EXHIBIT 10.5.1
FIFTH AMENDED AND RESTATED
CREDIT AGREEMENT
DATED AS OF JULY 27, 2004
AMONG
ATLAS AIR, INC.,
AS BORROWER,
THE LENDERS LISTED HEREIN,
AS LENDERS,
AND
DEUTSCHE BANK TRUST COMPANY AMERICAS,
AS ADMINISTRATIVE AGENT
ARRANGED BY:
DEUTSCHE BANK SECURITIES INC.
ATLAS AIR, INC.
FIFTH AMENDED AND RESTATED
CREDIT AGREEMENT
TABLE OF CONTENTS
PAGE
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SECTION 1. DEFINITIONS .................................................. 2
1.1 Certain Defined Terms ......................................... 2
1.2 Accounting Terms; Utilization of GAAP for Purposes of
Calculations Under Agreement .................................. 27
1.3 Other Definitional Provisions ................................. 27
SECTION 2. AMOUNTS AND TERMS OF LOANS ................................... 27
2.1 Loans; Making of Loans; Notes; Register ....................... 27
2.2 Interest on the Loans ......................................... 29
2.3 Fees .......................................................... 31
2.4 Repayments, Prepayments and Reductions in Loans; General
Provisions Regarding Payments ................................. 32
2.5 Use of Proceeds ............................................... 36
2.6 Special Provisions Governing Eurodollar Rate Loans ............ 36
2.7 Increased Costs; Taxes; Capital Adequacy ...................... 38
2.8 Obligation of Lenders to Mitigate ............................. 42
2.9 Release of Collateral ......................................... 43
SECTION 3. CONDITIONS TO FIFTH RESTATEMENT EFFECTIVE DATE ............... 43
3.1 Conditions to Effectiveness ................................... 43
SECTION 4. REPRESENTATIONS AND WARRANTIES ..................... ......... 47
4.1 Organization, Powers, Qualification, Good Standing, Business
and Subsidiaries .............................................. 47
4.2 Authorization, etc. ........................................... 48
4.3 Financial Condition ........................................... 49
4.4 No Material Adverse Change; No Restricted Junior Payments ..... 49
4.5 Title to Properties; Liens .................................... 49
4.6 Litigation; Adverse Facts ..................................... 50
4.7 Payment of Taxes .............................................. 50
4.8 Performance of Agreements; Materially Adverse Agreements ...... 50
4.9 Governmental Regulation ....................................... 51
4.10 Securities Activities ......................................... 51
4.11 Employee Benefit Plans ........................................ 51
4.12 Certain Fees .................................................. 51
4.13 Environmental Protection ...................................... 52
4.14 Employee Matters .............................................. 52
4.15 Solvency ...................................................... 52
4.16 Disclosure .................................................... 52
SECTION 5. AFFIRMATIVE COVENANTS ........................................ 53
5.1 Financial Statements and Other Reports ........................ 53
5.2 Corporate Existence ........................................... 57
5.3 Payment of Taxes and Claims; Tax Consolidation ................ 57
5.4 Maintenance of Properties; Insurance .......................... 57
5.5 Inspection; Lender Meeting .................................... 58
5.6 Compliance with Laws, etc. .................................... 58
5.7 Environmental Indemnity ....................................... 58
5.8 Holdings' Remedial Action Regarding Hazardous Materials ....... 58
5.9 Further Assurances; New Subsidiaries .......................... 59
5.10 Appraisals .................................................... 59
5.11 Maintenance Contracts ......................................... 59
5.12 Employee Benefit Plans ........................................ 59
5.13 Registration of Foreign Leased Aircraft with FAA .............. 60
5.14 Civil Reserve Air Fleet Program ............................... 60
5.15 Engine Maintenance ............................................ 60
5.16 Grounding of Financed Aircraft ................................ 62
5.17 Maintain Aircraft Airworthiness ............................... 62
SECTION 6. NEGATIVE COVENANTS ........................................... 62
6.1 Indebtedness .................................................. 63
6.2 Liens and Related Matters ..................................... 64
6.3 Investments; Joint Ventures ................................... 65
6.4 Contingent Obligations ........................................ 66
6.5 Restricted Junior Payments .................................... 66
6.6 Financial Covenants ........................................... 67
6.7 Restriction on Fundamental Changes and Asset Sales ............ 68
6.8 Amendments of Material Agreements ............................. 71
6.9 Restriction on Leases ......................................... 71
6.10 Sales and Lease-Backs ......................................... 73
6.11 Sale or Discount of Receivables ............................... 73
6.12 Transactions with Shareholders, Affiliates and GSS ............ 73
6.13 Disposal of Subsidiary Stock .................................. 74
6.14 Conduct of Business ........................................... 74
6.15 Change To Legal Names; Organizational Identification Numbers,
Jurisdiction or Type of Organization .......................... 74
6.16 Subordinated Indebtedness ..................................... 74
SECTION 7. EVENTS OF DEFAULT ............................................ 75
7.1 Failure to Make Payments When Due ............................. 75
7.2 Default in Other Agreements ................................... 75
7.3 Breach of Certain Covenants ................................... 75
7.4 Breach of Warranty ............................................ 76
7.5 Other Defaults Under Loan Documents ........................... 76
7.6 Involuntary Bankruptcy; Appointment of Receiver, etc. ......... 76
7.7 Voluntary Bankruptcy; Appointment of Receiver, etc. ........... 76
7.8 Judgments and Attachments ..................................... 77
7.9 Dissolution ................................................... 77
(ii)
7.10 Change in Control ............................................. 77
7.11 Failure of Security ........................................... 77
7.12 Guaranties .................................................... 78
7.13 Certificated as Air Carrier ................................... 78
7.14 Material Agreements ........................................... 78
7.15 Pass Through Trust Documents .................................. 78
7.16 Equity Issuance ............................................... 78
SECTION 8. AGENT ........................................................ 79
8.1 Appointment ................................................... 79
8.2 Powers and Duties; General Immunity ........................... 79
8.3 Representations and Warranties; No Responsibility For Appraisal
of Creditworthiness ........................................... 81
8.4 Right to Indemnity ............................................ 81
8.5 Collateral Documents .......................................... 81
8.6 Successor Administrative Agent ................................ 82
SECTION 9. MISCELLANEOUS ................................................ 82
9.1 Assignments and Participations in Loans ....................... 82
9.2 Expenses ...................................................... 84
9.3 Indemnity ..................................................... 85
9.4 Set-Off ....................................................... 86
9.5 Ratable Sharing ............................................... 86
9.6 Amendments and Waivers ........................................ 87
9.7 Independence of Covenants ..................................... 88
9.8 Notices ....................................................... 88
9.9 Survival of Representations, Warranties and Agreements ........ 88
9.10 Failure or Indulgence Not Waiver; Remedies Cumulative ......... 89
9.11 Marshalling; Payments Set Aside ............................... 89
9.12 Severability .................................................. 89
9.13 Obligations Several; Independent Nature of Lenders' Rights .... 89
9.14 Headings ...................................................... 90
9.15 Applicable Law ................................................ 90
9.16 Successors and Assigns ........................................ 90
9.17 Consent to Jurisdiction and Service of Process ................ 90
9.18 Waiver of Jury Trial .......................................... 91
9.19 Confidentiality ............................................... 91
9.20 Counterparts; Effectiveness; Effect if Agreement Does Not
Become Effective .............................................. 92
9.21 Replacement Engines ........................................... 92
(iii)
ATLAS AIR, INC.
FIFTH AMENDED AND RESTATED
CREDIT AGREEMENT
This FIFTH AMENDED AND RESTATED CREDIT AGREEMENT is dated as of July
27, 2004 and entered into by and among ATLAS AIR WORLDWIDE HOLDINGS, INC., a
Delaware corporation ("HOLDINGS"), ATLAS AIR, INC., a Delaware corporation
("COMPANY"), THE LENDERS PARTY HERETO FROM TIME TO TIME, and DEUTSCHE BANK
TRUST COMPANY AMERICAS ("DBTCA"), as administrative agent for Lenders (in such
capacity, "ADMINISTRATIVE AGENT"). Capitalized terms used herein and not
otherwise defined shall have the meanings specified in Section 1.
RECITALS
WHEREAS, pursuant to that certain Fourth Amended and Restated Credit
Agreement dated as of April 25, 2000 (as so amended and restated, and as the
same has been further amended, modified and/or supplemented to, but not
including, the Fifth Restatement Effective Date, the "EXISTING CREDIT AGREEMENT
") among the Company, the financial institutions listed on the signature pages
thereof and the Administrative Agent, the lenders thereunder have made certain
credit facilities available to the Company for the purpose of acquisition and
modification of certain Financed Aircraft to be used in the Company's air cargo
business;
WHEREAS, the parties to the Existing Credit Agreement entered into a
Forbearance Agreement, Limited Waiver and Conditional Agreement to Amend the
Loan Documents dated as of July 3, 2003 (as amended, modified and/or
supplemented prior to the Fifth Restatement Effective Date, the "FORBEARANCE
AGREEMENT") pursuant to which certain of the Lenders agreed to (i) forbear from
exercising their rights and remedies under the Existing Credit Agreement and the
other Existing Loan Documents while Holdings implemented a comprehensive debt
restructuring program with respect to Holdings and certain of its affiliates in
accordance with the Restructuring Proposal Summary distributed to the Lenders on
March 27, 2003 (as amended and restated on November 24, 2003 with the consent of
the Administrative Agent but without giving effect to any further modifications
without the consent of the Administrative Agent) and (ii) waive the application
of the default interest provision under the Existing Credit Agreement;
WHEREAS, on January 30, 2004, Holdings, the Company and certain
Affiliates thereof filed voluntary petitions for relief under the Bankruptcy
Code;
WHEREAS, prior to filing for relief under the Bankruptcy Code,
Holdings, the Company and certain of the Lenders renegotiated certain of the
terms of the Existing Credit Agreement and the other Existing Loan Documents in
accordance with the Forbearance Agreement and the Letter Agreement and Term
Sheet annexed thereto, dated February 2, 2004
among the Company, Holdings, and the lenders party thereto (collectively, as
amended, modified or supplemented from time to time, the "TERM SHEET"), which
contemplated, among other things, an amendment and restatement of the Existing
Credit Agreement on terms satisfactory to the Lenders;
WHEREAS, the parties hereto desire to amend and restate the Existing
Credit Agreement in order to implement the agreements set forth in the Plan of
Reorganization, the Forbearance Agreement and the Term Sheet and to make certain
other amendments contained herein;
WHEREAS, it is the intention of Company, Administrative Agent and
each of the Lenders that such amendment and restatement of the Existing Credit
Agreement shall not constitute a refinancing of the Loans outstanding on the
Fifth Restatement Effective Date and that, with respect to the Loans outstanding
prior to the Fifth Restatement Effective Date, the First Aircraft Chattel
Mortgages shall continue to constitute purchase-money security interests subject
to Section 1110 of the Bankruptcy Code; and
WHEREAS, the Lenders identified on the signature pages hereof hold
all of the "Loans" under the Existing Credit Agreement as identified on Schedule
1.1;
NOW THEREFORE, in consideration of the premises and agreements,
provisions and covenants herein contained, the Company, the Lenders and the
Administrative Agent hereby agree that the Existing Credit Agreement shall be
amended and restated in its entirety as follows:
SECTION 1.
DEFINITIONS
1.1 CERTAIN DEFINED TERMS.
The following terms used in this Agreement shall have the following
meanings:
"ACMI CONTRACT" means (i) any contract entered into by Company
pursuant to which Company furnishes the aircraft, crew, maintenance and
insurance and customers bear all other operating expenses and (ii) any similar
contract in which the customer provides the flight crew, all in accordance with
Company's historical practices.
"ACMI CONTRACTED AIRCRAFT" means an aircraft acquired by Company or
its Subsidiaries and dedicated to a new ACMI Contract entered into in connection
with the acquisition of such aircraft (which ACMI Contract shall not represent a
renewal or replacement of a prior ACMI Contract unless the aircraft dedicated to
such prior ACMI Contract was operated under an operating lease and returned to
the lessor) which is in effect on the date of calculation and has a remaining
term of one year or more on the date such aircraft was dedicated to such ACMI
Contract (subject to cancellation terms, which may include the right to cancel
on six months notice). When making any calculation on a Pro Forma Basis effect
shall be given to the acquisition of an ACMI Contracted Aircraft by adding to
the appropriate components of Consolidated Adjusted EBITDA (i) the net projected
annualized revenues from the operation of
(2)
the ACMI Contracted Aircraft under such ACMI Contract for that portion of the
period for which Consolidated Adjusted EBITDA is being calculated prior to the
acquisition of such aircraft, assuming operation for the minimum guaranteed
number of block hours (less any block hours subject to cancellation) at the
minimum guaranteed rate under such ACMI Contract less (ii) the projected
annualized cash operating expenses from such operation for the same period for
which the related projected revenues are determined in clause (i) above;
PROVIDED that such projected cash operating expenses shall not be less on a per
block hour basis than the average historical per block hour operating expenses
of Company for the four full fiscal quarters immediately preceding the date of
calculation, and PROVIDED FURTHER that if such aircraft is of a model other than
a Boeing 747 freighter, such projected cash operating expenses shall include
maintenance costs which shall not be less than the average for such aircraft
type disclosed on the most recently available DOT Forms 41 with respect to such
aircraft type or any summary of such data as reported in a nationally recognized
industry publication. For purposes of this definition, "ACMI CONTRACT" shall
include contracts pursuant to which Company does not pay any crew costs, in
which event pro forma effect shall be given as described above but excluding
from the projected annualized cash operating expenses all crew costs. Cash
operating expenses means for purposes of this definition consolidated operating
expenses, less consolidated depreciation and amortization and Consolidated
Rental Payments, to the extent included in computing consolidated operating
expenses.
"ADJUSTED EURODOLLAR RATE" means, for any Interest Rate
Determination Date the rate per annum obtained by DIVIDING the offered rate
(expressed as a rate per annum and rounded upward to the nearest 1/16 of one
percent) appearing on the Dow Jones/Telerate Monitor on Telerate Access Service
Page 3750 (British Bankers Association Settlement Rate) (or such other page as
may, in the opinion of Administrative Agent, replace such page on that system
for the purpose of displaying such rate) at or about 11:00 a.m. (London time) on
such Interest Rate Determination Date for U.S. dollar deposits of amounts in
same day funds comparable to the principal amount of the Eurodollar Rate Loan
for which the Adjusted Eurodollar Rate is then being determined with maturities
comparable to the Interest Period for which such Adjusted Eurodollar Rate will
apply BY (ii) a percentage equal to 100% MINUS the stated maximum rate of all
reserve requirements (including, without limitation, any marginal, emergency,
supplemental, special or other reserves) applicable on such Interest Rate
Determination Date to any member bank of the Federal Reserve System in respect
of "Eurodollar liabilities" as defined in Regulation D (or any successor
category of liabilities under Regulation D).
"ADMINISTRATIVE AGENT" has the meaning provided in the first
paragraph of this Agreement and also means and includes any successor
Administrative Agent appointed pursuant to subsection 8.6.
"AFFECTED LENDER" has the meaning assigned to that term in
subsection 2.6C.
"AFFECTED LOANS" has the meaning assigned to that term in
subsection 2.6C.
"AFFILIATE" means, as applied to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with,
that Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms
(3)
"controlling", "controlled by" and "under common control with"), as applied to
any Person, means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of that Person, whether
through the ownership of voting securities or by contract or otherwise.
"AFL III" means Atlas Freighter Leasing III, Inc., a Delaware
corporation, a subsidiary of Holdings, the sole business of which is the
ownership of the AFL III Equipment and the leasing of the AFL III Equipment to
Company pursuant to the AFL III Leases and obtaining financing with respect
thereto.
"AFL III EQUIPMENT" means (i) thirteen 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.
"AFL III FINANCING" means Indebtedness incurred by AFL III pursuant
to the AFL III Financing Agreement.
"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 AFL III, the lenders party thereto and Deutsche Bank Trust Company
Americas, as Agent, as such agreement may be amended, amended and restated,
modified and/or supplemented from time to time in accordance with the terms
thereof.
"AFL III LEASES" means one or more triple net leases by and between
Company and AFL III with respect to the AFL III Equipment, as lessor thereunder,
as such leases may be amended, amended and restated, modified and/or
supplemented from time to time in accordance with the provisions of this
Agreement.
"AGGREGATE AMOUNTS DUE" has the meaning assigned to that term in
subsection 9.5.
"AGREEMENT" means this Fifth Amended and Restated Credit Agreement
dated as of July 27, 2004, as it may be amended, amended and restated,
supplemented or otherwise modified from time to time.
"AIRCRAFT CHATTEL MORTGAGE" means any or all of the First Aircraft
Chattel Mortgages and the Second Aircraft Chattel Mortgages.
"AIRCRAFT CHATTEL MORTGAGE AMENDMENT" has the meaning assigned to
such term in subsection 3.1(xii)
"AIRFRAME" means, as the context requires, an Airframe as defined
in a particular Aircraft Chattel Mortgage or all Airframes as defined in all
Aircraft Chattel Mortgages.
"APPLICABLE MARGIN" has the meaning assigned to that term in
subsection 2.2A.
(4)
"APPROVED APPRAISER" means any of the following: AvSolutions, Inc.,
BK Associates, Jack B. Feir Associates, Morton Beyer & Agnew, Inc., Airclaims,
Ltd., Aircraft Information Services, Inc., Simat, Helleisen & Eichner, Inc.,
AVITAS, Inc. or any other independent appraiser reasonably satisfactory to the
Administrative Agent.
"APPROVED LEASE" means, with respect to any Financed Aircraft, any
lease designated as an Approved Lease by Administrative Agent in its sole
discretion; PROVIDED that, the term of any such lease shall not exceed 36
months.
"ASSET SALE" means the sale (including any sale-leaseback
transaction other than sale-leaseback transactions permitted by subsections 6.9
and 6.10 hereof) by Holdings or any of its Subsidiaries to any other Person of
(i) any of the stock of any of Holdings' Subsidiaries, (ii) substantially all of
the assets of any division or line of business of Holdings or any of its
Subsidiaries, or (iii) any other assets (whether tangible or intangible) of
Holdings or any of its Subsidiaries outside of the ordinary course of business
EXCLUDING:
(A) any such other assets to the extent that the aggregate value of
such assets sold in any single transaction or related series of
transactions is equal to $2,500,000 or less;
(B) transactions related to aircraft engines, components, parts or
spare parts pursuant to customary pooling, exchange or similar
arrangements;
(C) asset swaps involving aircraft engines, components, parts or
spare parts (other than any engines encumbered pursuant to an Aircraft
Chattel Mortgage); PROVIDED that the assets received by Holdings or any
Subsidiary have a fair market value at least equal to the assets
transferred (provided that with respect to any asset swap or series of
related asset swaps involving assets of Holdings or any Subsidiary with a
fair market value exceeding $10,000,000, such determination shall be made
by the Board of Directors of Company));
(D) asset sales involving obsolete, worn-out, excess or redundant
equipment as long as the proceeds therefrom are used to replace or to
upgrade the aircraft or the equipment installed thereon;
(E) transactions permitted by subsection 9.21 of the AFL III
Financing Agreement; and
(F) the sale by AFL III of up to four AFL III Equipment aircraft
pursuant to subsection 6.6(i) of the AFL III Financing Agreement.
"ASSIGNED VALUE" means for any Financed Aircraft at any time, 33
1/3% of the aggregate principal amount of the Loans outstanding at such time,
provided that (x) if only two Financed Aircraft are included in the Collateral
at such time, such percentage shall be 50% and (y) if only one Financed Aircraft
is included in the Collateral at such time, such percentage shall be 100%.
(5)
"ASSIGNEE NOTES" means any promissory notes issued by Company (i) at
the request of a Lender pursuant to subsection 2.1B hereof or (ii) pursuant to
the last sentence of subsection 9.1B(i) in connection with assignments of the
Loans of any Lenders, substantially in the form of EXHIBIT III annexed hereto,
as the case may be, as they may be amended, supplemented or otherwise modified
from time to time.
"ASSIGNMENT AGREEMENT " means an Assignment Agreement in
substantially the form of EXHIBIT VII annexed hereto.
"AVAILABILITY" means at any time, the maximum additional amount
available to be borrowed by Holdings and its Subsidiaries as direct advances
under any Indebtedness at such time taking into account any applicable borrowing
base or similar requirements and limitations at such time, provided that all of
the conditions to borrowing (other than the delivery of a notice of borrowing)
required pursuant to such Indebtedness are satisfied at such time.
"BACK-TO-BIRTH TRACEABILITY ISSUE" has the meaning assigned to that
term in subsection 5.16C.
"BANKRUPTCY CODE" means Title 11 of the United States Code entitled
"Bankruptcy", as now and hereafter in effect, or any successor statute.
"BANKRUPTCY COURT" means the United States Bankruptcy Court for the
Southern District of Florida.
"BASE RATE" means, at any time, the higher of (x) the Prime Rate or
(y) the rate which is 1/2 of 1% in excess of the Federal Funds Effective Rate.
"BASE RATE LOANS" means Loans bearing interest at rates determined
by reference to the Base Rate as provided in subsection 2.2A.
"BUSINESS DAY" means any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the State of New York or is a day on
which banking institutions located in such state are authorized or required by
law or other governmental action to close.
"CAPITAL LEASE", as applied to any Person, means any lease of any
property (whether real, personal or mixed) by that Person as lessee that, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
"CASH" means money, currency or a credit balance in a Deposit
Account.
"CASH EQUIVALENTS" means, as at any date of determination, (i)
marketable securities (a) issued or directly and unconditionally guaranteed as
to interest and principal by the United States Government or (b) issued by any
agency of the United States the obligations of which are backed by the full
faith and credit of the United States, in each case maturing within two years
after the date of purchase; (ii) marketable direct obligations (fixed and/or
floating rate) issued by any state of the United States of America or any
political subdivision of any such state or any public instrumentality thereof,
in each case maturing within two years after the date of
(6)
purchase and having, at the time of the acquisition thereof and at all times
thereafter, the highest rating obtainable from at least two of S&P, Moody's and
Fitch; (iii) Dollar-denominated marketable direct obligations (fixed and/or
floating rate) issued by any corporation or commercial bank including medium
term notes and bonds, deposit notes and eurodollar/yankee notes and bonds, in
each case maturing within two years after the date of purchase and, at the time
of acquisition thereof and at all times thereafter, both (A) having a rating
from at least two of S&P, Moody's, and Fitch and (B) not having a rating of less
than A from S&P, A2 from Moody's, or A from Fitch; (iv) Dollar-denominated
commercial paper maturing no more than two years from the date of purchase and
issued by a corporation or commercial bank that, at the time of acquisition of
the commercial paper and at all times thereafter, both (A) has a short-term
credit rating from at least two of S&P, Moody's, and Fitch and (B) does not have
a short-term credit rating of less than A-1 (or the equivalent thereof) from
S&P, P-1 (or the equivalent thereof) from Moody's, or F-1 (or the equivalent
thereof) from Fitch; (v) Dollar-denominated certificates of deposit, bankers'
acceptances and/or time deposits maturing within two years after the date of
purchase and issued or accepted by (a) any Lender or (b) any commercial bank
that, at the time of acquisition of such security and at all times thereafter,
both (A) has a short-term credit rating from at least two of S&P, Moody's, and
Fitch and (B) does not have a short-term credit rating of less than A-1 (or the
equivalent thereof) from S&P, P-1 (or the equivalent thereof) from Moody's, or
F-1 (or the equivalent thereof) from Fitch; (vi) shares of any money market
mutual fund that (a) has at least 95% of its assets invested continuously in the
types of investments referred to in clauses (i) and (ii) above, (b) has net
assets of not less than $500,000,000 and (c) has the highest rating obtainable
from either S&P, Moody's or Fitch; (vii) Dollar-denominated asset-backed
securities (excluding any mortgage products) with a stated bullet maturity of no
more than two years from the date of purchase and, at the time of acquisition
thereof and at all times thereafter, both (A) having a rating from at least two
of S&P, Moody's, and Fitch and (B) not having a rating of less than A from S&P,
A2 from Moody's, or A from Fitch; (viii) repurchase agreements entered into with
financial institutions satisfying the criteria set forth in clause (v) above
with terms of not more than thirty days for securities described in clauses (i)
and (ii) above and having a fair market value of at least 102% of the amount of
the repurchase obligations; and (ix) auction rate securities (auction rate debt
and money market preferreds) with terms of not more than ninety days and, at the
time of acquisition thereof and at all times thereafter, both (A) having a
rating from at least two of S&P, Moody's, and Fitch and (B) not having a rating
of less than A from S&P, A2 from Moody's, or A from Fitch.
"CASH PROCEEDS" means, (i) with respect to any Asset Sale other
than an Asset Sale of Financed Aircraft, Cash payments (including any Cash
received by way of deferred payment pursuant to, or monetization of, a note
receivable or otherwise, but only as and when so received) received from such
Asset Sale and (ii) with respect to any Asset Sale of Financed Aircraft, the sum
of Cash payments received from such Asset Sale.
"C-CHECK" has the meaning assigned to that term in the Company's FAA
approved maintenance program.
(7)
"CERTIFICATE RE NON-BANK STATUS" means a certificate substantially
in the form of EXHIBIT VIII annexed hereto delivered by a Lender to
Administrative Agent pursuant to subsection 2.7B(iii).
"COLLATERAL" means all of the properties and assets in which Liens
are purported to be granted by the Collateral Documents.
"COLLATERAL DOCUMENTS" means each First Aircraft Chattel Mortgage
and each Second Aircraft Chattel Mortgage and any security agreement executed
pursuant to subsection 5.9.
"COMPANY" has the meaning provided in the first paragraph of this
Agreement.
"COMPANY 401(k) PLAN" has the meaning assigned to that term in
subsection 4.11.
"COMPLIANCE CERTIFICATE" means a certificate substantially in the
form of EXHIBIT IV annexed hereto delivered to Administrative Agent and Lenders
by Company pursuant to subsection 5.1(iv).
"CONDEMNATION PROCEEDS" has the meaning assigned to that term in
subsection 2.4B(ii)(c).
"CONFIRMATION DATE" means "Confirmation Date" as defined in the Plan
of Reorganization.
"CONSOLIDATED ADJUSTED EBITDA" means, for any period, the sum of the
amounts for such period of (i) Consolidated Net Income, (ii) Consolidated
Interest Expense, (iii) provisions for taxes based on income, (iv) total
depreciation expense, (v) total amortization expense, (vi) other non-cash items
reducing Consolidated Net Income LESS other non-cash items increasing
Consolidated Net Income, all of the foregoing as determined on a consolidated
basis for Holdings and its Subsidiaries in conformity with GAAP and, (vii) for
all periods through the first anniversary of the Fifth Restatement Effective
Date, expenses incurred in connection with the Plan of Reorganization, including
professional fees and expenses, severance, key employee retention plans,
executory contract and lease rejection claims, asset write downs and any other
such costs determined by Holdings' independent accountants to be reported as
"Reorganization Costs".
"CONSOLIDATED CAPITAL EXPENDITURES" means, for any period, the sum
of (i) the aggregate of all expenditures (whether paid in cash or other
consideration or accrued as a liability and including that portion of Capital
Leases which is capitalized on the consolidated balance sheet of Holdings and
its Subsidiaries) by Holdings and its Subsidiaries during that period that, in
conformity with GAAP, are included in "additions to property, plant or
equipment" or comparable items reflected in the consolidated statement of cash
flows of Holdings and its Subsidiaries PLUS (ii) to the extent not covered by
clause (i) of this definition, the aggregate of all expenditures by Holdings and
its Subsidiaries during that period to acquire (by purchase or otherwise) the
business, property or fixed assets of any Person, or the stock or
(8)
other evidence of beneficial ownership of any Person that, as a result of such
acquisition, becomes a Subsidiary of Holdings.
"CONSOLIDATED FIXED CHARGES" means, for any period, the sum of the
amounts for such period (without duplication) of (i) Consolidated Interest
Expense for such period paid in cash, (ii) Consolidated Rental Payments for such
period paid in cash, (iii) Consolidated Capital Expenditures paid in cash for
such period (other than Consolidated Capital Expenditures funded with the
proceeds of Asset Sales pursuant to Section 6.7(vii)(z)), (iv) any Restricted
Junior Payments actually made during such period and (v) the scheduled principal
amount of all amortization payments with respect to the Loans and other
Indebtedness of Holdings and the Subsidiaries required to be made during such
period (as determined on the first day of such period) (assuming for this
purpose that the maximum amount of principal deferral permitted pursuant to
Section 2.4A(ii) of the AFL III Financing Agreement shall have occurred (whether
or not the conditions thereto shall have been satisfied)).
"CONSOLIDATED INTEREST EXPENSE" means, for any period, total net
interest expense (to be computed by reducing interest expense by the amount of
interest income) (including that portion attributable to Capital Leases in
accordance with GAAP and capitalized interest) of Holdings and its Subsidiaries
on a consolidated basis with respect to all outstanding Indebtedness of Holdings
and its Subsidiaries, including, without limitation, all commissions, discounts
and other fees and charges owed with respect to letters of credit and bankers'
acceptance financing and net costs under Interest Rate Agreements and Currency
Agreements.
"CONSOLIDATED NET INCOME" means, for any period, the net income (or
loss) of Holdings and its Subsidiaries on a consolidated basis for such period
taken as a single accounting period determined in conformity with GAAP; PROVIDED
that there shall be excluded (i) the income (or loss) of any Person (other than
a Subsidiary of Holdings) in which any other Person (other than Holdings or any
of its Subsidiaries) has a joint interest, except to the extent of the amount of
dividends or other distributions actually paid to Holdings or any of its
Subsidiaries by such Person during such period, (ii) the income (or loss) of any
Person accrued prior to the date it becomes a Subsidiary of Holdings or is
merged into or consolidated with Holdings or any of its Subsidiaries or that
Person's assets are acquired by Holdings or any of its Subsidiaries, (iii) the
income of any Subsidiary of Holdings to the extent that the declaration or
payment of dividends or similar distributions by that Subsidiary of that income
is not at the time permitted by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Subsidiary, (iv) any after-tax gains or losses
attributable to Asset Sales or returned surplus assets of any pension plan, and
(v) (to the extent not included in clauses (i) through (iv) above) any net
extraordinary gains or net non-cash extraordinary losses.
"CONSOLIDATED RENTAL PAYMENTS" means, for any period, the aggregate
amount of all rents with respect to aircraft and engines paid or payable by
Holdings and its Subsidiaries on a consolidated basis during that period under
all Operating Leases to which Holdings or any of its Subsidiaries is a party as
lessee (net of sublease income other than income from ACMI Contracts). For the
avoidance of doubt, (x) all rental payments to AFL III shall not be included
(9)
in Consolidated Rental Payments and (y) payments in respect of Capital Leases
shall not be included in Consolidated Rental Payments.
"CONTINGENT OBLIGATION" means, as applied to any Person, any direct
or indirect liability, contingent or otherwise, of that Person (i) with respect
to any Indebtedness, lease, dividend or other obligation of another if the
primary purpose or intent thereof by the Person incurring the Contingent
Obligation is to provide assurance to the obligee of such obligation of another
that such obligation of another will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders of such
obligation will be protected (in whole or in part) against loss in respect
thereof, (ii) with respect to any letter of credit issued for the account of
that Person or as to which that Person is otherwise liable for reimbursement of
drawings, or (iii) under Interest Rate Agreements and Currency Agreements.
Contingent Obligations shall include, without limitation, (a) the direct or
indirect guaranty, endorsement (otherwise than for collection or deposit in the
ordinary course of business), co-making, discounting with recourse or sale with
recourse by such Person of the obligation of another, (b) the obligation to make
take-or-pay or similar payments if required regardless of non-performance by any
other party or parties to an agreement, and (c) any liability of such Person for
the obligation of another through any agreement (contingent or otherwise) (X) to
purchase, repurchase or otherwise acquire such obligation or any security
therefore, or to provide funds for the payment or discharge of such obligation
(whether in the form of loans, advances, stock purchases, capital contributions
or otherwise) or (Y) to maintain the solvency or any balance sheet item, level
of income or financial condition of another if, in the case of any agreement
described under subclauses (X) or (Y) of this sentence, the primary purpose or
intent thereof is as described in the preceding sentence. The amount of any
Contingent Obligation shall be equal to the amount of the obligation so
guaranteed or otherwise supported or, if less, the amount to which such
Contingent Obligation is specifically limited.
"CONTINUING DIRECTORS" shall mean the directors of a Person on the
Fifth Restatement Effective Date and each other director, if such other
director's nomination for election to the Board of Directors of such Person is
recommended by a majority of the then Continuing Directors.
"CONTRACTUAL OBLIGATION", as applied to any Person, means any
provision of any Security issued by that Person or of any material indenture,
mortgage, deed of trust, deed to secure debt, contract, undertaking, agreement
or other instrument to which that Person is a party or by which it or any of its
properties is bound or to which it or any of its properties is subject.
"CURRENCY AGREEMENT" means any foreign exchange contract (other
than spot foreign exchange contracts), currency swap agreement, futures
contract, option contract, synthetic cap or other similar agreement or
arrangement designed to protect Holdings or any of its Subsidiaries against
fluctuations in currency values.
"DBTCA" has the meaning assigned to that term in the first paragraph
of this Agreement.
"D-CHECK" has the meaning assigned to that term in the Company's FAA
approved maintenance program.
(10)
"DEPOSIT ACCOUNT" means a demand, time, savings, passbook or like
account with a bank, savings and loan association, credit union or like
organization, other than an account evidenced by a negotiable certificate of
deposit.
"DESIGNATED INDEBTEDNESS" means Indebtedness incurred pursuant to
the Pass Through Trust Documents, the AFL III Financing Agreement, any Other
Permitted Indebtedness and any Permitted Extension Indebtedness in respect of
the foregoing.
"DISCLOSURE STATEMENT" means the Second Amended Disclosure Statement
under 11 U.S.C. Section 1125 In Support of the Debtors' Second Amended Joint
Chapter 11 Plan, dated June 8, 2004 pursuant to Section 1125 of the Bankruptcy
Code relating to the Plan of Reorganization, as approved by the Bankruptcy
Court, and as the same may be amended, modified or supplemented from accordance
with the terms hereof and thereof.
"DOLLARS" and the sign "$" mean the lawful money of the United
States of America.
"DRY LEASE" has the meaning assigned to such term in subsection
6.7(viii) hereof.
"DVB APPEAL" means the Notice of Appeal from Order Confirming Final
Modified Second Amended Final Plan of Reorganization of the Debtors Entered July
16, 2004 and Findings of Fact and Conclusions of Law by DVB Bank AG and Wells
Fargo Bank Northwest, National Association, dated July 26, 2004.
"ELIGIBLE ASSIGNEE" means (A) (i) a commercial bank organized under
the laws of the United States or any state thereof; (ii) a savings and loan
association or savings bank organized under the laws of the United States or any
state thereof; (iii) a commercial bank organized under the laws of any other
country or a political subdivision thereof; PROVIDED that (x) such bank is
acting through a branch or agency located in the United States or (y) such bank
is organized under the laws of a country that is a member of the Organization
for Economic Cooperation and Development or a political subdivision of such
country; and (iv) any other entity which is an "accredited investor" (as defined
in Regulation D under the Securities Act) which extends credit or buys loans as
one of its businesses including, but not limited to, insurance companies, mutual
funds and lease financing companies, in each case (under clauses (i) through
(iv) above) that is reasonably acceptable to Administrative Agent; and (B) any
Lender and any Affiliate of any Lender; PROVIDED that no Affiliate of Company
shall be an Eligible Assignee.
"EMPLOYEE BENEFIT PLAN" means any "employee benefit plan" as defined
in Section 3(3) of ERISA which is, or was at any time, maintained or contributed
to by Company or any of its ERISA Affiliates.
"ENGINE" means, as the context requires, an Engine as defined in a
particular Aircraft Chattel Mortgage, Engines as defined in all Aircraft Chattel
Mortgages, a Replacement Engine, all Replacement Engines or all of any of the
foregoing.
(11)
"ENVIRONMENTAL CLAIM" means any investigation, notice, claim, suit
or order, by any governmental authority or any Person arising in connection with
any alleged or actual violation of Environmental Laws or with any Hazardous
Material, or any actual or alleged damage, or harm to health, safety or the
environment.
"ENVIRONMENTAL LAWS" means any and all current or future statutes,
ordinances, orders, rules, regulations, guidance documents, judgments,
governmental authorizations, or any other requirement of governmental
authorities relating to environmental matters, including, without limitation,
those relating to any Hazardous Materials Activity.
"EQUITY LENDER" means any Lender that is a Lender under this
Agreement on the Fifth Restatement Effective Date.
"EQUITY PROCEEDS" means the cash proceeds (net of underwriting
discounts and commissions and other reasonable costs associated therewith) from
the issuance of any equity Securities of Holdings including, without limitation,
additional issuances of Holdings Common Stock.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and any successor statute.
"ERISA AFFILIATE" means, as applied to any Person, (i) any
corporation which is, or was at any time, a member of a controlled group of
corporations within the meaning of Section 414(b) of the Internal Revenue Code
of which that Person is, or was at any time, a member; (ii) any trade or
business (whether or not incorporated) which is, or was at any time, a member of
a group of trades or businesses under common control within the meaning of
Section 414(c) of the Internal Revenue Code of which that Person is, or was at
any time, a member; and (iii) any member of an affiliated service group within
the meaning of Section 414(m) or (o) of the Internal Revenue Code of which that
Person, any corporation described in clause (i) above or any trade or business
described in clause (ii) above is, or was at any time, a member.
"EURODOLLAR RATE LOANS " means Loans bearing interest at rates
determined by reference to the Adjusted Eurodollar Rate as provided in
subsection 2.2A.
"EVENT OF DEFAULT" means each of the events set forth in Section 7.
"EVENT OF LOSS" shall mean any of the following events with respect
to any Financed Aircraft (whether the Airframe or an Engine of such Financed
Aircraft or Spare Engine or both):
(A) loss of such Financed Aircraft or Spare Engine or the use
thereof due to theft or disappearance of such Financed Aircraft or Spare
Engine which shall result in the loss of possession thereof for a period
of 120 days (or for a shorter period ending on the date on which there is
an insurance settlement for a total loss on the basis of the theft or
disappearance of such Financed Aircraft or Spare Engine);
(12)
(B) the destruction, damage beyond repair or rendition of such
Financed Aircraft or Spare Engine permanently unfit for normal use for any
reason whatsoever;
(C) the condemnation, confiscation or seizure of, or requisition
of title to, or use or possession (other than use by the United States
Government if Company obtains adequate compensation from the United States
Government) of such Financed Aircraft or Spare Engine;
(D) as a result of any rule, regulation, order or other action by
the FAA or other governmental body having jurisdiction, the use of such
Financed Aircraft or Spare Engine in the normal course of interstate air
transportation of persons or cargo shall have been prohibited for a period
of more than nine consecutive months unless Company, prior to the
expiration of such nine month period, shall have undertaken and shall be
diligently carrying forward all steps which are necessary or desirable to
permit the normal use of such property by Company or, in any event, if
such use shall have been prohibited for a period of twelve (12)
consecutive months;
(E) the operation or location of such Financed Aircraft or Spare
Engine, while under requisition for use by the United States or any
instrumentality or agency thereof, in any area excluded from coverage by
any insurance policy in effect with respect to such Financed Aircraft or
Spare Engine, if Company shall be unable to obtain indemnity in lieu
thereof from the United States;
(F) any damage which results in an insurance settlement with
respect to such Financed Aircraft or Spare Engine on the basis of an
actual or constructive total loss; or
(G) a divestiture of such Airframe or Spare Engine as described in
Section 4(d)(iii), Section 4(d)(vi), Section 4(d)(vii)(B) or Section
4(d)(viii)(B) of any Aircraft Chattel Mortgage. An Event of Loss with
respect to any Financed Aircraft shall be deemed to have occurred if an
Event of Loss occurs with respect to the Airframe of such Financed
Aircraft.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor statute.
"EXISTING AIRCRAFT" means the aircraft identified on Schedule 1.1
annexed hereto.
"EXISTING CREDIT AGREEMENT" has the meaning provided in the
recitals hereto.
"EXISTING INDEBTEDNESS" has the meaning assigned to that term in
subsection 6.1.
"EXISTING LOAN DOCUMENTS" has the meaning assigned to the term "Loan
Documents" in the Existing Credit Agreement.
"EXIT FACILITY" means the credit agreement to be entered into among
Holdings and the lenders party thereto providing financing for working capital
and other general corporate
(13)
purposes, as same may be amended, modified, supplemented, refinanced or replaced
from time to time.
"FACILITIES" means any and all real property now, hereafter or
heretofore owned, leased, operated or used by Company or any of its
predecessors.
"FEDERAL AVIATION ACT" means the Federal Aviation Act of 1958, as
amended and as recodified in Title 49, United States Code, or any similar
legislation of the United States enacted to supersede, amend or supplement such
Act and the rules and regulations promulgated thereunder.
"FEDERAL AVIATION ADMINISTRATION" or "FAA" means the United States
Federal Aviation Administration or any successor thereto administering the
functions of the Federal Aviation Administration under the Federal Aviation Act.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any period, a fluctuating
interest rate equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day on which is a Business Day, the average of the quotations for such day on
such transactions received by Administrative Agent from three Federal funds
brokers of recognized standing selected by Administrative Agent.
"FIFTH RESTATEMENT EFFECTIVE DATE" means the date on which the
conditions to effectiveness set forth in subsection 3.1 are satisfied.
"FINAL ORDER" means an order of the Bankruptcy Court entered by the
Bankruptcy Court, which has not been reversed, vacated or stayed and as to which
the time to appeal, petition for certioreri, or to move for a new trial has
expired and as to which no appeal, writ of certioreri or request for a new trial
shall then be pending.
"FINAL SCHEDULED MATURITY DATE" means February 28, 2011.
"FINANCED AIRCRAFT" means all Existing Aircraft, including the
airframes and engines, all of which have been purchased by Company with proceeds
of Loans made or deemed made under this Agreement and with respect to which a
First Aircraft Chattel Mortgage has been executed and delivered.
"FIRST AIRCRAFT CHATTEL MORTGAGE" means, with respect to each
Financed Aircraft, a Security Agreement and Chattel Mortgage substantially in
the form of EXHIBIT X annexed hereto granting to Administrative Agent for the
benefit of Lenders a purchase money first priority security interest in such
Financed Aircraft, as such First Aircraft Chattel Mortgage is amended by an
Aircraft Chattel Mortgage Amendment delivered with respect thereto pursuant to
subsection 3.1(xii) and as such First Aircraft Chattel Mortgage may be further
amended, restated, supplemented or otherwise modified from time to time in
accordance with the terms hereof and thereof.
(14)
"FISCAL YEAR" means Holdings' fiscal year ending on December 31 of
each year.
"FITCH" means Fitch, Inc.
"FIXED CHARGE COVERAGE RATIO" means as of any date, the ratio of (i)
the sum of (x) Consolidated Adjusted EBITDA for the period of twelve consecutive
months ending on such date (a "TEST PERIOD") and (y) Consolidated Rental
Payments for such Test Period to (ii) Consolidated Fixed Charges for such Test
Period.
"FORBEARANCE AGREEMENT" has the meaning provided in the recitals
hereto.
"FOREIGN LEASED AIRCRAFT" means a Leased Aircraft that is registered
in a country other than the United States during the term of the applicable
Approved Lease.
"FUNDING AND PAYMENT OFFICE" means the office of the Administrative
Agent located at 60 Wall Street, New York, NY 10005, Attention: David Bell.
"GAAP" means, subject to the limitations on the application thereof
set forth in subsection 1.2, generally accepted accounting principles set forth
in opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession. Financial statements and other information required
to be delivered by Holdings or Company to Lenders pursuant to clauses (ii) and
(iii) of subsection 5.1 shall be prepared in accordance with GAAP as in effect
at the time of such preparation (and delivered together with the reconciliation
statements provided for in subsection 5.1(v)). Calculations in connection with
the definitions, covenants and other provisions of this Agreement shall utilize
accounting principles and policies in effect for the preparation of financial
statements of Holdings and its Subsidiaries as of December 31, 2002.
"GEAE" has the meaning assigned that term in Section 5.15.
"GOVERNMENTAL AUTHORIZATION" means any permit, license,
authorization, plan, directive, consent order or consent decree of or from any
federal, state or local governmental authority, agency or court.
"GROUNDED AIRCRAFT" has the meaning assigned to that term in
subsection 6.9B.
"GSS" means Global Supply Systems, Limited, an English Company.
"GUARANTOR" means Holdings and each Subsidiary Guarantor.
"GUARANTY" means the Holdings Guaranty and the Subsidiary Guaranty.
"HAZARDOUS MATERIALS" means any chemical or other material or
substance, exposure to which is now or hereafter prohibited, limited or
regulated under any law.
(15)
"HAZARDOUS MATERIALS ACTIVITY" means any past, current, proposed, or
threatened use, storage, release, generation, treatment, remediation or
transportation of any Hazardous Material (i) from, under, in, into or on the
Facilities or surrounding property; and (ii) caused by, or undertaken by or on
behalf of, Company.
"HOLDINGS" has the meaning provided in the first paragraph of this
Agreement.
"HOLDINGS COMMON STOCK" means the common stock of Holdings.
"HOLDINGS GUARANTY" has the meaning assigned to that term in
subsection 3.1.
"INDEBTEDNESS" means, as applied to any Person, (i) all indebtedness
for borrowed money, (ii) that portion of obligations with respect to Capital
Leases that is properly classified as a liability on a balance sheet in
conformity with GAAP, (iii) notes payable and drafts accepted representing
extensions of credit whether or not representing obligations for borrowed money,
(iv) any obligation owed for all or any part of the deferred purchase price of
property or services (excluding any such obligations incurred under ERISA),
which purchase price is (a) due more than six months from the date of incurrence
of the obligation in respect thereof or (b) evidenced by a note or similar
written instrument, and (v) all indebtedness secured by any Lien on any property
or asset owned or held by that Person regardless of whether the indebtedness
secured thereby shall have been assumed by that Person or is nonrecourse to the
credit of that Person. For purposes of this Agreement, Obligations under
Interest Rate Agreements and Currency Agreements constitute Contingent
Obligations and not Indebtedness.
"INDEMNIFIED LIABILITIES" has the meaning assigned to that term in
subsection 9.3.
"INDEMNITEE" has the meaning assigned to that term in subsection
9.3.
"INDEMNITEES" has the meaning assigned to that term in subsection
9.3.
"INITIAL CLOSING DATE" means the date on or before May 8, 1996 on
which the initial Loans were made.
"INSTRUCTION LETTER" means a letter from an Equity Lender to Company
or its designee containing the name, address, tax ID number and the number of
shares Holdings Common Stock to be issued to such Equity Lender.
"INSURANCE PROCEEDS" has the meaning assigned to that term in
subsection 2.4B(ii)(c).
"INTERCOMPANY LOANS" has the meaning assigned to that term in
subsection 6.3(v).
"INTEREST PAYMENT DATE" means the last Business Day of each calendar
month, commencing on the first such date to occur after the Fifth Restatement
Effective Date.
(16)
"INTEREST PERIOD" has the meaning assigned to that term in
subsection 2.2B.
"INTEREST RATE AGREEMENT" means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or other similar
agreement or arrangement designed to protect Holdings or any of its Subsidiaries
against fluctuations in interest rates.
"INTEREST RATE DETERMINATION DATE" means, with respect to any
Interest Period, the second Business Day prior to the first day of such Interest
Period.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter.
"INVESTMENT" means (i) any direct or indirect purchase or other
acquisition by Holdings or any of its Subsidiaries of, or of a beneficial
interest in, any Securities of any other Person, (ii) any direct or indirect
redemption, retirement, purchase or other acquisition for value, by any
Subsidiary of Holdings from any Person other than Holdings or any of its
Subsidiaries, of any equity Securities of such Subsidiary, or (iii) any direct
or indirect loan, advance (other than advances to employees for moving,
entertainment and travel expenses, drawing accounts and similar expenditures in
the ordinary course of business) or capital contribution by Holdings or any of
its Subsidiaries to any other Person (other than a wholly owned Subsidiary of
Holdings), including all indebtedness and accounts receivable from that other
Person that are not current assets or did not arise from sales to that other
Person in the ordinary course of business. The amount of any Investment shall be
the original cost of such Investment plus the cost of all additions thereto,
without any adjustments for increases or decreases in value, or write-ups,
write-downs or write-offs with respect to such Investment.
"JOINT VENTURE" means a joint venture, partnership or other similar
arrangement, whether in corporate, partnership or other legal form; PROVIDED
that in no event shall any corporate Subsidiary of any Person be considered to
be a Joint Venture to which such Person is a party.
"LEASED AIRCRAFT" means a Financed Aircraft subject to an Approved
Lease.
"LENDER" and "LENDERS" means the persons identified as "Lenders" and
listed on the signature pages of this Agreement, together with their successors
and permitted assigns pursuant to subsection 9.1.
"LIEN" means any lien, mortgage, deed of trust, deed to secure debt,
pledge, assignment, security interest, charge, hypothecation, preference,
priority, privilege, lease or encumbrance of any kind (including any conditional
sale or other title retention agreement, any lease in the nature thereof, and
any agreement to give any security interest) and any option, trust or other
preferential arrangement having the practical effect of any of the foregoing.
"LOAN" or "LOANS" has the meaning provided in subsection 2.1A.
"LOAN DOCUMENTS" means this Agreement, the Notes, the Holdings
Guaranty, the Subsidiaries Guaranty and the Collateral Documents.
(17)
"LOAN EXPOSURE" means, with respect to any Lender as of any date of
determination the outstanding principal amount of that Lender's Loans.
"LOAN PARTIES" means Company, Holdings and each subsidiary of
Holdings which becomes party to a Subsidiaries Guaranty.
"LOAN REPAYMENT AMOUNT" means, for each Loan Repayment Date, the
amount set forth opposite such Loan Repayment Date on Schedule 2.4.
"LOAN REPAYMENT DATE" means the last Business Day of each calendar
month, PROVIDED that, notwithstanding anything in the foregoing to the contrary,
the unpaid amount of all Loans shall be due and payable on the Final Scheduled
Maturity Date.
"MARGIN STOCK" has the meaning assigned to that term in Regulation U
of the Board of Governors of the Federal Reserve System as in effect from time
to time.
"MATERIAL ADVERSE EFFECT" means (i) a material adverse effect upon
the business, operations, properties, assets, condition (financial or otherwise)
or prospects of Holdings and its Subsidiaries taken as a whole or (ii) the
impairment of the ability of any Loan Party to perform the Obligations, or the
impairment, as a result of actions or inaction by Holdings or Company, of the
ability of Administrative Agent or Lenders to enforce the Obligations.
"MATERIAL AGREEMENT" means any or all of the Pass Through Trust
Documents, AFL III Financing Agreement, AFL III Leases, each Lease relating to
747-200s in effect on the Fifth Restatement Effective Date and agreements in
respect of Permitted Extension Indebtedness in respect of any of the foregoing.
"MATERIAL SUBSIDIARY" means any domestic Subsidiary of Holdings
that at any time has a consolidated net worth as of the end of its most recent
fiscal year for which financial statements are available or consolidated gross
revenues for its most recent fiscal year for which financial statements are
available greater than $250,000, in each case as determined in accordance with
GAAP.
"MAXIMUM CAPITAL EXPENDITURE AMOUNT" means for any period, the
amount set fourth opposite such period below:
Fiscal Year Amount
---------------- ------------
2004 $ 20,000,000
2005 $ 20,000,000
2006 $ 21,300,000
2007 $ 21,500,000
Each Fiscal Year $ 22,000,000
thereafter
"MOODY'S" means Moody's Investors Service, Inc.
(18)
"MTU" means MTU Maintenance Hanover GmbH.
"NET CASH PROCEEDS" means, with respect to any Asset Sale, Cash
Proceeds of such Asset Sale net of bona fide direct costs of sale including (i)
income taxes reasonably estimated to be actually payable as a result of such
Asset Sale within two years of the date of such Asset Sale and (ii) payment of
the outstanding principal amount of, premium or penalty, if any, and interest on
any Indebtedness (other than the Loans) that is secured by a Lien on the stock
or assets of Holdings or a Subsidiary and that is required to be repaid under
the terms thereof as a result of such Asset Sale.
"1998 PASS THROUGH TRUST DOCUMENTS" means that certain Pass Through
Trust Agreement dated as of February 9, 1998 between Atlas Air, Inc. and
Wilmington Trust Company, as Trustee (the "1998 PASS THROUGH TRUST AGREEMENT")
and any trust indenture and security agreements including any related trust
indenture and security agreement supplements which related to the equipment
notes to be held in trust pursuant to the 1998 Pass Through Trust Agreement and
all related agreements, as the same may be amended, restated, supplemented or
otherwise modified from time to time in accordance with the terms thereof and
hereof.
"1999 PASS THROUGH TRUST DOCUMENTS" means that certain Pass Through
Trust Agreement dated as of April 13, 1999 between Atlas Air, Inc. and
Wilmington Trust Company, as Trustee (the "1999 PASS THROUGH TRUST AGREEMENT")
and any trust indenture and security agreements including any related trust
indenture and security agreement supplements which related to the equipment
notes to be held in trust pursuant to the 1999 Pass Through Trust Agreement and
all related agreements, as the same may be amended, restated, supplemented or
otherwise modified from time to time in accordance with the terms thereof and
hereof.
"NON-US LENDER" has the meaning assigned to that term in subsection
2.7B(iii)(a).
"NOTES" means one or more Notes substantially in the form of Exhibit
IIIA annexed hereto (as defined in the Existing Credit Agreement) or the
Assignee Notes, as the context requires.
"NOTICE OF CONFIRMATION" means notice of an order of the Bankruptcy
Court confirming the Plan of Reorganization, which order shall be a Final Order
except for the DVB Appeal.
"NOTICE OF CONVERSION/CONTINUATION" means a notice substantially in
the form of EXHIBIT II annexed hereto delivered by Company to Administrative
Agent pursuant to subsection 2.2D with respect to a proposed conversion or
continuation of the applicable basis for determining the interest rate with
respect to the Loans specified therein.
"OBLIGATIONS" means all obligations of every nature of each Loan
Party from time to time owed to Administrative Agent, Lenders or any of them
under the Loan Documents, whether for principal, interest, fees, expenses,
indemnification or otherwise.
(19)
"OFFICERS' CERTIFICATE" means, as applied to any corporation, a
certificate executed on behalf of such corporation by its chairman of the board
(if an officer) or its president or one of its vice presidents and by its chief
financial officer or its treasurer; PROVIDED that every Officers' Certificate
with respect to the compliance with a condition precedent to the making of any
Loans hereunder shall include (i) a statement that the officer or officers
making or giving such Officers' Certificate have read such condition and any
definitions or other provisions contained in this Agreement relating thereto,
(ii) a statement that, in the opinion of the signers, they have made or have
caused to be made such examination or investigation as is necessary to enable
them to express an informed opinion as to whether or not such condition has been
complied with, and (iii) a statement as to whether, in the opinion of the
signers, such condition has been complied with.
"OPERATING LEASE" means, as applied to any Person, any lease
(including, without limitation, leases that may be terminated by the lessee at
any time) of any property (whether real, personal or mixed) that is not a
Capital Lease other than any such lease under which that Person is the lessor.
"OTHER PERMITTED INDEBTEDNESS" means Indebtedness incurred for the
purpose of financing the acquisition of aircraft or aircraft engines so long as
(i) any such Indebtedness bears interest at a rate which does not exceed 15% per
annum, (ii) such Indebtedness has a final stated maturity later than the Final
Scheduled Maturity Date of the Notes and (iii) the amortization and the other
terms, provisions, conditions, covenants and events of default thereof taken as
a whole shall be no more onerous or restrictive from the perspective of Company
and its Subsidiaries or any less favorable, from the perspective of Lenders,
than any other Designated Indebtedness.
"PART" means, as the context requires, a Part as defined in a
particular Aircraft Chattel Mortgage or Parts as defined in all Aircraft Chattel
Mortgages.
"PASS THROUGH TRUST DOCUMENTS " means the 1998 Pass Through Trust
Agreement, the 1999 Pass Through Trust Agreement and the 2000 Pass Through Trust
Agreement (the "PASS THROUGH TRUST AGREEMENTS") and any trust indenture and
security agreements including any related trust indenture and security agreement
supplements which related to the equipment notes to be held in trust pursuant to
the Pass Through Trust Agreements and all related agreements, as the same may be
amended, restated, supplemented or otherwise modified from time to time in
accordance with this Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Section 4002 of ERISA, or any successor thereto.
"PERMITTED ENCUMBRANCES" means the following types of Liens (other
than any such Lien imposed pursuant to Section 401(a)(29) or 412(n) of the
Internal Revenue Code or by ERISA):
(i) Liens for taxes, assessments or governmental charges
or claims the payment of which is not, at the time, required by
subsection 5.3;
(20)
(ii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics and materialmen and other Liens imposed by
law incurred in the ordinary course of business for sums not yet
delinquent or being contested in good faith by appropriate
proceedings that do not involve any danger of the sale, forfeiture
or loss of any Collateral, if such reserve or other appropriate
provision, if any, as shall be required by GAAP shall have been made
therefore;
(iii) Liens incurred or deposits made in the ordinary
course of business in connection with workers' compensation,
unemployment insurance and other types of social security, or to
secure the performance of tenders, statutory obligations, surety and
appeal bonds, bids, leases, government contracts, trade contracts,
performance and return-of-money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed money);
(iv) any attachment or judgment Lien not constituting an
Event of Default under subsection 7.8;
(v) easements, rights-of-way, restrictions, minor
defects, encroachments or irregularities in title and other similar
charges or encumbrances not interfering in any material respect with
the ordinary conduct of the business of Company or any of its
Subsidiaries;
(vi) any (a) interest or title of a lessor or sublessor
under any lease permitted by subsection 6.9, (b) restriction or
encumbrance that the interest or title of such lessor or sublessor
may be subject to, or (c) subordination of the interest of the
lessee or sublessee under such lease to any restriction or
encumbrance referred to in the preceding clause (b);
(vii) Liens arising from filing UCC financing statements
relating solely to leases permitted by this Agreement;
(viii) 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;
(ix) the rights of others under agreements or
arrangements to the extent expressly permitted by the terms of
Sections 4(d) and 4(e) of the Aircraft Chattel Mortgages;
(x) Liens described in SCHEDULE 6.2 annexed hereto;
(xi) Liens arising pursuant to the AFL III Financing
Agreement; PROVIDED that such Liens do not encumber any assets other
than the AFL III Equipment and other assets of AFL III;
(21)
(xii) the rights of others under agreements or
arrangements to the extent expressly permitted by the terms of
Sections 4(d) and 4(e) of any Aircraft Chattel Mortgages entered
into in connection with the AFL III Financing Agreement;
(xiv) Liens granted pursuant to the Collateral Documents;
(xv) extensions, modifications, replacements and
refinancings of any of the foregoing, except in the case of the
foregoing clause (x) as may be limited as set forth in Schedule 6.2;
and
(xvi) Liens (other than Liens on the Collateral) securing
the Exit Facility to the extent that the aggregate principal amount
of the Indebtedness and Contingent Obligations secured thereby does
not exceed the amount permitted under Section 6.1(viii).
"PERMITTED EXTENSION INDEBTEDNESS" means renewals, extensions,
substitutions, refinancings or replacements (each an "EXTENSION") by Holdings or
any of its Subsidiaries of any Indebtedness (other than the Exit Facility) of
Holdings or such Subsidiary, including any such successive transactions thereby,
so long as (i) any such Indebtedness bears interest at a rate which does not
exceed 15% per annum, (ii) any such Permitted Extension Indebtedness shall be in
a principal amount that does not exceed the principal amount immediately prior
to such extension, PLUS the amount of any premium required to be paid in
connection with such extension pursuant to the terms of such Indebtedness, PLUS
the amount of expenses of Holdings or such Subsidiary reasonably incurred in
connection with such extension, (iii) in the case of any extension of
subordinated Indebtedness, such Permitted Extension Indebtedness is made
subordinate to the Obligations at least to the same extent as the Indebtedness
immediately prior to such extension, (iv) such Permitted Extension Indebtedness
has a final stated maturity later than the Final Scheduled Maturity Date of the
Notes and (v) the amortization and the other terms, provisions, conditions,
covenants and events of default thereof taken as a whole shall be no more
onerous or restrictive from the perspective of Holdings and its Subsidiaries or
any less favorable, from the perspective of Lenders than those contained in the
Indebtedness immediately prior to such extension.
"PERSON" means and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, joint stock
companies, Joint Ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts or other organizations, whether or not
legal entities, and governments and agencies and political subdivisions thereof.
"PLAN DOCUMENTS" means "Plan Documents" as defined in the Plan of
Reorganization and includes the documents attached to the Notice of Filing Plan
Documents, filed June 8, 2004 in connection with the Plan of Reorganization.
"PLAN OF REORGANIZATION" means the Joint Second Amended Plan of
Reorganization of the Debtors relating to Company, Holdings and certain of its
Subsidiaries, dated June 8, 2004, including the exhibits and schedules thereto,
as the same may be amended,
(22)
modified or supplemented from time to time in accordance with the provisions of
the Bankruptcy Code and the terms thereof and hereof.
"POLAR AIR" means Polar Air Cargo, Inc., a California corporation.
"POST EFFECTIVE DATE LEASE" has the meaning assigned to that term in
subsection 6.9.
"POTENTIAL EVENT OF DEFAULT" means a condition or event that, after
notice or the expiration of any grace period or both, would constitute an Event
of Default.
"PREFERRED EQUITY", as applied to the equity interests of any
Person, means equity interests of such Person (other than common stock of such
Person) of any class or classes (however designated) that ranks prior, as to the
payment of dividends or as to the distribution of assets upon any voluntary or
involuntary liquidation, dissolution or winding up of such Person, to equity
interests of any other class of such Person.
"PRIME RATE" means the rate that Administrative Agent announces from
time to time as its prime lending rate, as in effect from time to time. The
Prime Rate is a reference rate and does not necessarily represent the lowest or
best rate actually charged to any customer. Administrative Agent or any other
Lender may make commercial loans or other loans at rates of interest at, above
or below the Prime Rate.
"PROCEEDINGS" has the meaning assigned to that term in subsection
5.1(ix).
"PRO FORMA BASIS" means, with respect to compliance with any
covenant hereunder, compliance with such covenant after giving effect to any
proposed incurrence of Indebtedness (including Capital Leases) or the entering
into an Operating Lease by Holdings or any of its Subsidiaries and the
application of the proceeds thereof, the acquisition (whether by purchase,
merger or otherwise) or disposition (whether by sale, merger or otherwise) of
any company, entity or business or any asset (including any ACMI Contracted
Aircraft) by Holdings or any of its Subsidiaries or any other related action
which requires compliance on a Pro Forma Basis. In making any determination of
compliance on a Pro Forma Basis, such determination shall be performed after
good faith consultation with Administrative Agent using the consolidated
financial statements of Holdings and its Subsidiaries which shall be
reformulated as if any such incurrence of Indebtedness or entry into such
Operating Lease, as the case may be, and the application of proceeds,
acquisition, disposition or other related action had been consummated at the
beginning of the period specified in the covenant with respect to which Pro
Forma Basis compliance is required.
"PRO RATA SHARE " means, with respect to each Lender, the percentage
obtained by DIVIDING the Loan Exposure of that Lender BY the aggregate Loan
Exposure of all Lenders, as such percentage may be adjusted BY assignments
permitted pursuant to subsection 9.1. The Pro Rata Share of each Lender as of
the date hereof is set forth opposite the name of that Lender in SCHEDULE 1.1
annexed hereto.
"REGISTER" has the meaning assigned to that term in subsection
2.1.C.
(23)
"REGULATION A" means Regulation A of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"REGULATION D" means Regulation D of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"REGULATION T" means Regulation T of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"REGULATION U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"REGULATION X" means Regulation X of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"RELEASE" means any release, spill, emission, leaking, pumping,
pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping,
leaching or migration of Hazardous Materials into the indoor or outdoor
environment (including, without limitation, the abandonment or disposal of any
barrels, containers or other closed receptacles containing any Hazardous
Materials), or into or out of any Facility, including the movement of any
Hazardous Material through the air, soil, surface water, groundwater or
property.
"REPLACEMENT ENGINE" has the meaning assigned to that term in
subsection 9.21A.
"REQUISITE LENDERS" means Lenders having or holding 50.1% or more
of the aggregate Loan Exposure of all Lenders.
"RESTRICTED JUNIOR PAYMENT" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of stock
of Holdings now or hereafter outstanding, except a dividend payable solely in
shares of that class of stock to the holders of that class, (ii) any redemption,
retirement, sinking fund or similar payment, purchase or other acquisition for
value, direct or indirect, of any shares of any class of stock of Holdings now
or hereafter outstanding, (iii) any payment made to retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire
shares of any class of stock of Holdings now or hereafter outstanding, and (iv)
any payment or prepayment of principal of, premium, if any, or interest on, or
redemption, purchase, retirement, defeasance (including in-substance or legal
defeasance), sinking fund or similar payment with respect to, any Designated
Indebtedness.
"RESTRUCTURING DOCUMENTS" means the Restructuring Agreements, dated
July 27, 2004, among Company, Wilmington Trust Company, in its capacity as
Trustee to each of the Pass Through Trust Documents and the other parties party
thereto and any other documents incorporated therein or in connection therewith.
"S&P" means Standard & Poor's, a division of the McGraw-Hill
Companies, Inc.
"SAP" means SAP America, Inc.
(24)
"SEC" means the Securities and Exchange Commission.
"SECOND AIRCRAFT CHATTEL MORTGAGE" means with respect to each
Financed Aircraft, a Second Security Agreement and Chattel Mortgage
substantially in the form of EXHIBIT XI annexed hereto, granting a security
interest in such Financed Aircraft and Parts securing all Obligations that are
not secured by the First Chattel Mortgage entered into concurrently therewith,
as such Second Aircraft Chattel Mortgage is amended by an Aircraft Chattel
Mortgage Amendment delivered with respect thereto pursuant to subsection
3.1(xii) and as such Second Aircraft Chattel Mortgage may be further amended,
restated, supplemented or otherwise modified from time to time in accordance
with the terms hereof and thereof.
"SECURITIES" means any stock, shares, partnership interests, voting
trust certificates, certificates of interest or participation in any
profit-sharing agreement or arrangement, options, warrants, bonds, debentures,
notes, or other evidences of indebtedness, secured or unsecured, convertible,
subordinated or otherwise, or in general any instruments commonly known as
"securities" or any certificates of interest, shares or participations in
temporary or interim certificates for the purchase or acquisition of, or any
right to subscribe to, purchase or acquire, any of the foregoing.
"SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time, and any successor statute.
"SOLVENT" means, with respect to any Person, that as of the date of
determination both (A) (i) the then fair saleable value of the property of such
Person is (y) greater than the total amount of liabilities (including contingent
liabilities) of such Person and (z) not less than the amount that will be
required to pay the probable liabilities on such Person's then existing debts as
they become absolute and matured considering all financing alternatives and
potential asset sales reasonably available to such Person; (ii) such Person's
capital is not unreasonably small in relation to its business or any
contemplated or undertaken transaction; and (iii) such Person does not intend to
incur, or believe (nor should it reasonably believe) that it will incur, debts
beyond its ability to pay such debts as they become due; and (B) such Person is
"solvent" within the meaning given that term and similar terms under applicable
laws relating to fraudulent transfers and conveyances. For purposes of this
definition, the amount of any contingent liability at any time shall be computed
as the amount that, in light of all of the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become an
actual or matured liability.
"S-P" has the meaning assigned to that term in subsection 5.15B.
"SPARE ENGINE" means, as the context requires, a Spare Engine as
defined in a particular Aircraft Chattel Mortgage or all Spare Engines as
defined in all Aircraft Chattel Mortgages.
"SPECIFIED INDEBTEDNESS" has the meaning assigned to that term in
subsection 3.1(vii).
(25)
"SPECIFIED LEASE" has the meaning assigned to that term in
subsection 6.12 hereof.
"STORAGE PROGRAM" has the meaning assigned to that term in
subsection 5.16.
"STORED ENGINE" has the meaning assigned to that term in subsection
6.9B.
"SUBSIDIARIES GUARANTY" has the meaning assigned to that term in
subsection 3.1.
"SUBSIDIARY" means, with respect to any Person, any corporation,
partnership, association, joint venture or other business entity of which more
than 50% of the total voting power of shares of stock or other ownership
interests entitled (without regard to the occurrence of any contingency) to
vote in the election of the Person or Persons (whether directors, managers,
trustees or other Persons performing similar functions) having the power to
direct or cause the direction of the management and policies thereof is at the
time owned or controlled, directly or indirectly, by that Person or one or more
of the other Subsidiaries of that Person or a combination thereof.
"SUBSIDIARY GUARANTOR" means each Subsidiary of Holdings which
executes and delivers a counterpart to the Subsidiaries Guaranty, unless and
until such time as the respective Subsidiary is released from all of its
obligations under the Subsidiaries Guaranty in accordance with the terms and
provisions thereof.
"TAX" or "TAXES" means any present or future tax, levy, impost,
duty, charge, fee, deduction or withholding of any nature and whatever called,
by whomsoever, on whomsoever and wherever imposed, levied, collected, withheld
or assessed; PROVIDED that "TAX ON THE OVERALL NET INCOME" of a Person shall be
construed as a reference to a tax imposed by the jurisdiction in which that
Person's principal office (and/or, in the case of a Lender, its lending office)
is located or in which that Person is deemed to be doing business on all or part
of the net income, profits or gains of that Person (whether worldwide, or only
insofar as such income, profits or gains are considered to arise in or to relate
to a particular jurisdiction, or otherwise).
"TERM SHEET" has the meaning provided in the recitals hereto.
"TRANSACTION" means, collectively, (i) the consummation of the Plan
of Reorganization, (ii) the occurrence of the Fifth Restatement Effective Date,
and (iii) the payment of fees and expenses in connection with the foregoing.
"2000 PASS THROUGH TRUST DOCUMENTS" means that certain Pass Through
Trust Agreement dated as of January 28, 2000 between Atlas Air, Inc. and
Wilmington Trust Company, as Trustee (the "2000 PASS THROUGH TRUST AGREEMENT")
and any trust indenture and security agreements including any related trust
indenture and security agreement supplements which related to the equipment
notes to be held in trust pursuant to the 2000 Pass Through Trust Agreement and
all related agreements, as the same may be amended, restated, supplemented or
otherwise modified from time to time in accordance with this Agreement.
(26)
"UCC" means the Uniform Commercial Code (or any similar or
equivalent legislation) as in effect in any jurisdiction.
"UNITED STATES CITIZEN" has the meaning assigned to that term in
subsection 4.1B.
"UNRESTRICTED CASH AND CASH EQUIVALENTS" means Cash and Cash
Equivalents that are not subject to any restriction or limitation on Holdings or
its Subsidiaries' ability to withdraw (in the case of Cash) or sell (in the case
of Cash Equivalents).
"VALUE" of any non-Cash Proceeds, means the principal amount of such
non-Cash Proceeds or such other amount as may be agreed by the Borrower and the
Requisite Lenders.
1.2 ACCOUNTING TERMS; UTILIZATION OF GAAP FOR PURPOSES OF CALCULATIONS UNDER
AGREEMENT.
Except as otherwise expressly provided in this Agreement, all
accounting terms not otherwise defined herein shall have the meanings assigned
to them in conformity with GAAP.
1.3 OTHER DEFINITIONAL PROVISIONS.
References to "Sections" and "subsections" shall be to Sections and
subsections, respectively, of this Agreement unless otherwise specifically
provided. Any of the terms defined in subsection 1.1 may, unless the context
otherwise requires, be used in the singular or the plural, depending on the
reference.
SECTION 2.
AMOUNTS AND TERMS OF LOANS
2.1 LOANS; MAKING OF LOANS; NOTES; REGISTER.
A. LOANS. Subject to the terms and conditions of this Agreement and in
reliance upon the representations and warranties of Company herein set forth,
the Lenders and Company each hereby agree that prior to the date hereof, the
Lenders have made "Existing Aircraft Extended Loans" and "New Aircraft Term
Loans" under (and as defined in) the Existing Credit Agreement in the aggregate
principal amount of $41,890,494.06, the proceeds of which were used to purchase
and modify the Existing Aircraft. The principal amount of all "Existing Aircraft
Extended Loans" and "New Aircraft Term Loans" anticipated to be outstanding on
the Fifth Restatement Effective Date is set forth on Schedule 2.1 annexed hereto
and each such "Existing Aircraft Extended Loan" and "New Aircraft Term Loan," as
the case may be, shall be deemed to be a "Loan" in such principal amount upon
the satisfaction of the conditions set forth in subsection 3.1 and the
effectiveness of this Agreement. From and after the Fifth Restatement Effective
Date, each Lender severally agrees, subject to the terms and conditions of this
Agreement to maintain and extend its Pro Rata Share of the Loans and such Loans
shall be repaid as provided in subsection 2.4A. The Lenders shall have no
obligation to lend any additional amounts to Company under this Agreement.
(27)
B. NOTES. Each of the outstanding "Existing Aircraft Extended Notes"
and "New Aircraft Notes" under (and as defined in) the Existing Credit Agreement
shall be deemed amended and restated on the Fifth Restatement Effective Date to
reflect the extension of the maturity to the Final Scheduled Maturity Date. To
the extent requested by a Lender, Company shall execute and deliver on the Fifth
Restatement Effective Date to each Lender (or to Administrative Agent for that
Lender) Notes to evidence the Lender's Loans.
C. THE REGISTER.
(i) Administrative Agent shall maintain, at its address referred
to in subsection 9.8, a register for the recordation of the names and
addresses of the Lenders and the Loans of each Lender from time to time
(the "REGISTER"). The Register shall be available for inspection by
Company or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(ii) Administrative Agent shall record in the Register the Loans
from time to time of each Lender and each repayment or prepayment in
respect of the principal amount of the Loans of each Lender. Any such
recordation shall be conclusive and binding on Company and each Lender,
absent manifest error; PROVIDED that failure to make any such recordation,
or any error in such recordation, shall not affect Company's Obligations
in respect of the applicable Loans.
(iii) Each Lender shall record on its internal records (including,
without limitation the Notes held by such Lender) the amount of each Loan
made by it and each payment in respect thereof. Any such recordation shall
be conclusive and binding on Company, absent manifest error; PROVIDED that
failure to make any such recordation, or any error in such recordation,
shall not affect Company's Obligations in respect of the applicable Loans;
and PROVIDED FURTHER that in the event of any inconsistency between the
Register and any Lender's records, the recordations in the Register shall
govern.
(iv) Company, Administrative Agent and Lenders shall deem and treat
the Persons listed as Lenders in the Register as the holders and owners of
the corresponding Loans listed therein for all purposes hereof, and no
assignment or transfer of any such Loan shall be effective, in each case
unless and until an Assignment Agreement effecting the assignment or
transfer thereof shall have been accepted by Administrative Agent and
recorded in the Register as provided in subsection 9.1B(ii). Prior to such
recordation, all amounts owed with respect to the applicable Loan shall be
owed to the Lender listed in the Register as the owner thereof, and any
request, authority or consent of any Person who, at the time of making
such request or giving such authority or consent, is listed in the
Register as a Lender shall be conclusive and binding on any subsequent
holder, assignee or transferee of the corresponding Loans.
(v) Company hereby designates Administrative Agent to serve as
Company's agent solely for purposes of maintaining the Register as
provided in this subsection 2.1C, and Company hereby agrees that, to the
extent Administrative Agent serves in such capacity, Administrative Agent
and its officers, directors, employees, agents and affiliates shall
constitute Indemnitees for all purposes under subsection 9.3.
(28)
2.2 INTEREST ON THE LOANS.
A. RATE OF INTEREST. Subject to the provisions of subsections 2.6 and
2.7, each Loan shall bear interest on the unpaid principal amount thereof from
the date made through maturity (whether by acceleration or otherwise) at a rate
determined by reference to the Base Rate or the Adjusted Eurodollar Rate, as the
case may be. The basis for determining the interest rate with respect to any
Loan may be changed from time to time pursuant to subsection 2.2D. If on any day
a Loan is outstanding with respect to which notice has not been delivered to
Administrative Agent in accordance with the terms of this Agreement specifying
the applicable basis for determining the rate of interest, then for that day
that Loan shall bear interest determined by reference to the Adjusted Eurodollar
Rate.
Subject to the provisions of subsections 2.2E and 2.7, each Loan shall
bear interest through maturity as follows:
(i) if a Base Rate Loan, then at the sum of the Base Rate PLUS the
Applicable Margin per annum; or
(ii) if a Eurodollar Rate Loan, then at the sum of the Adjusted
Eurodollar Rate PLUS the Applicable Margin per annum.
The "APPLICABLE MARGIN" for (x) each Base Rate Loan shall be 3.125% and
(y) each Eurodollar Rate Loan shall be 4.125%.
B. INTEREST PERIODS. In connection with each Eurodollar Rate Loan,
Company may, pursuant to the applicable Notice of Conversion/Continuation select
an interest period (each an "INTEREST PERIOD") to be applicable to such Loan,
which Interest Period shall be a one month period; PROVIDED that:
(i) the initial Interest Period for any Eurodollar Rate Loan shall
commence on the date specified in the applicable Notice of
Conversion/Continuation, in the case of a Loan converted to a Eurodollar
Rate Loan;
(ii) in the case of immediately successive Interest Periods
applicable to a Eurodollar Rate Loan continued as such pursuant to a
Notice of Conversion/Continuation, each successive Interest Period shall
commence on the day on which the next preceding Interest Period expires;
(iii) if an Interest Period would otherwise expire on a day that is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; PROVIDED that, if any Interest Period would
otherwise expire on a day that is not a Business Day but is a day of the
month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day;
(iv) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically
corresponding day in the calendar
(29)
month at the end of such Interest Period) shall, subject to clause (v) of
this subsection 2.2B, end on the last Business Day of a calendar month;
(v) no Interest Period with respect to any portion of the Loans
shall extend beyond the Final Scheduled Maturity Date;
(vi) no Interest Period with respect to any portion of the Loans
shall extend beyond a date on which Company is required to make a
scheduled payment of principal of the Loans unless the sum of (a) the
aggregate principal amount of Loans that are Base Rate Loans PLUS (b) the
aggregate principal amount of Loans that are Eurodollar Rate Loans with
Interest Periods expiring on or before such date equals or exceeds the
principal amount required to be paid on the Loans on such date; and
(vii) in the event Company fails to specify an Interest Period for
any Eurodollar Rate Loan in the applicable Notice of
Conversion/Continuation, Company shall be deemed to have selected an
Interest Period of one month.
C. INTEREST PAYMENTS. Subject to the provisions of subsection 2.2E,
interest on each Loan shall be payable in arrears on and to each Interest
Payment Date applicable to that Loan, upon any prepayment of that Loan (to the
extent accrued on the amount being prepaid) and at maturity (including final
maturity).
D. CONVERSION OR CONTINUATION. Subject to the provisions of subsection
2.6, Company shall have the option (i) to convert at any time all or any part of
its outstanding Loans equal to $3,000,000 and integral multiples of $100,000 in
excess of that amount from Loans bearing interest at a rate determined by
reference to one basis to Loans bearing interest at a rate determined by
reference to an alternative basis or (ii) upon the expiration of any Interest
Period applicable to a Eurodollar Rate Loan, to continue all or any portion of
such Loan equal to $3,000,000 and integral multiples of $100,000 in excess of
that amount as a Eurodollar Rate Loan; PROVIDED, HOWEVER, that a Eurodollar Rate
Loan may only be converted into a Base Rate Loan on the expiration date of an
Interest Period applicable thereto.
Company shall deliver a Notice of Conversion/Continuation to
Administrative Agent no later than 12:00 Noon (New York time) at least one
Business Day in advance of the proposed conversion date (in the case of a
conversion to a Base Rate Loan) and at least three Business Days in advance of
the proposed conversion/continuation date (in the case of a conversion to, or a
continuation of, a Eurodollar Rate Loan). A Notice of Conversion/Continuation
shall specify (i) the proposed conversion/continuation date (which shall be a
Business Day), (ii) the amount and type of the Loan to be converted/continued,
(iii) the nature of the proposed conversion/continuation, (iv) in the case of a
conversion to, or a continuation of, a Eurodollar Rate Loan, the requested
Interest Period, and (v) in the case of a conversion to, or a continuation of, a
Eurodollar Rate Loan, that no Potential Event of Default or Event of Default has
occurred and is continuing. In lieu of delivering the above-described Notice of
Conversion/Continuation, Company may give Administrative Agent telephonic notice
by the required time of any proposed conversion/continuation under this
subsection 2.2D; PROVIDED that such notice shall be promptly confirmed in
writing by delivery of a Notice of Conversion/Continuation to Administrative
Agent on or before the proposed conversion/continuation date.
(30)
Neither Administrative Agent nor any Lender shall incur any liability to
Company in acting upon any telephonic notice referred to above that
Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to act on behalf of Company or for
otherwise acting in good faith under this subsection 2.2D, and upon conversion
or continuation of the applicable basis for determining the interest rate with
respect to any Loans in accordance with this Agreement pursuant to any such
telephonic notice Company shall have effected a conversion or continuation, as
the case may be, hereunder.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a Notice
of Conversion/Continuation for conversion to, or continuation of, a Eurodollar
Rate Loan (or telephonic notice in lieu thereof) shall be irrevocable on and
after the related Interest Rate Determination Date, and Company shall be bound
to effect a conversion or continuation in accordance therewith.
E. DEFAULT RATE. Upon the occurrence and during the continuation of any
Event of Default, the outstanding principal amount of all Loans and, to the
extent permitted by applicable law, any interest payments thereon not paid when
due and any fees and other amounts then due and payable hereunder, shall
thereafter bear interest (including post-petition interest in any proceeding
under the Bankruptcy Code or other applicable bankruptcy laws) payable upon
demand at a rate that is 2% per annum in excess of the interest rate otherwise
payable under this Agreement with respect to the applicable Loans (or, in the
case of any such fees and other amounts, at a rate which is 2% per annum in
excess of the interest rate otherwise payable under this Agreement for Base Rate
Loans); PROVIDED that, in the case of Eurodollar Rate Loans, upon the expiration
of the Interest Period in effect at the time any such increase in interest rate
is effective such Eurodollar Rate Loans shall thereupon become Base Rate Loans
and shall thereafter bear interest payable upon demand at a rate which is 2% per
annum in excess of the interest rate otherwise payable under this Agreement for
Base Rate Loans. Payment or acceptance of the increased rates of interest
provided for in this subsection 2.2E is not a permitted alternative to timely
payment and shall not constitute a waiver of any Event of Default or otherwise
prejudice or limit any rights or remedies of Administrative Agent or any Lender.
F. COMPUTATION OF INTEREST. Interest on each Loan shall be computed on
the basis of a 360-day year, in each case for the actual number of days elapsed
in the period during which it accrues. In computing interest on any Loan, the
date of the making of such Loan or the first day of an Interest Period
applicable to such Loan or, with respect to a Base Rate Loan being converted
from a Eurodollar Rate Loan, the date of conversion of such Eurodollar Rate Loan
to such Base Rate Loan, as the case may be, shall be included, and the date of
payment of such Loan or the expiration date of an Interest Period applicable to
such Loan or, with respect to a Base Rate Loan being converted to a Eurodollar
Rate Loan, the date of conversion of such Base Rate Loan to such Eurodollar Rate
Loan, as the case may be, shall be excluded; PROVIDED that if a Loan is repaid
on the same day on which it is made, one day's interest shall be paid on that
Loan.
2.3 FEES.
A. ADMINISTRATIVE FEE. Company agrees to pay to Administrative Agent,
an Administrative Agent's fee in the amount as from time to time agreed upon by
Company and Administrative Agent.
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B. OTHER FEES. Company agrees to pay to Administrative Agent such other
fees in the amounts and at the times separately agreed upon between Company and
Administrative Agent.
2.4 REPAYMENTS, PREPAYMENTS AND REDUCTIONS IN LOANS; GENERAL PROVISIONS
REGARDING PAYMENTS.
A. SCHEDULED REPAYMENTS.
SCHEDULED REPAYMENTS OF LOANS. Company shall make principal payments
of the Loans in installments on each Loan Repayment Date in an amount equal to
the applicable Loan Repayment Amount for such date set forth on Schedule 2.4;
PROVIDED that such scheduled installments of principal of the Loans shall be
reduced in connection with voluntary or mandatory prepayments of the Loans in
accordance with subsection 2.4B; and PROVIDED FURTHER that the Loans and all
other amounts owed hereunder with respect to the Loans shall be paid in full no
later than the Final Scheduled Maturity Date, and the final installment payable
by Company in respect of the Loans on such date shall be in an amount sufficient
to repay all amounts owing by Company under this Agreement with respect to the
Loans.
B. PREPAYMENTS.
(i) VOLUNTARY PREPAYMENTS. Company may, upon not less than three
Business Days' prior written or telephonic notice given to Administrative
Agent by 12:00 Noon (New York time) on the date required and, if given by
telephone, promptly confirmed in writing to Administrative Agent (which
original written or telephonic notice Administrative Agent will promptly
transmit by telefacsimile or telephone to each Lender), at any time and
from time to time prepay, without premium or penalty (other than pursuant
to subsection 2.6D), any Loans on any Business Day in whole or in part in
an aggregate minimum amount of $1,000,000 (or such lesser amount as may be
agreed to by the Administrative Agent) and integral multiples of $100,000
in excess of that amount; PROVIDED, HOWEVER, that a Eurodollar Rate Loan
may only be prepaid on the expiration of the Interest Period applicable
thereto. Notice of prepayment having been given as aforesaid, the
principal amount of the Loans specified in such notice shall become due
and payable on the prepayment date specified therein. Any such voluntary
prepayment shall be applied as specified in subsection 2.4B(iii).
(ii) MANDATORY PREPAYMENTS.
(a) PREPAYMENTS FROM ASSET SALES. (I) No later than the
second Business Day following the date of receipt by Holdings or any
of its Subsidiaries of Cash Proceeds of any Asset Sale that is not
an Asset Sale of Financed Aircraft, Company shall prepay, without
premium or penalty (other than pursuant to subsection 2.6D), the
Loans in an amount equal to the Net Cash Proceeds of such Asset
Sale; PROVIDED that, with respect to Asset Sales which do not
include the sale of a Financed Aircraft, so long as no Potential
Event of Default or Event of Default has occurred and is continuing,
Holdings or any of its Subsidiaries shall have the option to use the
Net Cash Proceeds within one hundred eighty (180)
(32)
days of receipt thereof for the purpose of making Consolidated
Capital Expenditures; PROVIDED, FURTHER, that if all or any portion
of such Net Cash Proceeds not required to be applied as provided in
the preceding proviso are not so reinvested within such 180-day
period (or such earlier date as Holdings or its respective
Subsidiary determines not to reinvest the Net Cash Proceeds from
such Asset Sale as set forth above), such remaining portion shall be
applied on the last day of such period (or such earlier date as the
case may be) as provided above without regard to the preceding
proviso and (II) no later than the second Business Day following the
date of receipt by Holdings or any of its Subsidiaries of Cash
Proceeds of any Asset Sale of a Financed Aircraft, Company shall
prepay, without premium or penalty (other than pursuant to
subsection 2.6D), the Loans in an amount equal to the greater of the
(i) Assigned Value of such Financed Aircraft and (ii) the sum of (x)
the Net Cash Proceeds of such Asset Sale and (y) the Value of any
non-Cash Proceeds of such Asset Sale. Concurrently with any
prepayment of the Loans pursuant to this subsection 2.4B(ii)(a),
Company shall deliver to Administrative Agent an Officers'
Certificate demonstrating the derivation of the Net Cash Proceeds of
the correlative Asset Sale from the gross sales price thereof and
the amount required to be prepaid pursuant to this subsection
2.4B(ii)(a). In the event that Company shall, at any time after
receipt of Cash Proceeds of any Asset Sale requiring a prepayment
pursuant to this subsection 2.4B(ii)(a), determine that the
prepayments previously made in respect of such Asset Sale were in an
aggregate amount less than that required by the terms of this
subsection 2.4B(ii)(a), Company shall promptly make an additional
prepayment of the Loans in the manner described above in an amount
equal to the amount of any such deficit, and Company shall
concurrently therewith deliver to Administrative Agent an Officers'
Certificate demonstrating the derivation of the additional Net Cash
Proceeds resulting in such deficit and the additional amount
required to be prepaid pursuant to this subsection 2.4B(ii)(a). Any
mandatory prepayments pursuant to this subsection 2.4B(ii)(a) shall
be applied as specified in subsection 2.4B(iii).
(b) PREPAYMENTS DUE TO ISSUANCE OF CERTAIN INDEBTEDNESS. On
the date of receipt by Holdings or any of its Subsidiaries of the
cash proceeds (net of underwriting discounts and commissions and
other reasonable costs associated therewith) from the issuance of
(x) any Permitted Extension Indebtedness with respect to a Financed
Aircraft or (y) any other Indebtedness (other than Indebtedness
permitted under Section 6.1 whether incurred on the Fifth
Restatement Effective Date or thereafter), Company shall prepay,
without premium or penalty (other than pursuant to subsection 2.6D),
the Loans in an amount equal to such net cash proceeds. Any such
mandatory prepayments shall be applied as specified in subsection
2.4B(iii). Notwithstanding the foregoing, any such cash proceeds
received pursuant to the AFL III Financing Agreement shall not be
subject to the provisions of this subsection 2.4(B)(ii)(b).
(c) PREPAYMENTS DUE TO INSURANCE AND CONDEMNATION PROCEEDS.
No later than the second Business Day following the date of receipt
by Holdings or
(33)
any of its Subsidiaries of any cash payments under any of the
casualty insurance policies covering damage to or loss of property
maintained pursuant to subsection 5.4 resulting from damage to or
loss of all or any portion of the Collateral or any other tangible
asset (net of actual and documented reasonable costs incurred by
Holdings or any of its Subsidiaries in connection with adjustment
and settlement thereof, "INSURANCE PROCEEDS") or any proceeds
resulting from the taking of assets by the power of eminent domain,
condemnation or otherwise (net of actual and documented reasonable
costs incurred by Company in connection with adjustment and
settlement thereof, "CONDEMNATION PROCEEDS") (other than (x) the
portion of such proceeds promptly applied to repair or replace the
property in respect of which such proceeds were paid, (y) the
portion of such proceeds required to be paid to Lien holders on
assets other than Financed Aircraft or (z) proceeds applied pursuant
to subsection 2.4B(ii)(d)), Company shall prepay, without premium or
penalty (other than pursuant to subsection 2.6D), the Loans in an
amount equal to such proceeds. Company shall, no later than 180 days
after receipt of any such Insurance Proceeds or Condemnation
Proceeds that have not theretofore been applied to the Obligations,
make an additional prepayment of Loans, in the manner described
above, in the full amount of all such proceeds that have not then
been applied to repair or replace the property in respect of which
such proceeds were paid. Any such mandatory prepayments shall be
applied as specified in subsection 2.4B(iii). Notwithstanding the
foregoing so long as (i) the AFL III Financing remains outstanding,
Insurance Proceeds and Condemnation Proceeds with respect to the AFL
III Equipment shall not be subject to the provisions of this
subsection 2.4(B)(ii)(c) to the extent such proceeds are applied in
accordance with the terms of the AFL III Financing Agreement.
(d) PREPAYMENTS DUE TO AN EVENT OF LOSS. No later than the
earlier of (x) the second Business Day following the date of receipt
by Holdings or any of its Subsidiaries of any Insurance Proceeds or
Condemnation Proceeds with respect to a Financed Aircraft or (y)
180 days following an Event of Loss with respect to a Financed
Aircraft, Company shall prepay, without premium or penalty (other
than pursuant to subsection 2.6D), the Loans by an amount equal to
the greater of the (i) Assigned Value of such Financed Aircraft and
(ii) the Insurance Proceeds or Condemnation Proceeds, as the case
may be, received with respect to such Financed Aircraft; PROVIDED
that Holdings and its Subsidiaries shall not be required to make a
prepayment pursuant to this subsection 2.4B(ii)(d) with respect to
any proceeds applied pursuant to Section 4(f)(iv)(A) or 4(f)(iv)(B)
of any Aircraft Chattel Mortgage.
(iii) APPLICATION OF PREPAYMENTS.
(a) APPLICATION OF VOLUNTARY PREPAYMENTS BY TYPE OF LOANS
AND ORDER OF MATURITY. Any voluntary prepayments (other than a
prepayment of Loans made with respect to a specific Financed
Aircraft, Airframe or Engine) of the Loans pursuant to subsection
2.4B(i) shall be applied to reduce the scheduled installments of
principal of the Loans on a pro rata basis.
(34)
(b) APPLICATION OF MANDATORY PREPAYMENTS OF LOANS. Any
mandatory prepayments of the Loans pursuant to subsection 2.4B(ii)
shall be applied to reduce the scheduled installments of principal
of the Loans in inverse order of maturity.
(c) APPLICATION OF PREPAYMENTS TO BASE RATE LOANS AND
EURODOLLAR RATE LOANS. Any prepayment of Loans shall be applied
first to Base Rate Loans to the full extent thereof before
application to Eurodollar Rate Loans, in each case in a manner which
minimizes the amount of any payments required to be made by Company
pursuant to subsection 2.6D.
C. GENERAL PROVISIONS REGARDING PAYMENTS.
(i) MANNER AND TIME OF PAYMENT. All payments by Company of principal,
interest, fees and other Obligations hereunder and under the Notes shall be made
in Dollars in same day funds, without defense, set-off or counterclaim, free of
any restriction or condition, and delivered to Administrative Agent not later
than 12:00 Noon (New York time) on the date due at the Funding and Payment
Office for the account of Lenders; funds received by Administrative Agent after
that time on such due date shall be deemed to have been paid by Company on the
next succeeding Business Day. Holdings and Company hereby authorize
Administrative Agent to charge their respective accounts (and the accounts of
their Subsidiaries) with Administrative Agent in order to cause timely payment
to be made to Administrative Agent of all principal, interest, fees and expenses
due hereunder (subject to sufficient funds being available in its accounts for
that purpose).
(ii) APPLICATION OF PAYMENTS TO PRINCIPAL AND INTEREST. All payments in
respect of the principal amount of any Loan shall include payment of accrued
interest on the principal amount being repaid or prepaid, and all such payments
shall be applied to the payment of interest before application to principal.
(iii) APPORTIONMENT OF PAYMENTS. Aggregate principal and interest payments
in respect of Loans shall be apportioned among all outstanding Loans to which
such payments relate, in each case proportionately to Lenders' respective Pro
Rata Shares. Administrative Agent shall promptly distribute to each Lender, at
its primary address set forth below its name on the appropriate signature page
hereof or at such other address as such Lender may request, its Pro Rata Share
of all such payments received by Administrative Agent. Notwithstanding the
foregoing provisions of this subsection 2.4C(iii), if, pursuant to the
provisions of subsection 2.6C, any Notice of Conversion/Continuation is
withdrawn as to any Affected Lender or if any Affected Lender makes Base Rate
Loans in lieu of its Pro Rata Share of any Eurodollar Rate Loans, Administrative
Agent shall give effect thereto in apportioning payments received thereafter.
(iv) PAYMENTS ON BUSINESS DAYS. Whenever any payment to be made
hereunder shall be stated to be due on a day that is not a Business Day, such
payment
(35)
shall be made on the next succeeding Business Day and such extension of time
shall be included in the computation of the payment of interest hereunder.
(v) NOTATION OF PAYMENT. Each Lender agrees that before disposing
of any Note held by it, or any part thereof (other than by granting
participations therein), that Lender will make a notation thereon of all
Loans evidenced by that Note and all principal payments previously made
thereon and of the date to which interest thereon has been paid; provided
that the failure to make (or any error in the making of) a notation of any
Loan made under such Note shall not limit or otherwise affect the
obligations of Company hereunder or under such Note with respect to any
Loan or any payments of principal or interest on such Note.
2.5 USE OF PROCEEDS.
A. LOANS. The proceeds of the Loans were used to finance the purchase
and renovation of the Existing Aircraft as shown on SCHEDULE 2.1 annexed hereto.
B. MARGIN REGULATIONS. No portion of the proceeds of any borrowing
under this Agreement shall be, or were used by Company or any of its
Subsidiaries in any manner that might cause the borrowing or the application of
such proceeds to violate Regulation U, Regulation T or Regulation X or any other
regulation of such Board or to violate the Exchange Act, in each case as in
effect on the date or dates of such borrowing and such use of proceeds.
2.6 SPECIAL PROVISIONS GOVERNING EURODOLLAR RATE LOANS.
Notwithstanding any other provision of this Agreement to the contrary, the
following provisions shall govern with respect to Eurodollar Rate Loans as to
the matters covered:
A. DETERMINATION OF APPLICABLE INTEREST RATE. As soon as practicable
after 10:00 A.M. (New York time) on each Interest Rate Determination Date,
Administrative Agent shall determine (which determination shall, absent manifest
error, be final, conclusive and binding upon all parties) the interest rate that
shall apply to the Eurodollar Rate Loans for which an interest rate is then
being determined for the applicable Interest Period and shall promptly give
notice thereof (in writing or by telephone confirmed in writing) to Company and
each Lender.
B. INABILITY TO DETERMINE APPLICABLE INTEREST RATE. In the event that
Administrative Agent shall have determined (which determination shall be final
and conclusive and binding upon all parties hereto), on any Interest Rate
Determination Date with respect to any Eurodollar Rate Loans, that by reason of
circumstances affecting the interbank Eurodollar market adequate and fair means
do not exist for ascertaining the interest rate applicable to such Loans on the
basis provided for in the definition of Adjusted Eurodollar Rate, Administrative
Agent shall on such date give notice (by telefacsimile or by telephone confirmed
in writing) to Company and each Lender of such determination, whereupon (i) no
Loans may be made as, or converted to, Eurodollar Rate Loans until such time as
Administrative Agent notifies Company and Lenders that the circumstances giving
rise to such notice no longer exist and (ii) Notice of Conversion/Continuation
given by Company with respect to the Loans in respect of which such
determination was made shall be deemed to be rescinded by Company.
(36)
C. ILLEGALITY OR IMPRACTICABILITY OF EURODOLLAR RATE LOANS. In the
event that on any date any Lender shall have determined (which determination
shall be final and conclusive and binding upon all parties hereto but shall be
made only after consultation with Company and Administrative Agent) that the
maintaining or continuation of its Eurodollar Rate Loans (i) has become unlawful
as a result of compliance by such Lender in good faith with any law, treaty,
governmental rule, regulation, guideline or order (or would conflict with any
such treaty, governmental rule, regulation, guideline or order not having the
force of law even though the failure to comply therewith would not be unlawful)
or (ii) has become impracticable, or would cause such Lender material hardship,
as a result of contingencies occurring after the date of this Agreement which
materially and adversely affect the interbank Eurodollar market or the position
of such Lender in that market, then, and in any such event, such Lender shall
be an "AFFECTED LENDER" and it shall on that day give notice (by telefacsimile
or by telephone confirmed in writing) to Company and Administrative Agent of
such determination (which notice Agent shall promptly transmit to each other
Lender). Thereafter (a) the obligation of the Affected Lender to convert Loans
to Eurodollar Rate Loans shall be suspended until such notice shall be withdrawn
by the Affected Lender, (b) to the extent such determination by the Affected
Lender relates to a Eurodollar Rate Loan then being requested by Company
pursuant to a Notice of Conversion/Continuation, the Affected Lender shall make
such Loan as (or convert such Loan to, as the case may be) a Base Rate Loan, (c)
the Affected Lender's obligation to maintain its outstanding Eurodollar Rate
Loans (the "AFFECTED LOANS") shall be terminated at the earlier to occur of the
expiration of the Interest Period then in effect with respect to the Affected
Loans or when required by law, and (d) the Affected Loans shall automatically
convert into Base Rate Loans on the date of such termination. Notwithstanding
the foregoing, to the extent a determination by an Affected Lender as described
above relates to a Eurodollar Rate Loan then being requested by Company pursuant
to a Notice of Conversion/Continuation, Company shall have the option, subject
to the provisions of subsection 2.6D, to rescind such Notice of
Conversion/Continuation as to all Lenders by giving notice (by telefacsimile or
by telephone confirmed in writing) to Administrative Agent of such rescission on
the date on which the Affected Lender gives notice of its determination as
described above (which notice of rescission Administrative Agent shall promptly
transmit to each other Lender). Except as provided in the immediately preceding
sentence, nothing in this subsection 2.6C shall affect the obligation of any
Lender other than an Affected Lender to make or maintain Loans as, or to convert
Loans to, Eurodollar Rate Loans in accordance with the terms of this Agreement.
D. COMPENSATION FOR BREAKAGE OR NON-COMMENCEMENT OF INTEREST PERIODS.
Company shall compensate each Lender, upon written request by that Lender (which
request shall set forth the basis for requesting such amounts), for all
reasonable losses, expenses and liabilities (including, without limitation, any
interest paid by that Lender to lenders of funds borrowed by it to make or carry
its Eurodollar Rate Loans and any loss, expense or liability sustained by that
Lender in connection with the liquidation or re-employment of such funds) which
that Lender may sustain: (i) if for any reason (other than a default by that
Lender) a conversion to or continuation of any Eurodollar Rate Loan does not
occur on a date specified therefore in a Notice of Conversion/Continuation or a
telephonic request for conversion or continuation, (ii) if any prepayment or
other principal payment or any conversion of any of its Eurodollar Rate Loans
occurs on a date prior to the last day of an Interest Period applicable to that
Loan, (iii) if any prepayment of any of its Eurodollar Rate Loans is not made on
any date
(37)
specified in a notice of prepayment given by Company, or (iv) as a consequence
of any other default by Company in the repayment of its Eurodollar Rate Loans
when required by the terms of this Agreement.
E. BOOKING OF EURODOLLAR RATE LOANS. Any Lender may make, carry or
transfer Eurodollar Rate Loans at, to, or for the account of any of its branch
offices or the office of an Affiliate of that Lender.
F. ASSUMPTIONS CONCERNING FUNDING OF EURODOLLAR RATE LOANS.
Calculation of all amounts payable to a Lender under this subsection 2.6 and
under subsection 2.7A shall be made as though that Lender had actually funded
each of its relevant Eurodollar Rate Loans through the purchase of a Eurodollar
deposit bearing interest at the rate obtained pursuant to clause (i) of the
definition of Adjusted Eurodollar Rate in an amount equal to the amount of such
Eurodollar Rate Loan and having a maturity comparable to the relevant Interest
Period and through the transfer of such Eurodollar deposit from an offshore
office of that Lender to a domestic office of that Lender in the United States
of America; PROVIDED, HOWEVER, that each Lender may fund each of its Eurodollar
Rate Loans in any manner it sees fit and the foregoing assumptions shall be
utilized only for the purposes of calculating amounts payable under this
subsection 2.6 and under subsection 2.7A.
G. EURODOLLAR RATE LOANS AFTER DEFAULT. After the occurrence of and
during the continuation of a Potential Event of Default or an Event of Default,
(i) Company may not elect to have a Loan be maintained as, or converted to, a
Eurodollar Rate Loan after the expiration of any Interest Period then in effect
for that Loan and (ii) subject to the provisions of subsection 2.6D, any Notice
of Conversion/Continuation given by Company with respect to a requested
conversion/continuation that has not yet occurred shall be deemed to be
rescinded by Company.
2.7 INCREASED COSTS; TAXES; CAPITAL ADEQUACY.
A. COMPENSATION FOR INCREASED COSTS AND TAXES. Subject to the
provisions of subsection 2.7B, in the event that any Lender shall determine
(which determination shall, absent manifest error, be final and conclusive and
binding upon all parties hereto) that any law, treaty or governmental rule,
regulation or order, or any change therein or in the interpretation,
administration or application thereof (including the introduction of any new
law, treaty or governmental rule, regulation or order), or any determination of
a court or governmental authority, in each case that becomes effective after the
date hereof, or compliance by such Lender with any guideline, request or
directive issued or made after the date hereof by any central bank or other
governmental or quasi-governmental authority (whether or not having the force
of law):
(i) subjects such Lender (or its applicable lending office) to any
additional Tax (other than any Tax on the overall net income of such
Lender) with respect to this Agreement or any of its obligations hereunder
or any payments to such Lender (or its applicable lending office) of
principal, interest, fees or any other amount payable hereunder;
(38)
(ii) imposes, modifies or holds applicable any reserve (including
without limitation any marginal, emergency, supplemental, special or other
reserve), special deposit, compulsory loan, FDIC insurance or similar
requirement against assets held by, or deposits or other liabilities in or
for the account of, or advances or loans by, or other credit extended by,
or any other acquisition of funds by, any office of such Lender (other
than any such reserve or other requirements with respect to Eurodollar
Rate Loans that are reflected in the definition of Adjusted Eurodollar
Rate); or
(iii) imposes any other condition (other than with respect to a Tax
matter) on or affecting such Lender (or its applicable lending office) or
its obligations hereunder or the interbank Eurodollar market;
and the result of any of the foregoing is to increase the cost to such Lender of
agreeing to make, making or maintaining Loans hereunder or to reduce any amount
received or receivable by such Lender (or its applicable lending office) with
respect thereto; then, in any such case, Company shall promptly pay to such
Lender, upon receipt of the statement referred to in the next sentence, such
additional amount or amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Lender in its
sole discretion shall determine) as may be necessary to compensate such Lender
for any such increased cost or reduction in amounts received or receivable
hereunder. Such Lender shall deliver to Company (with a copy to Administrative
Agent) a written statement, setting forth in reasonable detail the basis for
calculating the additional amounts owed to such Lender under this subsection
2.7A, which statement shall be conclusive and binding upon all parties hereto
absent manifest error.
B. WITHHOLDING OF TAXES.
(i) PAYMENTS TO BE FREE AND CLEAR. All sums payable by Company
under this Agreement and the other Loan Documents shall be paid free and
clear of and (except to the extent required by law) without any deduction
or withholding on account of any Tax (other than a Tax on the overall net
income of any Lender) imposed, levied, collected, withheld or assessed by
or within the United States of America or any political subdivision in or
of the United States of America or any other jurisdiction from or to which
a payment is made by or on behalf of Company or by any federation or
organization of which the United States of America or any such
jurisdiction is a member at the time of payment.
(ii) GROSSING-UP OF PAYMENTS. If Company or any other Person is
required by law to make any deduction or withholding on account of any
such Tax from any sum paid or payable by Company to Administrative Agent
or any Lender under any of the Loan Documents:
(a) Company shall notify Administrative Agent of any such
requirement or any change in any such requirement as soon as Company
becomes aware of it;
(b) Company shall pay any such Tax before the date on which
penalties attach thereto, such payment to be made (if the liability
to pay is
(39)
imposed on Company) for its own account or (if that liability is
imposed on Administrative Agent or such Lender, as the case may be)
on behalf of and in the name of Administrative Agent or such Lender;
(c) the sum payable by Company in respect of which the
relevant deduction, withholding or payment is required shall be
increased to the extent necessary to ensure that, after the making
of that deduction, withholding or payment, Administrative Agent or
such Lender, as the case may be, receives on the due date a net sum
equal to what it would have received had no such deduction,
withholding or payment been required or made; and
(d) within 30 days after paying any sum from which it is
required by law to make any deduction or withholding, and within 30
days after the due date of payment of any Tax which it is required
by clause (b) above to pay, Company shall deliver to Administrative
Agent evidence satisfactory to the other affected parties of such
deduction, withholding or payment and of the remittance thereof to
the relevant taxing or other authority;
PROVIDED that no such additional amount shall be required to be paid to
any Lender under clause (c) above except to the extent that any change
after the date hereof (in the case of each Lender listed on the signature
pages hereof) or after the date of the Assignment Agreement pursuant to
which such Lender became a Lender (in the case of each other Lender) in
any such requirement for a deduction, withholding or payment as is
mentioned therein shall result in an increase in the rate of such
deduction, withholding or payment from that in effect at the date of this
Agreement or at the date of such Assignment Agreement, as the case may be,
in respect of payments to such Lender.
(iii) EVIDENCE OF EXEMPTION FROM U.S. WITHHOLDING TAX.
(a) Each Lender that is organized under the laws of any
jurisdiction other than the United States or any state or other
political subdivision thereof (for purposes of this subsection
2.7B(iii), a "NON-US LENDER") shall deliver to Administrative Agent
for transmission to Company, on or prior to the Fifth Restatement
Effective Date (in the case of each Lender listed on the signature
pages hereof) or on the date of the Assignment Agreement pursuant to
which it becomes a Lender (in the case of each other Lender), and at
such other times as may be necessary in the determination of Company
or Administrative Agent (each in the reasonable exercise of its
discretion), (1) two original copies of Internal Revenue Service
Form W-8ECI or W-8BEN (or any successor forms), properly completed
and duly executed by such Lender, together with any other
certificate or statement of exemption required under the Internal
Revenue Code or the regulations issued thereunder to establish that
such Lender is not subject to deduction or withholding of United
States federal income tax with respect to any payments to such
Lender of principal, interest, fees or other amounts payable under
any of the Loan Documents or (2) if such Lender is not a "bank" or
other Person described in Section 881(c)(3) of the Internal Revenue
Code and cannot deliver either Internal Revenue Service Form W-8ECI
or W-8BEN pursuant to
(40)
clause (1) above, a Certificate re Non-Bank Status together with two
original copies of Internal Revenue Service Form W-8BEN (or any
successor form), properly completed and duly executed by such
Lender, together with any other certificate or statement of
exemption required under the Internal Revenue Code or the
regulations issued thereunder to establish that such Lender is not
subject to deduction or withholding of United States federal income
tax with respect to any payments to such Lender of interest payable
under any of the Loan Documents.
(b) Each Lender required to deliver any forms, certificates
or other evidence with respect to United States federal income tax
withholding matters pursuant to subsection 2.7B(iii)(a) hereby
agrees, from time to time after the initial delivery by such Lender
of such forms, certificates or other evidence, whenever a lapse in
time or change in circumstances renders such forms, certificates or
other evidence obsolete or inaccurate in any material respect, such
Lender shall (1) deliver to Administrative Agent for transmission to
Company two new original copies of Internal Revenue Service Form
W-8ECI or W-8BEN, or a Certificate re Non-Bank Status and two
original copies of Internal Revenue Service Form W-8BEN, as the case
may be, properly completed and duly executed by such Lender,
together with any other certificate or statement of exemption
required in order to confirm or establish that such Lender is not
subject to deduction or withholding of United States federal income
tax with respect to payments to such Lender under the Loan Documents
or (2) immediately notify Administrative Agent and Company of its
inability to deliver any such forms, certificates or other evidence.
(c) Company shall not be required to pay any additional
amount to any Non-US Lender under clause (c) of subsection 2.7B(ii)
if such Lender shall have failed to satisfy the requirements of
subsection 2.7B(iii)(a); PROVIDED that if such Lender shall have
satisfied such requirements on the Fifth Restatement Effective Date
(in the case of each Lender listed on the signature pages hereof) or
on the date of the Assignment Agreement pursuant to which it became
a Lender (in the case of each other Lender), nothing in this
subsection 2.7B(iii)(c) shall relieve Company of its obligation to
pay any additional amounts pursuant to clause (c) of subsection
2.7B(ii) in the event that, as a result of any change in any
applicable law, treaty or governmental rule, regulation or order, or
any change in the interpretation, administration or application
thereof, such Lender is no longer properly entitled to deliver
forms, certificates or other evidence at a subsequent date
establishing the fact that such Lender is not subject to withholding
as described in subsection 2.7B(iii)(a).
C. CAPITAL ADEQUACY ADJUSTMENT. If any Lender shall have determined
that the adoption, effectiveness, phase-in or applicability after the date
hereof of any law, rule or regulation (or any provision thereof) regarding
capital adequacy, or any change therein or in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Lender (or its applicable lending office) with any guideline, request or
directive regarding
(41)
capital adequacy (whether or not having the force of law) of any such
governmental authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on the capital of such Lender or any
corporation controlling such Lender as a consequence of, or with reference to,
such Lender's Loans or other obligations hereunder to a level below that which
such Lender or such controlling corporation could have achieved but for such
adoption, effectiveness, phase-in, applicability, change or compliance (taking
into consideration the policies of such Lender or such controlling corporation
with regard to capital adequacy), then from time to time, within five Business
Days after receipt by Company from such Lender of the statement referred to in
the next sentence, Company shall pay to such Lender such additional amount or
amounts as will compensate such Lender or such controlling corporation on an
after-tax basis for such reduction. Such Lender shall deliver to Company (with a
copy to Administrative Agent ) a written statement, setting forth in reasonable
detail the basis of the calculation of such additional amounts, which statement
shall be conclusive and binding upon all parties hereto absent manifest error.
D. SUBSTITUTE LENDERS. In the event Company is required under the
provisions of this subsection 2.7 to make payments in a material amount to any
Lender or in the event any Lender fails to lend to Company in accordance with
this Agreement, Company may, so long as no Event of Default or Potential Event
of Default shall have occurred and be continuing, elect to terminate such Lender
as a party to this Agreement; PROVIDED that, concurrently with such termination,
(i) Company shall pay that Lender all principal, interest and fees and other
amounts (including without limitation, amounts, if any, owed under this
subsection 2.7) owed to such Lender through such date of termination, (ii)
another financial institution satisfactory to Company and Administrative Agent
(or if Administrative Agent is also the Lender to be terminated, the successor
Administrative Agent) shall agree, as of such date, to become a Lender for all
purposes under this Agreement (whether by assignment or amendment) and to assume
all obligations of the Lender to be terminated as of such date, and (iii) all
documents and supporting materials necessary, in the judgment of Administrative
Agent (or if Administrative Agent is also the Lender to be terminated, the
successor Administrative Agent) to evidence the substitution of such Lender
shall have been received and approved by Administrative Agent as of such date.
2.8 OBLIGATION OF LENDERS TO MITIGATE.
Each Lender agrees that, as promptly as practicable after the officer of
such Lender responsible for administering the Loans of such Lender becomes aware
of the occurrence of an event or the existence of a condition that would cause
such Lender to become an Affected Lender or that would entitle such Lender to
receive payments under subsection 2.7, it will, to the extent not inconsistent
with the internal policies of such Lender and any applicable legal or regulatory
restrictions, use reasonable efforts (i) to make, issue, fund or maintain the
affected Loans of such Lender through another lending office of such Lender, or
(ii) take such other measures as such Lender may deem reasonable, if as a result
thereof the circumstances which would cause such Lender to be an Affected Lender
would cease to exist or the additional amounts which would otherwise be required
to be paid to such Lender pursuant to subsection 2.7 would be materially reduced
and if, as determined by such Lender in its sole discretion, the making,
issuing, funding or maintaining of such Loans through such other lending office
or in accordance with such other measures, as the case may be, would not
otherwise materially
(42)
adversely affect such Loans or the interests of such Lender; PROVIDED that such
Lender will not be obligated to utilize such other lending office pursuant to
this subsection 2.8 unless Company agrees to pay all incremental expenses
incurred by such Lender as a result of utilizing such other lending office as
described in clause (i) above. A certificate as to the amount of any such
expenses payable by Company pursuant to this subsection 2.8 (setting forth in
reasonable detail the basis for requesting such amount) submitted by such Lender
to Company (with a copy to Administrative Agent) shall be conclusive absent
manifest error.
2.9 RELEASE OF COLLATERAL.
Upon the prepayment of all Loans made with respect to a specific Financed
Aircraft or a specific Airframe or Engine pursuant to subsection 2.4B(ii)(a)
hereof, Administrative Agent, at the reasonable expense of Company, agrees to
execute and deliver to Company such documents as shall be reasonably
satisfactory to Company to evidence the release of the Liens granted pursuant to
the Collateral Documents with respect to such Financed Aircraft or such Airframe
or Engine and shall use its best efforts to (i) in the event of a prepayment of
all Loans made with respect to a specific Financed Aircraft, return the
originals of all Notes representing such Loans to Company, marked "Paid" or (ii)
in the event of a prepayment of all Loans made with respect to a specific
Airframe or Engine(s), prepare allonges to the Notes representing such Loans to
Company describing the release of such Airframe or Engine(s).
SECTION 3.
CONDITIONS TO FIFTH RESTATEMENT EFFECTIVE DATE
3.1 CONDITIONS TO EFFECTIVENESS.
The effectiveness of this Agreement and the obligation of the Lenders to
maintain the Loans are subject to the satisfaction of all of the following
conditions:
(i) each of the parties hereto shall have executed and delivered
counterparts of this Agreement to Administrative Agent;
(ii) Company shall have delivered to Lenders (or to Administrative
Agent for Lenders) executed originals of the Notes, duly executed in accordance
with subsection 2.1B, drawn to the order of each Lender and with appropriate
insertions;
(iii) Company shall have delivered to Administrative Agent the
following, each, unless otherwise noted, dated the Fifth Restatement Effective
Date:
(a) certified copies of the certificate of incorporation (or
equivalent organizational document) of each Loan Party, together
with a good standing certificate from the Secretary of State of the
state of organization and each other state in which each Loan Party
is qualified as a foreign corporation to do business and, to the
extent generally available, a certificate or other evidence of good
standing as to payment of any applicable franchise or similar taxes
from the appropriate taxing authority of each of such states, each
dated a recent date prior to the Fifth Restatement Effective Date;
(43)
(b) copies of the bylaws of each Loan Party, certified as of
the Fifth Restatement Effective Date by its corporate secretary or
an assistant secretary;
(c) resolutions of the Board of Directors of each Loan Party
approving and authorizing the execution, delivery and performance of
this Agreement and the other documents contemplated by the
Transactions certified as of the Fifth Restatement Effective Date by
each Loan Party's corporate secretary or assistant secretary as
being in full force and effect without modification or amendment;
(d) signature and incumbency certificate of the officer of
Company and each other Loan Party executing this Agreement and any
other Loan Documents;
(e) a certificate of an authorized officer of the Company,
certifying that the conditions set forth in clauses (vii), (ix),
(xiv), (xv) and (xvi) of this subsection 3.1 are satisfied;
(f) the audited consolidated balance sheet of Holdings and
its Subsidiaries as at December 31, 2003 and the related
consolidated statement of income, stockholders equity and cash flows
of Holdings and its Subsidiaries for the Fiscal Year then ended; and
(g) such other documents as Administrative Agent may
reasonably request.
(iv) Holdings shall have delivered to Administrative Agent a
financial condition certificate executed by its Chief Executive Officer, Chief
Financial Officer or Treasurer and dated the Fifth Restatement Effective Date,
substantially in the form annexed hereto as Exhibit IX with appropriate
attachments demonstrating that Holdings and its Subsidiaries, taken as a whole,
are Solvent;
(v) The Administrative Agent shall have received (A) originally
executed copies of one or more favorable written opinions of Cahill Gordon &
Reindel LLP, counsel for Company, in form and substance reasonably satisfactory
to Administrative Agent and its counsel, dated as of the Fifth Restatement
Effective Date and setting forth substantially the matters in the opinions
designated in Exhibit VA annexed hereto and as to such other matters as
Administrative Agent acting on behalf of Lenders may reasonably request, and (B)
the opinion of Cahill Gordon & Reindel LLP regarding Section 1110 of the
Bankruptcy Code, dated the Fifth Restatement Effective Date and setting forth
substantially the matters in the opinions designated in Exhibit VB annexed
hereto;
(vi) The Administrative Agent shall have received executed copies
of one or more favorable written opinions of General Counsel of Holdings, in
form and substance reasonably satisfactory to Administrative Agent and its
counsel, dated the Fifth Restatement Effective Date, and setting forth
substantially the matters in the opinions designated in Exhibit VC annexed
hereto;
(44)
(vii) the capital, organization, ownership and management
structure of Holdings and its Subsidiaries and the form and substance of the
ACMI Contracts aircraft lease arrangements (including each Operating Lease) and
the Existing Indebtedness, the AFL III Financing Agreement and the Restructuring
Documents (collectively, the "SPECIFIED INDEBTEDNESS") shall be as set forth in
the Plan Documents with such modifications as shall have been approved in
writing by the Administrative Agent and the Requisite Lenders and shall
otherwise be satisfactory to the Administrative Agent and the Requisite Lenders;
(viii) the AFL III Financing Agreement shall have been completed
or shall be completed concurrently under terms and conditions reasonably
satisfactory to Administrative Agent and Lenders;
(ix) on and as of the Fifth Restatement Effective Date, (A)
neither Holdings nor any of its Subsidiaries shall have any Preferred Equity or
any Indebtedness outstanding, except for (i) the Obligations and (ii) the
Specified Indebtedness and (B) all of the Specified Indebtedness shall remain
outstanding after giving effect to the Transaction and the other transactions
contemplated hereby without any default or events of default existing thereunder
or arising as a result of the Transaction and the other transactions
contemplated hereby (except to the extent amended or waived by the parties
thereto on terms and conditions reasonably satisfactory to the Administrative
Agent and the Requisite Lenders);
(x) on or prior to the Fifth Restatement Effective Date, (i)
there shall have been delivered to the Administrative Agent true and correct
copies of the Plan of Reorganization, the Disclosure Statement, which Plan of
Reorganization and Disclosure Statement shall, in each case, be in the form
delivered to the Lenders prior to the execution and delivery of this Agreement
and shall not have been amended or modified without the written consent of the
Administrative Agent and each Lender, (ii) a Notice of Confirmation, in form and
substance satisfactory to the Administrative Agent, shall have been entered into
and (iii) all conditions precedent to the effective date of the Plan of
Reorganization shall have been satisfied (and not waived without the consent of
the Administrative Agent and the Requisite Lenders) to the satisfaction of the
Administrative Agent and the Requisite Lenders;
(xi) on the Fifth Restatement Effective Date, (A) Holding shall
have duly authorized, executed and delivered the Holdings' Guaranty
substantially in the form of Exhibit XIII (as amended, modified, restated and/or
supplemented from time to time, the "HOLDINGS GUARANTY") guaranteeing all of the
obligations of Company as more fully provided therein and the Holdings Guaranty
shall be in full force and effect and (B) each Subsidiary Guarantor shall have
duly authorized, executed and delivered the Subsidiaries Guaranty in the form of
Exhibit XII (as amended, modified, restated and/or supplemented from time to
time, the "SUBSIDIARIES GUARANTY"), guaranteeing all of the obligations of
Company as more fully provided therein, and the Subsidiaries Guaranty shall be
in full force and effect;
(xii) on the Fifth Restatement Effective Date, an amendment to
each of the First Aircraft Chattel Mortgage and the Second Aircraft Chattel
Mortgage (each an "AIRCRAFT CHATTEL MORTGAGE AMENDMENT") and substantially in
the form of EXHIBIT XII hereto, and any documents in connection therewith
requested by the Administrative Agent shall have been duly
(45)
authorized, executed and delivered, and each such Aircraft Chattel Mortgage, as
so amended, shall be in full force and effect;
(xiii) on the Fifth Restatement Effective Date, all reasonable
and documented costs, fees and expenses, and all other compensation due to the
Administrative Agent and the Lenders (including, without limitation,
professional fees and expenses) shall have been paid to the extent then due and
invoiced at least three Business Days prior to the Fifth Restatement Effective
Date;
(xiv) on the Fifth Restatement Effective Date, all
representations and warranties set forth in this Agreement and the other Loan
Documents shall be true and correct in all material respects and no Potential
Event of Default or Event of Default shall exist;
(xv) except as otherwise disclosed in the Disclosure
Statement or Holdings' filings with the SEC delivered prior to the execution and
delivery of this Agreement by the Lenders, on the Fifth Restatement Effective
Date, there shall be no actions, suits, proceedings or investigations pending or
threatened (a) with respect to the Transaction or any documentation executed in
connection therewith (including any Loan Document) or the transactions
contemplated hereby and thereby, (b) with respect to any Existing Indebtedness
or (c) which the Administrative Agent or the Requisite Lenders shall reasonably
determine has had, or could reasonably be expected to have a Material Adverse
Effect; and
(xvi) on or prior to the Fifth Restatement Effective Date, (i)
all necessary governmental (domestic and foreign), regulatory and third party
approvals and/or consents in connection with any Specified Indebtedness or the
Transaction and otherwise referred to herein or therein shall have been obtained
and remain in full force and effect and evidence thereof shall have been
provided to the Administrative Agent, and (ii) all applicable waiting periods
shall have expired without any action being taken by any competent authority
which restrains, prevents or imposes materially adverse conditions upon the
consummation of the Transaction and the transactions contemplated by the Loan
Documents or otherwise referred to herein or therein. Additionally, on the Fifth
Restatement Effective Date, there shall not exist any judgment, order,
injunction or other restraint issued or filed or a hearing seeking injunctive
relief or other restraint pending or notified prohibiting or imposing materially
adverse conditions upon, or materially delaying, or making economically
unfeasible, the consummation of the Transaction or otherwise referred to herein
or therein.
To the extent that any of the conditions set forth in this subsection 3.1
requires that any document, action or condition be satisfactory to the
Administrative Agent, the Lenders or the Requisite Lenders, or a determination
by any such Person(s), unless such Person(s) shall have given the Company
written notice within (5) five days of the Confirmation Date that such document,
action or condition is not satisfactory to such Person(s), or that such
Person(s) have made such determination, as the case may be, such document,
action or condition shall be deemed to be satisfactory or such determination
shall be deemed not to have been made, as the case may be.
(46)
SECTION 4.
REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Agreement, Holdings and
Company represent and warrant to each Lender, on the date of this Agreement,
that the following statements are true, correct and complete:
4.1 ORGANIZATION, POWERS, QUALIFICATION, GOOD STANDING, BUSINESS AND
SUBSIDIARIES.
A. ORGANIZATION AND POWERS. Each of Holdings and Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Holdings and Company each have all requisite corporate
power and authority to own and operate their respective properties, to carry on
their business as now conducted and as proposed to be conducted, to enter into
the Loan Documents and to carry out the transactions contemplated thereby.
B. QUALIFICATION AND GOOD STANDING; AIR CARRIER CERTIFICATION. Each
Loan Party is qualified to do business and in good standing in every
jurisdiction where its assets are located and wherever necessary to carry out
its business and operations, except in jurisdictions where the failure to be so
qualified or in good standing has not had and will not have a Material Adverse
Effect. Company is a "citizen of the United States" within the meaning of the
Federal Aviation Act (a "UNITED STATES CITIZEN") and holds an air carrier
operating certificate under the Federal Aviation Act for aircraft capable of
carrying 10 or more individuals or 6,000 pounds or more of cargo.
C. SUBSIDIARIES. All of the Subsidiaries of Holdings as of the Fifth
Restatement Effective Date are identified in SCHEDULE 4.1 annexed hereto. The
capital stock of each of the Subsidiaries of Holdings identified in SCHEDULE 4.1
annexed hereto (as so supplemented) is duly authorized, validly issued, fully
paid and non-assessable and none of such capital stock constitutes Margin Stock.
Each of the Subsidiaries of Holdings identified in SCHEDULE 4.1 annexed hereto
(as so supplemented) is a corporation duly organized, validly existing and in
good standing under the laws of its respective jurisdiction of incorporation set
forth therein, has all requisite corporate power and authority to own and
operate its properties and to carry on its business as now conducted and as
proposed to be conducted, and is qualified to do business and in good standing
in every jurisdiction where its assets are located and wherever necessary to
carry out its business and operations, in each case except where failure to be
so qualified or in good standing or a lack of such corporate power and authority
has not had and will not have a Material Adverse Effect. SCHEDULE 4.1 annexed
hereto (as so supplemented) correctly sets forth the ownership interest of
Holdings and each of its Subsidiaries in each of the Subsidiaries of Holdings
identified therein.
D. COLLATERAL DOCUMENTS. The security interests created in favor of
Administrative Agent under the Collateral Documents have at all times from and
after the Initial Closing Date constituted and will continue to constitute, as
security for the obligations purported to be secured thereby, a legal, valid and
enforceable security interest in and Lien on all of the Collateral referred to
therein in favor of Administrative Agent for the benefit of the Lenders,
perfected and prior to the rights of all third persons in accordance with the
requirements of all applicable
(47)
Collateral Documents including, without limitation all Liens and security
interests in the cash proceeds (or in the indubitable equivalent thereof) of the
administrative priority claim in the amount, if any, required to cure a monetary
default (as described in Bankruptcy Code Section 1110(a)(2)(B)), provided under
the Stipulation Providing for Section 1110(b) Extension Regarding Intercompany
Lease of N355MC approved by order of the Bankruptcy Court dated April 22, 2004.
Each Loan Party has good and marketable title to its respective Collateral, and
all such Collateral is free and clear of all Liens except for Liens permitted by
subsection 6.2. No consents, filings or recordings are required in order to
perfect (or maintain the perfection or priority of) the security interests
purported to be created by any of the Collateral Documents, other than such as
have been obtained and which remain in full force and effect and UCC financing
statements to be filed, or delivered to Administrative Agent for filing, on the
Fifth Restatement Effective Date and periodic UCC continuation filings or as is
specifically otherwise permitted by the terms of any applicable Collateral
Document.
4.2 AUTHORIZATION, ETC.
A. AUTHORIZATION. The execution, delivery and performance of the Loan
Documents have been duly authorized by all necessary corporate action on the
part of each Loan Party.
B. NO CONFLICT. The execution, delivery and performance by the Loan
Parties of the Loan Documents and the consummation of the transactions
contemplated by the Loan Documents do not and will not (i) violate any provision
of any law or any governmental rule or regulation applicable to Holdings or any
of its Subsidiaries, the Certificate or Articles of Incorporation or Bylaws of
Holdings or any of its Subsidiaries or any order, judgment or decree of any
court or other agency of government binding on Holdings or any of its
Subsidiaries, (ii) conflict with in any material respect, result in a material
breach of or constitute (with due notice or lapse of time or both) a material
default under any Contractual Obligation of Holdings or any of its Subsidiaries,
(iii) result in or require the creation or imposition of any Lien upon any of
the properties or assets of Holdings or any of its Subsidiaries (other than any
Liens created under any of the Loan Documents in favor of Administrative Agent
on behalf of Lenders), or (iv) require any approval of stockholders or any
approval or consent of any Person under any Contractual Obligation of Holdings
or any of its Subsidiaries, except for such approvals or consents which will be
obtained on or before the Fifth Restatement Effective Date and disclosed in
writing to Lenders.
C. GOVERNMENTAL CONSENTS. The execution, delivery and performance by
the Loan Parties of the Loan Documents and the consummation of the transactions
contemplated by the Loan Documents do not and will not require any registration
with, consent or approval of, or notice to, or other action to, with or by, any
federal, state or other governmental authority or regulatory body which has not
been obtained or made on or prior to the date required to be obtained or made
unless waived by Administrative Agent in accordance with this Agreement.
D. BINDING OBLIGATION. Each of the Loan Documents has been duly
executed and delivered by each of the Loan Parties party thereto and is the
legally valid and binding obligation of each such Loan Party, enforceable
against such Loan Party in accordance with its respective terms, except as may
be limited by bankruptcy, insolvency, reorganization, moratorium or
(48)
similar laws relating to or limiting creditors' rights generally or by equitable
principles relating to enforceability.
4.3 FINANCIAL CONDITION.
Holdings has heretofore delivered to Lenders, at Lenders' request, the
following financial statements and information: (i) the audited consolidated
balance sheet of Holdings and its Subsidiaries as at December 31, 2002, and the
related consolidated statements of income, stockholders' equity and cash flows
of Holdings and its Subsidiaries for the Fiscal Year then ended and (ii) the
unaudited consolidated balance sheets of Holdings and its Subsidiaries as at
March 31, 2004, and the related consolidated statements of income, stockholders'
equity and cash flows of Holdings and its Subsidiaries for the fiscal quarter
then ended. All such statements were prepared in conformity with GAAP and fairly
present the financial position (on a consolidated basis) of the entities
described in such financial statements as at the respective dates thereof and
the results of operations and cash flows (on a consolidated basis) of the
entities described therein for each of the periods then ended, subject, in the
case of any such unaudited financial statements, to changes resulting from audit
and year-end adjustments. Holdings and its Subsidiaries do not have any
Contingent Obligation, contingent liability or liability for taxes, long-term
lease or unusual forward or long-term commitment that is not reflected in the
foregoing financial statements or the notes thereto and which in any such case
is material in relation to the business, operations, properties, assets,
condition (financial or otherwise) or prospects of Holdings and its Subsidiaries
taken as a whole.
4.4 NO MATERIAL ADVERSE CHANGE; NO RESTRICTED JUNIOR PAYMENTS.
Except as otherwise disclosed in the Disclosure Statement or Holdings'
filings with the SEC delivered prior to the execution and delivery of this
Agreement by the Lenders, since December 31, 2003, (i) no event or change has
occurred that has caused or evidences, either in any case or in the aggregate, a
Material Adverse Effect and (ii) neither Holdings nor any of its Subsidiaries
has directly or indirectly declared, ordered, paid or made, or set apart any sum
or property for, any Restricted Junior Payment or agreed to do so except as
permitted by subsection 6.5.
4.5 TITLE TO PROPERTIES; LIENS.
A. Holdings and its Subsidiaries have (i) good, sufficient and legal
title to (in the case of fee interests in real property), (ii) valid leasehold
interests in (in the case of leasehold interests in real or personal property),
or (iii) good title to (in the case of all other personal property), all of the
properties and assets reflected in the financial statements referred to in
subsection 4.3, in each case except for assets disposed of since the date of
such financial statements in the ordinary course of business or as otherwise
permitted under subsection 6.7. Except as permitted by this Agreement, all such
properties and assets are free and clear of Liens.
B. Each Financed Aircraft operated in the United States has a current
and valid airworthiness certificate issued by the FAA pursuant to the Federal
Aviation Act in effect and is in such condition as may be necessary to enable
the airworthiness certificate to be maintained in good standing. Each Engine has
a rated takeoff horsepower greater than 750 horsepower, or the
(49)
equivalent of such horsepower. Each Financed Aircraft operated in the United
States is registered with the FAA in the name of Company, and Company has
authority to operate such Financed Aircraft. Company has good title to such
Financed Aircraft, free and clear of all Liens other than Liens permitted by
subsection 6.2.
4.6 LITIGATION; ADVERSE FACTS.
Except as otherwise disclosed in the Disclosure Statement or Holdings'
filings with the SEC delivered prior to the execution and delivery of this
Agreement by the Lenders, there are no actions, suits, proceedings, arbitrations
or governmental investigations (whether or not purportedly on behalf of Holdings
or any of its Subsidiaries) at law or in equity or before or by any federal,
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, pending or, to the knowledge of
Holdings, threatened against or affecting Holdings or any of its Subsidiaries or
any property of Holdings or any of its Subsidiaries that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect.
Neither Holdings nor any of its Subsidiaries is (i) in violation of any
applicable laws that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect or (ii) subject to or in default
with respect to any final judgments, writs, injunctions, decrees, rules or
regulations of any court or any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, that, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect.
4.7 PAYMENT OF TAXES.
Except as set forth on SCHEDULE 4.7 and except to the extent permitted by
subsection 5.3, all tax returns and reports of Holdings and its Subsidiaries
required to be filed by any of them have been timely filed, and all taxes,
assessments, fees and other governmental charges upon Holdings and its
Subsidiaries and upon their respective properties, assets, income, businesses
and franchises which are due and payable have been paid when due and payable.
Holdings does not know of any proposed tax assessment against Holdings or any of
its Subsidiaries which is not being actively contested by Holdings or such
Subsidiary in good faith and by appropriate proceedings; PROVIDED that such
reserves or other appropriate provisions, if any, for liabilities for taxes as
shall be required in conformity with GAAP shall have been made or provided in
the financial statements of Holdings. There are no agreements with respect to
taxes between Holdings and any tax agency or authority.
4.8 PERFORMANCE OF AGREEMENTS; MATERIALLY ADVERSE AGREEMENTS.
A. Neither Holdings nor any of its Subsidiaries is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any of its Contractual Obligations, and no condition
exists that, with the giving of notice or the lapse of time or both, would
constitute such a default, except where the consequences, direct or indirect, of
such default or defaults, if any, would not have a Material Adverse Effect.
(50)
B. Neither Holdings nor any of its Subsidiaries is a party to or is
otherwise subject to any agreements or instruments or any charter or other
internal restrictions which, individually or in the aggregate, could reasonably
be expected to result in a Material Adverse Effect.
4.9 GOVERNMENTAL REGULATION.
Neither Holdings nor any of its Subsidiaries is subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act or the Investment Company Act of 1940 or under any other
federal or state statute or regulation which may limit its ability to incur
Indebtedness or which may otherwise render all or any portion of the Obligations
unenforceable.
4.10 SECURITIES ACTIVITIES.
A. Neither Holdings nor any of its Subsidiaries is engaged principally,
or as one of its important activities, in the business of extending credit for
the purpose of purchasing or carrying any Margin Stock.
B. Following application of the proceeds of each Loan, not more than
25% of the value of the assets (either of Holdings only or of Holdings and its
Subsidiaries on a consolidated basis) subject to the provisions of subsection
6.2 or 6.7 or subject to any restriction contained in any agreement or
instrument, between any Loan Party, on the one had, and any Lender or any
Affiliate of any Lender, on the other hand, relating to Indebtedness and within
the scope of subsection 7.2, will be Margin Stock.
4.11 EMPLOYEE BENEFIT PLANS.
Company maintains a qualified retirement plan under Section 401(k) of the
Internal Revenue Code (the "COMPANY 401(k) PLAN"). Company's 401(k) Plan has no
unfunded liabilities in excess of $10,000,000, and Company is in compliance in
all material respects with all applicable provisions and requirements of ERISA
and the regulations and published interpretations thereunder with respect to
each Employee Benefit Plan and has performed all its obligations under such
Employee Benefit Plan in all material respects. Company has no Employee Benefit
Plans, other than Company 401(k) Plan and the plan described in subsection
6.2A(iv). Company has no ERISA Affiliates that sponsor, maintain, contribute to
or are liable with respect to any Employee Benefit Plans.
4.12 CERTAIN FEES.
No broker's or finder's fee or commission will be payable with respect to
this Agreement or any of the transactions contemplated hereby, and Holdings
hereby indemnifies Lenders against, and agrees that it will hold Lenders
harmless from, any claim, demand or liability for any such broker's or finder's
fees alleged to have been incurred in connection herewith or therewith and any
expenses (including reasonable fees, expenses and disbursements of counsel)
arising in connection with any such claim, demand or liability.
(51)
4.13 ENVIRONMENTAL PROTECTION.
A. All Facilities and operations of Holdings and its Subsidiaries are,
and have been to the best of Holdings' and Company's knowledge, in compliance in
all material respects with all Environmental Laws.
B. Except as otherwise disclosed in the Disclosure Statement or
Holdings' filings with the SEC delivered prior to the execution and delivery of
this Agreement by the Lenders, there are no, and have been no, conditions,
occurrences, or Hazardous Materials Activity (a) arising at any Facilities or at
any other location or (b) arising in connection with the operations of Holdings
and its Subsidiaries (including the transportation of Hazardous Materials in
accordance with applicable regulations), which conditions, occurrences or
Hazardous Materials Activity could reasonably be expected to form the basis of
an Environmental Claim against Holdings or any of its Subsidiaries and which,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
C. To the best of Holdings' knowledge, there are no pending or
threatened Environmental Claims against Holdings or any of its Subsidiaries, and
neither Holdings or any of its Subsidiaries has received any notices, inquiries,
or requests for information with respect to any Environmental Claims which,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
4.14 EMPLOYEE MATTERS.
There is no strike or work stoppage in existence or threatened involving
Holdings or any of its Subsidiaries that could reasonably be expected to have a
Material Adverse Effect.
4.15 SOLVENCY.
Holdings and each Loan Party is Solvent.
4.16 DISCLOSURE.
No representation or warranty of Holdings or any of its Subsidiaries
contained in any Loan Document or in any other document, certificate or written
statement furnished to Lenders by or on behalf of Holdings or any of its
Subsidiaries for use in connection with the transactions contemplated by this
Agreement contains any untrue statement of a material fact or omits to state a
material fact (known to Holdings or such Subsidiary, in the case of any document
not furnished by Holdings or such Subsidiary) necessary in order to make the
statements contained herein or therein not misleading in light of the
circumstances in which the same were made. Any projections and pro forma
financial information contained in such materials are based upon good faith
estimates and assumptions believed by Holdings to be reasonable at the time
made, it being recognized by Lenders that such projections as to future events
are not to be viewed as facts and that actual results during the period or
periods covered by any such projections may differ from the projected results.
There are no facts known (or which should upon the reasonable exercise of
diligence be known) to Holdings (other than matters of a general economic
nature) that, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse
(52)
Effect and that have not been disclosed herein or in such other documents,
certificates and statements furnished to Lenders for use in connection with the
transactions contemplated hereby.
SECTION 5.
AFFIRMATIVE COVENANTS
Holdings and Company each covenant and agree that, until payment in full
of all of the Loans and other Obligations unless Requisite Lenders shall
otherwise give prior written consent, Holdings and Company shall perform, and
shall cause each of their respective Subsidiaries to perform, all covenants in
this Section 5.
5.1 FINANCIAL STATEMENTS AND OTHER REPORTS.
Holdings will maintain, and cause each of its Subsidiaries to maintain, a
system of accounting established and administered in accordance with sound
business practices to permit preparation of financial statements in conformity
with GAAP. Holdings will deliver to Administrative Agent:
(i) MONTHLY FINANCIAL REPORTS: as soon as available and in any
event within 30 days after the end of each calendar month, monthly
financial reports that contain revenue, block hours, debt, cash (including
a thirteen week rolling cash flow report) and investments as at the end of
such calendar month, and setting forth in each case (except with respect
to the rolling cash flow report and for monthly reports delivered prior to
the delivery of audited financial statements for the Fiscal Year ending
December 31, 2003) in comparative form the corresponding figures for the
corresponding periods of the previous Fiscal Year, if applicable, in
reasonable detail, together with a certificate signed by the chief
financial officer or treasurer of Holdings that, to the best of such
officer's knowledge as of the date of delivery of such certificate, the
reports contain true and correct information for the period indicated;
(ii) QUARTERLY FINANCIALS: as soon as available and in any event
within 45 days after the end of each of the first three fiscal quarters of
each Fiscal Year, (a) the consolidated balance sheet of Holdings and its
Subsidiaries as at the end of such fiscal quarter and the related
consolidated statement of income, stockholders' equity and cash flows of
Holdings and its Subsidiaries for such fiscal quarter and for the period
from the beginning of the then current Fiscal Year to the end of such
fiscal quarter, setting forth in each case for the fiscal quarters
subsequent to the completion of the audited financial statements for the
Fiscal Year ending December 31, 2003 in comparative form the corresponding
figures for the corresponding periods of the previous Fiscal Year, all in
reasonable detail and certified by the chief financial officer of Holdings
that they fairly present the financial condition of Holdings and its
Subsidiaries as at the dates indicated and the results of their operations
and their cash flows for the periods indicated, subject to changes
resulting from audit and year-end adjustments, and (b) after the filing of
Holdings' first 10-Q following the Fifth Restatement Effective Date, a
narrative report describing the operations of Holdings and its
Subsidiaries in the form prepared for presentation to senior management
for such fiscal quarter and for the period from the beginning of the then
current Fiscal Year to the end of such fiscal quarter, provided that
(53)
delivery of Holdings' 10-Q for such fiscal quarter shall be deemed to
satisfy the requirements of this subsection 5.1(ii);
(iii) YEAR-END FINANCIALS: as soon as available and in any event
within 90 days (or in the case of Fiscal Year ending December 31, 2004,
120 days) after the end of each Fiscal Year, (a) the consolidated balance
sheet of Holdings and its Subsidiaries as at the end of such Fiscal Year
and the related consolidated statement of income, stockholders' equity and
cash flows of Holdings and its Subsidiaries for such Fiscal Year, setting
forth in each case in comparative form the corresponding figures for the
previous Fiscal Year, all in reasonable detail and certified by the chief
financial officer of Holdings that they fairly present the financial
condition of Holdings and its Subsidiaries as at the dates indicated and
the results of their operations and their cash flows for the periods
indicated, (b) a narrative report describing the operations of Holdings
and its Subsidiaries in the form prepared for presentation to senior
management for such Fiscal Year, and (c) in the case of such consolidated
financial statements, a report thereon of Ernst & Young LLP or other
independent certified public accountants of recognized national standing
selected by Holdings and satisfactory to Administrative Agent, which
report (x) for Fiscal Year 2005 and each subsequent Fiscal Year thereafter
shall express no doubts about the ability of Holdings and its Subsidiaries
to continue as a going concern, (y) in all cases shall be unqualified as
to scope of audit, and (z) shall state that such consolidated financial
statements fairly present the consolidated financial position of Holdings
and its Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated in conformity
with GAAP applied on a basis consistent with prior years (except as
otherwise disclosed in such financial statements) and that the examination
by such accountants in connection with such consolidated financial
statements has been made in accordance with generally accepted auditing
standards, provided that delivery of Holdings' Form 8-K or 10-K for such
Fiscal Year shall be deemed to satisfy the requirements of this subsection
5.1(iii);
(iv) OFFICERS' AND COMPLIANCE CERTIFICATES: together with each
delivery of financial statements of Holdings and its Subsidiaries pursuant
to subdivisions (ii) and (iii) above after the Fifth Restatement Effective
Date, (a) an Officers' Certificate of Holdings stating that the signers
have reviewed the terms of this Agreement and have made, or caused to be
made under their supervision, a review in reasonable detail of the
transactions and condition of Holdings and its Subsidiaries during the
accounting period covered by such financial statements and that such
review has not disclosed the existence during or at the end of such
accounting period, and that the signers do not have knowledge of the
existence as at the date of such Officers' Certificate, of any condition
or event that constitutes an Event of Default or Potential Event of
Default, or, if any such condition or event existed or exists, specifying
the nature and period of existence thereof and what action Holdings has
taken, is taking and proposes to take with respect thereto; and (b) a
Compliance Certificate demonstrating in reasonable detail compliance
during and at the end of the applicable quarterly and annual accounting
periods with the restrictions contained in Section 6;
(54)
(v) RECONCILIATION STATEMENTS: if, as a result of any change in
accounting principles and policies from those used in the preparation of
the audited financial statements referred to in subsection 4.3, the
consolidated financial statements of Company and its Subsidiaries
delivered pursuant to subdivisions (ii) or (iii) of this subsection 5.1
will differ in any material respect from the consolidated financial
statements that would have been delivered pursuant to such subdivisions
had no such change in accounting principles and policies been made, then
(a) together with the first delivery of financial statements pursuant to
subdivision (ii) or (iii) of this subsection 5.1 following such change,
consolidated financial statements of Holdings and its Subsidiaries for (y)
the current Fiscal Year to the effective date of such change and (z) the
two full Fiscal Years immediately preceding the Fiscal Year in which such
change is made, in each case prepared on a pro forma basis as if such
change had been in effect during such periods, and (b) together with each
delivery of financial statements pursuant to subdivision (ii) or (iii) of
this subsection 5.1 following such change, a written statement of the
chief accounting officer or chief financial officer of Holdings setting
forth the differences which would have resulted if such financial
statements had been prepared without giving effect to such change;
(vi) ACCOUNTANTS' REPORTS: promptly upon receipt thereof copies of
any comment letter submitted by such accountants to management in
connection with their annual audit or a special audit;
(vii) SEC FILINGS AND PRESS RELEASES: promptly upon their becoming
available, copies of (a) all financial statements, reports, notices and
proxy statements sent or made available generally by Holdings to its
security holders, (b) all regular and periodic reports and all
registration statements (other than on Form S-8 or a similar form) and
prospectuses, if any, filed by Holdings or any of its Subsidiaries with
any securities exchange or with the SEC or any governmental or private
regulatory authority, and (c) all press releases made available generally
by Holdings or any of its Subsidiaries to the public concerning material
developments in the business of Holdings or any of its Subsidiaries, it
being understood and agreed that Company shall be deemed to have delivered
to the Administrative Agent the documents required by this Section
5.9(viii) by posting such documents on Company's website;
(viii) EVENTS OF DEFAULT, ETC.: promptly upon any officer of
Holdings or Company obtaining knowledge (a) of any condition or event that
constitutes an Event of Default or Potential Event of Default, or becoming
aware that any Lender has given notice (other than to Administrative
Agent) or taken affirmative action with respect to a claimed Event of
Default or Potential Event of Default, (b) that any Person has given any
notice to Holdings or any of its Subsidiaries or taken any other action
with respect to a claimed default or event or condition of the type
referred to in subsection 7.2, (c) of any condition or event that would be
required to be disclosed in a current report filed by Holdings with the
SEC on Form 8-K (Items 2.01, and 5.01 of such Form as in effect on the
date hereof), or (d) of the occurrence of any event or change that has
caused or evidences, either in any case or in the aggregate, a Material
Adverse Effect, an Officers' Certificate specifying the nature and period
of existence of such condition, event or
(55)
change, or specifying the notice given or action taken by any such Person
and the nature of such claimed Event of Default, Potential Event of
Default, default, event or condition, and what action Holdings has taken,
is taking and proposes to take with respect thereto;
(ix) LITIGATION OR OTHER PROCEEDINGS: promptly upon any officer of
Holdings obtaining knowledge of (X) the institution of, or non-frivolous
threat of, any action, suit, proceeding (whether administrative, judicial
or otherwise), governmental investigation or arbitration against or
affecting Holdings or any of its Subsidiaries or any property of Holdings
or any of its Subsidiaries (collectively, "PROCEEDINGS") not previously
disclosed in writing by Holdings to the Lenders or (Y) any material
development in any Proceeding that, in any case:
(1) if adversely determined, has a reasonable possibility of
giving rise to a Material Adverse Effect; or
(2) seeks to enjoin or otherwise prevent the consummation of,
or to recover any damages or obtain relief as a result of, the
transactions contemplated hereby;
written notice thereof together with such other information as may be
reasonably available to Holdings to enable Lenders and their counsel to
evaluate such matters;
(x) 401K PLAN NOTICES: promptly upon becoming aware of the
occurrence of or forthcoming occurrence of any material and adverse event
with respect to Company's 401(k) Plan (as defined in subsection 4.11), a
written notice specifying the nature thereof, what action Holdings has
taken, is taking or proposes to take with respect thereto, and, when
known, any action taken or threatened by the Internal Revenue Service,
the Department of Labor or the PBGC with respect thereto;
(xi) INSURANCE: as soon as practicable and in any event within 30
days following the first day of each Fiscal Year, a report in form and
substance satisfactory to Administrative Agent outlining all material
insurance coverage maintained as of the date of such report by Holdings
and its Subsidiaries and all material insurance coverage planned to be
maintained by Holdings and its Subsidiaries in such Fiscal Year;
(xii) ENVIRONMENTAL AUDITS AND REPORTS: as soon as practicable
following receipt thereof, copies of all environmental audits and reports,
whether prepared by personnel of Holdings or any of its Subsidiaries or by
independent consultants, with respect to significant environmental matters
at any Facility or which relate to an Environmental Claim which could
result in a Material Adverse Effect; and
(xiii) OTHER INFORMATION: with reasonable promptness, such other
information and data with respect to Holdings or any of its Subsidiaries
as from time to time may be reasonably requested by Administrative Agent
or any Lender.
(56)
5.2 CORPORATE EXISTENCE.
Except as permitted under subsection 6.7, Holdings will, and will cause
each of its Subsidiaries to, at all times preserve and keep in full force and
effect its corporate existence and all rights and franchises material to its
business; PROVIDED, HOWEVER, that the corporate existence of any such Subsidiary
may be terminated if such termination is in the best interests of Holdings and
its Subsidiaries and is not materially disadvantageous to any Lender. Holdings
will, and will cause each of the Company, Polar Air and AFL III to, at all times
maintain its corporate existence as a United States Citizen.
5.3 PAYMENT OF TAXES AND CLAIMS; TAX CONSOLIDATION.
A. Holdings will, and will cause its Subsidiaries to, pay all taxes,
assessments and other governmental charges imposed upon it or any of its
properties or assets or in respect of any of its income, businesses or
franchises before any penalty, fine or interest accrues thereon, and all claims
(including, without limitation, claims for labor, services, materials and
supplies) for sums that have become due and payable and that by law have or may
become a Lien upon any of its properties or assets, prior to the time when any
penalty fine or interest shall be incurred with respect thereto; PROVIDED that
no such charge or claim need be paid if being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted and if such
reserve or other appropriate provision, if any, with respect to any liability
for taxes, as shall be required in conformity with GAAP shall have been made
therefore in the financial statements of the Holdings.
B. Holdings will not, and will not permit any of its Subsidiaries to,
file or consent to the filing of any consolidated income tax return with any
Person (other than any Subsidiary of Holdings).
5.4 MAINTENANCE OF PROPERTIES; INSURANCE.
Holdings will, and will cause its Subsidiaries to, maintain or cause to be
maintained in good repair, working order and condition, ordinary wear and tear
excepted, all material properties used or useful in the business of Holdings and
its Subsidiaries and from time to time will make or cause to be made all
appropriate repairs, renewals and replacements thereof. Holdings will maintain
or cause to be maintained, with insurers of recognized responsibility and
reputation, insurance with respect to its properties and business and the
properties and businesses of its Subsidiaries against loss or damage (including,
without limitation, flood insurance, if necessary or advisable) of the kinds
customarily carried or maintained under similar circumstances by corporations
engaged in similar businesses and Company will, with respect to each Financed
Aircraft, maintain the insurance specified in the First Aircraft Chattel
Mortgage with respect to such Financed Aircraft.
Holdings and its Subsidiaries may self-insure, by way of deductible or
equivalent structures or provisions in insurance policies, the risks required to
be insured against pursuant to this subsection 5.4 in such reasonable amounts as
are then applicable to other similar aircraft or spare engines in Holdings'
fleet, and as are not substantially greater than amounts self-insured by
corporations engaged in the same or similar business and similarly situated with
Holdings;
(57)
PROVIDED, HOWEVER, that Company may not self-insure in an amount in excess of
$1,000,000 per Financed Aircraft without the prior written consent of
Administrative Agent.
5.5 INSPECTION; LENDER MEETING.
Holdings will, and will cause its Subsidiaries to, permit any authorized
representatives designated by any Lender to visit and inspect any of the
properties of Holdings or any of its Subsidiaries, including its and their
financial and accounting records, and, with the permission of Holdings which
shall not be unreasonably withheld, to make copies and take extracts therefrom,
and to discuss its and their affairs, finances and accounts with its and their
officers and independent public accountants (provided that Holdings may, if it
so chooses, be present at or participate in any such discussion), all upon
reasonable notice and at such reasonable times during normal business hours and
as often as may be reasonably requested; PROVIDED that so long as no Event of
Default shall have occurred and be continuing, such inspection shall not be
disruptive to Holdings' business, as reasonably determined by Holdings. Within
150 days after the end of the 2004 Fiscal Year, and within 120 days after the
end of each Fiscal Year thereafter, senior management of Holdings shall
participate in a meeting of Lenders during which senior management will review,
among other matters, the financial results of Holdings and its Subsidiaries for
such Fiscal Year and outline the prospects for Holdings for the current Fiscal
Year and report on any major changes in the business strategy of Holdings
anticipated to occur during the term of this Agreement.
5.6 COMPLIANCE WITH LAWS, ETC.
Holdings will, and will cause its Subsidiaries to, comply with the
requirements of all applicable laws, rules, regulations and orders of any
governmental authority (including, without limitation, Environmental Laws),
noncompliance with which could reasonably be expected to cause a Material
Adverse Effect.
5.7 ENVIRONMENTAL INDEMNITY.
Holdings agrees to indemnify, defend, and hold harmless Administrative
Agent and Lenders, and the officers, directors, employees, agents and affiliates
of Administrative Agent and Lenders from and against any and all losses, claims,
liability or expenses arising in connection with Environmental Claims against
such Loan Party or with any Hazardous Materials Activity.
5.8 HOLDINGS' REMEDIAL ACTION REGARDING HAZARDOUS MATERIALS.
Holdings and Company will promptly take, and will cause each of their
Subsidiaries promptly to take, any and all necessary remedial action in
connection with the presence, storage, use, disposal, transportation or Release
of any Hazardous Materials on, under or about any Facility in order to comply
with all applicable Environmental Laws and Governmental Authorizations to the
extent that any failure to take such action could reasonably be expected to have
a Material Adverse Effect. In the event Holdings or any of its Subsidiaries is
required to undertake any remedial action with respect to any Hazardous
Materials on, under or about any Facility, Holdings or such Subsidiary will
conduct and complete such remedial action in compliance with all applicable
Environmental Laws, and in accordance with the policies, orders
(58)
and directives of all federal, state and local governmental authorities except
when, and only to the extent that, Holdings' or such Subsidiary's liability for
such presence, storage, use, disposal, transportation or discharge of any
Hazardous Materials is being contested in good faith by Holdings or such
Subsidiary.
5.9 FURTHER ASSURANCES; NEW SUBSIDIARIES.
A. At any time or from time to time upon the request of Administrative
Agent, Holdings, Company or any Subsidiary Guarantor will, at its expense,
promptly execute, acknowledge and deliver such further documents and do such
other acts and things as Administrative Agent may reasonably request in order to
effect fully the purposes of the Loan Documents and to provide for payment of
the Obligations in accordance with the terms of this Agreement, the Notes and
the other Loan Documents.
B. In furtherance and not in limitation of the foregoing, Holdings will
cause each Material Subsidiary of Holdings (other than AFL III), to take such
actions as Administrative Agent may reasonably request from time to time to
ensure that the Obligations are guarantied by any such Subsidiary.
Notwithstanding the foregoing, so long as the AFL III Financing remains
outstanding nothing herein shall cause or give rise to an obligation on the part
of Company or AFL III to require a guaranty or grant of security interest in the
assets of AFL III. The Lenders acknowledge that the security interests and Liens
created by the Collateral Documents do not extend to the assets of AFL III now
existing or hereafter acquired.
5.10 APPRAISALS.
At the request of Administrative Agent or Requisite Lenders (but no more
than once each calendar year), Company will obtain desktop appraisals of each of
the Financed Aircraft from an Approved Appraiser, in form satisfactory to
Administrative Agent; PROVIDED that upon the occurrence and during the
continuance of an Event of Default, Company will obtain such additional
appraisals with respect to the Financed Aircraft as Administrative Agent or
Requisite Lenders may request.
5.11 MAINTENANCE CONTRACTS.
Subject to Section 5.15, Company shall maintain, or enter into, contracts
with respect to the maintenance of each Financed Aircraft sufficient to insure
compliance with the Federal Aviation Act.
5.12 EMPLOYEE BENEFIT PLANS.
Holdings and its Subsidiaries will not establish or permit to be
established any Employee Benefit Plans for Holdings, any of its Subsidiaries or
any of their employees and will not permit any ERISA Affiliate to establish any
Employee Benefit Plan which, in either case, could result in a liability for
Holdings or any Subsidiary, under ERISA, in excess of $10,000,000 in the
aggregate.
(59)
5.13 REGISTRATION OF FOREIGN LEASED AIRCRAFT WITH FAA.
Upon termination of an Approved Lease to which a Foreign Leased Aircraft
is subject, Company shall cause such Foreign Leased Aircraft to be deregistered
in such country and registered under the Federal Aviation Act and file for
recordation with the FAA following such deregistration a First Aircraft Chattel
Mortgage and Second Aircraft Chattel Mortgage with respect to such Foreign
Leased Aircraft and shall cause FAA counsel to deliver an opinion in form and
substance satisfactory to Administrative Agent.
5.14 CIVIL RESERVE AIR FLEET PROGRAM.
To the extent any of the Financed Aircraft or any component thereof are
leased or under contract to the United States or any agency or instrumentality
thereof pursuant to the Civil Reserve Air Fleet Program established pursuant to
10 U.S.C. 9511-13 (as administered pursuant to Executive Order 1268, or any
substitute regulation or order), or a similar program, Company shall use its
reasonable best efforts to take such actions as the Administrative Agent may
reasonably request to ensure that the Administrative Agent, for the benefit of
the Lenders, (i) is a loss payee under any insurance policy or indemnity granted
to Company or any of its affiliates by the United States or any agency or
instrumentality thereof and/or (ii) has a perfected security interest in the
proceeds of any payments made by the United States or any agency or
instrumentality thereof pursuant to any such insurance policy or indemnity.
5.15 ENGINE MAINTENANCE.
A. At all times each of the Engines will be subject to an engine
maintenance agreement with General Electric Aircraft Engines ("GEAE"), MTU or
such other provider of engine maintenance services as may be acceptable to the
Administrative Agent and the Requisite Lenders, in each case in accordance with
an engine maintenance agreement that is in form and substance satisfactory to
the Administrative Agent and the Requisite Lenders (it being understood and
agreed that (x) any engine maintenance agreement with respect to any Engine that
is not a "power by the hour" engine maintenance agreement or similar agreement
that provides for the prepayment of maintenance expense shall not be
satisfactory to the Administrative Agent and the Requisite Lenders and (y) the
GEAE and MTU engine maintenance agreements as in effect on the Fifth Restatement
Effective Date are satisfactory to the Administrative Agent and the Requisite
Lenders). Company will use its commercially reasonable best efforts to enter
into new or amended engine maintenance agreements covering the Financed Aircraft
and the Engines comprising the Collateral on a power-by-the-hour basis and on
terms requiring Company to make monthly payments to the engine maintenance
contractor in respect of each engine at the rate of at least $150 per flight
hour that such engine was operated during the prior month. Company shall use its
commercially reasonable best efforts to have the new engine maintenance
agreements provide that (i) the Administrative Agent is a third party
beneficiary, (ii) the Administrative Agent has a security interest in the
agreements and (iii) the Administrative Agent has the right to step into
Company's place should any Engines be returned to the Lenders. Notwithstanding
the foregoing, Company may amend the existing GEAE and MTU engine maintenance
agreements to reduce the hourly rate payable thereunder to the extent
attributable to demonstrable hourly rate and materials cost savings with the
relevant engine maintenance provider (as determined by the Administrative Agent)
and to the extent that
(60)
such reductions could not reasonably be expected to result in an increase in any
"top-up" or "make-whole" or similar payment thereunder, PROVIDED that (x) each
Engine shall at all times be subject to a minimum build standard in respect of
each Part thereof of at least 2,000 cycles and (y) Company will not remove any
Part from an Engine if such Part has at least 2,000 cycles remaining (except as
permitted by Section 6.9B hereof). In addition, Company shall continue to comply
with the terms of each such engine maintenance agreement (including making all
payments when due thereunder) and not take any action with respect to any
credits or equivalents thereof related to any Engine (or permit any action to be
taken), if, in the opinion of the Administrative Agent, such action could cause
the loss of any economic benefit available under any engine maintenance
agreement applicable to such Engine (other than any loss resulting from the
performance of maintenance on such engine in accordance with the applicable
engine maintenance agreement or as specifically provided in the following
sentence). To the extent under the GEAE, MTU or any other engine maintenance
agreement in effect with respect to any Engine, there is any surplus cash or
credit with respect to any Engine after such Engine completes a shop visit and
the terms of the engine maintenance agreement applicable to such Engine permit
such surplus cash or credit to be allocated to other engines currently being
overhauled by such engine maintenance provider pursuant to such agreement, such
surplus will first be applied to or for the benefit of any other Engines and,
second to the extent any such surplus can not be applied to or for the benefit
of any other Engine, to or for the benefit of any other engine. In addition,
Company shall, at no material cost to Company, assist the Administrative Agent,
for the benefit of the Lenders, in obtaining the benefit of the credits or
equivalents thereof relating to such Engines in the event that the
Administrative Agent acquires possession of the Engines under each such engine
maintenance agreement through direct contractual agreements between the
Administrative Agent and such engine maintenance provider.
B. Sage-Popovich Inc. ("S-P") or such other company as may be appointed
by the Requisite Lenders will be retained by Company as a third party provider
to perform the services identified in Schedule 5.15 attached hereto, S-P will
have limited access to the maintenance module of SAP or an equivalent program
(with no ability to enter or change data) and Company will provide to S-P such
additional documents as S-P reasonably requests from time to time (and not
available to S-P as a third-party provider). Company will promptly take such
actions as the Administrative Agent deems reasonably necessary to resolve each
of the outstanding issues raised by S-P's ongoing reviews of Company's
maintenance records and procedures (including, without limitation, the
resolution of all issues regarding Company's failure to maintain records for
each Part constituting Collateral dating back to the date of manufacture of such
Part (each such issue, a "BACK-TO-BIRTH TRACEABILITY ISSUE") as provided in the
immediately succeeding subclause C). Any dispute concerning any issues raised by
S-P shall be resolved by an arbitrator reasonably satisfactory to Company and
the Requisite Lenders (it being understood and agreed that a request to resolve
any back-to-birth traceability issues with respect to the Collateral in the
manner set forth in the immediately succeeding subclause C shall be complied
with in accordance with such subclause C and shall not be subject to such
dispute resolution provision). Company will pay the reasonable fees and expenses
of S-P in connection with such review.
C. Company will resolve any Back-To-Birth Traceability Issues by the
replacement of any Part with an unresolved back-to-birth traceability issue at
the next shop visit for such
(61)
Engine; PROVIDED that (i) Company shall not be required to spend more than
$3,000,000 during the twelve month period commencing upon November 3, 2003 or
any twelve month period thereafter or $8,000,000 in the aggregate on or after
July 3, 2003 to replace (x) any Parts and (y) any parts of the engines securing
the AFL III Financing Agreement, in each case because of back-to-birth
traceability issues, (ii) the amounts in the preceding clause (i) shall be net
of any salvage value attributable to the removed Parts or parts, as the case may
be, and (iii) the cost to replace any Part or part, as the case may be, that is
scheduled to be (or otherwise would have been) removed at such shop visit shall
not be included in the calculation in clause (i) of this proviso.
5.16 GROUNDING OF FINANCED AIRCRAFT.
Notwithstanding the restrictions set forth in subclause 6.9B, Company
shall have the right to ground no more than one of the Financed Aircraft at any
time, PROVIDED that the Airframe of such Financed Aircraft (with such engines as
are then on the Airframe) is grounded in an FAA-approved storage program that is
acceptable to the Administrative Agent and the Requisite Lenders (the "STORAGE
PROGRAM"), it being understood and agreed that Company's Storage Program in
Roswell, New Mexico (as in effect on the Fifth Restatement Effective Date) is
acceptable to the Administrative Agent and the Requisite Lenders. In addition,
Company covenants to provide the work cards generated by the provider of the
Storage Program to the Administrative Agent on a monthly basis. Except to the
extent compliance by Company is required under the terms of the Storage Program,
Company is not required to comply with the maintenance provisions of the Loan
Documents (solely with respect to such Grounded Aircraft), PROVIDED that Company
shall still be subject to maintain records with respect to such Financed
Aircraft as required by the Loan Documents and relevant FAA regulations. If
Engines are not the only engines installed on the Airframe at the time such
Financed Aircraft is grounded, no later than sixty days after receipt of a
request in writing from the Administrative Agent or the Requisite Lenders,
Company shall cause Engines to be installed on the Airframe and such Engines to
be subject to the Storage Program.
5.17 MAINTAIN AIRCRAFT AIRWORTHINESS.
Company will keep all Financed Aircraft airworthy and perform, C-Checks,
D-Checks and any other required maintenance on the Financed Aircraft, except as
otherwise provided in subsection 5.16.
SECTION 6.
NEGATIVE COVENANTS
Holdings covenants and agrees that, until payment in full of all of the
Loans and other Obligations, unless Requisite Lenders shall otherwise give prior
written consent, Holdings shall perform, and shall cause each of its
Subsidiaries to perform, all covenants in this Section 6.
(62)
6.1 INDEBTEDNESS.
Holdings shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, assume or guaranty, or otherwise become
or remain directly or indirectly liable with respect to, any Indebtedness,
except:
(i) Company may become and remain liable with respect to the
Obligations;
(ii) Holdings and its Subsidiaries may become and remain liable
with respect to Contingent Obligations permitted by subsection 6.4 and,
upon any matured obligations actually arising pursuant thereto, the
Indebtedness corresponding to the Contingent Obligations so extinguished;
(iii) Holdings and its Subsidiaries, as applicable, may remain
liable with respect to Indebtedness described in SCHEDULE 6.1 annexed
hereto (the "EXISTING INDEBTEDNESS");
(iv) Holdings and its Subsidiaries may become and remain liable
with respect to Permitted Extension Indebtedness;
(v) so long as no Event of Default or Potential Event of Default
shall have occurred and be continuing or would result therefrom and
Company delivers an Officers' Certificate to Administrative Agent and
Lenders, in form and substance reasonably satisfactory to Administrative
Agent, confirming that, on a Pro Forma Basis after giving effect to such
incurrence of Indebtedness, the Fixed Charge Coverage Ratio determined as
of the last day of the last fiscal quarter for which financial statement
are then available is greater than 1.25 to 1.00, Holdings and its
Subsidiaries may incur Indebtedness (including pursuant to Capital
Leases), PROVIDED that (x) the aggregate principal amount of Indebtedness
incurred pursuant to this clause (v) does not exceed $50,000,000 at any
one time outstanding;
(vi) AFL III may become and remain liable with respect to all of
the obligations under the AFL III Financing Agreement and Company may
become and remain liable with respect to the AFL III Leases;
(vii) Company may become and remain liable with respect to the Pass
Through Trust Agreements and with the leases related thereto;
(viii) Company may become and remain liable with respect to the Exit
Facility, provided that the aggregate principal amount thereof (including
any letters of credit issued thereunder) shall not exceed $60,000,000 at
any one time outstanding;
(ix) Company and its Subsidiaries may become and remain liable in
respect of Indebtedness constituting Intercompany Loans; and
(63)
(x) Company and its Subsidiaries may become and remain liable with
respect to other Indebtedness in an aggregate principal amount not to
exceed $10,000,000 at any one time outstanding;
PROVIDED that, notwithstanding the foregoing, neither Holdings nor any of its
Subsidiaries may become or remain liable, directly or indirectly, for any
Indebtedness of any Subsidiary of Holdings, which is not a Subsidiary Guarantor.
6.2 LIENS AND RELATED MATTERS.
A. PROHIBITION ON LIENS. Holdings shall not, and shall not permit any
of its Subsidiaries to, directly or indirectly, create, incur, assume or permit
to exist any Lien on or with respect to any property or asset of any kind
(including any document or instrument in respect of goods or accounts
receivable) of Holdings or any of its Subsidiaries, whether now owned or
hereafter acquired, or any income or profits therefrom, or file or permit the
filing of, or permit to remain in effect, any financing statement or other
similar notice of any Lien with respect to any such property, asset, income or
profits under the Uniform Commercial Code of any state or under any similar
recording or notice statute, except:
(i) Permitted Encumbrances;
(ii) Liens in respect of (x) Permitted Extension Indebtedness (but
only to the extent permitted by the definition thereof) and (y) Other
Permitted Indebtedness; PROVIDED that such Liens encumber only assets
subject to purchase money Liens securing such Indebtedness;
(iii) other Liens on assets other than Collateral securing
Indebtedness and Contingent Obligations in an aggregate amount not to
exceed $5,000,000 at any time outstanding;
(iv) Liens to secure obligations in respect of letters of credit
incurred in the ordinary course of business in an aggregate amount not to
exceed $5,000,000 at any time outstanding; and
(v) as part of an Employee Benefit Plan providing deferred
compensation to Company's employees and approved by its board of
directors, Company may create a trust, pursuant to documentation in form
and substance reasonably satisfactory to the Administrative Agent, for the
benefit of its employees and make payments thereto not to exceed
$10,000,000 in the aggregate.
B. EQUITABLE LIEN IN FAVOR OF LENDERS. If Holdings or any of its
Subsidiaries shall create or assume any Lien upon any of its properties or
assets, whether now owned or hereafter acquired, other than Liens excepted by
the provisions of subsection 6.2A, it shall make or cause to be made effective
provision whereby the Obligations will be secured by such Lien equally and
ratably with any and all other Indebtedness secured thereby as long as any such
Indebtedness shall be so secured; PROVIDED that, notwithstanding the foregoing,
this covenant shall not be
(64)
construed as a consent by Requisite Lenders to the creation or assumption of any
such Lien not permitted by the provisions of subsection 6.2A.
C. NO RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS TO HOLDINGS OR OTHER
SUBSIDIARIES. Except (i) as provided herein, as (ii) described on SCHEDULE 6.2
annexed hereto, and (iii) pursuant to the AFL III Financing Agreement, Holdings
will not, and will not permit any of its Subsidiaries to, create or otherwise
cause or suffer to exist or become effective any consensual encumbrance or
restriction of any kind on the ability of any such Subsidiary to (i) pay
dividends or make any other distributions on any of such Subsidiary's capital
stock owned by Holdings or any other Subsidiary of Holdings, (ii) repay or
prepay any Indebtedness owed by such Subsidiary to Holdings or any other
Subsidiary of Holdings, (iii) make loans or advances to Holdings or any other
Subsidiary of Holdings, or (iv) transfer any of its property or assets to
Holdings or any other Subsidiary of Holdings.
6.3 INVESTMENTS; JOINT VENTURES.
Holdings shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, make or own any Investment in any Person, including any
Joint Venture, except:
(i) Holdings and its Subsidiaries may make and own Investments in
Cash Equivalents; PROVIDED that, (x) the weighted average maturity of all
Investments in Cash Equivalents shall not exceed twelve months, (y) no
more than 10% of the Holdings' and its Subsidiaries' Investments in Cash
Equivalents shall be in a single security or issuer (other than U.S.
treasuries, U.S. government agency obligations and money market funds),
and (z) no more than 50% of the Holdings' and its Subsidiaries'
Investments in Cash Equivalents shall be in a single U.S. treasury or U.S.
government agency security;
(ii) Holdings and its Subsidiaries may continue to own the
Investments owned by them as of the Fifth Restatement Effective Date in
any Subsidiaries of Holdings;
(iii) Holdings and its Subsidiaries may continue to own the
Investments owned by them on the Fifth Restatement Effective Date and
described in SCHEDULE 6.3 annexed hereto, without giving effect to any
additions thereto or replacements thereof, it being understood that any
additional Investments made with respect to such existing Investments
shall be permitted only if independently justified under the other
provisions of this Section 6.3;
(iv) so long as no Event of Default or Potential Event of Default
has occurred and is continuing or would result therefrom, and so long as,
on a Pro Forma Basis, Holdings and its Subsidiaries will be in compliance
with the covenant set forth in subsection 6.6B, Company may make
Investments in an aggregate amount not to exceed $10,000,000; and
(v) any Loan Party may make intercompany loans and advances to any
other Loan Party (collectively, the "INTERCOMPANY LOANS").
(65)
Notwithstanding the foregoing, neither Holdings nor any of its
Subsidiaries may make any direct or indirect loan, advance or capital
contribution to AFL III.
6.4 CONTINGENT OBLIGATIONS.
Holdings shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create or become or remain liable with respect to any
Contingent Obligation, except:
(i) Holdings and any Subsidiary may become and remain liable with
respect to Contingent Obligations arising under their guaranties of the
Obligations;
(ii) Company may become and remain liable with respect to
Contingent Obligations under Interest Rate Agreements and Currency
Agreements with a Lender;
(iii) Holdings and its Subsidiaries may become and remain liable
with respect to Contingent Obligations in respect of customary
indemnification and purchase price adjustment obligations incurred in
connection with Asset Sales or other sales of assets or securities;
(iv) Holdings and its Subsidiaries may become and remain liable
with respect to letters of credit issued under the Exit Facility;
(v) Holdings and its Subsidiaries may become and remain liable
with respect to letters of credit issued in the ordinary course of
business of Holdings and its Subsidiaries in an amount not to exceed
$5,000,000 in the aggregate at any time;
(vi) Holdings and its Subsidiaries, as applicable, may remain
liable with respect to Contingent Obligations described in SCHEDULE 6.4
annexed hereto (other than in respect of letters of credit);
(vii) Holdings and its Subsidiaries may become and remain liable
with respect to Contingent Obligations to the extent such Contingent
Obligations are permitted pursuant to subsections 6.9 and 6.10; and
(viii) Holdings and its Subsidiaries may become and remain liable
with respect to other Contingent Obligations; PROVIDED that the maximum
aggregate liability, contingent or otherwise, of Company and its
Subsidiaries in respect of all such Contingent Obligations shall at no
time exceed $10,000,000.
6.5 RESTRICTED JUNIOR PAYMENTS.
Holdings shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, declare, order, pay, make or set apart any sum for any
Restricted Junior Payment; PROVIDED that Holdings and its Subsidiaries may make
scheduled payments of principal and interest or mandatory prepayments of
principal (including through the exercise of remedies) from time to time on
Designated Indebtedness; and PROVIDED FURTHER that so long as no Event of
Default or Potential Event of Default has occurred and is continuing, or would
result therefrom and so long
(66)
as, on a Pro Forma Basis, Holdings will be in compliance with the covenant set
forth in subsection 6.6B:
(i) Holdings and its Subsidiaries may prepay Designated
Indebtedness from the proceeds of Permitted Extension Indebtedness or cash
Equity Proceeds received after the Fifth Restatement Effective Date; and
(ii) Holdings may repurchase Holdings Common Stock in an amount not
to exceed in any Fiscal Year $1,000,000 for purposes of establishing or
contributing to an employee compensation plan; PROVIDED that any such
repurchased Holdings Common Stock resold to employees of Holdings shall,
to the extent of the price paid for such Holdings Common Stock by such
employee, be excluded from the calculation of the $1,000,000 limit set
forth above.
6.6 FINANCIAL COVENANTS.
A. MINIMUM FIXED CHARGE COVERAGE RATIO. Holdings shall not permit the
Fixed Charge Coverage Ratio as of the last day of any fiscal quarter of Holdings
set forth below to be less than the correlative ratio indicated:
- --------------------------------------------------------------
MINIMUM
FIXED CHARGE
FISCAL QUARTER ENDING COVERAGE RATIO
- --------------------------------------------------------------
September 30, 2004 No Test
- --------------------------------------------------------------
December 31, 2004 0.75:1.00
- --------------------------------------------------------------
March 31, 2005 0.85:1.00
- --------------------------------------------------------------
June 30, 2005 0.95:1:00
- --------------------------------------------------------------
September 30, 2005 1.00:1.00
- --------------------------------------------------------------
December 31, 2005 0.95:1.00
- --------------------------------------------------------------
March 31, 2006 1.00:1.00
- --------------------------------------------------------------
June 30, 2006 1.075:1.00
- --------------------------------------------------------------
Thereafter 1.10:1.00
- --------------------------------------------------------------
B. MINIMUM LIQUIDITY. Holdings shall not permit its reserve of
Unrestricted Cash and Cash Equivalents and Availability at any time during any
period set forth below to be less than the amount set forth opposite such period
below:
(67)
- --------------------------------------------------------------
MINIMUM
FOR THE PERIOD LIQUIDITY
- --------------------------------------------------------------
September 1, 2004 to October 7, 2004 $ 55,000,000
- --------------------------------------------------------------
October 8, 2004 to November 7, 2004 $ 60,000,000
- --------------------------------------------------------------
November 8, 2004 to December 7, 2004 $ 65,000,000
- --------------------------------------------------------------
December 8, 2004 to January 7, 2005 $ 70,000,000
- --------------------------------------------------------------
January 8, 2005 to April 7, 2005 $ 75,000,000
- --------------------------------------------------------------
April 8, 2005 to September 30, 2005 $ 85,000,000
- --------------------------------------------------------------
October 1, 2005 to December 31, 2005 $ 95,000,000
- --------------------------------------------------------------
January 1, 2006 to December 31, 2006 $ 110,000,000
- --------------------------------------------------------------
January 1, 2007 and Thereafter $ 125,000,000
- --------------------------------------------------------------
6.7 RESTRICTION ON FUNDAMENTAL CHANGES AND ASSET SALES.
Holdings shall not, and shall not permit any of its Subsidiaries to, enter
into any transaction of merger or consolidation, or liquidate, wind-up or
dissolve itself (or suffer any liquidation or dissolution), or convey, sell,
lease, sub-lease, transfer or otherwise dispose of, in one transaction or a
series of transactions, all or any part of its business, property or fixed
assets, whether now owned or hereafter acquired, or acquire by purchase or
otherwise all or any portion of the business, property or fixed assets of, or
stock or other evidence of beneficial ownership of, any Person or any division
or line of business of any Person, except:
(i) any Subsidiary of Holdings may be merged with or into Company
or any Subsidiary Guarantor, or be liquidated, wound up or dissolved, or
all or any part of its business, property or assets may be conveyed, sold,
leased, transferred or otherwise disposed of, in one transaction or a
series of transactions, to Company or any Subsidiary Guarantor; PROVIDED
that, in the case of such a merger, Company or such Subsidiary Guarantor
shall be the continuing or surviving corporation;
(ii) Holdings and its Subsidiaries may sell or otherwise dispose of
assets in transactions that do not constitute Asset Sales; PROVIDED that
the consideration received for such assets shall be in an amount at least
equal to the fair market value thereof;
(iii) subject to subsection 6.13, Holdings and its Subsidiaries may
make Asset Sales of assets other than Financed Aircraft having a fair
market value not in excess of $70,000,000 in the aggregate; PROVIDED that
(x) the consideration received for such assets shall be in an amount at
least equal to the fair market value thereof; (y) the consideration
(68)
received shall be at least 75% cash; and (z) the proceeds of such Asset
Sales shall be applied as required by subsection 2.4B(ii)(a);
(iv) Holdings and its Subsidiaries may make Asset Sales of up to (1)
one Financed Aircraft; PROVIDED that (t) no Potential Event of Default or
Event of Default exists at the time of such Asset Sale or results
therefrom; (u) such Asset Sale is to a Person that is not an Affiliate of
either Holdings or any of its Subsidiaries; (v) at the time of such Asset
Sale there is no agreement of any kind between or among the Persons party
to such Asset Sale that the Financed Aircraft subject to such Asset Sale
is part of any sale leaseback or similar transaction to which Holdings or
any of its Subsidiaries is party to; (w) the Financed Aircraft subject to
such Asset Sale shall not be part of any sale leaseback transaction to
which Holdings or any Subsidiaries are party to for at least six months
after the consummation of such Asset Sale; (x) the consideration received
for such Financed Aircraft shall be in an amount at least equal to the
fair market value thereof; (y) the consideration received from such
Financed Aircraft shall be at least 75% Cash with the remaining
consideration other than Cash to be evidenced by a note or similar
financial instrument; and (z) on or prior to the consummation of such
Asset Sale the Loans shall be repaid by at least the amount required by
subsection 2.4B(ii)(a) in accordance with the terms thereof;
(v) Holdings and its Subsidiaries may sell or otherwise dispose of
up to (3) three aircraft subject to the Pass Through Trust Documents;
PROVIDED that (x) the consideration received for such assets shall be in
an amount at least equal to the fair market value thereof; (y) the
consideration received shall be at least 75% cash; and (z) the Net Cash
Proceeds of such Asset Sales shall be applied as required by subsection
2.4B(ii)(a);
(vi) Company may lease or transfer any Financed Aircraft to the
extent expressly permitted by Section 4(d) of the First Aircraft Chattel
Mortgage with respect to such Financed Aircraft;
(vii) Holdings and its Subsidiaries may make (x) Consolidated
Capital Expenditures not in excess of the Maximum Capital Expenditure
Amount during any Fiscal Year, (y) Consolidated Capital Expenditures
required to retrofit airplanes in order to conform to FAA regulations in
an amount not to exceed $7,000,000 in the aggregate and (z) Consolidated
Capital Expenditures constituting the reinvestment of proceeds of Asset
Sales not required to repay the Loans pursuant to Section 2.4B(ii)(a);
PROVIDED that up to 50% of any amount of such Consolidated Capital
Expenditures permitted pursuant to clause (x) of this subsection (vii),
but not made, in any Fiscal Year may be carried forward to and made during
the immediately succeeding Fiscal Year (but no amount once carried forward
to the next Fiscal Year may be carried forward to any Fiscal Year
thereafter);
(viii) Company and Polar Air may lease aircraft pursuant to ACMI
Contracts;
(ix) Company and Polar Air may lease aircraft other than pursuant
to ACMI Contracts (each such lease, a "DRY LEASE"); PROVIDED that in the
case of a Financed
(69)
Aircraft (a) such Dry Lease (i) shall be expressly subject and subordinate
to the lien and security interest of the Lenders under the Collateral
Documents, (ii) except in the case of a Dry Lease between the Company and
Polar Air, shall not have a term (including, without limitation, any
option to renew or extend) in excess of sixty (60) months, (iii) except in
the case of a Dry Lease between the Company and Polar Air, shall require
rental payments to be made at least monthly and (iv) except in the case of
a Dry Lease between the Company and Polar Air, shall otherwise be in form
and substance reasonably satisfactory to the Administrative Agent
(including, without limitation, with regard to the identity of the
lessee), (b) Company shall grant a first priority security interest in
such Dry Lease to the Administrative Agent, for the benefit of the
Lenders, and their respective successors and assigns, shall take all
necessary action to ensure that such security interest is fully perfected,
and shall deliver an opinion addressed to the Administrative Agent to the
effect that Administrative Agent holds a fully perfected first priority
security interest in such Dry Lease, which opinion shall be in form and
substance reasonably satisfactory to the Administrative Agent, from
counsel reasonably satisfactory to the Administrative Agent, (c) either
(1)(x) the lessee under such Dry Lease, at the time such Dry Lease in
entered into, shall hold an air carrier operating certificate issued
pursuant to Chapter 447 of Title 49 of the United States Code for aircraft
capable of carrying ten or more individuals or 6,000 pounds or more of
cargo, (y) Company and the lessee under such Dry Lease have expressed in
writing (either in such Dry Lease or in a substantially contemporaneous
writing) that such Dry Lease is intended to be treated as a lease for U.S.
federal tax purposes, and (z) Company has obtained an opinion, addressed
to Company, the Administrative Agent, and the Lenders, in form and
substance reasonably satisfactory to the Administrative Agent, stating
that Company is entitled to the benefits of Section 1110 of the Bankruptcy
Code with respect to the relevant Airframe and the relevant Engines or
engines installed thereon or (2) Company shall obtain the prior written
consent of the Administrative Agent, which consent may be withheld by the
Administrative Agent in its sole discretion, and which consent (x) may be
conditioned on receipt of opinions in form and substance satisfactory to
the Administrative Agent in its sole discretion from counsel of the same
domicile as the lessee under such Dry Lease, which counsel must be
satisfactory to Administrative Agent in its sole discretion and (y) may be
conditioned on such other conditions as the Administrative Agent may, in
its sole discretion, determine, (d) except in the case of Dry Leases
between Company and Polar Air, Company shall not enter into any waiver,
amendment or other modification with respect to the related Dry Lease that
could reasonably be expected to be materially adverse in any respect to
Company or Polar Air, as the case may be, or Lenders without the prior
written consent of the Administrative Agent, which consent shall be
granted or denied by Administrative Agent in its sole discretion within
ten (10) Business Days of receipt by Administrative Agent of the proposed
amendment and any related documents reasonably requested by Administrative
Agent and (e) Company shall provide Administrative Agent with a copy of
any amendment, consent, waiver, supplement, or other modification with
respect to any such Dry Lease within fifteen Business Days after the
execution thereof; and
(x) any Subsidiary of Holdings may convey, lease, license, sell or
otherwise transfer all or part of its business, properties or assets
(other than any Financed Aircraft or
(70)
any Part thereof) to Company or to any Subsidiary Guarantor, so long as
any security interests granted to the Administrative Agent pursuant to the
Collateral Documents in the assets so transferred shall remain in full
force and effect and perfected (to at least the same extent as in effect
immediately prior to such transfer) and all actions required to maintain
said perfected status have been taken.
6.8 AMENDMENTS OF MATERIAL AGREEMENTS.
Holdings shall not permit (i) the certificate or articles of incorporation
or bylaws of any Loan Party to be amended or otherwise modified in any manner
which could reasonably be expected to have a Material Adverse Effect or (ii) any
Material Agreement to be amended or otherwise modified (including by way of a
waiver of any provision thereof) (x) at any time in any manner with respect to
any provision providing material representations and warranties to Holdings or
any of its Subsidiaries, indemnification rights to Holdings or any of its
Subsidiaries, or limiting Holdings' or any of its Subsidiaries, remedies or
rights upon the other party to such agreements failure to perform or which could
otherwise reasonably be expected to have Material Adverse Effect on the value of
any Financed Aircraft, (y) in the case of any Material Agreement at any time
during the period ending on the first anniversary of the Fifth Restatement
Effective Date, to provide (I) additional or increased rent, debt payments,
maintenance reserves or any other form of additional compensation (including any
amendment, modification or waiver, requiring any mandatory repayment of the
principal amount of any Indebtedness or the prepayment of any rent with respect
to any lease), (II) new fees or other compensation, (III) an increase in
interest rate, (IV) additional collateral or credit support, (V) improved
maintenance provisions or return condition provisions, (VI) additional
financial, affirmative or negative covenants or (VII) any other form of material
enhancements or (z) in the case of any Material Agreement at any time unless the
Board of Directors of Holdings has determined that an amendment or modification
of the type described in clause (I) through (VII) of clause (y) above is in the
best interests of Holdings and its Subsidiaries and that Holdings and its
Subsidiaries have received fair value in return for such amendment or
modification.
In addition, Holdings and its Subsidiaries shall not amend or modify any
Permitted Extension Indebtedness or Other Permitted Indebtedness if such
amendment or modification would have resulted in such Indebtedness not
constituting Permitted Extension Indebtedness or Other Permitted Indebtedness
when incurred had such amendment or modification been effective at such time.
6.9 RESTRICTION ON LEASES.
A. Other than such Operating Leases or Capital Leases as are in effect
on the Fifth Restatement Effective Date, Holdings shall not, and shall not
permit any of its Subsidiaries to, become liable in any way, whether directly or
by assignment or as a guarantor or other surety, for the obligations of the
lessee under any lease, whether an Operating Lease or a Capital Lease (other
than intercompany leases between Loan Parties) except that, other than as set
forth in clause (B) of this Section 6.9, so long as no Event of Default or
Potential Event of Default shall have occurred and be continuing or would result
therefrom and Company delivers an Officers' Certificate to Administrative Agent
and Lenders, in form and substance reasonably satisfactory to Administrative
Agent, certifying (i) the cash scheduled rental payments required to be made
(71)
during each Fiscal Year of the Company under all Operating Leases and Capital
Leases (including, without limitation, the lease proposed to be entered into)
entered into after the Fifth Restatement Effective Date (each a "POST EFFECTIVE
DATE LEASE") and (ii) in the event that the cash scheduled rental payments
required to be made under all Post Effective Date Leases (including, without
limitation, the leases proposed to be entered into) exceed $15,000,000 during
any Fiscal Year of Holdings that on a Pro Forma Basis after giving effect to
such Operating Lease or Capital Lease, the Fixed Charge Coverage Ratio
determined as of the last day of the last fiscal quarter for which financial
statement are then available is greater than 1.25 to 1.00, Holdings and its
Subsidiaries may enter into Operating leases and Capital Leases; PROVIDED that
the aggregate principal amount of Capital Leases entered into pursuant to this
subsection 6.9 does not exceed the amount permitted by subsection 6.1(v). For
purposes of this Section 6.9(A), Operating Leases and Capital Leases entered
into after the Fifth Restatement Effective Date which are replacements of
Operating Leases or Capital Leases in effect on the Fifth Restatement Effective
Date (and related to the same property), shall be deemed to be Post Effective
Date Leases only to the extent that the scheduled cash rental payments required
to be made thereunder during any Fiscal Year of the Company exceed the scheduled
cash rental payments required to be made during any Fiscal Year of the Company
under the replaced leases as in effect on the Fifth Restatement Effective Date.
B. Except as provided in subsection 5.17, (i) so long as any Financed
Aircraft (including any Engines) are grounded, stored or are otherwise not
maintained in a condition to be utilized in commercial operations throughout the
world (including, without limitation, the failure to maintain a FAA
airworthiness certificate with respect to the Airframe) (each such Financed
Aircraft, a "GROUNDED AIRCRAFT" and each such Engine, a "STORED ENGINE"),
Holdings, Company and each of their respective Subsidiaries will not be
permitted to purchase, lease or take delivery of (I) any aircraft whilst any
Financed Aircraft is a Grounded Aircraft, other than the scheduled delivery of
an aircraft from The Boeing Corporation in September 2006 and the lease of up to
five (5) Boeing 747 aircraft at any time, with each such lease to have a term of
no longer than six (6) months (with no option to extend or renew such lease
(other than any option to extend or renew at the then prevailing market rate at
the date of expiration of the current term of such lease for an additional term
of up to six (6) months)) or (II) any engine of a type that could be installed
on any Boeing 747-200 or 747-300 aircraft whilst any Engine is a Stored Engine
(other than any engine installed on a Financed Aircraft), other than leases of
engines solely in order to replace an engine that has suffered unexpected
in-flight damage, with such leases to have a term of no longer than one (1)
month (with no option to extend or renew such lease), (ii) Company shall not be
permitted to remove any Parts from the Grounded Aircraft and Stored Engines,
except (x) as required by the Storage Program and (y) that Parts may be removed
from the Grounded Aircraft and Stored Engines from time to time, if the removal
of such Part is necessary to maintain other Airframes and Engines and so long as
(I) the removal of such Part does not adversely affect Company's ability to
comply with the Storage Program, (II) the Administrative Agent is provided with
at least 24-hours prior written notice of Company's intent to remove such Part,
(III) concurrently with the removal of such Part, Company deposits cash in an
amount equal to 150% of the cost to purchase a new part or a part that has a
value, utility and remaining useful life at least equal to the Part removed
(determined as of the time such Part was removed from such Grounded Aircraft or
Stored Engine) in a cash collateral account to be established at the
Administrative Agent (with such cash and accrued interest to be
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returned to Company upon the replacement of such Part to the satisfaction of the
Administrative Agent), (IV) such Part is replaced with a new part or a part that
has a value, utility and remaining useful life at least equal to the Part
removed (determined as of the time such Part was removed from such Grounded
Aircraft or Stored Engine) as soon as practicable thereafter and in no event
later than five (5) weeks after such Part was removed and (V) the Administrative
Agent shall have the right to have a technical advisor present (at Company's
expense) during the removal or installation of any Part on a Grounded Aircraft
or Stored Engine.
6.10 SALES AND LEASE-BACKS.
Holdings shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, become or remain liable as lessee or as a guarantor or
other surety with respect to any lease, whether an Operating Lease or a Capital
Lease, of any property (whether real, personal or mixed), whether now owned or
hereafter acquired, (i) which Holdings or any of its Subsidiaries has sold or
transferred or is to sell or transfer to any other Person (other than Holdings
or any of its Subsidiaries) or (ii) which Holdings or any of its Subsidiaries
intends to use for substantially the same purpose as any other property which
has been or is to be sold or transferred by Company or any of its Subsidiaries
to any Person (other than Company or any of its Subsidiaries) in connection with
such lease; PROVIDED that Company and its Subsidiaries may become and remain
liable as lessee, guarantor or other surety with respect to any such lease if
and to the extent that Company or any of its Subsidiaries would be permitted to
enter into, and remain liable under, such lease under subsection 6.9.
Notwithstanding the foregoing provisions of this subsection 6.10, this
subsection 6.10 shall not restrict or prohibit in any manner the AFL III Leases.
6.11 SALE OR DISCOUNT OF RECEIVABLES.
Holdings shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, sell with recourse, or discount or otherwise sell for
less than the face value thereof, any of its notes or accounts receivable.
6.12 TRANSACTIONS WITH SHAREHOLDERS, AFFILIATES AND GSS.
In the event that Holdings or any of its Subsidiaries enters into, or
agrees to amend or modify, any lease of aircraft to or from GSS or any holder of
10% or more of any class of equity Securities of Holdings or its Subsidiaries or
with any Affiliate of Holdings (other than a Loan Party) or of any such holder
or of GSS (any such lease, a "SPECIFIED LEASE"), Holdings or such Subsidiary
shall deliver an originally executed officer's certificate, in form and
substance satisfactory to the Administrative Agent, stating that such Specified
Lease is on terms no less favorable to Holdings or such Subsidiary than those
that could have been obtained in an arm's-length transaction with unrelated
third parties.
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6.13 DISPOSAL OF SUBSIDIARY STOCK.
Holdings shall not:
(i) directly or indirectly sell, assign, pledge or otherwise
encumber or dispose of any shares of capital stock or other equity
Securities of any of its Subsidiaries, except to qualify directors if
required by applicable law or to a Subsidiary Guarantor; or
(ii) permit any of its Subsidiaries directly or indirectly to sell,
assign, pledge or otherwise encumber or dispose of any shares of capital
stock or other equity Securities of any of its Subsidiaries (including
such Subsidiary), except to Holdings, another Subsidiary Guarantor, or to
qualify directors if required by applicable law.
6.14 CONDUCT OF BUSINESS.
From and after the Fifth Restatement Effective Date, Holdings shall not,
and shall not permit any of its Subsidiaries to, engage in any business other
than (i) the businesses engaged in by Holdings and its Subsidiaries on the Fifth
Restatement Effective Date and similar or related businesses and (ii) such other
lines of business as may be consented to by Requisite Lenders.
6.15 CHANGE TO LEGAL NAMES; ORGANIZATIONAL IDENTIFICATION NUMBERS, JURISDICTION
OR TYPE OF ORGANIZATION.
No Loan Party shall change, or permit any change to, its legal name,
jurisdiction of organization and/or type of organization until (i) it shall have
given to the Administrative Agent not less than 30 days prior written notice of
its intention so to do, clearly describing such new name and providing other
information in connection therewith as the Administrative Agent may reasonably
request and (ii) it shall have taken all action reasonably requested by the
Administrative Agent to maintain the security interests of the Administrative
Agent in the Collateral at all times fully perfected and in full force and
effect. In addition, to the extent that any Loan Party does not have an
organizational identification number on the date hereof and later obtains one,
or if there is any change in the organizational identification number of any
Loan Party, Holdings shall promptly notify the Administrative Agent of such new
or changed organizational identification number and shall take all actions
reasonably satisfactory to the Administrative Agent to the extent necessary to
maintain the security interests of the Administrative Agent in the Collateral
fully perfected and in full force and effect.
6.16 SUBORDINATED INDEBTEDNESS.
In addition to and not in limitation of, any other term, covenant or
condition set forth in this Agreement (x) any Indebtedness of Holdings and its
Subsidiaries which shall be subordinated in right of payment to any other
Indebtedness of Holdings and its Subsidiaries shall also be expressly
subordinated in right of payment on the same basis to the Obligations, the Pass
Through Trust Documents and related leases thereto and AFL III Financing
Agreement and (y) no repayments of any such subordinated Indebtedness (except
scheduled payments of principal and interest or mandatory prepayments of
principal) shall be made unless, on a Pro Forma Basis
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after giving effect to such repayment, Holdings and its Subsidiaries shall be
able to incur an additional $1.00 of Indebtedness under Section 6.1(v).
SECTION 7.
EVENTS OF DEFAULT
If any of the following conditions or events ("EVENTS OF DEFAULT") shall
occur:
7.1 FAILURE TO MAKE PAYMENTS WHEN DUE.
Failure by Company to pay any installment of principal of any Loan when
due, whether at stated maturity, by acceleration, by notice of voluntary
prepayment, by mandatory prepayment or otherwise; or failure by Company to pay
any interest on any Loan or any fee or any other amount due under this Agreement
within five days after the date due; or
7.2 DEFAULT IN OTHER AGREEMENTS.
(i) Failure of Holdings or any of its Subsidiaries to pay when due
following applicable grace periods (a) any principal of or interest on any
Indebtedness (other than Indebtedness referred to in subsection 7.1) in an
individual principal amount of $5,000,000 or more or any items of Indebtedness
with an aggregate principal amount of $10,000,000 or more or (b) any Contingent
Obligation in an individual principal amount of $5,000,000 or more or any
Contingent Obligations with an aggregate principal amount of $10,000,000 or
more, in each case beyond the end of any grace period provided therefore; or
(ii) breach or default by Holdings or any of its Subsidiaries with respect to
any other material term of (a) any evidence of any Indebtedness in an individual
principal amount of $5,000,000 or more or any items of Indebtedness with an
aggregate principal amount of $10,000,000 or more or any Contingent Obligation
in an individual principal amount of $5,000,000 or more or any Contingent
Obligations with an aggregate principal amount of $10,000,000 or more or (b) any
loan agreement, mortgage, indenture or other agreement relating to such
Indebtedness or Contingent Obligation(s), if the effect of such breach or
default is to cause, or to permit the holder or holders of that Indebtedness or
Contingent Obligation(s) (or a trustee on behalf of such holder or holders) to
cause, that Indebtedness or Contingent Obligation(s) to become or be declared
due and payable prior to its stated maturity or the stated maturity of any
underlying obligation, as the case may be (upon the giving or receiving of
notice, lapse of time, both, or otherwise); or
7.3 BREACH OF CERTAIN COVENANTS.
(i) Failure of any Loan Party to perform or comply in any material respect
with any term or condition contained in subsection 2.5, 5.2, or subsection 6.1,
6.2 (as it relates to prohibitions on Liens on Financed Aircraft), 6.5, 6.7 (as
it relates to the sale of any Financed Aircraft or all or substantially all of
the assets of Holdings and its Subsidiaries or to the merger of Holdings and its
Subsidiaries into any other Person), 6.8, 6.10 and 6.13 of this Agreement or in
clauses (i) and (ii) of Section 4(c), Section 4(d) or Section 4(g) of any First
Aircraft Chattel Mortgage and (ii) the failure of any Loan Party to perform or
comply with any term or condition contained in subsection 6.6B and, if such
default has occurred for the first time during any month, such
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default has not been remedied or waived within (5) five Business Days after such
default has occurred; or
7.4 BREACH OF WARRANTY.
Any representation, warranty, certification or other statement made by
Holdings or Company or any of its Subsidiaries in any Loan Document or in any
statement or certificate at any time given by Holdings or Company or any of its
Subsidiaries in writing pursuant hereto or thereto or in connection herewith or
therewith shall be false in any material respect on the date as of which made;
or
7.5 OTHER DEFAULTS UNDER LOAN DOCUMENTS.
(i) Any Loan Party shall default in the performance of or compliance with
any term contained in this Agreement or any of the other Loan Documents, other
than any such term referred to in any other subsection of this Section 7, and
such default shall not have been remedied or waived (x) within 15 days after the
earlier of (a) an officer of Holdings or Company becoming aware of such default
or (b) receipt by Holdings or Company of notice from Administrative Agent or any
Lender of such default or (y) with respect to a default under subsection 6.6,
the earlier of (a) an officer of Holdings or Company becoming aware of the
default after the applicable measurement date and (b) the delivery of financial
statements pursuant to subsection 5.1 or (ii) a guaranty, if any, of the
Obligations for any reason ceases to be in full force and effect; or
7.6 INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
(i) A court having jurisdiction in the premises shall enter a decree or
order for relief in respect of Holdings or any of its Subsidiaries in an
involuntary case under the Bankruptcy Code or under any other applicable
bankruptcy, insolvency or similar law now or hereafter in effect, which decree
or order is not stayed; or any other similar relief shall be granted under any
applicable federal or state law; or (ii) an involuntary case shall be commenced
against Holdings or any of its Subsidiaries under the Bankruptcy Code or under
any other applicable bankruptcy, insolvency or similar law now or hereafter in
effect; or a decree or order of a court having jurisdiction in the premises for
the appointment of a receiver, liquidator, sequestrator, trustee, custodian or
other officer having similar powers over Holdings or any of its Subsidiaries, or
over all or a substantial part of its property, shall have been entered; or
there shall have occurred the involuntary appointment of an interim receiver,
trustee or other custodian of Holdings or any of its Subsidiaries for all or a
substantial part of its property; or a warrant of attachment, execution or
similar process shall have been issued against any substantial part of the
property of Holdings or any of its Subsidiaries, and any such event described in
this clause (ii) shall continue for 60 days unless dismissed, bonded or
discharged; or
7.7 VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
(i) Holdings or any of its Subsidiaries shall have an order for relief
entered with respect to it or commence a voluntary case under the Bankruptcy
Code or under any other applicable bankruptcy, insolvency or similar law now or
hereafter in effect, or shall consent to the entry of
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an order for relief in an involuntary case, or to the conversion of an
involuntary case to a voluntary case, under any such law, or shall consent to
the appointment of or taking possession by a receiver, trustee or other
custodian for all or a substantial part of its property; or Holdings or any of
its Subsidiaries shall make any assignment for the benefit of creditors; or (ii)
Holdings or any of its Subsidiaries shall be unable, or shall fail generally, or
shall admit in writing its inability, to pay its debts as such debts become due;
or the Board of Directors of Holdings or any of its Subsidiaries (or any
committee thereof) shall adopt any resolution or otherwise authorize any action
to approve any of the actions referred to in clause (i) above or this clause
(ii); or
7.8 JUDGMENTS AND ATTACHMENTS.
Any money judgment, writ or warrant of attachment or similar process
involving (i) in any individual case an amount in excess of $5,000,000 or (ii)
in the aggregate at any time an amount in excess of $10,000,000 (in either case
not adequately covered by insurance as to which a solvent and unaffiliated
insurance company has acknowledged coverage) shall be entered or filed against
Holdings or any of its Subsidiaries or any of their respective assets and shall
remain undischarged, unvacated, unbonded or unstayed for a period of 60 days (or
in any event later than five days prior to the date of any proposed sale
thereunder); or
7.9 DISSOLUTION.
Any order, judgment or decree shall be entered against Holdings or any of
its Subsidiaries decreeing the dissolution or split up of Holdings or that
Subsidiary and such order shall remain undischarged or unstayed for a period in
excess of 30 days; or
7.10 CHANGE IN CONTROL.
(i) (a) any Person or any two or more Persons acting in concert shall have
acquired beneficial ownership (within the meaning of Rule 13d-3 of the SEC under
the Exchange Act), directly or indirectly, of Securities of Holdings (or other
Securities convertible into such Securities) representing 40% or more of the
combined voting power of all Securities of Holdings entitled to vote in the
election of directors, other than Securities having such power only by reason of
the happening of a contingency; or (b) the Board of Directors of Holdings shall
not consist of a majority Continuing Directors; or (c) a "Change of Control"
shall occur under any of the Pass Through Trust Documents or any other Material
Agreement (as in effect on the date of such occurrence); or (d) if at any time
Holdings ceases to own directly 100% (excluding director's qualifying shares, if
any) of (i) the outstanding capital stock of Company and Polar Air or (ii) any
outstanding Securities (other than capital stock) of Company entitled to vote in
the election of the directors of Company; or (e) if any time Holdings grants a
Lien with respect to the capital stock of Company or any Subsidiary Guarantor;
or
7.11 FAILURE OF SECURITY.
Upon execution and delivery thereof, any Collateral Document shall, at any
time, cease to be in full force and effect (other than by reason of a release of
Collateral thereunder in accordance with the terms hereof or thereof, the
satisfaction in full of the Obligations or any other termination of such
Collateral Document in accordance with the terms hereof or thereof) or
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shall be declared null and void, or the validity or enforceability thereof shall
be contested in writing by any Loan Party, or Administrative Agent shall not
have or shall cease to have a valid security interest in any Collateral
purported to be covered thereby, perfected and with the priority required by the
relevant Collateral Document, for any reason other than the failure of
Administrative Agent or any Lender to take any action within its control,
subject only to Liens permitted under the applicable Collateral Documents; or
7.12 GUARANTIES.
Any Guaranty or any provision thereof shall cease to be in full force and
effect, or any Guarantor or any Person acting by or on behalf of such Guarantor
shall deny or disaffirm such Guarantor's obligations under the relevant Guaranty
or any Guarantor shall default in the due performance or observance of any term,
covenant or agreement on its part to be performed or observed pursuant to any
Guaranty; or
7.13 CERTIFICATED AS AIR CARRIER.
Company for any reason ceases to be a United States Citizen or to hold an
air carrier operating certificate under the Federal Aviation Act for aircraft
capable of carrying 10 or more individuals or 6,000 pounds or more of cargo; or
7.14 MATERIAL AGREEMENTS.
Any Material Agreement, other than any Approved Lease, shall at any time
be terminated other than by its terms or cease to be in full force and effect
other than by its terms; or
7.15 PASS THROUGH TRUST DOCUMENTS.
Failure of Holdings and/or its Subsidiaries to deliver to the
Administrative Agent by no later than December 1, 2004 fully executed amendments
and any other documents in connection therewith to the Pass Through Trust
Documents and the leases related thereto on substantially the same terms as the
Restructuring Documents and such documents shall be in full force and effect; or
7.16 EQUITY ISSUANCE.
Within 10 Business Days of an Equity Lender providing Company an
Instruction Letter, such Equity Lender shall have received its proportionate
number of shares (calculated as of the Fifth Restatement Effective Date by such
Equity Lender) of Holdings Common Stock which in the aggregate for all Equity
Lenders shall be an amount equal to 0.334% of the equity value of Holdings
(prior to giving effect to any employee compensation plan), on terms specified
in the Plan of Reorganization:
THEN (i) upon the occurrence of any Event of Default described in subsection 7.6
or 7.7, each of (a) the unpaid principal amount of and accrued interest on the
Loans and (b) all other Obligations shall automatically become immediately due
and payable, without presentment, demand, protest or other requirements of any
kind, all of which are hereby expressly waived by
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Company, and the obligation of each Lender to make any Loan shall thereupon
terminate and (ii) upon the occurrence and during the continuation of any other
Event of Default, Administrative Agent shall, upon the written request or with
the written consent of Requisite Lenders, by written notice to Company, declare
all or any portion of the amounts described in clauses (a) and (b) above to be,
and the same shall forthwith become, immediately due and payable, and the
obligation of each Lender to make any Loan shall thereupon terminate.
Notwithstanding anything contained in the second preceding paragraph, if
at any time within 60 days after an acceleration of the Loans pursuant to such
paragraph Company shall pay all arrears of interest and all payments on account
of principal which shall have become due otherwise than as a result of such
acceleration (with interest on principal and, to the extent permitted by law, on
overdue interest, at the rates specified in this Agreement) and all Events of
Default and Potential Events of Default (other than non-payment of the principal
of and accrued interest on the Loans, in each case which is due and payable
solely by virtue of acceleration) shall be remedied or waived pursuant to
subsection 9.6, then Requisite Lenders, by written notice to Holdings or
Company, may at their option rescind and annul such acceleration and its
consequences; but such action shall not affect any subsequent Event of Default
or Potential Event of Default or impair any right consequent thereon. The
provisions of this paragraph are intended merely to bind Lenders to a decision
which may be made at the election of Requisite Lenders and are not intended to
benefit Holdings or any of its Subsidiaries and do not grant Holdings or any of
its Subsidiaries the right to require Lenders to rescind or annul any
acceleration hereunder, even if the conditions set forth herein are met.
SECTION 8.
AGENT
8.1 APPOINTMENT.
DBTCA is hereby appointed Administrative Agent hereunder and under the
other Loan Documents and each Lender hereby authorizes Administrative Agent to
act as its agent in accordance with the terms of this Agreement and the other
Loan Documents. Administrative Agent agrees to act upon the express conditions
contained in this Agreement and the other Loan Documents, as applicable. The
provisions of this Section 8 are solely for the benefit of Administrative Agent
and Lenders and neither Holdings nor any of its Subsidiaries shall have rights
as a third party beneficiary of any of the provisions thereof. In performing its
functions and duties under this Agreement, Administrative Agent shall act
solely as an agent of Lenders and does not assume and shall not be deemed to
have assumed any obligation towards or relationship of agency or trust with or
for Holdings or any of its Subsidiaries.
8.2 POWERS AND DUTIES; GENERAL IMMUNITY.
A. POWERS; DUTIES SPECIFIED. Each Lender irrevocably authorizes
Administrative Agent to take such action on such Lender's behalf and to exercise
such powers, rights and remedies hereunder and under the other Loan Documents as
are specifically delegated or granted to Administrative Agent by the terms
hereof and thereof, together with such powers, rights and remedies as are
reasonably incidental thereto. Administrative Agent shall have only those duties
and responsibilities that are expressly specified in this Agreement and the
other Loan
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Documents. Administrative Agent may exercise such powers, rights and remedies
and perform such duties by or through its agents or employees. Administrative
Agent shall not have, by reason of this Agreement or any of the other Loan
Documents, a fiduciary relationship in respect of any Lender; and nothing in
this Agreement or any of the other Loan Documents, expressed or implied, is
intended to or shall be so construed as to impose upon Administrative Agent any
obligations in respect of this Agreement or any of the other Loan Documents
except as expressly set forth herein or therein.
B. NO RESPONSIBILITY FOR CERTAIN MATTERS. Administrative Agent shall
not be responsible to any Lender for the execution, effectiveness, genuineness,
validity, enforceability, collectibility or sufficiency of this Agreement or any
other Loan Document or for any representations, warranties, recitals or
statements made herein or therein or made in any written or oral statements or
in any financial or other statements, instruments, reports or certificates or
any other documents furnished or made by Administrative Agent to Lenders or by
or on behalf of Holdings and its Subsidiaries to Administrative Agent or any
Lender in connection with the Loan Documents and the transactions contemplated
thereby or for the financial condition or business affairs of Holdings or any of
its Subsidiaries or any other Person liable for the payment of any Obligations,
nor shall Administrative Agent be required to ascertain or inquire as to the
performance or observance of any of the terms, conditions, provisions, covenants
or agreements contained in any of the Loan Documents or as to the use of the
proceeds of the Loans or as to the existence or possible existence of any Event
of Default or Potential Event of Default. Anything contained in this Agreement
to the contrary notwithstanding, Administrative Agent shall not have any
liability arising from confirmations of the amount of outstanding Loans or the
component amounts thereof.
C. EXCULPATORY PROVISIONS. Neither of Administrative Agent nor any of
its officers, directors, partners, employees or agents shall be liable to
Lenders for any action taken or omitted by it under or in connection with any of
the Loan Documents except to the extent caused by Administrative Agent's gross
negligence or willful misconduct. If Administrative Agent shall request
instructions from Lenders with respect to any act or action (including the
failure to take an action) in connection with this Agreement or any of the other
Loan Documents, Administrative Agent shall be entitled to refrain from such act
or taking such action unless and until Administrative Agent shall have received
instructions from Requisite Lenders. Without prejudice to the generality of the
foregoing, (i) Administrative Agent shall be entitled to rely, and shall be
fully protected in relying, upon any communication, instrument or document
believed by it to be genuine and correct and to have been signed or sent by the
proper person or persons, and shall be entitled to rely and shall be protected
in relying on opinions and judgments of attorneys (who may be attorneys for
Holdings and its Subsidiaries), accountants, experts and other professional
advisors selected by it; and (ii) no Lender shall have any right of action
whatsoever against Administrative Agent as a result of Administrative Agent
acting or (where so instructed) refraining from acting under this Agreement or
any of the other Loan Documents in accordance with the instructions of Requisite
Lenders. Administrative Agent shall be entitled to refrain from exercising any
power, discretion or authority vested in it under this Agreement or any of the
other Loan Documents unless and until it has obtained the instructions of
Requisite Lenders.
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D. ADMINISTRATIVE AGENT ENTITLED TO ACT AS LENDER. The
agency hereby created shall in no way impair or affect any of the rights and
powers of, or impose any duties or obligations upon, Administrative Agent in
its individual capacity as a Lender hereunder. With respect to its
participations in the Loans, Administrative Agent shall have the same rights and
powers hereunder as any other Lender and may exercise the same as though it were
not performing the duties and functions delegated to it hereunder, and the term
"Lender" or "Lenders" or any similar term shall, unless the context clearly
otherwise indicates, include Administrative Agent in its individual capacity.
Administrative Agent and its Affiliates may accept deposits from, lend money to
and generally engage in any kind of banking, trust, financial advisory or other
business with Company or any of its Affiliates as if it were not performing the
duties specified herein, and may accept fees and other consideration from
Company for services in connection with this Agreement and otherwise without
having to account for the same to Lenders.
8.3 REPRESENTATIONS AND WARRANTIES; NO RESPONSIBILITY FOR APPRAISAL OF
CREDITWORTHINESS.
Each Lender represents and warrants that it has made its own independent
investigation of the financial condition and affairs of Holdings and its
Subsidiaries in connection with the transactions contemplated hereunder and that
it has made and shall continue to make its own appraisal of the creditworthiness
of Holdings and its Subsidiaries. Administrative Agent shall have no duty or
responsibility, either initially or on a continuing basis, to make any such
investigation or any such appraisal on behalf of Lenders or to provide any
Lender with any credit or other information with respect thereto, whether coming
into its possession before the making of the Loans or at any time or times
thereafter, and Administrative Agent shall not have responsibility with respect
to the accuracy of or the completeness of any information provided to Lenders.
8.4 RIGHT TO INDEMNITY.
Each Lender, in proportion to its Pro Rata Share, severally agrees to
indemnify Administrative Agent (and its respective affiliates and partners), to
the extent that Administrative Agent shall not have been reimbursed by Holdings
or its Subsidiaries for and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
(including, without limitation, counsel fees and disbursements) or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by or
asserted against Administrative Agent in exercising its powers, rights and
remedies or performing its duties hereunder or under the other Loan Documents or
otherwise in its capacity as Administrative Agent, in any way relating to or
arising out of this Agreement or the other Loan Documents; PROVIDED that no
Lender shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from Administrative Agent's gross negligence or willful misconduct.
8.5 COLLATERAL DOCUMENTS.
Without limiting the generality of subsection 8.1, each Lender hereby
further authorizes Administrative Agent to enter into the Collateral Documents
as secured party on behalf of and
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for the benefit of such Lender and agrees to be bound by the terms of each of
the Collateral Documents; PROVIDED that, except as otherwise provided below,
Administrative Agent shall not enter into or consent to any amendment,
modification, termination or waiver of any provision contained in any Collateral
Document without prior written consent of Requisite Lenders. Anything contained
in any of the Loan Documents to the contrary notwithstanding, each Lender agrees
that no Lender shall have any right individually to realize upon any of the
collateral under any Collateral Document, it being understood and agreed that
all powers, rights and remedies under the Collateral Documents may be exercised
solely by Administrative Agent for the benefit of Lenders in accordance with the
terms thereof. Each Lender hereby authorizes Administrative Agent (i) to release
or subordinate Collateral as permitted or required under this Agreement or the
Collateral Documents, and agrees that a certificate executed by Administrative
Agent evidencing such release of Collateral shall be conclusive evidence of such
release as to any third party and (ii) to enter into any amendments of the
Collateral Documents to cure any ambiguity, defect or inconsistency or to amend
provisions relating to ministerial or administrative matters which do not
materially adversely affect the rights of the Lenders thereunder and (iii) in
the event that a Financed Aircraft is subject to a Dry Lease permitted by
Section 6.7(viii), to enter into amendments, supplements or other modifications
of the Collateral Documents relating to such Financed Aircraft for the purpose
of permitting the Dry Lease and requiring Company to grant a security interest
in favor of the Lenders in such Dry Lease and other reasonably related changes.
8.6 SUCCESSOR ADMINISTRATIVE AGENT.
Administrative Agent may resign at any time by giving 30 days' prior
written notice thereof to Lenders and Company. Upon any such notice of
resignation, Requisite Lenders shall have the right, upon consultation with
Company, to appoint a successor Administrative Agent. Upon the acceptance of any
appointment hereunder by a successor Administrative Agent, that successor
Administrative Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Administrative Agent. Upon
the earlier of (x) the acceptance of any appointment hereunder by a successor
Administrative Agent and (y) 30 days after the written notice described in the
first sentence of this subsection 8.6, the retiring or removed Administrative
Agent shall be discharged from its duties and obligations under this Agreement.
After any retiring Administrative Agent's resignation hereunder as
Administrative Agent, the provisions of this Section 8 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement.
SECTION 9.
MISCELLANEOUS
9.1 ASSIGNMENTS AND PARTICIPATIONS IN LOANS.
A. GENERAL. Each Lender shall have the right at any time to (i) sell,
assign or transfer to any Eligible Assignee, or (ii) sell participations to any
Person in, all or any part any Loan or Loans made by it or any other interest
herein or in any other Obligations owed to it; PROVIDED that no such sale,
assignment, transfer or participation shall, without the consent of Company,
require Company to file a registration statement with the Securities and
Exchange Commission or apply to qualify such sale, assignment, transfer or
participation under the
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securities laws of any state; PROVIDED FURTHER that no such sale, assignment or
transfer described in clause (i) above shall be effective unless and until an
Assignment Agreement effecting such sale, assignment or transfer shall have been
accepted by Administrative Agent and recorded in the Register as provided in
subsection 9.1B(ii). Except as otherwise provided in this subsection 9.1, no
Lender shall, as between Company and such Lender, be relieved of any of its
obligations hereunder as a result of any sale, assignment or transfer of, or any
granting of participations in, all or any part of the Loans, or the other
Obligations owed to such Lender.
B. ASSIGNMENTS.
(i) AMOUNTS AND TERMS OF ASSIGNMENTS. Each Loan or other Obligation
may (a) be assigned in any amount to another Lender, or to an Affiliate of
the assigning Lender or another Lender, with the giving of notice to
Company and Administrative Agent or (b) be assigned in an aggregate amount
of not less than $2,500,000 (or such lesser amount as shall constitute the
aggregate amount of the Loans and other Obligations of the assigning
Lender) to any other Eligible Assignee with the giving of notice to
Company and with the consent of Administrative Agent and so long as no
Default or Event of Default has occurred and is continuing, Company (which
consent shall not be unreasonably withheld). Any assignment of Loans
hereunder so long as no default or event of default has occurred and is
continuing, shall effect a pro rata assignment of the Notes with respect
to each Financed Aircraft. To the extent of any such assignment in
accordance with either clause (a) or (b) above, the assigning Lender shall
be relieved of its obligations with respect to its Loans, or other
Obligations or the portion thereof so assigned. The parties to each such
assignment shall execute and deliver to Administrative Agent, for its
acceptance and recording in the Register, an Assignment Agreement,
together with a processing and recordation fee of $3,000 and such forms,
certificates or other evidence, if any, with respect to United States
federal income tax withholding matters as the assignee under such
Assignment Agreement may be required to deliver to Administrative Agent
pursuant to subsection 2.7B(iii)(a); PROVIDED, HOWEVER, that such
processing fee shall not be required where the assignee is an existing
Lender. Upon such execution, delivery and acceptance, from and after the
effective date specified in such Assignment Agreement, (y) the assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment
Agreement, shall have the rights and obligations of a Lender hereunder and
(z) the assigning Lender thereunder shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment
Agreement, relinquish its rights and be released from its obligations
under this Agreement (and, in the case of an Assignment Agreement covering
all or the remaining portion of an assigning Lender's rights and
obligations under this Agreement, such Lender shall cease to be a party
hereto). The Loans hereunder shall be modified to reflect the Loans of
such assignee and any remaining Loans of such assigning Lender and, the
assigning Lender may, upon the effectiveness of such assignment, surrender
its applicable Notes to Administrative Agent for cancellation, and
thereupon new Notes shall be issued to the assignee substantially in the
form of EXHIBIT IIIA annexed hereto or EXHIBIT IIIB, as the case may be,
with appropriate insertions, to reflect the outstanding Loans of the
assignee and/or the assigning Lender.
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(ii) ACCEPTANCE BY ADMINISTRATIVE AGENT; RECORDATION IN REGISTER. Upon its
receipt of an Assignment Agreement executed by an assigning Lender and an
assignee representing that it is an Eligible Assignee, together with the
processing and recordation fee referred to in subsection 9.1B(i) and any
forms, certificates or other evidence with respect to United States
federal income tax withholding matters that such assignee may be required
to deliver to Administrative Agent pursuant to subsection 2.7B(iii)(a),
Administrative Agent shall, if such Assignment Agreement has been
completed and is in substantially the form of EXHIBIT VII hereto and if
Administrative Agent has consented to the assignment evidenced thereby to
the extent such consent is required pursuant to subsection 9.1B(i)), (a)
accept such Assignment Agreement by executing a counterpart thereof as
provided therein (which acceptance shall evidence any required consent of
Administrative Agent to such assignment), (b) record the information
contained therein in the Register and (c) give prompt notice thereof to
Company. Administrative Agent shall maintain a copy of each Assignment
Agreement delivered to and accepted by it as provided in this subsection
9.1B(ii).
C. PARTICIPATIONS. The holder of any participation, other than an
Affiliate of the Lender granting such participation, shall not be entitled to
require such Lender to take or omit to take any action hereunder except action
directly affecting (i) the extension of the scheduled final maturity date of any
Loan allocated to such participation, (ii) a reduction of the principal amount
of or the rate of interest payable on any Loan allocated to such participation
or (iii) a release of Collateral, and all amounts payable by Company hereunder
(including without limitation amounts payable to such Lender pursuant to
subsections 2.6D and 2.7) shall be determined as if such Lender had not sold
such participation. Company and each Lender hereby acknowledge and agree that,
solely for purposes of subsection 9.5, (a) any participation will give rise to a
direct obligation of Company to the participant and (b) the participant shall be
considered to be a "Lender".
D. ASSIGNMENTS TO FEDERAL RESERVE BANKS. In addition to the assignments
and participations permitted under the foregoing provisions of this subsection
9.1, any Lender may assign and pledge all or any portion of its Loans, the other
Obligations owed to such Lender, and its Notes to any Federal Reserve Bank as
collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any operating circular issued by such Federal Reserve
Bank; PROVIDED that (i) no Lender shall, as between Company and such Lender, be
relieved of any of its obligations hereunder as a result of any such assignment
and pledge and (ii) in no event shall such Federal Reserve Bank be considered to
be a "Lender" or be entitled to require the assigning Lender to take or omit to
take any action hereunder.
E. INFORMATION. Each Lender may furnish any information concerning
Holdings and its Subsidiaries in the possession of that Lender from time to time
to assignees and participants (including prospective assignees and
participants), subject to subsection 9.19.
9.2 EXPENSES.
Whether or not the transactions contemplated hereby shall be consummated,
Holdings and Company agrees to pay promptly (i) all the actual and reasonable
costs and expenses of preparation of the Loan Documents; (ii) all the costs of
furnishing all opinions by counsel for
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Company (including without limitation any opinions requested by Lenders as to
any legal matters arising hereunder) and of Company's performance of and
compliance with all agreements and conditions on its part to be performed or
complied with under this Agreement and the other Loan Documents including,
without limitation, with respect to confirming compliance with environmental and
insurance requirements; (iii) the reasonable fees, expenses and disbursements of
counsel to Administrative Agent in connection with the negotiation, preparation,
execution and administration of the Loan Documents and the Loans and any
consents, amendments, waivers or other modifications hereto or thereto and any
other documents or matters requested by Company; (iv) all the costs and expenses
of creating and perfecting the Liens in favor of Administrative Agent for the
benefit of Lenders pursuant to the Loan Documents, including filing and
recording fees and expenses, title insurance, fees and expenses of counsel for
providing such opinions as Lenders may reasonably request and fees and expenses
of legal counsel to Administrative Agent (including local counsel); (v) all
other actual and reasonable costs and expenses incurred by Administrative Agent
in connection with the negotiation, preparation and execution of the Loan
Documents and the transactions contemplated hereby and thereby; and (vi) after
the occurrence of an Event of Default, all costs and expenses, including
reasonable attorneys' fees (including allocated costs of internal counsel) and
costs of settlement, incurred by Administrative Agent and Lenders in enforcing
any Obligations of or in collecting any payments due from Holdings or any of its
Subsidiaries hereunder or under the other Loan Documents by reason of such Event
of Default or in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a "work-out" or
pursuant to any insolvency or bankruptcy proceedings.
9.3 INDEMNITY.
In addition to the payment of expenses pursuant to subsection 9.2, whether
or not the transactions contemplated hereby shall be consummated, Holdings and
Company agree to defend, indemnify, pay and hold harmless Administrative Agent
and Lenders, and the officers, directors, partners, employees, agents and
affiliates of Administrative Agent and Lenders (collectively called the
"INDEMNITEES") from and against any and all other liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, costs, expenses
and disbursements of any kind or nature whatsoever (including without limitation
the reasonable fees and disbursements of counsel for such Indemnitees in
connection with any investigative, administrative or judicial proceeding
commenced or threatened by any Person, whether or not any such Indemnitee shall
be designated as a party or a potential party thereto), whether direct, indirect
or consequential and whether based on any federal, state or foreign laws,
statutes, rules or regulations (including without limitation securities and
commercial laws, statutes, rules or regulations and Environmental Laws), on
common law or equitable cause or on contract or otherwise, that may be imposed
on, incurred by, or asserted against any such Indemnitee, in any manner relating
to or arising out of this Agreement or the other Loan Documents or the
transactions contemplated hereby or thereby (including without limitation the
use or intended use of the proceeds of any of the Loans) or the statements
contained in the commitment letter delivered by any Lender to Company with
respect thereto (collectively called the "INDEMNIFIED LIABILITIES"); PROVIDED
that Holdings and Company shall not have any obligation to any Indemnitee
hereunder with respect to any Indemnified Liabilities to the extent such
Indemnified Liabilities arise solely from the gross negligence or willful
misconduct of that Indemnitee as
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determined by a final judgment of a court of competent jurisdiction. To the
extent that the undertaking to defend, indemnify, pay and hold harmless set
forth in the preceding sentence may be unenforceable because it is violative of
any law or public policy, Holdings and Company shall contribute the maximum
portion that it is permitted to pay and satisfy under applicable law to the
payment and satisfaction of all Indemnified Liabilities incurred by the
Indemnitees or any of them.
9.4 SET-OFF.
In addition to any rights now or hereafter granted under applicable law
and not by way of limitation of any such rights, upon the occurrence of any
Event of Default each Lender is hereby authorized by Holdings and each of its
Subsidiaries at any time or from time to time, without notice to Holdings or
such Subsidiary or to any other Person, any such notice being hereby expressly
waived, to set off and to appropriate and to apply any and all deposits (general
or special, including, but not limited to, Indebtedness evidenced by
certificates of deposit, whether matured or unmatured, but not including trust
accounts) and any other Indebtedness at any time held or owing by that Lender to
or for the credit or the account of Holdings or such Subsidiary against and on
account of the obligations and liabilities of Holdings or such Subsidiary to
that Lender under this Agreement, the Notes, and the other Loan Documents,
including, but not limited to, all claims of any nature or description arising
out of or connected with this Agreement, the Notes, or any other Loan Document,
irrespective of whether or not (i) that Lender shall have made any demand
hereunder or (ii) the principal of or the interest on the Loans or any other
amounts due hereunder shall have become due and payable pursuant to Section 7
and although said obligations and liabilities, or any of them, may be contingent
or unmatured.
9.5 RATABLE SHARING.
Lenders hereby agree among themselves that if any of them shall, whether
by voluntary payment, by realization upon security, through the exercise of any
right of set-off or banker's lien, by counterclaim or cross action or by the
enforcement of any right under the Loan Documents or otherwise, or as adequate
protection of a deposit treated as cash collateral under the Bankruptcy Code,
receive payment or reduction of a proportion of the aggregate amount of
principal, interest, fees and other amounts then due and owing to that Lender
hereunder or under the other Loan Documents (collectively, the "AGGREGATE
AMOUNTS DUE" to such Lender) which is greater than the proportion received by
any other Lender in respect of the Aggregate Amounts Due to such other Lender,
then the Lender receiving such proportionately greater payment shall (i) notify
Administrative Agent and each other Lender of the receipt of such payment and
(ii) apply a portion of such payment to purchase participations (which it shall
be deemed to have purchased from each seller of a participation simultaneously
upon the receipt by such seller of its portion of such payment) in the Aggregate
Amounts Due to the other Lenders so that all such recoveries of Aggregate
Amounts Due shall be shared by all Lenders in proportion to the Aggregate
Amounts Due to them; PROVIDED that if all or part of such proportionately
greater payment received by such purchasing Lender is thereafter recovered from
such Lender upon the bankruptcy or reorganization of Holdings and its
Subsidiaries or otherwise, those purchases shall be rescinded and the purchase
prices paid for such participations shall be returned to such purchasing Lender
ratably to the extent of such recovery, but without interest. Holdings and its
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Subsidiaries expressly consent to the foregoing arrangement and agrees that any
holder of a participation so purchased may exercise any and all rights of
banker's lien, set-off or counterclaim with respect to any and all monies owing
by Holdings and its Subsidiaries to that holder with respect thereto as fully as
if that holder were owed the amount of the participation held by that holder.
9.6 AMENDMENTS AND WAIVERS.
A. No amendment, modification, termination or waiver of any provision
of this Agreement or of the Notes, or consent to any departure by Company
therefrom, shall in any event be effective without the written concurrence of
Requisite Lenders; PROVIDED that any such amendment, modification, termination,
waiver or consent which: reduces the principal amount of any of the Loans;
changes any Lender's Pro Rata Share; changes in any manner the definition of
"Requisite Lenders"; changes in any manner any provision of this Agreement
which, by its terms, expressly requires the approval or concurrence of all
Lenders; postpones the Final Scheduled Maturity Date (but not the date of any
scheduled installment of principal) of any of the Loans; postpones the date on
which any interest or any fees are payable; decreases the interest rate borne by
any of the Loans (other than any waiver of any increase in the interest rate
applicable to any of the Loans pursuant to subsection 2.2E) or the amount of any
fees payable hereunder; increases the maximum duration of Interest Periods
permitted hereunder; releases all or substantially all of the Collateral; or
changes in any manner the provisions contained in subsection 7.1 or this
subsection 9.6 shall be effective only if evidenced by a writing signed by or on
behalf of all Lenders to whom are owed Obligations being directly affected by
such amendment, modification, termination, waiver or consent. In addition, (i)
any amendment, modification, termination or waiver of any of the provisions
contained in Section 3 shall be effective only if evidenced by a writing signed
by or on behalf of Administrative Agent and Requisite Lenders, (ii) no
amendment, modification, termination or waiver of any provision of any Note
shall be effective without the written concurrence of the Lender which is the
holder of that Note and (iii) no amendment, modification, termination or waiver
of any provision of Section 7 or of any other provision of this Agreement which,
by its terms, expressly requires the approval or concurrence of Administrative
Agent shall be effective without the written concurrence of Administrative
Agent. Administrative Agent may, but shall have no obligation to, with the
concurrence of any Lender, execute amendments, modifications, waivers or
consents on behalf of that Lender. Any waiver or consent shall be effective only
in the specific instance and for the specific purpose for which it was given. No
notice to or demand on Company in any case shall entitle Company to any other or
further notice or demand in similar or other circumstances. Any amendment,
modification, termination, waiver or consent effected in accordance with this
subsection 9.6 shall be binding upon each Lender at the time outstanding, each
future Lender and, if signed by Company, on Company. Notwithstanding anything
contained to the contrary in this subsection 9.6A, the Aircraft Chattel
Mortgages may be amended in the manner and for the purpose set forth in
subsection 9.21 without the consents required by this subsection 9.6A.
B. If, in connection with any proposed change, waiver, discharge or
termination to any of the provision of this Agreement as contemplated by the
proviso in the first sentence of this subsection 9.6, the consent of Requisite
Lenders is obtained but consent of one or more of
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such other Lenders whose consent is required is not obtained, then Company may,
so long as all non-consenting Lenders are so treated, elect to terminate such
Lender as a party to this Agreement; PROVIDED that, concurrently with such
termination, (i) Company shall pay that Lender all principal, interest and fees
and other amounts owed to such Lender through such date of termination, (ii)
another financial institution satisfactory to Company and Administrative Agent
(or if Administrative Agent is also the Lender to be terminated, the successor
Administrative Agent) shall agree, as of such date, to become a Lender for all
purposes under this Agreement (whether by assignment or amendment) and to assume
all obligations of the Lender to be terminated as of such date, and (iii) all
documents and supporting materials necessary, in the judgment of Administrative
Agent (or if Administrative Agent is also the Lender to be terminated, the
successor Administrative Agent) to evidence the substitution of such Lender
shall have been received and approved by Administrative Agent as of such date.
9.7 INDEPENDENCE OF COVENANTS.
All covenants under this Agreement shall be given independent effect so
that if a particular action or condition is not permitted by any of such
covenants, the fact that it would be permitted by an exception to, or would
otherwise be within the limitations of, another covenant shall not avoid the
occurrence of an Event of Default or Potential Event of Default if such action
is taken or condition exists.
9.8 NOTICES.
Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
may be personally served, telexed or sent by telefacsimile or United States mail
or courier service and shall be deemed to have been given when delivered in
person or by courier service, upon receipt of telefacsimile or telex, or three
Business Days after depositing it in the United States mail with postage prepaid
and properly addressed; PROVIDED that notices to Administrative Agent shall not
be effective until received. For the purposes hereof, the address of each party
hereto shall be as set forth under such party's name on the signature pages
hereof or (i) as to Holdings, Company and Administrative Agent, such other
address as shall be designated by such Person in a written notice delivered to
the other parties hereto and (ii) as to each other party, such other address as
shall be designated by such party in a written notice delivered to
Administrative Agent.
9.9 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
A. All representations, warranties and agreements made herein shall
survive the execution and delivery of this Agreement and the making of the Loans
hereunder.
B. Notwithstanding anything in this Agreement or implied by law to the
contrary, the agreements of Holdings and its Subsidiaries set forth in
subsections 2.6D, 2.7, 9.2, 9.3 and 9.4 and the agreements of Lenders set forth
in subsections 8.2C, 8.4 and 9.5 shall survive the payment of the Loans, and the
termination of this Agreement.
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9.10 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of Administrative Agent or any Lender in
the exercise of any power, right or privilege hereunder or under any other Loan
Document shall impair such power, right or privilege or be construed to be a
waiver of any default or acquiescence therein, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other power, right or privilege. All rights and
remedies existing under this Agreement and the other Loan Documents are
cumulative to, and not exclusive of, any rights or remedies otherwise available.
9.11 MARSHALLING; PAYMENTS SET ASIDE.
Neither Administrative Agent nor any Lender shall be under any obligation
to marshal any assets in favor of Company or any other party or against or in
payment of any or all of the Obligations. To the extent that Company makes a
payment or payments to Administrative Agent or Lenders (or to Administrative
Agent for the benefit of Lenders), or Administrative Agent or Lenders enforce
any security interests or exercise their rights of set-off, and such payment or
payments or the proceeds of such enforcement or set-off or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, any other state or federal law, common law, the law of admiralty
or any equitable cause, then, to the extent of such recovery, the obligation or
part thereof originally intended to be satisfied, and all Liens, rights and
remedies therefore or related thereto, shall be revived and continued in full
force and effect as if such payment or payments had not been made or such
enforcement or set-off had not occurred.
9.12 SEVERABILITY.
In case any provision in or obligation under this Agreement or the Notes
shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or obligations, or of
such provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
9.13 OBLIGATIONS SEVERAL; INDEPENDENT NATURE OF LENDERS' RIGHTS.
The obligations of Lenders hereunder are several and no Lender shall be
responsible for the obligations of any other Lender hereunder. Nothing contained
herein or in any other Loan Document, and no action taken by Lenders pursuant
hereto or thereto, shall be deemed to constitute Lenders as 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
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.
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9.14 HEADINGS.
Section and subsection headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose or be given any substantive effect.
9.15 APPLICABLE LAW.
THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES.
9.16 SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties
hereto and the successors and assigns of Lenders (it being understood that
Lenders' rights of assignment are subject to subsection 9.1). Neither Holdings'
or Company's rights or obligations hereunder nor any interest therein may be
assigned or delegated by Company or Holdings, as the case may be, without the
prior written consent of all Lenders.
9.17 CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST HOLDINGS OR ANY OF ITS
SUBSIDIARIES ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT OR ANY OBLIGATION MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION IN THE STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY
OF THIS AGREEMENT HOLDINGS AND COMPANY EACH ACCEPTS FOR ITSELF AND IN CONNECTION
WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON
CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY
IN CONNECTION WITH THIS AGREEMENT, SUCH OTHER LOAN DOCUMENT OR SUCH OBLIGATION
(SUBJECT TO ANY RIGHT TO APPEAL TO A COURT IN THE STATE OF NEW YORK). Holdings
and Company each hereby agree that service of all process in any such proceeding
in any such court may be made by registered or certified mail, return receipt
requested, to Holdings or Company, as the case may be, at its address provided
in subsection 9.8, such service being hereby acknowledged by Company to be
sufficient for personal jurisdiction in any action against Company in any such
court and to be otherwise effective and binding service in every respect.
Nothing herein shall affect the right to serve process in any other manner
permitted by law or shall limit the right of any Lender to bring proceedings
against Company in the courts of any other jurisdiction.
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9.18 WAIVER OF JURY TRIAL.
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS
BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE
LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of this waiver
is intended to be all-encompassing of any and all disputes that may be filed in
any court and that relate to the subject matter of this transaction, including
without limitation contract claims, tort claims, breach of duty claims and all
other common law and statutory claims. Each party hereto acknowledges that this
waiver is a material inducement to enter into a business relationship, that each
has already relied on this waiver in entering into this Agreement, and that each
will continue to rely on this waiver in their related future dealings. Each
party hereto further warrants and represents that it has reviewed this waiver
with its legal counsel and that it knowingly and voluntarily waives its jury
trial rights following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS
OR MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY
OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. In the event
of litigation, this Agreement may be filed as a written consent to a trial by
the court.
9.19 CONFIDENTIALITY.
(a) Each Lender shall hold all non-public information obtained pursuant
to the requirements of this Agreement which has been identified as confidential
by Company in accordance with such Lender's customary procedures for handling
confidential information of this nature, it being understood and agreed by
Company that in any event a Lender may make disclosures to any Person who
evaluates, approves, structures or administers the Loans on behalf of a Lender
and who is subject to this confidentiality provision, or, reasonably required by
any bona fide assignee, transferee or participant in connection with the
contemplated assignment or transfer by such Lender of any Loans or any
participation therein or as required or requested by any governmental or
regulatory agency (including, without limitation, the National Association of
Insurance Commissioners) or representative thereof or pursuant to legal process
or in accordance with any applicable law or regulation; PROVIDED that, unless
specifically prohibited by applicable law or court order, each Lender shall
notify Company of any request by any governmental or regulatory agency or
representative thereof (other than any such request in connection with any
examination of the financial condition of such Lender by such governmental or
regulatory agency) for disclosure of any such non-public information prior to
disclosure of such information; and PROVIDED FURTHER that in no event shall any
Lender be obligated or required to return any materials furnished by Holdings or
any of its Subsidiaries.
(b) Each of Holdings and Company hereby acknowledges and agrees that
each Lender may share with any of its affiliates or its investment advisors any
information related to
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Holdings or any of its Subsidiaries (including, without limitation, any
nonpublic customer information regarding the creditworthiness of such entities),
PROVIDED that such Persons shall be subject to the provisions of this Section
9.19 to the same extent as such Lender and shall only use such information in
connection with matters relating to this Agreement.
(c) Each of Holdings and Company hereby represents and acknowledges
that, to the best of its knowledge, neither the Administrative Agent nor any
Lender, nor any employees or agents of, or other persons affiliated with, the
Administrative Agent or any Lender, have directly or indirectly made or provided
any statement (oral or written) to Holdings or Company or to any of their
respective employees or agents, or other persons affiliated with or related to
Holdings or Company (or, so far as Holdings or Company is aware, to any other
person), as to the potential tax consequences of the transaction contemplated by
this Agreement.
9.20 COUNTERPARTS; EFFECTIVENESS; EFFECT IF AGREEMENT DOES NOT BECOME
EFFECTIVE.
This Agreement and any amendments, waivers, consents or supplements hereto
or in connection herewith may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. This Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto and receipt by Company and
Administrative Agent of written or telephonic notification of such execution and
authorization of delivery thereof and the satisfaction (or waiver) of each of
the conditions set forth in subsection 3.1. Until this Agreement becomes
effective, the Existing Credit Agreement remains in full force and effect and,
in the event this Agreement does not become effective on or before July 27,
2004, the execution and delivery of this Agreement shall be disregarded and this
Agreement shall be deemed null and void for all purposes.
9.21 REPLACEMENT ENGINES.
A. ENGINES. So long as no Event of Default or Potential Event of
Default has occurred and is continuing, Company may, upon not less than five (5)
Business Days prior written notice to Administrative Agent, replace any Engine
which is the subject of an Aircraft Chattel Mortgage with another engine (the
"REPLACEMENT ENGINE") meeting the requirements of the applicable Aircraft
Chattel Mortgage. In addition to the preceding sentence, any Replacement Engine
shall be an engine that is the same or improved make and model as the Engine to
be replaced, and that is suitable for installation and use on any Airframe, and
that has a value, utility and remaining useful life (including with respect to
hours and cycles remaining until overhaul) at least equal to the Engine to be
replaced thereby.
The Lenders agree to release the Lien created by the applicable
Aircraft Chattel Mortgage for any Engine to be replaced by a Replacement Engine
promptly upon (i) presentation by Company of documentation necessary to create a
legal, valid and enforceable first priority security interest in and to the
Replacement Engine, (ii) delivery to Administrative Agent of an opinion of
Cahill Gordon & Reindel LLP, or such other counsel as may be acceptable to
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Administrative Agent, confirming that Administrative Agent will continue to be
entitled to the benefits of Section 1110 of the Bankruptcy Code with respect to
such Replacement Engine free of all Liens (other than Permitted Encumbrances)
and (iii) receipt of all other deliveries required by Section 4(f)(iii) of the
applicable Aircraft Chattel Mortgage.
B. FURTHER ASSURANCES. Holdings and Company shall take all necessary
actions to provide that Administrative Agent will continue to be entitled to the
benefits of Section 1110 of the Bankruptcy Code with respect to each Replacement
Engine, free of all Liens (other than Permitted Encumbrances).
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
ATLAS AIR WORLDWIDE HOLDINGS, INC.
By: /s/ William C. Bradley
------------------------------------
Name: William C. Bradley
Title: Vice President & Treasurer
Notice Address:
2000 Westchester Avenue
Purchase, NY 10577
Attention: Treasurer
ATLAS AIR, INC.
By: /s/ William C. Bradley
------------------------------------
Name: William C. Bradley
Title: Vice President & Treasurer
Notice Address:
2000 Westchester Avenue
Purchase, NY 10577
Attention: Treasurer
ADMINISTRATIVE AGENT:
DEUTSCHE BANK TRUST COMPANY AMERICAS,
as Administrative Agent and Lender
By: /s/ David J. Bell
------------------------------------
Name: David J. Bell
Title: Managing Director
Notice Address:
Deutsche Bank Trust Company Americas
60 Wall Street
New York, New York 10005
Attention: David J. Bell
CITADEL CREDIT TRADING LTD.
By: Citadel Limited Partnership, its
Portfolio Manager
By: GLB Partners, L.P., its General
Partner
By: Citadel Investment Group, L.L.C.,
its General Partner
By: /s/ Levoyd E. Robinson
------------------------------------
Name: Levoyd E. Robinson
Title: Managing Director
CITADEL EQUITY FUND LTD.
By: Citadel Limited Partnership, its
Portfolio Manager
By: GLB Partners, L.P., its General
Partner
By: Citadel Investment Group, L.L.C.,
its General Partner
By: /s/ Levoyd E. Robinson
------------------------------------
Name: Levoyd E. Robinson
Title: Managing Director
Concordia Distressed Debt Fund, L.P.
acting by and through Concordia
Advisors L.L.C.
By: /s/ Robert J. Capozzi
------------------------------------
Name: Robert J. Capozzi
Title: Portfolio Manager and Co-Head
of Distressed Debt Trading
Fernwood Associates LLC
By: Intermarket Corp.
By: /s/ Robert Gaviglio
------------------------------------
Name: Robert Gaviglio
Title: Vice President
Fernwood Foundation LLC
By: Intermarket Corp.
By: /s/ Robert Gaviglio
------------------------------------
Name: Robert Gaviglio
Title: Vice President
FERNWOOD RESTRUCTURINGS LIMITED
By: /s/ Robert Gaviglio
------------------------------------
Name: Robert Gaviglio
Title: Vice President
GMAC Commercial Finance LLC, successor by
merger to GMAC Commercial Credit LLC
By: /s/ Stephe W. Arnold
-------------------------------------
Name: Stephe W. Arnold
Title: V.P. Portfolio Manager
GOLDMAN SACHS CREDIT PARTNERS, L.P.
By: /s/ Pedro Ramirez
-------------------------------------
Name: Pedro Ramirez
Title: Authorized Signatory
Restoration Holdings, Ltd.
By: /s/ Pamela M. Lawrence
------------------------------------
Name: Pamela M. Lawrence
Title: Manager
UNION BANK OF CALIFORNIA, N.A.
By: /s/ Bette J. McCole
------------------------------------
Name: Bette J. McCole
Title: Vice President
U.S. BANK NATIONAL ASSOCIATION
By: /s/ Dale L. Welke
------------------------------------
Name: Dale L. Welke
Title: Vice President