CREDIT AGREEMENT

EXHIBIT 10.45

CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT REQUEST PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. THE OMITTED CONFIDENTIAL INFORMATION APPEARS ON THREE (3) PAGES OF THIS EXHIBIT.

EXECUTION VERSION

 

CREDIT AGREEMENT

dated as of August 1, 2006

among

A IR T RAN A IRWAYS , I NC ., as Borrower,

E ACH L ENDER I DENTIFIED ON S CHEDULE 1 H ERETO , as Lenders,

and

T HE R OYAL B ANK OF S COTLAND PLC N EW Y ORK B RANCH , as Security Agent

 

Advance Payments

Seven (7) Boeing model 737-7BD Aircraft

each equipped with

Two (2) CFM International model CFM56 engines

 

TABLE OF CONTENTS

 

 

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CREDIT AGREEMENT

T HIS C REDIT A GREEMENT (this “Agreement”), dated as of August 1, 2006, is by and among (i) A IR T RAN A IRWAYS , I NC . a Delaware corporation, (the “Borrower”), (ii)  EACH L ENDER IDENTIFIED ON S CHEDULE 1 HERETO (“Lenders”) and (iii) T HE R OYAL B ANK OF S COTLAND PLC N EW Y ORK B RANCH , as agent for the Lenders (“Security Agent”).

W I T N E S S E T H:

W HEREAS , Borrower and Airframe Manufacturer have entered into the Purchase Agreement, pursuant to which, among other things, Airframe Manufacturer agreed to manufacture and sell to Borrower, and Borrower agreed to purchase and take delivery of, among other things, seven (7) Boeing model 737-7BD aircraft, described by MSN in Schedule 3, each equipped with two (2) CFM International model CFM56-7B20 engines, each to be delivered during the Scheduled Delivery Months (collectively, the “Aircraft”); and

W HEREAS , Borrower desires to borrow from Lenders, and Lenders desire to lend to Borrower, seventy-five percent (75%) of the non-deferrable Advance Payments (as defined in the Purchase Agreement) made or to be made by Borrower to Airframe Manufacturer in respect of the Aircraft pursuant to the Purchase Agreement.

N OW T HEREFORE , in consideration of the mutual agreements herein contained, the parties hereto agree as follows:

1. D EFINITIONS AND C ONSTRUCTION

Except as otherwise defined in this Agreement, including its schedules and exhibits, terms used herein in capitalized form shall have the meanings attributed thereto in Annex A of the Security Agreement. Annex A of the Security Agreement also contains rules of usage that control construction of this Agreement.

2. C OMMITMENTS ; B ORROWER ’ S N OTICE OF P AYMENT D ATES ; C LOSING P ROCEDURE

(a) Subject to the terms and conditions of this Agreement, each Lender agrees to make a secured loan to the Borrower in respect of each Advance (herein called, for each Advance, a “Drawing”) on a Borrowing Date to be designated pursuant to Section 2(d) hereof, but in no event later than the Commitment Termination Date. In the case of each Lender and each Advance, such Drawing shall be equal to such Lender’s Participation Percentage set forth opposite such Lender’s name in Schedule 2 hereto multiplied by the amount of such Advance (for each Lender, subject to adjustment as provided in Section 2(b) and in any Transfer Agreement, such Lender’s “Commitment” with respect to such Advance); provided further that the aggregate amount of Drawings for all Advances to be made by any Lender shall not exceed the amount in Dollars set forth opposite such Lender’s name in Schedule 2 hereto as its Maximum Commitment (subject to adjustment as provided in Section 2(b) and in any Transfer Agreement, its “Maximum Commitment”). All Drawings in respect of an Aircraft shall be evidenced in single series (each, a “Series”) of Loan Certificates issued with respect to such Aircraft.

 

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(b) If any Lender shall default in its obligation to make the amount of its Commitment available pursuant to Section 2(a) in respect of any Advance, except as provided below in this Section 2(b) with respect to RBS, no other Lender shall have an obligation to increase the amount of its Commitment for such Advance and, notwithstanding the further provisions of this Section 2(b), the obligations of the non-defaulting Lenders shall remain subject to the terms and conditions set forth in this Agreement. If a Lender to whom RBS has transferred its Commitment in whole or in part pursuant to Section 9(a) without the consent of Borrower with respect to an Aircraft fails to perform its obligation to make a secured loan on a Borrowing Date, RBS shall be obligated to make an additional secured loan on such Borrowing Date in an amount equal to the amount of the secured loan that such Lender was so obligated to, but did not, make. In the event that the preceding sentence is applicable and RBS is obligated to make an additional secured loan, the Commitment of RBS shall be increased by the amount of such additional secured loan, and the Commitment of the affected Lender shall be reduced by an equivalent amount, effective on the applicable Borrowing Date. In the circumstances of the second preceding sentence, such Lender shall be liable to RBS (but not to Borrower) for any damages attributable to its failure to make the secured loan in question which was made, instead, by RBS.

(c) Each Drawing shall be evidenced by this Agreement and the Series of Loan Certificate issued with respect thereto, and notations made from time to time by each Lender in its respective books and records, including computer records. Each Lender shall make notations on each Loan Certificate it holds, and record in its books and records, including computer records, regarding the unpaid principal amount of the Drawings made under the Loan Certificates its holds and the amounts of payments of principal made thereon from time to time. Each Lender’s books and records shall constitute presumptive evidence, absent manifest error, of the accuracy of the information contained therein. Failure by any Lender to make any such notation or record shall not affect the obligations of Borrower to such Lender with respect to the repayment of its Loan Certificates.

(d) On the Business Day coinciding with the Effective Date, upon satisfaction of the applicable conditions precedent in Section 4(a) hereof, the Lenders shall, severally in accordance with their respective Commitments, fund Drawings in respect of Advances which were paid by Borrower prior to the Effective Date. On the first (1 ^st ) Business Day of each calendar month following the Effective Date (the initial and each subsequent date on which Drawings are so funded and borrowings made hereunder referred to herein as a “Borrowing Date”), the Lenders shall, severally in accordance with their respective Commitments, upon satisfaction of the applicable conditions precedent in Section 4(a) hereof, fund Drawings in respect of Advances which are then due and payable by Borrower to Airframe Manufacturer.

(e) On the Borrowing Date for each Drawing, subject to the terms and conditions of this Agreement, the Borrower requests that each Lender, and each Lender agrees to, pay the amount of its Commitment for such Advance directly to Airframe Manufacturer (or to Borrower, if Borrower shall have paid the Advance to Airframe Manufacturer on or prior to the Borrowing Date thereof) by wire transferring (or by making other arrangements reasonably satisfactory to Security Agent and Airframe Manufacturer or Borrower (as the case may be)) such amounts to the account or the accounts specified by Borrower in the applicable Borrowing Notice. The Borrower shall furnish to the Security Agent notice of each proposed borrowing hereunder (a

 

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“Borrowing Notice) no later than 4:30 p.m. New York City time on the fourth (4 ^th ) Business Day prior to the applicable Borrowing Date. Such Borrowing Notice shall set forth (i) the proposed Borrowing Date, (ii) the amount of the Drawings to be made and (iii) the Series to which such Drawings relate.

(a) The closing (“Closing”) with respect to the funding of each Advance shall take place at 12:00 Noon, New York City time, at the offices of Simpson Thacher & Bartlett, LLP, 425 Lexington Avenue, New York, New York 10017.

(b) The Borrower agrees to indemnify each Lender for, and to hold each Lender harmless from, any loss or expense that such Lender may sustain or incur as a consequence of (a) failure by the Borrower in making a borrowing after the Borrower has given a Borrowing Notice requesting the same in accordance with the provisions of this Agreement other than as a result of a breach by any Lender to make its Commitment available pursuant to Section 2(a), (b) failure by the Borrower in making any prepayment of Loan Certificates after the Borrower has given a notice thereof in accordance with the provisions of this Agreement or (c) the making of a prepayment of Loan Certificates on a day that is not the last day of an Interest Period with respect thereto. This covenant shall survive the termination of this Agreement and the payment of the Loan Certificates and all amounts payable hereunder.

3. L OAN C ERTIFICATES , I NTEREST , E XPENSES , F EES , I NCREASED C OSTS AND I LLEGALITY

(a) Loan Certificates, Interest . Each Loan Certificate shall bear interest and be repaid in accordance with the applicable terms of this Agreement, the Security Agreement and such Loan Certificate.

The Applicable Rate for each Interest Period shall be established by the Security Agent. The Security Agent shall give prompt notice to the Borrower and the Lenders of the Applicable Rate determined by the Security Agent from time to time in accordance with the applicable provisions hereof and the interest rate, if any, furnished by each Reference Bank and used by the Security Agent for the purpose of determining the LIBOR Rate. Each determination by the Security Agent of an Applicable Rate pursuant hereto shall be conclusive and binding for all purposes, absent manifest error.

(b) Pro Rata Treatment and Payments .

(1) Each borrowing by the Borrower from the Lenders hereunder, each payment by the Borrower on account of Commitment Fee and, except as provided in Section 4.1(c) of the Security Agreement, any reduction of the Commitments of the Lenders shall be made pro rata according to the respective Commitments of the relevant Lenders.

(2) Each payment (including each prepayment) by the Borrower on account of principal of and interest on the Loan Certificates shall be made pro rata according to the respective outstanding principal amounts of the Loan Certificates then held by the Lenders (except as otherwise provided in the Security Agreement).

 

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(c) Transaction Expenses . If the borrowing and other transactions in respect of such Drawing are consummated, or do not close for any reason other than any Lender’s breach of its obligations under Section 2 hereof, Borrower agrees to the pay all Transaction Expenses, subject to the limits set forth in Section 3 of Schedule 2.

(d) 2006 Long-Term Facility . Borrower and RBS hereby agree to work in good faith towards executing and delivering the Loan Agreement described in clause (b) of the definition of “Loan Agreements” set forth in the Security Agreement on or before August 31, 2006.

(e) Commitment Fee. Borrower agrees to pay the Commitment Fee in arrears on the last day of the calendar quarter following the Effective Date and on the last day of each calendar quarter thereafter. Such Commitment Fee shall be calculated on the basis of a year of 360 days and actual number of days elapsed and shall accrue on the average daily unused portion of the aggregate Maximum Commitment of the Lenders during such calendar quarter. Borrower shall continue to pay the Commitment Fee until the earliest to occur of (i) the full drawing of the aggregate Maximum Commitment of the Lenders and (ii) the Commitment Termination Date. The Commitment Fee shall be payable by Borrower to Security Agent on the due date thereof in immediately available funds no later than 12:00 Noon, New York City time, on such date to the account of Security Agent on Schedule 1. Security Agent shall distribute the Commitment Fee when received to the Lenders in the manner provided in Section 3(b)(1). For purposes hereof, the aggregate unused Maximum Commitment of the Lenders shall be reduced by an amount equal to the unused Maximum Commitment of the Lenders in respect of an Aircraft in the event that Borrower or Airframe Manufacturer cancels the delivery of such Aircraft. Any such reduction in the aggregated unused Maximum Commitment of the Lenders shall be permanent.

(f) Increased Costs/Capital Adequacy.

(i) Subject to the provisions of Section 3(f)(v) below, Borrower shall promptly pay directly to each Lender such amounts as are reasonably necessary to compensate such Lender for any increase in costs which are attributable to such Lender’s making, maintaining or continuing of its Commitment or the loans evidenced by its Loan Certificates or funding arrangements utilized in connection with such loans, or any reduction in any amount receivable by such Lender hereunder in respect of any of its Commitments or under the Loan Certificates, such loans or such arrangements (such increases in costs and reductions in amounts receivable being herein called “Additional Costs”), applicable to the period commencing thirty (30) days prior to Lender’s notification thereof pursuant to Section 3(f)(iii) and resulting from the adoption of or any change after the date hereof in Law or in the interpretation or application thereof or compliance by any Lender with any request or directive (whether or not having the force of Law but, if not having the force of Law, is generally applied by Lender with respect to similar credits under similar circumstances) from any central bank or other Governmental Entity made subsequent to the date hereof:

(1) shall impose any tax that is the functional equivalent of any reserve, special deposit or similar requirement of the sort covered by clause (2) below; or

 

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(2) shall impose or modify any reserve, special deposit, compulsory loan or similar requirements against assets held by, deposits or other liabilities in or for the account of advances, loans or other extensions of credit by, or any other acquisition of funds by, any office of such Lender; or

(3) imposes any other condition affecting this Agreement or its Loan Certificates (or any of such extensions of credit or liabilities) or any such obligation.

(ii) Without duplication of any amounts payable by Borrower under Section 3(f)(i), if any Lender shall have determined, acting reasonably and in good faith, that after the date hereof, the adoption of or any change in any Law regarding capital adequacy or in the interpretation or application thereof, or compliance by such Lender or any corporation controlling such Lender with any request or directive regarding capital adequacy (whether or not having the force of Law but, if not having the force of Law, is generally applied by such Lender with respect to similar credits under similar circumstances) from any Governmental Entity made subsequent to the date hereof, shall have the effect of reducing the rate of return on such Lender’s or such corporation’s capital as a consequence of its obligations hereunder to a level below that which such Lender or such corporation could have achieved but for such adoption, change or compliance (taking into consideration such Lender’s or such corporation’s policies with respect to capital adequacy) by an amount deemed by such Lender to be material acting reasonably and in good faith, then from time to time, after submission by such Lender to Borrower (with a copy to Security Agent) of a written request therefor, Borrower shall pay to such Lender such additional amount or amounts as will compensate such Lender or such corporation for such reduction attributable to the period commencing thirty (30) days prior to Lender’s notification thereof pursuant to Section 3(f)(iii).

(iii) Each Lender will furnish to Borrower (with a copy to Security Agent) an Officer’s Certificate setting forth in reasonable detail (A) the events giving rise to the request by such Lender for compensation under subsection (i) or (ii) of this Section 3(f), (B) the basis for determining such compensation and (C) the amount of each request by such Lender for compensation under subsection (i) or (ii) of this Section 3(f), together with a statement that the determinations made in respect of the such compensation comply with the provisions of this Section 3(f) and that none of the exceptions set forth in Section 3(f)(iv) apply with respect to such compensation. Determinations set forth in such Officer’s Certificate shall be presumed correct, absent manifest error.

(iv) The Borrower shall not be required to make payments under this Section 3(f) to any Lender if (1) a claim hereunder arises through circumstances peculiar to such Lender and which do not affect commercial banks in the same jurisdiction generally or (2) the claim arises out of a relocation by such Lender of its lending office (except any such relocation effected pursuant to Section 3(f)(v)), or (3) if a comparably situated Borrower is being treated more favorably by such Lender (as reasonably determined by such Lender) in respect of a claim made hereunder.

 

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(v) Each Lender will, if requested by Borrower, to the extent not inconsistent with any applicable legal or regulatory restrictions and subject to the overall policy considerations of such Lender, use commercially reasonable efforts to designate a different lending office for the Loan Certificates of such Lender affected by such event or, failing that, to take other reasonable measures requested by Borrower (including transferring such Loan Certificates pursuant to Section 9(b) hereof) to mitigate the amount of payment of Additional Costs or other amounts under this Section 3(f), if as a result thereof the additional amounts that would otherwise be required to be paid to such Lender pursuant to this Section 3(f) would be reduced or eliminated and if the making, funding or maintaining of its interest in the Loan Certificates through such other lending office or the taking of such other reasonable measures would not, in the good faith judgment of such Lender, result in any economic, legal or regulatory disadvantage (other than de minimis disadvantages) or adverse tax consequences to such Lender (other than adverse tax consequences for which Borrower agrees to indemnify such Lender); provided, that such Lender will not be obligated to utilize such other lending office pursuant to this Section 3(f) unless Borrower agrees to pay all incremental out-of-pocket expenses, if any, reasonably incurred by such Lender as a result of utilizing such other lending office as described above; provided, further, that such Lender shall have no obligation to designate another lending office that does not maintain loans comparable to the loan evidenced by such Lender’s Loan Certificate. An Officer’s Certificate as to the amount of any such expenses (setting forth in reasonable detail the basis for requesting such amount and the calculation thereof) submitted by such Lender to Borrower shall be presumed correct, absent manifest error. If after using commercially reasonable efforts as aforesaid such Lender is not able to mitigate the amount of or the need for the Additional Costs to the reasonable satisfaction of Borrower within thirty (30) days of such Lender’s notice described in Section 3(f)(iii) hereof, Borrower may prepay in accordance with Section 2.10 of the Security Agreement the unpaid amount of the affected Loan Certificates plus interest accrued thereon. Nothing in this Section shall affect or postpone any of the obligations of Borrower or the rights of any Lender pursuant to this Section 3(f).

(g) Illegality. In the event that at any time any Lender shall determine that due to a change of Law it shall become unlawful for any Lender to make or maintain or fund all or a portion of the Loan Certificates it holds in the manner contemplated by the Operative Agreements, then such Lender shall give prompt notice thereof to Borrower. Thereafter, the affected Lender agrees that it will, if requested by Borrower, to the extent not inconsistent with any applicable legal or regulatory restrictions and subject to the overall policy considerations of such Lender, use commercially reasonable efforts to avoid such illegality by designating a different lending office for the affected Loan Certificates of such Lender affected by such illegality or, failing that, shall take other reasonable measures requested by Borrower (including transferring such Loan Certificates pursuant to Section 9(b) hereof) to avoid such illegality and if the making, funding and maintaining of its interest in the affected Loan Certificates through such other lending office or the taking of such other reasonable measures would not, in the good faith judgment of such Lender, result in any economic, legal or regulatory disadvantage (other than a de minimis disadvantage) or adverse tax consequences to such Lender (other than adverse tax consequences for which Borrower agrees to indemnify such Lender); provided, that such Lender shall not be obligated to utilize such other lending office pursuant to this Section 3(g) unless

 

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Borrower agrees to pay all incremental out-of-pocket expenses, if any, reasonably incurred by such Lender as a result of utilizing such other lending office as described above; provided, further that such Lender shall have no obligation to designate another lending office that does not maintain loans comparable to the loan evidenced by such Lender’s Loan Certificate. If after using commercially reasonable efforts as aforesaid such Lender is not able to avoid such illegality within thirty (30) days after such Lender’s notice thereof to Borrower, the affected Loan Certificates may be prepaid by Borrower in accordance with Section 2.10 of the Security Agreement.

4. C ONDITIONS

(a) Conditions Precedent to each Lender’s Obligations . Each Lender’s obligation to make the secured loans described in Section 2 and to participate in the transactions contemplated hereby is subject to the fulfillment or waiver prior to or on the Effective Date and each Borrowing Date, as the case may be, of the following conditions:

(i) On or before the Effective Date, each Lender and Security Agent receives executed counterparts of the following documents and such counterparts have (x) been duly authorized, executed and delivered by the parties thereto and (y) are in full force and effect:

(1) the Security Agreement and any supplement thereto;

(2) the Consent and Agreement;

(3) the Engine Consent and Agreement;

(4) the Loan Certificates in respect of each Aircraft

(5) the Remarketing Agreement;

(6) the Holdings Guarantee; and

(7) the Fee Letter.

(ii) Security Agent shall have received the following, in each case in form and substance reasonably satisfactory to Security Agent:

(1) On or before the Effective Date, (A) a copy of the certificate of incorporation and bylaws of Borrower and a copy of resolutions of the board of directors of Borrower or the executive committee thereof, in each case certified as of the Effective Date by the secretary or an assistant secretary of Borrower, duly authorizing the execution, delivery and performance by Borrower of this Agreement, the Security Agreement and each other document required to be executed and delivered by Borrower on each Borrowing Date in accordance with the provisions hereof and thereof and (B) incumbency certificate of Borrower as to the Person(s) authorized to execute and deliver the Operative Agreements;

 

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(2) On or before the Effective Date, (A) a copy of the articles of incorporation and bylaws of Holdings and a copy of resolutions of the board of directors of Holdings or the executive committee thereof, in each case certified as of the Effective Date by the secretary or an assistant secretary of Holdings, duly authorizing the execution, delivery and performance by Holdings of the Holdings Guarantee and (B) incumbency certificate of Holdings as to the Person(s) authorized to execute and deliver the Holdings Guarantee;

(3) On or before the Effective Date, good standing certificates for Borrower from the Secretary of States of Delaware and Florida dated as of a date reasonably near the Effective Date; and

(4) On or before the Effective Date, good standing certificates for Holdings from the Secretary of States of Nevada dated as of a date reasonably near the Effective Date.

(iii) On or before the Effective Date, Security Agent shall have received opinions addressed to the Lenders and Security Agent from special counsel to Borrower and Borrower’s legal department in form and substance reasonably satisfactory to the Security Agent.

(iv) On or before the Effective Date, Security Agent shall have received evidence in form and substance reasonably satisfactory to Security Agent that the aggregate amount of Drawings and expected Cash Contribution in connection with each Aircraft shall be sufficient when paid to Airframe Manufacturer to satisfy Borrower’s obligations with respect to all non-deferrable Advance Payments (as defined in the Purchase Agreement) then due and payable for each Aircraft under the Purchase Agreement. Security Agent shall also receive confirmation from Airframe Manufacturer that all non-deferrable Advance Payments due prior to the Effective Date have been paid in full by Borrower.

(v) [Intentionally Omitted].

(vi) On or before the Effective Date and each Borrowing Date, Financing Statements related to the Collateral shall have been duly filed or shall be in the process of being filed in the appropriate jurisdiction.

(vii) On or before the Effective Date and each Borrowing Date, Security Agent shall have received all amounts then due and payable under the Fee Letter.

(viii) On or before the Effective Date, Security Agent shall have received certified (with sensitive pricing information redacted) copies of the provisions of the Purchase Agreement and the GTA specifically assigned to Security Agent pursuant to the terms of the Security Agreement.

(ix) On or before the Effective Date, Security Agent shall have received Holdings’ audited consolidated balance sheet for its most recent fiscal year ended December 31, 2005, and the related consolidated statements of operations and cash flows from the period then ended prepared in accordance with GAAP.

 

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(x) On the Effective Date and each Borrowing Date, no change shall have occurred after the date of the execution and delivery of this Agreement in applicable Law that makes it a violation of Law for (i) Borrower, Holdings, any Lender or Security Agent to execute, deliver and perform under the Operative Agreements to which any of them is a party or (ii) for any Lender to make the secured loans contemplated to be made by it pursuant to the terms herein or to realize the benefits of the security afforded by the Security Agreement.

(xi) On each Borrowing Date, (A) the representations and warranties of the Borrower contained in Section 5(a) of this Agreement and the representations and warranties of Holdings contained in Section 9 of the Holdings Guarantee shall be true and accurate in all material respects as though made on and as of such date except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties shall be true and accurate in all material respects on and as of such earlier date), (B) no Default or Event of Default exists or would result from the borrowing hereunder, the use of proceeds of such borrowing or the consummation of the other transactions contemplated in the Operative Agreements, and (C) since December 31, 2005 there shall have been no Material Adverse Change to Borrower or Holdings and each Lender and Security Agent shall have received an Officer’s Certificate to the effect of (A), (B) and (C).

(xii) On the Effective Date and on each Borrowing Date, no action or proceeding shall have been instituted nor shall any action be, to the Actual Knowledge of Borrower or Holdings, threatened before any Governmental Entity, nor has any order, judgment or decree been issued or proposed to be issued by any Governmental Entity to set aside, restrain, enjoin or prevent the completion and consummation of this Agreement or the transactions contemplated hereby.

(xiii) On the Effective Date and on each Borrowing Date, after giving effect to the filing of the Financing Statements covering all the security interests created by or pursuant to the Granting Clause of the Security Agreement, Security Agent shall have a duly-perfected first priority security interest in all of Borrower’s right, title and interest in the Collateral, subject only to Permitted Liens.

(xiv) On each Borrowing Date, Security Agent shall have received a duly completed and executed Borrowing Notice with respect to the Borrowing Date for such Advance in compliance with Section 2 hereof.

(xv) On or before each Borrowing Date, Borrower shall have paid to Airframe Manufacturer an amount equal to its Cash Contribution due and payable to Airframe Manufacturer on such Borrowing Date.

(xvi) With respect to the second Drawings to be made hereunder, on or before the Borrowing Date related thereto, Borrower shall have executed and delivered an

 

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amendment to the Existing PDP Security Agreement and an amendment to each of the Related Mortgages entered into in connection with the transactions contemplated by the Loan Agreement described in clause (a) of the definition of “Loan Agreements” set forth in the Security Agreement relating to cross-default and cross-collateralization, in form and substance reasonably satisfactory to the Security Agent and Borrower, and shall have made the appropriate filings with respect to such Related Mortgages with the Federal Aviation Authority and on the international registry established under the Cape Town Convention.

(xvii) With respect to any Drawing to be made hereunder on or after September 30, 2006, on or before the Borrowing Date related thereto, Borrower shall have executed and delivered the Loan Agreement described in clause (b) of the definition of “Loan Agreements” set forth in the Security Agreement.

(xviii) On the Effective Date and each Borrowing Date, Security Agent shall have received such other documents as it may reasonably request.

(b) Conditions Precedent to Borrower’s Obligations. It is hereby agreed that Borrower’s obligation to borrow the Commitments with respect to each Advance is subject to the satisfaction (or waiver), on or before the Borrowing Date for such Advance of the following conditions:

(i) Borrower shall have received (or waived receipt of) (aa) executed original counterparts of the documents described in Section 4(a)(i) (other than Loan Certificates, as to which it shall have received a copy only) and such documents shall be reasonably satisfactory to Borrower and (bb) such other documents as Borrower may reasonably request from Security Agent or any Lender, unless the failure to receive any such document is the result of any action or inaction by Borrower.

(ii) Each of the conditions in Subsections (ii) and (iv) of Section 4(b) are satisfied or have been waived by Borrower unless the failure of any such condition to be satisfied is the result of any action or inaction by Borrower.

5. R EPRESENTATIONS AND W ARRANTIES

(a) Borrower Representations and Warranties . Borrower represents and warrants to each Lender and the Security Agent that on the date hereof and on each Borrowing Date:

(i) Borrower is a corporation duly incorporated, validly existing and in good standing under the Laws of the State of Delaware, and has the corporate power and authority to conduct the business in which it is currently engaged and to own or hold under lease its properties and to enter into and perform its obligations under each of the Operative Agreements to which Borrower is or will be a party. Borrower is duly qualified to do business as a foreign corporation in good standing in each jurisdiction in which the nature and extent of the business conducted by it, or the ownership of its properties, requires such qualification, except where the failure to be so qualified does not constitute or would not give rise to a Material Adverse Change with respect to Borrower.

 

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(ii) The execution and delivery by Borrower of, and performance by Borrower of its obligations under, this Agreement and the other Operative Agreements to which Borrower is or will be a party, and the Purchase Agreement and the GTA, have been duly authorized by all necessary corporate action on the part of Borrower and do not require any stockholder approval, or approval or consent of any trustee or holder of any indebtedness or obligations of Borrower, except such as have been duly obtained and are in full force and effect.

(iii) Borrower’s execution and delivery of, and performance of its obligations under, the Operative Agreements to which Borrower is or will be a party, and the Purchase Agreement and the GTA, do not, (1) violate any provision of Borrower’s certificate of incorporation or by-laws, (2) violate any Law applicable to or binding on Borrower, or (3) violate or constitute any default under, or result in the creation of any Lien (other than as permitted under the Security Agreement) upon the Collateral under, any material lease, loan or other agreement to which Borrower is or will be a party or by which Borrower or any of its properties is bound.

(iv) Borrower’s execution and delivery of, and performance of its obligations under, the Operative Agreements to which Borrower is or will be a party, and the Purchase Agreement and the GTA, and the consummation by Borrower of any transactions contemplated hereby or thereby will not require the consent, approval or authorization of, the giving of notice to, the registration with, the recording or filing of any documents with, or the taking of any other action in respect of (1) any trustee or other holder of any debt of Borrower, or (2) any Governmental Entity, other than (x) the Financing Statements (and continuation statements periodically related to the Collateral), (y) filings, recordings, notices, or other ministerial actions pursuant to any routine recording, contractual, or regulatory requirements and (z) the execution and delivery of the Consent and Agreement and the Engine Consent and Agreement by Airframe Manufacturer and Engine Manufacturer, respectively.

(v) Each of the Operative Agreements to which Borrower is a party, and the Purchase Agreement and the GTA, have been, duly authorized, executed, and delivered by Borrower and, assuming the due authorization, execution, and delivery thereof by the other parties hereto and thereto, the Operative Agreements and the Purchase Agreement and the GTA, constitute, and on the applicable Borrowing Date, each of the other Operative Agreements to which Borrower is a party will constitute legal, valid, and binding obligations of Borrower enforceable against Borrower in accordance with their terms, except as such enforceability may be limited by bankruptcy, insolvency, and other similar Laws affecting the rights of creditors generally or by general principles of equity.

(vi) Except as set forth in Holdings’ most recent annual report on Form 10-K, quarterly report on Form 10-Q or current report on Form 8-K filed by Holdings with the SEC on or prior to December 31, 2005, no action, claim or proceeding is now pending or, to Borrower’s Actual Knowledge, threatened, against Borrower before any Governmental Entity, that is reasonably likely to be determined adversely to Borrower and if determined adversely to Borrower would result in a Material Adverse Change with respect to Borrower, and there is no action, suit or proceeding pending, or to the Actual Knowledge

 

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of Borrower threatened, before or by any court, arbitrator or administrative agency, body or official to which Borrower is subject, that questions the validity of the Operative Agreements.

(vii) The financial statements delivered by Borrower pursuant to Section 4(a)(ix) have been prepared in accordance with GAAP and fairly present in all material respects in accordance with GAAP the financial condition of Holdings and its consolidated subsidiaries as of such date and the results of its operations and cash flows for such periods, and since the date of such balance sheet, there has been no material adverse change in such financial condition or results of operations, except for matters disclosed in (1) the financial statements referred to above, or (2) any subsequent report filed with the SEC.

(viii) Except for the security interest granted to the Security Agent pursuant to the Security Agreement and except for Permitted Liens, Borrower owns each item of the Collateral free and clear of any and all Liens or claims of others. No financing statement or other public notice with respect to all or any part of the Collateral is on file or of record in any public office, except such as have been filed in favor of the Security Agent, for the ratable benefit of the Lenders, pursuant to this Agreement. On each Borrowing Date, except for the filing of the Financing Statements, no further action, including filing or recording any document (including any financing statement under UCC Article 9) is necessary in order to establish and perfect Security Agent’s first priority Lien on the Collateral, as against Borrower and any other Person, in any applicable jurisdictions in the United States. The security interests granted pursuant to the Security Agreement will, upon completion of the filings of the Financing Statements specified in the prior sentence, constitute valid first priority perfected security interests in all of the Collateral in favor of Security Agent as collateral security for the Secured Obligations, enforceable in accordance with the terms hereof against all creditors of Borrower and any Persons purporting to purchase any Collateral from Borrower in any applicable jurisdiction in the United States. On the date hereof, Borrower’s jurisdiction of organization, identification number from the jurisdiction of organization (if any), and the location of Borrower’s chief executive office are as follows:

 

(ix) Each of the Purchase Agreement and the GTA are in full force and effect and neither Borrower nor, to the Actual Knowledge of Borrower, either of the Airframe Manufacturer or the Engine Manufacturer is in default of its obligations thereunder. Borrower has delivered to Security Agent a true and complete copy (with sensitive pricing information redacted) of the Purchase Agreement and the GTA, together with all amendments, supplements, modifications and letter agreements relating thereto, except for those letter agreements and provisions of letter agreements specifically excluded from the assignment of the Security Agreement (by virtue of the definitions of “Purchase Agreement” and “GTA”). None of the excluded letter agreements or provisions thereof

 

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could have an adverse effect on the rights and privileges of the Security Agent, as assignee, under the non-excluded portions of the Purchase Agreement or GTA. The Borrower has not received any notice from Airframe Manufacturer or Engine Manufacturer claiming that Borrower is in default of any provision under the Purchase Agreement or the GTA or claiming any rights or intent to terminate or cancel any such agreement.

(x) Neither Borrower nor any Person authorized to act on its behalf has directly or indirectly offered any beneficial interest or Security relating to the ownership of any interest in the Collateral, or any of the Loan Certificates, for sale to, or solicited any offer to acquire any such interest or security from, or has sold any such interest or Security to, any Person in violation of the registration requirements of the Securities Act or in violation of the registration requirements of any applicable state or foreign securities Laws.

(xi) Borrower is not an “investment company” or a company controlled by an “investment company” within the meaning of the Investment Company Act of 1940.

(xii) [Intentionally Omitted].

(xiii) No Person acting on behalf of Borrower is or will be entitled to any broker’s fee, commission, or finder’s fee in connection with the transactions contemplated by this Agreement, other than Borrower’s Advisor.

(xiv) Borrower will not directly or indirectly use any of the proceeds from the issuance of the Loan Certificates so as to result in a violation of Regulation T, U or X of the Board of Governors of the Federal Reserve System.

(xv) Borrower is not (A) in default under any indenture, mortgage, lease or credit agreement or under any other agreement or instrument of a material nature to which Borrower is now a party or by which it is bound or (B) in violation of any law, order, injunction, decree, rule or regulation applicable to Borrower of any court or administrative body, which violation or default referred to in the preceding clause (A) or (B) (x) would reasonably be expected to result in a Material Adverse Change or (y) would involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien on, the Collateral.

(xvi) Assuming the representations of the Lenders in Section 5(b)(iii) hereof are correct, none of the execution and delivery of this Agreement or any of the Operative Agreements or the consummation of the transactions contemplated herein or therein will involve any prohibited transaction within the meaning of Section 406 of ERISA or Section 4975 of the Code.

(xvii) All non-deferrable Advance Payments due prior to the Effective Date have been paid in full by Borrower.

(xviii) Schedule 4 represents the current schedule of non-deferrable Advance Payments due and payable for each Aircraft under the Purchase Agreement.

 

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(b) Lenders’ Representations and Warranties . Each Lender represents and warrants to Borrower on the date hereof and on each Borrowing Date:

(i) This Agreement has been duly authorized, executed, and delivered by it and, assuming the due authorization, execution, and delivery thereof by the other parties hereto, this Agreement constitutes its legal, valid, and binding obligation enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, and other similar Laws affecting the rights of creditors generally or general principles of equity.

(ii) No Person acting on behalf of it is or will be entitled to any broker’s fee, commission, or finder’s fee in connection with the transactions contemplated by this Agreement (except any such fees which have been paid in full, in the case of Lenders other than The Royal Bank of Scotland plc New York Branch).

(iii) Either (i) no portion of the funds used by it to purchase the Loan Certificates constitute “plan assets” (within the meaning of the Department of Labor regulations codified at 29 C.F.R. Section 2510.3-101) of any Plan or (ii) the purchase of the Loan Certificates do not constitute a non-exempt prohibited transaction under Section 406(a) of ERISA or Section 4975(c)(1)(A)-(D) of the Code.

(iv) Neither it nor any Person authorized to act on its behalf has directly or indirectly offered any beneficial interest or Security relating to the ownership of any interest in the Collateral or any of the Loan Certificates for sale to, or solicited any offer to acquire any such interest or security from, or has sold any such interest or Security to, any Person in violation of the registration requirements of the Securities Act or in violation of the registration requirements of any applicable state or foreign securities Laws.

6. C OVENANTS OF B ORROWER .

(a) Liens . Borrower will not directly or indirectly create, incur, assume, or suffer to exist any Lien on or with respect to the Collateral, title thereto, or any interest of Borrower therein, except Permitted Liens. Borrower shall promptly, at its own expense, take such action as may be necessary duly to discharge (by bonding or otherwise) any such Lien other than a Permitted Lien arising at any time.

(b) Borrower Merger.

(i) Borrower shall not convey all or substantially all of its assets in one or a series of related transactions to, or consolidate with or merge with or into any other Person under circumstances in which Borrower is not the surviving corporation, unless:

(1) after giving effect to such conveyance, consolidation or merger, such Person is organized, existing, and in good standing under the Laws of the United States, any state of the United States, or the District of Columbia, and, upon consummation of such transaction, such Person will be a U.S. Air Carrier; and

 

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(2) such Person executes and delivers to Security Agent a duly authorized, legal, valid and binding agreement, reasonably satisfactory in form and substance to Security Agent, containing an effective assumption by such Person of the due and punctual performance and observance of each covenant, agreement, and condition in the Operative Agreements to be performed or observed by Borrower, together with customary officer’s certificates and legal opinions in form and substance satisfactory to Security Agent; and

(3) such Person, immediately after giving effect to such conveyance, consolidation or merger, shall have a tangible net worth of not less than the lesser of (aa) Borrower’s tangible net worth (determined in each case in accordance with GAAP) as of the calendar quarter ending March 31, 2006 or (bb) Borrower’s tangible net worth (determined in each case in accordance with GAAP) immediately prior to such conveyance, consolidation or merger;

(4) immediately after giving effect to such conveyance, consolidation or merger, no Event of Default has occurred or is continuing, and

(5) Borrower has at least thirty (30) days prior to such conveyance, consolidation or merger, given written notice of such transaction to Security Agent.

(ii) Upon any such conveyance, consolidation or merger of Borrower with or into any Person in accordance with this Section 6(b), such Person will succeed to, and be substituted for, and may exercise every right and power of, Borrower under the Operative Agreements with the same effect as if such Person had been named as “Borrower” therein. No such conveyance, consolidation or merger shall have the effect of releasing Borrower or such Person from any of the obligations, liabilities, covenants, or undertakings of Borrower under the Operative Agreements.

(c) Corporate Existence, U.S. Air Carrier . Borrower shall at all times maintain its corporate existence, except as permitted by Section 6(b), and shall at all times remain a U.S. Air Carrier.

(d) Notice of Change of Name or Location . Borrower will give to Security Agent timely written notice (but in any event at least thirty (30) days before the expiration of the period of time specified under applicable Law to prevent lapse of perfection) of any change of its name or jurisdiction of organization (as defined in UCC Article 9), and will promptly take any action required by Section 6(e)(2) as a result of such change of name or relocation.

(e) Certain Assurances .

(1) Borrower shall duly execute, acknowledge, and deliver (or cause to be executed, acknowledged, and delivered) all such further documents, and shall do and cause to be done such further things, as Security Agent reasonably requests to accomplish the purposes of the Operative Agreements, provided that any document so executed by Borrower will not expand any obligations or limit any rights of Borrower in respect of any of the Operative Agreements.

 

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(2) Borrower shall, at its own cost, promptly take such action with respect to the recording, filing, re-recording, and re-filing of the Security Agreement, and any supplements thereto, as shall be necessary to continue the perfection and priority of the Lien created by the Security Agreement.

(3) Borrower shall, on each Borrowing Date, subject to the satisfaction (or waiver), on or before the Borrowing Date, of the conditions precedent set forth in Section 4(b), fund the Cash Contribution(s) due and payable to Airframe Manufacturer on such Borrowing Date.

(4) Borrower will cause the Financing Statements and all continuation statements (and any amendments necessitated by any combination, consolidation, or merger of Borrower, or any change in its name or its jurisdiction of organization) in respect of the Financing Statements to be prepared and duly and timely filed and recorded to the extent permitted under the UCC or similar Law of any applicable jurisdiction.

(f) Securities Laws . Neither Borrower nor any Person authorized to act on its behalf will directly or indirectly offer any beneficial interest or Security relating to the ownership of any interest in the Collateral or any of the Loan Certificates, for sale to, or solicit any offer to acquire any such interest or security from, or sell any such interest or Security to, any Person in violation of the registration requirements of the Securities Act or in violation of the registration requirements of any applicable state or foreign securities Laws.

(g) Financial Information .

(i) Borrower shall provide to Security Agent, (1) copies of the (x) audited financial statements of Holdings for its financial year ended as at December 31, 2006 and for each financial year thereafter as soon as they are available but in any event not later than 120 days after the close of the relevant period and (y) unaudited financial statements of Holdings for each quarterly period as soon as they are available but in any event not later than sixty (60) days after the close of the relevant period. Each financial statement provided hereunder shall have been prepared in accordance with GAAP and each annual financial statement shall be accompanied by an Officer’s Certificate of Borrower, stating that, based on an examination sufficient to enable such officer to make an informed statement, no Default or Event of Default under the Operative Agreements has occurred and is continuing or, if such is not the case, specifying such Default or Event of Default and its nature, when it occurred and the steps being taken by Borrower with respect thereto. Notwithstanding the foregoing to the contrary, if Holdings is subject to, and so long as it is complying with, the reporting requirements under the Securities and Exchange Act of 1934, the timely delivery (or public posting on the website of the Securities Exchange Commission (“SEC”) of a copy of Holdings’ report on Form 10-K (or any successor form) with respect to the relevant year shall satisfy the requirements of clause (x) and the timely delivery (or public posting on the SEC’s website) a copy of Holdings’ report on Form 10Q (or any successor form) for the relevant quarter shall satisfy the requirements of clause (y); and

 

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(ii) Promptly upon the reasonable request of Security Agent (x) such additional financial information and other information regarding Borrower or Holdings that has been publicly disclosed and which Borrower or Holdings releases or otherwise makes available to lessors and/or creditors generally and (y) (i) so long as no Event of Default shall have occurred and be continuing, such other information regarding the Collateral which Borrower generally releases or otherwise makes available to lessors and/or creditors regarding similar property and (ii) if an Event of Default is in existence, such other information (not subject to a confidentiality agreement that prohibits disclosure to the Lenders) regarding the Collateral.

7. L ENDER C OVENANTS .

(a) Liens . No Lender (1) will directly or indirectly create, incur, assume, or suffer to exist any Lien on all or any part of the Collateral arising as a result of (a) claims against such Lender not related to its interest in the Collateral or the transactions contemplated by the Operative Agreements or (b) acts of such Lender not permitted by, or the failure of such Lender to take any action required by, the Operative Agreements and (2) will, at its own cost and expense, promptly take such action as is necessary to discharge any such Lien on all or any part of the Collateral attributable to such Lender on all or any part of the Collateral.

8. S ECURITY A GENT ’ S C OVENANTS

(a) Liens . Security Agent (1) will not directly or indirectly create, incur, assume, or suffer to exist any Lien on all or any part of the Collateral arising as a result of (a) claims against Security Agent not related to its interest in the Collateral or the transactions contemplated by the Operative Agreements or (b) acts of Security Agent not permitted by, or the failure of Security Agent to take any action required by, the Operative Agreements and (2) will, at its own cost and expense, promptly take such action as is necessary to discharge any such Lien on all or any part of the Collateral attributable to Security Agent on all or any part of the Collateral.

(b) Securities Laws . Security Agent will not offer any beneficial interest or security relating to the ownership of any interest in the Collateral or any of the Loan Certificates for sale to, or solicit any offer to acquire any such interest or security from, or sell any such interest or security to, any Person in violation of the registration requirements of the Securities Act or in violation of the registration requirements of any applicable state or foreign securities Laws.

9. A SSIGNMENT OR T RANSFER OF I NTEREST

(a) Lenders .

(i) Transfer . Subject to Sections 9(a)(ii) and (iii) below and Section 2.7 of the Security Agreement, any Lender may, at any time, Transfer or grant participations in all or any portion of its Commitment, Loan Certificates or all or any portion of its interest in or represented by its Commitment or Loan Certificates to a Transferee; provided, that any participant in any such participation shall not have any direct rights under the Operative

 

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Agreements or any Lien on all or any part of any of the Collateral except that each participant shall be entitled to the benefits of Sections 3(f), 9(c) and 15(k) to the same extent as if it were a Lender and had acquired its interest by Transfer pursuant to this Section 9(a)(i); further provided, no such Transfer or participation shall diminish Borrower’s rights or increase Borrower’s liability or obligations or the amounts thereof (including with respect to withholding Taxes) above (x) in the case of a Transfer, that which would result had any such Transfer not occurred (except to the extent resulting from a change in Law after the date of such Transfer) and (y) in the case of a participation, that which would have resulted had the relevant Lender retained the interest in the Commitment or the Loan Certificates that is the subject of such participation. In the case of any Transfer, the Transferee, by execution and delivery of a Transfer Agreement in connection with such Transfer, shall be bound, to the extent provided therein, by all of the covenants of the transferring Lender in the Operative Agreements. In connection with any Transfer or participation, Section 15 shall continue to apply with respect to any confidential and proprietary information of Borrower and, prior to disclosing such information to a Transferee or participant or potential Transferee or participant, such Lender shall obtain the agreements of Transferee(s) and such other Persons as contemplated by clause (a) of Section 15. Notwithstanding any provisions of the Operative Agreements to the contrary, no Lender shall be entitled to Transfer or grant participations to any Person in all or any portion of its Commitment, Loan Certificates or all or any portion of its beneficial interest in its Commitment or Loan Certificates, unless such Transfer or participation is in respect of a Commitment amount or an unpaid principal amount that is greater than or equal to Five Million Dollars (US$5,000,000) or if less, the outstanding principal amount of such Loan Certificates or the outstanding amount of such Lender’s Commitment, as the case may be.

(ii) Securities Law . Each Lender agrees that it will not Transfer or grant participations in its Commitment, any Loan Certificate which it holds or any interest in, or represented by, its Commitment or any Loan Certificate which it holds in violation of the registration requirements of the Securities Act or in violation of the registration requirements of any applicable state or foreign securities Laws.

(iii) ERISA . Each Lender agrees that it will not Transfer any Loan Certificates which it holds or any interest in, or represented by any Loan Certificate which it holds unless the proposed Transferee thereof first provides Borrower with a written representation in the applicable Transfer Agreement that either (a) no portion of the funds used by it to purchase such Loan Certificate constitutes “plan assets” (within the meaning of the Department of Labor regulations codified at 29 C.F.R. Section 2510.3-101) of any Plan, or (b) its purchase of such Loan Certificate will not constitute a non-exempt prohibited transaction under Section 4975(c)(1)(A)-(D) of the Code or Section 406(a) of ERISA.

(b) Transfer at Request of Borrower . In the event that Indemnified Withholding Taxes become payable by Borrower pursuant to Section 10(c)(i) hereof with respect to payments by Borrower to a Lender under a Loan Certificate or pursuant to any Operative Agreement and the elimination or sufficient reduction of such Indemnified Withholding Taxes pursuant to a transfer described in the last sentence of such Section 10(c)(i) is not accomplished, such Lender

 

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shall, upon the written request of Borrower, sell in accordance with this Section 9 the affected Loan Certificate to a Person identified by Borrower to which payments under the Loan Certificate would not be subject to withholding Taxes under then applicable Law for an amount which, together with any supplemental payment by Borrower in connection with such sale, shall be equal to the par value of such affected Loan Certificate plus accrued but unpaid interest thereon plus any Breakage Amount. In the circumstances required in Section 3(f)(i) and Section 3(g), the affected Lender shall, upon the written request of Borrower, sell in accordance with this Section 9 the affected Loan Certificates to a Person identified by Borrower for an amount which, together with any supplemental payment by Borrower in connection with such sale, shall be equal to the par value of such affected Loan Certificate plus accrued but unpaid interest thereon plus any Breakage Amount. Out-of-pocket costs and expenses, if any, (including reasonable fees and disbursements of counsel) reasonably incurred by a Lender and Security Agent in connection with any such transfer shall be for the account of Borrower.

(c) Federal Reserve Bank . Any Lender may at any time pledge or grant a security interest in its interest in the Loan Certificates it holds and in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or grant of a security interest to secure obligations to a Federal Reserve Bank, and Section 9(a) shall not apply to any such pledge or grant of a security interest; provided, that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or grantee for such Lender as a party hereto and; provided, further, that no such pledge or grant shall diminish Borrower’s rights or increase Borrower’s liability or obligations or the amounts thereof (including with respect to withholding Taxes) above that which would result had any such pledge or grant not occurred (except to the extent resulting from a change in Law after the date of such pledge or grant) and that in connection with any such pledge or grant (except to the Federal Reserve Bank, but subject to confidentiality arrangements as are customary in such pledges or grants to the Federal Reserve Bank), Section 14 shall continue to apply with respect to any confidential and proprietary information of Borrower and, prior to disclosing such information to pledgee or grantee, Lender shall obtain the agreements of pledgee(s), grantee(s) and such other Persons as contemplated by clause (b) of Section 14.

(d) Effect of Transfer; Costs . Upon any Transfer in accordance with Section 9(a), the Transferee shall be deemed a “Lender” for all purposes of the Operative Agreements, and the transferring Lender shall be released from all of its liabilities and obligations with respect to such transferred Loan Certificate under the Operative Agreements to the extent such liabilities and obligations arise with respect to the period after such Transfer (or as otherwise agreed between the transferring Lender and the Transferee) and, in each case, to the extent such liabilities and obligations are assumed by the Transferee; provided, that such transferring Lender (and its Affiliates, successors, assigns, agents, representatives, directors, and officers) will continue to have the benefit of any rights or indemnities under any Operative Agreement vested or relating to circumstances, conditions, acts, or events before such Transfer (or as otherwise agreed between the transferring Lender and the Transferee). The transferring Lender agrees that it shall reimburse, or shall cause the Transferee to reimburse, Borrower and Security Agent for all of their reasonable out-of-pocket costs and expenses (including reasonable fees and disbursements of counsel) incurred in connection with any such Transfer.

 

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10. I NDEMNITIES

(a) General Indemnity .

(i) Whether or not any of the transactions contemplated by this Agreement are consummated, Borrower shall indemnify, protect, defend, and hold harmless each Indemnitee from, against, and in respect of, and shall pay on an After-Tax Basis, any and all Expenses of any kind or nature whatsoever that may be imposed on, incurred by, or asserted against any Indemnitee, relating to, resulting from, or arising out of or in connection with any one or more of the following:

(1) the Operative Agreements or any of the transactions contemplated hereby or thereby or the enforcement of any of the Operative Agreements during the existence of a Default;

(2) (aa) any claim or penalty arising out of violations of applicable Laws by Borrower, (bb) any Liens in respect of the Collateral, (cc) tort liability whether or not arising out of the negligence of any Indemnitee (whether active, passive or imputed) and (dd) the offer, sale or delivery by Borrower of any Loan Certificates issued on any Borrowing Date; and

(3) any breach of or failure to perform or observe, or any other noncompliance with, any covenant, agreement, or other obligation to be performed by Borrower under any Operative Agreement to which it is pa