminated,
the numerator shall be the unpaid amount of such Lender's Loans and its interest
in the Letter of Credit Accommodations and the denominator shall be the
aggregate amount of all unpaid Loans and Letter of Credit Accommodations.
1.136 "Provision for Taxes" shall mean an amount equal to all taxes
imposed on or measured by net income, whether federal, state, Provincial, county
or local, and whether foreign or domestic, that are paid or payable by any
Person in respect of any period in accordance with GAAP.
1.137 "Qualified Cash" shall mean unrestricted cash or Cash Equivalents of
Borrowers and Guarantors in deposit or securities accounts maintained by a bank
or securities intermediary located in the United States of America, which
accounts are subject to Deposit Account Control Agreements or Investment
Property Control Agreements, as applicable, and which cash or Cash Equivalents
is otherwise available to Borrowers or Guarantors for working capital without
condition or limitation.
1.138 "Real Property" shall mean all now owned and hereafter acquired real
property of each Borrower and Guarantor, including leasehold interests, together
with all buildings, structures, and other improvements located thereon and all
licenses, easements and appurtenances relating thereto, wherever located.
1.139 "Recap Sheet" shall have the meaning set forth in Section 7.1(b)
hereof.
1.140 "Receivables" shall mean all of the following now owned or hereafter
arising or acquired property of each Borrower and Guarantor: (a) all Accounts;
(b) all interest, fees, late charges, penalties, collection fees and other
amounts due or to become due or otherwise payable in connection with any
Account; (c) all payment intangibles of such Borrower or Guarantor; (d)
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letters of credit, indemnities, guarantees, security or other deposits and
proceeds thereof issued payable to any Borrower or Guarantor or otherwise in
favor of or delivered to any Borrower or Guarantor in connection with any
Account; or (e) all other accounts, contract rights, chattel paper, instruments,
notes, general intangibles and other forms of obligations owing to any Borrower
or Guarantor, whether from the sale and lease of goods or other property,
licensing of any property (including Intellectual Property or other general
intangibles), rendition of services or from loans or advances by any Borrower or
Guarantor or to or for the benefit of any third person (including loans or
advances to any Affiliates or Subsidiaries of any Borrower or Guarantor) or
otherwise associated with any Accounts, Inventory or general intangibles of any
Borrower or Guarantor (including, without limitation, choses in action, causes
of action, tax refunds, tax refund claims, any funds which may become payable to
any Borrower or Guarantor in connection with the termination of any Plan or
other employee benefit plan and any other amounts payable to any Borrower or
Guarantor from any Plan or other employee benefit plan, rights and claims
against carriers and shippers, rights to indemnification, business interruption
insurance and proceeds thereof, casualty or any similar types of insurance and
any proceeds thereof and proceeds of insurance covering the lives of employees
on which any Borrower or Guarantor is a beneficiary).
1.141 "Records" shall mean, as to each Borrower and Guarantor, all of such
Borrower's and Guarantor's present and future books of account of every kind or
nature, purchase and sale agreements, invoices, ledger cards, bills of lading
and other shipping evidence, statements, correspondence, memoranda, credit files
and other data relating to the Collateral or any account debtor, together with
the tapes, disks, diskettes and other data and software storage media and
devices, file cabinets or containers in or on which the foregoing are stored
(including any rights of any Borrower or Guarantor with respect to the foregoing
maintained with or by any other person).
1.142 "Reference Bank" shall mean Wachovia Bank, National Association, or
such other bank as Agent may from time to time designate.
1.143 "Refinancing Indebtedness" shall have the meaning set forth in
Section 9.9(1) hereof.
1.144 "Register" shall have the meaning set forth in Section 13.7 hereof.
1.145 "Renewal Date" shall the meaning set forth in Section 13.1 hereof.
1.146 "Reorganization Plan" shall mean the Final Modified Second Amended
Joint Plan of Reorganization of Debtors, dated July 14, 2004, approved by the
Confirmation Order.
1.147 "Required Lenders" shall mean, at any time, those Lenders whose Pro
Rata Shares aggregate fifty-one (51%) percent or more of the aggregate of the
Commitments of all Lenders, or if the Commitments shall have been terminated,
Lenders to whom at least fifty-one (51%) percent of the then outstanding
Obligations are owing.
1.148 "Reserves" shall mean as of any date of determination, such amounts
as Agent may from time to time establish and revise in good faith reducing the
amount of Loans and Letter of Credit Accommodations which would otherwise be
available to any Borrower under the
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lending formula(s) provided for herein: (a) to reflect events, conditions,
contingencies or risks which, as determined by Agent in good faith, adversely
affect, or would have a reasonable likelihood of adversely affecting, either (i)
the Collateral or any other property which is security for the Obligations, its
value or the amount that might be received by Agent from the sale or other
disposition or realization upon such Collateral, or (ii) the assets, business or
prospects of Borrowers and Guarantors (taken as a whole) or (iii) the security
interests and other rights of Agent or any Lender in the Collateral (including
the enforceability, perfection and priority thereof) or (b) to reflect Agent's
good faith belief that any collateral report or financial information furnished
by or on behalf of any Borrower or Obligor to Agent is or may have been
incomplete, inaccurate or misleading or (c) to reflect outstanding Letter of
Credit Accommodations as provided in Section 2.2 hereof or (d) in respect of any
state of facts which Agent determines in good faith constitutes a Default or an
Event of Default. Without limiting the generality of the foregoing, Reserves
may, at Agent's option, be established to reflect: dilution with respect to the
Accounts or any category thereof (based on the ratio of the aggregate amount of
non-cash reductions in Accounts for any period to the aggregate dollar amount of
the sales of such Borrower for such period) as calculated by Agent for any
period is or is reasonably anticipated to be greater than five (5%) percent; or
returns, discounts, claims, credits and allowances of any nature that are not
paid pursuant to the reduction of Accounts; or sales, excise or similar taxes
included in the amount of any Accounts reported to Agent; or amounts due or to
become due to owners and lessors of premises where any Collateral is located,
other than for those locations where Agent has received a Collateral Access
Agreement that Agent has accepted in writing; (e) obligations (contingent or
otherwise) of Borrowers or Guarantors to any Affiliate of Agent or a Lender or
any other Person arising under or in connection with any Interest Rate
Protection Agreement of any Borrower or Guarantor with such Affiliate or Person
or as such Affiliate or Person may otherwise require in connection therewith to
the extent that such obligations constitute Obligations as such term is defined
herein or otherwise receive the benefit of the security interest of Agent in any
Collateral. The amount of any Reserve established by Agent shall have a
reasonable relationship to the event, condition or other matter which is the
basis for such reserve as determined by Agent in good faith. Agent shall not
maintain a reserve in respect of an event, condition or other matter that had
been the basis for a reserve, but which no longer exists or otherwise has been
addressed in a manner satisfactory to Agent.
1.149 "Routes" shall mean the commercial air routes for which any Borrower
or, if applicable, any Guarantor, holds or hereafter acquires the requisite
authority to operate pursuant to Federal Aviation Laws, including applicable
designations pursuant to any transport agreement between the United States of
America and a foreign government, frequencies, exemption and certificate
authorities and Fifth Freedom Rights.
1.150 "Secured Aircraft" shall mean, collectively: (a) the Boeing model
747-283B airframe bearing manufacturer's serial number 21575 and FAA
registration number N921FT, together with the four (4) Pratt & Whitney model
JT9D-70A aircraft engines related thereto, respectively bearing manufacturer's
serial numbers 689167, 689169, 689184 and 689185, and (b) the Boeing model
747-100SF airframe bearing manufacturer's serial number 20109 and FAA
registration number N858FT, together with the four (4) Pratt & Whitney model
JT9D-7A aircraft engines related thereto, respectively bearing manufacturer's
serial numbers 662476, 695757,
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662642, and 662652, and any and all parts, aircraft manuals, records, logs and
books related to any of the foregoing; each sometimes hereafter referred to
individually as a "Secured Aircraft".
1.151 "Slot" shall mean a Domestic Slot or a Foreign Slot.
1.152 "Slots Agreement" shall mean a Slot, Airport Leasehold and Routes
Pledge and Security Agreement, dated of even date herewith, duly executed and
delivered by Borrowers and each applicable Guarantor, as pledgers, in favor of
Agent, as pledgee for itself and the benefit of Lenders, with respect to certain
rights of Borrowers and Guarantors with respect to Slots and Routes, as the same
now exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
1.153 "Solvent" shall mean, at any time with respect to any Person, that
at such time such Person (a) is able to pay its debts as they mature and has
(and has a reasonable basis to believe it will continue to have) sufficient
capital (and not unreasonably small capital) to carry on its business consistent
with its practices as of the date hereof, and (b) the assets and properties of
such Person at a fair valuation (and including as assets for this purpose at a
fair valuation all rights of subrogation, contribution or indemnification
arising pursuant to any guarantees given by such Person) are greater than the
Indebtedness of such Person, and including subordinated and contingent
liabilities computed at the amount which, such person has a reasonable basis to
believe, represents an amount which can reasonably be expected to become an
actual or matured liability (and including as to contingent liabilities arising
pursuant to any guarantee the face amount of such liability as reduced to
reflect the probability of it becoming a matured liability).
1.154 "Spare Parts" shall mean goods of a Borrower or Guarantor consisting
of (a) aircraft instruments, apparatus, parts, accessories, appliances,
rotables, expendables, repairables, avionics, and other components and parts,
which are owned or held by or on behalf of a Borrower or Guarantor in connection
with the use, operation or maintenance of Aircraft, and (b) aircraft engines
having less than 750 rated take off shaft horsepower) that are owned or held by
or on behalf of a Borrower or Guarantor in connection with the use, operation or
maintenance of Aircraft, in each case, whether now owned or hereafter acquired
and wherever located.
1.155 "Spare Parts Agreement" shall mean the Aircraft Spare Security
Agreement, dated of even date herewith, duly executed and delivered by Borrowers
and each applicable Guarantor, as debtors, granting to Agent, as secured party
for itself and on behalf of Lenders, a lien upon and security interest in (a)
aircraft engines having less than 750 rated take off shaft horsepower) that are
owned or held by or on behalf of a Borrower or Grantor in connection with the
use, operation or maintenance of Aircraft, and (b) Spare Parts of each Borrower
and Guarantor, as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
1.156 "Special Agent Advances" shall have the meaning set forth in Section
12.11 hereof.
1.157 "Subsidiary" or "subsidiary" shall mean, with respect to any Person,
any corporation, limited liability company, limited liability partnership or
other limited or general partnership, trust, association or other business
entity of which an aggregate of at least a majority
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of the outstanding Capital Stock or other interests entitled to vote in the
election of the board of directors of such corporation (irrespective of whether,
at the time, Capital Stock of any other class or classes of such corporation
shall have or might have voting power by reason of the happening of any
contingency), managers, trustees or other controlling persons, or an equivalent
controlling interest therein, of such Person is, at the time, directly or
indirectly, owned by such Person and/or one or more subsidiaries of such Person.
1.158 "Supporting Route Facilities" shall mean the Airport Leaseholds
reasonably necessary to operate a flown Route.
1.159 "Sweep Event" shall have the meaning set forth in Section 6.3(a)
hereof.
1.160 "UCC" shall mean the Uniform Commercial Code as in effect in the
State of New York, and any successor statute, as in effect from time to time
(except that terms used herein which are defined in the Uniform Commercial Code
as in effect in the State of New York on the date hereof shall continue to have
the same meaning notwithstanding any replacement or amendment of such statute
except as Agent may otherwise determine).
1.161 "Use or Lose Rule" shall mean, with respect to Slots, the terms of
14 C.F.R. Section 93.227 or any successor provision with respect to Domestic
Slots, and any corresponding rule of any Foreign Aviation Authority with respect
to Foreign Slots.
1.162 "Voting Stock" shall mean with respect to any Person, (a) one (1) or
more classes of Capital Stock of such Person having general voting powers to
elect at least a majority of the board of directors, managers or trustees of
such Person, irrespective of whether at the time Capital Stock of any other
class or classes have or might have voting power by reason of the happening of
any contingency, and (b) any Capital Stock of such Person convertible or
exchangeable without restriction at the option of the holder thereof into
Capital Stock of such Person described in clause (a) of this definition.
SECTION 2. CREDIT FACILITIES
2.1 LOANS.
(a) Subject to and upon the terms and conditions contained herein, each
Lender severally (and not jointly) agrees to make its Pro Rata Share of Loans to
each Borrower from time to time in amounts requested by such Borrower (or
Administrative Borrower on behalf of such Borrower) up to the aggregate amount
outstanding for all Lenders at any time equal to the lesser of: (i) the
Borrowing Base at such time or (ii) the Loan Limit of such Borrower at such
time.
(b) Except in Agent's discretion, with the consent of all Lenders, or
as otherwise provided herein, (i) the aggregate amount of the Loans and the
Letter of Credit Accommodations outstanding at any time shall not exceed the
Maximum Credit, (ii) the aggregate principal amount of Loans and Letter of
Credit Accommodations outstanding at any time to Borrowers shall not exceed the
Borrowing Base, (iii) the aggregate principal amount of Loans and Letter of
Credit Accommodations outstanding at any time to a Borrower shall not exceed the
Loan Limit
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of such Borrower and (iv) the aggregate amount of the outstanding Letter of
Credit Accommodations shall not exceed the sublimit set forth in Section 2.2(e)
hereof.
(c) In the event that the aggregate principal amount of the Loans and
Letter of Credit Accommodations outstanding at any time exceeds the Maximum
Credit, or the aggregate principal amount of the Loans and Letter of Credit
Accommodations outstanding at any time to Borrowers exceeds the Borrowing Base,
or the aggregate principal amount of Loans and Letter of Credit Accommodations
outstanding at any time to a Borrower exceeds the Loan Limit of such Borrower,
or the aggregate amount of the outstanding Letter of Credit Accommodations
exceeds the sublimit for Letter of Credit Accommodations set forth in Section
2.2(e) hereof, such event shall not limit, waive or otherwise affect any rights
of Agent or Lenders in such circumstances or on any future occasions and
Borrowers shall, upon demand by Agent, which may be made at any time or from
time to time, immediately repay to Agent the entire amount of any such
excess(es) for which payment is demanded.
2.2 LETTER OF CREDIT ACCOMMODATIONS.
(a) Subject to and upon the terms and conditions contained herein, at
the request of a Borrower (or Administrative Borrower on behalf of such
Borrower), Agent agrees, for the ratable risk of each Lender according to its
Pro Rata Share, to provide or arrange for Letter of Credit Accommodations for
the account of such Borrower containing terms and conditions acceptable to Agent
and the issuer thereof. Any payments made by or on behalf of Agent or any Lender
to any issuer thereof and/or related parties in connection with the Letter of
Credit Accommodations provided to or for the benefit of a Borrower shall
constitute additional Loans to such Borrower pursuant to this Section 2 (or
Special Agent Advances as the case may be).
(b) In addition to any charges, fees or expenses charged by any bank or
issuer in connection with the Letter of Credit Accommodations, Borrowers shall
pay to Agent, for the benefit of Lenders, a letter of credit fee at a rate equal
to the Applicable Margin with respect to Eurodollar Rate Loans per annum, on the
daily outstanding balance of the Letter of Credit Accommodations for the
immediately preceding month (or part thereof), payable in arrears as of the
first day of each succeeding month, except that Agent may, and upon the written
direction of Required Lenders shall, require Borrowers to pay to Agent for the
benefit of Lenders such letter of credit fee, at a rate equal to two (2%)
percent per annum in excess of the otherwise applicable rate on such daily
outstanding balance for: (i) the period from and after the date of termination
hereof until Agent and Lenders have received full and final payment of all
Obligations (notwithstanding entry of a judgment against any Borrower) and (ii)
the period from and after the date of the occurrence of an Event of Default for
so long as such Event of Default is continuing as determined by Agent. Such
letter of credit fee shall be calculated on the basis of a three hundred sixty
(360) day year and actual days elapsed and the obligation of Borrowers to pay
such fee shall survive the termination of this Agreement.
(c) The Borrower requesting such Letter of Credit Accommodation (or
Administrative Borrower on behalf of such Borrower) shall give Agent two (2)
Business Days' prior written notice of such Borrower's request for the issuance
of a Letter of Credit Accommodation. Such notice shall be irrevocable and shall
specify the original face amount of the Letter of Credit Accommodation
requested, the effective date (which date shall be a Business
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Day and in no event shall be a date less than ten (10) days prior to the end of
the then current term of this Agreement) of issuance of such requested Letter of
Credit Accommodation, whether such Letter of Credit Accommodations may be drawn
in a single or in partial draws, the date on which such requested Letter of
Credit Accommodation is to expire (which date shall be a Business Day), the
purpose for which such Letter of Credit Accommodation is to be issued, and the
beneficiary of the requested Letter of Credit Accommodation. The Borrower
requesting the Letter of Credit Accommodation (or Administrative Borrower on
behalf of such Borrower) shall attach to such notice the proposed terms of the
Letter of Credit Accommodation.
(d) In addition to being subject to the satisfaction of the applicable
conditions precedent contained in Section 4 hereof and the other terms and
conditions contained herein, no Letter of Credit Accommodations shall be
available unless each of the following conditions precedent have been satisfied
in a manner satisfactory to Agent: (i) the Borrower requesting such Letter of
Credit Accommodation (or Administrative Borrower on behalf of such Borrower)
shall have delivered to the proposed issuer of such Letter of Credit
Accommodation at such times and in such manner as such proposed issuer may
require, an application, in form and substance satisfactory to such proposed
issuer and Agent, for the issuance of the Letter of Credit Accommodation and
such other documents as may be required pursuant to the terms thereof, and the
form and terms of the proposed Letter of Credit Accommodation shall be
satisfactory to Agent and such proposed issuer, (ii) as of the date of issuance,
no order of any court, arbitrator or other Governmental Authority shall purport
by its terms to enjoin or restrain money center banks generally from issuing
letters of credit of the type and in the amount of the proposed Letter of Credit
Accommodation, and no law, rule or regulation applicable to money center banks
generally and no request or directive (whether or not having the force of law)
from any Governmental Authority with jurisdiction over money center banks
generally shall prohibit, or request that the proposed issuer of such Letter of
Credit Accommodation refrain from, the issuance of letters of credit generally
or the issuance of such Letters of Credit Accommodation; and (iii) prior to
giving effect to any Reserves with respect to such Letter of Credit
Accommodations, on the date of the proposed issuance of any Letter of Credit
Accommodations, Excess Availability shall be equal to or greater than an amount
equal to one hundred (100%) percent of the face amount thereof and all other
commitments and obligations made or incurred by Agent with respect thereto.
Effective on the issuance of each Letter of Credit Accommodation, a Reserve
shall be established in the applicable amount set forth in Section 2.2(d)(iii).
(e) Except in Agent's discretion, with the consent of all Lenders, the
amount of all outstanding Letter of Credit Accommodations and all other
commitments and obligations made or incurred by Agent or any Lender in
connection therewith shall not at any time exceed $10,000,000.
(f) Borrowers and Guarantors shall indemnify and hold Agent and Lenders
harmless from and against any and all losses, claims, damages, liabilities,
costs and expenses which Agent or any Lender may suffer or incur in connection
with any Letter of Credit Accommodations and any documents, drafts or
acceptances relating thereto, including any losses, claims, damages,
liabilities, costs and expenses due to any action taken by any issuer or
correspondent with respect to any Letter of Credit Accommodation, except for
such losses, claims, damages, liabilities, costs or expenses that are a direct
result of the gross negligence or
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willful misconduct of Agent or any Lender as determined pursuant to a final
non-appealable order of a court of competent jurisdiction. Each Borrower and
Guarantor assumes all risks with respect to the acts or omissions of the drawer
under or beneficiary of any Letter of Credit Accommodation and for such purposes
the drawer or beneficiary shall be deemed such Borrower's agent. Each Borrower
and Guarantor assumes all risks for, and agrees to pay, all foreign, federal,
state and local taxes, duties and levies relating to any goods subject to any
Letter of Credit Accommodations or any documents, drafts or acceptances
thereunder. Each Borrower and Guarantor hereby releases and holds Agent and
Lenders harmless from and against any acts, waivers, errors, delays or
omissions, whether caused by any Borrower, Guarantor, by any issuer or
correspondent or otherwise with respect to or relating to any Letter of Credit
Accommodation, except for the gross negligence or willful misconduct of Agent or
any Lender as determined pursuant to a final, non-appealable order of a court of
competent jurisdiction. The provisions of this Section 2.2(f) shall survive the
payment of Obligations and the termination of this Agreement.
(g) Each Borrower and Guarantor hereby irrevocably authorizes and
directs any issuer of a Letter of Credit Accommodation to name such Borrower or
Guarantor as the account party therein and to deliver to Agent all instruments,
documents and other writings and property received by issuer pursuant to the
Letter of Credit Accommodations and to accept and rely upon Agent's instructions
and agreements with respect to all matters arising in connection with the Letter
of Credit Accommodations or the applications therefor. Nothing contained herein
shall be deemed or construed to grant any Borrower or Guarantor any right or
authority to pledge the credit of Agent or any Lender in any manner. Agent and
Lenders shall have no liability of any kind with respect to any Letter of Credit
Accommodation provided by an issuer other than Agent or any Lender unless Agent
has duly executed and delivered to such issuer the application or a guarantee or
indemnification in writing with respect to such Letter of Credit Accommodation.
Borrowers and Guarantors shall be bound by any reasonable interpretation made in
good faith by Agent, or any other issuer or correspondent under or in connection
with any Letter of Credit Accommodation or any documents, drafts or acceptances
thereunder, notwithstanding that such interpretation may be inconsistent with
any instructions of any Borrower or Guarantor.
(h) So long as no Event of Default exists or has occurred and is
continuing, a Borrower may (i) approve or resolve any questions of
non-compliance of documents, (ii) give any instructions as to acceptance or
rejection of any documents or goods, (iii) execute any and all applications for
steamship or airway guaranties, indemnities or delivery orders, and (iv) with
Agent's consent, grant any extensions of the maturity of, time of payment for,
or time of presentation of, any drafts, acceptances, or documents, and agree to
any amendments, renewals, extensions, modifications, changes or cancellations of
any of the terms or conditions of any of the applications, Letter of Credit
Accommodations, or documents, drafts or acceptances thereunder or any letters of
credit included in the Collateral.
(i) At any time an Event of Default exists or has occurred and is
continuing, Agent shall have the right and authority to, and Borrowers shall
not, without the prior written consent of Agent, (i) approve or resolve any
questions of non-compliance of documents, (ii) give any instructions as to
acceptance or rejection of any documents or goods, (iii) execute any and all
applications for steamship or airway guaranties, indemnities or delivery orders,
(iv) grant any extensions of the maturity of, time of payments for, or time of
presentation of, any drafts,
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acceptances, or documents, and (v) agree to any amendments, renewals,
extensions, modifications, changes or cancellations of any of the terms or
conditions of any of the applications, Letter of Credit Accommodations, or
documents, drafts or acceptances thereunder or any letters of credit included in
the Collateral. Agent may take such actions either in its own name or in any
Borrower's name.
(j) Any rights, remedies, duties or obligations granted or undertaken
by any Borrower or Guarantor to any issuer or correspondent in any application
for any Letter of Credit Accommodation, or any other agreement in favor of any
issuer or correspondent relating to any Letter of Credit Accommodation, shall be
deemed to have been granted or undertaken by such Borrower or Guarantor to Agent
for the ratable benefit of Lenders. Any duties or obligations undertaken by
Agent to any issuer or correspondent in any application for any Letter of Credit
Accommodation, or any other agreement by Agent in favor of any issuer or
correspondent to the extent relating to any Letter of Credit Accommodation,
shall be deemed to have been undertaken by Borrowers and Guarantors to Agent for
the ratable benefit of Lenders and to apply in all respects to Borrowers and
Guarantors.
(k) Immediately upon the issuance or amendment of any Letter of Credit
Accommodation, each Lender shall be deemed to have irrevocably and
unconditionally purchased and received, without recourse or warranty, an
undivided interest and participation to the extent of such Lender's Pro Rata
Share of the liability with respect to such Letter of Credit Accommodation
(including, without limitation, all Obligations with respect thereto).
(l) Each Borrower is irrevocably and unconditionally obligated, without
presentment, demand or protest, to pay to Agent any amounts paid by an issuer of
a Letter of Credit Accommodation with respect to such Letter of Credit
Accommodation (whether through the borrowing of Loans in accordance with Section
2.2(a) or otherwise). In the event that any Borrower fails to pay Agent on the
date of any payment under a Letter of Credit Accommodation in an amount equal to
the amount of such payment, Agent (to the extent it has actual notice thereof)
shall promptly notify each Lender of the unreimbursed amount of such payment and
each Lender agrees, upon one (1) Business Day's notice, to fund to Agent the
purchase of its participation in such Letter of Credit Accommodation in an
amount equal to its Pro Rata Share of the unpaid amount. The obligation of each
Lender to deliver to Agent an amount equal to its respective participation
pursuant to the foregoing sentence is absolute and unconditional and such
remittance shall be made notwithstanding the occurrence or continuance of any
Event of Default, the failure to satisfy any other condition set forth in
Section 4 or any other event or circumstance. If such amount is not made
available by a Lender when due, Agent shall be entitled to recover such amount
on demand from such Lender with interest thereon, for each day from the date
such amount was due until the date such amount is paid to Agent at the interest
rate then payable by any Borrower in respect of Loans that are Prime Rate Loans
as set forth in Section 3.1 (a) hereof.
2.3 COMMITMENTS. The aggregate amount of each Lender's Pro Rata Share of
the Loans and Letter of Credit Accommodations shall not exceed the amount of
such Lender's Commitment, as the same may from time to time be amended in
accordance with the provisions hereof.
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2.4 JOINT AND SEVERAL LIABILITY. Borrowers shall be jointly and severally
liable for all amounts due to Agent and Lenders under this Agreement and the
other Financing Agreements, regardless of which Borrower actually receives the
Loans or Letter of Credit Accommodations hereunder or the amount of such Loans
received or the manner in which Agent or any Lender accounts for such Loans,
Letter of Credit Accommodations or other extensions of credit on its books and
records. All references herein or in any of the other Financing Agreements to
any of the obligation of Borrowers to make any payment hereunder or thereunder
shall constitute joint and several obligations of Borrowers. The Obligations
with respect to Loans made to a Borrower, and the Obligations arising as a
result of the joint and several liability of a Borrower hereunder, with respect
to Loans made to the other Borrower, shall be separate and distinct obligations,
but all such other Obligations shall be primary obligations of both Borrowers.
The Obligations arising as a result of the joint and several liability of a
Borrower hereunder with respect to Loans, Letter of Credit Accommodations or
other extensions of credit made to the other Borrower shall, to the fullest
extent permitted by law, be unconditional irrespective of (a) the validity or
enforceability, avoidance or subordination of the Obligations of the other
Borrower or of any promissory note or other document evidencing all or any part
of the Obligations of the other Borrower, (b) the absence of any attempt to
collect the Obligations from the other Borrower, any Guarantor or any other
security therefor, or the absence of any other action to enforce the same, (c)
the waiver, consent, extension, forbearance or granting of any indulgence by
Agent or any Lender with respect to any provisions of any instrument evidencing
the Obligations of the other Borrower, or any part thereof, or any other
agreement now or hereafter executed by the other Borrower and delivered to Agent
or any Lender, (d) the failure by Agent or any Lender to take any steps to
perfect and maintain its security interest in, or to preserve its rights and
maintain its security or collateral for the Obligations of the other Borrower,
(e) the election of Agent and Lenders in any proceeding instituted under the
Bankruptcy Code, of the application of Section 111l(b)(2) of the Bankruptcy
Code, (f) the disallowance of all or any portion of the claim(s) of Agent or any
Lender for the repayment of the Obligations of the other Borrower under Section
502 of the Bankruptcy Code, or (g) any other circumstances which might
constitute a legal or equitable discharge or defense of a Guarantor or of the
other Borrower other than to the extent of the gross negligence or willful
misconduct of Agent or a Lender as determined pursuant to a final non-appealable
order of a court of competent jurisdiction. With respect to the Obligations
arising as a result of the joint and several liability of a Borrower hereunder
with respect to Loans, Letter of Credit Accommodations or other extensions of
credit made to the other Borrower hereunder, each Borrower waives, until the
Obligations shall have been paid in full and this Agreement shall have been
terminated, any right to enforce any right of subrogation or any remedy which
Agent or any Lender now has or may hereafter have against any Borrower or
Guarantor and any benefit of, and any right to participate in, any security or
collateral given to Agent or any Lender. Upon any Event of Default, and for so
long as such Event of Default is continuing, Agent may proceed directly and at
once, without notice, against any Borrower to collect and recover the full
amount, or any portion of the Obligations, without first proceeding against the
other Borrower or any other Person, or against any security or collateral for
the Obligations. Each Borrower consents and agrees that Agent and Lenders shall
be under no obligation to marshall any assets in favor of Borrower(s) or against
or in payment of any or all of the Obligations.
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2.5 REDUCTION OF MAXIMUM CREDIT.
(a) From time to time after the date hereof, upon not less than
ten (10) days prior written notice to Agent, on or after the date which is sixty
(60) days after the date hereof, Borrowers may irrevocably request that the
Maximum Credit be decreased by an amount equal to $5,000,000 or a greater
integral multiple thereof up to $30,000,000, to an amount of not less than
$30,000,000.
(b) Within ten (10) days of receipt by Agent of any written
request by Administrative Borrower for a decrease in the Maximum Credit in
accordance with Section 2.5(a) above, Agent shall give Administrative Borrower
written notice of the decrease in the Maximum Credit to the amount so requested
by Administrative Borrower (which decrease shall be effective on the date of
such notice by Agent to Administrative Borrower); PROVIDED, THAT, (i) Agent
shall not have received such request prior to the date which is sixty (60) days
after the date hereof, (ii) the giving of such notice by Agent to Administrative
Borrower of the decrease in the Maximum Credit shall not be deemed a waiver of
any Event of Default which may exist or have occurred on or before the date of
such notice or of any of Agent's or any Lender's rights or remedies with respect
thereto, (iii) Agent shall not be required to give such notice to Administrative
Borrower of the decrease in the Maximum Credit unless in the determination of
Agent, each of the conditions set forth above are satisfied, and (iv) as of the
effective date of any such decrease in the Maximum Credit, each reference to the
term Maximum Credit in this Agreement, herein, and in any of the other Financing
Agreements shall be deemed amended to mean the amount of the Maximum Credit
specified in such recent written notice from Agent to Administrative Borrower of
the decrease in the Maximum Credit.
SECTION 3. INTEREST AND FEES
3.1 INTEREST.
(a) Borrowers shall pay to Agent, for the benefit of Lenders,
interest on the outstanding principal amount of the Loans at the Interest Rate.
All interest accruing hereunder on and after the date of any Event of Default or
termination hereof shall be payable on demand.
(b) Each Borrower (or Administrative Borrower on behalf of such
Borrower) may from time to time request Eurodollar Rate Loans or may request
that Prime Rate Loans be converted to Eurodollar Rate Loans or that any existing
Eurodollar Rate Loans continue for an additional Interest Period. Such request
from a Borrower (or Administrative Borrower on behalf of such Borrower) shall
specify the amount of the Eurodollar Rate Loans or the amount of the Prime Rate
Loans to be converted to Eurodollar Rate Loans or the amount of the Eurodollar
Rate Loans to be continued (subject to the limits set forth below) and the
Interest Period to be applicable to such Eurodollar Rate Loans. Subject to the
terms and conditions contained herein, three (3) Business Days after receipt by
Agent of such a request from a Borrower (or Administrative Borrower on behalf of
such Borrower), such Eurodollar Rate Loans shall be made or Prime Rate Loans
shall be converted to Eurodollar Rate Loans or such Eurodollar Rate Loans shall
continue, as the case may be; PROVIDED, THAT, (i) no Default or Event of Default
shall exist or have occurred and be continuing, (ii) no party hereto shall have
sent any notice of termination of this Agreement, such Borrower (or
Administrative Borrower on behalf of such
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Borrower) shall have complied with such customary procedures as are established
by Agent and specified by Agent to Administrative Borrower from time to time for
requests by Borrowers for Eurodollar Rate Loans, (iii) no more than five (5)
Interest Periods may be in effect at any one time, (iv) the aggregate amount of
the Eurodollar Rate Loans must be in an amount not less than $5,000,000 or an
integral multiple of $1,000,000 in excess thereof, and (v) Agent and each Lender
shall have determined that the Interest Period or Adjusted Eurodollar Rate is
available to Agent and such Lender and can be readily determined as of the date
of the request for such Eurodollar Rate Loan by such Borrower. Any request by or
on behalf of a Borrower for Eurodollar Rate Loans or to convert Prime Rate Loans
to Eurodollar Rate Loans or to continue any existing Eurodollar Rate Loans shall
be irrevocable. Notwithstanding anything to the contrary contained herein, Agent
and Lenders shall not be required to purchase United States Dollar deposits in
the London interbank market or other applicable Eurodollar Rate market to fund
any Eurodollar Rate Loans, but the provisions hereof shall be deemed to apply as
if Agent and Lenders had purchased such deposits to fund the Eurodollar Rate
Loans.
(c) Any Eurodollar Rate Loans shall automatically convert to Prime
Rate Loans upon the last day of the applicable Interest Period, unless Agent has
received and approved a request to continue such Eurodollar Rate Loan at least
three (3) Business Days prior to such last day in accordance with the terms
hereof. Any Eurodollar Rate Loans shall, at Agent's option, upon notice by Agent
to Atlas Holdings, be subsequently converted to Prime Rate Loans in the event
that this Agreement shall terminate or not be renewed. Borrowers shall pay to
Agent, for the benefit of Lenders, upon demand by Agent (or Agent may, at its
option, charge any loan account of any Borrower) any amounts required to
compensate any Lender or Participant for any loss (including loss of anticipated
profits), cost or expense incurred by such person, as a result of the conversion
of Eurodollar Rate Loans to Prime Rate Loans (other than on the last day of the
Interest Period therefor) pursuant to any of the foregoing.
(d) Interest shall be payable by Borrowers to Agent, for the
account of Lenders, monthly in arrears not later than the first day of each
calendar month and shall be calculated on the basis of a three hundred sixty
(360) day year and actual days elapsed. The interest rate on non-contingent
Obligations (other than Eurodollar Rate Loans) shall increase or decrease by an
amount equal to each increase or decrease in the Prime Rate effective on the
first day of the month after any change in such Prime Rate is announced based on
the Prime Rate in effect on the last day of the month in which any such change
occurs. In no event shall charges constituting interest payable by Borrowers to
Agent and Lenders exceed the maximum amount or the rate permitted under any
applicable law or regulation, and if any such part or provision of this
Agreement is in contravention of any such law or regulation, such part or
provision shall be deemed amended to conform thereto.
3.2 FEES.
(a) Borrowers shall pay to Agent monthly, for the account of
Lenders, an unused line fee equal to the applicable percentage per annum set
forth in the definition of "Applicable Margin" herein, calculated upon the
amount by which Maximum Credit exceeds the average daily principal balance of
the outstanding Loans and Letter of Credit Accommodations during the immediately
preceding month (or part thereof) while this Agreement is in effect and for so
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long thereafter as any of the Obligations are outstanding, which fee shall be
payable on the first day of each month in arrears.
(b) Borrowers agree to pay to Agent the other fees and amounts set
forth in the Fee Letter in the amounts and at the times specified therein.
3.3 CHANGES IN LAWS AND INCREASED COSTS OF LOANS.
(a) If after the date hereof, either (i) any change in, or in the
interpretation of, any law or regulation is introduced, including, without
limitation, with respect to reserve requirements, applicable to Lender or any
banking or financial institution from whom any Lender borrows funds or obtains
credit (a "Funding Bank"), or (ii) a Funding Bank or any Lender complies with
any future guideline or request from any central bank or other Governmental
Authority or (iii) a Funding Bank or any Lender determines that the adoption of
any applicable law, rule or regulation regarding capital adequacy, or any change
therein, or any change in the interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof has or would have the effect described
below, or a Funding Bank or any Lender complies with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, and in the case of any event set
forth in this clause (iii), such adoption, change or compliance has or would
have the direct or indirect effect of reducing the rate of return on any
Lender's capital as a consequence of its obligations hereunder to a level below
that which Lender could have achieved but for such adoption, change or
compliance (taking into consideration the Funding Bank's or Lender's policies
with respect to capital adequacy) by an amount deemed by such Lender to be
material, and the result of any of the foregoing events described in clauses
(i), (ii) or (iii) is or results in an increase in the cost to any Lender of
funding or maintaining the Loans, the Letter of Credit Accommodations or its
Commitment, then Borrowers and Guarantors shall from time to time upon demand by
Agent pay to Agent additional amounts sufficient to indemnify Lenders against
such increased cost on an after-tax basis (after taking into account applicable
deductions and credits in respect of the amount indemnified). A certificate as
to the amount of such increased cost shall be submitted to Administrative
Borrower by Agent and shall be conclusive, absent manifest error.
(b) If prior to the first day of any Interest Period, (i) Agent
shall have determined in good faith (which determination shall be conclusive and
binding upon Borrowers and Guarantors) that, by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist for
ascertaining the Eurodollar Rate for such Interest Period, (ii) Agent has
received notice from the Required Lenders that the Eurodollar Rate determined or
to be determined for such Interest Period will not adequately and fairly reflect
the cost to Lenders of making or maintaining Eurodollar Rate Loans during such
Interest Period, or (iii) Dollar deposits in the principal amounts of the
Eurodollar Rate Loans to which such Interest Period is to be applicable are not
generally available in the London interbank market, Agent shall give telecopy or
telephonic notice thereof to Administrative Borrower as soon as practicable
thereafter, and will also give prompt written notice to Administrative Borrower
when such conditions no longer exist. If such notice is given (A) any Eurodollar
Rate Loans requested to be made on the first day of such Interest Period shall
be made as Prime Rate Loans, (B) any Loans that were to have been converted on
the first day of such Interest Period to or continued as
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Eurodollar Rate Loans shall be converted to or continued as Prime Rate Loans and
(C) each outstanding Eurodollar Rate Loan shall be converted, on the last day of
the then-current Interest Period thereof, to Prime Rate Loans. Until such notice
has been withdrawn by Agent, no further Eurodollar Rate Loans shall be made or
continued as such, nor shall any Borrower (or Administrative Borrower on behalf
of any Borrower) have the right to convert Prime Rate Loans to Eurodollar Rate
Loans.
(c) Notwithstanding any other provision herein, if the adoption of
or any change in any law, treaty, rule or regulation or final, non-appealable
determination of an arbitrator or a court or other Governmental Authority or in
the interpretation or application thereof occurring after the date hereof shall
make it unlawful for Agent or any Lender to make or maintain Eurodollar Rate
Loans as contemplated by this Agreement, (i) Agent or such Lender shall promptly
give written notice of such circumstances to Administrative Borrower (which
notice shall be withdrawn whenever such circumstances no longer exist), (ii) the
commitment of such Lender hereunder to make Eurodollar Rate Loans, continue
Eurodollar Rate Loans as such and convert Prime Rate Loans to Eurodollar Rate
Loans shall forthwith be canceled and, until such time as it shall no longer be
unlawful for such Lender to make or maintain Eurodollar Rate Loans, such Lender
shall then have a commitment only to make a Prime Rate Loan when a Eurodollar
Rate Loan is requested and (iii) such Lender's Loans then outstanding as
Eurodollar Rate Loans, if any, shall be converted automatically to Prime Rate
Loans on the respective last days of the then current Interest Periods with
respect to such Loans or within such earlier period as required by law. If any
such conversion of a Eurodollar Rate Loan occurs on a day which is not the last
day of the then current Interest Period with respect thereto, Borrowers and
Guarantors shall pay to such Lender such amounts, if any, as may be required
pursuant to Section 3.3(d) below.
(d) Borrowers and Guarantors shall indemnify Agent and each Lender
and hold Agent and each Lender harmless from any loss or expense which Agent or
such Lender may sustain or incur as a consequence of (i) default by Borrower in
making a borrowing of, conversion into or extension of Eurodollar Rate Loans
after such Borrower (or Administrative Borrower on behalf of such Borrower) has
given a notice requesting the same in accordance with the provisions of this
Loan Agreement, (ii) default by any Borrower in making any prepayment of a
Eurodollar Rate Loan after such Borrower has given a notice thereof in
accordance with the provisions of this Agreement, and (iii) the making of a
prepayment of Eurodollar Rate Loans on a day which is not the last day of an
Interest Period with respect thereto. With respect to Eurodollar Rate Loans,
such indemnification may include an amount equal to the excess, if any, of (A)
the amount of interest which would have accrued on the amount so prepaid, or not
so borrowed, converted or extended, for the period from the date of such
prepayment or of such failure to borrow, convert or extend to the last day of
the applicable Interest Period (or, in the case of a failure to borrow, convert
or extend, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Eurodollar
Rate Loans provided for herein over (B) the amount of interest (as determined by
such Agent or such Lender) which would have accrued to Agent or such Lender on
such amount by placing such amount on deposit for a comparable period with
leading banks in the interbank Eurodollar market. This covenant shall survive
the termination or non-renewal of this Loan Agreement and the payment of the
Obligations.
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SECTION 4. CONDITIONS PRECEDENT
4.1 CONDITIONS PRECEDENT TO INITIAL LOANS AND LETTER OF CREDIT
ACCOMMODATIONS. Each of the following is a condition precedent to Agent and
Lenders making the initial Loans and providing the initial Letter of Credit
Accommodations hereunder:
(a) no court of competent jurisdiction shall have issued any
injunction, restraining order or other order with respect to the Confirmation
Order which otherwise prohibits the consummation of the transactions described
herein, or modifies such transactions, and no governmental or other action or
proceeding shall have been commenced, seeking any injunction, restraining order
or other order which seeks to void or otherwise modify the transactions
described herein which has or could reasonably be expected to have a material
adverse effect upon the Reorganization Plan, the consummation of the
Reorganization Plan, the business or operations of Borrowers or Guarantors or
the transactions contemplated by the Financing Agreements, as determined by
Agent in good faith;
(b) no motion, action or proceeding shall be pending against the
Borrowers or Guarantors (or their predecessors) by any creditor or other
party-in-interest in the Bankruptcy Court or in any other court of competent
jurisdiction which has or could reasonably be expected to have a Material
Adverse Effect;
(c) Agent shall have received a certified copy of the Confirmation
Order as duly entered by the Bankruptcy Court and entered on the docket of the
Clerk of the Bankruptcy Court in the Chapter 11 Cases, following due notice to
such creditors and other parties-in-interest as required by the Bankruptcy
Court, which order shall be in form and substance acceptable to Agent and shall
provide that the Borrowers and Guarantors that are debtors in the Chapter 11
Cases are authorized to take any and all actions necessary or appropriate to
implement, effectuate and consummate the financing arrangements evidenced by
this Agreement and the other Financing Agreements and perform all of their
obligations hereunder and thereunder;
(d) Agent shall have received evidence, in form and substance
satisfactory to Agent, that prior to the date hereof or concurrently herewith,
(i) the Effective Date shall have occurred, the Confirmation Order shall be
valid, subsisting and continuing and a Final Order and all conditions precedent
to the effectiveness of the Reorganization Plan shall have been fulfilled, or
validly waived, including, without limitation, the execution, delivery and
performance of all of the conditions thereof other than conditions that have
been validly waived (but not including conditions consisting of the
effectiveness of this Agreement), and (ii) no motion, action or proceeding shall
be pending or filed by any creditor or other party-in-interest to the Chapter 11
Cases which has or could reasonably be expected to have a material adverse
effect upon the Reorganization Plan, the consummation of the Reorganization
Plan, the business or operations of Borrowers or Guarantors or the transactions
contemplated by the Financing Agreements, as determined by Agent in good faith;
(e) Agent shall have received, in form and substance satisfactory
to Agent, all releases, terminations and such other documents as Agent may
request to evidence and effectuate the termination and release by all persons of
any interest in and to any assets and properties of each Borrower and Guarantor
(other than liens and security interests permitted pursuant to
41
Section 9.8 hereof), duly authorized, executed and delivered by it or each of
them, including, but not limited to, (i) UCC termination statements for all UCC
financing statements previously filed by it or any of them or their
predecessors, as secured party and any Borrower or Guarantor, as debtor; and
(ii) satisfactions and discharges of any mortgages, deeds of trust or deeds to
secure debt by any Borrower or Guarantor in favor of it or any of them, in form
acceptable for recording with the appropriate Governmental Authority;
(f) all requisite corporate action and proceedings in connection
with this Agreement and the other Financing Agreements shall be satisfactory in
form and substance to Agent, and Agent shall have received all information and
copies of all documents, including records of requisite corporate action and
proceedings which Agent may have requested in connection therewith, such
documents where requested by Agent or its counsel to be certified by appropriate
corporate officers or Governmental Authority (and including a copy of the
certificate of incorporation of each Borrower and Guarantor certified by the
Secretary of State (or equivalent Governmental Authority) which shall set forth
the same complete corporate name of such Borrower or Guarantor as is set forth
herein and such document as shall set forth the organizational identification
number of each Borrower or Guarantor, if one is issued in its jurisdiction of
incorporation);
(g) no material adverse change shall have occurred in the assets,
business or financial condition of Borrowers and Guarantors (taken as a whole)
since the date of Agent's latest field examination (not including for this
purpose the field review referred to in the immediately succeeding clause (h)
below) and no change or event shall have occurred which would impair the ability
of any Borrower or Obligor to perform its obligations hereunder or under any of
the other Financing Agreements to which it is a party or of Agent or any Lender
to enforce the Obligations or realize upon the Collateral;
(h) not more than five (5) Business Days prior to the date
thereof, Agent shall have completed a field review of the Records and such other
information with respect to the Collateral as Agent may require to determine the
amount of Loans available to Borrowers (including, without limitation, the most
current perpetual inventory records and/or roll-forwards of Accounts and
Inventory available prior to the date of closing in a manner satisfactory to
Agent, together with such supporting documentation as may be necessary or
appropriate, and other documents and information that will enable Agent to
accurately identify and verify the Collateral), the results of which in each
case shall not reflect any material adverse changes in the assets, business or
financial condition of Borrowers and Guarantors (taken as a whole) from the
results of the most recent similar field view conducted by Agent prior to the
date hereof;
(i) Agent shall have received, in form and substance satisfactory
to Agent, all consents, waivers, acknowledgments and other agreements from third
persons which Agent may deem necessary or desirable in order to permit, protect
and perfect its security interests in and liens upon the Collateral or to
effectuate the provisions or purposes of this Agreement and the other Financing
Agreements, including, without limitation, Collateral Access Agreements that
Agent determines are necessary to obtain access to and use any books or records
related to the Accounts;
42
(j) without limiting the immediately preceding clause (i) above,
Agent shall have received, in form and substance satisfactory to Agent, such
agreements with CNS, IATA and other third parties that are party to
Clearinghouse Agreements, as Agent may request, providing, among other things,
for each such third party to perform for the benefit of Agent and its agents,
services substantially similar to those it performs under the Clearinghouse
Agreement to which it is a party, acknowledging the security interests and liens
of Agent, for itself and the benefit of Lenders, and agreeing to follow the
directions of Agent with respect to any amounts payable to Borrowers and
Guarantors;
(k) Agent shall have received, in form and substance satisfactory
to Agent, evidence that Polar is a member or an associate member in good
standing of IATA and is a party to Clearinghouse Agreements with IATA;
(1) Excess Availability as determined by Agent in good faith, as
of the date hereof, shall be not less than $25,000,000 after giving effect to
the initial Loans made or to be made and Letter of Credit Accommodations issued
or to be issued in connection with the initial transactions hereunder;
(m) Agent shall have received, in form and substance satisfactory
to Agent, Deposit Account Control Agreements by and among Agent, each Borrower
and Guarantor, as the case may be, and each domestic bank where such Borrower or
Guarantor has a deposit account (other than such deposit accounts in which not
more than $50,000 for any single account or $250,000 in the aggregate for all
such accounts are maintained on deposit), in each case, duly authorized,
executed and delivered by such bank and Borrower or Guarantor, as the case may
be (or Agent shall be the bank's customer with respect to such deposit account
as Agent may specify);
(n) Agent shall have received, in form and substance satisfactory
to Agent, Investment Property Control Agreements by and among Agent, each
Borrower and Guarantor, as the case may be, and each securities intermediary or
commodity intermediary with which such Borrower or Guarantor maintains an
investment account, securities account or other similar account;
(o) Agent shall have received evidence, in form and substance
satisfactory to Agent, that Agent has a valid perfected first priority security
interest in such Collateral as required by Agent;
(p) Agent shall have received and reviewed lien and judgment
search results for the jurisdiction of organization of each Borrower and
Guarantor, the jurisdiction of the chief executive office of each Borrower and
Guarantor and all jurisdictions in which assets of Borrowers and Guarantors are
located, which search results shall be in form and substance satisfactory to
Agent;
(q) Agent shall have received originals of the shares of the stock
certificates representing all of the issued and outstanding shares of the
Capital Stock of each Borrower and Guarantor (other than Atlas Holdings) and
owned by any Borrower or Guarantor, except as to Liege Global Cargo (Sales Co),
a company organized under the laws of Belgium, and as
43
otherwise provided in Section 5.1(c) hereof, in each case together with stock
powers duly executed in blank with respect thereto;
(r) Agent shall have received a Borrowing Base Certificate setting
forth the Loans and Letter of Credit Accommodations available to Borrowers, as
completed in a manner satisfactory to Agent;
(s) Agent shall have received evidence of insurance and loss payee
endorsements required hereunder and under the other Financing Agreements, in
form and substance satisfactory to Agent, and certificates of insurance policies
and/or endorsements naming Agent as loss payee;
(t) Agent shall have received, in form and substance satisfactory
to Agent, such opinion letters of counsel to Borrowers and Guarantors, including
special FAA counsel, with respect to the Financing Agreements, the Confirmation
Order, aviation law matters and such other matters as Agent may request;
(u) Agent shall have received the EETC Intercreditor Agreement;
(v) the Chief Executive Officer or the Chief Financial Officer of
Atlas Holdings shall have certified to Agent that the EETC Effective Date shall
have occurred contemporaneously herewith and not prior to the date hereof; and
(w) the other Financing Agreements (including the Aircraft
Security Agreement, Engine Security Agreement, Spare Parts Agreement and Slots
Agreement) and all instruments and documents hereunder and thereunder shall have
been duly executed and delivered to Agent, in form and substance satisfactory to
Agent and, in the case of the Aircraft Security Agreement, Engine Security
Agreement and Spare Parts Agreement, filed and recorded with the FAA as
appropriate to effect the perfection of the security interest of Agent, for the
benefit of Lenders, with respect to the Collateral subject thereto.
4.2 CONDITIONS PRECEDENT TO ALL LOANS AND LETTER OF CREDIT ACCOMMODATIONS.
Each of the following is an additional condition precedent to the Loans and/or
providing Letter of Credit Accommodations to Borrowers, including the initial
Loans and Letter of Credit Accommodations and any future Loans and Letter of
Credit Accommodations:
(a) all representations and warranties contained herein and in the
other Financing Agreements shall be true and correct with the same effect as
though such representations and warranties had been made on and as of the date
of the making of each such Loan or providing each such Letter of Credit
Accommodation and after giving effect thereto, except to the extent that such
representations and warranties expressly relate solely to an earlier date (in
which case such representations and warranties shall have been true and accurate
on and as of such earlier date);
(b) no law, regulation, order, judgment or decree of any
Governmental Authority shall exist, and no action, suit, investigation,
litigation or proceeding shall be pending or threatened in any court or before
any arbitrator or Governmental Authority, which (i) purports to enjoin,
prohibit, restrain or otherwise affect (A) the making of the Loans or providing
the Letter
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of Credit Accommodations, or (B) the consummation of the transactions
contemplated pursuant to the terms hereof or the other Financing Agreements or
(ii) has or has a reasonable likelihood of having a Material Adverse Effect; and
(c) no Default or Event of Default shall exist or have occurred
and be continuing on and as of the date of the making of such Loan or providing
each such Letter of Credit Accommodation and after giving effect thereto.
SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST
5.1 GRANT OF SECURITY INTEREST.
(a) To secure payment and performance of all Obligations, each
Borrower and Guarantor hereby grants to Agent, for itself and the benefit of
Lenders, a continuing security interest in, a lien upon, and a right of set off
against, and hereby assigns to Agent, for itself and the benefit of Lenders, as
security, all personal property and fixtures, and interests in property and
fixtures, of each Borrower and Guarantor, whether now owned or hereafter
acquired or existing, and wherever located (together with all other collateral
security for the Obligations at any time granted to or held or acquired by Agent
or any Lender, collectively, the "Collateral"), including:
(i) all Accounts;
(ii) all general intangibles, including all Intellectual
Property;
(iii) all goods, including Inventory and Equipment;
(iv) the Secured Aircraft;
(v) to the extent not included in Inventory or Equipment,
Spare Parts and Engines;
(vi) all chattel paper (including each ACMI Contract, whether
or not constituting chattel paper), including all tangible and electronic
chattel paper;
(vii) all instruments, including all promissory notes;
(viii) all documents;
(ix) all deposit accounts;
(x) all letters of credit, banker's acceptances and similar
instruments and including all letter-of-credit rights;
(xi) all supporting obligations and all present and future
liens, security interests, rights, remedies, title and interest in, to and in
respect of Receivables and other Collateral, including (A) rights and remedies
under or relating to guaranties, contracts of suretyship, letters of credit and
credit and other insurance related to the Collateral, (B) rights of stopPAGE in
transit,
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replevin, repossession, reclamation and other rights and remedies of an unpaid
vendor, lienor or secured party, (C) goods described in invoices, documents,
contracts or instruments with respect to, or otherwise representing or
evidencing, Receivables or other Collateral, including returned, repossessed and
reclaimed goods, and (D) deposits by and property of account debtors or other
persons securing the obligations of account debtors;
(xii) all (A) investment property (including securities,
whether certificated or uncertificated, securities accounts, security
entitlements, commodity contracts or commodity accounts) and (B) monies, credit
balances, deposits and other property of any Borrower or Guarantor now or
hereafter held or received by or in transit to Agent, any Lender or its
Affiliates or at any other depository or other institution from or for the
account of any Borrower or Guarantor, whether for safekeeping, pledge, custody,
transmission, collection or otherwise, and all present and future liens,
security interests, rights, remedies, title and interest in, to and in respect
of Accounts and other Collateral, including (1) tickets, exchange orders, bills
of lading and other transportation documents related to the air transportation
of cargo, including mail and (2) settlement accounts or other deposit accounts
maintained by CNS, CASS and/or IATA or the Clearing Bank and all sums now or
hereafter credited to, in, payable to or withdrawable from, such accounts or
deposit accounts;
(xiii) all commercial tort claims, including, without
limitation, those identified in the Information Certificate;
(xiv) to the extent not otherwise described above, all
Receivables;
(xv) all Records; and
(xvi) all products and proceeds of the foregoing, in any form,
including insurance proceeds and all claims against third parties for loss or
damage to or destruction of or other involuntary conversion of any kind or
nature of any or all of the other Collateral.
(b) Notwithstanding anything to the contrary set forth in Section
5.1(a) hereof, the Collateral shall not include (i) any Aircraft (other than
the Secured Aircraft), (ii) any other asset or property described on Schedule
5.1 hereto and that is subject to a mortgage, lien or security interest in favor
of a third person as specifically provided by the Reorganization Plan and the
Confirmation Order, to the extent existing as of the Effective Date (such assets
and property herein referred to as the "Excluded Property"); provided, however,
that in no event shall such Excluded Property include or be deemed or construed
to include (A) any Accounts or other rights to payment arising from the
rendition of any charter or scheduled cargo transportation services or other
services by any Borrower or Guarantor (other than any such services performed
using the Aircraft bearing FAA registration numbers N494MC or N495MC), and (B)
any ACMI Contracts and any Accounts or other rights to payment arising therefrom
to the extent performed using any Aircraft, or (iii) more than sixty-five (65%)
percent of the shares of Capital Stock entitled to vote of any Subsidiary of
Atlas Holdings that is organized under the laws of a jurisdiction outside of the
United States of America, to the extent that the pledge of any greater
percentage thereof would result in additional tax liability to Borrowers or
Guarantors under Section 956 of the Code.
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(c) Notwithstanding anything to the contrary contained herein, the
Collateral shall not include (i) any Real Property other than the leasehold
interests and other rights and interests of Borrowers or Guarantors in the
Collateral described in the Slots Agreement (whether or not such rights and
interests may be deemed to constitute Real Property) or (ii) the equity
interests of Borrowers or Guarantors in Atlas Freighter Leasing II, Inc. and
Atlas Freighter Leasing III, Inc.
5.2 PERFECTION OF SECURITY INTERESTS.
(a) Each Borrower and Guarantor irrevocably and unconditionally
authorizes Agent (or its agent) to file at any time and from time to time such
financing statements with respect to the Collateral naming Agent or its designee
as the secured party and such Borrower or Guarantor as debtor, as Agent may
require, and including any other information with respect to such Borrower or
Guarantor or otherwise required by part 5 of Article 9 of the Uniform Commercial
Code of such jurisdiction as Agent may determine, together with any amendment
and continuations with respect thereto, which authorization shall apply to all
financing statements filed on, prior to or after the date hereof. Each Borrower
and Guarantor hereby ratifies and approves all financing statements naming Agent
or its designee as secured party and such Borrower or Guarantor, as the case may
be, as debtor with respect to the Collateral (and any amendments with respect to
such financing statements) filed by or on behalf of Agent prior to the date
hereof and ratifies and confirms the authorization of Agent to file such
financing statements (and amendments, if any). Each Borrower and Guarantor
hereby authorizes Agent to adopt on behalf of such Borrower and Guarantor any
symbol required for authenticating any electronic filing. In the event that the
description of the collateral in any financing statement naming Agent or its
designee as the secured party and any Borrower or Guarantor as debtor includes
assets and properties of such Borrower or Guarantor that do not at any time
constitute Collateral, whether hereunder, under any of the other Financing
Agreements or otherwise, the filing of such financing statement shall
nonetheless be deemed authorized by such Borrower or Guarantor to the extent of
the Collateral included in such description and it shall not render the
financing statement ineffective as to any of the Collateral or otherwise affect
the financing statement as it applies to any of the Collateral. In no event
shall any Borrower or Guarantor at any time file, or permit or cause to be
filed, any correction statement or termination statement with respect to any
financing statement (or amendment or continuation with respect thereto) naming
Agent or its designee as secured party and such Borrower or Guarantor as debtor.
(b) Each Borrower and Guarantor does not have any chattel paper
(whether tangible or electronic) or instruments as of the date hereof, except
for any ACMI Contracts constituting chattel paper, existing on the date hereof
and as set forth in the Information Certificate.
(i) In the event that any Borrower or Guarantor shall be
entitled to or shall receive any chattel paper or instrument after the date
hereof, Borrowers and Guarantors shall promptly notify Agent thereof in writing.
Promptly upon the receipt thereof by or on behalf of any Borrower or Guarantor
(including by any agent or representative), or a request from Agent with respect
to any chattel paper existing on the date hereof, each Borrower and Guarantor
shall deliver, or cause to be delivered to Agent, all tangible chattel paper and
instruments that such Borrower or Guarantor has or may at any time acquire,
accompanied by such instruments of transfer or assignment duly executed in blank
as Agent may from time to time specify, in each case except as Agent may
otherwise agree.
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(ii) At Agent's option, each Borrower and Guarantor shall, or
Agent may at any time on behalf of any Borrower or Guarantor, cause the original
of any such instrument or chattel paper to be conspicuously marked in a form and
manner acceptable to Agent with the following legend referring to chattel paper
or instruments as applicable: "This [chattel paper][instrument] is subject to
the security interest of Congress Financial Corporation and any sale, transfer,
assignment or encumbrance of this [chattel paper][instrument] violates the
rights of such secured party."
(iii) No Borrower or Guarantor has delivered or at any time
shall cause to be delivered to any Person which is not the account debtor with
respect thereto, an original, executed ACMI Contract.
(c) In the event that any Borrower or Guarantor shall at any time
hold or acquire an interest in any electronic chattel paper or any "transferable
record" (as such term is defined in Section 201 of the Federal Electronic
Signatures in Global and National Commerce Act or in Section 16 of the Uniform
Electronic Transactions Act as in effect in any relevant jurisdiction), such
Borrower or Guarantor shall promptly notify Agent thereof in writing. Promptly
upon Agent's request, such Borrower or Guarantor shall take, or cause to be
taken, such actions as Agent may request to give Agent control of such
electronic chattel paper under Section 9-105 of the UCC and control of such
transferable record under Section 201 of the Federal Electronic Signatures in
Global and National Commerce Act or, as the case may be, Section 16 of the
Uniform Electronic Transactions Act, as in effect in such jurisdiction.
(d) Each Borrower and Guarantor does not have any deposit accounts
as of the date hereof, except as set forth in the Information Certificate.
Borrowers and Guarantors shall not, directly or indirectly, after the date
hereof open, establish or maintain any deposit account unless each of the
following conditions is satisfied: (i) Agent shall have received not less than
five (5) Business Days prior written notice of the intention of any Borrower or
Guarantor to open or establish such account which notice shall specify in
reasonable detail and specificity acceptable to Agent the name of the account,
the owner of the account, the name and address of the bank at which such account
is to be opened or established, the individual at such bank with whom such
Borrower or Guarantor is dealing and the purpose of the account, (ii) the bank
where such account is opened or maintained shall be acceptable to Agent, and
(iii) on or before the opening of such deposit account, such Borrower or
Guarantor shall as Agent may specify either (A) deliver to Agent a Deposit
Account Control Agreement with respect to such deposit account duly authorized,
executed and delivered by such Borrower or Guarantor and the bank at which such
deposit account is opened and maintained or (B) arrange for Agent to become the
customer of the bank with respect to the deposit account on terms and conditions
acceptable to Agent. The terms of this subsection (d) shall not apply to deposit
accounts (i) held by financial institutions located in the United States of
America at which Borrowers or Guarantors do not maintain more than $50,000 for
any single account at any one time or $250,000 in the aggregate for all such
deposit accounts, (ii) specifically and exclusively used for payroll, payroll
taxes and other employee wage and benefit payments to or for the benefit of any
Borrower's or Guarantor's salaried employees, and (iii) held by financial
institutions located in (x) any Non-Preferred Foreign Jurisdiction or (y) for
the first 180 days after the date hereof, any Preferred Foreign Jurisdiction.
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(e) No Borrower or Guarantor owns or holds, directly or
indirectly, beneficially or as record owner or both, any investment property, as
of the date hereof, or have any investment account, securities account,
commodity account or other similar account with any bank or other financial
institution or other securities intermediary or commodity intermediary as of the
date hereof, in each case except as set forth in the Information Certificate.
(i) In the event that any Borrower or Guarantor shall be
entitled to or shall at any time after the date hereof hold or acquire any
certificated securities constituting Collateral, such Borrower or Guarantor
shall promptly endorse, assign and deliver the same to Agent, accompanied by
such instruments of transfer or assignment duly executed in blank as Agent may
from time to time specify. If any securities constituting Collateral, now or
hereafter acquired by any Borrower or Guarantor are uncertificated and are
issued to such Borrower or Guarantor or its nominee directly by the issuer
thereof, such Borrower or Guarantor shall immediately notify Agent thereof and
shall as Agent may specify, either (A) cause the issuer to agree to comply with
instructions from Agent as to such securities, without further consent of any
Borrower or Guarantor or such nominee, or (B) arrange for Agent to become the
registered owner of the securities.
(ii) Borrowers and Guarantors shall not, directly or
indirectly, after the date hereof open, establish or maintain any investment
account, securities account, commodity account or any other similar account
(other than a deposit account) with any securities intermediary or commodity
intermediary unless each of the following conditions is satisfied: (A) Agent
shall have received not less than five (5) Business Days prior written notice of
the intention of such Borrower or Guarantor to open or establish such account
which notice shall specify in reasonable detail and specificity acceptable to
Agent the name of the account, the owner of the account, the name and address of
the securities intermediary or commodity intermediary at which such account is
to be opened or established, the individual at such intermediary with whom such
Borrower or Guarantor is dealing and the purpose of the account, (B) the
securities intermediary or commodity intermediary (as the case may be) where
such account is opened or maintained shall be acceptable to Agent, and (C) on or
before the opening of such investment account, securities account or other
similar account with a securities intermediary or commodity intermediary, such
Borrower or Guarantor shall as Agent may specify either (i) execute and deliver,
and cause to be executed and delivered to Agent, an Investment Property Control
Agreement with respect thereto duly authorized, executed and delivered by such
Borrower or Guarantor and such securities intermediary or commodity intermediary
or (ii) arrange for Agent to become the entitlement holder with respect to such
investment property on terms and conditions acceptable to Agent.
(f) Borrowers and Guarantors are not the beneficiary or otherwise
entitled to any right to payment under any letter of credit, banker's acceptance
or similar instrument as of the date hereof, except as set forth in the
Information Certificate. In the event that any Borrower or Guarantor shall be
entitled to or shall receive any right to payment under any letter of credit,
banker's acceptance or any similar instrument, whether as beneficiary thereof or
otherwise after the date hereof, such Borrower or Guarantor shall promptly
notify Agent thereof in writing. Such Borrower or Guarantor shall immediately,
as Agent may specify, either (i) deliver, or cause to be delivered to Agent,
with respect to any such letter of credit, banker's acceptance or similar
instrument, the written agreement of the issuer and any other nominated person
obligated to
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make any payment in respect thereof (including any confirming or negotiating
bank), in form and substance satisfactory to Agent, consenting to the assignment
of the proceeds of the letter of credit to Agent by such Borrower or Guarantor
and agreeing to make all payments thereon directly to Agent or as Agent may
otherwise direct or (ii) cause Agent to become, at Borrowers' expense, the
transferee beneficiary of the letter of credit, banker's acceptance or similar
instrument (as the case may be).
(g) Borrowers and Guarantors do not have any commercial tort
claims as of the date hereof, except as set forth in the Information
Certificate. In the event that any Borrower or Guarantor shall at any time after
the date hereof have any commercial tort claims (excluding any such claims of
their respective insurers, including insurers claiming in the name of a Borrower
or Guarantor, pursuant to rights of subrogation or otherwise in respect of
amounts paid to Borrowers or Guarantors under policies of insurance in respect
of the conduct of third-party commercial tortfeasors) in an aggregate amount in
excess of $5,000,000 for all such claims of all Borrowers and Guarantors, such
Borrower or Guarantor shall promptly notify Agent thereof in writing, which
notice shall (i) set forth in reasonable detail the basis for and nature of such
commercial tort claim and (ii) include the express grant by such Borrower or
Guarantor to Agent of a security interest in such commercial tort claim (and the
proceeds thereof). In the event that such notice does not include such grant of
a security interest, the sending thereof by such Borrower or Guarantor to Agent
shall be deemed to constitute such grant to Agent. Upon the sending of such
notice, any commercial tort claim described therein shall constitute part of the
Collateral and shall be deemed included therein. Without limiting the
authorization of Agent provided in Section 5.2(a) hereof or otherwise arising by
the execution by such Borrower or Guarantor of this Agreement or any of the
other Financing Agreements, Agent is hereby irrevocably authorized from time to
time and at any time to file such financing statements naming Agent or its
designee as secured party and such Borrower or Guarantor as debtor, or any
amendments to any financing statements, covering any such commercial tort claim
as Collateral. In addition, each Borrower and Guarantor shall promptly upon
Agent's request, execute and deliver, or cause to be executed and delivered, to
Agent such other agreements, documents and instruments as Agent may require in
connection with such commercial tort claim.
(h) Borrowers and Guarantors do not have any goods constituting
Collateral, documents of title or other Collateral in the custody, control or
possession of a third party as of the date hereof, except as set forth in the
Information Certificate and except for goods (i) leased to third parties to the
extent permitted under the terms hereof, or (ii) located in the United States in
transit to a location of a Borrower or Guarantor permitted herein in the
ordinary course of business of such Borrower or Guarantor in the possession of
the carrier transporting such goods. Promptly upon Agent's request, Borrowers
and Guarantors shall deliver to Agent a Collateral Access Agreement that Agent
determines in good faith is necessary to obtain access to and use any books or
records related to the Accounts constituting Collateral, duly authorized,
executed and delivered by such person and the appropriate Borrower or Guarantor.
(i) Except as otherwise expressly provided herein, Borrowers and
Guarantors shall take any other actions reasonably requested by Agent from time
to time to cause the attachment, perfection and first priority of, and the
ability of Agent to enforce, the security interest of Agent in any and all of
the Collateral, including, without limitation, (i) executing, delivering and,
where appropriate, filing financing statements and amendments relating thereto
under the UCC or other
50
applicable law, to the extent, if any, that any Borrower's or Guarantor's
signature thereon is required therefor, (ii) causing Agent's name to be noted as
secured party on any certificate of title for a titled good if such notation is
a condition to attachment, perfection or priority of, or ability of Agent to
enforce, the security interest of Agent in such Collateral, (iii) without
limitation upon Section 1.70(1) hereof complying with any provision of any
statute, regulation or treaty of the United States as to any Collateral if
compliance with such provision is a condition to attachment, perfection or
priority of, or ability of Agent to enforce, the security interest of Agent in
such Collateral, (iv) obtaining the consents and approvals of any Governmental
Authority or third party, including, without limitation, any consent of any
licensor, lessor or other person obligated on Collateral, and taking all actions
required by any earlier versions of the UCC or by other law, as applicable in
any relevant jurisdiction.
5.3 NO ASSUMPTION. Nothing contained herein or in any of the other
Financing Agreements nor any grant of a security interest in the Collateral to
Agent and Lenders or otherwise shall constitute or be deemed an assumption by
Agent or any Lender of any liability or obligation under any ACMI Contract or
any other agreement, contract or obligation of any Borrower or Guarantor.
SECTION 6. COLLECTION AND ADMINISTRATION
6.1 BORROWERS' LOAN ACCOUNTS. Agent shall maintain one or more loan
account(s) on its books in which shall be recorded (a) all Loans, Letter of
Credit Accommodations and other Obligations and the Collateral, (b) all payments
made by or on behalf of any Borrower or Guarantor and (c) all other appropriate
debits and credits as provided in this Agreement, including fees, charges,
costs, expenses and interest. All entries in the loan account(s) shall be made
in accordance with Agent's customary practices as in effect from time to time.
6.2 STATEMENTS. Agent shall render to Administrative Borrower each month
a statement setting forth the balance in the Borrowers' loan account(s)
maintained by Agent for Borrowers pursuant to the provisions of this Agreement,
including principal, interest, fees, costs and expenses. Each such statement
shall be subject to subsequent adjustment by Agent but shall, absent manifest
errors or omissions, be considered correct and deemed accepted by Borrowers and
Guarantors and conclusively binding upon Borrowers and Guarantors as an account
stated except to the extent that Agent receives a written notice from
Administrative Borrower of any specific exceptions of Administrative Borrower
thereto within thirty (30) days after the date such statement has been received
by Administrative Borrower. Until such time as Agent shall have rendered to
Administrative Borrower a written statement as provided above, the balance in
any Borrower's loan account(s) shall be presumptive evidence of the amounts due
and owing to Agent and Lenders by Borrowers and Guarantors.
6.3 COLLECTION OF ACCOUNTS.
(a) Borrowers shall establish and maintain, at their expense,
blocked accounts or lockboxes and related blocked accounts (in either case,
"Blocked Accounts"), as Agent may specify, with such banks as are acceptable to
Agent into which Borrowers shall promptly deposit and direct their respective
account debtors (including, in the case of Polar, account debtors in respect of
Accounts settled through the Clearing Bank) to directly remit all payments on
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Receivables and all payments constituting proceeds of Inventory constituting
Collateral or other Collateral in the identical form in which such payments are
made, whether by cash, check or other manner. Borrowers shall deliver, or cause
to be delivered to Agent a Deposit Account Control Agreement duly authorized,
executed and delivered by each bank where a Blocked Account is maintained as
provided in Section 5.2 hereof or at any time and from time to time Agent may
become the bank's customer with respect to any of the Blocked Accounts and
promptly upon Agent's request, Borrowers shall execute and deliver such
agreements and documents as Agent may require in connection therewith. In the
case of Accounts, the payment of which is settled through CNS and/or CASS and
the Clearing Bank, Polar shall cause CNS and/or CASS, as applicable, to enter
into and continue effective an agreement in favor of and in form and substance
satisfactory to Agent, providing for the automatic remittance directly to the
Agent Payment Account (unless Agent otherwise instructs the Clearing Bank) of
all credit balances available to Polar under the Clearinghouse Agreements on
each scheduled or other settlement date in accordance with the terms hereof.
Agent will only instruct the depository banks at which the Blocked Accounts are
maintained to transfer all funds received or deposited into the Blocked Accounts
to the Agent Payment Account and will only instruct the Clearing Bank to remit
funds directly to the Agent Payment Account, at any time that either of the
following events (each, a "Sweep Event") has occurred: (i) a Default or Event of
Default shall exist or have occurred which has not been waived by Agent in
writing, or (ii) Excess Availability shall be less than $20,000,000. Each
Borrower and Guarantor agrees that all payments made to such Agent Payment
Account or other funds received and collected by Agent or any Lender, whether in
respect of the Receivables, as proceeds of Inventory constituting Collateral or
other Collateral or otherwise shall be treated as payments to Agent and Lenders
in respect of the Obligations and therefore shall constitute the property of
Agent and Lenders to the extent of the then outstanding Obligations.
(b) For purposes of calculating the amount of the Loans available
to each Borrower, such payments will be applied (conditional upon final
collection) to the Obligations on the Business Day of receipt by Agent of
immediately available funds in the Agent Payment Account provided such payments
and notice thereof are received in accordance with Agent's usual and customary
practices as in effect from time to time and within sufficient time to credit
such Borrower's loan account on such day, and if not, then on the next Business
Day. For the purposes of calculating interest on the Obligations, such payments
or other funds received will be applied (conditional upon final collection) to
the Obligations on the date of receipt of immediately available funds by Agent
in the Agent Payment Account provided such payments or other funds and notice
thereof ARE received in accordance with Agent's usual and customary practices as
in effect from time to time and within sufficient time to credit such Borrower's
loan account on such day, and if not, then on the next Business Day. The
economic benefit of the timing in the application of payments shall be for the
sole benefit of Agent.
(c) Each Borrower and Guarantor and their respective
shareholders, directors, employees, agents, Subsidiaries or other Affiliates
shall, acting as trustee for Agent, receive, as the property of Agent, any
monies, checks, notes, drafts or any other payment relating to and/or proceeds
of Accounts constituting Collateral or other Collateral which come into their
possession or under their control and immediately upon receipt thereof, shall
deposit or cause the same to be deposited in the Blocked Accounts, or remit the
same or cause the same to be remitted, in kind, to Agent. In no event shall the
same be commingled with any Borrower's or Guarantor's own
52
funds. Borrowers agree to reimburse Agent on demand for any amounts owed or paid
to any bank or other financial institution at which a Blocked Account or any
other deposit account or investment account is established or any other bank,
financial institution or other person involved in the transfer of funds to or
from the Blocked Accounts arising out of Agent's payments to or indemnification
of such bank, financial institution or other person. The obligations of
Borrowers to reimburse Agent for such amounts pursuant to this Section 6.3 shall
survive the termination of this Agreement.
(d) Without limiting anything contained in Section 6.3(c) hereof,
each Borrower shall, at its expense and on behalf of Agent, collect as Agent's
property and hold in trust for Agent all exchange orders, bills of lading or
other transportation documents with respect to the air transportation by such
Borrower of cargo, including mail. Promptly upon each Borrower's receipt of such
exchange orders, bills of lading or other transportation documents, such
Borrower shall submit those applicable to any Accounts settled under the
Clearinghouse Agreements in batches, to the CNS and/or CASS Clearing Bank,
together with such supporting or accompanying summaries, schedules and reports,
as required by the applicable Clearinghouse Agreement, the Clearing Bank or the
account debtor, as applicable.
6.4 PAYMENTS.
(a) All Obligations shall be payable to the Agent Payment Account
as provided in Section 6.3 or such other place as Agent may designate from time
to time. Subject to the other terms and conditions contained herein, Agent shall
apply payments received or collected from any Borrower or Guarantor or for the
account of any Borrower or Guarantor (including the monetary proceeds of
collections or of realization upon any Collateral) as follows: FIRST, to pay any
fees, indemnities or expense reimbursements then due to Agent and Lenders from
any Borrower or Guarantor; SECOND, to pay interest due in respect of any Loans
(and including any Special Agent Advances); THIRD, to pay or prepay principal in
respect of Special Agent Advances; FOURTH, to pay principal due in respect of
the Loans and to pay Obligations then due (and after a Default or Event of
Default to prepay any such Obligations whether or not then due and owing)
arising under or pursuant to any Interest Rate Protection Agreements of a
Borrower or Guarantor with an Affiliate of Agent (up to the amount of any then
effective Reserve established in respect of such Obligations whether or not then
due and owing), on a pro rata basis; FIFTH, to pay any other Obligations then
due (and after a Default or Event of Default to prepay any other Obligations
whether or not then due and owing), in such order and manner as Agent determines
and SIXTH, to pay any Obligations then due (and after a Default or Event of
Default to prepay any such Obligations) arising under or pursuant to Interest
Rate Protection Agreements (other than to the extent provided for above) on a
pro rata basis. Notwithstanding anything to the contrary contained in this
Agreement, (i) unless so directed by Administrative Borrower, or unless a
Default or an Event of Default shall exist or have occurred and be continuing,
Agent shall not apply any payments which it receives to any Eurodollar Rate
Loans, except (A) on the expiration date of the Interest Period applicable to
any such Eurodollar Rate Loans or (B) in the event that there are no outstanding
Prime Rate Loans, (ii) to the extent any Borrower uses any proceeds of the Loans
or Letter of Credit Accommodations to acquire rights in or the use of any
Collateral or to repay any Indebtedness used to acquire rights in or the use of
any Collateral, payments in respect of the Obligations shall be deemed applied
first to the Obligations arising from Loans and Letter of Credit Accommodations
that were not used for such purposes and second to the
53
Obligations arising from Loans and Letter of Credit Accommodations the proceeds
of which were used to acquire rights in or the use of any Collateral in the
chronological order in which such Borrower acquired such rights in or the use of
such Collateral, and (iii) if a Default or Event of Default has occurred that is
continuing, Agent shall apply any payments received or collected to the
outstanding Obligations in such order and manner as Agent may determine and, if
all such outstanding Obligations have been repaid, at Agent's option to be held
as cash collateral for any unmatured or contingent Obligations.
(b) At Agent's option, all principal, interest, fees, costs,
expenses and other charges provided for in this Agreement or the other Financing
Agreements may be charged directly to the loan account(s) of any Borrower
maintained by Agent. Borrowers and Guarantors shall make all payments to Agent
and Lenders on the Obligations free and clear of, and without deduction or
withholding for or on account of, any setoff, counterclaim, defense, duties,
taxes, levies, imposts, fees, deductions, withholding, restrictions or
conditions of any kind. If after receipt of any payment of, or proceeds of
Collateral applied to the payment of, any of the Obligations, Agent or any
Lender is required to surrender or return such payment or proceeds to any Person
for any reason, then the Obligations intended to be satisfied by such payment or
proceeds shall be reinstated and continue and this Agreement shall continue in
full force and effect as if such payment or proceeds had not been received by
Agent or such Lender. Borrowers and Guarantors shall be liable to pay to Agent,
and do hereby indemnify and hold Agent and Lenders harmless for the amount of
any payments or proceeds surrendered or returned. This Section 6.4(b) shall
remain effective notwithstanding any contrary action which may be taken by Agent
or any Lender in reliance upon such payment or proceeds. This Section 6.4 shall
survive the payment of the Obligations and the termination of this Agreement.
6.5 AUTHORIZATION TO MAKE LOANS. Agent and Lenders are authorized to
make the Loans and provide the Letter of Credit Accommodations based upon
telephonic or other instructions received from anyone purporting to be an
officer of Administrative Borrower or any Borrower or other authorized person
or, at the discretion of Agent, if such Loans are necessary to satisfy any
Obligations. All requests for Loans or Letter of Credit Accommodations hereunder
shall specify the date on which the requested advance is to be made or Letter of
Credit Accommodations established (which day shall be a Business Day) and the
amount of the requested Loan. Requests received after 11:00 a.m. New York City
time on any day shall be deemed to have been made as of the opening of business
on the immediately following Business Day. Agent and Lenders shall use
commercially reasonable efforts in accordance with its regular business
practices, subject to the terms and conditions of this Agreement and the other
Financing Agreements, to (a) make Loans requested before 11:00 a.m. New York
City time on any Business Day, prior to the end of such Business Day and (b)
establish Letter of Credit Accommodations requested before 11:00 a.m. New York
City time on any Business Day, prior to the close of business on the day which
is two (2) Business Days after the day on which such Letter of Credit
Accommodations are requested. All Loans and Letter of Credit Accommodations
under this Agreement shall be conclusively presumed to have been made to, and at
the request of and for the benefit of, any Borrower or Guarantor when deposited
to the credit of any Borrower or Guarantor or otherwise disbursed or established
in accordance with the instructions of any Borrower or Guarantor or in
accordance with the terms and conditions of this Agreement.
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6.6 USE OF PROCEEDS. Borrowers shall use the initial proceeds of the
Loans provided by Agent to Borrowers hereunder only for: (a) payments to each of
the persons listed in the disbursement direction letter furnished by Borrowers
to Agent on or about the date hereof and (b) costs, expenses and fees in
connection with the preparation, negotiation, execution and delivery of this
Agreement and the other Financing Agreements. All other Loans made or Letter of
Credit Accommodations provided to or for the benefit of any Borrower pursuant to
the provisions hereof shall be used by such Borrower only for general operating,
working capital and other proper corporate purposes of such Borrower not
otherwise prohibited by the terms hereof. None of the proceeds will be used,
directly or indirectly, for the purpose of purchasing or carrying any margin
security or for the purposes of reducing or retiring any indebtedness which was
originally incurred to purchase or carry any margin security or for any other
purpose which might cause any of the Loans to be considered a "purpose credit"
within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System, as amended.
6.7 APPOINTMENT OF ADMINISTRATIVE BORROWER AS AGENT FOR REQUESTING LOANS
AND RECEIPTS OF LOANS AND STATEMENTS.
(a) Each Borrower hereby irrevocably appoints and constitutes
Administrative Borrower as its agent to request and receive Loans and Letter of
Credit Accommodations pursuant to this Agreement and the other Financing
Agreements from Agent or any Lender in the name or on behalf of such Borrower.
Agent and Lenders may disburse the Loans to such bank account of Administrative
Borrower or a Borrower or otherwise make such Loans to a Borrower and provide
such Letter of Credit Accommodations to a Borrower as Administrative Borrower
may designate or direct, without notice to any other Borrower or Obligor.
Notwithstanding anything to the contrary contained herein, Agent may at any time
and from time to time require that Loans to or for the account of any Borrower
be disbursed directly to an operating account of such Borrower.
(b) Administrative Borrower hereby accepts the appointment by
Borrowers to act as the agent of Borrowers pursuant to this Section 6.7.
Administrative Borrower shall ensure that the disbursement of any Loans to each
Borrower requested by or paid to or for the account of Atlas Holdings, or the
issuance of any Letter of Credit Accommodations for a Borrower hereunder, shall
be paid to or for the account of such Borrower.
(c) Each Borrower and other Guarantor hereby irrevocably appoints
and constitutes Administrative Borrower as its agent to receive statements on
account and all other notices from Agent and Lenders with respect to the
Obligations or otherwise under or in connection with this Agreement and the
other Financing Agreements.
(d) Any notice, election, representation, warranty, agreement or
undertaking by or on behalf of any other Borrower or any Guarantor by
Administrative Borrower shall be deemed for all purposes to have been made by
such Borrower or Guarantor, as the case may be, and shall be binding upon and
enforceable against such Borrower or Guarantor to the same extent as if made
directly by such Borrower of Guarantor.
(e) No purported termination of the appointment of Administrative
Borrower as agent as aforesaid shall be effective, except after ten (10) days'
prior written notice to Agent.
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6.8 PRO RATA TREATMENT. Except to the extent otherwise provided in
this Agreement: (a) the making and conversion of Loans shall be made among the
Lenders based on their respective Pro Rata Shares as to the Loans and (b) each
payment on account of any Obligations to or for the account of one or more of
Lenders in respect of any Obligations due on a particular day shall be allocated
among the Lenders entitled to such payments based on their respective Pro Rata
Shares and shall be distributed accordingly.
6.9 SHARING OF PAYMENTS, ETC.
(a) Each Borrower and Guarantor agrees that, in addition to (and
without limitation of) any right of setoff, banker's lien or counterclaim Agent
or any Lender may otherwise have, each Lender shall be entitled, at its option
(but subject, as among Agent and Lenders, to the provisions of Section 12.3(b)
hereof), to offset balances held by it for the account of such Borrower or
Guarantor at any of its offices, in dollars or in any other currency, against
any principal of or interest on any Loans owed to such Lender or any other
amount payable to such Lender hereunder, that is not paid when due (regardless
of whether such balances are then due to such Borrower or Guarantor), in which
case it shall promptly notify Administrative Borrower and Agent thereof;
PROVIDED, THAT, such Lender's failure to give such notice shall not affect the
validity thereof.
(b) If any Lender (including Agent) shall obtain from any Borrower
or Guarantor payment of any principal of or interest on any Loan owing to it or
payment of any other amount under this Agreement or any of the other Financing
Agreements through the exercise of any right of setoff, banker's lien or
counterclaim or similar right or otherwise (other than from Agent as provided
herein), and, as a result of such payment, such Lender shall have received more
than its Pro Rata Share of the principal of the Loans or more than its share of
such other amounts then due hereunder or thereunder by any Borrower or Guarantor
to such Lender than the percentage thereof received by any other Lender, it
shall promptly pay to Agent, for the benefit of Lenders, the amount of such
excess and simultaneously purchase from such other Lenders a participation in
the Loans or such other amounts, respectively, owing to such other Lenders (or
such interest due thereon, as the case may be) in such amounts, and make such
other adjustments from time to time as shall be equitable, to the end that all
Lenders shall share the benefit of such excess payment (net of any expenses that
may be incurred by such Lender in obtaining or preserving such excess payment)
in accordance with their respective Pro Rata Shares or as otherwise agreed by
Lenders. To such end all Lenders shall make appropriate adjustments among
themselves (by the resale of participation sold or otherwise) if such payment is
rescinded or must otherwise be restored.
(c) Each Borrower and Guarantor agrees that any Lender purchasing
a participation (or direct interest) as provided in this Section may exercise,
in a manner consistent with this Section, all rights of setoff, banker's lien,
counterclaim or similar rights with respect to such participation as fully as if
such Lender were a direct holder of Loans or other amounts (as the case may be)
owing to such Lender in the amount of such participation.
(d) Nothing contained herein shall require any Lender to exercise
any right of setoff, banker's lien, counterclaims or similar rights or shall
affect the right of any Lender to exercise, and retain the benefits of
exercising, any such right with respect to any other
56
Indebtedness or obligation of any Borrower or Guarantor. If, under any
applicable bankruptcy, insolvency or other similar law, any Lender receives a
secured claim in lieu of a setoff to which this Section applies, such Lender
shall, to the extent practicable, assign such rights to Agent for the benefit of
Lenders and, in any event, exercise its rights in respect of such secured claim
in a manner consistent with the rights of Lenders entitled under this Section to
share in the benefits of any recovery on such secured claim.
6.10 SETTLEMENT PROCEDURES.
(a) In order to administer the Credit Facility in an efficient
manner and to minimize the transfer of funds between Agent and Lenders, Agent
may, at its option, subject to the terms of this Section, make available, on
behalf of Lenders, the full amount of the Loans requested or charged to any
Borrower's loan account(s) or otherwise to be advanced by Lenders pursuant to
the terms hereof, without requirement of prior notice to Lenders of the proposed
Loans.
(b) With respect to all Loans made by Agent on behalf of Lenders
as provided in this Section, the amount of each Lender's Pro Rata Share of the
outstanding Loans shall be computed weekly, and shall be adjusted upward or
downward on the basis of the amount of the outstanding Loans as of 5:00 p.m. New
York City time on the Business Day immediately preceding the date of each
settlement computation; PROVIDED, THAT, Agent retains the absolute right at any
time or from time to time to make the above described adjustments at intervals
more frequent than weekly, but in no event more than twice in any week. Agent
shall deliver to each of the Lenders after the end of each week, or at such
lesser period or periods as Agent shall determine, a summary statement of the
amount of outstanding Loans for such period (such week or lesser period or
periods being hereinafter referred to as a "Settlement Period"). If the summary
statement is sent by Agent and received by a Lender prior to 12:00 p.m. New York
City time, then such Lender shall make the settlement transfer described in this
Section by no later than 3:00 p.m. New York City time on the same Business Day
and if received by a Lender after 12:00 p.m. New York City time, then such
Lender shall make the settlement transfer by not later than 3:00 p.m. New York
City time on the next Business Day following the date of receipt. If, as of the
end of any Settlement Period, the amount of a Lender's Pro Rata Share of the
outstanding Loans is more than such Lender's Pro Rata Share of the outstanding
Loans as of the end of the previous Settlement Period, then such Lender shall
forthwith (but in no event later than the time set forth in the preceding
sentence) transfer to Agent by wire transfer in immediately available funds the
amount of the increase. Alternatively, if the amount of a Lender's Pro Rata
Share of the outstanding Loans in any Settlement Period is less than the amount
of such Lender's Pro Rata Share of the outstanding Loans for the previous
Settlement Period, Agent shall forthwith transfer to such Lender by wire
transfer in immediately available funds the amount of the decrease. The
obligation of each of the Lenders to transfer such funds and effect such
settlement shall be irrevocable and unconditional and without recourse to or
warranty by Agent. Agent and each Lender agrees to mark its books and records at
the end of each Settlement Period to show at all times the dollar amount of its
Pro Rata Share of the outstanding Loans and Letter of Credit Accommodations.
Each Lender shall only be entitled to receive interest on its Pro Rata Share of
the Loans to the extent such Loans have been funded by such Lender. Because the
Agent on behalf of Lenders may be advancing and/or may be repaid Loans prior to
the time when Lenders will actually advance and/or be repaid such Loans,
interest with respect to Loans shall be allocated by Agent in accordance with
the amount of Loans
57
actually advanced by and repaid to each Lender and the Agent and shall accrue
from and including the date such Loans are so advanced to but excluding the date
such Loans are either repaid by Borrowers or actually settled with the
applicable Lender as described in this Section.
(c) To the extent that Agent has made any such amounts available
and the settlement described above shall not yet have occurred, upon repayment
of any Loans by a Borrower, Agent may apply such amounts repaid directly to any
amounts made available by Agent pursuant to this Section. In lieu of weekly or
more frequent settlements, Agent may, at its option, at any time require each
Lender to provide Agent with immediately available funds representing its Pro
Rata Share of each Loan, prior to Agent's disbursement of such Loan to Borrower.
In such event, all Loans under this Agreement shall be made by the Lenders
simultaneously and proportionately to their Pro Rata Shares. No Lender shall be
responsible for any default by any other Lender in the other Lender's obligation
to make a Loan requested hereunder nor shall the Commitment of any Lender be
increased or decreased as a result of the default by any other Lender in the
other Lender's obligation to make a Loan hereunder.
(d) If Agent is not funding a particular Loan to a Borrower (or
Administrative Borrower for the benefit of such Borrower) pursuant to Sections
6.10(a) and 6.10(b) above on any day, but is requiring each Lender to provide
Agent with immediately available funds on the date of such Loan as provided in
Section 6.10(c) above, Agent may assume that each Lender will make available to
Agent such Lender's Pro Rata Share of the Loan requested or otherwise made on
such day and Agent may, in its discretion, but shall not be obligated to, cause
a corresponding amount to be made available to or for the benefit of such
Borrower on such day. If Agent makes such corresponding amount available to a
Borrower and such corresponding amount is not in fact made available to Agent by
such Lender, Agent shall be entitled to recover such corresponding amount on
demand from such Lender together with interest thereon for each day from the
date such payment was due until the date such amount is paid to Agent at the
Federal Funds Rate for each day during such period (as published by the Federal
Reserve Bank of New York or at Agent's option based on the arithmetic mean
determined by Agent of the rates for the last transaction in overnight federal
funds arranged prior to 9:00 a.m. (New York City time) on that day by each of
the three leading brokers of federal funds transactions in New York City
selected by Agent) and if such amounts are not paid within three (3) days of
Agent's demand, at the highest Interest Rate provided for in Section 3.1 hereof
applicable to Prime Rate Loans. During the period in which such Lender has not
paid such corresponding amount to Agent, notwithstanding anything to the
contrary contained in this Agreement or any of the other Financing Agreements,
the amount so advanced by Agent to or for the benefit of any Borrower shall, for
all purposes hereof, be a Loan made by Agent for its own account. Upon any such
failure by a Lender to pay Agent, Agent shall promptly thereafter notify
Administrative Borrower of such failure and Borrowers shall pay such
corresponding amount to Agent for its own account within five (5) Business Days
of Administrative Borrower's receipt of such notice. A Lender who fails to pay
Agent its Pro Rata Share of any Loans made available by the Agent on such
Lender's behalf, or any Lender who fails to pay any other amount owing by it to
Agent, is a "Defaulting Lender". Agent shall not be obligated to transfer to a
Defaulting Lender any payments received by Agent for the Defaulting Lender's
benefit, nor shall a Defaulting Lender be entitled to the sharing of any
payments hereunder (including any principal, interest or fees). Amounts payable
to a Defaulting Lender shall instead be paid to or retained by Agent. Agent may
hold and, in its discretion, relend to a Borrower the amount of all such
payments received or
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retained by it for the account of such Defaulting Lender. For purposes of voting
or consenting to matters with respect to this Agreement and the other Financing
Agreements and determining Pro Rata Shares, such Defaulting Lender shall be
deemed not to be a "Lender" and such Lender's Commitment shall be deemed to be
zero (0). This Section shall remain effective with respect to a Defaulting
Lender until such default is cured. The operation of this Section shall not be
construed to increase or otherwise affect the Commitment of any Lender, or
relieve or excuse the performance by any Borrower or Obligor of their duties and
obligations hereunder.
(e) Nothing in this Section or elsewhere in this Agreement or the
other Financing Agreements shall be deemed to require Agent to advance funds on
behalf of any Lender or to relieve any Lender from its obligation to fulfill its
Commitment hereunder or to prejudice any rights that any Borrower may have
against any Lender as a result of any default by any Lender hereunder in
fulfilling its Commitment.
6.11 OBLIGATIONS SEVERAL; INDEPENDENT NATURE OF LENDERS' RIGHTS. The
obligation of each Lender hereunder is several, and no Lender shall be
responsible for the obligation or commitment of any other Lender hereunder.
Nothing contained in this Agreement or any of the other Financing Agreements and
no action taken by the Lenders pursuant hereto or thereto shall be deemed to
constitute the Lenders to be a partnership, an association, a joint venture or
any other kind of entity. The amounts payable at any time hereunder to each
Lender shall be a separate and independent debt, and subject to Section 12.3
hereof, each Lender shall be entitled to protect and enforce its rights arising
out of this Agreement and it shall not be necessary for any other Lender to be
joined as an additional party in any proceeding for such purpose.
SECTION 7. COLLATERAL REPORTING AND COVENANTS
7.1 CNS/CASS AND COLLATERAL REPORTING.
(a) Borrowers shall provide Agent with the following documents in
a form satisfactory to Agent:
(i) on a regular basis as required by Agent, a schedule of
Accounts indicating sales made, credits issued and cash received;
(ii) as soon as possible after the end of each month (but in
any event within thirteen (13) Business Days after the end thereof), on a
monthly basis or more frequently as Agent may request, (A) a Borrowing Base
Certificate setting forth the calculation of the Borrowing Base as of the last
Business Day of the immediately preceding month, duly completed and executed by
the chief financial officer, chief executive officer, vice president of finance,
treasurer or controller of Administrative Borrower, together with all schedules
required pursuant to the terms of the Borrowing Base Certificate duly completed
(including a schedule of all Accounts created, collections received and credit
memos issued for each day of the immediately preceding month); (B) aging of
accounts receivable (together with a reconciliation to the previous month's
aging and general ledger), (C) aging of accounts payable (and including
information indicating the amounts owing to owners and lessors of leased
premises, warehouses, processors and other third parties from time to time in
possession of any Collateral) and (D) a listing of each ACMI Contract in effect
as of the last day of such month setting forth on such
59
listing the name of the account debtor and the amount of contractual monthly
rental for each such ACMI Contract;
(iii) as soon as possible after the end of each calendar
quarter (but in any event within thirteen (13) Business Days after the end
thereof, if Loans or Letter of Credit Accommodations are then outstanding), (A)
perpetual Inventory, Engines and Spare Parts reports of Inventory, Engines and
Spare Parts constituting Collateral, and (B) Inventory, Engines and Spare Parts
reports by location and category of Inventory, Engines and Spare Parts
constituting Collateral (and including the amounts thereof and the value thereof
at any leased locations and at premises of warehouses, processors or other third
parties).
(iv) upon Agent's request, (A) copies of customer statements,
purchase orders, sales invoices, credit memos, remittance advices and reports,
and copies of deposit slips and bank statements, (B) copies of shipping and
delivery documents, (C) copies of purchase orders, invoices and delivery
documents for Spare Parts, Inventory and Engines and Equipment for Spare Parts,
Inventory and Engines and Equipment constituting Collateral acquired by any
Borrower or Guarantor and (D) with respect to Accounts constituting Eligible
Accounts as to which the account debtor is the United States of America, any
state, political subdivision, department, agency or instrumentality thereof,
copies of all agreements, invoices and other documents and materials related
thereto, together with such other information with respect thereto as Agent may
request, for the purpose of verifying the validity, amount or any other matter
related to such Accounts;
(v) such other reports as to the Collateral as Agent shall
request from time to time in good faith.
(b) Without limiting any of the provisions contained in Section
7.1(a) hereof, Polar shall, twice each month, forward to Agent copies of the
data submitted by Polar to CASS and/or CNS in connection with and pursuant to
and in accordance with the Clearinghouse Agreements with respect to the
preceding bi-monthly period (the "Recap Sheet"). Polar shall promptly present
the Recap Sheet to CASS and/or CNS, as applicable, together with all related
supporting documents properly batched in accordance with the Clearinghouse
Agreements or as otherwise required by CNS and/or CASS, the Clearing Bank, or
the account debtor. Polar shall submit the Recap Sheet to the Clearing Bank so
that the Recap Sheet is received by the Clearing Bank on or before the
bi-monthly due date therefor as provided in the Clearinghouse Agreements. Agent
shall have the right, in its discretion, at any time on or after the occurrence
of an Event of Default, to require that Polar deliver to Agent or its designee
at such place and in such manner as Agent may direct, all original exchange
orders, bills of lading or other transportation documents relating to the air
transportation of cargo, including mail, by Polar, whether before or after
having been grouped or otherwise processed by Polar, prior to the presentation
of such items to the Clearing Bank, CNS or CASS, IATA or any account debtor.
(c) Polar shall, upon Agent's request, promptly after submitting
the Recap Sheet to CNS or CASS deliver a copy of the Recap Sheet to Agent,
together with such other information, schedules, reports, or other materials
with respect thereto, as Agent may from time to time request in good faith.
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(d) Polar shall furnish, or cause to be furnished to Agent, all
settlement statements and other material printouts, notices, correspondence or
documents at any time received by Polar (promptly after receipt thereof) or sent
by Polar (concurrently with the sending thereof), as the case may be, from or to
the Clearing Bank, CNS, CASS or IATA.
(e) If any Borrower's or Guarantor's records or reports of the
Collateral are prepared or maintained by an accounting service, contractor,
shipper or other agent, including pursuant to any Clearinghouse Agreement, such
Borrower and Guarantor hereby irrevocably authorizes such service, contractor,
shipper or agent to deliver such records, reports, and related documents to
Agent and to follow Agent's instructions with respect to further services at any
time that an Event of Default exists or has occurred and is continuing.
7.2 ACCOUNTS COVENANTS.
(a) Borrowers shall notify Agent promptly of: (i) any material
delay in any Borrower's performance of any of its material obligations to any
account debtor or the assertion of any material claims, offsets, defenses or
counterclaims by any account debtor, or any material disputes with account
debtors, or any settlement, adjustment or compromise thereof, (ii) all material
adverse information known to any Borrower or Guarantor relating to the financial
condition of any account debtor and (iii) any event or circumstance which, to
the best of any Borrower's or Guarantor's knowledge, would cause Agent to
consider any then existing Eligible Accounts as no longer constituting Eligible
Accounts. No credit, discount, allowance or extension or agreement for any of
the foregoing shall be granted to any account debtor without Agent's consent,
except in the ordinary course of a Borrower's or Guarantor's business in
accordance with practices and policies previously disclosed in writing to Agent
and except as set forth in the schedules delivered to Agent pursuant to Section
7.1 (a) above. So long as no Event of Default exists or has occurred and is
continuing, Borrowers and Guarantors shall settle, adjust or compromise any
claim, offset, counterclaim or dispute with any account debtor. At any time that
an Event of Default exists or has occurred and is continuing, Agent shall, at
its option, have the exclusive right to settle, adjust or compromise any claim,
offset, counterclaim or dispute with account debtors or grant any credits,
discounts or allowances.
(b) With respect to each Account constituting Collateral: (i) the
amounts shown on any invoice delivered to Agent or schedule thereof delivered to
Agent shall be true and complete, (ii) no payments shall be made thereon except
payments made in accordance with the terms and conditions of this Agreement,
(iii) no credit, discount, allowance or extension or agreement for any of the
foregoing shall be granted to any account debtor except as reported to Agent in
accordance with this Agreement and except for credits, discounts, allowances or
extensions made or given in the ordinary course of each Borrower's business in
accordance with practices and policies previously disclosed to Agent, (iv) there
shall be no setoffs, deductions, contras, defenses, counterclaims or disputes
existing or asserted with respect thereto except as reported to Agent in
accordance with the terms of this Agreement, (v) none of the transactions giving
rise thereto will violate any applicable foreign, federal, state or local laws
or regulations, all documentation relating thereto will be legally sufficient
under such laws and regulations and all such documentation will be legally
enforceable in accordance with its terms.
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(c) Agent shall have the right at any time or times, in Agent's
name or in the name of a nominee of Agent, to verify the validity, amount or any
other matter relating to any Receivables constituting Collateral or other
Collateral, by mail, telephone, facsimile transmission or otherwise.
(d) Polar represents, warrants and covenants to Agent and Lenders
that not less than thirty (30%) percent of all Accounts and other sums payable
by IATA members to Polar in respect of transportation services rendered by Polar
are and shall be settled through CNS and/or CASS and remitted by the Clearing
Bank in accordance herewith.
(e) Agent may, at any time or times that an Event of Default
exists or has occurred and is continuing, (i) notify any or all account debtors,
CNS, CASS and/or the Clearing Bank that the Accounts constituting Collateral of
Polar have been assigned to Agent and that Agent has a security interests
therein and Agent may direct any or all account debtors, CNS, CASS, IATA and/or
the Clearing Bank to make payment of such Accounts of Polar directly to Agent,
(ii) extend the time of payment of, compromise, settle or adjust for cash,
credit, return of merchandise or otherwise, and upon any terms or conditions,
any and all Accounts or other obligations included in the Collateral and thereby
discharge or release the account debtor, CNS, CASS, IATA and/or the Clearing
Bank or any other party or parties in any way liable for payment or settlement
thereof without affecting any of the Obligations, (iii) demand, collect or
enforce payment of any Accounts constituting Eligible Accounts or such other
obligations, but without any duty to do so, and Agent shall not be liable for
its failure to collect or enforce the payment thereof nor for the negligence of
its agents or attorneys with respect thereto and (iv) take whatever other action
Agent may deem necessary or desirable for the protection of its interests. At
any time that an Event of Default exists or has occurred and is continuing, at
Agent's request, all invoices and statements sent to any account debtor, CNS,
CASS, IATA and/or the Clearing Bank shall state that the Accounts constituting
Collateral and such other obligations have been assigned to Agent and are
payable directly and only to Agent and Polar shall deliver to Agent such
originals of documents evidencing the sale and delivery of goods or the
performance of services giving rise to any such Accounts as Agent may require.
(f) Borrowers and Guarantors represent, warrant and covenant with,
to and in favor of Agent that all of the Accounts and Receivables (other than
any such Accounts or Receivables which are Excluded Property) shall at all times
constitute Collateral in which Agent has a first priority security interest.
7.3 ENGINES, SPARE PARTS AND INVENTORY COVENANTS. With respect to that
portion of the Collateral consisting of Engines, Spare Parts and Inventory, in
addition to, and not in limitation of any of the provisions contained in the
Engine Security Agreement, Spare Parts Agreement or any other Financing
Agreement: (a) Borrowers shall at all times maintain inventory records, logs and
other materials in accordance with the past practices of Borrowers as previously
disclosed to Agent (i) that are necessary or appropriate to preserve in full
force and effect any warranties with respect to the Engines, Spare Parts and
Inventory constituting Collateral and (ii) itemizing and describing the kind,
type, quality and quantity of Engines, Spare Parts and Inventory constituting
Collateral, each Borrower's and Guarantor's cost therefor and periodic
withdrawals therefrom and additions thereto; (b) Borrowers shall conduct a cycle
count of the Engines, Spare Parts and Inventory constituting Collateral at least
once each year, but at any time or times as
62
Agent may request on or after an Event of Default, and promptly following such
cycle count shall supply Agent with a report in the form and with such
specificity as may be satisfactory to Agent concerning such cycle count; (c)
each Borrower and Guarantor shall store and maintain the Secured Aircraft or
Engines and Spare Parts constituting Collateral in accordance with and in
compliance in all material respects with the requirements of such Borrower's or
Guarantor's maintenance program approved by the FAA to the extent required by
applicable law; (d) Borrowers and Guarantors shall perform all material
overhauls, checks, inspections, recertifications and maintenance service to all
Engines or Spare Parts constituting Collateral as are required to be performed
under all applicable Federal Aviation Laws, manufacturers' service bulletins,
manuals and notices relating to the Engines or Spare Parts; (e) no Borrower or
Guarantor shall remove any Engines, Spare Parts or Inventory constituting
Collateral from the locations set forth or permitted herein, without the prior
written consent of Agent, except, prior to an Event of Default (or, after an
Event of Default, with Agent's prior written consent) to (A) deliver possession
to any third party lessee pursuant to the lease thereof to the extent such lease
is otherwise permitted herein, and (B) move Engines, Spare Parts or Inventory
constituting Collateral directly from one location set forth or permitted herein
to another such location for use or consumption in the ordinary course of a
Borrower's or Guarantor's business, including installation upon Aircraft, and
except for the refurbishment, repair and/or recertification of any Engines or
Spare Parts constituting Collateral removed from Aircraft; (f) Borrowers shall,
at their expense, deliver or cause to be delivered to Agent annual updated
desktop Appraisals as to the Engines and Spare Parts constituting Collateral, or
more frequent updated or new Appraisals at Agent's request at any time or times
on or after an Event of Default, in form, scope and methodology acceptable to
Agent and by an appraiser acceptable to Agent, addressed to Agent or upon which
Agent is expressly permitted to rely; (g) each Borrower and Guarantor shall use,
store and maintain Engines, Spare Parts and Inventory constituting Collateral
consistent with customary industry standards and in accordance in all material
respects with applicable standards of any insurance and in conformity with
applicable laws (including, but not limited to, the requirements of the Federal
Aviation Laws and the Federal Fair Labor Standards Act of 1938, as amended and
all rules, regulations and orders related thereto); (h) each Borrower and
Guarantor assumes all responsibility and liability arising from or relating to
the maintenance, use, and operation of Engines, Spare Parts and Inventory
constituting Collateral; (i) each Borrower and Guarantor shall keep all material
Engines, Spare Parts and Inventory constituting Collateral in good condition,
reasonable wear and tear excepted; and (j) the Spare Parts that are required to
be subject to the first priority, perfected security interest of Agent pursuant
to this Agreement and the other Financing Agreements, shall at all times have a
value (determined on the basis of the lower of cost or market value) of not less
than $50,000,000 in the aggregate.
7.4 AIRCRAFT COVENANTS.
(a) With respect to the Secured Aircraft: (i) upon Agent's request,
each Borrower shall, at its expense, at any time or times as Agent may request
on or after an Event of Default, deliver or cause to be delivered to Agent
written reports or desktop appraisals as to the Secured Aircraft; (ii) Borrowers
and Guarantors shall keep the Secured Aircraft in good order, repair, running
and marketable condition (ordinary wear and tear excepted) in compliance in all
material respects with the requirements of such Borrower's maintenance program
approved by the FAA, Foreign Aviation Authorities and all of the manufacturers'
manuals and mandatory and non-mandatory service bulletins; (iii) Borrowers and
Guarantors shall perform all material overhauls,
63
checks, inspections and maintenance service to all Secured Aircraft as are
required under all Air Carrier Certificates, all Federal Aviation Laws and all
manufacturers' service manuals and bulletins; (iv) Borrowers and Guarantors
shall use the Secured Aircraft with all reasonable care and caution and in
accordance with applicable standards of any insurance and in conformity with all
Air Carrier Certificates, Federal Aviation Laws and all other applicable laws;
(v) the Secured Aircraft are and shall be used in a Borrower's business and not
for personal, family, household or farming use; (vi) Borrowers and Guarantors
shall not remove any Secured Aircraft except for the movement of such Secured
Aircraft used by or for the benefit of a Borrower in the ordinary course of
business; (vii) the Secured Aircraft are now and shall remain personal property
and Borrowers and Guarantors shall not permit any of the Secured Aircraft to be
or become a part of or affixed to real property; and (viii) each Borrower and
Guarantor assumes all responsibility and liability arising from the use of the
Secured Aircraft.
(b) Borrowers shall provide to Agent a quarterly report setting
forth the usage of the EETC Aircraft and such information with respect thereto
as Agent may request.
7.5 POWER OF ATTORNEY. Each Borrower and Guarantor hereby irrevocably
designates and appoints Agent (and all persons designated by Agent) as such
Borrower's and Guarantor's true and lawful attorney-in-fact, and authorizes
Agent, in such Borrower's, Guarantor's or Agent's name, to: (a) at any time an
Event of Default exists or has occurred and is continuing (i) demand payment on
Receivables constituting Collateral or other Collateral, including from CNS,
CASS, IATA and/or the Clearing Bank, payment on Accounts or other proceeds of
Collateral, (ii) enforce payment of Receivables constituting Collateral by legal
proceedings or otherwise, (iii) exercise all of such Borrower's or Guarantor's
rights and remedies to collect any Receivable constituting Collateral or other
Collateral, (iv) sell or assign any Receivable constituting Collateral upon such
terms, for such amount and at such time or times as the Agent deems advisable,
(v) settle, adjust, compromise, extend or renew an Account constituting
Collateral, (vi) discharge and release any Receivable constituting Collateral,
(vii) prepare, file and sign such Borrower's or Guarantor's name on any proof of
claim in bankruptcy or other similar document against an account debtor, the
CNS, CASS, IATA, the Clearing Bank or other obligor in respect of any
Receivables constituting Collateral or other Collateral, (viii) notify the post
office authorities to change the address for delivery of remittances from
account debtors or other obligors in respect of Receivables constituting
Collateral or other proceeds of Collateral to an address designated by Agent,
and open and dispose of all mail addressed to such Borrower or Guarantor and
handle and store all mail relating to the Collateral; and (ix) do all acts and
things which are necessary, in Agent's determination, to fulfill such Borrower's
or Guarantor's obligations under this Agreement and the other Financing
Agreements and (b) at any time to (i) take control in any manner of any item of
payment in respect of Receivables constituting Collateral or other Collateral or
otherwise received in or for deposit in the Blocked Accounts or otherwise
received by Agent or any Lender, (ii) have access to any lockbox or postal box
into which remittances from account debtors or other obligors in respect of
Receivables constituting Collateral or other proceeds of Collateral are sent or
received, (iii) endorse such Borrower's or Guarantor's name upon any items of
payment in respect of Receivables constituting Collateral or Collateral or
otherwise received by Agent and any Lender and deposit the same in Agent's
account for application to the Obligations, (iv) endorse such Borrower's or
Guarantor's name upon any chattel paper, document, instrument, invoice, or
similar document or agreement relating to any Receivable constituting Collateral
or any goods pertaining thereto or any other
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Collateral, including any warehouse or other receipts, or bills of lading and
other negotiable or non-negotiable documents, (v) clear Inventory the purchase
of which was financed with Letter of Credit Accommodations through U.S. Customs
or foreign export control authorities in such Borrower's or Guarantor's name,
Agent's name or the name of Agent's designee, and to sign and deliver to customs
officials powers of attorney in such Borrower's or Guarantor's name for such
purpose, and to complete in such Borrower's or Guarantor's or Agent's name, any
order, sale or transaction, obtain the necessary documents in connection
therewith and collect the proceeds thereof, (vi) file and submit in any
Borrower's or Guarantor's name, any statements, Recap Sheets or reports and take
any other action required to be taken by a Borrower or Guarantor under the
Clearinghouse Agreements, in order to effect payment of sums to be settled and
paid by or through the CNS, CASS, IATA or the Clearing Bank, and (vii) sign such
Borrower's or Guarantor's name on any verification of Receivables constituting
Collateral and notices thereof to account debtors or any secondary obligors or
other obligors in respect thereof. Each Borrower and Guarantor hereby releases
Agent and Lenders and their respective officers, employees and designees from
any liabilities arising from any act or acts under this power of attorney and in
furtherance thereof, whether of omission or commission, except as a result of
Agent's or any Lender's own gross negligence or willful misconduct as determined
pursuant to a final non-appealable order of a court of competent jurisdiction.
7.6 RIGHT TO CURE. Agent may, at its option, upon notice to
Administrative Borrower, (a) cure any default by any Borrower or Guarantor under
any material agreement with a third party that affects the Collateral, its value
or the ability of Agent to collect, sell or otherwise dispose of the Collateral
or the rights and remedies of Agent or any Lender therein or the ability of any
Borrower or Guarantor to perform its obligations hereunder or under any of the
other Financing Agreements, (b) pay or bond on appeal any judgment entered
against any Borrower or Guarantor, (c) discharge taxes, liens, security
interests or other encumbrances at any time levied on or existing with respect
to the Collateral and pay any amount, incur any expense or perform any act
which, in Agent's judgment, is necessary or appropriate to preserve, protect,
insure or maintain the Collateral and the rights of Agent and Lenders with
respect thereto. Agent may add any amounts so expended to the Obligations and
charge any Borrower's account therefor, such amounts to be repayable by
Borrowers on demand. Agent and Lenders shall be under no obligation to effect
such cure, payment or bonding and shall not, by doing so, be deemed to have
assumed any obligation or liability of any Borrower or Guarantor. Any payment
made or other action taken by Agent or any Lender under this Section shall be
without prejudice to any right to assert an Event of Default hereunder and to
proceed accordingly.
7.7 ACCESS TO PREMISES. From time to time as requested by Agent, at the
cost and expense of Borrowers, (a) Agent or its designee shall have complete
access to all of each Borrower's and Guarantor's premises during normal business
hours and after reasonable notice to Atlas Holdings, or at any time and without
notice to Administrative Borrower if an Event of Default exists or has occurred
and is continuing, for the purposes of inspecting, verifying and auditing the
Collateral and all of each Borrower's and Guarantor's books and records,
including the Records, and (b) each Borrower and Guarantor shall promptly
furnish to Agent such copies of such books and records or extracts therefrom as
Agent may request, and Agent or any Lender or Agent's designee may use during
normal business hours such of any Borrower's and Guarantor's personnel,
equipment, supplies and premises as may be reasonably necessary for the
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foregoing and if an Event of Default exists or has occurred and is continuing
for the collection of Receivables constituting Collateral and realization of
other Collateral.
SECTION 8. REPRESENTATIONS AND WARRANTIES
Each Borrower and Guarantor hereby represents and warrants to Agent and
Lenders the following (which shall survive the execution and delivery of this
Agreement), the truth and accuracy of which are a continuing condition of the
making of Loans and providing Letter of Credit Accommodations to Borrowers:
8.1 CORPORATE EXISTENCE, POWER AND AUTHORITY. Each Borrower and
Guarantor is a corporation duly organized and in good standing under the laws of
its state of incorporation and is duly qualified as a foreign corporation and in
good standing in all states or other jurisdictions where the nature and extent
of the business transacted by it or the ownership of assets makes such
qualification necessary, except for those jurisdictions in which the failure to
so qualify would not have a Material Adverse Effect. The execution, delivery and
performance of this Agreement, the other Financing Agreements and the
transactions contemplated hereunder and thereunder (i) are all within each
Borrower's and Guarantor's corporate powers, (ii) have been duly authorized,
(iii) are not in contravention of law or the terms of any Borrower's or
Guarantor's certificate of incorporation, by-laws, or other organizational
documentation, or any indenture, agreement or undertaking to which any Borrower
or Guarantor is a party or by which any Borrower or Guarantor or its property
are bound and (iv) will not result in the creation or imposition of, or require
or give rise to any obligation to grant, any lien, security interest, charge or
other encumbrance upon any property of any Borrower or Guarantor other than in
favor of Agent, for itself and the benefit of Lenders. This Agreement and the
other Financing Agreements to which any Borrower or Guarantor is a party
constitute legal, valid and binding obligations of such Borrower and Guarantor
enforceable in accordance with their respective terms.
8.2 NAME; STATE OF ORGANIZATION; CHIEF EXECUTIVE OFFICE; COLLATERAL
LOCATIONS.
(a) The exact legal name of each Borrower and Guarantor is as set
forth on the signature page of this Agreement and in the Information
Certificate. No Borrower or Guarantor has, during the five years prior to the
date of this Agreement, been known by or used any other corporate or fictitious
name or been a party to any merger or consolidation, or acquired all or
substantially all of the assets of any Person, or acquired any of its property
or assets out of the ordinary course of business, except as set forth in the
Information Certificate.
(b) Each Borrower and Guarantor is an organization of the type and
organized in the jurisdiction set forth in the Information Certificate. The
Information Certificate accurately sets forth the organizational identification
number of each Borrower and Guarantor or accurately states that such Borrower or
Guarantor has none and accurately sets forth the federal employer identification
number of each Borrower and Guarantor.
(c) The chief executive office and mailing address of each
Borrower and Guarantor and each Borrower's and Guarantor's Records concerning
Accounts are located only at the address identified as such in Schedule 8.2 to
the Information Certificate and its only other places
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of business and the only other locations of Collateral, if any, are the
addresses set forth in Schedule 8.2 to the Information Certificate, subject to
the rights of any Borrower or Guarantor to establish new locations in accordance
with Section 9.2 below. The Information Certificate correctly identifies any of
such locations which are not owned by a Borrower or Guarantor and sets forth the
owners and/or operators thereof.
8.3 FINANCIAL STATEMENTS; NO MATERIAL ADVERSE CHANGE. All financial
statements relating to any Borrower or Guarantor (including financial statements
with respect to Atlas Holdings and its Subsidiaries) which have been or may
hereafter be delivered by any Borrower or Guarantor to Agent and Lenders have
been prepared in accordance with GAAP (except as to (a) any forecasted financial
statements, or (b) any interim financial statements, to the extent such
statements are subject to post period adjustments and do not include any notes)
and fairly present in all material respects the financial condition and the
results of operation of Atlas Holdings, on a consolidated basis, as at the dates
and for the periods set forth therein. Except as disclosed in any interim
financial statements or written report specifically identifying a Material
Adverse Effect, in either case furnished by Borrowers and Guarantors to Agent
prior to the date of this Agreement, there has been no act, condition or event
which has had or is reasonably likely to have a Material Adverse Effect since
the date of the most recent audited financial statements of Atlas Holdings
furnished by any Borrower or Guarantor to Agent prior to the date of this
Agreement.
8.4 PRIORITY OF LIENS; TITLE TO PROPERTIES. The security interests and
liens granted to Agent under this Agreement and the other Financing Agreements
constitute valid and perfected first priority liens and security interests in
and upon the Collateral subject only to the liens indicated on Schedule 8.4 to
the Information Certificate and the other liens permitted under Section 9.8
hereof. Each Borrower and Guarantor has good and marketable fee simple title to
or valid leasehold interests in all of its Real Property and good, valid and
merchantable title to all of its other material properties and assets subject to
no liens, mortgages, pledges, security interests, encumbrances or charges of any
kind, except those granted to Agent and such others as are specifically listed
on Schedule 8.4 to the Information Certificate or permitted under Section 9.8
hereof.
8.5 TAX RETURNS. Except as disclosed in the Information Certificate, (a)
each Borrower and Guarantor has filed, or caused to be filed, in a timely manner
all tax returns, reports and declarations which are required to be filed by it,
(b) all information in such tax returns, reports and declarations is complete
and accurate in all material respects, (c) each Borrower and Guarantor has paid
or caused to be paid all taxes due and payable or claimed due and payable in any
assessment received by it, except taxes the validity of which are being
contested in good faith by appropriate proceedings diligently pursued and
available to such Borrower or Guarantor and with respect to which adequate
reserves have been set aside on its books, and (d) adequate provision has been
made for the payment of all accrued and unpaid federal, state, county, local,
foreign and other taxes whether or not yet due and payable and whether or not
disputed.
8.6 LITIGATION. Except as set forth on Schedule 8.6 to the Information
Certificate, (a) there is no investigation by any Governmental Authority
pending, or to the best of any Borrower's or Guarantor's knowledge threatened,
against or affecting any Borrower or Guarantor, its or their assets or business
and (b) there is no action, suit, proceeding or claim by
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any Person pending, or to the best of any Borrower's or Guarantor's knowledge
threatened, against any Borrower or Guarantor or its or their assets or
goodwill, or against or affecting any transactions contemplated by this
Agreement, in each case as to clauses (a) and (b), which has or could reasonably
be expected to have a Material Adverse Effect.
8.7 COMPLIANCE WITH OTHER AGREEMENTS AND APPLICABLE LAWS.
(a) Borrowers and Guarantors are not in default in any respect
under, or in violation in any respect of the terms of, any agreement, contract,
instrument, lease or other commitment to which it is a party or by which it or
any of its assets are bound where such default or violation has or could
reasonably be expected to have a Material Adverse Effect. Borrowers and
Guarantors are in compliance with the requirements of all applicable laws,
rules, regulations and orders of any Governmental Authority (including the FAA
and the DOT) relating to their respective businesses, including those set forth
in or promulgated pursuant to the Federal Aviation Laws, Occupational Safety and
Health Act of 1970, as amended, the Fair Labor Standards Act of 1938, as
amended, and the rules and regulations thereunder, and all Environmental Laws
where the failure to so comply has or could reasonably be expected to have a
Material Adverse Effect.
(b) Borrowers and Guarantors have obtained all material permits,
licenses, approvals, consents, certificates (including Air Carrier
Certificates), orders or authorizations of any Governmental Authority (including
the FAA and DOT) required for the lawful conduct of their businesses (the
"Permits"). Exhibit F hereto sets forth the Permits issued to Borrowers or
Guarantors by the FAA, the DOT or other domestic Governmental Authority as of
the date hereof, and Borrowers and Guarantors represent, warrant and agree that,
upon the request of Agent, Borrowers and Guarantors shall update such Exhibit F
hereto to reflect any additions to or deletions from such Exhibit F including,
on or after an Event of Default, any Permits issued to Borrowers or Guarantors
by all foreign Governmental Authorities. All of the Permits are valid and
subsisting and in full force and effect. There are no actions, claims or
proceedings pending or to the best of any Borrower's or Guarantor's knowledge,
threatened that seek the revocation, cancellation, suspension or modification of
any of the Permits except as disclosed on Schedule 8.7 to the Information
Certificate.
8.8 AIR CARRIER OPERATIONS.
(a) Each Borrower has all necessary Air Carrier Certificates in
connection with the transportation cargo, including mail, and the operation,
maintenance and repair of its Aircraft, Engines, Spare Parts and related
Equipment, in the ordinary course of its business as presently conducted or
proposed to be conducted, in accordance with all requirements of the Federal
Aviation Laws and other applicable laws and regulations.
(b) Except at set forth on Schedule 8.8 to the Information
Certificate, no Borrower has received any notice or citation for non-compliance
with any Air Carrier Certificates or any Federal Aviation Laws in connection
with the air transportation of cargo, including mail, and the use, operation and
maintenance of its Aircraft, Engines, Spare Parts and related Equipment, where
the failure to so comply has or could reasonably be expected to have a Material
Adverse Effect.
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(c) All Aircraft have been duly registered with the FAA and/or the
applicable Foreign Aviation Authority pursuant to an Aircraft registration, and
such Aircraft registration has been affixed or placed therein, and each Aircraft
in use or to be used by a Borrower has been issued an Airworthiness Certificate
(as defined in the Federal Aviation Laws) by the FAA or an equivalent
certificate issued by an equivalent Foreign Aviation Authority having
jurisdiction with respect thereto.
(d) Except as permitted under Section 9.3(a), each Borrower is
and shall at all times remain a Certificated Air Carrier.
8.9 SLOT AND ROUTE UTILIZATION.
(a) Each Borrower is utilizing its Slots in a manner consistent
with applicable laws, regulations and contracts in order to preserve its right
to hold and operate its Slots. As of the Effective Date, no Borrower has
received any notice from the FAA, DOT or any applicable Foreign Aviation
Authority, or is aware of any other event or circumstance, that would be
reasonably likely to impair its right to hold and operate any of its Slots.
(b) Each Borrower holds the requisite authority to operate over
each of its Routes pursuant to the Federal Aviation Laws, applicable foreign
law, and the applicable regulations, orders and directives of the FAA, the DOT
and, to the extent applicable, the Foreign Aviation Authorities having
jurisdiction over its operations, and has, at all times after being awarded each
such Route, complied in all material respects with all of the terms, conditions
and limitations of each such certificate, order, permit or license issued by the
DOT and the applicable Foreign Aviation Authorities regarding such Route and
with all applicable provisions of the Federal Aviation Laws or applicable
foreign law. There exists no violation by any Borrower of such terms, conditions
or limitations that could reasonably be expected to cause the FAA, DOT or any
applicable Foreign Aviation Authorities to terminate, cancel, withdraw or modify
the rights of any Borrower in any of its Routes.
8.10 CASS/IATA OPERATIONS.
(a) Atlas is a member in good standing of IATA and is in
compliance in all material respects with the rules and procedures of IATA
applicable to Atlas;
(b) Polar is a CASS participant and is not required in connection
with such CASS participation or otherwise, to be a member of IATA;
(c) From time to time, as Agent may request, Polar shall promptly
provide to Agent a schedule of the offices of CASS with respect to which Polar
has entered into and maintains Clearinghouse Agreements;
(d) From time to time, as Agent may request, Polar shall promptly
provide to Agent a schedule of the Cargo Agents acting on behalf of Polar, which
schedule shall indicate which Cargo Agents remit payments to Polar through CASS
and which Cargo Agents remit payments to Polar directly (outside of CASS); and
69
(e) In respect of their rendition of services for the benefit of
Polar, each Cargo Agent, as applicable, is responsible for the payment of all
monies due to the applicable air carrier resulting from the issuance of any
transportation documents in the name of such air carrier, irrespective of
whether such monies are collected by such Cargo Agent.
8.11 ENVIRONMENTAL COMPLIANCE.
(a) Except as set forth on Schedule 8.11 to the Information
Certificate, Borrowers, Guarantors and any Subsidiary of any Borrower or
Guarantor have not generated, used, stored, treated, transported, manufactured,
handled, produced or disposed of any Hazardous Materials, on or off its premises
(whether or not owned by it) in any manner which at any time violates in any
material respect any applicable Environmental Law or Permit, and the operations
of Borrowers, Guarantors and any Subsidiary of any Borrower or Guarantor
complies in all material respects with all Environmental Laws and all Permits.
(b) Except as set forth on Schedule 8.11 to the Information
Certificate, there has been no investigation by any Governmental Authority or
any proceeding, complaint, order, directive, claim, citation or notice by any
Governmental Authority or any other person nor is any pending or to the best of
any Borrower's or Guarantor's knowledge threatened, with respect to any
non-compliance with or violation of the requirements of any Environmental Law by
any Borrower or Guarantor and any Subsidiary of any Borrower or Guarantor or the
release, spill or discharge, threatened or actual, of any Hazardous Material or
the generation, use, storage, treatment, transportation, manufacture, handling,
production or disposal of any Hazardous Materials or any other environmental,
health or safety matter, which has or could reasonably be expected to have a
Material Adverse Effect.
(c) Except as set forth on Schedule 8.11 to the Information
Certificate, Borrowers, Guarantors and their Subsidiaries have no liability
(contingent or otherwise) in connection with a release, spill or discharge,
threatened or actual, of any Hazardous Materials or the generation, use,
storage, treatment, transportation, manufacture, handling, production or
disposal of any Hazardous Materials which has or could reasonably be expected to
have a Material Adverse Effect.
(d) Borrowers, Guarantors and their Subsidiaries have all Permits
required to be obtained or filed in connection with the operations of Borrowers
and Guarantors under any Environmental Law and all of such licenses,
certificates, approvals or similar authorizations and other Permits are valid
and in full force and effect except where the failure to obtain or maintain any
Permit has or could reasonably be expected to have a Material Adverse Effect.
8.12 EMPLOYEE BENEFITS.
(a) To the best of each Borrower's and Guarantor's knowledge, each
Plan is in compliance in all material respects with the applicable provisions of
ERISA, the Code and other federal or state law. Each Plan which is intended to
qualify under Section 401 (a) of the Code has received a favorable determination
letter from the Internal Revenue Service and to the best of any Borrower's or
Guarantor's knowledge, nothing has occurred which would cause the loss of such
qualification. Each Borrower and its ERISA Affiliates have made all required
contributions
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to any Plan subject to Section 412 of the Code, and no application for a funding
waiver or an extension of any amortization period pursuant to Section 412 of the
Code has been made with respect to any Plan.
(b) There are no pending, or to the best of any Borrower's or
Guarantor's knowledge, threatened claims, actions or lawsuits, or action by any
Governmental Authority, with respect to any Plan.
(c) (i) To the best of each Borrower's and Guarantor's knowledge, no
ERISA Event has occurred or is reasonably expected to occur that has resulted in
or could reasonably be expected to result in liability of any Borrower or
Guarantor in an aggregate amount in excess of $250,000; (ii) the current value
of each Plan's assets (determined in accordance with the assumptions used for
funding such Plan pursuant to Section 412 of the Code) are not less than such
Plan's liabilities under Section 4001(a)(16) of ERISA; (iii) each Borrower and
Guarantor, and their ERISA Affiliates, have not incurred and do not reasonably
expect to incur, any liability under Title IV of ERISA with respect to any Plan
(other than premiums due and not delinquent under Section 4007 of ERISA); (iv)
each Borrower and Guarantor, and their ERISA Affiliates, have not incurred and
do not reasonably expect to incur, any liability (and no event has occurred
which, with the giving of notice under Section 4219 of ERISA, would result in
such liability) under Section 4201 or 4243 of ERISA with respect to a
Multiemployer Plan; and (v) each Borrower and Guarantor, and their ERISA
Affiliates, have not engaged in a transaction that would be subject to Section
4069 or 4212(c) of ERISA.
8.13 BANK ACCOUNTS. All of the deposit accounts, investment accounts or
other accounts in the name of or used by any Borrower or Guarantor maintained at
any bank or other financial institution are set forth on Schedule 8.13 to the
Information Certificate, subject to the right of each Borrower and Guarantor to
establish new accounts in accordance with Section 5.2 hereof.
8.14 INTELLECTUAL PROPERTY. Each Borrower and Guarantor owns or licenses
or otherwise has the right to use all Intellectual Property necessary for the
operation of its business as presently conducted or proposed to be conducted. As
of the date hereof, Borrowers and Guarantors do not have any Intellectual
Property registered, or subject to pending applications, in the United States
Patent and Trademark Office or any similar office or agency in the United
States, any state thereof, any political subdivision thereof or in any other
country, other than those described in Schedule 8.14 to the Information
Certificate and has not granted any licenses with respect thereto other than as
set forth in Schedule 8.14 to the Information Certificate. No event has occurred
which permits or would permit after notice or passage of time or both, the
revocation, suspension or termination of such rights. To the best of any
Borrower's and Guarantor's knowledge, no slogan or other advertising device,
product, process, method, substance or other Intellectual Property or goods
bearing or using any Intellectual Property presently contemplated to be sold by
or employed by any Borrower or Guarantor infringes any patent, trademark,
servicemark, tradename, copyright, license or other Intellectual Property owned
by any other Person presently and as of the date hereof no claim or litigation
is pending or threatened against or affecting any Borrower or Guarantor
contesting its right to sell or use any such Intellectual Property, except as
set forth on Schedule 8.14 to the Information Certificate. Schedule 8.14 to the
Information Certificate sets forth all of the agreements or other arrangements
of each Borrower and Guarantor pursuant to which such Borrower or Guarantor
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has a license or other right to use any trademarks, logos, designs,
representations or other Intellectual Property owned by another person as in
effect on the date hereof and the dates of the expiration of such agreements or
other arrangements of such Borrower or Guarantor as in effect on the date hereof
(collectively, together with such agreements or other arrangements as may be
entered into by any Borrower or Guarantor after the date hereof, collectively,
the "License Agreements" and individually, a "License Agreement"). All
trademarks and other Intellectual Property used by any Borrower or Guarantor
that are owned by another Person are being used in all material respects in
accordance with the terms of the License Agreement applicable thereto.
8.15 SUBSIDIARIES; AFFILIATES: CAPITALIZATION: SOLVENCY.
(a) As of the date hereof, each Borrower and Guarantor does not have
any direct or indirect Subsidiaries or Affiliates and is not engaged in any
joint venture or partnership except as set forth in Schedule 8.15 to the
Information Certificate.
(b) As of the date hereof, each Borrower and Guarantor is the record
and beneficial owner of all of the issued and outstanding shares of Capital
Stock of each of the Subsidiaries listed on Schedule 8.15 to the Information
Certificate as being owned by such Borrower or Guarantor and there are no
proxies, irrevocable or otherwise, with respect to such shares and no equity
securities of any of the Subsidiaries are or may become required to be issued by
reason of any options, warrants, rights to subscribe to, calls or commitments of
any kind or nature and there are no contracts, commitments, understandings or
arrangements by which any Subsidiary is or may become bound to issue additional
shares of it Capital Stock or securities convertible into or exchangeable for
such shares.
(c) As of the date hereof, the issued and outstanding shares
of Capital Stock of each Borrower and Guarantor (other than Atlas Holdings) are
directly and beneficially owned and held by the persons indicated in the
Information Certificate, and in each case all of such shares have been duly
authorized and are fully paid and non-assessable, free and clear of all claims,
liens, pledges and encumbrances of any kind, except as disclosed in writing to
Agent prior to the date hereof.
(d) Each Borrower and Guarantor (i) is Solvent and will continue to
be Solvent after the creation of the Obligations, the security interests of
Agent and the other transactions contemplated hereby, (ii) does not have
unreasonably small capital after the consummation of the transactions
contemplated hereby, and (iii) has not incurred liabilities as a result of the
transactions contemplated hereby that are beyond its ability to pay as such
liabilities mature.
8.16 INTERRELATED BUSINESSES. Borrowers and Guarantors make up a related
organization of various entities constituting a single economic and business
enterprise so that Borrowers and Guarantors share an identity of interests such
that any benefit received by any one of them benefits the others. Borrowers and
Guarantors render services to or for the benefit of the other Borrowers and/or
Guarantors, as the case may be, purchase or sell and supply services to or from
or for the benefit of the others, make loans, advances and provide other
financial accommodations to or for the benefit of the other Borrowers and
Guarantors (including INTER ALIA, the payment by Borrowers and Guarantors of
creditors of the other Borrowers or Guarantors and guarantees by Borrowers and
Guarantors of indebtedness of the other Borrowers and Guarantors
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and provide administrative, marketing, payroll and management services to or for
the benefit of the other Borrowers and Guarantors). Borrowers and Guarantors
have the same chief executive office, centralized accounting and legal services,
certain common officers and directors and generally do not provide consolidating
financial statements to creditors.
8.17 LABOR DISPUTES.
(a) Set forth on Schedule 8.17 to the Information Certificate is a
list (including dates of termination) of all collective bargaining or similar
agreements between or applicable to each Borrower and Guarantor and any union,
labor organization or other bargaining agent in respect of the employees of any
Borrower or Guarantor on the date hereof.
(b) Except as set forth on Schedule 8.17 to the Information
Certificate, there is (i) no significant unfair labor practice complaint pending
against any Borrower or Guarantor or, to the best of any Borrower's or
Guarantor's knowledge, threatened against it, before the National Labor
Relations Board, and no significant grievance or significant arbitration
proceeding arising out of or under any collective bargaining agreement is
pending on the date hereof against any Borrower or Guarantor or, to best of any
Borrower's or Guarantor's knowledge, threatened against it, and (ii) no strike,
labor dispute, slowdown or stoppage is pending against any Borrower or Guarantor
or, to the best of any Borrower's or Guarantor's knowledge, threatened against
any Borrower or Guarantor which would have or could reasonably be expected to
have a Material Adverse Effect.
8.18 RESTRICTIONS ON SUBSIDIARIES. Except for restrictions contained in
this Agreement or any other agreement with respect to Indebtedness of any
Borrower or Guarantor permitted hereunder as in effect on the date hereof, there
are no contractual or consensual restrictions on any Borrower or Guarantor or
any of its Subsidiaries which prohibit or otherwise restrict (a) the transfer of
cash or other assets (i) between any Borrower or Guarantor and any of its or
their Subsidiaries or (ii) between any Subsidiaries of any Borrower or Guarantor
or (b) the ability of any Borrower or Guarantor or any of its or their
Subsidiaries to incur Indebtedness or grant security interests to Agent or any
Lender in the Collateral.
8.19 MATERIAL CONTRACTS. Schedule 8.19 to the Information Certificate
sets forth all Material Contracts to which any Borrower or Guarantor is a party
or is bound as of the date hereof. Borrowers and Guarantors have delivered true,
correct and complete copies of such Material Contracts (subject to any
confidentiality provisions contained therein) to Agent on or before the date
hereof. Borrowers and Guarantors are not in breach or in default in any material
respect of or under any Material Contract and have not received any notice of
the intention of any other party thereto to terminate any Material Contract
prior to the expiration of its stated term.
8.20 PAYABLE PRACTICES. Each Borrower and Guarantor have not made any
material change in the historical accounts payable practices from those in
effect immediately prior to the date hereof.
8.21 ACCURACY AND COMPLETENESS OF INFORMATION. All information furnished
by or on behalf of any Borrower or Guarantor in writing to Agent or any Lender
in connection with this
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Agreement or any of the other Financing Agreements or any transaction
contemplated hereby or thereby, including all information on the Information
Certificate is true and correct in all material respects on the date as of which
such information is dated or certified and does not omit any material fact
necessary in order to make such information not misleading. No event or
circumstance has occurred since the Effective Date which has had or could
reasonably be expected to have a Material Adverse Effect, which has not been
fully and accurately disclosed to Agent in writing prior to the date hereof.
8.22 INACTIVE SUBSIDIARIES. None of the Inactive Subsidiaries owns (or
will own) any material assets or conducts or engages (or will engage) in any
business.
8.23 EETC DOCUMENTS. To the extent that: (a) any of the EETC Documents
delivered to Agent hereunder have been redacted in accordance with Section
9.9(h)(ii) hereof, or (b) any of the EETC Documents were not delivered to Agent
hereunder in accordance with Section 9.9(h)(ii) hereof, none of the redacted
language nor the provisions of the EETC Documents not delivered creates, grants
or evidences the creation or grant of any lien, claim, security interest or
other encumbrance with respect to any assets or properties of any of Borrowers
or Guarantors.
8.24 SURVIVAL OF WARRANTIES: CUMULATIVE. All representations and
warranties contained in this Agreement or any of the other Financing Agreements
shall survive the execution and delivery of this Agreement and shall be deemed
to have been made again to Agent and Lenders on the date of each additional
borrowing or other credit accommodation hereunder and shall be conclusively
presumed to have been relied on by Agent and Lenders regardless of any
investigation made or information possessed by Agent or any Lender. The
representations and warranties set forth herein shall be cumulative and in
addition to any other representations or warranties which any Borrower or
Guarantor shall now or hereafter give, or cause to be given, to Agent or any
Lender.
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
9.1 MAINTENANCE OF EXISTENCE.
(a) Without limitation upon the provisions of Section 9.7 hereof,
each Borrower and Guarantor shall at all times preserve, renew and keep in full
force and effect its corporate existence and rights and franchises with respect
thereto and maintain in full force and effect all licenses, trademarks,
tradenames, approvals, authorizations, leases, contracts (including the
Clearinghouse Agreements) and Permits (including Air Carrier Certificates)
necessary to carry on the business as presently or proposed to be conducted.
Borrowers shall not enter into any amendment or supplement to any of the
Clearinghouse Agreements without the consent of Agent, which consent Agent
agrees shall not be unreasonably withheld if Agent determines that any such
proposed amendment or supplement does not adversely affect any of the Collateral
or the rights of Agent or Lenders with respect thereto; PROVIDED, THAT Borrowers
may after prior written notice to Agent enter into any amendment or supplement
to any of the Clearinghouse Agreements that does not adversely affect the
Collateral or Agent's rights with respect thereto.
(b) No Borrower or Guarantor shall change its name unless each of
the following conditions is satisfied: (i) Agent shall have received not less
than thirty (30) days prior written
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notice from Administrative Borrower of such proposed change in its corporate
name, which notice shall accurately set forth the new name; and (ii) Agent shall
have received a copy of the amendment to the Certificate of Incorporation of
such Borrower or Guarantor providing for the name change certified by the
Secretary of State of the jurisdiction of incorporation or organization of such
Borrower or Guarantor as soon as it is available.
(c) No Borrower or Guarantor shall change its chief executive office
or its mailing address or organizational identification number (or if it does
not have one, shall not acquire one) unless Agent shall have received not less
than thirty (30) days' prior written notice from Administrative Borrower of such
proposed change, which notice shall set forth such information with respect
thereto as Agent may require and Agent shall have received such agreements as
Agent may reasonably require in connection therewith. No Borrower or Guarantor
shall change its type of organization, jurisdiction of organization or other
legal structure unless Agent shall have received not less than thirty (30)
Business Days' prior written notice from Administrative Borrower of such
proposed change, which notice shall set forth such information with respect
thereto as Agent may require and Agent shall have received such agreements as
Agent may reasonably require in connection therewith; provided, that, in no
event shall any Borrower or Guarantor change its type of organization so that it
is other than a registered organization or change its jurisdiction to a
jurisdiction outside the United States of America.
9.2 NEW COLLATERAL LOCATIONS. Each Borrower and Guarantor may only open
any new location provided such Borrower or Guarantor (a) such Borrower or
Guarantor gives Agent thirty (30) days prior written notice of the intended
opening of any such new location, and (b) with respect to any new location in
the United States, its territories or possessions, such Borrower or Guarantor
executes and delivers, or causes to be executed and delivered, to Agent such
agreements, documents, and instruments as Agent may deem reasonably necessary or
desirable to protect its interests in the Collateral at such location, including
amended or supplemental chattel mortgages for recordation with the FAA and UCC
Financing Statements.
9.3 COMPLIANCE WITH LAWS, REGULATIONS, ETC.
(a) Each Borrower and Guarantor shall, and shall cause any
Subsidiary to, at all times, comply in all material respects with all laws,
rules, regulations, licenses, approvals, orders and Permits (including, in the
case of Borrowers, the maintenance of Air Carrier Certificates unless a Borrower
is required to surrender such Air Carrier Certificate as required by applicable
Federal Aviation Laws upon the consummation of a merger of Borrowers to the
extent permitted by and in accordance with the terms and conditions of Section
9.7(b) hereof), approvals and orders applicable to it, including the Federal
Aviation Laws, and duly observe in all material respects all requirements of any
foreign, federal, state or local Governmental Authority.
(b) Borrowers and Guarantors shall give written notice to Agent
promptly upon any Borrower's or Guarantor's receipt of any notice of, or any
Borrower's or Guarantor's otherwise obtaining knowledge of, (i) the occurrence
of any event involving the release, spill or discharge, threatened or actual, of
any Hazardous Material or (ii) any investigation, proceeding, complaint, order,
directive, claims, citation or notice with respect to: (A) any non-compliance
with or violation of any Environmental Law by any Borrower or Guarantor or (B)
the release, spill or discharge, threatened or actual, of any Hazardous Material
other than in the ordinary course of
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business and other than as permitted under any applicable Environmental Law.
Unless otherwise agreed by Agent and Administrative Borrower, copies of all
environmental surveys, audits, assessments, feasibility studies and results of
remedial investigations shall be promptly furnished, or caused to be furnished,
by such Borrower or Guarantor to Agent. Each Borrower and Guarantor shall take
prompt action to respond to any material non-compliance with any of the
Environmental Laws and shall regularly report to Agent on such response.
(c) Without limiting the generality of the foregoing, whenever Agent
reasonably determines that there is material non-compliance, or any condition
which requires any action by or on behalf of any Borrower or Guarantor in order
to avoid any material non-compliance, with any Environmental Law, Borrowers
shall, at Agent's request and Borrowers' expense: (i) cause an independent
environmental engineer reasonably acceptable to Agent to conduct such tests of
the site where material non-compliance or alleged material non-compliance with
such Environmental Laws has occurred as to such non-compliance and prepare and
deliver to Agent a report as to such non-compliance setting forth the results of
such tests, a proposed plan for responding to any environmental problems
described therein, and an estimate of the costs thereof and (ii) provide to
Agent a supplemental report of such engineer whenever the scope of such
non-compliance, or such Borrower's or Guarantor's response thereto or the
estimated costs thereof, shall change in any material respect.
(d) Each Borrower and Guarantor shall indemnify and hold harmless
Agent and Lenders and their respective directors, officers, employees, agents,
invitees, representatives, successors and assigns, from and against any and all
losses, claims, damages, liabilities, costs, and expenses (including reasonable
attorneys' fees and expenses) directly or indirectly arising out of or
attributable to the use, generation, manufacture, reproduction, storage,
release, threatened release, spill, discharge, disposal or presence of a
Hazardous Material, including the costs of any required or necessary repair,
cleanup or other remedial work with respect to any property of any Borrower or
Guarantor and the preparation and implementation of any closure, remedial or
other required plans. All representations, warranties, covenants and
indemnifications in this Section 9.3 shall survive the payment of the
Obligations and the termination of this Agreement.
9.4 PAYMENT OF TAXES AND CLAIMS. Each Borrower and Guarantor shall, and
shall cause any Subsidiary to, duly pay and discharge all taxes, assessments,
contributions and governmental charges upon or against it or its properties or
assets, except for taxes the validity of which are being contested in good faith
by appropriate proceedings diligently pursued and available to such Borrower,
Guarantor or Subsidiary, as the case may be, and with respect to which adequate
reserves have been set aside on its books. Each Borrower and Guarantor shall be
liable for any tax or penalties imposed on Agent or any Lender as a result of
the financing arrangements provided for herein and each Borrower and Guarantor
agrees to indemnify and hold Agent harmless with respect to the foregoing, and
to repay to Agent, for the benefit of Lenders, on demand the amount thereof, and
until paid by such Borrower or Guarantor such amount shall be added and deemed
part of the Loans; PROVIDED, THAT, nothing contained herein shall be construed
to require any Borrower or Guarantor to pay any income or franchise taxes
attributable to the income or capital of Lenders from any amounts charged or
paid hereunder to Lenders. The foregoing indemnity shall survive the payment of
the Obligations and the termination of this Agreement.
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9.5 INSURANCE. Each Borrower and Guarantor shall, and shall cause any
Subsidiary to, at all times, maintain with financially sound and reputable
insurers insurance with respect to the Collateral against loss or damage and all
other insurance of the kinds and in the amounts customarily insured against or
carried by corporations of established reputation engaged in the same or similar
businesses and similarly situated. Said policies of insurance shall be
reasonably satisfactory to Agent as to form, amount and insurer (whose approval
will not be unreasonably withheld). Borrowers and Guarantors shall furnish
certificates to Agent as Agent shall reasonably require as proof of such
insurance, and, if any Borrower or Guarantor fails to do so, Agent is
authorized, but not required, to obtain such insurance at the expense of
Borrowers. All policies shall provide for at least thirty (30) days (ten (10)
days for non-payment of premium) prior written notice to Agent of any
cancellation or reduction of coverage and that Agent may act as attorney for
each Borrower and Guarantor in obtaining, and at any time an Event of Default
exists or has occurred and is continuing, adjusting, settling and amending such
insurance. Borrowers and Guarantors shall cause Agent to be named as a loss
payee and an additional insured (but without any liability for any premiums)
under such insurance policies and Borrowers and Guarantors shall obtain
non-contributory lender's loss payable endorsements to all insurance policies in
form and substance satisfactory to Agent (whose approval will not be
unreasonably withheld). Such lender's loss payable endorsements shall specify
that the proceeds of such insurance shall be payable to Agent as its interests
may appear and further specify that Agent and Lenders shall be paid regardless
of any act or omission by any Borrower, Guarantor or any of its or their
Affiliates. Without limiting any other rights of Agent or Lenders, any insurance
proceeds received by Agent at any time may be applied to payment of the
Obligations, whether or not then due, in any order and in such manner as Agent
may determine. Upon application of such proceeds to the Loans, Loans may be
available subject and pursuant to the terms hereof to be used for the costs of
repair or replacement of the Collateral lost or damages resulting in the payment
of such insurance proceeds.
9.6 FINANCIAL STATEMENTS AND OTHER INFORMATION.
(a) Each Borrower and Guarantor shall, and shall cause any
Subsidiary to, keep proper books and records in which true and complete entries
shall be made of all dealings or transactions of or in relation to the
Collateral and the business of such Borrower, Guarantor and its Subsidiaries in
accordance with GAAP. Borrowers and Guarantors shall promptly furnish to Agent
and Lenders all such financial and other information as Agent shall reasonably
request relating to the Collateral and the assets, business and operations of
Borrowers and Guarantors, and Borrower shall notify the auditors and accountants
of Borrowers and Guarantors that Agent is authorized to obtain such information
directly from them. Without limiting the foregoing, Borrowers and Guarantors
shall furnish or cause to be furnished to Agent, the following: (i) within
thirty (30) days after the end of each fiscal month, monthly unaudited
consolidated financial statements (including in each case balance sheets,
statements of income and loss, statements of cash flow, and statements of
shareholders' equity), all in reasonable detail, fairly presenting in all
material respects the financial position and the results of the operations of
Atlas Holdings and its Subsidiaries on a consolidated basis as of the end of and
through such fiscal month, certified to be correct in all material respects by
the chief executive officer or chief financial officer of Atlas Holdings,
subject to post period adjustments and no footnotes and accompanied by a
compliance certificate substantially in the form of Exhibit D hereto, along with
a schedule in a form satisfactory to Agent of the calculations used in
determining, as of the
77
end of such month, whether Borrowers and Guarantors are in compliance with the
covenant set forth in Section 9.17 of this Agreement for such month in which
such covenant is required by the terms of such Section 9.17 to be tested and
(ii) within one hundred fifty (150) days after the end of the fiscal year of
Atlas Holdings ending December 31, 2004 and ninety (90) days after the end of
each fiscal year thereafter, audited consolidated financial statements of Atlas
Holdings and its Subsidiaries (including in each case balance sheets, statements
of income and loss, statements of cash flow, and statements of shareholders'
equity), and the accompanying notes thereto, all in reasonable detail, fairly
presenting in all material respects the financial position and the results of
the operations of Atlas Holdings and its Subsidiaries as of the end of and for
such fiscal year, together with the unqualified opinion of independent certified
public accountants with respect to the audited consolidated financial
statements, which accountants shall be an independent accounting firm selected
by Borrowers and acceptable to Agent, that such audited consolidated financial
statements have been prepared in accordance with GAAP, and present fairly in all
material respects the results of operations and financial condition of Atlas
Holdings and its Subsidiaries as of the end of and for the fiscal year then
ended.
(b) Borrowers and Guarantors shall promptly notify Agent in writing
of the details of (i) any loss, damage, investigation, action, suit, proceeding
or claim relating to Collateral having a value of more than $1,000,000 or which
if adversely determined would result in any Material Adverse Effect, (ii) any
Material Contract being terminated or amended or any new Material Contract
entered into (in which event, unless otherwise agreed by Agent and Borrowers,
Borrowers and Guarantors shall provide Agent with a copy of such Material
Contract), (iii) any order, judgment or decree in excess of $2,500,000 shall
have been entered against any Borrower or Guarantor any of its or their
properties or assets, (iv) any notification of a material violation of laws or
regulations received by any Borrower or Guarantor, (v) any ERISA Event, and (vi)
the occurrence of any Default or Event of Default.
(c) Borrowers and Guarantors shall promptly after the sending or
filing thereof furnish or cause to be furnished to Agent copies of all reports
which any Borrower or Guarantor sends to its stockholders generally and copies
of all reports and registration statements which any Borrower or Guarantor files
with the Securities and Exchange Commission, any national securities exchange or
the National Association of Securities Dealers, Inc., it being understood and
agreed that Borrowers and Guarantors shall be deemed to have delivered to Agent
the documents required by this Section 9.6(c) by posting such documents on the
company website of Atlas Holdings (www.atlasair.com) and advising Agent in
writing of such posting.
(d) Borrowers and Guarantors shall furnish or cause to be furnished
to Agent such budgets, forecasts, projections and other information respecting
the Collateral and the business of Borrowers and Guarantors, as Agent may, from
time to time, reasonably request. Subject to the terms and conditions of the
confidentiality provisions of Section 13.5 hereof, Agent is hereby authorized to
deliver a copy of any financial statement or any other information relating to
the business of Borrowers and Guarantors to any court or other Governmental
Authority or to any Lender or Participant or prospective Lender or Participant
or any Affiliate of any Lender or Participant. Subject to the terms and
conditions of the confidentiality provisions of Section 13.5 hereof, each
Borrower and Guarantor hereby irrevocably authorizes and directs all of its
accountants or auditors to deliver to Agent, at Borrowers' expense, copies of
the financial statements of any Borrower and Guarantor and any reports or
management letters prepared by
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such accountants or auditors on behalf of any Borrower or Guarantor and to
disclose to Agent and Lenders such information as they may have regarding the
business of any Borrower and Guarantor. Any documents, schedules, invoices or
other papers delivered to Agent or any Lender may be destroyed or otherwise
disposed of by Agent or such Lender one (1) year after the same are delivered to
Agent or such Lender, except as otherwise designated by Administrative Borrower
to Agent or such Lender in writing.
9.7 SALE OF ASSETS, CONSOLIDATION, MERGER, DISSOLUTION, ETC. Each
Borrower and Guarantor shall not, and shall not permit any Subsidiary to,
directly or indirectly,
(a) merge into or with or consolidate with any other Person or
permit any other Person to merge into or with or consolidate with it, EXCEPT
THAT:
(i) any Subsidiary of Atlas Holdings which is not a Borrower
or Guarantor may merge with or consolidate into any other Subsidiary of Atlas
Holdings which is not a Borrower or Guarantor, and any wholly-owned Subsidiary
of Atlas Holdings which is a Borrower or Guarantor may merge with and into or
consolidate with any other wholly-owned Subsidiary of Atlas Holdings; PROVIDED,
THAT, each of the following conditions is satisfied as determined by Agent in
good faith: (A) Agent shall have received not less than ten (10) Business Days'
prior written notice of the intention of such entities to so merge or
consolidate, which notice shall set forth in reasonable detail satisfactory to
Agent, the persons that are merging or consolidating, which person will be the
surviving entity, the locations of the assets of the persons that are merging or
consolidating, and the material agreements and documents relating to such merger
or consolidation, (B) Agent shall have received such other information with
respect to such merger or consolidation as Agent may reasonably request, (C) as
of the effective date of the merger or consolidation and after giving effect
thereto, no Default or Event of Default shall exist or have occurred and be
continuing, (D) Agent shall have received, true, correct and complete copies of
all agreements, documents and instruments relating to such merger or
consolidation, including, but not limited to, the certificate or certificates of
merger to be filed with each appropriate Secretary of State (with a copy as
filed promptly after such filing), (E) the surviving corporation shall expressly
confirm, ratify and assume the Obligations and the Financing Agreements to which
it is a party in writing, in form and substance satisfactory to Agent, and
Borrowers and Guarantors shall execute and deliver such other agreements,
documents and instruments as Agent may request in connection therewith; and
(ii) nothing set forth in Section 9.7(a)(i) above shall be
construed as a limitation upon Section 9.7(c) below.
(b) sell, issue, assign, lease, license, transfer, abandon or
otherwise dispose of any Capital Stock or Indebtedness to any other Person or
any of its assets to any other Person; EXCEPT FOR
(i) sales, transfers or other dispositions of assets other
than Accounts or Receivables by a Borrower or a Guarantor to another Borrower or
Guarantor;
(ii) sales of Inventory in the ordinary course of business,
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(iii) customary pooling, exchange and similar arrangements
with respect to Engines, Spare Parts and components consistent with the
practices of Borrowers as of the date hereof;
(iv) asset swaps with respect to Engines, Spare Parts and
components; PROVIDED, THAT, the assets received by Atlas Holdings or any of its
Subsidiaries shall have a fair market value at least equal to that of the assets
transferred and; PROVIDED, FURTHER, that with respect to any asset swap or
series of related asset swaps involving assets of Atlas Holdings or any of its
Subsidiaries having a market value in excess of $10,000,000, such determination
shall be made by the Board of Directors of Atlas Holdings;
(v) asset sales by Atlas Freighter Leasing III, Inc. for the
purpose of replacing its assets pursuant to and in accordance with the terms and
conditions set forth in subsection 9.21 of the AFL III Financing Agreement as in
effect on the date hereof; PROVIDED, THAT, the net cash proceeds of such sale
(if any) are concurrently therewith applied in full to the repayment of
Indebtedness described in the AFL III Financing Agreement and related chattel
mortgages or other security agreements or in accordance with the terms and
conditions of the AFL III Financing Agreement as in effect on the date hereof;
(vi) the sale by Atlas Freighter Leasing III, Inc. of up to
four (4) AFL III Aircraft (as defined in the AFL III Financing Agreement)
pursuant to and in accordance with the terms and conditions set forth in
subsection 6.6(i) of the AFL III Financing Agreement as in effect on the date
hereof; PROVIDED, THAT, the net cash proceeds of such sale, if any are
concurrently therewith applied in full to the repayment of Indebtedness
described in the AFL III Financing Agreement and related chattel mortgages or
other security agreements;
(vii) the sale by Atlas Air of one (1) Financed Aircraft (as
described in the Aircraft Credit Facility Agreement) pursuant to and in
accordance with the terms and conditions set forth in subsection 6.7(iv) of the
Aircraft Credit Facility Agreement as in effect on the date hereof; PROVIDED,
THAT, the net cash proceeds of such sale, if any are concurrently therewith
applied in full to the repayment of Indebtedness described in the Aircraft
Credit Facility Agreement and related chattel mortgages or other security
agreements;
(viii) the sale by Atlas Holdings and its Subsidiaries of up
to three (3) Aircraft other than the Secured Aircraft if so required pursuant to
the EETC Documents as in effect on the date hereof and in accordance with the
terms thereof;
(ix) the sale or other disposition of Equipment (including
worn-out or obsolete Equipment or Equipment no longer used or useful in the
business of any Borrower or Guarantor) so long as such sales or other
dispositions do not involve Equipment having an aggregate fair market value in
excess of $5,000,000 for all such Equipment disposed of in any fiscal year of
Borrowers or as Agent may otherwise agree,
(x) without limitation upon Section 9.7(b)(iii), 9.7(b)(v),
9.7(b)(vi), 9.7(b)(vii), 9.7(b)(viii) or 9.7(b)(ix) above, the sale or other
disposition of (I) Spare Parts, provided that, after giving effect thereto the
Borrowers shall be in compliance with the terms of Section 7.3(i) hereof, and
(II) assets not consisting of Accounts by Atlas Holdings and its Subsidiaries
having a
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fair market value in an aggregate amount not to exceed $25,000,000 during the
term hereof; PROVIDED, THAT, (A) the consideration received for such assets
shall be in an amount at least equal to the fair market value thereof; (B) the
consideration received shall be at least 75% cash; (C) upon any such sale or
disposition and after giving effect thereto, no Default or Event of Default
shall exist or have occurred and be continuing, and (D) all Net Cash Proceeds of
any such sale or other disposition shall be paid promptly to Agent for
application to the then outstanding Obligations in accordance with Section 6.4
hereof,
(xi) leases by Borrowers as lessors or sublessors, of Aircraft
and Engines on terms and otherwise in a manner consistent with the conduct of
their respective businesses as conducted on the date hereof, including under
ACMI Contracts,
(xii) the issuance and sale by Atlas Holdings of Capital Stock
after the date hereof; PROVIDED, THAT, (A) other than with respect to the
issuance of Capital Stock pursuant to the terms of the Reorganization Plan as
approved by the Confirmation Order, Agent shall have received not less than ten
(10) Business Days' prior written notice of such issuance and sale by such
Borrower or Guarantor, which notice shall specify the parties to whom such
shares are to be sold, the terms of such sale, the total amount which it is
anticipated will be realized from the issuance and sale of such stock and the
net cash proceeds, if any, which it is anticipated will be received by such
Borrower or Guarantor from such sale, (B) such Borrower or Guarantor shall not
be required to pay any cash dividends or repurchase or redeem such Capital Stock
or make any other payments in respect thereof, except as otherwise permitted in
Section 9.11 hereof, (C) the terms of such Capital Stock, and the terms and
conditions of the purchase and sale thereof, shall not include any terms that
include any limitation on the right of any Borrower to request or receive Loans
or Letter of Credit Accommodations or the right of any Borrower and Guarantor to
amend or modify any of the terms and conditions of this Agreement or any of the
other Financing Agreements or otherwise in any way relate to or affect the
arrangements of Borrowers and Guarantors with Agent and Lenders or are more
restrictive or burdensome to any Borrower or Guarantor than the terms of any
Capital Stock in effect on the date hereof, (D) except as Agent may otherwise
agree in writing, all of the net cash proceeds of the sale and issuance of such
Capital Stock shall be paid to Agent for application to the Obligations in
accordance with the terms and conditions of Section 6.4 hereof and (E) as of the
date of such issuance and sale and after giving effect thereto, no Default or
Event of Default shall exist or have occurred and be continuing,
(xiii) the issuance and/or sale by any Subsidiary of Atlas
Holdings (other than a Borrower or Guarantor) of any Capital Stock of such
Subsidiary or the sale by any Subsidiary of Atlas Holdings (other than a
Borrower or Guarantor) of any other assets; provided, that, (A) no Borrower or
Guarantor shall have any liability in respect thereof, and (B) in the event of
any sale of Capital Stock of a Subsidiary of Atlas Holdings which is subject to
a security interest, lien, charge, pledge or other encumbrance of any Lender,
such sale thereof shall be subject to such interest, the purchaser thereof shall
be acceptable to Agent in all respects and Agent shall receive, in form and
substance satisfactory to Agent, the express written assumption and
acknowledgement by such purchaser of the interests of Agent and Lenders and the
written agreement of such purchaser to be bound by all of the terms and
conditions of the Financing Agreements to the extent of the Capital Stock
acquired by such purchaser, and
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(xiv) the issuance of Capital Stock of any Borrower or
Guarantor consisting of common stock pursuant to an employee stock option or
grant or similar equity plan or 401(k) plans of such Borrower or Guarantor for
the benefit of its employees, directors and consultants; PROVIDED, THAT, in no
event shall such Borrower or Guarantor be required to issue, or shall such
Borrower or Guarantor issue, Capital Stock pursuant to such stock plans or
401(k) plans which would result in a Change of Control or other Event of
Default;
(c) wind up, liquidate or dissolve except that any Subsidiary of
Atlas Holdings (other than a Borrower or a Guarantor) and any Guarantor (other
than Atlas Holdings) may wind up, liquidate and dissolve; PROVIDED, THAT, with
respect to any liquidation or dissolution of any Guarantor, each of the
following conditions is satisfied, (i) the winding up, liquidation and
dissolution of such Guarantor shall not violate any law or any order or decree
of any court or other Governmental Authority in any material respect and shall
not conflict with or result in the breach of, or constitute a default under, any
indenture, mortgage, deed of trust, or any other agreement or instrument to
which any Borrower or Guarantor is a party or may be bound, (ii) such winding
up, liquidation or dissolution shall be done in accordance with the requirements
of all applicable laws and regulations, (iii) effective upon such winding up,
liquidation or dissolution, all of the assets and properties of such Guarantor
shall be duly and validly transferred and assigned to a Borrower or another
Guarantor, free and clear of any liens, restrictions or encumbrances other than
the security interest and liens of Agent (and Agent shall have received such
evidence thereof as Agent may require) and Agent shall have received such deeds,
assignments or other agreements as Agent may request to evidence and confirm the
transfer of such assets of such Guarantor to a Borrower or other Guarantor, as
applicable, (iv) Agent shall have received all documents and agreements that any
Borrower or Guarantor has filed with any Governmental Authority or as are
otherwise required to effectuate such winding up, liquidation or dissolution,
(v) no Borrower or Guarantor shall assume any Indebtedness, obligations or
liabilities as a result of such winding up, liquidation or dissolution, or
otherwise become liable in respect of any obligations or liabilities of the
entity that is winding up, liquidating or dissolving, unless such Indebtedness
is otherwise expressly permitted hereunder, (vi) Agent shall have received not
less than ten (10) Business Days prior written notice of the intention of such
Guarantor to wind up, liquidate or dissolve, and (vii) as of the date of such
winding up, liquidation or dissolution and after giving effect thereto, no
Default or Event of Default shall exist or have occurred; or
(d) agree to do any of the foregoing.
9.8 ENCUMBRANCES. Each Borrower and Guarantor shall not, and shall not
permit any other Obligor to, create, incur, assume or suffer to exist any
security interest, mortgage, pledge, lien, charge or other encumbrance of any
nature whatsoever on any of its assets or properties, including the Collateral,
or file or permit the filing of, or permit to remain in effect, any financing
statement or other similar notice of any security interest or lien with respect
to any such assets or properties, except:
(a) the security interests and liens of Agent for itself and the
benefit of Lenders and the security interests and liens of Agent for the benefit
of any Affiliate of Agent, any Lender, any Affiliate of any Lender or any other
financial institution acceptable to Agent that is party to an
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Interest Rate Protection Agreement to the extent provided for herein and subject
to the terms hereof;
(b) liens securing the payment of taxes, assessments or other
governmental charges or levies either not yet overdue or the validity of which
are being contested in good faith by appropriate proceedings diligently pursued
and available to such Borrower, or Guarantor or other Obligor, as the case may
be and with respect to which adequate reserves have been set aside on its books;
(c) non-consensual statutory liens (other than liens securing the
payment of taxes) arising in the ordinary course of such Borrower's, Guarantor's
or other Obligor's business to the extent: (i) such liens secure Indebtedness
which is not overdue or (ii) such liens secure Indebtedness relating to claims
or liabilities which are fully insured (subject to customary deductibles) and
being defended at the sole cost and expense and at the sole risk of the insurer
or being contested in good faith by appropriate proceedings diligently pursued
and available to such Borrower, Guarantor or other Obligor, in each case prior
to the commencement of foreclosure or other similar proceedings and with respect
to which adequate reserves have been set aside on its books;
(d) zoning restrictions, easements, licenses, covenants and other
restrictions affecting the use of Real Property which do not interfere in any
material respect with the use of such Real Property or ordinary conduct of the
business of such Borrower, Guarantor or other Obligor as presently conducted
thereon or materially impair the value of the Real Property which may be subject
thereto;
(e) purchase money security interests in Aircraft or other Equipment
(including Capital Leases) and purchase money mortgages on Real Property to
secure Indebtedness permitted under Sections 9.9(b) and 9.9(g) hereof;
(f) liens and security interests in favor of EETC Trustee, for
itself and the benefit of EETC Certificate Holders, to secure the Indebtedness
of Atlas Air to EETC Certificate Holders under the EETC Documents as in effect
on the date hereof, as permitted under Section 9.9(h) below, which liens and
security interests are subject and subordinate to the liens and security
interests of Agent, for itself and the benefit of Lenders, pursuant to and in
accordance with the terms of the provisions of the EETC Intercreditor Agreement,
the Reorganization Plan, the Confirmation Order and the EETC Documents;
(g) liens and security interests in favor of mortgagees, lessors and
sublessors of Aircraft and Engines identified as such on Schedule 9.9 to the
Information Certificate or acquired on a purchase money basis in accordance with
Section 9.9(b) hereof to Borrowers pursuant to the Existing Aircraft Financings,
in each case subject to and in accordance with the terms thereof as in effect on
the date hereof, to secure the Indebtedness permitted under Sections 9.9(b) and
9.9(i) hereof;
(h) pledges and deposits of cash by any Borrower or Guarantor after
the date hereof in the ordinary course of business in connection with workers'
compensation, unemployment
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insurance and other types of social security benefits consistent with the
current practices of such Borrower or Guarantor as of the date hereof;
(i) pledges and deposits of cash by any Borrower or Guarantor after
the date hereof to secure the performance of tenders, bids, leases, trade
contracts (other than for the repayment of Indebtedness), overflight fees,
landing fees statutory obligations and other similar obligations, in each case
in the ordinary course of business consistent with the current practices of such
Borrower or Guarantor as of the date hereof; PROVIDED, THAT, in connection with
any performance bonds issued by a surety or other person, the issuer of such
bond shall not have any rights in or to, or other interest in, any of the
Collateral other than such cash;
(j) liens arising from (i) operating leases and the precautionary
UCC financing statement filings in respect thereof and (ii) equipment or other
materials which are not owned by any Borrower or Guarantor located on the
premises of such Borrower or Guarantor (but not in connection with, or as part
of, the financing thereof) from time to time in the ordinary course of business
and consistent with current practices of such Borrower or Guarantor and the
precautionary UCC financing statement filings in respect thereof;
(k) judgments and other similar liens arising in connection with
court proceedings that do not constitute an Event of Default; PROVIDED, THAT,
(i) such liens are being contested in good faith and by appropriate proceedings
diligently pursued, (ii) adequate reserves or other appropriate provision, if
any, as are required by GAAP have been made therefor, (iii) a stay of
enforcement of any such liens is in effect and (iv) Agent may establish a
Reserve with respect thereto;
(1) the security interests and liens to secure Refinancing
Indebtedness to the extent permitted under Section 9.9 below;
(m) pledges and deposits by Borrowers and Guarantors of cash in an
aggregate amount not to exceed $2,500,000 to secure Indebtedness of any Borrower
or Guarantor arising under Interest Rate Protection Agreements to the extent
permitted by Section 9.9(e) hereof;
(n) pledges and deposits by Borrowers and Guarantors of cash in an
aggregate amount of $2,500,000 as of the date hereof to secure the Indebtedness
arising in respect of the Existing Letters of Credit as provided by Section
9.9(k) hereof; and
(o) the security interests and liens set forth on Schedule 8.4 to
the Information Certificate.
(p) liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods.
9.9 INDEBTEDNESS. Each Borrower and Guarantor shall not, and shall not
permit any other Obligor to, incur, create, assume, become or be liable in any
manner with respect to, or permit to exist, any Indebtedness, or guarantee,
assume, endorse, or otherwise become responsible for (directly or indirectly),
the Indebtedness, performance, obligations or dividends of any other Person,
except:
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(a) the Obligations;
(b) purchase money Indebtedness (including Capital Leases) arising
after the date hereof to the extent secured by purchase money security interests
in Aircraft and other Equipment, consistent with the conduct of the businesses
of Borrowers and Guarantors as of the date hereof (including Capital Leases) and
purchase money mortgages on Real Property not to exceed $10,000,000 in the
aggregate at any time outstanding so long as such security interests and
mortgages do not apply to any property of such Borrower, Guarantor or Subsidiary
other than the Equipment or Real Property so acquired and the proceeds of the
disposition thereof, and the Indebtedness secured thereby does not exceed the
cost of the Equipment or Real Property so acquired, as the case may be;
(c) guarantees by any Borrower or Guarantor of the Obligations of
the other Borrowers or Guarantors in favor of Agent for the benefit of Lenders;
(d) the Indebtedness of any Borrower or Guarantor to any other
Borrower or Guarantor arising after the date hereof pursuant to loans by any
Borrower or Guarantor permitted under Section 9.10(g) hereof;
(e) Indebtedness of any Borrower or Guarantor entered into in the
ordinary course of business pursuant to Interest Rate Protection Agreements;
PROVIDED, THAT, (i) such arrangements are either with a Lender or an Affiliate
thereof or with banks or other financial institutions that have combined capital
and surplus and undivided profits of not less than $250,000,000 and are
reasonably acceptable to Agent, (ii) are not for speculative purposes and (iii)
such Indebtedness shall be unsecured, except (A) as to obligations under
Interest Rate Protection Agreements with a Lender or an Affiliate of a Lender or
another financial institution, in each case approved by Agent, to the extent of
the security interest of Agent in the Collateral as provided herein or (B) to
the extent permitted pursuant to and in accordance with Section 9.8(m) hereof;
(f) unsecured Indebtedness of any Borrower or Guarantor (consistent
with the business practices of such Borrower or Guarantor as of the date hereof
and arising after the date hereof) to any third person (but not to any other
Borrower or Guarantor); PROVIDED, THAT, each of the following conditions is
satisfied as determined by Agent: (i) such Indebtedness shall be on terms and
conditions acceptable to Agent and shall be subject and subordinate in right of
payment to the right of Agent and Lenders to receive the prior indefeasible
payment and satisfaction in full payment of all of the Obligations pursuant to
the terms of an intercreditor agreement between Agent and such third party, in
form and substance satisfactory to Agent, (ii) Agent shall have received not
less than ten (10) days prior written notice of the intention of such Borrower
or Guarantor to incur such Indebtedness, which notice shall set forth in
reasonable detail satisfactory to Agent the amount of such Indebtedness, the
person or persons to whom such Indebtedness will be owed, the interest rate, the
schedule of repayments and maturity date with respect thereto and such other
information as Agent may request with respect thereto, (iii) Agent shall have
received true, correct and complete copies of all agreements, documents and
instruments evidencing or otherwise related to such Indebtedness, (iv) except as
Agent may otherwise agree in writing, all of the proceeds of the loans or other
accommodations giving rise to such Indebtedness shall be paid to Agent for
application to the outstanding Obligations in
85
accordance with Section 6.4 hereof, (v) in no event shall the aggregate
principal amount of such Indebtedness incurred during the term of this Agreement
exceed $10,000,000, (vi) as of the date of incurring such Indebtedness and after
giving effect thereto, no Default or Event of Default shall exist or have
occurred, (vii) such Borrower and Guarantor shall not, directly or indirectly,
(A) amend, modify, alter or change the terms of such Indebtedness or any
agreement, document or instrument related thereto, except, that, such Borrower
or Guarantor may, after prior written notice to Agent, amend, modify, alter or
change the terms thereof so as to extend the maturity thereof, or defer the
timing of any payments in respect thereof, or to forgive or cancel any portion
of such Indebtedness (other than pursuant to payments thereof), or to reduce the
interest rate or any fees in connection therewith, or to amend or waive any
non-monetary covenant compliance or (B) redeem, retire, defease, purchase or
otherwise acquire such Indebtedness (except pursuant to regularly scheduled
payments permitted herein), or set aside or otherwise deposit or invest any sums
for such purpose, and (viii) Borrowers and Guarantors shall furnish to Agent all
material notices or demands in connection with such Indebtedness either received
by any Borrower or Guarantor or on its behalf promptly after the receipt
thereof, or sent by any Borrower or Guarantor or on its behalf concurrently with
the sending thereof, as the case may be;
(g) Indebtedness of any Borrower or Guarantor to any third person
(but not to any other Borrower or Guarantor) in addition to the unsecured
Indebtedness referred to in Section 9.9(f) above; PROVIDED, THAT, each of the
following conditions is satisfied as determined by Agent in good faith: (i)
Agent shall have received not less than ten (10) days prior written notice of
the intention of such Borrower or Guarantor to incur such Indebtedness, which
notice shall set forth in reasonable detail satisfactory to Agent the amount of
such Indebtedness, the person or persons to whom such Indebtedness will be owed,
the interest rate, the schedule of repayments and maturity date with respect
thereto and such other information as Agent may request with respect thereto,
(ii) Agent shall have received true, correct and complete copies of all
agreements, documents and instruments evidencing or otherwise related to such
Indebtedness promptly after their execution and delivery, (iii) except as Agent
may otherwise agree in writing, all of the proceeds of the loans or other
accommodations giving rise to such Indebtedness shall be paid to Agent for
application to the outstanding Obligations in accordance with Section 6.4
hereof, (iv) such Indebtedness is permitted under and subject to the terms and
conditions of Section 6.1(v) of the Aircraft Credit Facility Agreement (as in
effect on the date hereof), (v) in no event shall the aggregate principal amount
of such Indebtedness incurred during the term of this Agreement exceed
$10,000,000, unless, in addition to all other conditions set forth in this
Section 9.9(g), as of the date of the incurrence of such Indebtedness and after
giving effect thereto, Excess Availability shall be not less than $20,000,000,
(vi) as of the date of the incurrence of such Indebtedness and after giving
effect thereto, no Default or Event of Default shall exist or have occurred,
(vii) such Borrower and Guarantor shall not, directly or indirectly, amend,
modify, alter or change the terms of such Indebtedness or any agreement,
document or instrument related thereto, except, that, such Borrower or Guarantor
may, after prior written notice to Agent, amend, modify, alter or change the
terms thereof so as to extend the maturity thereof, or defer the timing of any
payments in respect thereof, or to forgive or cancel any portion of such
Indebtedness (other than pursuant to payments thereof), or to reduce the
interest rate or any fees in connection therewith, or to amend or waive any
non-monetary covenant compliance, and (viii) Borrowers and Guarantors shall
furnish to Agent all material notices or demands in connection with such
Indebtedness either received by any Borrower or Guarantor or on its behalf
promptly
86
after the receipt thereof, or sent by any Borrower or Guarantor or on its behalf
concurrently with the sending thereof, as the case may be;
(h) the Indebtedness of Atlas Air incurred with respect to the EETC
Transactions; PROVIDED, THAT, each of the following conditions is satisfied as
determined by Agent:
(i) the aggregate principal amount of such Indebtedness shall
not exceed $506,224,889 less the aggregate amount of all repayments, repurchases
or redemptions, whether optional or mandatory, in respect thereof,
(ii) Agent shall have received true, correct and complete
copies of all EETC Documents (subject to redaction or non-delivery as required
by any confidentiality provisions contained therein or with respect thereto),
each as duly authorized, executed and/or delivered, as applicable, by the
parties thereto,
(iii) Agent shall have received the EETC Intercreditor
Agreement,
(iv) Borrowers and Guarantors shall not, directly or
indirectly, make, or be required to make, any payments in respect of such
Indebtedness, EXCEPT, THAT. Borrowers and Guarantors may make regularly
scheduled monthly payments in respect of Aircraft subject to the EETC
Transactions, in an aggregate amount in each month not to exceed the amount
specified for such month in Schedule 9.9 to the Information Certificate with
respect to such regularly scheduled payments plus payments required using
proceeds of sales of Aircraft to the extent permitted by and in accordance with
the terms and conditions of Section 9.7(b)(viii) hereof; PROVIDED, THAT, as of
the date of each such payment and after giving effect thereto, no Default or
Event of Default shall exist or have occurred and be continuing or would result
therefrom; EXCEPT, FURTHER, THAT. Borrowers and Guarantors may make prepayments
with respect thereto in addition to such regularly scheduled payments; PROVIDED,
THAT, (A) commencing on and after January 1, 2006, as of the date of each such
prepayment and after giving affect thereto, the aggregate amount of (1) such
prepayments (on a consolidated basis) with respect to any fiscal year of
Borrowers and Guarantors (each, a "Reference Year") PLUS (2) the sum of all
prepayments and other payments made with respect to such Reference Year in
respect of dividends, redemptions or repurchases of Capital Stock pursuant to
Section 9.11 hereof PLUS all prepayments of Indebtedness pursuant to Sections
9.9(g),9.9(i),9.9(j) and 9.9(m) hereof, shall not in the aggregate exceed fifty
(50%) percent of the amount of the Consolidated Net Income of Atlas Holdings for
the immediately preceding Reference Year, and (B) as of the date of each such
payment and after giving effect thereto, Excess Availability shall be not less
than $25,000,000, and (C) as of the date of each such prepayment and after
giving effect thereto, no Default or Event of Default shall exist or have
occurred and be continuing or would result therefrom,
(v) Borrowers and Guarantors shall not, directly or
indirectly, (A) materially amend, modify, alter or change the terms of such
Indebtedness or any agreement, document or instrument related thereto, except,
that, Borrower may, after prior written notice to Agent, amend, modify, alter or
change the terms thereof so as to extend the maturity thereof, or defer the
timing of any payments in respect thereof, or to forgive or cancel any portion
of such Indebtedness (other than pursuant to payments thereof), or to reduce the
interest rate or any fees
87
in connection therewith, or to amend or waive any non-monetary covenant
compliance or (B) redeem, retire, defease, purchase or otherwise acquire such
Indebtedness (except pursuant to payments permitted in Sections 9.9(h)(iv)
hereof), or set aside or otherwise deposit or invest any sums for such purpose,
and
(vi) Administrative Borrower shall furnish to Agent all
material demands or notices in connection with such Indebtedness either received
by a Borrower or Guarantor promptly after the receipt thereof, or sent by a
Borrower or Guarantor or on its behalf concurrently with the sending thereof, as
the case may be;
(i) the Indebtedness of Borrowers and Guarantors evidenced by or
arising under the Aircraft Credit Facility Agreement (as in effect on the date
hereof); PROVIDED, THAT, each of the following conditions is satisfied as
determined by Agent:
(i) the aggregate principal amount of such Indebtedness shall
not exceed $40,667,209 less the aggregate amount of all repayments, repurchases
or redemptions, whether optional or mandatory, in respect thereof,
(ii) Agent shall have received a true, correct and complete
copy of the Aircraft Facility Agreement and all agreements, documents and
instruments requested by it related to the Aircraft Credit Facility Agreement
(subject to any confidentiality provisions contained therein), each as duly
authorized, executed and/or delivered, as applicable, by the parties thereto,
(iii) Borrowers and Guarantors shall not, directly or
indirectly, make, or be required to make, any payments in respect of such
Indebtedness, EXCEPT, THAT, Borrowers and Guarantors may make regularly
scheduled monthly payments in respect of Aircraft subject to such Aircraft
Credit Facility Agreement, in an aggregate amount in each month not to exceed
the amount specified for such month in Schedule 9.9 to the Information
Certificate with respect to such regularly scheduled monthly payments plus
payments required using proceeds of sales of Aircraft to the extent permitted by
and in accordance with the terms and conditions of Section 9.7(b)(vii) hereof;
PROVIDED, THAT, as of the date of each such payment and after giving effect
thereto, no Default or Event of Default shall exist or have occurred and be
continuing or would result therefrom; EXCEPT, FURTHER, THAT, Borrowers and
Guarantors may make prepayments with respect thereto in addition to such
regularly scheduled payments; PROVIDED, THAT. (A) commencing on and after
January 1, 2006, as of the date of each such prepayment and after giving affect
thereto, the aggregate amount of (1) such prepayments (on a consolidated basis)
with respect to any fiscal year of Borrowers and Guarantors (each, a "Reference
Year") PLUS (2) the sum of all prepayments and other payments made with respect
to such Reference Year in respect of dividends, redemptions or repurchases of
Capital Stock pursuant to Section 9.11 hereof PLUS all prepayments of
Indebtedness pursuant to Sections 9.9(g), 9.9(h), 9.9(j), and 9.9(m) hereof,
shall not in the aggregate exceed fifty (50%) percent of the amount of the
Consolidated Net Income of Atlas Holdings for the immediately preceding
Reference Year, and (B) as of the date of each such payment and after giving
effect thereto, Excess Availability shall be not less than $25,000,000, and (C)
as of the date of each such prepayment and after giving effect thereto, no
Default or Event of Default shall exist or have occurred and be continuing or
would result therefrom,
88
(iv) Borrowers and Guarantors shall not, directly or
indirectly, (A) materially amend, modify, alter or change the terms of such
Indebtedness or any agreement, document or instrument related thereto, except,
that, Borrower may, after prior written notice to Agent, amend, modify, alter or
change the terms thereof so as to extend the maturity thereof, or defer the
timing of any payments in respect thereof, or to forgive or cancel any portion
of such Indebtedness (other than pursuant to payments thereof), or to reduce the
interest rate or any fees in connection therewith, or to amend or waive any
non-monetary covenant compliance or (B) redeem, retire, defease, purchase or
otherwise acquire such Indebtedness (except pursuant to regularly scheduled
payments permitted by Section 9.9(i)(iii) hereof), or set aside or otherwise
deposit or invest any sums for such purpose, and
(v) Administrative Borrower shall furnish to Agent all
material demands or notices in connection with such Indebtedness either received
by a Borrower or Guarantor promptly after the receipt thereof, or sent by a
Borrower or Guarantor or on its behalf concurrently with the sending thereof, as
the case may be;
(j) the Indebtedness of Borrowers and Guarantors evidenced by or
arising under the Existing Aircraft Financings (as in effect on the date
hereof); PROVIDED, THAT, each of the following conditions is satisfied as
determined by Agent:
(i) the aggregate principal amount of such Indebtedness shall
not exceed $47,619,910 less the aggregate amount of all repayments, repurchases
or redemptions, whether optional or mandatory, in respect thereof,
(ii) Agent shall have received true, correct and complete
copies of all agreements, documents and instruments requested by it related to
the Existing Aircraft Financings (subject to any confidentiality provisions
contained therein), each as duly authorized, executed and/or delivered, as
applicable, by the parties thereto,
(iii) Borrowers and Guarantors shall not, directly or
indirectly, make, or be required to make, any payments in respect of such
Indebtedness, EXCEPT, THAT, Borrowers and Guarantors may make regularly
scheduled monthly payments in respect of Aircraft subject to such Existing
Aircraft Financings, in an aggregate amount in each month not to exceed the
amount specified for such month in Schedule 9.9 to the Information Certificate
with respect to such month; PROVIDED, THAT, as of the date of each such payment
and after giving effect thereto, no Default or Event of Default shall exist or
have occurred and be continuing or would result therefrom; EXCEPT, FURTHER,
THAT, Borrowers and Guarantors may make prepayments with respect thereto in
addition to such regularly scheduled payments; PROVIDED, THAT. (A) commencing on
and after January 1, 2006, as of the date of each such prepayment and after
giving affect thereto, the aggregate amount of (1) such prepayments (on a
consolidated basis) with respect to any fiscal year of Borrowers and Guarantors
(each, a "Reference Year") PLUS (2) the sum of all prepayments and other
payments made with respect to such Reference Year in respect of dividends,
redemptions or repurchases of Capital Stock pursuant to Section 9.11 hereof PLUS
all prepayments of Indebtedness pursuant to Sections 9.9(g), 9.9(h), 9.9(i), and
9.9(m) hereof, shall not in the aggregate exceed fifty (50%) percent of the
amount of the Consolidated Net Income of Atlas Holdings for the immediately
preceding Reference Year, and (B) as of the date of each such payment and after
giving effect thereto, Excess Availability shall be not less than
89
$25,000,000, and (C) as of the date of each such prepayment and after giving
effect thereto, no Default or Event of Default shall exist or have occurred and
be continuing or would result therefrom,
(iv) Borrowers and Guarantors shall not, directly or
indirectly, (A) materially amend, modify, alter or change the terms of such
Indebtedness or any agreement, document or instrument related thereto, except,
that, Borrower may, after prior written notice to Agent, amend, modify, alter or
change the terms thereof so as to extend the maturity thereof, or defer the
timing of any payments in respect thereof, or to forgive or cancel any portion
of such Indebtedness (other than pursuant to payments thereof), or to reduce the
interest rate or any fees in connection therewith, or to amend or waive any
non-monetary covenant compliance or (B) redeem, retire, defease, purchase or
otherwise acquire such Indebtedness (except pursuant to payments permitted by
Section 9.9(j)(iii) hereof), or set aside or otherwise deposit or invest any
sums for such purpose, and
(v) Administrative Borrower shall furnish to Agent all
material demands or notices in connection with such Indebtedness either received
by a Borrower or Guarantor promptly after the receipt thereof, or sent by a
Borrower or Guarantor or on its behalf concurrently with the sending thereof, as
the case may be;
(k) Indebtedness of Atlas Holdings and its Subsidiaries in respect
of the Existing Letters of Credit; PROVIDED, THAT, none of the Existing Letters
of Credit shall be amended, renewed or extended and Borrowers and Guarantors
shall not cause to be issued during the term hereof for the account of any
Borrower or Guarantor or in respect of which any of them shall be liable,
letters of credit other than Letter of Credit Accommodations;
(l) Indebtedness of any Borrower or Guarantor arising after the date
hereof issued in exchange for, or the proceeds of which are used to extend,
refinance, replace or substitute for Indebtedness permitted under Section
9.9(b), Section 9.9(f), Section 9.9(g), Section 9.9(h), Section 9.9(i), Section
9.9(j) and Section 9.9(m) hereof (the "Refinancing Indebtedness"); PROVIDED,
THAT, as to any such Refinancing Indebtedness, each of the following conditions
is satisfied: (A) Agent shall have received not less than thirty (30) days prior
written notice of the intention to incur such Indebtedness, which notice shall
set forth in reasonable detail satisfactory to Agent, the amount of such
Indebtedness, the schedule of repayments and maturity date with respect thereto
and such other information with respect thereto as Agent may reasonably request,
(B) promptly upon Agent's request, Agent shall have received true, correct and
complete copies of all agreements, documents and instruments evidencing or
otherwise related to such Indebtedness, as duly authorized, executed and
delivered by the parties thereto, (C) the Refinancing Indebtedness shall have a
Weighted Average Life to Maturity and a final maturity equal to or greater than
the Weighted Average Life to Maturity and the final maturity, respectively, of
the Indebtedness being extended, refinanced, replaced, or substituted for, (D)
the Refinancing Indebtedness shall rank in right of payment no more senior than,
and be at least subordinated (if subordinated) to, the Obligations as the
Indebtedness being extended, refinanced, replaced or substituted for, (E) the
Refinancing Indebtedness shall not include terms and conditions with respect to
any Borrower or Guarantor which are more burdensome or restrictive in any
material respect than those included in the Indebtedness so extended,
refinanced, replaced or substituted for, (F) such Indebtedness incurred by any
Borrower or
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Guarantor shall be at rates and with fees or other charges that are commercially
reasonable, (G) the incurring of such Indebtedness shall not result in an Event
of Default, (H) the principal amount of such Refinancing Indebtedness shall not
exceed the principal amount of the Indebtedness so extended, refinanced,
replaced or substituted for (plus the amount of refinancing fees and expenses
incurred in connection therewith outstanding on the date of such event), (I) the
Refinancing Indebtedness shall be secured by substantially the same assets (or
less of such assets) that secure the Indebtedness so extended, refinanced,
replaced or substituted for, provided, that, such security interests with
respect to the Refinancing Indebtedness shall have a priority no more senior
than, and be at least as subordinated, if subordinated (on terms and conditions
substantially similar to the subordination provisions applicable to the
Indebtedness so extended, refinanced, replaced or substituted for or as is
otherwise acceptable to Agent) as the security interest with respect to the
Indebtedness so extended, refinanced, replaced or substituted for, (J) in the
case of Refinancing Indebtedness with respect to an Aircraft, Agent shall have
received from the secured party with respect thereto a lien clarification
agreement, in form and substance satisfactory to Agent, duly authorized,
executed and delivered to Agent by such secured party, (K) Borrowers and
Guarantors may only make payments of principal, interest and fees, if any, in
respect of such Indebtedness to the extent such payments would have been
permitted hereunder in respect of the Indebtedness so extended, refinanced,
replaced or substituted for (and except as otherwise permitted below), (L)
Borrowers and Guarantors shall not, directly or indirectly, (1) materially
amend, modify, alter or change any terms of the agreements with respect to such
Refinancing Indebtedness, except that Borrowers and Guarantors may, after prior
written notice to Agent, amend, modify, alter or change the terms thereof to the
extent permitted with respect to the Indebtedness so extended, refinanced,
replaced or substituted for, or (2) redeem, retire, defease, purchase or
otherwise acquired such Indebtedness, or set aside or otherwise deposit or
invest any sums for such purpose (other than with Refinancing Indebtedness to
the extent permitted herein and to the extent permitted with respect to the
Indebtedness so extended, refinanced, replaced or substituted for), and (M)
Borrowers and Guarantors shall furnish to Agent copies of all material notices
or demands in connection with Indebtedness received by any Borrower or Guarantor
or on its behalf promptly after the receipt thereof or sent by any Borrower or
Guarantor or on its behalf concurrently with the sending thereof, as the case
may be; and
(m) the Indebtedness set forth on Schedule 9.9(m) to the Information
Certificate; PROVIDED, THAT, (i) Borrowers and Guarantors may only make
regularly scheduled payments of principal and interest in respect of such
Indebtedness in accordance with the terms of the agreement or instrument
evidencing or giving rise to such Indebtedness as in effect on the date hereof,
EXCEPT, THAT, commencing on and after January 1, 2006, Borrowers and Guarantors
may make prepayments with respect thereto in addition to such regularly
scheduled payments; PROVIDED, THAT, (A) as of the date of each such prepayment
and after giving affect thereto, the aggregate amount of (1) such prepayments
(on a consolidated basis) with respect to any fiscal year of Borrowers and
Guarantors (each, a "Reference Year") PLUS (2) the sum of all prepayments and
other payments made with respect to such Reference Year in respect of dividends,
redemptions or repurchases of Capital Stock pursuant to Section 9.11 hereof PLUS
all prepayments of Indebtedness pursuant to Sections 9.9(g), 9.9(h), 9.9(i), and
9.9(j) hereof, shall not in the aggregate exceed fifty (50%) percent of the
amount of the Consolidated Net Income of Atlas Holdings for the immediately
preceding Reference Year, and (B) as of the date of each such payment and after
giving effect thereto, Excess Availability shall be not less than
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$25,000,000, and (C) as of the date of each such prepayment and after giving
effect thereto, no Default or Event of Default shall exist or have occurred and
be continuing or would result therefrom, (ii) Borrowers and Guarantors shall
not, directly or indirectly, (A) amend, modify, alter or change the terms of
such Indebtedness or any agreement, document or instrument related thereto as in
effect on the date hereof except, that, Borrowers and Guarantors may, after
prior written notice to Agent, amend, modify, alter or change the terms thereof
so as to extend the maturity thereof, or defer the timing of any payments in
respect thereof, or to forgive or cancel any portion of such Indebtedness (other
than pursuant to payments thereof), or to reduce the interest rate or any fees
in connection therewith, or (B) redeem, retire, defease, purchase or otherwise
acquire such Indebtedness, or set aside or otherwise deposit or invest any sums
for such purpose (except with respect to regularly scheduled payments or other
payments as may be permitted hereunder), and (iii) Borrowers and Guarantors
shall furnish to Agent all material notices or demands in connection with such
Indebtedness either received by any Borrower or Guarantor or on its behalf,
promptly after the receipt thereof, or sent by any Borrower or Guarantor or on
its behalf, concurrently with the sending thereof, as the case may be.
9.10 LOANS, INVESTMENTS, ETC. Each Borrower and Guarantor shall not, and
shall not permit any other Obligor to, directly or indirectly, make any loans or
advance money or property to any person, or invest in (by capital contribution,
dividend or otherwise) or purchase or repurchase the Capital Stock or
Indebtedness or all or a substantial part of the assets or property of any
person, or create, form or acquire any new Subsidiary, or agree to do any of the
foregoing, except:
(a) the endorsement of instruments for collection or deposit in the
ordinary course of business;
(b) the Domestic Cash Reserve; PROVIDED, THAT, the terms and
conditions of Section 5.2 hereof shall have been satisfied with respect to the
deposit account, investment account or other account in which such cash or Cash
Equivalents are held;
(c) the Foreign Cash Reserve;
(d) investments in cash or Cash Equivalents other than the Domestic
Cash Reserve or the Foreign Cash Reserve; PROVIDED, THAT, (i) no Loans are then
outstanding or, if Loans are then outstanding, no Sweep Event has occurred and
(ii) the terms and conditions of Section 5.2 hereof shall have been satisfied
with respect to the deposit account, investment account or other account in
which such cash or Cash Equivalents are held;
(e) the existing loans, advances and equity investments of each
Borrower and Guarantor as of the date hereof in its Subsidiaries, the Polar Air
Cargo, Inc. General Unsecured Creditors Trust and GSS; PROVIDED, THAT, no
Borrower or Guarantor shall have any further obligations or liabilities to make
any capital contributions or other additional investments or other payments to
or in or for the benefit of any of the foregoing except for those, if any,
expressly contemplated by the Plan, and other additional loans, advances and
investments in an aggregate amount not to exceed $2,000,000 for such
Subsidiaries, the Polar Air Cargo, Inc. General Unsecured Creditors Trust and
GSS;
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(f) loans and advances by any Borrower or Guarantor to employees of
such Borrower or Guarantor not to exceed the principal amount of $1,000,000 in
the aggregate at any time outstanding for: (i) reasonably and necessary
work-related travel or other ordinary business expenses to be incurred by such
employee in connection with their work for such Borrower or Guarantor and (ii)
reasonable and necessary relocation expenses of such employees (including home
mortgage financing for relocated employees);
(g) stock or obligations issued to any Borrower or Guarantor by any
Person (or the representative of such Person) in respect of Indebtedness of such
Person owing to such Borrower or Guarantor in connection with the insolvency,
bankruptcy, receivership or reorganization of such Person or a composition or
readjustment of the debts of such Person; PROVIDED, THAT, the original of any
such stock or instrument evidencing such obligations shall be promptly delivered
to Agent, upon Agent's request, together with such stock power, assignment or
endorsement by such Borrower or Guarantor as Agent may request;
(h) obligations of (i) account debtors to any Borrower or Guarantor
arising from Accounts which are past due evidenced by a promissory note made by
such account debtor payable to such Borrower or Guarantor, and (ii) purchasers
of assets owed to any Borrower or Guarantor pursuant to any sale of assets
permitted hereunder, which obligations are evidenced by a promissory note made
by such purchaser payable to such Borrower or Guarantor; PROVIDED, THAT,
promptly upon the receipt of the original of any such promissory note by such
Borrower or Guarantor, such promissory note shall be endorsed to the order of
Agent by such Borrower or Guarantor and promptly delivered to Agent as so
endorsed;
(i) loans, advances or investments by a Borrower to another Borrower
after the date hereof; PROVIDED, THAT,
as to all of such loans, advances or investments (A) within thirty (30) days
after the end of each fiscal month, Borrowers shall provide to Agent a report in
form and substance satisfactory to Agent of the outstanding amount of such loans
as of the last day of the immediately preceding month and indicating any loans
made and payments received during the immediately preceding month, and (B) the
Indebtedness arising pursuant to any such loan shall not be evidenced by a
promissory note or other instrument, unless the single original of such note or
other instrument is promptly delivered to Agent upon its request to hold as part
of the Collateral, with such endorsement and/or assignment by the payee of such
note or other instrument as Agent may require,
(j) (i) loans, advances or investments by a Borrower to a
Guarantor or loans, advances or investments by a Guarantor to a Borrower or
another Guarantor after the date hereof; PROVIDED, THAT, as to all of such
loans, advances or investments, (A) within thirty (30) days after the end of
each fiscal month, Borrowers shall provide to Agent a report in form and
substance satisfactory to Agent of the outstanding amount of such loans,
advances or investments as of the last day of the immediately preceding month
and indicating any loans, advances or investments made and payments received
during the immediately preceding month, (B) the Indebtedness arising pursuant to
any such loan or advance shall not be evidenced by a promissory note or other
instrument, unless the single original of such note or other instrument is
promptly delivered to Agent upon its request to hold as part of the Collateral,
with such
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endorsement and/or assignment by the payee of such note or other instrument as
Agent may require, and (C) as of the date of any such loan, advance or
investment and after giving effect thereto, no Default or Event of Default shall
exist or have occurred and be continuing;
(ii) as to loans by a Guarantor to a Borrower, (A) the
Indebtedness arising pursuant to such loan shall be subject to, and subordinate
in right of payment to, the right of Agent and Lenders to receive the prior
final payment and satisfaction in full of all of the Obligations on terms and
conditions acceptable to Agent, (B) promptly upon Agent's request, Agent shall
have received a subordination agreement, in form and substance satisfactory to
Agent, providing for the terms of the subordination in right of payment of such
Indebtedness of such Borrower to the prior final payment and satisfaction in
full of all of the Obligations, duly authorized, executed and delivered by such
Guarantor and such Borrower, and (C) such Borrower shall not, directly or
indirectly make, or be required to make, any payments in respect of such
Indebtedness at any time that a Default or Event of Default shall exist or have
occurred and be continuing.
(k) the formation or acquisition by a Borrower or Guarantor after
the date hereof of one or more Subsidiaries incorporated or organized under the
laws of any state of the United States of America; PROVIDED, THAT: (i) such
Borrower or Guarantor (as the case may be) shall cause any such Subsidiary to
execute and deliver to Agent, in form and substance satisfactory to Agent, (A)
an absolute and unconditional guarantee of payment of the Obligations, (B) a
security agreement granting to Agent a first priority security interest and lien
(except as otherwise consented to in writing by Agent) upon all of the assets of
any such Subsidiary, (C) related UCC financing and FAA registration statements,
and (D) such other agreements, documents and instruments as Agent may require,
including, but not limited to, supplements and amendments hereto and other loan
agreements or instruments evidencing Indebtedness of such new Subsidiaries to
Agent, (ii) such Borrower or Guarantor (as the case may be) shall (A) execute
and deliver to Agent, in form and substance satisfactory to Agent, a pledge and
security agreement granting to Agent a first pledge of and lien on all of the
issued and outstanding shares of Capital Stock of any such Subsidiary, and (B)
deliver the original stock certificates evidencing such shares of Capital Stock
(or such other evidence as may be issued in the case of a limited liability
company), together with stock powers with respect thereto duly executed in blank
(or the equivalent thereof in the case of a limited liability company in which
such interests are certificated, or otherwise take such actions as Agent shall
require with respect to Agent's security interests therein), (iii) the
Subsidiary formed or acquired shall be engaged in a business related, ancillary
or complimentary to the businesses of Borrowers as conducted on the date hereof,
(iv) the sum of (A) the aggregate amount of all loans, advances, capital
contributions or other investments or payments by Borrowers and Guarantors to,
or for the acquisition of, all of such Subsidiaries or otherwise in connection
therewith, plus (B) the aggregate amount of all loans or investments made which
are permitted under Section 9.10(l) below, plus (C) the aggregate of all amounts
paid in connection with purchases permitted under Section 9.10(m) below, shall
not in the aggregate exceed $10,000,000 during the term of this Agreement, (v)
in the case of loans and advances, the original of any promissory note or other
instrument evidencing the Indebtedness arising pursuant to such loans and
advances shall be delivered, or caused to be delivered, to Agent, at Agent's
option, together with an appropriate endorsement and with full recourse to the
payee thereof, (vi) as of the date of any such loan, advance, capital
contribution or other investment or payment by such Borrower or Guarantor to, or
for the acquisition of, any
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such Subsidiary or otherwise in connection therewith and after giving effect
thereto, Excess Availability shall be not less than $25,000,000, (vii) Agent
shall have received (A) not less than ten (10) Business Days' prior written
notice of the formation or acquisition of any such Subsidiary and such
information with respect thereto as Agent may request, and (B) true, correct and
complete copies of all agreements, documents and instruments relating thereto
and (viii) as of the date of any such loan, advance, capital contribution or
other investment or payment, no Default or Event of Default shall exist or have
occurred and be continuing;
(l) loans, advances or investments (but not in any case of Accounts
or Receivables) by any Borrower or Guarantor to any Person (other than another
Borrower or Guarantor) after the date hereof or investment by any Borrower or
Guarantor by capital contribution in any Person after the date hereof (other
than another Borrower or Guarantor); PROVIDED, THAT, as to any such loans or
investments, each of the following conditions is satisfied as determined by
Agent (except as Agent may otherwise agree): (i) the Person receiving such loan
or investment is engaged in a business related, ancillary or complimentary to
the businesses of Borrowers as conducted on the date hereof, (ii) the sum of (A)
the aggregate amount of any such loans or investments, plus (B) all loans,
advances, capital contributions or other investments or payments permitted under
Section 9.10(k) above, plus (C) the aggregate of all amounts paid in connection
with purchases permitted under Section 9.10(m) below, shall not in the aggregate
exceed $10,000,000 during the term of this Agreement, (iii) as of the date of
any such loan or investment and after giving effect thereto, no Default or Event
of Default shall exist or have occurred and be continuing, (iv) in the case of
an investment by capital contribution, unless otherwise prohibited by the terms
of such capital contribution or the organizational documents of the entity to
which such capital contribution is made, at Agent's option, the original stock
certificate or other instrument evidencing such capital contribution (or such
other evidence as may be issued in the case of a limited liability company)
shall be promptly delivered to Agent, together with such stock power, assignment
or endorsement as Agent may request, and promptly upon Agent's request, such
Borrower or Guarantor shall execute and deliver to Agent in form and substance
satisfactory to Agent, a pledge and security agreement granting to Agent a first
pledge of and lien on all of the issued and outstanding shares of such stock or
other instrument or interest (and in the case of a limited liability company
take such other actions as Agent shall require with respect to Agent's security
interests therein), (v) in the case of loans of money or property, the original
of any promissory note or other instrument evidencing the Indebtedness arising
pursuant to such loans shall be delivered, or caused to be delivered, to Agent,
at Agent's option, together with an appropriate endorsement and with full
recourse to the payee thereof, (vi) as of the date of any such loan or
investment and after giving effect thereto, Excess Availability shall be not
less than $25,000,000 and (vii) Agent shall have received (A) not less than ten
(10) Business Days' prior written notice thereof setting forth in reasonable
detail the nature and terms thereof, (B) true, correct and complete copies of
all agreements, documents and instruments relating thereto and (C) such other
information with respect thereto as Agent may request;
(m) the purchase by any Borrower or Guarantor of all or a
substantial part of the assets or property of any person located in the United
States (other than Capital Stock); PROVIDED, THAT, each of the following
conditions is satisfied as determined by Agent;
(i) Agent shall have received not less than ten (10) Business
Days' prior written notice of the proposed acquisition and such information with
respect thereto as Agent
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may request, including (A) the proposed date and amount of the acquisition, (B)
a list and description of the assets to be acquired, and (C) the total purchase
price for the assets to be purchased (and the terms of payment of such purchase
price),
(ii) as of the date of such purchase and after giving effect
thereto, no Default or Event of Default shall exist or have occurred and be
continuing,
(iii) promptly upon Agent's request, such Borrower or
Guarantor shall deliver, or cause to be delivered to Agent, true, correct and
complete copies of all agreements, documents and instruments relating to such
acquisition,
(iv) the assets and properties being acquired by such Borrower
or Guarantor shall be substantially consistent with, and related to, the
business of such Borrower or Guarantor as conducted on the date hereof,
(v) the assets acquired by such Borrower or Guarantor shall be
free and clear of any security interest, mortgage, pledge, lien, charge or other
encumbrance and Agent shall have received evidence satisfactory to it of the
same (other than security interests and liens permitted under Section 9.8
hereof),
(vi) the acquisition by such Borrower or Guarantor of such
assets shall not violate any law or regulation or any order or decree of any
court or Governmental Authority in any respect and shall not and will not
conflict with or result in the breach of, or constitute a default in any respect
under, any agreement, document or instrument to which any Borrower, Guarantor or
any Affiliate is a party or may be bound, or result in the creation or
imposition of any lien, charge or encumbrance upon any of the property of any
Borrower, Guarantor or any Affiliate or violate any provision of the certificate
of incorporation or by-laws of any Borrower or Guarantor,
(vii) such purchase shall be on commercially reasonable prices
and terms and in a BONA FIDE arms' length transaction,
(viii) Borrowers and Guarantors shall not become obligated
with respect to any Indebtedness, nor any of their property become subject to
any security interest or lien, pursuant to such acquisition unless Borrowers and
Guarantors could incur such Indebtedness or create such security interest or
lien hereunder or under the other Financing Agreements,
(ix) Agent shall have received, in form and substance
satisfactory to Agent, (A) evidence that Agent has valid and perfected security
interests in and liens upon the assets purchased, (B) UCC Financing Statements
and FAA registrations, (C) all Collateral Access Agreements for locations where
books and records are kept in respect of Accounts or Receivables that Borrowers
wish to have considered by Agent as the basis for the making of Loans, and other
consents, waivers, acknowledgments and other agreements from third persons which
Agent may reasonably deem necessary or desirable in order to permit, protect and
perfect its security interests in and liens upon the assets purchased, (D) the
agreement of the seller consenting to the collateral assignment by Borrower or
Guarantor of all rights and remedies and claims for damages of Borrower or
Guarantor relating to the Collateral (including, without limitation, any bulk
sales indemnification) under the agreements, documents and instruments
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relating to such acquisition and (E) such other agreements, documents and
instruments as Agent may request in connection therewith,
(x) in no event shall any Accounts so acquired by a Borrower
pursuant to such acquisition be deemed Eligible Accounts unless and until Agent
shall have conducted a field examination with respect thereto and then only to
the extent the criteria for Eligible Accounts set forth herein are satisfied
with respect thereto (or such other or additional criteria as Agent may, at its
option, establish with respect thereto), and upon the request of Agent, the
Accounts acquired by such Borrower pursuant to such acquisition shall at all
times after such acquisition be separately identified and reported to Agent in a
manner satisfactory to Agent,
(xi) not less than ten (10) Business Days' prior to the date
of such acquisition, Agent shall have received projected financial statements
approved by the Board of Directors of such Borrower or Guarantor reflecting the
projected effect of such acquisition on Borrowers for the remaining portion of
the then current year and for the succeeding years after giving effect to the
acquisition (including forecasted income statements, cash flow statements and
balance sheets) prepared on a summary basis as to the current year and the
immediately succeeding year, in each case, all in reasonable detail, together
with such supporting information as Agent may reasonably request, which
projections shall represent Borrowers' reasonable best estimate of the future
financial performance of Borrowers for the periods set forth therein and shall
have been prepared on the basis of the assumptions set forth therein which
Borrowers believe are fair and reasonable in light of current and reasonably
foreseeable business conditions,
(xii) the sum of (A) the aggregate amount of all payments by
Borrowers and Guarantors in connection with all of such acquisitions, plus (B)
the aggregate amount of all loans, advances, capital contributions or other
investments or payments permitted under Section 9.10(k) above, plus (C) the
aggregate amount of all loans or investments permitted under Section 9.10(1)
above, shall not exceed $10,000,000 outstanding at any time during the term of
this Agreement, and
(xiii) as of the date of any such acquisition and after giving
effect thereto, the Excess Availability shall be not less than $25,000,000;
(n) the loans, advances and investments set forth on Schedule 9.10
to the Information Certificate and all renewals, extensions or replacements
thereof; PROVIDED, THAT, as to such loans, advances and investments, Borrowers
and Guarantors shall not, directly or indirectly, materially amend, modify,
alter or change the terms of such loans and advances or any agreement, document
or instrument related thereto and Borrowers and Guarantors shall furnish to
Agent all notices or demands in connection with such loans and advances either
received by any Borrower or Guarantor or on its behalf, promptly after the
receipt thereof, or sent by any Borrower or Guarantor or on its behalf,
concurrently with the sending thereof, as the case may be.
9.11 DIVIDENDS AND REDEMPTIONS. Each Borrower and Guarantor shall not,
directly or indirectly, declare or pay any dividends on account of any shares or
class of any Capital Stock of such Borrower or Guarantor now or hereafter
outstanding, or set aside or otherwise deposit or invest any sums for such
purpose, or redeem, retire, defease, purchase or otherwise acquire any
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shares of any class of Capital Stock (or set aside or otherwise deposit or
invest any sums for such purpose) for any consideration or apply or set apart
any sum, or make any other distribution (by reduction of capital or otherwise)
in respect of any such shares or agree to do any of the foregoing, except that:
(a) any Borrower or Guarantor may declare and pay such dividends or
redeem, retire, defease, purchase or otherwise acquire any shares of any class
of Capital Stock for consideration in the form of shares of common stock (so
long as after giving effect thereto no Change of Control or other Default or
Event of Default shall exist or occur);
(b) Borrowers and Guarantors may pay dividends, purchase, redeem or
repurchase any of their Capital Stock to the extent permitted in Section 9.12
below;
(c) any Subsidiary of a Borrower or Guarantor may pay dividends to a
Borrower or Guarantor;
(d) Borrowers and Guarantors may repurchase Capital Stock consisting
of common stock held by employees pursuant to any employee stock ownership plan
thereof upon the termination, retirement or death of any such employee in
accordance with the provisions of such plan; PROVIDED, THAT, as to any such
repurchase, each of the following conditions is satisfied: (i) as of the date of
the payment for such repurchase and after giving effect thereto, no Default or
Event of Default shall exist or have occurred and be continuing, (ii) such
repurchase shall be paid with funds legally available therefor, (iii) such
repurchase shall not violate any law or regulation or the terms of any
indenture, agreement or undertaking to which such Borrower or Guarantor is a
party or by which such Borrower or Guarantor or its or their property are bound,
and (iv) the aggregate amount of all payments for such repurchases in any
calendar year shall not exceed $1,000,000; and
(e) Atlas Holdings may pay dividends or may redeem or repurchase any
of its Capital Stock; PROVIDED, THAT, as to any payment of such dividend or for
such redemption or repurchase each of the following conditions is satisfied:
(i) such payment shall be made with funds legally available
therefor,
(ii) such dividend or redemption or repurchase shall not
violate any law or regulation or the terms of any indenture, agreement or
undertaking to which a Borrower or Guarantor is a party or by which a Borrower
or Guarantor or its properties are bound,
(iii) as of the date of the payment of each such dividend or
redemption or repurchase, and after giving effect thereto, the aggregate amount
of (A) all such payments (on a consolidated basis) made in any fiscal year of
Borrowers and Guarantors PLUS (B) commencing after January 1, 2006, all payments
and prepayments with respect to Indebtedness made pursuant to the exception set
forth in Section 9.9(g)(iv) hereof with respect to repayments or prepayments of
Indebtedness made in such fiscal year, shall not exceed the amount equal to
fifty (50%) percent of the Consolidated Net Income of Atlas Holdings in the
immediately preceding Reference Year (and as to which such payments relate),
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(iv) as of the date of the payment of such dividend or
redemption or repurchase and after giving effect thereto, the aggregate amount
of the Excess Availability shall not be less than $25,000,000, and
(v) as of the date of the payment of such dividend or
redemption or repurchase and after giving effect thereto, no Default or Event of
Default shall exist or have occurred and be continuing,
9.12 TRANSACTIONS WITH AFFILIATES. Except as set forth on Schedule 9.12,
each Borrower and Guarantor shall not, directly or indirectly:
(a) purchase, acquire or lease any property from, or sell, transfer
or lease any property to, any officer, director or other Affiliate of such
Borrower or Guarantor, except in the ordinary course of and pursuant to the
reasonable requirements of such Borrower's or Guarantor's business (as the case
may be) and upon fair and reasonable terms no less favorable to such Borrower or
Guarantor than such Borrower or Guarantor would obtain in a comparable arm's
length transaction with an unaffiliated person; or
(b) make any payments (whether by dividend, loan or otherwise) of
management, consulting or other fees for management or similar services, or of
any Indebtedness owing to any officer, employee, shareholder, director or any
other Affiliate of such Borrower or Guarantor, EXCEPT, in each case, for (i)
reasonable compensation to officers, employees and directors for services
rendered to such Borrower or Guarantor in the ordinary course of business, and
(ii) payments by any Subsidiary of Atlas Holdings to Atlas Holdings for actual
and necessary reasonable out-of-pocket legal and accounting, insurance,
marketing, payroll and similar types of services paid for by Atlas Holdings on
behalf of such Subsidiary, in the ordinary course of their respective businesses
or as the same may be directly attributable to such Subsidiary and for the
payment of taxes by or on behalf of Atlas Holdings.
9.13 COMPLIANCE WITH ERISA. Each Borrower and Guarantor shall, and shall
cause each of its ERISA Affiliates, to: (a) maintain each Plan in compliance in
all material respects with the applicable provisions of ERISA, the Code and
other federal and state law; (b) cause each Plan which is qualified under
Section 401(a) of the Code to maintain such qualification; (c) not terminate
any of such Plans so as to incur any material liability to the Pension Benefit
Guaranty Corporation; (d) not allow or suffer to exist any prohibited
transaction involving any of such Plans or any trust created thereunder which
would subject such Borrower, Guarantor or such ERISA Affiliate to a material tax
or penalty or other liability on prohibited transactions imposed under Section
4975 of the Code or ERISA; (e) make all required contributions to any Plan which
it is obligated to pay under Section 302 of ERISA, Section 412 of the Code or
the terms of such Plan; (f) not allow or suffer to exist any accumulated funding
deficiency, whether or not waived, with respect to any such Plan; or (g) allow
or suffer to exist any occurrence of a reportable event or any other event or
condition which presents a material risk of termination by the Pension Benefit
Guaranty Corporation of any such Plan that is a single employer plan, which
termination could result in any material liability to the Pension Benefit
Guaranty Corporation.
9.14 END OF FISCAL YEARS; FISCAL QUARTERS. Each Borrower and Guarantor
shall, for financial reporting purposes, cause its, and each of its
Subsidiaries' (a) fiscal years to end on
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December 31 of each year and (b) fiscal quarters to end on March 31, June 30,
September 30 and December 31 of each year.
9.15 CHANGE IN BUSINESS. Each Borrower and Guarantor shall not engage in
any business other than the business of such Borrower or Guarantor on the date
hereof and any business reasonably related, ancillary or complimentary to the
business in which such Borrower or Guarantor is engaged on the date hereof.
9.16 LIMITATION OF RESTRICTIONS AFFECTING SUBSIDIARIES. Each Borrower and
Guarantor shall not, directly, or indirectly, create or otherwise cause or
suffer to exist any encumbrance or restriction which prohibits or limits the
ability of any Subsidiary of such Borrower or Guarantor to (a) pay dividends or
make other distributions or pay any Indebtedness owed to such Borrower or
Guarantor or any Subsidiary of such Borrower or Guarantor; (b) make loans or
advances to such Borrower or Guarantor or any Subsidiary of such Borrower or
Guarantor, (c) transfer any of its properties or assets to such Borrower or
Guarantor or any Subsidiary of such Borrower or Guarantor; or (d) create, incur,
assume or suffer to exist any lien upon any of its property, assets or revenues,
whether now owned or hereafter acquired, other than encumbrances and
restrictions arising under (i) applicable law, (ii) this Agreement, (iii)
customary provisions restricting subletting or assignment of any lease governing
a leasehold interest of such Borrower or Guarantor or any Subsidiary of such
Borrower or Guarantor and customary provisions restricting the disposition or
encumbrance of property subject to purchase money financing arrangements
otherwise permitted under this Agreement, (iv) customary restrictions on
dispositions of real property interests found in reciprocal easement agreements
of such Borrower or Guarantor or any Subsidiary of such Borrower or Guarantor,
(v) any agreement relating to permitted Indebtedness incurred by a Subsidiary of
such Borrower or Guarantor prior to the date on which such Subsidiary was
acquired by such Borrower or such Guarantor and outstanding on such acquisition
date, and (vi) all contractual obligations in existence on the date hereof and
the extension or continuation thereof; PROVIDED, THAT, any such encumbrances or
restrictions contained in such extension or continuation are no less favorable
to Agent and Lenders than those encumbrances and restrictions under or pursuant
to the contractual obligations so extended or continued.
9.17 EBITDAR. At any time Excess Availability is less than $30,000,000,
the EBITDAR of Atlas Holdings and its Subsidiaries on a consolidated basis shall
be measured monthly for the immediately preceding twelve (12) month period and
shall be not less than the amount specified on Schedule 9.17 hereto with respect
to each such period.
9.18 EXCESS AVAILABILITY. Borrowers shall at all times have and maintain
Excess Availability of not less than $5,000,000.
9.19 CAPITAL EXPENDITURES.
(a) Borrowers shall not directly or indirectly, make or commit to
make, whether through purchase, capital leases or otherwise, Capital
Expenditures on a non-cumulative basis in excess of a total aggregate amount of
$25,000,000 (the "Base Amount") during any fiscal year of Borrowers (exclusive
of mandatory Capital Expenditures for avionics improvements or compliance
prescribed by the FAA or Federal Aviation Act Laws of up to the aggregate amount
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of $7,000,000 during the term hereof); provided, that, (i) if the aggregate
amount of Capital Expenditures expended by Borrowers during the fiscal year of
Borrowers ending December 31, 2004, is less than the Base Amount for such fiscal
year, then the amount of Capital Expenditures permitted to be expended pursuant
to this Section 9.19 in the immediately succeeding fiscal year of Borrowers and
Guarantors shall be increased by the lesser of (A) such shortfall and (B)
$6,000,000 and (ii) if the aggregate amount of Capital Expenditures expended by
Borrowers during any fiscal year thereafter, commencing with the fiscal year of
Borrowers ending December 31, 2005 is less than the Base Amount for such fiscal
year, then the amount of Capital Expenditures permitted to be expended pursuant
to this Section 9.19 in the immediately succeeding fiscal year of Borrowers and
Guarantors shall be increased by the lesser of (A) such shortfall and (B)
$12,500,000.
(b) Notwithstanding anything to the contrary set forth in this Loan
Agreement (including Section 9.19(a) above) or any of the other Financing
Agreements, Blade and Disk Expenditures (as hereinafter defined) and Back to
Birth Expenditures (as hereinafter defined) shall not constitute Capital
Expenditures for purposes of calculating compliance with Section 9.19(a) above
except: (i) in the case of Blade and Disk Expenditures, to the extent such
expenditures exceed $15,000,000 in the aggregate during the term hereof and (ii)
in the case of Back to Birth Expenditures, to the extent such expenditures
exceed $8,000,000 in the aggregate during the term hereof. For purposes of this
Section 9.19(b), "Blade and Disk Expenditures" shall mean Capital Expenditures
to address under-platform cracking, including blade and disk replacement,
required for CF6-80C2 Engines. For purposes of this Section 9.19(b), "Back to
Birth Expenditures" shall mean Capital Expenditures to resolve issues related to
any failure by Atlas Air to maintain with respect to any Part (as defined in the
Aircraft Credit Facility Agreement) records dating back to the date of
manufacture of such Part.
9.20 LICENSE AGREEMENTS.
(a) Each Borrower and Guarantor shall (i) promptly and faithfully
observe and perform all of the material terms, covenants, conditions and
provisions of the material License Agreements to which it is a party to be
observed and performed by it, at the times set forth therein, if any, (ii) not
do, permit, suffer or refrain from doing anything that could reasonably be
expected to result in a default under or breach of any of the terms of any
material License Agreement, (iii) not cancel, surrender, modify, amend, waive or
release any material License Agreement in any material respect or any term,
provision or right of the licensee thereunder in any material respect, or
consent to or permit to occur any of the foregoing; EXCEPT, THAT, subject to
Section 9.20(b) below, such Borrower or Guarantor may cancel, surrender or
release any material License Agreement in the ordinary course of the business of
such Borrower or Guarantor; PROVIDED, THAT, such Borrower or Guarantor (as the
case may be) shall give Agent not less than thirty (30) days prior written
notice of its intention to so cancel, surrender and release any such material
License Agreement, (iv) give Agent prompt written notice of any material License
Agreement entered into by such Borrower or Guarantor after the date hereof,
together with a true, correct and complete copy thereof and such other
information with respect thereto as Agent may request, (v) give Agent prompt
written notice of any material breach of any obligation, or any default, by any
party under any material License Agreement, and deliver to Agent (promptly upon
the receipt thereof by such Borrower or Guarantor in the case of a notice to
such Borrower or Guarantor and concurrently with the sending thereof in the case
of a notice
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from such Borrower or Guarantor) a copy of each notice of default and every
other material notice or other communication received or delivered by such
Borrower or Guarantor in connection with any material License Agreement which
relates to the right of such Borrower or Guarantor to continue to use the
property subject to such License Agreement, and (vi) furnish to Agent, promptly
upon the request of Agent, such information and evidence as Agent may reasonably
require from time to time concerning the observance, performance and compliance
by such Borrower or Guarantor or the other party or parties thereto with the
material terms, covenants or provisions of any material License Agreement.
(b) Each Borrower and Guarantor will either exercise any option to
renew or extend the term of each material License Agreement (other than those
which are no longer used or useful in its business) to which it is a party in
such manner as will cause the term of such material License Agreement to be
effectively renewed or extended for the period provided by such option and give
prompt written notice thereof to Agent or give Agent prior written notice that
such Borrower or Guarantor does not intend to renew or extend the term of any
such material License Agreement or that the term thereof shall otherwise be
expiring, not less than sixty (60) days prior to the date of any such
non-renewal or expiration. In the event of the failure of such Borrower or
Guarantor to extend or renew any such material License Agreement to which it is
a party, Agent shall have, and is hereby granted, the irrevocable right and
authority, at its option, to renew or extend the term of such material License
Agreement, whether in its own name and behalf, or in the name and behalf of a
designee or nominee of Agent or in the name and behalf of such Borrower or
Guarantor, as Agent shall determine at any time that an Event of Default shall
exist or have occurred and be continuing. At any time that a Default or Event of
Default exists, Agent may, but shall not be required to, perform any or all of
such obligations of such Borrower or Guarantor under any of the License
Agreements, including, but not limited to, the payment of any or all sums due
from such Borrower or Guarantor thereunder. Any sums so paid by Agent shall
constitute part of the Obligations.
9.21 SLOT UTILIZATION; ROUTE UTILIZATION; LEASEHOLD UTILIZATION.
(a) Each Borrower shall (i) utilize its Slots in a manner consistent
with applicable laws, regulations and contracts in order reasonably to preserve
its right to hold and operate the Slots, taking into account any waivers or
other relief granted to any Borrower by the FAA and any applicable Foreign
Aviation Authority, (ii) cause to be done all things reasonably necessary to
preserve and keep in full force and effect its rights in and use of its Slots,
including satisfying the Use or Lose Rule and other regulations, as may be
modified, amended or superseded from time to time, and (iii) without in any way
limiting the foregoing, promptly take all such steps as may be reasonably
necessary now or in the future to maintain, renew and obtain the rights,
licenses, authorizations or certifications as are necessary to the continued and
future holding and operation by any Borrower of its Slots. Notwithstanding the
foregoing, the Slot assignments of Borrowers may be modified from time to time
in the ordinary course of the businesses of Borrower and in a manner consistent
with the prior operation by Borrowers of such businesses and Borrowers shall not
be required to satisfy Use or Lose Rules in order to retain Slots which
Borrowers determine in their good faith business judgment are no longer useful
in the conduct of their businesses.
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(b) Each Borrower shall (i) utilize the Routes in a manner
consistent in all material respects with the Federal Aviation Laws and
applicable foreign law, and the applicable rules and regulations of the FAA, DOT
and any applicable Foreign Aviation Authorities, including the terms and
conditions of any operating authorizations, certificates, bilateral
authorizations and bilateral agreements with any applicable Foreign Aviation
Authorities and contracts with respect to such Routes, in order reasonably to
preserve its rights with respect to Routes and Supporting Route Facilities for
Routes, in each case which are used or useful in the operations of a Borrower,
(ii) cause to be done all things reasonably necessary to preserve and keep in
full force and effect its rights in and to use those Routes and Supporting Route
Facilities for such Routes, in each case which are used or useful in the
operations of a Borrower, (iii) without in any way limiting the foregoing, (A)
take all such steps as may be reasonably necessary to obtain renewal from the
DOT and any applicable Foreign Aviation Authorities, within a reasonable time
prior to the expiration of such authority (as prescribed by law or regulation,
if any), of each Route authority necessary to the continued or future operations
of a Borrower and notify the Agent of the status of such renewal and (B) take
all such other steps as may be necessary to maintain, renew and obtain any and
all Supporting Route Facilities for such Routes as needed for the continued and
future operations of any Borrower. Each Borrower shall further take all actions
reasonably necessary or, in the reasonable judgment of the Agent, advisable in
order to maintain all such rights referred to in this Section 9.2l(b).
Notwithstanding the foregoing, each Borrower may make adjustments to its flight
routings and schedules and, in the case of Fifth Freedom Rights and to change
designated points, in each case in the ordinary course of the businesses of
Borrowers and consistent with the prior operation by Borrowers of such
businesses.
(c) Each Borrower and any applicable Guarantor shall pay any
applicable filing fees and other expenses related to the submission of
applications, renewal requests, and other filings as may be reasonably necessary
to maintain or obtain such entity's rights in such Routes and Supporting Route
Facilities for such Routes.
(d) Each Borrower shall utilize all of its Airport Leaseholds in a
manner sufficient to comply in all material respects with applicable lease
provisions governing such Airport Leaseholds.
9.22 COSTS AND EXPENSES. Borrowers and Guarantors shall pay to Agent on
demand all costs, expenses, filing fees and taxes paid or payable in connection
with the preparation, negotiation, execution, delivery, recording, syndication,
administration, collection, liquidation, enforcement and defense of the
Obligations, Agent's rights in the Collateral, this Agreement, the other
Financing Agreements and all other documents related hereto or thereto,
including any amendments, supplements or consents which may hereafter be
contemplated (whether or not executed) or entered into in respect hereof and
thereof, including: (a) all costs and expenses of filing or recording (including
Uniform Commercial Code financing statement filing taxes and fees, documentary
taxes, intangibles taxes and mortgage recording taxes and fees, if applicable);
(b) costs and expenses and fees for insurance premiums, environmental audits,
title insurance premiums, surveys, assessments, engineering reports and
inspections, appraisal fees and search fees, costs and expenses of remitting
loan proceeds, collecting checks and other items of payment, and establishing
and maintaining the Blocked Accounts, together with Agent's customary charges
and fees with respect thereto; (c) charges, fees or expenses charged by any bank
or issuer in connection with the Letter of Credit Accommodations; (d) costs and
expenses
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of preserving and protecting the Collateral; (e) costs and expenses paid or
incurred in connection with obtaining payment of the Obligations, enforcing the
security interests and liens of Agent, selling or otherwise realizing upon the
Collateral, and otherwise enforcing the provisions of this Agreement and the
other Financing Agreements or defending any claims made or threatened against
Agent or any Lender arising out of the transactions contemplated hereby and
thereby (including preparations for and consultations concerning any such
matters); (f) all out-of-pocket expenses and costs heretofore and from time to
time hereafter incurred by Agent during the course of periodic field
examinations of the Collateral and such Borrower's or Guarantor's operations,
plus a per diem charge at Agent's then standard rate for Agent's examiners in
the field and office (which rate as of the date hereof is $850 per person per
day); and (g) the fees and disbursements of counsel (including legal assistants)
to Agent in connection with any of the foregoing.
9.23 DISSOLUTION OF INACTIVE SUBSIDIARIES. On or before the date which is
ninety (90) days after the date hereof, Borrowers shall cause each Inactive
Subsidiary to (a) be dissolved in accordance with all applicable laws and
regulations and (b) assign all of its assets to its shareholder.
9.24 FURTHER ASSURANCES. At the request of Agent at any time and from time
to time, Borrowers and Guarantors shall, at their expense, duly execute and
deliver, or cause to be duly executed and delivered, such further agreements,
documents and instruments, and do or cause to be done such further acts as may
be necessary or proper to evidence, perfect, maintain and enforce the security
interests and the priority thereof in the Collateral and to otherwise effectuate
the provisions or purposes of this Agreement or any of the other Financing
Agreements. Agent may at any time and from time to time request a certificate
from an officer of any Borrower or Guarantor representing that all conditions
precedent to the making of Loans and providing Letter of Credit Accommodations
contained herein are satisfied. In the event of such request by Agent, Agent and
Lenders may, at Agent's option, cease to make any further Loans or provide any
further Letter of Credit Accommodations until Agent has received such
certificate and, in addition, Agent has determined that such conditions are
satisfied.
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
10.1 EVENTS OF DEFAULT. The occurrence or existence of any one or more of
the following events are referred to herein individually as an "Event of
Default", and collectively as "Events of Default":
(a) (i) any Borrower fails to pay any principal amount of the Loans
when due or fails to pay any other Obligations when due and such failure
continues for three Business Days or (ii) any Borrower or Obligor fails to
perform any of the covenants contained in Sections 7.3, 7.4, 9.2, 9.3, 9.4, 9.5,
9.6, 9.13, 9.14, 9.15, 9.16, 9.20, 9.21 and 9.22 of this Agreement and such
failure shall continue for fifteen (15) days; PROVIDED, THAT, such fifteen (15)
day period shall not apply in the case of any failure to observe any such
covenant which is not capable of being cured at all or within such fifteen (15)
day period or which has been the subject of a prior failure within a six (6)
month period or (iii) any Borrower or Obligor fails to perform any of the terms,
covenants, conditions or provisions contained in this Agreement or any of the
other Financing Agreements other than those described in Sections 10.1(a)(i) and
10.1(a)(ii) above;
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(b) any representation, warranty or statement of material fact made
by any Borrower or Guarantor to Agent in this Agreement, the other Financing
Agreements or any other written agreement, schedule, confirmatory assignment or
otherwise shall when made or deemed made be false or misleading in any material
respect;
(c) any Obligor revokes or terminates or purports to revoke or
terminate or fails to perform any of the terms, covenants, conditions or
provisions of any guarantee, endorsement or other agreement of such party in
favor of Agent or any Lender;
(d) any judgment for the payment of money is rendered against any
Borrower or Obligor in excess of $5,000,000 in any one case or in excess of
$25,000,000 in the aggregate (to the extent not covered by insurance where the
insurer has assumed responsibility in writing for such judgment) and shall
remain undischarged or unvacated for a period in excess of forty-five (45) days
or execution shall at any time not be effectively stayed, or any judgment other
than for the payment of money, or injunction, attachment, garnishment or
execution is rendered against any Borrower or Obligor or any of the Collateral
having a value in excess of $5,000,000;
(e) any Obligor (being a natural person or a general partner of an
Obligor which is a partnership) dies or any Borrower or Obligor, which is a
partnership, limited liability company, limited liability partnership or a
corporation, dissolves or suspends or discontinues doing business, except as
otherwise permitted under this Agreement;
(f) any Borrower or Obligor makes an assignment for the benefit of
creditors, makes or sends notice of a bulk transfer or calls a meeting of its
creditors or principal creditors in connection with a moratorium or adjustment
of the Indebtedness due to them;
(g) a case or proceeding under the bankruptcy laws of the United
States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at law or
in equity) is filed against any Borrower or Obligor or all or any part of its
properties and such petition or application is not dismissed within sixty (60)
days after the date of its filing or any Borrower or Obligor shall file any
answer admitting or not contesting such petition or application or indicates its
consent to, acquiescence in or approval of, any such action or proceeding or the
relief requested is granted sooner;
(h) a case or proceeding under the bankruptcy laws of the United
States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at a law
or equity) is filed by any Borrower or Obligor or for all or any part of its
property;
(i) any default in respect of any Indebtedness of any Borrower or
Obligor (other than Indebtedness owing to Agent and Lenders hereunder), in any
case in an amount in excess of $5,000,000, which default continues unremedied
for more than forty-five (45) days after the applicable cure period, if any,
with respect thereto; PROVIDED, HOWEVER, that such default shall immediately
constitute an Event of Default at any time during such period of up to
forty-five (45) days that the obligee or payee in respect of such Indebtedness
(or such other person entitled
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to take action) takes any action against such Borrower or Obligor or the assets
or properties of such Borrower or Obligor;
(j) any default by any Borrower or Obligor under any Material
Contract, which default continues unremedied for more than forty-five (45) days
after the applicable cure period, if any, with respect thereto; PROVIDED,
HOWEVER, that such default shall immediately constitute an Event of Default at
any time during such period of up to forty-five (45) days that the person
entitled to take action against such Borrower or Guarantor under such Material
Contract takes any action against such Borrower or Obligor or the assets or
properties of such Borrower or Obligor;
(k) any material provision hereof or of any of the other Financing
Agreements shall for any reason cease to be valid, binding and enforceable with
respect to any party hereto or thereto (other than Agent or any Lender) in
accordance with its terms, or any such party shall challenge the enforceability
hereof or thereof, or shall assert in writing, or take any action or fail to
take any action based on the assertion that any provision hereof or of any of
the other Financing Agreements has ceased to be or is otherwise not valid,
binding or enforceable in accordance with its terms, or any security interest
provided for herein or in any of the other Financing Agreements shall cease to
be a valid and perfected first priority security interest in any of the
Collateral purported to be subject thereto (except as otherwise permitted herein
or therein);
(l) any default by a Borrower or Guarantor under any of the
Clearinghouse Agreements;
(m) any cessation of payments or suspension of settlements or
payments in favor of Polar (whether affecting Polar or CNS alone or other IATA
members or clients), or any failure by Polar for any reason to receive on the
scheduled monthly settlement date for Polar (or within three (3) Business Days
thereafter) a net credit settlement from the CNS or IATA, as applicable, or any
failure of CNS or IATA to transfer such net credit settlement, in an amount of
at least eighty (80%) percent of the amount of the gross Accounts reported to
Agent as submitted to the CNS or IATA, as applicable, in respect of the period
covered by such monthly settlement date;
(n) an ERISA Event shall occur which results in or could reasonably
be expected to result in liability of any Borrower in an aggregate amount in
excess of $5,000,000;
(o) any Change of Control;
(p) there shall be a material adverse change in the business, assets
or prospects of Borrowers and Guarantors (taken as a whole) after the date
hereof; or
(q) there shall be an event of default under any of the other
Financing Agreements.
10.2 REMEDIES.
(a) At any time an Event of Default exists or has occurred and is
continuing, Agent and Lenders shall have all rights and remedies provided in
this Agreement, the other Financing Agreements, the UCC and other applicable
law, all of which rights and remedies may be exercised without notice to or
consent by any Borrower or Obligor, except as such notice or
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consent is expressly provided for hereunder or required by applicable law. All
rights, remedies and powers granted to Agent and Lenders hereunder, under any of
the other Financing Agreements, the UCC or other applicable law, are cumulative,
not exclusive and enforceable, in Agent's discretion, alternatively,
successively, or concurrently on any one or more occasions, and shall include,
without limitation, the right to apply to a court of equity for an injunction to
restrain a breach or threatened breach by any Borrower or Obligor of this
Agreement or any of the other Financing Agreements. Subject to Section 12
hereof, Agent may, and at the direction of the Required Lenders shall, at any
time or times, proceed directly against any Borrower or Obligor to collect the
Obligations without prior recourse to the Collateral.
(b) Without limiting the generality of the foregoing, at any time an
Event of Default exists or has occurred and is continuing, Agent may, at its
option and shall upon the direction of the Required Lenders, (i) upon notice to
Administrative Borrower, accelerate the payment of all Obligations and demand
immediate payment thereof to Agent for itself and the benefit of Lenders;
(PROVIDED, THAT, upon the occurrence of any Event of Default described in
Sections 10.1(g) and 10.1(h), all Obligations shall automatically become
immediately due and payable), and (ii) terminate the Commitments and this
Agreement; (PROVIDED, THAT, upon the occurrence of any Event of Default
described in Sections 10.1(g) and 10.1(h), the Commitments and any other
obligation of the Agent or a Lender hereunder shall automatically terminate).
(c) Without limiting the foregoing, at any time an Event of Default
exists or has occurred and is continuing, Agent may, in its discretion (i) with
or without judicial process or the aid or assistance of others, enter upon any
premises on or in which any of the Collateral may be located and take possession
of the Collateral or complete processing, manufacturing and repair of all or any
portion of the Collateral, (ii) require any Borrower or Obligor, at Borrowers'
expense, to assemble and make available to Agent any part or all of the
Collateral at any place and time designated by Agent, (iii) collect, foreclose,
receive, appropriate, setoff and realize upon any and all Collateral, including
collection of amounts to be settled and paid by or through CNS, CASS, IATA
and/or the Clearing Bank, (iv) remove any or all of the Collateral from any
premises on or in which the same may be located for the purpose of effecting the
sale, foreclosure or other disposition thereof or for any other purpose, (v)
sell, lease, transfer, assign, deliver or otherwise dispose of any and all
Collateral (including entering into contracts with respect thereto, public or
private sales at any exchange, broker's board, at any office of Agent or
elsewhere) at such prices or terms as Agent may deem reasonable, for cash, upon
credit or for future delivery, with the Agent having the right to purchase the
whole or any part of the Collateral at any such public sale, all of the
foregoing being free from any right or equity of redemption of any Borrower or
Obligor, which right or equity of redemption is hereby expressly waived and
released by Borrowers and Obligors and/or (vi) terminate this Agreement. If any
of the Collateral is sold or leased by Agent upon credit terms or for future
delivery, the Obligations shall not be reduced as a result thereof until payment
therefor is finally collected by Agent. If notice of disposition of Collateral
is required by law, ten (10) days prior notice by Agent to Administrative
Borrower designating the time and place of any public sale or the time after
which any private sale or other intended disposition of Collateral is to be
made, shall be deemed to be reasonable notice thereof and Borrowers and Obligors
waive any other notice. In the event Agent institutes an action to recover any
Collateral or seeks recovery of any Collateral by way of prejudgment remedy,
each Borrower and Obligor waives the posting of any bond which might otherwise
be required. At any time an Event of Default exists or has occurred and is
continuing, upon Agent's request,
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Borrowers will either, as Agent shall specify, furnish cash collateral to the
issuer to be used to secure and fund Agent's reimbursement obligations to the
issuer in connection with any Letter of Credit Accommodations or furnish cash
collateral to Agent for the Letter of Credit Accommodations. Such cash
collateral shall be in the amount equal to one hundred ten (110%) percent of the
amount of the Letter of Credit Accommodations plus the amount of any fees and
expenses payable in connection therewith through the end of the latest
expiration date of such Letter of Credit Accommodations.
(d) At any time or times that an Event of Default exists or has
occurred and is continuing, Agent may, in its discretion, enforce the rights of
any Borrower or Obligor against any account debtor, secondary obligor or other
obligor in respect of any of the Accounts or other Receivables constituting
Collateral. Without limiting the generality of the foregoing, Agent may, in its
discretion, at such time or times (i) notify any or all account debtors,
secondary obligors or other obligors in respect thereof that the Receivables
have been assigned to Agent and that Agent has a security interest therein and
Agent may direct any or all account debtors, secondary obligors and other
obligors to make payment of such Receivables directly to Agent, (ii) extend the
time of payment of, compromise, settle or adjust for cash, credit, return of
merchandise or otherwise, and upon any terms or conditions, any and all such
Receivables or other obligations included in the Collateral and thereby
discharge or release the account debtor or any secondary obligors or other
obligors in respect thereof without affecting any of the Obligations, (iii)
demand, collect or enforce payment of any such Receivables or such other
obligations, but without any duty to do so, and Agent and Lenders shall not be
liable for any failure to collect or enforce the payment thereof nor for the
negligence of its agents or attorneys with respect thereto and (iv) take
whatever other action Agent may deem necessary or desirable for the protection
of its interests and the interests of Lenders. At any time that an Event of
Default exists or has occurred and is continuing, at Agent's request, all
invoices and statements sent to any account debtor shall state that the Accounts
and such other obligations have been assigned to Agent and are payable directly
and only to Agent and Borrowers and Obligors shall deliver to Agent such
originals of documents evidencing the sale and delivery of goods or the
performance of services giving rise to any Accounts as Agent may require. In the
event any account debtor returns Inventory constituting Collateral when an Event
of Default exists or has occurred and is continuing, Borrowers shall, upon
Agent's request, hold such returned Inventory in trust for Agent, segregate all
such returned Inventory from all of its other property, dispose of such returned
Inventory solely according to Agent's instructions, and not issue any credits,
discounts or allowances with respect thereto without Agent's prior written
consent.
(e) To the extent that applicable law imposes duties on Agent or any
Lender to exercise remedies in a commercially reasonable manner (which duties
cannot be waived under such law), each Borrower and Guarantor acknowledges and
agrees that it is not commercially unreasonable for Agent or any Lender (i) to
fail to incur expenses reasonably deemed significant by Agent or any Lender to
prepare Collateral for disposition or otherwise to complete raw material or work
in process into finished goods or other finished products for disposition, (ii)
to fail to obtain third party consents for access to Collateral to be disposed
of, or to obtain or, if not required by other law, to fail to obtain consents of
any Governmental Authority or other third party for the collection or
disposition of Collateral to be collected or disposed of, (iii) to fail to
exercise collection remedies against account debtors, secondary obligors or
other persons obligated on Collateral or to remove liens or encumbrances on or
any adverse claims against
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Collateral, (iv) to exercise collection remedies against account debtors and
other persons obligated on Collateral directly or through the use of collection
agencies and other collection specialists, (v) to advertise dispositions of
Collateral through publications or media of general circulation, whether or not
the Collateral is of a specialized nature, (vi) to contact other persons,
whether or not in the same business as any Borrower or Guarantor, for
expressions of interest in acquiring all or any portion of the Collateral, (vii)
to hire one or more professional auctioneers to assist in the disposition of
Collateral, whether or not the Collateral is of a specialized nature, (viii) to
dispose of Collateral by utilizing Internet sites that provide for the auction
of assets of the types included in the Collateral or that have the reasonable
capability of doing so, or that match buyers and sellers of assets, (ix) to
dispose of assets in wholesale rather than retail markets, (x) to disclaim
disposition warranties, (xi) to purchase insurance or credit enhancements to
insure Agent or Lenders against risks of loss, collection or disposition of
Collateral or to provide to Agent or Lenders a guaranteed return from the
collection or disposition of Collateral, or (xii) to the extent deemed
appropriate by Agent, to obtain the services of other brokers, investment
bankers, consultants and other professionals to assist Agent in the collection
or disposition of any of the Collateral. Each Borrower and Guarantor
acknowledges that the purpose of this Section is to provide non-exhaustive
indications of what actions or omissions by Agent or any Lender would not be
commercially unreasonable in the exercise by Agent or any Lender of remedies
against the Collateral and that other actions or omissions by Agent or any
Lender shall not be deemed commercially unreasonable solely on account of not
being indicated in this Section. Without limitation of the foregoing, nothing
contained in this Section shall be construed to grant any rights to any Borrower
or Guarantor or to impose any duties on Agent or Lenders that would not have
been granted or imposed by this Agreement or by applicable law in the absence of
this Section.
(f) For the purpose of enabling Agent to exercise the rights and
remedies hereunder, each Borrower and Obligor hereby grants to Agent, to the
extent assignable, an irrevocable, nonexclusive license (exercisable at any time
an Event of Default shall exist or have occurred and for so long as the same is
continuing) without payment of royalty or other compensation to any Borrower or
Obligor, to use, assign, license or sublicense any of the trademarks,
service-marks, trade names, business names, trade styles, designs, logos and
other source of business identifiers and other Intellectual Property and general
intangibles now owned or hereafter acquired by any Borrower or Obligor, wherever
the same maybe located, including in such license reasonable access to all media
in which any of the licensed items may be recorded or stored and to all computer
programs used for the compilation or printout thereof.
(g) At any time an Event of Default exists or has occurred and is
continuing, Agent may apply the cash proceeds of Collateral actually received by
Agent from any sale, lease, foreclosure or other disposition of the Collateral
to payment of the Obligations, in whole or in part and in accordance with the
terms hereof, whether or not then due or may hold such proceeds as cash
collateral for the Obligations. Borrowers and Guarantors shall remain liable to
Agent and Lenders for the payment of any deficiency with interest at the highest
rate provided for herein and all costs and expenses of collection or
enforcement, including attorneys' fees and expenses.
(h) Without limiting the foregoing, upon the occurrence of a Default
or an Event of Default, (i) Agent and Lenders may, at Agent's option, and upon
the occurrence of an Event of
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Default at the direction of the Required Lenders, Agent and Lenders shall,
without notice, (A) cease making Loans or arranging for Letter of Credit
Accommodations or reduce the lending formulas or amounts of Loans and Letter of
Credit Accommodations available to Borrowers and/or (B) terminate any provision
of this Agreement providing for any future Loans or Letter of Credit
Accommodations to be made by Agent and Lenders to Borrowers and (ii) Agent may,
at its option, establish such Reserves as Agent determines, without limitation
or restriction, notwithstanding anything to the contrary contained herein.
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW
11.1 GOVERNING LAW; CHOICE OF FORUM; SERVICE OF PROCESS; JURY TRIAL
WAIVER.
(a) The validity, interpretation and enforcement of this Agreement
and the other Financing Agreements (except as otherwise provided therein) and
any dispute arising out of the relationship between the parties hereto, whether
in contract, tort, equity or otherwise, shall be governed by the internal laws
of the State of New York but excluding any principles of conflicts of law or
other rule of law that would cause the application of the law of any
jurisdiction other than the laws of the State of New York.
(b) Borrowers, Guarantors, Agent and Lenders irrevocably consent and
submit to the non-exclusive jurisdiction of the Supreme Court of the State of
New York for New York County and the United States District Court for the
Southern District of New York, whichever Agent may elect, and waive any
objection based on venue or forum non conveniens with respect to any action
instituted therein arising under this Agreement or any of the other Financing
Agreements or in any way connected with or related or incidental to the dealings
of the parties hereto in respect of this Agreement or any of the other Financing
Agreements or the transactions related hereto or thereto, in each case whether
now existing or hereafter arising, and whether in contract, tort, equity or
otherwise, and agree that any dispute with respect to any such matters shall be
heard only in the courts described above (except that Agent and Lenders shall
have the right to bring any action or proceeding against any Borrower or
Guarantor or its or their property in the courts of any other jurisdiction which
Agent deems necessary or appropriate in order to realize on the Collateral or to
otherwise enforce its rights against any Borrower or Guarantor or its or their
property).
(c) Each Borrower and Guarantor hereby waives personal service of
any and all process upon it and consents that all such service of process may be
made by certified mail (return receipt requested) directed to its address set
forth herein and service so made shall be deemed to be completed five (5) days
after the same shall have been so deposited in the U.S. mails, or, at Agent's
option, by service upon any Borrower or Guarantor (or Administrative Borrower on
behalf of such Borrower or Guarantor) in any other manner provided under the
rules of any such courts. Within thirty (30) days after such service, such
Borrower or Guarantor shall appear in answer to such process, failing which such
Borrower or Guarantor shall be deemed in default and judgment may be entered by
Agent against such Borrower or Guarantor for the amount of the claim and other
relief requested.
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(d) BORROWERS, GUARANTORS, AGENT AND LENDERS EACH HEREBY WAIVES ANY
RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING
UNDER THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN
RESPECT OF THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE
TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE.
BORROWERS, GUARANTORS, AGENT AND LENDERS EACH HEREBY AGREES AND CONSENTS THAT
ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY AND THAT ANY BORROWER, ANY GUARANTOR, AGENT OR ANY LENDER
MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY.
(e) Agent and Lenders shall not have any liability to any Borrower
or Guarantor (whether in tort, contract, equity or otherwise) for losses
suffered by such Borrower or Guarantor in connection with, arising out of, or in
any way related to the transactions or relationships contemplated by this
Agreement, or any act, omission or event occurring in connection herewith,
unless it is determined by a final and non-appealable judgment or court order
binding on Agent and such Lender, that the losses were the result of acts or
omissions constituting gross negligence or willful misconduct. In any such
litigation, Agent and Lenders shall be entitled to the benefit of the rebuttable
presumption that it acted in good faith and with the exercise of ordinary care
in the performance by it of the terms of this Agreement. Each Borrower and
Guarantor: (i) certifies that neither Agent, any Lender nor any representative,
agent or attorney acting for or on behalf of Agent or any Lender has
represented, expressly or otherwise, that Agent and Lenders would not, in the
event of litigation, seek to enforce any of the waivers provided for in this
Agreement or any of the other Financing Agreements and (ii) acknowledges that in
entering into this Agreement and the other Financing Agreements, Agent and
Lenders are relying upon, among other things, the waivers and certifications set
forth in this Section 11.1 and elsewhere herein and therein.
11.2 WAIVER OF NOTICES. Each Borrower and Guarantor hereby expressly
waives demand, presentment, protest and notice of protest and notice of dishonor
with respect to any and all instruments and chattel paper, included in or
evidencing any of the Obligations or the Collateral, and any and all other
demands and notices of any kind or nature whatsoever with respect to the
Obligations, the Collateral and this Agreement, except such as are expressly
provided for herein. No notice to or demand on any Borrower or Guarantor which
Agent or any Lender may elect to give shall entitle such Borrower or Guarantor
to any other or further notice or demand in the same, similar or other
circumstances.
11.3 AMENDMENTS AND WAIVERS.
(a) Neither this Agreement nor any other Financing Agreement nor any
terms hereof or thereof may be amended, waived, discharged or terminated unless
such amendment, waiver, discharge or termination is in writing signed by Agent
and the Required Lenders or at
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Agent's option, by Agent with the authorization of the Required Lenders, and as
to amendments to any of the Financing Agreements (other than with respect to any
provision of Section 12 hereof), by any Borrower; except, that, no such
amendment, waiver, discharge or termination shall:
(i) reduce the interest rate or any fees or extend the time of
payment of principal, interest or any fees or reduce the principal amount of any
Loan or Letter of Credit Accommodations, in each case without the consent of
each Lender directly affected thereby,
(ii) increase the Commitment of any Lender over the amount
thereof then in effect or provided hereunder, in each case without the consent
of the Lender directly affected thereby,
(iii) release any Collateral consisting of Receivables (except
as expressly required hereunder or under any of the other Financing Agreements
or applicable law and except as permitted under Section 12.1l(b) hereof),
without the consent of Agent and all of Lenders,
(iv) reduce any percentage specified in the definition of
Required Lenders, without the consent of Agent and all of Lenders,
(v) consent to the assignment or transfer by any Borrower or
Guarantor of any of their rights and obligations under this Agreement, without
the consent of Agent and all of Lenders,
(vi) amend, modify or waive any terms of this Section 11.3
hereof, without the consent of Agent and all of Lenders, or
(vii) increase the advance rates constituting part of the
Borrowing Base or increase the sublimits with respect to Loans based on Foreign
Accounts or for Letter of Credit Accommodations, without the consent of Agent
and all of Lenders.
(b) Agent and Lenders shall not, by any act, delay, omission or
otherwise be deemed to have expressly or impliedly waived any of its or their
rights, powers and/or remedies unless such waiver shall be in writing and signed
as provided herein. Any such waiver shall be enforceable only to the extent
specifically set forth therein. A waiver by Agent or any Lender of any right,
power and/or remedy on any one occasion shall not be construed as a bar to or
waiver of any such right, power and/or remedy which Agent or any Lender would
otherwise have on any future occasion, whether similar in kind or otherwise.
(c) Notwithstanding anything to the contrary contained in Section
11.3(a) above, in connection with any amendment, waiver, discharge or
termination, in the event that any Lender whose consent thereto is required
shall fail to consent or fail to consent in a timely manner (such Lender being
referred to herein as a "Non-Consenting Lender"), but the consent of any other
Lenders to such amendment, waiver, discharge or termination that is required are
obtained, if any, then Congress shall have the right, but not the obligation, at
any time thereafter, and upon the exercise by Congress of such right, such
Non-Consenting Lender shall have the obligation, to sell, assign and transfer to
Congress or such Eligible Transferee as Congress may specify, the Commitment of
such Non-Consenting Lender and all rights and interests of such Non-
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Consenting Lender pursuant thereto. Congress shall provide the Non-Consenting
Lender with prior written notice of its intent to exercise its right under this
Section, which notice shall specify on date on which such purchase and sale
shall occur. Such purchase and sale shall be pursuant to the terms of an
Assignment and Acceptance
(d) (whether or not executed by the Non-Consenting Lender), except
that on the date of such purchase and sale, Congress, or such Eligible
Transferee specified by Congress, shall pay to the Non-Consenting Lender (except
as Congress and such Non-Consenting Lender may otherwise agree) the amount equal
to: (i) the principal balance of the Loans held by the Non-Consenting Lender
outstanding as of the close of business on the business day immediately
preceding the effective date of such purchase and sale, plus (ii) amounts
accrued and unpaid in respect of interest and fees payable to the Non-Consenting
Lender to the effective date of the purchase (but in no event shall the
Non-Consenting Lender be deemed entitled to any early termination fee), minus
(iii) the amount of the closing fee received by the Non-Consenting Lender
pursuant to the terms hereof or of any of the other Financing Agreements
multiplied by the fraction, the numerator of which is the number of months
remaining in the then current term of the Credit Facility and the denominator of
which is the number of months in the then current term thereof. Such purchase
and sale shall be effective on the date of the payment of such amount to the
Non-Consenting Lender and the Commitment of the Non-Consenting Lender shall
terminate on such date.
(e) The consent of Agent shall be required for any amendment, waiver
or consent affecting the rights or duties of Agent hereunder or under any of the
other Financing Agreements, in addition to the consent of the Lenders otherwise
required by this Section and the exercise by Agent of any of its rights
hereunder with respect to Reserves or Eligible Accounts or Eligible Inventory
shall not be deemed an amendment to the advance rates provided for in this
Section 11.3.
11.4 WAIVER OF COUNTERCLAIMS. Each Borrower and Guarantor waives all
rights to interpose any claims, deductions, setoffs or counterclaims of any
nature (other then compulsory counterclaims) in any action or proceeding with
respect to this Agreement, the Obligations, the Collateral or any matter arising
therefrom or relating hereto or thereto.
11.5 INDEMNIFICATION. Each Borrower and Guarantor shall, jointly and
severally, indemnify and hold Agent and each Lender, and its officers,
directors, agents, employees, advisors and counsel and their respective
Affiliates (each such person being an "Indemnitee"), harmless from and against
any and all losses, claims, damages, liabilities, costs or expenses (including
attorneys' fees and expenses) imposed on, incurred by or asserted against any of
them in connection with any litigation, investigation, claim or proceeding
commenced or threatened related to the negotiation, preparation, execution,
delivery, enforcement, performance or administration of this Agreement, any
other Financing Agreements, or any undertaking or proceeding related to any of
the transactions contemplated hereby or any act, omission, event or transaction
related or attendant thereto, including amounts paid in settlement, court costs,
and the fees and expenses of counsel except that Borrowers and Guarantors shall
not have any obligation under this Section 11.5 to indemnify an Indemnitee with
respect to a matter covered hereby resulting from the gross negligence or wilful
misconduct of such Indemnitee as determined pursuant to a final, non-appealable
order of a court of competent jurisdiction (but without
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limiting the obligations of Borrowers or Guarantors as to any other Indemnitee).
To the extent that the undertaking to indemnify, pay and hold harmless set forth
in this Section may be unenforceable because it violates any law or public
policy, Borrowers and Guarantors shall pay the maximum portion which it is
permitted to pay under applicable law to Agent and Lenders in satisfaction of
indemnified matters under this Section. To the extent permitted by applicable
law, no Borrower or Guarantor shall assert, and each Borrower and Guarantor
hereby waives, any claim against any Indemnitee, on any theory of liability, for
special, indirect, consequential or punitive damages (as opposed to direct or
actual damages) arising out of, in connection with, or as a result of, this
Agreement, any of the other Financing Agreements or any undertaking or
transaction contemplated hereby. All amounts due under this Section shall be
payable upon demand. The foregoing indemnity shall survive the payment of the
Obligations and the termination or non-renewal of this Agreement.
SECTION 12. THE AGENT
12.1 APPOINTMENT, POWERS AND IMMUNITIES. Each Lender irrevocably
designates, appoints and authorizes Congress to act as Agent hereunder and under
the other Financing Agreements with such powers as are specifically delegated to
Agent by the terms of this Agreement and of the other Financing Agreements,
together with such other powers as are reasonably incidental thereto. Agent (a)
shall have no duties or responsibilities except those expressly set forth in
this Agreement and in the other Financing Agreements, and shall not by reason of
this Agreement or any other Financing Agreement be a trustee or fiduciary for
any Lender; (b) shall not be responsible to Lenders for any recitals,
statements, representations or warranties contained in this Agreement or in any
of the other Financing Agreements, or in any certificate or other document
referred to or provided for in, or received by any of them under, this Agreement
or any other Financing Agreement, or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other
Financing Agreement or any other document referred to or provided for herein or
therein or for any failure by any Borrower or any Obligor or any other Person to
perform any of its obligations hereunder or thereunder; and (c) shall not be
responsible to Lenders for any action taken or omitted to be taken by it
hereunder or under any other Financing Agreement or under any other document or
instrument referred to or provided for herein or therein or in connection
herewith or therewith, except for its own gross negligence or willful misconduct
as determined by a final non-appealable judgment of a court of competent
jurisdiction. Agent may employ agents and attorneys-in-fact and shall not be
responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it in good faith. Agent may deem and treat the
payee of any note as the holder thereof for all purposes hereof unless and until
the assignment thereof pursuant to an agreement (if and to the extent permitted
herein) in form and substance satisfactory to Agent shall have been delivered to
and acknowledged by Agent.
12.2 RELIANCE BY AGENT. Agent shall be entitled to rely upon any
certification, notice or other communication (including any thereof by
telephone, telecopy, telex, telegram or cable) believed by it to be genuine and
correct and to have been signed or sent by or on behalf of the proper Person or
Persons, and upon advice and statements of legal counsel, independent
accountants and other experts selected by Agent. As to any matters not expressly
provided for by this Agreement or any other Financing Agreement, Agent shall in
all cases be fully protected in acting, or in refraining from acting, hereunder
or thereunder in accordance with instructions
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given by the Required Lenders or all of Lenders as is required in such
circumstance, and such instructions of such Agents and any action taken or
failure to act pursuant thereto shall be binding on all Lenders.
12.3 EVENTS OF DEFAULT.
(a) Agent shall not be deemed to have knowledge or notice of the
occurrence of a Default or an Event of Default or other failure of a condition
precedent to the Loans and Letter of Credit Accommodations hereunder, unless and
until Agent has received written notice from a Lender, or a Borrower specifying
such Event of Default or any unfulfilled condition precedent, and stating that
such notice is a "Notice of Default or Failure of Condition". In the event that
Agent receives such a Notice of Default or Failure of Condition, Agent shall
give prompt notice thereof to the Lenders. Agent shall (subject to Section 12.7)
take such action with respect to any such Event of Default or failure of
condition precedent as shall be directed by the Required Lenders to the extent
provided for herein; PROVIDED, THAT, unless and until Agent shall have received
such directions, Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to or by reason of such Event of
Default or failure of condition precedent, as it shall deem advisable in the
best interest of Lenders. Without limiting the foregoing, and notwithstanding
the existence or occurrence and continuance of an Event of Default or any other
failure to satisfy any of the conditions precedent set forth in Section 4 of
this Agreement to the contrary, unless and until otherwise directed by the
Required Lenders, Agent may, but shall have no obligation to, continue to make
Loans and issue or cause to be issued Letter of Credit Accommodations for the
ratable account and risk of Lenders from time to time if Agent believes making
such Loans or issuing or causing to be issued such Letter of Credit
Accommodations is in the best interests of Lenders.
(b) Except with the prior written consent of Agent, no Lender may
assert or exercise any enforcement right or remedy in respect of the Loans,
Letter of Credit Accommodations or other Obligations, as against any Borrower or
Obligor or any of the Collateral or other property of any Borrower or Obligor.
12.4 CONGRESS IN ITS INDIVIDUAL CAPACITY. With respect to its Commitment
and the Loans made and Letter of Credit Accommodations issued or caused to be
issued by it (and any successor acting as Agent), so long as Congress shall be a
Lender hereunder, it shall have the same rights and powers hereunder as any
other Lender and may exercise the same as though it were not acting as Agent,
and the term "Lender" or "Lenders" shall, unless the context otherwise
indicates, include Congress in its individual capacity as Lender hereunder.
Congress (and any successor acting as Agent) and its Affiliates may (without
having to account therefor to any Lender) lend money to, make investments in and
generally engage in any kind of business with Borrowers (and any of its
Subsidiaries or Affiliates) as if it were not acting as Agent, and Congress and
its Affiliates may accept fees and other consideration from any Borrower or
Guarantor and any of its Subsidiaries and Affiliates for services in connection
with this Agreement or otherwise without having to account for the same to
Lenders.
12.5 INDEMNIFICATION. Lenders agree to indemnify Agent (to the extent not
reimbursed by Borrowers hereunder and without limiting any obligations of
Borrowers hereunder) ratably, in accordance with their Pro Rata Shares, for any
and all claims of any kind and nature whatsoever
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that may be imposed on, incurred by or asserted against Agent (including by any
Lender) arising out of or by reason of any investigation in or in any way
relating to or arising out of this Agreement or any other Financing Agreement or
any other documents contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby (including the costs and expenses
that Agent is obligated to pay hereunder) or the enforcement of any of the terms
hereof or thereof or of any such other documents; PROVIDED, THAT, no Lender
shall be liable for any of the foregoing to the extent it arises from the gross
negligence or willful misconduct of the party to be indemnified as determined by
a final non-appealable judgment of a court of competent jurisdiction. The
foregoing indemnity shall survive the payment of the Obligations and the
termination or non-renewal of this Agreement.
12.6 NON-RELIANCE ON AGENT AND OTHER LENDERS. Each Lender agrees that it
has, independently and without reliance on Agent or other Lender, and based on
such documents and information as it has deemed appropriate, made its own credit
analysis of Borrowers and Obligors and has made its own decision to enter into
this Agreement and that it will, independently and without reliance upon Agent
or any other Lender, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own analysis and decisions in
taking or not taking action under this Agreement or any of the other Financing
Agreements. Agent shall not be required to keep itself informed as to the
performance or observance by any Borrower or Obligor of any term or provision of
this Agreement or any of the other Financing Agreements or any other document
referred to or provided for herein or therein or to inspect the properties or
books of any Borrower or Obligor. Agent will use reasonable efforts to provide
Lenders with any information received by Agent from any Borrower or Obligor
which is required to be provided to Lenders or deemed to be requested by Lenders
hereunder and with a copy of any Notice of Default or Failure of Condition
received by Agent from any Borrower or any Lender; PROVIDED, THAT, Agent shall
not be liable to any Lender for any failure to do so, except to the extent that
such failure is attributable to Agent's own gross negligence or willful
misconduct as determined by a final non-appealable judgment of a court of
competent jurisdiction. Except for notices, reports and other documents
expressly required to be furnished to Lenders by Agent or deemed requested by
Lenders hereunder, Agent shall not have any duty or responsibility to provide
any Lender with any other credit or other information concerning the affairs,
financial condition or business of any Borrower or Obligor that may come into
the possession of Agent.
12.7 FAILURE TO ACT. Except for action expressly required of Agent
hereunder and under the other Financing Agreements, Agent shall in all cases be
fully justified in failing or refusing to act hereunder and thereunder unless it
shall receive further assurances to its satisfaction from Lenders of their
indemnification obligations under Section 12.5 hereof against any and all
liability and expense that may be incurred by it by reason of taking or
continuing to take any such action.
12.8 ADDITIONAL LOANS. Agent shall not make any Loans or provide any
Letter of Credit Accommodations to any Borrower on behalf of Lenders
intentionally and with actual knowledge that such Loans or Letter of Credit
Accommodations would cause the aggregate amount of the total outstanding Loans
and Letter of Credit Accommodations to exceed the Borrowing Base, without the
prior consent of all Lenders, EXCEPT, THAT, Agent may make such additional Loans
or provide such additional Letter of Credit Accommodations on behalf of Lenders,
intentionally and
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with actual knowledge that such Loans or Letter of Credit Accommodations will
cause the total outstanding Loans and Letter of Credit Accommodations to
Borrowers to exceed the Borrowing Base, as Agent may deem necessary or advisable
in its discretion; PROVIDED, THAT: (a) the total principal amount of the
additional Loans or additional Letter of Credit Accommodations which Agent may
make or provide after obtaining such actual knowledge that the aggregate
principal amount of the Loans equal or exceed the Borrowing Base, plus the
amount of Special Agent Advances made pursuant to Section 12.1l(a)(ii) hereof
then outstanding, shall not exceed the aggregate amount equal to $6,000,000 and
shall not cause the total principal amount of the Loans and Letter of Credit
Accommodations to exceed the Maximum Credit and (b) no such additional Loan or
Letter of Credit Accommodation shall be outstanding more than ninety (90) days
after the date such additional Loan or Letter of Credit Accommodation is made or
issued (as the case may be), except as the Required Lenders may otherwise agree.
Each Lender shall be obligated to pay Agent the amount of its Pro Rata Share of
any such additional Loans or Letter of Credit Accommodations.
12.9 CONCERNING THE COLLATERAL AND THE RELATED FINANCING AGREEMENTS. Each
Lender authorizes and directs Agent to enter into this Agreement and the other
Financing Agreements. Each Lender agrees that any action taken by Agent or
Required Lenders in accordance with the terms of this Agreement or the other
Financing Agreements and the exercise by Agent or Required Lenders of their
respective powers set forth therein or herein, together with such other powers
that are reasonably incidental thereto, shall be binding upon all of the
Lenders.
12.10 FIELD AUDIT, EXAMINATION REPORTS AND OTHER INFORMATION; DISCLAIMER
BY LENDERS. By signing this Agreement, each Lender:
(a) is deemed to have requested that Agent furnish such Lender,
promptly after it becomes available, a copy of each field audit or examination
report and report with respect to the Borrowing Base prepared or received by
Agent (each field audit or examination report and report with respect to the
Borrowing Base being referred to herein as a "Report" and collectively,
"Reports"), appraisals with respect to the Collateral and financial statements
with respect to Atlas Holdings and its Subsidiaries received by Agent;
(b) expressly agrees and acknowledges that Agent (i) does not make
any representation or warranty as to the accuracy of any Report, appraisal or
financial statement or (ii) shall not be liable for any information contained in
any Report, appraisal or financial statement;
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or any other party performing
any audit or examination will inspect only specific information regarding
Borrowers and Guarantors and will rely significantly upon Borrowers' and
Guarantors' books and records, as well as on representations of Borrowers' and
Guarantors' personnel; and
(d) agrees to keep all Reports confidential and strictly for its
internal use in accordance with the terms of Section 13.5 hereof, and not to
distribute or use any Report in any other manner.
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12.11 COLLATERAL MATTERS.
(a) Agent may, at its option, from time to time, at any time on or
after an Event of Default and for so long as the same is continuing or upon any
other failure of a condition precedent to the Loans and Letter of Credit
Accommodations hereunder, make such disbursements and advances ("Special Agent
Advances") which Agent, in its sole discretion, (i) deems necessary or desirable
either to preserve or protect the Collateral or any portion thereof or (ii) to
enhance the likelihood or maximize the amount of repayment by Borrowers and
Guarantors of the Loans and other Obligations; PROVIDED, THAT, the aggregate
principal amount of the Special Agent Advances pursuant to this clause (ii),
plus the then outstanding principal amount of the additional Loans and Letter of
Credit Accommodations which Agent may make or provide as set forth in Section
12.8 hereof, shall not exceed the aggregate amount of $6,000,000 or (iii) to pay
any other amount chargeable to any Borrower or Guarantor pursuant to the terms
of this Agreement or any of the other Financing Agreements consisting of (A)
costs, fees and expenses and (B) payments to any issuer of Letter of Credit
Accommodations. Special Agent Advances shall be repayable on demand and together
with all interest thereon shall constitute Obligations secured by the
Collateral. Special Agent Advances shall not constitute Loans but shall
otherwise constitute Obligations hereunder. Interest on Special Agent Advances
shall be payable at the Interest Rate then applicable to Prime Rate Loans and
shall be payable on demand. Without limitation of its obligations pursuant to
Section 6.10, each Lender agrees that it shall make available to Agent, upon
Agent's demand, in immediately available funds, the amount equal to such
Lender's Pro Rata Share of each such Special Agent Advance. If such funds are
not made available to Agent by such Lender, such Lender shall be deemed a
Defaulting Lender and Agent shall be entitled to recover such funds, on demand
from such Lender together with interest thereon for each day from the date such
payment was due until the date such amount is paid to Agent at the Federal Funds
Rate for each day during such period (as published by the Federal Reserve Bank
of New York or at Agent's option based on the arithmetic mean determined by
Agent of the rates for the last transaction in overnight federal funds arranged
prior to 9:00 a.m. (New York City time) on that day by each of the three leading
brokers of federal funds transactions in New York City selected by Agent) and if
such amounts are not paid within three (3) days of Agent's demand, at the
highest Interest Rate provided for in Section 3.1 hereof applicable to Prime
Rate Loans.
(b) Lenders hereby irrevocably authorize Agent, at its option and in
its discretion to release any security interest in, mortgage or lien upon, any
of the Collateral (i) upon termination of the Commitments and payment and
satisfaction of all of the Obligations and delivery of cash collateral to the
extent required under Section 13.1 below, or (ii) constituting property being
sold or disposed of if Administrative Borrower or any Borrower or Guarantor
certifies to Agent that the sale or disposition is made in compliance with
Section 9.7 hereof (and Agent may rely conclusively on any such certificate,
without further inquiry), or (iii) constituting property in which any Borrower
or Guarantor did not own an interest at the time the security interest, mortgage
or lien was granted or at any time thereafter, or (iv) having a value in the
aggregate in any twelve (12) month period of less than $5,000,000, and to the
extent Agent may release its security interest in and lien upon any such
Collateral pursuant to the sale or other disposition thereof, such sale or other
disposition shall be deemed consented to by Lenders, or (v) if required or
permitted under the terms of any of the other Financing Agreements, including
any intercreditor agreement, or (vi) approved, authorized or ratified in writing
by the Required
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Lenders or all of Lenders, as applicable. Except as provided above, Agent will
not release any security interest in, mortgage or lien upon, any of the
Collateral without the prior written authorization of all of Lenders. Upon
request by Agent at any time, Lenders will promptly confirm in writing Agent's
authority to release particular types or items of Collateral pursuant to this
Section.
(c) Without any manner limiting Agent's authority to act without any
specific or further authorization or consent by the Required Lenders, each
Lender agrees to confirm in writing, upon request by Agent, the authority to
release Collateral conferred upon Agent under this Section. Agent shall (and is
hereby irrevocably authorized by Lenders to) execute such documents as may be
necessary to evidence the release of the security interest, mortgage or liens
granted to Agent upon any Collateral to the extent set forth above; PROVIDED,
THAT, (i) Agent shall not be required to execute any such document on terms
which, in Agent's opinion, would expose Agent to liability or create any
obligations or entail any consequence other than the release of such security
interest, mortgage or liens without recourse or warranty and (ii) such release
shall not in any manner discharge, affect or impair the Obligations or any
security interest, mortgage or lien upon (or obligations of any Borrower or
Guarantor in respect of) the Collateral retained by such Borrower or Guarantor.
(d) Agent shall have no obligation whatsoever to any Lender or any
other Person to investigate, confirm or assure that the Collateral exists or is
owned by any Borrower or Guarantor or is cared for, protected or insured or has
been encumbered, or that any particular items of Collateral meet the eligibility
criteria applicable in respect of the Loans or Letter of Credit Accommodations
hereunder, or whether any particular reserves are appropriate, or that the liens
and security interests granted to Agent pursuant hereto or any of the Financing
Agreements or otherwise have been properly or sufficiently or lawfully created,
perfected, protected or enforced or are entitled to any particular priority, or
to exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to Agent in this Agreement or in any
of the other Financing Agreements, it being understood and agreed that in
respect of the Collateral, or any act, omission or event related thereto,
subject to the other terms and conditions contained herein, Agent may act in any
manner it may deem appropriate, in its discretion, given Agent's own interest in
the Collateral as a Lender and that Agent shall have no duty or liability
whatsoever to any other Lender.
12.12 AGENCY FOR PERFECTION. Each Lender hereby appoints Agent and each
other Lender as agent and bailee for the purpose of perfecting the security
interests in and liens upon the Collateral of Agent in assets which, in
accordance with Article 9 of the UCC can be perfected only by possession (or
where the security interest of a secured party with possession has priority over
the security interest of another secured party) and Agent and each Lender hereby
acknowledges that it holds possession of any such Collateral for the benefit of
Agent as secured party. Should any Lender obtain possession of any such
Collateral, such Lender shall notify Agent thereof, and, promptly upon Agent's
request therefor shall deliver such Collateral to Agent or in accordance with
Agent's instructions.
12.13 SUCCESSOR AGENT. Agent may resign as Agent upon thirty (30) days'
notice to Lenders and Atlas Holdings. If Agent resigns under this Agreement, the
Required Lenders shall
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appoint from among the Lenders a successor agent for Lenders. If no successor
agent is appointed prior to the effective date of the resignation of Agent,
Agent may appoint, after consulting with Lenders and Atlas Holdings, a successor
agent from among Lenders. Upon the acceptance by the Lender so selected of its
appointment as successor agent hereunder, such successor agent shall succeed to
all of the rights, powers and duties of the retiring Agent and the term "Agent"
as used herein and in the other Financing Agreements shall mean such successor
agent and the retiring Agent's appointment, powers and duties as Agent shall be
terminated. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Section 12 shall inure to its benefit as to any actions taken
or omitted by it while it was Agent under this Agreement. If no successor agent
has accepted appointment as Agent by the date which is thirty (30) days after
the date of a retiring Agent's notice of resignation, the retiring Agent's
resignation shall nonetheless thereupon become effective and Lenders shall
perform all of the duties of Agent hereunder until such time, if any, as the
Required Lenders appoint a successor agent as provided for above.
12.14 LEAD ARRANGER. The party identified on the facing page or signature
pages of this Agreement as a "lead arranger" shall have no right, power,
obligation, liability, responsibility or duty under this Agreement or any of the
other Financing Agreements. Without limiting the foregoing, the party so
identified as a Co-Agent shall not have or be deemed to have any fiduciary
relationship with any Lender. Each Lender acknowledges that it has not relied,
and will not rely, on the party identified in deciding to enter into this
Agreement or in taking or not taking action hereunder.
SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS
13.1 TERM.
(a) This Agreement and the other Financing Agreements shall become
effective as of the date set forth on the first page hereof and shall continue
in full force and effect for a term ending on the date that is four (4) years
from the date hereof (the "Renewal Date"), and from year to year thereafter,
unless sooner terminated pursuant to the terms hereof. Agent may, at its option
(or shall at the direction of any Lender in writing received by Agent at least
ninety (90) days prior to the Renewal Date or the anniversary of any Renewal
Date, as the case may be), terminate this Agreement and the other Financing
Agreements, or Administrative Borrower or any Borrower may terminate this
Agreement and the other Financing Agreements, each case, effective on the
Renewal Date or on the anniversary of the Renewal Date in any year by giving to
the other party at least sixty (60) days prior written notice; PROVIDED, THAT,
this Agreement and all other Financing Agreements must be terminated
simultaneously. In addition, Borrowers may terminate this Agreement at any time
without premium or penalty upon ten (10) days prior written notice to Agent
(which notice shall be irrevocable) and Agent may, at its option, and shall at
the direction of Required Lenders, terminate this Agreement at any time on or
after an Event of Default. Upon the Renewal Date or any other effective date of
termination of the Financing Agreements, Borrowers shall pay to Agent all
outstanding and unpaid Obligations and shall furnish cash collateral to Agent
(or at Agent's option, a letter of credit issued for the account of Borrowers
and at Borrowers' expense, in form and substance satisfactory to Agent, by an
issuer acceptable to Agent and payable to Agent as beneficiary) in such amounts
as Agent determines are reasonably necessary to secure Agent and Lenders from
loss, cost, damage or
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expense, including attorneys' fees and expenses, in connection with any
contingent Obligations, including issued and outstanding Letter of Credit
Accommodations and checks or other payments provisionally credited to the
Obligations and/or as to which Agent or any Lender has not yet received final
and indefeasible payment and any continuing obligations of Agent or any Lender
pursuant to any Deposit Account Control Agreement (contingent or otherwise) and
for any of the Obligations arising under or in connection with any Interest Rate
Protection Agreements in such amounts as the other party thereto may require
(unless such obligations arising under or in connection with any Interest Rate
Protection Agreements are paid in full in cash and terminated in a manner
satisfactory to such other party). The amount of such cash collateral (or letter
of credit, as Agent may determine) as to any Letter of Credit Accommodations
shall be in the amount equal to one hundred ten (110%) percent of the amount of
the Letter of Credit Accommodations plus the amount of any fees and expenses
payable in connection therewith through the end of the latest expiration date of
such Letter of Credit Accommodations. Such payments in respect of the
Obligations and cash collateral shall be remitted by wire transfer in federal
funds to the Agent Payment Account or such other bank account of Agent, as Agent
may, in its discretion, designate in writing to Administrative Borrower for such
purpose. Interest shall be due until and including the next Business Day, if the
amounts so paid by Borrowers to the Agent Payment Account or other bank account
designated by Agent are received in such bank account later than 12:00 noon, New
York time.
(b) No termination of this Agreement or the other Financing
Agreements shall relieve or discharge any Borrower or Guarantor of its
respective duties, obligations and covenants under this Agreement or the other
Financing Agreements until all outstanding, non-contingent Obligations have been
fully and finally discharged and paid, and Agent and Lenders shall have no
further commitment to make Loans or Letter of Credit Accommodations under this
Agreement, as determined by Agent, and Agent's continuing security interest in
the Collateral and the rights and remedies of Agent and Lenders hereunder, under
the other Financing Agreements and applicable law, shall remain in effect until
all such Obligations have been fully and finally discharged and paid.
Accordingly, each Borrower and Guarantor waives any rights it may have under the
UCC to demand the filing of termination statements with respect to the
Collateral and Agent shall not be required to send such termination statements
to Borrowers or Guarantors, or to file them with any filing office, unless and
until this Agreement shall have been terminated in accordance with its terms and
all outstanding, non-contingent Obligations paid and satisfied in full in
immediately available funds, and Agent and Lenders shall have no further
commitment to make Loans or Letter of Credit Accommodations under this
Agreement, as determined by Agent.
13.2 INTERPRETATIVE PROVISIONS.
(a) All terms used herein which are defined in Article 1, Article 8
or Article 9 of the UCC shall have the meanings given therein unless otherwise
defined in this Agreement.
(b) All references to the plural herein shall also mean the singular
and to the singular shall also mean the plural unless the context otherwise
requires.
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(c) All references to any Borrower, Guarantor, Agent and Lenders
pursuant to the definitions set forth in the recitals hereto, or to any other
person herein, shall include their respective successors and assigns.
(d) The words "hereof, "herein", "hereunder", "this Agreement" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not any particular provision of this Agreement and as
this Agreement now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
(e) The word "including" when used in this Agreement shall mean
"including, without limitation" and the word "will" when used in this Agreement
shall be construed to have the same meaning and effect as the word "shall".
(f) An Event of Default shall exist or continue or be continuing
until such Event of Default is waived in accordance with Section 11.3 or is
cured in a manner satisfactory to Agent, if such Event of Default is capable of
being cured as determined by Agent.
(g) All references to the term "good faith" used herein when
applicable to Agent or any Lender shall mean, notwithstanding anything to the
contrary contained herein or in the UCC, honesty in fact in the conduct or
transaction concerned. Borrowers and Guarantors shall have the burden of proving
any lack of good faith on the part of Agent or any Lender alleged by any
Borrower or Guarantor at any time.
(h) Any accounting term used in this Agreement shall have, unless
otherwise specifically provided herein, the meaning customarily given in
accordance with GAAP, and all financial computations hereunder shall be computed
unless otherwise specifically provided herein, in accordance with GAAP as
consistently applied and using the same method for inventory valuation as used
in the preparation of the financial statements of Atlas Holdings most recently
received by Agent prior to the date hereof. Notwithstanding anything to the
contrary contained in GAAP or any interpretations or other pronouncements by the
Financial Accounting Standards Board or otherwise, the term "unqualified
opinion" as used herein to refer to opinions or reports provided by accountants
shall mean an opinion or report that is unqualified and also does not include
any explanation, supplemental comment or other comment concerning the ability of
the applicable person to continue as a going concern or the scope of the audit.
(i) In the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including", the words "to"
and "until" each mean "to but excluding" and the word "through" means "to and
including".
(j) Unless otherwise expressly provided herein, (i) references
herein to any agreement, document or instrument shall be deemed to include all
subsequent amendments, modifications, supplements, extensions, renewals,
restatements or replacements with respect thereto, but only to the extent the
same are not prohibited by the terms hereof or of any other Financing Agreement,
and (ii) references to any statute or regulation are to be construed as
including all statutory and regulatory provisions consolidating, amending,
replacing, recodifying, supplementing or interpreting the statute or regulation.
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(k) The captions and headings of this Agreement are for convenience
of reference only and shall not affect the interpretation of this Agreement.
(1) This Agreement and other Financing Agreements may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and shall
each be performed in accordance with their terms.
(m) This Agreement and the other Financing Agreements are the result
of negotiations among and have been reviewed by counsel to Agent and the other
parties, and are the products of all parties. Accordingly, this Agreement and
the other Financing Agreements shall not be construed against Agent or Lenders
merely because of Agent's or any Lender's involvement in their preparation.
13.3 NOTICES. All notices, requests and demands hereunder shall be in
writing and deemed to have been given or made: if delivered in person,
immediately upon delivery; if by telex, telegram or facsimile transmission,
immediately upon sending and upon confirmation of receipt; if by nationally
recognized overnight courier service with instructions to deliver the next
Business Day, one (1) Business Day after sending; and if by certified mail,
return receipt requested, five (5) days after mailing. All notices, requests and
demands upon the parties are to be given to the following addresses (or to such
other address as any party may designate by notice in accordance with this
Section):
If to any Borrower or Guarantor: Atlas Air Worldwide Holdings, Inc.
2000 Westchester Avenue
Purchase, New York 10577-2543
Attention: Mr. William C. Bradley
Telephone No.: 914-701-8395
Telecopy No.: 914-701-8750
with a copy to: Haynes and Boone, L.L.P.
One Houston Center
1221 McKinney Street, Suite 2100
Houston, Texas 77010
Attention: Lenard Parkins, Esq.
Telephone No.: 713-547-2008
Telecopy No.: 713-236-5405
If to Agent: Congress Financial Corporation
1133 Avenue of the Americas
New York, New York l0036
Attention: Portfolio Manager
Telephone No.: 212-840-2000
Telecopy No.: 212-840-6259
13.4 PARTIAL INVALIDITY. If any provision of this Agreement is held to be
invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Agreement as a whole,
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but this Agreement shall be construed as though it did not contain the
particular provision held to be invalid or unenforceable and the rights and
obligations of the parties shall be construed and enforced only to such extent
as shall be permitted by applicable law.
13.5 CONFIDENTIALITY.
(a) Agent and each Lender shall use all reasonable efforts to keep
confidential, in accordance with its customary procedures for handling
confidential information and safe and sound lending practices, any non-public
information supplied to it by any Borrower pursuant to this Agreement which is
clearly and conspicuously marked as confidential at the time such information is
furnished by such Borrower to Agent or such Lender; PROVIDED, THAT, nothing
contained herein shall limit the disclosure of any such information: (i) to the
extent required by statute, rule, regulation, subpoena or court order, (ii) to
bank examiners and other regulators, auditors and/or accountants, in connection
with any litigation to which Agent or such Lender is a party, (iii) to any
Lender or Participant (or prospective Lender or Participant) or to any Affiliate
of any Lender so long as such Lender or Participant (or prospective Lender or
Participant) or Affiliate shall have been instructed to treat such information
as confidential in accordance with this Section 13.5, or (iv) to counsel for
Agent or any Lender or Participant (or prospective Lender or Participant).
(b) In the event that Agent or any Lender receives a request or
demand to disclose any confidential information pursuant to any subpoena or
court order, Agent or such Lender, as the case may be, agrees (i) to the extent
permitted by applicable law or if permitted by applicable law, to the extent
Agent or such Lender determines in good faith that it will not create any risk
of liability to Agent or such Lender, Agent or such Lender will promptly notify
Administrative Borrower of such request so that Administrative Borrower may seek
a protective order or other appropriate relief or remedy and (ii) if disclosure
of such information is required, disclose such information and, subject to
reimbursement by Borrowers of Agent's or such Lender's expenses, cooperate with
Administrative Borrower in the reasonable efforts to obtain an order or other
reliable assurance that confidential treatment will be accorded to such portion
of the disclosed information which Administrative Borrower so designates, to the
extent permitted by applicable law or if permitted by applicable law, to the
extent Agent or such Lender determines in good faith that it will not create any
risk of liability to Agent or such Lender.
(c) In no event shall this Section 13.5 or any other provision of
this Agreement, any of the other Financing Agreements or applicable law be
deemed: (i) to apply to or restrict disclosure of information that has been or
is made public by any Borrower, Guarantor or any third party or otherwise
becomes generally available to the public other than as a result of a disclosure
in violation hereof, (ii) to apply to or restrict disclosure of information that
was or becomes available to Agent or any Lender (or any Affiliate of any Lender)
on a non-confidential basis from a person other than a Borrower or Guarantor,
(iii) to require Agent or any Lender to return any materials furnished by a
Borrower or Guarantor to Agent or a Lender or prevent Agent or a Lender from
responding to routine informational requests in accordance with the CODE OF
ETHICS FOR THE EXCHANGE OF CREDIT INFORMATION promulgated by The Robert Morris
Associates or other applicable industry standards relating to the exchange of
credit information. The obligations of Agent and Lenders under this Section 13.5
shall supersede and replace the obligations of Agent and Lenders under any
confidentiality letter signed prior to the date hereof
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or any other arrangements concerning the confidentiality of information provided
by any Borrower or Guarantor to Agent or any Lender.
13.6 SUCCESSORS. This Agreement, the other Financing Agreements and any
other document referred to herein or therein shall be binding upon and inure to
the benefit of and be enforceable by Agent, Lenders, Borrowers, Guarantors and
their respective successors and assigns, except that Borrower may not assign its
rights under this Agreement, the other Financing Agreements and any other
document referred to herein or therein without the prior written consent of
Agent and Lenders. Any such purported assignment without such express prior
written consent shall be void. No Lender may assign its rights and obligations
under this Agreement without the prior written consent of Agent, except as
provided in Section 13.7 below. The terms and provisions of this Agreement and
the other Financing Agreements are for the purpose of defining the relative
rights and obligations of Borrowers, Guarantors, Agent and Lenders with respect
to the transactions contemplated hereby and there shall be no third party
beneficiaries of any of the terms and provisions of this Agreement or any of the
other Financing Agreements.
13.7 ASSIGNMENTS; PARTICIPATIONS.
(a) Each Lender may, with the prior written consent of Agent, assign
all or, if less than all, a portion equal to at least $5,000,000 in the
aggregate for the assigning Lender, of such rights and obligations under this
Agreement to one or more Eligible Transferees (but not including for this
purpose any assignments in the form of a participation), each of which assignees
shall become a party to this Agreement as a Lender by execution of an Assignment
and Acceptance; PROVIDED, THAT, (i) such transfer or assignment will not be
effective until recorded by Agent on the Register and (ii) Agent shall have
received for its sole account payment of a processing fee from the assigning
Lender or the assignee in the amount of $5,000. Prior to any such assignment by
Congress of all or any portion of its rights and obligations under this
Agreement, Congress shall notify Administrative Borrower of its intention to so
assign and of the identify of the Eligible Transferee.
(b) Agent shall maintain a register of the names and addresses of
Lenders, their Commitments and the principal amount of their Loans (the
"Register"). Agent shall also maintain a copy of each Assignment and Acceptance
delivered to and accepted by it and shall modify the Register to give effect to
each Assignment and Acceptance. The entries in the Register shall be conclusive
and binding for all purposes, absent manifest error, and any Borrowers,
Obligors, Agent and Lenders may treat each Person whose name is recorded in the
Register as a Lender hereunder for all purposes of this Agreement. The Register
shall be available for inspection by Administrative Borrower and any Lender at
any reasonable time and from time to time upon reasonable prior notice.
(c) Upon such execution, delivery, acceptance and recording, from
and after the effective date specified in each Assignment and Acceptance, the
assignee thereunder shall be a party hereto and to the other Financing
Agreements and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, have the rights and
obligations (including, without limitation, the obligation to participate in
Letter of Credit Accommodations) of a Lender hereunder and thereunder and the
assigning Lender shall, to the
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extent that rights and obligations hereunder have been assigned by it pursuant
to such Assignment and Acceptance, relinquish its rights and be released from
its obligations under this Agreement.
(d) By execution and delivery of an Assignment and Acceptance, the
assignor and assignee thereunder confirm to and agree with each other and the
other parties hereto as follows: (i) other than as provided in such Assignment
and Acceptance, the assigning Lender makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or any of the other
Financing Agreements or the execution, legality, enforceability, genuineness,
sufficiency or value of this Agreement or any of the other Financing Agreements
furnished pursuant hereto, (ii) the assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of any Borrower, Obligor or any of their Subsidiaries or the performance or
observance by any Borrower or Obligor of any of the Obligations; (iii) such
assignee confirms that it has received a copy of this Agreement and the other
Financing Agreements, together with such other documents and information it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance, (iv) such assignee will, independently and
without reliance upon the assigning Lender, Agent and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement and the
other Financing Agreements, (v) such assignee appoints and authorizes Agent to
take such action as agent on its behalf and to exercise such powers under this
Agreement and the other Financing Agreements as are delegated to Agent by the
terms hereof and thereof, together with such powers as are reasonably incidental
thereto, and (vi) such assignee agrees that it will perform in accordance with
their terms all of the obligations which by the terms of this Agreement and the
other Financing Agreements are required to be performed by it as a Lender. Agent
and Lenders may furnish any information concerning any Borrower or Obligor in
the possession of Agent or any Lender from time to time to assignees and
Participants.
(e) Each Lender may sell participations to one or more banks or
other entities in or to all or a portion of its rights and obligations under
this Agreement and the other Financing Agreements (including, without
limitation, all or a portion of its Commitments and the Loans owing to it and
its participation in the Letter of Credit Accommodations, without the consent of
Agent or the other Lenders); PROVIDED, THAT, (i) such Lender's obligations under
this Agreement (including, without limitation, its Commitment hereunder) and the
other Financing Agreements shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations, and Borrowers, Guarantors, the other Lenders and Agent shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement and the other Financing
Agreements, and (iii) the Participant shall not have any rights under this
Agreement or any of the other Financing Agreements (the Participant's rights
against such Lender in respect of such participation to be those set forth in
the agreement executed by such Lender in favor of the Participant relating
thereto) and all amounts payable by any Borrower or Obligor hereunder shall be
determined as if such Lender had not sold such participation.
(f) Nothing in this Agreement shall prevent or prohibit any Lender
from pledging its Loans hereunder to a Federal Reserve Bank in support of
borrowings made by such Lenders
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from such Federal Reserve Bank; PROVIDED, THAT, no such pledge shall release
such Lender from any of its obligations hereunder or substitute any such pledgee
for such Lender as a party hereto.
(g) Borrowers and Guarantors shall assist Agent or any Lender
permitted to sell assignments or participations under this Section 13.7 in
whatever manner reasonably necessary in order to enable or effect any such
assignment or participation, including (but not limited to) the execution and
delivery of any and all agreements, notes and other documents and instruments as
shall be requested and the delivery of informational materials, appraisals or
other documents for, and the participation of relevant management in meetings
and conference calls with, potential Lenders or Participants. Borrowers shall
certify the correctness, completeness and accuracy, in all material respects, of
all descriptions of Borrowers and Guarantors and their affairs provided,
prepared or reviewed by any Borrower or Guarantor that are contained in any
selling materials and all other information provided by it and included in such
materials.
13.8 ENTIRE AGREEMENT. This Agreement, the other Financing Agreements, any
supplements hereto or thereto, and any instruments or documents delivered or to
be delivered in connection herewith or therewith represents the entire agreement
and understanding concerning the subject matter hereof and thereof between the
parties hereto, and supersede all other prior agreements, understandings,
negotiations and discussions, representations, warranties, commitments,
proposals, offers and contracts concerning the subject matter hereof, whether
oral or written. In the event of any inconsistency between the terms of this
Agreement and any schedule or exhibit hereto, the terms of this Agreement shall
govern.
13.9 USA PATRIOT ACT. Each Lender hereby notifies each Borrower and
Guarantor that pursuant to the requirements of the USA Patriot Act, it is
required to obtain, verify and record information that identifies such Borrower
and Guarantor, which information includes the name and address of such Borrower
and Guarantor and other information that will allow such Lender to identify such
Borrower and Guarantor in accordance with the requirements of such Act and any
other applicable law.
13.10 COUNTERPARTS, ETC. This Agreement or any of the other Financing
Agreements may be executed in any number of counterparts, each of which shall be
an original, but all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of this Agreement or any of the
other Financing Agreements by telefacsimile shall have the same force and effect
as the delivery of an original executed counterpart of this Agreement or any of
such other Financing Agreements. Any party delivering an executed counterpart of
any such agreement by telefacsimile shall also deliver an original executed
counterpart, but the failure to do so shall not affect the validity,
enforceability or binding effect of such agreement.
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IN WITNESS WHEREOF, Agent, Lenders, Borrowers and Guarantors have caused
these presents to be duly executed as of the day and year first above written.
AGENT BORROWERS
CONGRESS FINANCIAL CORPORATION, ATLAS AIR, INC.
as Agent
By:______________________________ By: /s/ William C. Bradley
---------------------------------
William C. Bradley
Title: ---------------------------------
Title:___________________________ Vice President & Treasurer
POLAR AIR CARGO, INC.
By: /s/ Dorinda Pannozzo
---------------------------------
Dorinda Pannozzo
Title: ---------------------------------
Assistant Treasurer
GUARANTORS
ATLAS AIR WORLDWIDE
HOLDINGS, INC.
By: /s/ T. Wakelee Smith
---------------------------------
T. Wakelee Smith
Title: ---------------------------------
Senior Vice President &
Chief Operating Officer
AIRLINE ACQUISITION CORP I
By: /s/ John Dietrich
---------------------------------
Title: Sr. VP, General Counsel - CHRO
IN WITNESS WHEREOF, Agent, Lenders, Borrowers and Guarantors have caused
these presents to be duly executed as of the day and year first above written.
AGENT BORROWERS
CONGRESS FINANCIAL CORPORATION, ATLAS AIR, INC.
as Agent
By: /s/ Peter Provenzale By: _________________________________
------------------------------
Title: SVP Title: ______________________________
POLAR AIR CARGO, INC.
By: _________________________________
Title: ______________________________
GUARANTORS
ATLAS AIR WORLDWIDE
HOLDINGS, INC.
By: _________________________________
Title: ______________________________
AIRLINE ACQUISITION CORP I
By: _________________________________
Title: ______________________________
LENDERS
CONGRESS FINANCIAL CORPORATION
By: /s/ Peter Provenzale
----------------------------------
Title: SUP
Commitment: $60,000,000