Exhibit 10.103
EXECUTION COPY
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CREDIT AGREEMENT
dated as of December 17, 2004
Among
AMERICAN AIRLINES, INC.,
as Borrower,
AMR CORPORATION,
as Parent Guarantor,
CITICORP USA, INC.,
as Administrative Agent,
JPMORGAN CHASE BANK, N.A.,
as Syndication Agent,
and
the Other Lenders Party Thereto.
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CITIGROUP GLOBAL MARKETS INC. and J.P. MORGAN SECURITIES INC.,
as Joint Lead Arrangers and Joint Book-Running Managers
TABLE OF CONTENTS
PAGE
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ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms............................................. 1
SECTION 1.02. Computation of Time Periods; Other Definitional Provisions........ 23
SECTION 1.03. Accounting Terms.................................................. 23
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. The Advances...................................................... 23
SECTION 2.02. Making the Advances............................................... 24
SECTION 2.03. Fees.............................................................. 25
SECTION 2.04. Termination or Reduction of the Commitments....................... 25
SECTION 2.05. Repayment of Advances............................................. 26
SECTION 2.06. Interest.......................................................... 27
SECTION 2.07. Conversion of Advances............................................ 28
SECTION 2.08. Prepayments of Advances........................................... 29
SECTION 2.09. Increased Costs, Etc.............................................. 29
SECTION 2.10. Illegality........................................................ 31
SECTION 2.11. Payments and Computations......................................... 31
SECTION 2.12. Taxes............................................................. 33
SECTION 2.13. Sharing of Payments, Etc.......................................... 36
SECTION 2.14. Evidence of Debt.................................................. 36
SECTION 2.15. Use of Proceeds................................................... 37
SECTION 2.16. Mitigation, Substitution of Lender................................ 37
SECTION 2.17. Defaulting Lenders................................................ 37
ARTICLE III
CONDITIONS OF EFFECTIVENESS
SECTION 3.01. Conditions Precedent to Effectiveness............................. 40
SECTION 3.02. Conditions Precedent to Each Borrowing............................ 44
SECTION 3.03. Determinations Under Section 3.01................................. 44
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Borrower.................... 44
SECTION 4.02. Representations and Warranties of the Parent Guarantor............ 48
ARTICLE V
COVENANTS OF THE LOAN PARTIES
SECTION 5.01. Affirmative Covenants............................................. 50
SECTION 5.02. Negative Covenants................................................ 60
SECTION 5.03. Financial Covenants............................................... 63
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default................................................. 64
ARTICLE VII
PARENT GUARANTY
SECTION 7.01. Guaranty.......................................................... 67
SECTION 7.02. Guaranty Absolute................................................. 68
SECTION 7.03. Waivers and Acknowledgments....................................... 69
SECTION 7.04. Subrogation....................................................... 70
SECTION 7.05. Continuing Guaranty; Assignments.................................. 70
ARTICLE VIII
THE AGENT
SECTION 8.01. Authorization and Action.......................................... 71
SECTION 8.02. Agent's Reliance, Etc............................................. 72
SECTION 8.03. CUSA and Affiliates............................................... 72
SECTION 8.04. Lender Credit Decision............................................ 73
SECTION 8.05. Indemnification................................................... 73
SECTION 8.06. Successor Agent................................................... 73
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Amendments, Etc................................................... 74
SECTION 9.02. Notices, Etc...................................................... 75
SECTION 9.03. No Waiver; Remedies............................................... 77
SECTION 9.04. Costs and Expenses................................................ 77
SECTION 9.05. Right of Set-off.................................................. 78
SECTION 9.06. Binding Effect.................................................... 79
SECTION 9.07. Assignments and Participations.................................... 79
SECTION 9.08. Confidentiality................................................... 82
SECTION 9.09. Release of Collateral............................................. 83
SECTION 9.10. Governing Law..................................................... 83
SECTION 9.11. Execution in Counterparts......................................... 83
SECTION 9.12. Jurisdiction, Etc................................................. 83
SECTION 9.13. Waiver of Jury Trial.............................................. 85
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SCHEDULES
Schedule I - Commitments and Applicable Lending Offices
Schedule 1.01 - Existing Capacity Agreements
Schedule 4.01(b) - Subsidiaries
Schedule 4.01(d) - Authorizations, approvals, actions, notices and filings
Schedule 4.01(f) - Litigation
EXHIBITS
Exhibit A-1 - Form of Revolving Credit Note
Exhibit A-2 - Form of Term Note
Exhibit B - Form of Notice of Borrowing
Exhibit C - Form of Assignment and Acceptance
Exhibit D - Form of Aircraft Security Agreement
Exhibit E - Form of SGR Security Agreement
Exhibit F - Form of Pledge Agreement
Exhibit G-1 - Form of Opinion of General Counsel of the Borrower
Exhibit G-2 - Form of Opinion of General Counsel of the Parent Guarantor
Exhibit G-3 - Form of Opinion of FAA Counsel to the Borrower
Exhibit H-1 - Form of Security Opinion of General Counsel of the Borrower
Exhibit H-2 - Form of Security Opinion of FAA Counsel to the Borrower
Exhibit I - Form of Opinion of Regulatory Counsel to the Lenders
Exhibit J-1 - Form of Compliance Certificate for the Borrower
Exhibit J-2 - Form of Compliance Certificate for the Parent Guarantor
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CREDIT AGREEMENT
CREDIT AGREEMENT dated as of December 17, 2004 among American
Airlines, Inc., a Delaware corporation (the "BORROWER"), AMR Corporation, a
Delaware corporation ("AMR"), the banks, financial institutions and other
institutional lenders listed on the signature pages hereof (the "INITIAL
LENDERS"), Citicorp USA, Inc. ("CUSA"), as Administrative Agent (the "AGENT")
for the Lenders (as hereinafter defined), JPMorgan Chase Bank, N.A., as
Syndication Agent (the "SYNDICATION AGENT") and Citigroup Global Markets Inc.
and J.P. Morgan Securities Inc., as Joint Lead Arrangers and Joint Book-Running
Managers (collectively, the "LEAD ARRANGERS").
PRELIMINARY STATEMENTS:
(1) The Borrower has entered into a Credit Agreement dated as of December
15, 2000, among the Borrower, Citibank, N.A., as administrative agent, JPMorgan
Chase Bank, as syndication agent, and the various financial institutions and
other Persons party thereto, as lenders, as amended by (i) Amendment No. 1 dated
as of November 30, 2001, (ii) the Waiver and Amendment dated as of March 31,
2003 and (iii) the Letter Amendment dated as of September 22, 2004 (such Credit
Agreement, as so amended, the "EXISTING CREDIT AGREEMENT").
(2) The Borrower has requested that the Lenders agree to lend to the
Borrower an aggregate amount of up to $850,000,000 (i) to repay in full any
amounts outstanding under the Existing Credit Agreement, (ii) to pay transaction
fees and expenses and (iii) for general corporate purposes of the Borrower and
its subsidiaries. The Initial Lenders are willing to lend such amounts on the
terms and conditions of this Agreement.
NOW THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties hereto covenant and agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"AA COLLATERAL" means, collectively, (a) the "Collateral" as such
term is defined in the Aircraft Security Agreement and (b) the
"Collateral" as such term is defined in the SGR Security Agreement (it
being understood that "Collateral" under the SGR Security Agreement shall,
in any case for purposes of this Agreement, consist of the Narita
Collateral).
"ADVANCE" means a Term Advance or a Revolving Credit Advance.
"AFFILIATE" means, as to any Person, any other Person that, directly
or indirectly, controls, is controlled by or is under common control with
such Person. For purposes of this definition, the term "control"
(including the terms "controlling", "controlled by" and "under common
control with") of a Person means the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies
of such Person, whether through the ownership of Voting Interests, by
contract or otherwise.
"AGENT" has the meaning specified in the recital of parties to this
Agreement.
"AGENT'S ACCOUNT" means the account of the Agent maintained by the
Agent at Citibank, N.A., at its office at 388 Greenwich Street, New York,
New York 10013, Account No. 36852248, ABA #021000089, Account Name: Medium
Term Finance, Reference: American Airlines, or such other account of the
Agent as is designated in writing from time to time by the Agent to the
Borrower and the Lenders for such purpose.
"AGGREGATE COLLATERAL VALUE" means, at any time, the sum of (without
duplication):
(a) with respect to Eligible Aircraft, 50% of the Aircraft Value
thereof; and
(b) with respect to Eligible Cash Collateral, the Cash Collateral
Value thereof;
provided, however, that (i) the Aircraft Value of MD-80 Aircraft
constituting Eligible Aircraft included in the calculation of Aggregate
Collateral Value shall not exceed 30% of the Aircraft Value of the
Eligible Aircraft at such time, (ii) the Aircraft Value of Eligible
Aircraft in Temporary Storage included in the calculation of Aggregate
Collateral Value shall not exceed 10% of the Aircraft Value of the
Eligible Aircraft at such time and (iii) there shall be excluded from the
calculation of Aggregate Collateral Value any Aircraft in Deep Storage.
"AGREEMENT" means this Credit Agreement, as amended, amended and
restated, supplemented or otherwise modified from time to time.
"AGREEMENT VALUE" means, for each Hedge Agreement, on any date of
determination, an amount determined by the Agent equal to: (a) in the case
of a Hedge Agreement documented pursuant to the Master Agreement
(Multicurrency-Cross Border) published by the International Swap and
Derivatives Association, Inc. (the "MASTER AGREEMENT"), the amount, if
any, that would be payable by any Loan Party or any of its Subsidiaries to
its counterparty to such Hedge Agreement, as if (i) such Hedge Agreement
was being terminated early on such date of determination, (ii) such Loan
Party or Subsidiary was the sole "Affected Party", and (iii) the Agent was
the sole party determining such payment amount (with the Agent making such
determination pursuant to the provisions of the form of Master Agreement);
(b) in the case of a Hedge Agreement traded on an exchange, the
mark-to-market value of such Hedge Agreement, which will be the unrealized
loss on such Hedge Agreement to the Loan Party or Subsidiary of a Loan
Party party to such Hedge Agreement determined by the Agent based on the
settlement price of such Hedge Agreement on such date of determination; or
(c) in all other cases, the mark-to-market value of such Hedge Agreement,
which will be
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the unrealized loss on such Hedge Agreement to the Loan Party or
Subsidiary of a Loan Party party to such Hedge Agreement determined by the
Agent as the amount, if any, by which (i) the present value of the future
cash flows to be paid by such Loan Party or Subsidiary exceeds (ii) the
present value of the future cash flows to be received by such Loan Party
or Subsidiary pursuant to such Hedge Agreement; capitalized terms used and
not otherwise defined in this definition shall have the respective
meanings set forth in the above described Master Agreement.
"AIRCRAFT" means at any time, the Airframes and Engines set forth on
Schedule 1 to the Aircraft Security Agreement, as supplemented or amended
from time to time in accordance with Section 5.01(n), including from and
after the Effective Date, the Airframes and Engines described in the
Security Agreement Supplement originally executed and delivered under the
Aircraft Security Agreement and any Replacement Airframe or Replacement
Engine substituted for any collateral in accordance with Section 5.01(n),
whether or not, in the case of any such Engines, such initial Engines or
Replacement Engines may from time to time be installed on such Airframe or
installed on any other airframe or any other aircraft. The term "AIRCRAFT"
shall include any Replacement Aircraft.
"AIRCRAFT SECURITY AGREEMENT" has the meaning specified in Section
3.01(a)(ii).
"AIRCRAFT VALUE" means, at any time, with respect to any Aircraft,
the current market value, as reflected in the Appraisal Report then most
recently delivered to the Agent with respect to such Aircraft.
"AIRFRAME" means (a) each of the Unencumbered Stage 3 Aircraft
(except the Engines or engines from time to time installed thereon) listed
on Schedule 1 to the Aircraft Security Agreement, as supplemented or
amended from time to time in accordance with Section 5.01(n) and (b) any
and all Parts so long as the same shall be incorporated or installed in or
attached to such aircraft.
"AMR" has the meaning specified in the recital of parties to this
Agreement.
"AMR COLLATERAL" means the "Collateral" as such term is defined in
the Pledge Agreement.
"AMR SUBSIDIARY" means any corporation of which AMR owns or
controls, directly or indirectly, more than 50% of the Voting Interests.
"APPLICABLE LENDING OFFICE" means, with respect to each Lender, such
Lender's Domestic Lending Office in the case of a Base Rate Advance and
such Lender's Eurodollar Lending Office in the case of a Eurodollar Rate
Advance.
"APPLICABLE MARGIN" means (a) in respect of the Term Facility, 5.25%
per annum, in the case of Eurodollar Rate Advances, and 4.25% per annum,
in the case of Base Rate Advances, and (b) in respect of the Revolving
Credit Facility, (i) for the first six months after the Effective Date,
4.75% per annum, in the case of Eurodollar Rate Advances, and 3.75% per
annum, in the case of Base Rate Advances, and (ii) thereafter, a
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percentage per annum to be determined by reference to the Pricing Level as
set forth below:
Applicable Margin for Applicable Margin for Base
Pricing Level Eurodollar Rate Advances Rate Advances
- ------------- ------------------------ ---------------------------
Level 1 3.25% 2.25%
Level 2 4.00% 3.00%
Level 3 4.75% 3.75%
Level 4 5.25% 4.25%
"APPRAISAL REPORT" means, (a) with respect to any Aircraft or
Engine, an extended desktop appraisal prepared by an Appraiser, which does
not include any on-site inspection of such Aircraft or Engine or its
maintenance records, and which assumes its physical condition is average
for an aircraft or engine of its type and age and its maintenance time
status is at mid-life, mid-time, and (b) with respect to the Narita
Collateral, an appraisal report prepared by an Appraiser in form and
substance reasonably satisfactory to the Agent (it being agreed that an
Appraisal Report substantially in the form of the Appraisal Report
delivered on the Effective Date shall be deemed to be reasonably
satisfactory to the Agent).
"APPRAISER" means, in the case of Aircraft and Engines, Airclaims
Ltd., and in the case of the Narita Collateral, Simat, Helliesen &
Eichner, Inc., or in either case, if for any reason such Person ceases or
is unable at such time to provide an appraisal of the type set forth under
the definition of "Appraisal Report" (including, without limitation, by
virtue of the fact that such Person ceases to exist), such other
independent appraiser as may be selected by the Agent with the reasonable
consent of the Borrower; provided that if the Agent fails to select such
an independent appraiser within 5 Business Days after a request by the
Borrower to do so, the Borrower may designate such an independent
appraiser by notice to the Agent.
"APPROPRIATE LENDER" means, at any time, with respect to either the
Term Facility or the Revolving Credit Facility, a Lender that has a
Commitment with respect to such Facility at such time.
"ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance
entered into by a Lender and an Eligible Assignee, and accepted by the
Agent, in accordance with Section 9.07 and in substantially the form of
Exhibit C hereto.
"BANKRUPTCY CODE" means Chapter 11 of the Bankruptcy Code (11 U.S.C.
ss.ss. 101 et seq.), as amended or any successor statutes thereto.
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"BASE RATE" means a fluctuating interest rate per annum in effect
from time to time, which rate per annum shall at all times be equal to the
highest of:
(a) The rate of interest announced publicly by Citibank, N.A.
in New York, New York, from time to time, as Citibank, N.A.'s base
rate;
(b) -1/2 of 1% per annum above the Federal Funds Rate; and
(c) the sum (adjusted to the nearest -1/4 of 1% or, if there
is no nearest -1/4 of 1%, to the next higher -1/4 of 1%) of (i) -1/2
of 1% per annum, plus (ii) the rate obtained by dividing (A) the
latest three-week moving average of secondary market morning
offering rates in the United States for three-month certificates of
deposit of major United States money market banks, such three-week
moving average (adjusted to the basis of a year of 360 days) being
determined weekly on each Monday (or, if such day is not a Business
Day, on the next succeeding Business Day) for the three-week period
ending on the previous Friday by Citibank, N.A. on the basis of such
rates reported by certificate of deposit dealers to and published by
the Federal Reserve Bank of New York or, if such publication shall
be suspended or terminated, on the basis of quotations for such
rates received by Citibank, N.A. from three New York certificate of
deposit dealers of recognized standing selected by Citibank, N.A.,
by (B) a percentage equal to 100% minus the average of the daily
percentages specified during such three-week period by the Board of
Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including, but not
limited to, any emergency, supplemental or other marginal reserve
requirement) for Citibank, N.A. with respect to liabilities
consisting of or including (among other liabilities) three-month
U.S. dollar non-personal time deposits in the United States, plus
(iii) the average during such three-week period of the annual
assessment rates estimated by Citibank, N.A. for determining the
then current annual assessment payable by Citibank, N.A. to the
Federal Deposit Insurance Corporation (or any successor) for
insuring the U.S. dollar deposits of Citibank, N.A. in the United
States.
"BASE RATE ADVANCE" means an Advance that bears interest as provided
in Section 2.06(a)(i).
"BENEFIT ARRANGEMENT" means at any time an employee benefit plan
within the meaning of Section 3(3) of ERISA which is not a Plan or a
Multiemployer Plan and which is maintained or otherwise contributed to by
any member of the ERISA Group.
"BORROWER" has the meaning specified in the recital of parties to
this Agreement.
"BORROWER'S ACCOUNT" means the account of the Borrower maintained by
the Borrower with JPMorgan Chase Bank, N.A. at its office at One Chase
Plaza, New York, New York 10081, Account No. 910-1-019884, or such other
account as the Borrower shall specify in writing to the Agent.
"BORROWING" means a Term Borrowing or a Revolving Credit Borrowing.
5
"BUSINESS DAY" means a day of the year on which banks are not
required or authorized by law to close in New York City and, if the
applicable Business Day relates to any Eurodollar Rate Advances, on which
dealings are carried on in the London interbank market.
"CASH COLLATERAL ACCOUNT" has the meaning set forth in the Aircraft
Security Agreement.
"CASH COLLATERAL VALUE" means, with respect to any cash and/or
Permitted Investments in or being deposited in or credited to the Cash
Collateral Account at any time, the face value thereof.
"CASH FLOW COVERAGE RATIO" means, with respect to any period, the
ratio of Covenant Cash Flow for such period to Fixed Charges for such
period.
"CHANGE IN CONTROL" means such time as at any time, (i) AMR shall
cease to own directly 100% of the Equity Interests in the Borrower; (ii) a
"person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of
the Exchange Act), other than an Employee Benefit Plan or any AMR
Subsidiary, shall become the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of more than 25% of the
total voting power of all classes then outstanding of AMR's Voting
Interests; (iii) one or more Employee Benefit Plans shall become in
aggregate the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of more than 40% of the total
voting power of all classes then outstanding of AMR's Voting Interests or
(iv) during any period of 24 consecutive months, individuals who at the
beginning of such period constitute AMR's Board of Directors (together
with any new director whose election by AMR's Board of Directors or whose
nomination for election by AMR's stockholders was approved by a vote of at
least two-thirds of the directors then still in office who either were
directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason (other than
death or disability) to constitute a majority of the directors then in
office.
"CHANGE IN TAX LAW" means, with respect to any Lender, a change in
or amendment to the Internal Revenue Code or a change in, or amendment to,
or the entering into of, an income tax treaty between the United States of
America and the jurisdiction where such Lender is a tax resident, or a
change in or amendment to the treasury regulations, or the issuance of any
rulings, in each case that occurred after such Lender became a Lender;
provided that in the case of any Lender claiming exemption from
Indemnified Taxes under Section 871(h) or 881(c) of the Internal Revenue
Code, "Change in Tax Law" shall be limited to a change in or amendment to
the Internal Revenue Code that occurred after such Lender became a Lender.
"COLLATERAL" means the AA Collateral and the AMR Collateral.
"COLLATERAL DOCUMENTS" means the Aircraft Security Agreement, the
SGR Security Agreement, the Pledge Agreement, each of the collateral
documents, instruments and supplements delivered pursuant to Section
5.01(n) (including, without
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limitation, the Security Arrangements), and each other agreement to which
the Borrower or the Parent Guarantor is a party that creates or purports
to create a Lien in favor of the Agent for the benefit of the Secured
Parties.
"COMMITMENT" means a Term Commitment or a Revolving Credit
Commitment.
"COMMUNICATIONS" has the meaning specified in Section 9.02(b).
"CONFIDENTIAL INFORMATION" means information that any Loan Party
furnishes to the Agent or any Lender in a writing designated as
confidential, but does not include any such information that is or becomes
generally available to the public or that is or becomes available to the
Agent or such Lender from a source other than the Loan Parties.
"CONSOLIDATED" refers to the consolidation of accounts in accordance
with GAAP.
"CONSOLIDATED NET INCOME" means, for any period, the consolidated
net income of the Parent Guarantor and its Subsidiaries for such period,
before dividends.
"CONTRACTUAL OBLIGATION" means, as to any Person, any provision of
any agreement, instrument or other undertaking to which such Person is a
party or by which it or any of its property is bound.
"CONVERSION", "CONVERT" and "CONVERTED" each refer to a conversion
of Advances of one Type into Advances of the other Type pursuant to
Section 2.07 or 2.10.
"COVENANT CASH FLOW" means, for any period, Consolidated Net Income
for such period, (i) excluding therefrom (A) any extraordinary items of
gain or loss for such period, (B) any gain or loss of any other Person for
such period accounted for on the equity method, except to the extent of
cash distributions received during such period and (C) any non-cash gains
or losses for such period, (ii) plus cash payments received (or minus cash
payments made) by the Parent Guarantor and its consolidated Subsidiaries
during such period in respect of such non-cash gains or losses recognized
in any previous fiscal quarter, (iii) plus the aggregate amounts deducted
in determining Consolidated Net Income for such period in respect of (w)
interest expense (less capitalized interest), (x) without duplication,
income taxes, (y) depreciation and amortization expense and (z) Rentals.
"CUSA" has the meaning specified in the recital of parties to this
Agreement.
"DEBT" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money (including obligations to
reimburse any bank in respect of amounts paid under a letter of credit or
similar instrument), (ii) all obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, (iii) all
obligations of such Person to pay the deferred purchase price of property
or services, except trade accounts payable arising in the ordinary course
of business, (iv) all obligations of such Person as lessee which are
capitalized in accordance with generally accepted accounting principles,
(v) all Debt of others secured by a Lien on any asset of such Person,
whether or not such Debt is assumed by such Person, (vi) all Debt of
others
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Guaranteed by such Person, (vii) all Obligations of such Person to
purchase, redeem, retire, defease or otherwise make any payment in respect
of any Equity Interests in such Person or any other Person or any
warrants, rights or options to acquire such Equity Interests, valued, in
the case of Redeemable Preferred Interests, at the greater of its
voluntary or involuntary liquidation preference plus accrued and unpaid
dividends, (viii) all Obligations of such Person in respect of Hedge
Agreements, valued at the Agreement Value thereof, and (ix) all
Off-Balance Sheet Obligations of such Person.
"DEEP STORAGE" for any Aircraft means that such Aircraft has been
stored (1) with a low expectation of a return to service, sale or lease
within one year and (2) in a manner intended to minimize over a period of
more than one year the rate of environmental degradation of the structure
and components of such Aircraft during such period, in each case, as such
storage status is reported in good faith by the Borrower to the Agent at
the time of the applicable appraisal.
"DEFAULT" means any Event of Default or any event that would
constitute an Event of Default but for the requirement that notice be
given or time elapse or both.
"DEFAULTED ADVANCE" means, with respect to any Lender at any time,
the portion of any Advance required to be made by such Lender to the
Borrower pursuant to Section 2.01 or 2.02 at or prior to such time that
has not been made by such Lender or by the Agent for the account of such
Lender pursuant to Section 2.02(d) as of such time. In the event that a
portion of a Defaulted Advance shall be deemed made pursuant to Section
2.17(a), the remaining portion of such Defaulted Advance shall be
considered a Defaulted Advance originally required to be made pursuant to
Section 2.01 on the same date as the Defaulted Advance so deemed made in
part.
"DEFAULTED AMOUNT" means, with respect to any Lender at any time,
any amount required to be paid by such Lender to the Agent or any other
Lender hereunder or under any other Financing Document at or prior to such
time that has not been so paid as of such time, including, without
limitation, any amount required to be paid by such Lender to (a) the Agent
pursuant to Section 2.02(d) to reimburse the Agent for the amount of any
Advance made by the Agent for the account of such Lender, (b) any other
Lender pursuant to Section 2.13 to purchase any participation in Advances
owing to such other Lender and (c) the Agent pursuant to Section 8.05 to
reimburse the Agent for such Lender's ratable share of any amount required
to be paid by the Lender to the Agent as provided therein. In the event
that a portion of a Defaulted Amount shall be deemed paid pursuant to
Section 2.17(b), the remaining portion of such Defaulted Amount shall be
considered a Defaulted Amount originally required to be paid hereunder or
under any other Financing Document on the same date as the Defaulted
Amount so deemed paid in part.
"DEFAULTING LENDER" means, at any time, any Lender that, at such
time, (a) owes a Defaulted Advance or a Defaulted Amount or (b) shall take
any action or be the subject of any action or proceeding of a type
described in Section 6.01(f).
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"DISCLOSURE DOCUMENTS" means, at any time, the annual report of the
Borrower on Form 10-K (or any successor form) most recently filed by it
with the Securities and Exchange Commission pursuant to Section 13(a) or
15(d) of the Exchange Act and the quarterly and current reports of the
Borrower on Form 10-Q or 8-K (or any successor forms), if any, so filed
with the Securities and Exchange Commission since the filing of such most
recently filed annual report.
"DOLLARS" and the "$" sign each means lawful currency of the United
States of America.
"DOMESTIC LENDING OFFICE" means, with respect to any Lender, the
office of such Lender specified as its "Domestic Lending Office" opposite
its name on Schedule I hereto or in the Assignment and Acceptance pursuant
to which it became a Lender, as the case may be, or such other office of
such Lender as such Lender may from time to time specify to the Borrower
and the Agent.
"DOT" has the meaning specified in the SGR Security Agreement.
"EFFECTIVE DATE" has the meaning specified in Section 3.01.
"ELIGIBLE AIRCRAFT" means the Aircraft set forth on Schedule 1 to
the Aircraft Security Agreement as of the Effective Date and such further
Unencumbered Stage 3 Aircraft designated by the Borrower (including,
without limitation, any such Replacement Aircraft); provided, however,
that no such Aircraft or additional aircraft shall be considered to be an
Eligible Aircraft at any time unless the Aircraft Security Agreement and
the related filings of such Aircraft Security Agreement (or any supplement
thereto) create a valid and perfected lien or security interest in such
aircraft (and all components thereof) in favor of the Agent, on behalf of
the Secured Parties, securing the Secured Obligations, free and clear of
all other Liens, other than Permitted Liens.
"ELIGIBLE ASSIGNEE" means (i) a Lender; (ii) an Affiliate of a
Lender or (iii) any other Person approved by the Agent, such approval not
to be unreasonably withheld or delayed, and, unless an Event of Default
has occurred and is continuing at the time any assignment is effected in
accordance with Section 9.07, the Borrower, such approval not to be
unreasonably withheld or delayed; provided, however, that neither the
Borrower nor an Affiliate of the Borrower shall qualify as an Eligible
Assignee.
"ELIGIBLE CASH COLLATERAL" means any cash and/or Permitted
Investments on deposit in or credited to the Cash Collateral Account in
which the Agent, for the benefit of the Secured Parties, shall have a
valid and perfected lien or security interest, free and clear of any other
Liens.
"EMPLOYEE BENEFIT PLAN" means any "employee benefit plan" (as
defined in Section 3(3) of ERISA) maintained by the Borrower, AMR or any
Subsidiary of any thereof, or any separate investment fund or any trust or
funding vehicle maintained thereunder.
9
"ENGINE" means each of the engines listed by manufacturer's serial
number on Schedule 1 to the Aircraft Security Agreement, as supplemented
or amended from time to time in accordance with Section 5.01(n), together,
in each case, with any and all Parts so long as the same shall be
incorporated or installed in or attached thereto.
"ENVIRONMENTAL ACTION" means any action, suit, demand, demand
letter, claim, notice of non-compliance or violation, notice of liability
or potential liability, investigation, proceeding, consent order or
consent agreement relating in any way to any Environmental Law, any
Environmental Permit or Hazardous Material or arising from alleged injury
or threat to health, safety or the environment, including, without
limitation, (a) by any governmental or regulatory authority for
enforcement, cleanup, removal, response, remedial or other actions or
damages and (b) by any governmental or regulatory authority or third party
for damages, contribution, indemnification, cost recovery, compensation or
injunctive relief.
"ENVIRONMENTAL LAW" means any federal, state, local or foreign
statute, law, ordinance, rule, regulation, code, order, writ, judgment,
injunction, decree or judicial or agency interpretation, policy or
guidance relating to pollution or protection of the environment, health,
safety or natural resources, including, without limitation, those relating
to the use, handling, transportation, treatment, storage, disposal,
release or discharge of Hazardous Materials.
"ENVIRONMENTAL PERMIT" means any permit, approval, identification
number, license or other authorization required under any Environmental
Law.
"EQUITY INTERESTS" means, with respect to any Person, shares of
capital stock of (or other ownership interests in) such Person, warrants,
options or other rights for the purchase or other acquisition from such
Person of shares of capital stock of (or other ownership or profit
interests in) such Person, securities convertible into or exchangeable for
shares of capital stock of (or other ownership interests in) such Person
or warrants, rights or options for the purchase or other acquisition from
such Person of such shares (or such other interests), and other ownership
interests in such Person (including, without limitation, partnership,
member or trust interests therein), whether voting or nonvoting, and
whether or not such shares, warrants, options, rights or other interests
are authorized or otherwise existing on any date of determination.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated and rulings
issued thereunder.
"ERISA GROUP" means the Borrower and all members of a controlled
group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the Borrower, are
treated as a single employer under Section 414(b), (c) or (m) of the
Internal Revenue Code.
"ESCROW BANK" has the meaning specified in Section 2.17(c).
10
"EUROCURRENCY LIABILITIES" has the meaning specified in Regulation D
of the Board of Governors of the Federal Reserve System, as in effect from
time to time.
"EURODOLLAR LENDING OFFICE" means with respect to any Lender, the
office of such Lender specified as its "Eurodollar Lending Office"
opposite its name on Schedule I hereto or in the Assignment and Acceptance
pursuant to which it became a Lender (or, if no such office is specified,
its Domestic Lending Office), or such other office of such Lender as such
Lender may from time to time specify to the Borrower and the Agent.
"EURODOLLAR RATE" means, for any Interest Period for all Eurodollar
Rate Advances comprising part of the same Borrowing, an interest rate per
annum equal to the rate per annum obtained by dividing (a) the rate per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
appearing on Telerate Page 3750 (or any successor page) as the London
interbank offered rate for deposits in U.S. dollars at 11:00 A.M. (London
time) two Business Days before the first day of such Interest Period for a
period equal to such Interest Period (provided that, if for any reason
such rate is not available, the term "Eurodollar Rate" shall mean, for any
Interest Period for all Eurodollar Rate Advances comprising part of the
same Borrowing, the rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as the London
interbank offered rate for deposits in Dollars at approximately 11:00 A.M.
(London time) two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period); provided, however,
if more than one rate is specified on Reuters Screen LIBO Page, the
applicable rate shall be the arithmetic mean of all such rates) by (b) a
percentage equal to 100% minus the Eurodollar Rate Reserve Percentage for
such Interest Period.
"EURODOLLAR RATE ADVANCE" means an Advance that bears interest as
provided in Section 2.06(a)(ii).
"EURODOLLAR RATE RESERVE PERCENTAGE" for any Interest Period for all
Eurodollar Rate Advances comprising part of the same Borrowing means the
reserve percentage applicable two Business Days before the first day of
such Interest Period under regulations issued from time to time by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including, without
limitation, any emergency, supplemental or other marginal reserve
requirement) for a member bank of the Federal Reserve System in New York
City with respect to liabilities or assets consisting of or including
Eurocurrency Liabilities (or with respect to any other category of
liabilities that includes deposits by reference to which the interest rate
on Eurodollar Rate Advances is determined) having a term equal to such
Interest Period.
"EVENT OF DEFAULT" has the meaning specified in Section 6.01.
"EVENT OF LOSS" has the meaning set forth in the Aircraft Security
Agreement.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
11
"EXISTING CAPACITY AGREEMENTS" means each of the capacity purchase
agreements existing as of the Effective Date and entered into by and among
the Borrower and one or more of the Borrower's Affiliates, as such
capacity purchase agreements are listed on Schedule 1.01 hereto.
"EXISTING CREDIT AGREEMENT" has the meaning specified in the
preliminary statements hereto.
"FAA" means the Federal Aviation Administration.
"FACILITY" means the Term Facility or the Revolving Credit Facility.
"FEDERAL FUNDS RATE" means, for any period, a fluctuating interest
rate per annum 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 that is a Business Day, the
average of the quotations for such day for such transactions received by
the Agent from three Federal funds brokers of recognized standing selected
by it.
"FINANCING DOCUMENTS" means this Agreement, the Notes, the
Collateral Documents and the Parent Guaranty.
"FINANCING VEHICLES" has the meaning specified in Section 5.01(j).
"FISCAL YEAR" means a fiscal year of the Borrower and its
Consolidated subsidiaries ending on December 31 in any calendar year.
"FIXED CHARGES" means, for any period, to the extent deducted in
determining Consolidated Net Income for such period, interest expense
(less capitalized interest) and Rentals.
"GAAP" has the meaning specified in Section 1.03.
"GATE LEASEHOLDS" has the meaning specified in the SGR Security
Agreement.
"GUARANTEE" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or
other obligation of any other Person and, without limiting the generality
of the foregoing, any obligation, direct or indirect, contingent or
otherwise, of such Person (i) to purchase or pay (or advance or supply
funds for the purchase or payment of) such Debt or other obligation
(whether arising by virtue of partnership arrangements, by agreement to
keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or otherwise)
or (ii) entered into for the purpose of assuring in any other manner the
obligee of such Debt or other obligation of the payment thereof or to
protect such obligee against loss in respect thereof (in whole or in
part), provided that the term
12
"Guarantee" shall not include endorsements for collection or deposit in
the ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning.
"GUARANTEED OBLIGATIONS" for the meaning specified in Section
7.01(a).
"HAZARDOUS MATERIALS" means (a) petroleum or petroleum products,
by-products or breakdown products, radioactive materials,
asbestos-containing materials, polychlorinated biphenyls and radon gas and
(b) any other chemicals, materials or substances designated, classified or
regulated as hazardous or toxic or as a pollutant or contaminant under any
Environmental Law.
"HEDGE AGREEMENTS" means interest rate swap, cap or collar
agreements, interest rate future or option contracts, currency swap
agreements, currency future or option contracts and other hedging
agreements (including, without limitation, any commodity and fuel hedging
agreements).
"INDEMNIFIED COSTS" has the meaning specified in Section 8.05(a).
"INDEMNIFIED PARTY" has the meaning specified in Section 9.04(b).
"INDEMNIFIED TAXES" means, with respect to any Agent or Lender, any
Taxes other than (a) any Tax imposed by the state or foreign jurisdiction
under the laws of which such Lender or Agent, as the case may be, is
organized or any political subdivision thereof and, in the case of each
Lender, any tax that is imposed by the state or foreign jurisdiction of
such Lender's Applicable Lending Office or any political subdivision
thereof, (b) any Tax that would not have been imposed but for a connection
between such Lender or Agent or its branch, affiliate, principal office or
Applicable Lending Office and the jurisdiction imposing such Tax or any
political subdivision thereof or therein that is unrelated to the
transactions contemplated by any Financing Document or performing any
obligations, receiving any payments or enforcing any rights thereunder,
(c) any Tax attributable to such Lender or Agent's failure to comply with
Section 2.12(e) of this Credit Agreement or any form or certificate
delivered by such Lender or Agent being incorrect, (d) any Tax
attributable to such Lender changing its Applicable Lending Office, (e)
any Tax imposed as a result of such Agent or Lender not being treated as a
beneficial owner of its Note for federal income tax purposes or (f) any
Tax arising as a result of the Agent making any payment hereunder or under
the Notes or the other Financing Documents through an account or branch
outside the United States; provided that in the case of Taxes imposed by
the United States, Indemnified Taxes shall only include Taxes imposed as a
result of a Change in Tax Law except the limitation set forth in this
proviso shall not apply to the extent that a Lender (its transferor or its
assignor, if any) was entitled at the time of designation of a new Lending
Office (or transfer or assignment) to receive additional amounts from any
Loan Party pursuant to Section 2.12 of this Agreement.
"INFORMATION MEMORANDUM" means the information memorandum dated
December 2004 used by the Lead Arrangers in connection with the
syndication of the Commitments.
13
"INITIAL EXTENSION OF CREDIT" means the initial Borrowing hereunder.
"INITIAL LENDERS" has the meaning specified in the recital of
parties to this Agreement.
"INTEREST PERIOD" means, for each Eurodollar Rate Advance comprising
part of the same Borrowing, the period commencing on the date of such
Eurodollar Rate Advance or the date of the Conversion of any Base Rate
Advance into such Eurodollar Rate Advance, and ending on the last day of
the period selected by the Borrower pursuant to the provisions below and,
thereafter, each subsequent period commencing on the last day of the
immediately preceding Interest Period and ending on the last day of the
period selected by the Borrower pursuant to the provisions below. The
duration of each such Interest Period shall be one, two, three or six
months, as the Borrower may, upon notice received by the Agent not later
than 11:00 A.M. (New York City time) on the third Business Day prior to
the first day of such Interest Period, select; provided, however, that:
(a) the Borrower may not select any Interest Period with
respect to any Eurodollar Rate Advance under a Facility that ends
after any principal repayment installment date for such Facility
unless, after giving effect to such selection, the aggregate
principal amount of Base Rate Advances and of Eurodollar Rate
Advances having Interest Periods that end on or prior to such
principal repayment installment date for such Facility shall be at
least equal to the aggregate principal amount of Advances under such
Facility due and payable on or prior to such date;
(b) Interest Periods commencing on the same date for
Eurodollar Rate Advances comprising part of the same Borrowing shall
be of the same duration;
(c) whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day, the last day of
such Interest Period shall be extended to occur on the next
succeeding Business Day; provided, however, that, if such extension
would cause the last day of such Interest Period to occur in the
next following calendar month, the last day of such Interest Period
shall occur on the next preceding Business Day; and
(d) whenever the first day of any Interest Period occurs on a
day of an initial calendar month for which there is no numerically
corresponding day in the calendar month that succeeds such initial
calendar month by the number of months equal to the number of months
in such Interest Period, such Interest Period shall end on the last
Business Day of such succeeding calendar month.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended from time to time.
"LEAD ARRANGERS" has the meaning specified in the recital of parties
to this Agreement.
14
"LENDERS" means the Initial Lenders and each Person that shall
become a party hereto pursuant to Section 9.07 for so long as such Initial
Lender or Person, as the case may be, shall be a party to this Agreement.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such
asset. For the purposes of this Agreement, the Borrower or any Subsidiary
shall be deemed to own subject to a Lien any asset which it has acquired
or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention
agreement relating to such asset.
"LOAN PARTIES" means the Borrower and the Parent Guarantor.
"MATERIAL ADVERSE EFFECT" means (i) a material adverse effect on the
business, assets, operations, properties or condition (financial or
otherwise) of the Borrower and its Subsidiaries, taken as a whole, (ii) a
material adverse effect on the ability of the Borrower or the Parent
Guarantor to perform its obligations under the Financing Documents or
(iii) a material adverse effect on the rights and remedies of the Agent or
the Lenders under the Financing Documents.
"MATERIAL CONTRACT" means, with respect to any Person, each contract
(as in effect from time to time, as amended, amended and restated,
supplemented or otherwise modified) to which such Person is a party and
that is material to the business, condition (financial or otherwise),
operations, performance or properties of such Person.
"MATERIAL PLAN" means, at any time, a Plan or Plans having aggregate
Unfunded Liabilities in excess of $25,000,000.
"MATERIAL SUBSIDIARY" means any Subsidiary that constitutes a
"significant subsidiary" of the Borrower within the meaning of Regulation
S-X of the Securities and Exchange Commission (as in effect on the date
hereof).
"MOODY'S" means Moody's Investors Service, Inc. and any successor
thereto.
"MULTIEMPLOYER PLAN" means at any time an employee pension benefit
plan within the meaning of Section 4001(a)(3) of ERISA to which any member
of the ERISA Group is then making or accruing an obligation to make
contributions or has within the preceding five plan years made
contributions, including for these purposes any Person which ceased to be
a member of the ERISA Group during such five year period.
"NARITA COLLATERAL" means all of the Borrower's Narita Routes,
Slots, Narita Slots, Gate Leaseholds and Supporting Route Facilities.
"NARITA ROUTES" has the meaning specified in the SGR Security
Agreement.
"NARITA SLOTS" has the meaning specified in the SGR Security
Agreement.
"NET WORTH" means the excess of total assets over total liabilities.
15
"NOTE" means a Term Note or a Revolving Credit Note, as the context
may require.
"NOTICE OF BORROWING" has the meaning specified in Section 2.02(a).
"OBLIGATION" means, with respect to any Person, any payment,
performance or other obligation of such Person of any kind, including,
without limitation, any liability of such Person on any claim, whether or
not the right of any creditor to payment in respect of such claim is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
disputed, undisputed, legal, equitable, secured or unsecured, and whether
or not such claim is discharged, stayed or otherwise affected by any
proceeding referred to in Section 6.01(f). Without limiting the generality
of the foregoing, the Obligations of any Loan Party under the Financing
Documents include (a) the obligation to pay principal, interest, charges,
expenses, fees, attorneys' fees and disbursements, indemnities and other
amounts payable by such Loan Party under any Financing Document and (b)
the obligation of such Loan Party to reimburse any amount in respect of
any of the foregoing that any Lender, in its sole discretion, may elect to
pay or advance on behalf of such Loan Party.
"OFF BALANCE SHEET OBLIGATION" means, with respect to any Person,
without duplication of any clause within this definition or within the
definition of "Debt", all (a) Obligations of such Person under any lease
which is treated as an operating lease for financial accounting purposes
and a financing lease for tax purposes (i.e., a "synthetic lease"), (b)
Obligations of such Person in respect of transactions entered into by such
Person, the proceeds from which would be reflected on the financial
statements of such Person in accordance with GAAP as cash flows from
financings at the time such transaction was entered into (other than as a
result of the issuance of Equity Interests) and (c) Obligations of such
Person in respect of other transactions entered into by such Person that
are not otherwise addressed in the definition of "Debt" or in clause (a)
or (b) above that are intended to function primarily as a borrowing of
funds (including, without limitation, any minority interest transactions
that function primarily as a borrowing).
"OTHER TAXES" has the meaning specified in Section 2.12(b).
"PARENT GUARANTOR" means AMR.
"PARENT GUARANTY" means the Guarantee of the Parent Guarantor set
forth in Article VII.
"PARTS" has the meaning set forth in the Aircraft Security
Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation (or any
successor).
"PERMITTED INVESTMENTS" means any Dollar denominated investment in
(i) direct obligations of the United States or any agency thereof, or
obligations guaranteed by the United States or any agency thereof, (ii)
commercial paper rated at least A-2 by S&P and P-2 by Moody's or (iii)
time deposits with, including certificates of deposit issued by, any
office located in the United States of any bank or trust company which is
organized under
16
the laws of the United States or any state thereof and has capital,
surplus and undivided profits aggregating at least $500,000,000, provided
in the case of each of the investments referred to in clauses (i) through
(iii) above, (x) such investment matures within six months from the date
of acquisition thereof by the Agent and (y) in order to provide the Agent,
for the benefit of the Secured Parties, with a perfected security interest
therein, each Permitted Investment shall be either: (A) evidenced by
negotiable certificates or instruments, or if non-negotiable then issued
in the name of the Agent, which (together with any appropriate instruments
of transfer) are delivered to, and held by, the Agent or any agent thereof
(which shall not be the Borrower or any of its affiliates) in the State of
New York; or (B) in book-entry form and issued by the United States and
subject to pledge under applicable state law and Treasury regulations and
as to which (in the opinion of counsel to the Agent) appropriate measures
shall have been taken for perfection of the security interests created
under the Aircraft Security Agreement and (iv) such other investments of
credit quality not lower than that of the investments referred to in
clauses (i) through (iii) above and maturing within six months from the
date of acquisition thereof by the Agent, as to which the Agent shall have
received satisfactory assurances that appropriate measures shall have been
taken for perfection of the security interests created under the Aircraft
Security Agreement.
"PERMITTED LIENS" means:
(1) the respective rights and interests created by or pursuant
to or resulting from the Financing Documents, and the respective
rights of the Agent and the Loan Parties as therein provided;
(2) the rights of others under agreements or arrangements to
the extent expressly permitted by Sections 5.02(a) and 5.04(b) of
the Aircraft Security Agreement or by the terms of the SGR Security
Agreement;
(3) Liens for taxes either not yet due or being contested in
good faith (and for the payment of which adequate reserves have been
provided) by appropriate proceedings so long as such proceedings do
not involve any substantial danger of the sale, forfeiture or loss
of any Airframe or any Engine, or any interest therein;
(4) materialmen's, mechanics', workers', repairmen's,
employees', or other Liens arising in the ordinary course of
business for amounts the payment of which is either not yet
delinquent or is being contested in good faith (and for the payment
of which adequate reserves have been provided) by appropriate
proceedings so long as such proceedings do not involve any
substantial danger of the sale, forfeiture or loss of any Airframe
or any Engine, or any interest therein;
(5) Liens (other than Liens for taxes) arising out of
judgments or awards against any Loan Party with respect to which at
the time an appeal or proceeding for review is being prosecuted in
good faith and with respect to which there shall have been secured a
stay of execution pending such appeal or proceeding for review, and
which such Liens relate to any Collateral only as a
17
result of a general Lien on the assets of such Loan Party in one or
more jurisdictions and are not entitled to priority with respect to
Collateral over any Lien created by the Collateral Documents;
(6) salvage or similar rights of insurers under insurance
policies maintained pursuant to Section 5.06 of the Aircraft
Security Agreement; and
(7) Liens arising after the Effective Date to satisfy a
condition for granting or modifying a waiver of the minimum funding
standards or extension of amortization periods under Section 412 of
the Internal Revenue Code in respect of a Plan, provided the
interests and rights under such Liens are subordinated to the
claims, rights and interests of the Lenders and Agent under the
Financing Documents upon terms reasonably satisfactory to the Agent.
"PERSON" means an individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, or a government
or any political subdivision or agency thereof.
"PLAN" means at any time an employee pension benefit plan (other
than a Multiemployer Plan) which is covered by Title IV of ERISA or
subject to the minimum funding standards under Section 412 of the Internal
Revenue Code and either (i) is maintained, or contributed to, by any
member of the ERISA Group for employees of any member of the ERISA Group
or (ii) has at any time within the preceding five years been maintained,
or contributed to, by any Person which was at such time a member of the
ERISA Group for employees of any Person which was at such time a member of
the ERISA Group.
"PLATFORM" has the meaning specified in Section 9.02(c).
"PLEDGE AGREEMENT" has the meaning specified in Section 3.01(a)(iv).
"PREFERRED INTERESTS" means, with respect to any Person, Equity
Interests issued by such Person that are entitled to a preference or
priority over any other Equity Interests issued by such Person upon any
distribution of such Person's property and assets, whether by dividend or
upon liquidation.
"PRICING LEVEL" means, as of any date of determination, the level
set forth as then in effect for the Borrower, as determined in accordance
with the following provisions of this definition:
Level 1: Senior Secured Debt Rating of not lower that BB by S&P and not
lower than Ba3 by Moody's.
Level 2: Level 1 does not apply and a Senior Secured Debt Rating of not
lower than BB- by S&P and not lower than B1 by Moody's.
18
Level 3: Level 1 and 2 do not apply and a Senior Secured Debt Rating of
not lower than B+ by S&P and not lower than B2 by Moody's.
Level 4: Levels 1, 2 and 3 do not apply.
"REDEEMABLE" means, with respect to any Equity Interest, any such Equity
Interest that (a) the issuer has undertaken to redeem at a fixed or determinable
date or dates, whether by operation of a sinking fund or otherwise, or upon the
occurrence of a condition not solely within the control of the issuer or (b) is
redeemable at the option of the holder.
"REGISTER" has the meaning specified in Section 9.07(c).
"REGULATION U" means Regulation U of the Board of Governors of the Federal
Reserve System, as in effect from time to time.
"RENTALS" means the aggregate amounts payable by the Parent Guarantor or
any Subsidiary, as lessee, to a lessor with respect to and pursuant to the terms
of any operating lease for a specified period.
"REPLACEMENT AIRCRAFT" means any Unencumbered Stage 3 Aircraft of which a
Replacement Airframe is part.
"REPLACEMENT AIRFRAME" means an airframe (except Engines or engines from
time to time installed thereon) constituting part of an Unencumbered Stage 3
Aircraft, which shall have been added to Schedule 1 to the Aircraft Security
Agreement or made subject to the Lien of the Aircraft Security Agreement
pursuant to Section 5.01(n)(iii) or (v), together with all Parts relating to
such airframe.
"REPLACEMENT ENGINE" means an engine of make and model suitable for use on
any Airframe or Replacement Airframe, which shall have been added to Schedule 1
to the Aircraft Security Agreement pursuant to Section 5.01(n)(iii) or (v),
together with all Parts relating to such engine.
"REQUIRED COLLATERAL AMOUNT" means, at any time, the sum of (a) the
aggregate amount of the Revolving Credit Commitments at such time, or if such
Revolving Credit Commitments shall have been terminated, an amount equal to the
aggregate unpaid principal amount of the Revolving Credit Advances, plus (b) an
amount equal to the aggregate unpaid principal amount of the Term Advances.
"REQUIRED LENDERS" means, at any time, Lenders owed or holding at least a
majority in interest of the sum of (a) the aggregate principal amount of the
Advances outstanding at such time and (b) the aggregate unused Revolving Credit
Commitments at such time; provided, however, that if any Lender shall be a
Defaulting Lender at such time, there shall be excluded from the determination
of Required Lenders at such time (A) the aggregate principal amount of the
Advances owing to such Lender (in its capacity as a Lender) and outstanding at
such time and (B) the unused Revolving Credit Commitment of such Lender at such
time.
19
"RESPONSIBLE OFFICER" means any senior executive officer, senior
accounting officer or treasurer of the Borrower, or any vice president, director
or managing director of the Borrower having responsibility for the
administration of this Agreement.
"REVOLVING CREDIT ADVANCE" has the meaning specified in Section 2.01(b).
"REVOLVING CREDIT BORROWING" means a borrowing consisting of simultaneous
Revolving Credit Advances of the same Type made by each of the Revolving Credit
Lenders pursuant to Section 2.01(b).
"REVOLVING CREDIT COMMITMENT" means, with respect to any Revolving Credit
Lender at any time, the amount set forth opposite such Revolving Credit Lender's
name on Schedule I hereto under the caption "Revolving Credit Commitment" or, if
such Revolving Credit Lender has entered into any one or more Assignment and
Acceptances, the amount set forth for such Lender in the Register maintained by
the Agent pursuant to Section 9.07(c) as such Lender's "Revolving Credit
Commitment", as such amount may be reduced at or prior to such time pursuant to
Section 2.04.
"REVOLVING CREDIT FACILITY" means, at any time, the aggregate amount of
the Revolving Credit Commitments at such time.
"REVOLVING CREDIT LENDER" means any Lender that has a Revolving Credit
Commitment.
"REVOLVING CREDIT NOTE" means a promissory note of the Borrower payable to
the order of any Revolving Credit Lender, in substantially the form of Exhibit
A-1 hereto, evidencing the aggregate indebtedness of the Borrower to such
Revolving Credit Lender resulting from the Revolving Credit Advances made by
such Revolving Credit Lender, as amended.
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc. and any successor thereto.
"SECURED OBLIGATIONS", in respect of the AA Collateral, has the meaning
specified in Section 2 of each of the Aircraft Security Agreement and the SGR
Security Agreement, and, in respect of the AMR Collateral, has the meaning
specified in Section 2 of the Pledge Agreement.
"SECURED PARTIES" means the Agent and the Lenders.
"SECURITY ARRANGEMENTS" has the meaning set forth in Section 5.01(n)(ii).
"SECURITY OPINIONS" means, with respect to any item referred to in Section
5.01(n), (a) an opinion of the General Counsel of the Borrower substantially in
the form of Exhibit H-1 hereto and (b) an opinion of Daugherty Fowler Peregrin &
Haught (or such other counsel acceptable to the Required Lenders) substantially
in the form of Exhibit H-2 hereto.
20
"SENIOR SECURED DEBT RATING" means, as of any date, the senior secured
debt rating that has been most recently announced by Moody's or S&P for the
Facilities. For purposes of the foregoing, (a) if only one of S&P and Moody's
shall have in effect a Senior Secured Debt Rating, the Applicable Margin shall
be determined by reference to the available rating; (b) if both S&P and Moody's
shall not have in effect a Senior Secured Debt Rating, the Applicable Margin
will be set in accordance with Level 4 under the definition of "Applicable
Margin"; (c) if any rating established by S&P or Moody's shall be changed, such
change shall be effective as of the date on which such change is first announced
publicly by the rating agency making such change; and (d) if S&P or Moody's
shall change the basis on which ratings are established, each reference to the
Senior Secured Debt Rating announced by S&P or Moody's, as the case may be,
shall refer to the then equivalent rating by S&P or Moody's, as the case may be.
"SGR SECURITY AGREEMENT" has the meaning specified in Section
3.01(a)(iii).
"SHORT TERM INVESTMENTS" means, as of any date of determination, any US
dollar denominated investment in: (i) direct obligations of the United States or
any agency thereof, or guaranteed by the United States or any agency thereof;
(ii) commercial paper issued by corporations, sovereigns or special purpose
entities (i.e., asset backed commercial paper) rated at least A-1 by S&P and P-1
by Moody's; (iii) certificates of deposit, time deposits and bank notes of any
bank or trust company rated not less than A by S&P and A2 by Moody's; (iv)
corporate or municipal securities rated not less than A by S&P and A2 by
Moody's; and (v) mortgage backed and asset backed securities rated not less than
A by S&P and A2 by Moody's; provided in the case of each of the investments
referred to in clauses (i) through (v) above, such investment matures within
eighteen months from the date of such determination.
"SLOTS" has the meaning specified in the SGR Security Agreement.
"SUBSIDIARY" means any corporation of which the Borrower and/or one or
more Subsidiaries at the time owns or controls, directly or indirectly, more
than 50% of the shares of stock having general voting power under ordinary
circumstances to elect a majority of the board of directors, managers or
trustees of such corporation (irrespective of whether or not at the time stock
of any other class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency).
"SUPPLEMENTAL AGENT" has the meaning specified in Section 8.01(c).
"SUPPORTING ROUTE FACILITIES" has the meaning specified in the SGR
Security Agreement.
"SYNDICATION AGENT" has the meaning specified in the recital of parties to
this Agreement.
"TAXES" means any present or future taxes, levies, imposts, deductions,
charges or withholdings imposed by any governmental authority.
21
"TEMPORARY STORAGE" for any Aircraft means that such Aircraft (A) has been
stored (1) without a scheduled or planned return to active service, sale or
lease and (2) in a manner suitable for an aircraft expected to be returned to
service, sold or leased within one year, (B) has been in such storage for less
than one year, and (C) may be removed from such storage without material cost
for such removal, in each case, as such storage status is reported in good faith
by the Borrower to the Agent at the time of the applicable appraisal.
"TERM ADVANCE" has the meaning specified in Section 2.01(a).
"TERM BORROWING" means a borrowing consisting of simultaneous Term
Advances of the same Type made by each of the Term Lenders pursuant to Section
2.01(a).
"TERM COMMITMENT" means, with respect to any Term Lender at any time, the
amount set forth opposite such Term Lender's name on Schedule I hereto, under
the caption "Term Commitment" or, if such Term Lender has entered into one or
more Assignment and Acceptances, the amount set forth for such Lender in the
Register maintained by the Agent pursuant to Section 9.07(c) as such Lender's
"Term Commitment".
"TERM FACILITY" means, at any time, the aggregate amount of the Term
Lenders' Term Commitments at such time.
"TERM LENDER" means any Lender that has a Term Commitment.
"TERM NOTE" means a promissory note of the Borrower payable to the order
of any Term Lender, in substantially the form of Exhibit A-2 hereto, evidencing
the indebtedness of the Borrower to such Lender resulting from the Term Advances
made by such Lender, as amended.
"TERMINATION DATE" means the earlier of (a) the date of termination in
whole of the Commitments pursuant to Section 2.04 or 6.01 and (b) (i) for
purpose of the Revolving Credit Facility, June 17, 2009 and (ii) for purpose of
the Term Facility, December 17, 2010.
"TITLE 49" has the meaning specified in the SGR Security Agreement.
"TRANSACTION" means the transactions contemplated by the Financing
Documents.
"TYPE" refers to the distinction between Advances bearing interest at the
Base Rate and Advances bearing interest at the Eurodollar Rate.
"UNENCUMBERED STAGE 3 AIRCRAFT" means a "Stage 3 airplane" as defined in
Title 14, Section 36.1(f)(6) of the Code of Federal Regulations consisting of
Boeing 737-800, 757-200, 767-200ER, 767-300ER and 777-200 aircraft and McDonnell
Douglas MD-80 aircraft, in each case owned by the Borrower and unencumbered by
any Lien, other than Permitted Liens.
22
"UNFUNDED LIABILITIES" means, with respect to any Plan at any time, the
amount (if any) by which (i) the present value of all benefits under such Plan
exceeds (ii) the fair market value of all Plan assets allocable to such benefits
(excluding any accrued but unpaid contributions), all determined as of the then
most recent valuation date for such Plan, but only to the extent that such
excess represents a potential liability of a member of the ERISA Group to the
PBGC or any other Person under Title IV of ERISA.
"UNITED STATES CITIZEN" has the meaning specified in Section 4.01(q).
"VOTING INTERESTS" means shares of capital stock issued by a corporation,
or equivalent Equity Interests in any other Person, the holders of which are
ordinarily, in the absence of contingencies, entitled to vote for the election
of directors (or persons performing similar functions) of such Person, even if
the right so to vote has been suspended by the happening of such a contingency.
SECTION 1.02. Computation of Time Periods; Other Definitional
Provisions. In this Agreement and the other Financing Documents in the
computation of periods of time from a specified date to a later specified date,
the word "FROM" means "from and including" and the words "TO" and "UNTIL" each
mean "to but excluding". References in the Financing Documents to any agreement
or contract "AS AMENDED" shall mean and be a reference to such agreement or
contract as amended, amended and restated, supplemented or otherwise modified
from time to time in accordance with its terms.
SECTION 1.03. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles consistent with those applied in the preparation
of the financial statements referred to in Sections 4.01(g)(i) and 4.02(e)(i),
as applicable ("GAAP").
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. The Advances. (a) The Term Advances. Each Term Lender
severally agrees, on the terms and conditions hereinafter set forth, to make a
single advance (a "TERM ADVANCE") to the Borrower on the Effective Date in an
amount not to exceed such Term Lender's Term Commitment at such time. The Term
Borrowing shall consist of Term Advances made simultaneously by the Term Lenders
ratably according to their Term Commitments. Amounts borrowed under this Section
2.01(a) and repaid or prepaid may not be reborrowed.
(b) The Revolving Credit Advances. Each Revolving Credit Lender
severally agrees, on the terms and conditions hereinafter set forth, to make
advances (each a "REVOLVING CREDIT Advance") to the Borrower from time to time
on any Business Day during the period from the Effective Date until the
Termination Date in an amount for each such Advance not to exceed such Revolving
Credit Lender's Revolving Credit Commitment at such time. Each Revolving Credit
Borrowing shall be in an aggregate amount of $10,000,000 or an integral multiple
of $1,000,000 in excess thereof and shall consist of Revolving Credit Advances
of the same Type made on the same day by the Revolving Credit Lenders ratably
according to their respective
23
Revolving Credit Commitments. Within the limits of each Revolving Credit
Lender's Revolving Credit Commitment in effect from time to time, the Borrower
may borrow under this Section 2.01(b), repay or prepay pursuant to Section 2.05
and reborrow under this Section 2.01(b).
SECTION 2.02. Making the Advances. (a) Each Borrowing shall be made
on notice, given not later than 11:00 A.M. (New York City time) on the third
Business Day prior to the date of the proposed Borrowing in the case of a
Borrowing consisting of Eurodollar Rate Advances or 11:00 A.M. (New York City
time) on the date of the proposed Borrowing consisting of Base Rate Advances, by
the Borrower to the Agent, which shall give to each Appropriate Lender prompt
notice thereof by telecopier or telex. Each such notice of a Borrowing (a
"NOTICE OF Borrowing") shall be by telephone, confirmed immediately in writing,
or telecopier or telex in substantially the form of Exhibit B hereto, specifying
therein the requested (i) date of such Borrowing, (ii) Facility under which such
Borrowing is to be made, (iii) Type of Advances comprising such Borrowing, (iv)
aggregate amount of such Borrowing and (v) in the case of a Borrowing consisting
of Eurodollar Rate Advances, initial Interest Period for each such Advance. Each
Appropriate Lender shall, before 1:00 P.M. (New York City time) on the date of
such Borrowing, make available for the account of its Applicable Lending Office
to the Agent at the Agent's Account, in same day funds, such Lender's ratable
portion of such Borrowing in accordance with the respective Commitments under
the applicable Facility of such Lender and the other Appropriate Lenders. After
the Agent's receipt of such funds and upon fulfillment of the applicable
conditions set forth in Article III, the Agent will make such funds available to
the Borrower by crediting the Borrower's Account.
(b) Anything in subsection (a) above to the contrary
notwithstanding, (i) the Borrower may not select Eurodollar Rate Advances for
the initial Borrowing hereunder and for the period from the date hereof to
January 17, 2005 (or such earlier date as shall be specified in its sole
discretion by the Agent in a written notice to the Borrower and the Lenders) or
for any Borrowing if the aggregate amount of such Borrowing is less than
$10,000,000 or if the obligation of the Appropriate Lenders to make Eurodollar
Rate Advances shall then be suspended pursuant to Section 2.07 or 2.10 and (ii)
the Term Advances may not be outstanding as part of more than six separate
Borrowings and the Revolving Credit Advances may not be outstanding as part of
more than six separate Borrowings.
(c) If the Borrower fails to borrow any Borrowing to be comprised of
Eurodollar Rate Advances after the related Notice of Borrowing has been given to
any Appropriate Lender in accordance with Section 2.02(a), the Borrower shall,
within 15 days after demand by any Appropriate Lender, reimburse such Lender for
any resulting loss or expense incurred by it (or by an existing or prospective
participant in the related Advance), including (without limitation) any loss
incurred in obtaining, liquidating or employing deposits from third parties, but
excluding loss of margin for the period after such failure to borrow, provided
that such Lender has delivered to the Borrower a certificate setting forth in
reasonable detail calculations as to the amount of such loss or expense, which
certificate shall be conclusive absent manifest error.
(d) Unless the Agent shall have received notice from an Appropriate
Lender prior to the date of any Borrowing under a Facility under which such
Lender has a Commitment that such Lender will not make available to the Agent
such Lender's ratable portion of such
24
Borrowing, the Agent may assume that such Lender has made such portion available
to the Agent on the date of such Borrowing in accordance with subsection (a) of
this Section 2.02 and the Agent may, in reliance upon such assumption, make
available to the Borrower on such date a corresponding amount. If and to the
extent that such Lender shall not have so made such ratable portion available to
the Agent, such Lender and the Borrower severally agree to repay to the Agent
forthwith on demand such corresponding amount together with interest thereon,
for each day from the date such amount is made available to the Borrower until
the date such amount is repaid to the Agent, at (i) in the case of the Borrower,
the higher of (A) the interest rate applicable at the time to Advances
comprising such Borrowing and (B) the cost of funds incurred by the Agent in
respect of such amount; provided, however, that (x) the Borrower shall have
received from the Agent notice that the Agent has made such amount available to
the Borrower pursuant to its right under this Section 2.02(d) to assume receipt
of such Lender's ratable portion and (y) any payment by the Borrower of such
amount shall be without prejudice to its rights against such Lender under this
Agreement; and (ii) in the case of such Lender, the Federal Funds Rate. If such
Lender shall repay to the Agent such corresponding amount, such amount so repaid
shall constitute such Lender's Advance as part of such Borrowing for purposes of
this Agreement.
(e) The failure of any Lender to make the Advance to be made by it
as part of any Borrowing shall not relieve any other Lender of its obligation,
if any, hereunder to make its Advance on the date of such Borrowing, but no
Lender shall be responsible for the failure of any other Lender to make the
Advance to be made by such other Lender on the date of any Borrowing.
SECTION 2.03. Fees. (a) Commitment Fee. The Borrower agrees to pay
to the Agent for the account of each of the Revolving Credit Lenders, from the
Effective Date, in the case of each Initial Revolving Credit Lender, and from
the effective date specified in the Assignment and Acceptance pursuant to which
it became a Revolving Credit Lender, in the case of each other Revolving Credit
Lender, until the Termination Date of the Revolving Credit Facility, payable in
arrears on the last day of each March, June, September and December commencing
March 31, 2005 and on the Termination Date of the Revolving Credit Facility, a
commitment fee on the average daily unused Revolving Credit Commitment of such
Revolving Credit Lender at the rate of -1/2 of 1% per annum; provided, however,
that no commitment fee shall accrue on any of the Revolving Credit Commitments
of a Defaulting Lender so long as such Lender shall be a Defaulting Lender.
(b) Agent's Fees. The Borrower shall pay to the Agent for its own
account such fees as may from time to time be agreed between the Borrower and
the Agent.
SECTION 2.04. Termination or Reduction of the Commitments. (a)
Optional. The Borrower shall have the right, upon at least three Business Days'
notice to the Agent, to terminate in whole or reduce ratably in part the unused
portions of the Revolving Credit Commitments of the Lenders, provided that each
partial reduction shall be in the aggregate amount of $10,000,000 or an integral
multiple of $1,000,000 in excess thereof.
25
(b) Mandatory. (i) Term Facility. On the date of the Term Borrowing,
after giving effect to such Term Borrowing, the aggregate Term Commitments of
the Term Lenders shall be automatically and permanently reduced to zero.
(ii) Revolving Credit Facility. On each date set forth below, the
Revolving Credit Commitments shall be reduced by the amount set forth opposite
such date (with each such reduction of Revolving Credit Commitments to be made
ratably among the Revolving Credit Lenders' Revolving Credit Commitments):
Date Amount of Reduction
- ------------------ -------------------
March 17, 2005 $ 15,000,000
June 17, 2005 $ 15,000,000
September 17, 2005 $ 15,000,000
December 17, 2005 $ 15,000,000
March 17, 2006 $ 15,000,000
June 17, 2006 $ 15,000,000
September 17, 2006 $ 15,000,000
December 17, 2006 $ 15,000,000
March 17, 2007 $ 15,000,000
June 17, 2007 $ 15,000,000
September 17, 2007 $ 15,000,000
December 17, 2007 $ 15,000,000
March 17, 2008 $ 0.00
June 17, 2008 $ 0.00
September 17, 2008 $ 0.00
December 17, 2008 $ 0.00
March 17, 2009 $ 0.00
June 17, 2009 $420,000,000
SECTION 2.05. Repayment of Advances. (a) Term Advances. The Borrower
shall repay to the Agent for the ratable account of the Term Lenders the
aggregate outstanding principal amount of the Term Advances on the following
dates in the amounts indicated (which amounts shall be reduced as a result of
the application of prepayments in accordance with the order of priority set
forth in Section 2.08):
Date Amount
- ------------------ ----------------
March 17, 2005 $ 625,000
June 17, 2005 $ 625,000
September 17, 2005 $ 625,000
December 17, 2005 $ 625,000
March 17, 2006 $ 625,000
26
June 17, 2006 $ 625,000
September 17, 2006 $ 625,000
December 17, 2006 $ 625,000
March 17, 2007 $ 625,000
June 17, 2007 $ 625,000
September 17, 2007 $ 625,000
December 17, 2007 $ 625,000
March 17, 2008 $ 625,000
June 17, 2008 $ 625,000
September 17, 2008 $ 625,000
December 17, 2008 $ 625,000
March 17, 2009 $ 625,000
June 17, 2009 $ 625,000
September 17, 2009 $ 625,000
December 17, 2009 $ 625,000
March 17, 2010 $ 0.00
June 17, 2010 $ 0.00
September 17, 2010 $ 0.00
December 17, 2010 $237,500,000
provided, however, that the final principal installment shall be repaid on the
Termination Date in respect of the Term Facility and in any event shall be in an
amount equal to the aggregate principal amount of the Term Advances outstanding
on such date.
(b) Revolving Credit Advances. The Borrower shall repay to the Agent
for the ratable account of the Revolving Credit Lenders on the Termination Date
in respect of the Revolving Credit Facility the aggregate principal amount of
the Revolving Credit Advances then outstanding.
SECTION 2.06. Interest. (a) Scheduled Interest. The Borrower shall
pay interest on the unpaid principal amount of each Advance owing to each Lender
from the date of such Advance until such principal amount shall be paid in full,
at the following rates per annum:
(i) Base Rate Advances. During such periods as such Advance is a
Base Rate Advance, a rate per annum equal at all times to the sum of (x)
the Base Rate in effect from time to time plus (y) the Applicable Margin
in effect from time to time, payable in arrears quarterly on the last day
of each March, June, September and December during such periods and on the
date such Base Rate Advance shall be Converted or paid in full.
(ii) Eurodollar Rate Advances. During such periods as such Advance
is a Eurodollar Rate Advance, a rate per annum equal at all times during
each Interest Period
27
for such Advance to the sum of (x) the Eurodollar Rate for such Interest
Period for such Advance plus (y) the Applicable Margin in effect from time
to time, payable in arrears on the last day of such Interest Period and,
if such Interest Period has a duration of more than three months, on each
day that occurs during such Interest Period every three months from the
first day of such Interest Period and on the date such Eurodollar Rate
Advance shall be Converted or paid in full.
(b) Default Interest. Upon the occurrence and during the continuance
of an Event of Default under Section 6.01(a), the Borrower shall pay interest on
(x) the unpaid principal amount of each Advance owing to each Lender, payable in
arrears on the dates referred to in clause (a)(i) or (a)(ii) above and on
demand, at a rate per annum equal at all times to 2% per annum above the rate
per annum required to be paid on such Advance pursuant to clause (a)(i) or
(a)(ii) above and (y) to the fullest extent permitted by law, the amount of any
interest, fee or other amount payable under the Financing Documents that is not
paid when due, from the date such amount shall be due until such amount shall be
paid in full, payable in arrears on the date such amount shall be paid in full
and on demand, at a rate per annum equal at all times to 2% per annum above the
rate per annum required to be paid, in the case of interest, on the Type of
Advance on which such interest has accrued pursuant to clause (a)(i) or (a)(ii)
above and, in all other cases, on Base Rate Advances pursuant to clause (a)(i)
above.
(c) Notice of Interest Period and Interest Rate. Promptly after
receipt of a Notice of Borrowing pursuant to Section 2.02(a), a notice of
Conversion pursuant to Section 2.07 or a notice of selection of an Interest
Period pursuant to the terms of the definition of "Interest Period", the Agent
shall give notice to the Borrower and each Appropriate Lender of the applicable
Interest Period and the applicable interest rate determined by the Agent for
purposes of clause (a)(i) or (a)(ii) above.
SECTION 2.07. Conversion of Advances. (a) Optional. The Borrower may
on any Business Day, upon notice given to the Agent not later than 11:00 A.M.
(New York City time) on the third Business Day prior to the date of the proposed
Conversion and subject to the provisions of Section 2.09, Convert all or any
portion of the Advances of one Type comprising the same Borrowing into Advances
of the other Type; provided, however, that any Conversion of Eurodollar Rate
Advances into Base Rate Advances shall be made only on the last day of an
Interest Period for such Eurodollar Rate Advances, any Conversion of Base Rate
Advances into Eurodollar Rate Advances shall be in an amount not less than the
minimum amount specified in Section 2.02(b), no Conversion of any Advances shall
result in more separate Borrowings than permitted under Section 2.02(b) and each
Conversion of Advances comprising part of the same Borrowing under any Facility
shall be made ratably among the Appropriate Lenders in accordance with their
Commitments under such Facility. Each such notice of a Conversion shall, within
the restrictions specified above, specify (i) the date of such Conversion, (ii)
the Advances to be Converted and (iii) if such Conversion is into Eurodollar
Rate Advances, the duration of the initial Interest Period for each such
Advance. Each notice of Conversion shall be irrevocable and binding on the
Borrower.
(b) Mandatory. (i) On the date on which the aggregate unpaid
principal amount of Eurodollar Rate Advances comprising any Borrowing shall be
reduced, by payment or
28
prepayment or otherwise, to less than $10,000,000, such Advances shall
automatically Convert into Base Rate Advances.
(ii) If the Borrower shall fail to select the duration of any
Interest Period for any Eurodollar Rate Advances in accordance with the
provisions contained in the definition of "Interest Period" in Section 1.01, the
Agent will forthwith so notify the Borrower and the Appropriate Lenders,
whereupon each such Eurodollar Rate Advance will automatically, on the last day
of the then existing Interest Period therefor, Convert into a Base Rate Advance.
(iii) Upon the occurrence and during the continuance of any Event of
Default, (x) each Eurodollar Rate Advance will automatically, on the last day of
the then existing Interest Period therefor, Convert into a Base Rate Advance and
(y) the obligation of the Lenders to make, or to Convert Advances into,
Eurodollar Rate Advances shall be suspended.
SECTION 2.08. Prepayments of Advances. (a) Optional. The Borrower
may, upon notice at least three Business Days' prior to the date of such
prepayment, in the case of Eurodollar Rate Advances, and upon notice at least
one Business Day prior to the date of such prepayment, in the case of Base Rate
Advances, to the Agent stating the proposed date and aggregate principal amount
of the prepayment, and if such notice is given the Borrower shall, prepay the
outstanding principal amount of the Advances comprising part of the same
Borrowing in whole or ratably in part, together with (i) accrued interest to the
date of such prepayment on the principal amount prepaid, and (ii) in the case of
any such prepayment prior to December 17, 2005 of any Term Advances, a premium
of 1.00% of the aggregate principal amount so prepaid; provided, however, that
(x) each partial prepayment shall be in an aggregate principal amount of
$10,000,000 or an integral multiple of $1,000,000 in excess thereof and (y) in
the event of any such prepayment of a Eurodollar Rate Advance, the Borrower
shall be obligated to reimburse the Lenders in respect thereof pursuant to
Section 9.04(c). Each such prepayment of any Term Advances shall be applied to
the installments thereof in inverse order of maturity.
(b) Mandatory. The Borrower shall, on each Business Day, prepay an
aggregate principal amount of the Revolving Credit Advances comprising part of
the same Borrowings in an amount equal to the amount by which (A) the aggregate
principal amount of the Revolving Credit Advances then outstanding exceeds (B)
the Revolving Credit Facility on such Business Day.
SECTION 2.09. Increased Costs, Etc. (a) If on or after the date
hereof, the adoption of any applicable law, rule or regulation, or any change in
any applicable law, rule or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Lender (or its Applicable Lending Office) with any request or directive
(whether or not having the force of law) of any such authority, central bank or
comparable agency:
(i) shall subject any Lender (or its Applicable Lending Office) to
any tax, duty or other charge with respect to its Eurodollar Rate
Advances, its related Note or its Commitment or its obligation to make
Eurodollar Rate Advances, or shall change the basis of taxation of
payments to any Lender (or its Applicable Lending Office) of the
29
principal of or interest on its Eurodollar Rate Advances or any other
amounts due under this Agreement in respect of its Eurodollar Rate
Advances or its obligation to make Eurodollar Rate Advances (except for
changes in franchise taxes or taxes on the overall net income of such
Lender or its Applicable Lending Office unless such taxes arise in whole
or in part by reason of the activities, presence or other connection of
the Borrower in or with the jurisdiction imposing such taxes); or
(ii) shall impose, modify or deem applicable any reserve (including,
without limitation, any such requirement imposed by the Board of Governors
of the Federal Reserve System, but excluding with respect to any
Eurodollar Rate Advance any such requirement included in an applicable
Eurodollar Reserve Percentage), special deposit, insurance assessment or
similar requirement against assets of, deposits with or for the account
of, or credit extended by, any Lender (or its Applicable Lending Office)
or shall impose on any Lender (or its Applicable Lending Office) or on the
London interbank market any other condition affecting its Eurodollar Rate
Advances, its related Note or its obligation to make Eurodollar Rate
Advances;
and the result of any of the foregoing is to increase the cost to such Lender
(or its Applicable Lending Office) of making or maintaining any Eurodollar Rate
Advance, or to reduce the amount of any sum received or receivable by such
Lender (or its Applicable Lending Office) under this Agreement or under its Note
with respect thereto, by an amount deemed by such Lender to be material, then,
within 15 days after demand by such Lender (with a copy to the Agent), the
Borrower shall pay to such Lender such additional amount or amounts as will
compensate such Lender for such increased cost or reduction.
(b) If any Lender shall have determined that, after the date hereof,
the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change in any applicable law, rule or regulation regarding
capital adequacy, or any change in the interpretation or administration thereof
by any governmental authority, central bank or comparable agency charged with
the interpretation or administration thereof, or any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on capital of such Lender (or any Person controlling
such Lender) as a direct consequence of such Lender's obligations hereunder to a
level below that which such Lender (or any Person controlling such Lender) could
have achieved but for such adoption, change, request or directive (taking into
consideration its policies with respect to capital adequacy) by an amount deemed
by such Lender to be material, then, from time to time, within 15 days after
demand by such Lender (with a copy to the Agent), the Borrower shall pay to such
Lender such additional amount or amounts as will compensate such Lender (or any
Person controlling such Lender) for such reduction (without duplication of any
amounts payable pursuant to subsection (a) above).
(c) Each Lender will notify the Borrower and the Agent of any event
occurring after the date of this Agreement which will entitle such Lender to
compensation pursuant to this Section 2.09 as promptly as practicable after it
obtains knowledge thereof, specifying the event giving rise to such claim and
setting out in reasonable detail an estimate (without prejudice) of the basis
and computation of such claim. Upon receipt of such notice and of such further
notice as may be required by this subsection (c), the Borrower shall compensate
30
such Lender in accordance with this Section 2.09 from as of the date such costs
are incurred (including, without limitation, where such costs are retroactively
applied); provided that the Borrower shall not be required to compensate a
Lender for costs incurred earlier than 120 days prior to the date of the notice
required to be delivered to the Borrower pursuant to this subsection (c). As
soon as practicable after the delivery of the initial notice pursuant to this
subsection (c), such Lender will furnish the Borrower with a certificate setting
forth in reasonable detail the basis and amount of each request by such Lender
for compensation under this Section 2.09, accompanied by such evidence of such
Lender's entitlement to make a claim under this Section 2.09 as the Borrower may
reasonably request.
(d) If, with respect to any Eurodollar Rate Advances, the Required
Lenders notify the Agent that the Eurodollar Rate for any Interest Period for
such Advances will not adequately reflect the cost to such Lenders of making,
funding or maintaining their Eurodollar Rate Advances for such Interest Period,
the Agent shall forthwith so notify the Borrower and the Appropriate Lenders,
whereupon (i) each such Eurodollar Rate Advance under such Facility will
automatically, on the last day of the then existing Interest Period therefor,
Convert into a Base Rate Advance and (ii) the obligation of the Appropriate
Lenders to make, or to Convert Advances into, Eurodollar Rate Advances shall be
suspended until the Agent shall notify the Borrower that such Lenders have
determined that the circumstances causing such suspension no longer exist.
(e) The Borrower shall not be liable to any Lender in respect of any
withholding taxes (including, without limitation, Taxes) under this Section.
SECTION 2.10. Illegality. Notwithstanding any other provision of
this Agreement, if the adoption of or any change in or in the interpretation of
any law or regulation shall make it unlawful, or compliance by any Lender with
any request or directive of any central bank or other governmental authority
shall make it unlawful, for any Lender or its Eurodollar Lending Office to
perform its obligations hereunder to make Eurodollar Rate Advances or to
continue to fund or maintain Eurodollar Rate Advances hereunder, then, on notice
thereof and demand therefor by such Lender to the Borrower through the Agent,
(a) each Eurodollar Rate Advance will automatically, upon such demand, Convert
into a Base Rate Advance or an advance that bears interest at the Base Rate plus
the Applicable Margin in effect from time to time, as the case may be, and (b)
the obligation of the Lenders to make, or to Convert Advances into, Eurodollar
Rate Advances shall be suspended until the Agent shall notify the Borrower that
such Lender has determined that the circumstances causing such suspension no
longer exist. Before giving any notice through the Agent pursuant to this
Section, such Lender shall designate a different Eurodollar Lending Office if
such designation will avoid the need for giving such notice and will not, in the
judgment of such Lender, be otherwise disadvantageous to such Lender.
SECTION 2.11. Payments and Computations. (a) The Borrower shall make
each payment hereunder not later than 11:00 A.M. (New York City time) on the day
when due in Dollars to the Agent at the applicable Agent's Account in same day
funds without counterclaim or set-off. The Agent will promptly thereafter cause
to be distributed like funds relating to the payment of principal or interest or
facility fees ratably (other than amounts payable pursuant to Section 2.09, 2.12
or 9.04(c)) to the Lenders for the account of their respective Applicable
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Lending Offices, and like funds relating to the payment of any other amount
payable to any Lender to such Lender for the account of its Applicable Lending
Office, in each case to be applied in accordance with the terms of this
Agreement. Upon its acceptance of an Assignment and Acceptance and recording of
the information contained therein in the Register pursuant to Section 9.07(c),
from and after the effective date specified in such Assignment and Acceptance,
the Agent shall make all payments hereunder in respect of the interest assigned
thereby to the Lender assignee thereunder, and the parties to such Assignment
and Acceptance shall make all appropriate adjustments in such payments for
periods prior to such effective date directly between themselves.
(b) All computations of interest based on the Base Rate shall be
made by the Agent on the basis of a year of 365 or 366 days, as the case may be,
all computations of interest based on the Eurodollar Rate or the Federal Funds
Rate and of fees shall be made by the Agent on the basis of a year of 360 days,
in each case for the actual number of days (including the first day but
excluding the last day) occurring in the period for which such interest or
facility fees are payable. Each determination by the Agent of an interest rate
hereunder shall be conclusive and binding for all purposes, absent manifest
error.
(c) Whenever any payment hereunder shall be stated to be due on a
day other than a Business Day, such payment shall be made on the next succeeding
Business Day, and such extension of time shall in such case be included in the
computation of payment of interest or fee, as the case may be; provided,
however, that, if such extension would cause payment of interest on or principal
of Eurodollar Rate Advances to be made in the next following calendar month,
such payment shall be made on the next preceding Business Day.
(d) Unless the Agent shall have received notice from the Borrower
prior to the date on which any payment is due to the Lenders hereunder that the
Borrower will not make such payment in full, the Agent may assume that the
Borrower has made such payment in full to the Agent on such date and the Agent
may, in reliance upon such assumption, cause to be distributed to each Lender on
such due date an amount equal to the amount then due such Lender. If and to the
extent the Borrower shall not have so made such payment in full to the Agent,
each Lender shall repay to the Agent forthwith on demand such amount distributed
to such Lender together with interest thereon, for each day from the date such
amount is distributed to such Lender until the date such Lender repays such
amount to the Agent, at the Federal Funds Rate.
(e) Whenever any payment received by the Agent under this Agreement
or any of the other Financing Documents is insufficient to pay in full all
amounts due and payable to the Agent and the Lenders under or in respect of this
Agreement and the other Financing Documents on any date, such payment shall be
distributed by the Agent and applied by the Agent and the Lenders in the
following order of priority:
(i) first, to the payment of all of the fees, indemnification
payments, costs and expenses that are due and payable to the Agent (solely
in its capacity as Agent) under or in respect of this Agreement and the
other Financing Documents on such date, ratably based upon the respective
aggregate amounts of all such fees, indemnification payments, costs and
expenses owing to the Agent on such date;
32
(ii) second, to the payment of all of the indemnification payments,
costs and expenses that are due and payable to the Lenders under Section
9.04 hereof, and any similar section of any of the other Financing
Documents on such date, ratably based upon the respective aggregate
amounts of all such indemnification payments, costs and expenses owing to
the Lenders on such date;
(iii) third, to the payment of all of the amounts that are due and
payable to the Agent and the Lenders under Sections 2.09 and 2.12 hereof
on such date, ratably based upon the respective aggregate amounts thereof
owing to the Agent and the Lenders on such date;
(iv) fourth, to the payment of all of the fees that are due and
payable to the Revolving Credit Lenders under Section 2.03(a) on such
date, ratably based upon the respective aggregate Revolving Credit
Commitments of the Revolving Credit Lenders under the Revolving Credit
Facility on such date;
(v) fifth, to the payment of all of the accrued and unpaid interest
on the Obligations of the Borrower under or in respect of the Financing
Documents that is due and payable to the Agent and the Lenders under
Section 2.06(b) on such date, ratably based upon the respective aggregate
amounts of all such interest owing to the Agent and the Lenders on such
date;
(vi) sixth, to the payment of all of the accrued and unpaid interest
on the Advances that is due and payable to the Agent and the Lenders under
Section 2.06(a) on such date, ratably based upon the respective aggregate
amounts of all such interest owing to the Agent and the Lender on such
date;
(vii) seventh, to the payment of the principal amount of all of the
outstanding Advances that is due and payable to the Agent and the Lenders
on such date, ratably based upon the respective aggregate amounts of all
such principal owing to the Agent and the Lenders on such date; and
(viii) eighth, to the payment of all other Obligations of the Loan
Parties owing under or in respect of the Financing Documents that are due
and payable to the Agent and the other Secured Parties on such date,
ratably based upon the respective aggregate amounts of all such
Obligations owing to the Agent and the other Secured Parties on such date.
(f) The Borrower hereby authorizes each Lender and each of its
Affiliates, if and to the extent payment owed to such Lender is not made when
due hereunder or, in the case of a Lender, under the Note held by such Lender,
to charge from time to time, to the fullest extent permitted by law, against any
or all of the Borrower's accounts with such Lender or such Affiliate any amount
so due.
SECTION 2.12. Taxes
(a) Any and all payments by any Loan Party to or for the account of
any Lender or the Agent hereunder or under the Notes or any other Financing
Document shall be
33
made, in accordance with Section 2.11 or the applicable provisions of such other
Financing Document, if any, free and clear of and without deduction for any and
all Taxes, except to the extent required by law. If any Loan Party shall be
required by law to deduct any Indemnified Taxes from or in respect of any sum
payable hereunder or under any Note or any other Financing Document to any
Lender or the Agent, (i) the sum payable by such Loan Party shall be increased
as may be necessary so that after such Loan Party and the Agent have made all
required deductions (including deductions applicable to additional sums payable
under this Section 2.12) such Lender or such Agent, as the case may be, receives
an amount equal to the sum it would have received had no such deductions been
made, (ii) such Loan Party shall make all such deductions and (iii) such Loan
Party shall pay the full amount deducted to the relevant taxation authority or
other authority in accordance with applicable law.
(b) In addition, a Loan Party shall pay any present or future stamp,
documentary, excise, mortgage recording or similar taxes, charges or levies that
arise from any payment made by such Loan Party hereunder or under any Notes or
any other Financing Documents or from the execution, delivery or registration
of, performance under, or otherwise with respect to, this Agreement, the Notes
or the other Financing Documents (hereinafter referred to as "OTHER TAXES").
(c) The Loan Parties shall indemnify each Lender and the Agent for
and hold them harmless against the full amount of Indemnified Taxes (including
additional sums payable under this Section 2.12) imposed as a result of the
failure of a Loan Party or the Agent to deduct such Indemnified Taxes from any
payments hereunder or under the Notes or the Other Financing Documents and pay
such amounts to the appropriate taxing authorities, and Other Taxes, in each
case imposed on or paid by such Lender or the Agent (as the case may be) and any
liability (including penalties, additions to tax, interest and expenses) arising
therefrom or with respect thereto. This indemnification shall be made within 30
days from the date such Lender or the Agent (as the case may be) makes written
demand therefor.
(d) Within 30 days after the date of any payment of any Indemnified
Taxes, the appropriate Loan Party shall furnish to the Agent, at its address
referred to in Section 9.02, the original or a certified copy of a receipt
evidencing such payment, to the extent such a receipt is issued therefor, or
other written proof of payment thereof that is reasonably satisfactory to the
Agent. In the case of any payment hereunder or under the Notes or the other
Financing Documents by or on behalf of a Loan Party (other than by the Agent)
through an account or branch outside the United States or by or on behalf of a
Loan Party by a payor (other than by the Agent) that is not a United States
person, if such Loan Party determines that no additional Taxes are payable in
respect thereof, such Loan Party shall furnish, or shall cause such payor to
furnish, to the Agent, at such address, an opinion of counsel acceptable to the
Agent to such effect. For purposes of subsections (d) and (e) of this Section
2.12, the terms "UNITED STATES" and "UNITED STATES PERSON" shall have the
meanings specified in Section 7701 of the Internal Revenue Code.
(e) Each Lender organized under the laws of a jurisdiction outside
the United States shall, on or prior to the date of its execution and delivery
of this Agreement in the case of each Initial Lender and on the date of the
Assignment and Acceptance pursuant to which it becomes a Lender in the case of
each other Lender and from time to time thereafter as reasonably requested in
writing by the Borrower (but only so long thereafter as such Lender
34
remains lawfully able to do so), provide each of the Agent and the Borrower with
two original Internal Revenue Service Forms W-8BEN (claiming the benefits of an
income tax treaty) or W-8ECI or, in the case of a Lender that is claiming
exemption from Taxes under Section 881(c) of the Code with respect to payments
of "portfolio interest", a Form W-8BEN (certifying that such Lender is a non-US
beneficial owner of such payments) and a certificate representing that such
Lender is not (i) a "bank" as defined in Section 881(c)(3)(A) of the Internal
Revenue Code), (ii) a 10-percent shareholder (within the meaning of Section
871(h)(3)(B) of the Internal Revenue Code) of the Borrower or (iii) a controlled
foreign corporation related to the Borrower (within the meaning of Section
864(d)(4) of the Internal Revenue Code), or any successor or other form
prescribed by the Internal Revenue Service, certifying that such Lender is
exempt from or entitled to a reduced rate of United States withholding tax on
payments pursuant to this Agreement or the Notes or any other Financing provided
that if any form or certificate provided by a Lender becomes invalid because of
a change in the circumstances relating to such Lender, such Lender will provide
a new form certifying that such Lender is exempt from or entitled to a reduced
rate of United States withholding tax on payments pursuant to this Agreement or
the Notes or any other Financing Document. Each Lender and the Agent shall also
deliver to each of the Borrower and the Agent, at the Borrower's request and
expense, to the extent such Lender or Agent is legally able to do so, such other
forms, statements or certificates as may be required in order to establish the
legal entitlement of such Lender or Agent to an exemption from, or a reduction
in the amount of, any Indemnified Taxes. If any form or document referred to in
this subsection (e) requires the disclosure of information, other than
information necessary to compute the tax payable and information required on the
date hereof by Internal Revenue Service Form W-8BEN or W-ECI or the related
certificate described above, that the applicable Lender reasonably considers to
be confidential, such lender shall give notice thereof to the Borrower and shall
not be obligated to include in such form or document such confidential
information. If a Lender becomes subject to Taxes because of its failure to
deliver a form, certificate or other document required hereunder, the Loan
Parties shall take such steps as such Lender shall reasonably request at such
Lender's expense to assist such lender to recover such Taxes; provided that the
Loan Party shall not have determined, in its sole discretion, that such steps
may be disadvantageous to any Loan Party.
(f) If the Agent or any Lender determines, in its sole reasonable
discretion, that it has received a refund of any Taxes as to which it has been
indemnified by any Loan Party or with respect to which any Loan Party has paid
additional amounts pursuant to this Section 2.12, it shall pay over such refund
to such Loan Party (but only to the extent of indemnity payments made, or
additional amounts paid, by such Loan Party under this Section 2.12 with respect
to Taxes giving rise to such refund), net of all reasonable out-of-pocket
expenses of the Agent or such Lender and without interest (other than any
interest paid by the relevant taxing jurisdiction with respect to such refund,
which shall not be subject to the limitations set forth in the immediately
preceding parenthetical); provided that such Loan Party, upon the request of the
Agent or such Lender, agrees to repay the amount paid over to such Loan Party
(plus any interest imposed by the relevant taxing jurisdiction) to the Agent or
such Lender in the event the Agent or such Lender is required to repay such
refund to such taxing jurisdiction.
(g) Upon the request and at the expense of any Loan Party, the Agent
and any Lender subject to Taxes in respect of which such Loan Party is obligated
to make payments under this Section 2.12 shall reasonably cooperate with such
Loan Party in contesting such Tax,
35
provided that each of the agent and any such Lender shall not have determined,
in its sole discretion, that such content may be disadvantageous to it.
(h) The Agent agrees to withhold Taxes from any amounts paid by it
hereunder or under the Notes or any other Financing Document and to file such
information returns with respect to such payments and withholdings, in each case
as required by law.
SECTION 2.13. Sharing of Payments, Etc. If any Lender shall obtain
any payment (whether voluntary, involuntary, through the exercise of any right
of set-off, or otherwise) on account of the Advances owing to it (other than
pursuant to Section 2.09, 2.12 or 9.04(c)) (a) on account of Obligations due and
payable to such Lender hereunder and under the Notes at such time in excess of
its ratable share (according to the proportion of (i) the amount of such
Obligations due and payable to such Lender at such time to (ii) the aggregate
amount of the Obligations due and payable to all Lenders hereunder and under the
Notes at such time) of payments on account of the Obligations due and payable to
all Lenders hereunder and under the Notes at such time obtained by all the
Lenders at such time or (b) on account of Obligations owing (but not due and
payable) to all Lenders hereunder and under the Notes at such time in excess of
its ratable share (according to the proportion of (i) the amount of such
Obligations owing to such Lender at such time to (ii) the aggregate amount of
the Obligations owing (but not due and payable) to all Lenders hereunder and
under the Notes at such time) of payments on account of the Obligations owing
(but not due and payable) to all Lenders hereunder and under the Notes at such
time obtained by all of the Lenders at such time, on account such Lender shall
forthwith purchase from the other Lenders such participations in the Advances
owing to them as shall be necessary to cause such purchasing Lender to share the
excess payment ratably with each of them; provided, however, that if all or any
portion of such excess payment is thereafter recovered from such purchasing
Lender, such purchase from each Lender shall be rescinded and such Lender shall
repay to the purchasing Lender the purchase price to the extent of such Lender's
ratable share (according to the proportion of (i) the amount of such Lender's
required payment to (ii) the total amount so recovered from the purchasing
Lender) of any interest or other amount paid or payable by the purchasing Lender
in respect of the total amount so recovered. The Borrower agrees that any Lender
so purchasing a participation from another Lender pursuant to this Section 2.13
may, to the fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off) with respect to such participation as fully as
if such Lender were the direct creditor of the Borrower in the amount of such
participation.
SECTION 2.14. Evidence of Debt. (a) Each Lender shall maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower to such Lender resulting from each Advance owing to
such Lender from time to time, including the amounts of principal and interest
payable and paid to such Lender from time to time hereunder in respect of
Advances. The Borrower agrees that upon notice by any Lender to the Borrower
(with a copy of such notice to the Agent) to the effect that a Note is required
or appropriate in order for such Lender to evidence (whether for purposes of
pledge, enforcement or otherwise) the Advances owing to, or to be made by, such
Lender, the Borrower shall promptly execute and deliver to such Lender a Note
payable to the order of such Lender in a principal amount up to the Commitment
of such Lender. All reference to Notes in the Financing Documents shall mean
Notes, if any, to the extent issued hereunder.
36
(b) The Register maintained by the Agent pursuant to Section 9.07(c)
shall include a control account, and a subsidiary account for each Lender, in
which accounts (taken together) shall be recorded (i) the date and amount of
each Borrowing made hereunder, the Type of Advances comprising such Borrowing
and, if appropriate, the Interest Period applicable thereto, (ii) the terms of
each Assignment and Acceptance delivered to and accepted by it, (iii) the amount
of any principal or interest due and payable or to become due and payable from
the Borrower to each Lender hereunder and (iv) the amount of any sum received by
the Agent from the Borrower hereunder and each Lender's share thereof.
(c) Entries made in good faith by the Agent in the Register pursuant
to subsection (b) above, and by each Lender in its account or accounts pursuant
to subsection (a) above, shall be prima facie evidence of the amount of
principal and interest due and payable or to become due and payable from the
Borrower to, in the case of the Register, each Lender and, in the case of such
account or accounts, such Lender, under this Agreement, absent manifest error;
provided, however, that the failure of the Agent or such Lender to make an
entry, or any finding that an entry is incorrect, in the Register or such
account or accounts shall not limit or otherwise affect the obligations of the
Borrower under this Agreement.
SECTION 2.15. Use of Proceeds. The proceeds of the Advances shall be
available (and the Borrower agrees that it shall use such proceeds) solely (i)
to repay in full any amounts outstanding under the Existing Credit Agreement,
(ii) pay transaction fees and expenses and (iii) for general corporate purposes
of the Borrower and its Subsidiaries.
SECTION 2.16. Mitigation, Substitution of Lender. If, with respect
to any Lender, a condition arises or an event occurs which would, or would upon
the giving of notice, result in the payment of any additional costs pursuant to
Section 2.09 or any additional amounts pursuant to Section 2.12, such Lender,
promptly upon becoming aware of the same, shall notify the Borrower (with a copy
to the Agent) thereof and shall take such steps as may be reasonable to it to
mitigate the effects of such condition or event including the designation of a
different Applicable Lending Office or furnishing of the proper certificates
under any applicable tax laws, tax treaties and conventions to the extent that
such certificates are legally available to such Lender, provided that such
Lender shall be under no obligation to take any step that, in its good-faith
opinion would (i) result in its incurring any additional costs in performing its
obligations hereunder unless the Borrower has agreed to reimburse it therefore
or (ii) be otherwise disadvantageous to such Lender in a significant respect in
the reasonable judgment of such Lender. If (i) the obligation of any Lender to
make Eurodollar Rate Advances has been suspended pursuant to Section 2.09, (ii)
any Lender has demanded compensation under Section 2.09 or 2.12, or (iii) any
Lender becomes a Defaulting Lender, the Borrower shall have the right, so long
as no Default shall have occurred and be continuing, to seek a substitute one or
more Eligible Assignees (which may be one or more of the Lenders) to purchase
the Note and assume the Commitment of such Lender, in accordance with Section
9.07(a).
SECTION 2.17. Defaulting Lenders. (a) In the event that, at any one
time, (i) any Lender shall be a Defaulting Lender, (ii) such Defaulting Lender
shall owe a Defaulted Advance to the Borrower and (iii) the Borrower shall be
required to make any payment hereunder or under any other Financing Document to
or for the account of such Defaulting Lender, then the Borrower may, so long as
no Default shall occur or be continuing at such time
37
and to the fullest extent permitted by applicable law, set off and otherwise
apply the Obligation of the Borrower to make such payment to or for the account
of such Defaulting Lender against the obligation of such Defaulting Lender to
make such Defaulted Advance. In the event that, on any date, the Borrower shall
so set off and otherwise apply its obligation to make any such payment against
the obligation of such Defaulting Lender to make any such Defaulted Advance on
or prior to such date, the amount so set off and otherwise applied by the
Borrower shall constitute for all purposes of this Agreement and the other
Financing Documents an Advance by such Defaulting Lender made on the date of
such setoff under the Facility pursuant to which such Defaulted Advance was
originally required to have been made pursuant to Section 2.01. Such Advance
shall be considered, for all purposes of this Agreement, to comprise part of the
Borrowing in connection with which such Defaulted Advance was originally
required to have been made pursuant to Section 2.01, even if the other Advances
comprising such Borrowing shall be Eurodollar Rate Advances on the date such
Advance is deemed to be made pursuant to this subsection (a). The Borrower shall
notify the Agent at any time the Borrower exercises its right of set-off
pursuant to this subsection (a) and shall set forth in such notice (A) the name
of the Defaulting Lender and the Defaulted Advance required to be made by such
Defaulting Lender and (B) the amount set off and otherwise applied in respect of
such Defaulted Advance pursuant to this subsection (a). Any portion of such
payment otherwise required to be made by the Borrower to or for the account of
such Defaulting Lender which is paid by the Borrower, after giving effect to the
amount set off and otherwise applied by the Borrower pursuant to this subsection
(a), shall be applied by the Agent as specified in subsection (b) or (c) of this
Section 2.17.
(b) In the event that, at any one time, (i) any Lender shall be a
Defaulting Lender, (ii) such Defaulting Lender shall owe a Defaulted Amount to
the Agent or any of the other Lenders and (iii) the Borrower shall make any
payment hereunder or under any other Financing Document to the Agent for the
account of such Defaulting Lender, then the Agent may, on its behalf or on
behalf of such other Lenders and to the fullest extent permitted by applicable
law, apply at such time the amount so paid by the Borrower to or for the account
of such Defaulting Lender to the payment of each such Defaulted Amount to the
extent required to pay such Defaulted Amount. In the event that the Agent shall
so apply any such amount to the payment of any such Defaulted Amount on any
date, the amount so applied by the Agent shall constitute for all purposes of
this Agreement and the other Financing Documents payment, to such extent, of
such Defaulted Amount on such date. Any such amount so applied by the Agent
shall be retained by the Agent or distributed by the Agent to such other
Lenders, ratably in accordance with the respective portions of such Defaulted
Amounts payable at such time to the Agent and such other Lenders and, if the
amount of such payment made by the Borrower shall at such time be insufficient
to pay all Defaulted Amounts owing at such time to the Agent and such other
Lenders in the following order of priority:
(i) first, to the Agent for any Defaulted Amounts then owing to it,
in its capacity as such; and
(ii) second, to any other Lenders for any Defaulted Amounts then
owing to such other Lenders, ratably in accordance with such respective
Defaulted Amounts then owing to such other Lenders.
38
Any portion of such amount paid by the Borrower for the account of such
Defaulting Lender remaining, after giving effect to the amount applied by the
Agent pursuant to this subsection (b), shall be applied by the Agent as
specified in subsection (c) of this Section 2.17.
(c) In the event that, at any one time, (i) any Lender shall be a
Defaulting Lender, (ii) such Defaulting Lender shall not owe a Defaulted Advance
or a Defaulted Amount and (iii) the Borrower, the Agent or any other Lender
shall be required to pay or distribute any amount hereunder or under any other
Financing Document to or for the account of such Defaulting Lender, then the
Borrower or such other Lender shall pay such amount to the Agent to be held by
the Agent, to the fullest extent permitted by applicable law, in escrow or the
Agent shall, to the fullest extent permitted by applicable law, hold in escrow
such amount otherwise held by it. Any funds held by the Agent in escrow under
this subsection (c) shall be deposited by the Agent in an account with a bank
(the "ESCROW BANK") selected by the Agent, in the name and under the control of
the Agent, but subject to the provisions of this subsection (c). The terms
applicable to such account, including the rate of interest payable with respect
to the credit balance of such account from time to time, shall be the Escrow
Bank's standard terms applicable to escrow accounts maintained with it. Any
interest credited to such account from time to time shall be held by the Agent
in escrow under, and applied by the Agent from time to time in accordance with
the provisions of, this subsection (c). The Agent shall, to the fullest extent
permitted by applicable law, apply all funds so held in escrow from time to time
to the extent necessary to make any Advances required to be made by such
Defaulting Lender and to pay any amount payable by such Defaulting Lender
hereunder and under the other Financing Documents to the Agent or any other
Lender, as and when such Advances or amounts are required to be made or paid
and, if the amount so held in escrow shall at any time be insufficient to make
and pay all such Advances and amounts required to be made or paid at such time,
in the following order of priority:
(i) first, to the Agent for any amounts then due and payable by such
Defaulting Lender to it, in its capacity as such;
(ii) second, to any other Lenders for any amount then due and
payable by such Defaulting Lender to such other Lenders hereunder, ratably
in accordance with such respective amounts then due and payable to such
other Lenders; and
(iii) third, to the Borrower for any Advance then required to be
made by such Defaulting Lender pursuant to a Commitment of such Defaulting
Lender.
In the event that any Lender that is a Defaulting Lender shall, at any time,
cease to be a Defaulting Lender, any funds held by the Agent in escrow at such
time with respect to such Lender shall be distributed by the Agent to such
Lender and applied by such Lender to the Obligations owing to such Lender at
such time under this Agreement and the other Financing Documents ratably in
accordance with the respective amounts of such Obligations outstanding at such
time.
(d) The rights and remedies against a Defaulting Lender under this
Section 2.17 are in addition to other rights and remedies that the Borrower may
have against
39
such Defaulting Lender with respect to the Defaulted Advance and that the Agent
or any Lender may have against such Defaulting Lender with respect to any
Defaulted Amount.
ARTICLE III
CONDITIONS OF EFFECTIVENESS
SECTION 3.01. Conditions Precedent to Effectiveness. This Agreement
shall become effective on and as of the first date (the "EFFECTIVE DATE") on
which the following conditions precedent shall have been satisfied or waived:
(a) The Agent shall have received on or before the day of the
Initial Extension of Credit the following, each dated such day (unless
otherwise specified), in form and substance satisfactory to the Agent
(unless otherwise specified) and (except for the Notes) in sufficient
copies for each Initial Lender:
(i) The Notes payable to each Initial Lender or registered
assigns requesting a Note prior to the date hereof.
(ii) An aircraft security agreement in substantially the form
of Exhibit D hereto (together with each other security agreement and
security agreement supplement delivered pursuant to Section 5.01(n),
in each case as amended, the "AIRCRAFT SECURITY AGREEMENT"), duly
executed by the Borrower, together with:
(A) evidence of the completion of all recordings and
filings of or with respect to the Aircraft Security Agreement
that the Agent may deem reasonably necessary or desirable in
order to perfect (to the extent provided in the Aircraft
Security Agreement) and protect the Liens created thereby,
including, without limitation, recordings and filings with the
FAA and the Delaware Secretary of State, and all filing and
recording fees and taxes in respect thereof shall have been
duly paid,
(B) completed requests for information, dated on or
before the date of the Initial Extension of Credit, listing
all effective financing statements filed in the jurisdictions
referred to in clause (A) above and in such other
jurisdictions as determined by the Agent, that name any Loan
Party as debtor, together with copies of such financing
statements, and
(C) evidence that all other action that the Agent may
deem reasonably necessary or desirable in order to perfect (to
the extent provided in the Aircraft Security Agreement) and
protect the liens and security interests created under the
Aircraft Security Agreement has been taken (including, without
limitation, receipt of duly executed payoff letters and UCC-3
termination statements).
40
(iii) A slot, gate and route security agreement in
substantially the form of Exhibit E hereto (as amended, the "SGR
SECURITY AGREEMENT"), duly executed by the Borrower, together with:
(A) in respect of each of the Slots, undated slot
transfer documents, executed in blank, to be held in escrow by
the Agent,
(B) in respect of each of the Narita Routes, UCC-1
financing statements in appropriate form for filing with the
Delaware Secretary of State, and
(C) evidence that all other action that the Agent may
deem reasonably necessary or desirable in order to perfect (to
the extent provided in the SGR Security Agreement) and protect
the liens and security interests created under the SGR
Security Agreement has been taken.
(iv) A pledge agreement in substantially the form of Exhibit F
hereto, duly executed by the Parent Guarantor (the "PLEDGE
AGREEMENT"), together with:
(A) certificates representing the Pledged Equity (as
defined therein) accompanied by undated stock powers executed
in blank, and
(B) evidence that all other action that the Agent may
deem necessary or desirable in order to perfect (to the extent
provided in the Pledge Agreement) and protect the liens and
security interests created under the Pledge Agreement has been
taken.
(v) Certified copies of the resolutions of the Board of
Directors of each Loan Party approving the Transaction, and of all
documents evidencing other necessary corporate action and
governmental and other third party approvals and consents, if any,
with respect to the Transaction.
(vi) A copy of a certificate of the Secretary of State of the
jurisdiction of incorporation of each Loan Party, dated reasonably
near the date of the Initial Extension of Credit, certifying (A) as
to a true and correct copy of the charter of such Loan Party and
each amendment thereto on file in such Secretary's office, (B) that
(1) such amendments are the only amendments to such Loan Party's
charter on file in such Secretary's office and (2) such Loan Party
has paid all franchise taxes to the date of such certificate, and
(C) such Loan Party is duly incorporated and in good standing or
presently subsisting under the laws of the State of jurisdiction of
its incorporation.
(vii) A copy of a certificate of the Secretary of State of
each of the State of Florida, the State of Illinois and the State of
Texas, dated reasonably near the date of the Initial Extension of
Credit, stating that each Loan Party is duly qualified and in good
standing as a foreign corporation in such State and has filed all
annual reports required to be filed to the date of such certificate.
41
(viii) A certificate of each Loan Party signed on behalf of
such Loan Party by its President or a Vice President and its
Secretary or any Assistant Secretary, dated the date of the Initial
Extension of Credit (the statements made in which certificate shall
be true on and as of the date of the Initial Extension of Credit,
except to the extent that any such representation or warranty
relates to a specified date, in which case such representation or
warranty shall be or was true and correct as of such date),
certifying as to (A) the absence of any amendments to the charter of
such Loan Party since the date of the Secretary of State's
certificate referred to in Section 3.01(a)(vi), (B) a true and
correct copy of the bylaws of such Loan Party as in effect on the
date on which the resolutions referred to in Section 3.01(a)(v) were
adopted and on the date of the Initial Extension of Credit, (C) the
due incorporation and good standing or valid existence of such Loan
Party as a corporation organized under the laws of the jurisdiction
of its incorporation, and the absence of any proceeding for the
dissolution or liquidation of such Loan Party, (D) the truth of the
representations and warranties contained in the Financing Documents
as though made on and as of the date of the Initial Extension of
Credit, except to the extent that any such representation or
warranty relates to a specified date, in which case such
representation or warranty shall be or was true and correct as of
such date, and (E) the absence of any event occurring and
continuing, or resulting from the Initial Extension of Credit, that
constitutes a Default.
(ix) A certificate of the Secretary or an Assistant Secretary
of each Loan Party certifying the names and true signatures of the
officers of such Loan Party authorized to sign each Financing
Document to which it is or is to be a party and the other documents
to be delivered hereunder and thereunder.
(x) Appraisal Reports from the respective Appraisers in
respect of the Aircraft set forth on Schedule 1 to the Aircraft
Security Agreement and the Narita Collateral, in each case dated
after November 1, 2004.
(xi) An insurance report from an independent insurance broker
stating the opinion of such firm that the insurance maintained in
respect of the Aircraft complies with the requirements set forth in
the Aircraft Security Agreement.
(xii) Certificates of insurance evidencing the insurance
required by the terms of the Collateral Documents and naming the
Agent, on behalf of the Lenders, as additional insured or loss
payee, as the case may be.
(xiii) A Notice of Borrowing relating to the Initial Extension
of Credit.
(xiv) A favorable opinion of the General Counsel for the
Borrower, in substantially the form of Exhibit G-1 hereto and a
favorable opinion of the General Counsel for the Parent Guarantor,
in substantially the form of Exhibit G-2 hereto.
42
(xv) A favorable opinion of Daugherty Fowler Peregrin &
Haught, FAA counsel to the Loan Parties, in substantially the form
of Exhibit G-3 hereto.
(xvi) A favorable opinion of O'Melveny & Myers LLP, regulatory
counsel to the Lenders, in substantially the form of Exhibit I
hereto.
(xvii) A favorable opinion of Shearman & Sterling LLP, counsel
for the Agent.
(b) The Lead Arrangers shall have completed a due diligence
investigation of the business, assets, operations, properties, condition
(financial or otherwise), contingent liabilities, prospects and material
agreements of the Borrower and its Subsidiaries in scope, and with
results, satisfactory to the Lead Arrangers. Except as disclosed in
writing to the Agent and the Lenders prior to the date hereof, there shall
not have occurred a material adverse change in the business, assets,
operations, properties or condition (financial or otherwise) of the
Borrower and its Subsidiaries, taken as a whole, since December 31, 2003.
(c) The Lead Arrangers shall have received (x) from the Revolving
Credit Lenders Revolving Credit Commitments in an aggregate amount of at
least $450,000,000 and (y) from the Lenders Commitments in an aggregate
amount of at least $750,000,000.
(d) The Borrower shall have paid (i) the upfront fees payable to the
Lenders and (ii) all invoiced accrued fees and expenses of the Agent and
the Lead Arrangers (including the fees and expenses of counsel to the
Agent and the Lead Arrangers).
(e) The Agent and the Lenders shall have received evidence
satisfactory to the Agent and the Senior Lenders that the indebtedness
outstanding under the Existing Credit Agreement shall have been repaid and
that the Existing Credit Agreement shall have been terminated.
(f) On the basis of the Borrower's assessment of the effect of
Environmental Laws on the business, operations and properties of the
Borrower and its Subsidiaries, in the course of which it identified and
evaluated associated liabilities and costs (including, without limitation,
any capital or operating expenditures required for clean-up or closure of
properties presently or previously owned or operated, any capital or
operating expenditures required to achieve or maintain compliance with
environmental protection standards imposed by law or as a condition of any
license, permit or contract, any related constraints on operating
activities, including any periodic or permanent shutdown of any facility
or reduction in the level of or change in the nature of operations
conducted thereat and any actual or potential liabilities to third
parties, including employees, and any related costs and expenses), the
Borrower has reasonably concluded that Environmental Laws could not
reasonably be expected to have a Material Adverse Effect.
(g) There shall be no action, suit, investigation or proceeding
pending or, to the knowledge of the Borrower, threatened in any court or
before any arbitrator or governmental authority that (i) could reasonably
be expected to have a Material Adverse Effect or (ii) purports to
adversely affect the Transaction.
43
SECTION 3.02. Conditions Precedent to Each Borrowing. The obligation
of each Appropriate Lender to make an Advance on the occasion of each Borrowing
(including the initial Borrowing) shall be subject to the further conditions
precedent that on the date of such Borrowing the following statements shall be
true (and each of the giving of the applicable Notice of Borrowing and the
acceptance by the Borrower of the proceeds of such Borrowing shall constitute a
representation and warranty by the Borrower that on the date of such Borrowing
such statements are true, except to the extent that any such representation or
warranty relates to a specified date, in which case such representation or
warranty shall be or was true and correct as of such date):
(a) the representations and warranties contained in each Financing
Document are correct on and as of such date, before and after giving
effect to such Borrowing and to the application of the proceeds therefrom,
as though made on and as of such date, other than any such representations
or warranties that, by their terms, refer to a specific date other than
the date of such Borrowing; and
(b) no Default has occurred and is continuing, or would result from
such Borrowing or from the application of the proceeds therefrom.
SECTION 3.03. Determinations Under Section 3.01. For purposes of
determining compliance with the conditions specified in Section 3.01, each
Lender shall be deemed to have consented to, approved or accepted or to be
satisfied with each document or other matter required thereunder to be consented
to or approved by or acceptable or satisfactory to the Lenders unless an officer
of the Agent responsible for the transactions contemplated by the Financing
Documents shall have received notice from such Lender prior to the date that the
Borrower, by notice to the Lenders, designates as the proposed Effective Date,
specifying its objection thereto and, if the Initial Extension of Credit
consists of a Borrowing, such Lender shall not have made available to the Agent
such Lender's ratable portion of such Borrowing. The Agent shall promptly notify
the Lenders of the occurrence of the Effective Date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Borrower. The
Borrower represents and warrants as follows:
(a) Corporate Existence and Power. The Borrower (i) is a corporation
duly incorporated, validly existing and in good standing under the laws of
the State of Delaware, (ii) is duly qualified and in good standing as a
foreign corporation in each other jurisdiction in which it owns or leases
property or in which the conduct of its business requires it to so qualify
or be licensed, except where the failure to so qualify or be licensed
could not reasonably be expected to have a Material Adverse Effect and
(iii) has all corporate powers and all material governmental licenses,
authorizations, consents and approvals required to carry on its business
as now conducted.
44
(b) Subsidiaries. Set forth on Schedule 4.01(b) hereto is a complete
and accurate list of all Material Subsidiaries of the Borrower. All of the
outstanding Equity Interests in the Borrower's Material Subsidiaries have
been validly issued, are fully paid and non-assessable.
(c) Corporate Authorization; No Contravention. The execution,
delivery and performance by the Borrower of this Agreement and the other
Financing Documents to be delivered by it are within the Borrower's
corporate powers, have been duly authorized by all necessary corporate
action, and do not contravene, or constitute a default under, any
provision of applicable law or regulation or of the certificate of
incorporation or by-laws of the Borrower or of any agreement, judgment,
injunction, order, decree or other instrument binding upon the Borrower or
result in the creation or imposition of any Lien on any asset of the
Borrower or any of its Material Subsidiaries, other than Liens created
pursuant to the Financing Documents.
(d) Governmental, Third-Party Approvals or Consents. No
authorization or approval or other action by, and no notice to or filing
with, any governmental authority or regulatory body or any other third
party is required for (i) the due execution, delivery, recordation, filing
or performance by the Borrower of any Financing Document to which it is or
is to be a party, or for the consummation of the Transaction, (ii) the
grant by the Borrower of the Liens granted by it pursuant to the
Collateral Documents, (iii) the perfection or maintenance of the Liens
under the laws of the United States, any State thereof or any political
subdivision or agency thereof created under the Collateral Documents,
subject only to Permitted Liens or (iv) as of the Effective Date, the
exercise by the Agent or any Lender of its rights under the Financing
Documents or the remedies in respect of the Collateral pursuant to the
Collateral Documents, except for (a) the authorizations, approvals,
actions, notices and filings listed on Schedule 4.01(d) hereto, all of
which have been duly observed, taken, given or made and are in full force
and effect and (b) the authorizations, approvals, actions, notices and
filings contemplated by the SGR Security Agreement.
(e) Binding Effect. This Agreement constitutes, and the other
Financing Documents, when executed and delivered by the Borrower, will
constitute, valid and binding agreements of the Borrower, enforceable
against the Borrower in accordance with their respective terms, except as
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors generally and
by general principles of equity.
(f) Litigation. Except as disclosed to the Lenders in Schedule
4.01(f) hereto, there is no action, suit, investigation, litigation or
proceeding pending against, or to the knowledge of the Borrower threatened
against or affecting, the Borrower or any of its Material Subsidiaries
before any court or arbitrator or any governmental body, agency or
official (i) which could reasonably be expected to have a Material Adverse
Effect or (ii) which purports to affect the legality, validity or
enforceability of this Agreement or any Financing Documents or the
consummation of the transactions contemplated hereby.
45
(g) Financial Information. (i) The consolidated balance sheet of the
Borrower and its Subsidiaries as of December 31, 2003 and the related
consolidated statements of operations and cash flows for the fiscal year
then ended, reported on by Ernst & Young LLP and set forth in the
Borrower's report on Form 10-K for the year ended December 31, 2003, a
copy of which has been delivered to each of the Lenders, fairly present,
in conformity with generally accepted accounting principles, the
consolidated financial position of the Borrower and its Subsidiaries as of
such date and their consolidated results of operations and cash flows for
such fiscal year.
(ii) The unaudited consolidated balance sheet of the Borrower and
its Subsidiaries as of September 30, 2004 and the related unaudited
consolidated statements of operations and cash flows for the nine months
then ended, set forth in the Borrower's report on Form 10-Q as filed with
the Securities and Exchange Commission, a copy of which has been delivered
to each of the Lenders, fairly present, in conformity with generally
accepted accounting principles applied on a basis consistent with the
financial statements referred to in subsection (i) of this Section, the
consolidated financial position of the Borrower and its Subsidiaries as of
such date and their consolidated results of operations and cash flows for
such nine month period (subject to normal year-end adjustments).
(iii) Except as disclosed in the Disclosure Documents filed on or
prior to December 3, 2004, since the date of the financial statements
delivered to the Lenders pursuant to Section 4.01(g)(i), there has been no
material adverse change in the business, assets, operations, properties or
condition (financial or otherwise) of the Borrower and its Material
Subsidiaries, considered as a whole.
(iv) Neither the Information Memorandum nor any other written
information, exhibit or report or the Disclosure Documents (as modified or
supplemented by other written information so furnished), taken as a whole,
furnished by or on behalf of any Loan Party to the Agent, the Lead
Arrangers or any Lender in connection with the negotiation and syndication
of the Financing Documents or pursuant to the terms of the Financing
Documents contained any untrue statement of a material fact or omitted to
state a material fact necessary to make the statements made therein not
misleading in light of the circumstances in which such information,
exhibits and reports were provided; provided that, with respect to
projections, the Borrower represents only that such information was
prepared in good faith based upon assumptions believed to be reasonable at
the time.
(h) Compliance with ERISA. Each member of the ERISA Group has
fulfilled its obligations under the minimum funding standards of ERISA and
the Internal Revenue Code with respect to each Plan and is in compliance
in all material respects with the presently applicable provisions of ERISA
and the Internal Revenue Code with respect to each Plan. No member of the
ERISA Group has (i) sought a waiver of the minimum funding standard under
Section 412 of the Internal Revenue Code in respect of any Plan, (ii)
failed to make any contribution or payment to any Plan or Multiemployer
Plan or in respect of any Benefit Arrangement, or made any amendment to
any Plan or Benefit Arrangement, which has resulted or could result in the
imposition of a Lien or the posting
46
of a bond or other security under ERISA or the Internal Revenue Code or
(iii) incurred any liability under Title IV of ERISA other than a
liability to the PBGC for premiums under Section 4007 of ERISA. Nothing in
this paragraph (h) precludes a member of the ERISA Group from seeking,
after the Effective Date, a waiver of the minimum funding standards under
Section 412 of the Internal Revenue Code in respect of any Plan, provided
the requested waiver complies in all other respects with the terms of this
Agreement.
(i) Environmental Matters. The Borrower has not received notice to
the effect, nor does any Responsible Officer have any actual knowledge,
that its operations are not in material compliance with any applicable
Environmental Laws or the subject of any federal or state investigation
evaluating whether any remedial action is needed to respond to a release
of any toxic or hazardous waste or substance into the environment, which
non-compliance or remedial action could reasonably be expected to have a
Material Adverse Effect.
(j) Margin Regulations. The Borrower is not engaged in the business
of extending credit for the purpose of purchasing or carrying margin stock
(within the meaning of Regulation U issued by the Board of Governors of
the Federal Reserve System), and no proceeds of any Advance will be used
to purchase or carry any margin stock or to extend credit to others for
the purpose of purchasing or carrying any margin stock.
(k) Investment Company Act; Public Utility Holding Company Act.
Neither the Borrower nor any of its Material Subsidiaries is an
"investment company" or "promoter" or "principal underwriter" for, an
"investment company", as such terms are defined in the Investment Company
Act of 1940, as amended. Neither the Borrower nor any of its Material
Subsidiaries is a "holding company", or a "subsidiary company" of a
"holding company", as such terms are defined in the Public Utility Holding
Company Act of 1935, as amended.
(l) Perfection, Etc. All filings and other actions necessary or
desirable to perfect (to the extent provided in the Collateral Documents)
and protect the security interest in the AA Collateral created under the
Collateral Documents have been duly made or taken and are in full force
and effect under the laws of the United States, any State thereof or any
political subdivision or agency thereof, and the Collateral Documents
create in favor of the Agent for the benefit of the Secured Parties a
valid and, together with such filings and other actions, perfected
security interest in such AA Collateral, securing the payment of the
Secured Obligations, under the laws of the United States, any State
thereof or any political subdivision or agency thereof and all filings and
other actions necessary or desirable to perfect and protect such security
interest have been duly taken under the laws of the United States, any
State thereof or any political subdivision or agency thereof. The Borrower
is the legal and beneficial owner of the Collateral (as such term is
defined in the Aircraft Security Agreement) free and clear of any Lien,
except for the liens and security interests created or permitted under the
Financing Documents. The Borrower is the holder of the Narita Collateral
free and clear of any Lien, except for the liens and security interests
created or permitted under the Financing Documents.
47
(m) No Default. Neither the Borrower nor any Material Subsidiary of
the Borrower is in default under or with respect to any Contractual
Obligation that could, either individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.
(n) Casualty, Etc. Neither the business nor the properties of the
Borrower or any of its Material Subsidiaries are affected by any fire,
explosion, accident, strike, lockout or other labor dispute, drought,
storm, hail, earthquake, embargo, act of God or of the public enemy or
other casualty (whether or not covered by insurance) that could reasonably
be expected to have a Material Adverse Effect.
(o) Taxes. The Borrower and each of its Material Subsidiaries and
Affiliates has filed, has caused to be filed or has been included in all
material tax returns (Federal, state, local and foreign) required to be
filed and has paid all taxes shown thereon to be due and all material
taxes otherwise due and payable, together with applicable interest and
penalties.
(p) Aircraft Value. Schedule 1 to the Aircraft Security Agreement,
as amended or supplemented from time to time, sets forth a list of
Unencumbered Stage 3 Aircraft with an Aircraft Value, as set forth in the
most recent Appraisal Report delivered with respect thereto (a copy of
which has been delivered to each of the Lenders), equal to the amount set
forth opposite such Aircraft.
(q) Regulatory Status. The Borrower is an "air carrier" within the
meaning of Section 40102 of Title 49 and holds a certificate under Section
41102 of Title 49. The Borrower holds an air carrier operating certificate
issued pursuant to Chapter 447 of Title 49. The Borrower and the Parent
Guarantor are each a "citizen of the United States" as defined in Section
40102(a)(15) of Title 49 and as that statutory provision has been
interpreted by DOT pursuant to its policies (a "UNITED STATES CITIZEN").
The Borrower possesses all necessary certificates, franchises, licenses,
permits, rights, designations, authorizations, exemptions, concessions,
frequencies, and consents to operate the Narita Routes.
SECTION 4.02. Representations and Warranties of the Parent
Guarantor. The Parent Guarantor represents and warrants as follows:
(a) Corporate Existence and Power. The Parent Guarantor (i) is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware, (ii) is duly qualified and in good standing as a
foreign corporation in each other jurisdiction in which it owns or leases
property or in which the conduct of its business requires it to so qualify or be
licensed, except where the failure to so qualify or be licensed could not
reasonably be expected to have a Material Adverse Effect and (iii) has all
corporate powers and all material governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted.
(b) Corporate Authorization; No Contravention. The execution,
delivery and performance by the Parent Guarantor of this Agreement and the other
Financing Documents to
48
be delivered by it are within the Parent Guarantor's corporate powers, have been
duly authorized by all necessary corporate action, and do not contravene, or
constitute a default under, any provision of applicable law or regulation or of
the certificate of incorporation or by-laws of the Parent Guarantor or of any
agreement, judgment, injunction, order, decree or other instrument binding upon
the Parent Guarantor or result in the creation or imposition of any Lien on any
asset of the Parent Guarantor or any of its Material Subsidiaries, other than
Liens created pursuant to the Financing Documents.
(c) Governmental, Third Party Approvals or Consents. No
authorization or approval or other action by, and no notice to or filing with,
any governmental authority or regulatory body or any other third party is
required for (i) the due execution, delivery, recordation, filing or performance
by the Parent Guarantor of any Financing Document to which it is or is to be a
party, or for the consummation of the Transaction, (ii) the grant by the Parent
Guarantor of the Liens granted by it pursuant to the Collateral Documents, (iii)
the perfection or maintenance of the Liens created under the Collateral
Documents, subject only to Permitted Liens or (iv) as of the Effective Date, the
exercise by the Agent or any Lender of its rights under the Financing Documents
or the remedies in respect of the Collateral pursuant to the Collateral
Documents, except for the authorizations, approvals, actions, notices and
filings listed on Schedule 4.01(d) hereto, all of which have been duly observed,
taken, given or made and are in full force and effect.
(d) Binding Effect. This Agreement constitutes, and the other
Financing Documents, when executed and delivered by the Parent Guarantor, will
constitute, valid and binding agreements of the Parent Guarantor, enforceable
against the Parent Guarantor in accordance with their respective terms, except
as may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors generally and by
general principles of equity.
(e) Financial Information. (i) The consolidated balance sheet of the
Parent Guarantor and its Subsidiaries as of December 31, 2003 and the related
consolidated statements of operations and cash flows for the fiscal year then
ended, reported on by Ernst & Young LLP and set forth in the Parent Guarantor's
report on Form 10-K for the year ended December 31, 2003, a copy of which has
been delivered to each of the Lenders, fairly present, in conformity with
generally accepted accounting principles, the consolidated financial position of
the Parent Guarantor and its Subsidiaries as of such date and their consolidated
results of operations and cash flows for such fiscal year.
(ii) The unaudited consolidated balance sheet of the Parent
Guarantor and its Subsidiaries as of September 30, 2004 and the related
unaudited consolidated statements of operations and cash flows for the nine
months then ended, set forth in the Parent Guarantor's report on Form 10-Q as
filed with the Securities and Exchange Commission, a copy of which has been
delivered to each of the Lenders, fairly present, in conformity with generally
accepted accounting principles applied on a basis consistent with the financial
statements referred to in subsection (i) of this Section, the consolidated
financial position of the Parent Guarantor and its Subsidiaries as of such date
and their consolidated results of operations and cash flows for such nine month
period (subject to normal year-end adjustments).
49
(f) Perfection, Etc. All filings and other actions necessary or
desirable to perfect (to the extent set forth in the Pledge Agreement) and
protect the security interest in the AMR Collateral created under the Collateral
Documents have been duly made or taken and are in full force and effect, and the
Collateral Documents create in favor of the Agent for the benefit of the Secured
Parties a valid and, together with such filings and other actions, perfected
security interest in such AMR Collateral, securing the payment of the Secured
Obligations, and all filings and other actions necessary or desirable to perfect
and protect such security interest have been duly taken. The Parent Guarantor is
the legal and beneficial owners of the AMR Collateral free and clear of any
Lien, except for the liens and security interests created or permitted under the
Financing Documents.
ARTICLE V
COVENANTS OF THE LOAN PARTIES
SECTION 5.01. Affirmative Covenants. So long as any principal,
interest and premiums related to any Advances and any fees hereunder shall
remain unpaid or any Lender shall have any Commitment hereunder, the Borrower,
and as to Sections 5.01(a)(iv), 5.01(a)(v), 5.01(a)(vi), 5.01(a)(ix),
5.01(a)(x), 5.01(a)(xvi), 5.01(b)(i) and 5.01(h) the Parent Guarantor, will:
(a) Information. Deliver to the Agent for distribution to the
Lenders:
(i) as soon as available and in any event within 90 days (or
such longer period as is permitted for the filing of an equivalent
periodic report to the extent an extension thereof has been obtained
under Rule 12b-25 of the General Rules and Regulations under the
Securities Exchange Act of 1934, or any successor rules) after the
end of each fiscal year of the Borrower, a consolidated balance
sheet of the Borrower and its Subsidiaries as of the end of such
fiscal year and the related consolidated statements of operations
and cash flows for such fiscal year, setting forth in each case in
comparative form the figures for the previous fiscal year, all in
the form filed with the Securities and Exchange Commission
accompanied by an opinion of Ernst & Young LLP or other independent
public accountants of nationally recognized standing;
(ii) as soon as available and in any event within 45 days (or
such longer period as is permitted for the filing of an equivalent
periodic report to the extent an extension thereof has been obtained
under Rule 12b-25 of the General Rules and Regulations under the
Securities Exchange Act of 1934, or any successor rules) after the
end of each of the first three quarters of each fiscal year of the
Borrower, a consolidated balance sheet of the Borrower and its
Subsidiaries as of the end of such quarter and the related
consolidated statements of operations and cash flows for such
quarter and for the portion of the Borrower's fiscal year ended at
the end of such quarter, setting forth in each case in comparative
form the figures for the corresponding quarter and the corresponding
portion of the Borrower's previous fiscal year, all in the form
filed with the Securities and Exchange Commission and certified
(subject to normal year-end adjustments) as
50
to fairness of presentation, generally accepted accounting
principles and consistency by the chief financial officer or the
chief accounting officer or the treasurer of the Borrower;
(iii) within 90 days after the end of each fiscal year of the
Borrower and within 45 days after the end of each of the first three
quarters of each fiscal year of the Borrower (or, in each case, such
longer period as is permitted for the filing of an equivalent
underlying periodic report to the extent an extension thereof has
been obtained under Rule 12b-25 of the General Rules and Regulations
under the Securities Exchange Act of 1934, or any successor rules),
a certificate of the chief financial officer or the chief accounting
officer or the treasurer of the Borrower, in substantially the form
of Exhibit J-1 attached hereto, (A) setting forth in reasonable
detail the calculations required to establish whether the Borrower
was in compliance with the requirements of Section 5.03(a) on the
date of the financial statements most recently delivered pursuant to
clause (i) or (ii) above, as applicable, (B) stating whether any
Default exists on the date of such certificate and, if any Default
then exists, setting forth the details thereof and the action which
the Borrower is taking or proposes to take with respect thereto and
(C) as to such Collateral matters as provided for on Exhibit J-1
attached hereto, provided that in the event of any change in GAAP
used in the preparation of such financial statements, the Borrower
shall also provide, if necessary for the determination of compliance
with Section 5.03(a), a statement of reconciliation conforming such
financial statements to GAAP;
(iv) as soon as available and in any event within 90 days (or
such longer period as is permitted for the filing of an equivalent
periodic report to the extent an extension thereof has been obtained
under Rule 12b-25 of the General Rules and Regulations under the
Securities Exchange Act of 1934, or any successor rules) after the
end of each fiscal year of the Parent Guarantor, a consolidated
balance sheet of the Parent Guarantor and its Subsidiaries as of the
end of such fiscal year and the related consolidated statements of
operations and cash flows for such fiscal year, setting forth in
each case in comparative form the figures for the previous fiscal
year, all in the form filed with the Securities and Exchange
Commission accompanied by an opinion of Ernst & Young LLP or other
independent public accountants of nationally recognized standing;
(v) as soon as available and in any event within 45 days (or
such longer period as is permitted for the filing of an equivalent
periodic report to the extent an extension thereof has been obtained
under Rule 12b-25 of the General Rules and Regulations under the
Securities Exchange Act of 1934, or any successor rules) after the
end of each of the first three quarters of each fiscal year of the
Parent Guarantor, a consolidated balance sheet of the Parent
Guarantor and its Subsidiaries as of the end of such quarter and the
related consolidated statements of operations and cash flows for
such quarter and for the portion of the Parent Guarantor's fiscal
year ended at the end of such quarter, setting forth in each case in
comparative form the figures for the corresponding quarter and the
corresponding portion of the Parent Guarantor's previous fiscal
year, all in the
51
form filed with the Securities and Exchange Commission and certified
(subject to normal year-end adjustments) as to fairness of
presentation, generally accepted accounting principles and
consistency by the chief financial officer or the chief accounting
officer or the treasurer of the Parent Guarantor;
(vi) within 90 days after the end of each fiscal year of the
Parent Guarantor and within 45 days after the end of each of the
first three quarters of each fiscal year of the Parent Guarantor
(or, in each case, such longer period as is permitted for the filing
of an equivalent underlying periodic report to the extent an
extension thereof has been obtained under Rule 12b-25 of the General
Rules and Regulations under the Securities Exchange Act of 1934, or
any successor rules), a certificate of the chief financial officer
or the chief accounting officer or the treasurer of the Parent
Guarantor, in substantially the form of Exhibit J-2 hereto, (A)
setting forth in reasonable detail the calculations required to
establish whether the Parent Guarantor was in compliance with the
requirements of Section 5.03(b) on the date of the financial
statements most recently delivered pursuant to clause (iv) or (v)
above, as applicable, and (B) stating whether any Default exists on
the date of such certificate and, if any Default then exists,
setting forth the details thereof and the action which the Parent
Guarantor is taking or proposes to take with respect thereto,
provided that in the event of any change in GAAP used in the
preparation of such financial statements, the Parent Guarantor shall
also provide, if necessary for the determination of compliance with
Section 5.03(b), a statement of reconciliation conforming such
financial statements to GAAP;
(vii) within five Business Days after any Responsible Officer
obtains knowledge of any Default that is not reasonably likely to be
cured within the applicable grace period or of any Event of Default,
if such event or condition is then continuing, a certificate of the
chief financial officer or the chief accounting officer or the
treasurer of the Borrower setting forth the details thereof and the
action which the Borrower is taking or proposes to take with respect
thereto;
(viii) promptly after any Responsible Officer of the Borrower
obtains knowledge thereof, notice of all material actions, suits,
investigations, litigation and proceedings before any court or
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, affecting the Borrower or any
of its Material Subsidiaries of the type described in Section
4.01(f);
(ix) promptly upon the mailing thereof to the shareholders of
the Borrower or the Parent Guarantor generally, copies of all
financial statements, reports and proxy statements so mailed;
(x) promptly after the furnishing thereof, copies of any
notice of default furnished to any holder of Debt securities or
lenders under any bank facility of the Parent Guarantor, the
Borrower or any of the Borrower's Material Subsidiaries in a
principal amount of over $40,000,000.
52
(xi) promptly upon the filing thereof, copies of all
registration statements (other than the exhibits thereto and any
registration statements on Form S-8 or its equivalent) and reports
on Forms 10-K, 10-Q and 8-K (or their equivalents) which the
Borrower or the Parent Guarantor shall have filed with the
Securities and Exchange Commission;
(xii) if and when any member of the ERISA Group (i) gives or
is required to give notice to the PBGC of any "reportable event" (as
defined in Section 4043 of ERISA) with respect to any Plan which
might constitute grounds for a termination of such Plan under Title
IV of ERISA, or knows that the plan administrator of any Plan has
given or is required to give notice of any such reportable event,
promptly, but in no event later than 30 days after the occurrence of
such reportable event, a copy of the notice of such reportable event
given or required to be given to the PBGC; (ii) receives notice of
complete or partial withdrawal liability under Title IV of ERISA or
notice that any Multiemployer Plan is in reorganization, is
insolvent or has been terminated, promptly upon receipt of such
notice, a copy of such notice; (iii) receives notice from the PBGC
under Title IV of ERISA of an intent to terminate, impose liability
(other than for premiums under Section 4007 of ERISA) in respect of,
or appoint a trustee to administer, any Plan, promptly upon receipt
of such notice, a copy of such notice; (iv) applies for a waiver of
the minimum funding standard under Section 412 of the Internal
Revenue Code, promptly upon the filing of such application, a copy
of such application; (v) gives notice of intent to terminate any
Plan under Section 4041(c) of ERISA, promptly on giving such notice,
a copy of such notice and other information filed with the PBGC;
(vi) gives notice of withdrawal from any Plan pursuant to Section
4063 of ERISA, promptly upon the giving of such notice, a copy of
such notice; or (vii) fails to make any payment or contribution to
any Plan or Multiemployer Plan or in respect of any Benefit
Arrangement or makes any amendment to any Plan or Benefit
Arrangement which has resulted or could result in the imposition of
a Lien or the posting of a bond or other security, promptly upon the
occurrence of such failure, a certificate of the chief financial
officer or the chief accounting officer of the Borrower setting
forth details as to such occurrence and action, if any, which the
Borrower or applicable member of the ERISA Group is required or
proposes to take;
(xiii) promptly after any Responsible Officer of the Borrower
obtains knowledge thereof, notice of any Environmental Action
against or of any noncompliance by the Borrower or any of its
Material Subsidiaries with any Environmental Law or Environmental
Permit that could reasonably be expected to have a Material Adverse
Effect;
(xiv) promptly after any Responsible Officer of the Borrower
obtains knowledge thereof, notice of any taxes, assessments and
governmental charges or liens imposed upon the Borrower or any of
its Material Subsidiaries or any of their properties, or any action,
suit, investigation or proceeding in respect thereof, which, either
individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect;
53
(xv) promptly after any Responsible Officer of the Borrower
obtains knowledge thereof, any announcement by Moody's or S&P of any
change in the Senior Secured Debt Rating; and
(xvi) from time to time such additional historical information
regarding the financial position or business of the Parent
Guarantor, the Borrower and the Borrower's Material Subsidiaries as
the Agent, at the request of any Lender, may reasonably request;
provided that requests for non-public information shall be limited
to items of significant importance to the requesting Lender's credit
monitoring process and that any Lender receiving non-public
materials furnished pursuant to this clause shall be deemed
Confidential Information for purposes of this Agreement.
Reports required to be delivered pursuant to clauses (i), (ii),
(iv), (v) and (xi) above shall be deemed to have been delivered on the
date on which such report is posted on the SEC's website at www.sec.gov,
and such posting shall be deemed to satisfy the reporting requirements of
clauses (i), (ii), (iv), (v) and (xi) above; provided that the Borrower or
the Parent Guarantor, as the case may be, shall deliver copies of the
reports referred to in clauses (i), (ii), (iv), (v) and (xi) above to the
Agent for distribution to any Lender in accordance with Section 9.02(b)
(it being understood that to the extent Section 9.02(b) shall not be
applicable, paper copies of such reports shall be delivered to the Agent
for distribution to any Lender who requests such paper copies until
written notice to cease delivering paper copies is given by the Agent or
such Lender); provided further that in every instance the Borrower or the
Parent Guarantor, as the case may be, shall provide paper copies of the
items described in clauses (iii), (vi), (vii), (viii), (ix), (x), (xii),
(xiii), (xiv), (xv) and (xvi) above to the Agent.
(b) Maintenance of Existence. (i) Preserve, renew and keep in full
force and effect its corporate existence and (ii) maintain, and cause each
of its Material Subsidiaries to maintain, permits, rights, privileges,
licenses, franchises and approvals, except where the failure to do so
could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect; provided that nothing in this Section
5.01(b) shall prohibit consolidations, mergers or sales of assets which
comply with Section 5.02(b).
(c) Compliance with Laws. Comply, and cause each of its Material
Subsidiaries to comply, in all material respects, with all applicable laws
(including, without limitation, ERISA and Environmental Laws), rules,
regulations and orders which are of material importance to the conduct of
the business, or the ownership of the property, of the Borrower and its
Material Subsidiaries, except where the necessity of compliance therewith
is contested in good faith by appropriate proceedings.
(d) Insurance. Maintain, and cause each of its Material Subsidiaries
to maintain, insurance (including but not limited to liability insurance)
with responsible and reputable insurers in such amounts and covering such
risks as is usually carried by companies engaged in a similar business and
owning similar properties and such other insurance as is required by law
(including, without limitation, war risk and terrorism insurance on all
its property and the property of its Material Subsidiaries in an amount
54
that is no less than the maximum amount available to the Borrower and the
Parent Guarantor from the DOT under the Federal Aviation Insurance
Program, as amended by the Air Transportation Stabilization Act and
Regulations and further amended by the Homeland Security Act of 2002, and
as further amended by the Vision-100 Century of Aviation Reauthorization
Act, and as extended by Congress in November 2004).
(e) Use of Proceeds. Use the proceeds of the Advances solely for the
purposes set forth in Section 2.15.
(f) Payment of Taxes, Etc. Pay and discharge, and cause each of its
Material Subsidiaries to pay and discharge, before the same shall become
delinquent, (i) all taxes, governmental assessments and governmental
charges or levies imposed upon it or upon its property and (ii) all lawful
claims in respect of taxes, governmental assessments, governmental charges
and levies that, if unpaid, might by law become a Lien upon its property;
provided, however, that neither the Borrower nor any of its Material
Subsidiaries shall be required to pay or discharge any such tax,
assessment, charge, levy or claim that is being contested in good faith
and by proper proceedings and as to which appropriate reserves are being
maintained, unless and until any Lien resulting therefrom attaches to its
property and becomes enforceable against its other creditors and any such
Liens shall attach and become enforceable in respect of any such taxes,
assessments, charges, levies and claims, which either individually or in
the aggregate exceed $25,000,000.
(g) Inspection of Aircraft. Permit the Agent or any of the Lenders,
or any agent or representative thereof, to exercise its inspection rights
in accordance with Section 5.03 of the Aircraft Security Agreement.
(h) Keeping of Books. Keep, and cause each of its Material
Subsidiaries to keep, proper books of record and account, in which full
and correct entries shall be made of all financial transactions and the
assets and business of the Borrower and each such Subsidiary in accordance
with generally accepted accounting principles in effect from time to time.
(i) Maintenance of Equipment. Maintain, and cause each of its
Material Subsidiaries to maintain, substantially all of its equipment
(except surplus or obsolete equipment) in good operating order, except
where the failure to keep such equipment in good operating order would not
have a material adverse effect on the financial conditions or results of
operations of the Borrower.
(j) Transactions with Affiliates. Conduct all transactions with any
of its Affiliates on terms that are fair and reasonable and no less
favorable to the Borrower than it would obtain in a comparable
arm's-length transaction with a Person not an Affiliate. The following
transactions shall be deemed to comply with this Section 5.01(j): (i) any
Existing Capacity Agreement (or any amendments, renewals or replacements
thereof to the extent that any such Existing Capacity Agreement, as so
amended, renewed or replaced, shall be on terms (A) approved by the
Borrower's management upon a good faith determination that such
amendments, renewals or replacements are consistent with
55
industry norms at the time made, (B) that are reasonably consistent with
past practice and that, taken as a whole, are not materially less
favorable to the Borrower than such Existing Capacity Agreement, or (C)
that, taken as a whole together with other benefits received at the time
from the other party thereto, are not materially less favorable to the
Borrower than such Existing Capacity Agreement); (ii) any transaction or
arrangement (other than Existing Capacity Agreements or any amendments,
renewals or replacements thereof) between or among any of the Parent
Guarantor and any of its direct or indirect subsidiaries (including,
without limitation, payment of dividends, guarantees and making of
inter-company loans); (iii) the entering into, making payments pursuant to
and otherwise performing indemnification and contribution obligations in
favor of any Person who is or becomes a director, officer, agent or
employee of the Parent Guarantor or any of its direct or indirect
subsidiaries, in respect of liabilities (A) arising out of the fact that
any indemnitee was or is a director, officer, agent or employee of the
Parent Guarantor or any of its direct or indirect subsidiaries, or is or
was serving at the request of any such corporation, as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or enterprise or (B) to the fullest extent permitted by
applicable law, arising out of any breach or alleged breach by such
indemnitee of his or her fiduciary duty as a director or officer of the
Parent Guarantor or any of its direct or indirect subsidiaries; (iv) the
Borrower and its Subsidiaries may enter into, and may make payments under,
employment agreements, employee benefits plans, stock option plans,
indemnification provisions and other similar compensatory arrangements
with officers, employees and directors of the Parent Guarantor and its
direct or indirect subsidiaries in the ordinary course of business; (v)
performance by the Borrower or any of its Subsidiaries under any customary
or commercially reasonable tax sharing agreements or arrangements; (vi)
ordinary course transactions approved by the Board of Directors of
Borrower or by Borrower's management that are reasonably consistent with
past practice and reasonable modifications or extensions thereof; (vii)
transactions with or involving any special purpose entities, variable
interest entities and other similar entities formed in connection with any
bona fide financing transaction on terms necessary or appropriate or
customary for the relevant type of transaction (such entities, "FINANCING
VEHICLES") and (viii) any transaction as to which the Borrower has
obtained an opinion from a financial advisor or appraiser that the
transaction is fair to the Borrower from a financial point of view.
(k) Performance of Material Contracts. Perform and observe all the
terms and provisions of each Material Contract to be performed or observed
by it, except, in any case, where the failure to do so, either
individually or in the aggregate, could not reasonably be expected to have
a Material Adverse Effect.
(l) Pari Passu. Ensure that all claims of the Lenders or the Agent
against the Borrower will be at all times at least pari passu to the
claims of other unsecured creditors of the Borrower (except to the extent
provided under bankruptcy, insolvency and other similar laws of general
applications relating to or affecting the enforcement of creditors'
rights).
(m) Appraisals. (i) Cause the Appraiser to conduct an appraisal of
the then current Aircraft Value of the Aircraft and to deliver an
Appraisal Report in respect
56
thereof to the Lenders and the Borrower (x) by no later than 45 days prior
to each 6-month anniversary of the Effective Date (it being understood
that such appraisal shall not have been conducted earlier than 90 days
prior to such 6-month anniversary) or (y) promptly at the request of the
Agent, upon the occurrence or continuation of an Event of Default (but not
more frequently than every 90 days following the occurrence and during the
continuance of any Event of Default); and (ii) cause the Appraiser to
conduct an appraisal of the then current fair market value of the Narita
Collateral and to deliver an Appraisal Report in respect thereof to the
Lenders, (x) by no later than 45 days prior to each 12-month anniversary
of the Effective Date (it being understood that such appraisal shall not
have been conducted earlier than 90 days prior to such 12-month
anniversary) or (y) promptly at the request of the Agent, upon the
occurrence or continuation of an Event of Default (but not more frequently
than every 90 days following the occurrence and during the continuance of
any Event of Default).
(n) Security.
(i) Collateral Coverage. Cause, subject to the provisions set
forth in this Section 5.01(n), the Aggregate Collateral Value, as
determined pursuant to the Appraisal Report most recently delivered
to the Lenders pursuant to Section 5.01(m)(i), to be equal to or
greater than the Required Collateral Amount.
(ii) Delivery of Additional Aircraft Collateral. If the
Aggregate Collateral Value determined in accordance with the
Appraisal Report most recently delivered to the Lenders and the
Borrower pursuant to Section 5.01(m)(i) is less than the Required
Collateral Amount, the Borrower shall, within 45 days of the
delivery to it of such Appraisal Report pursuant to Section
5.01(m)(i), (A) designate by a supplement to Schedule 1 to the
Aircraft Security Agreement delivered to each Lender additional
Unencumbered Stage 3 Aircraft with an Aircraft Value (as determined
by the Appraiser in an Appraisal Report with respect thereto
delivered prior to the required time of delivery of such
supplement), and/or deposit cash and/or Permitted Investments into
the Cash Collateral Account, such that, after giving effect to such
supplement and/or such deposit, the Aggregate Collateral Value is
not less than the Required Collateral Amount and (B) if additional
Unencumbered Stage 3 Aircraft are being pledged, (i) execute and
deliver to the Agent the Security Agreement Supplements with respect
to all Aircraft then being pledged and assigned and (ii) within 10
days after receiving the executed Security Agreement Supplement back
from the Agent, take all action necessary or desirable to cause the
Liens created thereby to be perfected and protected against all
creditors and transferees of the Borrower under applicable law
(including without limitation the applicable rules and regulations
promulgated under the Federal Aviation Act) subject to no prior
Liens (other than Permitted Liens) (such perfected and protected
interest, the "SECURITY ARRANGEMENTS") and furnish Security Opinions
with respect to all of such Aircraft and any other collateral. If
the Borrower fails to make any such Security Arrangements within the
45-day period set forth above, the Borrower shall prepay any
Advances and, to the extent such Advances are Revolving Credit
Advances, reduce any corresponding Revolving Credit Commitments in
accordance with the
57
terms hereof, so that, after giving effect to such prepayment of
Advances, the Aggregate Collateral Value determined in accordance
with the Appraisal Report most recently delivered to the Lenders
pursuant to Section 5.01(m)(i), shall be equal to or greater than
the Required Collateral Amount.
(iii) Substitution and Release of Aircraft Collateral. (A) The
Borrower may, at any time and from time to time, provided no Default
under Section 6.01(a) or Section 6.01(f) and no Event of Default
shall have occurred and be continuing, substitute (x) one or more
Replacement Aircraft or Replacement Engines for one or more Aircraft
or Engines, respectively, designated by the Borrower, (y) one or
more Replacement Aircraft or Replacement Engines for cash and/or
Permitted Investments or (z) cash and/or Permitted Investments for
one or more Aircraft or Engines designated by the Borrower. In the
event that the Borrower desires to effect any such substitution, the
Borrower shall deliver an amendment to Schedule 1 to the Aircraft
Security Agreement to all of the Lenders designating any Replacement
Aircraft or Replacement Engine to be added to such Schedule,
specifying any Aircraft or Engine to be removed from such Schedule
and specifying the amount of any cash and/or Permitted Investments
to be added to, or cash and/or Permitted Investments to be removed
from, the Cash Collateral Account; provided that (I) such amendment
is accompanied by (A) an Appraisal Report of the Appraiser as to the
Aircraft Value of the Replacement Aircraft or Replacement Engines,
as the case may be, to be delivered in substitution and (B) an
executed Security Agreement Supplement with respect to any such
Replacement Aircraft or Replacement Engine, and evidence
satisfactory to the Agent that such Replacement Aircraft or
Replacement Engine has been made subject to the Security
Arrangements together with Security Opinions with respect to such
Replacement Aircraft or Replacement Engine or, if the collateral
delivered in substitution is cash and/or Permitted Investments,
deposit of such cash and/or Permitted Investments with the
applicable Cash Collateral Value in the Cash Collateral Account and
(II) the Aircraft Value of the Replacement Aircraft or Replacement
Engine, as the case may be, to be delivered in substitution (as set
forth in the Appraisal Report delivered at such time), together with
the Cash Collateral Value of any cash and/or Permitted Investments
deposited in the Cash Collateral Account, equals or exceeds the
Aircraft Value or Cash Collateral Value, as the case may be, of the
Aircraft, Engines or cash and/or Permitted Investments being
replaced.
(B) At any time when the Aggregate Collateral Value,
determined in accordance with the Appraisal Report most recently
delivered to the Lenders pursuant to Section 5.01(m)(i) exceeds the
Required Collateral Amount, provided that no Default under Section
6.01(a) or Section 6.01(f) and no Event of Default shall then have
occurred and be continuing, the Borrower may deliver notice to the
Agent (which shall promptly send copies thereof to each Lender)
removing any Aircraft or Engine from Schedule 1 to the Aircraft
Security Agreement and requesting the release of Aircraft, Engines
or cash and/or Permitted Investments from the Lien of the Aircraft
Security Agreement, provided that the Aggregate
58
Collateral Value after giving effect to such removal or release
shall not be less than the Required Collateral Amount. Such notice
shall identify the Aircraft, Engines or cash and/or Permitted
Investments in the Cash Collateral Account to be released.
(iv) Upon compliance with the foregoing provisions the Agent
shall, if the Security Arrangements have been effected, release the
item of collateral being replaced or released and any related
Warranty Rights (as defined in the Aircraft Security Agreement) in
accordance with the provisions of the Aircraft Security Agreement.
(v) Event of Loss. (A) Upon the occurrence of an Event of Loss
with respect to any Airframe, the Borrower shall forthwith give the
Agent notice of such Event of Loss and, within 45 days thereafter:
(x) designate by a supplement to Schedule 1 to the Aircraft Security
Agreement delivered to each Lender a Replacement Airframe (together
with the same number of Replacement Engines as the Engines relating
to such Airframe at the time such Event of Loss occurred unless such
Engines did not suffer such Event of Loss and are suitable for use
on such Replacement Airframe), such Replacement Airframe and
Replacement Engines (if any) to be free and clear of all Liens
(other than Permitted Liens) and/or (y) deposit cash and/or
Permitted Investments in the Cash Collateral Account in replacement
for any Aircraft of which such Airframe was a part, in each case
accompanied by (A) an Appraisal Report of the Appraiser as to the
Aircraft Value of the Replacement Airframe and Replacement Engines
(if any) delivered in replacement, such value, together with the
Cash Collateral Value of any cash and/or Permitted Investments
deposited in the Cash Collateral Account pursuant to clause (y)
above, to be at least equal to the Aircraft Value of the Airframe
and Engines, if any, so replaced and (B) an executed Security
Agreement Supplement with respect to such Replacement Airframe and
Replacement Engines (if any), and evidence satisfactory to the Agent
that any such Replacement Airframes and/or Replacement Engines have
been made subject to the Security Arrangements together with
Security Opinions with respect to any such Replacement Aircraft or
Replacement Engines.
(B) Upon the occurrence of an Event of Loss with respect to an
Engine under circumstances in which there has not occurred an Event
of Loss with respect to any Airframe, the Borrower shall forthwith
give the Agent notice of such Event of Loss and, within 45 days
thereafter: (x) designate by a supplement to Schedule 1 to the
Aircraft Security Agreement delivered to each Lender a Replacement
Engine, such Replacement Engine to be free and clear of all Liens
(other than Permitted Liens) and to have an Aircraft Value (as set
forth in an Appraisal Report of the Appraiser delivered to the
Lenders at such time) at least equal to the Aircraft Value of the
Engine so replaced and (y) deliver a Security Agreement Supplement
with respect to such Replacement Engine, and otherwise cause such
Replacement Engine to become subject to the Security Arrangements
and Security Opinions to be delivered with respect thereto.
59
(C) Upon compliance with the foregoing provisions, the Agent
shall release the item of collateral being replaced and any related
Warranty Rights (as defined in the Aircraft Security Agreement) in
accordance with the provisions of the Aircraft Security Agreement.
(vi) Costs of Compliance. The Borrower shall bear all costs
and expenses of compliance with Section 5.01(m) and this Section
5.01(n).
(o) Further Assurances. Promptly upon request by the Agent, or any
Lender through the Agent, do, execute, acknowledge, deliver, record,
re-record, file, re-file, register and re-register any and all such
further acts, deeds, conveyances, pledge agreements, assignments,
financing statements and continuations thereof, termination statements,
notices of assignment, transfers, certificates, assurances and other
instruments as the Agent, or any Lender through the Agent, may reasonably
require from time to time in order to (A) to the fullest extent permitted
by applicable law, subject any Loan Party's Collateral to the Liens now or
hereafter intended to be covered by any of the Collateral Documents, (B)
perfect and maintain the validity, effectiveness and priority of any of
the Collateral Documents and any of the Liens intended to be created
thereunder and (C) assure, convey, grant, assign, transfer, preserve,
protect and confirm more effectively unto the Secured Parties the rights
granted or now or hereafter intended to be granted to the Secured Parties
under any Financing Document or under any other instrument executed in
connection with any Financing Document to which any Loan Party is or is to
be a party, and cause each of its Material Subsidiaries to do so.
(p) FAA and DOT Matters; Citizenship. (i) Maintain at all times its
status at the DOT as an "air carrier" within the meaning of Section
40102(a)(2) of Title 49, and hold a certificate under Section 41102(a)(1)
of Title 49; (ii) at all times hereunder be a United States Citizen; (iii)
maintain at all times its status at the FAA as an air carrier and hold an
air carrier operating certificate and other operating authorizations
issued by the FAA pursuant to 14 C.F.R. Sections 119 and 121 as currently
in effect or as may be amended or recodified from time to time; and (iv)
possess and maintain all necessary certificates, exemptions, franchises,
licenses, permits, designations, rights, concessions, authorizations,
frequencies and consents which are material to the operation of the Slots,
the Narita Routes and the Narita Slots flown by it and the conduct of its
business and operations as currently conducted except in any case
described in this clause (iv), where the failure to do so, either
individually or in the aggregate, could not reasonably be expected to have
a Material Adverse Effect (provided that nothing in this clause (iv) shall
prohibit transactions that otherwise comply with the terms of the
Collateral Documents).
SECTION 5.02. Negative Covenants. So long as any principal, interest
and premiums related to any Advances and any fees hereunder shall remain unpaid
or any Lender shall have any Commitment hereunder, the Borrower will not, at any
time:
(a) Liens, Etc. Create, incur or assume any Lien or suffer to exist
(for a period of 30 days after obtaining knowledge thereof) any Lien on or
with respect to any AA Collateral whether now owned or hereafter acquired,
or suffer to exist (for a period of 30 days after obtaining knowledge
thereof) or file, under the Uniform Commercial Code
60
of any jurisdiction, a financing statement that names the Borrower as
debtor in respect of any AA Collateral, or suffer to exist (for a period
of 30 days after obtaining knowledge thereof) or sign, any security
agreement authorizing any secured party thereunder to file such financing
statement, except:
(i) Liens created under the Financing Documents; and
(ii) Permitted Liens.
(b) Consolidation, Merger, Sale of Assets, Etc. Consolidate with or
merge with or into any Person, or convey, transfer or lease substantially
all of its assets as an entirety to any Person, unless the following
conditions are satisfied:
(i) except in the case of a merger in which the Borrower is
the surviving corporation, the entity formed by such consolidation
or into which the Borrower is merged, or the Person that acquires by
conveyance, transfer or lease substantially all of the assets of the
Borrower as an entirety, shall be a corporation organized and
existing under the laws of the United States of America or any State
thereof or the District of Columbia, shall be a United States
Citizen, and shall execute and deliver to the Agent, an agreement,
in form and substance satisfactory to the Agent, containing an
assumption by such successor corporation of the due and punctual
performance and observance of each obligation, covenant and
condition of the Borrower under the Financing Documents;
(ii) immediately after and after giving effect to such
transaction, no Default shall have occurred and be continuing, and
the Net Worth of the corporation formed by such consolidation or
into which the Borrower is merged, or of the Person that acquired by
conveyance, transfer or lease substantially all of the assets of the
Borrower as an entirety, shall not be less than 75% of the Net Worth
of the Borrower prior to such consolidation, merger, conveyance,
transfer or lease; and
(iii) except in the case of the merger in which the Borrower
is the surviving corporation, the Borrower shall have delivered to
the Agent a certificate signed by the President, a Senior Vice
President or a Vice President of the Borrower, and an opinion of
counsel (which may be the Borrower's General Counsel), each stating
that such consolidation, merger, conveyance, transfer or lease and
such assumption agreement comply with this Section, and that all
conditions precedent herein provided for relating to such
transaction have been complied with; provided, however, that any
such opinion of counsel need not opine as to the matters set forth
in clause (ii) of this Section.
Upon any consolidation or merger, or any conveyance, transfer or lease of
substantially all of the assets of the Borrower as an entirety in
accordance with this Section, the successor corporation formed by such
consolidation or into which the Borrower is merged, or to which such
conveyance, transfer or lease is made, shall succeed to, and be
substituted for, and may exercise every right and power of, the Borrower
under the
61
Financing Documents with the same effect as if such successor corporation
had been named as the Borrower herein. No such conveyance, transfer or
lease of substantially all of the assets of the Borrower as an entirety
shall have the effect of releasing the Borrower or any successor
corporation that shall theretofore have become such in the manner
prescribed in this Section from its liability hereunder.
(c) Sales, Etc., of AA Collateral. Sell, lease, transfer or
otherwise dispose of, any AA Collateral, or grant any option or other
right to purchase, lease or otherwise acquire any AA Collateral, except:
(i) (x) a sale of any AA Collateral (other than the Narita
Collateral) and (y) any other transfer or disposition (including any
transfer of possession, asset swaps, exchanges, interchanges or
pooling of assets) or lease of the AA Collateral to the extent
permitted by the Collateral Documents and Section 5.01(n) hereof,
provided that, in any case, before and after giving effect to any
such sale, lease, transfer or other disposition (A) no Event of
Default shall have occurred and be continuing, (B) in the case of
subclause (x) above, the Aggregate Collateral Value determined in
accordance with the Appraisal Report most recently delivered
pursuant to Section 5.01(m)(i) shall be equal to or greater than the
Required Collateral Amount and (C) the Borrower shall be in
compliance with the provisions of Section 5.01(n)(ii);
(ii) in a transaction authorized by Section 5.02(b); and
(iii) as otherwise consented to by the Agent (such consent not
to be unreasonably withheld).
(d) Accounting Changes. Make or permit, or permit any of its
Material Subsidiaries to make or permit, any change in (i) accounting
policies or reporting practices, except as required or permitted by
generally accepted accounting principles, or (ii) Fiscal Year.
(e) Partnerships, Etc. Become a general partner in any limited
partnership, or permit any of its Material Subsidiaries to do so, except
(i) to the extent the Borrower or any of such Subsidiaries shall have
become a general partner in any such limited partnership prior to the
Effective Date or (ii) through a special purpose entity.
(f) Payment Restrictions Affecting Subsidiaries. Directly or
indirectly, enter into or suffer to exist, or permit any of its Material
Subsidiaries to enter into or suffer to exist, any agreement or
arrangement limiting the ability of any of its Material Subsidiaries
(other than any Financing Vehicles) to declare or pay dividends or other
distributions in respect of its Equity Interests or repay or prepay any
Debt owed to, make loans or advances to, or otherwise transfer assets to
or invest in, the Borrower or any Material Subsidiary of the Borrower
(whether through a covenant restricting dividends, loans, asset transfers
or investments, a financial covenant or otherwise), except (i) the
Financing Documents, (ii) any agreement in effect at the time such
Material Subsidiary becomes a Subsidiary of the Borrower, so long as such
agreement was not entered into
62
solely in contemplation of such Person becoming a Subsidiary of the
Borrower, (iii) applicable law (including regulatory requirements), (iv)
customary provisions restricting subletting or assignment of any lease
governing a leasehold interest of the Borrower or a Material Subsidiary of
the Borrower, (v) customary provisions restricting assignment of any
licensing agreement entered into by the Borrower or a Material Subsidiary
of the Borrower in the ordinary course of business, (vi) customary
provisions restricting the transfer of assets (A) subject to Liens or (B)
pending disposition, (vii) provisions in charters, bylaws, stockholders
agreements, partnership agreements, joint venture agreements, limited
liability company agreements and other similar agreements and (viii)
provisions in financing agreements customary for transactions of a similar
nature with counterparties that are similarly situated with the applicable
Material Subsidiary and constitute a similar credit.
SECTION 5.03. Financial Covenants. (a) Liquidity. So long as any
principal, interest and premiums related to any Advances and any fees hereunder
shall remain unpaid or any Lender shall have any Commitment hereunder, the
Borrower will maintain at all times, for the periods indicated below, an amount
of liquidity consisting of (i) unencumbered cash, (ii) unencumbered Short Term
Investments and (iii) amounts available for drawing under committed revolving
credit facilities which have a final maturity of at least 12 months after the
date of determination, of not less than the amounts specified below for such
periods:
Period Ending Liquidity
------------- --------------
December 31, 2004 $ 1.5 billion
March 31, 2005 $ 1.5 billion
June 30, 2005 $ 1.5 billion
September 30, 2005 $ 1.5 billion
December 31, 2005 (and each fiscal $ 1.25 billion
quarter thereafter)
(b) Cash Flow Coverage. So long as any principal, interest and
premiums related to any Advances and any fees hereunder shall remain unpaid or
any Lender shall have any Commitment hereunder, the Parent Guarantor will
maintain, for each period indicated below, a Cash Flow Coverage Ratio for any
period of four consecutive fiscal quarters of the Parent Guarantor most recently
ended, of not less than the amount specified below for such period:
Cash Flow
Coverage
Period Ending Ratio
- ------------- ---------
December 31, 2004 0.90:1.00
March 31, 2005 0.85:1.00
June 30, 2005 0.85:1.00
September 30, 2005 0.90:1.00
December 31, 2005 1.10:1.00
March 31, 2006 1.20:1.00
June 30, 2006 1.25:1.00
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September 30, 2006 1.30:1.00
December 31, 2006 1.30:1.00
March 31, 2007 1.35:1.00
June 30, 2007 1.40:1.00
September 30, 2007 1.40:1.00
December 31, 2007 1.40:1.00
March 31, 2008 (and each fiscal quarter 1.50:1.00
thereafter)
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default. If any of the following events
("EVENTS OF DEFAULT") shall occur and be continuing:
(a) (i) the Borrower shall fail to pay any principal of any Advance
within one Business Day after the same becomes due and payable or (ii) the
Borrower shall fail to pay any interest on any Advance, or any Loan Party
shall fail to make any other payment under any Financing Document, in each
case under this clause (ii) within five Business Days after the same shall
become due and payable; or
(b) any representation or warranty made or deemed made herein by any
Loan Party or under or in connection with any Financing Document, shall
prove to have been false or misleading as of the time made or deemed made
or furnished in any material respect; or
(c) the Borrower shall default in the performance of any covenant
contained in Section 2.15, 5.01(a)(i), 5.01(a)(ii), 5.01(a)(iii),
5.01(a)(iv), 5.01(a)(v), 5.01(a)(vi), 5.01(a)(vii), 5.01(b)(i), 5.01(m),
5.01(n), 5.02(a), 5.02(b), 5.02(c) or 5.03; provided that no failure to
deliver Appraisal Reports pursuant to Section 5.01(m) shall constitute an
Event of Default hereunder for a period of 5 Business Days after the same
shall become due if the Appraiser in respect of such Appraisal Reports
ceases or is unable prior to such time to provide such Appraisal Reports;
or
(d) any Loan Party shall fail to perform or observe any other term,
covenant or agreement contained in any Financing Document (other than as
specified elsewhere in this Section 6.01) on its part to be performed or
observed if such failure shall remain unremedied for 30 days after the
earlier of the date on which (i) any Responsible Officer of a Loan Party
becomes aware of such failure or (ii) written notice thereof shall have
been given to the Borrower by the Agent or any Lender; or
(e) the Borrower or any of its Subsidiaries or the Parent Guarantor
shall fail to pay any principal of, premium or interest on any Debt of the
Borrower, such Subsidiary or the Parent Guarantor (as the case may be)
that is outstanding in a principal amount (or, in the case of any Hedge
Agreement, an Agreement Value) of at least $40,000,000 either individually
or in the aggregate for all of the Borrower, such Subsidiaries and the
Parent
64
Guarantor (but excluding Debt outstanding hereunder), when the same
becomes due and payable (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise), and such failure shall
continue after the applicable grace period, if any, specified in the
agreement or instrument relating to such Debt; or by virtue of (i)
non-compliance by the Borrower, any of its Subsidiaries or the Parent
Guarantor with any of its obligations under documents, agreements or
instruments in respect of such Debt or (ii) the occurrence of a change of
control (or similar event) in respect of the Borrower or the Parent
Guarantor, any other event shall occur or condition shall exist under any
agreement or instrument relating to any such Debt and shall continue after
the applicable grace period, if any, specified in such agreement or
instrument, if the effect of such event or condition is to accelerate, or
to permit the acceleration of, the maturity of such Debt or otherwise to
cause, or to permit the holder thereof to cause, such Debt to mature; or
by virtue of (i) non-compliance by the Borrower, any of its Subsidiaries
or the Parent Guarantor with any of its obligations under documents,
agreements or instruments in respect of such Debt or (ii) the occurrence
of a change of control (or similar event) in respect of the Borrower or
the Parent Guarantor, any such Debt shall be declared to be due and
payable or required to be prepaid or redeemed (other than by a regularly
scheduled required prepayment or redemption), purchased or defeased, or an
offer to prepay, redeem, purchase or defease such Debt shall be required
to be made, in each case prior to the stated maturity thereof; or
(f) the Borrower or any of its Material Subsidiaries or the Parent
Guarantor shall generally not pay its debts as such debts become due, or
shall admit in writing its inability to pay its debts generally, or shall
make a general assignment for the benefit of creditors; or any proceeding
shall be instituted by or against the Borrower or any of its Material
Subsidiaries or the Parent Guarantor seeking to adjudicate it a bankrupt
or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its
debts under any law relating to bankruptcy, insolvency or reorganization
or relief of debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee or other similar official for it or for
any substantial part of its property and, in the case of any such
proceeding instituted against it (but not instituted by it) that is being
diligently contested by it in good faith, either such proceeding shall
remain undismissed or unstayed for a period of 30 days or any of the
actions sought in such proceeding (including, without limitation, the
entry of an order for relief against, or the appointment of a receiver,
trustee, custodian or other similar official for, it or any substantial
part of its property) shall occur; or the Borrower or any of its Material
Subsidiaries or the Parent Guarantor shall take any corporate action to
authorize any of the actions set forth above in this subsection (f); or
(g) a judgment or order for the payment of money in excess of
$25,000,000 shall be rendered against the Borrower, any of its
Subsidiaries or the Parent Guarantor and such judgment or order shall
continue unsatisfied and unstayed for a period of 30 days; or
(h) any Financing Document after delivery thereof pursuant to
Section 3.01 or 5.01(n) shall for any reason cease to be valid and binding
on or enforceable in any
65
material respect against any Loan Party party to it, or any such Loan
Party shall so state in writing; or
(i) any Collateral Document or financing statement after delivery
thereof pursuant to Section 3.01 or 5.01(n) shall for any reason (other
than (x) pursuant to the terms thereof or (y) as a result of any action or
failure to act by the Agent in respect of such Collateral Document or
financing statement) cease to create a valid and perfected first priority
lien on and security interest in the Collateral purported to be covered
thereby (subject only to Permitted Liens); or
(j) a Change of Control shall occur; or
(k) any member of the ERISA Group shall fail to pay when due an
amount or amounts aggregating in excess of $25,000,000 which it shall have
become liable to pay under Title IV of ERISA; or notice of intent to
terminate a Material Plan shall be filed under Title IV of ERISA by any
member of the ERISA Group, any plan administrator or any combination of
the foregoing; or the PBGC shall institute proceedings under Title IV of
ERISA to terminate, to impose liability (other than for premiums under
Section 4007 of ERISA) in respect of, or to cause a trustee to be
appointed to administer, any Material Plan; or a condition shall exist
under Section 4042(a)(1), (2) or (3) of ERISA (but not Section 4042(a)(4)
of ERISA) by reason of which the PBGC would be entitled to obtain a decree
adjudicating that any Material Plan must be terminated; or there shall
occur a complete or partial withdrawal from, or a default, within the
meaning of Section 4219(c)(5) of ERISA, with respect to, one or more
Multiemployer Plans which could cause one or more members of the ERISA
Group to incur a current payment obligation in excess of $25,000,000; or
(l) the Borrower shall fail to carry and maintain insurance on or
with respect to the Aircraft in accordance with the provisions of Section
5.06 of the Aircraft Security Agreement; provided that, in the case of
insurance with respect to which cancellation, change or lapse for
nonpayment of premium shall not be effective as to the Agent or any Lender
for 30 days (seven days, or such other period as may from time to time be
customarily obtainable in the industry, in the case of any war risk and
allied perils coverage) after receipt of notice by the Agent or such
Lender of such cancellation, change or lapse, no such failure to carry and
maintain insurance shall constitute an Event of Default until the earlier
of (i) the date such failure shall have continued unremedied for a period
of 20 days (five days in the case of any war risk and allied perils
coverage) after receipt by the Agent or such Lender of the notice of
cancellation, change or lapse referred to in such Section 5.06, or (ii)
the date on which such insurance is not in effect as to the Agent or any
Lender; or
(m) any Loan Party shall operate any Aircraft at a time when public
liability insurance required by Section 5.06(a) of the Aircraft Security
Agreement shall not be in effect; or
(n) the Borrower shall fail to perform any term, covenant or
agreement contained in (x) Article V of the Aircraft Security Agreement
(other than
66
Sections 5.02(b), 5.03, 5.05(a), 5.05(b), 5.06(a), 5.06(b), 5.06(c),
5.06(d) and 5.08 thereof), (y) Article IX of the Aircraft Security
Agreement or (z) the SGR Security Agreement (other than Section 12
thereof) if such failure shall remain unremedied for 30 days after the
earlier of the date on which (i) any Responsible Officer of the Borrower
becomes aware of such failure or (ii) written notice thereof shall have
been given to the Borrower by the Agent or any Lender; provided that if
such failure is capable of being remedied, no such failure shall
constitute an Event of Default hereunder for a period of 90 days after the
earlier of any Responsible Officer becoming aware of any such failure or
such written notice so long as the Borrower is diligently proceeding to
remedy such failure;
then, and in any such event, the Agent (i) shall at the request, or may with the
consent, of the Required Lenders, by notice to the Borrower, terminate the
Commitments, whereupon the same shall forthwith terminate, and (ii) shall at the
request, or may with the consent, of the Required Lenders, by notice to the
Borrower, declare the Advances, all interest thereon and all other amounts
payable under this Agreement and the other Financing Documents to be forthwith
due and payable, whereupon the Advances, all such interest and all such amounts
shall become and be forthwith due and payable, without presentment, demand,
protest or further notice of any kind, all of which are hereby expressly waived
by the Borrower; provided, however, that, in the event of an actual or deemed
entry of an order for relief with respect to the Borrower under the Federal
Bankruptcy Code, (A) the Commitments shall automatically be terminated and (B)
the Advances, all such interest and all such amounts shall automatically become
and be due and payable, without presentment, demand, protest or any notice of
any kind, all of which are hereby expressly waived by the Borrower.
ARTICLE VII
PARENT GUARANTY
SECTION 7.01. Guaranty. (a) The Parent Guarantor hereby absolutely,
unconditionally and irrevocably guarantees the punctual payment when due,
whether at scheduled maturity or on any date of a required prepayment or by
acceleration, demand or otherwise, of all Obligations of the Borrower now or
hereafter existing under or in respect of the Financing Documents (including,
without limitation, any extensions, modifications, substitutions, amendments or
renewals of any or all of the foregoing Obligations), whether direct or
indirect, absolute or contingent, and whether for principal, interest, premiums,
if any, fees, indemnities, contract causes of action, costs, expenses or
otherwise (such Obligations being the "GUARANTEED OBLIGATIONS"), and agrees to
pay any and all expenses (including, without limitation, reasonable fees and
expenses of counsel) incurred by the Agent or any other Secured Party in
enforcing any rights under this Parent Guaranty or any other Financing Document.
Without limiting the generality of the foregoing, the Parent Guarantor's
liability shall extend to all amounts that constitute part of the Guaranteed
Obligations and would be owed by the Borrower to any Secured Party under or in
respect of the Financing Documents but for the fact that they are unenforceable
or not allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving the Borrower.
67
(b) The Parent Guarantor hereby unconditionally and irrevocably
agrees that in the event any payment shall be required to be made to any Secured
Party under this Parent Guaranty or any other guaranty, the Parent Guarantor
will contribute, to the maximum extent permitted by law, such amounts to each
other guarantor so as to maximize the aggregate amount paid to the Secured
Parties under or in respect of the Financing Documents.
SECTION 7.02. Guaranty Absolute. The Parent Guarantor guarantees
that the Guaranteed Obligations will be paid strictly in accordance with the
terms of the Financing Documents, regardless of any law, regulation or order now
or hereafter in effect in any jurisdiction affecting any of such terms or the
rights of any Secured Party with respect thereto. The Obligations of the Parent
Guarantor under or in respect of this Parent Guaranty are independent of the
Guaranteed Obligations or any other Obligations of the Borrower under or in
respect of the Financing Documents, and a separate action or actions may be
brought and prosecuted against the Parent Guarantor to enforce this Parent
Guaranty, irrespective of whether any action is brought against the Borrower or
any other Loan Party or whether the Borrower is joined in any such action or
actions. The liability of the Parent Guarantor under this Parent Guaranty shall
be irrevocable, absolute and unconditional irrespective of, and, to the extent
permitted by law, the Parent Guarantor hereby irrevocably waives any defenses it
may now have or hereafter acquire in any way relating to, any or all of the
following:
(a) any lack of validity or enforceability of any Financing Document
or any agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Guaranteed Obligations or any other
Obligations of the Borrower under or in respect of the Financing
Documents, or any other amendment or waiver of or any consent to departure
from any Financing Document, including, without limitation, any increase
in the Guaranteed Obligations resulting from the extension of additional
credit to the Borrower or any of its Subsidiaries or otherwise;
(c) any taking, exchange, release or non-perfection of any
Collateral or any other collateral, or any taking, release or amendment or
waiver of, or consent to departure from, any other guaranty, for all or
any of the Guaranteed Obligations;
(d) any manner of application of Collateral or any other collateral,
or proceeds thereof, to all or any of the Guaranteed Obligations, or any
manner of sale or other disposition of any Collateral or any other
collateral for all or any of the Guaranteed Obligations or any other
Obligations of the Borrower under the Financing Documents or any other
assets of the Borrower or any of its Subsidiaries;
(e) any change, restructuring or termination of the corporate
structure or existence of the Borrower or any of its Subsidiaries;
(f) any failure of any Secured Party to disclose to any Loan Party
any information relating to the business, condition (financial or
otherwise), operations, performance, properties or prospects of any other
Loan Party now or hereafter known to
68
such Secured Party (the Parent Guarantor waiving any duty on the part of
the Secured Parties to disclose such information);
(g) the failure of any other Person to execute or deliver any other
guaranty or agreement or the release or reduction of liability of any
other guarantor or surety with respect to the Guaranteed Obligations; or
(h) any other circumstance (including, without limitation, any
statute of limitations) or any existence of or reliance on any
representation by any Secured Party that might otherwise constitute a
defense available to, or a discharge of, any Loan Party or any other
guarantor or surety, except to the extent the Guaranteed Obligations and
all other amounts payable under this Parent Guaranty shall have been paid
in full in cash.
This Parent Guaranty shall continue to be effective or be reinstated, as the
case may be, if at any time any payment of any of the Guaranteed Obligations is
rescinded or must otherwise be returned by any Secured Party or any other Person
upon the insolvency, bankruptcy or reorganization of the Borrower or any other
Loan Party or otherwise, all as though such payment had not been made.
SECTION 7.03. Waivers and Acknowledgments. (a) The Parent Guarantor
hereby unconditionally and irrevocably waives promptness, diligence, notice of
acceptance, presentment, demand for performance, notice of nonperformance,
default, acceleration, protest or dishonor and any other notice with respect to
any of the Guaranteed Obligations and this Parent Guaranty and any requirement
that any Secured Party protect, secure, perfect or insure any Lien or any
property subject thereto or exhaust any right or take any action against any
Loan Party or any other Person or any Collateral.
(b) The Parent Guarantor hereby unconditionally and irrevocably
waives any right to revoke this Parent Guaranty and acknowledges that this
Parent Guaranty is continuing in nature and applies to all Guaranteed
Obligations, whether existing now or in the future.
(c) The Parent Guarantor hereby unconditionally and irrevocably
waives (i) any defense arising by reason of any claim or defense based upon an
election of remedies by any Secured Party that in any manner impairs, reduces,
releases or otherwise adversely affects the subrogation, reimbursement,
exoneration, contribution or indemnification rights of the Parent Guarantor or
other rights of the Parent Guarantor to proceed against the Borrower, any other
guarantor or any other Person or any Collateral and (ii) any defense based on
any right of set-off or counterclaim against or in respect of the Obligations of
the Parent Guarantor hereunder.
(d) The Parent Guarantor acknowledges that the Agent may, without
notice to or demand upon the Parent Guarantor and without affecting the
liability of the Parent Guarantor under this Parent Guaranty, foreclose under
any mortgage by nonjudicial sale, and the Parent Guarantor hereby waives any
defense to the recovery by the Agent and the other Secured Parties against the
Parent Guarantor of any deficiency after such nonjudicial sale and any defense
or benefits that may be afforded by applicable law.
(e) The Parent Guarantor hereby unconditionally and irrevocably
waives any duty on the part of any Secured Party to disclose to the Parent
Guarantor any matter, fact or thing
69
relating to the business, condition (financial or otherwise), operations,
performance, properties or prospects of any other Loan Party or any of its
Subsidiaries now or hereafter known by such Secured Party.
(f) The Parent Guarantor acknowledges that it will receive
substantial direct and indirect benefits from the financing arrangements
contemplated by the Financing Documents and that the waivers set forth in
Section 7.02 and this Section 7.03 are knowingly made in contemplation of such
benefits.
SECTION 7.04. Subrogation. The Parent Guarantor hereby
unconditionally and irrevocably agrees not to exercise any rights that it may
now have or hereafter acquire against the Borrower or any other insider
guarantor that arise from the existence, payment, performance or enforcement of
the Parent Guarantor's Obligations under or in respect of this Parent Guaranty
or any other Financing Document, including, without limitation, any right of
subrogation, reimbursement, exoneration, contribution or indemnification and any
right to participate in any claim or remedy of any Secured Party against the
Borrower or any other insider guarantor or any Collateral, whether or not such
claim, remedy or right arises in equity or under contract, statute or common
law, including, without limitation, the right to take or receive from the
Borrower or any other insider guarantor, directly or indirectly, in cash or
other property or by set-off or in any other manner, payment or security on
account of such claim, remedy or right, unless and until all of the Guaranteed
Obligations and all other amounts payable under this Parent Guaranty shall have
been paid in full in cash and the Commitments shall have expired or been
terminated. If any amount shall be paid to the Parent Guarantor in violation of
the immediately preceding sentence at any time prior to the later of (a) the
payment in full in cash of the Guaranteed Obligations and all other amounts
payable under this Parent Guaranty and (b) the Termination Date, such amount
shall be received and held in trust for the benefit of the Secured Parties,
shall be segregated from other property and funds of the Parent Guarantor and
shall forthwith be paid or delivered to the Agent in the same form as so
received (with any necessary endorsement or assignment) to be credited and
applied to the Guaranteed Obligations and all other amounts payable under this
Parent Guaranty, whether matured or unmatured, in accordance with the terms of
the Financing Documents, or to be held as Collateral for any Guaranteed
Obligations or other amounts payable under this Parent Guaranty thereafter
arising. If (i) the Parent Guarantor shall make payment to any Secured Party of
all or any part of the Guaranteed Obligations, (ii) all of the Guaranteed
Obligations and all other amounts payable under this Parent Guaranty shall have
been paid in full in cash and (iii) the Termination Date shall have occurred,
the Secured Parties will, at the Parent Guarantor's request and expense, execute
and deliver to the Parent Guarantor appropriate documents, without recourse and
without representation or warranty, necessary to evidence the transfer by
subrogation to the Parent Guarantor of an interest in the Guaranteed Obligations
resulting from such payment made by the Parent Guarantor pursuant to this Parent
Guaranty.
SECTION 7.05. Continuing Guaranty; Assignments. This Parent Guaranty
is a continuing guaranty and shall (a) remain in full force and effect until the
latest of (i) the payment in full in cash of the Guaranteed Obligations and all
other amounts payable under this Parent Guaranty and (ii) the Termination Date,
(b) be binding upon the Parent Guarantor, its successors and assigns and (c)
inure to the benefit of and be enforceable by the Secured Parties and their
successors, transferees and assigns. Without limiting the generality of clause
(c) of the
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immediately preceding sentence, any Secured Party may assign or otherwise
transfer all or any portion of its rights and obligations under this Agreement
(including, without limitation, all or any portion of its Commitments, the
Advances owing to it and the Note or Notes held by it) to any other Person as
permitted pursuant to Section 9.07, and such other Person shall thereupon become
vested with all the benefits in respect thereof granted to such Secured Party
herein or otherwise, in each case as and to the extent provided in Section 9.07.
The Parent Guarantor shall not have the right to assign its rights hereunder or
any interest herein without the prior written consent of the Secured Parties.
ARTICLE VIII
THE AGENT
SECTION 8.01. Authorization and Action. (a) Each Lender hereby
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers and discretion under this Agreement and the other
Financing Documents as are delegated to the Agent by the terms hereof, together
with such powers and discretion as are reasonably incidental thereto. As to any
matters not expressly provided for by the Financing Documents, the Agent shall
not be required to exercise any discretion or take any action, but shall be
required to act or to refrain from acting (and shall be fully protected in so
acting or refraining from acting) upon the instructions of the Required Lenders,
and such instructions shall be binding upon all Lenders; provided, however, that
the Agent shall not be required to take any action that exposes the Agent to
personal liability or that is contrary to this Agreement or applicable law. The
Agent agrees to give to each Lender prompt notice of each notice given to it by
the Borrower pursuant to the terms of this Agreement.
(a) In furtherance of the foregoing, each Lender hereby appoints and
authorizes the Agent to act as the agent of such Lender for purposes of
acquiring, holding and enforcing any and all Liens on Collateral granted by any
of the Loan Parties to secure any of the Secured Obligations, together with such
powers and discretion as are reasonably incidental thereto. In this connection,
the Agent (and any Supplemental Agents appointed by the Agent pursuant to
Section 8.01(c) for purposes of holding or enforcing any Lien on the Collateral
(or any portion thereof) granted under the Collateral Documents, or for
exercising any rights or remedies thereunder at the direction of the Agent),
shall be entitled to the benefits of this Article VIII (including, without
limitation, Section 8.05 as though such Supplemental Agents were an "Agent"
under the Financing Documents) as if set forth in full herein with respect
thereto.
(b) The Agent may execute any of its duties under this Agreement or
any other Financing Document (including for purposes of holding or enforcing any
Lien on the Collateral (or any portion thereof) granted under the Collateral
Documents or of exercising any rights and remedies thereunder at the direction
of the Agent) by or through agents, employees or attorneys-in-fact and shall be
entitled to advice of counsel and other consultants or experts concerning all
matters pertaining to such duties. The Agent may also from time to time, when
the Agent deems it to be necessary or desirable, appoint one or more trustees,
co-trustees, collateral co-agents, collateral subagents or attorneys-in-fact
(each, a "SUPPLEMENTAL AGENT") with respect to all or any part of the
Collateral; provided, however, that no such Supplemental Agent shall be
authorized to take any action with respect to any Collateral unless and except
to
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the extent expressly authorized in writing by the Agent. Should any instrument
in writing from the Borrower or any other Loan Party be required by any
Supplemental Agent so appointed by the Agent to more fully or certainly vest in
and confirm to such Supplemental Agent such rights, powers, privileges and
duties, the Borrower shall, or shall cause such Loan Party to, execute,
acknowledge and deliver any and all such instruments promptly upon request by
the Agent. If any Supplemental Agent, or successor thereto, shall die, become
incapable of acting, resign or be removed, all rights, powers, privileges and
duties of such Supplemental Agent, to the extent permitted by law, shall
automatically vest in and be exercised by the Agent until the appointment of a
new Supplemental Agent. The Agent shall not be responsible for the negligence or
misconduct of any agent, attorney-in-fact or Supplemental Agent that it selects
in accordance with the foregoing provisions of this Section 8.01(c) in the
absence of the Agent's gross negligence or willful misconduct.
SECTION 8.02. Agent's Reliance, Etc. Neither the Agent nor any of
its directors, officers, agents or employees shall be liable for any action
taken or omitted to be taken by it or them under or in connection with the
Financing Documents, except for its or their own gross negligence or willful
misconduct. Without limitation of the generality of the foregoing, the Agent:
(i) may treat the payee of any Note as the holder thereof until, in the case of
the Agent, the Agent receives and accepts an Assignment and Acceptance entered
into by the Lender that is the payee of such Note, as an assignor, and an
Eligible Assignee, as assignee; (ii) may consult with legal counsel (including
counsel for any Loan Party), independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (iii) makes no warranty or representation to any Lender
and shall not be responsible to any Lender for any statements, warranties or
representations (whether written or oral) made in or in connection with the
Financing Documents; (iv) shall not have any duty to ascertain or to inquire as
to the performance, observance or satisfaction of any of the terms, covenants or
conditions of any Financing Document on the part of any Loan Party or the
existence at any time of any Default under the Financing Documents or to inspect
the property (including the books and records) of any Loan Party; (v) shall not
be responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of, or the perfection or
priority of any lien or security interest created or purported to be created
under or in connection with, any Financing Document or any other instrument or
document furnished pursuant hereto; and (vi) shall incur no liability under or
in respect of any Financing Document by acting upon any notice, consent,
certificate or other instrument or writing (which may be by telecopier, telegram
or telex) believed by it to be genuine and signed or sent by the proper party or
parties.
SECTION 8.03. CUSA and Affiliates. With respect to its Commitments,
the Advances made by it and the Notes issued to it, CUSA and its Affiliates
shall have the same rights and powers under the Financing Documents as any other
Lender and may exercise the same as though it were not an Agent; and the term
"Lender" or "Lenders" shall, unless otherwise expressly indicated, include CUSA
in its individual capacity. CUSA and its respective affiliates may accept
deposits from, lend money to, act as trustee under indentures of, accept
investment banking engagements from and generally engage in any kind of business
with, any Loan Party, any of its Subsidiaries and any Person that may do
business with or own securities of any Loan Party or any such Subsidiary, all as
if CUSA were not an Agent and without any duty to account therefor to the
Lenders. The Agent shall not have any duty to disclose any information obtained
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or received by it or any of its Affiliates relating to any Loan Party or any of
its Subsidiaries to the extent such information was obtained or recorded in any
capacity other than as Agent.
SECTION 8.04. Lender Credit Decision. Each Lender acknowledges that
it has, independently and without reliance upon the Agent or any other Lender
and based on the financial statements referred to in Section 4.01 or 4.02 and
such other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the Agent or
any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement.
SECTION 8.05. Indemnification. (a) Each Lender severally agrees to
indemnify the Agent (to the extent not reimbursed by the Borrower), from and
against such Lender's ratable share (determined as provided below) of any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever that
may be imposed on, incurred by, or asserted against the Agent in any way
relating to or arising out of the Financing Documents or any action taken or
omitted by the Agent under the Financing Documents (collectively, the
"INDEMNIFIED COSTS"); provided that no Lender shall be liable for any portion of
the Indemnified Costs resulting from the Agent's gross negligence or willful
misconduct as found in a final, non-appealable judgment by a court of competent
jurisdiction. Without limitation of the foregoing, each Lender agrees to
reimburse the Agent promptly upon demand for its ratable share of any costs and
expenses (including, without limitation, fees and expenses of counsel) incurred
by the Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, to the extent that the Agent
is not reimbursed for such expenses by the Borrower. In the case of any
investigation, litigation or proceeding giving rise to any Indemnified Costs,
this Section 8.05 applies whether any such investigation, litigation or
proceeding is brought by the Agent, any Lender or any other Person.
(b) For purposes of this Section 8.05, the Lenders' respective
ratable shares of any amount shall be determined, at any time, according to the
sum of (i) the aggregate principal amount of the Advances outstanding at such
time and owing to the respective Lenders and (ii) their respective unused
Revolving Credit Commitments at such time. The failure of any Lender to
reimburse the Agent promptly upon demand for its ratable share of any amount
required to be paid by the Lenders to the Agent, as provided herein shall not
relieve any other Lender of its obligation hereunder to reimburse the Agent for
its ratable share of such amount, but no Lender shall be responsible for the
failure of any other Lender to reimburse the Agent for such other Lender's
ratable share of such amount. Without prejudice to the survival of any other
agreement of any Lender hereunder, the agreement and obligations of each Lender
contained in this Section 8.05 shall survive the payment in full of principal,
interest and all other amounts payable hereunder and under the other Financing
Documents.
SECTION 8.06. Successor Agent. The Agent may resign at any time by
giving written notice thereof to the Lenders and the Borrower and may be removed
at any time with or without cause by the Required Lenders. Upon any such
resignation or removal, the Required
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Lenders shall have the right to appoint a successor Agent, which shall be a
commercial bank organized or licensed under the laws of the United States of
America or of any State thereof and having a combined capital and surplus of at
least $1,000,000,000. If no successor Agent shall have been so appointed by the
Required Lenders, and shall have accepted such appointment, within 30 days after
the retiring Agent's giving of notice of resignation or the Required Lenders'
removal of the retiring Agent, then the retiring Agent may, on behalf of the
Lenders, appoint a successor Agent, which shall be a commercial bank organized
or licensed under the laws of the United States of America or of any State
thereof and having a combined capital and surplus of at least $1,000,000,000.
Upon the acceptance of any appointment as Agent hereunder by a successor Agent,
such successor Agent shall thereupon succeed to and become vested with all the
rights, powers, discretion, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations under this
Agreement. After any retiring Agent's resignation or removal hereunder as Agent,
the provisions of this Article VIII shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Agreement. If
within 45 days after written notice is given of the retiring Agent's resignation
or removal under this Section 8.06 no successor Agent shall have been appointed
and shall have accepted such appointment, then on such 45th day (a) the retiring
Agent's resignation or removal shall become effective, (b) the retiring Agent
shall thereupon be discharged from its duties and obligations under the
Financing Documents and (c) the Required Lenders shall thereafter perform all
duties of the retiring Agent under the Financing Documents until such time, if
any, as the Required Lenders appoint a successor Agent as provided above.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement or the Notes, nor consent to any departure by any
Loan Party therefrom, shall in any event be effective unless the same shall be
in writing and signed (or, in the case of the Collateral Documents, consented
to) by the Required Lenders, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given;
provided, however, that (a) no amendment, waiver or consent shall, unless in
writing and signed by all the Lenders (other than any Lender that is, at such
time, a Defaulting Lender), do any of the following at any time: (i) waive any
of the conditions specified in Section 3.01, or, in the case of the Initial
Extension of Credit, Section 3.02, (ii) change the number of Lenders or the
percentage of (x) the Commitments or (y) the aggregate unpaid principal amount
of the Advances that, in each case, shall be required for the Lenders or any of
them to take any action hereunder, (iii) reduce or limit the obligations of the
Parent Guarantor under Section 7.01 hereof or release the Parent Guarantor or
otherwise limit the Parent Guarantor's liability with respect to the Obligations
owing to the Agent and the Lenders, (iv) release all or substantially all of the
Collateral in any transaction or series of related transactions or permit the
creation, incurrence, assumption or existence of any Lien on all or
substantially all of the Collateral in any transaction or series of related
transactions to secure any Obligations other than Obligations owing to the
Secured Parties under the Financing Documents, or (v) amend Section 2.13 or this
Section 9.01, (b) no amendment, waiver or consent shall, unless in writing and
signed by all Lenders (other than any Lender that is, at such time, a Defaulting
Lender), (i) amend the definitions of "Aggregate Collateral Value", "Aircraft
Value", "Cash Collateral Value", "Aircraft", "Eligible
74
Aircraft", "Eligible Cash Collateral" or "Required Collateral Amount" and (ii)
amend Section 5.01(m) or Section 5.01(n), and (c) no amendment, waiver or
consent shall, unless in writing and signed by the Required Lenders and each
Lender (other than any Lender that is, at such time, a Defaulting Lender) that
has a Commitment under, or is owed any amounts under or in respect of, the Term
Facility or the Revolving Credit Facility if such Lender is directly affected by
such amendment, waiver or consent, (i) increase the Commitments of such Lender,
(ii) reduce the principal of, or interest on, the Advances held by such Lender
or any fees or other amounts payable hereunder to such Lender, (iii) postpone
any date fixed for any payment of principal of, or interest on, the Advances
held by such Lender or any fees or other amounts payable hereunder to such
Lender or (iv) postpone any date fixed for the reduction of the Commitments of
any Lender; provided further that no amendment, waiver or consent shall, unless
in writing and signed by the Agent in addition to the Lenders required above to
take such action, affect the rights or duties of the Agent under this Agreement
or the other Financing Documents.
SECTION 9.02. Notices, Etc. (a) (a) All notices and other
communications provided for hereunder shall be either (x) in writing (including
telecopier, telegraphic or telex communication) and mailed, telecopied,
telegraphed, telexed or delivered or (y) as and to the extent set forth in
Section 9.02(b) and in the proviso to this Section 9.02(a), if to the Borrower,
at its address at 4333 Amon Carter Boulevard, Fort Worth, Texas 76155,
Attention: Vice President - Corporate Development and Treasurer (telecopy: (817)
967-4318); if to the Parent Guarantor, at its address at 4333 Amon Carter
Boulevard, Fort Worth, Texas 76155, Attention: Chief Financial Officer
(telecopy: (817) 967-4318); if to any Initial Lender, at its Domestic Lending
Office specified opposite its name on Schedule I hereto; if to any other Lender,
at its Domestic Lending Office specified in the Assignment and Acceptance
pursuant to which it became a Lender; and if to the Agent, at its address at Two
Penns Way, Suite 110, New Castle, Delaware 19720, Attention: Bank Loan
Syndications Department, Elizabeth Wier (telecopy: (212) 994-0961); or, as to
the Borrower, the Parent Guarantor or the Agent, at such other address as shall
be designated by such party in a written notice to the other parties and, as to
each other party, at such other address as shall be designated by such party in
a written notice to the Borrower and the Agent, provided that materials required
to be delivered pursuant to Section 5.01(a)(i), (ii), (iv), (v) and (xi) shall
be delivered to the Agent as specified in Section 9.02(b) or as otherwise
specified to the Borrower or the Parent Guarantor by the Agent. All such notices
and communications shall, when mailed, telecopied, telegraphed or e-mailed, be
effective when deposited in the mails, telecopied, delivered to the telegraph
company or confirmed by e-mail, respectively, except that notices and
communications to the Agent pursuant to Article II, III or VIII shall not be
effective until received by the Agent. Delivery by telecopier of an executed
counterpart of any amendment or waiver of any provision of this Agreement or the
Notes or of any Exhibit hereto to be executed and delivered hereunder shall be
effective as delivery of a manually executed counterpart thereof.
(b) Each of the Borrower and the Parent Guarantor hereby agrees that
it will provide to the Agent all information, documents and other materials that
it is obligated to furnish to the Agent pursuant to the Financing Documents,
including, without limitation, all notices, requests, financial statements,
financial and other reports, certificates and other information materials, but
excluding any such communication that (i) relates to a request for a new, or a
Conversion of an existing Borrowing or other extension of credit (including any
election of an interest rate or interest period relating thereto), (ii) relates
to the payment of any principal or
75
other amount due under the Financing Documents prior to the scheduled date
therefor, (iii) provides notice of any Default or Event of Default under the
Financing Documents or (iv) is required to be delivered to satisfy any condition
precedent to the effectiveness of the Financing Documents and/or any Borrowing
or other extension of credit thereunder (all such non-excluded communications
being referred to herein collectively as "COMMUNICATIONS"), by transmitting the
Communications in an electronic/soft medium in a format reasonably acceptable to
the Agent to oploanswebadmin@citigroup.com. In addition, the Borrower and the
Parent Guarantor agree to continue to provide the Communications to the Agent in
the manner specified in the Financing Documents but only to the extent
reasonably requested by the Agent.
(c) The Borrower and the Parent Guarantor further agree that the
Agent may make the Communications available to the Lenders by posting the
Communications on Intralinks or a substantially similar electronic transmission
systems (the "PLATFORM").
(d) THE PLATFORM IS PROVIDED "AS IS" AND "AS AVAILABLE". THE AGENT
PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE
COMMUNICATIONS, OR THE ADEQUACY OF THE PLATFORM AND EXPRESSLY DISCLAIM LIABILITY
FOR ERRORS OR OMISSIONS IN THE COMMUNICATIONS. NO WARRANTY OF ANY KIND, EXPRESS,
IMPLIED OR STATUTORY, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD
PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY THE AGENT
PARTIES IN CONNECTION WITH THE COMMUNICATIONS OR THE PLATFORM. IN NO EVENT SHALL
THE AGENT OR ANY OF ITS AFFILIATES OR ANY OF THEIR RESPECTIVE OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS, ADVISORS OR REPRESENTATIVES (COLLECTIVELY, "AGENT
PARTIES") HAVE ANY LIABILITY TO THE BORROWER, THE PARENT GUARANTOR ANY LENDER OR
ANY OTHER PERSON OR ENTITY FOR DAMAGES OF ANY KIND, including, without
limitation, direct or indirect, special, incidental or consequential damages,
losses or expenses (WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF THE
BORROWER'S, THE PARENT GUARANTOR'S OR THE AGENT'S TRANSMISSION OF COMMUNICATIONS
THROUGH THE INTERNET, EXCEPT TO THE EXTENT THE LIABILITY OF ANY AGENT PARTY IS
FOUND BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED PRIMARILY FROM SUCH
AGENT PARTY'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
(e) The Agent agrees that the receipt of the Communications by the
Agent at its e-mail address set forth above shall constitute effective delivery
of the Communications to the Agent for purposes of the Financing Documents. Each
Lender agrees that notice to it (as provided in the next sentence) specifying
that the Communications have been posted to the Platform shall constitute
effective delivery of the Communications to such Lender for purposes of the
Financing Documents. Each Lender agrees (i) to notify the Agent in writing
(including by electronic communication) from time to time of such Lender's
e-mail address to which the foregoing notice may be sent by electronic
transmission and (ii) that the foregoing notice may be sent to such e-mail
address.
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(f) Nothing herein shall prejudice the right of the Agent or any
Lender to give any notice or other communication pursuant to any Financing
Document in any other manner specified in such Financing Document.
SECTION 9.03. No Waiver; Remedies. No failure on the part of any
Lender or the Agent to exercise, and no delay in exercising, any right hereunder
or under any Note shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
SECTION 9.04. Costs and Expenses. (a) The Borrower agrees to pay on
demand all reasonable costs and expenses of the Agent in connection with the
preparation, execution, delivery, modification and amendment of the Financing
Documents and the other documents to be delivered hereunder, including, without
limitation, (A) all due diligence, collateral review, syndication (including
printing, distribution and bank meetings), transportation, computer,
duplication, appraisal, insurance obtained by any Lender in accordance with the
Collateral Documents, consultant search, filing and recording fees, and audit
expenses and (B) the reasonable fees and expenses of counsel for the Agent with
respect thereto and with respect to advising the Agent as to its rights and
responsibilities under the Financing Documents, with respect to negotiations
with any Loan Party or with other creditors of any Loan Party or any of its
Subsidiaries arising out of any Event of Default or any Default that is not
reasonably likely to be cured within the applicable grace period and with
respect to presenting claims in or otherwise participating in or monitoring any
bankruptcy or insolvency relating to any Loan Party or any of its Material
Subsidiaries as a debtor (or other similar proceeding involving creditors'
rights generally and any proceeding ancillary thereto in respect of any Loan
Party or any of its Material Subsidiaries) and (ii) all costs and expenses of
the Agent and each Lender in connection with the enforcement of the Financing
Documents, whether in any action, suit or litigation, or any bankruptcy,
insolvency or other similar proceeding affecting creditors' rights generally
(including, without limitation, the reasonable fees and expenses of counsel for
the Agent and each Lender with respect thereto) in respect of such Financing
Documents.
(b) The Borrower agrees to indemnify and hold harmless the Agent,
each Lead Arranger, the Syndication Agent and each Lender and each of their
Affiliates and their officers, directors, employees, agents and advisors (each,
an "INDEMNIFIED PARTY") from and against any and all claims, damages, losses,
liabilities and expenses (including, without limitation, reasonable fees and
expenses of counsel) that may be incurred by or asserted or awarded against any
Indemnified Party, in each case arising out of or in connection with or by
reason of (including, without limitation, in connection with any investigation,
litigation or proceeding or preparation of a defense in connection therewith)
this Agreement and the other Financing Documents, any of the transactions
contemplated hereby or thereby or the actual or proposed use of the proceeds of
the Advances, or the actual or alleged presence of Hazardous Materials on any
property of the Borrower or any of its Subsidiaries or the Parent Guarantor or
any Environmental Action relating in any way to the Borrower or any of its
Subsidiaries or the Parent Guarantor except to the extent such claim, damage,
loss, liability or expense is found by a court of competent jurisdiction to have
resulted from such Indemnified Party's gross negligence or willful misconduct;
provided the Borrower shall have no liability in respect of any tax imposed with
respect to this Agreement or any transaction hereunder or thereunder except as
77
specifically provided for in Section 2.12, and provided further that the
indemnity in this Section 9.04(b) shall not cover any claims, damages, losses,
liabilities and expenses arising primarily out of the Aircraft Security
Agreement or relating to the Aircraft, all of which shall be covered solely to
the extent provided in Section 5.08 of the Aircraft Security Agreement. In the
case of an investigation, litigation or other proceeding to which the indemnity
in this Section 9.04(b) applies, such indemnity shall be effective whether or
not such investigation, litigation or proceeding is brought by any Loan Party,
its directors or its equityholders or creditors, whether or not any Indemnified
Party is a party thereto and whether or not the transactions contemplated hereby
are consummated. The Agent, each of its Affiliates and their officers,
directors, employees, agents and advisors agree to provide the Borrower with ten
Business Days' notice prior to the settlement of any claim under this Section
9.04(b); and each other Indemnified Party agrees to consult with the Borrower
prior to the settlement of any claim under this Section 9.04(b). The Borrower
also agrees not to assert any claim against the Agent, any Lead Arranger, the
Syndication Agent, any Lender, any of their Affiliates, or any of their
respective directors, officers, employees, attorneys and agents, on any theory
of liability, for special, indirect, consequential or punitive damages
(including, without limitation, any loss of profits, business or anticipated
savings) relating to the Facilities, the actual or proposed use of the proceeds
of the Advances, the Financing Documents or any of the transactions contemplated
by the Financing Documents.
(c) If any payment of principal of, or Conversion of, any Eurodollar
Rate Advance is made by the Borrower to or for the account of a Lender other
than on the last day of the Interest Period for such Advance, as a result of a
payment or Conversion pursuant to Section 2.05, 2.07 or 2.09, acceleration of
the Advances pursuant to Section 6.01 or for any other reason or by an Eligible
Assignee to a Lender other than on the last day of the Interest Period for such
Advance upon an assignment of rights and obligations under this Agreement
pursuant to Section 9.07 as a result of a demand by the Borrower pursuant to
Section 9.07(a), the Borrower shall, within 15 days after demand by such Lender,
reimburse such Lender for any resulting loss or expense incurred by it (or by an
existing or prospective participant in the related Advance), including (without
limitation) any loss incurred in obtaining, liquidating or employing deposits
from third parties, but excluding loss of margin for the period after any such
payment or failure to borrow, provided that such Lender shall have delivered to
the Borrower a certificate setting forth in reasonable detail calculations as to
the amount of such loss or expense, which certificate shall be conclusive in the
absence of manifest error.
(d) Without prejudice to the survival of any other agreement of the
Borrower hereunder or under any other Financing Document, the agreements and
obligations of the Borrower contained in Sections 2.09, 2.12 and 9.04 shall
survive the payment in full of principal, interest and all other amounts payable
hereunder or under any other Financing Document.
(e) If any Loan Party fails to pay when due any costs, expenses or
other amounts payable by it under any Financing Document in respect of any
Collateral, including, without limitation, fees and expenses of counsel and
indemnities, such amount may be paid on behalf of such Loan Party by the Agent,
in its sole discretion.
SECTION 9.05. Right of Set-off. Upon (i) the occurrence and during
the continuance of any Event of Default and (ii) the making of the request or
the granting of the
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consent specified by Section 6.01 to authorize the Agent to declare the Notes
due and all interest payable pursuant to the provisions of Section 6.01, the
Agent and each Lender and each of their respective Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by the Agent, such Lender or such Affiliate to or for the credit or
the account of the Borrower against any and all of the Obligations of the
Borrower now or hereafter existing under the Financing Documents, whether or not
the Agent or such Lender shall have made any demand under this Agreement or such
Note or Notes and although such Obligations may be unmatured. The Agent, each
Lender and each of their respective Affiliates agrees promptly to notify the
Borrower after any such set-off and application; provided that the failure to
give such notice shall not affect the validity of such set-off and application.
The rights of the Agent, each Lender and each of their respective Affiliates
under this Section are in addition to other rights and remedies (including,
without limitation, other rights of set-off) that such Lender may have.
SECTION 9.06. Binding Effect. This Agreement shall become effective
(other than Section 2.01, which shall only become effective upon satisfaction of
the conditions precedent set forth in Section 3.01) when it shall have been
executed by the Borrower, the Parent Guarantor and the Agent and when the Agent
shall have been notified by each Initial Lender that such Initial Lender has
executed it and thereafter shall be binding upon and inure to the benefit of the
Borrower, the Parent Guarantor, the Agent and each Lender and their respective
successors and permitted assigns, except that, subject to Section 5.02(b),
neither the Parent Guarantor nor the Borrower shall have the right to assign its
rights hereunder or any interest herein without the prior written consent of the
Lenders.
SECTION 9.07. Assignments and Participations. (a) Each Lender may
and, if demanded by the Borrower (following a demand by such Lender pursuant to
Section 2.09 or 2.12) upon at least 5 Business Days' notice to such Lender and
the Agent, will assign to one or more Persons all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Commitment and the Advances owing to it); provided, however, that
(i) each such assignment shall be of a constant, and not a varying, percentage
of all rights and obligations under any or all Facilities, (ii) except in the
case of an assignment to a Person that, immediately prior to such assignment,
was a Lender or an assignment of all of a Lender's rights and obligations under
this Agreement, the amount of the Commitment of the assigning Lender being
assigned pursuant to each such assignment (determined as of the date of the
Assignment and Acceptance with respect to such assignment) shall in no event be
less than $1,000,000 or an integral multiple of $1,000,000 in excess thereof,
(iii) each such assignment shall be to an Eligible Assignee, (iv) each such
assignment made as a result of a demand by the Borrower pursuant to this Section
9.07(a) shall be arranged by the Borrower after consultation with the Agent and
shall be either an assignment of all the rights and obligations of the assigning
Lender under this agreement or an assignment of a portion of such rights and
obligations made concurrently with another such assignment or other such
assignments that together cover all of the rights and obligations of the
assigning Lender under this Agreement, (v) no Lender shall be obligated to make
any such assignment as a result of a demand by the Borrower pursuant to this
Section 9.07(a) unless and until such Lender shall have received one or more
payments from either the Borrower or one or more Eligible Assignees in an
aggregate amount at least equal to the aggregate outstanding principal amount of
the Advances owing to such Lender, together with
79
accrued interest thereon to the date of payment of such principal amount and all
other amounts payable to such Lender under this Agreement, (vi) the parties to
each such assignment shall execute and deliver to the Agent, for its acceptance
and recording in the Register, an Assignment and Acceptance and a processing and
recordation fee of $3,500, provided, however, that in the case of each
assignment made as a result of a demand by the Borrower, such recordation fee
shall be payable by the Borrower except that no such recordation fee shall be
payable in the case of an assignment made at the request of the Borrower to an
Eligible Assignee that is an existing Lender, (vii) any Lender may, without the
approval of the Borrower and the Agent, but with notice to the Borrower and the
Agent, assign all or a portion of its rights to any of its Affiliates and (viii)
if the assignee is not incorporated under the laws of the United States or a
state thereof, it shall, on the date of the assignment, deliver to the Borrower
and the Agent certification as to exemption from deduction or withholding of any
United States federal income taxes in accordance with Section 2.12. Upon such
execution, delivery, acceptance and recording, from and after the effective date
specified in each Assignment and Acceptance, (x) 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 and Acceptance, have the rights
and obligations of a Lender hereunder and (y) the Lender assignor thereunder
shall, to the extent that rights and obligations hereunder have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights (other than
the rights under Sections 2.09, 2.12 and 9.04 to the extent any claim thereunder
relates to an event arising prior to such assignment) and be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance 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).
(b) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with any
Financing Document or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of, or the perfection or priority of any lien
or security interest created or purported to be created under or in connection
with, any Financing Document or any other instrument or document furnished
pursuant hereto; (ii) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of any
Loan Party or the performance or observance by any Loan Party of any of its
obligations under any Financing Document or any other instrument or document
furnished pursuant thereto; (iii) such assignee confirms that it has received a
copy of this Agreement, together with copies of the financial statements
referred to in Section 4.01 and Section 4.02 and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such assignee will,
independently and without reliance upon the Agent, such assigning Lender or any
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement; (v) such assignee confirms that it is an
Eligible Assignee; (vi) such assignee appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers and discretion
under the Financing Documents as are delegated to the Agent by the terms hereof,
together with such powers and discretion as are reasonably incidental thereto;
and (vii) such assignee agrees that it will perform
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in accordance with their terms all of the obligations that by the terms of this
Agreement are required to be performed by it as a Lender.
(c) The Agent, acting for this purpose (but only for this purpose)
as the agent of the Borrower, shall maintain at its address referred to in
Section 9.02 a copy of each Assignment and Acceptance delivered to and accepted
by it and a register for the recordation of the names and addresses of the
Lenders and the Commitment of, and principal amount of the Advances owing to,
each Lender from time to time (the "REGISTER"). The entries in the Register
shall be conclusive and binding for all purposes, absent manifest error, and the
Borrower, the Agent and the Lenders shall treat each Person whose name is
recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Borrower or any
Lender at any reasonable time and from time to time upon reasonable prior
notice.
(d) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an assignee representing that it is an Eligible Assignee,
the Agent shall, if such Assignment and Acceptance has been completed and is in
substantially the form of Exhibit C hereto, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Borrower.
(e) Each Lender may sell participations to one or more banks or
other entities (other than any Loan Party or any of its Affiliates) in or to all
or a portion of its rights and obligations under this Agreement (including,
without limitation, all or a portion of its Commitment and the Advances owing to
it); provided, however, that (i) such Lender's obligations under this Agreement
(including, without limitation, its Commitment to the Borrower hereunder) shall
remain unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iii) the Borrower, the
Agent and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement and (iv) no participant under any such participation shall have any
right to enforce the obligations of the Loan Parties hereunder or to approve any
amendment or waiver of any provision of this Agreement, or any consent to any
departure by any Loan Party therefrom, except to the extent that such amendment,
waiver or consent would reduce the principal of, or interest on, the Advances or
any fees or other amounts payable hereunder, in each case to the extent subject
to such participation, or postpone any date fixed for any payment of principal
of, or interest on, the Advances or any fees or other amounts payable hereunder,
in each case to the extent subject to such participation, or release all or
substantially all of the Collateral.
(f) No Eligible Assignee or other transferee of any Lender's rights
shall be entitled to receive any greater payment under Section 2.09 than such
Lender would have been entitled to receive with respect to the rights
transferred, unless such transfer is made with the Borrower's prior written
consent or by reason of the provision of Section 2.16 requiring such Lender to
designate a different Applicable Lending Office under certain circumstances. The
Borrower shall not be obligated to make any greater payment under the Financing
Documents than it would have been required to make in the absence of any
participation.
81
(g) Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
9.07, disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Borrower furnished to such Lender
by or on behalf of the Borrower; provided that, prior to any such disclosure,
the assignee or participant or proposed assignee or participant shall agree to
preserve the confidentiality of any Confidential Information received by it from
such Lender.
(h) Notwithstanding any other provision set forth in this Agreement,
any Lender may at any time create a security interest in all or any portion of
its rights under this Agreement (including, without limitation, the Advances
owing to it) in favor of any Federal Reserve Bank in accordance with Regulation
A of the Board of Governors of the Federal Reserve System.
(i) Notwithstanding anything to the contrary contained herein, any
Lender that is a fund that invests in bank loans may create a security interest
in all or any portion of the Advances owing to it to the trustee for holders
of obligations owed, or securities issued, by such fund as security for such
obligations or securities, provided that unless and until such trustee actually
becomes a Lender in compliance with the other provisions of this Section 9.07,
(i) no such pledge shall release the pledging Lender from any of its obligations
under the Financing Documents and (ii) such trustee shall not be entitled to
exercise any of the rights of a Lender under the Financing Documents even though
such trustee may have acquired ownership rights with respect to the pledged
interest through foreclosure or otherwise.
(j) If the Borrower wishes to replace Advances or the Commitments
under any Facility with ones having different terms, it shall have the option,
with the consent of the Agent and subject to at least three Business Days'
advance notice to the Lenders under such Facility, instead of prepaying the
Advances or reducing or terminating the Commitments to be replaced, to (i)
require the Appropriate Lenders to assign such Advances or Commitments to the
Agent or its designees and (ii) amend the terms thereof in accordance with
Section 9.01 (with such replacement, if applicable, being deemed to have been
made pursuant to Section 9.01(c)). Pursuant to any such assignment, all Advances
and Commitments to be replaced shall be purchased at par (allocated among the
Appropriate Lenders under such Facility in the same manner as would be required
if such Advances were being optionally prepaid or such Commitments were being
optionally reduced or terminated by the Borrower), accompanied by payment of any
accrued interest, premiums (including any premiums payable pursuant to Section
2.08(a), it being understood that any assignment pursuant to this Section
9.07(j) shall be deemed an optional prepayment under Section 2.08(a) for
purposes of the payment of such premiums) and fees thereon and any amounts owing
pursuant to Section 9.04(c). By receiving such purchase price, the Appropriate
Lenders under such Facility shall automatically be deemed to have assigned their
Commitments under such Facility pursuant to the terms of the form of Assignment
and Acceptance attached hereto as Exhibit C, and accordingly no other action by
such Lenders shall be required in connection therewith. The provisions of this
paragraph are intended to facilitate the maintenance of the perfection and
priority of existing security interests in the Collateral during any such
replacement.
SECTION 9.08. Confidentiality. Neither the Agent nor any Lender
shall disclose any Confidential Information to any Person without the consent of
the Borrower, other than (a)
82
to the Agent's or such Lender's Affiliates and their officers, directors,
employees, agents and advisors and to actual or prospective Eligible Assignees
and participants, and then only on a confidential basis, (b) as required by any
law, rule or regulation, (c) as requested or required by any state, Federal or
foreign authority or examiner (including the National Association of Insurance
Commissioners or any similar organization or quasi-regulatory authority)
regulating such Lender, (d) to any rating agency when required by it, provided
that, prior to any such disclosure, such rating agency shall undertake to
preserve the confidentiality of any Confidential Information relating to the
Loan Parties received by it from such Lender, (e) in connection with any
litigation or proceeding to which the Agent or such Lender or any of its
Affiliates may be a party or as required by judicial process, or (f) in
connection with the exercise of any right or remedy under this Agreement or any
other Financing Document; provided that if any party hereto (such party, the
"DISCLOSING PARTY") is required to disclose any Confidential Information
pursuant to clause (e) above, the Disclosing Party will, to the extent permitted
by applicable law, promptly notify the other parties hereto (such other parties,
the "NON-DISCLOSING Parties") prior to such disclosure to enable the
Non-Disclosing Parties to seek a protective order or to take other action that
the Non-Disclosing Parties in their reasonable discretion deem appropriate, and
the Disclosing Party will use reasonable efforts to cooperate with the
Non-Disclosing Parties in their efforts to obtain a protective order or other
reasonable assurance that confidential treatment will be accorded the
Confidential Information.
SECTION 9.09. Release of Collateral. Upon the sale, lease, transfer
or other disposition of any item of Collateral of any Loan Party in accordance
with the terms of the Financing Documents, the Agent will, at the Borrower's
expense, execute and deliver to such Loan Party such documents as such Loan
Party may reasonably request to evidence the release of such item of Collateral
from the assignment and security interest granted under the Collateral Documents
in accordance with the terms of the Financing Documents.
SECTION 9.10. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of New York.
SECTION 9.11. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 9.12. Jurisdiction, Etc. (a) Each of the parties hereto
hereby irrevocably and unconditionally submits, for itself and its property, to
the nonexclusive jurisdiction of any New York State court or federal court of
the United States of America sitting in New York City, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement or any of the other Financing Documents to which it is a party, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in any such New York State
court or, to the extent permitted by law, in such federal court. Each of the
parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
83
judgment or in any other manner provided by law. Nothing in this Agreement shall
affect any right that any party may otherwise have to bring any action or
proceeding relating to this Agreement or any of the other Financing Documents in
the courts of any jurisdiction.
(b) Each of the parties hereto irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or any of the
other Financing Documents to which it is a party in any New York State or
federal court. Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
84
SECTION 9.13. Waiver of Jury Trial. Each of the Borrower, the Parent
Guarantor, the Agent and the Lenders hereby irrevocably waives all right to
trial by jury in any action, proceeding or counterclaim (whether based on
contract, tort or otherwise) arising out of or relating to any of the Financing
Documents the Advances or the actions of the Agent or any Lender in the
negotiation, administration, performance or enforcement thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
AMERICAN AIRLINES, INC.,
as Borrower
By
_________________________
Name:
Title:
AMR CORPORATION,
as Parent Guarantor
By
________________________
Name:
Title:
CITICORP USA, INC.,
as Agent
By
_________________________
Name:
Title:
85
SCHEDULE I
COMMITMENTS AND APPLICABLE LENDING OFFICES
DOMESTIC EURODOLLAR
REVOLVING CREDIT TERM COMMITMENT LENDING LENDING
NAME OF INITIAL LENDER COMMITMENT OFFICE OFFICE
- ---------------------- ---------------- --------------- ------- ----------
EXHIBIT D
EXECUTION COPY
================================================================================
AIRCRAFT SECURITY AGREEMENT
dated as of December 17, 2004
between
AMERICAN AIRLINES, INC.
and
CITICORP USA, INC.
as Collateral Agent
================================================================================
American Airlines - Aircraft Security Agreement
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
SECTION 1.01 Certain Definitions........................................................................ 1
ARTICLE II
SECURITY
SECTION 2.01 Grant of Security......................................................................... 2
ARTICLE III
CASH COLLATERAL AND PERMITTED INVESTMENTS
SECTION 3.01 Establishment of Cash Collateral Account; Investments..................................... 4
SECTION 3.02 Release of Collateral..................................................................... 4
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF AMERICAN
SECTION 4.01 Representations and Warranties of American................................................ 5
ARTICLE V
COVENANTS OF AMERICAN
SECTION 5.01 Liens..................................................................................... 6
SECTION 5.02 Possession, Operation and Use, Maintenance and Registration............................... 6
SECTION 5.03 Inspection................................................................................ 11
SECTION 5.04 Replacement and Pooling of Parts; Alterations, Modifications and Additions; Substitution
of Engines................................................................................ 11
SECTION 5.05 Loss, Destruction or Requisition.......................................................... 13
SECTION 5.06 Insurance................................................................................. 14
SECTION 5.07 Maintenance of Certain Engines............................................................ 18
SECTION 5.08 General Indemnification and Waiver of Certain Claims...................................... 18
American Airlines - Aircraft Security Agreement
i
ARTICLE VI
RECEIPT, DISTRIBUTION AND APPLICATION
OF INCOME FROM THE COLLATERAL
SECTION 6.01 Application of Income from the Collateral................................................. 21
ARTICLE VII
REMEDIES OF THE AGENT
UPON AN EVENT OF DEFAULT
SECTION 7.01 Remedies with Respect to Collateral....................................................... 21
SECTION 7.02 Remedies Cumulative....................................................................... 23
SECTION 7.03 Discontinuance of Proceedings............................................................. 23
SECTION 7.04 Waiver of Past Defaults................................................................... 24
SECTION 7.05 Quiet Enjoyment........................................................................... 24
ARTICLE VIII
THE AGENT
SECTION 8.01 General................................................................................... 24
SECTION 8.02 Appointment of Co-Agents.................................................................. 25
ARTICLE IX
CERTAIN COVENANTS
SECTION 9.01 Certain Changes........................................................................... 25
SECTION 9.02 Further Assurances........................................................................ 25
SECTION 9.03 Additional Information.................................................................... 25
ARTICLE X
SUPPLEMENTS AND AMENDMENTS
TO THIS SECURITY AGREEMENT AND OTHER DOCUMENTS
SECTION 10.01 Supplemental Security Agreements.......................................................... 26
ARTICLE XI
INVESTMENT OF SECURITY FUNDS
SECTION 11.01 Investment of Security Funds.............................................................. 26
SECTION 11.02 Liability for Losses...................................................................... 26
American Airlines - Aircraft Security Agreement
ii
ARTICLE XII
MISCELLANEOUS
SECTION 12.01 Termination of Security Agreement................................................. 26
SECTION 12.02 No Legal Title to Collateral in Secured Parties................................... 27
SECTION 12.03 Benefit of Security Agreement..................................................... 27
SECTION 12.04 Performance and Rights............................................................ 27
SECTION 12.05 Notices........................................................................... 27
SECTION 12.06 Severability...................................................................... 27
SECTION 12.07 Separate Counterparts............................................................. 27
SECTION 12.08 Successors and Assigns............................................................ 28
SECTION 12.09 Headings.......................................................................... 28
SECTION 12.10 Governing Law..................................................................... 28
SECTION 12.11 Normal Commercial Relations....................................................... 28
APPENDICES
Appendix A -- Definitions Relating to the Security Agreement
SCHEDULES
Schedule 1 -- Pledged Unencumbered Stage 3 Aircraft
Schedule 2 -- Legal Name, Chief Executive Office, Type of Organization, Jurisdiction of Organization
and Organizational Identification Number
EXHIBITS
Exhibit A -- Form of Security Agreement Supplement No. __
American Airlines - Aircraft Security Agreement
iii
AIRCRAFT SECURITY AGREEMENT
This AIRCRAFT SECURITY AGREEMENT, dated as of December 17, 2004,
between AMERICAN AIRLINES, INC., a Delaware corporation (together with its
successors and permitted assigns, "AMERICAN"), and CITICORP USA, INC. ("CUSA"),
as Collateral Agent for the Secured Parties (as hereinafter defined) (together
with its successors in such capacity, the "AGENT").
W I T N E S S E T H:
WHEREAS, American, AMR Corporation, a Delaware corporation, the
banks, financial institutions and other institutional lenders party thereto from
time to time (the "LENDERS"), the Agent and Citigroup Global Markets Inc. and
J.P. Morgan Securities Inc. have entered into a Credit Agreement, dated as of
December 17, 2004 (as amended, amended and restated, supplemented or otherwise
modified from time to time, the "CREDIT AGREEMENT"); and
WHEREAS, American desires by this Security Agreement, among other
things, to grant to the Agent a Lien on the Collateral in accordance with the
terms hereof as security for American's obligations to the Lenders; and
WHEREAS, each of the Lenders has appointed the Agent its agent
hereunder for the purposes of administering and enforcing this Security
Agreement in accordance with the terms hereof, and the Agent has agreed to act
as agent for the Lenders under this Security Agreement; and
WHEREAS, all things necessary to make this Security Agreement a
legal, valid and binding and enforceable obligation of American and the Agent,
for the uses and purposes herein set forth, in accordance with its terms, have
been done and performed and have occurred;
NOW, THEREFORE, to secure the prompt and complete payment of all
Secured Obligations, it is hereby covenanted and agreed by and between the
parties hereto as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Certain Definitions. For all purposes of this Security
Agreement, except as otherwise expressly provided or unless the context
otherwise requires:
(a) capitalized terms used herein have the meanings set forth
in Appendix A hereto or, if not defined in Appendix A, then as defined in
the Credit Agreement;
(b) the definitions stated herein and those stated in Appendix
A apply equally to both the singular and the plural forms of the terms
defined; and
(c) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Security Agreement as a whole and
not to any particular Article, Section or other subdivision.
American Airlines - Aircraft Security Agreement
ARTICLE II
SECURITY
SECTION 2.01 Grant of Security. American, in order to secure the
prompt and complete payment and performance of all Secured Obligations, and in
consideration of the premises and of the covenants contained herein and in the
other Financing Documents, does hereby grant, bargain, sell, convey, transfer,
mortgage, assign, pledge, and confirm unto the Agent and its permitted
successors and assigns, for the security and benefit of the Secured Parties, a
security interest in, and mortgage lien on, all estate, right, title and
interest of American in, to and under, all and singular, the following described
properties, rights, interests and privileges whether now or hereafter acquired
(hereinafter referred to as the "COLLATERAL"):
(a) the Aircraft, including each Airframe and each Engine,
whether or not any such Engine may from time to time be installed on an
Airframe or on any other airframe or any other aircraft, and, to the
extent provided herein, all substitutions and replacements of and
additions, improvements, accessions and accumulations to the Aircraft,
each Airframe, the Engines and any and all Parts relating thereto (such
Airframes and Engines as more particularly described on Schedule 1 to this
Security Agreement or in a Security Agreement Supplement executed and
delivered with respect to any substitutions or replacements therefor), and
together with all flight records, logs, manuals, maintenance data and
inspection, modification and overhaul records and other documents at any
time required to be maintained in accordance with the rules and
regulations of the FAA (and, if an Aircraft is registered under the laws
of a jurisdiction other than the United States, under the applicable laws
of such jurisdiction) with respect to the foregoing;
(b) the Warranty Rights, together with all rights, powers,
privileges, options and other benefits of American under the same, to the
extent the same may be assigned without the manufacturer's prior written
consent;
(c) all requisition proceeds with respect to the Aircraft or
any Part thereof, and all insurance proceeds with respect to the Aircraft
or any Part thereof, but excluding all proceeds of, and rights under, any
insurance maintained by American pursuant to Section 5.06(e) and not
required under Section 5.06(a) or (b);
(d) all moneys, securities and Permitted Investments now or
hereafter paid, deposited or credited or required to be paid, deposited or
credited to or with the Agent by or for the account of American pursuant
to any term of this Security Agreement or any other Financing Document and
held or required to be held by the Agent hereunder or thereunder,
including without limitation the Cash Collateral Account, all cash on
deposit therein, all Permitted Investments credited thereto and all
investments made pursuant to Section 3.01(b); and
(e) all proceeds of the foregoing;
provided, however, that notwithstanding any of the foregoing provisions of this
Article II, so long as no Event of Default shall have occurred and be
continuing, American shall have the right, to the
American Airlines - Aircraft Security Agreement
2
exclusion of the Agent, (i) to quiet enjoyment of the Aircraft, the Airframes
and Engines, and to possess, use, retain and control the Aircraft, the Airframes
and Engines and all revenues, income and profits derived therefrom and (ii) with
respect to the Warranty Rights, to exercise in American's name all rights and
powers of the Buyer (as defined in the Purchase Agreement) under the Warranty
Rights and to retain any recovery or benefit resulting from the enforcement of
any warranty or indemnity or other obligation under the Warranty Rights; and
provided, further, that notwithstanding the occurrence and continuation of an
Event of Default, the Agent shall not enter into any amendment or modification
of the product assurance provisions of the Purchase Agreement that would alter
the rights, benefits or obligations of American thereunder;
TO HAVE AND TO HOLD all and singular the Collateral unto the Agent,
its permitted successors and assigns, forever, for the ratable benefit, security
and protection of the Secured Parties from time to time, and for the uses and
purposes and subject to the terms and provisions set forth in this Security
Agreement.
It is expressly agreed that anything herein to the contrary
notwithstanding, American shall remain liable under the Financing Documents to
perform all of its obligations thereunder, and neither the Agent nor any Secured
Party shall be required or obligated in any manner to perform or fulfill any
obligations of American under or pursuant to any thereof, or to make any inquiry
as to the nature or sufficiency of any payment received by it, or present or
file any claim or take any action to collect or enforce the payment of any
amount which may have been assigned to it or to which it may be entitled at any
time or times.
American does hereby constitute and appoint the Agent the true and
lawful attorney of American (which appointment is coupled with an interest) with
full power (in the name of American or otherwise) to ask, require, demand and
receive any and all moneys and claims for moneys (in each case including
insurance and requisition proceeds), and all other property which now or
hereafter constitutes part of the Collateral, to endorse any checks or other
instruments or orders in connection therewith and to file any claims or to take
any action or to institute any proceeding which the Agent may deem to be
necessary or advisable in the premises; provided that the Agent shall not
exercise any such rights except during the continuance of an Event of Default.
Without limiting the provisions of the foregoing, during the continuance of any
Event of Default but subject to the terms hereof and any mandatory requirement
of applicable law, the Agent shall have the right under such power of attorney
in its discretion to file any claim or take any other action or proceedings,
either in its own name or in the name of American or otherwise, which the Agent
may reasonably deem necessary or appropriate to protect and preserve the right,
title and interest of the Agent in and to the security intended to be afforded
hereby. American agrees that promptly upon receipt thereof, to the extent
required by the Financing Documents, it will transfer to the Agent any and all
moneys from time to time received by American constituting part of the
Collateral, for distribution by the Agent pursuant to the Credit Agreement and
this Security Agreement.
American does hereby warrant and represent that it has not sold,
assigned or pledged, and hereby covenants that it will not sell, assign or
pledge, so long as this Security Agreement shall remain in effect and the Lien
hereof shall not have been released pursuant to the provisions hereof, any of
its estate, right, title or interest hereby assigned, to any Person other than
the Agent, except for Permitted Liens.
American Airlines - Aircraft Security Agreement
3
ARTICLE III
CASH COLLATERAL AND PERMITTED INVESTMENTS
SECTION 3.01 Establishment of Cash Collateral Account; Investments. (a) There is
hereby established with the Agent a cash collateral account (the "CASH
COLLATERAL ACCOUNT") in the name and under the exclusive dominion and control of
the Agent, as security for the benefit of the Secured Parties, into which
American may deposit funds from time to time as provided herein. Any income
received by the Agent with respect to the balance from time to time of the Cash
Collateral Account, including any interest or capital gains on Permitted
Investments, shall be retained therein and shall constitute Collateral; provided
that if no Payment Default, Bankruptcy Default or Event of Default is then
continuing, such income shall be promptly paid to American upon request. All
amounts on deposit from time to time in the Cash Collateral Account together
with any Permitted Investments from time to time made pursuant to Section
3.01(b) shall constitute part of the Collateral hereunder.
(b) Amounts on deposit in the Cash Collateral Account may be
invested and re-invested from time to time at the expense and risk of American
in Permitted Investments, which Permitted Investments shall be held in the name
and be under the control of the Agent. The investment of amounts on deposit in
the Cash Collateral Account shall be effected by the Agent, except that so long
as no Event of Default shall have occurred and be continuing, investment of
amounts on deposit in the Cash Collateral Account shall be effected by the Agent
acting upon the written authorization and direction of American. If any such
investment results in a loss, American shall promptly pay a cash amount equal to
the amount of such loss to the Agent for application to the Cash Collateral
Account.
(c) The parties hereto agree that American shall be the taxpayer
with respect to any income earned on investments made pursuant to Section
3.01(b). The Agent shall treat American as the taxpayer with respect to any
reporting or other obligations imposed by applicable tax laws.
SECTION 3.02 Release of Collateral. American shall have such
obligations to provide additional and replacement Collateral from time to time,
and rights to substitute or require the release of Collateral from time to time,
all as set forth in the Credit Agreement. Upon any release of Collateral in
accordance with the terms of the Credit Agreement, including (without
limitation) pursuant to any substitution or any replacement in connection with
an Event of Loss, the Agent shall release from the Lien of this Security
Agreement such Collateral and shall execute and deliver such instruments of
release and shall take such further actions as American shall reasonably
request, all at American's sole cost and expense.
American Airlines - Aircraft Security Agreement
4
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF AMERICAN
SECTION 4.01 Representations and Warranties of American. American
represents and warrants that:
(a) (i) it is an "air carrier" within the meaning of the
Transportation Code operating under certificates issued pursuant to such
Code (49 U.S.C. ss.ss.41101-41112), and (ii) its exact legal name (as such
terms is defined in the Uniform Commercial Code), type of organization,
jurisdiction of organization or organizational identification number are
correctly set forth on Schedule 2;
(b) it holds title to all the Aircraft, free and clear of all
Liens except the Lien of this Security Agreement and Permitted Liens;
(c) the execution, delivery and performance by American of
this Security Agreement have been duly authorized by all necessary
corporate action on the part of American, do not require any stockholder
approval, or approval or consent of any trustee or holder of any
indebtedness or obligations of American, except such as have been duly
obtained and are in full force and effect, and do not and will not
contravene any current law, governmental rule, regulation, judgment or
order binding on American or the Certificate of Incorporation or By-Laws
of American or contravene or result in a breach of, or constitute a
default under, or result in the creation of any Lien upon the property of
American under, any indenture, mortgage, contract or other agreement to
which American is a party or by which it or its properties may be bound or
affected;
(d) neither the execution and delivery by American of this
Security Agreement, nor the performance of its obligations hereunder, nor
the consummation by American of any of the transactions contemplated
hereby, requires the consent or approval of, the giving of notice to, or
the registration with, or the taking of any other action in respect of,
the Department of Transportation, the FAA, or any other Federal, state or
foreign governmental authority having jurisdiction, except for (i) the
filings referred to in Section 4.01(f) and (ii) the filing of Uniform
Commercial Code financing statements with respect to the Cash Collateral
Account;
(e) this Security Agreement has been duly executed and
delivered by American and constitutes a legal, valid and binding
obligation of American enforceable against American in accordance with its
terms, except as the same may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the rights of
creditors generally and by general principles of equity and except as
limited by applicable laws which may affect the remedies provided in this
Security Agreement, which laws, however, do not make the remedies provided
in this Security Agreement inadequate for the practical realization of the
rights and benefits intended to be provided thereby; and
(f) except for the filing for recordation pursuant to the
Transportation Code of this Security Agreement (with the Security
Agreement Supplement covering the
American Airlines - Aircraft Security Agreement
5
Aircraft attached), no further filing or recording of any document
(including, without limitation, any financing statement in respect thereof
under Article 9 of the Uniform Commercial Code of any applicable
jurisdiction) is necessary or advisable under the laws of the United
States of America or any State thereof as of the date hereof in order to
establish, perfect and protect the security interest in the Aircraft
created under this Security Agreement in favor of the Agent as against
American and any third parties in any applicable jurisdiction in the
United States, other than with respect to such portion, if any, of the
Aircraft as may not be covered by the recording system established by the
FAA under the Transportation Code, the filing of a financing statement in
respect of such security interest under Article 9 of the Uniform
Commercial Code as in effect in the State of Delaware and the filing of
continuation statements with respect thereto under such Uniform Commercial
Code.
ARTICLE V
COVENANTS OF AMERICAN
SECTION 5.01 Liens. American shall promptly take (or cause to be
taken) such action as may be necessary duly to discharge (by bonding or
otherwise) any Lien other than a Permitted Lien arising at any time with respect
to any Collateral.
SECTION 5.02 Possession, Operation and Use, Maintenance and
Registration. (a) Possession. American shall not, without the prior written
consent of the Required Lenders, lease or otherwise in any manner deliver,
transfer or relinquish possession of any Airframe or any Engine or install any
Engine, or permit any Engine to be installed, on any airframe other than an
Airframe; provided that American may, so long as no Event of Default shall have
occurred and be continuing, and so long as the action to be taken shall not
deprive the Agent of the perfected Lien of this Security Agreement on any
Airframe or (subject to the provisos to clauses (i)(C) and (vii) of this Section
5.02(a)) any Engine, and in any event so long as American shall comply with the
provisions of Section 5.06, without the prior consent of the Agent or any
Secured Party:
(i) subject any Airframe to normal interchange agreements or
any Engine to normal interchange or pooling agreements or arrangements, in
each case customary in the airline industry and entered into by American
in the ordinary course of its business with any other U.S. Air Carrier or
with any "foreign air carrier" (as such term is defined in the
Transportation Code) as to which there is in force a permit issued
pursuant to the Transportation Code (49 U.S.C.ss.ss.41301-41306) or any
successor provision that gives like authority (any such U.S. Air Carrier
and any such foreign air carrier being hereinafter called a "PERMITTED AIR
CARRIER"); provided that (A) no transfer of the registration of any
Airframe shall be - effected in connection therewith, (B) no such
agreement or arrangement contemplates or requires the - transfer of title
to any Airframe and (C) if American's title to any such Engine shall be
divested under - any such agreement or arrangement, such divestiture shall
be deemed to be an Event of Loss with respect to such Engine and American
shall comply with Section 5.05(a) in respect thereof;
(ii) deliver possession of any Airframe or any Engine to any
organization for testing, service, repair, maintenance, overhaul work or
other similar purpose on such Airframe or such Engine or any part thereof
or for alterations or modifications in or additions
American Airlines - Aircraft Security Agreement
6
to such Airframe or such Engine to the extent required or permitted by the
terms of this Security Agreement;
(iii) transfer possession of any Airframe or any Engine to the
United States government pursuant to a lease, contract or other
instrument;
(iv) subject any Airframe or any Engine to the CRAF Program or
transfer possession of any Airframe or any Engine at any time to the
United States government or any instrumentality or agency thereof in
accordance with applicable laws, rulings, regulations or orders
(including, without limitation, any transfer pursuant to the CRAF
Program); provided that American (A) shall promptly notify the Agent upon
- transferring possession pursuant to this clause (iv) and (B) in the case
of a transfer of possession - pursuant to the CRAF Program, shall within
60 days of such transfer notify the Agent of the name and address of the
responsible Contracting Officer Representative for the Military Airlift
Command of the United States of America or other appropriate person to
whom notices must be given and to whom requests or claims must be made to
the extent applicable under the CRAF Program;
(v) install an Engine on an airframe owned by American free
and clear of all Liens, except (A) Permitted Liens and Liens which apply
only to the engines (other than Engines), appliances, parts, instruments,
appurtenances, accessories, furnishings and other equipment (other than
Parts) installed on such airframe (but not to the airframe as an
entirety)and (B) the rights of other Permitted Air Carriers under
interchange agreements which would be permitted under clause (i) above;
(vi) install an Engine on an airframe leased to American or
purchased or owned by American subject to a conditional sale or other
security agreement; provided that (A) such airframe is free and clear of
all - Liens except the rights of the parties to the lease or conditional
sale or other security agreement covering such airframe and except Liens
of the type permitted by clauses (A) and (B) of clause (v) of this Section
5.02(a) and (B) American shall have obtained from the lessor or secured
party of such - airframe a written agreement (which may be the lease or
conditional sale or other security agreement covering such airframe), in
form and substance satisfactory to the Agent (it being understood that an
agreement from such lessor or secured party substantially in the form of
the final sentence of the penultimate paragraph of this Section 5.02(a)
shall be deemed to be satisfactory to the Agent), whereby such lessor or
secured party expressly agrees that neither it nor its successors or
assigns will acquire or claim any right, title or interest in any Engine
by reason of such Engine being installed on such airframe at any time
while such Engine is subject to the Lien of this Security Agreement;
(vii) install an Engine on an airframe owned by American,
leased to American or owned by American subject to a conditional sale or
other security agreement under circumstances where neither clause (v) nor
clause (vi) of this Section 5.02(a) is applicable; provided that such
installation shall be deemed an Event of Loss with respect to such Engine
and American shall comply with Section 5.05(a) in respect thereof, the
Agent not intending hereby to waive any right or interest it may have to
or in such Engine under applicable law until compliance by American with
such Section 5.05(a); and
American Airlines - Aircraft Security Agreement
7
(viii) lease any Engine or any Airframe and Engines or engines
then installed on any Airframe to any Permitted Lessee; provided that (i)
such lease shall provide that the lessee shall not sublease the Aircraft
except in connection with an integrated transaction involving a sublease
to a Permitted Lessee commencing at the inception of such lease and (ii)
the Aircraft Value of any such Engines and Airframes leased to any
Permitted Lessee referred to in clause (c) of the definition of "Permitted
Lessee" shall at no time exceed 5% of the Aggregate Collateral Value;
provided that the rights of any transferee who receives possession by reason of
a transfer permitted by this Section 5.02(a) (other than the transfer of an
Engine which is deemed an Event of Loss) shall be, during the period of such
possession, subject and subordinate to, and any lease permitted by this Section
5.02(a) shall be made expressly subject and subordinate to, all the terms of
this Security Agreement, including, without limitation, the Agent's rights to
take possession pursuant to Section 7.01 and to avoid and terminate such lease
upon such repossession, and American shall, in all events, remain primarily
liable hereunder for the performance and observance of all of the terms and
conditions of this Security Agreement (including, without limitation, the terms
and conditions set forth in Section 5.02(c) and Section 5.06) to the same extent
as if such lease or transfer had not occurred, and any such lease shall include
appropriate provisions for the maintenance, operation, use and insurance of the
Aircraft and shall permit inspection as provided in Section 5.03 and shall not
result in any registration or re-registration of the Aircraft except to the
extent permitted in Section 5.02(e). No interchange agreement, pooling
agreement, lease or other relinquishment of possession of any Airframe or any
Engine shall in any way discharge or diminish any of American's obligations
hereunder or under any other Financing Document. The Agent and the Secured
Parties hereby agree, for the benefit of the lessor or secured party of any
airframe or engine leased to American or purchased or owned by American subject
to a conditional sale or other security agreement, that the Agent and the
Secured Parties will not acquire or claim, as against such lessor or secured
party, any right, title or interest in any engine or engines owned by the lessor
under such lease or subject to a security interest in favor of the secured party
under such conditional sale or other security agreement as the result of such
engine or engines being installed on any Airframe at any time while such engine
or engines are subject to such lease or conditional sale or other security
agreement.
The Agent acknowledges that any "wet lease" or other similar
arrangement under which American maintains operational control of the Aircraft
shall not constitute a delivery, transfer or relinquishment of possession for
purposes of this Section 5.02(a).
(b) Operation and Use. American agrees that the Aircraft will not be
maintained, used or operated in violation of any law or any rule, regulation or
order of any government or governmental authority having jurisdiction over the
Aircraft, or in violation of any airworthiness certificate, license or
registration relating to such Aircraft issued by any such authority, except
where any such violation, either individually or in the aggregate with all other
such violations, could not be reasonably expected to have a Material Adverse
Effect; provided that American may in good faith contest the validity or
application of any such law, rule, regulation or order in any reasonable manner
which does not materially adversely affect the Lien of this Security Agreement;
and provided further that American shall not be in default under this sentence
if it is not possible for it to comply with the laws of a jurisdiction other
than the United States of America (or other than any jurisdiction in which any
Aircraft is then registered) because of a conflict with the applicable laws of
the United States of America (or such jurisdiction in which such Aircraft is
then registered) in which event American
American Airlines - Aircraft Security Agreement
8
shall use its reasonable best efforts to cause such Aircraft to be removed, as
soon as practicable, from the jurisdiction other than the United States (or
other than the jurisdiction in which such Aircraft is then registered) creating
the conflict or take such other reasonable action (including, if necessary,
changing the registration of such Aircraft unless such Aircraft is then
registered in the United States), as soon as practicable, as may be necessary to
avoid the conflict. American also agrees not to operate or locate any Aircraft,
or suffer any Aircraft to be operated or located, (i) in any area excluded from
coverage by any insurance required by the terms of Section 5.06, except in the
case of a requisition for use by the United States government where American
obtains indemnity in lieu of such insurance from such United States government
against the risks and in the amounts required by Section 5.06 (without giving
effect to any self-insurance provisions thereunder) covering such area, or (ii)
in any war zone or recognized or, in American's reasonable judgment, threatened
area of hostilities unless covered by war risk insurance, or unless such
Aircraft is operated or used under contract with the United States government,
under which contract such government assumes liability for any damage, loss or
destruction of such Aircraft at the end of the term of such contract and for
injury to persons and damage to property of others.
(c) Maintenance. American shall maintain, service, repair, overhaul
and test each Aircraft in accordance with the applicable maintenance program (as
approved by the FAA) for aircraft of such make and model (or, at American's
option, in accordance with the aircraft maintenance standards for aircraft of
such make and model required by or substantially equivalent to those required by
the FAA or the central civil aviation authority of any of Australia, Austria,
Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, The
Netherlands, New Zealand, Norway, Spain, Sweden, Switzerland or the United
Kingdom) and in the same manner and with the same care used with respect to
similar aircraft and engines operated by American and utilized in similar
circumstances so as to keep the Aircraft in as good operating condition as when
delivered to American by the manufacturer of such Aircraft, ordinary wear and
tear excepted, and in such condition as may be necessary to enable the
airworthiness certification of each Aircraft to be maintained in good standing
at all times (other than during temporary periods of storage in accordance with
applicable regulations, during maintenance or modification permitted hereunder
or during periods of grounding by applicable governmental authorities except
where such periods of grounding are the result of the failure by American to
maintain the Aircraft as otherwise required herein) under the Transportation
Code or the applicable laws of any other jurisdiction in which the Aircraft may
then be registered. American shall maintain, in the English language, all
records, logs and other materials required by the appropriate authorities in the
jurisdiction where each Aircraft is registered to be maintained in respect of
such Aircraft.
(d) Identification of Agent's Interest. American agrees to affix as
promptly as practicable after the date hereof and thereafter to maintain in the
cockpit of each Aircraft adjacent to the airworthiness certificate and (if not
prevented by applicable law or regulations or by any governmental authority) on
each Engine, a nameplate bearing the inscription "SUBJECT TO A MORTGAGE AND
SECURITY AGREEMENT IN FAVOR OF CITICORP USA, INC. (U.S.A.), AS AGENT" (such
nameplate to be replaced, if necessary, with a nameplate reflecting the name of
any successor Agent).
(e) Registration. Each Aircraft has been duly registered at the FAA
in the name of American, as owner, and, subject to the further provisions of
this Section 5.02(e), American will cause each Aircraft to remain duly
registered in American's name, except as otherwise required by
American Airlines - Aircraft Security Agreement
9
such applicable registration laws and regulations and except to the extent such
registration cannot be effected because of any failure by the Agent or any
Secured Party to comply with the citizenship or other eligibility requirements
for the registration of aircraft under such applicable registration laws and
regulations; provided that the Agent shall execute and deliver all such
documents as American may reasonably request for the purpose of effecting and
continuing such registration; and provided further that American may at any
time, upon notice to the Agent, subject to the terms and conditions hereinafter
in this Section 5.02(e) set forth, at no expense or liability to the Secured
Parties or the Agent, register any Aircraft or permit any Aircraft to be
registered under the applicable statutes of any other country in which a
Permitted Lessee could be based in the name of American or, if required by
applicable law, any other Person and the Agent and the Secured Parties will
cooperate with American's reasonable requests in effecting such foreign
registration, and American shall maintain such registration unless and until any
such Aircraft is re-registered in accordance with this Section 5.02(e);
provided, however, that if any such country is not at the time of registration
the United States or a Permitted Country, as a condition to American's right to
effect such foreign registration, American shall have delivered to the Agent
prior to the time of such registration an opinion of counsel to American (which
counsel shall be reasonably acceptable to the Agent) with respect to such
country of a tenor comparable to that described in clause (c) of the definition
of Permitted Lessee. Notwithstanding the foregoing, no such re-registration of
the Aircraft pursuant to this Section 5.02(e) shall occur unless prior to any
such change in the country of registry of the Aircraft, the following conditions
are met or are waived by the Agent:
(i) no Event of Default shall have occurred and be continuing
at the date of such request or at the effective date of the change in
registration; provided that it shall not be necessary to comply with this
condition (i) if the change in registration involves the registration of
any Aircraft under the laws of the United States of America;
(ii) the Agent shall have received a legal opinion from
counsel to American reasonably satisfactory to the Agent to the effect
that: (A) after giving effect to such change in registration, the Lien of
this - Security Agreement shall continue as a valid and duly perfected
Lien and that all filing, recording or other action necessary to perfect
and protect the Lien of this Security Agreement has been accomplished (or
if such opinion cannot be given at the time by which the Agent has been
requested to consent to a change in registration, (x) the opinion shall
detail what filing, recording or other action is necessary - and (y) the
Agent shall have received a certificate from a Responsible Officer that
all possible - preparations to accomplish such filing, recording and other
action shall have been done, and such filing, recording and other action
shall be accomplished and a supplemental opinion to that effect shall be
delivered to the Agent on or prior to the effective date of such change in
registration), (B) the - terms of this Security Agreement are legal, valid
and binding and enforceable in such jurisdiction (subject to customary
exceptions) and (C) all approvals or consents of any government in such -
jurisdiction having jurisdiction required for such change in registration
shall have been duly obtained and shall be in full force and effect;
(iii) the Agent shall have received assurances reasonably
satisfactory to it (x) that the insurance provisions contained herein will
have been complied with after giving effect to such change in registration
and (y) that the Agent or American shall have agreed to meet the
requirements, if any, detailed in the opinion described in Section
5.02(e)(ii)(c) above; and
American Airlines - Aircraft Security Agreement
10
(iv) American shall have paid or made provision for the payment of
all reasonable expenses (including reasonable attorneys' fees) of the Agent and
the Secured Parties in connection with such change in registration.
SECTION 5.03 Inspection. At all reasonable times, but upon at least
15 days' (or if a Default is continuing, 2 Business Days') prior notice to
American, the Agent or its authorized representative (which may be a Secured
Party) may at its own expense and risk (including, without limitation, any risk
of personal injury or death) conduct a visual walk-around inspection of any
Aircraft (including the interior of such Aircraft) and any Engine and may
inspect the books and records of American relating thereto; provided that (i)
the Agent shall provide, prior to conducting any such inspection, assurances
reasonably satisfactory to American that such representative is fully insured
with respect to any risks incurred in connection with any such inspection, (ii)
any such inspection shall be subject to the safety, security and workplace rules
applicable at the location where such inspection is conducted and to the
requirements of any applicable law and (iii) in the case of an inspection during
a maintenance visit, such inspection shall not in any respect interfere with the
normal conduct of such maintenance visit or extend the time required for such
maintenance visit. All information obtained in connection with any such
inspection shall be treated as Confidential Information in accordance with
Section 9.08 of the Credit Agreement. Neither the Agent nor any Secured Party
shall have any duty to make any such inspection or incur any liability or
obligation by reason of not making any such inspection. No inspection pursuant
to this Section 5.03 shall relieve American of any of its obligations hereunder.
No inspection pursuant to this Section 5.03 shall interfere with the use,
operation or maintenance of any Aircraft or the normal conduct of American's
business, and American shall not be required to undertake or incur any
additional liabilities in connection therewith.
SECTION 5.04 Replacement and Pooling of Parts; Alterations,
Modifications and Additions; Substitution of Engines. (a) Replacement of Parts.
American, at its own cost and expense, will promptly replace or cause to be
replaced all Parts which may from time to time be incorporated or installed in
or attached to any Airframe or any Engine and which may from time to time become
worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or
rendered permanently unfit for use for any reason whatsoever, except as
otherwise provided in Section 5.04(c). In addition, American may, at its own
cost and expense, remove or cause to be removed in the ordinary course of
maintenance, service, repair, overhaul or testing, any Parts, whether or not
worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or
rendered permanently unfit for use; provided that American, except as otherwise
provided in Section 5.04(c), will, at its own cost and expense, replace or cause
to be replaced such Parts as promptly as possible. All replacement Parts shall
be free and clear of all Liens (except for Permitted Liens), and shall be in as
good operating condition as, and shall have a value and utility at least equal
to, the Parts replaced, assuming such replaced Parts were in the condition and
repair required to be maintained by the terms hereof. All Parts at any time
removed from any Airframe or any Engine shall remain subject to the Lien of this
Security Agreement no matter where located, until such time as such Parts shall
be replaced by Parts which have been incorporated or installed in or attached to
such Airframe or such Engine and which meet the requirements for replacement
Parts specified above. Immediately upon any replacement Part becoming
incorporated or installed in or attached to any Airframe or any Engine as above
provided, without further act, (i) the replaced Part shall thereupon be free and
clear of all rights of the Agent and of the Lien of this Security Agreement and
shall no longer be deemed a Part hereunder and (ii) such replacement Part shall
become subject to
American Airlines - Aircraft Security Agreement
11
the Lien of this Security Agreement and be deemed a Part of such Airframe or
such Engine for all purposes to the same extent as the Parts originally
incorporated or installed in or attached to such Airframe or such Engine.
(b) Pooling of Parts. Any Part removed from any Airframe or any
Engine as provided in Section 5.04(a) may be subjected by American or a Person
permitted to be in possession of the Aircraft pursuant to Section 5.02(a) to a
normal pooling arrangement customary in the airline industry entered into in the
ordinary course of American's or such other Person's business with Permitted Air
Carriers; provided that the Part replacing such removed Part shall be
incorporated or installed in or attached to such Airframe or such Engine in
accordance with Section 5.04(a) as promptly as practicable after the removal of
such removed Part. In addition, any replacement Part when incorporated or
installed in or attached to any Airframe or any Engine in accordance with
Section 5.04(a) may be owned by a Permitted Air Carrier subject to such a normal
pooling arrangement; provided that American, at its expense, as promptly
thereafter as practicable, either (i) causes title to such replacement Part to
vest in American, free and clear of all Liens (other than Permitted Liens), at
which time such replacement Part shall, in accordance with Section 5.04(a),
become a Part and become subject to the Lien of this Security Agreement or (ii)
replaces or causes to be replaced such replacement Part by incorporating or
installing in or attaching to such Airframe or such Engine a further replacement
Part owned by American, free and clear of all Liens (other than Permitted
Liens), which without further act shall be subject to the Lien of this Security
Agreement.
(c) Alterations, Modifications and Additions. American, at its own
expense, will make or cause to be made such alterations and modifications in and
additions to any Airframe and any Engine as may be required from time to time to
meet the applicable standards of any applicable regulatory agency or body of the
jurisdiction in which the applicable Aircraft is then registered as permitted by
Section 5.02(e) or other governmental authority having jurisdiction over such
Aircraft; provided that American may, in good faith, contest the validity or
application of any such standard within 150 days of the date on which American
is required to make such alterations or modifications and in any reasonable
manner that does not materially adversely affect the Lien of this Security
Agreement. In addition, American, at its own expense, may from time to time make
or cause to be made such alterations and modifications in and additions to any
Airframe or any Engine as American may deem desirable in the proper conduct of
its business, provided that no such alteration, modification or addition shall
materially diminish the value or utility of the Airframe or such Engine below
its value or utility, immediately prior to such alteration, modification or
addition, assuming that the Airframe or such Engine was then in the condition
required to be maintained by the terms of this Security Agreement, except that
the value (but not the utility) of the Airframe or any Engine may be reduced by
the value of any such Parts that shall have been removed that American deems
obsolete or no longer suitable or appropriate for use on the Airframe or any
Engine. All Parts incorporated or installed in or attached or added to any
Airframe or any Engine as the result of such alteration, modification or
addition shall, without further act, be subject to the Lien of this Security
Agreement. Upon the removal by American of any Part as permitted by this Section
5.04(c), such Part shall, without further act, be free and clear of all rights
and interests of the Agent and the Lien of this Security Agreement and such Part
shall no longer be deemed part of the Airframe or Engine from which it was
removed. Except as otherwise expressly provided in this Security Agreement, any
Part removed other than in accordance with this Section 5.04(c), shall remain
subject to the Lien of this Security Agreement.
American Airlines - Aircraft Security Agreement
12
SECTION 5.05 Loss, Destruction or Requisition. (a) Event of Loss
with Respect to any Airframe or Engine. Upon the occurrence of an Event of Loss
with respect to any Airframe or Engine, American shall forthwith comply with the
provisions set forth in Section 5.01(n)(v) of the Credit Agreement with respect
thereto.
(b) Application of Payments for Event of Loss from Requisition of
Title or Use. Any payments (other than insurance proceeds the application of
which is provided for in Section 5.06) received at any time by American or by
the Agent from any governmental authority or other Person with respect to an
Event of Loss to any Airframe or any Engine, will be, subject to Section
5.01(n)(i) of the Credit Agreement, applied as follows:
(i) if, after such Event of Loss, the Aggregate Collateral Value
equals or exceeds the Required Collateral Amount, then such payments will
be retained by American;
(ii) if, after such Event of Loss, the Aggregate Collateral Value is
less than the Required Collateral Amount and such payments are received
with respect to any Airframe or any Airframe and Engines that have been or
are being replaced by American pursuant to Section 5.05(a), or American
has elected to deposit funds into the Cash Collateral Account in lieu of
such replacement, such payments shall be paid over to, or retained by, the
Agent and upon completion of such replacement or deposit be paid over to,
or retained by, American; and
(iii) if, after such Event of Loss, the Aggregate Collateral Value
is less than the Required Collateral Amount and such payments are received
with respect to any Airframe or any Airframe and Engines that have not
been and will not be replaced pursuant to Section 5.05(a), and American
has not deposited funds into the Cash Collateral Account in lieu of such
replacement, so much of such payments remaining after reimbursement of the
Agent for costs and expenses as shall not exceed the difference between
the Aggregate Collateral Value and the Required Collateral Amount shall be
deposited by the Agent into the Cash Collateral Account, and the balance,
if any, of such payment remaining thereafter will be paid over to, or
retained by, American.
(c) Requisition for Use by the Government of any Airframe and the
Engines Installed Thereon. In the event of the requisition for use by any
government (including for this purpose any agency or instrumentality thereof),
of any Airframe and the Engines installed thereon or engines installed on any
Airframe under circumstances not constituting an Event of Loss, American shall
promptly notify the Agent of such requisition, and all of American's obligations
under this Security Agreement with respect to such Aircraft shall continue to
the same extent as if such requisition had not occurred, provided that,
notwithstanding the foregoing, American's obligations hereunder other than
payment obligations shall only continue to the extent reasonably feasible. All
such payments received by the Agent or American from such government for the use
of any Airframe and Engines or engines shall be paid over to, or retained by,
American.
(d) Requisition for Use by the Government of an Engine. In the event
of the requisition for use by any government (including for this purpose any
agency or instrumentality thereof) of any Engine (but not the Airframe to which
such Engine relates), American will comply with the terms of Section 5.05(a) to
the same extent as if an Event of Loss had occurred with respect
American Airlines - Aircraft Security Agreement
13
to such Engine. Upon such compliance, any payments received by the Agent or
American from such government with respect to such requisition shall be paid
over to, or retained by, American.
(e) Application of Payments During Existence of Event of Default.
Any amount referred to in Section 5.05(b), in Section 5.05(c) or in Section
5.05(d) that is payable to American shall not be paid to American, or if it has
been previously paid directly to American, shall not be retained by American, if
at the time of such payment a Payment Default, Bankruptcy Default or Event of
Default shall have occurred and be continuing, but shall be paid to and held by
the Agent as security for the obligations of American under this Security
Agreement, applied against American's payment obligations hereunder when and as
they become due and payable, and at such time as there shall not be continuing
any such Payment Default, Bankruptcy Default or Event of Default, such amount,
to the extent not previously so applied against American's payment obligations,
shall be paid to American.
SECTION 5.06 Insurance
(a) Aircraft Liability Insurance. (i) Except as provided in clause
(ii) of this subsection (a) and subject to the rights of American to establish
and maintain self-insurance in the manner and to the extent specified in Section
5.06(c), American will carry, or cause to be carried, at no expense to the Agent
or any Secured Party, aircraft liability insurance (including, but not limited
to, bodily injury, personal injury and property damage liability, exclusive of
manufacturer's product liability insurance) and contractual liability insurance
with respect to each Aircraft (A) in amounts that are not less than the aircraft
liability insurance applicable to similar aircraft and engines in American's
fleet on which American carries insurance, (B) of the type usually carried by
corporations engaged in the same or similar business, similarly situated with
American and owning or operating similar aircraft and engines and covering risks
of the kind customarily insured against by American and (C) that is maintained
in effect with insurers of recognized responsibility. Any policies of insurance
carried in accordance with this Section 5.06(a) and any policies taken out in
substitution or replacement for any of such policies shall (A) name the Agent
(in its individual capacity and as Agent) and each Secured Party, as their
respective Interests (as defined below in this Section 5.06) may appear, as
additional insureds, (B) subject to the condition of clause (C) below, provide
that, in respect of the interests of the Agent and each Secured Party in such
policies, the insurance shall not be invalidated by any action or inaction of
American and shall insure the Agent's and each Secured Party's Interests as they
appear, regardless of any breach or violation of any warranty, declaration or
condition contained in such policies by American, (C) provide that, if such
insurance is cancelled for any reason whatever, or if any material adverse
change is made in the policy that affects coverage certified hereunder to any
Secured Party or the Agent, or if such insurance is allowed to lapse for
nonpayment of premium, such cancellation, change or lapse shall not be effective
as to the Agent or any Secured Party for 30 days (seven (7) days, or such other
period as is customarily available in the industry, in the case of any war risk
or allied perils coverage) after receipt by the Agent or such Secured Party,
respectively, of written notice from such insurers of such cancellation, change
or lapse, (D) provide that none of the Agent or any Secured Party shall have any
obligation or liability for premiums, commissions, assessments or calls in
connection with such insurance, (E) provide that the insurers shall waive any
rights of (1) set-off, counterclaim or any other deduction, whether by
attachment or otherwise, in respect of any liability of the Agent or any Secured
Party to the extent of any moneys due to the Agent or such Secured Party and (2)
subrogation against the Agent or any Secured Party to the extent that American
has
American Airlines - Aircraft Security Agreement
14
waived its rights by its agreements to indemnify such party pursuant to the
Financing Documents, (F) be primary without right of contribution from any other
insurance that may be carried by the Agent or any Secured Party with respect to
its Interests as such in the Aircraft and (G) expressly provide that all of the
provisions thereof, except the limits of liability, shall operate in the same
manner as if there were a separate policy covering each insured. "INTERESTS" as
used in this Section 5.06(a) and in Section 5.06(b) with respect to any Person
means the interests of such Person in its individual capacity as Agent or
Secured Party, as the case may be, in the transactions contemplated by the
Financing Documents. In the case of a lease or contract with the United States
government in respect of any Aircraft or any Engine, or in the case of any
requisition for use of any Aircraft or any Engine by the United States
government, a valid agreement by such government to indemnify American, or an
insurance policy issued by such government, against the risks that American is
required hereunder to insure against shall be considered adequate insurance for
purposes of this Section 5.06(a) to the extent of the risks (and in the amounts)
that are the subject of such indemnification or insurance.
(ii) During any period that any Airframe or Engine, as the case may
be, is on the ground and not in operation, American may carry or cause to be
carried as to such non-operating Airframe or Engine, in lieu of the insurance
required by clause (i) above, and subject to self-insurance to the extent
permitted by subsection (c) of this Section 5.06, insurance otherwise conforming
with the provisions of said clause (i) except that: (A) the amounts of coverage
shall not be required to exceed the amounts of airline liability insurance from
time to time applicable to airframes or engines owned or leased by American of
the same type as such non-operating Airframe or Engine and that are on the
ground and not in operation and (B) the scope of the risks covered and the type
of insurance shall be the same as from time to time shall be applicable to
airframes or engines owned or leased by American of the same type as such
non-operating Airframe or Engine and that are on the ground and not in
operation.
(b) Insurance Against Loss or Damage to Aircraft. (i) Except as
provided in clause (ii) of this subsection (b), and subject to the rights of
American to establish and maintain self-insurance in the manner and to the
extent specified in Section 5.06(c), American shall maintain, or cause to be
maintained, in effect with insurers of recognized responsibility, at no expense
to the Agent or any Secured Party, all-risk aircraft hull insurance covering
each Aircraft and all-risk coverage with respect to any Engines or Parts while
removed from an Aircraft (including, without limitation, war risk insurance if
and to the extent the same is maintained by American or any Permitted Lessee
with respect to other aircraft owned or operated by American or such Permitted
Lessee, as the case may be, on the same routes) that is of the type and in
substantially the amount usually carried by corporations engaged in the same or
similar business and similarly situated with American; provided that (A) such
insurance (including the permitted self-insurance) shall at all times while an
Aircraft is subject to this Security Agreement be for an amount not less than
the Aircraft Value of such Aircraft and (B) such insurance need not cover an
Engine while attached to an airframe not owned, leased or operated by American.
Any policies carried in accordance with this Section 5.06(b) and any policies
taken out in substitution or replacement for any such policies shall (A) provide
that any insurance proceeds up to an amount equal to the Aircraft Value for any
loss or damage constituting an Event of Loss with respect to the Aircraft, and
any insurance proceeds in excess of $10,000,000 up to the amount of the Aircraft
Value for any loss or damage to the Aircraft (or Engines) not constituting an
Event of Loss with respect to the Aircraft, shall be paid to the Agent as long
as the Security Agreement shall not have been discharged, and that all other
amounts shall be
American Airlines - Aircraft Security Agreement
15
payable to American, unless the insurer shall have received notice that an Event
of Default exists, in which case all insurance proceeds for any loss or damage
to the Aircraft (or Engines) up to the Aircraft Value shall be payable to the
Agent, (B) subject to the conditions of clause (C) below, provide that, in
respect of the interests of the Agent and each Secured Party in such policies,
the insurance shall not be invalidated by any action or inaction of American and
shall insure the Agent's and each Secured Party's Interests as they appear,
regardless of any breach or violation of any warranty, declaration or condition
contained in such policies by American, (C) provide that, if such insurance is
canceled for any reason whatsoever, or if any material adverse change is made in
the policy that affects the coverage certified hereunder to any Secured Party or
the Agent, or if such insurance is allowed to lapse for nonpayment of premium,
such cancellation, change or lapse shall not be effective as to the Agent or any
Secured Party for 30 days (seven days, or such other period as is customarily
available in the industry, in the case of any war risk or allied perils
coverage) after receipt by the Agent or such Secured Parties, respectively, of
written notice from such insurers of such cancellation, change or lapse, (D)
provide that none of the Agent or any Secured Party shall have any obligation or
liability for premiums, commissions, assessments or calls in connection with
such insurance, (E) provide that the insurers shall waive any rights of (1)
set-off, counterclaim or any other deduction, whether by attachment or
otherwise, in respect of any liability of the Agent or any Secured Party to the
extent of any moneys due to the Agent or such Secured Party and (2) subrogation
against the Agent or any Secured Party to the extent that American has waived
its rights by its agreements to indemnify such party pursuant to the Financing
Documents and (F) be primary without right of contribution from any other
insurance that may be carried by the Agent or any Secured Party with respect to
its interests as such in the Aircraft. In the case of a lease or contract with
the United States government in respect of any Aircraft or any Engine, or in the
case of any requisition for use of any Aircraft or any Engine by the United
States government, a valid agreement by such government to indemnify American,
or any insurance policy issued by such government, against any risks that
American is required hereunder to insure against shall be considered adequate
insurance for purposes of this Section 5.06(b) to the extent of the risks (and
in the amounts) that are subject of such indemnification or insurance.
(ii) During any period that any Airframe or Engine is on the ground
and not in operation, American may carry or cause to be carried as to such
non-operating Airframe or Engine, in lieu of the insurance required by clause
(i) above, and subject to self-insurance to the extent permitted by subsection
(c) of this Section 5.06, insurance otherwise conforming with the provisions of
said clause (i) except that the scope of the risks covered and the type of
insurance shall be the same as from time to time applicable to airframes or
engines owned or leased by American (or, if a permitted lease is then in effect,
by the Permitted Lessee) of the same type as such non-operating Airframe or
Engine and that are on the ground and not in operation; provided that, subject
to self-insurance to the extent permitted by subsection (c) of this Section
5.06, American shall maintain insurance against risk of loss or damage to such
non-operating Airframe or Engine in an amount at least equal to the Aircraft
Value during such period that such Airframe or Engine is on the ground and not
in operation.
(c) Self-Insurance. American may from time to time self-insure, by
way of deductible, self-insured retention, premium adjustment or franchise or
otherwise (including, with respect to insurance maintained pursuant to
subsection (a) or (b) of this Section 5.06, insuring for a maximum amount that
is less than the amounts set forth in Section 5.06(a) and (b)), the risks
required to be insured against pursuant to Section 5.06(a) and 5.06(b), but in
no case shall the self-
American Airlines - Aircraft Security Agreement
16
insurance with respect to all of the aircraft and engines in American's fleet
(including, without limitation, the Aircraft) exceed $50,000,000 for any
12-month policy year; provided, if AMR Corporation's senior unsecured long-term
debt is rated at least BB+ or higher by Standard & Poor's Ratings Group (or any
successor thereto that is a nationally recognized statistical rating
organization) ("S&P") and Ba1 or higher by Moody's Investors Services, Inc. (or
any successor thereto that is a nationally recognized statistical rating
organization) ("Moody's"), then the self-insurance with respect to all of the
aircraft and engines in American's fleet (including, without limitation, the
Aircraft) shall not exceed for any 12-month policy year 1% of the average
aggregate insurable value (for the preceding policy year) of all aircraft
(including, without limitation, the Aircraft) on which American carries
insurance; provided further if AMR Corporation's senior unsecured long-term debt
is rated B- or below by S&P and B3 or below by Moody's, then American will
reduce the self-insurance permitted hereunder to such reasonable amount as the
Agent (acting on the instructions of the Required Lenders) may require; and
provided, further, that a deductible per occurrence that, in the case of the
Aircraft, is not in excess of the amount customarily allowed as a deductible in
the industry or is required to facilitate claims handling shall be permitted in
addition to the above mentioned self-insurance.
(d) Application of Insurance Payments. All losses will be adjusted
by American with the insurers, and all insurance payments received under
policies required to be maintained by American hereunder, exclusive of any
payments received in excess of the Aircraft Value for any Aircraft from such
policies, as the result of the occurrence of an Event of Loss with respect to
any Airframe or an Engine will be applied as follows:
(i) if, after such Event of Loss, the Aggregate Collateral Value
equals or exceeds the Required Collateral Amount, then such payments will
be retained by American;
(ii) if, after such Event of Loss, the Aggregate Collateral Value is
less than the Required Collateral Amount and such payments are received
with respect to any Airframe or any Airframe and any Engines that have
been or are being replaced by American as contemplated by Section 5.05(a),
or American has elected to deposit funds into the Cash Collateral Account
in lieu of such replacement, such payments shall be paid over to, or
retained by, the Agent, and upon completion of such replacement or deposit
be paid over to, or retained by, American; and
(iii) if, after such Event of Loss, the Aggregate Collateral Value
is less than the Required Collateral Amount and such payments are received
with respect to any Airframe or any Airframe and any Engines that have not
been and will not be replaced as contemplated by Section 5.05(a), and
American has not deposited funds into the Cash Collateral Account in lieu
of such replacement, so much of such payments remaining after
reimbursement of the Agent for costs and expenses as shall not exceed the
difference between the Aggregate Collateral Value and the Required
Collateral Amount shall be deposited by the Agent into the Cash Collateral
Account, and the balance, if any, of such payment remaining thereafter
will be paid over to, or retained by, American.
In all events, the insurance payment of any property damage loss
received under policies maintained by American in excess of the Aircraft Value
for an Aircraft shall be paid to American.
American Airlines - Aircraft Security Agreement
17
The insurance payments for any loss or damage to an Airframe or an
Engine not constituting an Event of Loss with respect to such Airframe or Engine
will be applied in payment (or to reimburse American) for repairs or for
replacement property in accordance with the terms of Sections 5.02 and 5.04, and
any balance remaining after compliance with such Sections with respect to such
loss or damage shall be paid to American. Any amount referred to in the
preceding sentence or in clause (i), (ii) or (iii) of the second preceding
paragraph which is payable to American shall not be paid to American or, if it
has been previously paid directly to American, shall not be retained by
American, if at the time of such payment a Payment Default, Bankruptcy Default
or Event of Default shall have occurred and be continuing, but shall be paid to
and held by the Agent in the Cash Collateral Account as security for the Secured
Obligations, and applied against American's payment obligations hereunder when
and as they become due and payable, and at such time as there shall not be
continuing any such Payment Default, Bankruptcy Default or Event of Default,
such amount, to the extent not previously so applied against American's payment
obligations, shall be paid to American at such time and in accordance with the
preceding sentence or clause (i), (ii) or (iii) of the second preceding
paragraph, as applicable.
(e) Reports, Etc. On or before the date hereof and annually upon
renewal of American's insurance coverage, American will promptly furnish to the
Agent (and the Agent shall furnish to the Secured Parties) a report signed by a
firm of independent aircraft insurance brokers appointed by American, stating
the opinion of such firm that the insurance then carried and maintained on the
Aircraft complies with the terms hereof; provided that all information contained
in such report shall be treated as Confidential Information in accordance with
Section 9.08 of the Credit Agreement. American will cause such firm to advise
the Agent and the Secured Parties in writing promptly of any default in the
payment of any premium and of any other act or omission on the part of American
of which such firm has knowledge and which might invalidate or render
unenforceable, in whole or in part, any insurance on any Aircraft. American will
also cause such firm to advise the Agent and the Secured Parties in writing as
promptly as practicable after such firm acquires knowledge that an interruption
or reduction of any insurance carried and maintained on any Aircraft pursuant to
the provisions of this Section 5.06 will occur.
(f) Insurance for Own Account. Nothing in this Section 5.06 shall
limit or prohibit the Agent, any Secured Party or American from obtaining
insurance for its own account with respect to any Airframe or any Engine and any
proceeds payable thereunder shall be payable as provided in the insurance policy
relating thereto; provided that no such insurance may be obtained which would
limit or otherwise adversely affect the coverage or amounts payable under
insurance maintained with respect to any Aircraft or any other aircraft in
American's fleet, it being understood that all salvage rights to any Airframe or
Engine shall remain with American's insurers at all times and provided further
that such insurance may only be obtained to the extent the procurement of such
insurance does not have an adverse effect on American's ability or cost to
obtain insurance with respect to any Aircraft or any other aircraft in
American's fleet.
SECTION 5.07 Maintenance of Certain Engines. Notwithstanding
anything to the contrary contained herein, an aircraft engine which is not an
Engine, but which is installed on an Airframe, shall be maintained in accordance
with Section 5.02(c).
SECTION 5.08 General Indemnification and Waiver of Certain Claims.
(a) Claims Defined. For the purposes of this Section 5.08, "CLAIMS" shall mean
any and all liabilities,
American Airlines - Aircraft Security Agreement
18
obligations, losses, damages, penalties, claims, costs, actions or suits
(whether or not on the basis of negligence, strict or absolute liability or
liability in tort) which may be imposed on, incurred by, suffered by, or
asserted against an Indemnified Person, as defined herein, and, except as
otherwise expressly provided in this Section 5.08, shall include all reasonable
costs, disbursements and expenses (including reasonable legal fees and expenses)
of an Indemnified Person in connection therewith or related thereto.
(b) Indemnified Person Defined. For the purposes of this Section
5.08, "INDEMNIFIED PERSON" means the Agent, each Secured Party, each Secured
Party's affiliates, and their respective officers, directors, employees, agents,
successors, or permitted assigns; provided that such Persons shall, to the
extent they are not signatories to this Security Agreement, upon the request of
American, expressly agree in writing in connection with any claim for indemnity
under this Section 5.08 to be bound by the terms of this Section 5.08; and
provided further that all rights of each Indemnified Person (including, without
limitation, the right to receive any indemnity payment under this Section 5.08)
shall be exercised solely by the Agent. In the event that any Indemnified Person
fails to comply with any duty or obligation under this Section 5.08, then to the
extent that such failure materially prejudices American's rights or obligations
under this Section 5.08 such Indemnified Person shall not be entitled to
indemnity under this Section 5.08 (but only to the extent of such prejudice).
(c) Claims Indemnified. Subject to the exclusions stated in
subsection (d) below, American agrees to indemnify, protect, defend and hold
harmless each Indemnified Person against Claims resulting from or arising out of
the manufacture, design, purchase, delivery, non-delivery, acceptance,
non-acceptance or rejection, ownership, lease, sublease, possession, use,
non-use, airworthiness, control, registration, re-registration, maintenance,
repair, operation, condition, sale, storage, modification, alteration, return,
substitution, transfer or other disposition of the Aircraft, any Airframe, any
Engine or any Part (including, without limitation, latent or other defects,
whether or not discoverable, and any claims for patent, trademark or copyright
infringement).
(d) Claims Excluded. The following are excluded from American's
agreement to indemnify under this Section 5.08:
(i) any Claim attributable to acts or events occurring after the
termination of this Security Agreement or after the transfer of possession
of the Aircraft pursuant to Article VII of this Security Agreement unless
such claim is caused by American's failure to fulfill its obligations
under this Security Agreement;
(ii) Any Claim that is or is attributable to taxes, levies, duties,
assessments, charges or withholdings, except as to any such taxes, levies,
duties, assessments, charges or withholdings related to or arising out of
the manufacture, design, purchase, delivery, non-delivery, acceptance,
non-acceptance or rejection, ownership, lease, sublease, possession, use,
non-use, airworthiness, control, registration, re-registration,
maintenance, repair, operation, condition, sale, storage, modification,
alteration, return, substitution, transfer or other disposition of the
Aircraft, any Airframe, any Engine or any Part (including, without
limitation, latent or other defects, whether or not discoverable, and any
claims for patent, trademark or copyright infringement);
American Airlines - Aircraft Security Agreement
19
(iii) Any Claim found by a court of competent jurisdiction to be
attributable to the gross negligence or willful misconduct of the
Indemnified Person seeking indemnification; and
(iv) Any Claim which constitutes a Permitted Lien.
(e) Insured Claims. In the case of any Claim indemnified by American
hereunder which is covered by a policy of insurance maintained by American, each
Indemnified Person agrees to cooperate, at American's expense, with the insurers
in the exercise of their rights to investigate, defend or compromise such claim
as may be required to retain the benefits of such insurance with respect to such
Claim.
(f) Claims Procedure. An Indemnified Person shall promptly notify
American of any Claim as to which indemnification is sought; provided that the
failure to provide such prompt notice shall not release American from any of its
obligations to indemnify hereunder, except to the extent that American is
materially prejudiced by such failure or American's indemnification obligations
are materially increased as a result of such failure. Subject to the rights of
insurers under policies of insurance maintained by American, American shall have
the right, at its sole cost and expense, to investigate, and the right in its
sole discretion to defend or compromise, any Claim for which indemnification is
sought under this Section 5.08, and at American's expense, the Indemnified
Person shall cooperate with all reasonable requests of American in connection
therewith. Where American or the insurers under a policy of insurance maintained
by American undertake the defense of an Indemnified Person with respect to a
Claim, no additional legal fees or expenses of such Indemnified Person in
connection with the defense of such Claim shall be indemnified hereunder unless
such fees or expenses were incurred at the request of American or such insurers;
provided, however, that if in the written opinion of counsel to such Indemnified
Person an actual or potential conflict of interest exists where it is advisable
for such Indemnified Person to be represented by separate counsel, the
reasonable fees and expenses of such separate counsel shall be borne by
American. Subject to the requirements of any policy of insurance, an Indemnified
Person may participate at its own expense in any judicial proceeding controlled
by American pursuant to the preceding provisions; provided that such party's
participation does not, in the opinion of the independent counsel appointed by
American or its insurers to conduct such proceedings, interfere with such
control, and such participation shall not constitute a waiver of the
indemnification provided in this Section 5.08. Notwithstanding anything to the
contrary contained herein, American shall not under any circumstances be liable
for the fees and expenses of more than one counsel for all Indemnified Persons
except in the case specified in the third sentence of this Section 5.08(f).
(g) Subrogation. To the extent that a Claim indemnified by American
under this Section 5.08 is in fact paid in full by American and/or an insurer
under a policy of insurance maintained by American, American and/or such
insurer, as the case may be, shall be subrogated to the rights and remedies of
the Indemnified Person on whose behalf such Claim was paid with respect to the
transaction or event giving rise to such claim. So long as no Payment Default,
Bankruptcy Default or Event of Default shall have occurred and be continuing, if
an Indemnified Person receives any payment from any party other than American or
its insurers, in whole or in part, with respect to any Claim paid in full by
American or its insurers hereunder, such Indemnified Person shall promptly pay
the amount paid (but not an amount in excess of the amount American or any of
its insurers has paid in respect of such Claim) over to American.
American Airlines - Aircraft Security Agreement
20
ARTICLE VI
RECEIPT, DISTRIBUTION AND APPLICATION
OF INCOME FROM THE COLLATERAL
SECTION 6.01 Application of Income from the Collateral. After an
Event of Default shall have occurred and be continuing and the unpaid principal
of all Advances then outstanding shall have become due and payable, the Agent
shall apply any payments received, any amounts then held and any amounts
realized by the Agent with respect to the Collateral in the following order of
priority set forth in Section 2.11(e) of the Credit Agreement.
ARTICLE VII
REMEDIES OF THE AGENT
UPON AN EVENT OF DEFAULT
SECTION 7.01 Remedies with Respect to Collateral. (a) Remedies
Available. Upon the occurrence of any Event of Default and at any time
thereafter so long as the same shall be continuing, the Agent may, and upon the
written instructions of the Required Lenders, the Agent shall, after the unpaid
principal of all Advances then outstanding shall have become due and payable, do
one or more of the following to the extent permitted by, and subject to
compliance with the mandatory requirements of, applicable law then in effect;
provided, however, that during any period an Aircraft is subject to the CRAF
Program in accordance with the provisions of Section 5.02(a), the Agent shall
not, on account of any Event of Default, be entitled to exercise any of the
remedies specified in the following clause (i) in such manner as to limit
American's control under this Security Agreement (or any lessee's control under
any lease permitted by the terms of this Security Agreement) of such Airframe or
any Engines installed thereon, unless at least 60 days' (or such lesser period
as may then be applicable under the Military Airlift Command Program of the
government of the United States of America) prior written notice of default
hereunder shall have been given by the Agent by registered or certified mail to
American (or any such lessee) with a copy addressed to the Contracting Officer
Representative or other appropriate person for the Military Airlift Command of
the United States Air Force under any contract with American (or any such
lessee) relating to the Aircraft:
(i) cause American, upon the written demand of the Agent, at
American's expense, to deliver promptly, and American shall deliver
promptly, all or such part of the Collateral as the Agent may so demand to
the Agent or its order, or, if American shall have failed to so return the
Collateral after such demand, the Agent, at its option, may enter upon the
premises where all or any part of any Airframe is or any Engines are
located and take immediate possession of and remove such Airframe or
Engines (together with any engine which is not an Engine but which is
installed on an Airframe, subject to all of the rights of the owner,
lessor, lienor or secured party of such engine; provided that an Airframe
with an engine (which is not an Engine) installed thereon may be flown or
returned only to a location within the continental United States of
America or, if such Airframe is located in a country other than the United
States of America, then to a location within such country or to the United
States of America, and such engine shall be held for the account of any
such owner, lessor, lienor or secured party or, if owned by American, may,
at the option of the Agent, be
American Airlines - Aircraft Security Agreement
21
exchanged with American for an Engine in accordance with the provisions of
Section 5.05(a)) and American shall comply therewith; or
(ii) sell all or any part of any Airframe and any Engine at public
or private sale, whether or not the Agent shall at the time have
possession thereof, as the Agent may determine, or otherwise dispose of,
hold, use, operate, lease to others or keep idle all or any part of any
Airframe or any Engine as the Agent, in its sole discretion, may
determine, free and clear of any rights of American, and the proceeds of
such sale or other disposition shall be applied in the order of priorities
referred to in Section 6.01; or
(iii) seize any funds held in and/or Permitted Investments credited
to the Cash Collateral Account and apply such funds and/or Permitted
Investments and any proceeds thereof in the order of priorities referred
to in Section 6.01; or
(iv) exercise any other remedy of a secured party under the Uniform
Commercial Code as in effect in the State of New York (whether or not in
effect in the jurisdiction in which enforcement is sought) or by any other
applicable law or proceed by appropriate court action to enforce the terms
or to recover damages for the breach hereof.
Upon every taking of possession of Collateral under this Section
7.01, the Agent may, from time to time, at the expense of the Collateral and
American, make all such expenditures for maintenance, insurance, repairs,
replacements, alterations, additions and improvements to and of the Collateral,
as it may reasonably deem proper. In each such case, the Agent shall have the
right to maintain, use, operate, store, lease, control or manage the Collateral
and to exercise all rights and powers of American relating to the Collateral in
connection therewith, as the Agent shall deem best, including the right to enter
into any and all such agreements with respect to the maintenance, insurance,
use, operation, storage, leasing, control, management or disposition of the
Collateral or any part thereof as the Agent may reasonably determine; and the
Agent shall be entitled to collect and receive directly all tolls, rents,
revenues, issues, income, products, proceeds and profits of the Collateral and
every part thereof. Such tolls, rents, revenues, issues, income, products,
proceeds and profits shall be applied to pay the expenses of use, operation,
storage, leasing, control, management or disposition of the Collateral, and of
all maintenance, repairs, replacements, alterations, additions and improvements,
and to make all payments which the Agent may be required or may elect to make,
if any, for insurance or other proper charges assessed against or otherwise
imposed upon the Collateral or any part thereof, and all other payments which
the Agent may be required or expressly authorized to make under any provision of
this Security Agreement, as well as just and reasonable compensation for the
services of the Agent, and shall otherwise be applied in accordance with the
provisions of Article VI.
In addition, American shall be liable, without duplication of any
amounts payable hereunder, for all legal fees and disbursements and other costs
and expenses incurred by reason of the occurrence of any Event of Default or the
exercise of the Agent's remedies with respect thereto, including all costs and
expenses incurred in connection with the retaking, return or sale of any
Airframe or any Engine in accordance with the terms hereof or under the Uniform
Commercial Code of the State of New York, which amounts shall, until paid, be
secured by the Lien of this Security Agreement.
American Airlines - Aircraft Security Agreement
22
To the extent permitted by applicable law, American irrevocably
appoints, while an Event of Default has occurred and is continuing, the Agent
the true and lawful attorney-in-fact of American (which appointment is coupled
with an interest) in its name and stead and on its behalf, for the purpose of
effectuating any sale, assignment, transfer or delivery for the enforcement of
the Lien of this Security Agreement, whether pursuant to foreclosure or power of
sale, or otherwise, to execute and deliver all such bills of sale, assignments
and other instruments as may be necessary or appropriate, with full power of
substitution, American hereby ratifying and confirming all that such attorney or
any substitute shall do by virtue hereof in accordance with applicable law;
provided that if so requested by the Agent or any purchaser, American shall
ratify and confirm any such sale, assignment or transfer of delivery, by
executing and delivering to the Agent or such purchaser all bills of sale,
assignments, releases and other proper instruments to effect such ratification
and confirmation as my be designated in any such request.
If an Event of Default shall have occurred and be continuing and the
unpaid principal of all Advances then outstanding shall have become due and
payable and the Agent shall be entitled to exercise rights hereunder, at the
request of the Agent, American shall promptly execute and deliver to the Agent
such instruments of title and other documents as the Agent may deem necessary or
advisable to enable the Agent or an agent or representative designated by the
Agent, at such time or times and place or places as the Agent may specify, to
obtain possession of all or any part of the Collateral to which the Agent shall
at the time be entitled hereunder. If American shall for any reason fail to
execute and deliver such instruments and documents after such request by the
Agent, the Agent may obtain a judgment conferring on the Agent the right to
immediate possession and requiring American to execute and deliver such
instruments and documents to the Agent, to the entry of which judgment American
hereby specifically consents to the fullest extent it may lawfully do so.
Nothing in the foregoing shall affect the right of any Secured Party
to receive all amounts owing to such Secured Party as and when the same may be
due.
(b) Notice of Sale. The Agent shall give American at least 30 days'
prior notice of any public sale or of the date on or after which any private
sale will be held, which notice American hereby agrees is reasonable notice.
SECTION 7.02 Remedies Cumulative. To the extent permitted by
applicable law, each and every right, power and remedy herein specifically given
to the Agent or otherwise in this Security Agreement shall be cumulative and
shall be in addition to every other right, power and remedy herein specifically
given or now or hereafter existing at law, in equity, by statute or by the
Financing Documents, and each and every right, power and remedy whether
specifically herein given or otherwise existing may be exercised from time to
time and as often and in such order as may be deemed expedient by the Agent, and
the exercise or the beginning of the exercise of any power or remedy shall not
be construed to be a waiver of the right to exercise at the same time or
thereafter any other right, power or remedy. No delay or omission by the Agent
in the exercise of any right, remedy or power or in the pursuance of any remedy
shall, to the extent permitted by applicable law, impair any such right, power
or remedy or be construed to be a waiver of any default on the part of American
or to be an acquiescence therein.
SECTION 7.03 Discontinuance of Proceedings. In case the Agent shall
have instituted any proceeding to enforce any right, power or remedy under this
Security Agreement by
American Airlines - Aircraft Security Agreement
23
foreclosure, entry or otherwise, and such proceedings shall have been
discontinued or abandoned for any reason or shall have been determined adversely
to the Agent, then and in every such case American and the Agent shall, subject
to any determination in such proceedings, be restored to their former positions
and rights hereunder with respect to the Collateral, and all rights, remedies
and powers of the Agent shall continue, as if no such proceedings had been
undertaken (but otherwise without prejudice).
SECTION 7.04 Waiver of Past Defaults. Upon written instructions from
the Required Lenders, the Agent shall waive any past default hereunder and its
consequences and upon any such waiver such default shall cease to exist and any
Event of Default arising therefrom shall be deemed to have been cured for every
purpose of this Security Agreement and the other Financing Documents, but no
such waiver shall extend to any subsequent or other default or impair any right
consequent thereon; provided, however, that in the absence of written
instructions from all of the Secured Parties, the Agent shall not waive any
default (a) in the payment of principal of or interest on any Advance
outstanding (other than with the consent of the holder thereof) or in the
payment of any facility fees (other than with the consent of the issuer thereof)
or (b) in respect of a covenant or provision hereof which, under Section 9.01 of
the Credit Agreement, cannot be modified or amended without the consent of each
Secured Party.
SECTION 7.05 Quiet Enjoyment. Notwithstanding anything herein or in
any other Financing Document to the contrary, so long as no Event of Default
shall have occurred and be continuing, the Agent shall not take any action
contrary to, or otherwise in any way interfere with or disturb, the quiet
enjoyment of the possession and use of any Aircraft, any Airframe or any Engine
by American or any transferee of any interest in any thereof permitted hereby.
ARTICLE VIII
THE AGENT
SECTION 8.01 General. The provisions of Article VIII of the Credit
Agreement shall inure to the benefit of the Agent in respect of this Security
Agreement and shall be binding upon the parties to the Credit Agreement in such
respect. In furtherance and not in derogation of the rights, privileges and
immunities of the Agent therein set forth:
(A) The Agent is authorized to take all such action as is provided to be
taken by it as Agent hereunder and all other action reasonably incidental
thereto. As to any matters not expressly provided for herein (including, without
limitation, the timing and methods of realization upon the Collateral) the Agent
shall act or refrain from acting in accordance with written instructions from
the Required Lenders or, in the absence of such instructions, in accordance with
its discretion.
(B) The Agent shall not be responsible for the existence, genuineness or
value of any of the Collateral or for the validity, perfection, priority or
enforceability of the security interests in any of the Collateral, whether
impaired by operation of law or (in the absence of its gross negligence or
willful misconduct) by reason of any action or omission to act on its part
hereunder. The Agent shall have no duty to ascertain or inquire as to the
performance or observance of any of the terms of this Security Agreement by
American.
American Airlines - Aircraft Security Agreement
24
SECTION 8.02 Appointment of Co-Agents. At any time or times, in
order to comply with any legal requirement in any jurisdiction, the Agent may
appoint another bank or trust company or one or more other persons, either to
act as co-agent or co-agents, jointly with the Agent, or to act as separate
agent or agents on behalf of the Secured Parties with such power and authority
as may be necessary for the effectual operation of the provisions hereof and may
be specified in the instrument of appointment (which may, in the discretion of
the Agent, include provisions for the protection of such co-agent or separate
agent similar to the provisions of Section 8.01).
ARTICLE IX
CERTAIN COVENANTS
SECTION 9.01 Certain Changes. American will not (a) change its name
or identity in any manner, (b) cease to be a corporation or (c) change the
location of its chief executive office or chief place of business from the
applicable location described herein unless it shall have given the Agent prior
notice thereof and, at its cost and expense, caused to be delivered to the
Secured Parties (x) an opinion of counsel, satisfactory to the Agent, to the
effect that all financing statements and amendments or supplements thereto,
continuation statements or other documents required to be recorded or filed
under Article 9 of the Uniform Commercial Code as in effect in the relevant
states in order to continue the perfection of the security interests created
hereunder for a period, specified in such opinion, continuing until a date not
earlier than eighteen months from the date of such opinion, have been filed in
each filing office necessary for such purpose and that all filing fees and
taxes, if any, payable in connection with such filings have been paid in full,
and (y) an opinion of counsel, satisfactory to the Agent, to the effect that all
filings with the FAA have been made as are necessary to continue the perfection
and protection of the Agent's security interest hereunder in the Aircraft.
SECTION 9.02 Further Assurances. American will, from time to time,
at its expense, execute, deliver, file and record any statement, assignment,
instrument, document, agreement or other paper, and take any other action, that
from time to time may be necessary, or that the Agent may reasonably request, in
order to create, preserve, perfect, confirm or validate the security interests
created hereunder or to enable the Agent and the Secured Parties to obtain the
full benefits of this Security Agreement, or to enable the Agent to exercise and
enforce any of its rights, powers and remedies hereunder with respect to any of
the Collateral. To the extent permitted by applicable law, American hereby
authorizes the Agent to execute and file financing statements or continuation
statements without American's signature appearing thereon. American shall pay
the costs of, or incidental to, any recording or filing, including without
limitation any filing of financing or continuation statements, concerning the
Collateral.
SECTION 9.03 Additional Information. American will, promptly upon
request, provide to the Agent all information and evidence it may reasonably
request concerning the Collateral to enable the Agent to enforce the provisions
of this Security Agreement.
ARTICLE X
SUPPLEMENTS AND AMENDMENTS
TO THIS SECURITY AGREEMENT AND OTHER DOCUMENTS
American Airlines - Aircraft Security Agreement
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SECTION 10.01 Supplemental Security Agreements. With the written
consent of the requisite percentage of Secured Parties required by the Credit
Agreement, American may, and the Agent shall, at any time and from time to time,
enter into an amendment or amendments hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Security Agreement or modifying in any manner the rights and obligations of
the Secured Parties and of American under this Security Agreement.
ARTICLE XI
INVESTMENT OF SECURITY FUNDS
SECTION 11.01 Investment of Security Funds. Any monies paid to or
retained by the Agent that are required to be paid to American or applied for
the benefit or at the direction of American (including, without limitation,
amounts payable to American under Sections 5.05(b), 5.05(d) and 5.06(d);
provided, however, that amounts relating to the Cash Collateral Account shall be
governed solely by the provisions of Section 3.01), but which the Agent is
entitled to hold under the terms hereof pending the occurrence of some event or
the performance of some act (including, without limitation, the remedying of an
Event of Default), shall, until paid to American or applied as provided herein,
be invested by the Agent at the written authorization and direction of American
from time to time at the sole expense and risk of American in Permitted
Investments. There shall be promptly remitted to American any gain (including
interest received) realized as the result of any such investment (net of any
fees, commissions and other expenses, if any, incurred in connection with such
investment) unless a Payment Default, Bankruptcy Default or Event of Default
shall have occurred and be continuing. If any such Default or Event of Default
shall have occurred and be continuing, the Agent shall hold any such gain as
security for the obligations of American hereunder and apply it against such
obligations as and when due and at such time as there shall not be continuing
any such Default or Event of Default such amount, to the extent not previously
so applied against American's obligations, shall be paid to American.
SECTION 11.02 Liability for Losses. Except to the extent provided in
Section 8.02 of the Credit Agreement, the Agent shall not be liable for any loss
relating to a Permitted Investment made pursuant to this Article XI or pursuant
to Section 3.01. American will promptly pay to the Agent, on demand, for deposit
in the Cash Collateral Account, the amount of any loss for which the Agent is
not liable realized as the result of any such investment (together with any
fees, commissions and other expenses, if any, incurred in connection with such
investment).
ARTICLE XII
MISCELLANEOUS
SECTION 12.01 Termination of Security Agreement. Upon the payment in
full of the principal of, and interest on, all Advances and all other amounts
owing under any Financing Document, and the termination of all Commitments under
the Credit Agreement, the Agent shall, upon the written request of American,
execute and deliver to, or as directed in writing by, and at the expense of,
American an appropriate instrument (in due form for recording) releasing all the
Aircraft and the balance of the Collateral from the Lien of this Security
Agreement and, in such event, this Security Agreement shall terminate and this
Security Agreement shall be of no further force or
American Airlines - Aircraft Security Agreement
26
effect, except that the indemnities and releases provided for herein shall
survive any such termination. Except as otherwise provided above, this Security
Agreement shall continue in full force and effect in accordance with the terms
hereof.
SECTION 12.02 No Legal Title to Collateral in Secured Parties. No
Secured Party shall have legal title to any part of the Collateral. No transfer,
by operation of law or otherwise, of any right, title and interest of a Secured
Party in and to the Collateral or this Security Agreement shall operate to
terminate this Security Agreement or the trusts hereunder or entitle any
successor or transferee of such Secured Party to an accounting or to the
transfer to it of legal title to any part of the Collateral.
SECTION 12.03 Benefit of Security Agreement. Nothing in this
Security Agreement, whether express or implied, shall be construed to give to
any Person other than American, the Agent and the Secured Parties or the other
Indemnified Persons any legal or equitable right, remedy or claim under or in
respect of this Security Agreement.
SECTION 12.04 Performance and Rights. Any obligation imposed on
American herein shall require only that American perform or cause to be
performed such obligation, even if stated as a direct obligation, and the
performance of any such obligation by any permitted assignee, lessee or
transferee under an assignment, lease or transfer agreement then in effect and
in accordance with the provisions of the Financing Documents shall constitute
performance by American and to the extent of such performance, discharge such
obligation by American. Except as otherwise expressly provided herein, any right
granted to American in this Security Agreement shall grant American the right to
permit such right to be exercised by any such assignee, lessee or transferee.
The inclusion of specific references to obligations or rights of any such
assignee, lessee or transferee in certain provisions of this Security Agreement
shall not in any way prevent or diminish the application of the provisions of
the two sentences immediately preceding with respect to obligations or rights in
respect of which specific reference to any such assignee, lessee or transferee
has not been made in this Security Agreement.
SECTION 12.05 Notices. Unless otherwise expressly specified or
permitted by the terms hereof, all notices required or permitted under the terms
and provisions hereof shall be in English and in writing, and any such notice
may be given by United States mail, courier service or facsimile (confirmed by
telephone or in writing in the case of notice by facsimile) or any other
customary means of communication, and any such notice shall be effective when
delivered (or, if mailed, ten Business Days after deposit, postage prepaid, in
the first class United States mail) (a) if to American to its address or number
set forth below its signature at the foot of this Security Agreement, or (b) if
to the Agent or any Lender, to its address set forth in the Credit Agreement.
SECTION 12.06 Severability. Should any one or more provisions of
this Security Agreement be determined to be illegal or unenforceable by a court
of any jurisdiction, such provision shall be ineffective to the extent of such
illegality or unenforceability without invalidating the remaining provisions
hereof or affecting the validity or enforceability of such provision in any
other jurisdiction.
SECTION 12.07 Separate Counterparts. This Security Agreement may be
executed in any number of counterparts (and each of the parties hereto shall not
be required to
American Airlines - Aircraft Security Agreement
27
execute the same counterpart). Each counterpart of this Security Agreement
including a signature page executed by each of the parties hereto shall be an
original counterpart of this Security Agreement, but all of such counterparts
together shall constitute one instrument.
SECTION 12.08 Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, American
and its successors and assigns permitted under the Credit Agreement, and the
Agent and its successors and permitted assigns, and the Secured Parties and
their successors and permitted assigns, all as herein provided. Any request,
notice, direction, consent, waiver or other instrument or action by a Secured
Party (unless withdrawn by such Secured Party or successor or assign prior to it
being acted upon by the Agent) shall bind the successors and assigns of such
Secured Party.
SECTION 12.09 Headings. The headings of the various Articles and
Sections herein and in the table of contents hereto are for convenience of
reference only and shall not define or limit any of the terms or provisions
hereof.
SECTION 12.10 Governing Law. THIS SECURITY AGREEMENT IS BEING
DELIVERED IN THE STATE OF NEW YORK AND THIS SECURITY AGREEMENT AND ANY SECURITY
AGREEMENT SUPPLEMENT SHALL IN ALL RESPECTS, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF NEW YORK.
SECTION 12.11 Normal Commercial Relations. Anything contained in
this Security Agreement to the contrary notwithstanding, American, any Secured
Party or the Agent or any Affiliate of American, any Secured Party or the Agent
may enter into commercial banking or other financial transactions with each
other, and conduct banking or other commercial relationships with each other,
fully to the same extent as if this Security Agreement were not in effect,
including, without limitation, the making of loans or other extensions of credit
for any purpose whatsoever.
American Airlines - Aircraft Security Agreement
28
IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed by their respective officers, as the case may be,
thereunto duly authorized, as of the day and year first above written.
AMERICAN AIRLINES, INC.
By ___________________________________
Name:
Title:
Address: 4333 Amon Carter Boulevard
Fort Worth, Texas 76155
Attention: Vice President - Corporate
Development and Treasurer
Telecopy: (817) 967-4318
CITICORP USA, INC., as Collateral Agent
By ____________________________________
Name:
Title:
Address: Two Penns Way, Suite 110
New Castle, Delaware 19720
Attention: Bank Loan Syndications
Department - Elisabeth Wier
Telecopy: (212) 994-0961
American Airlines - Aircraft Security Agreement
29
APPENDIX A
DEFINITIONS RELATING TO THE
SECURITY AGREEMENT
"ADVANCE" has the meaning set forth in Section 1.01 of the Credit
Agreement.
"AFFILIATE", means, as to any Person, any other Person that,
directly or indirectly controls, is controlled by or is under common control
with such Person. For the purposes of this definition, the term "control"
(including the terms "controlling", "controlled by" and "under common control
with") of a Person means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of Voting Interests, by contract or otherwise.
"AGENT" has the meaning set forth in the introductory paragraph of
this Security Agreement.
"AGGREGATE COLLATERAL VALUE" has the meaning set forth in Section
1.01 of the Credit Agreement.
"AIRCRAFT" means the Airframes (including any Replacement Airframe
substituted for any such Airframe pursuant to Section 5.01(n) of the Credit
Agreement) together with the Engines (including any Replacement Engine
substituted for any of such Engines pursuant to Section 5.01(n) of the Credit
Agreement), described in Schedule 1 to this Security Agreement or a Security
Agreement Supplement executed and delivered under Section 5.01(n) of the Credit
Agreement, whether or not any of such initial or substituted Engines may from
time to time be installed on such Airframe or installed on any other airframe or
on any other aircraft. The term "AIRCRAFT" shall include any Replacement
Aircraft.
"AIRCRAFT VALUE" has the meaning set forth in Section 1.01 of the
Credit Agreement.
"AIRFRAME" means (a) each of the aircraft (except the Engines or
engines from time to time installed thereon) subjected to the Lien of this
Security Agreement and identified on Schedule 1 to this Security Agreement or a
Security Agreement Supplement executed and delivered under Section 5.01(n) of
the Credit Agreement, and (b) any and all Parts so long as the same shall be
incorporated or installed in or attached to such aircraft or so long as the same
shall be subject to the Lien of this Security Agreement in accordance with the
terms of Section 5.04 hereof after removal from such aircraft. The term
"AIRFRAME" shall include any Replacement Airframe which may from time to time be
substituted pursuant to Section 5.01(n) of the Credit Agreement. At such time as
a Replacement Airframe shall be so substituted and the Airframe for which the
substitution is made shall be released from the Lien of this Security Agreement,
such replaced Airframe shall cease to be an Airframe under this Security
Agreement.
"AMERICAN" means American Airlines, Inc., a Delaware corporation,
and, subject to the provisions of the Credit Agreement, its successors and
permitted assigns.
"BANKRUPTCY DEFAULT" means any event which, with the giving of
notice, lapse of time or both, would become an Event of Default under Section
6.01 (f) of the Credit Agreement.
American Airlines - Aircraft Security Agreement
"CASH COLLATERAL ACCOUNT" has the meaning set forth in Section 3.01
of this Security Agreement.
"CODE" means the United States Internal Revenue Code of 1986, as
amended.
"COLLATERAL" has the meaning set forth in Article II of this
Security Agreement.
"COMMITMENT" has the meaning set forth in Section 1.01 of the Credit
Agreement.
"CRAF PROGRAM" means the Civil Reserve Air Fleet Program authorized
under 10 U.S.C. ss.9511 et seq. or any similar or substitute program under the
laws of the United States.
"CREDIT AGREEMENT" has the meaning set forth in the recitals to this
Security Agreement.
"DEFAULT" has the meaning set forth in Section 1.01 of the Credit
Agreement.
"DEPARTMENT OF TRANSPORTATION" means the United States Department of
Transportation and any agency or instrumentality of the United States government
succeeding to its functions.
"DOLLARS" and "$" mean the lawful currency of the United States of
America.
"BUSINESS DAY" has the meaning set forth in Section 1.01 of the
Credit Agreement.
"ENGINE" means (a) each of the engines listed by manufacturer's
serial numbers on Schedule 1 to this Security Agreement and subjected to the
Lien of this Security Agreement pursuant to this Security Agreement or a
Security Agreement Supplement executed and delivered under Sections 5.01(n) of
the Credit Agreement, whether or not from time to time installed on any Airframe
or installed on any other airframe or on any other aircraft; and (b) any
Replacement Engine that may from time to time be substituted for such Engine
pursuant to Section 5.01(n) of the Credit Agreement; together, in each case,
with any and all Parts so long as the same shall be incorporated or installed
therein or attached thereto or so long as the same shall be subject to the Lien
of this Security Agreement in accordance with the terms of Section 5.04 hereof
after removal from any such engine. At such time as a Replacement Engine shall
be so substituted and the Engine for which substitution is made shall be
released from the Lien of this Security Agreement, such replaced Engine shall
cease to be an Engine under this Security Agreement.
"EVENT OF DEFAULT" has the meaning set forth in Section 6.01 of the
Credit Agreement.
"EVENT OF LOSS" means, with respect to any property, any of the
following events with respect to such property: (i) loss of such property or the
use thereof due to theft, disappearance, destruction, damage beyond repair or
rendition of such property permanently unfit for normal use for any reason
whatsoever; (ii) any damage to such property which results in an insurance
settlement with respect to such property on the basis of a total loss or
constructive total loss; (iii) the condemnation, confiscation or seizure of, or
requisition of title to, or use of, such property (other than a requisition for
use of an Aircraft by the United States government); (iv) as a result of any
rule,
American Airlines - Aircraft Security Agreement
2
regulation, order or other action by the FAA, the Department of Transportation
or other governmental body of the United States of America or other country of
registry of an Aircraft having jurisdiction, the use of such property in the
normal course of passenger air transportation of persons shall have been
prohibited for a period of six consecutive months, unless such rule, regulation,
order or other action shall have prohibited such use with respect to all
aircraft of identical make and model registered in the applicable jurisdiction
or unless it can be reasonably expected that American (or any Permitted Lessee),
prior to the expiration of such six-month period, shall be able to return such
property to normal use and American (or any Permitted Lessee) have undertaken,
prior to the expiration of such six-month period, all steps that are necessary
to permit the normal use of such property by American (or any Permitted Lessee)
or, in any event, if such use shall have been prohibited for a period of nine
consecutive months; (v) the operation or location of an Aircraft, while under
requisition for use by any government, in any area excluded from coverage by any
insurance policy in effect with respect to an Aircraft required by the terms of
Section 5.06 of this Security Agreement, unless American shall have obtained
indemnity in lieu thereof from such government; (vi) the theft or disappearance
of such property for a period in excess of 180 days; or (vii) with respect to an
Engine only, any divestiture of title to or interest in an Engine or any event
with respect to an Engine that is deemed to be an Event of Loss with respect to
such Engine pursuant to Section 5.02(a)(vii) of the Security Agreement. An Event
of Loss with respect to an Aircraft shall be deemed to have occurred if an Event
of Loss occurs with respect to the Airframe of such Aircraft unless American
elects to substitute a Replacement Airframe pursuant to Section 5.01(n)(v) of
the Credit Agreement.
"FAA" means the United States Federal Aviation Administration and
any agency or instrumentality of the United States government succeeding to its
functions.
"FINANCING DOCUMENTS" means the Credit Agreement, the Notes, the
Collateral Documents and the Parent Guaranty.
"INTERESTS" has the meaning set forth in Section 5.06 of this
Security Agreement.
"LENDER" has the meaning set forth in Section 1.01 of the Credit
Agreement.
"LIEN" has the meaning set forth in Section 1.01 of the Credit
Agreement.
"NOTES" has the meaning set forth in Section 1.01 of the Credit
Agreement.
"PARTS" means any and all appliances, parts, instruments,
appurtenances, accessories, furnishings, and other equipment of whatever nature
(other than (a) complete Engines or engines, (b) any items leased by American
and (c) cargo containers) so long as the same shall be incorporated or installed
in or attached to an Airframe or any Engine or so long as the same shall be
subject to the Lien of this Security Agreement in accordance with the terms of
Section 5.04 hereof after removal from such Airframe or any such Engine.
"PAYMENT DEFAULT" means any event which with the lapse of time would
become an Event of Default under Section 6.01(a) of the Credit Agreement.
"PERMITTED AIR CARRIER" has the meaning set forth in Section
5.02(a)(i) of this Security Agreement.
American Airlines - Aircraft Security Agreement
3
"PERMITTED COUNTRY" means each of Argentina, Australia, Austria,
Bahamas, Belgium, Bermuda Islands, British Virgin Islands, Canada, Denmark,
Finland, France, Germany, Greece, Iceland, Ireland, Italy, Japan, Liechtenstein,
Luxembourg, Monaco, Netherlands, New Zealand, Norway, Portugal (including
Azores), Singapore, Spain (including Canary Islands), Sweden, Switzerland,
United Kingdom and Uruguay.
"PERMITTED INVESTMENTS" has the meaning set forth in Section 1.01 of
the Credit Agreement.
"PERMITTED LESSEE" means any (a) U.S. Air Carrier, (b) foreign air
carrier that is principally based in and a domiciliary of a Permitted Country,
or (c) foreign air carrier not described in clause (b) above, if, at the time
American enters into a lease with such foreign air carrier, the Agent receives
an opinion from counsel to American (which counsel shall be reasonably
satisfactory to the Agent) to the effect that (i) there exist no possessory
rights in favor of such lessee under the laws of such lessee's country which
would, upon bankruptcy or insolvency of or other default by American and
assuming that at the time of such bankruptcy, insolvency or other default by
American, such lessee is not insolvent or bankrupt, prevent the return of an
Engine or an Airframe and each Engine or engine subject to such lease to the
Agent in accordance with and when permitted by the terms of Section 7.01 of this
Security Agreement upon the exercise by the Agent of its remedies thereunder and
(ii) the terms of this Security Agreement are legal, valid, binding and
enforceable in the country in which such foreign air carrier is principally
based (subject to customary exceptions); provided that in the case of any such
foreign air carrier referred to in clause (b) or (c) above (other than a foreign
air carrier principally based in Taiwan), the United States of America maintains
full diplomatic relations with the country in which such foreign air carrier is
principally based at the time such lease is entered into and such foreign
carrier is not then subject to any bankruptcy, insolvency, liquidation,
reorganization, dissolution or similar proceeding and shall not have
substantially all of its property in the possession of any liquidator, trustee,
receiver or similar person.
"PERMITTED LIENS" has the meaning set forth in Section 1.01 of the
Credit Agreement.
"PERSON" means an individual, partnership, corporation, business
trust, limited liability company, joint stock company, trust, unincorporated
association, joint venture or other entity, or a government or any political
subdivision or agency thereof.
"PURCHASE AGREEMENT" means, with respect to any Aircraft, the
purchase agreement set forth on Schedule 1 for such Aircraft, as the same may be
amended, supplemented or otherwise modified from time to time in accordance with
its terms.
"REPLACEMENT AIRCRAFT" means any Unencumbered Stage 3 Aircraft of
which a Replacement Airframe is part.
"REPLACEMENT AIRFRAME" means an airframe (except Engines or engines
from time to time installed thereon) constituting part of an Aircraft, which is
to be made subject to the Lien of this Security Agreement pursuant to Section
5.01(n) of the Credit Agreement, together with all Parts relating to such
aircraft.
American Airlines - Aircraft Security Agreement
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"REPLACEMENT ENGINE" means an engine of make and model suitable for
use on any Airframe, which shall have been made subject to the Lien of this
Security Agreement pursuant to Section 5.01(n) of the Credit Agreement, together
with all Parts relating to such engine.
"REQUIRED LENDERS" has the meaning set forth in Section 1.01 of the
Credit Agreement.
"REQUIRED COLLATERAL AMOUNT" has the meaning set forth in Section
1.01 of the Credit Agreement.
"RESPONSIBLE OFFICER" means any senior executive officer, senior
accounting officer or treasurer of American, or any vice president, director or
managing director of American having responsibility for the administration of
this Agreement.
"SECURED OBLIGATIONS" means (i) all principal of and interest
(including, without limitation, any interest which accrues after the
commencement of any case, proceeding or other action relating to the bankruptcy,
insolvency or reorganization of American) on any Advance under, or any note
issued pursuant to, the Credit Agreement, (ii) all other amounts payable by
American hereunder or under the Financing Documents and (iii) any renewals or
extensions of any of the foregoing, including, in each case, any such amounts
whether or not allowed or allowable as a claim in any bankruptcy, insolvency or
reorganization proceeding of American.
"SECURITY AGREEMENT" means this Aircraft Security Agreement between
American and the Agent, including all annexes, schedules, exhibits, appendices,
supplements and Security Agreement Supplements hereto, all as amended, modified
or supplemented in accordance with the applicable provisions hereof and thereof.
"SECURITY AGREEMENT SUPPLEMENT" means (a) Security Agreement
Supplement, substantially in the form of Exhibit A to this Security Agreement
and from time to time executed and delivered, which shall describe with
particularity the Airframes and the Engines delivered in connection therewith
and which creates a security interest in such Airframes and Engines and (b) any
other supplement to this Security Agreement from time to time executed and
delivered.
"SECURED PARTIES" means the Lenders and the Agent.
"TRANSPORTATION CODE" means that portion of Title 49 of the United
States Code comprising those provisions formerly referred to as the Federal
Aviation Act of 1958, as amended.
"UNIFORM COMMERCIAL CODE" means the Uniform Commercial Code as in
effect, from time to time, in the State of New York; provided that, if
perfection or the effect of perfection or non-perfection or the priority of any
security interest in any Collateral is governed by the Uniform Commercial Code
as in effect in a jurisdiction other than the State of New York, the "UNIFORM
COMMERCIAL CODE" means the Uniform Commercial Code as in effect from time to
time in such other jurisdiction for purposes of the provisions hereof relating
to such perfection, effect of perfection or non-perfection or priority.
American Airlines - Aircraft Security Agreement
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"U.S. AIR CARRIER" means any United States air carrier as to which
there is in force a certificate issued pursuant to the Transportation Code (49
U.S.C. ss.41101-41112) or any successor provision that gives like authority.
"WARRANTY RIGHTS" means, with respect to any Aircraft, all right and
interest of American in, to and under the product assurance provisions of the
Purchase Agreement, but only to the extent the same relate to continuing rights
of American in respect of any warranty or indemnity, express or implied, as to
materials, workmanship or design with respect to the Airframe, it being
understood that the Warranty Rights exclude any and all other right, title and
interest of American in, to and under the Purchase Agreement.
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SCHEDULE 1
Pledged Unencumbered Stage 3 Aircraft
Type Year of Mfr. Reg. Number
- ---- ------------ -----------
American Airlines - Aircraft Security Agreement
SCHEDULE 2
Chief Executive Jurisdiction of Organizational
Legal Name Office Type of Organization Organization Identification #
- ---------- --------------- -------------------- --------------- ----------------
American Airlines - Aircraft Security Agreement
EXHIBIT A
SECURITY AGREEMENT SUPPLEMENT NO.___
Security Agreement Supplement No. __, dated __________, 20__
("SECURITY AGREEMENT SUPPLEMENT") between AMERICAN AIRLINES, INC. ("AMERICAN")
and CITICORP USA, INC., not in its individual capacity but solely as Agent under
the Security Agreement (each as hereinafter defined).
W I T N E S S E T H:
WHEREAS, the Aircraft Security Agreement, dated as of December 17,
2004 (as amended, modified or supplemented from time to time, the "SECURITY
AGREEMENT"), among American, AMR Corporation, the banks, financial institutions
and other institutional lenders party thereto, Citicorp USA, Inc., as Agent (the
"AGENT"), JPMorgan Chase Bank, N.A., as Syndication Agent and Citigroup Global
Markets Inc. and J.P. Morgan Securities Inc., as Joint Lead Arrangers and Joint
Book-Running Managers, provides for the execution and delivery of supplements
thereto substantially in the form hereof which shall particularly describe the
Aircraft (such term and other defined terms in the Security Agreement being used
herein with the same meanings), and shall specifically grant a security interest
in the Aircraft to the Agent for the security and benefit of the Secured
Parties; and
WHEREAS, [American has, as provided in the Security Agreement,
heretofore executed and delivered to the Agent Security Agreement Supplement(s)
for the purpose of specifically subjecting to the Lien of the Security Agreement
certain airframes and/or engines therein described, which Security Agreement
Supplement(s) and]o the Security Agreement are dated and have been duly recorded
with the FAA as set forth below, to wit:
Date Recordation Date FAA Document Number
---- ---------------- -------------------
- ----------------------
- - Use if there has been any other Security Agreement Supplement executed and
delivered previously.
American Airlines - Aircraft Security Agreement
NOW, THEREFORE, to secure the prompt and complete payment (whether
at the stated maturity, by acceleration or otherwise), of the Secured
Obligations, and in consideration of the premises and of the covenants contained
in the Security Agreement and the other Financing Documents, and of other good
and valuable consideration given to American by the Agent and the Secured
Parties at or before the delivery hereof, the receipt of which is hereby
acknowledged, American has granted, bargained, sold, conveyed, transferred,
mortgaged, assigned, pledged and confirmed, and does hereby grant, bargain,
sell, convey, transfer, mortgage, assign, pledge and confirm, unto the Agent and
its permitted successors and assigns, for the security and benefit of the Agent
and the Secured Parties, a security interest in, and mortgage lien on, all
estate, right, title and interest of American in, to and under, all and
singular, each Airframe and Engine described in Annex A attached hereto, whether
or not any such Engine shall be installed on any Airframe or any other airframe
of any other aircraft, and, to the extent provided in the Security Agreement,
all substitutions and replacements of and additions, improvements, accessions
and accumulations to the Aircraft, any Airframe, the Engines and any and all
Parts relating thereto;
To have and to hold all and singular the aforesaid property unto the
Agent, its permitted successors and assigns, forever, in trust, upon the terms
and trusts set forth in the Security Agreement, for the benefit, security and
protection of the Secured Parties from time to time, and for the uses and
purposes and subject to the terms and provisions set forth in the Security
Agreement.
This Security Agreement Supplement shall be construed as
supplemental to the Security Agreement and shall form a part thereof, and the
Security Agreement is hereby incorporated by reference herein and is hereby
ratified, approved and confirmed and terms not otherwise defined herein shall
have the meanings provided in the Security Agreement.
THIS SECURITY AGREEMENT SUPPLEMENT IS BEING DELIVERED IN THE STATE
OF NEW YORK AND SHALL IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF NEW YORK AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN
THE STATE OF NEW YORK.
American Airlines - Aircraft Security Agreement
IN WITNESS WHEREOF, the undersigned have caused this Security
Agreement Supplement No. __ to be duly executed by their respective officers
thereunto duly authorized, on the day and year first above written.
AMERICAN AIRLINES, INC.
By:___________________________________
Name:
Title:
CITICORP USA, INC., as Collateral Agent
By:___________________________________
Name:
Title:
American Airlines - Aircraft Security Agreement
DESCRIPTION OF AIRFRAMES AND ENGINE(1)
FAA Airframe Engine
Airframe Airframe Registration Manufacturer's Engine Engine Manufacturer's
Manufacturer Model No. Serial No. Manufacturer Model Serial No.
- ------------ --------- ------------ -------------- ------------ ------ --------------
- ---------------------------
(1) Each Engine is of 750 or more "rated take-off horsepower" or the equivalent
of such horsepower.
American Airlines - Aircraft Security Agreement
EXHIBIT E
EXECUTION COPY
================================================================================
SLOT, GATE AND ROUTE SECURITY AND PLEDGE AGREEMENT
Dated as of December 17, 2004
from
AMERICAN AIRLINES, INC.,
as Grantor
to
CITICORP USA, INC.,
as Collateral Agent
================================================================================
American Airlines SGR Security Agreement
SLOT, GATE AND ROUTE SECURITY AND PLEDGE AGREEMENT
This SLOT, GATE AND ROUTE SECURITY AND PLEDGE AGREEMENT, dated as of
December 17, 2004 (this "AGREEMENT"), is made by AMERICAN AIRLINES, INC., a
Delaware corporation, as grantor hereunder (in such capacity, the "GRANTOR") to
CITICORP USA, INC., acting as collateral agent (in such capacity, the
"COLLATERAL AGENT") for the benefit of the Secured Parties (as hereafter
defined).
W I T N E S S E T H:
WHEREAS, in connection with the execution and delivery of this Agreement,
the Grantor is entering into a Credit Agreement dated as of the date hereof (as
amended, amended and restated, supplemented or otherwise modified from time to
time, the "CREDIT AGREEMENT"; capitalized terms used but not otherwise defined
herein or in Section 16 hereof shall have the meanings ascribed thereto under
the Credit Agreement) among the Grantor, as borrower, the Parent Guarantor, the
Agent and the Lenders from time to time party thereto; and
WHEREAS, it is a condition precedent to the making of Advances by the
Lenders under the Credit Agreement from time to time that the Grantor shall have
granted a security interest in, pledge of and lien on the Collateral as
contemplated by this Agreement;
NOW, THEREFORE, in consideration of the premises and in order to induce
the Lenders to make Advances from time to time, the Grantor hereby agrees with
the Collateral Agent for the ratable benefit of the Secured Parties as follows:
Section 1. PLEDGE. The Grantor hereby pledges to the Collateral Agent and
grants to the Collateral Agent, in each case for the ratable benefit of the
Secured Parties, a security interest in all of the Grantor's right, title and
interest in and to the following, in each case, as to each type of property
described below, whether now owned or hereafter acquired by the Grantor, and
whether now or hereafter existing or arising (as limited by the last two
sentences of this Section 1, hereinafter, the "Collateral"):
(a) each and every Narita Route of the Grantor;
(b) each and every Slot of the Grantor;
(c) each and every Narita Slot of the Grantor;
(d) each and every Gate Leasehold of the Grantor;
(e) each and every Supporting Route Facility of the Grantor; and
(f) all Proceeds of any kind of any and all of the foregoing
(including, without limitation, in the cases of the rights, title and interests
in property of the type listed in (a), (b), (c), (d) and (e), above, the
proceeds (of any kind) received or to be received by the Grantor upon the
transfer or other disposition of such rights, title and interests
notwithstanding whether the pledge
American Airlines SGR Security Agreement
1
and grant of the security interest in such rights, title and interest is legally
effective under applicable law).
Any other provision in this Agreement to the contrary notwithstanding, (1) if a
Transfer Restriction would be applicable to the creation of a security interest
in any of the right, title or interest described in clauses (b) through (f) of
the first sentence of this Section 1, such right, title or interest shall not be
subject to the security interest created by this Agreement and shall not be
treated as Collateral for purposes hereof and (2) if any Transfer Restriction
applies to the transfer or assignment of (but not the creation of a security
interest in) any of the property referred to in the preceding clause (1) or in
clause (a) of the first sentence of this Section 1, any provision of this
Agreement permitting the Collateral Agent to cause the Grantor to transfer or
assign to it or any other person any of the Grantor's right, title or interest
rights in any such Collateral (and any right the Collateral Agent may have under
applicable law to do so by virtue of the security interest granted to it under
this Agreement) shall be subject to such Transfer Restriction; provided,
however, that following an Event of Default, at the direction of the Collateral
Agent, (a) the Grantor shall be required to take all necessary steps to obtain
all government and third party approvals and consents in order to transfer the
Narita Routes and the Narita Slots and (b) the Grantor shall use its reasonable
best efforts to obtain any and all approvals and consents required for the
transfer of the Slots, Gate Leaseholds and Supporting Route Facilities. For
purposes of this Section, "TRANSFER RESTRICTION" means any restriction or
consent requirement relating to the transfer or assignment by the Grantor of, or
the grant by the Grantor of a security interest in, any right, title or interest
in any type of property or any claim, right or benefit arising thereunder or
resulting therefrom, if an attempted transfer or assignment thereof (or the
grant of a security interest therein) without the consent of any third party
would constitute a violation of the terms under which the Grantor was granted
such right, title or interest (or the Grantor's interest in any agreement or
license related thereto), entitle any Governmental Authority or third party to
terminate or suspend any such right, title or interest (or the Grantor's
interest in any agreement or license related thereto), or violate any applicable
law, rule or regulation, except, in any case, to the extent such "Transfer
Restrictions" shall be rendered ineffective by virtue of Sections 9-406, 9-407,
9-408 or 9-409 of the Uniform Commercial Code as in effect, from time to time,
in the State of New York, to the extent applicable (or any corresponding
sections of the Uniform Commercial Code in a jurisdiction other than the State
of New York to the extent applicable).
Section 2. SECURITY FOR OBLIGATIONS. This Agreement secures the payment of
all Obligations of the Grantor now or hereafter existing under the Financing
Documents, whether direct or indirect, absolute or contingent, and whether for
principal, reimbursement obligations, interest, fees, premiums, penalties,
indemnifications, contract causes of action, costs, expenses or otherwise (all
such Obligations being the "SECURED OBLIGATIONS").
Section 3. NO RELEASE. Nothing set forth in this Agreement shall relieve
the Grantor from the performance of any term, covenant, condition or agreement
on the Grantor's part to be performed or observed under or in respect of any of
the Collateral or from any liability to any Person under or in respect of any of
the Collateral or impose any obligation on the Collateral Agent or any Secured
Party to perform or observe any such term, covenant, condition or agreement on
the Grantor's part to be so performed or observed or impose any liability on the
Collateral Agent or any Secured Party for any act or omission on the part of the
Grantor relating thereto or for any breach of any representation or warranty on
the part of the Grantor contained
American Airlines SGR Security Agreement
2
in this Agreement, or in respect of the Collateral or made in connection
herewith or therewith. This Section shall survive the termination of this
Agreement and the discharge of the Grantor's other obligations hereunder and
under the Financing Documents.
Section 4. REPRESENTATIONS, WARRANTIES, AND COVENANTS. The Grantor
represents, warrants and covenants as follows:
(a) FILINGS. Assuming that the Grantor's rights in the Collateral
constitute general intangibles or proceeds thereof, upon the filing of a Uniform
Commercial Code financing statement describing such Collateral in the State of
Delaware, all filings, registrations and recordings necessary under New York or
Delaware to create, preserve, protect and perfect the security interest granted
by the Grantor to the Collateral Agent hereby in respect of the Collateral in
which the Grantor is permitted by applicable law or contract to grant a security
interest have been accomplished and the security interest granted to the
Collateral Agent for the benefit of the Secured Parties pursuant to this
Agreement in and to the Collateral (x) constitutes, and hereinafter will
constitute, a perfected security interest therein superior and prior to the
rights of all other Persons therein (and subject to the authority of the DOT to
amend or withdraw the Narita Routes pursuant to Title 49 and/or the authority of
the FAA to withdraw Slots pursuant to Title 49 and Title 14 and the rights of
Foreign Aviation Authorities and the rights of other parties with respect to the
Gate Leaseholds and Supporting Route Facilities) and subject to no other Liens
other than Liens referred to in Section 5.02(a) of the Credit Agreement, and (y)
is entitled to all the rights, priorities and benefits afforded by the Uniform
Commercial Code as enacted in any relevant jurisdiction of the United States of
America to perfected security interests.
(b) OWNERSHIP. The Grantor is, and as to Collateral acquired by it
from time to time after the date hereof the Grantor will be, the holder of all
of such Collateral free from any Lien (other than the Lien and security
interests created by this Agreement or the Liens referred to in Section 5.02(a)
of the Credit Agreement) and subject to Title 49, Title 14 and the rights of
Foreign Aviation Authorities. The Grantor will, at or before the time it
subjects any property to the Lien of this Agreement, cause evidence of its title
to be duly recorded, filed, or filed for recording, to the extent permitted or
required under any applicable law, by the Grantor as holder and owner. The
Grantor shall defend the Collateral against any and all claims and demands of
all Persons at any time claiming any interest therein adverse to the Collateral
Agent or any Secured Party (other than Liens referred to in Section 5.02(a) of
the Credit Agreement).
(c) NO COMPETING INTERESTS. There is no financing statement (or
similar statement or instrument of registration under the law of any
jurisdiction intended to provide notice of a Lien) covering or purporting to
cover any interest of any kind in the Collateral, and so long as the Credit
Agreement has not been terminated or any of the Secured Obligations remain
unpaid, the Grantor shall not execute or authorize to be filed in any public
office any financing statement (or similar statement or instrument of
registration under the law of any jurisdiction intended to provide notice of a
Lien), or statements relating to the Collateral, except financing statements
filed or to be filed in respect of and covering the security interests granted
hereby to the Collateral Agent.
(d) AS TO SLOTS.
American Airlines SGR Security Agreement
3
(i) Set forth on Schedule 4(d) is a true, correct and complete
list of the Grantor's Slots as of the date of this Agreement, which Schedule
4(d) shall be revised from time to time by the Grantor as provided for in
Section 6(h)(i) of this Agreement.
(ii) The Grantor represents and warrants that it holds each of
the Slots pursuant to authority granted by the FAA pursuant to Title 14 and that
no violation by the Grantor of any terms, conditions or limitations of any rule
or regulation of the FAA and DOT regarding such Slots or any applicable
provisions of Title 49 and Title 14 has occurred that gives the FAA or the DOT
the right to terminate, cancel, withdraw or modify, in any material respect, the
rights of the Grantor in any such Slot.
(iii) The Grantor represents and warrants that it is utilizing
the Slots in a manner consistent in all material respects with applicable laws,
regulations and contracts in order to preserve its right to hold and operate the
Slots, taking into account any waivers or other relief granted to the Grantor by
the FAA. The Grantor has not received any notice from the FAA, and is not aware
of any other event or circumstance, that would be reasonably likely to impair,
in any material respect, its right to hold and operate the Slots.
(e) AS TO NARITA SLOTS.
(i) Set forth on Schedule 4(e) is a true, correct and complete
list of the Grantor's Narita Slots as of the date of this Agreement, which
Schedule 4(e) shall be revised from time to time by the Grantor as provided for
in Section 6(h)(i) of this Agreement.
(ii) The Grantor represents and warrants that it holds the
requisite authority and holds each of the Narita Slots pursuant to authority
granted by the applicable Foreign Aviation Authorities and that no violation by
the Grantor of any terms, conditions, or limitations of any rule or regulation
of the applicable Foreign Aviation Authorities regarding such Narita Slots or
any applicable provisions of foreign law has occurred that gives any Foreign
Aviation Authorities the right to terminate, cancel, withdraw or modify, in any
material respect, the rights of the Grantor in any such Narita Slot.
(iii) The Grantor represents and warrants that it is utilizing
the Narita Slots in a manner consistent in all material respects with applicable
foreign laws, regulations, and contracts in order to preserve its right to hold
and operate the Narita Slots. The Grantor has not received any notice from any
Foreign Aviation Authorities and is not aware of any other event or circumstance
that would be reasonably likely to impair its right to hold and operate in any
material respect the Narita Slots.
(f) AS TO GATE LEASEHOLDS.
(i) The Grantor represents and warrants that it holds the
requisite authority and holds each of the Gate Leaseholds pursuant to authority
granted by the applicable Governmental Authorities, and that no violation by the
Grantor of any terms, conditions, or limitations of any rule or regulation of
the applicable Governmental Authorities regarding such Gate Leaseholds or any
applicable provisions of law has occurred that gives the Governmental
Authorities the right to terminate, cancel, withdraw or modify, in any material
respect, the rights of the Grantor in any such Gate Leasehold.
American Airlines SGR Security Agreement
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(ii) The Grantor represents and warrants that it is utilizing
the Gate Leaseholds in a manner consistent in all material respects with
applicable laws, regulations and contracts in order to preserve its right to
hold and use the Gate Leaseholds. The Grantor has not received any notice from
any Governmental Authority and is not aware of any other event or circumstance
that would be reasonably likely to impair, in any material respect, its right to
hold and use any Gate Leasehold.
(g) AS TO NARITA ROUTES.
(i) Set forth on Schedule 4(g) is a true, correct and complete
list of the Grantor's Narita Routes as of the date of this Agreement, which
Schedule 4(g) shall be revised from time to time by the Grantor as provided for
in Section 6(h)(ii) of this Agreement.
(ii) The Grantor represents and warrants that it holds the
requisite authority to operate over each of the Narita Routes pursuant to Title
49, all rules and regulations promulgated thereunder, any provisions of foreign
law and applicable treaty and bilateral air transportation agreements (as
amended, and including any applicable memorandum of understanding and exchange
of notes) that are applicable to it, and the applicable rules and regulations of
the FAA, the DOT, any Governmental Authority, and any applicable Foreign
Aviation Authorities; and that no violation by Grantor of any terms, conditions
or limitations of each certificate, order or authority issued by the DOT or the
applicable Foreign Aviation Authorities regarding such Narita Route or any
applicable provisions of Title 49 has occurred that gives the FAA, the DOT, any
Governmental Authority or the applicable Foreign Aviation Authorities the right
to terminate, cancel, withdraw or modify, in any material respect, the rights of
the Grantor in any such Narita Route.
(iii) The Grantor represents and warrants that it is utilizing
the Narita Routes in a manner consistent in all material respects with
applicable laws, regulations, foreign law, the provisions of the applicable
treaty and bilateral air transportation agreement (as amended, and including any
applicable memorandum of understanding and exchange of notes) that are
applicable to it, and contracts in order to preserve its right to hold and
operate each Narita Route, taking into account any waivers or other relief
granted to the Grantor by the DOT and any Foreign Aviation Authorities. The
Grantor has not received any notice from the DOT or any Foreign Aviation
Authority, and is not aware of any other event or circumstance, that would be
reasonably likely to impair, in any material respect, its right to hold and
operate any Narita Route.
(h) AS TO SUPPORTING ROUTE FACILITIES.
(i) Within 60 days after the Effective Date, the Grantor shall
provide to the Collateral Agent, on Schedule 4(h), a true, correct and complete
list of the Grantor's Supporting Route Facilities as of the date of this
Agreement, which Schedule 4(h) shall be revised from time to time by the
Grantor, at the Grantor's expense, (x) to reflect all Supporting Route
Facilities in which the Grantor has or acquires any right, title and interest at
any time or (y) upon reasonable request of the Collateral Agent.
American Airlines SGR Security Agreement
5
(ii) The Grantor represents and warrants that it holds the
requisite authority and holds each of the Supporting Route Facilities pursuant
to authority granted by the applicable Foreign Aviation Authorities, and that no
violation by the Grantor of any terms, conditions, or limitations of any rule or
regulation of the applicable Foreign Aviation Authorities regarding such
Supporting Route Facilities or any applicable provisions of foreign law has
occurred that gives the applicable Foreign Aviation Authorities the right to
terminate, cancel, withdraw or modify, in any material respect, the rights of
the Grantor in any such Supporting Route Facilities.
(iii) The Grantor represents and warrants that it is utilizing
the Supporting Route Facilities in a manner consistent in all material respects
with applicable foreign laws, regulations and contracts in order to preserve its
right to hold and use such Supporting Route Facilities. The Grantor has not
received any notice from any Foreign Aviation Authorities and is not aware of
any other event or circumstance that would be reasonably likely to impair, in
any material respect, the Grantor's right to hold and use any of the Supporting
Route Facilities.
(i) AUTHORITY AND ACCURACY. The Grantor has full corporate power and
authority and legal right to grant a security interest in and pledge all the
Collateral pursuant to this Agreement. All information set forth herein relating
to the Collateral is accurate and complete in all material respects.
(j) CONSENTS. No consent of any other party (including, without
limitation, stockholders or creditors of the Grantor), and no consent,
authorization, approval, or other action by, and (except in connection with the
perfection of the Lien created hereby) no notice to or filing with, any
Governmental Authority or other Person is required either (i) for the pledge by
the Grantor of the Collateral pursuant to this Agreement or for the execution,
delivery or performance of this Agreement or (ii) as of the date of this
Agreement, for the exercise by the Collateral Agent of the rights provided for
in this Agreement or the remedies in respect of the Collateral pursuant to this
Agreement; provided, however, that (A) any transfer of Slots is subject to
confirmation by the FAA, (B) the transfer of the Narita Routes is subject to
approval by the DOT pursuant to Section 41105 of Title 49 and is subject to
Presidential review pursuant to Section 41307 of Title 49, (C) the transfer of
any Gate Leasehold is subject to the limitations contained in the agreements
under which such Gate Leasehold was awarded to the Grantor and the approval
rights, if any, of Governmental Authorities and (D) the transfer of the Narita
Slots and Supporting Route Facilities may be subject to approval by Foreign
Aviation Authorities and, in the case of the Supporting Route Facilities, by the
other parties to any contracts or agreements related thereto (it being
understood that any reference in clauses (A), (B), (C) and (D) to a "transfer"
shall not include and be a reference to a pledge or a grant of a security
interest in such items to the extent they are included in Collateral).
(k) RECOURSE. This Agreement is made with full recourse to the
Grantor and pursuant to and upon all the warranties, representations, covenants
and agreements on the part of the Grantor contained herein and in the other
Financing Documents.
American Airlines SGR Security Agreement
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Section 5. SUPPLEMENTS, FURTHER ASSURANCES.
(a) At the request of a Collateral Agent, the Grantor shall promptly
execute and deliver to the Collateral Agent, at any time and from time to time,
at the expense of the Grantor, instruments and documentation in form and
substance reasonably satisfactory to the Collateral Agent, and take all further
action, that may be required or that the Collateral Agent reasonably requests,
evidencing the security interests granted hereby and providing for the
perfection, preservation and protection of such security interests, and enabling
the Collateral Agent to exercise and enforce its rights and remedies hereunder
with respect to any Collateral; provided that, notwithstanding the foregoing,
the Grantor shall not be required to obtain consents from any third parties or
Governmental Authorities or to take any action in any jurisdiction outside of
the United States that may be required in order to perfect any lien purported to
be created hereby in any Collateral. Notwithstanding the foregoing, in the event
that there is a change in law after the date of this Agreement that permits the
grant or a security interest or affects the ability of the Grantor to provide
the Collateral Agent with a perfected lien on any Collateral, the Grantor agrees
to take such additional steps as may reasonably be requested by the Collateral
Agent to obtain the consent of any appropriate third party, Governmental
Authority or any applicable Foreign Aviation Authorities to grant such security
interest or to perfect such lien.
(b) The Grantor shall sign and deliver to the Collateral Agent, and
the Grantor further authorizes the Collateral Agent to prepare and file, such
financing and continuation statements, in form and substance reasonably
acceptable to the Collateral Agent, as may from time to time be necessary to
grant, continue and maintain a valid, enforceable, first priority security
interest in the Collateral and the other rights, as against third parties
provided hereby, all in accordance with the Uniform Commercial Code as enacted
in any relevant jurisdiction of the United States. The Grantor shall pay any
applicable filing fees and other expenses related to the filing of financing and
continuation statements or the expenses for other action taken (whether by a
Collateral Agent or by the Grantor upon a Collateral Agent's reasonable request)
to perfect under the laws of the United States or any jurisdiction thereof the
security interest granted hereunder. The Grantor hereby authorizes the
Collateral Agent to file any financing or continuation statements without the
signature of the Grantor when permitted by law.
(c) Upon the Parent Guarantor acquiring any right, title or interest
in or to any Collateral, the Grantor shall cause such Parent Guarantor to become
a party to this Agreement the result of which shall be that such Parent
Guarantor shall have pledged to the Collateral Agent, and granted the Collateral
Agent, a duly perfected first priority security interest in and to such
Collateral, to the same extent and subject to the same terms and conditions as
the Grantor is subject hereunder.
Section 6. AFFIRMATIVE COVENANTS AND PROVISIONS CONCERNING COLLATERAL.
(a) (i) SLOTS.
(x) Except as otherwise provided in Sections 6(a), (f)
or (g) of this Agreement, the Grantor will do or cause to be done all
commercially reasonable things necessary to preserve and keep in full force and
effect its rights in and to use its Slots, including,
American Airlines SGR Security Agreement
7
but not limited to, satisfying the Use or Lose Rule and utilizing the Slots in a
manner consistent in all material respects with applicable law, regulations and
contracts in order to preserve its right to hold and operate the Slots except
where the failure to do so could not reasonably be expected to have a material
adverse effect on the value of the related Narita Route. Without in any way
limiting the foregoing, the Grantor shall promptly take all commercially
reasonable steps as may be necessary now or in the future to maintain, renew and
obtain the rights, licenses, authorizations or certifications as are necessary
to the continued and future holding and operation by the Grantor of its Slots
except where the failure to do so could not reasonably be expected to have a
material adverse effect on the value of the related Narita Route.
(y) The Grantor shall provide to the Collateral Agent,
concurrently with the quarterly certificates required to be provided to the
Agent pursuant to Section 5.01(a)(iii) of the Credit Agreement (i) a copy of
every report on slot utilization filed with the FAA during the preceding
calendar quarter pursuant to applicable law and, if reasonably requested by the
Collateral Agent, a summary thereof as it relates to the Slots, in a format
reasonably acceptable to the Collateral Agent; and (ii) a certificate of a
Responsible Officer of the Grantor stating whether or not the Grantor has
satisfied the Use or Lose Rule with respect to each FAA reporting period for
which slot utilization reports were required to be delivered to the FAA during
such calendar quarter for each Slot identified on Schedule 4(d) of this
Agreement, as the same shall be amended from time to time pursuant to Section
6(h)(i) of this Agreement.
(ii) NARITA SLOTS.
(x) Except as otherwise provided in Sections 6(a), (f)
or (g) of this Agreement, the Grantor will do or cause to be done all
commercially reasonable things necessary to preserve and keep in full force and
effect its rights in and to use its Narita Slots, including, but not limited to,
utilizing the Narita Slots in a manner consistent in all material respects with
applicable foreign laws, regulations and contracts in order to preserve its
right to hold and operate the Narita Slots except where the failure to do so
could not reasonably be expected to have a material adverse effect on the value
of any Narita Route. Without in any way limiting the foregoing, the Grantor
shall promptly take all commercially reasonable steps as may be necessary, now
or in the future to maintain, renew and obtain the rights, licenses,
authorizations or certifications as are necessary to the continued and future
holding and operation by the Grantor of its Narita Slots except where the
failure to do so could not reasonably be expected to have a material adverse
effect on the value of any Narita Route.
(y) The Grantor shall provide to the Collateral Agent
concurrently with the quarterly certificates required to be provided to the
Agent pursuant to Section 5.01(a)(iii) of the Credit Agreement, (i) a
certificate of a Responsible Officer of the Grantor stating whether or not (A)
the Grantor has satisfied the applicable utilization requirement for each Narita
Slot identified on Schedule 4(e) of this Agreement, as the same shall be amended
from time to time pursuant to Section 6(h)(i) of this Agreement, for the most
recently ended IATA scheduling season and (B) the Grantor is conducting its
operations in a manner such that the Grantor should be able to meet the
applicable utilization requirement in order to retain its right to each such
Narita Slot in the next comparable IATA scheduling season; and (ii) for each
such Narita Slot listed on Schedule 4(e), as such Schedule shall be updated from
time to time pursuant to Section 6(h)(i) of this Agreement, a Narita Slot
Utilization Report.
American Airlines SGR Security Agreement
8
(b) GATE LEASEHOLDS. The Grantor will make all payments and
otherwise perform all material obligations in respect of each of its Gate
Leaseholds to the extent necessary to keep each such Gate Leasehold in full
force and effect and to prevent such leases from lapsing or terminating or
allowing any rights to renew any such Gate Leasehold to be forfeited or
cancelled, and further will utilize each such Gate Leasehold in a manner
sufficient to comply in all material respects with applicable lease provisions
governing such Gate Leasehold except, in each case, where the failure to do so
could not reasonably be expected to have a material adverse effect on the value
of the related Narita Route.
(c) NARITA ROUTES AND SUPPORTING ROUTE FACILITIES.
(i) Except as otherwise provided in Sections 6(e) or (k),
the Grantor will do or cause to be done all commercially reasonable things
necessary to preserve and keep in full force and effect its material rights in,
and to use and hold, its Narita Routes and Supporting Route Facilities,
including, but not limited to, utilizing and making the requisite filings
regarding the Narita Routes and Supporting Route Facilities in a manner
consistent in all material respects with Title 49, the rules and regulations
promulgated thereunder, any provisions of foreign law, treaty and bilateral air
transportation agreements (as amended, and including any applicable memorandum
of understanding and exchange of notes) that are applicable to it, and
applicable rules and regulations of the FAA, the DOT, any Governmental Authority
and any applicable Foreign Aviation Authorities, except, with respect to the
Supporting Route Facilities, in each case where the failure to do so could not
reasonably be expected to have a material adverse effect on the value of any
Narita Route.
(ii) Without in any way limiting the foregoing, the Grantor
shall promptly take (x) all such commercially reasonable steps as may be
necessary or, in the reasonable judgment of the Collateral Agent, advisable, to
maintain or to renew its authority to operate each such Narita Route from the
DOT, any Governmental Authority, and any applicable Foreign Aviation
Authorities, within a reasonable time prior to the expiration of such authority
(as prescribed by regulation or law, if any), and notify the Collateral Agent of
the status of such renewal and (y) all such other steps as may be necessary to
maintain, renew and obtain any and all Supporting Route Facilities as needed for
the continued and future operations of the Grantor over the Narita Routes, which
are now allocated or possessed, or as may hereafter be allocated or acquired,
except, with respect to the Supporting Route Facilities, in each case where the
failure to do so could not reasonably be expected to have a material adverse
effect on the value of any Narita Route.
(iii) The Grantor shall promptly provide copies to the
Collateral Agent of (x) all filings made with the DOT, any Governmental
Authority and Foreign Aviation Authorities to preserve and maintain the Narita
Routes and Supporting Route Facilities, (y) each certificate or order issued by
the DOT, any Governmental Authority and any applicable Foreign Aviation
Authorities with respect to the Narita Routes and the Supporting Route
Facilities, and (z) any notices received from the DOT, any Governmental
Authority and any applicable Foreign Aviation Authorities notifying the Grantor
of an event which could reasonably be expected to have a material adverse effect
upon any of the Narita Routes or any of the Supporting Route Facilities.
American Airlines SGR Security Agreement
9
(iv) The Grantor shall pay any applicable filing fees and
other expenses related to the submission of applications, renewal requests, and
other filings as may be reasonably necessary to maintain or obtain in accordance
with this Agreement the Grantor's rights in the Narita Routes and Supporting
Route Facilities.
(v) Concurrently with the quarterly certificates required to
be provided to the Agent pursuant to Section 5.01(a)(iii) of the Credit
Agreement the Grantor shall provide to the Collateral Agent (x) a certificate of
a Responsible Officer of the Grantor stating whether or not (A) the Grantor has
discontinued, suspended or otherwise interrupted service on any of the Narita
Routes during the most recently ended calendar quarter for more than seven (7)
days and (B) the Grantor is conducting its operations in a manner such that the
Grantor should be able to meet the applicable utilization requirement in order
to retain its right to use each such Narita Route in the next calendar quarter,
and (y) a report, in format reasonably acceptable to the Collateral Agent,
showing for each day in the most recently ended calendar quarter, the number of
flights operated by the Grantor between the United States and Tokyo, Japan.
(d) NO LIENS. The Grantor shall not create or suffer to exist any
lien, security interest or other charge or encumbrance upon or with respect to
any of the Collateral to secure any obligation of any person or entity, except
for the security interest created by this Agreement or except as otherwise
permitted by the Credit Agreement.
(e) TRANSFERS OR MODIFICATIONS OF NARITA ROUTES. (i) The Grantor
shall not be entitled to transfer or otherwise dispose of its rights in any
Narita Route without the express written consent and approval of the Collateral
Agent and the Required Lenders; provided that the Grantor may, with 30 days'
prior written notice to the Collateral Agent (or such lesser period as may be
acceptable to the Collateral Agent), (A) transfer or dispose of any of its
rights in a Narita Route to another air carrier (x) if such transfer or
disposition has been consented to by the Agent pursuant to Section 5.02(c)(iii)
of the Credit Agreement or (y) to the extent that such transfer or disposition
is made in exchange for another operating authority for scheduled service
between the United States and Tokyo, Japan of reasonably equivalent value to the
Grantor (as determined in the exercise of reasonable good faith by the Grantor)
and such new operating authority (subject to the limitations set forth in the
last two sentences of Section 1 hereof) shall become part of the Collateral; (B)
modify any Narita Route to change the city in the United States to which
scheduled service from Tokyo, Japan is authorized so long as the Grantor has
determined in the exercise of reasonable good faith that the new route would be
of reasonably equivalent value and such modified operating authority and related
frequencies shall remain part of the Collateral; or (C) transfer or otherwise
dispose of its rights in Supporting Route Facilities that are surplus or excess,
to the extent that such transfer or disposition could not reasonably be expected
to have a material adverse effect (as determined in the exercise of reasonable
good faith by the Grantor) on the value of the Narita Routes taken as a whole;
provided, that no less than 30 days (or such lesser period as may be acceptable
to the Collateral Agent) prior to any such transfer, disposition or
modification, the Grantor shall provide to the Collateral Agent all information
reasonably necessary for the Collateral Agent to determine compliance with this
Section 6(e).
(ii) Notwithstanding any other provision of this Agreement,
if at any time the number of frequencies, exemption and certificate authorities
included in the Grantor's Narita Routes are less than forty-one (41) per week
(the "REQUIRED NARITA ROUTE FREQUENCY
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10
AMOUNT") and the Grantor then holds, or subsequently acquires, additional
frequencies, exemption or certificate authorities related to the right to
operate scheduled service between the United States and Tokyo, Japan, the
Grantor shall cause such operational authorities (subject to the limitations set
forth in the last two sentences of Section 1 hereof) to become part of the
Collateral hereunder, but in any case only as necessary so that the number of
frequencies, exemption and certificate authorities applicable to the Grantor's
Narita Routes are not less than the Required Narita Route Frequency Amount.
(f) TRANSFERS OF SLOTS AND NARITA SLOTS. (i) Notwithstanding
anything to the contrary herein contained, the Grantor shall be entitled,
subject to Section 6(g) of this Agreement, (x) to permanently transfer or
otherwise dispose of its rights in its Slots and Narita Slots to the extent such
transfer or disposition is made in exchange for a Slot or, if applicable, a
Narita Slot of reasonably equivalent value (as determined in the exercise of
reasonable good faith by the Grantor), (y) to temporarily transfer its rights to
operate a Slot or a Narita Slot pursuant to a routine trade of such Slot or
Narita Slot to another Certificated Air Carrier, Commuter Air Carrier (as
defined in Part 298 of Title 14) or a foreign air carrier, including a
code-share or alliance partner, in the ordinary course of the Grantor's business
where such Slot or Narita Slot is intended to be returned to the Grantor at the
end of the then applicable summer or winter season or (z) transfer or dispose of
any of its rights in a Slot or a Narita Slot if such transfer or disposition has
been consented to by the Agent pursuant to Section 5.02(c)(iii) of the Credit
Agreement. Following any such transfer or other disposition, the Grantor shall
provide the Collateral Agent with all information reasonably necessary for the
Collateral Agent to determine the Grantor's compliance with this Section 6(f). A
permanent trade or exchange of Slots or Narita Slots under this Section is
subject to the requirements of Section 6(g) with respect to the slots received
by the Grantor in replacement of the slots exchanged or traded. A temporary
trade or exchange of Slots or Narita Slots under this Section must provide for
sufficient oversight by the Grantor to ensure that the temporary operator of
such Slots or Narita Slots is utilizing them in a manner consistent with
applicable laws, regulations, contracts, and foreign laws in order to preserve
the right of the Grantor to hold, and the right of the Grantor to operate, such
Slots or Narita Slots.
(ii) Notwithstanding any other provision of this Agreement,
if at any time the number of Narita Slots that the Grantor owns, holds or has
the right to use in respect of the Narita Routes is less than eighty-two (82)
per week (the "Required Narita Slot Amount") and the Grantor then holds, or
subsequently acquires, additional operational authorities to conduct landing or
takeoff operations at Narita Airport, Tokyo, Japan, the Grantor shall cause such
operational authorities (subject to the limitations set forth in the last two
sentences of Section 1 hereof) to become part of the Collateral hereunder, but
in any case only as necessary so that the number of Narita Slots again equals
the Required Narita Slot Amount.
(g) REPLACEMENT OF SLOTS AND NARITA SLOTS.
(i) The Grantor may, to the extent permitted hereunder and
subject to the limitations set forth in this Agreement and the Credit Agreement
and this Section 6(g), replace any Slot and/or Narita Slot with one or more
Replacement Slots through the transfer of slots or the substitutions for such
Slot or Narita Slot of another slot owned by Grantor of reasonably equivalent
value for the related Narita Route, provided, that, on the date of such
replacement, no Event of Default shall have occurred and be continuing, and
provided further
American Airlines SGR Security Agreement
11
that a Slot can only be replaced by another Slot and a Narita Slot can only be
replaced by another Narita Slot.
(ii) Upon the Grantor having received a Replacement Slot, the
Lien of this Agreement shall continue with respect to each such Replacement Slot
as though no replacement had occurred. The Collateral Agent shall, at the cost
and expense of the Grantor, release from the Lien of this Agreement each
replaced Slot or Narita Slot (and any related Collateral) upon the occurrence of
the replacement (including satisfaction of each condition for replacement
provided for or referred to in Section 6(g)(iii)) by executing and delivering to
the Grantor such documents and instruments, prepared at the Grantor's expense,
as the Grantor may reasonably request to evidence such release.
(iii) The Grantor's right to effect a replacement under
Section 6(g)(i) hereof shall be subject to the fulfillment, at the Grantor's
sole cost and expense and in addition to the conditions contained in such
Section 6(g)(i), of each of the following conditions precedent:
A. Each Replacement Slot is of reasonably equivalent
value (as determined in the exercise of reasonable good faith by the Grantor) to
the Slot or Narita Slot being replaced thereby;
B. The Collateral Agent shall have received a
certificate of a Responsible Officer of the Grantor stating (x) that on the
replacement date no Event of Default shall have occurred and be continuing, (y)
each of the conditions specified in this Section 6(g)(iii) with respect to such
Replacement Slot has been satisfied and (z) all the material licenses, permits,
authorizations, exemptions, certificates of compliance, certificates of public
convenience and necessity, and other certificates (including, without
limitation, air carrier operating certificates and operations specifications
issued by the FAA pursuant to 14 C.F.R. Parts 119 and 121, if applicable) which
are required by the DOT or the FAA and which are adequate for the Grantor to use
the Replacement Slot are in full force and duly issued to the Grantor, and in
the case of Narita Slots all of the material licenses, permits, authorizations,
exemptions, certificates of compliance, certificates of public convenience and
necessity, and other certificates, issued by Foreign Aviation Authorities and
which are adequate for the Grantor to use the Replacement Slot are in full force
and duly issued to the Grantor;
C. The Grantor shall take all necessary steps required
under the laws of any jurisdiction of the United States of America to cause each
Replacement Slot to be subject to the Lien of this Agreement, free and clear of
any Liens (other than Liens referred to in Section 5.02(a) of the Credit
Agreement);
D. The Grantor shall have been duly authorized to hold
each Replacement Slot pursuant to authority granted by the FAA pursuant to Title
14 or Foreign Aviation Authorities;
E. The Grantor shall have caused evidence of its right
to hold each Replacement Slot to be duly confirmed, recorded, filed, or filed
for recording with the FAA or Foreign Aviation Authorities, to the extent
customary and permitted or required under any applicable law or regulations; and
American Airlines SGR Security Agreement
12
F. The Collateral Agent shall have received from the
Grantor such documents and evidence with respect to the Grantor as the
Collateral Agent may reasonably request in order to establish the consummation
of the transactions contemplated by this Section 6(g), and evidence of taking of
all necessary corporate action in connection therewith and compliance with the
conditions set forth in this Section 6(g), in each case in form and substance
reasonably satisfactory to the Collateral Agent.
(h) UPDATED SCHEDULES.
(i) SLOTS/NARITA SLOTS. The Grantor shall deliver or cause
to be delivered to the Collateral Agent, at the Grantor's expense, updated
Schedules 4(d) and 4(e) to replace the then-existing Schedules 4(d) and 4(e)
within ten (10) Business Days after (i) the Grantor has or acquires any right,
title, and interest at any time in any "slot" that is required to be a Slot or
Narita Slot; (ii) the allocation to, or the acquisition by, the Grantor of any
permanent "slot" that is required to be a Slot or Narita Slot; (iii) any
permanent disposition or transfer by the Grantor of any Slot or Narita Slot
permitted pursuant to the terms of the Credit Agreement and this Agreement; or
(iv) any reasonable request by the Collateral Agent to update such Schedules
4(d) and 4(e).
(ii) NARITA ROUTES. The Grantor shall deliver or cause to be
delivered to the Collateral Agent, at the Grantor's expense, an updated Schedule
4(g) to replace the then-existing Schedule 4(g) within ten (10) Business Days
after (i) the allocation to, the acquisition by, or award to the Grantor of any
scheduled air carrier service operating authority between the United States and
Japan in exchange for, or replacement of, any existing Narita Route pursuant to
the terms of this Agreement; (ii) any permanent disposition, transfer or
discontinuance by the Grantor of any Narita Route permitted pursuant to the
terms of the Credit Agreement and this Agreement; or (iii) any reasonable
request by the Collateral Agent to update such Schedule 4(h).
(i) NOTICE OF VIOLATIONS OF LAWS AND REGULATIONS. The Grantor agrees
to give the Collateral Agent notice of any material violations of any applicable
laws, rules, or regulations (collectively, the "REQUIREMENTS") (whether
presently in effect or hereinafter enacted, passed, promulgated, made, issued or
adopted by the DOT, FAA, any Governmental Authority or Foreign Aviation
Authorities) affecting the Collateral or the Grantor's use thereof, by sending
within ten (10) business days after service upon, or receipt by, an SGR
Responsible Officer of the Grantor, a copy of each and every one thereof to the
Collateral Agent. At the same time, the Grantor will inform the Collateral Agent
as to the work or steps which the Grantor proposes to do or take in order to
correct the violation. Notwithstanding the foregoing, however, if such work or
step would require any alterations which would, in the Grantor's reasonable
opinion, reduce the value of the Collateral, the Grantor may defer compliance
therewith, as long as such deferral is consistent with applicable law in order
that the Grantor may, at the Grantor's expense, contest or seek modification of
or other relief with respect to such Requirements so long as such contest or the
seeking of such relief does not involve any substantial danger of the sale,
forfeiture or loss of the related Collateral.
(j) NOTICE OF CHANGES IN LAWS AND REGULATIONS. The Grantor agrees to
use reasonable best efforts to give the Collateral Agent notice of any material
changes in applicable Requirements affecting the Collateral or the Grantor's use
thereof, by sending within thirty (30) days after service upon, receipt by, or
after
American Airlines SGR Security Agreement
13
the same otherwise comes to the attention of an SGR Responsible Officer of the
Grantor, a copy of each and every such change to the Collateral Agent.
(k) MODIFICATION OR DISCONTINUANCE OF NARITA ROUTES. Nothing in this
Agreement shall be interpreted to prevent the Grantor from modifying, suspending
or discontinuing service on any of the Narita Routes or the use of any of the
Supporting Route Facilities due to a determination made by the Grantor that it
is commercially reasonable to do so; provided, however, that (x) should the
Narita Route on which service is to be or has been discontinued, suspended or
materially modified be subject to a dormancy provision, reallocation, or
withdrawal by the DOT, the Grantor shall use commercially reasonable efforts to
avoid the loss of such Narita Route for dormancy or the reallocation of such
Route; and (y) the Grantor shall not discontinue service over any Narita Route
without having given the Collateral Agent at least thirty (30) days' prior
written notice thereof. If the Grantor suspends service over any Narita Route,
it shall promptly provide the Collateral Agent with notice of such suspension
and, at the further request of the Collateral Agent, an explanation of the
circumstances that have caused such suspension.
Section 7. COLLATERAL AGENT APPOINTED.
(a) ATTORNEY-IN-FACT. The Grantor hereby irrevocably appoints the
Collateral Agent the Grantor's attorney-in-fact (which appointment shall be
irrevocable and deemed coupled with an interest) with full authority in the
place and stead of the Grantor and in the name of the Grantor or otherwise, from
time to time in the Collateral Agent's discretion, upon and during the
occurrence and continuation of an Event of Default, to take any action and to
execute any instrument which the Collateral Agent may deem necessary or
advisable to accomplish the purposes of this Agreement, including, without
limitation:
(i) to ask, demand, collect, sue for, recover, compound,
receive and give acquittance and receipts for moneys due and to become due under
or in respect of any of the Collateral;
(ii) to receive, endorse, and collect any instruments and
documents in connection with clause (i) above;
(iii) to receive, endorse and collect all instruments made
payable to the Grantor representing any distribution in respect of the
Collateral or any part thereof and to give full discharge for the same; and
(iv) to file any claims or take any action or institute any
proceedings which the Collateral Agent may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of the
Collateral Agent with respect to any of the Collateral.
(b) COLLATERAL AGENT'S DUTIES. The powers conferred on the
Collateral Agent hereunder are solely to protect its interest and the interests
of the Secured Parties in the Collateral and shall not impose any duty upon it
to exercise any such powers. Except for the safe custody of any Collateral in
its possession and the accounting for moneys actually received by the Collateral
Agent hereunder, the Collateral Agent shall have no duty as to any Collateral or
as to the taking of any necessary steps to preserve rights against prior parties
or any other rights pertaining to any Collateral,
American Airlines SGR Security Agreement
14
whether or not the Collateral Agent has or has been or is deemed to have
knowledge of such matters.
Section 8. COLLATERAL AGENT MAY PERFORM. If the Grantor fails to perform
any agreement contained herein within a reasonable time after receipt of a
written request to do so from the Collateral Agent, the Collateral Agent may
perform, or cause performance of, such agreement, and the reasonable expenses of
the Collateral Agent, including, but not limited to, the reasonable fees and
expenses of counsel, incurred in connection therewith, shall be payable by the
Grantor and shall be considered Secured Obligations.
Section 9. EVENTS OF DEFAULT, REMEDIES.
(a) EVENTS OF DEFAULT. It shall be an Event of Default hereunder if
under the Credit Agreement an "Event of Default" shall occur.
(b) REMEDIES; OBTAINING THE COLLATERAL UPON EVENT OF DEFAULT. If any
Event of Default shall have occurred and be continuing, then and in every such
case, the Collateral Agent may, at any time or from time to time during such
Event of Default:
(i) Declare the entire right, title and interest of the
Grantor in and to each Slot vested, subject to the requirements imposed by Title
49, Title 14, the FAA and other provisions of applicable law, in which event
such rights, title and interest shall immediately vest in the Collateral Agent,
in which case the Collateral Agent may or may cause the Grantor to effectuate
the transfer of any or all of the Slots and the Grantor agrees to execute and
deliver such transfer documents, deeds of conveyance, assignments and other
documents or instruments (including any notices or applications to the DOT, FAA
or any other Governmental Authority having jurisdiction over any such Slot or
the use thereof) and take such other actions and use its best efforts as shall
be required or requested by the Collateral Agent in order to legally effectuate
the transfer of such Slots, together with copies of the certificates,
confirmations, notices or orders issued by the FAA representing same and any
other rights of the Grantor with respect thereto, to any designee or designees
selected by the Collateral Agent and confirmed by the FAA; it being understood
that, as of the date hereof, transfers of Slots must accommodate the FAA
requirement that such Slots be used only by air carriers generally; it being
further understood that the Grantor's obligation to deliver such Collateral and
such documents and instruments with respect thereto is of the essence of this
Agreement and that, accordingly, upon application to a court of equity having
jurisdiction, the Collateral Agent shall be entitled to a decree requiring
specific performance by the Grantor of said obligations;
(ii) In the Collateral Agent's sole discretion, but subject to
the provisions of applicable law, such Collateral Agent may use the blank,
undated, signed Slot transfer documents held in escrow (in the form of Exhibit I
hereto) as a means to effectuate a transfer as contemplated herein;
(iii) Declare, to the extent permitted by foreign law, IATA
guidelines or regulations, the entire right, title and interest of the Grantor
in and to each Narita Slot vested, subject to the requirements imposed by
foreign law and Foreign Aviation Authorities, in which event such rights, title
and interest shall immediately vest in the Collateral Agent, in which case
American Airlines SGR Security Agreement
15
the Collateral Agent may or may cause the Grantor to effectuate the transfer of
any or all of the Narita Slots as may be required under foreign law, IATA
guidelines or regulations and the Grantor agrees to execute and deliver such
transfer documents, deeds of conveyance, assignments and other documents or
instruments (including any notices or applications to the Foreign Aviation
Authorities or any other Governmental Authority having jurisdiction over any
such Narita Slot or the use thereof) and take such other actions and use its
best efforts (including seeking the assistance of the U.S. Government) as shall
be required or requested by the Collateral Agent in order to legally effectuate
the transfer of such Narita Slots; it being understood that, with respect to
each Narita Slot, if any of the foregoing is not permitted under applicable law,
foreign law, IATA guidelines or regulations, the Collateral Agent for the
ratable benefit of the Secured Parties shall nevertheless continue to have all
of the Grantor's right, title and interest in and to all of the proceeds (of any
kind) received or to be received by the Grantor upon the transfer or other
disposition of the Collateral; it being further understood that where it is
permitted under applicable law, IATA guidelines or regulations, the Grantor's
obligation to deliver such Collateral and such documents and instruments with
respect thereto is of the essence of this Agreement and that, accordingly, upon
application to a court of equity having jurisdiction, to the extent permitted by
applicable law, the Collateral Agent shall be entitled to a decree requiring
specific performance by the Grantor of said obligations;
(iv) Declare the entire right, title and interest of the
Grantor in and to each Narita Route and the Supporting Route Facilities, vested,
subject to the requirements imposed by Title 49, the DOT, and Foreign Aviation
Authorities and other provisions of applicable law, in which event such rights,
title and interest shall immediately vest in the Collateral Agent, and, whether
or not such vesting is legally effective, the Grantor agrees to execute and
deliver such deeds of conveyance, assignments and other documents or instruments
(including any notices or applications to the DOT, FAA, applicable Foreign
Aviation Authorities or any Governmental Authority having jurisdiction over any
such Narita Route or Supporting Route Facilities, or the use thereof) and take
such other actions and use its best efforts (including seeking the assistance of
the U.S. Government) as shall be required or requested by the Collateral Agent
in order to legally effectuate the transfer of such Narita Routes and Supporting
Route Facilities, together with copies of the certificates or orders issued by
the DOT and the Foreign Aviation Authorities representing the same and any other
rights of the Grantor with respect thereto, and to use its best efforts to
transfer, assign or convey all of the Narita Routes and the Supporting Route
Facilities associated with, or related to, the Grantor's operation of the
applicable Narita Route, to any designee or designees selected by the Collateral
Agent and approved by the DOT and to the extent necessary, by any Foreign
Aviation Authorities, it being understood that, with respect to each Narita
Route and the Supporting Route Facilities, if any of the foregoing is not
permitted under applicable law, foreign law, IATA guidelines or regulations, the
Collateral Agent for the ratable benefit of the Secured Parties shall
nevertheless continue to have all of the Grantor's right, title and interest in
and to all of the proceeds (of any kind) received or to be received by the
Grantor upon the transfer or other disposition of the Collateral; it being
further understood that (x) as of the date hereof, the transfer of any Narita
Route (but not a pledge or the grant of a security interest therein) is subject
to approval by the DOT pursuant to Section 41105 of Title 49 and the President
pursuant to Section 41307 of Title 49, and that pursuant to such provisions the
Narita Routes may be transferred only to one or more Certificated Air Carriers
and (y) where it is permitted under applicable law, IATA guidelines or
regulations, the Grantor's obligation to deliver such Collateral and such
documents and
American Airlines SGR Security Agreement
16
instruments with respect thereto, including to use its best efforts to transfer,
assign or convey all of its right, title and interest in and to the Narita
Routes and the Supporting Route Facilities is of the essence of this Agreement
and that, accordingly, upon application to a court of equity having
jurisdiction, to the extent permitted by applicable law, the Collateral Agent
shall be entitled to a decree requiring specific performance by the Grantor of
said obligations;
(v) Declare the entire right, title and interest of the
Grantor in and to each Gate Leasehold vested, in which event such rights, title
and interest shall immediately vest in the Collateral Agent, and, whether or not
such vesting is legally effective, the Grantor agrees to execute and deliver
such deeds of conveyance, assignments and other documents or instruments and
take such other actions as shall be required or requested by the Collateral
Agent in order to legally effectuate the transfer of such Gate Leasehold, to any
designee or designees selected by the Collateral Agent and to use its best
efforts to effect such transfer; it being understood that if any of the
foregoing is not permitted under applicable law, the Collateral Agent for the
ratable benefit of the Secured Parties shall nevertheless continue to have all
of the Grantor's right, title and interest in and to all of the proceeds (of any
kind) received or to be received by the Grantor upon the transfer or other
disposition of the Collateral; it being further understood that any such Gate
Leasehold transfer may be subject to the approval or consent of the relevant
airport authority, airport operator, or Governmental Authority; and it being
further understood that where it is permitted under applicable law, IATA
guidelines or regulations, the Grantor's obligation to deliver such Collateral
and such documents and instruments with respect thereto is of the essence of
this Agreement and that, accordingly, upon application to a court of equity
having jurisdiction, to the extent permitted by applicable law, the Collateral
Agent shall be entitled to a decree requiring specific performance by the
Grantor of said obligations;
(vi) Sell, transfer, lease or otherwise liquidate, or direct
the Grantor to sell, transfer, lease or otherwise liquidate, any or all of the
Collateral or any part thereof, subject to the requirements imposed by Title 14,
Title 49, the FAA, the DOT and Foreign Aviation Authorities and other provisions
of applicable law and take possession of the Proceeds of any such sale transfer,
lease or liquidation; and
(vii) Direct the Grantor to deposit, in the Cash Collateral
Account or such other account as identified by the Collateral Agent from time to
time, any Proceeds of the Collateral, and the Grantor hereby agrees to do so
immediately upon receipt by the Grantor of such direction by the Collateral
Agent.
(c) REMEDIES; DISPOSITION OF THE COLLATERAL.
(i) The Collateral Agent shall, from time to time exercise
in respect of the Collateral, in addition to other rights and remedies provided
for herein or otherwise available to it, and to the extent not in violation of
applicable law, including Title 14 and Title 49, and subject to the approval of
the DOT and/or the FAA and/or Foreign Aviation Authorities or their respective
successors or nominees, all the rights and remedies of a secured party on
default under the UCC in effect in all relevant jurisdictions at the time of an
Event of Default and the Collateral Agent may also in its sole discretion,
without notice except as specified below, sell the Collateral or any part
thereof in one or more parcels at public or private sale, at any exchange,
broker's board or at a Collateral Agent's office or elsewhere, for cash, on
credit or for future
American Airlines SGR Security Agreement
17
delivery, and at such price or prices and upon such other terms as the
Collateral Agent may deem commercially reasonable. To the extent not
inconsistent with Title 49, Title 14, the DOT, the FAA requirements and other
requirements of applicable United States and foreign law, the Collateral Agent
or any other Secured Party may be the purchasers of any or all of the Collateral
at any such sale and shall be entitled, for the purpose of bidding and making
settlement or payment of the purchase price for all or any portion of the
Collateral sold at such sale, to use and apply any of the Secured Obligations
owed to such Person as a credit on account of the purchase price of any
Collateral payable by such Person at such sale. Each purchaser at any such sale
shall acquire the property sold absolutely free from any claim or right on the
part of the Grantor, and the Grantor hereby waives, to the fullest extent
permitted by law, all rights of redemption, stay or appraisal which it now has
or may at any time in the future have under any rule of law or statute now
existing or hereafter enacted. The Grantor agrees that at least ten (10) days'
advance notice to the Grantor of the time and place of any public sale or the
time after which any private sale is to be made shall constitute reasonable
notification. The Collateral Agent shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. The Collateral Agent
may adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned. The Grantor hereby
waives, to the fullest extent permitted by law, any claims against the
Collateral Agent arising by reason of the fact that the price at which any
Collateral may have been sold at such a private sale was less than the price
which might have been obtained at a public sale.
(ii) Except as otherwise provided herein, the Grantor hereby
waives, to the fullest extent permitted by applicable law, notice or judicial
hearing in connection with a Collateral Agent's taking possession or a
Collateral Agent's disposition of any of the Collateral, including, without
limitation, any and all prior notice and hearing for any prejudgment remedy or
remedies and any such right which the Grantor would otherwise have under law,
and the Grantor hereby further waives to the fullest extent permitted by
applicable law: (x) all damages occasioned by such taking of possession; (y) all
other requirements as to the time, place and terms of sale or other requirements
with respect to the enforcement of the Collateral Agent's rights hereunder; and
(z) all rights of redemption, appraisement, valuation, stay, extension or
moratorium now or hereafter in force under any applicable law. Any sale of, or
the grant of options to purchase, or any other realization upon, any Collateral
shall operate to divest all right, title, interest, claim and demand, either at
law or in equity, of the Grantor therein and thereto, and shall be a perpetual
bar both at law and in equity against the Grantor and against any and all
Persons claiming or attempting to claim the Collateral so sold, optioned or
realized upon, or any part thereof, from, through and under the Grantor.
(d) CONTINUING USE DURING REMEDIES. In the event that the Collateral
Agent invokes its rights or remedies under (b) or (c) of this Section, the
Grantor shall do or cause to be done all things necessary to preserve and keep
in full force and effect its material rights in, and to use and hold, its Narita
Routes, Slots, Narita Slots, Gate Leaseholds, and Supporting Route Facilities
until the Collateral Agent is able to complete the transfer or otherwise dispose
of such Narita Routes, Slots, Narita Slots, Gate Leaseholds, and Supporting
Route Facilities.
American Airlines SGR Security Agreement
18
Section 10. APPLICATION OF PROCEEDS.
All cash proceeds received by the Collateral Agent in respect of any sale
of, collection from, or other realization upon all or any part of the Collateral
pursuant to the exercise by the Collateral Agent of its remedies as a secured
party as provided in Section 9 of this Agreement shall be held by the Collateral
Agent as collateral for, and then at any time thereafter shall, as determined by
the Collateral Agent, be applied in whole or in part against, all or any part of
the Secured Obligations in such order as provided for in Section 2.11(e) of the
Credit Agreement. Any surplus of such cash or cash proceeds held by the
Collateral Agent and remaining after payment in full of all the Secured
Obligations shall be paid over to the Grantor or to whomever may be at such time
lawfully entitled to received such surplus.
Section 11. NO WAIVER, DISCONTINUANCE OF PROCEEDING.
(a) Each and every right, power and remedy hereby specifically given
to the Collateral Agent or otherwise in this Agreement shall be cumulative and
shall be in addition to every other right, power and remedy specifically given
under this Agreement, the Credit Agreement or the other Financing Documents now
or hereafter existing at law, in equity or by statute and each and every right,
power and remedy whether specifically herein given or otherwise existing may be
exercised from time to time or simultaneously and as often and in such order as
may be deemed expedient by the Collateral Agent. All such rights, powers and
remedies shall be cumulative and the exercise or the beginning of the exercise
of one shall not be deemed a waiver of the right to exercise any other or
others. No delay or omission of the Collateral Agent in the exercise of any such
right, power or remedy and no renewal or extension of any of the Secured
Obligations shall impair any such right, power or remedy or shall be construed
to be a waiver of any default or Event of Default or an acquiescence therein. No
notice to or demand on the Grantor in any case shall entitle it to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of any of the rights of the Collateral Agent to any other or further
action in any circumstances without notice or demand. In the event that the
Collateral Agent shall bring any suit to enforce any of its rights hereunder and
shall be entitled to judgment, then in such suit, to the extent permitted by
applicable law, the Collateral Agent may recover reasonable expenses, including
reasonable attorneys' fees, and the amounts thereof shall be included in such
judgment.
(b) In the event the Collateral Agent shall have instituted any
proceeding to enforce any right, power or remedy under this Agreement, the
Credit Agreement or the other Financing Documents by foreclosure, sale, entry or
otherwise, and such proceeding shall have been discontinued or abandoned for any
reason or shall have been determined adversely to the Collateral Agent, then and
in every such case the Grantor, the Collateral Agent and each holder of any of
the Secured Obligations shall to the extent permitted by applicable law be
restored to their respective former positions and rights hereunder with respect
to the Collateral, and all rights, remedies and powers of the Collateral Agent
and the Secured Parties shall continue as if no such proceeding had been
instituted.
American Airlines SGR Security Agreement
19
Section 12. INDEMNITIES AND EXPENSES.
(a) The Grantor agrees to indemnify, defend and save and hold
harmless each Secured Party and each of their Affiliates and their respective
officers, directors, employees, agents and advisors (each, an "INDEMNIFIED
PARTY") from and against, and shall pay on demand, any and all claims, damages,
losses, liabilities and expenses (including, without limitation, reasonable fees
and expenses of counsel) that may be incurred by or asserted or awarded against
any Indemnified Party, in each case arising out of or in connection with or
resulting from this Agreement (including, without limitation, enforcement of
this Agreement), except to the extent such claim, damage, loss, liability or
expense is found by a court of competent jurisdiction to have resulted from such
Indemnified Party's gross negligence or willful misconduct.
(b) The Grantor will upon demand pay to the Collateral Agent the
amount of any and all reasonable expenses, including, without limitation, the
reasonable fees and expenses of its counsel and of any experts and agents, that
the Collateral Agent may incur in connection with (i) the custody or
preservation of, or the sale of, collection from or other realization upon, any
of the Collateral of the Grantor, (ii) the exercise or enforcement of any of the
rights of the Collateral Agent or the other Secured Parties hereunder or (iii)
the failure by the Grantor to perform or observe any of the provisions hereof.
(c) The Grantor agrees that neither the Collateral Agent nor any of
the Secured Parties shall assume, or shall have responsibility for, the payment
of any sums due or to become due under any agreement or contract included in the
Collateral or the performance of any obligations to be performed under or with
respect to any such agreement or contract by the Grantor, and except as the same
may have resulted from the gross negligence or willful misconduct of the
Collateral Agent or such Secured Party finally determined by a court of
competent jurisdiction, the Grantor hereby agrees to indemnify and hold the
Collateral Agent harmless with respect to any and all claims by any person
relating thereto.
(d) If and to the extent that the obligations of the Grantor under
this Section 12 are unenforceable for any reason, the Grantor hereby agrees to
make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.
(e) Any amounts paid by any Indemnified Party as to which such
Indemnified Party has the right to reimbursement shall constitute Secured
Obligations. The indemnity obligations of the Grantor contained in this Section
12 shall continue in full force and effect notwithstanding the full payment of
the Credit Agreement and the payment of all other Secured Obligations and
notwithstanding the discharge thereof.
Section 13. AMENDMENTS, ETC. This Agreement and the provisions hereof may
not be amended, waived, modified, changed, discharged or terminated unless the
same shall be in writing and signed and delivered by the Collateral Agent and
the Grantor, subject to the requirements set forth in Section 9.01 of the Credit
Agreement.
Section 14. SECURITY INTEREST ABSOLUTE. The obligations of the Grantor
hereunder shall remain in full force and effect without regard to, and shall not
be impaired by: (i) any exercise or non-exercise, or any waiver of, any right,
remedy, power or privilege under or in
American Airlines SGR Security Agreement
20
respect of this Agreement or any other Financing Document, except as
specifically set forth in a waiver granted pursuant to Section 13; (ii) any
amendment to or modification of any Financing Document or any security for any
of the Secured Obligations, whether or not the Grantor shall have notice or
knowledge of any of the foregoing, except as specifically set forth in an
amendment or modification executed pursuant to Section 13; (iii) any lack of
validity or enforceability of any Financing Document or any other agreement or
instrument relating thereto; or (iv) any other circumstances which might
otherwise constitute a defense available to, or a discharge of, the Grantor.
Section 15. TERMINATION; RELEASE.
(a) This Agreement shall create a continuing security interest in
the Collateral and shall (i) remain in full force and effect until payment in
full of the Secured Obligations, (ii) be binding upon the Grantor, its
successors and assigns and (iii) inure, together with the rights and remedies of
the Collateral Agent hereunder, to the benefit of the Collateral Agent and each
of the Secured Parties and their respective successors, transferees and assigns.
Upon the payment in full of the Secured Obligations, the security interest
granted hereby shall terminate and all rights to the Collateral shall revert to
the Grantor subject to any existing liens, security interests or encumbrances on
such Collateral. Upon any such termination, the Collateral Agent will, at the
Grantor's expense, execute and deliver to the Grantor such documents as the
Grantor shall reasonably request to evidence such termination.
(b) In the event that any part of the Collateral of the Grantor (i)
is disposed of in connection with a disposition permitted by the Credit
Agreement or this Agreement or (ii) is otherwise released pursuant to the terms
and conditions of the Credit Agreement and, in the case of a sale or sales
contemplated by clause (i) above, the proceeds of such sale or sales are applied
in accordance with the terms herein and of the Credit Agreement, such Collateral
will be sold free and clear of the Liens created by this Agreement and the
Collateral Agent, at the request and expense of the Grantor, will duly assign,
transfer and deliver to the Grantor (without recourse and without any
representation or warranty) such of the Collateral of the Grantor as is then
being (or has been) so sold or released and has not theretofore been released
pursuant this Agreement.
(c) Except as may be otherwise provided in the Credit Agreement, at
any time that the Grantor desires that the Collateral of the Grantor be released
as provided in the foregoing Sections 15(a) or (b), the Grantor shall deliver to
the Collateral Agent a certificate signed by a Responsible Officer stating that
the release of the respective Collateral is permitted pursuant to Sections 15(a)
or (b). If requested by the Collateral Agent, the Grantor shall furnish
appropriate legal opinions (from counsel, which may be in-house counsel,
acceptable to the Collateral Agent) to the effect set forth in the immediately
preceding sentence. The Collateral Agent shall have no liability whatsoever to
any Secured Party as the result of any release of Collateral by it as permitted
by this Section 15.
Section 16. DEFINITIONS. Except as otherwise defined in this Agreement,
including this Section 16, terms defined in the Credit Agreement, as applicable,
shall be used herein as therein defined. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and
American Airlines SGR Security Agreement
21
"including" shall be deemed to be followed by the phrase "without limitation".
The word "will" shall be construed to have the same meaning and effect as the
word "shall". Unless the context requires otherwise (a) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
(b) any reference herein to any Person shall be construed to include such
Person's successors and assigns, (c) the words "herein", "hereof and
"hereunder", and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections and Schedules shall be construed to
refer to Articles and Sections of, and Schedules to, this Agreement and (e) the
words "asset" and "property" shall be construed to have the same meaning and
effect and to refer to any and all tangible and intangible assets and
properties, including cash, securities, accounts and contract rights. The
following terms shall have the following meanings:
"CERTIFICATED AIR CARRIER" means a United States Citizen that is an "air
carrier" within the meaning of Section 40102 of Title 49, holding a certificate
under Section 41102 of Title 49 and an air carrier operating certificate issued
pursuant to Chapter 447 of Title 49 or any analogous successor provision of the
U.S.C., for aircraft capable of carrying ten or more individuals or 6,000 pounds
or more of cargo.
"COLLATERAL" has the meaning set forth in Section 1 hereof.
"DOT" means the United States Department of Transportation.
"FAA" means the Federal Aviation Administration.
"FOREIGN AVIATION AUTHORITIES" means any foreign governmental,
quasi-governmental, regulatory or other agencies or public corporations or
private entities which exercise jurisdiction over the issuance or authorization
(i) to serve any foreign point on each of the Narita Routes and/or (ii) to
conduct operations related to the Narita Routes and Supporting Route Facilities
and/or (iii) to hold and operate any Narita Slots.
"GATE LEASEHOLDS" means all of the right, title, privilege, interest, and
authority now or hereafter acquired or held by the Grantor (or, if applicable,
the Parent Guarantor) in connection with the right to use or occupy space at
each U.S. airport covered by the Narita Routes to the extent necessary for
servicing the permitted scheduled air carrier service authorized by the Narita
Routes related to that airport.
"GOVERNMENTAL AUTHORITY" means any Federal, state, municipal or other
governmental or quasi-governmental department, commission, board, bureau,
agency, administration or instrumentality or any court, in each case whether of
the United States or foreign.
"JFK" means New York's John F. Kennedy (JFK) International Airport.
"NARITA ROUTES" means the requisite authority held on the date of this
Agreement by the Grantor (or, if applicable, Parent Guarantor) to operate
scheduled service between the United States and Tokyo, Japan, pursuant to Title
49 (or otherwise acquired hereafter to replace an
American Airlines SGR Security Agreement
22
existing Narita Route pursuant to Section 6(e) of this Agreement), including,
without limitation, applicable frequencies, exemption and certificate
authorities, all as set forth on Schedule 4(g) hereto, as may be amended from
time to time pursuant to the terms of this Agreement.
"NARITA SLOT" means all of the rights and operational authority of the
Grantor (and, if applicable, Parent Guarantor) on the date of this Agreement (or
otherwise acquired hereafter to replace an existing Narita Slot pursuant to
Section 6(g) of this Agreement), to conduct one landing or takeoff at a specific
time or in a specific time period on a specific day of the week at Narita
Airport, Tokyo, Japan, as described on Schedule 4(e), as amended from time to
time pursuant to the terms of this Agreement.
"NARITA SLOT UTILIZATION REPORT" means a quarterly report, in a format
reasonably acceptable to the Collateral Agent, showing for the related calendar
quarter the number of Narita Slots allocated to the Grantor during such period,
the number of Narita Slots used by the Grantor during such period for air
carrier service and, to the extent any allocated Narita Slot was not used during
such period, showing the week in any month and the day in such week during which
air carrier service was not operated and allocated to such Narita Slot.
"PROCEEDS" shall have the meaning assigned that term under the Uniform
Commercial Code in effect in the State of New York or under other relevant law
and, in any event, shall include, but not be limited to, any and all (i)
proceeds of any insurance, indemnity, warranty or guarantee payable to the
Collateral Agent or to the Grantor or any Affiliate of the Grantor from time to
time with respect to any of the Collateral, (ii) payments (in any form
whatsoever), made or due and payable to the Grantor from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any Governmental Authority
(or any Person acting under color of Governmental Authority), (iii) instruments
representing obligations to pay amounts in respect of the Collateral, (iv)
products of the Collateral, (v) any and all rights of the Grantor to receive
moneys due and to become due from any Person under or pursuant to any contract
or other agreement with respect to the Collateral, including, all rents,
revenues, royalties, license fees, for the use, or otherwise in respect, of the
Collateral, (vi) all causes of action, claims and warranties now or hereafter
held by the Grantor in respect of any of the assets and property of the Grantor
described in Section 1 and, to the extent related to any property described in
said Section 1, all books, correspondence, credit files, records, invoices and
other papers, and (vii) other amounts from time to time paid or payable under or
in connection with any of the Collateral.
"REPLACEMENT SLOT" means such Slots or Narita Slots which have been
permanently received by the Grantor as may be permitted by and made subject to
the Lien of this Agreement pursuant to Sections 6(f) and (g).
"REQUIREMENTS" has the meaning set forth in Section 6(i) hereof.
"SGR RESPONSIBLE OFFICER" means any employee of the Borrower having
oversight responsibility for the administration of this Agreement.
"SLOT" means all of the rights and operational authority of the Grantor
(and, if applicable, Parent Guarantor) held on the date of this Agreement (or
otherwise acquired hereafter to replace
American Airlines SGR Security Agreement
23
an existing Slot pursuant to Section 6(g) of this Agreement), to conduct one
Instrument Flight Rule (as defined under the FAA regulations) landing or takeoff
operation, in support of the Grantor's Narita Routes during a specific hour or
half-hour period at JFK pursuant to FAA regulations, including Title 14, as
described on Schedule 4(d), as amended from time to time pursuant to the terms
of this Agreement.
"SUPPORTING ROUTE FACILITIES" means gates, ticket counters and other
facilities at Tokyo's Narita Airport necessary to operate, or otherwise used in
support of the operation of, a Narita Route.
"TITLE 14" means Title 14 of the U.S. Code of Federal Regulations, Part
93, Subparts K and S, as amended from time to time or any successor or
recodified regulation.
"TITLE 49" means Title 49 of the United States Code, which, among other
things, recodified and replaced the U.S. Federal Aviation Act of 1958, and the
regulations promulgated pursuant thereto or any subsequent legislation that
amends, supplements or supersedes such provisions.
"UNITED STATES CITIZEN" means `citizen of the United States' as defined in
Section 40102(a)(15) of Title 49 and as that statutory provision has been
interpreted by the DOT pursuant to its policies.
"USE OR LOSE RULE" shall mean with respect to Slots, the terms of 14
C.F.R. Section 93.227.
Section 17. NOTICES. All notices and other communications provided for
hereunder shall be either (i) in writing (including telecopier or telex
communication) and mailed, telecopied, telexed or otherwise delivered or (ii) by
electronic mail (if electronic mail addresses are designated as provided below),
in the case of the Collateral Agent, addressed to it at its address specified in
the Credit Agreement and, in the case of the Grantor, addressed to it at its
address set forth opposite the Grantor's name on the signature pages hereto; or,
as to any party, at such other address as shall be designated by such party in a
written notice to the other parties. All such notices and other communications
shall, when mailed, telecopied, telexed, sent by electronic mail or otherwise,
be effective when deposited in the mails, telecopied, confirmed by telex
answerback, sent by electronic mail and confirmed in writing, or otherwise
delivered (or confirmed by a signed receipt), respectively, addressed as
aforesaid; except that notices and other communications to the Collateral Agent
shall not be effective until received by the Collateral Agent. Delivery by
telecopier of an executed counterpart of any amendment or waiver of any
provision of this Agreement or Schedule hereto shall be effective as delivery of
an original executed counterpart thereof.
Section 18. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
Section 19. SEVERABILITY OF PROVISIONS. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the
American Airlines SGR Security Agreement
24
remaining provisions hereof or affecting the validity or enforceability of such
provision in any other jurisdiction.
Section 20. HEADINGS. Section headings used in this Agreement are for
convenience of reference only and shall not affect the construction of this
Agreement. Section 21. EXECUTION IN COUNTERPARTS. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page to this Agreement by
telecopier shall be effective as delivery of a manually executed counterpart of
this Agreement.
Section 22. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns permitted hereby and by the Credit Agreement; provided,
that the Grantor may not transfer or assign any or all of its rights or
obligations hereunder without the prior written consent of the Collateral Agent.
Section 23. SURVIVAL OF REPRESENTATIONS AND WARRANTIES, ETC. All representations
and warranties made by the Grantor herein or in any certificate or other
instrument delivered by the Grantor or on its behalf under this Agreement shall
be considered to have been relied upon by the Secured Parties and shall survive
the execution and delivery of this Agreement, the Credit Agreement and the other
Financing Documents.
American Airlines SGR Security Agreement
25
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first written.
AMERICAN AIRLINES, INC.,
as Grantor
By: _____________________________________________
Name:
Title:
Address for Notices:
American Airlines, Inc.
4333 Amon Carter Boulevard
Fort Worth, Texas 76155
Attention: Vice President - Corporate Development
and Treasurer
Telecopy: 817-967-4318
CITICORP USA, INC.,
as Collateral Agent
By: _____________________________________________
Name:
Title:
Signature Pages to Slot, Gate and Route Security and Pledge Agreement
SCHEDULE 4(d)
SLOTS
American Airlines SGR Security Agreement
SCHEDULE 4(e)
NARITA SLOTS
American Airlines SGR Security Agreement
SCHEDULE 4(g)
NARITA ROUTES
American Airlines SGR Security Agreement
SCHEDULE 4(h)
SUPPORTING ROUTE FACILITIES
American Airlines SGR Security Agreement
EXHIBIT I
TO
SGR SECURITY AGREEMENT
Office of Slot Administration
Office of Chief Counsel - Slot Transfers
Federal Aviation Administration
800 Independence Avenue, S.W.
Washington, D.C. 20591
Re: Request for Confirmation of Slot Transfers
Dear Sirs/Madams:
Please be advised that, pursuant to 14 C.F.R. ss. 93.221(a), American
Airlines, Inc. ("AMERICAN") intends to transfer all rights, interests, and
privileges pertaining to the slots listed on the attached Schedule A (attached
hereto) to _______________. The slots involved in the transaction are
transferable under the High Density Rule. They are not IATA slots, are not used
exclusively for essential air service, nor are they AIR-21 slot exemptions. This
slot transfer is permanent.
This letter serves as written evidence of American's and _____________'s
consent to the transfer of the above-referenced slots -- said transfer to be
effective as of the date upon which ________________ signs this letter, subject
to confirmation by the FAA. Upon confirmation by the FAA, ______________ will
become the holder of record of the above-described slots.
Please confirm the transfer of the above-described slots by stamping and
signing the acknowledgement copy of this letter and returning it to
_________________ by facsimile at (___) ___-____ and by mail at_________________
________________________________________________________________________.
Sincerely,
By By
______________________________ ________________________
Name: Name:
Title: Title:
CONFIRMED BY:
__________________________
[FAA Name, Date]
Schedule A to
Request for Confirmation
of Slot Transfers
WINTER SLOT
Slot ID: 15034
Slot Time: 1700-1759
Type: Non-directional (note: winter slots are 59 minutes and non-directional,
i.e. can be used for either a takeoff or landing)
SUMMER SLOT
Slot ID: 5034
Slot Time: 1700-1729
Type: Arrival (note: summer slots are 29 minutes and are directional)
American Airlines SGR Security Agreement
Exhibit F
EXECUTION COPY
PLEDGE AGREEMENT
Dated December 17, 2004
From
AMR CORPORATION
as Pledgor
to
CITICORP USA, INC.
as Collateral Agent
American Airlines - AMR Pledge Agreement
TABLE OF CONTENTS
SECTION PAGE
- ------- ----
Section 1. Grant of Security............................................................................................... 2
Section 2. Security for Obligations........................................................................................ 3
Section 3. Delivery and Control of Security Collateral..................................................................... 3
Section 4. Representations and Warranties.................................................................................. 4
Section 5. Further Assurances.............................................................................................. 5
Section 6. Post-Closing Changes............................................................................................ 6
Section 7. Voting Rights; Dividends; Etc................................................................................... 6
Section 8. Transfers and Other Liens; Additional Shares.................................................................... 7
Section 9. Collateral Agent Appointed Attorney-in-Fact..................................................................... 8
Section 10. Collateral Agent May Perform................................................................................... 8
Section 11. The Collateral Agent's Duties.................................................................................. 8
Section 12. Remedies....................................................................................................... 9
Section 13. Indemnity and Expenses......................................................................................... 11
Section 14. Amendments; Waivers; Additional Pledgors; Etc.................................................................. 11
Section 15. Notices, Etc................................................................................................... 11
Section 16. Continuing Security Interest; Assignments Under the Credit Agreement........................................... 11
Section 17. Release; Termination........................................................................................... 12
Section 18. Execution in Counterparts...................................................................................... 12
Section 19. Governing Law.................................................................................................. 12
SCHEDULES
Schedule I - Location, Type Of Organization, Jurisdiction Of Organization
and Organizational Identification Number
Schedule II - Pledged Equity
American Airlines-AMR Pledge Agreement
PLEDGE AGREEMENT
PLEDGE AGREEMENT dated December 17, 2004, made by AMR Corporation, a
Delaware corporation (the "PLEDGOR"), to Citicorp USA, Inc., as collateral agent
(in such capacity, together with any successor agent appointed pursuant to
Article VIII of the Credit Agreement (as hereinafter defined), the "COLLATERAL
AGENT") for the Secured Parties (as defined in the Credit Agreement).
PRELIMINARY STATEMENTS:
(1) American Airlines, Inc., a Delaware corporation (the "BORROWER")
has entered into a Credit Agreement dated as of December 17, 2004 (said
Agreement, as it may hereafter be amended, amended and restated, supplemented or
otherwise modified from time to time, being the "CREDIT AGREEMENT") with the
Lenders, the Agent and the Lead Arrangers (each as defined therein).
(2) Pursuant to the Credit Agreement, the Pledgor is entering into
this Agreement in order to grant to the Collateral Agent for the ratable benefit
of the Secured Parties a security interest in the Collateral (as hereinafter
defined).
(3) The Pledgor is the owner of the shares of stock or other Equity
Interests (the "INITIAL PLEDGED EQUITY") set forth opposite the Pledgor's name
on and as otherwise described in Schedule II hereto and issued by the Borrower.
(4) It is a condition precedent to the making of Advances by the
Lenders under the Credit Agreement from time to time that the Pledgor shall have
granted the security interest contemplated by this Agreement.
(5) The Pledgor will derive substantial direct and indirect benefit
from the transactions contemplated by the Financing Documents.
(6) Terms defined in the Credit Agreement and not otherwise defined
in this Agreement are used in this Agreement as defined in the Credit Agreement.
Further, unless otherwise defined in this Agreement or in the Credit Agreement,
terms defined in Article 8 or 9 of the UCC (as defined below) are used in this
Agreement as such terms are defined in such Article 8 or 9. "UCC" means the
Uniform Commercial Code as in effect, from time to time, in the State of New
York; provided that, if perfection or the effect of perfection or non-perfection
or the priority of any security interest in any Collateral is governed by the
Uniform Commercial Code as in effect in a jurisdiction other than the State of
New York, "UCC" means the Uniform Commercial Code as in effect from time to time
in such other jurisdiction for purposes of the provisions hereof relating to
such perfection, effect of perfection or non-perfection or priority.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Lenders to make Advances from time to time, the Pledgor hereby agrees
with the Collateral Agent for the ratable benefit of the Secured Parties as
follows:
American Airlines - AMR Pledge Agreement
2
Section 1. Grant of Security. The Pledgor hereby grants to the
Collateral Agent, for the ratable benefit of the Secured Parties, a security
interest in the Pledgor's right, title and interest in and to the following, in
each case, as to each type of property described below, whether now owned or
hereafter acquired by the Pledgor, wherever located, and whether now or
hereafter existing or arising (collectively, the "COLLATERAL"):
(a) the following (the "SECURITY COLLATERAL"):
(i) the Initial Pledged Equity and the certificates, if any,
representing the Initial Pledged Equity, and all
dividends, distributions, return of capital, cash,
instruments and other property from time to time
received, receivable or otherwise distributed in respect
of or in exchange for any or all of the Initial Pledged
Equity and all subscription warrants, rights or options
issued thereon or with respect thereto;
(ii) all additional shares of stock and other Equity
Interests of or in the Borrower or any successor entity
from time to time acquired by the Pledgor in any manner
(such shares and other Equity Interests, together with
the Initial Pledged Equity, being the "PLEDGED EQUITY"),
and the certificates, if any, representing such
additional shares or other Equity Interests, and all
dividends, distributions, return of capital, cash,
instruments and other property from time to time
received, receivable or otherwise distributed in respect
of or in exchange for any or all of such shares or other
Equity Interests and all subscription warrants, rights
or options issued thereon or with respect thereto; and
(b) all proceeds of any and all of the Collateral
(including, without limitation, proceeds and collateral that constitute
property of the types described in clause (a) of this Section 1 and this
clause (b)).
Section 2. Security for Obligations. This Agreement secures the
payment of all Obligations of the Pledgor now or hereafter existing under the
Financing Documents, whether direct or indirect, absolute or contingent, and
whether for principal, reimbursement obligations, interest, fees, premiums,
penalties, indemnifications, contract causes of action, costs, expenses or
otherwise (all such Obligations being the "SECURED OBLIGATIONS").
Section 3. Delivery and Control of Security Collateral. (a) All
certificates or instruments representing or evidencing Security Collateral shall
be delivered to and held by or on behalf of the Collateral Agent pursuant hereto
and shall be in suitable form for transfer by delivery, or shall be accompanied
by duly executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to the Collateral Agent. The Collateral Agent shall have
the right, at any time in its discretion and without notice to the Pledgor, to
transfer to or to register in the name of the Collateral Agent or any of its
nominees any or all of the Security Collateral, subject only to the revocable
rights specified in Section 7(a). In addition, the Collateral Agent shall have
the right at any time to exchange certificates or instruments representing or
evidencing Security Collateral for certificates or instruments of smaller or
larger denominations.
American Airlines - AMR Pledge Agreement
3
(b) With respect to any Security Collateral in which the Pledgor
has any right, title or interest and that constitutes an uncertificated
security, the Pledgor will cause the issuer thereof either (i) to register the
Collateral Agent as the registered owner of such security or (ii) to agree in an
authenticated record with the Pledgor and the Collateral Agent that such issuer
will comply with instructions with respect to such security originated by the
Collateral Agent without further consent of the Pledgor, such authenticated
record to be in form and substance reasonably satisfactory to the Collateral
Agent.
(c) With respect to any Security Collateral in which the Pledgor
has any right, title or interest and that is not an uncertificated security,
upon the request of the Collateral Agent upon the occurrence and during the
continuance of an Event of Default, the Pledgor will notify each such issuer of
Pledged Equity that such Pledged Equity is subject to the security interest
granted hereunder.
Section 4. Representations and Warranties. The Pledgor represents
and warrants as follows:
(a) The Pledgor's exact legal name, as defined in Section 9-503(a)
of the UCC, is correctly set forth in Schedule I hereto. The Pledgor has only
the trade names listed on Schedule I hereto. The Pledgor is located (within the
meaning of Section 9-307 of the UCC) in the state or jurisdiction set forth in
Schedule I hereto. The information set forth in Schedule I hereto with respect
to the Pledgor is true and accurate in all respects.
(b) All Security Collateral consisting of certificated securities
and instruments has been delivered to the Collateral Agent.
(c) The Pledgor is the legal and beneficial owner of the
Collateral of the Pledgor free and clear of any Lien, claim, option or right of
others, except for the security interest created under this Agreement and
Permitted Liens. No effective financing statement or other instrument similar in
effect covering all or any part of such Collateral or listing the Pledgor or any
trade name of the Pledgor as debtor with respect to such Collateral is on file
in any recording office, except such as may have been filed in favor of the
Collateral Agent relating to the Financing Documents.
(d) The Pledged Equity pledged by the Pledgor hereunder has been
duly authorized and validly issued and is fully paid and non-assessable. With
respect to the Pledged Equity that is an uncertificated security, the Pledgor
has caused the issuer thereof either (i) to register the Collateral Agent as the
registered owner of such security or (ii) to agree in an authenticated record
with the Pledgor and the Collateral Agent that such issuer will comply with
instructions with respect to such security originated by the Collateral Agent
without further consent of the Pledgor.
(e) The Initial Pledged Equity pledged by the Pledgor constitutes
the percentage of the issued and outstanding Equity Interests of the issuers
thereof indicated on Schedule II hereto.
(f) All filings and other actions (including without limitation,
actions necessary to obtain control of Collateral as provided in Section 9-106
of the UCC)
American Airlines - AMR Pledge Agreement
4
necessary to perfect the security interest in the Collateral of the
Pledgor created under this Agreement have been duly made or taken and are in
full force and effect, and this Agreement creates in favor of the Collateral
Agent for the benefit of the Secured Parties a valid and, together with such
filings and other actions, perfected first priority security interest in the
Collateral of the Pledgor, securing the payment of the Secured Obligations.
(g) No authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body or any other
third party is required for (i) the grant by the Pledgor of the security
interest granted hereunder or for the execution, delivery or performance of this
Agreement by the Pledgor, (ii) the perfection or maintenance of the security
interest created hereunder (including the first priority nature of such security
interest), except for the filing of financing and continuation statements under
the UCC, which financing statements have been duly filed and are in full force
and effect, and the actions described in Section 3 with respect to Security
Collateral, which actions have been taken and are in full force and effect or
(iii) the exercise by the Collateral Agent of its voting or other rights
provided for in this Agreement or the remedies in respect of the Collateral
pursuant to this Agreement, except as may be required in connection with the
disposition of any portion of the Security Collateral by laws affecting the
offering and sale of securities generally.
Section 5. Further Assurances. (a) The Pledgor agrees that from time
to time, at the expense of the Pledgor, the Pledgor will promptly execute and
deliver, or otherwise authenticate, all further instruments and documents, and
take all further action that may be necessary or desirable, or that the
Collateral Agent may reasonably request, in order to perfect and protect any
pledge or security interest granted or purported to be granted by the Pledgor
hereunder or to enable the Collateral Agent to exercise and enforce its rights
and remedies hereunder with respect to any Collateral of the Pledgor. Without
limiting the generality of the foregoing, the Pledgor will promptly: (i) file
such financing or continuation statements, or amendments thereto, and such other
instruments or notices, as may be necessary or desirable, or as the Collateral
Agent may reasonably request, in order to perfect and preserve the security
interest granted or purported to be granted by the Pledgor hereunder; (ii)
deliver and pledge to the Collateral Agent for benefit of the Secured Parties
certificates representing Security Collateral that constitutes certificated
securities, accompanied by undated stock or bond powers executed in blank; (iii)
take all action necessary to ensure that the Collateral Agent has control of
Collateral consisting of investment property as provided in Section 9-106 of the
UCC; and (iv) deliver to the Collateral Agent evidence that all other action
that the Collateral Agent may deem reasonably necessary or desirable in order to
perfect and protect the security interest created by the Pledgor under this
Agreement has been taken. From time to time at the request of the Collateral
Agent upon the occurrence and during the continuance of an Event of Default, the
Pledgor will, at such Pledgor's expense, cause to be delivered to the Collateral
Agent, for the benefit of the Secured Parties, an opinion of counsel, from
counsel reasonably satisfactory to the Collateral Agent, as to such matters
relating to the transactions contemplated hereby as the Collateral Agent may
reasonably request.
(b) The Pledgor hereby authorizes the Collateral Agent to file one
or more financing or continuation statements, and amendments thereto indicating
that such financing statements cover the Collateral, in each case without the
signature of such Pledgor, and
American Airlines - AMR Pledge Agreement
5
regardless of whether any particular asset described in such financing
statements falls within the scope of the UCC or the granting clause of this
Agreement. A photocopy or other reproduction of this Agreement or any financing
statement covering the Collateral or any part thereof shall be sufficient as a
financing statement where permitted by law. The Pledgor ratifies its
authorization for the Collateral Agent to have filed such financing statements,
continuation statements or amendments filed prior to the date hereof.
(c) The Pledgor will furnish to the Collateral Agent from time to
time statements and schedules further identifying and describing the Collateral
and such other reports in connection with the Collateral as the Collateral Agent
may reasonably request, all in reasonable detail.
(d) The Borrower will furnish to the Collateral Agent, on or prior
to the fifth anniversary of the date hereof (but not more than six months prior
thereto), an opinion of counsel, from counsel reasonably satisfactory to the
Collateral Agent, to the effect that all financing or continuation statements
have been filed, and all other action has been taken (including, without
limitation, action necessary to give the Collateral Agent control over the
Collateral as provided in Section 9-106 of the UCC) to perfect continuously from
the date hereof the security interest granted hereunder.
Section 6. Post-Closing Changes. The Pledgor will not change its
name, type of organization, jurisdiction of organization, organizational
identification number or location from those set forth in Section 4(a) without
first giving at least 30 days' prior written notice to the Collateral Agent and
taking all action required by the Collateral Agent for the purpose of perfecting
or protecting the security interest granted by this Agreement. The Pledgor will
hold and preserve its records relating to the Collateral and will permit
representatives of the Collateral Agent at any time during normal business hours
to inspect and make abstracts from such records and other documents. If the
Pledgor does not have an organizational identification number and later obtains
one, it will forthwith notify the Collateral Agent of such organizational
identification number.
Section 7. Voting Rights; Dividends; Etc. (a) So long as no Event of
Default shall have occurred and be continuing:
(i) The Pledgor shall be entitled to exercise any and all
voting and other consensual rights pertaining to the Security Collateral
or any part thereof for any purpose; provided however, that the Pledgor
will not exercise or refrain from exercising any such right if such action
would, in its good faith judgment, have a material adverse effect on the
value of the Security Collateral or any part thereof.
(ii) The Pledgor shall be entitled to receive and retain any and
all dividends, interest and other distributions paid in respect of the
Security Collateral if and to the extent that the payment thereof is not
otherwise prohibited by the terms of the Financing Documents; provided,
however, that any and all
American Airlines - AMR Pledge Agreement
6
(A) dividends, interest and other distributions paid or
payable other than in cash in respect of, and instruments and other
property received, receivable or otherwise distributed in respect
of, or in exchange for, any Security Collateral,
(B) dividends and other distributions paid or payable in
cash in respect of any Security Collateral in connection with a
partial or total liquidation or dissolution or in connection with a
reduction of capital, capital surplus or paid-in-surplus and
(C) cash paid, payable or otherwise distributed in respect
of principal of, or in redemption of, or in exchange for, any
Security Collateral
shall be, and shall be forthwith delivered to the Collateral Agent to hold
as, Security Collateral and shall, if received by the Pledgor, be received
in trust for the benefit of the Collateral Agent, be segregated from the
other property or funds of the Pledgor and be forthwith delivered to the
Collateral Agent as Security Collateral in the same form as so received
(with any necessary indorsement).
(iii) The Collateral Agent will execute and deliver (or cause to be
executed and delivered) to the Pledgor all such proxies and other
instruments as the Pledgor may reasonably request for the purpose of
enabling the Pledgor to exercise the voting and other rights that it is
entitled to exercise pursuant to paragraph (i) above and to receive the
dividends or interest payments that it is authorized to receive and retain
pursuant to paragraph (ii) above.
(b) Upon the occurrence and during the continuance of an Event of
Default:
(i) Upon notice to the Pledgor by the Collateral Agent, all rights
of the Pledgor (x) to exercise or refrain from exercising the voting and
other consensual rights that it would otherwise be entitled to exercise
pursuant to Section 7(a)(i) shall cease and (y) to receive the dividends,
interest and other distributions that it would otherwise be authorized to
receive and retain pursuant to Section 7(a)(ii) shall automatically cease,
and all such rights shall thereupon become vested in the Collateral Agent,
which shall thereupon have the sole right to exercise or refrain from
exercising such voting and other consensual rights and to receive and hold
as Security Collateral such dividends, interest and other distributions.
(ii) All dividends, interest and other distributions that are
received by the Pledgor contrary to the provisions of paragraph (i) of
this Section 7(b) shall be received in trust for the benefit of the
Collateral Agent, shall be segregated from other funds of the Pledgor and
shall be forthwith paid over to the Collateral Agent as Security
Collateral in the same form as so received (with any necessary
indorsement).
Section 8. Transfers and Other Liens; Additional Shares. (a) The
Pledgor agrees that it will not (i) sell, assign or otherwise dispose of, or
grant any option with respect to, any of the Collateral, or (ii) create or
suffer to exist any Lien upon or with respect to any of the Collateral except
for the pledge, assignment and security interest created under this Agreement
and Permitted Liens.
American Airlines - AMR Pledge Agreement
7
(b) The Pledgor agrees that it will (i) cause the issuer of the
Pledged Equity not to issue any Equity Interests or other securities in addition
to or in substitution for the Pledged Equity issued by the issuer, except to the
Pledgor, and (ii) pledge hereunder, immediately upon its acquisition (directly
or indirectly) thereof, any and all additional Equity Interests or other
securities of the issuer of the Pledged Equity.
Section 9. Collateral Agent Appointed Attorney-in-Fact. The Pledgor
hereby irrevocably appoints the Collateral Agent the Pledgor's attorney-in-fact,
with full authority in the place and stead of the Pledgor and in the name of the
Pledgor or otherwise, from time to time in the Collateral Agent's discretion, to
take any action and to execute any instrument that the Collateral Agent may deem
necessary to accomplish the purposes of this Agreement, including, without
limitation:
(a) to ask for, demand, collect, sue for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become due
under or in respect of any of the Collateral,
(b) to receive, indorse and collect any drafts or other
instruments or documents, in connection with clause (a) above, and
(c) to file any claims or take any action or institute any
proceedings that the Collateral Agent may deem necessary or desirable for
the collection of any of the Collateral or otherwise to enforce the rights
of the Collateral Agent with respect to any of the Collateral.
Section 10. Collateral Agent May Perform. If the Pledgor fails to
perform any agreement contained herein, the Collateral Agent may, but without
any obligation to do so and with prior notice to the Pledgor, unless an Event of
Default has occurred and is continuing, itself perform, or cause performance of,
such agreement, and the expenses of the Collateral Agent incurred in connection
therewith shall be payable by the Pledgor under Section 13.
Section 11. The Collateral Agent's Duties. (a) The powers conferred
on the Collateral Agent hereunder are solely to protect the Secured Parties'
interest in the Collateral and shall not impose any duty upon it to exercise any
such powers. Except for the safe custody of any Collateral in its possession and
the accounting for moneys actually received by it hereunder, the Collateral
Agent shall have no duty as to any Collateral, as to ascertaining or taking
action with respect to calls, conversions, exchanges, maturities, tenders or
other matters relative to any Collateral, whether or not any Secured Party has
or is deemed to have knowledge of such matters, or as to the taking of any
necessary steps to preserve rights against any parties or any other rights
pertaining to any Collateral. The Collateral Agent shall be deemed to have
exercised reasonable care in the custody and preservation of any Collateral in
its possession if such Collateral is accorded treatment substantially equal to
that which it accords its own property.
(b) Anything contained herein to the contrary notwithstanding, the
Collateral Agent may from time to time, when the Collateral Agent deems it to be
necessary, appoint one or more subagents (each a "SUBAGENT") for the Collateral
Agent hereunder with respect to all or any part of the Collateral. In the event
that the Collateral Agent so appoints any Subagent with
American Airlines - AMR Pledge Agreement
8
respect to any Collateral, (i) the assignment and pledge of such Collateral and
the security interest granted in such Collateral by the Pledgor hereunder shall
be deemed for purposes of this Agreement to have been made to such Subagent, in
addition to the Collateral Agent, for the ratable benefit of the Secured
Parties, as security for the Secured Obligations of the Pledgor, (ii) such
Subagent shall automatically be vested, in addition to the Collateral Agent,
with all rights, powers, privileges, interests and remedies of the Collateral
Agent hereunder with respect to such Collateral, and (iii) the term "Collateral
Agent," when used herein in relation to any rights, powers, privileges,
interests and remedies of the Collateral Agent with respect to such Collateral,
shall include such Subagent; provided, however, that no such Subagent shall be
authorized to take any action with respect to any such Collateral unless and
except to the extent expressly authorized in writing by the Collateral Agent.
Section 12. Remedies. If any Event of Default shall have occurred
and be continuing:
(a) The Collateral Agent may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein
or otherwise available to it, all the rights and remedies of a secured
party upon default under the UCC (whether or not the UCC applies to the
affected Collateral) and also may: (i) without notice except as specified
below, sell the Collateral or any part thereof in one or more parcels at
public or private sale, at any of the Collateral Agent's offices or
elsewhere, for cash, on credit or for future delivery, and upon such other
terms as the Collateral Agent may deem commercially reasonable; and (ii)
exercise any and all rights and remedies of the Pledgor under or in
connection with the Collateral, or otherwise in respect of the Collateral,
including, without limitation, those set forth in Section 9-607 of the
UCC. The Pledgor agrees that, to the extent notice of sale shall be
required by law, at least ten days' notice to the Pledgor of the time and
place of any public sale or the time after which any private sale is to be
made shall constitute reasonable notification. The Collateral Agent shall
not be obligated to make any sale of Collateral regardless of notice of
sale having been given. The Collateral Agent may adjourn any public or
private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned.
(b) Any cash held by or on behalf of the Collateral Agent and all
cash proceeds received by or on behalf of the Collateral Agent in respect
of any sale of, collection from, or other realization upon all or any part
of the Collateral may, in the discretion of the Collateral Agent, be held
by the Collateral Agent as collateral for, and/or then or at any time
thereafter applied (after payment of any amounts payable to the Collateral
Agent pursuant to Section 13) in whole or in part by the Collateral Agent
for the ratable benefit of the Secured Parties against, all or any part of
the Secured Obligations, in the manner set forth in Section 2.11(e) of the
Credit Agreement. Any surplus of such cash or cash proceeds held by or on
the behalf of the Collateral Agent and remaining after payment in full of
all the Secured Obligations shall be paid over to the Pledgor or to
whomsoever may be lawfully entitled to receive such surplus.
(c) All payments received by the Pledgor in respect of the
Collateral shall be received in trust for the benefit of the Collateral
Agent, shall be segregated from other
American Airlines - AMR Pledge Agreement
9
funds of the Pledgor and shall be forthwith paid over to the Collateral
Agent in the same form as so received (with any necessary indorsement).
(d) If the Collateral Agent shall determine to exercise its right
to sell all or any of the Security Collateral of the Pledgor pursuant to
this Section 12, the Pledgor agrees that, upon request of the Collateral
Agent, the Pledgor will, at its own expense:
(i) execute and deliver, and cause each issuer of such
Security Collateral contemplated to be sold and the directors and
officers thereof to execute and deliver, all such instruments and
documents, and do or cause to be done all such other acts and
things, as may be necessary or, in the opinion of the Collateral
Agent, advisable to register such Security Collateral under the
provisions of the Securities Act of 1933 (as amended from time to
time, the "SECURITIES ACT"), to cause the registration statement
relating thereto to become effective and to remain effective for
such period as prospectuses are required by law to be furnished and
to make all amendments and supplements thereto and to the related
prospectus that, in the opinion of the Collateral Agent, are
reasonably necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and regulations of
the Securities and Exchange Commission applicable thereto;
(ii) use its best efforts to qualify the Security Collateral
under the state securities or "Blue Sky" laws and to obtain all
necessary governmental approvals for the sale of such Security
Collateral, as reasonably requested by the Collateral Agent;
(iii) cause each such issuer of such Security Collateral to
make available to its security holders, as soon as practicable, an
earnings statement that will satisfy the provisions of Section 11(a)
of the Securities Act;
(iv) provide the Collateral Agent with such other information
and projections as may be necessary or, in the opinion of the
Collateral Agent, reasonably advisable to enable the Collateral
Agent to effect the sale of such Security Collateral; and
(v) do or cause to be done all such other acts and things as
may be necessary to make such sale of such Security Collateral or
any part thereof valid and binding and in compliance with applicable
law.
(e) The Collateral Agent is authorized, in connection with any
sale of the Security Collateral pursuant to this Section 12, to deliver or
otherwise disclose to any prospective purchaser of the Security
Collateral: (i) any registration statement or prospectus, and all
supplements and amendments thereto, prepared pursuant to subsection (d)(i)
above; (ii) any information and projections provided to it pursuant to
subsection (d)(iv) above; and (iii) any other information in its
possession relating to such Security Collateral.
American Airlines - AMR Pledge Agreement
10
Section 13. Indemnity and Expenses. (a) The Pledgor agrees to
indemnify, defend and save and hold harmless each Secured Party and each of
their Affiliates and their respective officers, directors, employees, agents and
advisors (each, an "INDEMNIFIED PARTY") from and against, and shall pay on
demand, any and all claims, damages, losses, liabilities and expenses
(including, without limitation, reasonable fees and expenses of counsel) that
may be incurred by or asserted or awarded against any Indemnified Party, in each
case arising out of or in connection with or resulting from this Agreement
(including, without limitation, enforcement of this Agreement), except to the
extent such claim, damage, loss, liability or expense is found in a final,
non-appealable judgment by a court of competent jurisdiction to have resulted
from such Indemnified Party's gross negligence or willful misconduct.
(b) The Pledgor will upon demand pay to the Collateral Agent the
amount of any and all reasonable expenses, including, without limitation, the
reasonable fees and expenses of its counsel and of any experts and agents, that
the Collateral Agent may incur in connection with (i) the custody or
preservation of, or the sale of, collection from or other realization upon, any
of the Collateral of the Pledgor, (ii) the exercise or enforcement of any of the
rights of the Collateral Agent or the other Secured Parties hereunder or (iii)
the failure by the Pledgor to perform or observe any of the provisions hereof.
Section 14. Amendments; Waivers; Additional Pledgors; Etc. (a) No
amendment or waiver of any provision of this Agreement, and no consent to any
departure by the Pledgor herefrom, shall in any event be effective unless the
same shall be in writing and signed by the Collateral Agent, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given. No failure on the part of the Collateral Agent
or any other Secured Party to exercise, and no delay in exercising any right
hereunder, shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or the
exercise of any other right.
Section 15. Notices, Etc. All notices and other communications
provided for hereunder shall be either (i) in writing (including telecopier or
telex communication) and mailed, telecopied, telexed or otherwise delivered or
(ii) by electronic mail (if electronic mail addresses are designated as provided
below), in the case of the Collateral Agent, addressed to it at its address
specified in the Credit Agreement and, in the case of the Pledgor, addressed to
it at its address set forth opposite the Pledgor's name on the signature pages
hereto; or, as to any party, at such other address as shall be designated by
such party in a written notice to the other parties. All such notices and other
communications shall, when mailed, telecopied, telexed, sent by electronic mail
or otherwise, be effective when deposited in the mails, telecopied, confirmed by
telex answerback, sent by electronic mail and confirmed in writing, or otherwise
delivered (or confirmed by a signed receipt), respectively, addressed as
aforesaid; except that notices and other communications to the Collateral Agent
shall not be effective until received by the Collateral Agent. Delivery by
telecopier of an executed counterpart of any amendment or waiver of any
provision of this Agreement or Schedule hereto shall be effective as delivery of
an original executed counterpart thereof.
Section 16. Continuing Security Interest; Assignments Under the
Credit Agreement. This Agreement shall create a continuing security interest in
the Collateral and shall (a) remain in full force and effect until the latest of
(i) the payment in full in cash of the Secured
American Airlines - AMR Pledge Agreement
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Obligations and (ii) the Termination Date, (b) be binding upon the Pledgor, its
successors and assigns and (c) inure, together with the rights and remedies of
the Collateral Agent hereunder, to the benefit of the Secured Parties and their
respective successors, transferees and assigns. Without limiting the generality
of the foregoing clause (c), any Lender may assign or otherwise transfer all or
any portion of its rights and obligations under the Credit Agreement (including,
without limitation, all or any portion of its Commitments, the Advances owing to
it and the Note or Notes, if any, held by it) to any other Person, and such
other Person shall thereupon become vested with all the benefits in respect
thereof granted to such Lender herein or otherwise, in each case as provided in
Section 9.07 of the Credit Agreement.
Section 17. Release; Termination. (a) Upon any sale, transfer or
other disposition of any item of Collateral of the Pledgor in accordance with
the terms of the Financing Documents, the Collateral Agent will, at the
Pledgor's expense, execute and deliver to the Pledgor such documents as the
Pledgor shall reasonably request to evidence the release of such item of
Collateral from the security interest granted hereby; provided, however, that
(i) at the time of such request and such release no Event of Default shall have
occurred and be continuing, and (ii) the Pledgor shall have delivered to the
Collateral Agent, at least ten Business Days prior to the date of the proposed
release, a written request for release describing the item of Collateral and the
terms of the sale, transfer or other disposition in reasonable detail,
including, without limitation, the price thereof and any expenses in connection
therewith, together with a form of release for execution by the Collateral Agent
and a certificate of the Pledgor to the effect that the transaction is in
compliance with the Financing Documents and as to such other matters as the
Collateral Agent may request.
(b) Upon the latest of (i) the payment in full in cash of the
Secured Obligations and (ii) the Termination Date, the pledge and security
interest granted hereby shall terminate and all rights to the Collateral shall
revert to the Pledgor. Upon any such termination, the Collateral Agent will, at
the Pledgor's expense, execute and deliver to the Pledgor such documents as the
Pledgor shall reasonably request to evidence such termination.
Section 18. Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement. Delivery of an executed counterpart of a signature page
to this Agreement by telecopier shall be effective as delivery of an original
executed counterpart of this Agreement.
Section 19. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
American Airlines - AMR Pledge Agreement
12
IN WITNESS WHEREOF, the Pledgor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
AMR CORPORATION
By
___________________________________
Name:
Title:
Address for Notices:
AMR Corporation
4333 Amon Carter Boulevard
Fort Worth, Texas 76155
Attention: Chief Financial Officer
Fax: (817) 967-4318
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SCHEDULE I TO THE
PLEDGE AGREEMENT
LOCATION, TYPE OF ORGANIZATION, JURISDICTION OF ORGANIZATION AND
ORGANIZATIONAL IDENTIFICATION NUMBER
TYPE OF JURISDICTION OF ORGANIZATIONAL TRADE
PLEDGOR LOCATION ORGANIZATION ORGANIZATION I.D. NO. NAMES
- ------- -------- ------------ ------------ -------- -----
American Airlines - AMR Pledge Agreement
SCHEDULE II TO THE
PLEDGE AGREEMENT
PLEDGED EQUITY
PERCENTAGE
CLASS OF OF
EQUITY PAR CERTIFICATE NUMBER OUTSTANDING
PLEDGOR ISSUER INTEREST VALUE NO(S) OF SHARES SHARES
- ------- ------ -------- ----- ----------- --------- -----------
American Airlines - AMR Pledge Agreement