U.S. Department of the Treasury, Payroll Support Program: Alaska Airlines , "Transaction Documentation"
Summary
A letter agreement dated January 15, 2021 amends the Loan and Guarantee Agreement dated as of September 28, 2020 among Alaska Airlines, Inc. as Borrower, Alaska Air Group, Inc. as Parent, the United States Department of the Treasury and The Bank of New York Mellon as Administrative Agent and Collateral Agent. It adds a definition of the PSP2 Warrant Agreement and replaces "March 26, 2021" with "May 28, 2021" in Section 2.07. The documentation also includes the Restatement Agreement dated as of October 30, 2020, under which Treasury agrees to provide Additional Commitments under the CARES Act and the agreement is amended and restated in the form of Annex A. The conditions precedent include an Amended and Restated Horizon Aircraft, Engine and Propeller Pledge and Security Agreement, and closing forms name Horizon Air Industries, Inc. as grantor.
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“U.S. Department of the Treasury, Payroll Support Program: Alaska Airlines , ‘Transaction Documentation.’”
Original at home.treasury.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/u-s-department-of-the-treasury-payroll-support-program-alaska-airlines-899eade472/
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January 15, 2021
Alaska Airlines, Inc.
19300 International Blvd.
Seattle, WA 98188
Re: Amendments to Loan and Guarantee Agreement
Reference is made to that certain Loan and Guarantee Agreement, dated as of September
28, 2020, and amended and restated pursuant to that certain Restatement Agreement, dated as of
October 30, 2020] (the “Existing Loan and Guarantee Agreement”, and as amended hereby and as may
be further amended, supplemented and restated or otherwise modified from time to time, the “Loan and
Guarantee Agreement”), among Alaska Airlines, Inc., a corporation organized under the laws of the
State of Alaska (the “Borrower”), Alaska Air Group, Inc., a corporation organized under the laws of
the State of Delaware (the “Parent”), the United States Department of the Treasury (“Treasury”) and
The Bank of New York Mellon as Administrative Agent and Collateral Agent. Capitalized terms used
herein but not otherwise defined shall have the meanings ascribed to such terms in the Loan and
Guarantee Agreement.
WHEREAS, Pursuant to Section 11.02 of the Loan and Guarantee Agreement, the Borrower
has requested amendments to the Existing Loan and Guarantee Agreement as set forth herein; and
WHEREAS, Treasury, as the Initial Lender and constituting the Required Lenders, has agreed
to amend the Existing Loan and Guarantee Agreement as set forth herein.
NOW, THEREFORE, in consideration of the mutual promises contained herein and other
good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
1. Effective as of the date hereof, Section 1.01 of the Existing Loan and Guarantee Agreement is
hereby amended by inserting the following definition, in alphabetical order:
““PSP2 Warrant Agreement” means that certain warrant agreement, dated as of January 15,
2021 between Parent and Treasury.”
2. Effective as of the date hereof, the definition of “Warrants” in Section 1.01 of the Existing
Loan and Guarantee Agreement is hereby amended and restated in its entirety as follows:
““Warrants” means, collectively, those certain warrants issued to Treasury under the Warrant
Agreement, the PSP Warrant Agreement or the PSP2 Warrant Agreement.”
3. Effective as of the date hereof, Section 2.07 of the Existing Loan and Guarantee Agreement is
hereby amended by deleting the reference to “March 26, 2021” and replacing it with “May 28, 2021”.
4. This letter agreement shall be limited as written and nothing herein shall be deemed to
constitute an amendment or waiver of any other term, provision or condition of the Loan and
Guarantee Agreement or any of the other Loan Documents in any other instance than as expressly set
forth herein or prejudice any right or remedy that any Lender, the Administrative Agent or the
Collateral Agent may now have or may in the future have under the Loan and Guarantee Agreement
or any of the other Loan Documents. For the avoidance of doubt, this letter agreement is hereby
deemed to be a Loan Document under the Loan and Guarantee Agreement. Except as herein
provided, the Loan and Guarantee Agreement and the other Loan Documents shall remain unchanged
and in full force and effect. This letter agreement shall not constitute a novation of the Loan and
Guarantee Agreement or any other Loan Documents.
5. The Agents assume no responsibility for, and shall be entitled to rely on, without any
obligation to ascertain or investigate, the correctness of the recitals and statements contained herein.
The Agents shall not be liable or responsible in any manner whatsoever for, or in respect of, the
validity or sufficiency of the amendments contained in this letter agreement.
6. Sections 11.06(b) (Electronic Execution), 11.09 (Governing Law; Jurisdiction; Etc.) and
11.10 (Waiver of Jury Trial) of the Loan and Guarantee Agreement shall apply mutatis mutandis to
this letter agreement as if set out herein.
7. This letter agreement may be executed in counterparts (and by different parties hereto in
different counterparts), each of which shall constitute an original, but all of which when taken
together shall constitute a single contract. Delivery of an executed counterpart of a signature page of
this letter agreement by facsimile or in electronic (e.g., “pdf” or “tif”) format shall be effective as
delivery of a manually executed counterpart of this letter agreement.
The Lenders party hereto hereby authorize and direct the Administrative Agent and the Collateral
Agent to acknowledge this letter agreement.
[Remainder of this page intentionally left blank.]
Acknowledged:
THE BANK OF NEW YORK MELLON, as Administrative Agent
By: _______________________
Name: Bret S. Derman
Title: Vice President
THE BANK OF NEW YORK MELLON, as Collateral Agent
By: _______________________
Name: Bret S. Derman
Title: Vice President
[Signature Page to Letter Agreement – Alaska]
EXECUTION VERSION
RESTATEMENT AGREEMENT
RESTATEMENT AGREEMENT, dated as of October 30, 2020 (this “Restatement
Agreement”), to that certain Loan and Guarantee Agreement, dated as of September 28, 2020 (the
“Existing Loan and Guarantee Agreement”, and as amended and restated by this Restatement
Agreement, and as may be further amended, restated, amended and restated, supplemented or
otherwise modified from time to time, the “Loan and Guarantee Agreement”), among ALASKA
AIRLINES, INC., a corporation organized under the laws of the State of Alaska (the “Borrower”),
ALASKA AIR GROUP, INC., a corporation organized under the laws of the State of Delaware
(the “Parent”), the Guarantors party hereto from time to time, the UNITED STATES
DEPARTMENT OF THE TREASURY (“Treasury”), as Initial Lender and THE BANK OF NEW
YORK MELLON, as Administrative Agent and as Collateral Agent. Capitalized terms used and
not otherwise defined herein shall have the meanings assigned to such terms in the Loan and
Guarantee Agreement.
W I T N E S S E T H:
WHEREAS, the Parent, the Borrower, the Guarantors Treasury and the Agents are
each party to the Existing Loan and Guarantee Agreement;
WHEREAS, the Borrower has requested that Treasury extend additional
Commitments to the Borrower (the “Additional Commitments”) as is permissible under the
Coronavirus Aid, Relief, and Economic Security Act, Pub. L. 116-136 (Mar. 27, 2020), as the
same may be amended form time to time (the “CARES Act”) to the Borrower, and Treasury is
willing to do so on the terms and conditions set forth herein;
WHEREAS, pursuant to Section 4003(h)(1) of the CARES Act, for purposes of the
Code, the Loans made pursuant to the Commitments (as increased by the Additional Commitments
being provided hereby) shall be treated as indebtedness and as having been issued for their
aggregate stated principal amount, and the interest payable pursuant to Section 2.09(a) of the Loan
and Guarantee Agreement shall be treated as qualified stated interest;
WHEREAS, Loans made pursuant to the Commitments (as increased by the
Additional Commitments being provided hereby) will be secured by Liens on the Collateral
securing the existing Obligations, together with Liens on any Additional Collateral, subject to the
distribution priorities set forth in the Loan and Guarantee Agreement;
WHEREAS, pursuant to Section 11.02 of the Loan and Guarantee Agreement, the
Borrower has requested amendments to the Existing Loan and Guarantee Agreement as set forth
in this Restatement Agreement; and
WHEREAS, Treasury has agreed to amend the Existing Loan and Guarantee
Agreement as more particularly set forth in this Restatement Agreement.
NOW, THEREFORE, in consideration of the mutual promises contained herein
and other good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
Section 1. Additional Commitments. Treasury hereby agrees to provide
Additional Commitments to the Borrower on the Restatement Effective Date on the terms set forth
herein and in the Loan and Guarantee Agreement and the other Loan Documents, and subject to
the conditions set forth below, in an aggregate principal amount, together with the Closing Date
Commitment, not to exceed the amount of the Commitments as defined in the Loan and Guarantee
Agreement (as amended hereby). The Additional Commitments shall be deemed to be
“Commitments” under and as defined in the Loan and Guarantee Agreement (as amended hereby)
for all purposes of the Loan and Guarantee Agreement and the other Loan Documents, and shall
be secured by the applicable Liens granted to the Collateral Agent for the benefit of the Secured
Parties and entitled to the benefits of the applicable Security Documents.
Section 2. Amendments. Effective as of the Restatement Effective Date, (a)
the Existing Loan and Guarantee Agreement is hereby amended and restated, in its entirety, to be
in the form attached as Annex A hereto and (b) all of the other Schedules and Exhibits to the
Existing Loan and Guarantee Agreement remain in the forms attached to the Existing Loan and
Guarantee Agreement.
Section 3. Representations and Warranties. The Credit Parties represent
and warrant to the Administrative Agent, the Collateral Agent and the Lenders as of the
Restatement Effective Date that:
(a) The execution, delivery and performance by each Credit Party of this
Restatement Agreement and each other Loan Document to which it is party have been duly
authorized by all necessary corporate or other organizational action, and do not and will not
(a) contravene the terms of its Organizational Documents, (b) conflict with or result in any
breach or contravention of, or the creation of any Lien under, or require any payment to be made
under (i) any material Contractual Obligation to which each Credit Party is a party or affecting
each Credit Party or the material properties of any Credit Party or (ii) any material order,
injunction, writ or decree of any Governmental Authority or any arbitral award to which any
Credit Party or its property is subject or (c) violate any Law, except to the extent such violation
could not reasonably be expected to have a Material Adverse Effect.
(b) No approval, consent, exemption, authorization, or other action by, or
notice to, or filing with, any Governmental Authority or any other Person is necessary or required
in connection with the execution, delivery or performance by, or enforcement against, each
Credit Party of this Restatement Agreement or any other Loan Document, except for (i) such
approvals, consents, exemptions, authorizations, actions or notices that have been duly obtained,
taken or made and in full force and effect and (ii) filings and consents contemplated by the
Security Documents or Section 5.14 of the Loan and Guarantee Agreement.
(c) This Restatement Agreement has been, and each other Loan
Document, when delivered hereunder, will have been, duly executed and delivered by each
Credit Party set forth on the signature pages to this Restatement Agreement. This Restatement
Agreement constitutes, and each other Loan Document when so delivered will constitute, the
legal, valid and binding obligation of each Credit Party hereto enforceable against such Credit
Party in accordance with its terms, except as such enforceability may be limited by bankruptcy,
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insolvency, reorganization, receivership, moratorium or other Laws affecting the creditors’
rights generally and by general principles of equity.
(d) No Default exists under the Loan and Guarantee Agreement.
(e) All representations and warranties contained in the Loan and
Guarantee Agreement and the other Loan Documents are true and correct in all material respects
as of the date hereof, except to the extent that (A) such representations or warranties are qualified
by a materiality standard, in which case they are true and correct in all respects, and (B) such
representations or warranties expressly relate to an earlier date (in which case such
representations and warranties are true and correct in all material respects as of such earlier date).
Section 4. Conditions Precedent to Effectiveness. The effectiveness of this
Restatement Agreement and the Additional Commitments provided hereby are subject to the
satisfaction (or waiver in accordance with Section 11.02 of the Loan and Guarantee Agreement)
of the following conditions (and, in the case of each document specified in this Section to be
received by the Initial Lender (and the applicable Agent or Agents), such document shall be in
form and substance satisfactory to the Initial Lender and/or the applicable Agent or Agents) (the
date on which such conditions are satisfied or waived being the “Restatement Effective Date”)
when:
(a) Executed Counterparts. The Initial Lender and the Agents shall have
received from each Credit Party hereto a counterpart of this Restatement Agreement and an
Amended and Restated Horizon Aircraft, Engine and Propeller Pledge and Security Agreement,
substantially in the form attached hereto as Annex B (such amended and restated agreement, the
“Amended and Restated Horizon Pledge and Security Agreement”), each signed on behalf of
such Credit Party. Notwithstanding anything herein to the contrary, delivery of an executed
counterpart of a signature page of this Restatement Agreement or the Amended and Restated
Horizon Pledge and Security Agreement by telecopy or other electronic means, or confirmation
of the execution of this Restatement Agreement and the Amended and Restated Horizon Pledge
and Security Agreement on behalf of a party by an email from an authorized signatory of such
party shall be effective as delivery of a manually executed counterpart of this Restatement
Agreement and the Amended and Restated Horizon Pledge and Security Agreement.
(b) Certificates. The Initial Lender and any applicable Agent shall have
received such customary certificates of resolutions or other action, incumbency certificates
and/or other certificates of Responsible Officers of the Credit Parties as the Lenders may require
evidencing the identity, authority and capacity of each Responsible Officer thereof authorized to
act as a Responsible Officer in connection with the Loan Documents;
(c) Organizational Documents. The Initial Lender shall have received
customary resolutions or evidence of corporate authorization, secretary’s certificates and such
other documents and certificates (including Organizational Documents and good standing
certificates) as the Initial Lender may request relating to the organization, existence and good
standing of each Credit Party and any other legal matters relating to the Credit Parties, the Loan
Documents or the transactions contemplated thereby.
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(d) Opinion of Counsel to Credit Parties. The Initial Lender and the
applicable Agent or Agents shall have received opinions of counsel (including opinions of
counsel covering the creation and perfection, or the continuing creation and perfection, of the
security interests on Collateral, consistent with the opinions delivered on the Closing Date, and
including substantially similar opinions with respect to any Additional Collateral) to the Credit
Parties that are acceptable to the Initial Lender, addressed to the Initial Lender and the applicable
Agent or Agents and dated as of the Restatement Effective Date, in form and substance
satisfactory to the Initial Lender and the applicable Agent (and the Parent hereby instructs such
counsel to deliver such opinions to such Persons).
(e) Expenses. The Borrower shall have paid all reasonable fees, expenses
(including the reasonable fees and expenses of legal counsel) and other amounts due to the Initial
Lender, the Administrative Agent and the Collateral Agent (to the extent that statements for such
expenses shall have been delivered to the Borrower on or prior to the Restatement Effective
Date); provided that such expenses payable by the Borrower may be offset against the proceeds
of any Loans funded on the Restatement Effective Date.
(f) Officer’s Certificate. The Initial Lender shall have received a
certificate executed by a Responsible Officer of the Parent and the Borrower confirming (i) that
the representations and warranties contained in Section 3 of this Restatement Agreement are true
and correct on and as of the Restatement Effective Date, (ii) that the information provided in the
Loan Application Form submitted by the Borrower was true and correct on and as of the date of
delivery thereof, (iii) the satisfaction of Sections 4(j) and (l) herein as of the Restatement
Effective Date, (iv) the satisfaction of all other conditions precedent to the Restatement Effective
Date described in this Section 4 and (v) that no Default or Event of Default exists or will result
from the terms of this Restatement Agreement on the Restatement Effective Date.
(g) Appraisals. The Initial Lender shall have received Appraisals of
Additional Collateral satisfactory in form and substance and performed by an Eligible Appraiser
dated as of a date no earlier than thirty (30) days prior to the Restatement Effective Date.
(h) Consents and Authorizations. Each Credit Party shall have obtained
all consents and authorizations from Governmental Authorities and all consents of other Persons
(including shareholder approvals, if applicable) that are necessary or advisable in connection
with this Restatement Agreement, any Loan Document, any of the transactions contemplated
hereby or thereby or the continuing operations of the Credit Parties and each of the foregoing
shall be in full force and effect and in form and substance satisfactory to the Initial Lender.
(i) Lien Searches. The Initial Lender shall have received (i) UCC,
Intellectual Property and other applicable lien searches, including tax and judgment liens
searches, conducted in the jurisdictions and offices where such liens on material assets of the
Credit Parties are required to be filed or recorded, in each case, as of the date that such lien
searches were last conducted pursuant to the Loan and Guarantee Agreement and (ii) to the extent
any Additional Collateral consists of (x) Aircraft and Engine Assets (as defined in the Pledge
and Security Agreements), aircraft registry lien searches conducted with the FAA and the
International Registry or (y) Spare Part Assets (as defined in the Pledge and Security
Agreements), registry lien searches conducted with the FAA (with reference to each Designated
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Spare Parts Location set forth on Schedule 2.1 of the Pledge and Security Agreements), in each
case, reflecting the absence of Liens on the assets of the Credit Parties, other than Permitted
Liens or Liens to be discharged on or prior to the Restatement Effective Date pursuant to
documentation satisfactory to the Initial Lender.
(j) Collateral Coverage Ratio. On the Restatement Effective Date (and
after giving pro forma effect to any Borrowings on such date), the Collateral Coverage Ratio
shall not be less than 2.0 to 1.0.
(k) Solvency Certificate. The Initial Lender shall have received a
certificate of the chief financial officer or treasurer (or other comparable officer) of the Parent
certifying that the Borrower and its Subsidiaries (taken as a whole) are, and will be immediately
after giving effect to the Restatement Agreement, Solvent.
(l) No Material Adverse Effects. Since the Closing Date, (i) there has
been no event or circumstance that, either individually or in the aggregate, has had or could
reasonably be expected to have a Material Adverse Effect and (ii) none of the Credit Parties has
made a Disposition (including any sale of Currency) of any assets of the type that would be
included in the Collateral other than as would have been permitted under the Loan and Guarantee
Agreement.
(m) Audits. On the Restatement Effective Date, the opinion of the
independent public accountants (after giving effect to any reissuance or revision of such opinion)
on the most recent audited consolidated financial statements delivered by the Parent pursuant to
Section 5.01(a) of the Loan and Guarantee Agreement shall not include a “going concern”
qualification under GAAP as in effect on the date of this Restatement Agreement or, if there is
a change in the relevant provisions of GAAP thereafter, any like qualification or exception under
GAAP after giving effect to such change; and
(n) Perfection Certificate. The Initial Lender and the Agents shall have
received from each Credit Party hereto an amended and restated Perfection Certificate or
supplement thereof, updated to include all Additional Collateral, signed on behalf of such Credit
Party. Notwithstanding anything herein to the contrary, delivery of an executed signature page
of an amended and restated Perfection Certificate or supplement thereof by telecopy or other
electronic means, or confirmation of the execution of an amended and restated Perfection
Certificate or supplement thereof on behalf of a party by an email from an authorized signatory
of such party shall be effective as delivery of a manually executed counterpart of an amended
and restated Perfection Certificate or supplement thereof.
(o) Perfection of Liens on Collateral. On or prior to the Restatement
Effective Date, in connection with the execution of the Pledge and Security Agreements, the
Perfection Requirement (as defined in the Pledge and Security Agreements) shall have been
satisfied and all of the perfection steps thereunder shall have been completed, and copies or
evidence, if available, of any relevant filings, recordings and other perfection documentation
shall have been provided to the Initial Lender, the Administrative Agent and the Collateral
Agent.
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Section 5. Miscellaneous.
(a) Fees. The Borrower shall pay all fees required to be paid to the
Administrative Agent, the Collateral Agent and the Lenders and all expenses (including fees and
expenses of counsel) required to be paid to the Administrative Agent, Collateral Agent and the
Lenders, in each case as required by and in accordance with the terms of the Loan and Guarantee
Agreement, as they are due and payable in connection with this Restatement Agreement.
(b) Continued Effectiveness. Notwithstanding anything contained herein,
the terms of this Restatement Agreement shall not constitute a novation or termination of the
Existing Loan and Guarantee Agreement or any other Loan Documents and are not intended to
and do not serve to effect a novation or termination of the obligations outstanding under the
Existing Loan and Guarantee Agreement or instruments guaranteeing or securing the same,
which instruments shall remain and continue in full force and effect.
(c) Governing Law; Jurisdiction, Etc. THIS RESTATEMENT
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE FEDERAL LAW OF THE UNITED STATES IF AND TO THE EXTENT SUCH
LAW IS APPLICABLE, AND OTHERWISE IN ACCORDANCE WITH THE LAW OF THE
STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN SUCH STATE.
(d) WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED
BY APPLICABLE LAW, EACH CREDIT PARTY AND EACH LENDER HEREBY
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY CIVIL LEGAL ACTION
OR PROCEEDING RELATING TO THIS AGREEMENT, THE LOAN DOCUMENTS
OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
(e) Entire Agreement. This Restatement Agreement, the Loan and
Guarantee Agreement and the other Loan Documents constitute the entire contract among the
parties relating to the subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. The Borrower and the
Agents hereby designate this Restatement Agreement as a Loan Document.
(f) Counterparts. This Restatement Agreement may be executed in
counterparts (and by different parties hereto in different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a single contract.
Delivery of an executed counterpart of a signature page of this Restatement Agreement by
facsimile or in electronic (e.g., “pdf” or “tif”) format shall be effective as delivery of a manually
executed counterpart of this Agreement.
(g) Electronic Execution. The words “execution,” “signed,” “signature,”
and words of like import in this Restatement Agreement shall be deemed to include electronic
signatures or the keeping of records in electronic form, each of which shall be of the same legal
effect, validity or enforceability as a manually executed signature or the use of a paper-based
recordkeeping system, as the case may be, to the extent and as provided for in any Applicable
Law, including the Federal Electronic Signatures in Global and National Commerce Act, the
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New York State Electronic Signatures and Records Act, or any other similar state laws based on
the Uniform Electronic Transactions Act.
(h) Successors and Assigns. When this Restatement Agreement has been
executed by the Parent, the Borrower, the Guarantors, the Agents and the Lenders party hereto,
this Restatement Agreement shall thereafter be binding upon and inure to the benefit of the
parties and their respective successors and assigns, in accordance with the terms of the Loan and
Guarantee Agreement.
(i) Severability. If any provision of this Restatement Agreement or the
other Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity
and enforceability of the remaining provisions of this Restatement Agreement and the other Loan
Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good
faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions
the economic effect of which comes as close as possible to that of the illegal, invalid or
unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
(j) Headings. The headings of this Restatement Agreement are for
purposes of reference only and shall not limit or otherwise affect the meaning hereof.
(k) Direction to Agents. The Lenders party hereto hereby authorize and
direct the Administrative Agent and the Collateral Agent to execute and deliver this Restatement
Agreement.
(l) Release by Credit Parties. Each Credit Party hereto hereby
acknowledges and agrees that it has no actual knowledge of any defenses or claims against any
Lender, the Agents, any of their respective Affiliates or any of their respective officers, directors,
employees, attorneys, representatives, predecessors, successors or assigns with respect to the
Obligations, and that if such Credit Party now has, or ever did have, any defenses or claims with
respect to the Obligations against any Lender, the Agents, any of the respective Affiliates or any
of their respective officers, directors, employees, attorneys, representatives, predecessors,
successors, or assigns, whether known or unknown, at law or in equity, from the beginning of
the world through this date and through the time of effectiveness of this Restatement Agreement,
all of them are hereby expressly WAIVED, and the Borrower hereby RELEASES each Lender,
each Agent, their respective Affiliates and their respective officers, directors, employees,
attorneys, representatives, predecessors, successors and assigns from any liability therefor.
(m) No Liability of Agents. The Agents assume no responsibility for, and
shall be entitled to rely on, without any obligation to ascertain or investigate, the correctness of
the recitals and statements contained herein. The Agents shall not be liable or responsible in any
manner whatsoever for, or in respect of, the validity or sufficiency of this Restatement
Agreement.
Section 6. Reaffirmation.
(a) Each Credit Party hereto hereby consents to the execution, delivery
and performance of this Restatement Agreement and agrees that each reference to “the Loan and
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Guarantee Agreement,” “this Agreement,” “hereunder,” “hereof” or words of like import
referring to the Loan and Guarantee Agreement in the Loan Documents shall, on and after the
Restatement Effective Date, be deemed to be a reference to the Loan and Guarantee Agreement,
as amended and restated by this Restatement Agreement.
(b) Each Credit Party hereto hereby reaffirms all of its respective
obligations and liabilities under the Loan Documents to which it is a party, as such obligations
and liabilities have been amended by this Restatement Agreement, and acknowledges and agrees
that such obligations and liabilities remain in full force and effect.
(c) Each Credit Party hereto hereby irrevocably and unconditionally
ratifies each Loan Document to which it is a party (as such Loan Documents are amended to and
including the date hereof) and ratifies and reaffirms such Credit Party’s guarantee and grant of
liens and security interests under the Security Documents and confirms that the guarantees, liens
and security interests granted thereunder continue to secure the Obligations, including, without
limitation, any additional Obligations resulting from or incurred pursuant to the Loan and
Guarantee Agreement.
Section 7. Post-Closing Matters.
(a) Opinion of Crowe & Dunlevy. The Initial Lender and the applicable
Agent or Agents shall receive all opinions of Crowe & Dunlevy (including opinions covering
the creation and perfection, or the continuing creation and perfection, of the security interests on
Collateral, consistent with the opinions delivered by Crowe & Dunlevy on the Closing Date, and
including substantially similar opinions with respect to any Additional Collateral), aviation
counsel to the Credit Parties, that are acceptable to the Initial Lender, addressed to the Initial
Lender and the applicable Agent or Agents and dated no later than two (2) Business Days after
the Restatement Effective Date, in form and substance satisfactory to the Initial Lender and the
applicable Agent (and the Parent hereby instructs Crowe & Dunlevy to deliver such opinions to
such Persons). Failure to comply with this Section 7(a) shall constitute a Default under the Loan
and Guarantee Agreement.
[Remainder of this page intentionally left blank.]
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IN WITNESS WHEREOF, the undersigned have caused this Restatement Agreement
to be duly executed by their duly authorized representatives, all as of the day and year first
above written.
INC., as Borrower
..
By:
Name: er
Title: esident Fleet,
Fihance & Alliances, and Treasurer
[Signature Page to Restatement Agreement - Alaska Airlines]
ALASKAAIRG , INC., as Parent and
Guarantor
By:
[Signature Page to Restatement Agreement-Alaska Airlines]
HORIZON AIR USTRIES, INC., as
By:
[Signature Page to Restatement Agreement- Alaska Airlines]
THE BANK OF NEW YORK MELLON, as
Administrative Agent
By: _______________________
Name: Bret S. Derman
Title: Vice President
THE BANK OF NEW YORK MELLON, as
Collateral Agent
By: _______________________
Name: Bret S. Derman
Title:
Vice President
[Signature Page to Restatement Agreement – Alaska]
Annex A
Form of Amended and Restated Loan and Guarantee Agreement
LOAN AND GUARANTEE AGREEMENT
dated as of
September 28, 2020,
and as amended and restated as of
October 30, 2020
among
ALASKA AIRLINES, INC., as Borrower,
the Guarantors party hereto from time to time,
THE UNITED STATES DEPARTMENT OF THE TREASURY,
and
THE BANK OF NEW YORK MELLON,
as Administrative Agent and Collateral Agent
__________
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.01 Defined Terms ............................................................................................................ 1
SECTION 1.02 Terms Generally ....................................................................................................... 34
SECTION 1.03 Accounting Terms; Changes in GAAP .................................................................... 35
SECTION 1.04 Rates ......................................................................................................................... 35
SECTION 1.05 Divisions ................................................................................................................... 35
ARTICLE II
COMMITMENTS AND BORROWINGS
SECTION 2.01 Commitments ........................................................................................................... 35
SECTION 2.02 Loans and Borrowings .............................................................................................. 35
SECTION 2.03 Borrowing Requests ................................................................................................. 36
SECTION 2.04 [Reserved]................................................................................................................. 36
SECTION 2.05 [Reserved]................................................................................................................. 36
SECTION 2.06 Prepayments ............................................................................................................. 36
SECTION 2.07 Reduction and Termination of Commitments .......................................................... 38
SECTION 2.08 Repayment of Loans ................................................................................................. 38
SECTION 2.09 Interest ...................................................................................................................... 38
SECTION 2.10 Benchmark Replacement Setting.............................................................................. 39
SECTION 2.11 Evidence of Debt ...................................................................................................... 40
SECTION 2.12 Payments Generally .................................................................................................. 40
SECTION 2.13 Sharing of Payments ................................................................................................. 41
SECTION 2.14 Compensation for Losses.......................................................................................... 42
SECTION 2.15 Increased Costs ......................................................................................................... 42
SECTION 2.16 Taxes ........................................................................................................................ 43
SECTION 2.17 [Reserved]................................................................................................................. 46
SECTION 2.18 [Reserved]................................................................................................................. 46
SECTION 2.19 Mitigation Obligations; Replacement of Lenders..................................................... 46
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01 Existence, Qualification and Power.......................................................................... 47
SECTION 3.02 Authorization; No Contravention ............................................................................. 48
SECTION 3.03 Governmental Authorization; Other Consents ......................................................... 48
SECTION 3.04 Execution and Delivery; Binding Effect .................................................................. 48
SECTION 3.05 Financial Statements; No Material Adverse Change ................................................ 48
SECTION 3.06 Litigation .................................................................................................................. 48
SECTION 3.07 Contractual Obligations; No Default ........................................................................ 48
SECTION 3.08 Property .................................................................................................................... 49
SECTION 3.09 Taxes ........................................................................................................................ 49
i
SECTION 3.10 Disclosure ................................................................................................................. 49
SECTION 3.11 Compliance with Laws ............................................................................................. 49
SECTION 3.12 ERISA Compliance .................................................................................................. 50
SECTION 3.13 Environmental Matters ............................................................................................. 50
SECTION 3.14 Investment Company Act ......................................................................................... 51
SECTION 3.15 Sanctions; Export Controls; Anti-Corruption; AML Laws ...................................... 51
SECTION 3.16 Solvency ................................................................................................................... 51
SECTION 3.17 Subsidiaries............................................................................................................... 51
SECTION 3.18 Senior Indebtedness .................................................................................................. 51
SECTION 3.19 Insurance Matters ..................................................................................................... 51
SECTION 3.20 Labor Matters ........................................................................................................... 51
SECTION 3.21 Insolvency Proceedings ............................................................................................ 52
SECTION 3.22 Margin Regulations .................................................................................................. 52
SECTION 3.23 Liens ......................................................................................................................... 52
SECTION 3.24 Perfected Security Interests ...................................................................................... 52
SECTION 3.25 US Citizenship .......................................................................................................... 52
SECTION 3.26 Air Carrier Status ...................................................................................................... 52
SECTION 3.27 Cybersecurity ............................................................................................................ 52
SECTION 3.28 Loyalty Program Agreements ................................................................................... 53
ARTICLE IV
CONDITIONS
SECTION 4.01 Closing Date and Initial Borrowing.......................................................................... 53
SECTION 4.02 Each Borrowing ........................................................................................................ 55
ARTICLE V
AFFIRMATIVE COVENANTS
SECTION 5.01 Financial Statements ................................................................................................. 56
SECTION 5.02 Certificates; Other Information ................................................................................ 57
SECTION 5.03 Notices ...................................................................................................................... 59
SECTION 5.04 Preservation of Existence, Etc. ................................................................................. 59
SECTION 5.05 Maintenance of Properties ........................................................................................ 59
SECTION 5.06 Maintenance of Insurance......................................................................................... 60
SECTION 5.07 Payment of Obligations ............................................................................................ 60
SECTION 5.08 Compliance with Laws ............................................................................................. 60
SECTION 5.09 Environmental Matters ............................................................................................. 60
SECTION 5.10 Books and Records ................................................................................................... 60
SECTION 5.11 Inspection Rights ...................................................................................................... 60
SECTION 5.12 Sanctions; Export Controls; Anti-Corruption Laws and AML Laws ....................... 61
SECTION 5.13 Guarantors; Additional Collateral ............................................................................ 61
SECTION 5.14 Post-Closing Matters ................................................................................................ 62
SECTION 5.15 Further Assurances ................................................................................................... 62
SECTION 5.16 Delivery of Appraisals .............................................................................................. 62
SECTION 5.17 Ratings ...................................................................................................................... 62
SECTION 5.18 Regulatory Matters ................................................................................................... 62
SECTION 5.19 Loyalty Programs; Loyalty Program Agreements .................................................... 63
SECTION 5.20 Collections; Accounts; Payments ............................................................................. 63
ii
ARTICLE VI
NEGATIVE COVENANTS
SECTION 6.01 [Reserved]................................................................................................................. 64
SECTION 6.02 Liens ......................................................................................................................... 64
SECTION 6.03 Fundamental Changes .............................................................................................. 64
SECTION 6.04 Dispositions .............................................................................................................. 65
SECTION 6.05 Restricted Payments ................................................................................................. 66
SECTION 6.06 Investments ............................................................................................................... 67
SECTION 6.07 Transactions with Affiliates...................................................................................... 69
SECTION 6.08 [Reserved]................................................................................................................. 69
SECTION 6.09 [Reserved]................................................................................................................. 69
SECTION 6.10 Changes in Nature of Business ................................................................................. 69
SECTION 6.11 Sanctions; AML Laws .............................................................................................. 69
SECTION 6.12 Amendments to Organizational Documents ............................................................. 69
SECTION 6.13 [Reserved]................................................................................................................. 70
SECTION 6.14 Prepayments of Junior Indebtedness ........................................................................ 70
SECTION 6.15 Lobbying................................................................................................................... 70
SECTION 6.16 Use of Proceeds ........................................................................................................ 70
SECTION 6.17 Financial Covenants ................................................................................................. 70
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.01 Events of Default ...................................................................................................... 72
SECTION 7.02 Application of Payments .......................................................................................... 75
ARTICLE VIII
AGENCY
SECTION 8.01 Appointment and Authority ...................................................................................... 76
SECTION 8.02 Collateral Matters. .................................................................................................... 76
SECTION 8.03 Removal or Resignation of Administrative Agent ................................................... 76
SECTION 8.04 Exculpatory Provisions ............................................................................................. 77
SECTION 8.05 Reliance by Agent .................................................................................................... 79
SECTION 8.06 Delegation of Duties ................................................................................................. 79
SECTION 8.07 Non-Reliance on Agents and Other Lenders ............................................................ 79
SECTION 8.08 Administrative Agent May File Proofs of Claim ..................................................... 79
ARTICLE IX
GUARANTEE
SECTION 9.01 Guarantee of the Obligations .................................................................................... 80
SECTION 9.02 Payment or Performance by a Guarantor ................................................................. 80
SECTION 9.03 Liability of Guarantors Absolute .............................................................................. 80
SECTION 9.04 Waivers by Guarantors ............................................................................................. 82
SECTION 9.05 Guarantors’ Rights of Subrogation, Contribution, etc. ............................................. 82
iii
SECTION 9.06 Subordination ........................................................................................................... 82
SECTION 9.07 Continuing Guarantee ............................................................................................... 83
SECTION 9.08 Financial Condition of the Borrower ........................................................................ 83
SECTION 9.09 Reinstatement ........................................................................................................... 83
SECTION 9.10 Discharge of Guarantees........................................................................................... 83
ARTICLE X
CARES ACT REQUIREMENTS
SECTION 10.01 CARES Act Compliance .......................................................................................... 83
SECTION 10.02 Dividends and Buybacks .......................................................................................... 83
SECTION 10.03 Maintenance of Employment Levels ........................................................................ 84
SECTION 10.04 United States Business ............................................................................................. 84
SECTION 10.05 Limitations on Certain Compensation ...................................................................... 84
SECTION 10.06 Continuation of Certain Air Service ......................................................................... 85
SECTION 10.07 Treasury Access........................................................................................................ 85
SECTION 10.08 Additional Defined Terms ........................................................................................ 85
ARTICLE XI
MISCELLANEOUS
SECTION 11.01 Notices; Public Information...................................................................................... 86
SECTION 11.02 Waivers; Amendments ............................................................................................. 88
SECTION 11.03 Expenses; Indemnity; Damage Waiver .................................................................... 89
SECTION 11.04 Successors and Assigns ............................................................................................ 91
SECTION 11.05 Survival..................................................................................................................... 93
SECTION 11.06 Counterparts; Integration; Effectiveness; Electronic Execution ............................... 94
SECTION 11.07 Severability ............................................................................................................... 94
SECTION 11.08 Right of Setoff .......................................................................................................... 94
SECTION 11.09 Governing Law; Jurisdiction; Etc ............................................................................. 95
SECTION 11.10 Waiver of Jury Trial ................................................................................................. 95
SECTION 11.11 Headings ................................................................................................................... 95
SECTION 11.12 Treatment of Certain Information; Confidentiality .................................................. 95
SECTION 11.13 Money Laundering; Sanctions .................................................................................. 96
SECTION 11.14 Interest Rate Limitation ............................................................................................ 96
SECTION 11.15 Payments Set Aside .................................................................................................. 96
SECTION 11.16 No Advisory or Fiduciary Responsibility ................................................................. 96
SECTION 11.17 Acknowledgement and Consent to Bail-In of EEA Financial Institutions ............... 97
iv
SCHEDULES
SCHEDULE 1.01(a) - Carrier Loyalty Programs
SCHEDULE 1.01(b) - Loyalty Program Agreements
SCHEDULE 1.01(c) - Loyalty Subscription Programs
SCHEDULE 3.05 - Financial Statements
SCHEDULE 3.17 - Subsidiaries
SCHEDULE 5.14 - Post-Closing Matters
SCHEDULE 6.05(i) - Restricted Payments
SCHEDULE 6.06 - Investments
SCHEDULE 6.07 - Affiliate Transactions
EXHIBITS
EXHIBIT A - Assignment and Assumption
EXHIBIT B-1 - Form of U.S. Tax Compliance Certificate
EXHIBIT B-2 - Form of U.S. Tax Compliance Certificate
EXHIBIT B-3 - Form of U.S. Tax Compliance Certificate
EXHIBIT B-4 - Form of U.S. Tax Compliance Certificate
EXHIBIT C - Form of Note
EXHIBIT D - Form of Direct Agreement
EXHIBIT E - Form of Borrowing Request
v
1
LOAN AND GUARANTEE AGREEMENT dated as of September 28, 2020 (as amended
and restated by the Restatement Agreement, this “Agreement”), among ALASKA AIRLINES, INC., a
corporation organized under the laws of the State of Alaska (the “Borrower”), ALASKA AIR GROUP,
INC., a corporation organized under the laws of the State of Delaware (the “Parent”), the Guarantors party
hereto from time to time, the UNITED STATES DEPARTMENT OF THE TREASURY (“Treasury”) and
THE BANK OF NEW YORK MELLON as Administrative Agent and Collateral Agent.
WHEREAS, the Borrower has requested that the Initial Lender (as defined below) extend
credit as is permissible under the Coronavirus Aid, Relief, and Economic Security Act, Pub. L. 116-136
(Mar. 27, 2020), as the same may be amended form time to time (the “CARES Act”) to the Borrower, and
the Initial Lender is willing to do so on the terms and conditions set forth herein; and
WHEREAS, pursuant to Section 4003(h)(1) of the CARES Act, for purposes of the Code
(as defined below) the Loans (as defined below) shall be treated as indebtedness and as having been issued
for their aggregate stated principal amount, and the interest payable pursuant to Section 2.09(a) shall be
treated as qualified stated interest.
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Defined Terms. As used in this Agreement, the following terms have the
meanings specified below:
“ABL Agreement” means that certain credit agreement dated as of March 31, 2010 (as
amended, restated, amended and restated, supplemented or otherwise modified from time to time), by and
among the Borrower, the lenders party thereto and Wells Fargo Capital Finance, LLC as agent.
“Additional Collateral” shall mean (a) cash and Cash Equivalents pledged to the Collateral
Agent for the benefit of the Secured Parties under the Security Documents (and subject to an account control
agreement in form and substance satisfactory to the Appropriate Party), (b) airframes, aircraft, engines and
Spare Parts, registered, habitually located, or located in a designated location, respectively, in the United
States and that are eligible for the benefits of Section 1110 of the Bankruptcy Code, 11 U.S.C. § 1110 or
otherwise acceptable to the Required Lenders (provided that any airframe must be less than 20 years old at
the time of its designation as Additional Collateral), (c) Route Authorities for routes with at least one end
point located in the United States and all Slots and Gate Leaseholds related from time to time thereto or
otherwise acceptable to the Required Lenders, (d) real property, (e) ground support equipment, (f) flight
simulators and (g) any other assets acceptable to the Required Lenders, and all of which assets shall (i)
(other than Additional Collateral of the type described in clause (a)) be valued by a new Appraisal at the
time the Parent designates such assets as Additional Collateral, (ii) as of any date of addition of such assets
as Collateral, be subject, to the extent purported to be created by the applicable Security Document, to a
perfected first priority Lien and/or mortgage (or comparable Lien), in favor of the Collateral Agent for the
benefit of the Secured Parties and otherwise subject only to Permitted Liens (excluding those referred to in
clause (4) of the definition of “Permitted Lien”), (iii) pledged to the Collateral Agent for the benefit of the
Secured Parties pursuant to security agreement(s) or mortgage(s), as applicable, in a form satisfactory to
the Appropriate Party and (iv) at the time of their designation as Additional Collateral, be accompanied by
a legal opinion in form satisfactory to the Appropriate Party; provided that, in accordance with Section 8.06,
the Collateral Agent may designate a sub-agent to accept the security interest in any Additional Collateral
for the benefit of the Secured Parties; provided further that, with respect to Additional Collateral of the type
2
described in clauses (c), (d) and (g), the Borrower agrees to notify the Collateral Agent as promptly as
practicable of any new categories of assets which are expected to be designated as Additional Collateral or
any new jurisdictions in which any asset is to be secured or located; provided further that, with respect to
Additional Collateral of the type described in clause (d), (e) or (f), (i) such assets are acceptable to the
Required Lenders, (ii) the Borrower shall have delivered Appraisals acceptable in form and substance to
the Required Lenders with respect to such assets, (iii) such assets are subject to a loan to value framework
acceptable to the Required Lenders, (iv) such assets are pledged pursuant to documentation acceptable in
form and substance to the Required Lenders and (v) the benefits of pledging such assets outweigh the
associated cost, burden, difficulty or other consequences, as determined by the Required Lenders in their
sole discretion.
“Adjusted LIBO Rate” means, as to any Borrowing for any Interest Period, an interest rate
per annum (rounded upwards, if necessary, to the next 1/100 of 1%) equal to (a) the LIBO Rate for such
Interest Period divided by (b) one minus the Eurodollar Reserve Percentage.
“Administrative Account” means the account opened with the Administrative Agent in the
name of the Initial Lender as notified to the Borrower and the Initial Lender, or such other account as the
Administrative Agent shall advise the Borrower and each Lender from time to time.
“Administrative Agency Fee Letter” means any fee letter entered into between the
Borrower, the Administrative Agent and the Collateral Agent, or with any successor administrative agent
or collateral agent, in its capacity as administrative agent and in its capacity as collateral agent under any
of the Loan Documents.
“Administrative Agent” means The Bank of New York Mellon, in its capacity as
administrative agent under any of the Loan Documents, or any successor administrative agent.
“Administrative Questionnaire” means an Administrative Questionnaire in a form supplied
by or otherwise acceptable to the Administrative Agent.
“Affected Financial Institution” means (a) any EEA Financial Institution or (b) any UK
Financial Institution.
“Affiliate” means any Person that directly or indirectly controls, is controlled by, or is
under common control with, any other Person. For purposes of this definition, “control” of a Person shall
mean having the power, directly or indirectly, to direct or cause the direction of the management and
policies of such Person, whether by ownership of voting equity, by contract, or otherwise.
“Agent Parties” has the meaning specified in Section 11.01(d)(ii).
“Agent Responsible Officer” means, when used with respect to an Agent, any vice
president, assistant vice president, assistant treasurer or trust officer in the corporate trust and agency
administration of the Agent or any other officer of the Agent customarily performing functions similar to
those performed by any of the above-designated officers, and, in each case, who shall have direct
responsibility for the administration of this Agreement and also means, with respect to a particular agency
matter, any other officer to whom such matter is referred because of his or her knowledge of and familiarity
with the particular subject.
“Agents” means any of the Administrative Agent and the Collateral Agent.
“Agreement” has the meaning specified in introductory paragraph hereof.
3
“Air Carrier” has the meaning such term has under Section 40102 of Title 49, United States
Code.
“Alternate Base Rate” means, for any day, a rate per annum equal to the highest of (a) the
Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus 0.50%
and (c) the Adjusted LIBO Rate for a one-month term in effect on such day (taking into account any LIBO
Rate floor under the definition of “Adjusted LIBO Rate”) plus 1.00%. Any change in the Alternate Base
Rate due to a change in the Prime Rate, the Federal Funds Effective Rate or such Adjusted LIBO Rate shall
be effective from and including the effective date of such change in the Prime Rate, the Federal Funds
Effective Rate or such Adjusted LIBO Rate, respectively.
“AML Laws” means (a) the USA Patriot Act of 2001 (Pub. L. No. 107-56), (b) the U.S.
Money Laundering Control Act of 1986, as amended, (c) the Bank Secrecy Act, 31 U.S.C. sections 5301
et seq., (d) Laundering of Monetary Instruments, 18 U.S.C. section 1956, (e) Engaging in Monetary
Transactions in Property Derived from Specified Unlawful Activity, 18 U.S.C. section 1957, (f) the
Financial Recordkeeping and Reporting of Currency and Foreign Transactions Regulations (Title 31 Part
103 of the US Code of Federal Regulations), or (g) any other applicable money laundering or financial
recordkeeping Laws.
“Amortization Date” means the date that is four (4) years and six (6) months after the
Closing Date (except that, if such date is not a Business Day, the Amortization Date shall be the preceding
Business Day); provided that to the extent either (x) any Material Loyalty Program Agreement (other than
Material Loyalty Program Agreements that have been replaced as permitted under this Agreement) or (y)
Loyalty Program Agreements representing 90% of Loyalty Program Revenues (excluding revenues
generated under any Loyalty Subscription Program) in the aggregate over the immediately preceding twelve
(12) calendar month period then ended, in each case, expires prior to the date that is six (6) months after
the date that is four (4) years and six (6) months after the Closing Date, the Amortization Date shall be the
date that is six (6) months prior to the earliest such expiration date.
“Applicable Law” means, as to any Person, all applicable Laws binding upon such Person
or to which such a Person is subject.
“Applicable Percentage” means, with respect to any Lender, the percentage of the total
Outstanding Amount of Loans of all Lenders represented by the aggregate Outstanding Amount of Loans
of such Lender at such time.
“Applicable Rate” means 2.50%.
“Appraisal” means any appraisal specifying a value in Dollars (and not a range of values),
dated as of the delivery thereof, prepared by an Eligible Appraiser that certifies, at the time of determination,
in reasonable detail the Appraised Value of Eligible Collateral; provided that any methodology, form of
presentation and all assumptions must be acceptable to the Appropriate Party; provided further that the
methodology, form of presentation and assumptions in the Appraisal delivered on the Closing Date pursuant
to Section 4.01(i) shall be satisfactory for any subsequent Appraisal with respect to the same category and
specific type of Eligible Collateral, except that, for the avoidance of doubt, if any Appraisal provided one
Appraised Value for a combination of items of Eligible Collateral and any item is later removed from the
combination, any subsequent Appraisal shall either provide the Appraised Value of each item separately
or, in the case where the item removed from the combination of Eligible Collateral cannot be appraised
individually, the Appraised Value of the remaining combination of Eligible Collateral shall be zero until
the next Appraisal conducted after the removed item has been restored to such combination.
“Appraised Value” means, as of any date, (a) the specific value in Dollars (and not a range
of values) of any property constituting Eligible Collateral (other than cash and Cash Equivalents) as
4
reflected in the most recent Appraisal, (b) with respect to any cash pledged or being pledged at such time
as Collateral, 160% of the face amount and (c) with respect to any Cash Equivalents pledged or being
pledged at such time as Collateral, 100% of the fair market value thereof as determined by the Parent in
accordance with customary financial market practices determined no earlier than 45 days prior to such date;
provided that (i) if no Appraisal relating to such Eligible Collateral has been delivered to the Collateral
Agent prior to such date, the Appraised Value of such Eligible Collateral shall be deemed to be zero and
(ii) in the case of any such property consisting of ground support equipment, the Appraised Value shall be
deemed to be 50% of the value set forth in the most recent Appraisal.
“Appropriate Party” means (i) while the Initial Lender holds any Commitment or Loan, the
Initial Lender and (ii) if the Initial Lender is no longer a Lender, the Administrative Agent (acting at the
direction of the Required Lenders).
“Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an
Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.
“Assignment and Assumption” means an assignment and assumption entered into by a
Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 11.04),
and accepted by the Administrative Agent, in substantially the form of Exhibit A or any other form
approved by the Administrative Agent.
“Attributable Indebtedness” means, as of any date of determination, (a) in respect of any
Capitalized Lease Obligations of any Person, the capitalized amount thereof that would appear on a balance
sheet of such Person prepared as of such date in accordance with GAAP, and (b) in respect of any Synthetic
Lease Obligation, the capitalized amount of the remaining lease payments under the relevant lease that
would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such
lease were accounted for as a capital lease.
“Available Tenor” means, as of any date of determination and with respect to the then-
current Benchmark, as applicable, any tenor for such Benchmark or payment period for interest
calculated with reference to such Benchmark, as applicable, that is or may be used for determining the
length of an Interest Period pursuant to this Agreement as of such date and not including, for the
avoidance of doubt, any tenor for such Benchmark that is then-removed from the definition of “Interest
Period” pursuant to clause (d) of Section 2.10.
“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by an
applicable Resolution Authority in respect of any liability of any Affected Financial Institution.
“Bail-In Legislation” means, (a) with respect to any EEA Member Country implementing
Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union,
the implementing Law for such EEA Member Country from time to time which is described in the EU Bail-
In Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking
Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United
Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial
institutions or their affiliates (other than through liquidation, administration or other insolvency
proceedings).
“Benchmark” means, initially, USD LIBO Rate; provided that if a Benchmark Transition
Event or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date have
occurred with respect to USD LIBO Rate or the then-current Benchmark, then “Benchmark” means the
applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such
prior benchmark rate pursuant to Section 2.10(a).
5
“Benchmark Replacement” means, for any Available Tenor, the first alternative set forth
in the order below that can be determined by the Required Lenders for the applicable Benchmark
Replacement Date:
(1) the sum of: (a) Term SOFR and (b) the related Benchmark Replacement Adjustment;
(2) the sum of: (a) Daily Simple SOFR and (b) the related Benchmark
Replacement Adjustment;
(3) the sum of: (a) the alternate benchmark rate that has been selected by (y) so long as the
Initial Lender is a Lender, the Initial Lender and (z) otherwise, the Required Lenders and
the Borrower, in each case, as the replacement for the then-current Benchmark for the
applicable Corresponding Tenor giving due consideration to (i) any selection or
recommendation of a replacement benchmark rate or the mechanism for determining
such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing
market convention for determining a benchmark rate as a replacement for the then-
current Benchmark for U.S. dollar-denominated syndicated credit facilities at such time
and (b) the related Benchmark Replacement Adjustment;
provided that, in the case of clause (1), such Unadjusted Benchmark Replacement is displayed on a
screen or other information service that publishes such rate from time to time as selected by the
Required Lenders in their reasonable discretion and such screen is administratively acceptable as
determined by the Administrative Agent in its reasonable discretion. If the Benchmark Replacement
as determined pursuant to clause (1), (2) or (3) above would be less than the Floor, the Benchmark
Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Loan
Documents; provided further that any such Benchmark Replacement shall be administratively
feasible as determined by the Administrative Agent in its reasonable discretion.
“Benchmark Replacement Adjustment” means, with respect to any replacement of the
then- current Benchmark with an Unadjusted Benchmark Replacement for any applicable Interest
Period and Available Tenor for any setting of such Unadjusted Benchmark Replacement:
(1) for purposes of clauses (1) and (2) of the definition of “Benchmark Replacement,” the first
alternative set forth in the order below that can be determined by the Required Lenders:
(a) the spread adjustment, or method for calculating or determining such spread
adjustment, (which may be a positive or negative value or zero) as of the Reference
Time such Benchmark Replacement is first set for such Interest Period that has been
selected or recommended by the Relevant Governmental Body for the replacement
of such Benchmark with the applicable Unadjusted Benchmark Replacement for the
applicable Corresponding Tenor;
(b) the spread adjustment (which may be a positive or negative value or zero) as of the
Reference Time such Benchmark Replacement is first set for such Interest Period
that would apply to the fallback rate for a derivative transaction referencing the
ISDA Definitions to be effective upon an index cessation event with respect to such
Benchmark for the applicable Corresponding Tenor; and
(2) for purposes of clause (3) of the definition of “Benchmark Replacement,” the spread
adjustment, or method for calculating or determining such spread adjustment, (which may be a
positive or negative value or zero) that has been selected by (y) so long as the Initial Lender is
a Lender, the Initial Lender and (z) otherwise, the Required Lenders and the Borrower, in each
case, for the applicable Corresponding Tenor giving due consideration to (i) any selection or
recommendation of a spread adjustment, or method for calculating or determining such spread
adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark
Replacement by the Relevant Governmental Body on the applicable Benchmark Replacement
6
Date or (ii) any evolving or then-prevailing market convention for determining a spread
adjustment, or method for calculating or determining such spread adjustment, for the
replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for
U.S. dollar- denominated syndicated credit facilities;
provided that, in the case of clause (1) above, such adjustment is displayed on a screen or other
information service that publishes such Benchmark Replacement Adjustment from time to time as
selected by the Required Lenders in their reasonable discretion and such screen is administratively
acceptable as determined by the Administrative Agent in its reasonable discretion; provided that,
any such Benchmark Replacement Adjustment shall be administratively feasible as determined by
the Administrative Agent in its reasonable discretion.
“Benchmark Replacement Conforming Changes” means, with respect to any Benchmark
Replacement, any technical, administrative or operational changes (including changes to the definition of
“Alternate Base Rate,” the definition of “Business Day,” the definition of “Interest Period,” timing and
frequency of determining rates and making payments of interest, timing of borrowing requests or
prepayment, conversion or continuation notices, length of lookback periods, the applicability of breakage
provisions, and other technical, administrative or operational matters) that the Administrative Agent (after
consultation with the Required Lenders) decides may be appropriate to reflect the adoption and
implementation of such Benchmark Replacement and to permit the administration thereof by the
Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative
Agent (after consultation with the Required Lenders) decides that adoption of any portion of such market
practice is not administratively feasible or if the Administrative Agent (after consultation with the
Required Lenders) determines that no market practice for the administration of such Benchmark
Replacement exists, in such other manner of administration as the Administrative Agent (after
consultation with the Required Lenders) decides is reasonably necessary in connection with the
administration of this Agreement and the other Loan Documents). The Required Lenders shall cooperate
in good faith with the Administrative Agent so that the Administrative Agent may determine such
Benchmark Replacement Conforming Changes.
“Benchmark Replacement Date” means the earliest to occur of the following events with
respect to the then-current Benchmark:
(1) in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of
(a) the date of the public statement or publication of information referenced therein and (b) the
date on which the administrator of such Benchmark (or the published component used in the
calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such
Benchmark (or such component thereof);
(2) in the case of clause (3) of the definition of “Benchmark Transition Event,” the date of the
public statement or publication of information referenced therein; or
(3) in the case of an Early Opt-in Election, (y) so long as the Initial Lender is a Lender, the sixth
(6th) Business Day after the date notice of such Early Opt-in Election is provided to the
Administrative Agent and (z) otherwise, the sixth (6th) Business Day after the date notice of
such Early Opt-in Election is provided to the Administrative Agent, so long as the
Administrative Agent has not received, by 5:00 p.m. (New York City time) on the fifth (5th)
Business Day after the date notice of such Early Opt-in Election is provided to the Lenders,
written notice of objection to such Early Opt-in Election from Lenders comprising the Required
Lenders.
For the avoidance of doubt, (i) if the event giving rise to the Benchmark Replacement Date occurs on the
same day as, but earlier than, the Reference Time in respect of any determination, the Benchmark
Replacement Date will be deemed to have occurred prior to the Reference Time for such determination
and (ii) the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (1)
7
or (2) with respect to any Benchmark upon the occurrence of the applicable event or events set forth
therein with respect to all then-current Available Tenors of such Benchmark (or the published component
used in the calculation thereof).
“Benchmark Transition Event” means the occurrence of one or more of the following
events with respect to the then-current Benchmark:
(1) a public statement or publication of information by or on behalf of the administrator of such
Benchmark (or the published component used in the calculation thereof) announcing that
such administrator has ceased or will cease to provide all Available Tenors of such
Benchmark (or such component thereof), permanently or indefinitely, provided that, at the
time of such statement or publication, there is no successor administrator that will continue
to provide any Available Tenor of such Benchmark (or such component thereof);
(2) a public statement or publication of information by the regulatory supervisor for the
administrator of such Benchmark (or the published component used in the calculation thereof),
the Federal Reserve Board, the Federal Reserve Bank of New York, an insolvency official with
jurisdiction over the administrator for such Benchmark (or such component), a resolution
authority with jurisdiction over the administrator for such Benchmark (or such component) or
a court or an entity with similar insolvency or resolution authority over the administrator for
such Benchmark (or such component), which states that the administrator of such Benchmark
(or such component) has ceased or will cease to provide all Available Tenors of such
Benchmark (or such component thereof) permanently or indefinitely, provided that, at the time
of such statement or publication, there is no successor administrator that will continue to provide
any Available Tenor of such Benchmark (or such component thereof); or
(3) a public statement or publication of information by the regulatory supervisor for the
administrator of such Benchmark (or the published component used in the calculation
thereof) announcing that all Available Tenors of such Benchmark (or such component
thereof) are no longer representative.
For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect
to any Benchmark if a public statement or publication of information set forth above has occurred with
respect to each then-current Available Tenor of such Benchmark (or the published component used in the
calculation thereof).
“Benchmark Unavailability Period” means the period (if any) (x) beginning at the time
that a Benchmark Replacement Date pursuant to clauses (1) or (2) of that definition has occurred if, at
such time, no Benchmark Replacement has replaced the then-current Benchmark for all purposes
hereunder and under any Loan Document in accordance with Section 2.10 and (y) ending at the time that
a Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under
any Loan Document in accordance with Section 2.10.
“Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5
under the Exchange Act, except that in calculating the beneficial ownership of any particular “person” (as
that term is used in Section 13(d)(3) of the Exchange Act), such “person” will be deemed to have beneficial
ownership of all securities that such “person” has the right to acquire by conversion or exercise of other
securities, whether such right is currently exercisable or is exercisable only after the passage of time.
“Beneficial Ownership Certification” means a certification regarding beneficial ownership
as required by the Beneficial Ownership Regulation.
“Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.
8
“Blocked Account” means a deposit account in the name of a Credit Party noted as a
Blocked Account on Schedule 2.1 (as supplemented from time to time) of the Pledge and Security
Agreements that is, or is otherwise required under the terms thereof to be, subject to an agreement, in form
and substance satisfactory to the Appropriate Party, establishing Control (as defined in the Pledge and
Security Agreements) of such account by the Collateral Agent, and any replacement account thereof.
“Borrower” has the meaning specified in introductory paragraph hereof.
“Borrower Materials” has the meaning specified in Section 11.01(e).
“Borrowing” means a borrowing of Loans.
“Borrowing Request” means a request for a Borrowing in substantially the form of Exhibit
E or any other form approved by the Administrative Agent.
“Business Day” means any day on which Treasury and the Federal Reserve Bank of New
York are both open for business that is not a Saturday, Sunday or other day that is a legal holiday under the
laws of the State of New York or is a day on which banking institutions in such state are authorized or
required by Law to close; provided that, when used in connection with a Loan, the term “Business Day”
means any such day that is also a day on which dealings in Dollar deposits are conducted by and between
banks in the London interbank market.
“Capital Markets Offering” means any offering of “securities” (as defined under the
Securities Act and, including, for the avoidance of doubt, any offering of pass-through certificates by any
pass-through trust established by the Parent or any of its Subsidiaries) in (a) a public offering registered
under the Securities Act, or (b) an offering not required to be registered under the Securities Act (including,
without limitation, a private placement under Section 4(a)(2) of the Securities Act, an exempt offering
pursuant to Rule 144A and/or Regulation S of the Securities Act and an offering of exempt securities).
“Capitalized Lease Obligations” means, at the time any determination thereof is to be
made, the amount of the liability in respect of a Capitalized Lease that would at such time be required to be
capitalized and reflected as a liability on a balance sheet (excluding the footnotes thereto) prepared in
accordance with GAAP; provided that all leases of such Person that are or would have been treated as
operating leases for purposes of GAAP prior to the issuance of the ASU shall continue to be accounted for
as operating leases for purposes of all financial definitions and calculations for purposes of this Agreement
(whether or not such operating lease obligations were in effect on such date) notwithstanding the fact that
such obligations are required in accordance with the ASU (on a prospective or retroactive basis or
otherwise) to be treated as capitalized lease obligations for other purposes.
“Capitalized Leases” means all leases that have been or should be, in accordance with
GAAP as in effect on the Closing Date, recorded as capitalized leases; provided that for all purposes
hereunder the amount of obligations under any Capitalized Lease shall be the amount thereof accounted for
as a liability in accordance with GAAP; provided, further, that all leases of such Person that are or would
have been treated as operating leases for purposes of GAAP prior to the issuance of the ASU shall continue
to be accounted for as operating leases for purposes of all financial definitions and calculations for purposes
of this Agreement (whether or not such operating lease obligations were in effect on such date)
notwithstanding the fact that such obligations are required in accordance with the ASU (on a prospective
or retroactive basis or otherwise) to be treated as capitalized lease obligations for other purposes.
“CARES Act” has the meaning specified in the preamble to this Agreement.
“Carrier Loyalty Programs” means the Loyalty Programs listed on Schedule 1.01(a) and
any other Loyalty Program that is operated under a Trademark owned by any Credit Party, or that is
9
otherwise operated, owned or controlled, directly or indirectly by, or principally associated with, any Credit
Party or any of its Affiliates, as such program may be in effect from time to time, in each case whether now
existing or established, arising or acquired in the future and including any successor program of such
program. The term “Carrier Loyalty Program” shall include the provision, operation and promotion of such
program.
“Cash Equivalents” means:
(a) direct obligations of, or obligations the principal of and interest on which are
unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent such
obligations are backed by the full faith and credit of the United States of America), in each case maturing
within one year from the date of acquisition thereof;
(b) investments in commercial paper maturing within one year from the date of
acquisition thereof and having, at such date of acquisition, a rating of at least A-2 from S&P or at least P-
2 from Moody’s;
(c) investments in certificates of deposit, banker’s acceptances and time deposits
maturing within one year from the date of acquisition thereof issued or guaranteed by or placed with, and
money market deposit accounts issued or offered by, any domestic office of any commercial bank
organized under the laws of the United States of America or any State thereof that has a combined capital
and surplus and undivided profits of not less than $250,000,000;
(d) money market funds that (i) comply with the criteria set forth in SEC Rule 2a-7
under the Investment Company Act of 1940, (ii) are rated AAA and Aaa (or equivalent rating) by at least
two Credit Rating Agencies and (iii) have portfolio assets of at least $5,000,000,000;
(e) deposits available for withdrawal on demand with commercial banks organized
in the United States having capital and surplus in excess of $100,000,000; and
(f) other short-term liquid investments held by the Parent and the Subsidiaries as of
the Closing Date in accordance with their normal investment policies and practices for cash management.
“CCR Certificate” has the meaning specified in Section 6.17(b).
“CCR Certificate Delivery Date” has the meaning specified in Section 6.17(b).
“CCR Reference Date” has the meaning specified in Section 6.17(b).
“CFC” means a controlled foreign corporation within the meaning of Section 957 of the
Code.
“CFC Holdco” means any Domestic Subsidiary that has no material assets other than
Equity Interests of one or more Foreign Subsidiaries that are CFCs.
“Change in Law” means the occurrence, after the date of this Agreement, of any of the
following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law,
rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by
any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive
(whether or not having the force of law) by any Governmental Authority; provided that notwithstanding
anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and
all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests,
rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee
10
on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory
authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”,
regardless of the date enacted, adopted or issued.
“Change of Control” means the occurrence of any of the following: (a) the sale, lease,
transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series
of related transactions, of all or substantially all of the properties or assets of the Borrower and its
Subsidiaries, or if the Borrower is a direct or indirect Subsidiary of the Parent, the Parent and its
Subsidiaries, taken as a whole to any Person (including any “person” (as that term is used in
Section 13(d)(3) of the Exchange Act)); (b) the consummation of any transaction (including, without
limitation, any merger or consolidation), the result of which is that any Person (including any “person” (as
defined above)) becomes the Beneficial Owner, directly or indirectly, of more than 50% of the Voting Stock
of the Borrower or the Parent, as applicable, (measured by voting power rather than number of shares),
other than (i) any such transaction where the Voting Stock of the Borrower or the Parent, as applicable,
(measured by voting power rather than number of shares) outstanding immediately prior to such transaction
constitutes or is converted into or exchanged for at least a majority of the outstanding shares of the Voting
Stock of such Beneficial Owner (measured by voting power rather than number of shares), or (ii) the
consummation of any merger or consolidation of the Borrower or the Parent, as applicable, with or into any
Person (including any “person” (as defined above)) which owns or operates (directly or indirectly through
a contractual arrangement) a Permitted Business (a “Permitted Person”) or a Subsidiary of a Permitted
Person, in each case, if immediately after such transaction no Person (including any “person” (as defined
above)) is the Beneficial Owner, directly or indirectly, of more than 50% of the total Voting Stock of such
Permitted Person (measured by voting power rather than number of shares); (c) if the Borrower is a direct
or indirect Subsidiary of the Parent, the Parent ceasing to own, directly or indirectly, 100% of the Equity
Interests of the Borrower; (d) the adoption of a plan relating to the liquidation or dissolution of the Borrower
or the Parent or (e) the occurrence of a “change of control”, “change in control” or similar event under any
Material Indebtedness of the Borrower, the Parent or any parent entity of the foregoing.
“Closing Date” means the first date all the conditions precedent in Section 4.01 are
satisfied.
“Closing Date Commitment” means the commitment of the Initial Lender on the Closing
Date to make Loans in the amount of $1,301,000,000, as such commitment may be reduced or terminated
pursuant to Section 2.07.
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
“Collateral” has the meaning assigned to such term in the Pledge and Security Agreements.
“Collateral Account” means any of the Collection Account, the Blocked Account, the
Payment Account and the Collateral Proceeds Account.
“Collateral Agent” means The Bank of New York Mellon, in its capacity as collateral agent
under any of the Loan Documents, or any successor collateral agent.
“Collateral Cash Flow” means the funds that are deposited into a Collateral Account
pursuant to the Direct Agreements or directly by a Credit Party.
“Collateral Coverage Ratio” means, as of any date of determination, the ratio of (i) the
Appraised Value of the Eligible Collateral as of the date of the Appraisal most recently delivered pursuant
to Section 5.16 (or in the case of cash and Cash Equivalents, as of such date of determination) to (ii) the
aggregate principal amount of all Loans and Commitments outstanding as of such date; provided that for
the purposes of calculating clause (i) above, (x) no more than 25% of the Appraised Value of the Eligible
11
Collateral may correspond to ground support equipment and (y) any amounts held in the Blocked Account,
Payment Account and Collateral Proceeds Account shall not be included; provided further that for the
purposes of calculating clause (i) above, Loyalty Program Assets (other than any Loyalty Subscription
Program) shall not be included unless (x) each Material Loyalty Program Agreement has and (y) Loyalty
Program Agreements representing 90% of Loyalty Program Revenues (excluding revenues generated under
any Loyalty Subscription Program) in the aggregate over the immediately preceding twelve (12) calendar
month period then ended have, in each case, an expiration date that is at least six (6) months after the
Maturity Date.
“Collateral Proceeds Account” means a deposit account in the name of the Borrower that
is subject to an agreement in form and substance satisfactory to the Appropriate Party establishing Control
(as defined in the Pledge and Security Agreements) of such account by the Collateral Agent.
“Collection Account” means that certain concentration account at Bank of America, N.A.
in the name of a Credit Party, and any replacement account, which, in each case, must be a segregated
deposit account and subject at all times to an account control agreement in form and substance satisfactory
to the Appropriate Party.
“Commitment” means the commitment of the Initial Lender to make Loans in the amount
of $1,928,000,000 (which, for the avoidance of doubt, is an increase of the Closing Date Commitment by
$627,000,000, pursuant to that certain Restatement Agreement), as such commitment may be reduced or
terminated pursuant to Section 2.07.
“Communications” has the meaning specified in Section 11.01(d)(ii).
“Competitor” means (i) any Person operating an Air Carrier or a commercial passenger air
carrier business and (ii) any Affiliate of any Person described in clause (i) (other than any Affiliate of such
Person as a result of common control by a Governmental Authority or instrumentality thereof and any
Affiliate of such Person under common control with such Person which Affiliate is not actively involved
in the management and/or operations of such Person).
“Connection Income Taxes” means Other Connection Taxes that are imposed on or
measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.
“Contingent Payment Event” means any indemnity, termination payment or liquidated
damages under a Loyalty Program Agreement.
“Contractual Obligation” means, as to any Person, any provision of any security issued by
such Person or 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.
“Control” means the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the ability to exercise voting power,
by contract or otherwise. “Controlling” and “Controlled” have meanings analogous thereto.
“Convertible Indebtedness” means Indebtedness of the Parent that is convertible into
common Equity Interests of the Parent (and cash in lieu of fractional shares) and/or cash (in an amount
determined by reference to the price of such common Equity Interests).
“Corresponding Tenor” with respect to any Available Tenor means, as applicable, either a
tenor (including overnight) or an interest payment period having approximately the same length
(disregarding business day adjustment) as such Available Tenor.
12
“Credit Parties” means the Borrower and the Guarantors.
“Credit Rating” means a rating as determined by a Credit Rating Agency of the Parent’s
non-credit-enhanced, senior unsecured long-term indebtedness.
“Credit Rating Agency” means a nationally recognized credit rating agency that evaluates
the financial condition of issuers of debt instruments and then assigns a rating that reflects its assessment
of the issuer’s ability to make debt payments.
“Currency” means miles, points or other units that are a medium of exchange constituting
a convertible, virtual and private currency that is tradable property and that can be sold or issued to Persons.
“Daily Simple SOFR” means, for any day, SOFR, with the conventions for this rate (which
will include a lookback) being established by the Required Lenders in accordance with the conventions for
this rate selected or recommended by the Relevant Governmental Body for determining “Daily Simple
SOFR” for business loans; provided, that if the Administrative Agent decides that any such convention is
not administratively feasible for the Administrative Agent, then the Required Lenders may establish another
convention in its reasonable discretion, subject to the determination by the Administrative Agent of the
administrative feasibility of such convention.
“Debt Service Amount” means, as of any DSCR Determination Date or any other date of
determination, the sum of all accrued interest on the Loans and any other Indebtedness secured by Liens on
the Collateral in respect of the most recently ended DSCR Test Period.
“Debt Service Coverage Ratio” means, as of any DSCR Determination Date or any other
date of determination, the ratio of (a) the aggregate amount of Collateral Cash Flow received during the
relevant DSCR Test Period that has been deposited into a Collateral Account (and for the avoidance of
doubt, excluding any amounts on deposit in a Collateral Account in respect of prior periods) to (b) the Debt
Service Amount for such DSCR Test Period; provided, however, that for (i) the first calendar quarter ending
after the Closing Date, such ratio shall be calculated for the one calendar quarter ending on such date, (ii)
the second calendar quarter ending after the Closing Date, such ratio shall be calculated for the two calendar
quarters ending on such date and (iii) the third calendar quarter ending after the Closing Date, such ratio
shall be calculated for the three calendar quarters ending on such date.
“Debtor Relief Laws” means the Bankruptcy Code of the United States of America, and
all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium,
rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States
or other applicable jurisdictions from time to time in effect.
“Default” means any event or condition that constitutes an Event of Default or that, with
the giving of any notice, the passage of time, or both, would be an Event of Default.
“Default Rate” means an interest rate (before as well as after judgment) equal to the
applicable interest rate plus 2.00% per annum.
“Direct Agreements” means those certain Loyalty Partner Direct Agreements entered into
by and among the applicable Credit Party, the Collateral Agent, the Initial Lender and the applicable
counterparty to the Material Loyalty Program Agreements, substantially in the form of Exhibit D hereto.
“Disposition” or “Dispose” means the sale, transfer (including through a plan of division),
license, lease or other disposition of any property by any Person (including (i) any sale and leaseback
transaction, any issuance of Equity Interests by a Subsidiary of such Person, (ii) with respect to Intellectual
Property, any covenant not to sue, release, abandonment, lapse, forfeiture, dedication to the public or other
13
similar disposition of Intellectual Property and (iii) with respect to any Personal Data, any deletion, de-
identification, purging or other similar disposition of Personal Data), including any sale, assignment,
transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and
claims associated therewith.
“Disqualified Equity Interest” means any Equity Interest that, by its terms (or the terms of
any security or other Equity Interests into which it is convertible or for which it is exchangeable), or upon
the happening of any event or condition (a) matures or is mandatorily redeemable (other than solely for
Equity Interests that are not Disqualified Equity Interests), pursuant to a sinking fund obligation or
otherwise (except as a result of a change of control or asset sale so long as any rights of the holders thereof
upon the occurrence of a change of control or asset sale event shall be subject to the prior repayment in full
of the Loans and all other Obligations that are accrued and payable and the termination of the
Commitments), (b) is redeemable at the option of the holder thereof, in whole or in part, (c) provides for
scheduled payments of dividends in cash, or (d) is or becomes convertible into or exchangeable for
Indebtedness or any other Equity Interests that would constitute Disqualified Equity Interests, in each case,
prior to the date that is ninety-one (91) days after the Maturity Date; provided that if such Equity Interests
are issued pursuant to a plan for the benefit of employees of the Parent or any Subsidiary or by any such
plan to such employees, such Equity Interests shall not constitute Disqualified Equity Interests solely
because they may be required to be repurchased by the Parent or its Subsidiaries in order to satisfy
applicable statutory or regulatory obligations or as a result of such employee’s termination, death or
disability.
“Dollar” and “$” mean lawful money of the United States.
“Domestic Subsidiary” means any Subsidiary that is organized under the Laws of the
United States of America, any state thereof, or the District of Columbia.
“DOT” means the U.S. Department of Transportation.
“DSCR Determination Date” means the fifth Business Day following the last day of each
March, June, September and December (beginning with December 2020).
“DSCR Test Period” means, at any DSCR Determination Date or other date of
determination, the period of twelve (12) calendar months ending on the last day of the calendar month
ending immediately prior to such date.
“DSCR Trigger Event” has the meaning specified in Section 6.17(c)(ii).
“Early Opt-in Election” means, if the then-current Benchmark is USD LIBO Rate, the
occurrence of:
(a) (x) so long as the Initial Lender is a Lender, the Initial Lender and (y) otherwise, the Required
Lenders, in each case notifying to the Administrative Agent that the Initial Lender or the Required
Lenders have determined that at least five currently outstanding U.S. dollar-denominated syndicated
credit facilities at such time contain (as a result of amendment or as originally executed) a SOFR-based
rate (including SOFR, a term SOFR or any other rate based upon SOFR) as a benchmark rate (and such
syndicated credit facilities are identified in such notice and are publicly available for review), and
(b) (x) so long as the Initial Lender is a Lender, the election by the Initial Lender and (y)
otherwise, the joint election by the Required Lenders and the Borrower to trigger a fallback from USD
LIBO Rate and, in each case, the provision to the Administrative Agent and the other Lenders of written
notice of such election.
14
“EEA Financial Institution” means (a) any credit institution or investment firm established
in any EEA Member Country that is subject to the supervision of an EEA Resolution Authority, (b) any
entity established in an EEA Member Country that is a parent of an institution described in clause (a) of
this definition, or (c) any financial institution established in an EEA Member Country that is a subsidiary
of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision
with its parent.
“EEA Member Country” means any of the member states of the European Union, Iceland,
Liechtenstein, and Norway.
“EEA Resolution Authority” means any public administrative authority or any person
entrusted with public administrative authority of any EEA Member Country (including any delegee) having
responsibility for the resolution of any EEA Financial Institution.
“Eligible Appraiser” means (a) with respect to aircraft or engines: Morten Beyer & Agnew,
International Bureau of Aviation, Ascend Worldwide Group, ICF International Inc., BK Associates, Inc.,
Aircraft Information Services Inc., AVITAS, Inc., PAC Appraisal Inc., Aviation Specialists Group,
Aviation Asset Management Inc. or IBA Group Ltd., (b) with respect to slots, gates or routes: Morten Beyer
& Agnew, ICF International Inc., PAC Appraisal Inc. or BK Associates, Inc., (c) with respect to parts,
Morten Beyer & Agnew, ICF International Inc., Sage-Popovich, Inc., PAC Appraisal Inc., Aviation Asset
Management Inc. or Alton Aviation Consultancy LLC, (d) with respect to any other type of property,
Deloitte & Touche LLP, Andersen Tax LLC, BBC Aviation Enterprises Aviation Advisors Group, LLC,
PricewaterhouseCoopers, CBRE Group Inc. and Jones Lang LaSalle Incorporated, and (e) any independent
appraisal firm appointed by the Borrower and acceptable to the Appropriate Party.
“Eligible Assignee” means any Person that meets the requirements to be an assignee under
Section 11.04(b)(iii), 11.04(b)(v) and 11.04(b)(vi) (subject to such consents, if any, as may be required
under Section 11.04(b)(iii)); provided that no Competitor shall be an Eligible Assignee.
“Eligible Collateral” means, as of any date, all Collateral on which the Collateral Agent
has, as of such date, to the extent purported to be created by the applicable Security Document, a valid and
perfected first priority Lien and/or mortgage (or comparable Lien) for the benefit of the Secured Parties and
which is otherwise subject only to Permitted Liens and satisfies the requirements set out in the Loan
Documents for such type of Collateral.
“Environmental Laws” means any and all federal, state, local, and foreign statutes, Laws,
regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses,
agreements or governmental restrictions, including all common law, relating to pollution or the protection
of health, safety or the environment or the release of any materials into the environment, including those
related to Hazardous Materials, air emissions, discharges to waste or public systems and health and safety
matters.
“Environmental Liability” means any liability or obligation, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines, penalties or indemnities),
directly or indirectly, resulting from or based upon (a) violation of any Environmental Law, (b) the
generation, use, handling, transportation, storage, treatment, disposal or permitting or arranging for the
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened
release of any Hazardous Materials or (e) any contract, agreement or other consensual arrangement pursuant
to which liability is assumed or imposed with respect to any of the foregoing.
“Equity Interests” means, as to any Person, all of the shares of capital stock of (or other
ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or
acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such
15
Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other
ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition
from such Person of such shares (or such other interests), and all of the other ownership or profit interests
in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and
whether or not such shares, warrants, options, rights or other interests are outstanding on any date of
determination (other than Convertible Indebtedness or any other debt security that is convertible into or
exchangeable for Equity Interests of such Person and the Warrants).
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and
the rules and regulations promulgated thereunder.
“ERISA Affiliate” means any trade or business (whether or not incorporated) under
common control with any Credit Party within the meaning of Section 414(b) or (c) of the Code (and
Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code or
Section 302 of ERISA).
“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) the failure
by any Credit Party or any ERISA Affiliate to meet all applicable requirements under the Pension Funding
Rules or the filing of an application for the waiver of the minimum funding standards under the Pension
Funding Rules; (c) the incurrence by any Credit Party or any ERISA Affiliate of any liability pursuant to
Section 4063 or 4064 of ERISA or a cessation of operations with respect to a Pension Plan within the
meaning of Section 4062(e) of ERISA; (d) a complete or partial withdrawal by any Credit Party or any
ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization
or insolvent (within the meaning of Title IV of ERISA); (e) the filing of a notice of intent to terminate a
Pension Plan under, or the treatment of a Pension Plan amendment as a termination under, Section 4041 of
ERISA; (f) the institution by the PBGC of proceedings to terminate a Pension Plan; (g) any event or
condition that constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Pension Plan; (h) the determination that any Pension Plan is in at-risk status
(within the meaning of Section 430 of the Code or Section 303 of ERISA) or that a Multiemployer Plan is
in endangered or critical status (within the meaning of Section 432 of the Code or Section 305 of ERISA);
(i) the imposition or incurrence of any liability under Title IV of ERISA, other than for PBGC premiums
due but not delinquent under Section 4007 of ERISA, upon any Credit Party or any ERISA Affiliate; (j) the
engagement by any Credit Party or any ERISA Affiliate in a transaction that could be subject to
Section 4069 or Section 4212(c) of ERISA; (k) the imposition of a lien upon any Credit Party pursuant to
Section 430(k) of the Code or Section 303(k) of ERISA; or (l) the making of an amendment to a Pension
Plan that could result in the posting of bond or security under Section 436(f)(1) of the Code.
“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published
by the Loan Market Association (or any successor person), as in effect from time to time.
“Eurodollar Reserve Percentage” means, for any day during any Interest Period, the reserve
percentage in effect on such day, whether or not applicable to any Lender, under regulations issued from
time to time by the Federal Reserve Board for determining the maximum reserve requirement (including
any emergency, special, supplemental or other marginal reserve requirement) with respect to eurocurrency
funding (currently referred to as “Eurocurrency liabilities” in Regulation D). The Adjusted LIBO Rate for
each outstanding Loan shall be adjusted automatically as of the effective date of any change in the
Eurodollar Reserve Percentage.
“Event of Default” has the meaning specified in Article VII.
“Excluded Assets” has the meaning assigned to such term in the Pledge and Security
Agreements.
16
“Excluded Subsidiary” means any Subsidiary of the Parent (other than the Borrower) that
(i) is not wholly-owned, directly or indirectly, by the Parent, (ii) is a captive insurance company, (iii) is an
Immaterial Subsidiary, (iv) is a Receivables Subsidiary or (v) is a Foreign Subsidiary or a CFC Holdco
existing on the Closing Date; provided that, notwithstanding the foregoing, (1) a Subsidiary will not be an
Excluded Subsidiary if it (x) owns assets of the type that would be included in the Collateral, (y) owns
individually, or in the aggregate with other Subsidiaries (including any Subsidiary that would otherwise
qualify as an Excluded Subsidiary), a majority of the Equity Interests of any Subsidiary that owns any assets
of the type that would be included in the Collateral or is party to any agreements that constitute (or would
constitute) Collateral or (z) guarantees Material Indebtedness of the Parent or any of its Subsidiaries (other
than any acquired Subsidiary that guarantees assumed Indebtedness of a Person acquired pursuant to an
acquisition permitted under this Agreement that is existing at the time of such acquisition or investment;
provided that such Indebtedness was not created in contemplation of or in connection with such acquisition
and the amount of such Indebtedness is not increased) and (2) Horizon Air Industries, Inc. shall not be an
Excluded Subsidiary.
“Excluded Taxes” means any of the following Taxes imposed on or with respect to a
Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or
measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case,
(i) imposed as a result of such Recipient being organized under the laws of, or having its principal office
or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax
(or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender,
U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with
respect to an applicable interest in a Loan pursuant to a law in effect on the date on which (i) such Lender
acquires such interest in the Loans (other than pursuant to an assignment request by the Borrower under
Section 2.19(b)) or (ii) such Lender changes its lending office, except in each case to the extent that,
pursuant to Section 2.16, amounts with respect to such Taxes were payable either to such Lender’s
assignor immediately before such Lender became a party hereto or to such Lender immediately before it
changed its lending office, (c) Taxes attributable to such Recipient’s failure to comply with
Section 2.16(g) and (d) any withholding Taxes imposed under FATCA.
“Export Control Laws” means any applicable export control Laws including the
International Traffic in Arms Regulations (22 C.F.R. 120 et seq.) and the Export Administration
Regulations (15 C.F.R. 730 et seq.).
“FAA” means the United States Federal Aviation Administration and any successor
thereto.
“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement
(or any amended or successor version that is substantively comparable and not materially more onerous to
comply with), any current or future regulations or official interpretations thereof, any agreements entered
into pursuant to Section 1471(b)(1) of the Code and any fiscal or regulatory legislation, rules or practices
adopted pursuant to any intergovernmental agreement, treaty or convention among Governmental
Authorities and implementing such Sections of the Code.
“FCPA” has the meaning specified in Section 3.15(b).
“Federal Funds Effective Rate” means, for any day, the greater of (a) the rate calculated by
the Federal Reserve Bank of New York based on such day’s Federal funds transactions by depositary
institutions (as determined in such manner as the Federal Reserve Bank of New York shall set forth on its
public website from time to time) and published on the next succeeding Business Day by the Federal
Reserve Bank of New York as the Federal funds effective rate and (b) 0%.
17
“Federal Reserve Board” means the Board of Governors of the Federal Reserve System of
the United States.
“Finance Entity” means any Person created or formed by or at the direction of the Parent
or any of its Subsidiaries for the purpose of financing aircraft and aircraft related assets and related pre-
delivery payment obligations of Parent or such Subsidiaries that; provided, that, such (i) Person holds no
material assets other than the aircraft or aircraft related assets to be financed or assets pursuant to which
related pre-delivery payment obligations arise, (ii) financing is in the ordinary course of business of the
Parent and its Subsidiaries or otherwise customary for airlines based in the United States and (iii) Person
holds no assets constituting, or otherwise intended to be included in, Collateral.
“Financial Officer” means, as to any Person, the chief financial officer, principal
accounting officer, treasurer or controller of such Person.
“Fitch” means Fitch Ratings and any successor to its rating agency business.
“Floor” means the benchmark rate floor, if any, provided in this Agreement initially (as of
the execution of this Agreement, the modification, amendment or renewal of this Agreement or otherwise)
with respect to USD LIBO Rate. As of the Closing Date, the Floor shall be 0%.
“Foreign Lender” means any Lender that is not a U.S. Person.
“Foreign Plan” means any employee pension benefit plan, program, policy, arrangement
or agreement maintained or contributed to by the Parent or any Subsidiary with respect to employees
employed outside the United States (other than any governmental arrangement).
“Foreign Subsidiary” means any Subsidiary that is not a Domestic Subsidiary.
“Fund” means any Person (other than a natural person) that is (or will be) engaged in
making, purchasing, holding or otherwise investing in commercial loans, bonds and similar extensions of
credit in the ordinary course of its activities.
“GAAP” means, subject to Section 1.03, United States generally accepted accounting
principles as in effect from time to time; provided that if at any time any change in GAAP would affect the
computation of any financial ratio or financial requirement, or compliance with any covenant, set forth in
any Loan Document, the Required Lenders and the Borrower will negotiate in good faith to amend such
ratio, requirement or covenant to preserve the original intent thereof in light of such change in GAAP
(subject to the approval of the Required Lenders); provided that until so amended, (a) such ratio,
requirement or covenant will continue to be computed in accordance with GAAP prior to such change
therein and (b) the Borrower will provide to the Administrative Agent and the Lenders reconciliation
statements to the extent requested.
“Gate Leasehold” has the meaning assigned to such term in the Pledge and Security
Agreements.
“Governmental Authority” means the government of the United States of America or any
other nation, or of any political subdivision thereof, whether state or local, and any agency, authority,
instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including
any supra-national bodies such as the European Union or the European Central Bank).
“Guarantee” means, as to any Person, (a) any obligation, contingent or otherwise, of such
Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation
18
payable or performable by another Person (the “primary obligor”) in any manner, whether directly or
indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance
or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or
lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness
or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain
working capital, equity capital or any other financial statement condition or liquidity or level of income or
cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other
obligation or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such
Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against
loss in respect thereof (in whole or in part) or (b) any Lien on any assets of such Person securing any
Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation
is assumed by such Person (or any right, contingent or otherwise, of any holder of such Indebtedness to
obtain any such Lien); provided that the term “Guarantee” shall not include endorsements for collection or
deposit in the ordinary course of business. The amount of any Guarantee shall be deemed to be an amount
equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect
of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof as determined by the guaranteeing Person in good faith. The term “Guarantee”
as a verb has a corresponding meaning.
“Guaranteed Obligations” has the meaning specified in Section 9.01.
“Guarantor” means the Parent and each other Guarantor listed on the signature page to this
Agreement and any other Person that Guarantees the Obligations under this Agreement and any other Loan
Document.
“Hazardous Materials” means all explosive or radioactive substances or wastes and all
hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates,
asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical
wastes, and other substances or wastes of any nature regulated under or with respect to which liability or
standards of conduct are imposed pursuant to any Environmental Law.
“Immaterial Subsidiaries” means one or more Subsidiaries, for which (a) the assets of all
such Subsidiaries constitute, in the aggregate, no more than 7.50% of the total assets of the Parent and its
Subsidiaries on a consolidated basis (determined as of the last day of the most recent fiscal quarter of Parent
for which financial statements are available), and (b) the revenues of all such Subsidiaries account for, in
the aggregate, no more than 7.50% of the total revenues of the Parent and its Subsidiaries on a consolidated
basis for the four (4) fiscal quarter period ending on the last day of the most recent fiscal quarter of Parent
for which financial statements are available; provided that (x) a Subsidiary will not be an Immaterial
Subsidiary if it (i) directly or indirectly guarantees, or pledges any property or assets to secure, any
Obligations, (ii) owns any assets of the type that are intended to be included in the Collateral or is party to
any agreements that constitute (or would constitute) Collateral or (iii) owns a majority of the Equity
Interests of any Subsidiary that owns any assets of the type that are intended to be included in the Collateral
or is party to any agreements that constitute (or would constitute) Collateral, (y) the Borrower shall not be
an Immaterial Subsidiary and (z) Horizon Air Industries, Inc. shall not be an Immaterial Subsidiary.
“Indebtedness” means, as to any Person at a particular time, without duplication, all of the
following, whether or not included as indebtedness or liabilities in accordance with GAAP:
(a) all obligations of such Person for borrowed money and all obligations of such
Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments;
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(b) all direct or contingent obligations of such Person arising under (i) letters of credit
(including standby and commercial), bankers’ acceptances and bank guaranties and (ii) surety bonds,
performance bonds and similar instruments issued or created by or for the account of such Person;
(c) net obligations of such Person under any Swap Contract;
(d) all obligations of such Person to pay the deferred purchase price of property or
services (other than trade accounts payable in the ordinary course of business);
(e) indebtedness (excluding prepaid interest thereon) secured by a Lien on property
owned or being purchased by such Person (including indebtedness arising under conditional sales or other
title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is
limited in recourse;
(f) all Attributable Indebtedness;
(g) all obligations of such Person in respect of Disqualified Equity Interests; and
(h) all Guarantees of such Person in respect of any of the foregoing.
For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership
or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which
such Person is a general partner or a joint venturer, unless such Indebtedness is expressly made non-recourse
to such Person. The amount of any net obligation under any Swap Contract on any date shall be deemed
to be the Swap Termination Value thereof as of such date. The amount of any Indebtedness of any Person
for purposes of clause (e) that is expressly made non-recourse or limited-recourse (limited solely to the
assets securing such Indebtedness) to such Person shall be deemed to be equal to the lesser of (i) the
aggregate principal amount of such Indebtedness and (ii) the fair market value of the property encumbered
thereby as determined by such Person in good faith.
“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with
respect to any payment made by or on account of any obligation of the Borrower under any Loan Document
and (b) to the extent not otherwise described in (a), Other Taxes.
“Indemnitee” has the meaning specified in Section 11.03(b).
“Information” has the meaning specified in Section 11.12.
“Initial Lender” means Treasury or its designees (but, for the avoidance of doubt, excluding
any assignee of the Loans).
“Intellectual Property” has the meaning assigned to such term in the Pledge and Security
Agreements.
“Interest Payment Date” means the first Business Day following the 14th day of each
March, June, September and December (beginning with September 15, 2021), and the Amortization Date
and the Maturity Date.
“Interest Period” means, as to any Borrowing, (a) for the initial Interest Period, the period
commencing on the date of such Borrowing and ending on the next succeeding Interest Payment Date and
(b) for each Interest Period thereafter, the period commencing on the last day of the next preceding Interest
Period and ending on the next succeeding Interest Payment Date.
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“International Registry” has the meaning assigned to such term in the Pledge and Security
Agreements.
“Interpolated Rate” means, at any time, the rate per annum determined by the
Administrative Agent (which determination shall be conclusive and binding absent manifest error) to be
equal to the rate that results from interpolating on a linear basis between: (a) the rate as displayed on the
Bloomberg “LIBOR01” screen page (or any successor or replacement screen on such service; in each case
the “Screen Rate”) for the longest period (for which that Screen Rate is available) that is shorter than three
(3) months and (b) the Screen Rate for the shortest period (for which that Screen Rate is available) that is
equal to or exceeds three (3) months, in each case, at approximately 11:00 a.m., London time, two (2)
Business Days prior to the commencement of such Interest Period.
“Investment” means, as to any Person, any direct or indirect acquisition or investment by
such Person, whether by means of (a) the purchase or other acquisition of Equity Interests or debt or other
securities of another Person, (b) a loan, advance or capital contribution to, Guarantee or assumption of debt
of, or purchase or other acquisition of any other debt or equity participation or interest in, another Person,
including any partnership or joint venture interest in such other Person and any arrangement pursuant to
which the investor incurs Indebtedness of the type referred to in clause (h) of the definition of
“Indebtedness” in respect of such other Person, or (c) the purchase or other acquisition (in one transaction
or a series of transactions) of all or substantially all of the property and assets or business of another Person
or assets constituting a business unit, line of business or division of such Person. For purposes of covenant
compliance, the amount of any Investment shall be the amount actually invested, without adjustment for
subsequent increases or decreases in the value of such Investment but giving effect to any returns or
distributions of capital or repayment of principal actually received in case by such Person with respect
thereto.
“IP Licenses” has the meaning assigned to such term in the Pledge and Security
Agreements.
“IRS” means the United States Internal Revenue Service.
“ISDA Definitions” means the 2006 ISDA Definitions published by the International
Swaps and Derivatives Association, Inc. or any successor thereto, as amended or supplemented from time
to time, or any successor definitional booklet for interest rate derivatives published from time to time by
the International Swaps and Derivatives Association, Inc. or such successor thereto.
“IT Systems” has the meaning specified in Section 3.27.
“Laws” means, collectively, all international, foreign, federal, state and local statutes,
treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or
authorities, including the interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all applicable administrative orders,
directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental
Authority, in each case whether or not having the force of law.
“Lenders” means the Initial Lender and any other Person that shall have become party
hereto pursuant to an Assignment and Assumption, other than any such Person that ceases to be a party
hereto pursuant to an Assignment and Assumption.
“LIBO Rate” means, the greater of (a) the rate appearing on the Bloomberg “LIBOR01”
screen page (or any successor or replacement screen on such service) at approximately 11:00 a.m., London
time, two (2) Business Days prior to the commencement of such Interest Period, as the rate for dollar
deposits with a maturity of three (3) months; provided that (i) if such rate is not available at such time for
21
any reason, then the “LIBO Rate” shall be the Interpolated Rate, and (ii) if the Interpolated Rate is not
available (except as set forth in Section 2.10), the “LIBO Rate” shall be the LIBO Rate for the immediately
preceding Interest Period, two (2) Business Days prior to the commencement of such Interest Period and
(b) 0%.
“Lien” means any mortgage, pledge, hypothecation, collateral assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge, any option or other agreement to sell or give a
security interest in an asset, or preference, priority, or other security interest or preferential arrangement of
any kind or nature whatsoever (including any conditional sale or other title retention agreement, any
easement, right of way or other encumbrance on title to real property, and any financing lease having
substantially the same economic effect as any of the foregoing).
“Liquidity” means the sum of (i) all unrestricted cash and Cash Equivalents of Parent and
its Subsidiaries, (ii) cash or Cash Equivalents of the Parent and its Subsidiaries restricted in favor of the
Obligations or in connection with the Payroll Support Program Agreement (other than any amounts held in
the Blocked Account, Payment Account and Collateral Proceeds Account), (iii) the aggregate principal
amount committed and available to be drawn by the Parent and its Subsidiaries (taking into account all
borrowing base limitations or other restrictions) under all revolving credit facilities of the Parent and its
Subsidiaries, (iv) any remaining aggregate principal amount committed and available to be drawn (taking
into account any applicable restrictions) by the Parent and its Subsidiaries in respect of the Loans and (v)
the scheduled net proceeds (after giving effect to any expected repayment of existing Indebtedness using
such proceeds) of any Capital Markets Offering of the Parent or any of its Subsidiaries that has priced but
has not yet closed (until the earliest of the closing thereof, the termination thereof without closing or the
date that falls five (5) Business Days after the initial scheduled closing date thereof).
“Loan” means a loan made by a Lender to the Borrower pursuant to this Agreement.
“Loan Application Form” means the application form and any related materials submitted
by the Borrower to the Initial Lender in connection with an application for the Loans under Division A,
Title IV, Subtitle A of the CARES Act.
“Loan Documents” means, collectively, this Agreement, any Security Document, any
promissory notes issued pursuant to Section 2.11(b) and any other documents entered into in connection
herewith (including an Administrative Agency Fee Letter, if any).
“Loyalty Program” means (a) any frequent flyer program, co-branded card program or any
other program (whether now existing or established, arising or acquired in the future) that grants members
in such program or co-branded cardholders Currency based on such member’s or co-branded cardholder’s
purchasing or other behavior and that entitles a member or co-branded cardholder to accrue, redeem or
otherwise exploit such Currency for a benefit or reward, including flights, priority access, lounge or “club”
access, discounts, upgrades (including in seat or class) or other goods or services or (b) any Loyalty
Subscription Program.
“Loyalty Program Agreement” means each contract, agreement, transaction or other
undertaking described on Schedule 1.01(b) and any other current or future contract, agreement, transaction
or other undertaking between any Credit Party (or any of its Affiliates, as applicable) and a Loyalty Program
Participant entered into connection with any Carrier Loyalty Program, including any card marketing
agreement with respect to credit cards co-branded by a Credit Party and a Loyalty Program Participant and
any card network agreement, and any amendment, supplement or modification thereto, but excluding all
reciprocal passenger Currency accrual and redemption agreements with other Air Carriers.
“Loyalty Program Assets” has the meaning assigned to such term in the Pledge and
Security Agreements.
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“Loyalty Program Data” means all data (whether or not constituting Personal Data)
Processed in connection with, or generated or produced in the course of the operation of, any Carrier
Loyalty Program, but, with respect to Personal Data, solely to the extent Processed, generated or produced
regarding Loyalty Program Members as Loyalty Program Members, including all such data consisting of
(a) a list of all Loyalty Program Members and (b)data concerning each Loyalty Program Member as a
member of any of the Carrier Loyalty Programs, including such Loyalty Program Member’s (i) name,
mailing address, email address, date of birth, gender and phone number and other identifiers, (ii)
communication and promotion opt-ins and opt-outs, (iii) financial information and transaction histories,
(iv) total miles and awards, (v) third-party engagement history and customer experience, (vi) accrual and
redemption activity, (vii) member tier and status designations and member tier and status activity and
qualifications, (viii) internet or network activity (including information regarding interaction with a
website), (ix) profile preferences, (x) login information, (xi) Loyalty Program Member spend activity, (xii)
geolocation data and (xiii) any inferences drawn or enrichments created from any of the foregoing. Loyalty
Program Data also includes any Proceeds relating to any of the foregoing (other than any such Proceeds to
the extent arising from a Credit Party’s non-Loyalty Program operations). For the avoidance of doubt, the
definition of “Loyalty Program Data” does not impose an obligation on any Credit Party to collect any data
inconsistent with its past or current practices.
“Loyalty Program Intellectual Property” has the meaning assigned to such term in the
Pledge and Security Agreements.
“Loyalty Program Member” means, as of any date, any individual who is an applicant or
member of any Carrier Loyalty Program (or a legal guardian of such applicant or member).
“Loyalty Program Participant” means (a) a financial institution or other Person that is a
party to any card agreement with a Credit Party or (b) any other Person (i) to which a Credit Party or any
of its Affiliates sells, leases or otherwise transfers Currency in connection with any Carrier Loyalty
Program, including partner airline, co-branded card, hotel and car rental partners, (ii) that provides goods,
services or other consideration to Loyalty Program Members in exchange for, or redemption of, Currency
or (iii) that, in connection with the provision of goods, services or other consideration by such Person to
Loyalty Program Members or the use of the services of such Person by Loyalty Program Members, such
Person offers Currency to such Loyalty Program Members or provides any Credit Party (or any Affiliate
thereof) with sufficient information so that such Credit Party (or any Affiliate thereof) may post Currency
to such Loyalty Program Members’ accounts.
“Loyalty Program Revenue” means all payments received by, or otherwise required to be
paid to, the Credit Parties (and their Affiliates), and all other amounts the Credit Parties are entitled to,
under the Loyalty Program Agreements and any Loyalty Subscription Program.
“Loyalty Revenue Advance Transaction” means (i) any Pre-paid Currency Purchase or (ii)
any other transaction between any Credit Party and a counterparty to a Loyalty Program Agreement
providing for the advance of cash that is expected to be paid from or set off against future payments
otherwise required to be made by the counterparty to such Credit Party.
“Loyalty Subscription Program” means any program (whether now existing or established,
arising or acquired in the future) that grants members in such program access to discounted goods or
services in exchange for a periodic cash payment. The Loyalty Subscription Programs in existence as of
the Closing Date are listed on Schedule 1.01(c) of this Agreement.
“Margin Stock” means margin stock within the meaning of Regulations T, U and X.
“Material Adverse Effect” means (a) a material adverse change in, or a material adverse
effect on, the operations, business, properties, liabilities (actual or contingent), condition (financial or
23
otherwise) or prospects of the Parent and its Subsidiaries taken as a whole; or (b) a material adverse effect
on (i) the ability of the Borrower or any Credit Party to perform its Obligations, (ii) the legality, validity,
binding effect or enforceability against the Borrower or any Credit Party of any Loan Document to which
it is a party or the validity, perfection and first priority of the Liens on the Collateral in favor of the Collateral
Agent taken as a whole or with respect to a substantial portion of the Collateral, (iii) the rights, remedies
and benefits available to, or conferred upon, the Lenders or the Agents under any Loan Documents, (iv) the
ability of the Borrower or any Credit Party to perform its obligations under any Material Loyalty Program
Agreement, (v) the legality, validity, binding effect or enforceability against the Borrower or any Credit
Party of any Material Loyalty Program Agreement or (c) the business and operations of any Carrier Loyalty
Program, in each case, taken as a whole; provided that the impacts of the COVID-19 disease outbreak will
be disregarded for purposes of clauses (a)and (b)(vi) of this definition to the extent (i) publicly disclosed in
any SEC filing of the Parent or otherwise provided to the Initial Lender prior to the Closing Date and (ii)
the scope of such adverse effect is no greater than that which has been disclosed as of the Closing Date.
“Material Indebtedness” means Indebtedness of the Parent or any of its Subsidiaries (other
than the Loans) outstanding under the same agreement in a principal amount exceeding $50,000,000.
“Material Loyalty Program Agreements” means (a) each Loyalty Program Agreement
identified as a Material Loyalty Program Agreement as set forth on Schedule 1.01(b), as updated from time
to time pursuant to the terms of the Pledge and Security Agreements and (b) any other Loyalty Program
Agreements between a Credit Party and a Loyalty Program Participant such that, at all times, the Credit
Parties have identified to Lender Loyalty Program Agreements then in full force and effect and generating
not less than 90% of aggregate Loyalty Program Revenue (excluding revenues generated under any Loyalty
Subscription Program).
“Material Modification” means any amendment or waiver of, or modification or
supplement to, any term or condition of a Loyalty Program Agreement agreed to, executed or effected on
or after the Closing Date, which:
(a) extends, waives, delays or contractually or structurally subordinates one or more
payments due to any Credit Party with respect to such Loyalty Program Agreement;
(b) reduces the rate or amount of payments due to any Credit Party with respect to
such Loyalty Program Agreement or reduces the frequency or timing of payments due to any Credit Party;
(c) gives any Person other than Credit Parties party to such Loyalty Program
Agreement additional or improved termination rights with respect to such Loyalty Program Agreement;
(d) shortens the term of such Loyalty Program Agreement (other than in connection
with the replacement of such Loyalty Program Agreement with another Loyalty Program Agreement on
terms at least as favorable to the Lenders, as determined by the Appropriate Party in its reasonable discretion
(or in the case of the Initial Lender, its sole discretion)) or expands or improves any counterparty’s rights
or remedies following a termination;
(e) limits, or requires or results in the limitation of (x) the right or ability of any Credit
Party, any of its Affiliates, any of its or their successors or assigns or the Collateral Agent to, or to authorized
others to, use, exploit, share or transfer the Loyalty Program Intellectual Property or the IP Licenses
included in the Collateral (other than third-party Intellectual Property that ceases to be required or useful
for the conduct of any Carrier Loyalty Program as currently conducted and as currently contemplated to be
conducted) or (y) the right or ability of any Credit Party, any of its Affiliates, any of its or their successors
or assigns or the Collateral Agent to, or to authorized others to, Process any Loyalty Program Data,
including such amendment, waiver, modification or supplement that removes or narrows, or requires or
results in the removal or narrowing of any disclosure to individuals existing as of the date hereof regarding
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the potential future transfer, sharing or disclosure of Loyalty Program Data, in each case other than pursuant
to a change required under applicable Law; or
(f) imposes new financial obligations on any Credit Party under such Loyalty Program
Agreement, in each case, to the extent such amendment, waiver, modification or supplement would
reasonably be expected to (1) be materially adverse to the Lenders or any Secured Party (as defined in the
Pledge and Security Agreements) or (2) result in a Material Adverse Effect; provided that any amendment
to a Loyalty Program Agreement that (i) shortens the scheduled maturity or term thereof (other than changes
that are permitted under (d) above), (ii) amends, modifies or otherwise changes the calculation or rate of
fees, expenses, guarantee payments or termination payments due and owing thereunder, including changes
to interchange rates, in each case as defined in the applicable Loyalty Program Agreement and any other
term related to the calculation of fees related to the purchase of the applicable Currency, and in a manner
materially reducing the amount owed to the Credit Parties, (iii) changes the contractual subordination of
payments thereunder in a manner materially adverse to the Lenders, reduces the frequency of payments
thereunder or permits payments due to the applicable Credit Parties to be deposited to an account other than
the Collection Account, (iv) changes the amendment standards applicable to such Loyalty Program
Agreement in a manner that would reasonably be expected to result in a Material Adverse Effect, (v)
materially impairs the rights of the Collateral Agent or the Initial Lender to enforce or consent to
amendments to any provisions of a Loyalty Program Agreement in accordance therewith, or (vi) constitutes
an action set forth in clause (e) shall be deemed to result in a Material Adverse Effect and shall be considered
a Material Modification.
“Material Subsidiary” means any Subsidiary that is not an Immaterial Subsidiary.
“Maturity Date” means the date that is five (5) years after the Closing Date (except that, if
such date is not a Business Day, the Maturity Date shall be the preceding Business Day).
“Maximum Rate” has the meaning specified in Section 11.14.
“Moody’s” means Moody’s Investors Service, Inc. and any successor to its rating agency
business.
“Multiemployer Plan” means any employee benefit plan of the type described in
Section 4001(a)(3) of ERISA, to which any Credit Party or any ERISA Affiliate makes or is obligated to
make contributions, during the preceding five (5) plan years has made or been obligated to make
contributions, or has any liability.
“Multiple Employer Plan” means a Plan with respect to which any Credit Party or any
ERISA Affiliate is a contributing sponsor, and that has two (2) or more contributing sponsors at least two
(2) of whom are not under common control, as such a plan is described in Section 4064 of ERISA.
“Net Proceeds” means in connection with any Disposition, Recovery Event or Contingent
Payment Event, the aggregate cash and Cash Equivalents received by the Parent or any of its Subsidiaries
in respect of a Disposition of Collateral (including, without limitation, any cash or Cash Equivalents
received in respect of or upon the Disposition of any non-cash consideration received in any such
Disposition of Collateral) or Recovery Event or Contingent Payment Event, net of the direct costs and
expenses relating to such Disposition and incurred by the Parent or a Subsidiary (including the sale or
disposition of such non-cash consideration) or any such Recovery Event or Contingent Payment Event,
including, without limitation, legal, accounting and investment banking fees, and sales commissions, and
any relocation expenses incurred as a result of the Disposition, Recovery Event or Contingent Payment
Event, taxes paid or reasonably estimated to be payable as a result of the Disposition, Recovery Event or
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Contingent Payment Event, in each case, after taking into account any available tax credits or deductions
and any tax sharing arrangements.
“Non-Consenting Lender” means any Lender that does not approve any consent, waiver or
amendment that (a) requires the approval of all or all affected Lenders in accordance with the terms of
Section 11.02 and (b) has been approved by the Required Lenders.
“Non-Loyalty Collateral Coverage Ratio” means, as of any date of determination, the ratio
of (i) the Appraised Value of the Eligible Collateral as of the date of the Appraisal most recently delivered
pursuant to Section 5.16 (or in the case of cash and Cash Equivalents, as of such date of determination) to
(ii) the aggregate principal amount of all Loans and Commitments outstanding as of such date; provided
that for the purposes of calculating clause (i) above, (x) no more than 25% of the Appraised Value of the
Eligible Collateral may correspond to ground support equipment, (y) Loyalty Program Assets shall not be
included and (z) any amounts held in the Blocked Account, Payment Account and Collateral Proceeds
Account shall likewise not be included.
“Note” means the promissory note executed by the Borrower pursuant to Section 2.11(b).
“Obligations” means all advances to, and debts, liabilities, obligations, covenants and
duties of, each Credit Party arising under any Loan Document or otherwise with respect to any Loan,
whether direct or indirect (including those acquired by assumption), absolute or contingent, due or required
to be performed, or to become due or to be performed, now existing or hereafter arising and including
interest and fees that accrue after the commencement by or against any Credit Party or any Affiliate thereof
of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding,
regardless of whether such interest and fees are allowed claims in such proceeding. Without limiting the
foregoing, the Obligations include (a) the obligation to pay principal, interest, charges, expenses, fees,
indemnities and other amounts payable by the Borrower or any other Credit Party under any Loan
Document, (b) the obligation of any Credit Party to reimburse any amount in respect of any of the foregoing
that the Lenders, in each case in their sole discretion, may elect to pay or advance on behalf of any Credit
Party and (c) the obligation of any Credit Party or any of its Subsidiaries to take any action or refrain from
taking any action as required by the covenants and other provisions contained in this Agreement and any
other Loan Document.
“Obligee Guarantor” has the meaning specified in Section 9.06.
“Organizational Documents” means (a) as to any corporation, the charter or certificate or
articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect
to any non-U.S. jurisdiction), (b) as to any limited liability company, the certificate or articles of formation
or organization and operating or limited liability agreement and (c) as to any partnership, joint venture, trust
or other form of business entity, the partnership, joint venture or other applicable agreement of formation
or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with
its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation
or organization and, if applicable, any certificate or articles of formation or organization of such entity.
“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result
of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other
than connections arising from such Recipient having executed, delivered, become a party to, performed its
obligations under, received payments under, received or perfected a security interest under, engaged in any
other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in the Loans
or Loan Document).
“Other Taxes” means all present or future stamp, court or documentary, intangible,
recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery,
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performance, enforcement or registration of, from the receipt or perfection of a security interest under, or
otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes
imposed with respect to an assignment (other than an assignment made pursuant to Section 2.19(b)).
“Outstanding Amount” means, with respect to Loans on any date, the aggregate
outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments
of Loans occurring on such date.
“Parent” has the meaning specified in introductory paragraph hereof.
“Participant” has the meaning specified in Section 11.04(d).
“Participant Register” has the meaning specified in Section 11.04(d).
“Payment Account” has the meaning specified in Section 5.20.
“Payment Event” means (a), the Debt Service Coverage Ratio with respect to any DSCR
Determination Date is less than or equal to 1.50 to 1.00 (including if the Debt Service Coverage Ratio is
less than or equal to 1.25 to 1.00), or (b) an Event of Default or Term Trigger Event has occurred. A
Payment Event shall be deemed continuing until (i) with respect to clause (a), the Debt Service Coverage
Ratio is greater than 1.50 to 1.00 on a DSCR Determination Date or (ii) such Event of Default or Term
Trigger Event shall no longer be continuing.
“Payroll Support Program Agreement” means that certain Payroll Support Program
Agreement dated as of April 23, 2020, between the Borrower and Treasury.
“PBGC” means the Pension Benefit Guaranty Corporation.
“Pension Act” means the Pension Protection Act of 2006.
“Pension Funding Rules” means the rules of the Code and ERISA (as modified by the
CARES Act) regarding minimum funding standards and minimum required contributions (including any
installment payment thereof) to Pension Plans and Multiemployer Plans and set forth in, with respect to
plan years ending prior to the effective date of the Pension Act, Section 412 of the Code and Section 302
of ERISA, each as in effect prior to the Pension Act and, thereafter, Sections 412, 430, 431, 432 and 436
of the Code and Sections 302, 303, 304 and 305 of ERISA.
“Pension Plan” means any employee pension benefit plan (including a Multiple Employer
Plan, but excluding a Multiemployer Plan) that is maintained or is contributed to by any Credit Party or any
ERISA Affiliate and is either covered by Title IV of ERISA or is subject to the minimum funding standards
under Section 412 of the Code.
“Perfection Requirement” has the meaning specified in the Pledge and Security
Agreements.
“Permitted Bond Hedge Transaction” means any call or capped call option (or
substantively equivalent derivative transaction) on the Parent’s common Equity Interests purchased by the
Parent in connection with the issuance of any Convertible Indebtedness; provided that the purchase price
for such Permitted Bond Hedge Transaction does not exceed the net proceeds received by the Parent from
the sale of such Convertible Indebtedness issued in connection with the Permitted Bond Hedge Transaction.
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“Permitted Business” means any business that is the same as, or reasonably related,
ancillary, supportive or complementary to, the business in which the Parent and its Subsidiaries are engaged
on the date of this Agreement.
“Permitted Liens” means:
(1) Liens created for the benefit of (or to secure the payment and performance of) the
Obligations or any Guaranteed Obligations;
(2) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent
or that are being contested in good faith by appropriate proceedings promptly instituted and diligently
concluded; provided that any reserve or other appropriate provision as is required in conformity with GAAP
has been made therefor;
(3) Liens imposed by law, including carriers’, vendors’, materialmen’s, warehousemen’s,
landlord’s, mechanics’ repairmen’s, employees’ or other like Liens, in each case, incurred in the ordinary
course of business;
(4) Liens arising by operation of law in connection with judgments, attachments or awards
which do not constitute an Event of Default hereunder;
(5) (A) any overdrafts and related liabilities arising from treasury, netting, depository and cash
management services or in connection with any automated clearing house transfers of funds, in each case
as it relates to cash or Cash Equivalents, if any, and (B) Liens arising by operation of law or that are
contractual rights of set-off in favor of the depository bank or securities intermediary in respect of any
deposit or securities accounts pledged in favor of the Collateral Agent; provided that, such Liens shall be
subordinated to the Liens securing the Obligations (other than the Liens relating to amounts owed in
connection with the maintenance of such account);
(6) [reserved];
(7) [reserved];
(8) to the extent applicable, salvage or similar rights of insurers, in each case as it relates to
Collateral;
(9) any licenses or sublicenses (x) granted on a non-exclusive basis to customers or service
providers in the ordinary course of business or to business partners in the ordinary course of business in a
manner and subject to terms consistent with past practice or (y) granted pursuant to any Loyalty Program
Agreement in full force and effect as of the Closing Date, any successor agreement thereto or any new
Loyalty Program Agreement, in each case that is included in the Collateral (provided that any such grant
pursuant to such new or successor agreement is made in the ordinary course of business in a manner and
subject to terms substantially similar with those of the predecessor Loyalty Program Agreement or with any
Loyalty Program Agreement in full force and effect as of the Closing Date, as the case may be);
(10) to the extent constituting Liens on Collateral, Dispositions permitted pursuant to
Section 6.04(b), (d)(2), (e), (f) or (h); and
(11) Liens expressly permitted by the Pledge and Security Agreements.
“Permitted Refinancing” means with respect to any Person, any refinancings, renewals, or
extensions of any Indebtedness of such Person so long as: (a) such refinancings, renewals, or extensions do
not result in an increase in the principal amount of the Indebtedness so refinanced, renewed, or extended,
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other than by the amount of premiums paid thereon and the fees and expenses incurred in connection
therewith and by the amount of unfunded commitments with respect thereto; (b) such refinancings,
renewals, or extensions do not result in a shortening of the average weighted maturity (measured as of the
refinancing, renewal, or extension) of the Indebtedness so refinanced, renewed, or extended, nor are they
on terms or conditions that, taken as a whole, are or could reasonably be expected to be materially adverse
to the interests of the Lenders; (c) if the Indebtedness that is refinanced, renewed, or extended was
subordinated in right of payment to the Obligations, then the terms and conditions of the refinancing,
renewal, or extension must include subordination terms and conditions that are at least as favorable to the
Lenders as those that were applicable to the refinanced, renewed, or extended Indebtedness; (d) the
Indebtedness that is refinanced, renewed, or extended is not recourse to any Person that is liable on account
of the Obligations other than those Persons which were obligated with respect to the Indebtedness that was
refinanced, renewed, or extended and (e) to the extent the Indebtedness that is refinanced, renewed, or
extended is unsecured, the Indebtedness resulting from such refinancing, renewal or extension must be
unsecured.
“Person” means any natural person, corporation, limited liability company, trust, joint
venture, association, company, partnership, Governmental Authority or other entity.
“Personal Data” means any information or data that identifies, relates to, describes, is
reasonably capable of being associated with, or could reasonably be linked, directly or indirectly, with a
particular consumer or household, or any other data or information that constitutes personal data, personally
identifiable information, personal information or a similar defined term under any Privacy Law or any
policy of a Credit Party or any of its Affiliates relating to privacy or the Loyalty Program Data.
“Plan” means any employee benefit plan within the meaning of Section 3(3) of ERISA,
maintained for employees of the Parent or any Subsidiary, or any such plan to which the Parent or any
Subsidiary is required to contribute on behalf of any of its employees or with respect to which any Credit
Party has any liability.
“Platform” means Debt Domain, Intralinks, Syndtrak, DebtX or a substantially similar
electronic transmission system.
“Pledge and Security Agreements” means (a) that certain Alaska Airlines Loyalty Program
Pledge and Security Agreement, dated as of September 28, 2020 (as amended, restated, amended and
restated, supplemented, or otherwise modified from time to time), between the Borrower, as a Grantor (as
defined therein) and the Collateral Agent; (b) that certain Alaska Airlines Aircraft and Engine Security
Agreement, dated as of September 28, 2020 (as amended, restated, amended and restated, supplemented,
or otherwise modified from time to time), between the Borrower, as a Grantor (as defined therein) and the
Collateral Agent; and (c) that certain Amended and Restated Horizon Aircraft, Engine and Propeller Pledge
and Security Agreement, dated as of October 30, 2020 (as amended, restated, amended and restated,
supplemented, or otherwise modified from time to time), between Horizon Air Industries, Inc., as a Grantor
(as defined therein) and the Collateral Agent. For the avoidance of doubt, the terms of the “Pledge and
Security Agreements” shall include the terms of all Applicable Annexes (as defined in each Pledge and
Security Agreement).
“Pre-paid Currency Purchases” means the sale, lease or other transfer by any Credit Party
or any Subsidiary of a Credit Party of pre-paid Currency to a counterparty of a Loyalty Program Agreement.
“Prepayment Notice” means a notice by the Borrower to prepay Loans, which shall be in
such form as the Appropriate Party may approve.
“Prime Rate” means the rate of interest per annum last quoted by The Wall Street Journal
as the “Prime Rate” in the U.S. or, if The Wall Street Journal ceases to quote such rate, the highest per
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annum interest rate published by the Federal Reserve Board in Federal Reserve Statistical Release H.15
(519) (Selected Interest Rates) as the “bank prime loan” rate or, if such rate is no longer quoted therein, any
similar rate quoted therein (as determined by the Required Lenders) or any similar release by the Federal
Reserve Board (as determined by the Required Lenders). Any change in the Prime Rate shall take effect at
the opening of business on the day such change is publicly announced or quoted as being effective.
“Privacy Law” means all Applicable Laws worldwide relating to the Processing, privacy
or security of Personal Data and all regulations issued thereunder, including, to the extent applicable, the
EU General Data Protection Regulation (EU) 2016/679 (and all Laws implementing it), Section 5 of the
Federal Trade Commission Act, the California Consumer Privacy Act, the Children’s Online Privacy
Protection Act, Title V, Subtitle A of the Gramm-Leach-Bliley Act, 15 U.S.C. 6801 et seq. (and the rules
and regulations promulgated thereunder), state data breach notification Laws, state data security Laws, and
any Law concerning requirements for website and mobile application privacy policies and practices, or any
outbound communications (including e-mail marketing, telemarketing and text messaging), tracking and
marketing.
“Proceeds” means “proceeds,” as defined in Article 9 of the UCC.
“Processed”, “Processing” or “Process”, with respect to data (including Loyalty Program
Data), means collected, accessed, recorded, acquired, stored, organized, altered, adapted, retrieved,
disclosed, used, disposed, erased, disclosed, destructed, transferred or otherwise processed; in each case,
whether or not by automated means.
“PSP Warrant Agreement” means that certain warrant agreement, dated as of April 23,
2020 between Parent and Treasury.
“Public Lender” has the meaning specified in Section 11.01(e).
“Receivables Subsidiary” means (x) a Wholly-Owned Subsidiary of the Parent formed for
the purpose of and which engages in no activities other than in connection with the financing or
securitization of accounts receivables (a) no portion of the Indebtedness or any other obligations (contingent
or otherwise) of which (1) is guaranteed by the Parent by any Subsidiary of the Parent, and excluding any
guarantees of obligations (other than the principal of, and interest on, Indebtedness) pursuant to Standard
Securitization Undertakings, (2) is recourse to or obligates the Parent or any Subsidiary of the Parent in any
way other than pursuant to Standard Securitization Undertakings or (3) subjects any property or asset of the
Parent or any Subsidiary of the Parent (other than accounts receivable and related assets) or any property
or asset of the type that is intended to be include in the Collateral, directly or indirectly, contingently or
otherwise, to the satisfaction thereof, other than pursuant to Standard Securitization Undertakings, (b) with
which neither the Parent nor any Subsidiary of the Parent (other than another Receivables Subsidiary) has
any material contract, agreement, arrangement or understanding (other than pursuant to the related
financing of accounts receivable) other than on terms no less favorable to the Parent or such Subsidiary
than those that might be obtained at the time from Persons who are not Affiliates of the Parent and (c) with
which neither the Parent nor any Subsidiary of the Parent has any obligation to maintain or preserve such
Subsidiary’s financial condition, other than a minimum capitalization in customary amounts, or to cause
such Subsidiary to achieve certain levels of operating results or (y) any Subsidiary of a Receivables
Subsidiary. For the avoidance of doubt, the Parent and any Subsidiary of the Parent may enter into Standard
Securitization Undertakings for the benefit of a Receivables Subsidiary.
“Recipient” means (a) the Administrative Agent, (b) the Collateral Agent or (c) any
Lender, as applicable.
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“Recovery Event” means any settlement of or payment in respect of any property or
casualty insurance claim or any condemnation proceeding relating to any Collateral or any Event of Loss
(as defined in the Pledge and Security Agreements).
“Reference Time” with respect to any setting of the then-current Benchmark means (1) if
such Benchmark is USD LIBO Rate, 11:00 a.m. (London time) on the day that is two London banking days
preceding the date of such setting, and (2) if such Benchmark is not USD LIBO Rate, the time determined
by the Required Lenders in their reasonable discretion, provided that such time is determined to be
administratively feasible by the Administrative Agent.
“Register” has the meaning specified in Section 11.04(c).
“Regulation D” means Regulation D of the Federal Reserve Board, as in effect from time
to time and all official rulings and interpretations thereunder or thereof.
“Regulation T” means Regulation T of the Federal Reserve Board, as in effect from time
to time and all official rulings and interpretations thereunder or thereof.
“Regulation U” means Regulation U of the Federal Reserve Board, as in effect from time
to time and all official rulings and interpretations thereunder or thereof.
“Regulation X” means Regulation X of the Federal Reserve Board, as in effect from time
to time and all official rulings and interpretations thereunder or thereof.
“Related Parties” means, with respect to any Person, such Person’s Affiliates and the
partners, directors, officers, employees, agents, trustees, administrators, managers, advisors and
representatives of such Person and of such Person’s Affiliates.
“Relevant Governmental Body” means the Federal Reserve Board or the Federal Reserve
Bank of New York, or a committee officially endorsed or convened by the Federal Reserve Board or the
Federal Reserve Bank of New York, or any successor thereto.
“Reportable Event” means any of the events set forth in Section 4043(c) of ERISA, other
than events for which the thirty (30)-day notice period has been waived.
“Required Filings” shall have the meaning specified in the Pledge and Security
Agreements.
“Required Lenders” means, at any time, Lenders having Loans representing more than 50%
of the aggregate Outstanding Amount of Loans of all Lenders at such time.
“Resolution Authority” means an EEA Resolution Authority or, with respect to any UK
Financial Institution, a UK Resolution Authority.
“Responsible Officer” means (a) the chief executive officer, president, executive vice
president or a Financial Officer of the Borrower or such Credit Party, as applicable, (b) solely for purposes
of the delivery of incumbency certificates and certified Organizational Documents and resolutions pursuant
to Section 4.01, any vice president, secretary or assistant secretary of the Borrower or such Credit Party and
(c) solely for purposes of Borrowing Requests, prepayment notices and notices for Commitment
terminations or reductions given pursuant to Article II, any other officer or employee of the Borrower so
designated from time to time by one of the officers described in clause (a) in a notice to the Administrative
Agent (together with evidence of the authority and capacity of each such Person to so act in form and
substance satisfactory to the Administrative Agent). Any document delivered hereunder that is signed by
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a Responsible Officer of the a Credit Party shall be conclusively presumed to have been authorized by all
necessary corporate, partnership or other action on the part of such Credit Party and such Responsible
Officer shall be conclusively presumed to have acted on behalf of such Credit Party.
“Restatement Agreement” means that certain Restatement Agreement, dated as of October
30, 2020, to this Agreement, between the Borrower, the Parent, the Guarantors party thereto from time to
time, Treasury, the Adminstrative Agent and the Collateral Agent.
“Restricted Payment” means any dividend or other distribution (whether in cash, securities
or other property) with respect to any Equity Interest of any Person, or any payment (whether in cash,
securities or other property), including any sinking fund or similar deposit, on account of the purchase,
redemption, retirement, acquisition, cancellation or termination of any such Equity Interest, or on account
of any return of capital to such Person’s shareholders, partners or members (or the equivalent Persons
thereof).
“Route Authority” has the meaning assigned to such term in the Pledge and Security
Agreements.
“S&P” means S&P Global Ratings, and any successor to its rating agency business.
“Sanctioned Country” has the meaning specified in Section 3.15(a).
“Sanctioned Person” has the meaning specified in Section 3.15(a).
“Sanctions” has the meaning specified in Section 3.15(a).
“Screen Rate” has the meaning specified in the definition of the term “Interpolated Rate”.
“SEC” means the Securities and Exchange Commission, or any Governmental Authority
succeeding to any of its principal functions.
“Secured Obligations” has the meaning assigned to such term in the Pledge and Security
Agreements.
“Secured Parties” has the meaning assigned to such term in the Pledge and Security
Agreements.
“Securities Act” means the Securities Act of 1933, as amended.
“Security Document” means the Pledge and Security Agreements and any security or
pledge agreement, mortgage, hypothecation or other agreement, instrument or document relating to
collateral for the Loans (including any short form agreements, supplements, control agreements, collateral
access agreements and registrations executed or made) that may exist at any time and from time to time, as
amended from time to time.
“Slot” has the meaning assigned to such term in the Pledge and Security Agreements.
“SOFR” means, with respect to any Business Day, a rate per annum equal to the secured
overnight financing rate for such Business Day published by the SOFR Administrator on the SOFR
Administrator’s Website at approximately 8:00 a.m. (New York City time) on the immediately succeeding
Business Day.
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“SOFR Administrator” means the Federal Reserve Bank of New York (or a successor
administrator of the secured overnight financing rate).
“SOFR Administrator’s Website” means the website of the Federal Reserve Bank of New
York, currently at http://www.newyorkfed.org, or any successor source for the secured overnight financing
rate identified as such by the SOFR Administrator from time to time.
“Solvent” means, as to any Person as of any date of determination, that on such date (a) the
fair value of the property of such Person is greater than the total amount of liabilities, including contingent
liabilities, of such Person, (b) the present fair saleable value of such Person is not less than the amount that
will be required to pay the probable liability of such Person on its debts as they become absolute and
matured, (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond
such Person’s ability to pay such debts and liabilities as they mature and (d) such Person is not engaged in
a business or a transaction, and is not about to engage in a business or a transaction, for which such Person’s
property would constitute an unreasonably small capital. The amount of any contingent liability at any time
shall be computed as the amount that, in light of all of the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or matured liability. For the
avoidance of doubt, a Person shall not fail to be Solvent on any date solely as a result of such person’s audit
having a “going concern” or like qualification, exception or explanatory paragraph or any qualification,
exception or explanatory paragraph as to the scope of such audit solely due to the COVID-19 disease
outbreak.
“Spare Parts” has the meaning assigned to such term in the Pledge and Security
Agreements.
“Standard Securitization Undertakings” means all representations, warranties, covenants,
indemnities, performance Guarantees and servicing obligations entered into by the Parent or any Subsidiary
(other than a Receivables Subsidiary), which are customary in connection with any financing of accounts
receivable.
“Subsidiary” of a Person means a corporation, partnership, limited liability company,
association or joint venture or other business entity of which a majority of the Equity Interests having
ordinary voting power for the election of directors or other governing body (other than securities or interests
having such power only by reason of the happening of a contingency) are at the time owned or the
management of which is controlled, directly, or indirectly through one or more intermediaries, by such
Person. Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer
to a Subsidiary or Subsidiaries of the Parent.
“Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit
derivative transactions, forward rate transactions, commodity swaps, commodity options, forward
commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or
options or forward bond or forward bond price or forward bond index transactions, interest rate options,
forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency
swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other
similar transactions or any combination of any of the foregoing (including any options to enter into any of
the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and
(b) any and all transactions of any kind, and the related confirmations, that are subject to the terms and
conditions of, or governed by, any form of master agreement published by the International Swaps and
Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master
agreement (any such master agreement, together with any related schedules, a “Master Agreement”),
including any such obligations or liabilities under any Master Agreement.
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“Swap Termination Value” means, as to any one or more Swap Contracts, after taking into
account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any
date on or after the date such Swap Contracts have been closed out and termination value(s) determined in
accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause
(a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based
upon one or more mid-market or other readily available quotations provided by any recognized dealer in
such Swap Contracts (which may include a Lender or any Affiliate of a Lender).
“Synthetic Lease Obligation” means the monetary obligation of a Person under (a) a so-
called synthetic, off-balance sheet or tax retention lease or (b) an agreement for the use or possession of
property creating obligations that do not appear on the balance sheet of such Person but, upon the insolvency
or bankruptcy of such Person, would be characterized as the indebtedness of such Person (without regard
to accounting treatment).
“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings
(including backup withholding), assessments, fees or other charges imposed by any Governmental
Authority, including any interest, additions to tax or penalties applicable thereto.
“Term SOFR” means, for the applicable Corresponding Tenor as of the applicable
Reference Time, the forward-looking term rate based on SOFR that has been selected or recommended by
the Relevant Governmental Body.
“Term Trigger Event” has the meaning specified in Section 2.06(b).
“Trade Date” means the date on which an assigning Lender enters into a binding agreement
to sell and assign all or a portion of its rights and obligations under this Agreement to another Person.
“Trade Secrets” has the meaning assigned to such term in the Pledge and Security
Agreements.
“Trademark” has the meaning assigned to such term in the Pledge and Security
Agreements.
“Treasury” has the meaning specified in the preamble to this Agreement.
“UK Financial Institution” means any BRRD Undertaking (as such term is defined under
the PRA Rulebook (as amended from time to time) promulgated by the United Kingdom Prudential
Regulation Authority) or any Person falling within IFPRU 11.6 of the FCA Handbook (as amended from
time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain
credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms.
“UK Resolution Authority” means the Bank of England or any other public administrative
authority having responsibility for the resolution of any UK Financial Institution.
“Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement
excluding the related Benchmark Replacement Adjustment.
“Uniform Commercial Code” and “UCC” means the Uniform Commercial Code as in
effect from time to time in the State of New York or, when the context implies, the Uniform Commercial
Code as in effect from time to time in any other applicable jurisdiction.
“United States” and “U.S.” mean the United States of America.
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“USD LIBO Rate” means the LIBO Rate for U.S. dollars.
“U.S. Person” means any Person that is a “United States Person” as defined in
Section 7701(a)(30) of the Code.
“U.S. Tax Compliance Certificate” has the meaning specified in Section 2.16(g).
“Voting Stock” of any specified Person as of any date means the equity interests of such
Person that is at the time entitled to vote in the election of the board of directors of such Person.
“Warrant Agreement” means the warrant agreement, dated as of the date hereof between
Parent and Treasury, pursuant to which Parent agrees to issue Warrants to Treasury upon each Borrowing.
“Warrants” means, collectively, those certain warrants issued to Treasury under the
Warrant Agreement or the PSP Warrant Agreement.
“Wholly-Owned” means, as to a Subsidiary of a Person, a Subsidiary of such Person all of
the outstanding Equity Interests of which (other than (a) director’s qualifying shares and (b) shares issued
to foreign nationals to the extent required by Applicable Law) are owned by such Person and/or by one or
more Wholly-Owned Subsidiaries of such Person.
“Withholding Agent” means the Borrower and the Administrative Agent or other person
making or transferring to any Lender any payment on behalf of the Borrower.
“Write-Down and Conversion Powers” means, (a) with respect to any EEA Resolution
Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time
under the Bail-In Legislation for the applicable EEA Member Country, which powers are described in the
EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, any powers of the applicable
Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a
liability of any UK Financial Institution or any contract or instrument under which that liability arises, to
convert all or part of that liability into shares, securities or obligations of such Person or any other Person,
to provide that any such contract or instrument is to have effect as if a right had been exercised under it or
to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that
are related to or ancillary to any of those power.
SECTION 1.02 Terms Generally. 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 “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.” The word “or” is not exclusive. The word “year”
shall refer (i) in the case of a leap year, to a year of three hundred sixty-six (366) days, and (ii) otherwise, to
a year of three hundred sixty-five (365) days. 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, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and
Schedules to, this Agreement, (e) any reference to any law or regulation herein shall, unless otherwise
specified, refer to such law or regulation as amended, modified or supplemented from time to time, and (f) 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.
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SECTION 1.03 Accounting Terms; Changes in GAAP.
(a) Accounting Terms. Except as otherwise expressly provided herein, all accounting
terms not otherwise defined herein shall be construed in conformity with GAAP. Financial statements and
other information required to be delivered by the Parent to the Lenders pursuant to Sections 5.01(a)
and 5.01(b) shall be prepared in accordance with GAAP as in effect at the time of such preparation.
Notwithstanding the foregoing, for purposes of determining compliance with any covenant (including the
computation of any financial covenant) contained herein, Indebtedness of the Parent and its Subsidiaries
shall be deemed to be carried at 100% of the outstanding principal amount thereof, and the effects of FASB
ASC 825 and FASB ASC 470-20 on financial liabilities shall be disregarded.
(b) Changes in GAAP. If the Borrower notifies the Administrative Agent (who will
forward such notification to the Lenders) that the Borrower requests an amendment to any provision hereof
to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof
on the operation of such provision (or if the Administrative Agent notifies the Borrower that the Required
Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such
notice is given before or after such change in GAAP or in the application thereof, then such provision shall
be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have
become effective until such notice shall have been withdrawn, the Required Lenders shall have notified the
Borrower (with a copy to the Administrative Agent) of their objection to such amendment or such provision
shall have been amended in accordance herewith.
SECTION 1.04 Rates. The Administrative Agent does not warrant or accept responsibility
for, and shall not have any liability with respect to, the administration, submission or any other matter related
to the rates in the definition of “LIBO Rate” or with respect to any comparable or successor rate thereto.
SECTION 1.05 Divisions. For all purposes under the Loan Documents, in connection with
any division or plan of division under Delaware law (or any comparable event under a different jurisdiction’s
laws): (a) if any asset, right, obligation or liability of any Person becomes the asset, right, obligation or
liability of a different Person, then it shall be deemed to have been transferred from the original Person to the
subsequent Person, and (b) if any new Person comes into existence, such new Person shall be deemed to have
been organized on the first date of its existence by the holders of its Equity Interests at such time.
ARTICLE II
COMMITMENTS AND BORROWINGS
SECTION 2.01 Commitments. Subject to the terms and conditions set forth herein, the
Initial Lender agrees to make the Loans to the Borrower in one or more installments on or after the Closing
Date in an aggregate principal amount not to exceed the Initial Lender’s Commitment. Amounts borrowed
under this Section 2.01 and repaid or prepaid may not be reborrowed.
SECTION 2.02 Loans and Borrowings.
(a) Borrowings. The Borrower shall request the initial Borrowing of the Loans on the
Closing Date and may request one or more subsequent Borrowings of the Loans; provided that the Borrower
shall request no more than three (3) total Borrowings.
(b) Minimum Amounts. Each Borrowing shall be in an aggregate amount of
$135,000,000 or a larger multiple of $5,000,000; provided that, the final Borrowing may be in an amount
equal to the aggregate remaining outstanding Commitment available to the Borrower under the terms and
conditions of this Agreement.
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(c) Funding of Borrowings. Each Lender shall make the amount of each Borrowing
to be made by it hereunder available to the Administrative Agent by wire transfer of immediately available
funds to the Administrative Account not later than 12:00 noon (New York City time) on the proposed date
thereof. The Administrative Agent will make all such funds so received available to the Borrower in like
funds, by wire transfer of such funds in accordance with the instructions provided in the applicable
Borrowing Request; provided that if all such requested funds are not received by the Administrative Agent
by 12:00 noon (New York City time) on the proposed date for such Borrowing, the Administrative Agent
shall distribute such funds on the next succeeding Business Day.
SECTION 2.03 Borrowing Requests.
(a) Notice by Borrower. In order to request a Borrowing, the Borrower shall notify
the Administrative Agent of such request in writing not later than 11:00 a.m. (New York City time) (i) with
respect to the initial Borrowing under this Agreement, three (3) Business Days prior to the date of the
requested Borrowing and (ii) for each subsequent Borrowing, five (5) Business Days before such
Borrowing. Each such notice shall be irrevocable and shall be in the form of a written Borrowing Request,
appropriately completed and signed by a Responsible Officer of the Borrower. The Administrative Agent
shall promptly advise the applicable Lenders of any Borrowing Request given pursuant to this
Section 2.03(a) (and the contents thereof), and of each Lender’s portion of the requested Borrowing.
(b) Content of Borrowing Requests. Each Borrowing Request for a Borrowing
pursuant to this Section shall specify the following information in compliance with Section 2.02: (i) the
aggregate amount of the requested Borrowing; (ii) the date of such Borrowing (which shall be a Business
Day); and (iii) the location and number of the Borrower’s account to which funds are to be disbursed.
SECTION 2.04 [Reserved].
SECTION 2.05 [Reserved].
SECTION 2.06 Prepayments.
(a) Optional Prepayments. The Borrower may, upon written notice to the
Administrative Agent, at any time and from time to time prepay the Loans in whole or in part without
premium or penalty, subject to the requirements of this Section. Partial prepayments of the Loans shall be
in a minimum aggregate principal amount of $1,000,000 or a whole multiple of $100,000 in excess thereof.
Notwithstanding anything herein to the contrary, the Borrower may at any time elect to prepay the loans
with funds contained in the Collateral Proceeds Account.
(b) Mandatory Prepayments.
(i) Dispositions of Collateral. Within three (3) Business Days of the receipt
by the Parent or any of its Subsidiaries of any Net Proceeds from a Disposition of Collateral not
permitted by Section 6.04, the Borrower shall prepay the Loans in an amount equal to 100% of
such Net Proceeds.
(ii) Recovery Events. Within three (3) Business Days of the receipt by the
Parent or any of its Subsidiaries of any Net Proceeds from a Recovery Event in respect of Collateral,
the Borrower shall prepay the Loans in an amount equal to 100% of such Net Proceeds; provided
that with respect to Collateral consisting of airframes, aircraft, engines and Spare Parts, the
Borrower may deposit such Net Proceeds into the Collateral Proceeds Account for such purpose
and thereafter such Net Proceeds shall be applied (to the extent not otherwise applied pursuant to
the immediately succeeding proviso) to prepay the Loans; provided further that (I) the Borrower
may use such Net Proceeds to (A) replace the assets which are the subject of such Recovery Event
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with assets that are of the same type of Collateral or (B) repair the assets which are the subject of
such Recovery Event, in each case, within 270 days after such deposit is made, (II) all such Net
Proceeds amount may, at the option of the Borrower at any time, be applied to repay the Loans,
and (III) upon the occurrence of an Event of Default, the amount of any such deposit may be applied
by the Administrative Agent to repay the Loans.
(iii) Certain Debt Issuances. Immediately upon receipt by the Parent or any of
its Subsidiaries of any proceeds from the incurrence of any Indebtedness that is secured by Liens
on the Collateral (other than Permitted Liens), the Borrower shall prepay the Loans in an amount
equal to 100% of any such proceeds from any such Indebtedness.
(iv) Contingent Payment Events. Within three (3) Business Days of the receipt
by the Parent or any of its Subsidiaries of any Net Proceeds from a Contingent Payment Event
under a Loyalty Program Agreement, which Net Proceeds, together with the aggregate amount of
Net Proceeds previously received from Contingent Payment Events, are in excess of $5,000,000,
the Borrower shall prepay the Loans in an amount equal to 100% of such Net Proceeds.
(v) Loyalty Revenue Advance Transactions. Within three (3) Business Days
of the receipt by the Parent or any of its Subsidiaries of any Net Proceeds from a Loyalty Revenue
Advance Transaction, which Net Proceeds, together with the aggregate amount of Net Proceeds
previously received from Loyalty Revenue Advance Transactions during the term of this
Agreement, are in excess of an amount equal to the greater of (x) $10,000,000 and (y) 10% of the
aggregate amount of Collateral Cash Flow received during the most recently ended DSCR Test
Period that has been deposited into a Collateral Account, the Borrower shall prepay the Loans in
an amount equal to 100% of such excess Net Proceeds.
(vi) Payment Events.
(A) The Loans shall be required to be repaid if the Debt Service
Coverage Ratio with respect to any DSCR Determination Date is less than 1.50 to 1.00 or
1.25 to 1.00, as the case may be, as set forth in Section 6.17(c).
(B) After the occurrence and during the continuation of an Event of
Default, the Loans shall be repaid in an amount equal to 100% of all Loyalty Program
Revenue received thereafter, and the Parent and the Subsidiaries shall ACH or wire transfer
daily such Loyalty Program Revenue to the Payment Account (from the Collection
Account or otherwise) with all such amounts deposited into the Payment Account to be
applied to the prepayment of any Loans then outstanding.
(C) If at any time (x) any Material Loyalty Program Agreement has a
remaining term of less than two (2) years (or, if the Lender ever provides Loans in a
principal amount in excess of the Closing Date Commitment, thirty (30) calendar months)
or (y) Loyalty Program Agreements representing 90% of Loyalty Program Revenues
(excluding revenues generated under any Loyalty Subscription Program) in the aggregate
over the immediately preceding twelve (12) calendar month period then ended have
remaining terms of less than two (2) years (or, if the Lender ever provides Loans in a
principal amount in excess of the Closing Date Commitment, thirty (30) calendar months)
(a “Term Trigger Event”) and such Term Trigger Event is continuing, then the Loans shall
be repaid in an amount equal to 100% of all Loyalty Program Revenue received thereafter,
and the Parent and the Subsidiaries shall ACH or wire transfer daily such Loyalty Program
Revenue to the Payment Account (from the Collection Account or otherwise) with all such
amounts deposited into the Payment Account to be applied to the prepayment of any Loans
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then outstanding; provided that this Section 2.06(b)(vi)(C) will not apply upon the
satisfaction of the mandatory prepayment required by Section 2.06(b)(viii) below.
(vii) Change of Control. Immediately upon the occurrence of a Change of
Control, the Borrower shall prepay the Loans in an amount equal to 100% of the aggregate
outstanding principal amount of Loans.
(viii) Amortization Date. On the Amortization Date, the Borrower shall prepay
the Loans in an aggregate principal amount (together with any accrued and unpaid interest thereon)
such that the Non-Loyalty Collateral Coverage Ratio shall not be less than 2.00 to 1.00.
(c) Notices. Each such notice pursuant to this Section shall be in the form of a written
Prepayment Notice, appropriately completed and signed by a Responsible Officer of the Borrower, and
must be received by the Administrative Agent not later than 11:00 a.m. (New York City time) three (3)
Business Days before the date of prepayment (which delivery may initially be by electronic communication
including fax or email and shall be followed by an original authentic counterpart thereof). Each Prepayment
Notice shall specify (x) the prepayment date and (y) the principal amount of the Loans or portion thereof
to be prepaid. Each Prepayment Notice shall be irrevocable.
(d) Payments. Any prepayment of the Loans pursuant to this Section 2.06 shall be
accompanied by accrued interest on the principal amount prepaid as set forth in Section 2.09(c).
SECTION 2.07 Reduction and Termination of Commitments. The Initial Lender’s
Commitment shall (x) automatically and permanently be reduced by the amount of any Borrowing of a Loan
and (y) automatically and permanently terminate on March 26, 2021. The Borrower may, upon not less than
three (3) Business Days’ notice to the Initial Lender and the Administrative Agent, terminate the Commitment
or, from time to time, reduce the Commitment. Any such reduction in the Commitment shall be in an amount
equal to $1,000,000 or a whole multiple thereof, and shall permanently reduce the Commitment.
SECTION 2.08 Repayment of Loans. The Borrower shall repay to the Administrative Agent
for the ratable account of the Lenders the aggregate principal amount of all Loans outstanding on the Maturity
Date.
SECTION 2.09 Interest.
(a) Interest Rates. Subject to paragraph (b) of this Section, the Loans shall bear
interest at a rate per annum equal to the Adjusted LIBO Rate plus the Applicable Rate.
(b) Default Interest. If any amount payable by the Borrower under this Agreement or
any other Loan Document (including principal of any Loan, interest, fees and other amount) is not paid
when due, whether at stated maturity, by acceleration or otherwise, such amount shall thereafter bear
interest at a rate per annum equal to the applicable Default Rate. Upon the request of the Required Lenders,
while any Event of Default exists, the Borrower shall pay interest on the principal amount of all Loans
outstanding hereunder at a rate per annum equal to the applicable Default Rate.
(c) Payment Dates. Accrued interest on each Loan shall be payable in arrears on or
before 12:00 noon (New York City time) on each Interest Payment Date applicable thereto and at such
other times as may be specified herein; provided that (i) interest accrued pursuant to paragraph (b) of this
Section shall be payable on demand and (ii) in the event of any repayment or prepayment of any Loan
(including mandatory prepayments under Section 2.06(b)), accrued interest on the principal amount repaid
or prepaid shall be payable on the date of such repayment or prepayment.
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(d) Interest Computation. All interest hereunder shall be computed on the basis of a
year of three hundred sixty (360) days and shall be payable for the actual number of days elapsed (including
the first day but excluding the last day). The Adjusted LIBO Rate shall be determined by the Administrative
Agent, and such determination shall be conclusive absent manifest error.
SECTION 2.10 Benchmark Replacement Setting.
(a) Benchmark Replacement. Notwithstanding anything to the contrary herein or in
any other Loan Document, if a Benchmark Transition Event or an Early Opt-in Election, as applicable, and
its related Benchmark Replacement Date have occurred prior to the Reference Time in respect of any setting
of the then-current Benchmark, as notified by the Required Lenders to the Administrative Agent in writing,
then (x) if a Benchmark Replacement is determined in accordance with clause (1) or (2) of the definition
of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will
replace such Benchmark for all purposes hereunder and under any Loan Document in respect of such
Benchmark setting and subsequent Benchmark settings without any amendment to, or further action or
consent of any other party to, this Agreement or any other Loan Document and (y) if a Benchmark
Replacement is determined in accordance with clause (3) of the definition of “Benchmark Replacement”
for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all
purposes hereunder and under any Loan Document in respect of any Benchmark setting at or after 5:00
p.m. (New York City time) on the fifth (5th) Business Day after the date notice of such Benchmark
Replacement is provided to the Lenders and the Administrative Agent by the Required Lenders without any
amendment to, or further action or consent of any other party to, this Agreement or any other Loan
Document, so long as the Administrative Agent has not received, by such time, written notice of objection
to such Benchmark Replacement from Lenders comprising the Required Lenders.
(b) Benchmark Replacement Conforming Changes. In connection with the
implementation of a Benchmark Replacement, the Administrative Agent (after consultation with the
Required Lenders) will have the right to make Benchmark Replacement Conforming Changes from time to
time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments
implementing such Benchmark Replacement Conforming Changes will become effective without any
further action or consent of any other party to this Agreement or any other Loan Document.
(c) Notices; Standards for Decisions and Determinations. The Initial Lender or the
Required Lenders, as the case may be, will promptly notify the Administrative Agent, which will then
promptly notify the Borrower and the Lenders of (i) any occurrence of a Benchmark Transition Event or an
Early Opt-in Election, as applicable, and its related Benchmark Replacement Date, (ii) the implementation
of any Benchmark Replacement, (iii) the removal or reinstatement of any tenor of a Benchmark pursuant
to clause (d) below and (iv) the commencement or conclusion of any Benchmark Unavailability Period.
The Administrative Agent will promptly notify the Borrower and the Lenders of the effectiveness of any
Benchmark Replacement Conforming Changes. Any determination, decision or election that may be made
by any Lender (or group of Lenders) or the Administrative Agent, if applicable, pursuant to this Section 2.10
including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-
occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or
any selection, will be conclusive and binding absent manifest error and may be made in its or their sole
discretion and without consent from any other party to this Agreement or any other Loan Document, except,
in each case, as expressly required pursuant to this Section 2.10. Notwithstanding anything in this
Agreement to the contrary, the Administrative Agent does not warrant or accept any responsibility for, and
shall not have any liability with respect to, any determination made by it in connection with the adoption
of Benchmark Replacement Conforming Changes or for the impact of such Benchmark Replacement
Conforming Changes, nor for the failure to adopt any Benchmark Replacement Conforming Changes due
to the failure of the Required Lenders to cooperate in good faith in connection with the determination of
any Benchmark Replacement Conforming Changes.
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(d) Unavailability of Tenor of Benchmark. Notwithstanding anything to the contrary
herein or in any other Loan Document, at any time (including in connection with the implementation of a
Benchmark Replacement), (i) if the then-current Benchmark is a term rate (including Term SOFR or USD
LIBO Rate) and either (A) any tenor for such Benchmark is not displayed on a screen or other information
service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable
discretion or (B) the regulatory supervisor for the administrator of such Benchmark has provided a public
statement or publication of information announcing that any tenor for such Benchmark is or will be no
longer representative, then the definition of “Interest Period” may be modified for any Benchmark settings
at or after such time to remove such unavailable or non-representative tenor and (ii) if a tenor that was
removed pursuant to clause (i) above either (A) is subsequently displayed on a screen or information service
for a Benchmark (including a Benchmark Replacement) used by the Administrative Agent or (B) is not, or
is no longer, subject to an announcement that it is or will no longer be representative for a Benchmark
(including a Benchmark Replacement), then the definition of “Interest Period” may be modified for all
Benchmark settings at or after such time to reinstate such previously removed tenor.
(e) Benchmark Unavailability Period. During any Benchmark Unavailability Period,
all calculations of interest by reference to a LIBO Rate hereunder shall instead be made by reference to the
Alternate Base Rate.
SECTION 2.11 Evidence of Debt.
(a) Maintenance of Records. The Administrative Agent shall maintain the Register in
accordance with Section 11.04(c). The entries made in the records maintained pursuant to this
paragraph (a) shall be prima facie evidence absent manifest error of the existence and amounts of the
obligations recorded therein. Any failure of the Administrative Agent to maintain such records or make
any entry therein or any error therein shall not in any manner affect the obligations of the Borrower under
this Agreement and the other Loan Documents.
(b) Promissory Notes. The Borrower shall prepare, execute and deliver to such Lender
a promissory note of the Borrower payable to such Lender (or, if requested by such Lender, to such Lender
and its registered assigns) and a form attached as Exhibit C hereto, which shall evidence such Lender’s
Loan.
SECTION 2.12 Payments Generally.
(a) Payments by Borrower. All payments to be made by the Borrower hereunder and
the other Loan Documents shall be made without condition or deduction for any counterclaim, defense,
recoupment or setoff. Except as otherwise expressly provided herein, all such payments shall be made to
the Administrative Agent, for the account of the respective Lenders to which such payment is owed, to the
Administrative Account in immediately available funds not later than 12:00 noon (New York City time) on
the date specified herein. All amounts received by a Lender or the Administrative Agent after such time
on any date shall be deemed to have been received on the next succeeding Business Day and any applicable
interest or fees shall continue to accrue. The Administrative Agent will promptly distribute to each Lender
its ratable share (or other applicable share as provided herein) of such payment in like funds as received by
wire transfer to such Lender’s applicable lending office (or otherwise distribute such payment in like funds
as received to the Person or Persons entitled thereto as provided herein). If any payment to be made by the
Borrower shall fall due on a day that is not a Business Day, payment shall be made on the next succeeding
Business Day and such extension of time shall be reflected in computing interest or fees, as the case may
be; provided that, if such next succeeding Business Day would fall after the Amortization Date or the
Maturity Date, as applicable, payment shall be made on the immediately preceding Business Day. Except
as otherwise expressly provided herein, all payments hereunder or under any other Loan Document shall
be made in Dollars.
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(b) Application of Insufficient Payments. Subject to Section 7.02, if at any time
insufficient funds are received by and available to the Lenders or the Administrative Agent to pay fully all
amounts of principal, interest, fees and other amounts then due hereunder, such funds shall be applied
(i) first, to pay interest, fees and other amounts then due hereunder, ratably among the parties entitled thereto
in accordance with the amounts of interest, fees and other amounts then due to such parties, and (ii) second,
to pay principal then due hereunder, ratably among the parties entitled thereto in accordance with the
amounts of principal then due to such parties.
(c) Presumptions by Administrative Agent. Unless the Administrative Agent shall
have received notice from the Borrower prior to the date on which any payment is due to the Administrative
Agent for the account of the Lenders hereunder that the Borrower will not make such payment, the
Administrative Agent may assume that the Borrower has made such payment on such date in accordance
herewith and may, in reliance upon such assumption, but shall not be obligated to, distribute to the Lenders
the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders
severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to
such Lender, with interest thereon, for each day from and including the date such amount is distributed to
it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules
on interbank compensation. Notwithstanding the foregoing, the Administrative Agent is not required to
make any payment to the Lenders until it is in possession of cleared funds from the Borrower.
(d) Deductions by Administrative Agent. If any Lender (other than the Initial Lender)
shall fail to make any payment required to be made by it pursuant to Section 2.13 or 11.03(c), then the
Administrative Agent may, in its discretion and notwithstanding any contrary provision hereof, (i) apply
any amounts thereafter received by the Administrative Agent for the account of such Lender for the benefit
of the Administrative Agent to satisfy such Lender’s obligations to the Administrative Agent until all such
unsatisfied obligations are fully paid or (ii) hold any such amounts in a segregated account as cash collateral
for, and for application to, any future funding obligations of such Lender under any such Section, in the
case of each of clauses (i) and (ii) above, in any order as determined by the Administrative Agent in its
discretion.
(e) Several Obligations of Lenders. The obligations of the Lenders hereunder to make
Loans and to make payments pursuant to Section 11.03(c) are several and not joint. The failure of any
Lender to make any Loan or to make any such payment on any date required hereunder shall not relieve
any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible
for the failure of any other Lender to so make its Loan or to make its payment under Section 11.03(c).
SECTION 2.13 Sharing of Payments. If any Lender shall, by exercising any right of setoff
or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Loans or
other obligations hereunder resulting in such Lender receiving payment of a proportion of the aggregate
amount of its Loans and accrued interest thereon or other such obligations greater than its pro rata share
thereof as provided herein, then the Lender receiving such greater proportion shall (a) notify the
Administrative Agent of such fact, and (b) purchase (for cash at face value) participations in the Loans and
such other obligations of the other Lenders, or make such other adjustments as shall be equitable, so that the
benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount
of principal of and accrued interest on their respective Loans and other amounts owing them; provided that:
(i) if any such participations are purchased and all or any portion of the
payment giving rise thereto is recovered, such participations shall be rescinded and the purchase
price restored to the extent of such recovery, without interest; and
(ii) the provisions of this paragraph shall not be construed to apply to (x) any
payment made by the Borrower pursuant to and in accordance with the express terms of this
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Agreement or (y) any payment obtained by a Lender as consideration for the assignment of or sale
of a participation in any of its Loans to any assignee or participant, other than to the Borrower or
any Subsidiary thereof (as to which the provisions of this paragraph shall apply).
The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under Applicable
Law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against
the Borrower rights of setoff and counterclaim with respect to such participation as fully as if such Lender
were a direct creditor of the Borrower in the amount of such participation.
SECTION 2.14 Compensation for Losses. In the event of (a) the payment of any principal
of the Loans other than on the last day of an Interest Period (including as a result of an Event of Default),
(b) the failure to borrow or prepay the Loans (or any portion thereof) on the date specified in any notice
delivered pursuant hereto, or (c) the assignment of the Loans (or any portion thereof) other than on the last
day of the Interest Period applicable thereto as a result of a request by the Borrower pursuant to
Section 2.19(b), then, in any such event, the Borrower shall compensate each Lender for the loss, cost and
expense attributable to such event. Such loss, cost or expense to any Lender shall be deemed to include an
amount determined by such Lender to be the excess, if any, of (i) the amount of interest that would have
accrued on the principal amount of such Loan had such event not occurred, at the Adjusted LIBO Rate that
would have been applicable to such Loan, for the period from the date of such event to the last day of the then
current Interest Period therefor (or, in the case of a failure to borrow, for the date that would have been the
applicable Interest Period), over (ii) the amount of interest that would accrue on such principal amount for
such period at the interest rate that such Lender would bid were it to bid, at the commencement of such period,
for dollar deposits of a comparable amount and period from other banks in the London interbank eurodollar
market. A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive
pursuant to this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The
Borrower shall pay such Lender the amount shown as due on any such certificate promptly after receipt
thereof.
SECTION 2.15 Increased Costs.
(a) Increased Costs Generally. If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit,
compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the
account of, or credit extended or participated in by, any Lender (except any reserve requirement
reflected in the Adjusted LIBO Rate);
(ii) subject any Recipient to any Taxes (other than (A) Indemnified Taxes,
(B) Taxes described in clauses (b) through (d) of the definition of Excluded Taxes and
(C) Connection Income Taxes) on its loans, loan principal, letters of credit, commitments, or other
obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or
(iii) impose on any Lender or the London interbank market any other
condition, cost or expense (other than Taxes) affecting this Agreement or Loans made by such
Lender;
and the result of any of the foregoing shall be to increase the cost to such Lender or such other Recipient of
making or maintaining any Loan or to reduce the amount of any sum received or receivable by such Lender
or other Recipient hereunder (whether of principal, interest or any other amount) then, upon request of such
Lender or other Recipient, the Borrower will pay to such Lender or other Recipient, as the case may be,
such additional amount or amounts as will compensate such Lender or other Recipient, as the case may be,
for such additional costs incurred or reduction suffered.
43
(b) [Reserved].
(c) Certificates for Reimbursement. A certificate of a Lender setting forth the amount
or amounts necessary to compensate such Lender or its holding company, as the case may be, as specified
in paragraph (a) of this Section and delivered to the Borrower, shall be conclusive absent manifest error.
The Borrower shall pay such Lender the amount shown as due on any such certificate within ten (10) days
after receipt thereof.
(d) Delay in Requests. Failure or delay on the part of any Lender to demand
compensation pursuant to this Section shall not constitute a waiver of such Lender’s right to demand such
compensation; provided that the Borrower shall not be required to compensate a Lender pursuant to this
Section for any increased costs incurred or reductions suffered more than nine (9) months prior to the date
that such Lender notifies the Borrower of the Change in Law giving rise to such increased costs or
reductions, and of such Lender’s intention to claim compensation therefor (except that, if the Change in
Law giving rise to such increased costs or reductions is retroactive, then the nine-month period referred to
above shall be extended to include the period of retroactive effect thereof).
SECTION 2.16 Taxes.
(a) Defined Terms. For purposes of this Section, the term “Applicable Law” includes
FATCA.
(b) Payments Free of Taxes. Any and all payments by or on account of any obligation
of the Borrower under any Loan Document shall be made without deduction or withholding for any Taxes,
except as required by Applicable Law. If any Applicable Law (as determined in the good faith discretion
of an applicable Withholding Agent) requires the deduction or withholding of any Tax from any such
payment by a Withholding Agent, then the applicable Withholding Agent shall be entitled to make such
deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant
Governmental Authority in accordance with Applicable Law and, if such Tax is an Indemnified Tax, then
the sum payable by the Borrower shall be increased as necessary so that after such deduction or withholding
has been made (including such deductions and withholdings applicable to additional sums payable under
this Section) the applicable Recipient receives an amount equal to the sum it would have received had no
such deduction or withholding been made. Borrower acknowledges and agrees that, absent a Change in
Law, Borrower is not required to withhold or deduct from any such payments to the Initial Lender on
account of any U.S. federal withholding taxes or Taxes imposed pursuant to FATCA.
(c) Payment of Other Taxes by Borrower. The Borrower shall timely pay to the
relevant Governmental Authority in accordance with Applicable Law, or at the option of the Initial Lender,
the Required Lenders or the Administrative Agent timely reimburse it for the payment of, any Other Taxes.
(d) Indemnification by Borrower. The Borrower shall indemnify each Recipient,
within thirty (30) days after demand therefor, for the full amount of any Indemnified Taxes (including
Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) payable
or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any
reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were
correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the
amount of such payment or liability delivered to the Borrower by a Lender (with a copy to the
Administrative Agent if such Lender is not the Initial Lender), or by the Administrative Agent on its own
behalf or on behalf of a Lender, shall be conclusive absent manifest error.
(e) Indemnification by the Lenders. Each Lender (other than the Initial Lender) shall
severally indemnify the Administrative Agent, within thirty (30) days after demand therefor, for (i) any
Indemnified Taxes attributable to such Lender (but only to the extent that the Borrower has not already
44
indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of
the Borrower to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions
of Section 11.04(d) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes
attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection
with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether
or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.
A certificate as to the amount of such payment or liability delivered to any such Lender by the
Administrative Agent shall be conclusive absent manifest error. Each Lender (other than the Initial Lender)
hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to
such Lender under any Loan Document or otherwise payable by the Administrative Agent to such Lender
from any other source against any amount due to the Administrative Agent under this paragraph (e).
(f) Evidence of Payments. As soon as practicable after any payment of Taxes by the
Borrower to a Governmental Authority pursuant to this Section, the Borrower shall deliver to the
Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority
evidencing such payment, a copy of the return reporting such payment or other evidence of such payment
reasonably satisfactory to the Administrative Agent.
(g) Status of Lenders. (i) Any Lender (other than the Initial Lender) that is entitled to
an exemption from or reduction of withholding Tax with respect to payments made under any Loan
Document shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably
requested by the Borrower or the Administrative Agent, such properly completed and executed
documentation reasonably requested by the Borrower (or, if such Lender is not the Initial Lender, the
Administrative Agent) as will permit such payments to be made without withholding or at a reduced rate
of withholding. In addition, any Lender (other than the Initial Lender), if reasonably requested by the
Borrower (or the Administrative Agent), shall deliver such other documentation prescribed by Applicable
Law or reasonably requested by the Borrower (or the Administrative Agent) as will enable the Borrower
(or the Administrative Agent) to determine whether or not such Lender is subject to backup withholding or
information reporting requirements. Notwithstanding anything to the contrary in the preceding two
sentences, the completion, execution and submission of such documentation (other than such
documentation set forth in paragraphs (g)(ii)(A), (ii)(B)and (ii)(D) of this Section) shall not be required if
in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender
to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position
of such Lender.
(ii) Without limiting the generality of the foregoing,
(A) any Lender (other than the Initial Lender) that is a U.S. Person
shall deliver to the Borrower and the Administrative Agent on or about the date on which
such Lender becomes a Lender under this Agreement (and from time to time thereafter
upon the reasonable request of the Borrower or the Administrative Agent), executed copies
of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup
withholding tax;
(B) any Foreign Lender shall, to the extent it is legally entitled to do
so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall
be requested by the recipient) on or prior to the date on which such Foreign Lender becomes
a Lender under this Agreement (and from time to time thereafter upon the reasonable
request of the Borrower or the Administrative Agent), whichever of the following is
applicable:
(1) in the case of a Foreign Lender claiming the benefits of
an income tax treaty to which the United States is a party (x) with respect to
45
payments of interest under any Loan Document, executed copies of IRS Form W-
8BEN or IRS Form W-8BEN-E establishing an exemption from, or reduction of,
U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty
and (y) with respect to any other applicable payments under any Loan Document,
IRS Form W-8BEN or IRS Form W-8BEN-E establishing an exemption from, or
reduction of, U.S. federal withholding Tax pursuant to the “business profits” or
“other income” article of such tax treaty;
(2) executed copies of IRS Form W-8ECI (or any successor
forms) and, in the case of an Agent, a withholding certificate that satisfies the
requirements of Treasury Regulation Sections 1.1441-1(b)(2)(iv) and 1.1441-
1(e)(3)(v) as applicable to a U.S. branch that has agreed to be treated as a U.S.
Person for withholding tax purposes;
(3) in the case of a Foreign Lender claiming the benefits of
the exemption for portfolio interest under Section 881(c) of the Code, (x) a
certificate substantially in the form of Exhibit B-1 to the effect that such Foreign
Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a
“10 percent shareholder” of the Borrower within the meaning of
Section 871(h)(3)(B) of the Code, or a “controlled foreign corporation” related to
the Borrower as described in Section 881(c)(3)(C) of the Code (a “U.S. Tax
Compliance Certificate”) and (y) executed copies of IRS Form W-8BEN or IRS
Form W-8BEN-E; or
(4) to the extent a Foreign Lender is not the beneficial owner,
executed copies of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS
Form W-8BEN, IRS Form W-8BEN-E, a U.S. Tax Compliance Certificate
substantially in the form of Exhibit B-2 or Exhibit B-3, IRS Form W-9, and/or
other certification documents from each beneficial owner, as applicable; provided
that if the Foreign Lender is a partnership and one or more direct or indirect
partners of such Foreign Lender are claiming the portfolio interest exemption, such
Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in
the form of Exhibit B-4 on behalf of each such direct and indirect partner;
(C) any Foreign Lender shall, to the extent it is legally entitled to do
so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall
be requested by the recipient) on or about the date on which such Foreign Lender becomes
a Lender under this Agreement (and from time to time thereafter upon the reasonable
request of the Borrower or the Administrative Agent), executed copies of any other form
prescribed by Applicable Law as a basis for claiming exemption from or a reduction in
U.S. federal withholding Tax, duly completed, together with such supplementary
documentation as may be prescribed by Applicable Law to permit the Borrower or the
Administrative Agent to determine the withholding or deduction required to be made; and
(D) if a payment made to a Lender (other than the Initial Lender) under
any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA
if such Lender were to fail to comply with the applicable reporting requirements of FATCA
(including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such
Lender shall deliver to the Borrower and the Administrative Agent at the time or times
prescribed by law and at such time or times reasonably requested by the Borrower or the
Administrative Agent such documentation prescribed by Applicable Law (including as
prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation
reasonably requested by the Borrower or the Administrative Agent as may be necessary
46
for the Borrower and the Administrative Agent to comply with their obligations under
FATCA and to determine that such Lender has complied with such Lender’s obligations
under FATCA or to determine the amount, if any, to deduct and withhold from such
payment. Solely for purposes of this clause (D), “FATCA” shall include any amendments
made to FATCA after the date of this Agreement.
Each Lender agrees that if any form or certification it previously delivered expires or
becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify
the Borrower and the Administrative Agent in writing of its legal inability to do so. Notwithstanding
anything to the contrary in this Agreement, the Initial Lender shall be entitled to the benefits of this
Section 2.16 and all related provisions under this Agreement without regard to whether it provides any
documentation described in Section 2.16(g).
(h) Treatment of Certain Refunds. If any party determines, in its sole discretion
exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified
pursuant to this Section (including by the payment of additional amounts pursuant to this Section), it shall
pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments
made under this Section with respect to the Taxes giving rise to such refund), net of all out-of-pocket
expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by
the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the
request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to
this paragraph (h) (plus any penalties, interest or other charges imposed by the relevant Governmental
Authority) in the event that such indemnified party is required to repay such refund to such Governmental
Authority. Notwithstanding anything to the contrary in this paragraph (h), in no event will the indemnified
party be required to pay any amount to an indemnifying party pursuant to this paragraph (h) the payment
of which would place the indemnified party in a less favorable net after-Tax position than the indemnified
party would have been in if the Tax subject to indemnification and giving rise to such refund had not been
deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with
respect to such Tax had never been paid. This paragraph shall not be construed to require any indemnified
party to make available its Tax returns (or any other information relating to its Taxes that it deems
confidential) to the indemnifying party or any other Person.
(i) Survival. Each party’s obligations under this Section shall survive the resignation
or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender,
the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under
any Loan Document.
SECTION 2.17 [Reserved].
SECTION 2.18 [Reserved].
SECTION 2.19 Mitigation Obligations; Replacement of Lenders.
(a) Designation of a Different Lending Office. If any Lender requests compensation
under Section 2.15, or requires the Borrower to pay any Indemnified Taxes or additional amounts to any
Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.16, then such
Lender shall (at the request of the Borrower) use reasonable efforts to designate a different lending office
for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of
its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment
(i) would eliminate or reduce amounts payable pursuant to Section 2.15 or 2.16, as the case may be, in the
future, and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise
be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses
incurred by any Lender in connection with any such designation or assignment.
47
(b) Replacement of Lenders. If any Lender requests compensation under Section 2.15,
or if the Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.16 and, in each case, such
Lender has declined or is unable to designate a different lending office in accordance with paragraph (a) of
this Section, or if any Lender is a Non-Consenting Lender, then the Borrower may, at its sole expense and
effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate,
without recourse (in accordance with and subject to the restrictions contained in, and consents required by,
Section 11.04), all of its interests, rights (other than its existing rights to payments pursuant to Section 2.15
or Section 2.16) and obligations under this Agreement and the related Loan Documents to an Eligible
Assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts
such assignment); provided that:
(i) the Borrower shall have paid to the Administrative Agent the assignment
fee (if any) specified in Section 11.04;
(ii) such Lender shall have received payment of an amount equal to the
outstanding principal of its Loans, accrued interest thereon, accrued fees and all other amounts
payable to it hereunder and under the other Loan Documents (including any amounts under
Section 2.14) from the assignee (to the extent of such outstanding principal and accrued interest
and fees) or the Borrower (in the case of all other amounts);
(iii) in the case of any such assignment resulting from a claim for compensation
under Section 2.15 or payments required to be made pursuant to Section 2.16, such assignment will
result in a reduction in such compensation or payments thereafter;
(iv) such assignment does not conflict with Applicable Law; and
(v) in the case of any assignment resulting from a Lender becoming a Non-
Consenting Lender, the applicable assignee shall have consented to the applicable amendment,
waiver or consent.
A Lender shall not be required to make any such assignment or delegation if, prior thereto,
as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require
such assignment and delegation cease to apply.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Credit Parties represent and warrant to the Administrative Agent, the Collateral Agent
and the Lenders on the Closing Date and on the date of each Borrowing that:
SECTION 3.01 Existence, Qualification and Power. Each of the Credit Parties and their
respective Material Subsidiaries (a) is duly organized or formed, validly existing and, as applicable, in good
standing under the Laws of the jurisdiction of its incorporation or organization, (b) has all requisite power
and authority and all requisite governmental licenses, authorizations, consents and approvals to (i) own or
lease its assets and carry on its business and (ii) execute, deliver and perform its obligations under the Loan
Documents to which it is a party, and (c) is duly qualified and is licensed and, as applicable, in good standing
under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its
business requires such qualification or license, except, in each case referred to in clause (a) (other than with
respect to any Credit Party), (b)(i) or (c), to the extent that failure to do so could not reasonably be expected
to have a Material Adverse Effect.
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SECTION 3.02 Authorization; No Contravention. The execution, delivery and performance
by each Credit Party of each Loan Document to which it is party have been duly authorized by all necessary
corporate or other organizational action, and do not and will not (a) contravene the terms of its Organizational
Documents, (b) conflict with or result in any breach or contravention of, or the creation of any Lien under, or
require any payment to be made under (i) any material Contractual Obligation to which each Credit Party is
a party or affecting each Credit Party or the material properties of any Credit Party or (ii) any material order,
injunction, writ or decree of any Governmental Authority or any arbitral award to which any Credit Party or
its property is subject or (c) violate any Law, except to the extent such violation could not reasonably be
expected to have a Material Adverse Effect.
SECTION 3.03 Governmental Authorization; Other Consents. No approval, consent,
exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any
other Person is necessary or required in connection with the execution, delivery or performance by, or
enforcement against, each Credit Party of this Agreement or any other Loan Document, except for (i) such
approvals, consents, exemptions, authorizations, actions or notices that have been duly obtained, taken or
made and in full force and effect and (ii) filings and consents contemplated by the Security Documents or
Section 5.14.
SECTION 3.04 Execution and Delivery; Binding Effect. This Agreement has been, and each
other Loan Document, when delivered hereunder, will have been, duly executed and delivered by each Credit
Party. This Agreement constitutes, and each other Loan Document when so delivered will constitute, a legal,
valid and binding obligation of each Credit Party, enforceable against each Credit Party in accordance with
its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium or other Laws affecting creditors’ rights generally and by general principles of
equity.
SECTION 3.05 Financial Statements; No Material Adverse Change.
(a) Financial Statements. The financial statements described in Schedule 3.05 were
prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein, and fairly present in all material respects the financial condition of the
Parent and its Subsidiaries as of the date thereof and their results of operations and cash flows for the period
covered thereby in accordance with GAAP consistently applied throughout the period covered thereby,
except as otherwise expressly noted therein.
(b) No Material Adverse Change. Since the date of the most recent audited balance
sheet included in the financial statements described in Schedule 3.05, there has been no event or
circumstance that, either individually or in the aggregate, has had or could reasonably be expected to have
a Material Adverse Effect.
SECTION 3.06 Litigation. Except for those matters which have been publicly disclosed in
any SEC filing of the Parent filed prior to the Closing Date, there are no actions, suits, proceedings, claims,
disputes or investigations pending or, to the knowledge of any Credit Party, threatened, at Law, in equity, in
arbitration or before any Governmental Authority, by or against any Credit Party or any of its Subsidiaries or
against any of their properties or revenues that (a) either individually or in the aggregate could reasonably be
expected to have a Material Adverse Effect or (b) purport to affect or pertain to this Agreement or any other
Loan Document or any of the transactions contemplated hereby.
SECTION 3.07 Contractual Obligations; No Default. None of the Credit Parties and their
respective Subsidiaries is in default under or with respect to any Contractual Obligation that, either
individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. No Default
has occurred and is continuing or would result from the consummation of the transactions contemplated by
this Agreement or any other Loan Document.
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SECTION 3.08 Property.
(a) Ownership of Properties and Collateral. Each of the Credit Parties and their
respective Subsidiaries has good record and marketable title in fee simple to, or valid leasehold interests in,
all real property necessary or used in the ordinary conduct of its business, except for such defects in title
that, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse
Effect. Each Credit Party has good title to the Collateral owned by it, free and clear of all Liens other than
Permitted Liens.
(b) Intellectual Property and Personal Data. Each of the Credit Parties and their
respective Subsidiaries owns, licenses or possesses the valid and enforceable right to use all of the material
Intellectual Property and data (including Personal Data) that is used in or necessary for the operation of
each Carrier Loyalty Program. The use of Loyalty Program Intellectual Property and the Loyalty Program
Data by the Credit Parties and the conduct of the Carrier Loyalty Programs as currently conducted do not
materially infringe upon, misappropriate, dilute or otherwise violate any Privacy Law nor any rights held
by any other Person. No claim or litigation regarding any of the foregoing, or challenging the ownership,
validity or enforceability of any Loyalty Program Intellectual Property is pending or, to the knowledge of
any of the Credit Parties, threatened that could reasonably be expected to be material to any of the Credit
Parties, and to the knowledge of the Credit Parties, there is no basis for any such claim.
SECTION 3.09 Taxes. The Credit Parties and their respective Subsidiaries have filed all
federal, state and other tax returns and reports required to be filed, and have paid all federal, state and other
taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties,
income or assets otherwise due and payable, except (a) Taxes that are being contested in good faith by
appropriate proceedings diligently conducted and for which adequate reserves are being maintained in
accordance with GAAP or (b) to the extent that the failure to do so could not reasonably be expected to have
a Material Adverse Effect.
SECTION 3.10 Disclosure. (a) The Credit Parties and their respective Subsidiaries have
disclosed to the Administrative Agent, the Collateral Agent and the Lenders all agreements, instruments and
corporate or other restrictions to which they are subject, and all other matters known to them, that, either
individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. The Loan
Application Form, reports, financial statements, certificates and other written information (other than
projected or pro forma financial information) furnished by or on behalf of the Credit Parties and their
respective Subsidiaries to any Agent or any Lender in connection with the transactions contemplated hereby
and the negotiation of this Agreement or delivered hereunder or under any other Loan Document (as modified
or supplemented by other information so furnished), taken as a whole, do not contain any material
misstatement of fact or omit to state any material fact necessary to make the statements therein (when taken
as a whole), in the light of the circumstances under which they were made, not misleading; provided that,
with respect to projected or pro forma financial information, the Credit Parties represent only that such
information was prepared in good faith based upon assumptions believed to be reasonable at the time of
preparation and delivery (it being understood that such projected information may vary from actual results
and that such variances may be material) and (b) as of the Closing Date, the information included in the
Beneficial Ownership Certification is true and correct in all respects.
SECTION 3.11 Compliance with Laws. Each of the Credit Parties and their respective
Subsidiaries is in compliance with the requirements of all Laws (including Environmental Laws and Privacy
Laws) and all orders, writs, injunctions and decrees applicable to it or to its properties, except in such instances
in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by
appropriate proceedings diligently conducted or (b) the failure to so comply, either individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
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SECTION 3.12 ERISA Compliance.
(a) Except as could not reasonably be expected, either individually or in the aggregate,
to have a Material Adverse Effect, (i) each Plan is in compliance with the applicable provisions of ERISA,
the Code and other federal or state Laws and (ii) each Plan that is intended to be a qualified plan under
Section 401(a) of the Code has received a favorable determination letter, opinion letter or advisory letter
from the IRS to the effect that the form of such Plan is qualified under Section 401(a) of the Code and the
trust related thereto has been determined by the IRS to be exempt from federal income tax under
Section 501(a) of the Code, or an application for such a letter is currently being processed by the IRS, and,
to the knowledge of any Credit Party, nothing has occurred that would prevent or cause the loss of such
tax-qualified status.
(b) There are no pending or, to the knowledge of any Credit Party, threatened or
contemplated claims, actions or lawsuits, or action by any Governmental Authority, with respect to any
Plan that, either individually or in the aggregate, could reasonably be expected to have a Material Adverse
Effect. There has been no prohibited transaction or violation of the fiduciary responsibility rules with
respect to any Plan that, either individually or in the aggregate, has had or could reasonably be expected to
have a Material Adverse Effect.
(c) No ERISA Event has occurred, and neither any Credit Party nor any ERISA
Affiliate is aware of any fact, event or circumstance that, either individually or in the aggregate, could
reasonably be expected to constitute or result in an ERISA Event that, either individually or in the
aggregate, has had or could reasonably be expected to have a Material Adverse Effect.
(d) Except as would not reasonably be expected to have individually or in the
aggregate, a Material Adverse Effect, the present value of all accrued benefits under each Pension Plan
(based on those assumptions used to fund such Pension Plan) did not, as of the last annual valuation date
prior to the date on which this representation is made or deemed made, exceed the value of the assets of
such Pension Plan allocable to such accrued benefits by a material amount.
(e) To the extent applicable, each Foreign Plan has been maintained in compliance
with its terms and with the requirements of any and all applicable requirements of Law and has been
maintained, where required, in good standing with applicable regulatory authorities, except to the extent
that the failure so to comply could not reasonably be expected, either individually or in the aggregate, to
have a Material Adverse Effect. Neither the Parent nor any Subsidiary has incurred any obligation in
connection with the termination of or withdrawal from any Foreign Plan that, either individually or in the
aggregate, would reasonably be expected to have individually or in the aggregate, a Material Adverse
Effect. Except as would not reasonably be expected to have individually or in the aggregate, a Material
Adverse Effect, the present value of the accrued benefit liabilities (whether or not vested) under each
Foreign Plan that is funded, determined as of the end of the most recently ended fiscal year of the Parent or
Subsidiary, as applicable, on the basis of actuarial assumptions, each of which is reasonable, did not exceed
the current value of the property of such Foreign Plan by a material amount, and for each Foreign Plan that
is not funded, the obligations of such Foreign Plan are properly accrued.
SECTION 3.13 Environmental Matters. Except with respect to any matters that, either
individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect, none of
the Credit Parties and their respective Subsidiaries (a) has failed to comply with any Environmental Law or
to obtain, maintain or comply with any permit, license or other approval required under any Environmental
Law, (b) knows of any basis for any permit, license or other approval required under any Environmental Law
to be revoked, canceled, limited, terminated, modified, appealed or otherwise challenged, (c) has or could
reasonably be expected to become subject to any Environmental Liability, (d) has received notice of any
claim, complaint, proceeding, investigation or inquiry with respect to any Environmental Liability (and no
such claim, complaint, proceeding, investigation or inquiry is pending or, to the knowledge of the Parent, is
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threatened or contemplated) or (e) knows of any facts, events or circumstances that could give rise to any
basis for any Environmental Liability with respect thereto.
SECTION 3.14 Investment Company Act. None of the Credit Parties is an “investment
company” as defined in, or subject to regulation under, the Investment Company Act of 1940.
SECTION 3.15 Sanctions; Export Controls; Anti-Corruption; AML Laws.
(a) None of the Credit Parties and their respective Subsidiaries and no director, officer,
or affiliate of the foregoing is a Person that is: (i) the subject of any sanctions administered or enforced by
the United States (including, but not limited to, those administered by the U.S. Department of the Treasury’s
Office of Foreign Assets Control, the U.S. Department of State, and the U.S. Department of Commerce’s
Bureau of Industry and Security) (“Sanctions”), (ii) organized or resident in a country or territory that is
the subject of country-wide or region-wide Sanctions (including, currently, Crimea, Cuba, Iran, North
Korea, and Syria) (each a “Sanctioned Country”) or located in a Sanctioned Country except to the extent
authorized under Sanctions or (iii) a Person with whom dealings are restricted or prohibited by Sanctions
as a result of a relationship of ownership or control with a Person listed in (i) or (ii) (each of (i), (ii) and
(iii) is a “Sanctioned Person”).
(b) For the period beginning eight (8) years prior to the date hereof, each of the Credit
Parties and their respective Subsidiaries and their respective directors, officers and employees and, to the
knowledge of the Credit Parties, such respective affiliates, have been, in all material respects, in compliance
with the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder (the
“FCPA”) and any other applicable anti-bribery or anti-corruption laws and regulations (collectively with
the FCPA, the “Anticorruption Laws”) and all applicable Sanctions, Export Control Laws, and AML Laws.
SECTION 3.16 Solvency. The Borrower and its Subsidiaries are Solvent on a consolidated
basis after giving effect to the borrowing of the Loans.
SECTION 3.17 Subsidiaries. Schedule 3.17 sets forth the name of, and the ownership
interests of the Parent and each of its Subsidiaries and indicates which of such Subsidiaries are Excluded
Subsidiaries as of the date hereof.
SECTION 3.18 Senior Indebtedness. The Loans, the Obligations and the Guaranteed
Obligations constitute “senior indebtedness” (or any other similar or comparable term) under and as defined
in the documentation governing any Indebtedness of the Credit Parties that is subordinated in right of payment
to any other Indebtedness thereof.
SECTION 3.19 Insurance Matters. The properties of the Credit Parties are insured
pursuant to Section 5.06 hereof. Each insurance policy required to be maintained by the Credit Parties
pursuant to Section 5.06 is in full force and effect and all premiums in respect thereof that are due and payable
have been paid.
SECTION 3.20 Labor Matters. Except as would not reasonably be expected to have
individually or in the aggregate, a Material Adverse Effect, (a) there are no strikes, lockouts, slowdowns or
other material labor disputes against any Credit Party or any of its Subsidiary thereof pending or, to the
knowledge of the Credit Parties, threatened, (b) the Credit Parties and their respective Subsidiaries have
complied with all applicable federal, state, local and foreign Laws relating to the employment (or termination
thereof), the hours worked by and payments made to employees of the Parent and its Subsidiaries comply
with the Fair Labor Standards Act and any other applicable federal, state, local or foreign Law dealing with
such matters and (c) all payments due from the Credit Parties and their respective Subsidiaries, or for which
any claim may be made against the Credit Parties and their respective Subsidiaries, on account of wages and
employee health and welfare insurance and other benefits, have been paid or properly accrued in accordance
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with GAAP as a liability on the books of the Parent or such Subsidiary. There are no complaints, unfair labor
practice charges, grievances, arbitrations, unfair employment practices charges or any other claims or
complaints against the Credit Parties or their respective Subsidiaries pending or, to the knowledge of the
Credit Parties, threatened to be filed with any Governmental Authority or arbitrator based on, arising out of,
in connection with, or otherwise relating to the employment or termination of employment of any employee
of the Credit Parties and their respective Subsidiaries that would, individually or in the aggregate, be
reasonably expected to result in a Material Adverse Effect.
SECTION 3.21 Insolvency Proceedings. None of the Credit Parties has taken, and none of
the Credit Parties is currently evaluating taking, any action to seek relief or commence proceedings under any
Debtor Relief Law in any applicable jurisdiction.
SECTION 3.22 Margin Regulations. The Borrower is not engaged and will not engage,
principally or as one of its important activities, in the business of purchasing or carrying Margin Stock, or
extending credit for the purpose of purchasing or carrying Margin Stock, and no part of the proceeds of any
Borrowing hereunder will be used to buy or carry any Margin Stock. Following the application of the
proceeds of each Borrowing, not more than 25% of the value of the assets (either of the Borrower only or of
the Borrower and its Subsidiaries on a consolidated basis) will be Margin Stock.
SECTION 3.23 Liens. There are no Liens of any nature whatsoever on any Collateral other
than Liens permitted under Section 6.02 hereof.
SECTION 3.24 Perfected Security Interests.
(a) As of the Closing Date (or such later date as permitted under Section 5.14) and as
of the date of each Borrowing, the Security Documents, taken as a whole, are effective to create in favor of
the Collateral Agent for the benefit of the Secured Parties a legal, valid and enforceable first priority security
interest in all of the Collateral to the extent purported to be created thereby.
(b) As of the Closing Date (or such later date as permitted under Section 5.15 and as
of the date of each Borrowing, each Credit Party has or shall have satisfied the Perfection Requirement with
respect to the Collateral.
SECTION 3.25 US Citizenship. The Borrower is 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 the DOT pursuant
to its policies.
SECTION 3.26 Air Carrier Status. The Borrower is an “air carrier” within the meaning of
Section 40102 of Title 49, holds a certificate under Section 41102 of Title 49 and, during the time period
from April 1, 2019 to September 30, 2019, derived more than 50% of its air transportation revenue from the
transportation of passengers. The Borrower holds an air carrier operating certificate issued pursuant to
Chapter 447 of Title 49. The Borrower possesses all necessary certificates, franchises, licenses, permits,
rights, designations, authorizations, exemptions, concessions, frequencies and consents which relate to the
operation of the routes flown by it and the conduct of its business and operations as currently conducted,
except where failure to do so, either individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect.
SECTION 3.27 Cybersecurity. Except as could not reasonably be expected, either
individually or in the aggregate, to have a Material Adverse Effect, the information technology assets,
equipment, systems, networks, software, hardware, and the computers, websites, applications and databases
used by or on behalf of the Credit Parties in connection with any of the Carrier Loyalty Programs (collectively,
“IT Systems”) (i) are adequate for the operation of the Carrier Loyalty Programs as currently conducted, and
(ii) are free and clear of all bugs, errors, defects, Trojan horses, time bombs, malware and other corruptants.
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Except as could not reasonably be expected, either individually or in the aggregate, to have a Material Adverse
Effect, (i) the Credit Parties have implemented and maintained commercially reasonable (taking into account
the nature, scope and sensitivity of the information) policies, procedures, and safeguards designed to maintain
and protect all Loyalty Program Data and confidential information (including Trade Secrets) included in the
Collateral and the integrity, continuous operation, redundancy and security of all IT Systems and data and (ii)
there have been no breaches, cyberattacks (including ransomware attacks) or unauthorized uses of or accesses
to the IT Systems or any Loyalty Program Data, Trade Secrets or confidential information stored therein or
processed thereby, except for those that have been fully remedied.
SECTION 3.28 Loyalty Program Agreements. The Credit Parties have delivered or made
available to the Initial Lender complete and correct copies of each of the Material Loyalty Program
Agreements. Each of the Material Loyalty Program Agreements is in full force and effect and except as could
not reasonably be expected, either individually or in the aggregate, to have a Material Adverse Effect, none
of the Credit Parties has knowledge of or has received notice of (i) any breach, (ii) change in law or (iii) force
majeure event, in the case of (ii) and (iii) as defined under the applicable Material Loyalty Program
Agreement, that would prevent such Credit Party and/or the applicable counterparty from performing its
respective obligations under such Material Loyalty Program Agreement.
ARTICLE IV
CONDITIONS
SECTION 4.01 Closing Date and Initial Borrowing. The effectiveness of this Agreement
and the funding of the initial Borrowing hereunder are subject to the satisfaction (or waiver in accordance
with Section 11.02) of the following conditions (and, in the case of each document specified in this Section
to be received by the Initial Lender (and the applicable Agent or Agents), such document shall be in form and
substance satisfactory to the Initial Lender and/or the applicable Agent or Agents):
(a) Executed Counterparts. The Initial Lender and the Agents shall have received
from each party hereto a counterpart of this Agreement, any Security Documents to which it is a
party and the Note, each signed on behalf of such party. Notwithstanding anything herein to the
contrary, delivery of an executed counterpart of a signature page of this Agreement or any Security
Documents by telecopy or other electronic means, or confirmation of the execution of this
Agreement on behalf of a party by an email from an authorized signatory of such party shall be
effective as delivery of a manually executed counterpart of this Agreement.
(b) Certificates. The Initial Lender and any applicable Agent shall have received such
customary certificates of resolutions or other action, incumbency certificates and/or other
certificates of Responsible Officers of the Credit Parties as the Lenders may require evidencing the
identity, authority and capacity of each Responsible Officer thereof authorized to act as a
Responsible Officer in connection with the Loan Documents;
(c) Organizational Documents. The Initial Lender shall have received customary
resolutions or evidence of corporate authorization, secretary’s certificates and such other
documents and certificates (including Organizational Documents and good standing certificates) as
the Initial Lender may request relating to the organization, existence and good standing of each
Credit Party and any other legal matters relating to the Credit Parties, the Loan Documents or the
transactions contemplated thereby.
(d) Opinion of Counsel to Credit Parties. The Initial Lender and the applicable Agent
or Agents shall have received all opinions of counsel (including any additional opinions of counsel
as required under any Security Document) to the Credit Parties that is acceptable to the Initial
Lender, addressed to the Initial Lender and the applicable Agent or Agents and dated the Closing
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Date, in form and substance satisfactory to the Initial Lender and the applicable Agent (and the
Parent hereby instructs such counsel to deliver such opinions to such Persons).
(e) Beneficial Ownership Regulation Information. At least five (5) days prior to the
Closing Date, the Borrower shall deliver to the Initial Lender a Beneficial Ownership Certification.
(f) Expenses. The Borrower shall have paid all reasonable fees, expenses (including
the fees and expenses of legal counsel) and other amounts due to the Initial Lender, the
Administrative Agent and the Collateral Agent (to the extent that statements for such expenses shall
have been delivered to the Borrower on or prior to the Closing Date); provided that such expenses
payable by the Borrower may be offset against the proceeds of the Loans funded on the Closing
Date.
(g) Officer’s Certificate. The Initial Lender shall have received a certificate executed
by a Responsible Officer of the Parent and the Borrower confirming (i) that the representations and
warranties contained in Article III of this Agreement are true and correct on and as of the Closing
Date, (ii) that the information provided in the Loan Application Form submitted by the Borrower
was true and correct on and as of the date of delivery thereof, (iii) the satisfaction of such condition
and (iv) that no Default or Event of Default exists or will result from the borrowing of the Loans
on the Closing Date.
(h) Other Documents. The Initial Lender and the Agents shall have received such
other documents as it may request.
(i) Appraisals. The Initial Lender shall have received Appraisals satisfactory in form
and substance and performed by an Eligible Appraiser dated as of a date no earlier than thirty (30)
days prior to the Closing Date.
(j) Security Interests. Each Credit Party shall have, and caused its Subsidiaries to,
take any action and execute and deliver, or cause to be executed and delivered, any agreement,
document or instrument required in order to create a valid, perfected first priority security interest
in the Collateral in favor of the Collateral Agent for the benefit of the Secured Parties (including
delivery of UCC financing statements in appropriate form for filing under the UCC and of the
Intellectual Property security agreements included in the Required Filings and entering into control
agreements). Each Credit Party shall have satisfied, and caused its Subsidiaries to satisfy, the
Perfection Requirement with respect to the Collateral. In addition, the Credit Parties shall have
delivered a completed Perfection Certificate (as defined in the Pledge and Security Agreements).
(k) Consents and Authorizations. Each Credit Party shall have obtained all consents
and authorizations from Governmental Authorities and all consents of other Persons (including
shareholder approvals, if applicable) that are necessary or advisable in connection with this
Agreement, any Loan Document, any of the transactions contemplated hereby or thereby or the
continuing operations of the Credit Parties and each of the foregoing shall be in full force and effect
and in form and substance satisfactory to the Initial Lender.
(l) Lien Searches. The Initial Lender shall have received (i) UCC, Intellectual
Property and other lien searches conducted in the jurisdictions and offices where liens on material
assets of the Credit Parties are required to be filed or recorded and (ii) to the extent Collateral
consists of (x) Aircraft and Engine Assets (as defined in the Pledge and Security Agreements),
aircraft registry lien searches conducted with the FAA and the International Registry, and (y) Spare
Part Assets (as defined in the Pledge and Security Agreements), registry lien searches conducted
with the FAA (with reference to each Designated Spare Parts Location set forth on Schedule 2.1 of
the Pledge and Security Agreements), in each case, reflecting the absence of Liens on the assets of
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the Credit Parties, other than Permitted Liens or Liens to be discharged on or prior to the Closing
Date pursuant to documentation satisfactory to the Initial Lender.
(m) Collateral Coverage Ratio. On the Closing Date (and after giving pro forma effect
to any Borrowings on such date), the Collateral Coverage Ratio shall not be less than 2.0 to 1.0.
(n) Solvency Certificate. The Initial Lender shall have received a certificate of the
chief financial officer or treasurer (or other comparable officer) of the Parent certifying that the
Borrower and its Subsidiaries (taken as a whole) are, and will be immediately after giving effect to
any Loans borrowed on the Closing Date, Solvent.
(o) Warrant Agreement. Treasury and Parent shall have entered into the Warrant
Agreement.
(p) Loyalty Revenue Advance Transactions. On the Closing Date, the aggregate
outstanding balance of Loyalty Revenue Advance Transactions shall not exceed an aggregate
amount equal to $15,000,000.
(q) Control Agreements. The Initial Lender and the Collateral Agent shall have
received fully executed copies of account control agreements in form and substance satisfactory to
the Initial Lender with respect to the Collateral Accounts.
(r) [Reserved].
(s) Loyalty Partner Direct Agreements. The Initial Lender and the Collateral Agent
shall have received duly executed Direct Agreements from the counterparties to each Material
Loyalty Program Agreement in effect on the Closing Date substantially in the form of Exhibit D
hereto.
(t) ABL Agreement. The Initial Lender shall have received satisfactory evidence that
all Liens under the ABL Agreement encumbering any Loyalty Program Agreement, any other
Loyalty Program Assets, any Collateral Account or any other property constituting Collateral for
the Secured Obligations have been released and are no longer in effect.
(u) Other Matters. Since August 5, 2020, (i) there has been no event or circumstance
that, either individually or in the aggregate, has had or could reasonably be expected to have a
Material Adverse Effect and (ii) none of the Credit Parties has made a Disposition (including any
sale of Currency) of any assets of the type that would be included in the Collateral had this
Agreement been in effect at such time other than as would have been permitted under
Section 6.04(b), (d), (e) or (h).
SECTION 4.02 Each Borrowing. The funding by the Lenders of each Borrowing (including
the Borrowing to be requested on the Closing Date) is additionally subject to the satisfaction of the following
conditions:
(a) the Administrative Agent shall have received a written Borrowing Request in
accordance with the requirements of Section 2.03(a), with a copy to the Initial Lender (solely to the
extent the Initial Lender is a Lender at the time of such Borrowing);
(b) the representations and warranties of the Credit Parties set forth in this Agreement
and in any other Loan Document shall be true and correct in all material respects (or, in the case of
any such representation or warranty already qualified by materiality, in all respects) on and as of
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the date of such Borrowing (or, in the case of any such representation or warranty expressly stated
to have been made as of a specific date, as of such specific date);
(c) no Default shall have occurred and be continuing or would result from such
Borrowing or from the application of proceeds thereof;
(d) on the date of the funding of such Borrowing (and after giving pro forma effect
thereto and the pledge of any Additional Collateral), the Collateral Coverage Ratio shall not be less
than 2.0 to 1.0 as evidenced by a certificate of a Responsible Officer of the Parent;
(e) [reserved];
(f) the Initial Lender shall have received satisfactory evidence that (x) each Material
Loyalty Program Agreement has and (y) Loyalty Program Agreements representing 90% of
Loyalty Program Revenues (excluding revenues generated under any Loyalty Subscription
Program) in the aggregate over the immediately preceding twelve (12) calendar month period then
ended have, in each case, an expiration date that is at least six (6) months after the Amortization
Date (without giving effect to the proviso in the definition thereof);
(g) on the date of such Borrowing, the opinion of the independent public accountants
(after giving effect to any reissuance or revision of such opinion) on the most recent audited
consolidated financial statements delivered by the Parent pursuant to Section 5.01(a) shall not
include a “going concern” qualification under GAAP as in effect on the date of this Agreement or,
if there is a change in the relevant provisions of GAAP thereafter, any like qualification or
exception under GAAP after giving effect to such change; and
(h) on or prior to the date of such Borrowing, each Credit Party shall have satisfied the
Perfection Requirement with respect to the Collateral.
Each Borrowing Request by the Borrower hereunder and each Borrowing shall be deemed to constitute a
representation and warranty by the Borrower on and as of the date of the applicable Borrowing as to the
matters specified in clauses (b) and (c) above in this Section.
ARTICLE V
AFFIRMATIVE COVENANTS
Until all the later of (i) the date on which all of the Obligations shall have been paid in full
and (ii) such later date specified in this Agreement, the Credit Parties covenant and agree with the Lenders
that:
SECTION 5.01 Financial Statements. The Parent will furnish to the Administrative Agent
and each Lender:
(a) as soon as available, and in any event within ninety (90) days after the end of each
fiscal year of the Parent (or, if earlier, five (5) days after the date required to be filed with the SEC)
(commencing with the fiscal year ended prior to the Closing Date), a consolidated balance sheet of
the Parent and its Subsidiaries as at the end of such fiscal year and the related consolidated
statements of income or operations, shareholders’ equity and cash flows for such fiscal year, setting
forth in each case in comparative form the figures for the previous fiscal year, audited and
accompanied by a report and opinion of independent public accountants of nationally recognized
standing, which report and opinion shall be prepared in accordance with generally accepted
auditing standards (and shall not be subject to any “going concern” or like qualification (other than
57
a qualification solely resulting from (x) the impending maturity of any Indebtedness or (y) any
prospective or actual default under any financial covenant), exception or explanatory paragraph or
any qualification, exception or explanatory paragraph as to the scope of such audit) to the effect
that such consolidated financial statements present fairly in all material respects the financial
condition, results of operations, shareholders’ equity and cash flows of the Parent and its
Subsidiaries on a consolidated basis in accordance with GAAP consistently applied;
(b) as soon as available, but in any event within forty-five (45) days after the end of
each of the first three (3) fiscal quarters of each fiscal year of the Parent (or, if earlier, five (5) days
after the date required to be filed with the SEC) (commencing with the first of such fiscal quarters
ended prior to the Closing Date), a consolidated balance sheet of the Parent and its Subsidiaries as
at the end of such fiscal quarter, the related consolidated statements of income or operations,
shareholders’ equity and cash flows for such fiscal quarter and for the portion of the Parent’s fiscal
year then ended, in each case setting forth in comparative form, as applicable, the figures for the
corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the
previous fiscal year, certified by a Financial Officer of the Parent as fairly presenting in all material
respects the financial condition, results of operations, shareholders’ equity and cash flows of the
Parent and its Subsidiaries on a consolidated basis in accordance with GAAP consistently applied,
subject only to normal year-end audit adjustments and the absence of notes;
(c) for so long as the Initial Lender is the only Lender, as soon as available, but in any
event no later than seventy-five (75) days after the beginning of each fiscal year of the Parent, (i)
forecasts prepared by management of the Parent and a summary of material assumptions used to
prepare such forecasts, in form satisfactory to the Initial Lender, including projected consolidated
balance sheets and statements of income or operations and cash flows of the Parent and its
Subsidiaries on a quarterly basis for such fiscal year and (ii) reasonably detailed calculations in a
form satisfactory to the Appropriate Party of (A) all Loyalty Program Revenues and related cash
flows for the immediately preceding fiscal year and (B) projected Loyalty Program Revenues for
the next two fiscal years; and
(d) solely at the request of the Appropriate Party (which shall be no more than
quarterly), at a time mutually agreed with the Appropriate Party and the Parent, participate in a
conference call for Lenders to discuss the financial condition and results of operations of the Parent
and its Subsidiaries and any forecasts which have been delivered pursuant to this Section 5.01.
SECTION 5.02 Certificates; Other Information. The Parent will deliver to the
Administrative Agent and each Lender:
(a) [reserved];
(b) concurrently with the delivery of the financial statements referred to in
Sections 5.01(a) and (b), a duly completed certificate signed by a Responsible Officer of the Parent
certifying as to whether a Default has occurred and, if a Default has occurred, specifying the details
thereof and any action taken or proposed to be taken with respect thereto;
(c) [reserved];
(d) promptly after the furnishing thereof, copies of any notice of default or potential
default or other material written notice received by the Parent or any Subsidiary from, or furnished by the
Parent or any Subsidiary to, any holder of Material Indebtedness of the Parent or any Subsidiary;
(e) promptly after receipt thereof by any Credit Party or any Subsidiary thereof, copies
of each material notice or other material written correspondence received from the SEC (or
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comparable agency in any applicable non-U.S. jurisdiction) concerning any investigation or
possible investigation or other inquiry by such agency regarding material financial or other material
operational results of any Credit Party or any Subsidiary thereof;
(f) [reserved];
(g) promptly following any request therefor, (i) such other information regarding the
operations, business, properties, liabilities (actual or contingent), condition (financial or otherwise)
or prospects of any Credit Party or any Subsidiary, or compliance with the terms of the Loan
Documents, as the Administrative Agent, the Initial Lender or any other Lender (acting through the
Administrative Agent) may from time to time request; or (ii) beneficial ownership information and
documentation reasonably requested by the Administrative Agent or any Lender from time to time
for purposes of ensuring compliance with Sanctions and AML Laws. For purposes of determining
whether or not a representation with respect to any indirect ownership is true or a covenant is being
complied with under this Section, the Parent shall not be required to make any investigation into
(i) the ownership of publicly traded stock or other publicly traded securities or (ii) the ownership
of assets by a collective investment fund that holds assets for employee benefit plans or retirement
arrangements;
(h) concurrently with the delivery of the financial statements referred to in
Sections 5.01(a) and (b), a duly completed certificate signed by a Responsible Officer of the
Borrower certifying as to its compliance with Article X of this Agreement;
(i) knowledge or notice of any event or circumstance that has had or is reasonably
expected to (i) result in a material reduction or suspension of payments under any Material Loyalty
Program Agreement or any Loyalty Subscription Program or (ii) have a material adverse effect on
the ability of a Credit Party and/or any counterparty to a Material Loyalty Program Agreement to
perform its material obligations thereunder;
(j) certificates with reasonably detailed calculations of the Collateral Coverage Ratio
on each CCR Certificate Delivery Date and the Debt Service Coverage Ratio on each DSCR
Determination Date; and
(k) no later than ten (10) Business Days following the last day of each March, June,
September and December (commencing December 31, 2020), deliver a certificate of a Responsible
Officer of the Parent (i) setting forth the name of each new Material Loyalty Program Agreement
entered into as of such date and each of the parties thereto, (ii) certifying that all Loyalty Program
Revenue for the immediately preceding calendar quarter were deposited, directly or indirectly, into
the Collection Account or another Collateral Account (and at least 90% of all Loyalty Program
Revenues (excluding revenues generated under any Loyalty Subscription Program) were deposited
directly into a Collateral Account) and (iii) setting forth in reasonable detail and in form
satisfactory to the Appropriate Party (x) all Loyalty Program Revenues and related cash flows for
the immediately preceding calendar quarter and (y) for so long as the Initial Lender is the only
Lender, projected Loyalty Program Revenues for the current calendar quarter.
Documents required to be delivered pursuant to Section 5.01(a) or (b) or
Section 5.02(c), (d) or (e) (to the extent any such documents are included in materials otherwise filed with
the SEC) may be delivered electronically and, if so delivered, shall be deemed to have been delivered on
the date (i) on which such materials are publicly available as posted on the Electronic Data Gathering,
Analysis and Retrieval system (EDGAR); or (ii) on which such documents are posted on the Parent’s behalf
on an Internet or intranet website, if any, to which each Lender and the Administrative Agent have access
(whether a commercial, third-party website or whether sponsored by the Administrative Agent); provided
that: (A) upon written request by the Administrative Agent, the Parent shall deliver paper copies of such
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documents to the Administrative Agent or any Lender upon its request to the Parent to deliver such paper
copies until a written request to cease delivering paper copies is given by the Administrative Agent or such
Lender and (B) the Parent shall notify the Administrative Agent and each Lender (by facsimile or electronic
mail) of the posting of any such documents and provide to the Lenders by electronic mail electronic versions
(i.e., soft copies) of such documents. The Administrative Agent shall have no obligation to request the
delivery of or to maintain paper copies of the documents referred to above.
SECTION 5.03 Notices. The Parent will promptly notify the Administrative Agent and each
Lender of:
(a) promptly after any Responsible Officer of Parent or any of its Subsidiaries obtains
knowledge thereof, the occurrence of any Default;
(b) the filing or commencement of any action, suit, investigation or proceeding by or
before any arbitrator or Governmental Authority against or affecting the Parent or any Controlled
Affiliate thereof, including pursuant to any applicable Environmental Laws, that could reasonably
be expected to be adversely determined, and, if so determined, could reasonably be expected to
have a Material Adverse Effect;
(c) the occurrence of any ERISA Event that, either individually or together with any
other ERISA Events, could reasonably be expected to have a Material Adverse Effect;
(d) notice of any action arising under any Environmental Law or of any
noncompliance by any Credit Party or any Subsidiary with any Environmental Law or any permit,
approval, license or other authorization required thereunder that, if adversely determined, could
reasonably be expected to have a Material Adverse Effect;
(e) to the extent not publicly disclosed pursuant to an SEC filing of the Parent, any
material change in accounting or financial reporting practices by the Parent, any Credit Party or
any Subsidiary;
(f) any change in the Credit Ratings from a Credit Rating Agency with negative
implications, or the cessation by a Credit Rating Agency of, or its intent to cease, rating the
Borrower’s or the Parent’s debt; and
(g) any matter or development that has had or could reasonably be expected to have a
Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a statement of a
Responsible Officer of the Parent setting forth the details of the occurrence requiring such notice and stating
what action the Parent has taken and proposes to take with respect thereto.
SECTION 5.04 Preservation of Existence, Etc. Each Credit Party will, and will cause each
of its Subsidiaries to, (a) preserve, renew and maintain in full force and effect its legal existence and good
standing under the Laws of the jurisdiction of its organization except in a transaction permitted by
Section 6.03 or 6.04; (b) take all reasonable action to maintain all rights, licenses, permits, privileges and
franchises necessary or desirable in the normal conduct of its business, except to the extent that failure to do
so could not reasonably be expected to have a Material Adverse Effect; and (c) preserve or renew all of its
registered patents, trademarks, trade names and service marks, the non-preservation of which could
reasonably be expected to have a Material Adverse Effect.
SECTION 5.05 Maintenance of Properties. Each Credit Party will, and will cause each of
its Subsidiaries to, (a) maintain, preserve and protect all of its properties and equipment necessary in the
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operation of its business in good working order and condition (ordinary wear and tear excepted) and (b) make
all necessary repairs thereto and renewals and replacements thereof, except to the extent that the failure to do
so could not reasonably be expected to have a Material Adverse Effect.
SECTION 5.06 Maintenance of Insurance. Subject to any additional requirements under any
Security Document, each Credit Party will maintain with financially sound and reputable insurance
companies, insurance with respect to its properties and business against loss or damage of the kinds
customarily insured against by Persons engaged in the same or similar business, of such types and in such
amounts (after giving effect to any self-insurance reasonable and customary for similarly situated Persons
engaged in the same or similar businesses as Parent and its Subsidiaries; provided that, insurance in respect
of Collateral shall be maintained with such third party insurance companies except to the extent expressly
permitted in the Pledge and Security Agreements) as are customarily carried under similar circumstances by
such Persons.
SECTION 5.07 Payment of Obligations. Each Credit Party will pay, discharge or otherwise
satisfy as the same shall become due and payable, all of its obligations and liabilities, including Tax liabilities,
except to the extent (a) the same are being contested in good faith by appropriate proceedings diligently
conducted and adequate reserves in accordance with GAAP are being maintained by the Parent or such Credit
Party or (b) the failure to do so could not reasonably be expected to have a Material Adverse Effect.
SECTION 5.08 Compliance with Laws. Each Credit Party will, and will cause each of its
Subsidiaries to, comply with the requirements of all Laws and all orders, writs, injunctions and decrees
applicable to it or to its business or property, except to the extent that the failure to do so could not reasonably
be expected to have a Material Adverse Effect.
SECTION 5.09 Environmental Matters. Except to the extent that the failure to do so could
not reasonably be expected to have a Material Adverse Effect, each Credit Party will, and will cause each of
its Subsidiaries to, (a) comply with all Environmental Laws, (b) obtain, maintain in full force and effect and
comply with any permits, licenses or approvals required for the facilities or operations of the Parent or any of
its Subsidiaries, and (c) conduct and complete any investigation, study, sampling or testing, and undertake
any corrective, cleanup, removal, response, remedial or other action necessary to identify, report, remove and
clean up all Hazardous Materials present or released at, on, in, under or from any of the facilities or real
properties of the Parent or any of its Subsidiaries.
SECTION 5.10 Books and Records. Each Credit Party will maintain proper books of record
and account, in which full, true and correct entries in conformity with GAAP consistently applied shall be
made of all financial transactions and matters involving the assets and business of the Parent or such
Subsidiary, as the case may be.
SECTION 5.11 Inspection Rights. Each Credit Party will, and, to the extent relevant for
inspections of Collateral will cause each of its Subsidiaries to, permit representatives, agents and independent
contractors of the Administrative Agent, the Initial Lender and the Special Inspector General for Pandemic
Recovery to visit and inspect any of its properties (including all Collateral), to examine its corporate, financial
and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and
accounts with its directors, officers, and independent public accountants, all at the reasonable expense of the
Parent and at such reasonable times during normal business hours and as often as may be reasonably
requested; provided that, other than with respect to such visits and inspections during the continuation of an
Event of Default or by the Initial Lender or the Special Inspector General for Pandemic Recovery, (a) only
the Administrative Agent (or its representatives, agents and independent contractors) at the direction of a
Lender may exercise rights under this Section and (b) the Administrative Agent (or its representatives, agents
and independent contractors) shall not exercise such rights more often than two (2) times during any calendar
year; provided, further, that when an Event of Default exists the Administrative Agent, any Lender or the
Special Inspector General for Pandemic Recovery (or any of their respective representatives, agents or
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independent contractors) may do any of the foregoing under this Section at the expense of the Parent and at
any time during normal business hours and without advance notice.
SECTION 5.12 Sanctions; Export Controls; Anti-Corruption Laws and AML Laws. Each
Credit Party and its Subsidiaries will remain in compliance in all material respects with applicable Sanctions,
Export Control Laws, Anticorruption Laws, and AML Laws. Until all Obligations have been paid in full,
neither any Credit Party, any Subsidiary of a Credit Party, nor any director or officer of any Credit Party or
any Subsidiary of a Credit Party shall become a Sanctioned Person or a Person that is organized or resident
in a Sanctioned Country or located in a Sanctioned Country except to the extent authorized under Sanctions.
SECTION 5.13 Guarantors; Additional Collateral.
(a) The Guarantors listed on the signature page to this Agreement hereby Guarantee
the Guaranteed Obligations as set forth in Article IX. If any Subsidiary (other than an Excluded Subsidiary)
is formed or acquired after the Closing Date, if any Subsidiary ceases to be an Excluded Subsidiary or if
required in connection with the addition of Additional Collateral, then the Parent will cause such Subsidiary,
promptly (in any event, within thirty (30) days of such Subsidiary being formed or acquired or of such
Subsidiary ceasing to be an Excluded Subsidiary), (i) to become a Guarantor of the Loans pursuant to
joinder documentation reasonably acceptable to the Appropriate Party and on the terms and conditions set
forth in Article IX, (ii) to become a party to each applicable Security Document and all other agreements,
instruments or documents that create or purport to create and perfect a first priority Lien (subject to
Permitted Liens) in favor of the Collateral Agent for the benefit of the Secured Parties in its assets that are
of a type that are intended to be included in the Collateral (other than any Excluded Assets), subject to and
in accordance with the terms, conditions and provisions of the Loan Documents, (iii) to satisfy the
Perfection Requirement, (iv) to deliver a secretary’s certificate of such Subsidiary, in form and substance
reasonably acceptable to the Appropriate Party, with appropriate insertions and attachments, and (v) to
deliver legal opinions relating to the matters described above, which opinions shall be in form and
substance, and from counsel, satisfactory to the Appropriate Party.
(b) If the Parent or any Subsidiary desires, or is required pursuant to the terms of this
Agreement, to add Additional Collateral or, if any Subsidiary acquires any existing Collateral from a
Grantor (as defined in the Pledge and Security Agreements) that it is required pursuant to the terms of this
Agreement to maintain as Collateral, in each case, after the Closing Date, the Parent shall, in each case at
its own expense, promptly (in any event, unless any other time period is specified in this Agreement or any
other Loan Document, within thirty (30) days of the relevant date) (i) cause any such Subsidiary to become
a Grantor (to the extent such Subsidiary is not already a Grantor) pursuant to joinder documentation
acceptable to the Appropriate Party and on the terms and conditions set forth in the relevant Security
Documents, (ii) cause any such Subsidiary to become a party to each applicable Security Document and all
other agreements, instruments or documents that create or purport to create and perfect a first priority Lien
(subject to Permitted Liens) in favor of the Collateral Agent for the benefit of the Secured Parties applicable
to such Collateral, in form and substance satisfactory to the Appropriate Party (it being understood that in
the case of any Additional Collateral of a type, or in a jurisdiction, that has not been theretofore included
in the Collateral, such Additional Collateral may be subject to such additional terms and conditions as
requested by the Appropriate Party), (iii) promptly execute and deliver (or cause such Subsidiary to execute
and deliver) to the Collateral Agent such documents and take such actions to create, grant, establish,
preserve and perfect the first priority Liens (subject to Permitted Liens) (including to obtain any release or
termination of Liens not permitted under the definition of “Additional Collateral” in Section 1.01 or under
Section 6.02 and to satisfy all Perfection Requirements, including the filing of UCC financing statements,
filings with the FAA and registrations with the International Registry, as applicable) in favor of the
Collateral Agent for the benefit of the Secured Parties on such assets of the Parent or such Subsidiary, as
applicable, to secure the Obligations to the extent required under the applicable Security Documents or
reasonably requested by the Appropriate Party, and to ensure that such Collateral shall be subject to no
other Liens other than Permitted Liens and (iv) if requested by the Appropriate Party, deliver (or cause such
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Subsidiary to deliver) legal opinions to the Collateral Agent, for the benefit of the Secured Parties, relating
to the matters described above, which opinions shall be in form and substance, and from counsel,
satisfactory to the Appropriate Party.
SECTION 5.14 Post-Closing Matters. As promptly as practicable, and in any event within
the time periods after the Closing Date specified on Schedule 5.14 or such later date as the Initial Lender may
agree to in writing in its sole discretion, the Parent shall deliver the documents or take the actions specified
on Schedule 5.14 that would have been required to be delivered or taken on the Closing Date.
SECTION 5.15 Further Assurances. In each case subject to the terms, conditions and
limitations in the Loan Documents, (a) each Credit Party shall remain in compliance with the Perfection
Requirement with respect to all Collateral (including any assets, rights and properties that (x) become
Collateral after the Closing Date and (y) any permitted replacement or substitute assets, rights and properties
thereof (including any Additional Collateral) and (b) each Credit Party shall, promptly and at its expense,
execute any and all further documents and instruments and take all further actions, that may be required or
advisable under applicable law or that the Initial Lender, the Administrative Agent or the Collateral Agent
may request, in order to create, grant, establish, preserve, protect, renew or perfect the validity, perfection or
first priority of the Liens and security interests created or intended to be created by the Security Documents,
in each case to the extent required under this Agreement or the Security Documents (including with respect
to any additions to the Collateral (including any Additional Collateral) or replacements, substitutes or
proceeds thereof or with respect to any other property or assets hereafter acquired by any Credit Party that
are of a type that are intended to be included in the Collateral). Promptly following the entry by any Credit
Party into any Material Loyalty Program Agreement after the Closing Date, the Parent will enter into and
cause the counterparty to enter into a Direct Agreement substantially in the form of Exhibit D hereto.
SECTION 5.16 Delivery of Appraisals. The Parent shall (1) within ten (10) Business Days
prior to the last Business Day of March and September of each year, beginning with March 31, 2021 and (2)
promptly (but in any event within thirty (30) days) following request by the Administrative Agent (acting at
the direction of the Required Lenders) if an Event of Default has occurred and is occurring, deliver to the
Administrative Agent one or more Appraisals determining the Appraised Value of the Collateral. In addition,
on the date upon which any Additional Collateral is pledged as Collateral to the Collateral Agent for the
benefit of the Secured Parties to secure the Obligations, but only with respect to such Additional Collateral,
the Parent shall deliver to the Administrative Agent one or more Appraisals determining the Appraised Value
of such Additional Collateral.
SECTION 5.17 Ratings. At any time when the Initial Lender is a Lender, the Borrower shall,
upon request by the Initial Lender, use its reasonable best efforts to obtain a public rating in respect of the
Loans by any two of S&P, Moody’s and Fitch in connection with any contemplated assignment of, or
participation in, the Loans.
SECTION 5.18 Regulatory Matters.
(a) US Citizenship. The Borrower will at all times maintain its status as 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 the DOT pursuant to its policies.
(b) Air Carrier Status. The Borrower will at all times maintain its status as an “air
carrier” within the meaning of Section 40102 of Title 49 and holds a certificate under Section 41102 of
Title 49. The Borrower will at all times possess an air carrier operating certificate issued pursuant to
Chapter 447 of Title 49. The Borrower will at all times possess all necessary certificates, franchises,
licenses, permits, rights, designations, authorizations, exemptions, concessions, frequencies and consents
which relate to the operation of the routes flown by it and the conduct of its business and operations as
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currently conducted, except where failure to do so, either individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
SECTION 5.19 Loyalty Programs; Loyalty Program Agreements.
(a) Loyalty Programs. The Parent will, and will cause each of its Subsidiaries to, take
all actions necessary to maintain the existence, business and operations of the Carrier Loyalty Programs as
in effect on the Closing Date or on terms at least as favorable to the Lenders, as determined by the
Appropriate Party in its sole discretion, except as otherwise expressly permitted under this Agreement.
(b) Loyalty Program Agreements. The Parent will, and will cause each of its
Subsidiaries to, take any action permitted under the Material Loyalty Program Agreements and applicable
law that it, in its reasonable business judgment, determines is advisable, in order to diligently and promptly
(i) enforce its rights and any remedies available to it under the Material Loyalty Program Agreements, (ii)
perform its obligations under the Material Loyalty Program Agreements and (iii) use reasonable best efforts
to cause the applicable counterparties to perform their obligations under the related Material Loyalty
Program Agreements, including such counterparties’ obligations to make payments to and indemnify the
applicable Credit Parties in accordance with the terms thereof, in each case except as would not (1) be
materially adverse to the Lenders or (2) reasonably be expected to result in a Material Adverse Effect.
SECTION 5.20 Collections; Accounts; Payments.
(a) The Credit Parties shall (x) instruct and use their reasonable best efforts to cause
counterparties to all Material Loyalty Program Agreements to direct payments of all Loyalty Program
Revenue into the Collection Account and (y) cause sufficient counterparties to the Loyalty Program
Agreements to direct payments of Loyalty Program Revenue into the Collection Account (in the case of
Loyalty Program Revenue generated under any Material Loyalty Program Agreement, pursuant to a Direct
Agreement) such that during any DSCR Test Period, at least 90% of Loyalty Program Revenue (excluding
revenues generated under any Loyalty Subscription Program) for such period is deposited directly into the
Collection Account. Promptly following the entry by any Credit Party into any Material Loyalty Program
Agreement after the Closing Date, the applicable Credit Party will enter into and cause the counterparty to
enter into a Direct Agreement with respect to such Material Loyalty Program Agreement. To the extent the
Parent, any Subsidiary or any of their respective Controlled Affiliates receives any payments of Loyalty
Program Revenues to an account other than the Collection Account, such Person shall ACH or wire transfer
as soon as practicable, but in any event within three (3) Business Days of receipt, any such amounts to the
Collection Account. All amounts in the Collection Account shall be conclusively presumed to be Collateral
and proceeds of Collateral, and the Agents and the Lenders shall have no duty to inquire as to the source of
the amounts on deposit in the Collection Account. No Credit Party shall revoke, or permit to be revoked,
any payment direction included in any Direct Agreement other than in connection with a replacement
Collection Account (which shall be at a depository institution satisfactory to the Appropriate Party).
(b) Each account control agreement with respect to each Blocked Account shall
require, after the occurrence and during the continuance of a Payment Event, the ACH or wire transfer no
less frequently than once per Business Day (unless the Obligations are no longer outstanding), of all
collected and available funds in such Blocked Account (net of such minimum balance, not to exceed
$25,000, as may be required to be kept in the subject Blocked Account by the account bank), to an account
in the name of the Borrower maintained by the Administrative Agent at The Bank of New York Mellon
(the “Payment Account”) or such other account as directed by the Administrative Agent. The Payment
Accounts and the Blocked Accounts shall be non-interest bearing accounts. Funds on deposit in the Blocked
Accounts and the Payment Accounts shall be uninvested. All amounts in the Blocked Account shall be
conclusively presumed to be Collateral and proceeds of Collateral, and the Agents and the Lenders shall
have no duty to inquire as to the source of the amounts on deposit in the Blocked Account. The Borrower
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may at any time elect to apply amounts on deposit in the Blocked Account to prepay the Loans, by
requesting that the Collateral Agent instruct the account to withdraw such amounts for such prepayment.
(c) The Payment Account shall at all times be under the sole dominion and control of
the Collateral Agent and shall be subject to an account control agreement in form and substance satisfactory
to the Appropriate Party. The Credit Parties hereby acknowledge and agree that (i) the Credit Parties have
no right of withdrawal from the Payment Account, (ii) the funds on deposit in the Payment Account shall
at all times be collateral security for all of the Obligations, and (iii) the funds on deposit in the Payment
Account shall be applied to repay the Loans. All amounts in the Payment Account shall be conclusively
presumed to be Collateral and proceeds of Collateral, and the Agents and the Lenders shall have no duty to
inquire as to the source of the amounts on deposit in the Payment Account. Upon payment in full of the
Loans and all Obligations under this Agreement (other than contingent indemnification or reimbursement
obligations not yet accrued and payable) and termination of the Commitments, any remaining amounts in
the Payment Account will be released and transferred to a deposit account of the Credit Parties as the
Borrower shall direct.
ARTICLE VI
NEGATIVE COVENANTS
Until all the later of (i) the date on which all of the Obligations shall have been paid in full
and (ii) such later date specified in this Agreement, the Credit Parties covenant and agree with the Lenders
that:
SECTION 6.01 [Reserved].
SECTION 6.02 Liens. Parent will not, and will not permit any of its Subsidiaries to, create,
incur, assume or suffer to exist any Lien upon any property or assets constituting Collateral, whether now
owned or hereafter acquired, except for Permitted Liens.
SECTION 6.03 Fundamental Changes. Parent will not, and will not permit any of its
Subsidiaries to, merge, dissolve, liquidate, consolidate with or into another Person, or Dispose of (whether in
one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to or in favor of any Person, except that, so long as no Default exists or would result
therefrom:
(a) any Subsidiary may merge with (i) the Borrower; provided that the Borrower shall
be the continuing or surviving Person, or (ii) any one or more other Subsidiaries; provided that (x)
when any Wholly-Owned Subsidiary is merging with another Subsidiary, a Wholly-Owned
Subsidiary shall be the continuing or surviving Person and (y) when any Subsidiary that is a Credit
Party is merging with another Subsidiary, then such other Subsidiary shall be a Credit Party;
(b) any Subsidiary may Dispose of all or substantially all of its assets (upon voluntary
liquidation or otherwise) to the Parent or to another Subsidiary; provided that (x) if the transferor
in such a transaction is a Wholly-Owned Subsidiary, then the transferee shall either be the Parent
or another Wholly-Owned Subsidiary and (y) if the transferor in such a transaction is a Credit Party,
then the transferee shall be a Credit Party;
(c) the Parent and its Subsidiaries may make Dispositions permitted by Section 6.04;
(d) any Investment permitted by Section 6.06 may be structured as a merger,
consolidation or amalgamation;
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(e) any Subsidiary may dissolve, liquidate or wind up its affairs if it owns no material
assets, engages in no business and otherwise has no activities other than activities related to the
maintenance of its existence and good standing; and
(f) any Subsidiary may Dispose of all or substantially all of its assets (upon voluntary
liquidation or otherwise), provided that such assets do not constitute all or substantially all of the
consolidated assets of the Parent and its Subsidiaries.
SECTION 6.04 Dispositions. Parent will not, and will not permit any of its Subsidiaries to,
sell or otherwise make any Disposition of Collateral or enter into any agreement to make any sale or other
Disposition of Collateral (in each case, including, without limitation by way of any sale or other Disposition
of any Guarantor), except, subject to Article X and so long as no Default shall have occurred and be continuing
at the time of any action described below, or would result therefrom:
(a) the Disposition of Collateral expressly permitted under the applicable Security
Documents;
(b) any licenses or sublicenses (i) granted on a non-exclusive basis to customers or
service providers in the ordinary course of business or to business partners in the ordinary course of business
in a manner and subject to terms consistent with past practice or (ii) granted pursuant to any Loyalty
Program Agreement in full force and effect as of the Closing Date, any successor agreement thereto or any
new Loyalty Program Agreement, in each case that is included in the Collateral (provided that any such
grant pursuant to such new or successor agreement is made in the ordinary course of business in a manner
and subject to terms substantially similar with those of the predecessor Loyalty Program Agreement or with
any Loyalty Program Agreement in full force and effect as of the Closing Date, as the case may be);
(c) any abandonment, lapse, forfeiture or dedication to the public, in the ordinary
course of business, of any Intellectual Property that, in the applicable Credit Party’s reasonable
good faith judgment, is no longer used and no longer useful in the business of the Borrower or its
Subsidiaries;
(d) any (1) deletion, de-identification or purge of any Personal Data that is required
under applicable Privacy Laws, under any of the Credit Parties’ public-facing privacy policies in full force
and effect as of the Closing Date or in the ordinary course of business (including in connection with
terminating inactive Carrier Loyalty Program accounts) pursuant to the applicable Credit Party’s privacy
and data retention policies in full force and effect as of the Closing Date consistent with past practice, (2)
transfer of any Loyalty Program Data to services providers for their Processing of such data on behalf of
any of the Credit Parties in the ordinary course of business, subject to a prohibition on deletion, de-
identification and purging, except as permitted under clause (1) or (3) transfer of any Loyalty Program Data
to a third party in the ordinary course of business to the extent such Credit Party also retains a copy of such
Loyalty Program Data;
(e) the sale, lease or other transfer any Currency under any Loyalty Program in
accordance with any Loyalty Program Agreement as in existence on the Closing Date (or any (i)
permitted successor agreement thereto or (ii) new Loyalty Program Agreement permitted under
this Agreement, in each case that is included in the Collateral) or subsequently approved by the
Appropriate Party;
(f) Loyalty Revenue Advance Transactions (together with any Loyalty Revenue
Advance Transactions outstanding on the Closing Date that remain outstanding) in an aggregate
amount not to exceed an amount equal to the greater of (x) $15,000,000 and (y) 15% of the
aggregate amount of Collateral Cash Flow received during the most recently ended DSCR Test
Period that has been deposited into a Collateral Account;
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(g) to the extent constituting a Disposition of Collateral, the incurrence of Liens that
are permitted to be incurred pursuant to Section 6.02;
(h) to the extent constituting a Disposition of Collateral, (1) the sale or other transfer
of Currency in the ordinary course of business under the terms of the Loyalty Program Agreements
and (2) transfers of Currency to Loyalty Program Members in the ordinary course of business in
accordance with program terms;
(i) Dispositions of Collateral among the Credit Parties (including any Person that shall
become a Credit Party simultaneous with such Disposition in the manner contemplated by
Section 5.13); provided that:
(i) such Collateral remains at all times subject to a Lien with the same priority
and level of perfection as was the case immediately prior to such Disposition (and otherwise subject
only to Permitted Liens) in favor of the Collateral Agent for the benefit of the Secured Parties
following such Disposition;
(ii) concurrently therewith, the Credit Parties shall execute any documents and
take any actions reasonably required to create, grant, establish, preserve or perfect such Lien in
accordance with the other provisions of this Agreement or the Security Documents;
(iii) if requested by the Appropriate Party, concurrently therewith the
Appropriate Party shall receive an opinion of counsel to the applicable Credit Party as to the validity
and perfection of such Lien on the Collateral, in each case in form and substance satisfactory to the
Appropriate Party; and
(iv) concurrently with any Disposition of Collateral to any Person that shall
become a Credit Party simultaneous with such Disposition in the manner contemplated by
Section 5.13, such Person shall have complied with the requirements of Section 5.13;
(j) any Disposition of property resulting from an event of loss with respect to any
aircraft, airframe, engine, spare engine or Spare Parts if the Credit Party is replacing such aircraft, airframe,
engine, spare engine or Spare Parts in accordance with the terms of the Loan Documents;
(k) any Disposition of Collateral permitted by any of the Security Documents; and
(l) Dispositions of cash or Cash Equivalents in exchange for other cash or Cash
Equivalents constituting Collateral and having reasonably equivalent value therefor.
SECTION 6.05 Restricted Payments. Parent will not, and will not permit any of its
Subsidiaries to, declare or make, directly or indirectly, any Restricted Payment, or incur any obligation
(contingent or otherwise) to do so, except, that, subject to additional restrictions set forth in Article X, so long
as no Default shall have occurred and be continuing at the time of any action described below or would result
therefrom:
(a) each Subsidiary may make Restricted Payments to the Parent and any other Person
that owns an Equity Interest in such Subsidiary, ratably according to their respective holdings of
such Equity Interests in respect of which such Restricted Payment is being made;
(b) the Parent and each Subsidiary may declare and make dividend payments or other
distributions payable solely in common Equity Interests of such Person;
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(c) the Parent and each Subsidiary may purchase, redeem or otherwise acquire Equity
Interests issued by it with the proceeds received from the substantially concurrent issue of new
common Equity Interests;
(d) the Parent and each Subsidiary may pay withholding or similar taxes payable by
any future, present or former employee, director or officer (or any spouses, former spouses,
successors, executors, administrators, heirs, legatees or distributees of any of the foregoing) in
connection with any repurchases of Equity Interests or the exercise of stock options;
(e) the repurchase of Equity Interests or other securities deemed to occur upon (A) the
exercise of stock options, warrants or other securities convertible or exchangeable into Equity
Interests or any other securities, to the extent such Equity Interests or other securities represent a
portion of the exercise price of those stock options, warrants or other securities convertible or
exchangeable into Equity Interests or any other securities or (B) the withholding of a portion of
Equity Interests issued to employees and other participants under an equity compensation program
of the Parent or its Subsidiaries to cover withholding tax obligations of such persons in respect of
such issuance;
(f) payments of cash, dividends, distributions, advances, common stock or other
Restricted Payments by the Parent or any of its Subsidiaries to allow the payment of cash in lieu of
the issuance of fractional shares upon (A) the exercise of options or warrants, (B) the conversion
or exchange of capital stock of any such Person or (C) the conversion or exchange of Indebtedness
or hybrid securities into capital stock of any such Person;
(g) the Parent may make cash payments in connection with any conversion or
exchange of Convertible Indebtedness in amount equal to the sum of (i) the principal amount of
such Convertible Indebtedness and (ii) the proceeds of any payments received by the Parent or any
of its Subsidiaries pursuant to the exercise, settlement or termination of any related Permitted Bond
Hedge Transaction;
(h) the Parent may make payments in connection with a Permitted Bond Hedge
Transaction (i) by delivery of shares of the Parent’s Equity Interests upon net share settlement
thereof or (ii) by (A) set-off against the related Permitted Bond Hedge Transaction and (B) payment
of an early termination amount thereof in common Equity Interests of the Parent upon any early
termination thereof; and
(i) Restricted Payments not to exceed the amount allowable pursuant to Schedule
6.05(i).
SECTION 6.06 Investments. Parent will not, and will not permit any of its Subsidiaries to,
make any Investments, except:
(a) Investments held by the Parent or such Subsidiary in the form of cash or Cash
Equivalents;
(b) (i) Investments in Subsidiaries in existence on the Closing Date, (ii) other
Investments in existence on the Closing Date and listed in Section I to Schedule 6.06 and (iii) other
Investments described on Section II of Schedule 6.06, and, in each case, any refinancing, refunding,
renewal or extension of any such Investment that does not increase the amount thereof;
(c) advances to officers, directors and employees of the Parent and its Subsidiaries in
an aggregate amount not exceeding, at any time outstanding, an amount that is customary and
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consistent with past practice, for travel, entertainment, relocation and similar ordinary business
purposes;
(d) (x) Investments of the Parent in the Borrower or any other Credit Party, (y)
Investments of any Subsidiary in the Parent or any other Credit Party and (z) Investments made
between Subsidiaries that are not Credit Parties; provided that any such Investments made pursuant
to this clause (d) in the form of intercompany indebtedness incurred by a Credit Party and owed to
a Subsidiary that is not a Credit Party shall be subordinated to the Obligations and the Guaranteed
Obligations on customary terms (it being understood and agreed that any Investments permitted
under this clause (d) in the form of intercompany indebtedness that are not already subordinated on
such terms as of the Closing Date shall not be required to be so subordinated until the date that is
thirty (30) days after the Closing Date);
(e) Investments consisting of extensions of credit in the nature of accounts receivable
or notes receivable arising from the grant of trade credit in the ordinary course of business, and
Investments received in satisfaction or partial satisfaction thereof from financially troubled account
debtors to the extent reasonably necessary in order to prevent or limit loss;
(f) Investments consisting of the indorsement by the Parent or any Subsidiary of
negotiable instruments payable to such Person for deposit or collection in the ordinary course of
business;
(g) to the extent constituting an Investment, transactions otherwise permitted by
Sections 6.03 and 6.05;
(h) any Investments received in compromise or resolution of (i) obligations of trade
creditors or customers that were incurred in the ordinary course of business of Parent or any of its
Subsidiaries, including pursuant to any plan of reorganization or similar arrangement upon the
bankruptcy or insolvency of any trade creditor or customer or (ii) litigation, arbitration or other
disputes;
(i) Investments represented by obligations in respect of Swap Contracts that are not
speculative in nature and that are entered into to hedge or mitigate risks to which the Parent or any
of its Subsidiaries has (or will have) actual exposure (other than those in respect of the Equity
Interests or Indebtedness of the Parent or any of its Subsidiaries);
(j) accounts receivable arising in the ordinary course of business;
(k) any guarantee of Indebtedness of Parent or any Subsidiary of Parent, other than
any guarantee of Indebtedness secured by Liens that would not be permitted under Section 6.02;
(l) Investments to the extent that payment for such Investment is made with the capital
stock of the Parent;
(m) Investments having an aggregate fair market value (measured on the date each such
Investment was made and without giving effect to subsequent changes in value other than a
reduction for all returns of principal in cash and capital dividends in cash), when taken together
with all Investments made pursuant to this clause (n) that are at the time outstanding, not to exceed
30% of the total consolidated assets of the Parent and its Subsidiaries at the time of such Investment;
(n) Permitted Bond Hedge Transactions to the extent constituting Investments; and
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(o) Investments in Finance Entities in the ordinary course of business of the Parent
and its Subsidiaries or that are otherwise customary for airlines based in the United States.
SECTION 6.07 Transactions with Affiliates. Parent will not, and will not permit any of its
Subsidiaries to, enter into any transaction of any kind involving aggregate payments or consideration in excess
of $50,000,000 with any Affiliate of the Parent, whether or not in the ordinary course of business, other than
on fair and reasonable terms substantially as favorable to the Parent or such Subsidiary as would be obtainable
by the Parent or such Subsidiary at the time in a comparable arm’s-length transaction with a Person other than
an Affiliate, subject to delivery of (x) with respect to any transaction or series of related transactions involving
aggregate consideration in excess of $100,000,000, a certificate of a Responsible Officer of the Parent
certifying as to compliance with the foregoing and (y) with respect to any transaction or series of related
transactions involving aggregate consideration in excess of $150,000,000, an opinion as to the fairness to the
Parent or such Subsidiary of such transaction from a financial point of view issued by an accounting, appraisal
or investment banking firm of national standing (provided that this clause (y) shall not apply to any transaction
between or among the Parent or any of its Subsidiaries and any Finance Entities); provided that, subject to
Article X, the foregoing restriction shall not apply to:
(a) transactions between or among the Parent and any Wholly-Owned Subsidiaries,
(b) Restricted Payments permitted by Section 6.05,
(c) Investments permitted by Section 6.06(b), or (c) or (d),
(d) transactions described in Schedule 6.07,
(e) any employment agreement, confidentiality agreement, non-competition
agreement, incentive plan, employee stock option agreement, long-term incentive plan, profit sharing plan,
employee benefit plan, officer or director indemnification agreement or any similar arrangement entered
into by the Parent or any of its Subsidiaries in the ordinary course of business and payments pursuant
thereto, and
(f) payment of fees, compensation, reimbursements of expenses (pursuant to
indemnity arrangements or otherwise) and reasonable and customary indemnities provided to or on behalf
of officers, directors, employees or consultants of the Parent or any of its Subsidiaries.
SECTION 6.08 [Reserved].
SECTION 6.09 [Reserved].
SECTION 6.10 Changes in Nature of Business. Parent will not, and will not permit any of
its Subsidiaries to, engage to any material extent in any business other than those businesses conducted by
the Parent and its Subsidiaries on the date hereof or any business reasonably related or incidental thereto or
representing a reasonable expansion thereof.
SECTION 6.11 Sanctions; AML Laws. Parent will not, and will not permit any of its
Subsidiaries to, directly or knowingly indirectly, use the proceeds of the Loans, or lend, contribute or
otherwise make available such proceeds to any Subsidiary, joint venture partner or other Person to fund any
activities or business of or with any Person in a manner that would result in a violation of Sanctions or AML
Laws by any Person.
SECTION 6.12 Amendments to Organizational Documents. Parent will not, and will not
permit any of its Subsidiaries to amend, modify, or grant any waiver or release under or terminate in any
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manner, any Organizational Documents in any manner materially adverse to, or which would impair the rights
of, the Lenders.
SECTION 6.13 [Reserved].
SECTION 6.14 Prepayments of Junior Indebtedness. Parent will not, and will not permit
any of its Subsidiaries to, make any principal payment on, or redeem, repurchase, defease or otherwise acquire
or retire for value, in each case prior to any scheduled repayment, sinking fund payment or maturity, any
Indebtedness secured by junior Liens on the Collateral or that is subordinated in right of payment to the
Obligations, in each case other than in connection with a Permitted Refinancing of such Indebtedness.
SECTION 6.15 Lobbying. Parent will not, and will not permit any of its Subsidiaries to,
directly, or to the Parent or such Subsidiary’s knowledge, indirectly, use the proceeds of the Loans, or lend,
contribute, or otherwise make available such proceeds to any other Person (i) for publicity or propaganda
purposes designated to support or defeat legislation pending before the U.S. Congress or (ii) to fund any
activities that would constitute “lobbying activities” as defined under 2 U.S.C. § 1602. The Parent shall, and
shall cause its subsidiaries to, comply with the provisions of 31 U.S.C. § 1352, as amended, and with the
regulations at 31 CFR Part 21.
SECTION 6.16 Use of Proceeds. Parent will not, and will not permit any of its Subsidiaries
to, use the proceeds of the Loans for any purpose other than for general corporate purposes and operating
expenses (including payroll, rent, utilities, materials and supplies, repair and maintenance, and scheduled
interest payments on other Indebtedness incurred before February 15, 2020), in each case in compliance with
all applicable law to the extent permitted by the CARES Act; provided however that the proceeds of the Loans
shall not be used for any non-operating expenses (including capital expenses, delinquent taxes and payments
of principal on other Indebtedness), unless the Parent can demonstrate, to the satisfaction of the Initial Lender,
that payment of any such non-operating expense is necessary to optimize the continued operations of the
Parent’s business and does not merely constitute a transfer of risk from an existing creditor or investor to the
Federal taxpayer.
SECTION 6.17 Financial Covenants.
(a) Liquidity. The Parent will not permit the aggregate amount of Liquidity at the
close of any Business Day to be less than $500,000,000.
(b) Collateral Coverage Ratio.
(i) Within ten (10) Business Days after (x) the last day of March and
September of each year (beginning with March 2021) or (y) any date on which an Appraisal is
delivered pursuant to clause (2) of Section 5.16 (each such date in clauses (x) and (y), a “CCR
Reference Date” and the tenth Business Day after a CCR Reference Date, a “CCR Certificate
Delivery Date”), the Parent shall deliver to the Administrative Agent a certificate of a Responsible
Officer of the Parent containing a calculation of the Collateral Coverage Ratio (a “CCR
Certificate”).
(ii) If the Collateral Coverage Ratio with respect to any CCR Reference Date
is less than 1.60 to 1.00, the Borrower shall, no later than ten (10) Business Days after the applicable
CCR Certificate Delivery Date, (x) prepay any outstanding Loans such that following such
prepayment, the Collateral Coverage Ratio with respect to such CCR Reference Date, recalculated
by subtracting any such prepaid portion of the Loans, shall be no less than 1.60 to 1.00 and/or (y)
designate Additional Collateral as additional Eligible Collateral and comply with Sections 5.13
and 5.15, collectively, in an amount such that following such designation, the Collateral Coverage
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Ratio with respect to such CCR Reference Date, recalculated by adding such Additional Collateral,
shall be no less than 1.60 to 1.00.
(iii) At the Parent’s request, the Lien on the Loyalty Program Assets under the
Security Documents will be released, provided, in each case, that the following conditions are
satisfied or waived: (a) no Event of Default shall have occurred and be continuing, (b) either (x)
after giving effect to such release and to any Commitment reductions pursuant to Section 2.07, the
Collateral Coverage Ratio is not less than 2.00 to 1.00 or (y) the Parent shall prepay or cause to be
prepaid the Loans and/or shall designate Eligible Collateral as Additional Collateral and comply
with Sections 5.13 and 5.15, collectively, in an amount necessary to cause the Collateral Coverage
Ratio to not be less than 2.00 to 1.00, (c) the Parent shall deliver a certificate executed by a
Responsible Officer demonstrating compliance with this Section 6.17(b)(iii) and (d) the
Administrative Agent (acting at the direction of the Required Lenders) has given notice to the
Parent of such release in accordance with this Section 6.17(b)(iii). Upon any release in accordance
with the terms of this Section 6.17(b)(iii), the IP License Agreement, the Trademark Security
Agreement, Annex 1 of the Pledge and Security Agreements and each Direct Agreement with a
Loyalty Program Participant will terminate automatically, and the agents (acting at the direction of
the Required Lenders) shall take all actions reasonably requested by the Parent to evidence such
releases, notify the parties to the Direct Agreements, and file any reasonably required public notices
of such releases (and the Lenders shall instruct the Agents accordingly).
(A) Upon notice from the Administrative Agent (acting at the
direction of the Required Lenders) to the Borrower that all the requirements set forth in
Section 6.17(b)(iii) have been complied with and the Liens on all Loyalty Program Assets
have been released in accordance therewith, then: (1) the Credit Parties shall not be subject
to the provisions of this Agreement set forth under
Sections 2.06(b)(iv), 2.06(b)(v), 2.06(b)(vi), 3.08, 3.27, 3.28, 5.02(i), 5.19 5.20 and 6.17(c)
and the last sentence of Section 5.15, in each case to the extent such provision relates to
the Loyalty Program Assets or any other Loyalty Terms (as defined below); (2) the
requirement to deliver a certificate pursuant to Section 5.02(j) with calculations of the Debt
Service Coverage Ratio on each DSCR Determination Date shall no longer apply; (3) the
requirement to deliver a certificate pursuant to Section 5.02(k) for any period during which
no Liens on Loyalty Program Assets were in effect shall no longer apply; (4) the restrictions
on Loyalty Revenue Advance Transactions set forth under
Sections 6.04(b), 6.04(d), 6.04(e), 6.04(f) and 6.04(h) shall no longer apply; (5) the Events
of Default set forth under Sections 7.01(p), 7.01(q), 7.01(r) and 7.01(s) shall no longer
apply; and (6) the language “(iii) with respect to any Personal Data, any deletion, de-
identification, purging or other similar disposition of Personal Data” shall be deemed
deleted from the definition of the terms “Disposition” and “Dispose”. For purposes hereof,
“Loyalty Terms” means Loyalty Program Data, Loyalty Program Intellectual Property,
Loyalty Program Revenues, Loyalty Program Agreements, Material Loyalty Program
Agreements, Loyalty Revenue Advance Transaction, Loyalty Subscription Program or any
similar loyalty related term.
(iv) At the Parent’s request, the Lien on any Additional Collateral will be
released, provided, in each case, that the following conditions are satisfied or waived: (a) no Event
of Default shall have occurred and be continuing, (b) either (x) after giving effect to such release,
the Collateral Coverage Ratio is not less than 2.00 to 1.00 (or in the case of a swap or exchange of
existing Additional Collateral with new Additional Collateral, less than 1.60 to 1.00) or (y) the
Parent shall prepay or cause to be prepaid the Loans and/or shall designate Eligible Collateral as
Additional Collateral and comply with Sections 5.13 and 5.15, collectively, in an amount necessary
to cause the Collateral Coverage Ratio to not be less than 2.00 to 1.00 (or in the case of a swap or
exchange of existing Additional Collateral with new Additional Collateral, less than 1.60 to 1.00)
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and (c) the Parent shall deliver a certificate executed by a Responsible Officer demonstrating
compliance with this Section 6.17(b)(iv).
(c) Debt Service Coverage Ratio.
(i) On each DSCR Determination Date, the Parent shall deliver to the
Administrative Agent a certificate of a Responsible Officer of the Parent (x) containing a
calculation of the Debt Service Coverage Ratio and (ii) certifying that all Loyalty Program Revenue
for such DSCR Test Period has been deposited, directly or indirectly, into the Collection Account
or another Collateral Account (and at least 90% of all Loyalty Program Revenues (excluding
revenues generated under any Loyalty Subscription Program) were deposited directly into a
Collateral Account); and
(ii) if the Debt Service Coverage Ratio with respect to any DSCR
Determination Date is less than 1.75 to 1.00 (a “DSCR Trigger Event”), then the Parent and the
Subsidiaries shall cause an amount equal to at least 50% of all Loyalty Program Revenues received
thereafter to be transferred (as such payments are received) from the Collection Account to a
Blocked Account to be held for the benefit of the Lenders (which amounts on deposit in the Blocked
Account may be used to prepay the Loans at the option of the Borrower, upon request to the
Collateral Agent) until the first DSCR Determination Date on which the Debt Service Coverage
Ratio is 1.75 to 1.00 or more, whereupon such amounts may be transferred from the Blocked
Account to the Collection Account following a request to the Collateral Agent;
(iii) if the Debt Service Coverage Ratio with respect to any DSCR
Determination Date is less than or equal to 1.50 to 1.00 but greater than 1.25 to 1.00, then (x) all
amounts then deposited in the Blocked Account shall be applied to prepay the Loans and (y) the
Parent and the Subsidiaries shall cause an amount equal to at least 50% of all Loyalty Program
Revenues received thereafter to be transferred (as such payments are received) from the Collection
Account to the Payment Account with all such amounts deposited into the Payment Account to be
applied to the prepayment of any Loans then outstanding until the first DSCR Determination Date
on which the Debt Service Coverage Ratio is greater than 1.50 to 1.00; and
(iv) if the Debt Service Coverage Ratio with respect to any DSCR
Determination Date is less than or equal to 1.25 to 1.00, then (x) all amounts then deposited in the
Blocked Account shall be applied to prepay the Loans and (y) the Parent and the Subsidiaries shall
cause an amount equal to at least 75% of all Loyalty Program Revenues received thereafter to be
transferred (as such payments are received) from the Collection Account to the Payment Account
with all such amounts deposited into the Payment Account to be applied to the prepayment of any
Loans then outstanding until the first DSCR Determination Date on which the Debt Service
Coverage Ratio is greater than 1.25 to 1.00.
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.01 Events of Default. If any of the following events (each, an “Event of
Default”) shall occur:
(a) the Borrower shall fail to pay any principal of any Loan when and as the same shall
become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof
or otherwise;
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(b) the Borrower shall fail to pay any interest on any Loan, or any fee or any other
amount (other than an amount referred to in clause (a) of this Section) payable under this Agreement
or under any other Loan Document, when and as the same shall become due and payable, and such
failure shall continue unremedied for a period of two (2) or more Business Days;
(c) any representation or warranty made or deemed made by or on behalf of any Credit
Party, including those made prior to the Closing Date, in or in connection with this Agreement, the
Loan Application Form or any other Loan Document or any amendment or modification hereof or
thereof, or any waiver hereunder or thereunder, or in any report, certificate, financial statement or
other document furnished pursuant to or in connection with this Agreement, the Loan Application
Form or any other Loan Document or any amendment or modification hereof or thereof, or any
waiver hereunder or thereunder, shall prove to have been incorrect in any material respect (or, in
the case of any such representation or warranty under this Agreement, the Loan Application Form
or any other Loan Document already qualified by materiality, such representation or warranty shall
prove to have been incorrect) when made or deemed made;
(d) any Credit Party shall fail to observe or perform any covenant, condition or
agreement contained in Section 5.03(a), 5.04 (with respect to the Borrower’s existence) or in
Article VI or Article X;
(e) any Credit Party shall fail to observe or perform any covenant, condition or
agreement contained in this Agreement or any other Loan Document (other than those specified in
clause (a), (b) or (d) of this Section) and such failure shall continue unremedied for a period of
thirty (30) or more days after notice thereof by the Administrative Agent or the Initial Lender to
the Parent;
(f) (i) Any Credit Party or any Subsidiary thereof shall fail to make any payment when
due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in
respect of any Material Indebtedness (other than Indebtedness under this Agreement) and such
failure shall continue after the applicable grace period, if any, specified in the agreement or
instrument governing such Material Indebtedness; or (ii) any Credit Party or any Subsidiary thereof
shall fail to observe or perform any other agreement or condition relating to any such Indebtedness
or contained in any instrument or agreement evidencing, securing or relating thereto, or any other
event occurs, the effect of which default or other event results in the holder or holders or beneficiary
or beneficiaries of such Indebtedness (or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) causing such Indebtedness to become due or to be repurchased,
prepaid, defeased or redeemed (automatically or otherwise), or causing an offer to repurchase,
prepay, defease or redeem such Indebtedness to be made, prior to its stated maturity; provided that
this clause (f)(ii) shall not apply to secured Indebtedness that becomes due as a result of the
voluntary sale or transfer (or disposition of property as a result of a casualty or condemnation event)
of the property or assets securing such Indebtedness, if such sale or transfer is permitted hereunder
and under the documents providing for such Indebtedness and such Indebtedness is repaid when
required under the documents providing for such Indebtedness;
(g) an involuntary proceeding shall be commenced or an involuntary petition shall be
filed seeking (i) liquidation, reorganization or other relief in respect of any Credit Party or any
Material Subsidiary thereof or its debts, or of a substantial part of its assets, under any Debtor Relief
Law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for any Credit Party or any Material Subsidiary thereof or for a
substantial part of its assets, and, in any such case, such proceeding or petition shall continue
undismissed for a period of sixty (60) or more days or an order or decree approving or ordering any
of the foregoing shall be entered;
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(h) any Credit Party or any Material Subsidiary thereof shall (i) voluntarily commence
any proceeding or file any petition seeking liquidation, reorganization or other relief under any
Debtor Relief Law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in
a timely and appropriate manner, any proceeding or petition described in clause (g) of this Section,
(iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Parent or any of its Subsidiaries or for a substantial part of its
assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for
the purpose of effecting any of the foregoing;
(i) any Credit Party or any Material Subsidiary thereof shall become unable, admit in
writing its inability or fail generally to pay its debts as they become due;
(j) there is entered against any Credit Party or any Material Subsidiary thereof (i) a
final judgment or order for the payment of money in an aggregate amount (as to all such judgments
and orders) exceeding $50,000,000 (to the extent not covered by independent third-party insurance
as to which the insurer has been notified of such judgment or order and has not denied or failed to
acknowledge coverage), or (ii) a non-monetary final judgment or order that, either individually or
in the aggregate, has or could reasonably be expected to have a Material Adverse Effect and, in
either case, (A) enforcement proceedings are commenced by any creditor upon such judgment or
order, or (B) there is a period of thirty (30) consecutive days during which a stay of enforcement
of such judgment, by reason of a pending appeal or otherwise, is not in effect;
(k) an ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan that
has resulted or could reasonably be expected to result in liability of any Credit Party under Title IV
of ERISA to the Pension Plan, Multiemployer Plan or the PBGC that, either individually or in the
aggregate, has or could reasonably be expected to have a Material Adverse Effect;
(l) [reserved];
(m) any material provision of any Loan Document, at any time after its execution and
delivery and for any reason other than as expressly permitted hereunder or thereunder or
satisfaction in full of all Obligations, ceases to be in full force and effect; or any Credit Party or
any other Person who is a party to any Loan Document contests in writing the validity or
enforceability of any provision of any Loan Document; or any Credit Party denies in writing that it
has any or further liability or obligation under any Loan Document, or purports in writing to revoke,
terminate or rescind any Loan Document;
(n) any Lien purported to be created under any Security Document shall cease to be,
or shall be asserted in writing by any Credit Party not to be, a legal, valid and perfected Lien on
any material portion of the Collateral (individually or in the aggregate), with the priority required
by the applicable Security Documents, except (i) as a result of the sale or other Disposition of the
applicable Collateral to a Person that is not a Credit Party in a transaction not prohibited under the
Loan Documents or (ii) as a result of either Agent’s failure to maintain possession of any stock
certificates, promissory notes or other instruments delivered to it under the Security Documents or
(iii) as a result of acts or omissions with respect to possessory collateral held by the Collateral
Agent pursuant to this Agreement;
(o) any Guarantee of any Obligations by any Credit Party under any Loan Document
shall cease to be in full force in effect (other than in accordance with the terms of the Loan
Documents);
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(p) a default or breach by any Credit Party of its material obligations under a Material
Loyalty Program Agreement beyond any applicable notice and cure periods thereunder;
(q) an exit from, or a termination or cancellation of, any Carrier Loyalty Program (and
in the case of any Loyalty Subscription Program, such program as a whole by a Credit Party, and
not any individual cancellation or termination by a consumer) in effect on the Closing Date or any
Material Loyalty Program Agreement other than in connection with any replacement expressly
permitted hereunder;
(r) any material provision of any Material Loyalty Program Agreement, at any time
after its execution and delivery and for any reason other than as expressly permitted hereunder or
thereunder or satisfaction in full of all Obligations, ceases to be in full force and effect; or any
Credit Party contests in writing the validity or enforceability of any provision of any Material
Loyalty Program Agreement; or any Credit Party denies in writing that it has any or further liability
or obligation under any Material Loyalty Program Agreement, or purports in writing to revoke,
terminate or rescind any Material Loyalty Program Agreement; or
(s) any Credit Party makes a Material Modification to a Material Loyalty Program
Agreement without the prior written consent of the Required Lenders.
then, and in every such event (other than an event described in clause (g) or (h) of this Section), and at any
time thereafter during the continuance of such event, the Initial Lender may, and the Administrative Agent
may, and at the request of the Required Lenders or the Initial Lender shall, by notice to the Borrower, take
any or all of the following actions, at the same or different times:
(i) declare the Loans then outstanding to be due and payable in whole (or in
part, in which case any principal not so declared to be due and payable may thereafter be declared
to be due and payable), and thereupon the principal of the Loans so declared to be due and payable,
together with accrued interest thereon and all fees and other Obligations of the Credit Parties
accrued hereunder, shall become due and payable immediately, without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the Borrower and the other
Credit Parties; and
(ii) exercise on behalf of itself and the Lenders all rights and remedies
available to it and the Lenders under the Loan Documents and Applicable Law;
provided that, in case of any event described in clause (g) or (h) of this Section, the principal of the Loans
then outstanding, together with accrued interest thereon and all fees and other Obligations accrued
hereunder, shall automatically become due and payable, in each case without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Credit Parties.
SECTION 7.02 Application of Payments. Notwithstanding anything herein to the contrary,
following the occurrence and during the continuance of an Event of Default, and notice thereof to the Initial
Lender and the Administrative Agent by the Borrower or the Required Lenders, all payments received on
account of the Obligations shall be applied by the Administrative Agent as follows:
(i) first, to payment of that portion of the Obligations constituting fees,
indemnities, expenses and other amounts (including fees and disbursements and other charges of
counsel payable under Section 11.03 and amounts payable under an Administrative Agency Fee
Letter (if any)) payable to the Administrative Agent and the Collateral Agent in their respective
capacities as such;
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(ii) second, to payment of that portion of the Obligations constituting fees,
indemnities and other amounts (other than principal and interest) payable to the Lenders (including
fees and disbursements and other charges of counsel payable under Section 11.03) arising under
the Loan Documents, ratably among them in proportion to the respective amounts described in this
clause (ii) payable to them;
(iii) third, to payment of that portion of the Obligations constituting accrued
and unpaid interest on the Loans, ratably among the Lenders in proportion to the respective amounts
described in this clause (iii) payable to them;
(iv) fourth, to payment of that portion of the Obligations constituting unpaid
principal of the Loans ratably among the Lenders in proportion to the respective amounts described
in this clause (iv) payable to them;
(v) fifth, to the payment in full of all other Obligations, in each case ratably
among the Administrative Agent and the Lenders based upon the respective aggregate amounts of
all such Obligations owing to them in accordance with the respective amounts thereof then due and
payable; and
(vi) finally, the balance, if any, after all Obligations have been indefeasibly
paid in full, to the Borrower or as otherwise required by Law.
ARTICLE VIII
AGENCY
SECTION 8.01 Appointment and Authority. Each Lender hereby irrevocably appoints The
Bank of New York Mellon to act on its behalf as the Administrative Agent and as the Collateral Agent
hereunder and under the other Loan Documents and authorizes the Agents to take such actions on its behalf
and to exercise such powers as are delegated to such Agent by the terms of the Loan Documents, together
with such actions and powers as are reasonably incidental or related thereto; provided that notwithstanding
anything in this Article VIII or this Agreement to the contrary, the terms and conditions of the relationship
between the Initial Lender and the Agents shall be governed by a separate agreement between the Initial
Lender and the Agents. The Borrower and the Guarantors acknowledge and agree that the Agents are
Agents of the Lenders and not of the Borrower or the Guarantors. In connection with an assignment of the
Loans by the Initial Lender, upon the Administrative Agent’s request, the Borrower and the Agents shall
enter into an Administrative Agency Fee Letter. The provisions of this Article are solely for the benefit of
the Agents and the Lenders, and the Borrower shall not have rights as a third-party beneficiary of any of
such provisions. Without limiting the generality of the foregoing, the Agents are hereby expressly
authorized to (i) execute any and all documents (including releases) with respect to the Collateral and the
rights of the Secured Parties with respect thereto, as contemplated by and in accordance with the provisions
of this Agreement and the other Loan Documents and (ii) negotiate, enforce or settle any claim, action or
proceeding affecting the Lenders in their capacity as such, at the direction of the Required Lenders, which
negotiation, enforcement or settlement will be binding upon each Lender.
SECTION 8.02 Collateral Matters. Each of the Lenders hereby irrevocably appoints and
authorizes the Collateral 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 Credit Parties to secure any of the Obligations,
together with such powers and discretion as are reasonably incidental thereto and to enter into and perform
the other Loan Documents.
SECTION 8.03 Removal or Resignation of Administrative Agent. While the Initial Lender
is a Lender, the Administrative Agent may be removed or give notice of its resignation subject to any
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conditions as separately agreed between the Initial Lender and the Administrative Agent. Any such
resignation as Administrative Agent pursuant to this Section 8.03 shall also constitute its resignation as the
Collateral Agent; provided that in the case of any collateral security held by the Collateral Agent on behalf
of the Lenders under any of the Loan Documents, the retiring or removed Collateral Agent shall continue to
hold such collateral security until such time as a successor Collateral Agent is appointed. Upon such removal
or receipt of any such notice of resignation, the Initial Lender shall have the right to appoint a successor.
After the Initial Lender is no longer a Lender, either Agent may resign at any time by notifying the Lenders
and the Borrower in writing, and either Agent may be removed at any time with or without cause by an
instrument or concurrent instruments in writing delivered to the Borrower and such Agent and signed by the
Required Lenders. Upon any such resignation or removal, the Required Lenders shall have the right, with
the consent of the Borrower (which consent shall not be required during the continuance of an Event of
Default), to appoint a successor. If no successor shall have been so appointed by the Required Lenders (with
the consent of the Borrower (which consent shall not be required during the continuance of an Event of
Default)) and shall have accepted such appointment within 30 days after (i) the retiring Agent gives notice of
its resignation or (ii) the Required Lenders deliver removal instructions, then the retiring or removed Agent
may, on behalf of the Lenders (with the consent of the Borrower (which consent shall not be required during
the continuance of an Event of Default)), appoint a successor Agent which shall be a bank with an office in
New York, New York, or an Affiliate of any such bank. If no successor Agent has been appointed pursuant
to the immediately preceding sentence, such Agent’s resignation or removal shall become effective and the
Required Lenders shall thereafter perform all the duties of such Agent hereunder and/or under any other Loan
Document until such time, if any, as the Required Lenders (with the consent of the Borrower (which consent
shall not be required during the continuance of an Event of Default)) appoint a successor Administrative
Agent and/or Collateral Agent, as the case may be. Upon the acceptance of its appointment as Agent
hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers,
privileges and duties of its predecessor Agent, and its predecessor Agent shall be discharged from its duties
and obligations hereunder. The fees payable by the Borrower to a successor Agent shall be the same as those
payable to its predecessor unless otherwise agreed between the Borrower and such successor. After an
Agent’s resignation hereunder, the provisions of this Article and Section 9.03 shall continue in effect for the
benefit of such retiring Agent, its sub-agents and their respective Related Parties in respect of any actions
taken or omitted to be taken by any of them while acting as Agent.
SECTION 8.04 Exculpatory Provisions.
(a) The Agents shall not have any duties or obligations except those expressly set forth
herein and in the other Loan Documents or as separately agreed between the Initial Lender and the Agents,
and its duties hereunder shall be administrative in nature. Without limiting the generality of the foregoing:
(i) neither Agent shall be subject to any fiduciary or other implied duties,
regardless of whether a Default has occurred and is continuing, except that The Bank of New York
Mellon shall always have a fiduciary duty to Treasury while serving as its Agent in accordance
with the provisions of the separate writing between The Bank of New York Mellon and Treasury;
(ii) neither Agent shall have any duty to take any discretionary action or
exercise any discretionary powers, except discretionary rights and powers expressly contemplated
hereby or by the other Loan Documents that such Agent is required to exercise as directed in writing
by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly
provided for herein or in the other Loan Documents); and
(iii) except as expressly set forth herein and in the other Loan Documents,
neither Agent shall have any duty to disclose, nor shall it be liable for the failure to disclose, any
information relating to the Borrower or any of the Subsidiaries that is communicated to or obtained
by the bank serving as Administrative Agent and/or Collateral Agent or any of its Affiliates in any
capacity.
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(b) Neither Agent shall be required to expend or risk its own funds or otherwise incur
liability in the performance of any of its duties hereunder or under any other Loan Document or in the
exercise of any of its rights or powers. Notwithstanding anything in any Loan Document to the contrary,
prior to taking any action under this Agreement or any other Loan Document, each Agent shall be entitled
to indemnification satisfactory to it in its sole discretion against all losses and expenses in connection with
taking such action. Neither Agent shall be liable for any action taken or not taken by it with the consent or
at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be
necessary under the circumstances as provided in Sections 7.01 and 11.02) or in the absence of its own
gross negligence or willful misconduct as determined by the final non-appealable judgment of a court of
competent jurisdiction. Notwithstanding the foregoing, no action nor any omission to act, taken by either
Agent at the direction of the Required Lenders (or such other number of percentage of Lenders as shall be
expressly provided for herein or in the other Loan Documents) shall constitute gross negligence or willful
misconduct. Neither Agent shall be deemed to have knowledge of any Default unless and until written
notice thereof, conspicuously labeled as a “notice of default” and specifically describing such Default, is
given to an Agent Responsible Officer by the Borrower or a Lender.
(c) Neither Agent shall be responsible for or have any duty to ascertain or inquire into
(i) any statement, warranty or representation made in or in connection with this Agreement or any other
Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or
thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the
covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any
Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan
Document or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth
in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered
to the Administrative Agent.
(d) In no event shall either Agent be responsible or liable for any failure or delay in
the performance of its obligations hereunder or under any other Loan Document arising out of or caused
by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages,
epidemics, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes
or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software
and hardware) services (it being understood that such Agent shall use reasonable efforts which are
consistent with accepted practices in the banking industry to resume performance as soon as practicable
under the circumstances).
(e) Each Agent shall be entitled to rely upon, and shall not incur any liability for
relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing
believed by it in good faith to be genuine and to have been signed or sent by the proper Person. Each Agent
may also rely upon any statement made to it orally or by telephone and believed by it in good faith to have
been made by the proper Person, and shall not incur any liability for relying thereon. Delivery of reports,
information and documents to an Agent is for informational purposes only and an Agent’s receipt of the
foregoing will not constitute actual or constructive knowledge or notice of any information contained
therein or determinable from information contained therein, including the Borrower’s compliance with any
of its covenants hereunder. Each Agent may consult with legal counsel (who may be counsel for the
Borrower), independent accountants and other experts selected by it, and shall not be liable for any action
taken or not taken by it in reliance on the advice of any such counsel, accountants or experts. Any funds
held by an Agent shall, unless otherwise agreed in writing with the Borrower, be held uninvested in a non-
interest bearing account.
(f) Neither Agent shall have any obligation to calculate or confirm the calculation of
any financial covenant contained herein.
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(g) Notwithstanding anything to the contrary in any Loan Document, neither Agent
shall be responsible for the existence, genuineness or value of any of the Collateral; for filing any financing
or continuation statements or recording any documents or instruments in any public office or otherwise
perfecting or maintaining the perfection of any security interest in the Collateral (except, in the case of
possessory Collateral, for the Collateral Agent maintaining possession of any such Collateral received by
it in accordance with the terms of the Loan Documents); for the validity, perfection, priority or
enforceability of the Liens in any of the Collateral; for the validity or sufficiency of the Collateral or any
agreement or assignment contained therein; for the validity of the title of any grantor to the Collateral; for
insuring the Collateral; or for the payment of taxes, charges or assessments on the Collateral. The Collateral
Agent agrees that it will check any possessory Collateral received by it against any itemized list in the
Pledge and Security Agreements of Collateral to be delivered to it in accordance with the Pledge and
Security Agreements.
SECTION 8.05 Reliance by Agents. Each Agent shall be entitled to rely upon, and shall
not incur any liability for relying upon, any notice, request, certificate, opinion, consent, statement,
instrument, document or other writing believed by it in good faith to be genuine and to have been signed or
sent by the proper Person. Each Agent may also rely upon any statement made to it orally or by telephone
and believed by it in good faith to have been made by the proper Person, and shall not incur any liability
for relying thereon. Delivery of reports, information and documents to an Agent is for informational
purposes only and an Agent’s receipt of the foregoing will not constitute actual or constructive knowledge
or notice of any information contained therein or determinable from information contained therein,
including the Borrower’s compliance with any of its covenants hereunder. Each Agent may consult with
legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected
by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any
such counsel, accountants or experts.
SECTION 8.06 Delegation of Duties. Each Agent may perform any and all its duties and
exercise its rights and powers by or through any one or more sub-agents or attorneys appointed by it and
will not be responsible for the misconduct or negligence of any agent appointed with due care. Each Agent
and any such sub-agent may perform any and all its duties and exercise its rights and powers by or through
their respective Related Parties.
SECTION 8.07 Non-Reliance on Agents and Other Lenders. Each Lender (other than the
Initial Lender) acknowledges that it has, independently and without reliance upon the Administrative Agent
or any other Lender or any of their Related Parties and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender
(other than the Initial Lender) also acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender or any of their Related Parties and based on such documents and
information as it shall from time to time deem appropriate, continue to make its own decisions in taking or
not taking action under or based upon this Agreement, any other Loan Document or any related agreement
or any document furnished hereunder or thereunder.
SECTION 8.08 Administrative Agent May File Proofs of Claim. In case of the pendency
of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Credit
Party, the Administrative Agent (irrespective of whether the principal of any Loan shall then be due and
payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative
Agent shall have made any demand on the Borrower) shall be entitled and empowered (but not obligated)
by intervention in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of the principal and interest owing and
unpaid in respect of the Loans and all other Obligations that are owing and unpaid and to file such
other documents as may be necessary or advisable in order to have the claims of the Lenders and
the Agents (including any claim for the reasonable compensation, expenses, disbursements and
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advances of the Lenders and the Agents and their respective agents and counsel and all other
amounts due the Lenders and the Agents under Section 11.03) allowed in such judicial proceeding;
and
(b) to collect and receive any monies or other property payable or deliverable on any such
claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such
judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative
Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly
to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation,
expenses, disbursements and advances of the Agents and their respective agents and counsel, and any other
amounts due the Agents under the Loan Documents. Nothing contained herein shall be deemed to authorize
the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan of
reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any
Lender or to authorize the Administrative Agent to vote in respect of the claim of any Lender in any such
proceeding.
ARTICLE IX
GUARANTEE
SECTION 9.01 Guarantee of the Obligations. Each Guarantor jointly and severally hereby
irrevocably and unconditionally guarantees to the Secured Parties, the due and punctual payment in full and
performance of all Obligations (or such lesser amount as agreed by the Required Lenders in their sole
discretion with respect to Obligations owed to the Lenders) when the same shall become due or required to
be performed, whether at stated maturity, by required prepayment, declaration, acceleration, performance,
demand or otherwise (including amounts that would become and any performance that would have been
required to be taken due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy
Code, 11 U.S.C. § 362(a)) (collectively, the “Guaranteed Obligations”).
SECTION 9.02 Payment or Performance by a Guarantor. Each Guarantor hereby jointly and
severally agrees, in furtherance of the foregoing and the other terms of this Article IX and not in limitation of
any other right which the Secured Parties may have at law or in equity against any Guarantor by virtue hereof,
that upon the failure of the Borrower to pay or perform any of the Guaranteed Obligations when and as the
same shall become due or required to be performed, whether at stated maturity, by required prepayment,
declaration, acceleration, demand or otherwise (including amounts that would become due but for the
operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. § 362(a)), such
Guarantor will pay, or cause to be paid, in cash, or perform, or cause to be performed, to the Secured Parties
an amount equal to the sum of the unpaid principal amount of all Guaranteed Obligations then due as
aforesaid, accrued and unpaid interest on such Guaranteed Obligations (including interest which, but for the
Borrower’s becoming the subject of a case under the Bankruptcy Code, would have accrued on such
Guaranteed Obligations, whether or not a claim is allowed against the Borrower for such interest in the related
bankruptcy case) and all other Guaranteed Obligations then owed or required to be performed to the Secured
Parties as aforesaid.
SECTION 9.03 Liability of Guarantors Absolute. Each Guarantor agrees that its obligations
hereunder are irrevocable, absolute, independent and unconditional and shall not be affected by any
circumstance which constitutes a legal or equitable discharge of a guarantor or surety other than payment and
performance in full of the Guaranteed Obligations. In furtherance of the foregoing and without limiting the
generality thereof, each Guarantor agrees as follows:
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(a) this Guarantee is a guarantee of payment and performance when due and not
merely of collection;
(b) either Agent and any of the other Secured Parties may enforce this Guarantee upon
the occurrence of an Event of Default notwithstanding the existence of any dispute between the Borrower
and the Secured Parties with respect to the existence of such Event of Default;
(c) a separate action or actions may be brought and prosecuted against such Guarantor
whether or not any action is brought against the Borrower or any other Guarantors and whether or not
Borrower or such Guarantors are joined in any such action or actions;
(d) payment or performance by any Guarantor of a portion, but not all, of the
Guaranteed Obligations shall in no way limit, affect, modify or abridge any other Guarantor’s liability for
any portion of the Guaranteed Obligations which has not been paid or performed;
(e) the Required Lenders, upon such terms as they deem appropriate, without notice
or demand and without affecting the validity or enforceability hereof or giving rise to any reduction,
limitation, impairment, discharge or termination of any Guarantor’s liability hereunder, from time to time
may (i) renew, extend, accelerate, increase the rate of interest on, or otherwise change the time, place,
manner or terms of payment or performance of the Guaranteed Obligations; (ii) settle, compromise, release
or discharge, or accept or refuse any offer of performance with respect to, or substitutions for, the
Guaranteed Obligations or subordinate the payment of the same to the payment of any other obligations;
(iii) release, surrender, exchange, substitute, compromise, settle, rescind, waive, alter, subordinate or
modify, with or without consideration, any security for payment or performance of the Guaranteed
Obligations, any other guarantees of the Guaranteed Obligations, or any other obligation of any Person
(including any other Guarantor) with respect to the Guaranteed Obligations; and (iv) enforce its rights and
remedies even though such action may operate to impair or extinguish any right of reimbursement or
subrogation or other right or remedy of any Guarantor against the Borrower or any security for the
Guaranteed Obligations; and
(f) this Guarantee and the obligations of each Guarantor hereunder shall be legal, valid
and enforceable and shall not be subject to any reduction, limitation, impairment, discharge or termination
for any reason (other than payment or performance in full of the Guaranteed Obligations), including any
claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense or set-
off, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality or
unenforceability of any of the Guaranteed Obligations, any impossibility in the performance of any of the
Guaranteed Obligations, or otherwise. Without limiting the generality of the foregoing, except for the
payment and performance in full of the Guaranteed Obligations and to the fullest extent permitted by
Applicable Law, the obligations of each Guarantor hereunder shall not be discharged or impaired or
otherwise affected by: (i) any failure, delay or omission to assert or enforce or agreement or election not
to assert or enforce, or the stay or enjoining, by order of court, by operation of law or otherwise, of the
exercise or enforcement of, any claim or demand or any right, power or remedy with respect to the
Guaranteed Obligations, or with respect to any security for the payment and performance of the Guaranteed
Obligations; (ii) any rescission, waiver, amendment or modification of, or any consent to departure from,
any of the terms or provisions hereof or any other Loan Document; (iii) the Guaranteed Obligations, or any
agreement relating thereto, at any time being found to be illegal, invalid or unenforceable in any respect;
(iv) the Lender’s consent to the change, reorganization or termination of the corporate structure or existence
of the Borrower or any of its Subsidiaries and to any corresponding restructuring of the Guaranteed
Obligations; (v) the release of, or any impairment of or failure to perfect or continue perfection of or protect
a security interest in, any collateral which secures any of the Guaranteed Obligations; (vi) any defenses,
set-offs or counterclaims which the Borrower or any Guarantor may allege or assert against either Agent or
the Lenders in respect of the Guaranteed Obligations, including failure of consideration, lack of authority,
validity or enforceability, breach of warranty, payment, statute of frauds, statute of limitations, accord and
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satisfaction and usury; (vii) any change in the corporate existence, structure or ownership of any Credit
Party, or any insolvency, bankruptcy, reorganization, examinership or other similar proceeding affecting
any Credit Party or its assets or any resulting release or discharge of any of the Guaranteed Obligations;
(viii) the fact that any Person that, pursuant to the Loan Documents, was required to become a party hereto
may not have executed or is not effectually bound by this Agreement, whether or not this fact is known to
the Secured Parties; (ix) any action permitted or authorized hereunder; (x) any other circumstance, or any
existence of or reliance on any representation by the Agents, any Secured Party or any other Person, that
might otherwise constitute a defense to, or a legal or equitable discharge of, the Borrower, any Guarantor
or any other guarantor or surety; and (xi) any other event or circumstance that might in any manner vary
the risk of any Guarantor as an obligor in respect of the Guaranteed Obligations.
SECTION 9.04 Waivers by Guarantors. Each Guarantor hereby waives, for the benefit of
the Lender: (a) any right to require the Lender, as a condition of payment or performance by such Guarantor,
to (i) proceed against Borrower, any Guarantor or any other Person; (ii) proceed against or exhaust any
security in favor of the Lender; or (iii) pursue any other remedy in the power of the Agents or Secured Parties
whatsoever or (b) presentment to, demand for payment or performance from and protest to the Borrower or
any Guarantor or notice of acceptance; and (c) any defenses or benefits that may be derived from or afforded
by law which limit the liability of or exonerate guarantors or sureties, or which may conflict with the terms
hereof. The Agents and the other Secured Parties may, at their election, foreclose on any security held by one
or more of them by one or more judicial or nonjudicial sales, accept an assignment of any such security in
lieu of foreclosure or exercise any other right or remedy available to them against the Borrower or any other
Credit Party without affecting or impairing in any way the liability of any Guarantor hereunder except to the
extent the Guaranteed Obligations have been paid in full. To the fullest extent permitted by Applicable Law,
each Credit Party waives any defense arising out of any such election even though such election operates,
pursuant to Applicable Law, to impair or to extinguish any right of reimbursement or subrogation or other
right or remedy of such Credit Party against the Borrower or any other Credit Party, as the case may be, or
any security.
SECTION 9.05 Guarantors’ Rights of Subrogation, Contribution, etc. Until the Guaranteed
Obligations shall have been paid in full, each Guarantor hereby waives any claim, right or remedy, direct or
indirect, that such Guarantor now has or may hereafter have against the Borrower or any other Guarantor or
any of its assets in connection with this Guarantee or the performance by such Guarantor of its obligations
hereunder, including without limitation (a) any right of subrogation, reimbursement or indemnification that
such Guarantor now has or may hereafter have against the Borrower with respect to the Guaranteed
Obligations, (b) any right to enforce, or to participate in, any claim, right or remedy that the Agents or the
Secured Parties now has or may hereafter have against the Borrower, and (c) any benefit of, and any right to
participate in, any collateral or security now or hereafter held by the Agents or the Secured Parties. In
addition, until the Guaranteed Obligations shall have been paid in full, each Guarantor shall withhold exercise
of any right of contribution such Guarantor may have against any other guarantor (including any other
Guarantor) of the Guaranteed Obligations. If any amount shall be paid to any Guarantor on account of any
such subrogation, reimbursement, indemnification or contribution rights at any time when all Guaranteed
Obligations shall not have been finally and paid in full, such amount shall be held in trust for the Secured
Parties and shall forthwith be paid over to the Secured Parties to be credited and applied against the
Guaranteed Obligations, whether matured or unmatured, in accordance with the terms hereof.
SECTION 9.06 Subordination. Any Indebtedness of the Borrower or any Guarantor now or
hereafter and all rights of indemnity, contribution or subrogation under Applicable Law or otherwise held by
any Guarantor (the “Obligee Guarantor”) are hereby subordinated in right of payment or performance to the
Guaranteed Obligations until the Guaranteed Obligations is paid and performed in full. Any amount in respect
of such indebtedness or rights collected or received by the Obligee Guarantor after an Event of Default has
occurred and is continuing shall be held in trust for the Secured Parties and shall forthwith be paid over to the
Secured Parties to be credited and applied against the Guaranteed Obligations but without affecting, impairing
or limiting in any manner the liability of the Obligee Guarantor under any other provision hereof.
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SECTION 9.07 Continuing Guarantee. This Guarantee is a continuing guarantee and shall
remain in effect until all of the Guaranteed Obligations shall have been paid and performed in full. Each
Guarantor hereby irrevocably waives any right to revoke this Guarantee as to future transactions giving rise
to any Guaranteed Obligations.
SECTION 9.08 Financial Condition of the Borrower. The Loans may be made to the
Borrower without notice to or authorization from any Guarantor regardless of the financial or other condition
of the Borrower at the time of such grant. Each Guarantor has adequate means to obtain information from
the Borrower on a continuing basis concerning the financial condition of the Borrower and its ability to
perform its obligations under the Loan Documents, and each Guarantor assumes the responsibility for being
and keeping informed of the financial condition of the Borrower and of all circumstances bearing upon the
risk of nonpayment of the Guaranteed Obligations.
SECTION 9.09 Reinstatement. In the event that all or any portion of the Guaranteed
Obligations are paid by the Borrower or any Guarantor, the obligations of any other Guarantor hereunder
shall continue and remain in full force and effect or be reinstated, as the case may be, in the event that all or
any part of such payment(s) are rescinded or recovered directly or indirectly from the Secured Parties as a
preference, fraudulent transfer or otherwise must be so recovered or returned, and any such payments and
amounts which are so rescinded, recovered or returned shall constitute Guaranteed Obligations for all
purposes hereunder.
SECTION 9.10 Discharge of Guarantees. If, in compliance with the terms and provisions of
the Loan Documents, (x) all of the Equity Interests of any Guarantor that is a Subsidiary of the Parent or any
of its successors in interest hereunder shall be sold or otherwise disposed of (including by merger or
consolidation) to any Person (other than to the Parent or to any other Subsidiary of Parent), the Guarantee of
such Guarantor or such successor in interest, as the case may be, hereunder shall automatically be discharged
and released without any further action by any beneficiary or any other Person effective as of the time of such
asset sale or (y) a Guarantor becomes an Excluded Subsidiary (other than as a result of a Guarantor becoming
a non-Wholly Owned Subsidiary), the Borrower may request the release of the Guarantee of such Guarantor,
whereupon the Guarantee of such Guarantor shall be discharged and released.
ARTICLE X
CARES ACT REQUIREMENTS
Notwithstanding anything in this Agreement to the contrary, the Credit Parties, on behalf of
themselves and their Affiliates, represent, warrant, and agree with the Lenders that:
SECTION 10.01 CARES Act Compliance. Each Credit Party and its Subsidiaries are in
compliance, and will at all times comply, with all applicable requirements under Title IV of the CARES Act,
including any applicable requirements pertaining to the Borrower’s eligibility to receive the Loans. The
Parent, the Borrower and their Subsidiaries will provide any information requested by the Initial Lender or
Agents to assess the Borrower’s compliance with applicable requirements under Title IV of the CARES Act,
its obligations under this Article X or its eligibility to receive the Loans under the CARES Act. The Borrower
is not a “covered entity” as defined in Section 4019 of the CARES Act.
SECTION 10.02 Dividends and Buybacks
(a) Until the date that is twelve (12) months after the date on which the Loans are no
longer outstanding, neither any Borrower Air Carrier nor any of its Affiliates (other than an Affiliate that
is a natural person) shall, in any transaction, purchase an equity security of any Borrower Air Carrier or of
any direct or indirect parent company of a Borrower Air Carrier or of any Subsidiary of the Parent that, in
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each case, is listed on a national securities exchange, except to the extent required under a contractual
obligation in effect as of the date of enactment of the CARES Act.
(b) Until the date that is twelve (12) months after the date on which the Loans are no
longer outstanding, no Borrower Air Carrier shall pay dividends, or make any other capital distributions,
with respect to the common stock of any Borrower Air Carrier.
SECTION 10.03 Maintenance of Employment Levels. Until September 30, 2020, each
Borrower Air Carrier shall maintain its employment levels as of March 24, 2020, to the extent practicable,
and in any case shall not reduce its employment levels by more than ten percent (10%) from the levels on
March 24, 2020.
SECTION 10.04 United States Business. Each Borrower Air Carrier is created or organized
in the United States or under the laws of the United States and has significant operations in and a majority of
its employees based in the United States.
SECTION 10.05 Limitations on Certain Compensation.
(a) Beginning on the Closing Date, and ending on the date that is one (1) year after
the date on which the Loans are no longer outstanding, each Borrower Air Carrier and its Affiliates shall
not pay any of each Borrower Air Carrier’s Corporate Officers or Employees whose Total Compensation
exceeded $425,000 in calendar year 2019 or the Subsequent Reference Period (other than an Employee
whose compensation is determined through an existing collective bargaining agreement entered into before
March 1, 2020):
(i) Total Compensation which exceeds, during any twelve (12) consecutive
months of the period beginning on the Closing Date and ending on the date that is one (1) year after
the date on which the Loans are no longer outstanding, the Total Compensation the Corporate
Officer or Employee received in calendar year 2019 or the Subsequent Reference Period; or
(ii) Severance Pay or Other Benefits in connection with a termination of
employment with any Borrower Air Carrier which exceed twice the maximum Total Compensation
received by such Corporate Officer or Employee in calendar year 2019 or the Subsequent Reference
Period.
(b) Beginning on the Closing Date, and ending on the date that is one (1) year after
the date on which the Loans are no longer outstanding, each Borrower Air Carrier and its Affiliates shall
not pay any of each Borrower Air Carrier’s Corporate Officers or Employees whose Total Compensation
exceeded $3,000,000 in calendar year 2019 or the Subsequent Reference Period, Total Compensation which
exceeds, during any twelve (12) consecutive months of such period, in excess of the sum of:
(i) $3,000,000; and
(ii) Fifty percent (50%) of the excess over $3,000,000 of the Total
Compensation received by such Corporate Officer or Employee in calendar year 2019 or the
Subsequent Reference Period.
(c) For purposes of determining applicable amounts under this Section with respect to
any Corporate Officer or Employee who was employed by any Borrower Air Carrier or any of their
Affiliates for less than all of calendar year 2019, the amount of Total Compensation in calendar year 2019
shall mean such Corporate Officer’s or Employee’s Total Compensation on an annualized basis.
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SECTION 10.06 Continuation of Certain Air Service. Until March 1, 2022, each Borrower
Air Carrier shall comply with any applicable requirement issued by the Secretary of Transportation under
section 4005 of the CARES Act to maintain scheduled air transportation service to any point served by any
Borrower Air Carrier before March 1, 2020. The Borrower acknowledges that neither Treasury, nor any other
actor, department, or agency of the Federal Government, shall condition the issuance of any loan under this
Loan Agreement on the Borrower’s implementation of measures to enter into negotiations with the certified
bargaining representative of a craft or class of employees of the Borrower Air Carrier under the Railway
Labor Act (45 U.S.C. 151 et seq.) or the National Labor Relations Act (29 U.S.C. 151 et seq.), regarding pay
or other terms and conditions of employment.
SECTION 10.07 Treasury Access. Provide Treasury, the Treasury Inspector General, the
Special Inspector General for Pandemic Recovery, and such other entities as authorized by Treasury timely
and unrestricted access to all documents, papers, or other records, including electronic records, of the
Borrower related to the Loans, to enable Treasury, the Treasury Inspector General, and the Special Inspector
General for Pandemic Recovery to make audits, examinations, and otherwise evaluate the Borrower’s
compliance with the terms of this Agreement. This right also includes timely and reasonable access to the
Borrower’s and its Affiliates’ personnel for the purpose of interview and discussion related to such
documents.
SECTION 10.08 Additional Defined Terms. As used in this Article, the following terms
have the meanings specified below:
“Borrower Air Carrier” means, collectively, the Borrower, its Affiliates that are Air
Carriers, and their respective heirs, executors, administrators, successors, and assigns. Notwithstanding
anything to the contrary herein, for purposes of this Article X, an “Affiliate” of the Borrower shall not
include any Person(s) that become affiliated with the Borrower solely by virtue of the consummation of a
Change of Control transaction resulting in repayment of the Loans in full.
“Corporate Officer” means, with respect to any Borrower Air Carrier, its president; any
vice president in charge of a principal business unit, division, or function (such as sales, administration or
finance); any other officer who performs a policy-making function; or any other person who performs
similar policy making functions for the Borrower Air Carrier. Executive officers of subsidiaries or parents
of any Borrower Air Carrier may be deemed Corporate Officers of the Borrower Air Carrier if they perform
such policy-making functions for the Borrower Air Carrier.
“Employee” has the meaning given to the term in section 2 of the National Labor Relations
Act (29 U.S.C. 152 and includes any individual employed by an employer subject to the Railway Labor
Act (45 U.S.C. 151 et seq.), and for the avoidance of doubt includes all individuals who are employed by
the Borrower Air Carrier who are not Corporate Officers.
“Severance Pay or Other Benefits” means any severance payment or other similar benefits,
including cash payments, health care benefits, perquisites, the enhancement or acceleration of the payment
or vesting of any payment or benefit or any other in-kind benefit payable (whether in lump sum or over
time, including after March 24, 2022) by any Borrower Air Carrier or its Affiliates to a Corporate Officer
or Employee in connection with any termination of such Corporate Officer’s or Employee’s employment
(including, without limitation, resignation, severance, retirement, or constructive termination), which shall
be determined and calculated in respect of any Employee or Corporate Officer of the Borrower Air Carrier
in the manner prescribed in 17 CFR 229.402(j) (without regard to its limitation to the five (5) most highly
compensated executives and using the actual date of termination of employment rather than the last business
day of the Borrower Air Carrier’s last completed fiscal year as the trigger event).
“Subsequent Reference Period” means (i) for a Corporate Officer or Employee whose
employment with the Borrower Air Carrier or an Affiliate started during 2019 or later, the twelve (12)
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month period starting from the end of the month in which the officer or employee commenced employment,
if such officer’s or employee’s total compensation exceeds $425,000 (or $3,000,000) during such period
and (ii) for a Corporate Officer or Employee whose Total Compensation first exceeds $425,000 during a
12-month period ending after 2019, the 12-month period starting from the end of the month in which the
Corporate Officer’s or Employee’s Total Compensation first exceeded $425,000 (or $3,000,000).
“Total Compensation” means compensation including salary, wages, bonuses, awards of
stock, and any other financial benefits provided by the Borrower Air Carrier or an Affiliate, as applicable,
which shall be determined and calculated for the 2019 calendar year or any applicable twelve (12)-month
period in respect of any Employee or Corporate Officer of the Borrower Air Carrier in the manner
prescribed under paragraph e.5 of the award term in 2 CFR part 170, App. A, but excluding any Severance
Pay or Other Benefits in connection with a termination of employment.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01 Notices; Public Information.
(a) Notices Generally. Except in the case of notices and other communications
expressly permitted to be given by telephone (and except as provided in paragraph (b) below), all notices
and other communications provided for herein shall be in writing in English and shall be delivered by hand
or overnight courier service, mailed by certified or registered mail or sent by facsimile or email as follows:
(i) if to a Credit Party, to it at Alaska Air Group, Inc., 19300 International
Blvd., Seattle, WA, 98188, Attention of Nathaniel Pieper (Facsimile No. (206) 392-5290;
Telephone No. (206) 392-5062; Email: nat.pieper@alaskaair.com);
(ii) if to the Administrative Agent or the Collateral Agent, to The Bank of New
York Mellon at 240 Greenwich Street, 7th Floor, New York, NY 10286, Attention of Joanna
Shapiro, Managing Director (Telephone No. 212-815-4949; Email:
joanna.g.shapiro@bnymellon.com with a copy to UST.Cares.Program@bnymellon.com);
(iii) if to Treasury, as the Initial Lender, to The Department of the Treasury of
the United States at 1500 Pennsylvania Avenue, NW, Washington, D.C. 20220, Attention of
Assistant General Counsel (Banking and Finance) (Telephone No. 202-622-0283; Email:
eric.froman@treasury.gov); and
(iv) if to any other Lender, to it at its address (or facsimile number or email
address) set forth in its Administrative Questionnaire.
Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed
to have been given when received. Notices delivered through electronic communications, to the extent
provided in paragraph (b) below, shall be effective as provided in said paragraph (b).
(b) Electronic Communications. Notices and other communications to the Lenders
hereunder may be delivered or furnished by electronic communication (including e-mail, FpML, and
Internet or intranet websites) pursuant to procedures approved by the Lenders and reasonably acceptable to
the Administrative Agent, provided that the foregoing shall not apply to notices to any Lender pursuant to
Article II if such Lender has notified the Administrative Agent that it is incapable of receiving notices under
such Article by electronic communication. The Administrative Agent, the Collateral Agent, the Parent or
the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by
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electronic communications pursuant to procedures approved by it; provided that approval of such
procedures may be limited to particular notices or communications.
Unless the Administrative Agent, the Collateral Agent or a Lender otherwise prescribes,
(i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s
receipt of an acknowledgement from the intended recipient (such as by return e-mail or other written
acknowledgement), and (ii) notices or communications posted to an Internet or intranet website shall be
deemed received upon the deemed receipt by the intended recipient, at its e-mail address as described in
the foregoing clause (i), of notification that such notice or communication is available and identifying the
website address therefor; provided that, for both clauses (i) and (ii) above, if such notice, email or other
communication is not sent during the normal business hours of the recipient, such notice or communication
shall be deemed to have been sent at the opening of business on the next Business Day for the recipient.
(c) Change of Address, etc. Any party hereto may change its address or facsimile
number for notices and other communications hereunder by notice to the other parties hereto.
(d) Platform.
(i) The Borrower and the Lenders agree that the Administrative Agent may,
but shall not be obligated to, make the Communications (as defined below) available to the other
Lenders by posting the Communications on the Platform.
(ii) The Platform is provided “as is” and “as available.” The Agent Parties (as
defined below) do not warrant 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 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 any Agent Party in
connection with the Communications or the Platform. In no event shall the Administrative Agent
or any of its Related Parties (collectively, the “Agent Parties”) have any liability to the Credit
Parties, any Lender or any other Person or entity for damages of any kind, including direct or
indirect, special, incidental or consequential damages, losses or expenses (whether in tort, contract
or otherwise) arising out of the Borrower’s or the Administrative Agent’s transmission of
communications through the Platform. “Communications” means, collectively, any notice,
demand, communication, information, document or other material provided by or on behalf of the
Credit Parties pursuant to any Loan Document or the transactions contemplated therein that is
distributed to the Administrative Agent or any Lender by means of electronic communications
pursuant to this Section, including through the Platform.
(e) Public Information. The Borrower hereby acknowledges that certain of the
Lenders (each, a “Public Lender”) may have personnel who do not wish to receive material non-public
information with respect to the Borrower or its Affiliates, or the respective securities of any of the foregoing,
and who may be engaged in investment and other market-related activities with respect to such Persons’
securities. The Borrower hereby agrees that it will use commercially reasonable efforts to identify that
portion of the materials and information provided by or on behalf of the Borrower hereunder and under the
other Loan Documents (collectively, “Borrower Materials”) that may be distributed to the Public Lenders
and that (i) all such Borrower Materials shall be clearly and conspicuously marked “PUBLIC,” which, at a
minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (ii) by
marking Borrower Materials “PUBLIC,” the Borrower shall be deemed to have authorized the
Administrative Agent and the Lenders to treat such Borrower Materials as not containing any material non-
public information with respect to the Borrower or its securities for purposes of U.S. federal and state
securities Laws (provided, however, that to the extent that such Borrower Materials constitute Information,
they shall be subject to Section 11.12); (iii) all Borrower Materials marked “PUBLIC” are permitted to be
made available through a portion of the Platform designated “Public Side Information;” and (iv) the
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Administrative Agent shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as
being suitable only for posting on a portion of the Platform not designated “Public Side Information”. Each
Public Lender will designate one or more representatives that shall be permitted to receive information that
is not designated as being available for Public Lenders. Notwithstanding the foregoing, financial statements
and related documentation, in each case, provided pursuant to Section 5.01(a) or 5.01(b) shall be deemed
to be marked “PUBLIC”, unless the Parent notifies the Administrative Agent promptly that any such
document contains material non-public information.
SECTION 11.02 Waivers; Amendments.
(a) No Waiver; Remedies Cumulative; Enforcement. No failure or delay by the
Administrative Agent, the Collateral Agent or any Lender in exercising any right, remedy, power or
privilege hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right, remedy, power or privilege, or any abandonment or
discontinuance of steps to enforce such a right remedy, power or privilege, preclude any other or further
exercise thereof or the exercise of any other right remedy, power or privilege. The rights, remedies, powers
and privileges of the Administrative Agent, the Collateral Agent and the Lenders hereunder and under the
Loan Documents are cumulative and are not exclusive of any rights, remedies, powers or privileges that
any such Person would otherwise have.
Notwithstanding anything to the contrary contained herein or in any other Loan Document,
the authority to enforce rights and remedies hereunder and under the other Loan Documents against the
Credit Parties shall be vested exclusively in, and all actions and proceedings at law in connection with such
enforcement shall be instituted and maintained exclusively by, (i) so long as the Initial Lender is a Lender,
either the Initial Lender or, at the Initial’s Lender’s option, the Administrative Agent in accordance with
Section 7.01 for the benefit of all the Lenders and (ii) if the Initial Lender is no longer a Lender, the Required
Lenders or the Administrative Agent (acting at the direction of the Required Lenders) in accordance with
Section 7.01 for the benefit of all the Lenders; provided that the foregoing shall not prohibit (i) the
Administrative Agent from exercising on its own behalf the rights and remedies that inure to its benefit
(solely in its capacities as Administrative Agent and as Collateral Agent) hereunder and under the other
Loan Documents, (ii) any Lender from exercising setoff rights in accordance with Section 11.08 (subject
to the terms of Section 2.13) or (iii) any Lender from filing proofs of claim or appearing and filing pleadings
on its own behalf during the pendency of a proceeding relative to a Credit Party under any Debtor Relief
Law; provided, further, that if at any time there is no Person acting as Administrative Agent hereunder and
under the other Loan Documents, then (x) the Required Lenders shall have the rights otherwise provided to
the Administrative Agent pursuant to Section 7.01 and (y) in addition to the matters set forth in clauses (ii)
and (iii) of the preceding proviso and subject to Section 2.13, any Lender may, with the consent of the
Required Lenders, enforce any rights or remedies available to it and as authorized by the Required Lenders.
(b) Amendments, Etc. Except as otherwise expressly set forth in this Agreement
(including Section 2.10 and Section 8.01), no amendment or waiver of any provision of this Agreement or
any other Loan Document, and no consent to any departure by the Borrower therefrom, shall be effective
unless in writing executed by the Borrower and the Required Lenders, and acknowledged by the
Administrative Agent, or by the Borrower and the Administrative Agent with the consent of the Required
Lenders, and each such waiver or consent shall be effective only in the specific instance and for the specific
purpose for which given; provided that no such amendment, waiver or consent shall:
(i) extend or increase any Commitment of any Lender without the written
consent of such Lender;
(ii) reduce the principal of, or rate of interest specified herein on, any Loan, or
any fees or other amounts payable hereunder or under any other Loan Document, without the
written consent of each Lender directly and adversely affected thereby (provided that only the
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consent of the Required Lenders shall be necessary (x) to amend the definition of “Default Rate”
or to waive the obligation of the Borrower to pay interest at the Default Rate or (y) to amend any
financial covenant (or any defined term directly or indirectly used therein), even if the effect of
such amendment would be to reduce the rate of interest on any Loan or other Obligation or to
reduce any fee payable hereunder);
(iii) postpone any date scheduled for any payment of principal of, or interest
on, any Loan, or any fees or other amounts payable hereunder or under any other Loan Document,
or reduce the amount of, waive or excuse any such payment, without the written consent of each
Lender directly and adversely affected thereby;
(iv) change Section 2.12(b) or Section 2.13 in a manner that would alter the
pro rata sharing of payments required thereby without the written consent of each Lender directly
and adversely affected thereby;
(v) waive any condition set forth in Section 4.01 without the written consent
of the Initial Lender; or
(vi) change any provision of this Section or the percentage in the definition of
“Required Lenders” or any other provision hereof specifying the number or percentage of Lenders
required to amend, waive or otherwise modify any rights hereunder or make any determination or
grant any consent hereunder, without the written consent of each Lender;
provided, further, that no such amendment, waiver or consent shall amend, modify or otherwise affect the
rights or duties hereunder or under any other Loan Document of either of the Agents, unless in writing
executed by such Agent, in each case in addition to the Borrower and the Lenders required above.
In addition, notwithstanding anything in this Section to the contrary, (i) if the Borrower
shall have identified an obvious error or any error or omission of a technical nature, in each case, in any
provision of the Loan Documents, then, upon the delivery of a certificate of a Responsible Officer of the
Borrower to the Administrative Agent identifying such error and directing the Administrative Agent to
execute an amendment to correct such error, the Administrative Agent and the Borrower shall be permitted
to amend such provision, and, in each case, such amendment shall become effective without any further
action or consent of any other party to any Loan Document if the same is not objected to in writing by the
Required Lenders to the Administrative Agent within ten (10) Business Days following receipt of notice
thereof and (ii) that any Security Document may be amended, supplemented or otherwise modified with
the consent of the applicable Grantor (as defined in the Pledge and Security Agreements) and the
Administrative Agent to add assets (or categories of assets) to the Collateral covered by such Security
Document, as contemplated by the definition of Additional Collateral, or to remove any assets or categories
of assets (including after-acquired assets of that category) from the Collateral covered by such Security
Document to the extent the release thereof is permitted by Section 6.17(b)(iii).
SECTION 11.03 Expenses; Indemnity; Damage Waiver.
(a) Costs and Expenses. The Borrower shall pay (i) all reasonable out-of-pocket
expenses incurred by the Initial Lender, the Administrative Agent, the Collateral Agent and their Affiliates
(including the reasonable fees, charges and disbursements of any counsel for the Initial Lender, the
Administrative Agent or the Collateral Agent), and shall pay all fees and time charges and disbursements
for attorneys who may be employees of the Administrative Agent or the Collateral Agent, in connection
with the preparation, negotiation, execution, delivery and administration of this Agreement, the Loan
Documents, any other agreements or documents executed in connection herewith or therewith or any
amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions
contemplated hereby or thereby shall be consummated), and (ii) all out-of-pocket expenses incurred by the
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Administrative Agent, the Collateral Agent or any Lender (including the fees, charges and disbursements
of any counsel for the Administrative Agent, the Collateral Agent or any Lender), and shall pay all fees and
time charges for attorneys who may be employees of the Administrative Agent, the Collateral Agent or any
Lender, in connection with the enforcement or protection of its rights (A) in connection with this Agreement
and the Loan Documents, any other agreements or documents executed in connection herewith or therewith,
or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the
transactions contemplated hereby or thereby shall be consummated) including its rights under this Section,
or (B) in connection with the Loans made hereunder, including all such out-of-pocket expenses incurred
during any workout, restructuring, negotiations or enforcement in respect of this Agreement, the Loan
Documents and other agreements or documents executed in connection herewith or therewith.
(b) Indemnification by the Borrower. The Borrower shall indemnify the
Administrative Agent and Collateral Agent (and any sub-agents thereof) and each Lender, and each Related
Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold
each Indemnitee harmless from, any and all losses, claims, damages, liabilities, obligations, penalties, fines,
settlements, judgments, disbursements and related costs and related expenses (including the fees, charges
and disbursements of any counsel for any Indemnitee), and shall indemnify and hold harmless each
Indemnitee from all fees and time charges and disbursements for attorneys who may be employees of any
Indemnitee, incurred by any Indemnitee or asserted against any Indemnitee by any Person (including the
Parent) arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement,
any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance
by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the
transactions contemplated hereby or thereby, (ii) any Loan or the use or proposed use of the proceeds
therefrom, (iii) any actual or alleged presence or release of Hazardous Materials on or from any property
owned or operated by the Parent or any of its Subsidiaries, or any Environmental Liability related in any
way to the Parent or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation
or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether
brought by a third party or by the Parent, and regardless of whether any Indemnitee is a party thereto;
provided that such indemnity shall not, as to any Indemnitee other than the Initial Lender, be available to
the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of
competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or
willful misconduct of such Indemnitee. This paragraph (b) shall not apply with respect to Taxes other than
any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim.
(c) Reimbursement by Lenders. To the extent that the Borrower for any reason fails
to indefeasibly pay any amount required under paragraph (a) or (b) of this Section to be paid by it to the
Administrative Agent or Collateral Agent (or any sub-agents thereof) or any Related Party of any of the
foregoing, each Lender (other than the Initial Lender) severally agrees to pay to the Administrative Agent
or Collateral Agent (or any such sub-agents) or such Related Party, as the case may be, such Lender’s pro
rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is
sought based on each Lender’s Applicable Percentage at such time) of such unpaid amount (including any
such unpaid amount in respect of a claim asserted by such Lender); provided that the unreimbursed expense
or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or
asserted against the Administrative Agent or Collateral Agent (or any such sub-agents), or against any
Related Party of any of the foregoing acting for the Administrative Agent or Collateral Agent (or any such
sub-agents) in connection with such capacity. The obligations of the Lenders under this paragraph (c) are
subject to the provisions of Section 2.12(e).
(d) Waiver of Consequential Damages, Etc. To the fullest extent permitted by
Applicable Law, no Credit Party shall assert, and each hereby waives, any claim against any Indemnitee,
on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or
actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan
Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or
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thereby, any Loan, or the use of the proceeds thereof. No Indemnitee referred to in paragraph (b) above
shall be liable for any damages arising from the use by unintended recipients of any information or other
materials distributed by it through telecommunications, electronic or other information transmission
systems in connection with this Agreement or the other Loan Documents or the transactions contemplated
hereby or thereby.
(e) Payments. All amounts due under this Section shall be payable not later than
five (5) days after demand therefor; provided that the terms of this Section shall not apply to the Initial
Lender.
(f) Survival. Each party’s obligations under this Section shall survive the termination
of the Loan Documents and payment of the obligations hereunder and the resignation or removal of the
Administrative Agent or the Collateral Agent.
SECTION 11.04 Successors and Assigns.
(a) Successors and Assigns Generally. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that the Borrower may not assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of the Administrative Agent and each Lender (and
any other attempted assignment or transfer by any party hereto shall be null and void), and no Lender may
assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance
with the provisions of paragraph (b) of this Section, (ii) by way of participation in accordance with the
provisions of paragraph (d) of this Section, or (iii) by way of pledge or assignment of a security interest
subject to the restrictions of paragraph (e) of this Section. Nothing in this Agreement, expressed or implied,
shall be construed to confer upon any Person (other than the parties hereto, their respective successors and
assigns permitted hereby, Participants to the extent provided in paragraph (d) of this Section and, to the
extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the
Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.
(b) Assignments by Lenders. Any Lender may at any time assign to one or more
Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a
portion of the Loans at the time owing to it); provided that any such assignment by any Lender (other than
the Initial Lender) shall be subject to the following conditions:
(i) Minimum Amounts.
(A) in the case of an assignment of the entire remaining amount of the
assigning Lender’s Loans at the time owing to it or contemporaneous assignments to and/or
by related Approved Funds (determined after giving effect to such assignments) that equal
at least the amount specified in paragraph (b)(i)(B) of this Section in the aggregate or in
the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no
minimum amount need be assigned; and
(B) in any case not described in paragraph (b)(i)(A) of this Section,
the principal outstanding balance of the Loans of the assigning Lender subject to each such
assignment (determined as of the date the Assignment and Assumption with respect to such
assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the
Assignment and Assumption, as of the Trade Date) shall not be less than $5,000,000, unless
each of the Administrative Agent and, so long as no Default or Event of Default has
occurred and is continuing, the Borrower otherwise consents (each such consent not to be
unreasonably withheld or delayed).
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(ii) Proportionate Amounts. Each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender’s rights and obligations under this
Agreement with respect to the Loans assigned.
(iii) Required Consents. No consent shall be required for any assignment by
the Initial Lender. The consent of the Borrower (such consent not to be unreasonably withheld,
delayed or conditioned) shall be required for any assignment by any Lender other than the Initial
Lender unless (x) a Default or Event of Default has occurred and is continuing at the time of such
assignment, or (y) such assignment is to a Lender or an Affiliate of a Lender; provided that the
Borrower shall be deemed to have consented to any such assignment unless it shall object thereto
by written notice to the Administrative Agent within five (5) Business Days after having received
notice thereof.
(iv) Assignment and Assumption. The parties to each assignment shall execute
and deliver to the Administrative Agent an Assignment and Assumption, together with a processing
and recordation fee of $3,500; provided that the Administrative Agent may, in its sole discretion,
elect to waive such processing and recordation fee in the case of any assignment. The assignee, if
it is not a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.
(v) No Assignment to Certain Persons. No such assignment shall be made
to the Borrower or any of the Borrower’s Affiliates or Subsidiaries.
(vi) No Assignment to Natural Persons. No such assignment shall be made to
a natural person (or a holding company, investment vehicle or trust for, or owned and operated for
the primary benefit of, a natural person).
Subject to acceptance and recording thereof by the Administrative Agent pursuant to paragraph (c) of this
Section, from and after the effective date specified in each Assignment and Assumption, the assignee
thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment
and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be
released from its obligations under this Agreement (and, in the case of an Assignment and Assumption
covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease
to be a party hereto) but shall continue to be entitled to the benefits of Section 11.03 with respect to facts
and circumstances occurring prior to the effective date of such assignment. Any assignment or transfer by
a Lender other than the Initial Lender of rights or obligations under this Agreement that does not comply
with this paragraph shall be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with paragraph (d) of this Section.
(c) Register. The Administrative Agent, acting solely for this purpose as an agent of
the Borrower, shall maintain at one of its offices a copy of each Assignment and Assumption delivered to
it and a register for the recordation of the names and addresses of the Lenders, and the principal amounts
(and stated interest) of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the
“Register”). The entries in the Register shall be conclusive absent manifest error, and the Borrower, the
Administrative Agent, the Collateral Agent and the Lenders shall treat each Person whose name is recorded
in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement. The
Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from
time to time upon reasonable prior notice.
(d) Participations. Any Lender may at any time, without the consent of, or notice to,
the Borrower or the Administrative Agent, sell participations to any Person (other than a Competitor, a
natural person, or a holding company, investment vehicle or trust for, or owned and operated for the primary
benefit of, a natural person, or the Borrower or any of the Borrower’s Affiliates or Subsidiaries) (each, a
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“Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including
all or a portion of the Loans owing to it); provided that (i) such Lender’s obligations under this Agreement
shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, and (iii) the Borrower, the Administrative Agent, the Collateral Agent and
Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights
and obligations under this Agreement. For the avoidance of doubt, each Lender shall be responsible for the
indemnity under Section 11.03(b) with respect to any payments made by such Lender to its Participant(s).
Any agreement or instrument pursuant to which a Lender sells such a participation shall
provide that such Lender shall retain the sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this Agreement; provided that such agreement or
instrument may provide that such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver described in Section 11.02(b)(i) through (v) that affects such
Participant. The Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.14, 2.15
and 2.16 (subject to the requirements and limitations therein, including the requirements under
Section 2.16(g) (it being understood that the documentation required under Section 2.16(g) shall be
delivered to the participating Lender)) to the same extent as if it were a Lender and had acquired its interest
by assignment pursuant to paragraph (b) of this Section; provided that such Participant (A) agrees to be
subject to the provisions of Section 2.19 as if it were an assignee under paragraph (b) of this Section; and
(B) shall not be entitled to receive any greater payment under Section 2.15 or 2.16, with respect to any
participation, than its participating Lender would have been entitled to receive, except to the extent such
entitlement to receive a greater payment results from a Change in Law that occurs after the Participant
acquired the applicable participation. Each Lender that sells a participation agrees, at the Borrower’s
request and expense, to use reasonable efforts to cooperate with the Borrower to effectuate the provisions
of Section 2.19(b) with respect to any Participant. To the extent permitted by law, each Participant also
shall be entitled to the benefits of Section 11.08 as though it were a Lender; provided that such Participant
agrees to be subject to Section 2.13 as though it were a Lender. Each Lender that sells a participation shall,
acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it
enters the name and address of each Participant and the principal amounts (and stated interest) of each
Participant’s interest in the Loans or other obligations under the Loan Documents (the “Participant
Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant
Register (including the identity of any Participant or any information relating to a Participant’s interest in
any loans or its other obligations under any Loan Document) to any Person except to the extent that such
disclosure is necessary to establish that such loan or other obligation is in registered form under
Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall
be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the
Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding
any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as
Administrative Agent) shall have no responsibility for maintaining a Participant Register.
(e) Certain Pledges. Any Lender may at any time pledge or assign a security interest
in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any
pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or
assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee
or assignee for such Lender as a party hereto.
SECTION 11.05 Survival. All covenants, agreements, representations and warranties made
by any Credit Party herein and in any Loan Document or other documents delivered in connection herewith
or therewith or pursuant hereto or thereto shall be considered to have been relied upon by the other parties
hereto and shall survive the execution and delivery hereof and thereof and the making of the Borrowings
hereunder, regardless of any investigation made by any such other party or on its behalf and notwithstanding
that the Administrative Agent, the Collateral Agent or any Lender may have had notice or knowledge of any
Default at the time of any Borrowing, and shall continue in full force and effect as long as any Loan or any
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other Obligation hereunder shall remain unpaid or unsatisfied and so long as the Commitments have not
expired or been terminated. The provisions of Sections 2.14, 2.15, 11.03, 11.15 and Article VIII shall survive
and remain in full force and effect regardless of the consummation of the transactions contemplated hereby,
the payment in full of the Obligations, the expiration or termination of the Commitments or the termination
of this Agreement or any provision hereof.
SECTION 11.06 Counterparts; Integration; Effectiveness; Electronic Execution.
(a) Counterparts; Integration; Effectiveness. This Agreement may be executed in
counterparts (and by different parties hereto in different counterparts), each of which shall constitute an
original, but all of which when taken together shall constitute a single contract. This Agreement and the
other Loan Documents, constitute the entire contract among the parties relating to the subject matter hereof
and supersede any and all previous agreements and understandings, oral or written, relating to the subject
matter hereof. Except as provided in Section 4.01, this Agreement shall become effective when it shall
have been executed by the Administrative Agent and when the Administrative Agent shall have received
counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto.
Delivery of an executed counterpart of a signature page of this Agreement by facsimile or in electronic
(e.g., “pdf” or “tif”) format shall be effective as delivery of a manually executed counterpart of this
Agreement.
(b) Electronic Execution. The words “execution,” “signed,” “signature,” and words
of like import in this Agreement and in any Assignment and Assumption shall be deemed to include
electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal
effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping
system, as the case may be, to the extent and as provided for in any Applicable Law, including the Federal
Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures
and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.
Notwithstanding anything herein to the contrary, delivery of an executed counterpart of a signature page of
this Agreement by telecopy or other electronic means, or confirmation of the execution of this Agreement
on behalf of a party by an email from an authorized signatory of such party shall be effective as delivery of
a manually executed counterpart of this Agreement.
SECTION 11.07 Severability. If any provision of this Agreement or the other Loan
Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the
remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired
thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or
unenforceable provisions with valid provisions the economic effect of which comes as close as possible to
that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction
shall not invalidate or render unenforceable such provision in any other jurisdiction.
SECTION 11.08 Right of Setoff. If an Event of Default shall have occurred and be
continuing, 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 Applicable Law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final, in whatever currency) at any time held, and other
obligations (in whatever currency) at any time owing, by such Lender or any such Affiliate, to or for the credit
or the account of the Borrower against any and all of the due and unpaid Obligations of the Borrower now or
hereafter existing under this Agreement or any other Loan Document to such Lender or its respective
Affiliates, irrespective of whether or not such Lender or Affiliate shall have made any demand under this
Agreement or any other Loan Document and although such obligations of the Borrower may be contingent
or unmatured or are owed to a branch office or Affiliate of such Lender different from the branch office or
Affiliate holding such deposit or obligated on such indebtedness. The rights of each Lender and their
respective Affiliates under this Section are in addition to other rights and remedies (including other rights of
setoff) that such Lender or its respective Affiliates may have. Each Lender (other than the Initial Lender)
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agrees to notify the Borrower and the Administrative Agent promptly after any such setoff and application;
provided that the failure to give such notice shall not affect the validity of such setoff and application.
SECTION 11.09 Governing Law; Jurisdiction; Etc.
(a) Governing Law. This Agreement and the other Loan Documents will be governed
by and construed in accordance with the federal law of the United States if and to the extent such law is
applicable, and otherwise in accordance with the law of the State of New York applicable to contracts made
and to be performed entirely within such State.
(b) Jurisdiction and Venue. Each of the Credit Parties and each Lender agrees (a) to
submit to the exclusive jurisdiction and venue of the United States District Court for the District of
Columbia for any civil action, suit or proceeding arising out of or relating to this Agreement, the Loan
Documents, or the transactions contemplated hereby or thereby.
(c) Service of Process. Each party hereto irrevocably consents to service of process
in the manner provided for notices in Section 11.01. Nothing in this Agreement will affect the right of any
party hereto to serve process in any other manner permitted by Applicable Law.
SECTION 11.10 Waiver of Jury Trial. To the extent permitted by Applicable Law, each
Credit Party and each Lender hereby unconditionally waives trial by jury in any civil legal action or
proceeding relating to this Agreement, the Loan Documents or the transactions contemplated hereby or
thereby.
SECTION 11.11 Headings. Article and Section headings and the Table of Contents used
herein are for convenience of reference only, are not part of this Agreement and shall not affect the
construction of, or be taken into consideration in interpreting, this Agreement.
SECTION 11.12 Treatment of Certain Information; Confidentiality. Each of the Agents
and the Lenders (other than the Initial Lender) agree to maintain the confidentiality of the Information (as
defined below), except that Information may be disclosed (a) to its Affiliates and to its Related Parties (it
being understood that the Persons to whom such disclosure is made will be informed of the confidential nature
of such Information and instructed to keep such Information confidential); (b) to the extent required or request
by any regulatory authority purporting to have jurisdiction over such Person or its Related Parties (including
any self-regulatory authority, such as the National Association of Insurance Commissioners); (c) to the extent
required by Applicable Laws or by any subpoena or similar legal process; (d) to any other party hereto; (e) in
connection with the exercise of any remedies hereunder or under any other Loan Document or any action or
proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or
thereunder; (f) subject to an agreement containing provisions substantially the same as (or no less restrictive
than) those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant
in, any of its rights and obligations under this Agreement, or (ii) any actual or prospective party (or its Related
Parties) to any swap, derivative or other transaction under which payments are to be made by reference to the
Borrower and its obligations, this Agreement or payments hereunder; provided that, in each case under this
clause (f)(ii), such actual or prospective party is not a Competitor; (g) on a confidential basis to (i) any rating
agency in connection with rating the Borrower or its Subsidiaries or the Loans or (ii) the CUSIP Service
Bureau or any similar agency in connection with the issuance and monitoring of CUSIP numbers with respect
to the Loans; (h) with the consent of the Borrower or (i) to the extent such Information (x) becomes publicly
available other than as a result of a breach of this Section, or (y) becomes available to either Agent, any
Lender or any of their respective Affiliates on a nonconfidential basis from a source other than the Borrower
who did not acquire such information as a result of a breach of this Section.
For purposes of this Section, “Information” means all information received from the Parent
or any of its Subsidiaries relating to the Parent or any of its Subsidiaries or any of their respective businesses,
96
other than any such information that is available to the Administrative Agent or any Lender on a
nonconfidential basis prior to disclosure by the Parent or any of its Subsidiaries; provided that, in the case
of information received from the Parent or any of its Subsidiaries after the date hereof, such information is
clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality
of Information as provided in this Section shall be considered to have complied with its obligation to do so
if such Person has exercised the same degree of care to maintain the confidentiality of such Information as
such Person would accord to its own confidential information.
SECTION 11.13 Money Laundering; Sanctions. The Borrower shall provide to the
Administrative Agent, the Collateral Agent, and the Lenders information and documentation that the Lenders
may reasonably request that identifies the Borrower and its Affiliates, which information may include the
name and address of the Borrower and its Affiliates and other information regarding beneficial ownership of
the Borrower and its Affiliates that will allow the Lenders to ensure compliance with Sanctions and the AML
Laws. For purposes of determining whether or not a representation with respect to any indirect ownership is
true or a covenant is being complied with under this Section 11.13, the Borrower shall not be required to
make any investigation into (i) the ownership of publicly traded stock or other publicly traded securities or
(ii) the ownership of assets by a collective investment fund that holds assets for employee benefit plans or
retirement arrangements.
SECTION 11.14 Interest Rate Limitation. Notwithstanding anything herein to the contrary,
if at any time the interest rate applicable to any Loan, together with all fees, charges and other amounts that
are treated as interest on such Loan under Applicable Law (collectively, “charges”), shall exceed the
maximum lawful rate (the “Maximum Rate”) that may be contracted for, charged, taken, received or reserved
by the Lender holding such Loan in accordance with Applicable Law, the rate of interest payable in respect
of such Loan hereunder, together with all charges payable in respect thereof, shall be limited to the Maximum
Rate. To the extent lawful, the interest and charges that would have been paid in respect of such Loan but
were not paid as a result of the operation of this Section shall be cumulated and the interest and charges
payable to such Lender in respect of other Loans or periods shall be increased (but not above the amount
collectible at the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the
Federal Funds Effective Rate for each day to the date of repayment, shall have been received by such Lender.
Any amount collected by such Lender that exceeds the maximum amount collectible at the Maximum Rate
shall be applied to the reduction of the principal balance of such Loan or refunded to the Borrower so that at
no time shall the interest and charges paid or payable in respect of such Loan exceed the maximum amount
collectible at the Maximum Rate.
SECTION 11.15 Payments Set Aside. To the extent that any payment by or on behalf of
the Borrower is made to the Administrative Agent or any Lender, or any Lender exercises its right of setoff,
and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to
be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the
Administrative Agent or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in
connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such
recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in
full force and effect as if such payment had not been made or such setoff had not occurred, and (b) each
Lender (other than the Initial Lender) severally agrees to pay to the Administrative Agent upon demand its
applicable share (without duplication) of any amount so recovered from or repaid by the Administrative
Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per
annum equal to the Federal Funds Effective Rate from time to time in effect.
SECTION 11.16 No Advisory or Fiduciary Responsibility. In connection with all aspects
of each transaction contemplated hereby (including in connection with any amendment, waiver or other
modification hereof or of any other Loan Document), the Borrower acknowledges and agrees, and
acknowledges its Affiliates’ understanding, that: (a) (i) no fiduciary, advisory or agency relationship between
any Credit Party and any of their respective Subsidiaries and the Administrative Agent, the Collateral Agent
97
or any Lender is intended to be or has been created in respect of the transactions contemplated hereby or by
the other Loan Documents, irrespective of whether the Administrative Agent, the Collateral Agent, or any
Lender has advised or is advising any Credit Party or any of their respective Subsidiaries on other matters,
(ii) the lending and other services regarding this Agreement provided by the Administrative Agent, the
Collateral Agent and the Lenders are arm’s-length commercial transactions between Credit Parties and their
Affiliates, on the one hand, and the Administrative Agent, the Collateral Agent and the Lenders, on the other
hand, (iii) the Credit Parties have consulted their own legal, accounting, regulatory and tax advisors to the
extent that they has deemed appropriate and (iv) the Credit Parties are capable of evaluating, and understands
and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan
Documents; and (b) (i) the Administrative Agent, the Collateral Agent and the Lenders each is and has been
acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is
not, and will not be acting as an advisor, agent or fiduciary for the Credit Parties or any of their respective
Affiliates, or any other Person; (ii) none of the Administrative Agent, the Collateral Agent and the Lenders
has any obligation to the Credit Parties or any of their respective Affiliates with respect to the transactions
contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents;
and (iii) the Administrative Agent, the Collateral Agent and the Lenders and their respective Affiliates may
be engaged, in a broad range of transactions that involve interests that differ from those of the Credit Parties
and their respective Affiliates, and none of the Administrative Agent, the Collateral Agent and the Lenders
has any obligation to disclose any of such interests to the Credit Parties or any of their respective Affiliates.
To the fullest extent permitted by Law, the Credit Parties hereby waive and release any claims that they may
have against any of the Administrative Agent, the Collateral Agent and the Lenders with respect to any breach
or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated
hereby.
SECTION 11.17 Acknowledgement and Consent to Bail-In of EEA Financial Institutions.
Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or
understanding among the parties, each party hereto (including each Credit Party) acknowledges that any
liability arising under a Loan Document of any Credit Party that is an Affected Financial Institution, to the
extent such liability is unsecured, may be subject to the write-down and conversion powers of the applicable
Resolution Authority, and agrees and consents to, and acknowledges and agrees to be bound by: (a) the
application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such
liabilities arising under any Loan Documents which may be payable to it by any Credit Party that is an
Affected Financial Institution; and (b) the effects of any Bail-In Action on any such liability, including (i) a
reduction in full or in part or cancellation of any such liability, (ii) a conversion of all, or a portion of, such
liability into shares or other instruments of ownership in such Affected Financial Institution, its parent
undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares
or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability
under any Loan Document, or (iii) the variation of the terms of such liability in connection with the exercise
of the write-down and conversion powers of the applicable Resolution Authority.
[Signature pages follow.]
98
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first above written.
ALASKA AIRLINES, INC., as Borrower
By_________________________
Name:
Title:
99
ALASKA AIR GROUP, INC.,
as Parent and Guarantor
By_________________________
Name:
Title:
100
HORIZON AIR INDUSTRIES, INC., as Guarantor
By_________________________
Name:
Title:
101
THE BANK OF NEW YORK MELLON,
as Administrative Agent
By_________________________
Name:
Title:
THE BANK OF NEW YORK MELLON,
as Collateral Agent
By_________________________
Name:
Title:
102
UNITED STATES DEPARTMENT OF THE
TREASURY, as the Initial Lender
By_________________________
Name:
Title:
Annex B
Form of Amended and Restated Horizon Pledge and Security Agreement
EXECUTION VERSION
AMENDED AND RESTATED HORIZON AIRCRAFT, ENGINE AND PROPELLER PLEDGE
AND SECURITY AGREEMENT
dated as of October 30, 2020
between
EACH OF THE GRANTORS PARTY HERETO
and
THE BANK OF NEW YORK MELLON
as Collateral Agent
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TABLE OF CONTENTS
PAGE
Section 1. DEFINITIONS ...................................................................................................................... 1
General Definitions. ...................................................................................................................... 1
Definitions; Interpretation ............................................................................................................. 5
Section 2. GRANT OF SECURITY INTERESTS. ............................................................................... 5
Grant of Security ........................................................................................................................... 5
Section 3. SECURITY FOR OBLIGATIONS; GRANTORS REMAIN LIABLE. .............................. 7
Security for Obligations ................................................................................................................ 7
Continuing Liability Under Collateral .......................................................................................... 7
Section 4. REPRESENTATIONS AND WARRANTIES. .................................................................... 7
Generally. ...................................................................................................................................... 7
Section 5. COVENANTS AND AGREEMENTS ................................................................................. 9
Affirmative Covenants. ................................................................................................................. 9
Negative Covenants. ................................................................................................................... 10
Section 6. FURTHER ASSURANCES; ADDITIONAL GRANTORS. ............................................. 10
Further Assurances...................................................................................................................... 10
Additional Grantors .................................................................................................................... 11
Section 7. COLLATERAL AGENT APPOINTED PROXY ATTORNEY-IN-FACT. ...................... 11
Power of Attorney ....................................................................................................................... 11
No Duty on the Part of Collateral Agent or Secured Parties....................................................... 13
Standard of Care; Collateral Agent May Perform....................................................................... 13
Section 8. REMEDIES. ........................................................................................................................ 14
Generally. .................................................................................................................................... 14
Application of Proceeds .............................................................................................................. 17
Sales on Credit ............................................................................................................................ 17
Section 9. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS; Reinstatement. ...... 17
Continuing Security Interest; Transfer of Loans ......................................................................... 17
Reinstatement .............................................................................................................................. 18
Section 10. MISCELLANEOUS. .......................................................................................................... 18
Notices. ....................................................................................................................................... 18
Waiver; Amendment. .................................................................................................................. 18
Relation to Other Security Documents. ...................................................................................... 19
Collateral Agent’s Fees and Expenses. ....................................................................................... 19
Survival of Agreement. ............................................................................................................... 19
Counterparts; Effectiveness, Successors and Assigns. ............................................................... 19
Severability. ................................................................................................................................ 20
Governing Law; Jurisdiction, Etc. .............................................................................................. 20
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Schedules
Schedule 1.1 (Excluded Intellectual Property)
Schedule 2.1 (Certain Listed Collateral)
Schedule 4.1 (General Information)
Exhibits
Exhibit A (Form of Pledge Supplement)
Exhibit B (Form of Perfection Certificate)
Annexes
Annex 1 (Loyalty Program Assets)
Annex 2 (Control Collateral)
Annex 3A (Propeller Assets)
Annex 3B (Aircraft and Engine Assets)
Annex 4 (Slots, Gates and Routes)
Annex 5 (Pledged Collateral)
Annex 6 (Spare Parts Assets)
ii
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This AMENDED AND RESTATED HORIZON AIRCRAFT, ENGINE AND PROPELLER
PLEDGE AND SECURITY AGREEMENT, dated as of October 30, 2020 (together with the Annexes and
Schedules, and as may be further amended, restated, amended and restated, supplemented or otherwise
modified from time to time, this “Agreement”), between each Grantor, whether as an original signatory
hereto or as an Additional Grantor, and The Bank of New York Mellon, as collateral agent for the Secured
Parties (in such capacity as collateral agent, together with its successors and assigns, the “Collateral
Agent”).
W I T N E S S E T H:
WHEREAS, each Grantor has entered into a Restatement Agreement (the “Restatement
Agreement”), dated as the date hereof, to that certain Loan and Guarantee Agreement, dated as of
September 28, 2020 (the “Existing Loan and Guarantee Agreement”, and as restated by the Restatement
Agreement, and as may be further amended, restated, amended and restated, supplemented or otherwise
modified from time to time, the “Loan Agreement”), between ALASKA AIRLINES, INC. (the
“Borrower”), ALASKA AIR GROUP, INC. (the “Parent”), the Guarantors party thereto from time to
time, the UNITED STATES DEPARTMENT OF THE TREASURY (“Treasury”), as Initial Lender, and
THE BANK OF NEW YORK MELLON, as Administrative Agent and Collateral Agent;
WHEREAS, each Grantor had entered into that certain Horizon Aircraft and Engine Pledge and
Security Agreement, dated as of September 28, 2020 and filed for recordation with the FAA Registry
pursuant to and in accordance with the provisions of Section 44107 of the Transportation Code on
September 28, 2020 at 8:17 A.M., C.D.T. but has not yet been recorded, between each Grantor and the
Collateral Agent (the “Existing Horizon Security Agreement”);
WHEREAS, the Borrower has requested, and Treasury has agreed to, extend additional
Commitments to the Borrower as is permissible under the CARES Act to the Borrower;
WHEREAS, Loans made pursuant to the Commitments (as increased by the Additional
Commitments being provided by the Restatement Agreement to the Existing Loan and Guarantee
Agreement) will be secured by Liens on the Collateral securing the existing Obligations, together with
Liens on any Additional Collateral, subject to the distribution priorities set forth in the Loan Agreement;
WHEREAS, in connection with the foregoing, each Grantor and the Collateral Agent on behalf of
the Secured Parties wish to amend and restate the Existing Horizon Security Agreement to (i) add the Annex
3A to this Agreement covering any and all Propeller Assets as Additional Collateral and (ii) renumber the
existing Annex 3 (Aircraft and Engine Assets) as Annex 3B (Aircraft and Engine Assets);
NOW, THEREFORE, in consideration of the mutual promises contained herein and other good and
valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. DEFINITIONS
General Definitions.
All capitalized terms used herein (including the preamble and recitals hereto) shall have the
meanings assigned to such terms as set forth below or in any Applicable Annex, in the Loan Agreement, or
if not defined therein, in the UCC.
“Additional Grantor” shall have the meaning assigned in Section 6.2.
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“Agreement” shall have the meaning set forth in the preamble.
“Aircraft Protocol” means the official English language text of the Protocol to the Convention on
International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment adopted on
November 16, 2001, at a diplomatic conference in Cape Town, South Africa, and all amendments,
supplements and revisions thereto, as in effect in the United States.
“Annex Remedies Section” shall mean, with respect to an Applicable Annex, the section in such
Applicable Annex named “Defaults and Remedies”.
“Applicable Annex” shall mean, with respect to any Collateral and any Grantor, (i) each of Annex
1 (Loyalty Program Assets), Annex 2 (Control Collateral), Annex 3A (Propellers), Annex 3B (Aircraft and
Engine Assets), Annex 4 (Slots, Gates and Routes), Annex 5 (Pledged Collateral), and Annex 6 (Spare Parts
Assets) that is applicable to such Collateral and such Grantor and any other Annexes incorporated by
reference in such Annex and (ii) any other Annexes attached hereto.
“Cape Town Convention” shall mean the official English language text of the Convention on
International Interests in Mobile Equipment, adopted on November 16, 2001 at a diplomatic conference in
Cape Town, South Africa, and all amendments, supplements and revisions thereto, as in effect in the United
States.
“Cape Town Treaty” shall mean, collectively, (a) the Cape Town Convention, (b) the Aircraft
Protocol, and (c) all rules and regulations (including the Regulations and Procedures for the International
Registry) adopted pursuant thereto and all amendments, supplements and revisions thereto.
“Collateral” shall have the meaning assigned in Section 2.1.
“Collateral Agent” shall have the meaning set forth in the preamble.
“Control” shall mean the completion and satisfaction of those conditions and steps necessary for
the secured party to have “control” when used with respect to any (i) Certificated Security, under UCC
Section 8-106(a) or (b), as applicable, (ii) Securities Account, including any Financial Asset credited to
such Securities Account and all related Security Entitlements, under UCC Section 8-106(d) and (iii) Deposit
Account, under UCC Section 9-104(a).
“Control Collateral” shall mean Collateral consisting of the Deposit Accounts and Securities
Accounts identified in Schedule 2.1.
“Copyrights” shall mean all United States and foreign (A) copyrights, whether registered or
unregistered, whether in published or unpublished works of authorship, (B) copyright registrations or
applications in any IP Filing Office, (C) copyright renewals or extensions and (D) rights corresponding,
derived from or analogous to any of the foregoing.
“Excluded Asset” shall mean (i) any asset of a Grantor subject to a Permitted Lien, if, to the extent
and only for so long as the grant of a Lien on such asset to secure the Secured Obligations is prohibited by,
or requires additional action (that has not been taken) under, any agreement permitted under Section 6.02
of the Loan Agreement (unless the counterparty to such agreement is an Affiliate of any Grantor), (ii) any
lease, license, contract, property right or agreement to which any Grantor is a party to the extent any such
lease, license, contract, property right or agreement by its terms in effect on the date hereof or applicable
Law, prohibits, or requires consent (unless such consent has been received or is of an Affiliate of any
Grantor) to the granting of a Lien in the rights of such Grantor thereunder or which Lien would be invalid
2
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or unenforceable upon any such grant, in each case in this clause (ii) except to the extent that the UCC or
any other applicable Law provides that such grant of Lien is effective irrespective of any prohibitions to
such grant (iii) any “intent-to-use” application for registration of a Trademark filed with the United States
Patent and Trademark Office, pursuant to Section 1(b) of the Lanham Act, 15 U.S.C. §1051, prior to the
filing of a “Statement of Use” pursuant to Section 1(d) of the Lanham Act or an “Amendment to Allege
Use” pursuant to Section 1(c) of the Lanham Act with respect thereto, but solely to the extent, if any, that,
and solely during the period, if any, in which, the grant of a security interest therein would impair the
validity or enforceability of any registration that issues from such “intent-to-use” application under
applicable federal law, (iv) motor vehicles subject to certificates of title (other than to the extent a Lien
thereon can be perfected by the filing of a financing statement under the UCC), (v) margin stock (within
the meaning of Regulation U of the Board of Governors, as in effect from time to time), (vi) any Deposit
Account or Securities Account that is used solely as a pension fund, escrow (including any escrow accounts
for the benefit of customers), trust, or similar account, in each case, for the benefit of third parties and (vii)
any Equity Interest of an Excluded Subsidiary; provided, however, that Excluded Assets shall not include
any Material Loyalty Program Agreement, and licenses and property rights thereunder and, for the
avoidance of doubt, any other Loyalty Program Agreement as to which consent to the grant of the security
interest hereunder has been obtained and provided further that Excluded Assets shall not include any
Control Collateral or Proceeds, substitutions or replacements of any Excluded Assets referred to in clauses
(i) through (vii) (unless such Proceeds, substitutions or replacements would independently constitute
Excluded Assets referred to in clauses (i) through (vii)).
“Grantor” shall mean each of the signatories hereto (including any Additional Grantor) other than
the Collateral Agent.
“Loan Agreement” shall have the meaning set forth in the recitals.
“Insurance” shall mean (i) all insurance policies covering any or all of the Collateral (regardless
of whether the Collateral Agent is the loss payee thereof), (ii) any key man life insurance policies and (iii)
in each case, all claims thereunder.
“Intellectual Property” shall mean all intellectual property rights or other similar proprietary
rights, whether registered or unregistered, arising out of the laws of any jurisdiction throughout the world,
including such rights in and to: (A) Copyrights, (B) Patents, (C) Trademarks, (D) Trade Secrets, (E)
software, firmware and computer programs and applications, whether in source code, object code, human-
readable or other form, including data files, algorithms, analytical models, computerized databases, plugins,
subroutines, tools, application programming interfaces and libraries, and development documentation,
programming tools, drawings, specifications and data, (F) designs and databases, (G) IP addresses and (H)
all tangible embodiments and fixations thereof and documentation related thereto. “International Registry”
shall mean the “International Registry” as defined in the Cape Town Treaty.
“IP Filing Office” means, as applicable, the United States Patent and Trademark Office, the United
States Copyright Office or any similar office or agency in any jurisdiction.
“Patents” shall mean all United States and foreign issued patents (whether utility, design, or plant)
and certificates of invention, and similar industrial property rights, and applications for any of the foregoing,
including: (A) all reissues, divisions, continuations, continuations-in-part, extensions, renewals and
reexaminations thereof, (B) all rights corresponding, derived from or analogous thereto throughout the
world and (C) all inventions and improvements described or claimed therein.
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“Perfection Certificate” shall mean a perfection certificate, executed and delivered by each of the
Grantors, dated as of the date hereof, in substantially the form of Exhibit B attached hereto (as supplemented
from time to time).
“Perfection Requirement” shall mean, at any time and with respect to any property, the
requirement that:
(i) each Grantor, at its sole cost and expense, shall have executed a grant of a security
interest in such property in one or more applicable Security Documents (as specified in this Agreement) in
favor of the Collateral Agent for the benefit of the Secured Parties;
(ii) each Grantor, at its sole cost and expense, shall have prepared and duly and timely
filed, registered, recorded or made, or shall have caused to be prepared and duly and timely filed, registered,
recorded or made, the Required Filings in favor of the Collateral Agent for the benefit of the Secured Parties
with respect to the security interest in such property;
(iii) each Grantor shall have completed and satisfied, or shall have caused to be
completed and satisfied, all conditions and steps constituting the Perfection Requirement under the terms
of any Applicable Annex with respect to such property; and
(iv) each Grantor shall have obtained all consents and approvals required to be obtained
by it in connection with the execution and delivery of this Agreement and any other Security Documents
to which it is a party, the performance of its obligations thereunder and the granting by it of the Liens
hereunder and thereunder and delivered such consent or approval to the Collateral Agent.
“Pledge Supplement” shall mean any supplement to this Agreement in substantially the form of
Exhibit A attached hereto.
“Required Filing” shall mean each (i) UCC financing statement (including any fixture filing, as
applicable) in favor of the Collateral Agent for the benefit of the Secured Parties with respect to the
Collateral (based upon the information provided to the Collateral Agent in the Perfection Certificate) and
for filing in each governmental, municipal or other office specified in Schedule 5 to the Perfection
Certificate and (ii) any Required Filing under each Applicable Annex in favor of the Collateral Agent for
the benefit of the Secured Parties.
“Secured Obligations” shall have the meaning assigned in Section 3.1.
“Secured Parties” shall mean the Lenders (including the Treasury as the Initial Lender), the
Administrative Agent and the Collateral Agent.
“Spare Parts” shall mean all accessories, appurtenances, or parts of (A) an aircraft (except an
engine or propeller), (B) an engine (except a propeller), (C) a propeller, or (D) an Appliance, that are to be
installed at a later time in an aircraft, engine, propeller or Appliance (including “spare parts” (as defined in
Section 40102 of Title 49)) including, in all cases, any replacements, substitutions or renewals therefor, and
accessions thereto.
“Title 14” shall mean Title 14 of the United States Code, as amended from time to time.
“Title 49” shall mean Title 49 of the United States Code, as amended from time to time.
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“Trademarks” shall mean all United States, and foreign trademarks, trade names, corporate
names, company names, business names, fictitious business names, Internet domain names, trade dress,
service marks, certification marks, collective marks, logos, social media identifiers, handles, other source
or business identifiers, designs and general intangibles of a like nature, whether arising under a statute,
common law, or the laws of any jurisdiction throughout the world, whether registered or unregistered,
including: (A) all registrations, applications, extensions, renewals or other filings of any of the foregoing
and (B) all of the goodwill of the business connected with the use of or symbolized by the foregoing.
“Trade Secrets” shall mean all trade secrets and all other confidential or proprietary information,
data and know-how, whether arising under a statute, common law, or the Laws of any jurisdiction
throughout the world, whether or not such trade secret has been reduced to a writing or other tangible form,
including all documents and things embodying, incorporating, or referring in any way to such trade secret.
“Treasury” shall have the meaning set forth in the recitals.
“UCC” shall mean the Uniform Commercial Code as in effect from time to time in the State of
New York or, when the context implies, the Uniform Commercial Code as in effect from time to time in
any other applicable jurisdiction.
Definitions; Interpretation
References to “Annexes,” “Sections,” “Exhibits” and “Schedules” shall be to Annexes, Sections,
Exhibits and Schedules, as the case may be, of this Agreement unless otherwise specifically provided.
References to “Schedules” shall be as supplemented from time to time. References to this “Agreement”
shall include all Annexes, Exhibits and Schedules hereto. Section, Annex, Exhibit and Schedule headings
and the Table of Contents in this Agreement are included herein for convenience of reference only, are not
part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting,
this Agreement. Any of the terms defined herein may, unless the context otherwise requires, be used in the
singular or the plural, depending on the reference. The use herein of the word “include” or “including”,
when following any general statement, term or matter, shall not be construed to limit such statement, term
or matter to the specific items or matters set forth immediately following such word or to similar items or
matters, whether or not non-limiting language (such as “without limitation” or “but not limited to” or words
of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or
matters that fall within the broadest possible scope of such general statement, term or matter. The word
“or” is not exclusive. If any conflict or inconsistency exists between this Agreement and the Loan
Agreement, the Loan Agreement shall govern. All references herein to provisions of the UCC shall include
all successor provisions under any subsequent version or amendment to any Article of the UCC.
SECTION 2. GRANT OF SECURITY INTERESTS.
Grant of Security
(a) As security for the payment and performance in full of all Secured Obligations,
each Grantor hereby grants to the Collateral Agent for the benefit of the Secured Parties a security interest
in and continuing lien on all of such Grantor’s right, title and interest in, to and under the following personal
property of such Grantor, in each case, whether now owned or existing or hereafter acquired, developed,
created or arising and wherever located (all of which being hereinafter collectively referred to as the
“Collateral”):
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(i) all Loyalty Program Assets (including the Loyalty Program Assets
described on Schedule 2.1);
(ii) all Aircraft and Engine Assets described on Schedule 2.1;
(iii) all Spare Parts Assets described on Schedule 2.1;
(iv) all Propeller Assets described on Schedule 2.1;
(v) all Route Authorities and (w) all FAA Route Slots, (x) all Foreign Route
Slots, (y) all Domestic Gate Leaseholds and (z) all Foreign Gate
Leaseholds, in the case of each of (w), (x), (y) and (z), held, acquired, used,
allocated to or available for use by any Grantor in connection with any
such Route Authority described on Schedule 2.1;
(vi) Grantor’s rights under any leasing, licensing and use agreements with
respect to any of the foregoing Slots and Gate Leaseholds and under swap
or similar agreements or arrangements with respect to any of the foregoing
Slots;
(vii) all General Intangibles that are owned by such Grantor related to the
foregoing;
(viii) the Deposit Accounts and Securities Accounts described on Schedule 2.1
(which shall include the Collateral Proceeds Account) and all cash
deposited or held therein and financial assets credited thereto, as
applicable;
(ix) all Pledged Collateral described on Schedule 2.1;
(x) all Documents (including the Documents described on Schedule 2.1)
relating to assets described in the foregoing;
(xi) all Accounts (including the Accounts described on Schedule 2.1) relating
to assets described in the foregoing;
(xii) to the extent not otherwise included above, all books and records and
Supporting Obligations relating to any of the foregoing; and
(xiii) to the extent not otherwise included above, all Proceeds (including all
Proceeds (of any kind) received or to be received by the Grantors upon the
transfer or other such disposition of any of the foregoing), products,
accessions, rents and profits of or with respect to any of the foregoing.
(b) Notwithstanding anything herein to the contrary, in no event shall the Collateral
include, or the security interest granted under this Section 2.1 attach to, any Excluded Asset.
(c) Each Grantor shall file and make all Required Filings and also hereby authorizes
the Collateral Agent to file or make all Required Filings, including any financing or continuation statements,
and amendments thereto, in any jurisdictions and with any filing offices as the Collateral Agent may
determine, in its sole discretion, are necessary or advisable to perfect the security interest granted to the
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Collateral Agent herein. Such Required Filings may describe the Collateral in the same manner as described
herein or may contain an indication or description of collateral that describes such property in any other
manner as the Collateral Agent may determine, in its sole discretion, is necessary, advisable or prudent to
ensure the perfection of the security interest in all of the Collateral granted to the Collateral Agent herein.
Each Grantor shall 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
Appropriate Party may request, all in such detail as the Appropriate Party may require.
(d) If any Collateral (or any portion thereof) constitutes a type of asset covered by an
Applicable Annex, the Applicable Annex for such type of asset shall apply and be deemed to have been
incorporated in its entirety into this Agreement as if such Applicable Annex constituted a part of this
Agreement.
SECTION 3. SECURITY FOR OBLIGATIONS; GRANTORS REMAIN LIABLE.
Security for Obligations
This Agreement secures, and the Collateral is collateral security for, the prompt and complete
payment and performance in full when due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise (including amounts that would become due but for the operation of the
automatic stay under any Debtor Relief Law), of all Obligations and Guaranteed Obligations of the
Borrower and each Grantor (collectively, the “Secured Obligations”).
Continuing Liability Under Collateral
Notwithstanding anything herein to the contrary:
(a) nothing contained herein is intended or shall be a delegation of duties to any
Secured Party;
(b) each Grantor shall remain liable under each agreement included in or relating to
the Collateral and observe and perform all of the obligations undertaken by it thereunder all in accordance
with and pursuant to the terms and provisions thereof, and neither the Collateral Agent nor any other
Secured Party shall have any obligation or liability under any of such agreements by reason of or arising
out of this Agreement or any other document related thereto nor shall the Collateral Agent nor any other
Secured Party have any obligation to make any inquiry as to the nature or sufficiency of any payment
received by it or have any obligation to take any action to collect or enforce any rights under any agreement
included in or relating to the Collateral; and
(c) the exercise by the Collateral Agent of any of its rights or remedies hereunder, any
other Security Document or the Loan Agreement, shall not release any Grantor from any of its duties or
obligations under the contracts and agreements included in the Collateral.
SECTION 4. REPRESENTATIONS AND WARRANTIES.
Generally.
Each Grantor hereby represents and warrants, on the Closing Date and on the date of each
Borrowing (and, in the case of an Additional Grantor or Additional Collateral, on the date of such Grantor’s
execution and delivery of a Pledge Supplement, or the date such Additional Collateral becomes subject to
the security interest created hereby, as applicable, provided that if Additional Collateral becomes subject to
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the security interest created hereby without the execution and delivery of a Pledge Supplement, the
following representations and warranties are repeated only with respect to such Additional Collateral):
(a) It owns and has good and valid rights in all Collateral free and clear of any Lien
except for Permitted Liens.
(b) Subject to applicable Privacy Laws, it has the full corporate power, authority and
right to pledge, sell, assign or transfer the Collateral pursuant to, and as provided in, this Agreement.
(c) All information supplied by the Grantors with respect to Collateral, including
Schedules 2.1 and 4.1, is true, correct and complete in all material respects; provided that the Grantors may,
to the extent applicable, deliver to the Collateral Agent certified supplements to (or restated versions of)
Schedules 2.1 and 4.1 and the Perfection Certificate in advance of any making of this representation.
(d) The Perfection Certificate has been duly prepared, completed and executed and the
information set forth therein is true, correct and complete.
(e) This Agreement grants to the Collateral Agent for the benefit of the Secured Parties
a legal, valid and enforceable security interest in all of the Collateral and, upon the filing, recording or
registration of the UCC financing statements and any Required Filing set forth in any Applicable Annex,
the security interest granted hereunder constitute a perfected first priority security interest in all of the
Collateral, subject to no Liens other than Permitted Liens.
(f) The UCC financing statements and the Required Filing set forth in the Applicable
Annexes are all the financing statements, filings, recordings and registrations that are necessary to publish
notice of, protect the validity of and to establish a legal, valid and perfected first priority security interest
in favor of the Collateral Agent for the benefit of the Secured Parties with respect to all Collateral, and no
further or subsequent filing, refiling, recording, rerecording, registration or reregistration nor any other
steps or actions is necessary in any such jurisdiction in connection with the grant, perfection or first priority
status of the security interest of the Collateral Agent in any Collateral, except as provided (y) under
applicable Law with respect to the filing of continuation statements and (z) expressly (by reference to this
Section 4.1(f)) in any Applicable Annex.
(g) Other than the financing statements, filings, recordings or registrations filed or to
be filed in favor of the Collateral Agent for the benefit of the Secured Parties, no financing statement, filing,
recordings, registrations or other document similar in effect under any applicable Law covering or
purporting to cover any security interest in Collateral is on file or of record in any filing or recording office
except for (x) financing statements for which proper termination statements have been properly filed and
(y) financing statements filed in connection with Permitted Liens.
(h) No authorization, approval, consent or other action by, and no notice to or filing
with, any Person, Governmental Authority or regulatory body is required for either (A) the pledge or grant
by any Grantor of the security interest purported to be created hereunder to be legal, valid and enforceable
or (B) the exercise by the Collateral Agent of any rights or remedies with respect to any Collateral (whether
specifically granted or created hereunder or created or provided for by applicable Law), except (w) such as
have been obtained, (x) the filing of UCC financing statements and filing or recordation of any Required
Filings set forth in any Applicable Annex, in each case, in favor of the Collateral Agent for the benefit of
the Secured Parties,(y) any required continuation statements and (z) with respect to clause (B), to the extent
expressly specified (by reference to this Section 4.1(h)) in any Applicable Annex.
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SECTION 5. COVENANTS AND AGREEMENTS
Affirmative Covenants.
Each Grantor hereby covenants and agrees that:
(a) It shall have satisfied the Perfection Requirement (i) with respect to the Collateral
now owned or existing, on or prior to the Closing Date or, in the case of an Additional Grantor or Additional
Collateral, on the date of execution and delivery of a Pledge Supplement, or the date such Additional
Collateral becomes subject to the security interest created hereby, as applicable (except that the Perfection
Requirement with respect to UCC financing statements and any FAA or International Registry filings may
be satisfied by filing thereof by such Grantor on the Closing Date or such date of execution and delivery of
a Pledge Supplement, or the date such Additional Collateral becomes subject to the security interest created
hereby, as applicable, or, in each case, within one (1) Business Day thereafter) and (ii) with respect to any
Collateral acquired or arising after the Closing Date requiring satisfaction of any Perfection Requirement
that has not already been undertaken, as promptly as practicable after the date on which such Collateral was
acquired or arose (in any event, unless any other timeframe is specifically provided, within thirty (30) days).
(b) On the Closing Date and at any time at which an additional Perfection Requirement
is required with respect to any Collateral of any Grantor, such Grantor shall deliver opinions of counsel that
are acceptable to the Appropriate Party, addressed to the Secured Parties and dated the Closing Date or the
date at which such Perfection Requirement is required, as applicable, in form and substance satisfactory to
the Appropriate Party with respect to the validity and perfection of the Lien granted hereunder and under
the other Security Documents in the applicable item(s) of Collateral, fulfillment of all Perfection
Requirements, no governmental or third-party consents that have not been obtained, U.S. Bankruptcy Code
Section 1110 treatment for any Aircraft and Engine Assets or Spare Parts, in each case, constituting
Collateral, no contravention of agreements and such other matters relating to the Collateral as the
Appropriate Party requests.
(c) Concurrently with the Appraisals required to be delivered under Section 5.16 of
the Loan Agreement, it shall provide to the Collateral Agent:
(i) a certificate of a Responsible Officer of the applicable Grantor confirming
that Schedules 2.1 and 4.1 (after giving effect to the supplements and
restatements in clause (ii) below) with respect to Collateral remain true,
correct and complete in all material respects; and
(ii) to the extent applicable, supplements to (or restated versions of) Schedules
2.1 and 4.1 and the Perfection Certificate.
(d) At the expense of such Grantor, it shall maintain the security interest created by
this Agreement as a perfected first-priority security interest and shall defend such security interest against
claims and demands of all Persons at any time claiming any interest therein and the priority of such security
interest against any Lien (other than Permitted Liens). Without limiting the foregoing, the applicable
Grantor, at its sole cost and expense, will cause the Required Filings to be prepared and duly and timely
filed and recorded.
(e) It shall provide to the Collateral Agent statements and schedules (or supplements
thereto) further identifying and describing in detail the assets and property of such Grantor constituting
Collateral and such other reports therewith as the Appropriate Party may request from time to time.
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(f) Concurrently with any supplementing or changing of the Schedules to this
Agreement, it shall, at its expense, cause to be delivered to the Collateral Agent, at the request of the
Appropriate Party, (i) an opinion of counsel, in form and substance satisfactory to the Appropriate Party,
to the effect that all Perfection Requirements have been made, including that all Required Filings and any
amendments or supplements thereto or continuation statements in respect thereof (except any continuation
statements specified in such opinion of counsel that are to be filed more than six (6) months after the date
thereof), have been filed or recorded in each office necessary to create and perfect the Liens of the Secured
Parties and (ii) a certificate of a Responsible Officer as to any additional matters set forth in any Applicable
Annex.
(g) Grantor is an air carrier certificated under Section 44705 of Title 49, United States
Code.
Negative Covenants.
Each Grantor hereby covenants and agrees that:
(a) It shall not change the information provided in Schedule 2.1, Schedule 4.1 or the
Perfection Certificate delivered to the Collateral Agent or the Lenders at any time unless (i) prior to such
change or within the time period specified herein, it shall have satisfied all conditions and taken all actions,
if not already satisfied and taken, necessary or advisable to maintain the continuous legality, validity,
enforceability, perfection and the first priority (subject to Permitted Liens) of the Collateral Agent’s security
interest (for the benefit of the Secured Parties) in the Collateral (including making any and all filings under
the UCC or any other applicable Law that are required to have a valid, legal, perfected first-priority (subject
to Permitted Liens) security interest in the Collateral and satisfying any applicable Perfection Requirement,
any other action required under any Applicable Annex and any other actions requested by the Collateral
Agent or an Appropriate Party in connection therewith) and (ii) in connection with a change at any time to
remove any Collateral identified at that time on Schedule 2.1, Schedule 4.1 or the Perfection Certificate,
such change shall have been made in connection with a release or disposition permitted under, and made in
accordance with, Section 6.17(b)(iii) of the Loan Agreement or otherwise in accordance with the applicable
Loan Documents.
(b) It shall not authorize the filing of any financing statements or other registrations,
recordations or filings naming it as debtor covering all or any portion of the Collateral, except to cover
security interests created hereunder or other Permitted Liens.
SECTION 6. FURTHER ASSURANCES; ADDITIONAL GRANTORS.
Further Assurances.
(a) Each Grantor shall from time to time, at the sole expense of such Grantor, promptly
execute and deliver, or cause to be executed and delivered, all further instruments and documents, and take
or cause to be taken all further action, that may be necessary or advisable, or that the Appropriate Party or
the Collateral Agent may request, in order to create or maintain the validity, perfection or priority of and
protect any security interest granted hereby or to enable the Collateral Agent to obtain, preserve, exercise
and enforce its rights and remedies hereunder with respect to any Collateral (including the satisfaction and
completion of all conditions and steps constituting any applicable Perfection Requirement and any other
steps required under any Applicable Annex). Without limiting the generality of the foregoing, each Grantor
shall file or deliver to the Collateral Agent such Required Filings, or continuation statements or amendments
thereto, and execute and deliver, or cause to be executed and delivered, such other agreements, instruments,
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endorsements, powers of attorney or notices, as may be necessary or advisable, or as the Appropriate Party
may request, in order to perfect and preserve the security interests granted or purported to be granted hereby.
(b) Each Grantor shall provide any information on the Collateral that the Appropriate
Party or the Collateral Agent may request in order to ensure the Collateral Agent’s security interest in all
of the Collateral is perfected and is first priority.
(c) Notwithstanding anything herein to the contrary, with respect to pledges of, or
grants of security interests in, assets acquired by a Grantor after the Closing Date or that cease to be an
Excluded Asset and thereby become an item of Collateral after the Closing Date, unless any other timeframe
is specifically provided, within thirty (30) days after the date of such acquisition (or after the date such
assets cease to be Excluded Asset), the applicable Grantor shall satisfy the requirements of clause (a) above
(including the satisfaction and completion of all conditions and steps constituting any applicable Perfection
Requirement and any other action required under any Applicable Annex).
Additional Grantors; Additional Collateral
From time to time after the Closing Date, additional Persons may become parties hereto as
additional Grantors (each, an “Additional Grantor”) or assets eligible to be Additional Collateral may be
added to the Collateral, in each case, by an Additional Grantor or applicable Grantor, as relevant, by
executing a Pledge Supplement and, as applicable, satisfying the Perfection Requirements. Upon delivery
of such Pledge Supplement to the Collateral Agent, notice of which is hereby waived by the Grantors, each
Additional Grantor shall be a Grantor and shall be as fully a party hereto as if such Additional Grantor were
an original signatory hereto as a Grantor. Each Grantor expressly agrees that its obligations arising
hereunder shall not be affected or diminished by the addition or release of any other Grantor hereunder, nor
by any election of Collateral Agent (acting at the direction of the Required Lenders) not to cause any
Subsidiary of the Parent or any Grantor to become an Additional Grantor hereunder. This Agreement shall
be fully effective as to any Grantor that is or becomes a party hereto regardless of whether any other Person
becomes or fails to become or ceases to be a Grantor hereunder.
SECTION 7. COLLATERAL AGENT APPOINTED PROXY ATTORNEY-IN-FACT.
Power of Attorney
Each Grantor hereby irrevocably appoints the Collateral Agent (such appointment being coupled
with an interest and terminable only upon the payment in full of the Secured Obligations (other than
contingent indemnification or reimbursement obligations not yet accrued and payable) as such Grantor’s
proxy and attorney-in-fact) with full authority in the place and stead of such Grantor and in the name of
such Grantor, the Collateral Agent or otherwise, from time to time in the Collateral Agent’s discretion to
take any action and to execute any instrument that the Appropriate Party may deem necessary or advisable
to accomplish the purposes of this Agreement, all of which shall be at the Grantors’ expense and constitute
Secured Obligations, including, the following:
(a) to prepare and file any UCC financing statements and any other Required Filing
against such Grantor as debtor;
(b) to prepare, sign and file any documents with the United States Patent and
Trademark Office, the United States Copyright Office or any Governmental Authority in any jurisdiction
that the Collateral Agent deems appropriate in connection with the perfection, protection, priority or
enforcement of the security interest on the Collateral, and to remove any ineffective filings;
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(c) upon the occurrence and during the continuance of any Event of Default:
(i) to take any actions set forth in any Applicable Annex;
(ii) to do, at the Collateral Agent’s option, at any time or from time to time,
all acts and things that the Appropriate Party deems necessary or advisable
to protect, preserve, perfect, establish the first priority of or realize upon
the Collateral and the Collateral Agent’s security interest therein in order
to effect the intent of this Agreement, all as fully and effectively as such
Grantor might do, including any access to pay or discharge Taxes or Liens
levied or placed upon or threatened against the Collateral, the legality or
validity thereof and the amounts necessary to discharge the same to be
determined by the Collateral Agent (acting at the direction of the Required
Lenders), any such payments made by the Collateral Agent to become
obligations of such Grantor to the Collateral Agent, due and payable
immediately without demand;
(iii) to exercise control in respect of any Deposit Account or Securities
Account that is part of the Collateral, and issue instructions and
entitlement orders to any bank or securities intermediary in respect
thereof;
(iv) to obtain and adjust insurance required to be maintained by such Grantor
or paid to the Collateral Agent pursuant to the Loan Agreement;
(v) to ask for, demand, collect, sue for, recover, compound, receive and give
acquittance and receipts for moneys due and to become due under or with
respect to any of the Collateral;
(vi) to receive, endorse and collect any drafts or other instruments, documents
and chattel paper;
(vii) to file any claims or take any action or institute any proceedings that the
Required Lenders 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;
(viii) to use information relating to the Collateral for purposes of Disposing or
collecting the Collateral; provided that with respect to any information
granted to a Grantor by a third party, the Collateral Agent shall comply
with any of such Grantor’s existing contractual obligations and restrictions
that, in each case, such Grantor places the Collateral Agent on written
notice of (in reasonable detail); and
(ix) to Dispose, pledge, make any agreement with respect to or otherwise deal
with any of the Collateral as fully and completely as though the Collateral
Agent were the absolute owner thereof for all purposes, including to file
any documents necessary or advisable to implement, effectuate or reflect
the Disposition.
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None of the rights granted in this Section 7.1 shall be construed as duties, and the Collateral Agent shall
have no liability for omitting to take such actions.
No Duty on the Part of Collateral Agent or Secured Parties.
(a) The powers conferred on the Collateral Agent hereunder are solely to protect the
interests of the Secured Parties in the Collateral and shall not impose any duty upon the Collateral Agent
or any Secured Party to exercise any such powers. The Collateral Agent and the other Secured Parties shall
be accountable only for amounts that they actually receive as a result of the exercise of such powers, and
neither they nor any of their officers, directors, employees or agents shall be responsible to any Grantor for
any act or failure to act hereunder, except for their own gross negligence or willful misconduct. The failure
to act in the absence of any duty to act shall not be deemed an act of gross negligence or willful misconduct.
(b) The Collateral Agent has been appointed to act as Collateral Agent hereunder by
the Lenders and, by their acceptance of the benefits hereof, the other Secured Parties. The Collateral Agent
shall be obligated, and shall have the right hereunder, to make demands, to give notices, to exercise or
refrain from exercising any rights, and to take or refrain from taking any action (including any release or
substitution of Collateral), solely in accordance with this Agreement and the Loan Agreement.
(c) Notwithstanding any rights granted to the Collateral Agent hereunder to file or
make filings to perfect the security interest granted to the Collateral Agent herein, the Collateral Agent shall
not be responsible for the existence, genuineness or value of any of the Collateral; for filing any financing
or continuation statements or recording any documents or instruments in any public office or otherwise
perfecting or maintaining the perfection of any security interest in the Collateral (all of which shall be each
Grantor’s responsibility); for the validity, perfection, priority or enforceability of the Liens in any of the
Collateral; for the validity or sufficiency of the Collateral or any agreement or assignment contained therein;
for the validity of the title of any grantor to the Collateral; for insuring the Collateral; or for the payment of
taxes, charges or assessments on the Collateral.
Standard of Care; Collateral Agent May Perform.
(a) Except for the exercise of reasonable care in the 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 or any income therefrom or as to the taking of any necessary steps to preserve
rights against prior parties or any other rights pertaining to any Collateral.
(b) The Collateral Agent shall be deemed to have exercised reasonable care in the
custody and preservation of Collateral in its possession if such Collateral is accorded treatment substantially
equal to that which the Collateral Agent accords its own property.
(c) The Collateral Agent shall not be liable or responsible for any loss or damage to
any Collateral, or for any diminution in the value thereof, by reason of any act or omission of any sub-agent
or bailee selected by the Collateral Agent in good faith, except to the extent that such liability arises from
the Collateral Agent’s gross negligence or willful misconduct.
(d) Neither the Collateral Agent nor any of its directors, officers, employees or agents
shall be liable for failure to demand, collect or realize upon all or any part of the Collateral or for any delay
in doing so or shall be under any obligation to sell or otherwise Dispose of any Collateral upon the request
of any Grantor or otherwise.
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(e) If any Grantor fails to perform any agreement contained herein, the Collateral
Agent may itself (but shall have no obligation to) perform, or cause performance of, such agreement, and
the expenses of the Collateral Agent incurred in connection therewith shall be payable by each Grantor in
a manner consistent with Section 11.03 of the Loan Agreement.
(f) The Collateral Agent has been appointed by the Lenders under the Loan
Agreement and has the benefit of the rights and protections set forth therein, including without limitation,
that, notwithstanding any discretion given to it in any Loan Document, the Collateral Agent need not
exercise discretion, but shall act as directed by the Required Lenders.
SECTION 8. REMEDIES.
Generally.
(a) If any Event of Default shall have occurred and be continuing, the Collateral Agent
may exercise (at the direction of the Required Lenders) with respect to the Collateral, in addition to all other
rights and remedies provided for herein or otherwise available to it at law or in equity, all the rights and
remedies that the Collateral Agent may have or that are afforded to a secured party under the UCC or any
other applicable Law to collect, enforce or satisfy any Secured Obligations then owing, whether by
acceleration or otherwise, and also may pursue any of the following separately, successively or
simultaneously, subject to applicable Laws, including applicable Privacy Laws:
(i) require any Grantor to, and each Grantor hereby agrees that it shall, at its
expense and promptly upon request of the Appropriate Party or the
Collateral Agent forthwith, (A) provide to the Appropriate Party or the
Collateral Agent additional information concerning the Collateral and (B)
assemble all or part of the Collateral as directed by the Appropriate Party
or the Collateral Agent and make it available to the Collateral Agent at a
place to be designated by the Collateral Agent;
(ii) enter onto the property where any Collateral is located, if applicable and
take possession thereof with or without judicial process (to the extent
possession is not otherwise granted to the Collateral Agent by the
applicable Grantors), with or without prior notice or demand for
performance and without liability for trespass to enter any premises where
any Collateral may be located for the purposes of taking possession of or
removing any Collateral; provided that the Collateral Agent shall take
commercially reasonable measures to protect the confidentiality of any
Trade Secrets and other confidential information contained thereon;
(iii) prior to the Disposition of the Collateral, store, process, repair or
recondition the Collateral or otherwise prepare the Collateral for
Disposition in any manner to the extent the Collateral Agent deems
appropriate;
(iv) give notice of exclusive control or any other instruction under any control
agreement, collateral access agreement or other similar agreement and
take any action provided therein with respect to the applicable Collateral;
(v) seek the appointment of a receiver, keeper or any agent to take possession
of the Collateral and enforce any of the Collateral Agent’s remedies (for
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the benefit of the Collateral Agent and the Secured Parties) with respect to
such appointment without prior notice or hearing as to such appointment;
(vi) subject to compliance with the terms of Section 8.1(f), without notice
except as specified below or under the UCC, sell, assign, lease, license (on
an exclusive or non-exclusive basis), sublicense or otherwise Dispose of
the Collateral or any part thereof in one or more parcels at public or private
sale or on any securities exchange, at any of the Collateral Agent’s offices
or elsewhere, for cash, on credit or for future delivery, at such time or times
and at such price or prices and upon such other terms as the Collateral
Agent may deem appropriate (provided that such direct licenses or
sublicenses survive even when the Event of Default no longer exists);
(vii) require any applicable Grantor, and each applicable Grantor hereby agrees
that it shall, in connection with any foreclosure, collection, sale or other
enforcement of the Liens granted hereunder: (1) to cooperate with the
Collateral Agent to obtain all regulatory licenses, consents and other
governmental approvals necessary or advisable to conduct all aviation
operations with respect to the Collateral, as applicable, (2) to continue to
operate and manage the Collateral and maintain all applicable licenses
until the Collateral Agent or its designee does so and (3) to cooperate with
the transition of the operations to a new operator; and
(viii) take any other actions specified in any Applicable Annex.
(b) The Collateral Agent, the Administrative Agent or any other Secured Party may
be the purchaser of any or all of the Collateral at any public or private (to the extent the portion of the
Collateral being privately sold is of a kind that is customarily sold on a recognized market or the subject of
widely distributed standard price quotations) sale in accordance with the UCC, and the Collateral Agent, as
collateral agent for and representative of the Secured Parties, 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 any
such sale made in accordance with the UCC, to use and apply any of the Secured Obligations as a credit on
account of the purchase price for any Collateral payable by the Collateral Agent at such sale. Each
purchaser at any such sale shall hold the property sold absolutely free from any claim or right on the part
of any Grantor, and each Grantor hereby waives (to the extent permitted by applicable 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. Each Grantor agrees that, to the extent notice of sale shall be
required by law, at least ten (10) days’ notice to such 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. Each Grantor agrees that it would not be commercially unreasonable for the Collateral
Agent to Dispose of the Collateral or any portion thereof by using Internet sites that provide for the auction
of assets of the types included in the Collateral or that have the reasonable capability of doing so, or that
match buyers and sellers of assets. Each Grantor hereby waives 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, even if the Collateral Agent accepts
the first offer received and does not offer such Collateral to more than one offeree. If the proceeds of any
Disposition of the Collateral are insufficient to pay all the Secured Obligations, the Grantors shall be liable
for the deficiency and the fees of any attorneys employed by the Collateral Agent to collect such deficiency.
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Each Grantor further agrees that a breach of any of its covenants contained in this Section will cause
irreparable injury to the Secured Parties, that the Secured Parties have no adequate remedy at law with
respect to such breach and, as a consequence, that each and every covenant contained in this Section shall
be specifically enforceable against such Grantor, and such Grantor hereby waives and agrees not to assert
any defenses against an action for specific performance of such covenants except for a defense that no
default has occurred giving rise to the Secured Obligations becoming due and payable prior to their stated
maturities. Nothing in this Section shall in any way alter the rights of the Secured Parties hereunder.
(c) The Collateral Agent may sell the Collateral without giving any warranties as to
the Collateral. The Collateral Agent may specifically disclaim or modify any warranties of title or the like.
This procedure will not be considered to adversely affect the commercial reasonableness of any sale of the
Collateral.
(d) To the maximum extent permitted by the applicable Law, each Grantor absolutely
and irrevocably waives (which waiver may not be withdrawn without the written consent of the Collateral
Agent acting at the direction of the Required Lenders):
(i) all claims, damages, and demands against the Collateral Agent or any other
Secured Party arising out of the repossession, retention or Disposition of
the Collateral (after the occurrence of and during the continuance of an
Event of Default), except such as arise out of the gross negligence or
willful misconduct of the Collateral Agent or such Secured Party as finally
determined by a court of competent jurisdiction; and
(ii) the benefit and advantage of, and covenants not to assert against the
Collateral Agent or any other Secured Party, any valuation, stay, appraisal,
extension, moratorium, redemption or similar laws and any and all rights
or defenses it may have as a surety now or hereafter existing which, but
for this provision, might be applicable to the sale of any Collateral (after
the occurrence of and during the continuance of an Event of Default),
made under the judgment, order or decree of any court, or privately under
the power of sale conferred by this Agreement, or otherwise.
(e) The Collateral Agent shall have no obligation to marshal any of the Collateral.
(f) Each Grantor hereby grants each Secured Party a non-exclusive, irrevocable,
worldwide, transferable license (or sublicense) to use, license, sublicense and otherwise exercise such
Grantor’s rights in or to any Intellectual Property and any data (in each case, (i) whether or not included in
the Collateral, (ii) subject to applicable Laws, including applicable Privacy Laws and (iii) to the extent not
in conflict with such Grantor’s contractual obligations (not otherwise overridden by the UCC or applicable
Law) that exist as of the Closing Date with third parties), without payment of royalty or other compensation
to such Grantor, solely to enable the Collateral Agent to exercise its rights and remedies under Section 8 of
this Agreement and under the Annex Remedies Section of any Applicable Annex after the occurrence, and
solely during the continuance, of an Event of Default. For the avoidance of doubt, the license granted
pursuant to this Section 8.1(f) may be exercised by the Collateral Agent solely during the continuance of
an Event of Default. This license is in addition to the Secured Parties’ other rights with respect to the
Collateral and is subject to the following:
(i) to the extent that this license is a sublicense of such Grantor’s rights as a
licensee under any license, this license is subject to any limitations in the
primary license;
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(ii) without limiting the foregoing, this license does not include Intellectual
Property if the primary license for such Intellectual Property by its terms
or as a matter of law prohibits sublicenses, requires the licensor’s consent
or entails additional consideration;
(iii) for licensed Trademarks, this license is subject to such Grantor’s standards
of quality control and inspection, as necessary to avoid the risk of
invalidation of the Trademarks;
(iv) the Collateral Agent shall take commercially reasonable measures to
protect the confidentiality of any Trade Secrets and other confidential
information licensed pursuant to this Section 8.1(f); and
(v) the termination or expiration of the license granted pursuant to this Section
8.1(f) shall not terminate the rights of the sublicensees of any sublicenses
granted by the Collateral Agent or its assignee in connection with and in
accordance with this Section 8.1(f).
(g) Solely to the extent required to exploit or exercise the license rights granted in
Section 8.1(f) and solely to the extent not already in the possession of the Collateral Agent, each Grantor
shall provide to the Collateral Agent any Intellectual Property and data, including any embodiments thereof,
licensed pursuant to Section 8.1(f) that are in the possession or control of such Grantor, and shall not
interfere with the rights provided in Section 8.1(f) to such Intellectual Property (including such
embodiments) including any right to obtain such Intellectual Property (or such embodiments) from another
entity, in each case subject to applicable Laws, including applicable Privacy Laws.
Application of Proceeds
Upon the occurrence of an Event of Default, all proceeds received by the Collateral Agent with
respect to any sale, any collection from, or other realization upon all or any part of the Collateral shall be
applied in full or in part by the Collateral Agent against the Secured Obligations in accordance with Section
7.02 of the Loan Agreement.
Sales on Credit
If the Collateral Agent sells any of the Collateral upon credit, the Collateral Agent may retain such
Collateral until the sale price is paid by the purchaser thereof, and the Grantors will be credited only with
payments actually made by the purchaser and received by the Collateral Agent and applied to indebtedness
of such purchaser. In the event such purchaser fails to pay for the Collateral, neither the Collateral Agent
nor any other Secured Party shall incur any liability, and such Collateral may be sold again upon like notice,
and the Collateral Agent may resell the Collateral and Grantor shall be credited with proceeds of the sale.
SECTION 9. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS;
REINSTATEMENT.
Continuing Security Interest; Transfer of Loans
This Agreement shall create a continuing security interest in all of the Collateral and shall remain
in full force and effect until the payment in full of all Secured Obligations (other than contingent
indemnification or reimbursement obligations not yet accrued and payable) and the Lender no longer having
a commitment to make any Loan to the Borrower, be binding upon each Grantor, its successors and assigns,
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and inure, together with the rights and remedies of the Collateral Agent hereunder, to the benefit of the
Collateral Agent and its successors, transferees and assigns. Without limiting the generality of the
foregoing, but subject to the terms of the Loan Agreement, the Lender may assign or otherwise transfer any
Loans held by it to any other Person, and such other Person shall thereupon become vested with all the
benefits with respect thereto granted to the Lender herein or otherwise. Upon the payment in full of all
Secured Obligations (other than contingent indemnification or reimbursement obligations not yet accrued
and payable) and the Lender no longer has a commitment to make any loan to the Borrower, the security
interest granted hereby shall automatically terminate hereunder and of record and all rights to the Collateral
shall revert to Grantors. Upon any Disposition of property expressly permitted by the Loan Agreement, the
security interest granted herein shall be deemed to be automatically released and such property shall
automatically revert to the applicable Grantor with no further action on the part of any Person. Upon any
such termination or Disposition or any release of Collateral pursuant to the provisions of any Applicable
Annex or otherwise expressly permitted by the Loan Agreement, the Collateral Agent shall, at the Grantors’
expense, execute and deliver or otherwise authorize the filing of such documents as Grantors shall
reasonably request (including financing statement amendments to evidence such release) and return to the
applicable Grantors any corresponding possessory Collateral held by the Collateral Agent. Releases of the
Collateral may also be made in accordance with the express terms of any Applicable Annexes.
Reinstatement
This Agreement shall remain in full force and effect and continue to be effective should any petition
be filed by or against the Parent, any Grantor or any Affiliates thereof for liquidation or reorganization,
should the Borrower or any Grantor become insolvent or make an assignment for the benefit of any creditor
or creditors or should a receiver or trustee be appointed for all or any significant part of the Borrower’s or
such Grantor’s assets, and shall continue to be effective or be reinstated, as the case may be, if at any time
payment and performance of the Secured Obligations, or any part thereof, is, pursuant to Applicable Law,
rescinded or reduced in amount, or must otherwise be restored or returned by any obligee of the Secured
Obligations, whether as a “voidable preference,” “fraudulent conveyance,” or otherwise, all as though such
payment or performance had not been made. In the event that any payment, or any part thereof, is rescinded,
reduced, restored or returned, the Secured Obligations shall be reinstated and deemed reduced only by such
amount paid and not so rescinded, reduced, restored or returned.
SECTION 10. MISCELLANEOUS.
Notices.
All notices and other communications provided hereunder shall be given in a manner consistent
with Section 11.01 of the Loan Agreement (i) if to any Grantor, as it applies to a Credit Party and (ii) if to
the Collateral Agent, as it applies to the Collateral Agent.
Waiver; Amendment.
(a) No failure or delay by the Collateral Agent in exercising any right, remedy, power
or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such
right, remedy, power or privilege, or any abandonment or discontinuance of steps to enforce such a right
remedy, power or privilege, preclude any other or further exercise thereof or the exercise of any other right
remedy, power or privilege. The rights, remedies, powers and privileges of the Collateral Agent hereunder
are cumulative and are not exclusive of any rights, remedies, powers or privileges that any such Person
would otherwise have.
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(b) Neither this Agreement nor any provision hereof may be waived, amended or
modified except pursuant to an agreement or agreements in writing entered into by the Collateral Agent
and the Grantors with respect to which such waiver, amendment or modification is to apply. This
Agreement shall be construed as a separate agreement with respect to each Grantor and may be amended,
modified, supplemented, waived or released with respect to any Grantor without the approval of any other
Grantor and without affecting the obligations of any other Grantor hereunder.
Relation to Other Security Documents.
The provisions of this Agreement supplement the provisions of any Security Document or any other
mortgage granted by any Grantor, which secure the payment or performance of any of the Secured
Obligations. Nothing contained in any such Security Document or mortgage shall derogate from any of the
rights or remedies of the Secured Parties hereunder. In all other conflicts between this Agreement and any
other Security Document, this Agreement shall govern.
Collateral Agent’s Fees and Expenses.
(a) The Grantors jointly and severally agree to reimburse the Collateral Agent for its
fees and expenses incurred hereunder as provided in Section 11.03 of the Loan Agreement; provided that,
each reference therein to the “Borrower” shall be deemed to include a reference to the Grantors.
(b) Any such amounts payable as provided hereunder shall be additional Secured
Obligations secured hereby and by the other Security Documents.
Survival of Agreement.
All covenants, agreements, representations and warranties made by any Grantor herein and in any
Loan Document or other documents delivered in connection herewith or therewith or pursuant hereto or
thereto shall be considered to have been relied upon by the other parties hereto and shall survive the
execution and delivery hereof and thereof and the making of the Loan hereunder, regardless of any
investigation made by any such other party or on its behalf and notwithstanding that the Secured Parties
may have had notice or knowledge of any Default at the time of the Loan, and shall continue in full force
and effect as long as any Loan or any other Secured Obligation hereunder shall remain unpaid or unsatisfied.
The provisions of this Section 10 shall survive and remain in full force and effect regardless of the
termination of this Agreement or any other Loan Document, the consummation of the transactions
contemplated hereby or thereby, the repayment of any of the Secured Obligations, the invalidity or
unenforceability of any term or provision of this Agreement or any other Loan Document or any
investigation made by or on behalf of the Collateral Agent or any other Secured Party.
Counterparts; Effectiveness, Successors and Assigns.
(a) This Agreement may be executed in counterparts (and by different parties hereto
in different counterparts), each of which shall constitute an original, but all of which when taken together
shall constitute a single contract. This Agreement and the other Loan Documents, constitute the entire
contract among the parties relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter hereof. This Agreement shall
become effective when it shall have been executed by the Collateral Agent and when the Collateral Agent
shall have received counterparts hereof that, when taken together, bear the signatures of each of the other
parties hereto. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or
in electronic (e.g., “pdf” or “tif”) format shall be effective as delivery of a manually executed counterpart
of this Agreement.
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(b) The words “execution,” “signed,” “signature,” and words of like import shall be
deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be
of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-
based recordkeeping system, as the case may be, to the extent and as provided for in any Applicable Law,
including the Federal Electronic Signatures in Global and National Commerce Act, the New York State
Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic
Transactions Act. Notwithstanding anything herein to the contrary, delivery of an executed counterpart of
a signature page of this Agreement by telecopy or other electronic means, or confirmation of the execution
of this Agreement on behalf of a party by an email from an authorized signatory of such party shall be
effective as delivery of a manually executed counterpart of this Agreement.
Severability.
If any provision of this Agreement is held to be illegal, invalid or unenforceable, (a) the legality,
validity and enforceability of the remaining provisions of this Agreement shall not be affected or impaired
thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or
unenforceable provisions with valid provisions the economic effect of which comes as close as possible to
that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
Governing Law; Jurisdiction, Etc.
(a) This Agreement will be governed by and construed in accordance with the law of
the State of New York.
(b) Each of the parties hereto agrees to submit to the exclusive jurisdiction and venue
of the United States District Court for the District of Columbia for any civil action, suit or proceeding
arising out of or relating to this Agreement, the Loan Documents, or the transactions contemplated hereby
or thereby.
(c) To the extent permitted by Applicable Law, each parties hereto hereby
unconditionally waives trial by jury in any civil legal action or proceeding relating to this Agreement or the
transactions contemplated hereby.
(d) The Collateral Agent hereby notifies the Borrower and the Lenders that pursuant
to the requirements of The Uniting and Strengthening America by Providing Appropriate Tools Required
to Intercept and Obstruct Terrorism Act of 2001, it is required to obtain, verify and record information that
identifies the Borrower and the Lenders, which information includes the name and address of the Borrower
and the Lenders and other information that will allow the Collateral Agent to identify the Borrower and the
Lenders, in accordance with The Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001.
[Signature Pages Follow]
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DocuSign Envelope ID: AABD5C24-FA76-4398-82BC-FB1A587EE1A8
IN WITNESS WHEREOF, each Grantor and the Collateral Agent have caused this Agreement to
be duly executed and delivered by their respective officers thereunto duly authorized as of the date first
written above.
HORIZON AIR INDUSTRIES, INC., as Grantor
By:
Name: Nathaniel Pieper
Title: Treasurer
THE BANK OF NEW YORK MELLON,
as Collateral Agent
By:
Name:
Title:
[Signature Page to A&R Pledge and Security Agreement]
DocuSign Envelope ID: E1E9CC3A-2929-4B7C-8EAC-B1F297C6D221
IN WITNESS WHEREOF, each Grantor and the Collateral Agent have caused this Agreement to
be duly executed and delivered by their respective officers thereunto duly authorized as of the date first
written above.
HORIZON AIR INDUSTRIES, INC., as Grantor
By:
Name: Nathaniel Pieper
Title: Treasurer
THE BANK OF NEW YORK MELLON,
as Collateral Agent
By:
Name: Bret Derman
Title: Vice
President
[Signature Page to A&R Pledge and Security Agreement]
Schedule 1.1 (Excluded Intellectual Property)
to Agreement
EXCLUDED INTELLECTUAL PROPERTY (IF ANY)
None.
Schedule 1.1 - 1
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Schedule 2.1 (Certain Listed Collateral)
to Agreement
CERTAIN LISTED COLLATERAL
a. Aircraft
Embraer S.A. aircraft more specifically described below:
Aircraft Generic U.S. Registration
Aircraft Model Airframe Serial No.
Model No.
1. ERJ 170-200 LR ERJ 170-200 17000769 N646QX
2. ERJ 170-200 LR ERJ 170-200 17000773 N647QX
3. ERJ 170-200 LR ERJ 170-200 17000789 N648QX
4. ERJ 170-200 LR ERJ 170-200 17000794 N649QX
5. ERJ 170-200 LR ERJ 170-200 17000809 N650QX
6. ERJ 170-200 LR ERJ 170-200 17000812 N651QX
Bombardier Inc. aircraft more specifically described below:
Aircraft Generic U.S. Registration
Aircraft Model Airframe Serial No.
Model No.
1. DHC-8-402 DASH 8-Q400 4149 N421QX
2. DHC-8-402 DASH 8-Q400 4150 N422QX
3. DHC-8-402 DASH 8-Q400 4154 N426QX
4. DHC-8-402 DASH 8-Q400 4156 N427QX
5. DHC-8-402 DASH 8-Q400 4163 N430QX
6. DHC-8-402 DASH 8-Q400 4166 N432QX
7. DHC-8-402 DASH 8-Q400 4240 N437QX
8. DHC-8-402 DASH 8-Q400 4246 N439QX
9. DHC-8-402 DASH 8-Q400 4243 N438QX
10. DHC-8-402 DASH 8-Q400 4347 N440QX
11. DHC-8-402 DASH 8-Q400 4348 N441QX
12. DHC-8-402 DASH 8-Q400 4353 N443QX
13. DHC-8-402 DASH 8-Q400 4352 N442QX
14. DHC-8-402 DASH 8-Q400 4358 N445QX
15. DHC-8-402 DASH 8-Q400 4363 N446QX
16. DHC-8-402 DASH 8-Q400 4364 N447QX
17. DHC-8-402 DASH 8-Q400 4355 N444QX
18. DHC-8-402 DASH 8-Q400 4409 N448QX
19. DHC-8-402 DASH 8-Q400 4489 N453QX
20. DHC-8-4-2 DASH 8-Q400 4227 N434MK
Schedule 2.1 - 1
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21. DHC-8-402 DASH 8-Q400 4236 N436QX
b. Engines
General Electric engines as more specifically described below:
Engine Model Engine Generic Model Engine Serial No.
1. CF34-8E5 CF34-8E 902879
2. CF34-8E5 CF34-8E 902880
3. CF34-8E5 CF34-8E 902888
4. CF34-8E5 CF34-8E 902889
5. CF34-8E5 CF34-8E 902924
6. CF34-8E5 CF34-8E 902925
7. CF34-8E5 CF34-8E 902850
8. CF34-8E5 CF34-8E 902937
9. CF34-8E5 CF34-8E 902973
10. CF34-8E5 CF34-8E 902974
11. CF34-8E5 CF34-8E 902978
12. CF34-8E5 CF34-8E 902979
13. CF34-8E5 CF34-8E 902599
14. CF34-8E5 CF34-8E 902836
15. CF34-8E5 CF34-8E 902933
Pratt & Whitney Canada engines as more specifically described below:
Engine Model Engine Generic Model Engine Serial No.
1. PW150A PW150 SERIES PCEFA0116
2. PW150A PW150 SERIES PCEFA0133
3. PW150A PW150 SERIES PCEFA0374
4. PW150A PW150 SERIES PCEFA0343
5. PW150A PW150 SERIES PCEFA0084
6. PW150A PW150 SERIES PCEFA0103
7. PW150A PW150 SERIES PCEFA0346
8. PW150A PW150 SERIES PCEFA0354
9. PW150A PW150 SERIES PCEFA0355
10. PW150A PW150 SERIES PCEFA0351
11. PW150A PW150 SERIES PCEFA0353
12. PW150A PW150 SERIES PCEFA0371
13. PW150A PW150 SERIES PCEFA0192
14. PW150A PW150 SERIES PCEFA0377
15. PW150A PW150 SERIES PCEFA0378
16. PW150A PW150 SERIES PCEFA0536
17. PW150A PW150 SERIES PCEFA0537
Schedule 2.1 - 2
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18. PW150A PW150 SERIES PCEFA0551
19. PW150A PW150 SERIES PCEFA0312
20. PW150A PW150 SERIES PCEFA0541
21. PW150A PW150 SERIES PCEFA0340
22. PW150A PW150 SERIES PCEFA0763
23. PW150A PW150 SERIES PCEFA0184
24. PW150A PW150 SERIES PCEFA0118
25. PW150A PW150 SERIES PCEFA0792
26. PW150A PW150 SERIES PCEFA0365
27. PW150A PW150 SERIES PCEFA0778
28. PW150A PW150 SERIES PCEFA0776
29. PW150A PW150 SERIES PCEFA0769
30. PW150A PW150 SERIES PCEFA0785
31. PW150A PW150 SERIES PCEFA0786
32. PW150A PW150 SERIES PCEFA0366
33. PW150A PW150 SERIES PCEFA0800
34. PW150A PW150 SERIES PCEFA0470
35. PW150A PW150 SERIES PCEFA0803
36. PW150A PW150 SERIES PCEFA0903
37. PW150A PW150 SERIES PCEFA0904
38. PW150A PW150 SERIES PCEFA0902
39. PW150A PW150 SERIES PCEFA0373
40. PW150A PW150 SERIES PCEFA1090
41. PW150A PW150 SERIES PCEFA1094
42. PW150A PW150 SERIES PCEFA0507
43. PW150A PW150 SERIES PCEFA0552
44. PW150A PW150 SERIES PCEFA0526
45. PW150A PW150 SERIES PCEFA0529
46. PW150A PW150 SERIES PCEFA0110
47. PW150A PW150 SERIES PCEFA0174
48. PW150A PW150 SERIES PCEFA0367
49. PW150A PW150 SERIES PCEFA1077
50. PW150A PW150 SERIES PCEFA1342
Each of the above described Engines is of 550 or more “rated take-off horsepower” or the equivalent of
such horsepower.
c. Propellers
Dowty Aerospace model R408/6-123-F/17 propellers with the manufacturer's serial numbers described
below:
Propeller Serial No.
1. DAP0334
Schedule 2.1 - 3
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2. DAP0193
3. DAP0094
4. DAP0362
5. DAP0366
6. DAP0117
7. DAP0711
8. DAP0141
9. DAP0042
10. DAP0142
11. DAP0349
12. DAP0076
13. DAP0247
14. DAP0470
15. DAP0181
16. DAP0327
17. DAP0192
18. DAP0849
19. DAP0237
20. DAP0329
21. DAP0337
22. DAP0332
23. DAP0341
24. DAP0085
25. DAP0857
26. DAP0346
27. DAP0326
28. DAP0365
29. DAP0372
30. DAP0112
31. DAP0359
32. DAP0793
33. DAP0363
34. DAP0792
35. DAP0115
36. DAP0364
37. DAP0899
38. DAP0904
39. DAP0507
40. DAP0511
41. DAP0532
42. DAP0535
Each Propeller is capable of absorbing 750 or more “rated take-off shaft horsepower”.
Schedule 2.1 - 4
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d. Loyalty Program Assets – None1
e. Spare Parts Assets – None2
f. Slots, Gates and Routes – None3
1 If any collateral of this type is pledged or added to this Schedule after the closing date, then the UCC-1 financing statement
collateral description may need to be amended to reflect this additional asset(s).
2 If any collateral of this type is pledged or added to this Schedule after the closing date, then the UCC-1 financing statement
collateral description may need to be amended to reflect this additional asset(s).
3 If any collateral of this type is pledged or added to this Schedule after the closing date, then the UCC-1 financing statement
collateral description may need to be amended to reflect this additional asset(s).
Schedule 2.1 - 5
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Schedule 4.1 (General Information)
to Agreement
GENERAL INFORMATION
Federal Taxpayer
Identification
Jurisdiction Address of Chief
Number or
No. Legal Name Entity Type of Executive Office/Principal
Organizational
Organization Place of Business
Identification
Number
Horizon Air 19300 International Blvd.
1. Corporation Washington 91-1201373
Industries, Inc. Seattle, WA 98188
Schedule 4.1 - 1
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Exhibit A
to Agreement
[FORM OF] PLEDGE SUPPLEMENT
This PLEDGE SUPPLEMENT, dated [●], is executed and delivered by the undersigned (a
“Grantor”) pursuant to the Amended and Restated Horizon Aircraft, Engine and Propeller Pledge and
Security Agreement, dated as of October 30, 2020 (as it may be from time to time amended, restated,
modified or supplemented, the “Security Agreement”), among the Grantors and The Bank of New York
Mellon, as Collateral Agent. Capitalized terms used herein not otherwise defined herein shall have the
meanings ascribed thereto in the Security Agreement.
By executing and delivering this Pledge Supplement, the Grantor hereby confirms the grant to the
Collateral Agent set forth in the Security Agreement of, and does hereby grant to the Collateral Agent, a
security interest in all of such Grantor’s right, title and interest in, to and under all Collateral pledged by it
to secure the Secured Obligations, in each case whether now or hereafter existing or in which such Grantor
now has or hereafter acquires an interest and wherever the same may be located. If the Grantor is not an
existing Grantor under the Security Agreement, such Grantor hereby becomes a party to the Security
Agreement as an Additional Grantor and a Grantor under the Security Agreement, in each case with the
same force and effect as if originally named therein as a Grantor under the Security Agreement and subject
to all Annexes applicable to the Collateral being pledged by it (which for the avoidance of doubt are hereby
incorporated by reference). If the Grantor is an existing Grantor under the Security Agreement and is
providing, as Additional Collateral thereunder, the items specified in the attached Schedule hereto, such
Additional Collateral is subject to the Security Agreement with the same force and effect as if originally a
part thereof and to all Annexes applicable to such Additional Collateral (which for the avoidance of doubt
are hereby incorporated by reference).
The Grantor represents and warrants that each of the representations and warranties contained in
Section 4 of the Security Agreement and all Applicable Annexes are true, correct and complete on and as
of the date hereof (after giving effect to this Pledge Supplement) and agrees that the Schedule attached
hereto shall supplement the equivalent schedules of the Security Agreement and the Perfection Certificate.
The Grantor hereby additionally represents and warrants that the Grantor has taken the perfection actions
with respect to the Collateral specified in the Security Agreement and all Applicable Annexes, including
the Perfection Requirement.
This Pledge Supplement will be governed by and construed in accordance with the law of the State
of New York.
IN WITNESS WHEREOF, the Grantor has caused this Pledge Supplement to be duly executed
and delivered by its duly authorized officer as of the date hereof.
[NAME OF GRANTOR]
By:_____________________________
Name:
Title:
Exhibit A - 1
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[FORM OF] SCHEDULE TO PLEDGE SUPPLEMENT
[FORM OF] SUPPLEMENT TO SCHEDULES
TO AGREEMENT
i. Loyalty Program Assets (certain non-Loyalty Program Agreement components):
a. Loyalty Program Agreements (please denote any Loyalty Program Agreement which
is a Material Loyalty Program Agreement with a ‡ and include the expiration date for
each Material Loyalty Program Agreement)
b. Trademark Registration
No. Mark Registration Registration Jurisdiction Owner
Number Date
1. [●] [●] [●] [●] [●]
c. Trademark Application
No. Mark Application Filing Date Jurisdiction Owner
Number
1. [●] [●] [●] [●] [●]
d. Issued Patents
No. Title Patent Date Issued Jurisdiction Owner
Number
1. [●] [●] [●] [●] [●]
e. Patent Applications
No. Title Application Filing Date Jurisdiction Owner
Number
1. [●] [●] [●] [●] [●]
f. Copyright Registration
No. Title Registration Registration Jurisdiction Owner
Number Date
1. [●] [●] [●] [●] [●]
g. Copyright Applications
‡ Denotes a Material Loyalty Program Agreement.
Schedule to Pledge Supplement - 1
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No. Title Registration Registration Owner
Number Date
1. [●] [●] [●] [●]
h. Exclusive Copyright Licenses
i. Internet Domain Names
No. Domain Name Owner
1. [●] [●]
j. Material Unregistered Trademarks
k. IP Licenses
__________________________________________________________________________
(i) Aircraft and Engine Assets:
a. Airframes
Airframe Airframe Serial
No. U.S. Registration No. Airframe Manufacturer
Model No.
1. [●] [●] [●] [●]
b. Engines
Generic Manufacturer and Manufacturer’s
No. Manufacturer Model
Model Serial No.
1. [●] [●] [●] [●]
c. Insurance
__________________________________________________________________________
(i) Spare Parts Assets:
a. Spare Parts
Designated
Manufacturer Part Spare Parts
No. Grantor Type of Spare Part
Number Location
(and address)
1. [●] [●] [●] [●]
b. Insurance
Schedule to Pledge Supplement - 2
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__________________________________________________________________________
(i) SGR Assets:
a. Route Authorities
b. Scheduled Service
No. Domestic Airport Foreign Airport
1. [●] [●]
c. Slots
d. Copies of Routes Certificates and Orders
__________________________________________________________________________
COMPLETE FOR ALL COLLATERAL PACKAGES:
(ii) Control Collateral
a. Deposit Accounts
No. Grantor Name of Account Bank Account Number Type of Account
Horizon Air Industries, Collateral Proceeds
1. Bank of America, N.A 138110458058
Inc. Account
b. Securities Accounts†
Name of Securities
No. Grantor Account Number Account Name
Intermediary
1. [●] [●] [●] [●]
(iii) Pledged Collateral
a. Pledged Debt
Original Outstanding
No Maturity
Grantor Issuer Principal Principal Issue Date
. Date
Amount Balance
1. [●] [●] [●] [●] [●] [●]
b. Pledged Equity Interests
Denotes a Blocked Account.
† Denotes a Collection Account.
Schedule to Pledge Supplement - 3
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% of
No. of Outstand
If
Certifica Certifi Share ing
Type of Stock, Par
No. Grantor Issuer ted cate s or Equity
issuer Class of Value
(Y/N) No. Intere Interest
Stock
sts of the
issuer
1. [●] [●] [●] [●] [●] [●] [●] [●] [●]
Schedule 4.1 – General Information
Federal Taxpayer
Identification
Jurisdiction Address of Chief
Number or
No. Legal Name Entity Type of Executive Office/Principal
Organizational
Organization Place of Business
Identification
Number
1. [●] [●] [●] [●] [●]
Schedule to Pledge Supplement - 4
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Exhibit B
to Agreement
Form of Perfection Certificate
[Intentionally Omitted from the FAA Filing Counterpart as the Parties Deem it to Contain Confidential
Information]
Exhibit B - 1
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Annex 1 (Loyalty Program Assets)
Each Grantor and the Collateral Agent hereby agree that (i) the terms of this Annex shall apply with respect
to Collateral consisting of Loyalty Program Assets and Grantors of such Collateral and (ii) the terms of
Annexes 2 (for Control Collateral) and 5 (for Pledged Collateral) (each, an “Incorporated Annex”, and
collectively, the “Incorporated Annexes”) shall apply to the Collateral consisting of assets noted in the
parenthetical for such Annex and the Grantors of such Collateral.
1. Perfection Requirement. The following requirements shall be included in the definition of
“Perfection Requirement” and shall constitute an additional “Perfection Requirement”:
(a) Notwithstanding anything to the contrary herein or in the Loan Agreement, in no event
shall any Grantor be required to make any Intellectual Property filing in a jurisdiction other
than the United States (or any state thereof) to perfect the Secured Parties’ security interest
in the Loyalty Program Intellectual Property.
(b) Notwithstanding anything to the contrary herein or in the Loan Agreement, in no event
shall any Grantor be required to make any Required Filings for any Loyalty Program Assets
set forth in Section 7(a)(ix)(H) of this Annex other than the filing of UCC financing
statements (including any fixture filing, as applicable) in each governmental, municipal or
other office specified in Schedules 2(a) and 2(b) to the Perfection Certificate.
2. Required Filings. Each of the following financing statement, filing, recording or other document
shall be included in the definition of Required Filing and shall constitute an additional “Required
Filing”:
(a) A copy (or short-form memorialization) of all exclusive licenses (i) granted to any Grantor
under any registered or applied-for United States Copyrights and (ii) included in the
Collateral, for filing with the United States Copyright Office in favor of Grantor;
(b) With respect to each Grantor’s United States registered and applied-for Copyrights and any
exclusive IP License granted to any Grantor under any registered or applied-for United
States Copyrights, in each case, included in the Collateral, a Copyright security agreement
substantially in the form attached hereto as Exhibit 1, for filing with the United States
Copyright Office;
(c) With respect to such Grantor’s issued and applied-for United States Patents included in the
Collateral, a Patent Security Agreement substantially in the form attached hereto as Exhibit
2, for filing with the United States Patent and Trademark Office; and
(d) With respect to such Grantor’s registered and applied-for United States Trademarks
included in the Collateral, a Trademark Security Agreement in the form attached hereto as
Exhibit 3, for filing with the United States Patent and Trademark Office.
3. Representations and Warranties. Each Grantor (as applicable) hereby represents and warrants,
on the Closing Date and on the date of each Borrowing (or, in the case of an Additional Grantor or
Additional Collateral, on the date of such Grantor’s execution and delivery of a Pledge Supplement,
or the date such Additional Collateral becomes subject to the security interest created hereby, as
applicable) as set forth below:
Relevant IP & Data Representations
Annex 1 - 1
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(a) The Loyalty Program Intellectual Property, the Loyalty Program Data and the IP Licenses
included in the Collateral are fully transferable and alienable by such Grantor without
restriction and without payment of any kind to any Person (other than, with respect to the
Loyalty Program Intellectual Property, the fees and costs necessary to record such transfers
with an IP Filing Office, as applicable and other than off-the-shelf inbound third-party
computer software IP Licenses).
Relevant Data Representations
(b) Except as set forth on Schedule 3(b), such Grantor is, and at all times has been, in
compliance in all material respects with (i) all Privacy Laws, (ii) its and its Affiliates’
internal and public-facing privacy policies, notices and statements and (iii) its contractual
commitments and obligations, in each case in connection with the Loyalty Program Data.
Such public-facing policies are accurate, not misleading and consistent with the actual
practices of such Grantor.
(c) The consummation of the transactions contemplated by this Agreement, the Loan
Agreement and the other Security Documents will not cause any Grantor to be in material
violation or breach of any internal or public-facing privacy policy, notice or statement of
such Grantor, any Privacy Law or any Loyalty Program Agreement.
(d) Except as set forth on Schedule 3(d), none of such Grantor’s current or previous privacy
policies, notices or statements include or included any restrictions on, or fail or failed to
include any disclosures to permit, the potential transfer, sharing and disclosure of Loyalty
Program Data to an unaffiliated third party in connection with a bankruptcy or in
connection with an asset sale.
(e) Except as set forth on Schedule 3(e), to such Grantor’s knowledge, no notice of
enforcement or investigation, or prohibition, warning or audit requests have been served in
relation to the Processing by or on behalf of any Grantor or its Affiliates of any Loyalty
Program Data and no fact or circumstance exists which would reasonably be expected to
give rise to an such notice, warning or audit request. No judgment, decree, ruling, writ,
award, injunction or order of any Governmental Authority is pending, threatened or active
against any Grantor, its Affiliates or any of its or their service providers relating to the
Processing of Loyalty Program Data.
Relevant IP Representations
(f) Schedule 2.1 hereto sets forth a true and accurate list of (i) all United States and foreign
registrations of, issuances of and applications for Patents, Trademarks (including Internet
domain names) and Copyrights, in each case owned by a Grantor and included in the
Collateral, (ii) all exclusive IP Licenses included in the Collateral granted to any Grantor
under any Copyrights registered with or applied for at the United States Copyright Office,
(iii) all United States and foreign Trademarks that are material to any Carrier Loyalty
Program that are not registered or applied for in any IP Filing Office and (iv) all proprietary
software that is material to the Carrier Loyalty Program whether registered or unregistered.
Each item of Intellectual Property listed on Schedule 2.1 is valid and enforceable.
(g) It is the record owner of all of its Intellectual Property listed on Schedule 2.1, and there are
no gaps or inaccuracies in the chain of title of such Intellectual Property. It has the full
power, right and authority to grant the licenses set forth in the IP License Agreement, and
the licenses granted thereunder do not and the rights granted to Treasury thereunder if
Annex 1 - 2
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exercised by the Treasury would not conflict with or breach any prior agreements or
understandings entered into between such Grantor and any third party.
(h) It has sole and exclusive rights to sue third parties for the infringement, misappropriation
or other violation of its Loyalty Program Intellectual Property and Licensed Trademarks
and to collect royalties, revenues, income, damages or other payments arising therefrom.
(i) Schedule 2.1 is a true and complete list of all IP Licenses included in the Collateral that (i)
involve payments in excess of $1 million per year, (ii) contain a grant of exclusivity or (iii)
are otherwise material.
(j) To such Grantor’s knowledge, no Person is materially infringing, diluting,
misappropriating or otherwise violating any Grantors’ Loyalty Program Intellectual
Property or Licensed Trademarks, and such Grantor has not made any such claim that has
not been resolved.
(k) No holding, decision, judgment, order, or other final determination has been rendered by
any Governmental Authority that would materially limit, cancel or question the validity or
enforceability of, or such Grantor’s right, title or interest in, any material Loyalty Program
Intellectual Property or any of the Licensed Trademarks.
(l) It uses standards of quality sufficient to protect the validity and enforceability of the
Loyalty Program Trademarks in all products marketed and sold, and in the performance of
services provided, under the Loyalty Program Trademarks. To the extent applicable, such
Grantor has taken all reasonable actions necessary to ensure that all licensees of such
Grantor’s Loyalty Program Trademarks adhere to such Grantor’s established standards of
quality for the goods and services provided by the licensee using such licensed Loyalty
Program Trademarks.
Loyalty Program Agreement Representations
(m) Schedule 2.1 to this Agreement sets forth all Loyalty Program Agreements (including
Material Loyalty Program Agreements and the expiration date for each Material Loyalty
Program Agreement) that constitute Collateral and all Collateral Accounts.
(n) [Reserved.]
(o) With respect to each Material Loyalty Program Agreement:
(i) [Reserved.];
(ii) to the knowledge of the Grantors, no default by any party thereto exists and no
party thereto is delinquent in payment of any other amounts required to be paid
thereunder that (x) would be materially adverse to any Secured Party or (y) would,
or would be reasonably expected to, result in a Material Adverse Effect;
(iii) [Reserved.];
(iv) except as disclosed to the Collateral Agent, such Loyalty Program Agreement
permits such Grantor to grant a security interest in such Grantor’s rights therein
granted to the Collateral Agent and permits the Collateral Agent’s exercise of its
rights and remedies as secured party, including its rights of Disposition; and
Annex 1 - 3
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(v) the Collateral includes substantially all of the Loyalty Program Revenue.
Other Collateral Representations
(p) [Reserved.]
(q) The Collateral to which the Collateral Agent has been granted a security interest hereunder
together with the rights the Collateral Agent has been granted under the Loan Documents
(including Section 6 of this Annex) and the IP License Agreement constitute all the assets,
properties and rights (other than off-the-shelf third-party computer software that is
generally available and Equipment) reasonably necessary for the operation of the Carrier
Loyalty Programs as currently conducted in all material respects.
2. Covenants. Each Grantor (as applicable) hereby covenants and agrees as set forth below:
(a) [Reserved].
Affirmative Covenants - Data
(b) It will take all reasonable action requested by the Appropriate Party or any of its or their
successors or assigns for purposes of complying with applicable Privacy Laws, including
in issuing notices, opt-outs and similar communications to data subjects, including to
Loyalty Program Members, to allow the full use and transfer of Loyalty Program Data,
including full use by and transfer to an unaffiliated third party, in the Event of a Default.
(c) Within sixty (60) days of the Closing Date, the Loyalty Program Data shall be physically
segregated, compiled, hosted and maintained on a database that is separated and segregated
from each of Grantor’s databases that store data not included in the Loyalty Program Data,
and each of the applicable Grantors shall provide the Collateral Agent with a signed
certification certifying that the requirements of this Section 4(c) have been satisfied,
provided that if there is any Loyalty Program Data with respect to which there is
concurrently, (i) with respect to any Loyalty Program Data collected on or prior to the
Closing Date, (x) at least one copy stored in connection with Grantor’s Carrier Loyalty
Program immediately prior to the Closing Date and (y) at least one copy stored in
connection with Grantor’s non-Loyalty Program operations immediately prior to the
Closing Date as a result of such Grantor’s collection or usage of such data in connection
with such Grantor’s non-Loyalty Program operations, or (ii) with respect to any Loyalty
Program Data collected following the Closing Date, (x) at least one copy stored in
connection with Grantor’s Carrier Loyalty Program and (y) at least one copy stored in
connection with Grantor’s non-Loyalty Program operations as a result of such Grantor’s
collection or usage of such data in connection with such Grantor’s non-Loyalty Program
operations (such copies in clauses (i)(y) and (ii)(y), the “Non-Loyalty Copies”), this
Section 4(c) shall not apply to the Non-Loyalty Copies.
(d) It will maintain and be in compliance with commercially reasonable disaster recovery,
backup and security plans and procedures, and have taken reasonable steps to test such
plans and procedures on no less than an annual basis and to ensure that all employees and
any other Persons acting on behalf of such Grantor or any of its Affiliates in connection
with the Processing of the Loyalty Program Data are aware of and adhere to such plans and
procedures.
Annex 1 - 4
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(e) It shall maintain in effect and implement commercially reasonable privacy and data
security policies and procedures and administrative, physical and technical safeguards, and
shall comply in all material respects with (i) all applicable Privacy Laws, (ii) its internal
and public-facing privacy policies, notices and statements and (iii) its contractual
commitments and obligations, in each case in connection with Loyalty Program Data.
(f) It shall (i) promptly notify the Appropriate Party and the Collateral Agent, in accordance
with Section 10.1 of this Agreement, providing such details as the Appropriate Party or the
Collateral Agent may require, of (x) the institution of any enforcement or investigation, or
prohibition, warning or audit request that has been served, or judgment, decree, ruling, writ,
award, injunction or order of any Governmental Authority pending, threatened or active
against any Grantor, its Affiliates or any of its or, to such Grantor’s knowledge, their
service providers, related to the Processing of any Loyalty Program Data or (y) any material
breaches, cyberattacks (including ransomware attacks), violations or unauthorized uses of
or accesses to the IT Systems or any Loyalty Program Data, Trade Secrets or confidential
information stored therein or processed thereby and (ii) take all commercially reasonable
steps to (x) defend its rights in the Loyalty Program Data in any such enforcement,
investigation, audit or other proceeding and (y) as promptly as practicable, fully remediate
any such breaches, attacks, violations or unauthorized uses or accesses and, to the extent
required under applicable Law, including applicable Privacy Laws, notify the applicable
data subjects thereof.
(g) It shall maintain and, to the extent not already in its possession, obtain cyber liability
insurance covering breaches to or compromises of third party components of the Loyalty
Program Data and shall ensure that at all times the Collateral Agent, for the benefit of the
Secured Parties, shall be named as an additional insured and lender loss payee under such
cyber insurance, in each case to the fullest extent permitted under such insurance policy
and by the applicable insurance provider, with respect to any Loyalty Program Data.
Notwithstanding anything herein or in any other Loan Document to the contrary, the
applicable Grantor shall be permitted to obtain first-party coverage for cyber liability
insurance through its in-house captive insurance team to the extent that obtaining such first-
party coverage through a third-party insurance provider is commercially unviable.
(h) Notwithstanding anything to the contrary herein or in the other Loan Documents, any
reference to “Loyalty Program Data” in this Annex (including in Section 3(q)(F)) will not
include Non-Loyalty Copies.
Affirmative Covenants – Intellectual Property
(i) To the extent not already registered or issued or the subject of a pending application (for
the avoidance of doubt, including to the extent not already registered or the subject of a
pending application in a material class of goods and services), each Grantor will take
commercially reasonable efforts to promptly register all material Trademarks (other than
the “MILEAGE PLAN” Trademark) included in the Collateral or in the Licensed
Trademarks with the applicable IP Filing Office, including those set forth on Schedule 4(i).
It shall promptly (i) file (A) a “Statement of Use” with the United States Patent and
Trademark Office pursuant to Section 1(d) of the Lanham Act or (B) an “Amendment to
Allege Use” whereby such intent-to-use trademark application is converted to a “use in
commerce” application pursuant to Section 1(c) of the Lanham Act, in each case of (A)
and (B) against all Loyalty Program Trademarks or Licensed Trademarks to the extent such
Trademarks have been used in commerce by Grantor or any of its Affiliates and (ii) take
Annex 1 - 5
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all other actions necessary to facilitate the acceptance of such “Statement of Use” or
“Amendment to Allege Use” by the United States Patent and Trademark Office.
(j) It shall (i) promptly notify in the manner set forth in Section 10.1 of this Agreement the
Appropriate Party and the Collateral Agent, providing such details as the Appropriate Party
or the Collateral Agent may require, of the institution of any material proceeding before a
Governmental Authority regarding the validity or enforceability of, or such Grantor’s right
to register, own or use, any Loyalty Program Intellectual Property or any Licensed
Trademarks, and of any adverse determination on the merits in any such proceeding (in
each case, other than “office actions” by IP Filing Office examiners in the ordinary course
of prosecution of applications), (ii) take all reasonable steps to defend its rights in the
Loyalty Program Intellectual Property (other than any Loyalty Program Intellectual
Property that is, and immediately prior to the institution of such proceeding was, no longer
used and no longer useful in the business of any Grantor or its Subsidiaries) or the Licensed
Trademarks, as applicable, in such proceedings and other interference, reexamination,
opposition, cancellation, infringement, dilution, misappropriation and other proceedings
and (iii) take all reasonable steps to protect the security, integrity and confidentiality of all
Trade Secrets and any other confidential or proprietary information or data included in the
Collateral.
(k) It shall defend all material challenges to the validity and enforceability of, and its title to
and ownership of, any Loyalty Program Intellectual Property (other than any Loyalty
Program Intellectual Property that is, and immediately prior to the initiation of such
challenge was, no longer used and no longer useful in the business of any Grantor or its
Subsidiaries)and any Licensed Trademarks, and in the event that any Loyalty Program
Intellectual Property or, subject to the IP License Agreement, any Licensed Trademarks is
materially infringed, misappropriated, diluted or otherwise violated by a third party,
promptly take all reasonable actions, as permitted by applicable Law, to stop such
infringement, misappropriation, dilution or other violation and protect its rights in such
Intellectual Property, including any initiation of a suit for injunctive relief, and to recover
damages; for the avoidance of doubt, the Collateral Agent hereby permits Grantors to take
the actions set forth in this Section 4(k) of this Annex prior to an Event of Default
notwithstanding the IP License Agreement.
(l) It will maintain the standards of quality of all products marketed or sold, and in the
performance of services provided, under the Loyalty Program Trademarks, at a level at
least as high as on the date hereof and will take all reasonable actions necessary to ensure
that all licensees of its Loyalty Program Trademarks adhere to such Grantor’s then-
established standards of quality for the services provided by the licensee using such
licensed Trademarks.
(m) Within sixty (60) days of the Closing Date, a copy of all software code (in both object code
and source code form) included in the Loyalty Program Intellectual Property, and all
associated documentation, in each case (i) owned by any Grantor or any of its Affiliates or
(ii) in any Grantor’s or any of its Affiliates’ possession or control, shall be stored in
physically separated and segregated media from any of Grantors’ other software code not
included in the Loyalty Program Intellectual Property, and each of the applicable Grantors
shall provide the Collateral Agent with a signed certification certifying that the
requirements of this Section 4(m) have been satisfied. For the avoidance of doubt,
additional copies of such software code and associated documentation can concurrently
remain stored in their current locations.
Annex 1 - 6
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(n) For the avoidance of doubt, Section 6.1(c) of this Agreement shall apply to any and all
“intent-to-use” Loyalty Program Trademark applications included in the Excluded Assets
with respect to which any Grantor files with the United States Patent and Trademark Office
a “Statement of Use” pursuant to Section 1(d) of the Lanham Act or an “Amendment to
Allege Use” pursuant to Section 1(c) of the Lanham Act.
Affirmative Covenants - Other
(o) It shall notify the Collateral Agent of any Loyalty Program Agreement entered into after
the Closing Date, together with copies if such agreement constitutes a Material Loyalty
Program Agreement, (x) immediately after the execution thereof (in the case of a Material
Loyalty Program Agreement), at which time Schedule 1.01(b) of the Loan Agreement will
be deemed updated to include such agreement designated as a Material Loyalty Program
Agreement, or (y) within ten (10) Business Days thereof (in the case of any Loyalty
Program Agreement that is not a Material Loyalty Program Agreement).
(p) It shall honor Currency according to the Loyalty Program Rules, except to the extent that
would not, or would not be reasonably expected to, cause a Material Adverse Effect.
(q) It shall promptly give notice to the Appropriate Party and the Collateral Agent (it being
understood that such requirement will constitute a notice required under Section 5.03 of
the Loan Agreement) of (i) a default or breach by any Grantor or counterparty to a Material
Loyalty Program Agreement of its material obligations under such agreement and (ii)
knowledge or notice of any event or circumstance that would, or would reasonably be
expected to, reduce or offset the rate or amount of payments due to any Grantor under any
Material Loyalty Program Agreement, including an explanation of impact of such event or
circumstance on such Grantor’s portion of the Loyalty Program Revenue in form and
substance reasonably satisfactory to the Collateral Agent.
(r) Concurrently with the Appraisals required to be delivered under Section 5.16 of the Loan
Agreement, it shall additionally identify any material change to the terms of the Loyalty
Program Agreements since the date of delivering the latest Appraisal and, to the extent
such changes affect any Loyalty Program Agreements that constitute Material Loyalty
Program Agreements, provide to the Collateral Agent copies of such change (including the
relevant amendment, supplement, restatement or other modification).
(s) [Reserved.]
Negative Covenants - Data
(t) Except to the extent required by applicable Law, it will not modify, publish, provide or
deliver any privacy policies, notices or statements in a manner that impairs (as compared
with the last updated policies, notices or statements, as applicable, existing as of the date
hereof) the right or ability of any Grantor, any of its Affiliates, any of its or their successors
or assigns or the Collateral Agent to Process any Loyalty Program Data substantially in the
manner Processed as of the Closing Date or removes or narrows any disclosure existing as
of the date hereof regarding the potential future transfer, sharing or disclosure of Loyalty
Program Data.
Negative Covenants – Data & Intellectual Property
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(u) It will not enter into any agreement (i) with respect to the Loyalty Program Data, Loyalty
Program Intellectual Property or outbound IP Licenses included in the Collateral, after the
Closing Date, that prohibits the assignment of, grant of a security interest in, or license of
any such Collateral (other than to Treasury or the Collateral Agent) or (ii) that conflicts
with or breaches any of the terms of the IP License Agreement or that would conflict with
or breach the rights granted to Treasury thereunder if exercised by Treasury.
(v) It will not take any action or omit to take any action (other than such Grantor’s actions or
omissions of action that are in the ordinary course of business and consistent with past
practice) that could reasonably be expected to have a material negative effect on the
Loyalty Program Data, the Loyalty Program Intellectual Property or the IP Licenses
included in the Collateral (other than any Loyalty Program Intellectual Property that is no
longer used and no longer useful), including diminishing, diluting, tarnishing, invalidating
or rendering unenforceable Loyalty Program Trademarks, or otherwise materially
impairing or harming the value or reputation thereof or the goodwill associated therewith.
Negative Covenants - Other
(w) No Grantor nor any of its Affiliates shall create, establish, operate or otherwise permit to
exist any other Loyalty Program or Loyalty Subscription Program unless (i) substantially
all Loyalty Program Assets (including all income and revenue, Intellectual Property, data
(including Personal Data) and third-party contracts and intercompany agreements, related
to such other Loyalty Program) are Collateral (to the extent not already constituting
Collateral pursuant to Section 2.1) and (ii) the Perfection Requirements with respect to
such Collateral are satisfied (A) immediately (in the case of a Material Loyalty Program
Agreement and related Loyalty Program Assets (other than Loyalty Program Intellectual
Property)), (B) as promptly as practicable and in any event within thirty (30) days (in the
case of the Loyalty Program Intellectual Property related to a Material Loyalty Program
Agreement) or (C) within thirty (30) days (in the case of any Loyalty Program Agreement
that is not a Material Loyalty Program Agreement and related Loyalty Program Assets),
upon the creation, establishment or existence thereof, in the same manner and to the same
extent as other Loyalty Program Assets constituting Collateral, on a first-priority basis (in
each case, subject only to Permitted Liens); provided that (x) for purposes of this Section
4(w), the definition “Carrier Loyalty Program” included in the definition of “Loyalty
Program Assets” shall refer to such new Loyalty Program or Loyalty Subscription Program
and the definition of “Grantor” included in the definition of “Loyalty Program Assets” shall
refer to Grantor or any of its Affiliates and (y) any Trademarks under which such new
Loyalty Program or Loyalty Subscription Program are primarily operated shall be deemed
to be removed from Schedule 1.1.
(x) [Reserved.]
(y) It shall not substantially reduce, or permit any of its Subsidiaries to reduce, the Carrier
Loyalty Programs business as of the Closing Date.
3. Defaults and Remedies. Without limiting the generality of Section 8.1 of this Agreement and in
addition to any rights and remedies that the Collateral Agent may have under the Loan Documents
and the applicable Law:
(a) If any Event of Default shall have occurred and be continuing, the Collateral Agent (acting
at the direction of the Required Lenders) may, and each Grantor hereby irrevocably
appoints the Collateral Agent (such appointment being coupled with an interest and
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terminable only upon the payment in full of the Secured Obligations as such Grantor’s
proxy and attorney-in-fact) with full authority in the place and stead of such Grantor and
in the name of such Grantor, to:
(i) Subject to applicable Privacy Laws and consistent with Grantor’s public-facing
privacy policies in effect at the time of issuance, issue and circulate notices, opt-
outs and similar communications to data subjects, including Loyalty Program
Members, to allow the full use and transfer of Loyalty Program Data in the Event
of a Default, including full use by and transfer to an unaffiliated third-party
purchaser;
(ii) bring suit or otherwise commence any action or proceeding in the name of any
Grantor, as directed by the Required Lenders to the Collateral Agent, to enforce
any Loyalty Program Intellectual Property, in which event such Grantor shall, at
the request of the Appropriate Party or the Collateral Agent, do any and all lawful
acts and execute any and all documents required by the Appropriate Party or the
Collateral Agent in aid of such enforcement and such Grantor shall promptly, upon
demand, reimburse and indemnify the Appropriate Party and the Collateral Agent
in connection with the exercise of its rights under this Section 5 or Section 8 of
this Agreement, and, to the extent that the Appropriate Party or the Collateral
Agent shall elect not to bring suit to enforce any Loyalty Program Intellectual
Property as provided in this Section 5 or Section 8 of this Agreement, each Grantor
agrees to use all commercially reasonable measures, whether by action, suit,
proceeding or otherwise, to prevent the infringement, misappropriation, dilution or
other violation of any of such Grantor’s rights in the Loyalty Program Intellectual
Property by others and for that purpose agrees to diligently maintain any action,
suit or proceeding against any Person so infringing as shall be necessary to prevent
such infringement, misappropriation, dilution or violation;
(iii) notify, or require each Grantor to notify, any obligors with respect to amounts due
or to become due to such Grantor in respect of the Loyalty Program Intellectual
Property or the IP Licenses included in the Collateral, of the existence of the
security interest created herein, to direct such obligors to make payment of all such
amounts directly to the Collateral Agent, and, upon such notification and at the
expense of such Grantor, to enforce collection of any such amounts and to adjust,
settle or compromise the amount or payment thereof, in the same manner and to
the same extent as such Grantor might have done;
(iv) take any actions that the Appropriate Party deems appropriate to maintain the
applicable Grantor’s standards of quality, as referenced in Section 3(l) of this
Annex, for products marketed or sold, or in the performance of services provided,
under the Loyalty Program Trademarks; and
(v) institute, defend or settle legal proceedings to collect on or enforce the applicable
Grantor’s rights and remedies against third parties, including account debtors,
licensors, licensees, sublicensors, sublicensees and other parties to IP Licenses,
under or on account of any Loyalty Program Intellectual Property or IP License
included in the Collateral, without becoming a party to or incurring any liability
under any IP License.
(b) In connection with the Collateral Agent’s exercise of its rights and remedies under of this
Section 5 or Section 8 of this Agreement, each Grantor will, at the Collateral Agent’s or
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the Appropriate Party’s request and to the extent within such Grantor’s power and authority
and subject to Grantor’s existing third-party contractual restrictions, give the Collateral
Agent or the Appropriate Party access to:
(i) all software, technology, networks, systems, databases, information technology
environments and other tangible assets used for the management of the Collateral
or any Intellectual Property licensed under Section 8(e) of this Agreement or under
the IP License Agreement, and access to and possession of all media and files in
which any of such Collateral or Intellectual Property may be recorded or stored;
(ii) such Grantor’s know-how and expertise regarding the Collateral or the
manufacture, sale, distribution or provision of any goods or services in connection
with any Carrier Loyalty Program; and
(iii) such Grantor’s personnel responsible for either of the foregoing matters.
(c) The Collateral Agent shall take commercially reasonable measures to protect the
confidentiality of any Trade Secrets and other confidential information accessed pursuant
to Section 5(b) of this Annex.
4. Provision of Services.
(i) Until the time of an Event of Default and following an Event of Default, each
Grantor shall, and shall cause its Affiliates to, provide to the Collateral Agent, at
such Grantor’s cost and expense, any (i) services and (ii) access to any technology,
networks, systems, databases or other tangible assets, in the case of (i) or (ii), that
are required for, the operation of any Carrier Loyalty Program as such Carrier
Loyalty Program was operated prior to the occurrence of such Event of Default,
solely to enable the Collateral Agent to exercise its rights and remedies under
Section 8 of this Agreement and Section 5 of this Annex after the occurrence, and
solely during the continuance, of an Event of Default; provided that (x) with
respect to any such services or assets which, at the time of the Collateral Agent’s
exercise of the right described in this paragraph, were provided to such Grantor by
any third party and with respect to which the consent of such third party is
necessary for such third party or such Grantor to provide such services or access
to the Collateral Agent, such Grantor shall use its commercially reasonable efforts
to obtain the consent of such third party to provide such services to the Collateral
Agent and (y) this Section 6(i) of Annex 1 is exercisable solely upon and during
the continuance of an Event of Default.
(ii) Each Grantor shall work together, and cause its Affiliates, as applicable, to work
together in good faith with any assignee of any Collateral and any applicable third-
party service providers to provide the services and access set forth in clause (i) and
Section 5(b) above to such assignee on commercially reasonable terms until such
assignee is able to secure an adequate replacement or substitute for such services
or access from a third party and such Grantor shall continue to provide such
services and access to such assignee, on an actual cost basis, for the duration of a
reasonable negotiation period.
5. Closing Deliverables. On the Closing Date, (a) the Grantors shall deliver to the Treasury and the
Collateral Agent counterparts of the IP License Agreement duly executed by each of the applicable
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Grantors and (b) the Treasury shall deliver to a Grantor a counterpart of the IP License Agreement
duly executed by the Treasury.
6. Miscellaneous. Each Grantor and the Collateral Agent agree that:
(a) The terms of this Annex shall be deemed incorporated into and part of this Agreement.
(b) The terms of this Annex cumulative in nature and shall not limit the applicability or scope
of the other terms of this Agreement.
7. Terms.
(a) The following capitalized terms used in this Agreement shall have the following meanings:
(i) “Collateral Support” shall mean all property (real or personal) assigned or
securing any Collateral and shall include any agreement granting a Lien in such
real or personal property.
(ii) [Reserved].
(iii) [Reserved].
(iv) [Reserved].
(v) “IP License Agreement” shall mean that certain perpetual, transferable,
worldwide, royalty-free Intellectual Property license agreement, dated as of the
date hereof, by and among each of the Grantors that owns Loyalty Program
Intellectual Property, on the one hand, and Treasury, on the other hand.
(vi) “IP Licenses” shall mean any and all agreements, whether or not styled as a
“license,” that (A) grant a Person an exclusive or non-exclusive license or other
right to use or exercise any Intellectual Property, (B) that obligate a Person to
refrain from using or enforcing any Intellectual Property, including settlements,
co-existence agreements, consents-to-use, non-assertion agreements and
covenants not to sue and (C) any option or right of first refusal or first offer on any
of the foregoing in clauses (A) or (B).
(vii) “IP-Related Rights” shall mean, (A) with respect to any Loyalty Program
Intellectual Property or IP Licenses included in the Collateral, any Proceeds
thereof, and (B) with respect to any Loyalty Program Intellectual Property, Loyalty
Program Data or IP Licenses included in the Collateral, (1) all rights to royalties,
revenues, income, payments, claims, damages and proceeds of suit and other
payments arising therefrom and (2) all other accrued and unaccrued causes of
action (whether in contract, tort or otherwise) or rights to claim, sue or collect
damages for or enjoin or obtain other legal or equitable relief for, an infringement,
misuse, misappropriation, dilution, violation, unfair competition, injury to
goodwill or other impairment (whether past, present or future) thereof, including
expired items.
(viii) “Licensed Trademarks” shall mean the Carrier Licensed Trademarks as defined
in the IP License Agreement.
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(ix) “Loyalty Program Assets” shall mean each Grantor’s right, title and interest in,
to and under the following, in each case, whether now owned or existing or
hereafter acquired, developed, created or arising:
(A) [Reserved];
(B) the Loyalty Program Agreements, including all Loyalty Program Revenues and
all:
a. Accounts;
b. Instruments; and
c. Receivables and Receivable Records
in each case, representing such Grantor’s rights and claims arising under or in
connection with any Carrier Loyalty Program (including the Loyalty Program
Agreements) and the Loyalty Program Revenues;
(C) All Trademarks used or held for use in a material respect in connection with any
Carrier Loyalty Program and owned by a Grantor or any of its Affiliates (other
than the items set forth on Schedule 1.1, the Licensed Trademarks and the
Transitional Trademarks (as defined in the IP License Agreement)), and all
Trademarks set forth on Schedule 2.1, in each case and any successor or
replacement Trademarks thereto;
(D) All:
a. Intellectual Property (other than Trademarks);
b. General Intangibles (other than Intellectual Property);
c. IT Systems; and
d. Equipment;
in each case, (i) owned by a Grantor or any of its Affiliates (A) exclusively
used or held for use in connection with any Carrier Loyalty Program or (B)
primarily used in, and required to operate, any Carrier Loyalty Program
(which, for the avoidance of doubt, shall not include any aircraft, airframe,
engines, Spare Parts or SGR Assets unless otherwise specified on Schedule
2.1 or in any Pledge Supplement), or (ii) as set forth on Schedule 2.1;
(E) All IP Licenses (x) set forth on Schedule 7(a)(ix)(E)(x), (y) exclusively used or
held for use in connection with any Carrier Loyalty Program (other than such
Grantor’s rights under the IP License Agreement) or (z) granted by a Grantor to a
third party under any Loyalty Program Intellectual Property (other than non-
exclusive trademark licenses, non-disclosure agreements and similar agreements
entered into in the ordinary course of business, in each case that do not provide for
the payment of royalties for the use of such Loyalty Program Intellectual Property),
in each case other than all reciprocal passenger Currency accrual and redemption
agreements with other Air Carriers and any IP License set forth on Schedule
7(a)(ix)(E)(y);
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(F) All Loyalty Program Data;
(G) All IP-Related Rights;
(H) Any other assets or property (i) exclusively used or held for use in connection with
any Carrier Loyalty Program or (ii) primarily used in, and required to operate, any
Carrier Loyalty Program (which, for the avoidance of doubt, shall not include any
Intellectual Property, IT Systems, aircraft, airframe, engines, Spare Parts or SGR
Assets unless otherwise specified in this Section 7(a)(ix), Schedule 2.1 or in any
Pledge Supplement); and
(I) All books, records, information and data with respect to any of the foregoing, and
all tangible embodiments and fixations thereof (including all databases, files and
media in which any of the foregoing is recorded or stored).
(x) “Loyalty Program Intellectual Property” shall mean the Intellectual Property
included in the Loyalty Program Assets.
(xi) “Loyalty Program Rules” shall mean the rules, policies and procedures that
govern the applicable Carrier Loyalty Program.
(xii) “Loyalty Program Trademarks” shall mean the Trademarks included in the
Loyalty Program Assets.
(xiii) [Reserved].
(xiv) “Receivables” shall mean all rights to payment, whether or not earned by
performance, for goods or other property sold, leased, licensed, assigned or
otherwise Disposed of, or services rendered or to be rendered, including, but not
limited to, all such rights constituting or evidenced by any Account, Chattel Paper,
Instrument or General Intangible, together with all of Grantor’s rights, if any, in
any goods or other property giving rise to such right to payment and all Collateral
Support and Supporting Obligations related thereto and all Receivables Records.
(xv) “Receivables Records” shall mean all original copies of all documents,
instruments or other writings or electronic records or other Records evidencing the
Receivable, relating thereto or obtained or maintained in connection therewith.
(xvi) [Reserved].
(xvii) [Reserved].
(b) For the avoidance of doubt, each of the following terms shall have the meaning ascribed to
such term in the Loan Agreement: (i) Carrier Loyalty Program; (ii) Currency; (iii) Loyalty
Program; (iv) Loyalty Program Agreement; (v) Loyalty Program Data; (vi) Loyalty
Program Member; (vii) Loyalty Program Participant; (ix) Loyalty Program Revenue; (x)
Material Loyalty Program Agreement; and (xi) IT Systems.
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Schedule 7(a)(ix)(E) to Annex 1 (Loyalty Program Assets)
Schedule 7(a)(ix)(E)(x)
None.4
Schedule 7(a)(ix)(E)(y)
None.5
4 If any collateral of this type is pledged or added to this Schedule after the closing date, then the UCC-1 financing statement
collateral description may need to be amended to reflect this additional asset(s).
5 If any collateral of this type is pledged or added to this Schedule after the closing date, then the UCC-1 financing statement
collateral description may need to be amended to reflect this additional asset(s).
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EXHIBIT 1 to Annex 1 (Loyalty Program Assets)
FORM OF IP SECURITY AGREEMENT—COPYRIGHTS
COPYRIGHT SECURITY AGREEMENT
COPYRIGHT SECURITY AGREEMENT, dated as of [●], made by and between [●] (“Grantor”) and
THE BANK OF NEW YORK MELLON (the “Collateral Agent”).
WHEREAS, the Initial Lender has agreed to make Loans to the Grantor under that certain Loan and
Guarantee Agreement, dated as of September 28, 2020 (as amended by that certain Restatement Agreement,
dated as of October 30, 2020, and as further amended, restated, amended and restated, supplemented or
otherwise modified from time to time, the “Loan Agreement”) by and among ALASKA AIRLINES, INC.,
as Borrower, the Guarantors party thereto, the Collateral Agent, the Administrative Agent named therein
and the United States Department of the Treasury, as Lender;
WHEREAS, the Collateral Agent entered into that certain Amended and Restated Horizon Aircraft, Engine
and Propeller Pledge and Security Agreement dated as of as of October 30, 2020, by and among Grantor,
the grantors party thereto and the Collateral Agent (as amended, restated, amended and restated,
supplemented or otherwise modified from time to time, the “Security Agreement”).
WHEREAS, pursuant to the Security Agreement, the Grantor granted a security interest to the Collateral
Agent in the Copyright Collateral (as defined below) and is required to execute and deliver this Copyright
Security Agreement.
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration,
the receipt of which is hereby acknowledged, Grantor and the Collateral Agent hereby agree as follows:
1. Defined Terms
All capitalized terms used in this Copyright Security Agreement and not otherwise defined herein will
have the meanings assigned to them in the Security Agreement or Loan Agreement, as applicable.
2. Supplement to Security Agreement
This Copyright Security Agreement has been entered into in conjunction with the security interest granted
to the Collateral Agent under the Security Agreement, and Grantor hereby acknowledges and affirms that
the rights and remedies of the Collateral Agent with respect to the security interest in Collateral made and
granted hereby are more fully set forth in the Security Agreement, the terms and provisions of which are
incorporated by reference herein as if fully set forth herein. The terms of this Copyright Security
Agreement are supplemental to and not in replacement of the terms of the Security Agreement, and the
rights and remedies of the Collateral Agent with respect to the security interests granted herein are
without prejudice to, but in addition to, those set forth in the Security Agreement. If there is any conflict
between this Copyright Security Agreement and the Security Agreement, the Security Agreement will
govern.
3. Security Interest and Collateral
Grantor hereby grants to the Collateral Agent a security interest in and continuing lien on all of such
Grantor’s right, title and interest in, to and under the following, in each case whether now owned or
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existing or hereafter acquired, developed, created or arising and wherever located (collectively, the
“Copyright Collateral”):
a. any United States or foreign: (i) copyrights, whether registered or unregistered, whether
in published or unpublished works of authorship; (ii) copyright registrations or applications
in any IP Filing Office; (iii) copyright renewals or extensions; and (iv) rights corresponding,
derived from or analogous to the foregoing, in each case included in the Collateral,
including any copyright listed in Schedule 1 attached hereto (as such schedule may be
amended or supplemented from time to time) (collectively “Copyrights”);
b. any agreements, whether or not styled as a “license,” that grant to Grantor an exclusive
license to use or exercise rights in any registered or applied-for Copyright, included in the
Collateral, including any agreement listed in Schedule 1 attached hereto (as such schedule
may be amended or supplemented from time to time) (collectively, “Copyright Licenses”);
and
c. for any Copyright or Copyright License, any (i) Proceeds and rights to royalties, revenues,
income, payments, claims, damages and proceeds of suit and other payments arising
therefrom; and (ii) all other accrued and unaccrued causes of action (whether in contract,
tort or otherwise) or rights to claim, sue or collect damages for or enjoin or obtain other
legal or equitable relief for, an infringement, misuse, violation, unfair competition or other
impairment (whether past, present or future) thereof, including expired items.
For the avoidance of doubt, this Copyright Security Agreement is not to be construed as an assignment of
any Copyright Collateral.
4. Recordation
Grantor hereby authorizes the Register of Copyrights and any other government officials to record and
register, and Grantor hereby agrees to file at the United States Copyright Office, this Copyright Security
Agreement upon request by the Collateral Agent, and Grantor hereby agrees to furnish to the Collateral
Agent evidence of such recordation and registration.
5. Termination
When all Secured Obligations have been completely and indefeasibly paid and performed in full and the
Lender no longer has a commitment to make any Loan to the Borrower, this Copyright Security
Agreement will terminate.
6. Governing law
This Copyright Security Agreement shall be governed by, and construed in accordance with, the law of the
State of New York.
7. Counterparts; Electronic communications
This Copyright Security Agreement may be executed (including through electronic signatures) in one or
more counterparts and by different parties hereto in separate counterparts, each of which when so executed
and delivered shall be deemed an original, but all such counterparts together shall constitute but one and
the same instrument. Notices and other communications may be delivered electronically (including by
e-mail) and will be effective upon receipt, except that any record required to be signed, executed or
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authenticated will only be effective when authenticated and delivered by electronic imaging means
(e.g., .pdf or .tiff).
[Remainder of page left intentionally blank]
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IN WITNESS WHEREOF, [each][the] Grantor and the Collateral Agent have caused this Copyright
Security Agreement to be duly executed and delivered by their respective officers thereunto duly authorized
as of the date first written above.
[GRANTOR], as Grantor
By:
[NAME]
[TITLE]
THE BANK OF NEW YORK MELLON, as Collateral Agent
By:
[NAME]
[TITLE]
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SCHEDULE 1
TO COPYRIGHT SECURITY AGREEMENT
REGISTERED COPYRIGHTS
NO. TITLE OF WORK REGISTRATION REGISTRATION GRANTOR
NUMBER DATE
1.
COPYRIGHT APPLICATIONS
NO. TITLE OF WORK APPLICATION DATE GRANTOR
1.
EXCLUSIVE COPYRIGHT IP LICENSES
NO. TITLE OF WORK REGISTRATION REGISTRATION GRANTOR
NUMBER DATE
1.
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EXHIBIT 2 to Annex 1 (Loyalty Program Assets)
FORM OF IP SECURITY AGREEMENT—PATENTS
PATENT SECURITY AGREEMENT
PATENT SECURITY AGREEMENT, dated as of [●], made by and between [●] (“Grantor”) and [●] (the
“Collateral Agent”).
WHEREAS, the Initial Lender has agreed to make Loans to the Grantor under that certain Loan and
Guarantee Agreement, dated as of September 28, 2020 (as amended by that certain Restatement Agreement,
dated as of October 30, 2020, and as further amended, restated, amended and restated, supplemented or
otherwise modified from time to time, the “Loan Agreement”) by and among ALASKA AIRLINES, INC.,
as Borrower, the Guarantors party thereto, the Collateral Agent, the Administrative Agent named therein
and the United States Department of the Treasury, as Lender;
WHEREAS, the Collateral Agent entered into that certain Amended and Restated Horizon Aircraft, Engine
and Propeller Pledge and Security Agreement dated as of as of October 30, 2020, by and among Grantor,
the grantors party thereto and the Collateral Agent (as amended, restated, amended and restated,
supplemented or otherwise modified from time to time, the “Security Agreement”).
WHEREAS, pursuant to the Security Agreement, the Grantor granted a security interest to the Collateral
Agent in the Patent Collateral (as defined below) and is required to execute and deliver this Patent Security
Agreement.
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the
receipt of which is hereby acknowledged, Grantor and the Collateral Agent hereby agree as follows:
1. Defined Terms
All capitalized terms used in this Patent Security Agreement and not otherwise defined herein will have the
meanings assigned to them in the Security Agreement or Loan Agreement, as applicable.
2. Supplement to Security Agreement
This Patent Security Agreement has been entered into in conjunction with the security interest granted to
the Collateral Agent under the Security Agreement, and Grantor hereby acknowledges and affirms that the
rights and remedies of the Collateral Agent with respect to the security interest in Collateral made and
granted hereby are more fully set forth in the Security Agreement, the terms and provisions of which are
incorporated by reference herein as if fully set forth herein. The terms of this Patent Security Agreement
are supplemental to and not in replacement of the terms of the Security Agreement, and the rights and
remedies of the Collateral Agent with respect to the security interests granted herein are without prejudice
to, but in addition to, those set forth in the Security Agreement. If there is any conflict between this Patent
Security Agreement and the Security Agreement, the Security Agreement will govern.
3. Security Interest and Collateral
Grantor hereby grants the Collateral Agent a security interest in and continuing lien on all of such Grantor’s
right, title and interest in, to and under the following, in each case whether now owned or existing or
hereafter acquired, developed, created or arising and wherever located (collectively, the “Patent
Collateral”):
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a. Any United States and foreign issued patents (whether utility, design, or plant) and
certificates of invention, and similar industrial property rights, and applications for any of
the foregoing, in each case included in the Collateral, including: (i) all reissues, divisions,
continuations, continuations-in-part, extensions, renewals, and reexaminations thereof, (ii)
all rights corresponding, derived from or analogous thereto throughout the world and (iii)
all inventions and improvements described or claimed therein, including any patent listed
in Schedule 1 attached hereto (as such schedule may be amended or supplemented from
time to time) (collectively, “Patents”); and
b. for any Patent, any (i) Proceeds therefrom and all rights to royalties, revenue, income,
payments, claims, damages, and proceeds of suit and other payments arising therefrom;
and (ii) all other accrued and unaccrued causes of action (whether in contract, tort or
otherwise) or rights to claim, sue or collect damages for or enjoin or obtain other legal or
equitable relief for, an infringement, misuse, violation, unfair competition or other
impairment (whether past, present or future) thereof, including expired items.
For the avoidance of doubt, this Patent Security Agreement is not to be construed as an assignment of any
Patent Collateral.
4. Recordation
Grantor hereby authorizes the Commissioner for Patents and any other government officials to record and
register, and Grantor hereby agrees to file at the United States Patent and Trademark Office, this Patent
Security Agreement upon request by the Collateral Agent, and Grantor hereby agrees to furnish to the
Collateral Agent evidence of such recordation and registration.
5. Termination
When all Secured Obligations have been completely and indefeasibly paid and performed in full and the
Lender no longer has a commitment to make any Loan to the Borrower, this Patent Security Agreement
will terminate.
6. Governing law
This Patent Security Agreement shall be governed by, and construed in accordance with, the law of the
State of New York.
7. Counterparts; Electronic communications
This Patent Security Agreement may be executed (including through electronic signatures) in one or more
counterparts and by different parties hereto in separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all such counterparts together shall constitute but one and the
same instrument. Notices and other communications may be delivered electronically (including by e-mail)
and will be effective upon receipt, except that any record required to be signed, executed or authenticated
will only be effective when authenticated and delivered by electronic imaging means (e.g., .pdf or .tiff).
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IN WITNESS WHEREOF, [each][the] Grantor and the Collateral Agent have caused this Patent Security
Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of
the date first written above.
[GRANTOR], as Grantor
By:
[NAME]
[TITLE]
THE BANK OF NEW YORK MELLON, as Collateral Agent
By:
[NAME]
[TITLE]
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SCHEDULE 1
TO PATENT SECURITY AGREEMENT
ISSUED PATENTS
NO. PATENT NUMBER DATE ISSUED TITLE GRANTOR
1.
PATENT APPLICATIONS
NO. APPLICATION NUMBER FILING DATE TITLE GRANTOR
1.
Annex 1 - 23
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EXHIBIT 3 to Annex 1 (Loyalty Program Assets)
FORM OF IP SECURITY AGREEMENT—TRADEMARKS
TRADEMARK SECURITY AGREEMENT
TRADEMARK SECURITY AGREEMENT, dated as of [●], made by and between [●] (“Grantor”) and
[●] (the “Collateral Agent”).
WHEREAS, the Initial Lender has agreed to make Loans to the Grantor under that certain Loan and
Guarantee Agreement, dated as of September 28, 2020 (as amended by that certain Restatement Agreement,
dated as of October 30, 2020, and as further amended, restated, amended and restated, supplemented or
otherwise modified from time to time, the “Loan Agreement”) by and among ALASKA AIRLINES, INC.,
as Borrower, the Guarantors party thereto, the Collateral Agent, the Administrative Agent named therein
and the United States Department of the Treasury, as Lender;
WHEREAS, the Collateral Agent entered into that certain Amended and Restated Horizon Aircraft, Engine
and Propeller Pledge and Security Agreement dated as of as of October 30, 2020, by and among Grantor,
the grantors party thereto and the Collateral Agent (as amended, restated, amended and restated,
supplemented or otherwise modified from time to time, the “Security Agreement”).
WHEREAS, pursuant to the Security Agreement, the Grantor granted a security interest to the Collateral
Agent in the Trademark Collateral (as defined below) and is required to execute and deliver this Trademark
Security Agreement.
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the
receipt of which is hereby acknowledged, Grantor and the Collateral Agent hereby agree as follows:
1. Defined Terms
All capitalized terms used in this Trademark Security Agreement and not otherwise defined herein will
have the meanings assigned to them in the Security Agreement or Loan Agreement, as applicable.
2. Supplement to Security Agreement
This Trademark Security Agreement has been entered into in conjunction with the security interest granted
to the Collateral Agent under the Security Agreement, and Grantor hereby acknowledges and affirms that
the rights and remedies of the Collateral Agent with respect to the security interest in Collateral made and
granted hereby are more fully set forth in the Security Agreement, the terms and provisions of which are
incorporated by reference herein as if fully set forth herein. The terms of this Trademark Security
Agreement are supplemental to and not in replacement of the terms of the Security Agreement, and the
rights and remedies of the Collateral Agent with respect to the security interests granted herein are without
prejudice to, but in addition to, those set forth in the Security Agreement. If there is any conflict between
this Trademark Security Agreement and the Security Agreement, the Security Agreement will govern.
3. Security Interest and Collateral
Grantor hereby grants the Collateral Agent a security interest in and continuing lien on all of such Grantor’s
right, title and interest in, to and under the following, in each case whether now owned or existing or
hereafter acquired, developed, created or arising and wherever located (collectively, the “Trademark
Collateral”):
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a. all United States and foreign trademarks, trade names, corporate names, company names,
business names, fictitious business names, Internet domain names, trade dress, service
marks, certification marks, collective marks, logos, social media identifiers, handles, other
source or business identifiers, designs and general intangibles of a like nature, whether
arising under a statute, common law, or the laws of any jurisdiction throughout the world,
whether registered or unregistered, in each case included in the Collateral, including (i) all
registrations, applications, extensions, renewals or other filings of any of the foregoing and
(ii) all of the goodwill of the business connected with the use of and symbolized by the
foregoing, including any trademark listed in Schedule 1 attached hereto (as such schedule
may be amended or supplemented from time to time), in each case and any successor or
replacement trademarks thereto, (collectively, “Trademarks”); and
b. for any Trademark, any (i) Proceeds therefrom and rights to royalties, revenues, income,
payments, claims, damages and proceeds of suit and other payments arising therefrom; and
(ii) all other accrued and unaccrued causes of action (whether in contract, tort or otherwise)
or rights to claim, sue or collect damages for or enjoin or obtain other legal or equitable
relief for, an infringement, misuse, dilution, violation, unfair competition, injury to
goodwill or other impairment (whether past, present or future) thereof, including expired
items.
Notwithstanding the foregoing, the Trademark Collateral shall not include any “intent-to-use” application
for registration of a Trademark filed with the USPTO pursuant to Section 1(b) of the Lanham Act, 15 U.S.C.
§ 1051, prior to the filing of a “Statement of Use” pursuant to Section 1(d) of the Lanham Act or an
“Amendment to Allege Use” pursuant to Section 1(c) of the Lanham Act with respect thereto, but solely to
the extent, if any, that, and solely during the period, if any, in which, the grant of a security interest therein
would impair the validity or enforceability of any registration that issues from such “intent-to-use”
application under applicable federal law. For the avoidance of doubt, this Trademark Security Agreement
is not to be construed as an assignment of any Trademark Collateral.
4. Recordation
Grantor hereby authorizes the Commissioner for Trademarks and any other government officials to record
and register, and Grantor hereby agrees to file at the United States Patent and Trademark Office, this
Trademark Security Agreement upon request by the Collateral Agent, and Grantor hereby agrees to furnish
to the Collateral Agent evidence of such recordation and registration.
5. Termination
When all Secured Obligations have been completely and indefeasibly paid and performed in full and the
Lender no longer has a commitment to make any Loan to the Borrower, this Trademark Security Agreement
will terminate.
6. Governing law
This Trademark Security Agreement shall be governed by, and construed in accordance with, the law of
the State of New York.
7. Counterparts; Electronic communications
This Trademark Security Agreement may be executed (including through electronic signatures) in one or
more counterparts and by different parties hereto in separate counterparts, each of which when so executed
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and delivered shall be deemed an original, but all such counterparts together shall constitute but one and
the same instrument. Notices and other communications may be delivered electronically (including by e-
mail) and will be effective upon receipt, except that any record required to be signed, executed or
authenticated will only be effective when authenticated and delivered by electronic imaging means
(e.g., .pdf or .tiff).
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IN WITNESS WHEREOF, [each][the] Grantor and the Collateral Agent have caused this Trademark
Security Agreement to be duly executed and delivered by their respective officers thereunto duly authorized
as of the date first written above.
[GRANTOR], as Grantor
By:
[NAME]
[TITLE]
THE BANK OF NEW YORK MELLON, as Collateral Agent
By:
[NAME]
[TITLE]
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SCHEDULE 1
TO TRADEMARK SECURITY AGREEMENT
REGISTERED TRADEMARKS
NO. MARK REGISTRATION REGISTRATION GRANTOR
NUMBER DATE
1.
TRADEMARK APPLICATIONS
NO. MARK APPLICATION NUMBER FILING DATE GRANTOR
1.
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Annex 2 (Control Collateral)
Each Grantor and the Collateral Agent hereby agree that the terms of this Annex shall apply with respect
to Collateral consisting of Deposit Accounts and Securities Accounts (including the Collateral Proceeds
Account).
1. Perfection Requirement. The following requirements shall be included in the definition of
“Perfection Requirement” and shall constitute an additional “Perfection Requirement” with respect
to Collateral consisting of:
(a) A Deposit Account, each applicable Grantor shall, on or prior to the Closing Date or on the
date of the establishment of a Deposit Account constituting Collateral, execute and deliver
a control agreement with respect to such Collateral in form and substance satisfactory to
the Appropriate Party and agreed to by the relevant depositary institution such that, upon
the effectiveness of such control agreement, the Collateral Agent has Control over such
Collateral. Without limiting the generality of the foregoing, such control agreement shall
require such depositary institution to comply with the Collateral Agent’s instructions with
respect to Disposition of funds held in such Deposit Account without further instruction or
consent by any other Person; provided, that the Collateral Agent agrees with respect to the
Collection Account not to give any such instructions unless an Event of Default has
occurred and is continuing.
(b) A Securities Account (including any Security Entitlement with respect thereto), each
applicable Grantor shall, on or prior to the Closing Date or on the date of the establishment
of a Securities Account constituting Collateral, execute and deliver a control agreement
with respect to such Collateral in form and substance satisfactory to the Appropriate Party
and agreed to by the relevant securities intermediary such that, upon the effectiveness of
such control agreement, the Collateral Agent has Control over such Collateral. Without
limiting the generality of the foregoing, such control agreement shall require such securities
intermediary to comply with the Collateral Agent’s entitlement orders with respect to such
Securities Account without further consent by any other Person.
(c) A Collateral Proceeds Account, each applicable Grantor shall, on or prior to the Closing
Date and, for any Collateral Proceeds Account established after the Closing Date, on the
date of the establishment of such Collateral Proceeds Account, in addition to the above
requirements, cause to be included in the applicable control agreement such further
provisions required or advisable to implement the provisions of the Loan Agreement
applicable to such Collateral Proceeds Account, all in form and substance satisfactory to
the Appropriate Party.
2. Representations and Warranties. Each Grantor (as applicable) hereby additionally represents
and warrants, on the Closing Date and on the date of each Borrowing (or, in the case of an
Additional Grantor or Additional Collateral, on the date of such Grantor’s execution and delivery
of a Pledge Supplement, or the date such Additional Collateral becomes subject to the security
interest created hereby, as applicable):
(a) Schedule 2.1 to this Agreement sets forth Deposit Accounts and Securities Accounts
constituting Collateral (including the Collateral Proceeds Account). Each Grantor is the
sole account holder thereof, as applicable.
(b) It has not consented to, and is not otherwise aware of, any Person having Control over, or
any other interest in, any Deposit Account and Securities Accounts (including any Security
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Entitlement in respect thereof) constituting Collateral or any property deposited therein or
credited thereto.
(c) Upon satisfaction and completion of the Perfection Requirements under this Annex, the
Collateral Agent will (i) have Control over all Deposit Accounts and Securities Accounts
(including any Security Entitlement in respect thereof) constituting Collateral and (ii)
obtain a legal, valid and perfected first-priority security interest upon and in all Deposit
Accounts and Securities Accounts (including any Security Entitlement in respect thereof)
constituting Collateral, subject to no Lien (other than Permitted Liens).
3. Covenants. Each Grantor (as applicable) hereby agrees and covenants that:
(a) It shall not grant Control of any Collateral to any Person other than the Secured Parties or
any depositary bank or securities intermediary of any Deposit Account or Securities
Account constituting Collateral, respectively.
(b) Each Grantor of Collateral consisting of a Collateral Proceeds Account agrees to comply
with the provisions of the Loan Agreement applicable to such Collateral Proceeds Account.
4. Defaults and Remedies. If any Event of Default shall have occurred and be continuing, without
limiting the generality of Section 8.1 of this Agreement and in addition to any rights and remedies
that the Collateral Agent may have under the Loan Documents and the applicable Law, the
Collateral Agent may:
(a) give a notice of exclusive control or any other instruction under any control agreement and
take any action provided therein with respect to Collateral consisting of Deposit Accounts
or Securities Accounts, including any Collateral Proceeds Account;
(b) instruct the relevant depositary institution or securities intermediary to pay the balance of
or credited to such Deposit Account or Securities Account, including any Collateral
Proceeds Account; and
(c) apply funds held in or credited to Collateral consisting of Deposit Accounts and Securities
Accounts, including any Collateral Proceeds Account, to the Secured Obligations as set
forth in Section 7.02 of the Loan Agreement.
5. Miscellaneous. Each Grantor and the Collateral Agent agree that:
(a) The terms of this Annex shall be deemed incorporated into and part of this Agreement.
(b) The terms of this Annex are cumulative in nature and shall not limit the applicability or
scope of the other terms of this Agreement.
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Annex 3A (Propeller Assets)
Each Grantor and the Collateral Agent hereby agree that the terms of this Annex shall apply with respect
to Collateral consisting of Propellers.
1. Perfection Requirement. The following requirements shall be included in the definition of
“Perfection Requirement” and shall constitute an additional “Perfection Requirement” with respect
to Collateral consisting of Propellers:
The applicable Grantor, at its sole cost and expense, shall on the date of execution of any Mortgage
Supplement or a Pledge Supplement:
(i) execute and deliver, or cause to be executed and delivered, the Mortgage
Supplements in form and substance satisfactory to the Appropriate Party; and
(ii) duly prepare and file, or cause to be duly prepared and filed, the FAA Filed
Documents for recordation with the FAA in accordance with Title 49 and the
regulations thereunder.
2. Required Filings. The filing of an FAA Filed Document with respect to Propellers with the FAA
shall be included in the definition of “Required Filing” and shall constitute an additional “Required
Filing” with respect to Collateral consisting of Propellers:
3. Representations and Warranties. Each Grantor (as applicable) represents and warrants on the
date of each Borrowing (or, in the case of an Additional Grantor or Additional Collateral, including
any Additional Propeller, on the date of such Grantor’s execution and delivery of a Mortgage
Supplement or a Pledge Supplement, or the date such Additional Collateral becomes subject to the
security interest created hereby, as applicable):
(a) Schedule 2.1 sets forth all Propeller Assets constituting Collateral and that such Grantor is
the owner of the Propellers listed in Schedule 2.1.
(b) Necessary Filings. Upon (x) the filing of UCC financing statements (and continuation
statements at periodic intervals) with respect to the security and other interests created
hereby under the UCC as in effect in any applicable jurisdiction and (y) the recording and
the filing of each Mortgage or Mortgage Supplement in the office of the FAA pursuant to
Title 49, in each case, with respect to each Propeller constituting Collateral, (i) all filings,
registrations and recordings necessary in the United States to create, preserve, protect and
perfect the security interest granted by the Grantors to the Collateral Agent hereby in
respect of the Collateral have been accomplished or, as to Collateral to become subject to
the security interest of this Agreement after the date hereof, will be so filed, registered and
recorded simultaneously with such Collateral being subject to the Lien of this Agreement
and (ii) the security interest granted to the Collateral Agent pursuant to this Agreement in
and to the Collateral will constitute a perfected security interest therein prior to the rights
of all other Persons therein, but subject to no other Liens (other than Permitted Liens), and
is entitled to all the rights, priorities and benefits afforded by Title 49 and any other
applicable Law to perfected security interests or Liens.
(c) Other Filings or Registrations. There is no registration covering or purporting to cover any
interest of any kind in Propellers constituting Collateral (other than Permitted Liens).
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(d) All Propellers constituting Collateral have been first placed in service after October 22,
1994.
(e) All Propellers constituting Collateral have been duly certified by the FAA as to type and
airworthiness.
(f) All Propellers are habitually located in the United States.
4. Covenants. Each Grantor (as applicable) covenants and agrees that:
8. Filings and Registrations
(a) Such Grantor (as applicable) will take, or cause to be taken, at such Grantor’s cost and
expense, such action with respect to the recording, filing, re-recording and refiling of each
Mortgage or Mortgage Supplement in the office of the FAA, pursuant to Title 49, and such
other documents in such other places as may be required or desirable under any applicable
Law, and any other instruments as are necessary or desirable by the Appropriate Party or
the Collateral Agent, to maintain the existence, perfection, priority and preservation of the
Lien created by this Agreement, the related Mortgages and the related Mortgage
Supplement(s) of the Collateral Agent in the Propeller Assets constituting Collateral. The
Grantors will furnish to the Collateral Agent timely notice of the necessity or desirability
of such action, together with, if requested by the Collateral Agent, such instruments, in
execution form, and such other information as may be required to enable the Collateral
Agent to take such action or otherwise requested by the Appropriate Party.
9. Possession, Operation and Use, Maintenance, Registration and
Markings.
(a) General. Except as otherwise expressly provided herein, it shall be entitled to operate, use,
locate, employ or otherwise utilize or not utilize any Propeller in any lawful manner or
place in accordance with such Grantor’s business judgment.
(b) Possession. It shall not lease or otherwise in any manner deliver, transfer or relinquish
possession of any Propeller, or install any Propeller, or permit any Propeller to be installed,
on any engine other than an Engine, in each case, to the extent constituting Collateral;
except that the applicable Grantor may, so long as no Event of Default has occurred:
(i) Deliver possession of any Propeller constituting Collateral (x) to the Manufacturer
thereof or to any third-party maintenance provider for testing service, repair,
maintenance or overhaul work on such Propeller, or, to the extent required or
permitted by Section 3(c) of this Annex, for alterations or modifications in or
additions to such Propeller or (y) to any Person for the purpose of transport to a
Person referred to in the preceding clause (x); provided that such Grantor
covenants to promptly pay when due any payment obligation resulting in a
mechanic’s or other Lien related to such testing service, repair, maintenance,
overhaul, alternation, modification, addition or transport;
(ii) Transfer possession of the Propeller constituting Collateral to the U.S. Government,
in which event such Grantor shall promptly notify the Appropriate Party of any
such transfer of possession and, in the case of any transfer pursuant to CRAF, in
such notification shall identify by name, address and telephone numbers the
Contracting Office Representative or Representatives for the Military Airlift
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Command of the United States Air Force to whom notices must be given and to
whom requests or claims must be made to the extent applicable under CRAF; and
(iii) Install a Propeller on an engine owned (including any Engine) or leased by such
Grantor; provided that upon such installation, such Grantor shall be deemed to
covenant to the Collateral Agent for the benefit of the Secured Parties that such
installation shall not result in any material impairment (as compared to if such
Propeller had not so been installed) of the Collateral Agent’s rights and remedies
in respect of such Propeller and access in connection therewith and to comply with
the Appropriate Party’s requests in furtherance of the exercise of such rights and
remedies (including access). With respect to this clause (b)(iii), (A) the Collateral
Agent hereby agrees on behalf of the Secured Parties, and for the benefit of each
lessor, conditional seller, indenture trustee or secured party of any engine leased
to, or owned by, the applicable Grantor subject to a lease, conditional sale, trust
indenture or other security agreement that the Collateral Agent, on behalf of the
Secured Parties, will not acquire or claim, as against such lessor, conditional seller,
indenture trustee or secured party, any right, title or interest in such engine as the
result of any Propeller being installed on such engine at any time while such engine
is subject to such lease, conditional sale, trust indenture or other security agreement
and (B) such Grantor shall cause any lessor, conditional seller, indenture trustee or
secured party of any engine leased to, or owned by, the applicable Grantor subject
to any lease, conditional sale, trust indenture or other security agreement to
acknowledge that it will not acquire or claim, as against the Collateral Agent or
any other Secured Parties, any right, title or interest in a Propeller as the result of
such Propeller being installed on such engine at any time which such engine is
subject to such lease, conditional sale, trust indenture or other security agreement.
(c) Operation and Use. It shall not operate, use or locate such Propeller, or allow such Propeller
to be operated, used or located, (i) in any area excluded from coverage by any insurance
required by any Loan Document, except in the case of a requisition by the U.S. Government
where the Grantors obtain indemnity in lieu of such insurance from the U.S. Government,
or insurance from the U.S. Government, against substantially the same risks and for at least
the amounts of insurance required by any Loan Document covering such area, or (ii) in any
recognized area of hostilities unless covered in accordance with this Annex by war risk
insurance, or in either case unless the Propeller is only temporarily operated, used or
located in such area as a result of an emergency, equipment malfunction, navigational error,
hijacking, weather condition or other similar unforeseen circumstance, so long as such
Grantor diligently and in good faith proceeds to remove such Propeller from such area. No
Grantor shall permit such Propeller to be used, operated, maintained, serviced, repaired or
overhauled (x) in violation of any applicable Law or (y) in violation of any airworthiness
certificate, license or registration of any Governmental Authority relating to such Propeller,
except to the extent the validity or application of any such law or requirement relating to
any such certificate, license or registration is being contested in good faith by such Grantor
in any reasonable manner which does not involve any material risk of the sale, forfeiture
or loss of such Propeller, any material risk of criminal liability or material civil penalty
against the Collateral Agent or any Secured Party or impair the Appropriate Party’s security
interest in such Propeller.
(d) Maintenance and Repair. It shall cause all Propeller Assets to be maintained, serviced,
repaired and overhauled in accordance with maintenance standards required by or
substantially equivalent to those required by the FAA so as to keep such Propeller Assets
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in such operating condition as may be necessary to enable the applicable airworthiness
certification of such Propeller, or, in the case of any Propeller that is installed on an Engine,
the applicable Engine to be maintained under the regulations of the FAA. Each Grantor
further agrees that each Propeller constituting Collateral will be maintained, used, serviced,
repaired, overhauled or inspected in compliance with applicable Laws with respect to the
maintenance of the Propellers and in compliance with each applicable airworthiness
certificate, license and registration relating to such Propeller issued by the applicable
Aviation Authority.
10. Replacement of Parts, Alterations, Modification and Additions.
(a) Replacement of Parts. Except as otherwise provided herein, so long as the security interest
created herein has not been released in accordance with the Loan Agreement, each
applicable Grantor, at its own cost and expense, will, at its own cost and expense, promptly
replace (or cause to be replaced) all Parts which may from time to time be incorporated or
installed in or attached to such Propeller and which may from time to time become worn
out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently
rendered unfit for use for any reason whatsoever. In addition, each Grantor may, at its own
cost and expense, remove 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 permanently rendered unfit for use; provided, however, that such
Grantor, except as otherwise provided herein, at its own cost and expense, will, promptly
replace such Parts. All replacement parts shall be free and clear of all Liens, except
Permitted Liens and shall be in as good an operating condition and have a value and utility
not less than the value and utility of the Parts replaced (assuming such replaced Parts were
in the condition required hereunder).
(b) Parts Subject to Lien. Except as otherwise provided herein, any Part at any time removed
from a Propeller shall remain subject to the security interest created in this Mortgage, no
matter where located, until such time as such Part shall be replaced by a part that has been
incorporated or installed in or attached to such Propeller and that meets the requirements
for replacement parts specified above. Immediately upon any replacement part becoming
incorporated or installed in or attached to such Propeller as provided in this Annex, without
further act, (i) the replaced Part shall thereupon be free and clear of all rights of the
Collateral Agent and shall no longer be deemed a Part hereunder and (ii) such replacement
part shall become subject to this Agreement and be deemed part of such Propeller, as the
case may be, for all purposes hereof to the same extent as the Parts originally incorporated
or installed in or attached to such Propeller.
(c) Alterations, Modifications and Additions. It shall make alterations and modifications in
and additions to each Propeller as may be required to be made from time to time to meet
the applicable standards of the FAA, to the extent made mandatory in respect of such
Propeller (a “Mandatory Alteration”); provided, however, that each Grantor may, in good
faith and by appropriate procedure, contest the validity or application of any law, rule,
regulation or order in any reasonable manner which does not materially adversely affect
the Appropriate Party’s interest in such Propeller and does not involve any material risk of
sale, forfeiture or loss of such Propeller or the interest of the Appropriate Party therein, or
any material risk of material civil penalty or any material risk of criminal liability being
imposed on the Collateral Agent or any Secured Party. In addition, each Grantor, at its
own expense, may from time to time make such alterations and modifications in and
additions to any Propeller (each an “Optional Alteration”) as such Grantor may deem
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desirable in the proper conduct of its business including the removal of Parts which such
Grantor deems are obsolete or no longer suitable or appropriate for use in such Propeller
(“Obsolete Parts”); provided, however, that no such Optional Alteration to a Propeller
shall (i) materially diminish the fair market value, utility or remaining useful life of such
Propeller below its fair market value, utility or remaining useful life immediately prior to
such Optional Modification (assuming such Propeller was in the condition required by this
Agreement immediately prior to such Optional Modification) or (ii) cause such Propeller
to cease to have the applicable standard certificate of airworthiness. All Parts incorporated
or installed in or attached to any Propeller as the result of any alteration, modification or
addition effected by each applicable Grantor shall be free and clear of any Liens except
Permitted Liens and become subject to the Lien of this Agreement; provided that such
Grantor may, at any time so long as any Propeller is subject to the Lien of this Agreement,
remove any Part (such Part being referred to herein as a “Removable Part”) from such
Propeller if (i) such Part is in addition to, and not in replacement of or in substitution for,
any Part originally incorporated or installed in or attached to such Propeller at the time of
original delivery thereof by the Manufacturer or any Part in replacement of, or in
substitution for, any such original Part, (ii) such Part is not required to be incorporated or
installed in or attached or added to such Propeller pursuant to the terms of this Annex and
(iii) such Part can be removed from such Propeller without materially diminishing the fair
market value, utility or remaining useful life which such Propeller would have had at the
time of removal had such removal not been effected by such Grantor, assuming such
Propeller was otherwise maintained in the condition required by this Agreement and such
Removable Part had not been incorporated or installed in or attached to such Propeller.
Upon the removal by any applicable Grantor of any such Removable Part or Obsolete Part
as above provided, (A) title thereto shall, without further act, be free and clear of all rights
of the Collateral Agent and (B) such Removable Part or Obsolete Part shall no longer be
deemed a Part hereunder.
11. Loss, Destruction or Requisitions: Addition of Propellers.
(a) Event of Loss. Upon the occurrence of an Event of Loss with respect to a Propeller:
(i) each applicable Grantor shall promptly upon obtaining knowledge of such Event
of Loss (and in any event within fifteen (15) Business Days after such occurrence)
give the Collateral Agent written notice of such Event of Loss.
(ii) prior to the occurrence of a Recovery Event with respect to such Propeller, each
applicable Grantor shall have the right to replace and substitute such Propeller in
accordance with Section 4(d) of this Annex.
(iii) each Grantor shall comply with the applicable requirements of Section 2.06(b)(ii)
of the Loan Agreement with respect to any Recovery Event relating to such Event
of Loss, and upon such compliance, the Propeller suffering such Event of Loss
shall be released from the Lien of this Agreement.
(b) Requisition for Use. In the event of a requisition for use by any Governmental Authority
or a CRAF activation of a Propeller or a propeller installed on an Engine while such Engine
is subject to Liens of this Agreement, each applicable Grantor shall promptly notify the
Collateral Agent of such requisition or activation and all of such Grantor’s obligations
under this Agreement and the Loan Agreement shall continue to the same extent as if such
requisition or activation had not occurred and shall not be reduced or delayed by such
requisition or activation. So long as no Event of Default shall have occurred and be
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continuing, any payments received by the Collateral Agent or any Grantor from such
Governmental Authority with respect to such requisition of use or activation may be paid
over to, or retained by, such Grantor and shall not be required to be paid over to the
Collateral Agent to hold as Collateral.
(c) Conditions to Addition of a Propeller. When any Grantor (including any Additional
Grantor) is granting a security interest to the Collateral Agent for the benefit of the Secured
Parties in an additional Propeller (an “Additional Propeller”) pursuant to the requirements
under the Loan Documents, such Grantor shall, at such Grantor’s sole cost and expense,
fulfill the following conditions:
(i) an executed counterpart of a Mortgage Supplement or a Pledge Supplement
covering such Additional Propeller;
(ii) an executed counterpart of a Mortgage Supplement (in form and substance
satisfactory to the Appropriate Party) covering such Additional Propeller, which
shall have been duly filed for recordation pursuant to the Act or such other
applicable Law or as required under the terms of this Agreement;
(iii) each applicable Grantor shall have furnished to the Collateral Agent such evidence
of compliance with the insurance provisions of this Annex with respect to such
Additional Propeller;
(iv) such Grantor shall have furnished to the Collateral Agent and the Appropriate
Party, at the expense of such Grantor, (A) an opinion of counsel reasonably
satisfactory to the Appropriate Party and addressed to the Secured Parties, to the
effect that this Agreement creates a valid security interest in such Grantor’s interest
in the Additional Propeller and a UCC filing has been filed with respect thereto
resulting in a perfected security interest to the extent the UCC is applicable, (B) an
opinion of the Grantor’s in-house counsel, reasonably satisfactory to the
Appropriate Party and addressed to the Secured Parties, to the effect that the
Secured Parties will have the benefits of Section 1110 of the U.S. Bankruptcy Code
with respect to the Additional Propeller, and (C) an opinion of such Grantor’s
aviation law counsel reasonably satisfactory and addressed to the Appropriate
Party as to the due filing for recordation of the Mortgage Supplement with respect
to such Additional Propeller under the Act or any other applicable Law, and the
perfection and first priority (other than with respect to any Permitted Lien) of the
security interest in the Additional Propeller granted to the Appropriate Party
hereunder.
(v) the Grantors shall have delivered an Appraisal of such Additional Propeller to the
Appropriate Party and, if such Additional Propeller were delivered to such grantor
by the manufacturers within ninety (90) days prior to the date such Additional
Propeller is added as Collateral, in an officer’s certificate attesting to the foregoing;
and
(vi) the Grantors shall have taken such other actions and furnished such other
certificates and documents as the Appropriate Party may require in order to assure
that the Additional Propeller is duly and properly subjected to the Lien of this
Agreement.
(d) Substitution of Propellers.
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(i) Each Grantor shall have the right at its option at any time, on at least five (5) days’
prior notice to the Collateral Agent and the Appropriate Party, at such Grantor’s
sole cost and expense, to substitute an Additional Propeller to replace any Propeller
(such replaced Propeller, the “Replaced Propeller”) (including, if so elected by
such Grantor, in satisfaction of any applicable obligations in relation to an Event
of Loss with respect to such Propeller prior to the occurrence of a related Recovery
Event) in accordance with the requirements of Section 6.17(b)(iii) of the Loan
Agreement and Section 4(d) of this Annex. Such Additional Propeller shall be a
Propeller manufactured by the Manufacturer of the Replaced Propeller that is the
same model as the Replaced Propeller, or an improved model, and that has a value
and utility (without regard to hours and cycles remaining until overhaul) at least
equal to the Replaced Propeller (assuming that such Propeller had been maintained
in accordance with this Agreement (and, as applicable, had not suffered such Event
of Loss), which value and utility shall be established by an Appraisal delivered
pursuant to the terms of this Agreement; provided, that, until an Appraisal is
obtained for such Additional Propeller, it shall be deemed to have the same
Appraised Value of zero).
(ii) Each Grantor’s right to make a substitution hereunder shall be subject to the
delivery of (A) a written request from the applicable Grantor, requesting release of
the Replaced Propeller from Collateral and specifically describing such Propeller
and (B) a certificate of a Responsible Officer of such Grantor providing:
1. a description of the Replaced Propeller which shall be identified by
Manufacturer, model, and Propeller’s serial number;
2. a description of the Additional Propeller (including the Manufacturer,
model, and Propeller’s serial number) to be received as consideration for
the Replaced Propeller;
3. that on the date of the Mortgage Supplement relating to the Additional
Propeller, such Grantor will be the legal owner of such Additional
Propeller free and clear of all Liens (other than the Lien under this
Agreement and Permitted Liens), and that such Additional Propeller has
been duly registered in the name of such Grantor and that such Grantor
has the full right and authority to use such Additional Propeller;
4. that the insurance required by this Agreement is in full force and effect
with respect to such Additional Propeller and all premiums then due
thereon have been paid in full;
5. that no Event of Default has occurred and is continuing or would result
from the making and granting of the request for release and the addition
of such Additional Propeller; and
6. that the conditions set forth in Section 6.17(b)(iii) of the Loan Agreement
and Section 4(d) of this Annex have been satisfied after giving effect to
such substitution (it being understood and agreed, for the avoidance of
doubt, that any reference in Section 6.17(b)(iii) of the Loan Agreement to
existing Additional Collateral shall include such Replaced Propeller).
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(iii) Immediately upon the satisfaction of conditions set forth in this Section 4(d) of this
Annex and without further act, (A) the Replaced Propeller shall thereupon be
released from and be free and clear of the Lien of this Agreement and shall no
longer be deemed Collateral and (B) such Additional Propeller shall become
subject to this Agreement as a Propeller and as Collateral.
12. Insurance.
(a) Each applicable Grantor shall furnish to the Collateral Agent such evidence of compliance
with the insurance provisions of this Annex with respect to Propellers constituting
Collateral.
(b) Each Grantor shall ensure that at all times the Collateral Agent, for the benefit of the
Secured Parties, shall be named as an additional insured and lender loss payee with respect
to the insurance policies referenced in Appendix I with respect to any Propeller Assets
constituting Collateral and take any other steps required under this Annex.
(c) Obligation to Insure. Each Grantor (as applicable) shall comply with, or cause to be
complied with, each of the provisions of Appendix I to this Annex, which provisions are
hereby incorporated by this reference as if set forth in full herein.
(d) Insurance for Own Account. Nothing in this Annex shall limit or prohibit (i) any Grantor’s
from maintaining the policies of insurance required under Appendix I of this Annex with
higher coverage than those specified in Appendix I, or (ii) the Collateral Agent or any other
Additional Insured from obtaining, upon the occurrence of an Event of Default, at the
Grantors’ expense, insurance for its own account (and any proceeds payable under such
separate insurance shall be payable as provided in the policy relating thereto); provided,
however, that no insurance may be obtained or maintained that would limit or otherwise
adversely affect the coverage of any insurance required to be obtained or maintained by
any Grantor pursuant to this Annex and Appendix I of this Annex.
(e) Application of Insurance Proceeds. As between each applicable Grantor and the Collateral
Agent, all insurance proceeds received as a result of the occurrence of an Event of Loss
with respect to any Propeller constituting Collateral at the time of such receipt shall be
applied in accordance with Section 2.06(b) of the Loan Agreement.
5. Defaults and Remedies. If any Event of Default shall have occurred and be continuing, without
limiting the generality of Section 8.1 of this Agreement, the Collateral Agent may exercise all of
the rights and remedies of a secured party under the UCC and the Cape Town Treaty.
6. Release of Collateral. Each Grantor and the Collateral Agent agree that upon satisfaction and
completion, as determined by the Appropriate Party, of the conditions for release of any Propeller
Assets constituting Collateral from the Lien granted hereby in accordance with
to Section 6.17(b)(iii) of the Loan Agreement such Replaced Propeller, as the case may be, shall
be released from the Lien granted under this Agreement, and the Collateral Agent will thereupon
execute and deliver to the applicable Grantor, at such Grantor’s sole expense, all appropriate UCC
termination statements and other documents that such Grantor shall reasonably request to evidence
such release in such released Propeller Assets or Replaced Propeller. The Collateral Agent shall
have no liability whatsoever to any Secured Party as a result of its execution of any such
documentation with respect to any such release. The release of a Propeller from the Lien of this
Agreement shall have effect without further action of releasing all other Collateral, including the
related Propeller Documents relating to such released Propeller.
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7. Miscellaneous. Each Grantor and the Collateral Agent agree that:
(a) The terms of this Annex shall be deemed incorporated into and part of this Agreement.
(b) The terms of this Annex are cumulative in nature and shall not limit the applicability or
scope of the other terms of this Agreement.
(c) It is the intention of the parties that the Appropriate Party shall be entitled to the benefits
of Section 1110 with respect to the right to take possession of the Propellers as provided
herein in the event of a case under Chapter 11 of the Bankruptcy Code in which the
Grantors are debtors, and in any instance where more than one construction is possible of
the terms and conditions hereof or any other pertinent Loan Document, each such party
agrees that a construction which would preserve such benefits shall control over any
construction which would not preserve such benefits.
(d) The applicable Grantor shall deliver to the Collateral Agent a certificate from a Responsible
Officer of such Grantor, dated as of the date of the Mortgage Supplement or the Pledge
Supplement, which shall contain representations that such Grantor has exclusive title in all
Propeller Assets constituting Collateral.
8. Terms. The following capitalized terms used in this Annex shall have the following meanings:
(a) “Additional Insureds” is defined in Appendix I to this Annex.
(b) “Aircraft Protocol” means the official English language text of the Protocol to the
Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft
Equipment adopted on November 16, 2001, at a diplomatic conference in Cape Town,
South Africa, and all amendments, supplements and revisions thereto, as in effect in the
United States.
(c) “Aviation Authority” means, in the case of any Propeller, the FAA or, if such Propeller
is permitted to be, and is, registered with any other Governmental Authority, such other
Governmental Authority.
(d) “Cape Town Convention” shall mean the official English language text of the Convention
on International Interests in Mobile Equipment, adopted on November 16, 2001 at a
diplomatic conference in Cape Town, South Africa, and all amendments, supplements and
revisions thereto, as in effect in the United States.
(e) “Cape Town Treaty” shall mean, collectively, (a) the Cape Town Convention, (b) the
Aircraft Protocol, and (c) all rules and regulations (including the Regulations and
Procedures for the International Registry) adopted pursuant thereto and all amendments,
supplements and revisions thereto.
(f) “CRAF” means the Civil Reserve Air Fleet Program established pursuant to 10 U.S.C.
Section 9511-13 or any similar substitute program.
(g) “Engine” means (a) each of the engines identified by Manufacturer, model and
Manufacturer’s serial number in Schedule 2.1 or in the initial Mortgage Supplement or any
subsequent Mortgage Supplement or any subsequent Pledge Supplement, in each case,
executed and delivered by any Grantor and whether or not from time to time installed on
an Airframe or installed on any other airframe, and (b) any and all Parts incorporated or
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installed in or attached or appurtenant to such engine, and any and all Parts removed from
such engine, unless the Lien created hereunder shall not apply to such Parts in accordance
with Section 3 of this Annex, but excluding any such engine that has subsequently been
released from the Lien in accordance with the terms of this Agreement.
(h) “Event of Loss” means with respect to any Propeller, any of the following circumstances,
conditions or events with respect to such property, for any reason whatsoever:
(i) the destruction of such property, damage to such property beyond economic repair
or rendition of such property permanently unfit for normal use by the applicable
Grantor;
(ii) the actual or constructive total loss of such property or any damage to such property,
or requisition of title or use of such property, which results in an insurance
settlement with respect to such property on the basis of a total loss or constructive
or compromised total loss;
(iii) any theft, hijacking or disappearance of such property for a period of one hundred
and eighty (180) consecutive days or more; or
(iv) any seizure, condemnation, confiscation, taking or requisition (including loss of
title) of such property by any Governmental Authority or purported Governmental
Authority for a period exceeding one hundred and eighty (180) consecutive days
(i) “FAA Filed Document” shall mean the Mortgage or Mortgage Supplement executed by a
Grantor.
(j) “Mandatory Alteration” shall have the meaning given in this Annex.
(k) “Manufacturer” shall mean, with respect to any Propeller, the manufacturer thereof.
(l) “Mortgage” shall mean an FAA Mortgage, with appropriate modifications to reflect the
purpose for which it is being used in form and substance satisfactory to the Appropriate
Party.
(m) “Mortgage Supplement” shall mean an FAA Mortgage, substantially in the form of
Exhibit A to this Annex, with appropriate modifications to reflect the purpose for which it
is being used in form and substance satisfactory to the Appropriate Party.
(n) “Obsolete Part” shall have the meaning given in Section 3(c) of this Annex.
(o) “Optional Alteration” shall have the meaning given in Section 3(c) of this Annex.
(p) “Parts” means all appliances, parts, components, instruments, appurtenances, accessories,
furnishings, seats and other equipment of whatever nature, that may from time to time be
installed or incorporated in or attached or appurtenant to any Propeller or removed
therefrom unless the Lien created under this Agreement shall not be applicable to such
Parts in accordance with Section 3 of this Annex.
(q) “Propeller(s)” means (i) each of the propellers listed in Schedule 2.1 or in the initial
Mortgage Supplement or any subsequent Mortgage Supplement or any subsequent Pledge
Supplement, in each case, executed and delivered by any Grantor,whether or not from time
to time installed on any Engine or any other engine, and (ii) any replacement propeller
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which may from time to time be substituted for any Propeller pursuant to the terms hereof;
and (iii) in each case, any and all related Parts.
(r) “Propeller Assets” shall mean:
(i) Each Propeller as the same is now and will hereafter be constituted, together with
(a) all Parts of whatever nature, which are from time to time included within the
definition of “Propeller”, including all substitutions, renewals and replacements of
and additions, improvements, accessions and accumulations to the Propellers
(other than additions, improvements, accessions and accumulations which
constitute appliances, parts, instruments, appurtenances, accessories, furnishings
or other equipment excluded from the definition of Parts) and (b) all Propeller
Documents owned by, or in the possession of, the applicable Grantor;
(ii) Any continuing rights of any Grantor in respect of any warranty, indemnity or
agreement, express or implied, as to title, materials, workmanship, design or patent
infringement with respect to such Propellers (reserving in each case to the Grantors,
however, all of the Grantors’ other rights and interest in and to such warranty,
indemnity or agreement) together in each case under this clause with all rights,
powers, privileges, options and other benefits of such Grantor thereunder (subject
to such reservations) with respect to such Propellers, including the right to make
all waivers and agreements, to give and receive all notices and other instruments
or communications, to take such action upon the occurrence of a default thereunder,
including the commencement, conduct and consummation of legal, administrative
or other proceedings, as shall be permitted thereby or by law, and to do any and all
other things which such Grantor is or may be entitled to do thereunder (subject to
such reservations);
(iii) All General Intangibles which are owned by such Grantor (including the General
Intangibles described on Schedule 2.1) relating to Propeller Assets described in the
foregoing; and
(iv) All Insurance with respect to any of the foregoing.
(s) “Propeller Documents” means, with respect to any Propeller, all technical data, manuals
and log books, and all inspection, modification and overhaul records and other service,
repair, maintenance and technical records that are required by the FAA (or the relevant
Aviation Authority), to be maintained with respect to such Propeller, and such term shall
include all additions, renewals, revisions and replacements of any such materials from time
to time made, or required to be made, by the FAA (or other Aviation Authority) regulations,
and in each case in whatever form and by whatever means or medium (including any
microfiche, microfilm, paper or computer disk) such materials may be maintained or
retained by or on behalf of the applicable Grantor.
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Appendix I to Annex 3A
APPENDIX I
INSURANCE
A. Liability Insurance.
1. Except as provided in Section A.2 below, the applicable Grantor will carry at all times, at
no expense to the Collateral Agent or any Secured Party, commercial airline legal liability
insurance (including any passenger liability, property damage, baggage liability, cargo and
mail liability, hangarkeeper’s liability and contractual liability insurance) with respect to
each Propeller (including, as applicable, in respect of an Engine on which a Propeller is
then installed) which is (i) in an amount not less than the amount of commercial airline
legal liability insurance from time to time applicable to propellers owned or leased and
operated by the applicable Grantor of the same type and operating on similar routes as such
Propeller and (ii) of the type and covering the same risks as from time to time applicable
to propellers operated by the applicable Grantor of the same type as such Propeller; and
(iii) maintained in effect with insurers of nationally or internationally recognized
responsibility (such insurers being referred to herein as “Approved Insurers”).
2. During any period that a Propeller is on the ground and not in operation, the applicable
Grantor may carry, in lieu of the insurance required by Section A.1 above, insurance
otherwise conforming with the provisions of said Section A.1 except that (i) the amounts
of coverage shall not be required to exceed the amounts of liability and property damage
insurance from time to time applicable to propeller owned or operated by the applicable
Grantor of the same type as such Propeller which is on the ground and not in operation and
(ii) the scope of the risks covered and the type of insurance shall be the same as from time
to time shall be applicable to propellers owned or operated by the applicable Grantor of the
same type which are on the ground and not in operation by the applicable Grantor on the
ground, not in operation, and stored or hangared.
B. Hull Insurance.
1. Except as provided in Section B.2 below, the applicable Grantor will carry, at no expense
to the Collateral Agent or any Secured Party, with Approved Insurers “all-risk” aircraft
hull insurance covering the Propellers (including when the Propeller is not installed on any
engine) which is of the type as from time to time applicable to propellers owned by the
applicable Grantor of the same type as such Propeller for an amount denominated in United
States Dollars not less than, for each Propeller, 100% of the Appraised Value (which, as
applicable based on the relevant Appraisal, may at the applicable Grantor’s option be a
combined value for an aircraft comprised of its airframe, its associated Engines, and its
associated Propellers or separate such values for any airframe, Engine or Propeller) as set
forth in the most recent Appraisal delivered pursuant to the Loan Agreement before the
date (or renewal date) of the applicable insurance policies (the “Agreed Value”), or, prior
to the delivery of the initial Appraisal covering such Propeller, the applicable “Agreed
Value” set forth in the initial insurance certificate delivered with respect thereto, but in no
event, in all cases, less than applicable replacement value (as reasonably determined by the
applicable Grantor and its insurers); and in each case such insurance shall include all-risk
property damage insurance covering Propellers temporarily removed from an Engine and
Parts while temporarily removed from any Engine, in each case and not replaced by similar
components for not less than the replacement value thereof which are of the type as from
time to time applicable to components owned by the applicable Grantor of the same type
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as such Propeller and Parts for an amount denominated in United States Dollars (which
replacement value shall, for a Propeller with a separate Agreed Value pursuant to the
foregoing, be not less than such Agreed Value).
All losses will be adjusted by the applicable Grantor with the insurers; provided, however,
that during a period when an Event of Default shall have occurred and be continuing, the
applicable Grantor shall not agree to any such adjustment without the consent of the
Appropriate Party.
Any policies of insurance carried in accordance with this Section B.1 or Section C covering
any Propeller and any policies taken out in substitution or replacement for any such policies
shall provide that insurance proceeds under such policies shall be payable directly to the
Collateral Agent for prompt deposit into a Collateral Proceeds Account if such insurance
proceeds are in respect of an Event of Loss. The Collateral Agent shall be entitled to notify
an insurer that such insurance proceeds shall be paid directly to the Collateral Agent as
provided in the immediately preceding sentence.
For the avoidance of doubt, this Section B.1 shall not prohibit standard deductibles or
industry standard self-insured retentions for hull insurance carried by the applicable
Grantor.
2. During any period that a Propeller is on the ground and not in operation, the applicable
Grantor may carry, in lieu of the insurance required by Section B.1 above, insurance
otherwise conforming with the provisions of said Section B.1 except that the scope of the
risks and the type of insurance shall be the same as from time to time applicable to propeller
owned by the applicable Grantor of the same type as such Propeller similarly on the ground
and not in operation, provided that the applicable Grantor shall maintain insurance against
risk of loss or damage to such Propeller in an amount at least equal to the Agreed Value
for such Propeller during such period that it is on the ground and not in operation.
C. War-Risk, Hijacking and Allied Perils Insurance.
If the applicable Grantor shall at any time operate or propose to operate the Propeller (i) in any area of
recognized hostilities or (ii) on international routes and war-risk, hijacking or allied perils insurance is
maintained by the applicable Grantor with respect to other aircraft owned or operated by the applicable
Grantor on such routes or in such areas, the applicable Grantor shall maintain war-risk, hijacking and related
perils insurance of substantially the same type carried by major United States commercial air carriers
operating the same or comparable models of aircraft on similar routes or in such areas and in no event in
an amount less than the Agreed Value.
D. General Provisions.
Any policies of insurance carried in accordance with Sections A, B and C, including any policies taken out
in substitution or replacement for such policies:
in the case of Section A, shall name the Collateral Agent and each other Secured Party (collectively,
the “Additional Insureds”), as an additional insured, as its interests may appear;
shall apply worldwide subject to standard territorial restrictions or limitations applicable in the
Lloyd’s of London Insurance Market at the time the policy is issued (except only in the case of war,
hijacking and related perils insurance required under Section C, which shall apply to the fullest
extent available in the international insurance market);
shall provide that, in respect of the coverage of the Additional Insureds in such policies, the
insurance shall not be invalidated by any act or omission (including misrepresentation and
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nondisclosure) by the applicable Grantor which results in a breach of any term, condition or
warranty of the polices, provided that the Additional Insured so protected has not caused,
contributed to or knowingly condoned said act or omission. However, the coverage afforded the
Additional Insured will not apply in the event of exhaustion of policy limits or to losses or claims
arising from perils specifically excluded from coverage under the policies;
shall provide that, if the insurers cancel such insurance for any reason whatsoever, or if any material
change is made in the insurance policies by insurers which adversely affects the interest of any of
the Additional Insureds, such cancellation or change shall not be effective as to the Additional
Insureds for thirty (30) days (seven (7) days in the case of war risk, hijacking and allied perils
insurance and ten (10) days in the case of nonpayment of premium) after receipt by the Additional
Insureds of written notice by such insurers of such cancellation or change, provided that, if any
notice period specified above is not reasonably obtainable, such policies shall provide for as long
a period of prior notice as shall then be reasonably obtainable;
shall waive any rights of setoff (including for unpaid premiums), recoupment, counterclaim or other
deduction, whether by attachment or otherwise, against each Additional Insured;
shall waive any right of subrogation against any Additional Insured;
shall be primary without right of contribution from any other insurance that may be available to
any Additional Insured;
shall provide that all of the liability insurance provisions thereof, except the limits of liability, shall
operate in all respects as if a separate policy had been issued covering each party insured thereunder;
shall provide that none of the Additional Insureds shall be liable for any insurance premium; and
shall contain a 50/50 Clause per Lloyd’s Aviation Underwriters’ Association Standard Policy Form
AVS 103 or U.S. market equivalent.
E. Reports and Certificates; Other Information.
On the date of delivery of any Mortgage Supplement or Pledge Supplement with respect to each Propeller
constituting Collateral, and on or prior to each renewal date of the insurance policies required hereunder,
the applicable Grantor will furnish or cause to be furnished to the Collateral Agent insurance certificates
describing in reasonable detail the commercial insurance maintained by the applicable Grantor hereunder
and a report, signed by the applicable Grantor’s regularly retained independent insurance broker (the
“Insurance Broker”), stating the opinion of such Insurance Broker that (a) all premiums in connection with
the commercial insurance then due have been paid and (b) such insurance complies with the terms of this
Appendix I. To the extent such agreement is reasonably obtainable the applicable Grantor will also cause
the Insurance Broker to agree to advise the Secured Parties in writing of any default in the payment of any
premium and of any other act or omission on the part of the applicable Grantor of which it has knowledge
and which might invalidate or render unenforceable, in whole or in part, any commercial insurance on such
Propeller or cause the cancellation or termination of such insurance, and to advise the Secured Parties in
writing at least thirty (30) days (seven (7) days in the case of war-risk and allied perils coverage and ten
(10) days in the case of nonpayment of premium, or such shorter period as may be available in the
international insurance market, as the case may be) prior to the cancellation or material adverse change of
any commercial insurance maintained pursuant to this Appendix I.
F. Right to Pay Premiums.
The Additional Insureds shall have the rights but not the obligations of an additional named insured. None
of the Collateral Agent or the other Additional Insureds shall have any obligation to pay any premium,
commission, assessment or call due on any such insurance (including reinsurance). Notwithstanding the
foregoing, in the event of cancellation of any insurance due to the nonpayment of premiums, the Collateral
Agent shall have the option, as directed by the Required Lenders, to pay any such premium in respect of
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the Propeller that is due in respect of the coverage pursuant to this Agreement and to maintain such coverage,
as the Collateral Agent or the Appropriate Party may require, until the scheduled expiry date of such
insurance and, in such event, the applicable Grantor shall, upon demand, reimburse the Collateral Agent or
any Lender for amounts so paid by it, together with interest therein at the Default Rate from the date of
payment.
G. Salvage Rights; Other.
All salvage rights to each Propeller shall remain with the applicable Grantor’s insurers at all times, and any
insurance policies of the Collateral Agent insuring any Propeller shall provide for a release to the applicable
Grantor of any and all salvage rights in and to any Propeller.
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Exhibit A to Annex 3A
[FORM OF MORTGAGE SUPPLEMENT]
FAA MORTGAGE
THIS FAA MORTGAGE dated __________ (herein, this “FAA Mortgage”) made by [_____], a [_____]
(together with its permitted successors and assigns, the “Grantor”), in favor of The Bank of New York
Mellon, as the Collateral Agent (together with its successors and permitted assigns, the “Collateral Agent”).
W I T N E S S E T H:
WHEREAS, the Amended and Restated Horizon Aircraft, Engine and Propeller Pledge and
Security Agreement, dated as of October 30, 2020 and filed for recordation with the FAA Registry pursuant
to and in accordance with the provisions of Section 44107 of the Transportation Code on September 28,
2020 at 8:17 A.M., C.D.T. (herein called the “PSA”; capitalized terms used herein but not defined shall
have the meaning ascribed to them in the PSA), between the Grantors and the Collateral Agent, provides
for the execution and delivery of this FAA Mortgage substantially in the form hereof, which shall
particularly describe certain collateral, and shall specifically mortgage the same to the Collateral Agent;
WHEREAS, the PSA was entered into between the Grantors and the Collateral Agent in order to
secure the Secured Obligations; and
WHEREAS, the Grantors wish to supplement the PSA and to subject the Aircraft and Engine
Assets described in Exhibit A hereto to the security interest created by the PSA by execution and delivery
of this FAA Mortgage, and by reference herein to the terms of the PSA which are hereby made a part hereof,
and this FAA Mortgage is being filed for recordation on the date hereof with the FAA pursuant to Title 49
by the FAA at Oklahoma City, Oklahoma;
NOW, THEREFORE, THIS FAA MORTGAGE , in order to secure the prompt payment and
performance of the Secured Obligations from time to time outstanding and to secure the performance and
observance by the Grantor[s] and each of the other Credit Parties of all the agreements, covenants and
provisions contained in the Loan Documents for the benefit of the Secured Parties, the Grantor[s] has/have
mortgaged, assigned, pledged, hypothecated, transferred, conveyed and granted, and does hereby mortgage,
assign, pledge, hypothecate, transfer, convey and grant, unto the Collateral Agent, for the security and
benefit of the Secured Parties, a continuing first priority security interest in all right, title and interest of the
Grantors in, to and under the following described property:
1. The Propellers as further described on Exhibit A hereto, in each case together with any and all Parts
of whatever nature, which are from time to time included within the definitions of “Propeller”,
including all substitutions, renewals and replacements of and additions, improvements, accessions
and accumulations to each such Propeller (other than additions, improvements, accessions and
accumulations which constitute appliances, parts, instruments, appurtenances, accessories,
furnishings or other equipment excluded from the definition of Parts) and all Propeller Documents
relating to each such Propeller.
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TO HAVE AND TO HOLD all and singular the aforesaid property unto the Collateral Agent, its
successors and assigns, for the uses and purposes and subject to the terms and provisions set forth in the
PSA.
This FAA Mortgage shall be governed by, and construed in accordance with, the law of the State of New
York.
This FAA Mortgage shall be construed in every way in accordance to the terms of the PSA and as a part
thereof, and the PSA is hereby incorporated by reference herein and is hereby ratified, approved and
confirmed.
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IN WITNESS WHEREOF, the Grantor[s] has/have caused this FAA Mortgage to be duly
executed by one of its officers, thereunto duly authorized, on the day and year first above written.
[_____]
By:
Name:
Title:
Annex 3A - 18
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EXHIBIT A
TO
FAA MORTGAGE
THE PROPELLERS:
Propeller
No. Propeller Model
Serial No.
1. [●] [●]
Each of the above listed Propellers is capable of absorbing 750 or more “rated take-off shaft horsepower.”
Annex 3A - 19
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Exhibit B to Annex 3A
FORM OF OFFICER’S CERTIFICATE
[●], 202[●]
Reference is made to that certain Amended and Restated Horizon Aircraft, Engine and Propellers
Pledge and Security Agreement, dated as of the date hereof (the “Agreement”), between Horizon Air
Industries, Inc., a Washington corporation (the “Company”), as the Grantor, and The Bank of New York
Mellon, as Collateral Agent. Capitalized terms used herein but not otherwise defined shall have the
meanings ascribed to such terms in the Agreement.
The undersigned is a duly authorized Responsible Officer of the Company and I hereby certify, solely in
my capacity as a Responsible Officer of the Company, and not in my individual capacity, on the date hereof
that:
1. The Company is an “air carrier” within the meaning of Section 40102 of Title 49 and holds a
certificate under Section 40102 of Title 49;
2. The Company has exclusive title in all Aircraft and Engine Assets and Propeller Assets listed in
Schedule I attached hereto.
3. The information supplied by the Company with respect to the Aircraft and Engine Assets and the
Propeller Assets included in Schedule I and corresponding information in Schedule 2.1 to the
Agreement is true, correct and complete on and as of the date hereof.
4. Each Aircraft or Airframe listed on Schedule I has been duly registered in the name of the
applicable Company under Chapter 441 of the Transportation Code. An airworthiness certificate
has been duly issued under Chapter 447 of the Transportation Code with respect to each Aircraft
and Airframe listed on Schedule I. Each of the Aircraft and Airframes listed on Schedule I
corresponds to an Aircraft or Airframe specified in Schedule 2.1 to the Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
Annex 3A - 20
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The undersigned hereby certifies, in his or her capacity as a Responsible Officer of the Company
and not in his or her individual capacity, each and every matter contained herein to be true and correct as
of the date first written above.
[●]
By: _______________________________
Name:
Title:
Annex 3A - 21
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Schedule I
1. Aircraft/Airframes
[●] aircraft more specifically described below:
Aircraft Model Aircraft Generic Model Airframe Serial No. U.S. Registration No.
1.
2.
3.
4.
5.
6.
7.
2. Engines
[●] engines as more specifically described below:
Engine Model Engine Generic Model Engine Serial No.
1.
2.
3.
4.
5.
6.
7.
Each of the above described Engines is of 550 or more “rated take-off horsepower” or the equivalent of
such horsepower.
3. Propellers
[●] propellers as more specifically described below:
Propeller Model Propeller Serial No. Propeller Location
1.
2.
3.
4.
5.
6.
7.
Each Propeller is capable of absorbing 750 or more “rated take-off shaft horsepower”.
Annex 3A - 22
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Annex 3B (Aircraft and Engine Assets)
Each Grantor and the Collateral Agent hereby agree that the terms of this Annex shall apply with respect
to Collateral consisting of Aircraft and Engine Assets.
1. Perfection Requirement. The following requirements shall be included in the definition of
“Perfection Requirement” and shall constitute an additional “Perfection Requirement” with respect
to Collateral consisting of Aircraft and Engine Assets:
(a) The applicable Grantor, at its sole cost and expense, shall on or within one (1) Business
Day after the Closing Date or the date of execution of any Pledge Supplement:
(i) execute and deliver, or cause to be executed and delivered, the Mortgage
Supplements in form and substance satisfactory to the Appropriate Party;
(ii) duly prepare and file, or cause to be duly prepared and filed, the FAA Filed
Documents for recordation with the FAA in accordance with Title 49 and the
regulations thereunder; and
(iii) duly prepare and make, or cause to be duly prepared and made, all registrations of
the International Interests with respect to such Collateral in the International
Registry.
(b) The applicable Grantor, at is sole cost and expense, will on or within a commercially
reasonable time after the Closing Date or the date of execution of any Pledge Supplement,
as applicable, cause to be affixed to, and maintained in, the cockpit of all Airframes
constituting Collateral and on all Engines constituting Collateral, in a clearly visible
location, a placard of a reasonable size and shape bearing the legend: “Subject to a security
interest in favor of The Bank of New York Mellon, as Collateral Agent for the benefit of
the Secured Parties.”
2. Required Filings. Each of the following filings, recordings or other documents shall be included
in the definition of “Required Filing” and shall constitute an additional “Required Filing” with
respect to Collateral consisting of Aircraft and Engine Assets:
(a) Filing of an FAA Filed Document with respect to such Collateral with the FAA; and
(b) Registration of each International Interest with respect to such Collateral in the
International Registry.
3. Representations and Warranties. Each Grantor (as applicable) represents and warrants, on the
Closing Date and on the date of each Borrowing (or, in the case of an Additional Grantor or
Additional Collateral, including any Additional Airframe or Additional Engine, on the date of such
Grantor’s execution and delivery of a Pledge Supplement, or the date such Additional Collateral
becomes subject to the security interest created hereby, as applicable):
(a) Schedule 2.1 sets forth all Aircraft and Engine Assets constituting Collateral. Each Grantor
that is listed as owner in Schedule 2.1 is the registered owner as shown in FAA records,
and the registration of each Airframe constituting Collateral has not expired.
(b) Necessary Filings. Upon (x) the filing of UCC financing statements (and continuation
statements at periodic intervals) with respect to the security and other interests created
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hereby under the UCC as in effect in any applicable jurisdiction, (y) the recording and the
filing of each Mortgage Supplement in the office of the FAA pursuant to Title 49 and (z)
the registration of each International Interest in the International Registry, in each case,
with respect to each Airframe and Engine constituting Collateral, (i) all filings,
registrations and recordings necessary in the United States or in the International Registry
to create, preserve, protect and perfect the security interest granted by the Grantors to the
Collateral Agent hereby in respect of the Collateral have been accomplished or, as to
Collateral to become subject to the security interest of this Agreement after the date hereof,
will be so filed, registered and recorded simultaneously with such Collateral being subject
to the Lien of this Agreement and (ii) the security interest granted to the Collateral Agent
pursuant to this Agreement in and to the Collateral will constitute a perfected security
interest therein prior to the rights of all other Persons therein, but subject to no other Liens
(other than Permitted Liens), and is entitled to all the rights, priorities and benefits afforded
by Title 49, the Cape Town Treaty, and any other applicable Law to perfected security
interests or Liens.
(c) Other Filings or Registrations. There is no registration covering or purporting to cover any
interest of any kind in Airframes and Engines constituting Collateral (other than Permitted
Liens), and there are no International Interests registered on the International Registry in
respect of such. Each Grantor will not execute or authorize or permit to be filed in any
public office any registration covering International Interests on the International Registry
(other than the Lien created under this Agreement and the related Mortgage Supplement(s))
relating to such Collateral or location.
(d) All Engines constituting Collateral have been first placed in service after October 22, 1994.
(e) All Airframes constituting Collateral are equal to or less than 20 years old on the date that
the relevant Airframes are first pledged as Collateral.
(f) All Airframes constituting Collateral have been duly certified by the FAA as to type and
airworthiness.
(g) All Engines constituting Collateral have been duly certified by the FAA as to type.
(h) All Airframes are registered and all Engines are habitually located, as applicable, in the
United States.
4. Covenants. Each Grantor (as applicable) covenants and agrees that:
Filings and Registrations
(a) Such Grantor (as applicable) will take, or cause to be taken, at such Grantor’s cost and
expense, such action with respect to the recording, filing, re-recording and refiling of each
Mortgage Supplement in the office of the FAA, pursuant to Title 49, and such other
documents in such other places as may be required or desirable under any applicable Law,
and any other instruments, or registrations on the International Registry, as are necessary
or desirable by the Appropriate Party or the Collateral Agent, to maintain the existence,
perfection, priority and preservation of the Lien created by this Agreement, the related
Mortgage Supplement(s) and the International Interests of the Collateral Agent in the
Aircraft and Engines Assets constituting Collateral. The Grantors will furnish to the
Collateral Agent timely notice of the necessity or desirability of such action, together with,
if requested by the Collateral Agent, such instruments, in execution form, and such other
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information as may be required to enable the Collateral Agent to take such action or
otherwise requested by the Appropriate Party.
Possession, Operation and Use, Maintenance, Registration and Markings.
(b) General. Except as otherwise expressly provided herein, it shall be entitled to operate, use,
locate, employ or otherwise utilize or not utilize any Airframe, Engine or Part in any lawful
manner or place in accordance with such Grantor’s business judgment.
(c) Possession. It shall not lease or otherwise in any manner deliver, transfer or relinquish
possession of any Airframe or Engine, or install any Engine, or permit any Engine to be
installed, on any airframe other than an Airframe, in each case, to the extent constituting
Collateral; except that the applicable Grantor may, so long as no Event of Default has
occurred:
(i) Deliver possession of any Airframe, Engine or Part constituting Collateral (x) to
the Manufacturer thereof or to any third-party maintenance provider for testing
service, repair, maintenance or overhaul work on such Airframe, Engine or Part,
or, to the extent required or permitted by Section 4(k) of this Annex, for alterations
or modifications in or additions to such Airframe or Engine or (y) to any Person
for the purpose of transport to a Person referred to in the preceding clause (x);
provided that such Grantor covenants to promptly pay when due any payment
obligation resulting in a mechanic’s or other Lien related to such testing service,
repair, maintenance, overhaul, alternation, modification, addition or transport;
(ii) Transfer possession of the Aircraft, Airframe or any Engine constituting Collateral
to the U.S. Government, in which event such Grantor shall promptly notify the
Appropriate Party of any such transfer of possession and, in the case of any transfer
pursuant to CRAF, in such notification shall identify by name, address and
telephone numbers the Contracting Office Representative or Representatives for
the Military Airlift Command of the United States Air Force to whom notices must
be given and to whom requests or claims must be made to the extent applicable
under CRAF; and
(iii) Install an Engine on an airframe owned (including any Airframe) or leased by such
Grantor; provided that upon such installation, such Grantor shall be deemed to
covenant to the Collateral Agent for the benefit of the Secured Parties that such
installation shall not result in any material impairment (as compared to if such
Engine had not so been installed) of the Collateral Agent’s rights and remedies in
respect of such Engine and access in connection therewith and to comply with the
Appropriate Party’s requests in furtherance of the exercise of such rights and
remedies (including access). With respect to this clause (c)(iii), (A) the Collateral
Agent hereby agrees on behalf of the Secured Parties, and for the benefit of each
lessor, conditional seller, indenture trustee or secured party of any airframe leased
to, or owned by, the applicable Grantor subject to a lease, conditional sale, trust
indenture or other security agreement that the Collateral Agent, on behalf of the
Secured Parties, will not acquire or claim, as against such lessor, conditional seller,
indenture trustee or secured party, any right, title or interest in such airframe as the
result of any Engine being installed on such airframe at any time while such
airframe is subject to such lease, conditional sale, trust indenture or other security
agreement and (B) such Grantor shall cause any lessor, conditional seller,
indenture trustee or secured party of any airframe leased to, or owned by, the
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applicable Grantor subject to any lease, conditional sale, trust indenture or other
security agreement to acknowledge that it will not acquire or claim, as against the
Collateral Agent or any other Secured Parties, any right, title or interest in an
Engine as the result of such Engine being installed on such airframe at any time
which such airframe is subject to such lease, conditional sale, trust indenture or
other security agreement.
(d) Operation and Use. It shall not operate, use or locate such Airframe or Engine, or allow
such Airframe or Engine to be operated, used or located, (i) in any area excluded from
coverage by any insurance required by any Loan Document, except in the case of a
requisition by the U.S. Government where the Grantors obtain indemnity in lieu of such
insurance from the U.S. Government, or insurance from the U.S. Government, against
substantially the same risks and for at least the amounts of insurance required by any Loan
Document covering such area, or (ii) in any recognized area of hostilities unless covered
in accordance with this Annex by war risk insurance, or in either case unless the Airframe
or Engine is only temporarily operated, used or located in such area as a result of an
emergency, equipment malfunction, navigational error, hijacking, weather condition or
other similar unforeseen circumstance, so long as such Grantor diligently and in good faith
proceeds to remove such Airframe or Engine from such area. No Grantor shall permit such
Airframe or Engine to be used, operated, maintained, serviced, repaired or overhauled
(x) in violation of any applicable Law or (y) in violation of any airworthiness certificate,
license or registration of any Governmental Authority relating to such Airframe or Engine,
except to the extent the validity or application of any such law or requirement relating to
any such certificate, license or registration is being contested in good faith by such Grantor
in any reasonable manner which does not involve any material risk of the sale, forfeiture
or loss of such Airframe or Engine, any material risk of criminal liability or material civil
penalty against the Collateral Agent or any Secured Party or impair the Appropriate Party’s
security interest in such Airframe or Engine.
(e) Maintenance and Repair. It shall cause all Aircraft and Engine Assets to be maintained,
serviced, repaired and overhauled in accordance with maintenance standards required by
or substantially equivalent to those required by the FAA so as to keep such Aircraft and
Engine Assets in such operating condition as may be necessary to enable the applicable
airworthiness certification of such Airframe or, in the case of any Engine that is installed
on an Aircraft, the applicable Aircraft to be maintained under the regulations of the FAA.
Each Grantor further agrees that each Airframe or Engine constituting Collateral will be
maintained, used, serviced, repaired, overhauled or inspected in compliance with
applicable Laws with respect to the maintenance of the Airframes and Engines and in
compliance with each applicable airworthiness certificate, license and registration relating
to such Airframe or Engine issued by the applicable Aviation Authority.
(f) Registration. It shall cause each Airframe to remain duly registered in its name under Title
49, except as otherwise expressly permitted under any Loan Document.
(g) Markings. The placards described under “Perfection Requirement” in this Annex may be
removed temporarily, if necessary, in the course of maintenance of the Airframes and
Engines. If any such placard is damaged or becomes illegible, the applicable Grantor shall
promptly replace it with a placard complying with the requirements of this Annex. If the
Collateral Agent is replaced or its name is changed, such Grantor shall replace such
placards with new placards reflecting the correct name of the Collateral Agent promptly
Annex 3B - 4
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after such Grantor receives notice of such replacement or change (in any event within
fifteen (15) days).
Replacement of Parts, Alterations, Modification and Additions.
(h) Replacement of Parts. Except as otherwise provided herein, so long as the security interest
created herein has not been released in accordance with the Loan Agreement, each
applicable Grantor, at its own cost and expense, will, at its own cost and expense, promptly
replace (or cause to be replaced) all Parts which may from time to time be incorporated or
installed in or attached to such Airframe or Engine and which may from time to time
become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or
permanently rendered unfit for use for any reason whatsoever. In addition, each Grantor
may, at its own cost and expense, remove 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 permanently rendered unfit for use; provided,
however, that such Grantor, except as otherwise provided herein, at its own cost and
expense, will, promptly replace such Parts. All replacement parts shall be free and clear of
all Liens, except Permitted Liens and shall be in as good an operating condition and have
a value and utility not less than the value and utility of the Parts replaced (assuming such
replaced Parts were in the condition required hereunder).
(i) Parts Subject to Lien. Except as otherwise provided herein, any Part at any time removed
from an Airframe or Engine shall remain subject to the security interest created in this
Agreement, no matter where located, until such time as such Part shall be replaced by a
part that has been incorporated or installed in or attached to such Airframe or Engine and
that meets the requirements for replacement parts specified above. Immediately upon any
replacement part becoming incorporated or installed in or attached to such Airframe or
Engine as provided in this Annex, without further act, (i) the replaced Part shall thereupon
be free and clear of all rights of the Collateral Agent and shall no longer be deemed a Part
hereunder and (ii) such replacement part shall become subject to this Agreement and be
deemed part of such Airframe or Engine, as the case may be, for all purposes hereof to the
same extent as the Parts originally incorporated or installed in or attached to such Airframe
or Engine.
(j) [Reserved.]
(k) Alterations, Modifications and Additions. It shall make alterations and modifications in
and additions to each Airframe and Engine as may be required to be made from time to
time to meet the applicable standards of the FAA, to the extent made mandatory in respect
of such Airframe or Engine (a “Mandatory Alteration”); provided, however, that each
Grantor may, in good faith and by appropriate procedure, contest the validity or application
of any law, rule, regulation or order in any reasonable manner which does not materially
adversely affect the Appropriate Party’s interest in such Airframe or Engine and does not
involve any material risk of sale, forfeiture or loss of such Airframe or Engine or the
interest of the Appropriate Party therein, or any material risk of material civil penalty or
any material risk of criminal liability being imposed on the Collateral Agent or any Secured
Party. In addition, each Grantor, at its own expense, may from time to time make such
alterations and modifications in and additions to any Airframe or Engine (each an
“Optional Alteration”) as such Grantor may deem desirable in the proper conduct of its
business including the removal of Parts which such Grantor deems are obsolete or no
longer suitable or appropriate for use in such Airframe or Engine (“Obsolete Parts”);
Annex 3B - 5
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provided, however, that no such Optional Alteration to an Airframe or Engine shall
(i) materially diminish the fair market value, utility or remaining useful life of such
Airframe or Engine below its fair market value, utility or remaining useful life immediately
prior to such Optional Alteration (assuming such Airframe or Engine was in the condition
required by this Agreement immediately prior to such Optional Alteration) or (ii) cause
such Airframe to cease to have the applicable standard certificate of airworthiness. All
Parts incorporated or installed in or attached to any Airframe or Engine as the result of any
alteration, modification or addition effected by each applicable Grantor shall be free and
clear of any Liens except Permitted Liens and become subject to the Lien of this Agreement;
provided that such Grantor may, at any time so long as any Airframe or Engine is subject
to the Lien of this Agreement, remove any Part (such Part being referred to herein as a
“Removable Part”) from such Airframe or Engine if (i) such Part is in addition to, and not
in replacement of or in substitution for, any Part originally incorporated or installed in or
attached to such Airframe or Engine at the time of original delivery thereof by the
Manufacturer or any Part in replacement of, or in substitution for, any such original Part,
(ii) such Part is not required to be incorporated or installed in or attached or added to such
Airframe or Engine pursuant to the terms of this Annex and (iii) such Part can be removed
from such Airframe or Engine without materially diminishing the fair market value, utility
or remaining useful life which such Airframe or Engine would have had at the time of
removal had such removal not been effected by such Grantor, assuming such Airframe or
Engine was otherwise maintained in the condition required by this Agreement and such
Removable Part had not been incorporated or installed in or attached to such Airframe or
Engine. Upon the removal by any applicable Grantor of any such Removable Part or
Obsolete Part as above provided, (A) title thereto shall, without further act, be free and
clear of all rights of the Collateral Agent and (B) such Removable Part or Obsolete Part
shall no longer be deemed a Part hereunder.
Loss, Destruction or Requisitions: Addition of Airframes and Engines.
(l) Event of Loss. Upon the occurrence of an Event of Loss with respect to an Airframe or an
Engine:
(i) each applicable Grantor shall promptly upon obtaining knowledge of such Event
of Loss (and in any event within fifteen (15) Business Days after such occurrence)
give the Collateral Agent written notice of such Event of Loss.
(ii) prior to the occurrence of a Recovery Event with respect to such Airframe or
Engine, each applicable Grantor shall have the right to replace and substitute such
Airframe or Engine in accordance with Sections 4(p) and 4(q) of this Annex, as
applicable.
(iii) each Grantor shall comply with the applicable requirements of Section 2.06(b)(ii)
of the Loan Agreement with respect to any Recovery Event relating to such Event
of Loss, and upon such compliance, the Airframe or Engine suffering such Event
of Loss shall be released from the Lien of this Agreement.
(m) Requisition for Use. In the event of a requisition for use by any Governmental Authority
or a CRAF activation of an Airframe, Engine (whether or not installed on an Airframe), or
engine installed on such Airframe while such Airframe is subject to the Lien of this
Agreement, each applicable Grantor shall promptly notify the Collateral Agent of such
requisition or activation and all of such Grantor’s obligations under this Agreement and
the Loan Agreement shall continue to the same extent as if such requisition or activation
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had not occurred and shall not be reduced or delayed by such requisition or activation. So
long as no Event of Default shall have occurred and be continuing, any payments received
by the Collateral Agent or any Grantor from such Governmental Authority with respect to
such requisition of use or activation may be paid over to, or retained by, such Grantor and
shall not be required to be paid over to the Collateral Agent to hold as Collateral.
(n) Conditions to Addition of Airframe. When any Grantor (including any Additional Grantor)
is granting a security interest to the Collateral Agent for the benefit of the Secured Parties
in an additional Airframe (an “Additional Airframe”) pursuant to the requirements under
the Loan Documents, such Grantor shall, at such Grantor’s sole cost and expense, fulfill
the following conditions:
(i) an executed counterpart of a Pledge Supplement covering such Additional
Airframe;
(ii) an executed counterpart of a Mortgage Supplement (in form and substance
satisfactory to the Appropriate Party) covering such Additional Airframe, which
shall have been duly filed for recordation pursuant to the Act or such other
applicable Law or as required under the terms of this Agreement;
(iii) each applicable Grantor shall have furnished to the Collateral Agent such evidence
of compliance with the insurance provisions of this Annex with respect to such
Additional Airframe;
(iv) (A) the Additional Airframe shall have been duly certified by the FAA as to type
and airworthiness, (B) application for registration of the Additional Airframe in
accordance with the terms of this Annex shall have been duly made with and
granted by the FAA and each applicable Grantor shall own and have the authority
to operate the Additional Airframe and (C) each applicable Grantor shall have
caused the sale of such Additional Airframe to the such Grantor (if occurring after
February 28, 2006) and the International Interest granted under the Mortgage
Supplement in favor of the Collateral Agent for the benefit of the Secured Parties
with respect to such Additional Airframe, each to be registered on the International
Registry as a sale or an International Interest, respectively;
(v) the Collateral Agent and the Appropriate Party, at the expense of the Grantors,
shall have received (A) an opinion of counsel, reasonably satisfactory to the
Appropriate Party and addressed to the Secured Parties, to the effect that this
Agreement creates a valid security interest in each applicable Grantor’s interest in
the Additional Airframe, the Secured Parties will be entitled to the benefits of
Section 1110 of the U.S. Bankruptcy Code with respect to the Additional Airframe
and a UCC filing has been filed with respect thereto resulting in a perfected
security interest to the extent the UCC is applicable and (B) an opinion of such
Grantor’s aviation law counsel reasonably satisfactory to and addressed to the
Appropriate Party as to the due registration of any such Additional Airframe and
the due filing for recordation of the Mortgage Supplement with respect to such
Additional Airframe under the Act and any other applicable Law, and the
perfection and first priority (other than with respect to any Liens permitted under
the Loan Agreement) of the security interest in the Additional Airframe, granted
to the Appropriate Party hereunder and the registration with the International
Registry of the sale of such Additional Airframe, to such Grantor (if occurring after
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February 28, 2006) and the International Interest granted under the Mortgage
Supplement with respect to such Additional Airframe;
(vi) the Grantors shall have delivered an Appraisal of such Additional Airframe to the
Appropriate Party and, if such Additional Airframes were delivered to such grantor
by the manufacturers within ninety (90) days prior to the date such Additional
Airframe is added as Collateral, in an officer’s certificate attesting to the foregoing;
and
(vii) the Grantors shall have taken such other actions and furnished such other
certificates and documents as the Appropriate Party may require in order to assure
that the Additional Airframe is duly and properly subjected to the Lien of this
Agreement.
(o) Conditions to Addition of Engine. When any Grantor (including any Additional Grantor)
is granting a security interest to the Collateral Agent for the benefit of the Secured Parties
in an additional Engine (an “Additional Engine”) pursuant to the requirements under the
Loan Documents, such Grantor shall, at such Grantor’s sole cost and expense, fulfill the
following conditions:
(i) an executed counterpart of a Pledge Supplement covering such Additional Engine;
(ii) an executed counterpart of a Mortgage Supplement covering the Additional Engine,
which shall have been duly filed for recordation pursuant to the Act;
(iii) such Grantor shall have furnished to the Appropriate Party such evidence of
compliance with the insurance provisions of this Agreement with respect to such
Additional Engine;
(iv) such Grantor shall have furnished to the Collateral Agent and the Appropriate
Party an opinion of counsel from counsel satisfactory to the Appropriate Party to
the effect that (A) this Agreement creates a valid security interest in such Grantor’s
interest in the Additional Engine and (B) the Secured Parties will have the benefits
of Section 1110 of the U.S. Bankruptcy Code with respect to the Additional Engine,
and a UCC filing has been filed with respect thereto resulting in a perfected
security interest to the extent the UCC is applicable;
(v) such Grantor shall have furnished to the Appropriate Party an opinion of such
Grantor’s aviation law counsel satisfactory to the Appropriate Party as to the due
filing for recordation of the Mortgage Supplement with respect to such Additional
Engine under the Act or any other applicable Law, and the perfection and first
priority (other than with respect to any Permitted Lien) of the security interest in
the Additional Engine granted to the Appropriate Party hereunder, and the
registration with the International Registry of the sale to the Grantors of such
Additional Engine (if occurring after February 28, 2006) and the International
Interest granted under such Mortgage Supplement with respect to such Additional
Engine;
(vi) such Grantor shall have caused the sale of such Additional Engine to such Grantor
(if occurring after February 28, 2006) and the International Interest granted under
such Mortgage Supplement in favor of the Appropriate Party with respect to such
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Additional Engine each to be registered on the International Registry as a sale or
an International Interest, respectively;
(vii) such Grantor shall have delivered an Appraisal of such Additional Engine to the
Appropriate Party and, if such Additional Engine were delivered new to such
Grantor by the manufacturers within ninety (90) days prior to the date such
Additional Engine is added as Collateral, in an officer’s certificate attesting to the
foregoing; and
(viii) such Grantor shall have taken such other actions and furnished such other
certificates and documents as the Appropriate Party may require in order to assure
that the Additional Engine is duly and properly subjected to the Lien of this
Agreement.
Promptly after the recordation of the Mortgage Supplement or other requisite documents
or instruments covering such Additional Engine, if any, pursuant to the Act, the Grantors
shall cause to be delivered to the Appropriate Party an opinion of counsel, satisfactory in
form and substance to the Appropriate Party, as to the due recordation of the Mortgage
Supplement or other requisite documents or instruments covering such Additional Engine
and the perfection and first priority (other than with respect to any Liens permitted under
the Loan Agreement) of the security interest in such Additional Engine granted to the
Appropriate Party hereunder.
(p) Substitution of Airframes.
(i) Each Grantor shall have the right at its option at any time, on at least five (5) days’
prior notice to the Collateral Agent and the Appropriate Party, at such Grantor’s
sole cost and expense, to substitute an Additional Airframe to replace any Airframe
(such replaced Airframe, the “Replaced Airframe”) (including, if so elected by
such Grantor, in satisfaction of any applicable obligations in relation to an Event
of Loss with respect to such Airframe prior to the occurrence of a related Recovery
Event) in accordance with the requirements of Section 6.17(b)(iii) of the Loan
Agreement and Section 4(n) of this Annex. Such Additional Airframe shall be an
airframe manufactured by the Manufacturer of the Replaced Airframe that is the
same model as the Replaced Airframe, or an improved model, and that has a value
and utility (without regard to hours and cycles remaining until overhaul) at least
equal to the Replaced Airframe (assuming that such Airframe had been maintained
in accordance with this Agreement (and, as applicable, had not suffered such Event
of Loss), which value and utility shall be established by an Appraisal delivered
pursuant to the terms of this Agreement; provided, that, until an Appraisal is
obtained for such Additional Airframe, it shall be deemed to have the same
Appraised Value of zero).
(ii) Each Grantor’s right to make a substitution hereunder shall be subject to the
delivery of (A) a written request from the applicable Grantor, requesting release of
the Replaced Airframe from Collateral and specifically describing such Airframe
and (B) a certificate of a Responsible Officer of such Grantor providing:
1. a description of the Replaced Airframe which shall be identified by
Manufacturer, model, FAA registration number and Manufacturer’s serial
number;
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2. a description of the Additional Airframe (including the Manufacturer,
model, FAA registration number and manufacturer’s serial number) to be
received as consideration for the Replaced Airframe;
3. that on the date of the Mortgage Supplement relating to the Additional
Airframe, such Grantor will be the legal owner of such Additional
Airframe free and clear of all Liens (other than the Lien under this
Agreement and Permitted Liens), and that such Additional Airframe has
been duly registered in the name of such Grantor under Chapter 441 of the
Transportation Code and that an airworthiness certificate has been duly
issued under Chapter 447 of the Transportation Code with respect to such
Additional Airframe, and that such registration and certificate is in full
force and effect, and that such Grantor has the full right and authority to
use such Additional Airframe;
4. that the insurance required by this Agreement is in full force and effect
with respect to such Additional Airframe and all premiums then due
thereon have been paid in full;
5. that no Event of Default has occurred and is continuing or would result
from the making and granting of the request for release and the addition
of such Additional Airframe; and
6. that the conditions set forth in Section 6.17(b)(iii) of the Loan Agreement
and Section 4(n) of this Annex have been satisfied after giving effect to
such substitution (it being understood and agreed, for the avoidance of
doubt, that any reference in Section 6.17(b)(iii) of the Loan Agreement to
existing Additional Collateral shall include such Replaced Airframe).
(iii) Immediately upon the satisfaction of conditions set forth in this Section 4(p) of this
Annex and without further act, (A) the Replaced Airframe shall thereupon be
released from and be free and clear of the Lien of this Agreement and shall no
longer be deemed Collateral and (B) such Additional Airframe shall become
subject to this Agreement as an Airframe and as Collateral.
(q) Substitution of Engines.
(i) Each Grantor shall have the right at its option at any time, on at least five (5) days’
prior notice to the Collateral Agent and the Appropriate Party, at such Grantor’s
sole cost and expense, to substitute an Additional Engine to replace any Engine
(such replaced Engine, the “Replaced Engine”) (including, if so elected by such
Grantor, in satisfaction of any applicable obligations in relation to an Event of Loss
with respect to such Engine) in accordance with the requirements of Section
6.17(b)(iii) of the Loan Agreement and Section 4(o) of this Annex. Such
Additional Engine shall be an engine manufactured by the Manufacturer of the
Replaced Engine that is the same model as the Replaced Engine, or an improved
model, and that has a value and utility (without regard to hours and cycles
remaining until overhaul) at least equal to the Replaced Engine (assuming that the
Replaced Engine had been maintained in accordance with this Agreement (and, as
applicable, had not suffered such Event of Loss), which value and utility shall be
established by an Appraisal delivered pursuant to the terms of this Agreement;
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provided, that, until an Appraisal is obtained for such Additional Engine, it shall
be deemed to have the same Appraised Value of zero).
(ii) Each Grantor’s right to make a substitution hereunder shall be subject to the
delivery of (A) a written request from the applicable Grantor, requesting release of
the Replaced Engine from Collateral and specifically describing the Replaced
Engine and (B) a certificate of a Responsible Officer of such Grantor providing:
1. a description of the Replaced Engine which shall be identified by
Manufacturer’s name and serial number;
2. a description of the Additional Engine (including the Manufacturer’s name
and serial number) to be received as consideration for the Replaced Engine;
3. that on the date of the Mortgage Supplement relating to the Additional
Engine, such Grantor will be the legal owner of such Additional Engine
free and clear of all Liens (other than the Lien under this Agreement and
Permitted Liens);
4. that the insurance required by this Agreement is in full force and effect
with respect to such Additional Engine and all premiums then due thereon
have been paid in full;
5. that no Event of Default has occurred and is continuing or would result
from the making and granting of the request for release and the addition
of such Additional Engine; and
6. that the conditions set forth in Section 6.17(b)(iii) of the Loan Agreement
and Section 4(o) of this Annex have been satisfied after giving effect to
such substitution (it being understood and agreed, for the avoidance of
doubt, that any reference in Section 6.17(b)(iii) of the Loan Agreement to
existing Additional Collateral shall include such Replaced Engine).
(iii) Immediately upon the satisfaction of conditions set forth in this Section 4(q) of this
Annex and without further act, (A) the Replaced Engine shall thereupon be
released from and be free and clear of the Lien of this Agreement and shall no
longer be deemed Collateral and (B) such Additional Engine shall become subject
to this Agreement as an Engine and as Collateral.
Insurance.
(r) Each applicable Grantor shall furnish to the Collateral Agent such evidence of compliance
with the insurance provisions of this Annex with respect to Airframe and Engines
constituting Collateral.
(s) Each Grantor shall ensure that at all times the Collateral Agent, for the benefit of the
Secured Parties, shall be named as an additional insured and lender loss payee with respect
to the insurance policies referenced in Appendix I with respect to any Aircraft and Engine
Assets constituting Collateral and take any other steps required under this Annex.
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(t) Obligation to Insure. Each Grantor (as applicable) shall comply with, or cause to be
complied with, each of the provisions of Appendix I to this Annex, which provisions are
hereby incorporated by this reference as if set forth in full herein.
(u) Insurance for Own Account. Nothing in this Annex shall limit or prohibit (i) any Grantor’s
from maintaining the policies of insurance required under Appendix I of this Annex with
higher coverage than those specified in Appendix I, or (ii) the Collateral Agent or any other
Additional Insured from obtaining, upon the occurrence of an Event of Default, at the
Grantors’ expense, insurance for its own account (and any proceeds payable under such
separate insurance shall be payable as provided in the policy relating thereto); provided,
however, that no insurance may be obtained or maintained that would limit or otherwise
adversely affect the coverage of any insurance required to be obtained or maintained by
any Grantor pursuant to this Annex and Appendix I of this Annex.
(v) Application of Insurance Proceeds. As between each applicable Grantor and the Collateral
Agent, all insurance proceeds received as a result of the occurrence of an Event of Loss
with respect to any Airframe or Engine constituting Collateral at the time of such receipt
shall be applied in accordance with Section 2.06(b) of the Loan Agreement.
5. Defaults and Remedies. If any Event of Default shall have occurred and be continuing, without
limiting the generality of Section 8.1 of this Agreement, the Collateral Agent may:
(a) Exercise all of the rights and remedies of a secured party under the UCC and the Cape
Town Treaty.
6. Release of Collateral. Each Grantor and the Collateral Agent agree that
(a) Upon satisfaction and completion, as determined by the Appropriate Party, of the
conditions for release of any Aircraft and Engine Assets constituting Collateral from the
Lien granted hereby in accordance with to Section 6.17(b)(iii) of the Loan Agreement such
Replaced Airframe or Replaced Engine, as the case may be, shall be released from the Lien
granted under this Agreement, and the Collateral Agent will thereupon execute and deliver
to the applicable Grantor, at such Grantor’s sole expense, all appropriate UCC termination
statements and other documents that such Grantor shall reasonably request to evidence
such release and shall take necessary action to permit such Grantor to register with the
International Registry the discharge of the International Interest created by this Agreement
in such released Aircraft and Engine Assets, Replaced Airframe or Replaced Engine. The
Collateral Agent shall have no liability whatsoever to any Secured Party as a result of its
execution of any such documentation with respect to any such release. The release of an
Airframe or Engine from the Lien of this Agreement shall have effect without further action
of releasing all other Collateral, including the related Airframe Documents and Engine
Documents, respectively, relating to such released Airframe or Engine.
7. Miscellaneous. Each Grantor and the Collateral Agent agree that:
(a) The terms of this Annex shall be deemed incorporated into and part of this Agreement.
(b) The terms of this Annex are cumulative in nature and shall not limit the applicability or
scope of the other terms of this Agreement.
(c) It is the intention of the parties that the Appropriate Party shall be entitled to the benefits
of Section 1110 with respect to the right to take possession of the Airframes and Engines
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as provided herein in the event of a case under Chapter 11 of the Bankruptcy Code in which
the Grantors are debtor, and in any instance where more than one construction is possible
of the terms and conditions hereof or any other pertinent Loan Document, each such party
agrees that a construction which would preserve such benefits shall control over any
construction which would not preserve such benefits.
(d) The applicable Grantor shall deliver to the Collateral Agent a certificate from a Responsible
Officer of such Grantor in the form set forth in Exhibit B hereto, dated as of the Closing
Date (and, in the case of such Grantor’s execution and delivery of a Mortgage Supplement
or Pledge Supplement, the date thereof) which shall contain representations that such
Grantor (i) is an “air carrier” within the meaning of Section 40102 of Title 49 and holds a
certificate under Section 40102 of Title 49, (ii) has exclusive title in all Aircraft and Engine
Assets constituting Collateral, and (iii) each Airframe constituting Collateral has been duly
registered in the name of the Grantors under Chapter 441 of the Transportation Code and
an airworthiness certificate has been duly issued under Chapter 447 of the Transportation
Code with respect to each Airframe constituting Collateral.
8. Terms. The following capitalized terms used in this Annex shall have the following meanings:
(a) “Additional Insureds” is defined in Appendix I to this Annex.
(b) “Aircraft” shall mean, in the case of any Engine, the Airframe or airframe on which such
Engine is then installed (if any).
(c) “Aircraft and Engine Assets” shall mean:
(i) Each Airframe as the same is now and will hereafter be constituted, together with
(a) all Parts of whatever nature, which are from time to time included within the
definition of “Airframe”, including all substitutions, renewals and replacements of
and additions, improvements, accessions and accumulations to the Airframes
(other than additions, improvements, accessions and accumulations which
constitute appliances, parts, instruments, appurtenances, accessories, furnishings
or other equipment excluded from the definition of Parts) and (b) all Airframe
Documents owned by, or in the possession of, the applicable Grantor;
(ii) Each Engine as the same is now and will hereafter be constituted, and whether or
not any such Engine shall be installed on or attached to an Airframe or any other
airframe, together with (a) all Parts of whatever nature, which are from time to
time included within the definition of “Engines”, including all substitutions,
renewals and replacements of and additions, improvements, accessions and
accumulations to the Engines (other than additions, improvements, accessions and
accumulations which constitute appliances, parts, instruments, appurtenances,
accessories, furnishings or other equipment excluded from the definition of Parts)
and (b) all Engine Documents owned by, or in the possession of, the applicable
Grantor;
(iii) Any continuing rights of any Grantor in respect of any warranty, indemnity or
agreement, express or implied, as to title, materials, workmanship, design or patent
infringement with respect to such Airframes or Engines (reserving in each case to
the Grantors, however, all of the Grantors’ other rights and interest in and to such
warranty, indemnity or agreement) together in each case under this clause with all
rights, powers, privileges, options and other benefits of such Grantor thereunder
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(subject to such reservations) with respect to such Airframes or Engines, including
the right to make all waivers and agreements, to give and receive all notices and
other instruments or communications, to take such action upon the occurrence of
a default thereunder, including the commencement, conduct and consummation of
legal, administrative or other proceedings, as shall be permitted thereby or by law,
and to do any and all other things which such Grantor is or may be entitled to do
thereunder (subject to such reservations);
(iv) All General Intangibles which are owned by such Grantor (including the General
Intangibles described on Schedule 2.1) relating to Aircraft and Engine Assets
described in the foregoing; and
(v) All Insurance with respect to any of the foregoing.
(d) [Reserved].
(e) “Airframe” means (a) each airframe that is identified by Manufacturer model, United
States registration number and Manufacturer’s serial number in Schedule 2.1 or in the
initial Mortgage Supplement or any subsequent Mortgage Supplement or any subsequent
Pledge Supplement, in each case, executed and delivered by any Grantor and (b) any and
all Parts incorporated or installed in or attached or appurtenant to such airframe, and any
and all Parts removed from such airframe, unless the Lien of this Agreement shall not be
applicable to such Parts in accordance with Section 4 of this Annex, but excluding any such
airframe that has subsequently been released from the Lien of this Agreement pursuant to
the Loan Agreement.
(f) “Airframe Documents” means, with respect to any Airframe, all technical data, manuals
and log books, and all inspection, modification and overhaul records and other service,
repair, maintenance and technical records that are required by the FAA (or the relevant
Aviation Authority), to be maintained with respect to such Airframe, and such term shall
include all additions, renewals, revisions and replacements of any such materials from time
to time made, or required to be made, by the FAA (or other Aviation Authority) regulations,
and in each case in whatever form and by whatever means or medium (including any
microfiche, microfilm, paper or computer disk) such materials may be maintained or
retained by or on behalf of the applicable Grantor; provided that such term shall not include
manuals and data relating to aircraft generally of the same fleet type as the Airframe as
opposed to the Airframe specifically.
(g) “Aviation Authority” means, in the case of any Aircraft or Airframe, the FAA or, if such
Aircraft or Airframe is permitted to be, and is, registered with any other Governmental
Authority, such other Governmental Authority.
(h) [Reserved].
(i) [Reserved].
(j) “CRAF” means the Civil Reserve Air Fleet Program established pursuant to 10 U.S.C.
Section 9511-13 or any similar substitute program.
(k) “Engine” means (a) each of the engines identified by Manufacturer, model and
Manufacturer’s serial number in Schedule 2.1 or in the initial Mortgage Supplement or any
subsequent Mortgage Supplement or any subsequent Pledge Supplement, in each case,
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executed and delivered by any Grantor and whether or not from time to time installed on
an Airframe or installed on any other airframe, and (b) any and all Parts incorporated or
installed in or attached or appurtenant to such engine, and any and all Parts removed from
such engine, unless the Lien created hereunder shall not apply to such Parts in accordance
with Section 4 of this Annex, but excluding any such engine that has subsequently been
released from the Lien in accordance with the terms of this Agreement.
(l) “Engine Documents” means, with respect to any Engine, all technical data, manuals and
log books, and all inspection, modification and overhaul records and other service, repair,
maintenance and technical records that are required by the FAA (or the relevant Aviation
Authority), to be maintained with respect to such Engine, and such term shall include all
additions, renewals, revisions and replacements of any such materials from time to time
made, or required to be made, by the FAA (or other Aviation Authority) regulations, and
in each case in whatever form and by whatever means or medium (including any microfiche,
microfilm, paper or computer disk) such materials may be maintained or retained by or on
behalf of any Grantor; provided that such term shall not include manuals and data relating
to engines generally of the same type as the Engine as opposed to the Engine specifically.
(m) “Event of Loss” means with respect to any Airframe or Engine, any of the following
circumstances, conditions or events with respect to such property, for any reason
whatsoever:
(i) the destruction of such property, damage to such property beyond economic repair
or rendition of such property permanently unfit for normal use by the applicable
Grantor;
(ii) the actual or constructive total loss of such property or any damage to such property,
or requisition of title or use of such property, which results in an insurance
settlement with respect to such property on the basis of a total loss or constructive
or compromised total loss;
(iii) any theft, hijacking or disappearance of such property for a period of one hundred
and eighty (180) consecutive days or more; or
(iv) any seizure, condemnation, confiscation, taking or requisition (including loss of
title) of such property by any Governmental Authority or purported Governmental
Authority for a period exceeding one hundred and eighty (180) consecutive days.
(n) “FAA Filed Document” shall mean the Mortgage Supplement executed by a Grantor.
(o) “International Interest” shall mean an “international interest” as defined in the Cape
Town Treaty.
(p) [Reserved].
(q) “Mandatory Alteration” shall have the meaning given in this Annex.
(r) “Manufacturer” shall mean, with respect to any Airframe, Engine or Part, the
manufacturer thereof.
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(s) “Mortgage Supplement” shall mean an FAA Mortgage, substantially in the form of
Exhibit A to this Annex, with appropriate modifications to reflect the purpose for which it
is being used in form and substance satisfactory to the Appropriate Party.
(t) “Obsolete Part” shall have the meaning given in Section 4(j) of this Annex.
(u) “Optional Alteration” shall have the meaning given in Section 4(j) of this Annex.
(v) “Parts” means all appliances, parts, components, instruments, appurtenances, accessories,
furnishings, seats and other equipment of whatever nature (other than Engines or engines),
that may from time to time be installed or incorporated in or attached or appurtenant to any
Airframe or any Engine or removed therefrom unless the Lien created under this
Agreement shall not be applicable to such Parts in accordance with Section 4 of this Annex.
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Appendix I to Annex 3B
APPENDIX I
INSURANCE
A. Liability Insurance.
1. Except as provided in Section A.2 below, the applicable Grantor will carry at all times, at
no expense to the Collateral Agent or any Secured Party, commercial airline legal liability
insurance (including any passenger liability, property damage, baggage liability, cargo and
mail liability, hangarkeeper’s liability and contractual liability insurance) with respect to
each Airframe and Engine (including, as applicable, in respect of an applicable Aircraft or
airframe on which an Engine is then installed) which is (i) in an amount not less than the
amount of commercial airline legal liability insurance from time to time applicable to
aircraft (and airframes and engines) owned or leased and operated by the applicable
Grantor of the same type and operating on similar routes as such aircraft, airframe or engine
and (ii) of the type and covering the same risks as from time to time applicable to aircraft
operated by the applicable Grantor of the same type as such aircraft, airframe or engine;
and (iii) maintained in effect with insurers of nationally or internationally recognized
responsibility (such insurers being referred to herein as “Approved Insurers”).
2. During any period that an Aircraft, Airframe or Engine is on the ground and not in
operation, the applicable Grantor may carry, in lieu of the insurance required by
Section A.1 above, insurance otherwise conforming with the provisions of said Section A.1
except that (i) the amounts of coverage shall not be required to exceed the amounts of
liability and property damage insurance from time to time applicable to aircraft owned or
operated by the applicable Grantor of the same type as such Aircraft, Airframe or Engine
which is on the ground and not in operation and (ii) the scope of the risks covered and the
type of insurance shall be the same as from time to time shall be applicable to aircraft,
airframes or engines, as applicable, owned or operated by the applicable Grantor of the
same type which are on the ground and not in operation by the applicable Grantor on the
ground, not in operation, and stored or hangared.
B. Hull Insurance.
1. Except as provided in Section B.2 below, the applicable Grantor will carry, at no expense
to the Collateral Agent or any Secured Party, with Approved Insurers “all-risk” aircraft
hull insurance covering the Airframes and Engines (including when the Engine is not
installed on any airframe) which is of the type as from time to time applicable to airframes
and engines owned by the applicable Grantor of the same type as such Airframe or Engine
for an amount denominated in United States Dollars not less than, for each Aircraft,
Airframe or Engine, 100% of the Appraised Value (which, as applicable based on the
relevant Appraisal, may at the applicable Grantor’s option be a combined value for an
Aircraft comprised of its Airframe and associated Engines, or separate such values for any
Airframe or Engine) as set forth in the most recent Appraisal delivered pursuant to the Loan
Agreement before the date (or renewal date) of the applicable insurance policies (the
“Agreed Value”), or, prior to the delivery of the initial Appraisal covering such Aircraft,
Airframe or Engine, the applicable “Agreed Value” set forth in the initial insurance
certificate delivered with respect thereto, but in no event, in all cases, less than applicable
replacement value (as reasonably determined by the applicable Grantor and its insurers);
and in each case such insurance shall include all-risk property damage insurance covering
Engines temporarily removed from an Aircraft and Parts while temporarily removed from
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any Airframe or Engine, in each case and not replaced by similar components for not less
than the replacement value thereof which are of the type as from time to time applicable to
components owned by the applicable Grantor of the same type as such Engine and Parts
for an amount denominated in United States Dollars (which replacement value shall, for
an Engine with a separate Agreed Value pursuant to the foregoing, be not less than such
Agreed Value).
All losses will be adjusted by the applicable Grantor with the insurers; provided, however,
that during a period when an Event of Default shall have occurred and be continuing, the
applicable Grantor shall not agree to any such adjustment without the consent of the
Appropriate Party.
Any policies of insurance carried in accordance with this Section B.1 or Section C covering
any Aircraft, Airframe or Engine and any policies taken out in substitution or replacement
for any such policies shall provide that insurance proceeds under such policies shall be
payable directly to the Collateral Agent for prompt deposit into a Collateral Proceeds
Account if such insurance proceeds are in respect of an Event of Loss. The Collateral
Agent shall be entitled to notify an insurer that such insurance proceeds shall be paid
directly to the Collateral Agent as provided in the immediately preceding sentence.
For the avoidance of doubt, this Section B.1 shall not prohibit standard deductibles or
industry standard self-insured retentions for hull insurance carried by the applicable
Grantor.
2. During any period that an Aircraft, Airframe or Engine is on the ground and not in
operation, the applicable Grantor may carry, in lieu of the insurance required by
Section B.1 above, insurance otherwise conforming with the provisions of said Section B.1
except that the scope of the risks and the type of insurance shall be the same as from time
to time applicable to aircraft owned by the applicable Grantor of the same type as such
Aircraft, Airframe or Engine similarly on the ground and not in operation, provided that
the applicable Grantor shall maintain insurance against risk of loss or damage to such
Aircraft, Airframe or Engine in an amount at least equal to the Agreed Value for such
Aircraft, Airframe or Engine during such period that it is on the ground and not in operation.
C. War-Risk, Hijacking and Allied Perils Insurance.
If the applicable Grantor shall at any time operate or propose to operate the Aircraft, Airframe or any Engine
(i) in any area of recognized hostilities or (ii) on international routes and war-risk, hijacking or allied perils
insurance is maintained by the applicable Grantor with respect to other aircraft owned or operated by the
applicable Grantor on such routes or in such areas, the applicable Grantor shall maintain war-risk, hijacking
and related perils insurance of substantially the same type carried by major United States commercial air
carriers operating the same or comparable models of aircraft on similar routes or in such areas and in no
event in an amount less than the Agreed Value.
D. General Provisions.
Any policies of insurance carried in accordance with Sections A, B and C, including any policies taken out
in substitution or replacement for such policies:
in the case of Section A, shall name the Collateral Agent and each other Secured Party (collectively,
the “Additional Insureds”), as an additional insured, as its interests may appear;
shall apply worldwide subject to standard territorial restrictions or limitations applicable in the
Lloyd’s of London Insurance Market at the time the policy is issued (except only in the case of war,
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hijacking and related perils insurance required under Section C, which shall apply to the fullest
extent available in the international insurance market);
shall provide that, in respect of the coverage of the Additional Insureds in such policies, the
insurance shall not be invalidated by any act or omission (including misrepresentation and
nondisclosure) by the applicable Grantor which results in a breach of any term, condition or
warranty of the polices, provided that the Additional Insured so protected has not caused,
contributed to or knowingly condoned said act or omission. However, the coverage afforded the
Additional Insured will not apply in the event of exhaustion of policy limits or to losses or claims
arising from perils specifically excluded from coverage under the policies;
shall provide that, if the insurers cancel such insurance for any reason whatsoever, or if any material
change is made in the insurance policies by insurers which adversely affects the interest of any of
the Additional Insureds, such cancellation or change shall not be effective as to the Additional
Insureds for thirty (30) days (seven (7) days in the case of war risk, hijacking and allied perils
insurance and ten (10) days in the case of nonpayment of premium) after receipt by the Additional
Insureds of written notice by such insurers of such cancellation or change, provided that, if any
notice period specified above is not reasonably obtainable, such policies shall provide for as long
a period of prior notice as shall then be reasonably obtainable;
shall waive any rights of setoff (including for unpaid premiums), recoupment, counterclaim or other
deduction, whether by attachment or otherwise, against each Additional Insured;
shall waive any right of subrogation against any Additional Insured;
shall be primary without right of contribution from any other insurance that may be available to
any Additional Insured;
shall provide that all of the liability insurance provisions thereof, except the limits of liability, shall
operate in all respects as if a separate policy had been issued covering each party insured thereunder;
shall provide that none of the Additional Insureds shall be liable for any insurance premium; and
shall contain a 50/50 Clause per Lloyd’s Aviation Underwriters’ Association Standard Policy Form
AVS 103 or U.S. market equivalent.
E. Reports and Certificates; Other Information.
On or prior to the Closing Date or on the date of delivery of any Pledge Supplement with respect to each
Airframe and Engine constituting Collateral, and on or prior to each renewal date of the insurance policies
required hereunder, the applicable Grantor will furnish or cause to be furnished to the Collateral Agent
insurance certificates describing in reasonable detail the commercial insurance maintained by the applicable
Grantor hereunder and a report, signed by the applicable Grantor’s regularly retained independent insurance
broker (the “Insurance Broker”), stating the opinion of such Insurance Broker that (a) all premiums in
connection with the commercial insurance then due have been paid and (b) such insurance complies with
the terms of this Appendix I. To the extent such agreement is reasonably obtainable the applicable Grantor
will also cause the Insurance Broker to agree to advise the Secured Parties in writing of any default in the
payment of any premium and of any other act or omission on the part of the applicable Grantor of which it
has knowledge and which might invalidate or render unenforceable, in whole or in part, any commercial
insurance on such Airframe or Engine or cause the cancellation or termination of such insurance, and to
advise the Secured Parties in writing at least thirty (30) days (seven (7) days in the case of war-risk and
allied perils coverage and ten (10) days in the case of nonpayment of premium, or such shorter period as
may be available in the international insurance market, as the case may be) prior to the cancellation or
material adverse change of any commercial insurance maintained pursuant to this Appendix I.
F. Right to Pay Premiums.
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The Additional Insureds shall have the rights but not the obligations of an additional named insured. None
of the Collateral Agent or the other Additional Insureds shall have any obligation to pay any premium,
commission, assessment or call due on any such insurance (including reinsurance). Notwithstanding the
foregoing, in the event of cancellation of any insurance due to the nonpayment of premiums, the Collateral
Agent shall have the option, as directed by the Required Lenders, to pay any such premium in respect of
the Aircraft that is due in respect of the coverage pursuant to this Agreement and to maintain such coverage,
as the Collateral Agent or the Appropriate Party may require, until the scheduled expiry date of such
insurance and, in such event, the applicable Grantor shall, upon demand, reimburse the Collateral Agent or
any Lender for amounts so paid by it, together with interest therein at the Default Rate from the date of
payment.
G. Salvage Rights; Other.
All salvage rights to each Airframe and Engine shall remain with the applicable Grantor’s insurers at all
times, and any insurance policies of the Collateral Agent insuring any Airframe or Engine shall provide for
a release to the applicable Grantor of any and all salvage rights in and to any Airframe and Engine.
Annex 3B - 20
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Exhibit A to Annex 3B
[FORM OF MORTGAGE SUPPLEMENT]
FAA MORTGAGE
THIS FAA MORTGAGE dated __________ (herein, this “FAA Mortgage”) made by [_____], a [_____]
(together with its permitted successors and assigns, the “Grantor”), in favor of The Bank of New York
Mellon, as the Collateral Agent (together with its successors and permitted assigns, the “Collateral Agent”).
W I T N E S S E T H:
WHEREAS, the Amended and Restated Horizon Aircraft, Engine and Propeller Pledge and
Security Agreement, dated as of October 30, 2020 and filed for recordation with the FAA Registry pursuant
to and in accordance with the provisions of Section 44107 of the Transportation Code on September 28,
2020 at 8:17 A.M., C.D.T. (herein called the “PSA”; capitalized terms used herein but not defined shall
have the meaning ascribed to them in the PSA), between the Grantors and the Collateral Agent, provides
for the execution and delivery of this FAA Mortgage substantially in the form hereof, which shall
particularly describe certain collateral, and shall specifically mortgage the same to the Collateral Agent;
WHEREAS, the PSA was entered into between the Grantors and the Collateral Agent in order to
secure the Secured Obligations; and
WHEREAS, the Grantors wish to supplement the PSA and to subject the Aircraft and Engine
Assets described in Exhibit A hereto to the security interest created by the PSA by execution and delivery
of this FAA Mortgage, and by reference herein to the terms of the PSA which are hereby made a part hereof,
and this FAA Mortgage is being filed for recordation on the date hereof with the FAA pursuant to Title 49
by the FAA at Oklahoma City, Oklahoma;
NOW, THEREFORE, THIS FAA MORTGAGE , in order to secure the prompt payment and
performance of the Secured Obligations from time to time outstanding and to secure the performance and
observance by the Grantors and each of the other Credit Parties of all the agreements, covenants and
provisions contained in the Loan Documents for the benefit of the Secured Parties, the Grantor[s] has/have
mortgaged, assigned, pledged, hypothecated, transferred, conveyed and granted, and does hereby mortgage,
assign, pledge, hypothecate, transfer, convey and grant, unto the Collateral Agent, for the security and
benefit of the Secured Parties, a continuing first priority security interest in all right, title and interest of the
Grantor[s] in, to and under the following described property:
2. [The Airframes as further described on Exhibit A hereto, in each case together with any and all
Parts of whatever nature, which are from time to time included within the definitions of “Airframe”,
including all substitutions, renewals and replacements of and additions, improvements, accessions
and accumulations to each such Airframe (other than additions, improvements, accessions and
accumulations which constitute appliances, parts, instruments, appurtenances, accessories,
furnishings or other equipment excluded from the definition of Parts) and all Airframe Documents
relating to each such Airframe; and
3. The Engines as further described on Exhibit A hereto, in each case together with any and all Parts
of whatever nature, which are from time to time included within the definition of “Engines”,
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including all substitutions, renewals and replacements of and additions, improvements, accessions
and accumulations to each such Engine (other than additions, improvements, accessions and
accumulations which constitute appliances, parts, instruments, appurtenances, accessories,
furnishings or other equipment excluded from the definition of Parts) and all Engine Documents
relating to each such Engine.]6
TO HAVE AND TO HOLD all and singular the aforesaid property unto the Collateral Agent, its
successors and assigns, for the uses and purposes and subject to the terms and provisions set forth in the
PSA.
This FAA Mortgage shall be governed by, and construed in accordance with, the law of the State of New
York.
This FAA Mortgage shall be construed in every way in accordance to the terms of the PSA and as a part
thereof, and the PSA is hereby incorporated by reference herein and is hereby ratified, approved and
confirmed.
[remainder of page intentionally left blank]
6 Note to Form: Revise as appropriate to reflect what is listed on Exhibit A.
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IN WITNESS WHEREOF, the Grantor[s] has/have caused this FAA Mortgage to be duly executed by
one of its officers, thereunto duly authorized, on the day and year first above written.
[_____]
By:
Name:
Title:
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EXHIBIT A
TO
FAA MORTGAGE
THE AIRFRAMES:
U.S. Registration Airframe Airframe Airframe Serial
No. Owner
No. Manufacturer Model No.
1. [●] [●] [●] [●] [●]
THE ENGINES:
Generic Manufacturer
No. Manufacturer Model Manufacturer’s Serial No.
and Model
[●] [●] [●] [●]
1.
(Each of which Engines having at least 550 rated takeoff horsepower or the equivalent thereof).
Annex 3B - 24
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Exhibit B to Annex 3B
FORM OF OFFICER’S CERTIFICATE
[●], 202[●]
Reference is made to that certain Amended and Restated Horizon Aircraft, Engine and Propellers
Pledge and Security Agreement, dated as of the date hereof (the “Agreement”), between Horizon Air
Industries, Inc., a Washington corporation (the “Company”), as the Grantor, and The Bank of New York
Mellon, as Collateral Agent. Capitalized terms used herein but not otherwise defined shall have the
meanings ascribed to such terms in the Agreement.
The undersigned is a duly authorized Responsible Officer of the Company and I hereby certify, solely in
my capacity as a Responsible Officer of the Company, and not in my individual capacity, on the date hereof
that:
1. The Company is an “air carrier” within the meaning of Section 40102 of Title 49 and holds
a certificate under Section 40102 of Title 49;
2. The Company has exclusive title in all Aircraft and Engine Assets and Propeller Assets listed in
Schedule I attached hereto.
3. The information supplied by the Company with respect to the Aircraft and Engine Assets and the
Propeller Assets included in Schedule I and corresponding information in Schedule 2.1 to the
Agreement is true, correct and complete on and as of the date hereof.
4. Each Aircraft or Airframe listed on Schedule I has been duly registered in the name of the
applicable Company under Chapter 441 of the Transportation Code. An airworthiness certificate
has been duly issued under Chapter 447 of the Transportation Code with respect to each Aircraft
and Airframe listed on Schedule I. Each of the Aircraft and Airframes listed on Schedule I
corresponds to an Aircraft or Airframe specified in Schedule 2.1 to the Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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The undersigned hereby certifies, in his or her capacity as a Responsible Officer of the Company
and not in his or her individual capacity, each and every matter contained herein to be true and correct as
of the date first written above.
[●]
By: _______________________________
Name:
Title:
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Schedule I
4. Aircraft/Airframes
[●] aircraft more specifically described below:
Aircraft Model Aircraft Generic Model Airframe Serial No. U.S. Registration No.
1.
2.
3.
4.
5.
6.
7.
5. Engines
[●] engines as more specifically described below:
Engine Model Engine Generic Model Engine Serial No.
1.
2.
3.
4.
5.
6.
7.
Each of the above described Engines is of 550 or more “rated take-off horsepower” or the equivalent of
such horsepower.
6. Propellers
[●] propellers as more specifically described below:
Propeller Model Propeller Serial No. Propeller Location
1.
2.
3.
4.
5.
6.
7.
Each Propeller is capable of absorbing 750 or more “rated take-off shaft horsepower”.
Annex 3B - 27
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Annex 4 (Slots, Gates and Routes)
Each Grantor and the Collateral Agent hereby agree that the terms of this Annex shall apply with respect
to Collateral consisting of SGR Assets and the Grantors of such Collateral.
1. Perfection Requirement. The following requirements shall be included in the definition of
“Perfection Requirement” and shall constitute an additional “Perfection Requirement”:
(a) [Reserved].
2. Required Filings. Each of the following financing statement, filing, recording or other document
shall be included in the definition of “Required Filing” and shall constitute an additional “Required
Filing”:
(a) UCC financing statements for any SGR Assets constituting Collateral in such filing offices
as the Appropriate Party deems advisable to perfect or protect the security interest set forth
therein.
3. Representations and Warranties. Each Grantor (as applicable) hereby represents and warrants,
on the Closing Date and on the date of each Borrowing (or, in the case of an Additional Grantor or
Additional Collateral, on the date of such Grantor’s execution and delivery of a Pledge Supplement,
or the date such Additional Collateral becomes subject to the security interest created hereby, as
applicable):
(a) Schedule 2.1 sets forth (i) all Route Authorities that constitute Collateral, including the
departing airport and the arriving airport for each such Route Authority, (ii) a true, correct
and complete list of the Slots as of the date hereof (assuming full operation of the Route
Authorities) and (iii) a copy of each certificate or order issued by the United States
Department of Transportation (and any successor thereto) representing all Route
Authorities constituting Collateral as of the date hereof.
(b) There are no filings, registrations or recordings under Title 49 necessary to create, preserve,
protect or perfect the security interests granted by such Grantor to the Collateral Agent for
the benefit of the Secured Parties in respect of the SGR Assets constituting Collateral.
(c) The Grantors hold their Pledged Gate Leaseholds being used for operation of the Scheduled
Services pursuant to authority granted by the applicable Airport Authority or Foreign
Aviation Authority, and there exists no material violation of the regulations, terms,
conditions or limitations of the relevant Airport Authority or Foreign Aviation Authority
applicable to any Pledged Gate Leasehold or any provision of law applicable to the Pledged
Gate Leasehold that gives any applicable Airport Authority or Foreign Aviation Authority
the right to terminate, cancel, withdraw or modify the rights of the Grantors in any such
Pledged Gate Leasehold.
(d) Except for matters that would not reasonably be expected to result in a Material Adverse
Effect or a Collateral Material Adverse Effect, no consent of any other party, and no
consent, authorization, approval, or other action by, and (except in connection with the
perfection of the Lien created in the SGR Assets) no notice to or filing with, any
Governmental Authority or other Person is required either (x) for the pledge by the
Grantors of the SGR Assets constituting Collateral pursuant to this Agreement or for the
execution, delivery or performance of this Agreement or (y) for the exercise by the
Collateral Agent of its rights and remedies in respect of the SGR Assets constituting
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Collateral; provided, however, that (A) the transfer of (other than the grant or pledge of a
security interest in) the Route Authorities is subject to the consent of the DOT pursuant to
Section 41105 of Title 49 and is subject to Presidential review pursuant to Section 41307
of Title 49, (B) the FAA Route Slots, if any, may not be transferred (other than the lease
or trade of, or the grant or pledge of a security interest in, such FAA Route Slots), (C) the
transfer of Gate Leaseholds may be subject to the foregoing actions by Governmental
Authorities, Foreign Aviation Authorities or Airport Authorities, aviation authorities, air
carriers or other lessors and (D) the transfer of Foreign Route Slots may be subject to
approval by the applicable Foreign Aviation Authority or Airport Authorities. Section
4.1(f) and 4.1(h) of this Agreement shall be subject to, and deemed qualified by, the
foregoing.
(e) Pledged Slots. Except for matters that would not reasonably be expected to result in a
Material Adverse Effect or a Collateral Material Adverse Effect, and taking into account
any waivers or other relief granted to the applicable Grantor by the applicable authorities,
each Grantor holds its respective Pledged Slots pursuant to authority granted by the
applicable Governmental Authorities and Foreign Aviation Authorities, and there exists no
material violation by such Grantor of the terms, conditions or limitations of any rule,
regulation or order of the applicable Governmental Authorities or Foreign Aviation
Authorities regarding such Pledged Slots or any provisions of law applicable to such
Pledged Slots that gives any applicable Governmental Authority or Foreign Aviation
Authority the right to modify in any material respect, terminate, cancel or withdraw the
rights of such Grantor in any such Pledged Slots to the extent such Governmental Authority
or Foreign Aviation Authority would not have such right in the absence of such violation.
(f) Pledged Route Authorities. Each Grantor holds or co-holds the requisite authority to
operate over such Grantor’s Pledged Route Authorities pursuant to Title 49 and all rules
and regulations promulgated thereunder, subject only to the regulations of the DOT, the
FAA and the applicable Foreign Aviation Authorities and applicable treaties and bilateral
and multilateral air transportation agreements, and there exists no material violation by
such Grantor of any certificate or order issued by the DOT authorizing such Grantor to
operate over such Pledged Route Authorities, the rules and regulations of any applicable
Foreign Aviation Authority with respect to such Pledged Route Authorities or the
provisions of Title 49 and rules and regulations promulgated thereunder applicable to such
Pledged Route Authorities that gives the FAA, DOT or any applicable Foreign Aviation
Authority the right to modify in any material respect, terminate, cancel or withdraw the
rights of such Grantor in any such Pledged Route Authorities.
4. Covenants. Each Grantor (as applicable) covenants and agrees that:
(a) It shall promptly notify the Collateral Agent (which notice shall constitute notice required
under Section 5.03 of the Loan Agreement) notice or knowledge of any violation of any
applicable Laws or agreements with respect to the SGR Assets constituting Collateral or
such Grantor’s use thereof that could result in, or could reasonably be expected to result
in, a Material Adverse Effect or a Collateral Material Adverse Effect.
(b) [Reserved].
(c) [Reserved].
(d) It will at all times (i) possess and maintain all certificates, exemptions, licenses, permits,
designations, authorizations, frequencies and consents required by the FAA, the DOT or
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any applicable Foreign Aviation Authority or Airport Authority or any other Governmental
Authority that are material to the operation of the Pledged Route Authorities and Pledged
Slots operated by it, and to the conduct of its business and operations as currently
conducted, in each case, to the extent necessary for the Grantors’ operation of the
Scheduled Services, (ii) maintain Pledged Gate Leaseholds sufficient to ensure its ability
to operate the Scheduled Services and to preserve its right in and to its Pledged Slots, (iii)
utilize its Pledged Slots in a manner consistent with applicable regulations, rules, foreign
law and contracts in order to preserve its right to hold and use its Pledged Slots, taking into
account any waivers or other relief granted to it by the FAA, the DOT, any Foreign
Aviation Authority or any Airport Authority, (iv) cause to be done all things reasonably
necessary to preserve and keep in full force and effect its rights in and to use its Pledged
Slots, including, without limitation, satisfying any applicable Use or Lose Rule, taking into
account any waivers or other relief granted to it by the FAA, the DOT, any Foreign
Aviation Authority or any Airport Authority, (v) utilize its Pledged Route Authorities in a
manner consistent with Title 49, applicable foreign law, the applicable rules and
regulations of the FAA, the DOT and any applicable Foreign Aviation Authorities, and any
applicable treaty in order to preserve its rights to operate the Scheduled Services and (vi)
cause to be done all things reasonably necessary to preserve and keep in full force and
effect its authority to operate the Scheduled Services, except in each case, to the extent that
any failure to do so would not reasonably be expected to result in a Material Adverse Effect
or a Collateral Material Adverse Effect. Without in any way limiting the foregoing, each
Grantor will promptly take all such steps as may be necessary to obtain renewal of its
Pledged Route Authorities from the DOT and any applicable Foreign Aviation Authorities,
in each case to the extent necessary to operate the Scheduled Services, within a reasonable
time prior to the expiration of such authority (as prescribed by law or regulation, if any),
and promptly notify the Appropriate Party if it has been informed that such authority will
not be renewed, except to the extent that any failure to take such steps would not reasonably
be expected to result in a Material Adverse Effect or a Collateral Material Adverse Effect.
Each Grantor will 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 its rights in its Pledged Route Authorities and have access
to its Pledged Gate Leaseholds in each case to the extent necessary to operate the Scheduled
Services.
(e) It will not Dispose of any SGR Assets constituting Collateral except for:
i. Dispositions permitted by Section 6.04(b) or (c) of the Loan Agreement;
ii. exchanges of Slots in the ordinary course of business that in Grantor’s reasonable
judgment are of reasonably equivalent value (so long as the Slots received in such
exchange are concurrently pledged under this Agreement and constitute Eligible
Collateral, and such exchange would not result in a Material Adverse Effect or a
Collateral Material Adverse Effect);
iii. the termination of leases or subleases or airport use or license agreements in the
ordinary course of business to the extent such terminations do not have a Material
Adverse Effect or a Collateral Material Adverse Effect;
iv. abandonment or return of Slots and Gate Leaseholds (A) required by the DOT, the
FAA, Airport Authorities, Foreign Aviation Authorities or other Governmental
Authority or (B) in the ordinary course of business consistent with past practices
Annex 4 - 3
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and does not materially and adversely affect the business of the Parent and its
Restricted Subsidiaries, taken as a whole and, in each case, which would not
reasonably be expected to result in a Material Adverse Effect or a Collateral
Material Adverse Effect; and
v. any leasing, licensing and use agreements with respect to assets and properties that
constitute Slots or Gate Leaseholds in the ordinary course of business and swap
agreements or similar arrangements with respect to Slots in the ordinary course of
business and, in each case, which leasing, licensing and use agreement or swap
agreement or similar agreement (A)(i)(x) has a term of one year or less, or does
not extend beyond two comparable IATA traffic seasons (and contains no option
to extend beyond either of such periods), or (y) if longer (including any option
period), is expressly subject and subordinate to the rights (including remedies) of
the Collateral Agent under this Agreement on terms reasonably satisfactory to the
Collateral Agent (acting at the direction of the Appropriate Party), or (ii) is for
purposes of operations by another airline operating under a brand associated with
the applicable Grantor or otherwise operating routes at such Grantor’s direction
under a code share agreement, capacity purchase agreement, pro-rate agreement or
similar arrangement between such airline and such Grantor, and (B) in each case,
would not reasonably be expected to result in a Material Adverse Effect or a
Collateral Material Adverse Effect; provided that, at any time, the aggregate of the
most recently Appraised Value of such Slots and Gate Leaseholds subject to any
leasing, licensing and use agreements at such time and of such Slots subject to any
swap agreements or similar arrangements at such time, in each case permitted
under clause (A)(i)(y) above, is no greater than the lesser of (x) $[•] or (y) [•]% of
the most recently Appraised Value of the Collateral consisting of SGR Assets; and
provided further that the applicable Grantor’s rights under any such leasing,
licensing, use, swap or similar agreement or arrangement shall constitute Collateral
hereunder (but no representations or covenants shall apply in respect thereof).
(f) Upon the request of the Collateral Agent (acting at the direction of the Appropriate Party),
it shall use commercially reasonable efforts to deliver, in respect of each of the FAA Slots,
undated slot transfer documents in form and substance reasonably satisfactory to the
Collateral Agent (acting at the direction of the Appropriate Party) (considering any
requirements by the DOT, the FAA and/or Airport Authority), executed in blank to be held
in escrow by the Collateral Agent.
5. Defaults and Remedies.
(a) If any Event of Default shall have occurred and be continuing, without limiting the
generality of Section 8.1 of this Agreement, the Collateral Agent may:
i. declare the entire right, title and interest of any Grantor in, to and under the SGR Assets
constituting Collateral vested in the Collateral Agent, in which event such right, title
and interest shall immediately vest in the Collateral Agent. Such Grantor agrees to
execute and deliver such deeds of conveyance, assignments and other documents or
instruments (including any notices or applications to the DOT, the FAA, applicable
Foreign Aviation Authorities, Governmental Authorities or Airport Authorities having
jurisdiction over any such SGR Assets constituting Collateral or the use thereof)
necessary or advisable to effectuate the transfer of such SGR Assets constituting
Collateral (and as requested by the Appropriate Party or the Collateral Agent), together
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with copies of the certificates or orders issued by the DOT and the Foreign Aviation
Authorities representing the same and any other rights of such Grantor with respect
thereto, to any designee or designees selected by the Collateral Agent and approved by
all necessary Governmental Authorities, Foreign Aviation Authorities and Airport
Authorities (provided that if any of the foregoing is not permitted under the Law or by
the DOT or applicable Governmental Authority, Foreign Aviation Authority or Airport
Authority, the Collateral Agent for the benefit of the Secured Parties shall nevertheless
continue to have all of such Grantor’s right, title and interest in, to and under all of the
Proceeds (of any kind) received or to be received by such Grantor upon the use, transfer
or other disposition of such SGR Assets constituting Collateral); it being understood
that each Grantor’s obligation to deliver such SGR Assets constituting Collateral and
such documents and instruments with respect thereto, subject to the aforesaid
limitations, is of the essence of this Agreement;
ii. require any Grantor, and each Grantor hereby agrees and covenants to, upon the
occurrence and during the continuance of an Event of Default, use its reasonable best
efforts to obtain all approvals and consents that would be required to transfer or assign
all SGR Assets constituting Collateral as the Collateral Agent, acting on behalf of the
Secured Parties, may designate; and
iii. use the blank, undated, signed Slot transfer documents held in escrow (in form and
substance reasonably satisfactory to the Collateral Agent (acting at the direction of the
Appropriate Party) (considering any requirements by the DOT, the FAA and/or Airport
Authority)) from time to time as a means to effectuate a transfer as contemplated
herein.
(b) Notwithstanding any other provision of this Agreement, subject to Section 5(a) of this
Annex 4, if any Transfer Restriction applies to the transfer or assignment of (but not the
creation of a security interest in) any of the right, title or interest referred to SGR Assets
constituting Collateral, any provision of this Agreement permitting the Collateral Agent to
cause the Grantors to transfer or assign to it or any other person any of the Grantors’ right,
title or interest in any such SGR Assets constituting 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.
6. Release of Collateral. Each Grantor and the Collateral Agent agree that:
(a) For the avoidance of doubt, (i) if any Slot ceases to be included in the SGR Assets
constituting Collateral because it ceases to be actually utilized in connection with the
Scheduled Services or any Foreign Gate Leasehold ceases to be included in the SGR Assets
constituting Collateral because it ceases to be used for servicing the Scheduled Services
relating to the airport at which such Foreign Gate Leasehold is located, such Slot or Foreign
Gate Leasehold shall be automatically released from the Lien of this Agreement and
(ii) subject to Section 5(b) of this Annex, if any FAA Slot or Foreign Slot now held or
hereafter acquired by any Grantor becomes an FAA Route Slot or a Foreign Route Slot,
respectively, or any right, title, privilege, interest and authority now held or hereafter
acquired by such Grantor in connection with the right to use or occupy space in an airport
terminal becomes a Foreign Gate Leasehold, such FAA Slot, Foreign Slot or right, title,
privilege, interest and authority shall be automatically subject to the Lien of this Security
Agreement.
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(b) Upon satisfaction and completion, as determined by the Appropriate Party, of the
conditions for release of any SGR Assets constituting Collateral from the Lien granted
hereby in accordance with Section 6.17(b)(iii) of the Loan Agreement, such SGR Assets
shall be released from the Lien granted under this Agreement, and the Collateral Agent will
thereupon execute and deliver to the applicable Grantor, at such Grantor’s sole expense,
all appropriate UCC termination statements and other documents that such Grantor shall
reasonably request to evidence such release. The Collateral Agent shall have no liability
whatsoever to any Secured Party as a result of its execution of any such documentation
with respect to any such release.
(c) In connection with any release of any SGR Assets constituting Collateral pursuant to this
Section 6, the Collateral Agent will execute and deliver to the applicable Grantor, at such
Grantor’s sole expense, all appropriate UCC termination statements and other documents
that such Grantor shall reasonably request to evidence such release. The Collateral Agent
shall have no liability whatsoever to any Secured Party as a result of any release of SGR
Assets constituting Collateral by it as permitted by this Section 6.
7. Miscellaneous. Each Grantor and the Collateral Agent agree that:
(a) The terms of this Annex shall be deemed incorporated into and part of this Agreement.
(b) The terms of this Annex are cumulative in nature and shall not limit the applicability or
scope of the other terms of this Agreement.
(c) It is understood and agreed that, notwithstanding anything to the contrary in this Agreement
(including Section 5.2(a)), Schedule 2.1(c) (Slots) is intended to be descriptive of the Slots
listed on such Schedule as of the date hereof and shall not be construed as limiting in any
way the SGR Assets constituting Collateral subject to this Agreement, except as may
otherwise be expressly set forth herein.
(d) Any amendment or modification of the Scheduled Services in Schedule 2.1 identified as of
a certain date shall be in form and content similar to the information provided for such
Collateral in Schedule 2.1 on the Closing Date.
8. Terms. The following capitalized terms used in this Annex shall have the following meanings:
(a) “Airport Authority” means any city or any public or private board or other body or
organization chartered or otherwise established for the purpose of administering, operating
or managing an airport or related facilities.
(b) “Collateral Material Adverse Effect” means a material adverse effect on the Appraised
Value (as defined in the Loan Agreement) of the Collateral consisting of SGR Assets, taken
as a whole.
(c) “Domestic Airport” means any international airport located in the United States.
(d) “Domestic Gate Leasehold” means, at any time of determination, all of the right, title,
privilege, interest and authority of a Grantor to use or occupy space in an airport terminal
at any Domestic Airport, in each case, to the extent necessary at the relevant time of
determination for servicing the scheduled air carrier service authorized by a Route
Authority relating to such airport.
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(e) “Excluded Asset” means, solely for purposes of this Annex and any SGR Assets
constituting Collateral, in lieu of the same term in the Agreement, (i) any asset of a Grantor,
if, to the extent and only for so long as the grant of a Lien on such asset to secure the
Secured Obligations is prohibited or otherwise restricted by, or requires additional action
or consent (that has not been taken or obtained) under, any agreement (unless the
counterparty of such agreement is an Affiliate of any Grantor) or applicable Law, or entitles
any Governmental Authority or third party to terminate or suspend any right, title or interest
in any such asset (or the Grantors’ interest in any agreement or license related thereto) in
each case in this clause (i) except (A) to the extent that the UCC or any other applicable
Law provides that such grant of Lien is effective irrespective of any prohibitions to such
grant or (B) so long as any such agreement was not entered into for the purpose of
prohibiting or restricting such grant of Lien and (ii) any lease, license, contract, property
right or agreement to which any Grantor is a party to the extent any such lease, license,
contract, property right or agreement by its terms or applicable Law, prohibits, or requires
consent (unless such consent has been received or is of an Affiliate of any Grantor) to the
granting of a Lien in the rights of such Grantor thereunder or which Lien would be invalid
or unenforceable upon any such grant, in each case in this clause (ii) except (A) to the
extent that the UCC or any other applicable Law provides that such grant of Lien is
effective irrespective of any prohibitions to such grant of Lien or (B) so long as any such
lease, license, contract, property right or agreement was not entered into for the purpose of
prohibiting or restricting such grant of Lien; provided, however, that clauses (i) and (ii)
shall not apply to the pledge of any Route Authorities or FAA Slots and provided further
that Excluded Assets shall not include any Control Collateral or Proceeds, substitutions or
replacements of any Excluded Assets referred to in clauses (i) through (ii) (unless such
Proceeds, substitutions or replacements would independently constitute Excluded Assets
referred to in clauses (i) through (ii)).
(f) “FAA Route Slot” means, at any time of determination, any FAA Slot of such Grantor at
any Domestic Airport, in each case (i) to the extent such FAA Slot is actually being utilized
at the relevant time of determination in connection a Scheduled Service and (ii) excluding
any Temporary Slot.
(g) “FAA Slot” means, at any time of determination, the right and operational authority to
conduct an Instrument Flight Rule (as defined in Title 14) scheduled landing or take-off
operation at a specific time or during a specific time period at such Domestic Airport,
including, without limitation, slots, arrival authorizations and operating authorizations,
whether pursuant to FAA or DOT regulations or orders pursuant to Title 14, Title 49 or
other federal statutes or regulations now or hereinafter in effect.
(h) “Foreign Airport” means each international airport not located in the United States that is
an origin and/or destination point with respect to any Scheduled Service.
(i) “Foreign Aviation Authority” means any non-U.S. governmental, quasi‑governmental,
regulatory or other agency, public corporation or private entity that exercises jurisdiction
over the issuance or authorization (i) to serve any non-U.S. point on any Scheduled Service
that any Grantor is serving at any time and/or to conduct operations related to any
Scheduled Service and Gate Leaseholds at any time and/or (ii) to hold and operate any
Foreign Route Slots at any time.
(j) “Foreign Gate Leasehold” means all of the right, title, privilege, interest and authority,
now held or hereafter acquired, of the Grantors in connection with the right to use or occupy
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space at an airport terminal at any Foreign Airport but in each case excluding any Foreign
Gate Leasehold of Grantor that, at such time, is held, acquired, used, allocated to or
available for use by another air carrier pursuant to an agreement (including any loan
agreement, lease agreement, or other gate leasehold use arrangement).
(k) “Foreign Route Slot” means, at any time of determination, any Foreign Slot of a Grantor
at any Foreign Airport, but in each case excluding (i) any Temporary Slot and (ii) any
Foreign Slot of Grantor that, at such time, is held, acquired, used, allocated to or available
for use by another air carrier pursuant to an agreement (including any loan agreement, lease
agreement, slot exchange agreement or a slot release agreement).
(l) “Foreign Slot” means, at any time of determination, in the case of airports outside the
United States, the right and operational authority to conduct one landing or take-off
operation at a specific time or during a specific time period at such airport.
(m) “Gate Leasehold” means each Domestic Gate Leasehold and each Foreign Gate
Leasehold, or any of the foregoing.
(n) “Governmental Authority” has the meaning set forth in the Loan Agreement, except that
for purposes of this Annex, Governmental Authority shall not include any Person in its
capacity as an Airport Authority.
(o) “IATA” means the International Air Transport Association and any successor thereto.
(p) “Material Adverse Effect” shall have the meaning given in Section 1.01 of the Loan
Agreement except that, in the case of SGR Assets, clause (b)(ii) of Material Adverse Effect
shall refer to “the legality, validity, binding effect or enforceability against the Borrower
or any Credit Party of any Loan Document to which it is a party or the validity, perfection
and first priority of the Liens on the Collateral in favor of the Collateral Agent taken as a
whole or with respect to a material portion of the Collateral”.
(q) “Pledged Gate Leaseholds” means, as of any date, the Gate Leaseholds included in the
Collateral as of such date.
(r) “Pledged Route Authorities” means, as of any date, the Route Authorities included in the
Collateral as of such date.
(s) “Pledged Slots” means, as of any date, the Slots included in the Collateral as of such date.
(t) “Route Authorities” means, at any time of determination, any route authority whether
currently in effect or hereafter granted to each Grantor to operate Scheduled Services
between the points identified in Schedule 2.1 to this Agreement (as such Schedule may be
amended or modified from time to time pursuant to this Agreement), including applicable
frequencies, notices, approvals, orders, exemptions and certificate authorities issued to
such Grantor from time to time, in each case whether or not utilized by the Grantors.
(u) “Scheduled Services” means, at any time of determination, (i) each non-stop scheduled
air carrier service between any Domestic Airport listed on Schedule 2.1 and any Foreign
Airport listed on Schedule 2.1 of this Agreement (as such Schedule may be amended, or
modified from time to time pursuant to this Agreement) (x) being operated by a Grantor or
(y) available for operation by a Grantor (to the extent, with respect to clause (y), included
in the then most recent Appraisal delivered under the Loan Agreement) and (ii) any other
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non-stop scheduled air carrier service (x) being operated by a Grantor at such time or (y)
available for operation by a Grantor (to the extent, with respect to clause (y), included in
the then most recent Appraisal delivered under the Loan Agreement) that has been
designated as an additional “Scheduled Service” pursuant to any Pledge Supplement, and
“Scheduled Service” shall mean any of such Scheduled Services as the context requires.
(v) “SGR Assets” shall consist of:
i. Gate Leaseholds;
ii. Route Authorities;
iii. Slots;
iv. Grantor’s rights under any leasing, licensing and use agreements with respect to
any of the foregoing Slots and Gate Leaseholds and under swap or similar
agreements or arrangements with respect to any of the foregoing Slots; and
v. All General Intangibles which are owned by such Grantor (including the General
Intangibles described on Schedule 2.1) relating to the SGR Assets.
(w) “Slot” means each FAA Route Slot and each Foreign Route Slot, or any of the foregoing.
(x) “Temporary Slot” means, a Slot that was obtained by any Grantor from another air carrier
pursuant to an agreement (including any loan agreement, lease agreement, slot exchange
agreement, a slot release agreement or other use arrangement) and is held by such Grantor
on a temporary basis.
(y) “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 rules and regulations
promulgated pursuant thereto, as amended from time to time or any subsequent legislation
that amends, supplements or supersedes such provisions.
(z) “Transfer Restriction” means any restriction or consent requirement relating to the
transfer or assignment by a Grantor of any right, title or interest in (but not the creation of
a security interest in) any type of property or any claim, right or benefit arising thereunder
or resulting therefrom, if an attempted transfer or assignment thereof without the consent
of any third party would (i) constitute a violation of the terms under which the Grantors
were granted such right, title or interest (or the Grantors’ interest in any agreement or
license related thereto), (ii) entitle any Governmental Authority or third party to terminate
or suspend any such right, title or interest (or the Grantors’ interest in any agreement or
license related thereto), or (iii) violate any applicable Law, rule or regulation, except, in
any case, to the extent such “Transfer Restriction” shall be rendered ineffective (both to
the extent that it (x) prohibits, restricts or requires consent and (y) gives rise to a default,
breach, right of recoupment, claim, defense, termination, right of termination or remedy)
by virtue of any applicable law, including Sections 9-406, 9-407, 9-408 or 9-409 of the
UCC as in effect, from time to time, in the State of New York, to the extent applicable (or
any corresponding sections of the UCC in a jurisdiction other than the State of New York
to the extent applicable).
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(aa) “Use or Lose Rule” means, with respect to Slots, any applicable utilization
requirements issued by the FAA, other Governmental Authorities, any Foreign
Aviation Authorities or any Airport Authorities.
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Annex 5 (Pledged Collateral)
Each Grantor and the Collateral Agent hereby agree that the terms of this Annex shall apply with respect
to Collateral consisting of Pledged Collateral.
1. Perfection Requirement. The following requirements shall be included in the definition of
“Perfection Requirement” and shall constitute an additional “Perfection Requirement” with respect
to Collateral consisting of:
(a) Certificated Securities, each applicable Grantor shall, on or prior to the Closing Date and
immediately upon the issuance thereof after the Closing Date, deliver or cause to be
delivered to the Collateral Agent, for it to hold in its possession, the Security Certificates
evidencing such Certificated Securities duly indorsed by an effective indorsement (within
the meaning of Section 8-107 of the UCC) or accompanied by undated share transfer
powers or other instruments of transfer duly endorsed by such an effective endorsement,
in each case, to the Collateral Agent or in blank. In addition, each Grantor shall cause any
certificates evidencing any Pledged Equity Interests to be similarly delivered to the
Collateral Agent, for it to hold in its possession, regardless of whether such Pledged Equity
Interests constitute Certificated Securities. Each delivery after the Closing Date pursuant
to the requirement under this clause (a) shall be accompanied by a schedule describing the
Certificated Securities and Pledged Equity Interests so delivered, which schedule shall
supplement Schedule 2.1; provided that failure to provide any such schedule or any error
therein shall not affect the validity of the pledge of any Certificated Securities or Pledged
Equity Interests.
(b) Instruments constituting Pledged Debt, each applicable Grantor shall on or prior to the
Closing Date and immediately upon the issuance thereof after the Closing Date, deliver to
the Collateral Agent, for it to hold in its possession, all such Instruments duly indorsed or
accompanied by an undated transfer powers or other instruments of transfer duly endorsed
by such an effective endorsement, in each case, to the Collateral Agent or in blank. Each
delivery after the Closing Date pursuant to the requirement under this clause (b) shall be
accompanied by a schedule describing the Instruments so delivered, which schedule shall
supplement Schedule 2.1; provided that failure to provide any such schedule or any error
therein shall not affect the validity of the pledge of any such Instruments.
2. Representations and Warranties. Each Grantor (as applicable) represents and warrants, on the
Closing Date and on the date of each Borrowing (or, in the case of an Additional Grantor or
Additional Collateral, on the date of such Grantor’s execution and delivery of a Pledge Supplement,
or the date such Additional Collateral becomes subject to the security interest created hereby, as
applicable):
(a) Schedule 2.1 sets forth all Pledged Collateral that constitutes Collateral.
(b) All Pledged Equity Interests and Pledged Debt issued by the Parent, the Borrower, a
Grantor (or, in each case, a Subsidiary thereof), (A) have been duly and validly authorized,
(B) are fully paid and nonassessable and (C) are legal, valid and binding obligations of the
issuers thereof.
(c) (i) The Pledged Collateral is and will continue to be freely transferable and assignable and
(ii) there are and will be no outstanding warrants, options or other rights to purchase, or
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shareholder, voting trust or similar agreements outstanding with respect to, or property that
is convertible into, or that requires the issuance or sale of, any Pledged Equity Interests.
(d) Upon satisfaction and completion of all conditions and steps that constitute Perfection
Requirement in this Agreement and this Annex, the Collateral Agent will obtain a legal,
valid and perfected first-priority security interest upon and in such all Pledged Collateral
subject to no Lien (other than the Liens created hereunder and other Permitted Liens).
(e) Unless otherwise specified in Schedule 2.1 of this Agreement, any Pledged Equity Interests
consisting of an interest in a limited liability company, a partnership or limited partnership
are not represented by a certificate and are not a “security” within the meaning of the UCC.
3. Covenants. Each Grantor (as applicable) covenants and agrees that:
(a) In the event such Grantor receives any dividends, interest or distributions on any Pledged
Collateral upon the merger, consolidation, liquidation or dissolution of any issuer or
obligor thereof, then (a) such dividends, interest or distributions and securities or other
property shall be included in the definition of Collateral without further action and (b) such
Grantor shall immediately take all steps, if any, necessary or advisable to ensure the
validity, perfection, priority and, if applicable, Control of the Collateral Agent over such
Pledged Collateral and pending any such action, such Grantor shall be deemed to hold such
dividends, interest, distributions, securities or other property in trust for the benefit of the
Collateral Agent and shall segregate such dividends, distributions, Securities or other
property from all other property of such Grantor. Notwithstanding the immediately
foregoing sentence, without limiting the restrictions and limitations contained in Section
6.05 of the Loan Agreement, all cash dividends, interest or distributions on any Pledged
Collateral may be retained and used by the applicable Grantor so long as no Event of
Default shall have occurred and be continuing.
(b) The Pledged Equity Interests consisting of an interest in a limited liability company, a
partnership or limited partnership shall not be represented by a certificate, and no Grantor
shall elect to treat any such Pledged Equity Interests as a “security” within the meaning of
the UCC other than to the extent any Pledged Equity Interests were represented by a
certificate as of the Closing Date.
(c) So long as no Event of Default shall have occurred and be continuing, except as otherwise
provided in this Agreement or other Loan Documents, each Grantor shall be entitled to
exercise or refrain from exercising any and all voting and other consensual rights pertaining
to the Pledged Collateral or any part thereof for any purpose not inconsistent with the terms
of the Loan Agreement, this Agreement or any other Loan Documents; provided, no
Grantor shall exercise or refrain from exercising such voting and powers in any manner
that (y) would reasonably be expected to materially and adversely affect the rights and
remedies of the Collateral Agent with respect to the Pledged Collateral or (z) would result
in, or would reasonably be expected to result in, a Material Adverse Effect.
(d) If, after the Closing Date, any Grantor forms or acquires a Subsidiary that is a party to a
contract, agreement, transaction or other undertaking constituting a Material Loyalty
Program Agreement or Loyalty Program Agreement, then such Grantor will, as promptly
as practicable and, in any event, within one (1) Business Day (in the case of a Material
Loyalty Program Agreement) and ten (10) Business Days (in the case of a Loyalty Program
Agreement) after such Subsidiary is formed or acquired, notify that Appropriate Party
thereof and, at the request of the Appropriate Party, pledge, in favor of the Appropriate
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Party, all such Equity Interest in or Indebtedness of such Subsidiary owned by or on behalf
of any Grantor.
4. Defaults and Remedies. Without limiting the generality of Section 8.1 of this Agreement and in
addition to any rights and remedies that the Collateral Agent may have under the Loan Documents
and the applicable Law:
(a) Each Grantor recognizes that, by reason of certain prohibitions contained in the Securities
Act and applicable state securities laws, the Collateral Agent may be compelled, with
respect to any sale of all or any part of the Pledged Collateral conducted without prior
registration or qualification of such Pledged Collateral under the Securities Act and/or such
state securities laws, to limit purchasers to those who will agree, among other things, to
acquire the Pledged Collateral for their own account, for investment and not with a view
to the distribution or resale thereof. Each Grantor acknowledges that any such private sale
may be at prices and on terms less favorable than those obtainable through a public sale
without such restrictions (including a public offering made pursuant to a registration
statement under the Securities Act) and, notwithstanding such circumstances, each Grantor
agrees that any such private sale shall be deemed to have been made in a commercially
reasonable manner and that the Collateral Agent shall have no obligation to engage in
public sales and no obligation to delay the sale of any Pledged Collateral for the period of
time necessary to permit the issuer thereof to register it for a form of public sale requiring
registration under the Securities Act or under applicable state securities laws, even if such
issuer would, or should, agree to so register it. If the Collateral Agent determines to
exercise its right to sell any or all of the Pledged Collateral, upon written request, each
Grantor shall and shall cause each issuer of the Pledged Collateral to be sold hereunder
from time to time to furnish to the Collateral Agent all such information as the Collateral
Agent may request in order to determine the number and nature of interest, shares or other
instruments included in the Pledged Collateral which may be sold by the Collateral Agent
in exempt transactions under the Securities Act and the rules and regulations of the
Securities and Exchange Commission thereunder, as the same are from time to time in
effect.
(b) Each Grantor hereby authorizes and instructs each issuer of any Pledged Collateral that
constitute Collateral to (i) comply with any instruction received by it from the Collateral
Agent that (x) states that an Event of Default (or another applicable similar trigger event)
has occurred and is continuing and (y) is otherwise in accordance with the terms of this
Agreement, without any other or further instructions from any other Person, and each
Grantor agrees that each issuer shall be fully protected in so complying, and (ii) upon the
occurrence and continuance of any Event of Default, unless otherwise expressly permitted
hereby, pay any dividends or other payments with respect to the Pledged Collateral directly
to the Collateral Agent.
(c) If an Event of Default has occurred and is continuing:
(i) at the direction of the Collateral Agent (acting at the direction of the Required
Lenders), all rights of each Grantor to exercise or refrain from exercising the voting
and other consensual rights which it would otherwise be entitled to exercise
pursuant hereto shall cease and all such rights shall thereupon become vested in
the Collateral Agent, which shall thereupon have the sole and exclusive right to
exercise such voting and other consensual rights.
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(ii) all rights of any Grantor to dividends, interest, principal or other distributions that
such Grantor is authorized to receive as otherwise which it would otherwise be
entitled to exercise pursuant hereto shall cease, and all such rights shall thereupon
become vested in the Collateral Agent, which shall have the sole and exclusive
right and authority to receive and retain such dividends, interest, principal or other
distributions. All dividends, interest, principal or other distributions received by
any Grantor contrary to this provision shall be held in trust for the benefit of, or
for and on behalf of, the Collateral Agent and the other Secured Parties, shall be
segregated from other property or funds of such Grantor and shall be forthwith
delivered to the Collateral Agent upon demand in the same form as so received
(with any necessary endorsements, stock or note powers or other instruments of
transfer). Any and all money and other property paid over to or received by the
Collateral Agent pursuant to this provision shall be retained by the Collateral
Agent in an account in the name of the relevant Grantor to be established by the
Collateral Agent and held as security for the payment and performance of the
Secured Obligations and shall be applied in accordance with the provisions of
Section 7.02 of the Loan Agreement.
(iii) each Grantor will promptly give to the Collateral Agent copies of any notices or
other communications received by it with respect to Pledged Collateral registered
in the name of such Grantor.
(iv) the Collateral Agent may (and to the extent that action by it is required, the relevant
Grantor, if directed to do so by the Collateral Agent, will as promptly as
practicable) cause each of the Pledged Collateral (or any portion thereof specified
in such direction) to be transferred of record into the name of the Collateral Agent
or its nominee, for the benefit of the Secured Parties.
(v) the Collateral Agent may exercise all other rights, powers, privileges and remedies
to which a holder of the Pledged Equity Interests would be entitled (including, with
respect to the Pledged Equity Interests, giving or withholding written consents of
members, calling special meetings of members and voting at such meetings).
(vi) each Grantor agrees to use its best efforts to do or cause to be done all such other
acts as may be necessary to make such sale or sales of all or any portion of the
Pledged Equity Interests pursuant to this Agreement valid and binding and in
compliance with any and all other applicable Law. Each Grantor further agrees
that a breach of any of the covenants contained in this Section of this Annex will
cause irreparable injury to the Collateral Agent and the Secured Parties, that the
Collateral Agent and the Secured Parties have no adequate remedy at law with
respect to such breach and, as a consequence, that each and every covenant
contained in this Annex shall be specifically enforceable against such Grantor, and
such Grantor hereby waives and agrees not to assert any defenses against an action
for specific performance of such covenants except for a defense that no Event of
Default has occurred under the Loan Agreement and is continuing.
(vii) the Collateral Agent may complete any stock, bond or other power, to receive,
endorse and collect all instruments made payable to any Grantor representing any
dividend or other distribution with respect to the Pledged Equity Interests or any
part thereof and to give full discharge for the same.
5. Miscellaneous. Each Grantor and the Collateral Agent agree that:
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(a) The terms of this Annex shall be deemed incorporated into and part of this Agreement.
(b) The terms of this Annex are cumulative in nature and shall not limit the applicability or
scope of the other terms of this Agreement.
(c) Upon satisfaction and completion, as determined by the Appropriate Party, of the
conditions for release of any Pledged Collateral from the Lien granted hereby in accordance
with Section 6.17(b)(iii) of the Loan Agreement, such Pledged Collateral shall be released
from the Lien granted under this Agreement, and the Collateral Agent will thereupon
execute and deliver to the applicable Grantor, at such Grantor’s sole expense, all
appropriate UCC termination statements and other documents that such Grantor shall
reasonably request to evidence such release. The Collateral Agent shall have no liability
whatsoever to any Secured Party as a result of its execution of any such documentation
with respect to any such release.
6. Terms. The following capitalized terms used in this Annex shall have the following meanings:
(a) “Pledged Collateral” shall mean (i) Pledged Debt, (ii) Pledged Equity Interests, (iii) all
payments of principal or interest, dividends, cash, instruments and other property from time
to time received, receivable or otherwise distributed with respect to, in exchange for or
upon the conversion of, and all other Proceeds received with respect to, the securities and
instruments referred to in clauses (i) and (ii) above; (iv) all rights and privileges of such
Grantor with respect to the securities, instruments and other property referred to in
clauses (i), (ii) and (iii) above; and (v) all Proceeds of any and all of the foregoing.
(b) “Pledged Debt” shall mean all Indebtedness owed to any Grantor issued by the obligors
named therein, the promissory notes and any other instruments evidencing such
Indebtedness, and all interest, cash, instruments and other property or proceeds from time
to time received, receivable or otherwise distributed with respect to or in exchange for any
or all of such Indebtedness, listed opposite the name of such Grantor on Schedule 2.1.
(c) “Pledged Equity Interests” shall mean (i) Equity Interests set forth opposite the name of
such Grantor on Schedule 2.1, (ii) all rights, privileges, authorities, and powers of such
Grantor as an owner or holder of such Equity Interests, including all economic rights, all
control rights, authority, and powers, all status rights of such Grantor as a member,
shareholder, or other owner (as applicable), and all rights and interests, if any, to participate
in the management of each applicable issuer, (iii) all of such Grantor’s options and other
rights and interests, contractual or otherwise, with respect to the Pledged Equity Interests,
(iv) all of the certificates, if any, evidencing or representing the Pledged Equity Interests
and (v) all dividends, distributions, cash, warrants, rights, options, instruments, securities
and other property or proceeds from time to time received, receivable or otherwise
distributed with respect to or in exchange for any or all of any of the foregoing.
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Annex 6 (Spare Parts Assets)
Each Grantor and the Collateral Agent hereby agree that the terms of this Annex shall apply with respect
to Collateral consisting of Spare Parts Assets.
1. Perfection Requirement. The following requirements shall be included in the definition of
“Perfection Requirement” and shall constitute an additional “Perfection Requirement” with respect
to Collateral consisting of Spare Parts Assets:
(a) The applicable Grantor, at its sole cost and expense, will cause the FAA Filed Documents
to be prepared and duly and timely filed and recorded, or filed for recordation with the
FAA to the extent permitted or required under Title 49.
(b) The applicable Grantor, at its sole cost and expenses, shall:
(i) Execute and deliver, or cause to be executed and delivered, the Mortgage Location
Supplements in form and substance satisfactory to the Appropriate Party.
(ii) Duly prepare and file, or cause to be duly prepared and filed, the FAA Filed
Documents for recordation with the FAA in accordance with Title 49 and the
regulations thereunder.
2. Required Filings. Each of the following financing statement, filing, recording or other document
shall be included in the definition of “Required Filing” and shall constitute an additional “Required
Filing”:
(a) Each FAA Filed Document.
3. Representations and Warranties. Each Grantor represents and warrants, on the Closing Date and
on the date of each Borrowing (or, in the case of an Additional Grantor or Additional Collateral,
on the date of such Grantor’s execution and delivery of a Pledge Supplement, or the date such
Additional Collateral becomes subject to the security interest created hereby, as applicable):
(a) Schedule 2.1 sets forth all Spare Parts Assets that constitute Collateral and information
with respect thereto, including the Designated Spare Parts Location for all such Spare Parts
Assets.
(b) Upon satisfaction and completion of the Perfection Requirements under this Annex, the
Collateral Agent for the benefit of the Secured Parties will obtain a legal, valid and
perfected first-priority security interest upon and in all Collateral consisting of Spare Parts
Assets, subject to no Lien (other than the Lien created hereunder and other Permitted Liens)
and will be entitled to all the rights, priorities and benefits afforded by Title 49 and other
applicable Laws to perfected security interests or Liens.
(c) All Spare Parts Assets constituting Collateral have been first placed in service after October
22, 1994.
(d) There is no registration or filing covering or purporting to cover any interest of any kind in
the Spare Parts Assets (other than Permitted Liens).
(e) All Spare Parts Assets constituting Collateral are located at a Designated Spare Parts
Location in the United States.
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(f) The applicable Grantor, in compliance with 14 C.F.R. 49.53(a)(1) and (2), certifies that it
is an air carrier, certificated by the FAA under 49 U.S.C. 44705, and that the Spare Parts
Assets constituting Collateral are maintained by or on behalf of such Grantor at the
Designated Spare Parts Locations.
(g) Each Designated Spare Parts Location shall be either owned or leased by the Grantors.
4. Covenants. Each Grantor (as applicable) covenants and agrees that:
(a) It shall not execute or authorize or permit to be filed in any public office any filing (other
than with respect to Liens hereunder or other Permitted Liens) relating to any Spare Parts
Assets or the location thereof.
(b) Tracking System. It shall maintain the Tracking System in a manner sufficient to monitor
the Spare Parts Assets and its perpetual inventory procedures for Spare Parts Assets that
provide a continuous internal audit of Spare Parts Assets. Notwithstanding the limitations
herein, the Collateral Agent and the Appropriate Party, or their respective agents (as
designated by the Lenders) shall be entitled to access and inspect the Tracking System to
monitor the types, quantities and locations of any Spare Parts Assets and to ensure the
Grantors’ compliance with the terms hereof in a manner consistent with Section 5.11 of
the Loan Agreement. If requested by the Appropriate Party or the Collateral Agent, the
applicable Grantor will obtain a written acknowledgment of the Collateral Agent’s, the
Appropriate Party’s and their respective agents’ access and inspection rights hereunder
from any third party that owns or operates the Tracking System.
(c) Designated Spare Parts Locations.
(i) For so long as any Spare Parts Assets constitute Collateral hereunder, the
applicable Grantor shall remain certified as an air carrier, certificated by the FAA
under 49 U.S.C. 44705. Except in connection with any utilization or Disposition
thereof that is permitted hereunder or under the Loan Agreement, the Spare Parts
Assets constituting Collateral shall be maintained by or on behalf of such Grantor
at one or more of the Designated Spare Parts Locations, and the nature of such
Grantor’s interest in and to each such location (e.g., owner, leasehold, tenant) is
and shall remain as described to the Collateral Agent pursuant to this Agreement.
(ii) Each Grantor will promptly notify (in any event, within fifteen (15) days thereof)
the Collateral Agent if any of the representations, warranties or agreements
contained in the preceding sentence become inaccurate in any respect with respect
to any of the Spare Parts Assets or the interest of the applicable Grantor therein.
(iii) If any Grantor acquires at any time after the Closing Date a location at which such
Grantor keeps Spare Parts of a type or model which, if located at a Designated
Spare Parts Location would be subject to a Lien by this Agreement, then such
Grantor shall promptly (and in any event within 5 days) furnish to the Collateral
Agent, at such Grantor’s sole expense, the documents listed in Section 4(c)(iv)(A)-
(C).
(iv) If any Grantor desires at any time after the Closing Date to add a Designated Spare
Parts Location, such Grantor shall promptly furnish the following to the Collateral
Agent, at Grantors’ sole expense:
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(A) not less than fifteen (15) days prior to the utilization of such new
Designated Spare Parts Location, a Mortgage Location Supplement
duly executed by the applicable Grantor, identifying each location that
is to become a Designated Spare Parts Location and specifically
subjecting the applicable Spare Parts Assets at such location to the
Lien of this Agreement;
(B) not less than five (5) days prior to the utilization of such new
Designated Spare Parts Location, an opinion of counsel, dated the date
of execution of said Mortgage Location Supplement, in form and
substance satisfactory to the Appropriate Party, addressed to the
Secured Parties, stating that said Mortgage Location Supplement has
been duly filed for recording in accordance with the provisions of Title
49, and either: (a) no other filing or recording is required in any other
place within the United States in order to perfect the Lien of this
Mortgage on the Spare Parts Assets held at the Designated Spare Parts
Locations specified in such Mortgage Location Supplement under the
laws of the United States, or (b) if any such other filing or recording
shall be required that said filing or recording has been accomplished
in such other manner and places, which shall be specified in such
opinion of counsel, as are necessary to perfect the Lien of this
Mortgage with respect to such Spare Parts Assets; and
(C) not less than five (5) days prior to the utilization of such new
Designated Spare Parts Location, a certificate of the Responsible
Officer stating that in the opinion of the Responsible Officer executing
the certificate, all conditions precedent provided for in this Mortgage
relating to the subjection of such property to the Lien of this Mortgage
have been complied with.
(d) Maintenance. At its own cost and expense, it:
(i) shall maintain, or cause to be maintained, at all times the Spare Parts Assets in
accordance with all applicable Laws, including making any modifications,
alterations, replacements and additions necessary therefor, and shall utilize, or
cause to be utilized, the same manner and standard of maintenance with respect to
each model of Spare Parts or Appliance included in the Collateral as is utilized for
such model of Spare Parts or Appliance owned by such Grantor and not included
in the Collateral;
(ii) shall maintain, or cause to be maintained, all records, logs and other materials
required by the FAA or under Title 49 to be maintained in respect of the Spare
Parts Assets and shall not modify its record retention procedures in respect of the
Spare Parts Assets unless such modification is consistent with such Grantor’s FAA
approved maintenance program;
(iii) shall maintain, or cause to be maintained, all Spare Parts Documents in respect of
the Spare Parts Assets in the English language;
(iv) shall maintain, or cause to be maintained on a timely basis, the Spare Parts Assets
in good working order (other than during periods of maintenance, repair,
inspection and testing) and condition and shall perform all maintenance thereon
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necessary for that purpose, excluding (x) Spare Parts Assets that have become
worn out or unfit for use, beyond economic repair or become obsolete or scrap, (y)
Spare Parts Assets and quick change engine kits that are not required for such
Grantor’s normal operations and (z) Expendables that have been consumed or used
in the such Grantor’s operations; and
(v) notwithstanding anything herein to the contrary, all Rotables and Repairables
constituting Collateral and, to the extent customary, Expendables constituting
Collateral, located at Designated Spare Parts Locations other than as excluded
under clause (x), (y) or (z) above of clause (iv) above, shall have a current and
valid serviceable tag and shall be in compliance with such tag, in each case in
compliance with applicable FAA regulations.
(e) Possession. No Grantor may (A) Dispose of or relinquish possession of any Spare Parts
Asset to anyone except that the applicable Grantors shall have the right, (w) to Dispose to
the extent permitted under Section 6.04 of the Loan Agreement and in the ordinary course
of business, (x) to transfer possession of any Spare Parts Asset in the ordinary course of
business to the manufacturer thereof or any other organization for testing, overhaul, repairs,
maintenance, alterations or modifications (to the extent required or permitted by the terms
hereof) or to any Person for the purpose of transport to any of the foregoing; provided that
such Grantor covenants to promptly pay when due any payment obligation resulting in a
mechanic’s or other Lien related to such testing service, repair, maintenance, overhaul,
alternation, modification, or transport, (y) to subject any Spare Parts Asset to a maintenance
servicing agreement arrangement entered into and operated in the ordinary course of
business or (z) to transfer in the ordinary course of business any Spare Parts Asset between
any Designated Spare Parts Locations; provided, however, that if the applicable Grantor’s
title to any such Spare Parts Asset shall be divested under any situation described in clauses
(x) through (z) above, such divestiture shall be deemed to be a Disposition with respect to
such Spare Parts Asset subject to the provisions of Section 2.06(b) of the Loan Agreement
or (B) commingle at any location its Spare Parts Assets that constitute Collateral with (i)
other Spare Parts of the applicable Grantor not constituting Collateral or (ii) the Spare Parts
of another Affiliate if such other Affiliate has pledged Spare Parts which are not Collateral
to secure any other Indebtedness or obligations, unless (x) the ownership of each such
commingled Spare Parts can be definitely determined at all times by reference to the
applicable Grantor’s or Affiliate’s Spare Parts tracking number and system, as applicable,
or (y) the Spare Parts of such Grantor or Affiliate are not of a type or category of spare
parts that corresponds to a type of category of Spare Parts Assets that is included in the
Collateral; provided that Spare Parts that are segregated on a separate aisle, shelf or in a
separate storage bin or other storage unit or area shall not be considered as having been
commingled even though such Spare Parts are present at the same location so long as the
applicable Grantor install signs in or on each such aisle, shelf, bin or other storage unit or
area containing Collateral bearing the inscription: “Property of [GRANTOR], Mortgaged
to THE BANK OF NEW YORK MELLON as Collateral Agent for the benefit of the
Secured Parties” (such sign to be replaced if there is a successor Collateral Agent).
(f) Use; Modifications.
(i) Use. At its own cost and expense, without the necessity of any release from or
consent by the Collateral Agent, it may: (1) incorporate in, install on, attach or
make appurtenant to, or use in, any aircraft, engine, or spare part in its fleet
(whether or not subject to any Lien and whether or not operated by such Grantor)
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the Spare Parts Assets constituting Collateral and, as a result thereof, if such Spare
Parts Assets are incorporated in, installed in, attached or made appurtenant to an
airframe, engine or spare engine, such Spare Parts Asset shall thereupon be free
from the Lien of this Mortgage; provided that, except as provided for in Sections
4(e)(A)(x) and 4(f)(i)(2) of this Annex, if the Spare Part incorporated in, installed
on, attached or made appurtenant to, or used in, any aircraft, engine, or spare part
in its fleet is used to replace a part that would otherwise be covered by a Lien of
this Mortgage if it were located at a Designated Spare Parts Location, then the
applicable Grantor shall return that part to a Designated Spare Parts Location and
(2) dismantle any Spare Parts Asset that has become worn out or obsolete or unfit
for use, and to scrap, sell or Dispose of any such Spare Parts Asset or any salvage
resulting from such dismantling, in which case such Spare Parts Asset shall
thereupon be free from the Lien of this Agreement.
(g) Insurance.
(i) Each Grantor shall ensure that at all times the Collateral Agent, for the benefit of
the Secured Parties, shall be named as an additional insured and lender loss payee
with respect to any Spare Parts Assets constituting Collateral and take any other
steps required under this Annex.
(ii) Obligation to Insure. Each Grantor (as applicable) shall comply with, or cause to
be complied with, each of the provisions of Appendix I to this Annex, which
provisions are hereby incorporated by this reference as if set forth in full herein.
(iii) Insurance for Own Account. Nothing in this Annex shall limit or prohibit (i) any
Grantor from maintaining the policies of insurance required under Appendix I of
this Annex with higher coverage than those specified in Appendix I, or (ii) the
Collateral Agent (without a duty to do so) or any other Additional Insured from
obtaining insurance, upon the occurrence of an Event of Default, at the applicable
Grantor’s expense, for its own account (and any proceeds payable under such
separate insurance shall be payable as provided in the policy relating thereto);
provided, however, that no insurance may be obtained or maintained that would
limit or otherwise adversely affect the coverage of any insurance required to be
obtained or maintained by any Grantor pursuant to this Annex and Appendix I of
this Annex.
(iv) Application of Insurance Proceeds. As between each applicable Grantor and the
Collateral Agent, all insurance proceeds received as a result of the occurrence of
an Event of Loss with respect to any Spare Parts Asset constituting Collateral at
the time of such receipt shall be applied in accordance with Section 2.06(b) of the
Loan Agreement.
(h) Inspection.
(i) The Appropriate Party and the Collateral Agent, or their respective authorized
representatives, as designated by the Lenders may exercise inspection rights with
respect Aircraft and Engine Assets constituting Collateral to the fullest extent
permitted under Section 5.11 of the Loan Agreement.
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(ii) With respect to such rights of inspection, the Secured Parties shall not have any
duty or liability to make, or any duty or liability by reason of not making, any such
visit, inspection or survey.
(i) Data Reports. After the occurrence and during the continuance of an Event of Default and
as may be requested by the Collateral Agent or the Appropriate Party from time to time,
the applicable Grantor shall furnish the Collateral Agent and the Appropriate Party with a
Data Report.
5. Release of Collateral. Each Grantor and the Collateral Agent agree that:
(a) Upon satisfaction and completion, as determined by the Appropriate Party, of the
conditions for release of any Spare Parts Assets constituting Collateral from the Lien
granted hereby in accordance with Section 6.17(b)(iii) of the Loan Agreement, such Spare
Parts Assets shall be released from the Lien granted under this Agreement, and the
Collateral Agent will thereupon execute and deliver to the applicable Grantor, at such
Grantor’s sole expense, all appropriate UCC termination statements and other documents
that such Grantor shall reasonably request to evidence such release. The Collateral Agent
shall have no liability whatsoever to any Secured Party as a result of its execution of any
such documentation with respect to any such release.
6. Miscellaneous. Each Grantor and the Collateral Agent agree that:
(a) The terms of this Annex shall be deemed incorporated into and part of this Agreement.
(b) The terms of this Annex are cumulative in nature and shall not limit the applicability or
scope of the other terms of this Agreement.
7. Terms.
(a) The following capitalized terms used in this Annex shall have the following meanings:
(i) “Additional Insureds” is defined in Appendix I to this Annex.
(ii) “Aircraft” shall mean any contrivance invented, used, or designed to navigate, or
fly in, the air.
(iii) “Appliance” shall mean any instrument, equipment, apparatus, part, appurtenance,
or accessory used, capable of being used, or intended to be used, in operating or
controlling aircraft in flight, including a parachute, communication equipment, and
another mechanism installed in or attached to aircraft during flight, and not a part
of an aircraft, engine, or propeller (including “appliances” (as defined in Section
40102 of Title 49)).
(iv) “Data Report” means information and data relating to the Spare Part Assets
supplied by the Grantors to the Collateral Agent and the Appropriate Party and
substantially in the form of Exhibit B to this Annex.
(v) “Designated Spare Parts Locations” shall mean the locations designated from
time to time by the Grantors at which the Spare Parts Assets may be maintained
by or on behalf of the Grantors, which shall be the locations set forth on Schedule
2.1 to this Agreement.
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(vi) “Engine” shall mean an engine used, or intended to be used, to propel an Aircraft,
including a part, appurtenance, and accessory of the Engine, except a propeller.
(vii) “Event of Loss” means, with respect to any Spare Parts Asset, any of the following
circumstances, conditions or events with respect to such property, for any reason
whatsoever:
(A) the destruction of such property, damage to such property beyond
economic repair or rendition of such property permanently unfit for
normal use by the Grantors (other than the use of Expendables in Grantor’s
operations);
(B) the actual or constructive total loss of such property or any damage to such
property, or requisition of title or use of such property, which results in an
insurance settlement with respect to such property on the basis of a total
loss or constructive or compromised total loss;
(C) any theft, hijacking or disappearance of such property for a period of one
hundred and eighty (180) consecutive days or more; or
(D) any seizure, condemnation, confiscation, taking or requisition (including
loss of title) of such property by any Governmental Authority or purported
Governmental Authority (other than a requisition of use by the U.S.
Government) for a period exceeding one hundred and eighty (180)
consecutive days.
(viii) “Expendables” shall mean Spare Parts, other than Rotables and Repairables.
(ix) “FAA Filed Document” shall mean the Mortgage Location Supplement executed
by a Grantor.
(x) “Mortgage” shall mean this Pledge and Security Agreement.
(xi) “Mortgage Location Supplement” means a Mortgage Location Supplement,
substantially in the form of Exhibit A to this Annex, with appropriate modifications
to reflect the purpose for which it is being used.
(xii) “Repairable” shall mean any Spare Part that wears over time and can be
commonly restored to a serviceable condition until the expected point of being
beyond economic repair, excluding any such Spare Parts that qualifies as, and is
designated by any Grantor to be, a Rotable.
(xiii) “Rotable” means any Spare Part that wears over time and can be repeatedly
restored to a serviceable condition over a period approximating the life of the flight
equipment to which it relates, excluding any such Spare Parts that qualifies as, and
is designated by any Grantor to be, a Repairable.
(xiv) “Spare Parts” shall mean all accessories, appurtenances, or parts of (A) an aircraft
(except an engine or propeller), (B) an engine (except a propeller), (C) a propeller,
or (D) an Appliance, that are to be installed at a later time in an aircraft, engine,
propeller or Appliance (including “spare parts” (as defined in Section 40102 of
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Title 49)) including, in all cases, any replacements, substitutions or renewals
therefor, and accessions thereto.
(xv) “Spare Parts Assets” shall mean:
(A) All Spare Parts of the Grantors (including Expendables, Repairables and
Rotables (and all substitutions or replacements of any of the foregoing)),
including without limitation, all such Spare Parts from time to time located
at a Designated Spare Parts Location described on Schedule 2.1;
(B) Any continuing rights of any Grantor in respect of any warranty,
indemnity or agreement, express or implied, as to title, materials,
workmanship, design or patent infringement with respect to such Spare
Parts (reserving in each case to the Grantors, however, all of the Grantors’
other rights and interest in and to such warranty, indemnity or agreement)
together in each case under this clause with all rights, powers, privileges,
options and other benefits of such Grantor thereunder (subject to such
reservations) with respect to such Spare Parts, including the right to make
all waivers and agreements, to give and receive all notices and other
instruments or communications, to take such action upon the occurrence
of a default thereunder, including the commencement, conduct and
consummation of legal, administrative or other proceedings, as shall be
permitted thereby or by law, and to do any and all other things which such
Grantor is or may be entitled to do thereunder (subject to such
reservations);
(C) All Appliances with respect to the foregoing;
(D) All General Intangibles which are owned by such Grantor (including the
General Intangibles described on Schedule 2.1) relating to Spare Parts
Assets described in the foregoing; and
(E) All Insurance with respect to the foregoing.
(xvi) “Spare Parts Documents” means all repair, maintenance and inventory records,
logs, manuals and all other documents and materials similar thereto (including any
such records, logs, manuals, documents and materials that are computer print-outs)
at any time maintained, created or used by the applicable Grantor, and all records,
logs, documents and other materials required at any time to be maintained by the
applicable Grantor pursuant to the FAA or under Title 49, in each case with respect
to any of the Spare Parts Assets.
(xvii) “Tracking System” shall mean Grantor’s centralized computer system for
monitoring and tracking the location, condition and status of its Spare Parts Assets,
and any and all improvements, upgrades or replacement systems.
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Appendix I to Annex 6
APPENDIX I
INSURANCE
A. Liability Insurance.
Each Grantor (as applicable) will carry or cause to be carried at all times, at no expense to the
Collateral Agent or any Secured Party, comprehensive airline liability insurance with respect to the Spare
Parts Assets, which is (i) of an amount and scope as may be customarily maintained by such Grantor for
equipment similar to the Spare Parts Assets and (ii) maintained in effect with insurers of nationally or
internationally recognized responsibility (such insurers being referred to herein as “Approved Insurers”).
B. Hull (Spares) Insurance.
Each Grantor (as applicable) will carry or cause to be carried at all times, at no expense to any
additional insured/loss payee, with Approved Insurers comprehensive airline hull insurance (including
spares coverage) covering physical damage to the Spare Parts Assets providing for the reimbursement of
the actual expenditure incurred in repairing or replacing any damaged or destroyed Spare Parts Asset or, if
not repaired or replaced, for the payment of the amount it would cost to repair or replace such Spare Parts
Asset, on the date of loss, with proper deduction for obsolescence and physical depreciation.
Any policies of insurance carried in accordance with this Section B covering the Spare Parts Assets
and any policies taken out in substitution or replacement for any such policies shall provide that insurance
proceeds under such policies shall be payable directly to the Collateral Agent for prompt deposit into a
Collateral Proceeds Account in a manner consistent with Section 2.06(b)(ii) of the Loan Agreement as it
applies to a Recovery Event.
All losses will be adjusted by the applicable Grantor with the insurers; provided, however, that
during a period when an Event of Default shall have occurred and be continuing, no Grantor shall agree to
any such adjustment without the written consent of the Collateral Agent (acting at the direction of the
Required Lenders).
C. Reports and Certificates; Other Information.
On or prior to the Closing Date, and on or prior to each renewal date of the insurance policies
required hereunder, each applicable Grantor will furnish or cause to be furnished to the Collateral Agent
insurance certificates describing in reasonable detail the commercial insurance maintained by the applicable
Grantors hereunder, together with endorsements satisfactory to the Collateral Agent and the Appropriate
Party designating the Secured Parties as loss payees and additional insureds with respect to the Spare Parts
Assets constituting Collateral. To the extent such agreement is reasonably obtainable, the applicable
Grantors will also cause the Insurance Broker to agree to advise the Secured Parties in writing of any default
in the payment of any premium and of any other act or omission on the part of the applicable Grantors of
which it has knowledge and which might invalidate or render unenforceable, in whole or in part, any
commercial insurance on such Spare Parts Assets or cause the cancellation or termination of such insurance,
and to advise the Secured Parties in writing at least thirty (30) days (ten (10) days in the case of nonpayment
of premium, or such shorter period as may be available in the international insurance market, as the case
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may be) prior to the cancellation or material adverse change of any commercial insurance maintained
pursuant to this Appendix I.
D. Right to Pay Premiums.
The additional insureds/loss payees shall have the rights but not the obligations of an additional
named insured. None of the Collateral Agent or the other additional insureds/loss payees shall have any
obligation to pay any premium, commission, assessment or call due on any such insurance (including
reinsurance). Notwithstanding the foregoing, in the event of cancellation of any insurance due to the
nonpayment of premiums, the Collateral Agent may, at the direction of the Required Lenders, to pay any
such premium in respect of the Spare Parts Assets that is due in respect of the coverage pursuant to this
Agreement and to maintain such coverage, as the Secured Parties may require, until the scheduled expiry
date of such insurance and, in such event, the applicable Grantor shall, upon demand, reimburse the
Collateral Agent for amounts so paid by it, together with interest therein at the Default Rate from the date
of payment.
E. Salvage Rights; Other.
All salvage rights to Spare Parts Assets shall remain with the applicable Grantor’s insurers at all
times, and any insurance policies of the Collateral Agent insuring Spare Parts Assets shall provide for a
release to the applicable Grantor of any and all salvage rights in and to any Spare Parts Assets.
Appendix I to Annex 6 - 2
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Exhibit A to Annex 6
[FORM OF MORTGAGE LOCATION SUPPLEMENT]
THIS MORTGAGE LOCATION SUPPLEMENT NO. [•], dated [●] (herein, this “Mortgage
Location Supplement”) made by [NAME(S) OF GRANTOR(S)], [a] [●] (together with its permitted
successors and assigns, the “Grantor”), in favor of THE BANK OF NEW YORK MELLON, as the
Collateral Agent (together with its successors and assigns, the “Collateral Agent”) for the benefit of the
Secured Parties.
W I T N E S S E T H:
WHEREAS, the Amended and Restated Horizon Aircraft, Engine and Propeller Pledge and
Security Agreement, dated as of October 30, 2020 (as amended, supplement, restated or otherwise modified
from time to time, the “PSA”; capitalized terms used herein but not defined shall have the meaning ascribed
to them in the PSA), between the Grantors (as defined in the PSA) party thereto from time to time and the
Collateral Agent, provides for the execution and delivery of supplements thereto substantially in the form
hereof;
WHEREAS, the Grantor[s] has/have previously designated the locations at which the Spare Parts
Assets may be maintained by or on behalf of the Grantors in the PSA [and in Mortgage Location
Supplement No. [●]];7
WHEREAS, 8 the Mortgage [and the Mortgage Location Supplements] has [have] been duly
recorded with the FAA, pursuant to Title 49 on the following date as a document or conveyance bearing
the following number:
[DOCUMENT OR
[DATE OF RECORDING] CONVEYANCE NO.]9
[Mortgage]
WHEREAS, the Grantor[s] hereby confirm[s] that it is a certificated U.S. air carrier under Sections
41102 and 44705 of Title 49 of the United States Code, and the Spare Parts described in this Mortgage
Location Supplement are maintained by it or on its behalf at the applicable Designated Spare Parts
Locations described herein;
WHEREAS, the Grantor[s], as provided in the PSA, is/are hereby executing and delivering to the
Collateral Agent this Mortgage Location Supplement for the purposes of adding locations at which the
Spare Parts Assets may be maintained by or on behalf of the Grantor[s]; and
WHEREAS, all things necessary to make this Mortgage Location Supplement the valid, binding
and legal obligation of the Grantors, including all proper corporate action on the part of the Grantors, have
been done and performed and have happened;
7 Note to Form: Bracketed language not to be included in the initial Mortgage Location Supplement.
8 Note to Form: This recital is not to be included in the initial Mortgage Location Supplement.
9 Note to Form: Table not to be included in the initial Mortgage Location Supplement.
Exhibit A to Annex 6 - 1
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NOW, THEREFORE, in order to secure the prompt payment and performance of the Secured
Obligations from time to time outstanding and to secure the performance and observance by the Grantor[s]
and each of the other Credit Parties of all the agreements and provisions contained in the Loan Documents
(as such term is defined in the PSA for the benefit of the Secured Parties, the Grantor[s] has/have mortgaged,
assigned, pledged, hypothecated, transferred, conveyed and granted, and does hereby mortgage, assign,
pledge, hypothecate, transfer, convey and grant, unto the Collateral Agent, for the benefit and security of
the Secured Parties, a continuing first priority security interest in, and mortgage lien on, the property
comprising all its right, title and interest in and to the Spare Parts Assets at the Designated Spare Parts
Location(s) described on Schedule 1 hereto and the Designated Spare Parts Locations listed on Schedule 1
hereto shall be deemed to amend and supplement Schedule 2.1 to the PSA;
To have and to hold all and singular the aforesaid property unto the Collateral Agent, its successors
and assigns, for the benefit and security of the Secured Parties and for the uses and purposes and subject to
the terms and provisions set forth in the PSA.
This Mortgage Location Supplement shall be construed in every way in accordance to the terms of
the PSA and as a part thereof, and the PSA is hereby incorporated by reference herein and is hereby ratified,
approved and confirmed.
This Mortgage Location Supplement will be governed by and construed in accordance with the law
of the State of New York.
[remainder of page intentionally left blank]
Exhibit A to Annex 6 - 2
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IN WITNESS WHEREOF, the Grantor[s] has/have caused this Mortgage Location Supplement to be duly
executed by one of its officers, thereunto duly authorized, on the day and year first above written.
HORIZON AIR INDUSTRIES, INC., as Grantor
By:___________________________________
Name:
Title:
Exhibit A to Annex 6 - 3
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Schedule 1
DESIGNATED SPARE PARTS LOCATIONS
[●]
Exhibit A to Annex 6 - 4
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Exhibit B to Annex 6
[Address to Appropriate Party]
____________________, 20__
Data Report For Spare Parts Assets
Ladies and Gentlemen:
We refer to the Amended and Restated Horizon Aircraft, Engine and Propeller Pledge and Security
Agreement, dated as of October 30, 2020 (as amended, supplement, restated or otherwise modified from
time to time, the “Security Agreement”), between each Grantor, whether as an original signatory thereto
or as an Additional Grantor, and The Bank of New York Mellon, as collateral agent for the Secured Parties
(in such capacity as collateral agent, together with its successors and assigns, the “Collateral Agent”).
Terms defined in the Security Agreement and used herein have such respective defined meanings. The
Grantor[s] hereby certifies/certify that:
Attached hereto as Exhibit 1 is a report that correctly sets forth the following information as of the date
hereof with respect to each Pledged Spare Part:
1. Manufacturer’s part number;
2. part description;
3. related aircraft model(s) in summary form;
4. classification as Rotable or Expendable or Repairable;
5. quantity on hand;
6. Designated Spare Parts Location;
7. each Spare Parts Asset out for repair; and
8. each Spare Parts Asset in transit.
Very truly yours,
[GRANTOR]
By:___________________________________
Name:
Title:
Date:
Exhibit B to Annex 6 - 1
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