AMENDED AND RESTATED REVOLVING CREDIT, TERM LOAN AND GUARANTY AGREEMENT

Exhibit 4.1

AMENDED AND RESTATED REVOLVING CREDIT, TERM LOAN AND GUARANTY AGREEMENT

Among

UNITED AIR LINES, INC.,

as Borrower ,

and

UAL CORPORATION,

the Parent ,

and

THE SUBSIDIARIES OF THE BORROWER AND THE PARENT NAMED HEREIN,

as Guarantors

and

THE LENDERS PARTY HERETO,

and

JPMORGAN CHASE BANK, N.A.,

as Co-Administrative Agent, Co-Collateral Agent and Paying Agent

CITICORP USA, INC.,

as Co-Administrative Agent and Co-Collateral Agent

J.P. MORGAN SECURITIES INC.,

as Joint Lead Arranger and Joint Bookrunner

CITIGROUP GLOBAL MARKETS, INC.,

as Joint Lead Arranger and Joint Bookrunner

CREDIT SUISSE SECURITIES (USA) LLC,

as Syndication Agent

Dated as of February 2, 2007

TABLE OF CONTENTS

 

 

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TABLE OF CONTENTES

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AMENDED AND RESTATED REVOLVING CREDIT, TERM LOAN

AND GUARANTY AGREEMENT

Dated as of February 2, 2007

REVOLVING CREDIT, TERM LOAN AND GUARANTY AGREEMENT, dated as of February 2, 2007, among UNITED AIR LINES, INC., a Delaware corporation (the “ Borrower ”), UAL CORPORATION, a Delaware corporation and the parent company of the Borrower (the “ Parent ”) and the direct and indirect domestic subsidiaries of the Parent other than Immaterial Subsidiaries signatory hereto (the “ Subsidiaries ” and together with the Parent, each a “ Guarantor ” and collectively the “ Guarantors ”), JPMORGAN CHASE BANK, N.A., a national banking corporation (“ JPMCB ”), CITICORP USA, INC., a Delaware corporation (“ CITI ”), each of the Lenders from time to time party hereto, JPMCB and CITI, as co-administrative agents (each, an “ Agent ” and together, the “ Agents ”) and as co-collateral agents for the Lenders (each, a “ Collateral Agent ” and together, the “ Collateral Agents ”), JPMCB, as paying agent (in such capacity, the “ Paying Agent ”) for the Lenders, J.P. MORGAN SECURITIES INC. (“ JPMSI ”) and CITIGROUP GLOBAL MARKETS, INC. (“ CGMI ”), as joint lead arrangers and joint bookrunners , and CREDIT SUISSE SECURITIES (USA) LLC, as syndication agent.

INTRODUCTORY STATEMENT

The Borrower and certain of the Guarantors are party to the Existing Facility (as defined herein) and have requested that the Existing Facility be amended and restated in its entirety and that the Lenders make available hereunder a loan facility of $2,055,000,000 comprised of (a) a revolving credit and letter of credit facility in an aggregate principal amount not to exceed $255,000,000 as set forth herein and (b) a term loan in an aggregate principal amount equal to $1,800,000,000 as set forth herein, in each case, as such facilities (collectively, the “ Facility ”) may be increased in accordance with Section 10.08(c), all of the Obligations (as defined herein) in respect of which are to be guaranteed by the Guarantors.

The proceeds of the Loans will be used for working capital and other general corporate purposes (including the financing of Permitted Acquisitions) of the Borrower and the Guarantors and for the other purposes described in Section 3.10.

To provide guarantees and security for the repayment of the Loans, the reimbursement of any draft drawn under a Letter of Credit and the payment of the Obligations of the Borrower and the Guarantors hereunder and under the other Loan Documents, the Borrower and the Guarantors will, among other things, provide to the Agents, the Collateral Agents and the Lenders the following (each as more fully described herein):

(a) a guaranty from each of the Guarantors of the due and punctual payment of the Obligations of the Borrower hereunder pursuant to Section 9 hereof; and

(b) a security interest on or mortgages (or comparable Liens) with respect to the Collateral from the Borrower and each of the Guarantors pursuant to the Collateral Documents.

 

Accordingly, the parties hereto hereby agree that the Existing Facility is hereby amended and restated in its entirety as follows:

SECTION 1. DEFINITIONS

SECTION 1.01 Defined Terms .

“ ABR ”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Alternate Base Rate.

“ Account ” shall mean any right to payment for goods sold or leased or for services rendered, whether or not earned by performance.

“ Account Debtor ” shall mean the Person obligated on an Account.

“ Adjusted LIBO Rate ” shall mean, with respect to any Eurodollar Borrowing for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate.

“ Affiliate ” shall mean, as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. For purposes of this definition, a Person (a “ Controlled Person ”) shall be deemed to be “controlled by” another Person (a “ Controlling Person ”) if the Controlling Person possesses, directly or indirectly, power to direct or cause the direction of the management and policies of the Controlled Person whether by contract or otherwise; provided, that neither the trustees under the Indentures nor the PBGC shall be an Affiliate of the Borrower or any Guarantor.

“ Agent ” shall have the meaning set forth in the first paragraph of this Agreement.

“ Agreement ” shall mean this Amended and Restated Revolving Credit, Term Loan and Guaranty Agreement, as the same may be further amended, amended and restated, modified, supplemented, extended or replaced from time to time.

“ Aircraft Mortgage ” shall mean that “Aircraft Mortgage” as defined in Section 4.01(e), as the same may be amended, restated, modified, supplemented, extended or amended and restated from time to time.

“ Aircraft Protocol ” shall mean the Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment, as the same may be amended from time to time, available at: http://www.unidroit.org/english/conventions/mobile-equipment/aircraftprotocol.pdf , or any successor URL.

“ Airframe ” shall have the meaning set forth in the Aircraft Mortgage.

 

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“ Airport Authority ” shall mean any public or private board or other body or organization chartered or otherwise established for the purpose of administering, operating or managing airports or related facilities.

“ Alternate Base Rate ” shall mean, for any day, a rate per annum equal to the greater of (a) the Prime Rate in effect on such day and (b) the sum of the Federal Funds Effective Rate in effect on such day plus  ¹ / 2 of 1%. Any change in the Alternate Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective from and including the effective date of such change in the Prime Rate or the Federal Funds Effective Rate, respectively.

“ Appraisal Report ” shall mean an appraisal in form and substance reasonably satisfactory to the Agents and the Borrower and prepared by the Appraisers or the Real Estate Appraiser, which certifies, at the time of determination, the Appraised Value of the applicable Appraised Collateral, Eligible Collateral or Replacement Collateral, as the case may be, provided that if there is a good faith disagreement between the Agents and the Borrower with respect to whether such appraisal is reasonably satisfactory, the Agents and the Borrower shall jointly select a second appraiser (which will be retained at the Borrower’s sole expense) to independently review those items as to which a good faith disagreement exists and the results reflected in the report prepared by such second appraiser (as to the disputed item or items) shall be averaged with the results of the report prepared by the Appraiser to determine the Appraised Value of such items in dispute, and with such adjustment, such appraisals shall be deemed an Appraisal Report which is reasonably satisfactory to the Agents and the Borrower.

“ Appraised Collateral ” shall mean Collateral that is Mortgaged Collateral, Primary Routes, Primary Domestic Slots, Primary Foreign Slots, Gate Interests, Flight Simulators (whether constituting Collateral on the Closing Date or subsequently added as Replacement Collateral), Ground Support Equipment (whether constituting Collateral on the Closing Date or subsequently added as Replacement Collateral), Real Property Assets, the Denver Training Facility or any other individual asset that is included in an Appraisal Report.

“ Appraised Value ” shall mean (a) in the case of Appraised Collateral (excluding the Denver Training Facility), or other Eligible Collateral or assets (other than Eligible Accounts Receivable), the fair market value thereof as reflected in the most recent Appraisal Report obtained in respect of such Collateral or assets in accordance with this Agreement, (b) in the case of the Denver Training Facility, the in-use value thereof as reflected in the most recent Appraisal Report obtained in respect of the Denver Training Facility in accordance with this Agreement ( less the amount attributed to the Real Property Assets associated with the Denver Training Facility, as set forth in the most current Appraisal Report prepared by the Appraiser in accordance with this Agreement) and (c) in the case of Eligible Accounts Receivable, to the extent constituting Replacement Collateral, Eligible Accounts Receivable, as reflected in the most recent Officer’s Certificate delivered pursuant to Section 5.01(q), each such value referred to in this definition to be determined in a manner reasonably satisfactory to the Agents and, solely in the case of Eligible Accounts Receivable, subject to reserves and other criteria established by the Agents in accordance with the definitions of Eligible Accounts and Estimated Credit Card Receivables Component; provided that if an Airframe is (i) Parked, then 50% of the Appraised Value of such Airframe as set forth in the most recent Appraisal Report shall be excluded from Eligible Collateral until an Appraisal Report establishing the current Appraised

 

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Value of such Airframe in its Parked condition is delivered to the Agents, and if no such Appraisal Report shall have been delivered within such period, within ninety (90) days of such Airframe being Parked, then such Parked Aircraft shall be excluded from Eligible Collateral or (ii) Stored, then such Airframe shall be excluded from Eligible Collateral.

“ Appraisers ” shall mean, as to the Mortgaged Collateral, Primary Domestic Slots, Primary Routes, Primary Foreign Slots, Ground Support Equipment, Flight Simulators and Denver Training Facility, (a) Simat, Helliesen & Eichner, Inc. and (b) such other appraisal firm or firms as may be retained by the Agents and as may be reasonably satisfactory to the Borrower; provided however, that if an existing Appraiser ceases or is unable to provide an Appraisal Report of the type described in the definition of “Appraisal Report” (without reference to the portion of such definition stating that an Appraisal Report shall be reasonably satisfactory to the Borrower), then the Agents shall select another independent appraiser with the approval of the Borrower (not to be unreasonably withheld, delayed or conditioned) or if the Agents fail to so select a new Appraiser with in five (5) Business Days of notice from the Borrower of its desire to appoint a new Appraiser because of an issue set forth above in this proviso, the Borrower may designate an Appraiser by notice to Agents.

“ Approved Fund ” shall have the meaning given such term in Section 10.02(b).

“ Assignment and Acceptance ” shall mean an assignment and acceptance entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 10.02), and accepted by the Paying Agent, substantially in the form of Exhibit G.

“ Availability Period ” shall mean the period from and including the Closing Date to but excluding the Tranche A Maturity Date.

“ Bankruptcy Code ” shall mean The Bankruptcy Reform Act of 1978, as heretofore and hereafter amended, and codified as 11 U.S.C. Section 101 et seq .

“ Board ” shall mean the Board of Governors of the Federal Reserve System of the United States.

“ Borrower ” shall have the meaning set forth in the first paragraph of this Agreement.

“ Borrowing ” shall mean the incurrence, conversion or continuation of Loans of a single Type made from all the Tranche A Lenders or the Tranche B Lenders, as the case may be, on a single date and having, in the case of Eurodollar Loans, a single Interest Period.

“ Borrowing Request ” shall mean a request by the Borrower for a Borrowing in accordance with Section 2.03.

“ Business Day ” shall mean any day other than a Saturday, Sunday or other day on which commercial banks in New York City are required or authorized to remain closed (and, for a Letter of Credit, other than a day on which the Issuing Lender issuing such Letter of Credit is closed); provided , however , that when used in connection with a Eurodollar Loan, the term “Business Day” shall also exclude any day on which banks are not open for dealings in dollar deposits on the London interbank market.

 

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“ Cape Town Treaty ” shall mean, collectively, the Aircraft Protocol and the Convention, as the same may be amended from time to time.

“ Capitalized Lease ” shall mean, as applied to any Person, any lease of property by such Person as lessee which would be capitalized on a balance sheet of such Person prepared in accordance with GAAP. The amount of obligations of such Person under a Capitalized Lease shall be the capitalized amount thereof determined in accordance with GAAP.

“ Cash Collateralization ” shall have the meaning given such term in Section 2.02(j).

“ Cash Equivalents ” shall mean:

(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) direct obligations of state and local government entities in each case maturing within one year from the date of acquisition thereof, which have a rating of at least A- (or the equivalent thereof) from S&P or A-3 (or the equivalent thereof) from Moody’s;

(c) obligations of domestic or foreign companies and their subsidiaries (including, without limitation, agencies, sponsored enterprises or instrumentalities chartered by an Act of Congress, which are not backed by the full faith and credit of the United States of America), including, without limitation, bills, notes, bonds, debentures, and mortgage-backed securities, in each case maturing within one year from the date of acquisition thereof;

(d) investments in commercial paper maturing within 365 days from the date of acquisition thereof and having, at such date of acquisition, which have a rating of at least A-2 (or the equivalent thereof) from S&P or P-2 (or the equivalent thereof) from Moody’s;

(e) investments in certificates of deposit, banker’s acceptances, time deposits, eurodollar time deposits or overnight bank 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 other commercial bank of recognized standing 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;

(f) fully collateralized repurchase agreements with a term of not more than six (6) months for underlying securities that would otherwise be eligible for investment;

 

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(g) investments of money in an investment company organized under the Investment Company Act of 1940, as amended, or in pooled accounts or funds offered through mutual funds, investment advisors, banks and brokerage houses which invest its assets in obligations of the type described in (a) through (f) above. This could include, but not be limited to, money market funds or short-term and intermediate bonds funds;

(h) securities with maturities of one year or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least A by S&P or A by Moody’s;

(i) money market funds that (i) comply with the criteria set forth in Securities and Exchange Commission Rule 2a-7 under the Investment Company Act of 1940, (ii) are rated AAA (or the equivalent thereof) by S&P and Aaa (or the equivalent thereof) by Moody’s and (iii) have portfolio assets of at least $5,000,000,000; and

(j) deposits available for withdrawal on demand with commercial banks organized in the United States having capital and surplus in excess of $100,000,000.

“ CERCLA ” shall mean the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as heretofore and hereafter amended.

“ CGMI ” shall have the meaning set forth in the first paragraph of this Agreement.

“ Change in Law ” shall mean, after the date hereof, (a) the adoption of any law, rule or regulation after the date of this Agreement, (b) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority, Airport Authority, or Foreign Aviation Authorities after the date of this Agreement applicable to the Borrower or any of the Guarantors or (c) compliance by any Lender or the Issuing Lender (or, for purposes of Section 2.13(b), by any lending office of such Lender or by such Lender’s or the Issuing Lender’s holding company, if any) with any request, guideline or directive (having the force of law) of any Governmental Authority made or issued after the date of this Agreement.

“ Change of Control ” shall mean (a) at any time: (i) the acquisition after the Closing Date of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the Securities Exchange Act of 1934 and the rules of the Securities and Exchange Commission thereunder as in effect on the date hereof), of Equity Interests representing more than 40% of the aggregate ordinary voting power represented by the issued and outstanding Equity Interests of the Parent other than pursuant to a Permitted Holder Acquisition; (ii) during any period of up to 24 consecutive months, the occupation of a majority of the seats (other than vacant seats) on the Board of Directors of the Parent by Persons who were neither (A) directors on the Closing Date (B) approved by the Board of Directors of the Parent or the Borrower nor (C) appointed by directors so approved; or (iii) the Parent at any time owning, directly or indirectly, less than 100% of the Equity Interests in the Borrower and (b) if a Permitted Holder Acquisition has been consummated, at any time following the consummation

 

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thereof: (i) the acquisition of or subsistence of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the Securities Exchange Act of 1934 and the rules of the Securities and Exchange Commission thereunder as in effect on the date hereof), of Equity Interests representing more than 40% of the aggregate ordinary voting power represented by the issued and outstanding Equity Interests of the Permitted Holder; (ii) during any period of up to 24 consecutive months, the occupation of a majority of the seats (other than vacant seats) on the Board of Directors of the Permitted Holder by Persons who were neither (A) directors on the date of the Permitted Holder Acquisition was consummated (B) approved by the Board of Directors of the Permitted Holder nor (C) appointed by directors so approved; or (iii) the Permitted Holder at any time owning, directly or indirectly, less than 100% of the Equity Interests in the Parent.

“ Chase Bank ” shall mean Chase Bank USA, N.A.

“ CITI ” shall have the meaning set forth in the first paragraph of this Agreement.

“ Closing Date ” shall mean the date on which this Agreement has been executed and the conditions precedent to the making of the initial Loans or the issuance of the initial Letter of Credit (whichever may occur first) set forth in Section 4.01 have been satisfied or waived.

“ Co-Branded Agreement ” shall mean that certain Co-Branded Card Marketing Services Agreement, effective July 1, 2001, among the Borrower, the Parent, UAL Loyalty Services, LLC and Chase Bank, as heretofore amended and as may be further amended, amended and restated, modified, supplemented or extended from time to time.

“ Co-Branded Obligations ” shall mean the obligations of the Borrower, the Parent and UAL Loyalty Services, LLC to Chase Bank under the Co-Branded Agreement.

“ Code ” shall mean the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and rulings issued thereunder.

“ Collateral ” shall mean all of the “Collateral” referred to in the Collateral Documents.

“ Collateral Agents ” shall have the meaning set forth in the first paragraph of this Agreement.

“ Collateral Coverage Ratio ” means, as of any date of determination, the ratio of (x) the Appraised Value of all Eligible Collateral to (y) the sum of the aggregate value of (1) all Loans, (2) all LC Exposure plus (3) the Swap Termination Values of all contracts or agreements relating to Indebtedness permitted pursuant to Section 6.03(g).

“ Collateral Documents ” shall mean, collectively, the Aircraft Mortgage (including, without limitation, any Mortgage Supplement), the Real Estate Mortgages, the SGR Security Agreement, any Deposit Account Control Agreement relating to Replacement Collateral, the Security Agreement and other agreements to which the Borrower or any Guarantor is a party and that creates or purports to create a Lien in any Collateral in favor of the Collateral Agents for the benefit of the Secured Parties.

 

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“ Collateral Event ” shall mean, with respect to an item of Collateral, any of the events described below to the extent such event materially and adversely affects such Collateral:

(a) with respect to any and all Primary Domestic Slots affected thereby, the occurrence of any event, including Borrower’s failure to comply with any applicable Use or Lose Rule, that would allow the FAA or other Governmental Authority to withdraw, cancel or terminate Borrower’s authority to hold or use 20% or more of the Primary Domestic Slots at any one airport (with the resulting appraisal under Section 5.09 being of the Primary Domestic Slots at such airport); or

(b) with respect to any and all Primary Foreign Slots affected thereby, the occurrence of any event, including Borrower’s failure to comply with any applicable Use or Lose Rule, that would allow any Governmental Authority, Foreign Aviation Authority, or Airport Authority to withdraw, cancel or terminate Borrower’s authority to hold or use 10% or more of the Primary Foreign Slots at any one airport (with the resulting Appraisal under Section 5.09 being of the Primary Route associated with such Primary Foreign Slots); or

(c) with respect to any Primary Route or Primary Foreign Slot(s), the occurrence of any event that would allow the DOT, any Governmental Authority, or any Foreign Aviation Authority to withdraw cancel or terminate the authority granted to Borrower that authorizes Borrower to operate scheduled foreign air transportation of persons, property and mail over such Primary Route or to use such Primary Foreign Slot(s) other than (i) in cases where such Primary Route or Primary Foreign Slot(s) has been transferred or otherwise disposed of as permitted in this Agreement or the SGR Security Agreement or (ii) in cases where the Collateral Agents have consented in writing to the loss of such Primary Route or Primary Foreign Slot(s), or such loss could not reasonably be expected to have a material adverse effect of the value of the relevant Primary Route taken as a whole; or

(d) To the extent that any representation or warranty contained in Sections 3.12, 3.13 or 3.14 or any covenant or agreement contained in Sections 5.12, 5.13 or 5.14 contains a “Material Adverse Effect” standard, an event, circumstance or occurrence which would have constituted a violation of any of the foregoing (or have caused such representation or warranty to be inaccurate) if the definition of Material Adverse Effect included the following language: “any failure to maintain any Collateral (including without limitation with reference to maintenance of insurance or compliance with applicable law) in a manner which would have the effect, as determined by the Collateral Agents in their reasonable business judgment, of adversely affecting (1) the validity or perfection of the Liens of the Collateral Agents on such Collateral or the ability of the Collateral Agents to exercise remedies with respect thereto or (2) the value or marketability of any Collateral”;

(e) the occurrence of a “Collateral Event” as defined in the Aircraft Mortgage; or

 

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(f) the occurrence of a “Collateral Event” as defined in the SGR Security Agreement or the Security Agreement.

“ Collateral Step-Up Event ” shall have the meaning set forth in Section 6.06(a).

“ Commitment Fee ” shall have the meaning set forth in Section 2.19.

“ Contribution Agreement ” shall mean a contribution agreement among the Borrower and each of the Guarantors, substantially in the form of Exhibit H hereto, as such agreement may be amended, amended and restated, supplemented or otherwise modified, renewed or replaced from time to time.

“ Convention ” shall mean the Convention on International Interests in Mobile Equipment (Cape Town, 2001), as the same may be amended from time to time, available at: http://www.unidroit.org/english/conventions/mobile-equipment/mobile-equipment.pdf , or any successor URL.

“ Default ” shall mean any event or condition which, upon the giving of notice or expiration of any cure period or both would, unless cured or waived, constitute an Event of Default.

“ Defaulting Lender ” shall mean any Lender that (a) has failed to fund any portion of the Loans or participations in any Letter of Credit required to be funded hereunder within one (1) Business Day of the date required to be funded by it hereunder, unless the subject of a good faith dispute or subsequently cured, (b) has otherwise failed to pay over to the Agents or any Lender (or its banking Affiliates) any other amount required to be paid by it hereunder within one (1) Business Day of the date when due, unless the subject of a good faith dispute or subsequently cured, or (c) has been deemed insolvent or become the subject of a bankruptcy or insolvency proceeding.

“ Denver Training Facility ” shall mean that certain parcel of real property owned in fee by the Borrower and located at 7401 Martin Luther King Boulevard, Denver, Colorado 80207 (as such real property is more particularly described in the applicable Real Estate Mortgage, together with all Collateral described in such Real Estate Mortgage) and all assets located on or used in conjunction with such property (including, without limitation, training program contracts for training programs conducted at such location, but excluding Flight Simulators and the assets located at the above address not owned by the Borrower or otherwise encumbered), taken as a whole.

“ Deposit Account Control Agreement ” shall mean an agreement in writing in form and substance reasonably satisfactory to the Collateral Agents and the Borrower, by and among the Borrower or any Guarantor, as the case may be, the Collateral Agents, and any bank at which any deposit account of the Borrower or any Guarantor, as the case may be, is at any time maintained and into which any Eligible Accounts Receivable or other assets constituting Replacement Collateral are to be received (other than any accounts maintained at the Collateral Agents).

“ Dollars ” and “ $ ” shall mean lawful money of the United States of America.

 

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“ DOT ” shall mean the United States Department of Transportation and any successor thereto.

“ Earned Revenue Percentage ” shall mean, a percentage, representing the estimated portion of credit revenue which has been earned at any point in time, based on a rolling twelve-month analysis of ticket sales versus “load levels” (i.e. tickets used for actual flights) experienced by the Borrower during the most recent Rolling Twelve Month period for which such information is available at the time of such determination. The Earned Revenue Percentage shall initially be set at 46% and shall be subject to re-determination by either of the Agents based upon the results of each field audit of the Borrower conducted after the Closing Date.

“ EBITDAR ” shall mean, for any period, all as determined in accordance with GAAP, the consolidated net income (or net loss) of the Parent and its Subsidiaries for such period, plus (in each case without duplication) (a) the sum of (i) depreciation expense; (ii) amortization expense; (iii) other non-cash charges; (iv) consolidated federal, state and local income tax expense; (v) gross interest expense for such period less gross interest income for such period; (vi) aircraft rent expense; (vii) extraordinary, non-recurring or unusual losses; (viii) any non-cash non-recurring charge or non-cash restructuring charge; (ix) the cumulative effect (whether positive or negative) of any change in accounting principles; (x) cash restructuring charges not to exceed $75,000,000 paid in each of fiscal years 2006 and 2007; (xi) any other cash restructuring charges in an amount not to exceed $15,000,000 in any fiscal year (other than fiscal years 2006 and 2007); (xii) all transactional costs, expenses and charges incurred in connection with the consummation of any transaction related to any Permitted Acquisition, disposition, issuance of Indebtedness, issuance of Equity Interests, or any investment, in each case to the extent permitted hereunder; (xiii) proceeds from business interruption insurance (to the extent not already included in consolidated net income); (xiv) to the extent actually indemnified or reimbursed, any expenses and charges that are covered by indemnification or reimbursement provisions in connection with any Permitted Acquisition, disposition, issuance of Indebtedness, issuance of Equity Interests or any investment, less (b) extraordinary, non-recurring or unusual gains, plus or minus (c) the amount of cash received or expended in such period in respect of any amount which, under clause (a)(viii) above, was taken into account in determining EBITDAR for such or any prior period; provided , that with respect to any period during which any Specified Transaction occurs, EBITDAR shall be determined on a Pro Forma Basis.

“ Eligible Accounts ” means, at the time of any determination thereof, each Account with respect to (i) balances owed to the Borrower for revenues associated with the Borrower’s performance of cargo shipments for various freight brokers, freight forwarders and other airlines, (ii) balances owed to the Borrower from customers utilizing credit cards issued by the Borrower under the Universal Air Travel Plan utilized by the Borrower, (iii) balances owed to the Borrower from travel agencies for amounts charged back by the Borrower for additional passenger fares not properly charged at the time of the initial ticketing and other violations and (iv) balances owed to the Borrower from corporate customers generated from the sale of parts and the leasing of various airport ground equipment and gates and other non-transportation goods and services, in each case where such Account is not ineligible for inclusion in the calculation of Eligible Accounts pursuant to any of clauses (a) through (o) below. Without limiting the foregoing, to qualify as Eligible Accounts, an Account shall indicate no person other

 

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than the Borrower or a Guarantor as payee or remittance party. Criteria and eligibility standards used in determining Eligible Accounts may be fixed and revised from time to time by the Agents, in their reasonable discretion, and in the Agents’ reasonable judgment in good faith, with any changes in such criteria to be effective upon the date of the next Field Audit to be conducted pursuant to the terms herein. Unless otherwise approved from time to time in writing by the Agents, no Account shall be an Eligible Account if, without duplication:

(a) the Borrower or a Guarantor is not the sole owner of such Account; or

(b) it is not subject to a valid and perfected first priority Lien in favor of the Collateral Agents for the benefit of the Secured Parties, subject to no other Liens other than Liens permitted by the Agreement; or

(c) (i) it is unpaid more than 90 days from the original date of invoice or 60 days from the original due date or (ii) it has been written off the books of the Borrower or a Guarantor or has been otherwise designated on such books as uncollectible; or

(d) the Account Debtor is insolvent or the subject of any bankruptcy case or insolvency proceeding of any kind (other than postpetition accounts payable of an Account Debtor that is a debtor-in-possession under the Bankruptcy Code if an order has been entered permitting payment of pre-petition trade creditors specifically with respect to such Account Debtor and such Account Debtor has obtained post-petition financing reasonably determined by the Agents to be adequate to pay such Accounts, in which event the Accounts of such Account Debtor shall not be deemed ineligible under the provisions of this clause (d) to the extent the order permitting such financing allows the payment of the applicable Account); or

(e) the Account is not payable in Dollars or the Account Debtor is either not organized under the laws of the United States of America, any state of the United States of America or the District of Columbia or is located outside or has its principal place of business or substantially all of its assets outside the United States; or

(f) the Account Debtor is the United States of America or any department, agency or instrumentality thereof, unless the relevant Borrower duly assigns its rights to payment of such Account to the Agent pursuant to the Assignment of Claims Act of 1940, as amended, which assignment and related documents and filings shall be in form and substance reasonably satisfactory to the Agents; or

(g) the associated revenue from such Account has not been earned by the Borrower or the Guarantor; or

(h) to the extent the Account is classified as a note receivable by the Borrower or a Guarantor; or

(i) the Account is a non-trade Account, or relates to payments for interest; or

 

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(j) it arises out of a sale made by the Borrower or a Guarantor to an employee, officer, agent, director, stockholder, Subsidiary or Affiliate of the Borrower or a Guarantor; or

(k) such Account was not paid in full, and the Borrower or a Guarantor created a new receivable for the unpaid portion of the Account, and other Accounts constituting chargebacks, debit memos (other than debit memos reflecting balances owed to the Borrower referred to in clause (iii) of the first sentence of this definition of Eligible Accounts) and other adjustments for unauthorized deductions; or

(l) such Account is subject to any counterclaim, deduction, defense, setoff or dispute, but only to the extent of the amount of such counterclaim, deduction, defense, setoff or dispute, unless the Agents, in their sole discretion, have established an appropriate reserve and determine to include the entire amount outstanding with respect to such Account, less such appropriate reserve, as an Eligible Account; or

(m) the Account does not comply in all material respects with the requirements of all material applicable laws and regulations, whether Federal, state or local; or

(n) as to any Account, to the extent that a check, promissory note, draft, trade acceptance or other instrument for the payment of money has been received, presented for payment and returned uncollected for any reason (other than bank error prior to the correction thereof); or

(o) the Account is due from another airline.

“ Eligible Accounts Receivable ” shall mean, at the time of determination thereof, the sum of Eligible Accounts plus Estimated Credit Card Receivables Component in each case, solely to the extent that the Borrower or applicable Guarantors shall have delivered a Security Agreement granting to the Collateral Agents (on behalf of the Lenders) a Lien in such receivables and a Deposit Account Control Agreement with respect to the deposit account into which the proceeds of such accounts receivable are deposited, in each case reasonably satisfactory to the Collateral Agents and the Borrower.

“ Eligible Assignee ” shall mean (a) a commercial bank having total assets in excess of $1,000,000,000, (b) a finance company, insurance company or other financial institution or fund, in each case reasonably acceptable to the Agents, which in the ordinary course of business extends credit of the type contemplated herein and has total assets in excess of $200,000,000 and whose becoming an assignee would not constitute a prohibited transaction under Section 4975 of the Code or Section 406 of ERISA, (c) an Affiliate of the assignor Lender, (d) an Approved Fund and (e) any other financial institution reasonably satisfactory to the Agents; provided , that the no airline, commercial air freight carrier, air freight forwarder, entity engaged in the business of parcel transport by air or another Person controlling, controlled by or under common control with such an airline, commercial air carrier, air freight forwarder, entity engaged in the business of parcel transport by air or other similar Person shall constitute an Eligible Assignee.

 

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“ Eligible Collateral ” shall mean any Collateral, in each case to the extent owned or held by the Borrower or a Guarantor and on which the Collateral Agents shall have a valid and perfected first priority lien and/or mortgage (or comparable lien) (subject solely to Permitted Liens) (and, in the case of Replacement Collateral, the Collateral Agents shall have held such lien, mortgage or comparable lien for at least ninety (90) continuous days from the grant or perfection thereof prior to its constituting Eligible Collateral).

“ Engine ” shall have the meaning set forth in the Aircraft Mortgage.

“ Environmental Laws ” shall mean all laws (including common law), rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions or legally binding agreements issued, promulgated or entered into by or with any Governmental Authority, relating to the environment, preservation or reclamation of natural resources, the handling, treatment, storage, disposal, Release or threatened Release of any Hazardous Material or the exposure of any Person (including employees) to any Hazardous Materials.

“ Environmental Liability ” shall mean any liability (including any liability for damages, natural resource damage, costs of environmental remediation, administrative oversight, costs, fines or penalties) directly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the Release or threatened Release of any Hazardous Materials into the environment or (e) any contract, agreement, lease or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

“ Equity Interests ” shall mean shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person (whether direct or indirect), and any warrants, options or other rights entitling the holder thereof to purchase or acquire any such equity interest.

“ ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder.

“ ERISA Affiliate ” shall mean any trade or business (whether or not incorporated) that, together with the Borrower, is treated as a single employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.

“ Escrow Accounts ” shall mean certain funds set aside by the Borrower or any Guarantor to manage the collection and payment of amounts collected by the Borrower or such Guarantor for the benefit of third party beneficiaries relating to: (a) federal income tax withholding and backup withholding tax, employment taxes, transportation excise taxes and security related charges, including, without limitation, (i) federal payroll withholding taxes, as described in Sections 3101, 3111 and 3402 of the Code, (ii) federal Unemployment Tax Act taxes, as described in Chapter 23 of Subtitle C of the Code, (iii) federal air transportation excise

 

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taxes, as described in Sections 4261 and 4271 of the Code, (iv) federal security charges, as described in Title 49 of the Code of Federal Regulations of 2002 (referred to in this definition as the “ CFR ”), Chapter XII, Part 1510, (v) federal Animal and Plant Health Inspection Service of the United States Department of Agriculture (APHIS) user fees, as described in Title 21 of the United States Code (2002) (referred to in this definition as “ U.S.C. ”) Section 136a and 7 CFR Section 354.3, (vi) federal Immigration and Naturalization Service (INS) fees, as described in 8 CFR Part 286, (vii) federal customs taxes as described in 19 U.S.C. Section 58c, and (viii) federal jet fuel taxes as described in Sections 4091 and 4092 of the Code collected on behalf of and owed to the federal government; (b) any and all state and local income tax withholding, employment taxes and related charges and fees and similar taxes, charges and fees, including, but not limited to, state and local payroll withholding taxes, unemployment and supplemental unemployment taxes, disability taxes, workman’s or workers’ compensation charges and related charges and fees that are analogous to those described in Subtitle C of the Code and that are described in or are analogous to Chapter 23 of Title 19 Delaware Code Annotated (2002) collected on behalf of and owed to state and local authorities, agencies and entities; (c) passenger facility fees and charges as described in 49 U.S.C. Section 40117 (2005) and Title 14 of the CFR, Subchapter 1, Part 158 collected on behalf of and owed to various Airport Authorities or other applicable Governmental Authorities; (d) taxes, fees and charges similar to any of the foregoing set aside or collected on behalf of, or owed to, Foreign Aviation Authorities, Governmental Authorities or Airport Authorities; and (e) other funds held in trust for an identified beneficiary.

“ Estimated Credit Card Receivables Component ” shall mean an amount representing the estimated earned but outstanding portion of retail credit card receivables due from major credit card providers (including, without limitation, Visa, MasterCard, American Express, Discover and Carte Blanche) in connection with ticket purchases from the Borrower, as determined semi-annually in accordance with the following formula and set forth in the most recent Officer’s Certificate delivered to the Agents pursuant to Section 5.01(q). Such amount shall be equal to three (3) times the average daily adjusted credit card sales ( i.e. , the product of (a) three (3)  multiplied by (b) the gross retail credit card sales for the most recent fiscal month available at the time of determination multiplied by (c) the Earned Revenue Percentage divided by (d) the number of days in such month), subject to such adjustments as may be deemed appropriate by either of the Agents in their reasonable discretion, based upon their reasonable business judgment, and further based upon the results of each Field Audit of the Borrower conducted after the Closing Date (without duplication of any other reserves imposed herein).

“ Eurodollar ”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Adjusted LIBO Rate.

“ Eurodollar Borrowing ” shall mean a Borrowing comprised of Eurodollar Loans.

“ Event of Default ” shall have the meaning given such term in Article 7.

“ Event of Loss ” shall mean, with respect to any (a) Mortgaged Collateral or Real Property Assets, an “Event of Loss” (as defined in the Aircraft Mortgage or Real Estate Mortgage as applicable), has occurred with respect thereto and (b) any other Collateral, any of

 

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the following events with respect to such property: (i) the loss of such property or of the use thereof due to the destruction of or damage to such property which renders repair uneconomical or which renders such property permanently unfit for its intended use by the Borrower or Guarantors for any reason whatsoever or (ii) any damage to such property which results in an insurance settlement with respect to such property on the basis of a total loss or a constructive or compromised total loss.

“ Excluded Taxes ” shall mean, with respect to the Paying Agent, Agents, Collateral Agents, any Lender, any Issuing Lender or any other recipient of any payment to be made by or on account of any Obligation of the Borrower hereunder, (a) income or franchise taxes imposed on (or measured by) its net income by the United States of America, or by the jurisdiction under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located, (b) any branch profits taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction in which the Borrower is located and (c) in the case of a Foreign Lender, any withholding tax that is imposed by any jurisdiction other than the United States of America or any state thereof or is imposed by the United States of America on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party to this Agreement (or designates a new lending office) or is attributable to such Foreign Lender’s failure to comply with Section 2.15(e), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from the Borrower with respect to such withholding tax pursuant to Section 2.15(a).

“ Existing Facility ” shall mean that certain Revolving Credit, Term Loan and Guaranty Agreement (as amended, restated, amended and restated, supplemented, extended or otherwise modified to the date hereof), dated as of February 1, 2006, among the Borrower, the Parent, the direct and indirect subsidiaries of the Borrower and Parent party thereto, the lenders from time to time party thereto, JPMCB and CITI, as co-administrative agents and co-collateral agents, and JPMCB, as paying agent.

“ Existing Facility Agents ” shall mean, collectively, JPMCB and CITI as co-administrative agents under the Existing Facility.

“ Existing Facility Collateral Agents ” shall mean, collectively, JPMCB and CITI as co-collateral agents under the Existing Facility.

“ Existing Facility Letter of Credit ” shall mean each letter of credit that was issued under the Existing Facility and remains outstanding as of the Closing Date.

“ Exiting Lenders ” shall have the meaning given such term in Section 4.01(n).

“ Facility ” shall have the meaning given such term in the Introductory Statement.

“ FAA ” shall mean the Federal Aviation Administration of the United States of America and any successor thereto.

“ Federal Funds Effective Rate ” shall mean, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds

 

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transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by the Paying Agent from three Federal funds brokers of recognized standing selected by it.

“ Fees ” shall collectively mean the Commitment Fees, Letter of Credit Fees and other fees referred to in Sections 2.18, 2.19 and 2.20.

“ Field Audit ” shall mean a field examination conducted by a Field Auditor of the Borrower’s and the Guarantors’ accounts receivable and books and records related thereto. The results of such field examination shall be reasonably satisfactory to the Agents in all respects.

“ Field Auditor ” shall mean the Agents or their respective Affiliates, appraisers or other advisors who may be retained by the Agents with the approval of the Borrower (not to be unreasonably withheld or delayed, it being understood that each Agent (and each of the employees and officers thereof selected by such Agent to act as such) is hereby approved by the Borrower as a Field Auditor) to conduct a Field Audit.

“ Fifth-Freedom Rights ” shall mean the operational right to enplane passenger traffic and cargo in a foreign country and deplane it in another foreign country.

“ Fixed Charge Coverage Ratio ” shall mean, at any date for which such ratio is to be determined, the ratio of EBITDAR for the Rolling Twelve Month period ended on such date to the sum of the following for such period: (a) Interest Expense, plus (b) the aggregate cash aircraft rental expense of the Parent and its Subsidiaries on a consolidated basis for such period payable in cash in respect of any aircraft leases (other than Capitalized Leases), all as determined in accordance with GAAP, plus (c) scheduled principal payments on all Indebtedness (including Capitalized Leases) of the Parent and its Subsidiaries on a consolidated basis; provided, that with respect to any period during which any Specified Transaction occurs, the Fixed Charge Coverage Ratio for such period shall be determined on a Pro Forma Basis.

“ Flight Simulators ” shall mean the flight simulators and flight training devices of the Borrower or any applicable Guarantor, listed on Schedule 1.01(a) (as such Schedule may be amended from time to time to remove one or more flight simulators therefrom in accordance with Section 6.06 or 6.11, as applicable).

“ Foreign Aviation Authorities ” shall mean any foreign governmental, quasi-governmental, regulatory or other agencies, public corporations or private entities that exercise jurisdiction over the issuance or authorization (a) to serve any foreign point on each of the Routes and/or to conduct operations related to the Routes and Supporting Route Facilities and/or (b) to hold and operate any Foreign Slots.

“ Foreign Lender ” shall mean any Lender that is organized under the laws of a jurisdiction other than that in which the Borrower is located. For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

 

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“ Foreign Slot ” shall mean all of the rights and operational authority, now held or hereafter acquired, of Borrower and, if applicable, a Guarantor, to conduct one landing or takeoff at a specific time or in a specific time period on a specific day of the week at each non-U.S. airport served in conjunction with Borrower’s, or, if applicable, a Guarantor’s operations over a Route.

“ GAAP ” shall mean generally accepted accounting principles applied in accordance with Section 1.03.

“ Gate Interests ” shall mean all of the right, title, privilege, interest and authority now or hereinafter acquired or held by the Borrower or, if applicable, a Guarantor, in connection with the right to use or occupy space in any airport terminal located in the United States to or from which the Borrower regularly operates scheduled nonstop service to or from any point in Japan, the People’s Republic of China, Hong Kong, or London’s Heathrow Airport, to the extent such Gate Interest is actually used in conjunction with such service. To the extent that Borrower ceases, in a manner consistent with Section 6(c) of the SGR Security Agreement, to use any Gate Interests to operate scheduled non-stop service to or from such foreign points, such Gate Interests shall automatically cease to be Gate Interests hereunder.

“ Governmental Authority ” shall mean the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank organization, or other entity exercising executive, legislative, judicial, taxing or regulatory powers or functions of or pertaining to government. Governmental Authority shall not include any Airport Authority.

“ Ground Support Equipment ” shall mean the equipment owned by the Borrower or, if applicable, a Guarantor for crew and passenger ground transportation, cargo, mail and luggage handling, catering, fuel/oil servicing, de-icing, aircraft maintenance and servicing, dispatching, security and motor vehicles.

“ Guarantee ” of or by any Person (the “ guarantor ”) shall mean any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “ primary obligor ”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation; provided , that the term Guarantee shall not include (i) endorsements for collection or deposits or (ii) customary contractual indemnities, in each case in the ordinary course of business. The amount of any obligation relating to a Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee is made (or, if less, the maximum reasonably anticipated liability for which such Person may be liable pursuant

 

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to the terms of the instrument evidencing such Guarantee) or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform) as determined by the guaranteeing Person in good faith.

“ Guarantor ” shall have the meaning set forth in the first paragraph of this Agreement.

“ Hazardous Materials ” shall mean 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 all other substances or wastes of any nature as to which liability or standards of conduct may be imposed or regulated pursuant to any Environmental Law.

“ Hedging Agreement ” shall mean any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement, cap or collar agreements involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions.

“ Immaterial Subsidiaries ” shall mean one or more Subsidiaries of the Parent, determined annually with reference to the most recent audited financial statements delivered pursuant to Section 5.01(a), and, with respect to any newly-formed Subsidiary, with reference to Section 5.15, in each case, for which (a) the assets of all such designated Subsidiaries constitute, in the aggregate, less than or equal to 2.5% of the total assets of the Parent and its Subsidiaries on a consolidated basis, and (b) the revenues of such Subsidiaries, in the aggregate, account for less than or equal to 2.5% of the total revenues of the Parent and its Subsidiaries on a consolidated basis. The Immaterial Subsidiaries as of the Closing Date shall be listed on Schedule 1.01(e).

“ Incremental Facilities ” shall have the meaning set forth in Section 10.08(c).

“ Incremental Tranche A Facility ” shall have the meaning set forth in Section 10.08(c).

“ Incremental Tranche B Facility ” shall have the meaning set forth in Section 10.08(c).

“ Indebtedness ” of any Person shall mean, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person upon which interest charges are customarily paid, (d) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (e) all obligations of such Person in respect of the deferred purchase price of property or services (excluding current accrued expenses incurred and current accounts payable, in each case in the ordinary course of business), (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or

 

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acquired by such Person, whether or not the Indebtedness secured thereby has been assumed, (g) all Guarantees by such Person of Indebtedness of others described in clauses (a)-(f), and (h)-(l) herein, (h) all Obligations of such Person in respect of Capitalized Leases, (i) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty, (j) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances, (k) all obligations of such person to pay a specified purchase price for goods or services, whether or not delivered or accepted, i.e., take-or-pay and similar obligations, and (l) the obligations in respect of Hedging Agreements valued at the amount equal to what would be payable by such Person to its counterparty to such Hedging Agreements if such Hedging Agreement was terminated early on such date of determination (it being understood that, if a master netting agreement is entered into with any counterparty in respect of any Hedging Agreement, only the net obligations payable under all Hedging Agreements with such counterparty which are subject to such master netting agreement shall constitute Indebtedness under this clause (l)). The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.

“ Indemnified Taxes ” shall mean Taxes other than Excluded Taxes.

“ Indemnitee ” shall have the meaning given such term in Section 10.04(b).

“ Indentures ” shall mean, collectively, the (a) Senior Convertible Note Indenture, (b) Senior Convertible Note Indenture 2 and (c) the Senior Note Indenture.

“ Intercreditor Agreement ” shall mean that certain Intercreditor Agreement dated as of February 1, 2006 between the Existing Facility Agents, the Existing Facility Collateral Agents, Chase Bank, the Borrower and the Guarantors party thereto, which Intercreditor Agreement is attached hereto as Exhibit F.

“ Interest Election Request ” shall mean a request by the Borrower to convert or continue a Borrowing in accordance with Section 2.05.

“ Interest Expense ” shall mean, for any period, the gross cash interest expense (including the interest component of Capitalized Leases), of the Parent and its Subsidiaries on a consolidated basis for such period, including, without limitation or duplication, (a) cash interest expense in respect of the Loans and all other outstanding Indebtedness, (b) cash fees and cash charges payable in connection with letters of credit, and (c) net payments payable in connection with all Hedging Agreements involving interest rates (including amortization of any discount), all as determined in accordance with GAAP; provided, that with respect to any period during which any Specified Transaction occurs, the Interest Expense for such period shall be determined on a Pro Forma Basis.

“ Interest Payment Date ” shall mean (a) as to any Eurodollar Loan having an Interest Period of two weeks or one, two or three months, the last day of such Interest Period, (b) as to any Eurodollar Loan having an Interest Period of more than three months, the last day of

 

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such Interest Period and, in addition, each date during such Interest Period that would be the last day of an Interest Period commencing on the same day as the first day of such Interest Period but having a duration of three months or any integral multiple thereof and (c) with respect to ABR Loans, the last Business Day of each March, June, September and December.

“ Interest Period ” shall mean, as to any Borrowing of Eurodollar Loans, the period commencing on the date of such Borrowing (including as a result of a conversion from ABR Loans) or on the last day of the preceding Interest Period applicable to such Borrowing and ending two weeks thereafter or on the numerically corresponding day (or if there is no corresponding day, the last day) in the calendar month that is one, three, six, nine or twelve months thereafter, as the Borrower may elect in the related notice delivered pursuant to Sections 2.03 or 2.05; provided , however , that, to be available as an Interest Period hereunder, any two week, nine month or twelve month Interest Period requested by the Borrower must be available to all of the Lenders; provided , further , that (a) if any Interest Period would end on a day which shall not be a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day, and (b) no Interest Period shall end later than (i) to the extent relating to Tranche A Loans, the Tranche A Maturity Date and (ii) to the extent relating to the Tranche B Loans, the Tranche B Maturity Date.

“ Investments ” shall mean, with respect to any Person, any stock, evidence of indebtedness or other security of any other Person, any loan, advance, contribution of capital, extension of credit or commitment therefor (including, without limitation, the Guarantee of loans made to others, but excluding current trade and customer accounts receivable arising in the ordinary course of business and payable in accordance with customary trading terms in the ordinary course of business), and any purchase or acquisition of (a) any Equity Interests or other equity security issued by any other Person, or (b) a line of business, or all or substantially all of the assets, of any other Person.

“ Issuing Lender ” shall mean JPMCB or CITI (or any of their banking affiliates), each in its capacity as the issuer of Letters of Credit hereunder, and their successors in such capacity as provided in Section 2.02(i), and for one or more other Lenders, which other Lenders shall be reasonably satisfactory to the Borrower and the Agents. The Issuing Lender may, in its reasonable discretion, in consultation with the Borrower, arrange for one or more Letters of Credit to be issued by Affiliates of the Issuing Lender, in which case the term “Issuing Lender” shall include any such Affiliate with respect to Letters of Credit issued by such Affiliate.

“ Joint Commitment Letter ” shall mean that certain Commitment Letter dated as of January 11, 2007 among the Agents, JMPSI, CGMI, Credit Suisse Securities (USA) LLC and the Borrower.

“ Joint Lead Arrangers ” shall mean JPMSI and CGMI.

“ JPMCB ” shall have the meaning set forth in the first paragraph of this Agreement.

 

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“ JPMSI ” shall have the meaning set forth in the first paragraph of this Agreement.

“ LC Disbursement ” shall mean a payment made by the Issuing Lender pursuant to a Letter of Credit.

“ LC Exposure ” shall mean, at any time, the sum of (a) the aggregate maximum undrawn amount of all outstanding Letters of Credit at such time plus (b) the aggregate amount of all LC Disbursements that have not yet been reimbursed by or on behalf of the Borrower at such time. The LC Exposure of any Tranche A Lender at any time shall be its Tranche A Commitment Percentage of the LC Exposure at such time.

“ Lenders ” shall mean the Tranche A Lenders and the Tranche B Lenders.

“ Letter of Credit ” shall mean (a) any irrevocable letter of credit issued pursuant to Section 2.02, which letter of credit shall be (i) a standby letter of credit, (ii) denominated in Dollars and (iii) otherwise in such form as may be reasonably approved from time to time by the Agents and the applicable Issuing Lender and (b) each Existing Facility Letter of Credit. On the Closing Date, each Existing Facility Letter of Credit shall be deemed for all purposes herein to be a Letter of Credit issued pursuant to Section 2.02 and to constitute usage of the Total Tranche A Commitment.

“ Letter of Credit Account ” shall mean the account established by the Borrower under the sole and exclusive control of the Paying Agent maintained at the office of the Paying Agent at 270 Park Avenue, New York, New York 10017 designated as the “United Airlines LC Account” that shall be used solely for the purposes set forth herein.

“ Letter of Credit Fees ” shall mean the fees payable in respect of Letters of Credit pursuant to Section 2.20.

“ LIBO Rate ” shall mean, with respect to any Eurodollar Borrowing for any Interest Period, the rate appearing on Page 3750 of the Dow Jones Market Service (or on any successor or substitute page of such service, or any successor to or substitute for such service, providing rate quotations comparable to those currently provided on such page of such service, as determined by the Paying Agent from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, as the rate for dollar deposits with a maturity comparable to such Interest Period. In the event that such rate is not available at such time for any reason, then the “ LIBO Rate ” with respect to such Eurodollar Borrowing for such Interest Period shall be the rate at which dollar deposits of $1,000,000 and for a maturity comparable to such Interest Period are offered by the principal London office of the Paying Agent in immediately available funds in the London interbank market at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period.

“ Lien ” shall mean (a) any mortgage, deed of trust, pledge, hypothecation, security interest, easement (including, without limitation, reciprocal easement agreements and utility agreements), rights-of-ways, reservations, encroachments, zoning and other land use restrictions, claim or any other title defect, lease, encumbrance, restriction, lien or charge of any kind

 

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whatsoever, (b) the interest of a vendor or a lessor under any conditional sale, capital lease or other title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) and (c) in the case of securities, any purchase option, call or similar right or interest of a third party with respect to such securities (other than employee stock option plans).

“ Loan ” shall mean, collectively, the Tranche A Loans and the Tranche B Loans.

“ Loan Documents ” shall mean this Agreement, the Letters of Credit (including applications for Letters of Credit and related reimbursement agreements), the Collateral Documents, the Intercreditor Agreement and any other instrument or agreement (which is designated as a Loan Document therein) executed and delivered to the Paying Agent, the Agents, the Collateral Agents or any Lender, in each case, as the same may be amended, amended and restated, modified, supplemented or extended from time to time.

“ Material Adverse Change ” shall mean any event, development or circumstance that has had or would reasonably be expected to have a Material Adverse Effect.

“ Material Adverse Effect ” shall mean a material adverse effect on (a) the business, property, operations, assets, liabilities or financial condition of the Borrower and the Guarantors, taken as a whole, (b) the rights or remedies of the Agents and the Lenders under the Loan Documents, taken as a whole, or (c) the ability of the Borrower and the Guarantors, taken as a whole, to perform their obligations under the Loan Documents.

“Material Indebtedness ” shall mean Indebtedness (other than the Loans and Letters of Credit), of any one or more of the Borrower and Guarantors in an aggregate principal amount exceeding $50,000,000.

“ Minority Lenders ” shall have the meaning given such term in Section 10.08(b).

“ Moody’s ” shall mean Moody’s Investors Service, Inc.

“ Morgan Lewis ” shall have the meaning given such term in Section 10.04(a).

“ Mortgaged Collateral ” shall mean all of the “Collateral” as defined in the Aircraft Mortgage (including any Mortgage Supplement), defined to include, without limitation, all airframes, engines, QEC Kits and spare parts inventory included within the Collateral.

“ Mortgage Supplement ” shall have the meaning set forth in the Aircraft Mortgage.

“ Multiemployer Plan ” shall mean a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA, which is maintained or contributed to by (or to which there is an obligation to contribute of) the Borrower or a Subsidiary of the Borrower or an ERISA Affiliate, and each such plan for the five-year period immediately following the latest date on which the Borrower, or a Subsidiary of the Borrower or an ERISA Affiliate maintained, contributed to or had an obligation to contribute to such plan.

 

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“ Multiple Employer Plan ” shall mean a Single Employer Plan, which (a) is maintained for employees of the Borrower or an ERISA Affiliate and at least one person (as defined in Section 3(9) of ERISA) other than the Borrower and its ERISA Affiliates or (b) was so maintained and in respect of which the Borrower or an ERISA Affiliate could have liability under Section 4064 or 4069 of ERISA in the event such Plan has been or were to be terminated.

“ Net Cash Proceeds ” shall mean 100% of the cash proceeds actually received by the Borrower or any of the Guarantors (including any cash payments received by way of deferred payment or installment receivable or otherwise, but only as and when received) as a result of any Event of Loss, net of all taxes, costs and expenses (including appraisals, and brokerage, legal, title and recording or transfer tax expenses and commissions) incurred in connection with the collection of such proceeds, awards or other compensation.

“ Obligations ” shall mean the unpaid principal of and interest on (including interest, reasonable fees and reasonable documented out-of-pocket costs accruing after the maturity of the Loans and interest, reasonable fees and reasonable out-of-pocket costs accruing after the filing of any petition of bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a claim for post-filing or post-petition interest, fees or costs is allowed in such proceeding) the Loans and all other obligations and liabilities of the Borrower to any Agent or Lender, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which arise under, out of, or in connection with, this Agreement, any other Loan Document, any treasury, depository and cash management services and automated clearing house transfers of funds services provided by a Lender or any of its banking Affiliates, but not any other Person, as permitted by Section 6.03(h), any foreign exchange contracts, currency swap agreements, currency future or option contracts and other similar agreements designed to hedge against fluctuations in foreign exchange rates and currency values and any interest rate swap, cap or collar agreements, interest rate future or option contracts and other similar agreements designed to hedge against fluctuations in interest rates, in each case to the extent that the Indebtedness related to such contract or agreement is owing to a Lender or any of its banking Affiliates and is permitted to be secured pursuant to Section 6.01(a)(viii), or any other document made, delivered or given in connection herewith or therewith, whether on account of principal, interest, reimbursement obligations, reasonable fees, indemnities, reasonable documented out-of-pocket costs, reasonable documented out-of-pocket expenses (including all reasonable fees, charges and disbursements of counsel to any Agent or Lender that are required to be paid by the Borrower pursuant hereto) or otherwise.

“ Officer’s Certificate ” shall mean, as applied to the Borrower or any Guarantor, a certificate executed by a Responsible Officer of such Person solely in his/her capacity as such.

“ Other Taxes ” shall mean any and all present or future stamp, mortgage, intangible or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement.

“ Parent ” shall have the meaning set forth in the first paragraph of this Agreement; provided, however, that if a Permitted Holder exists or is created, the provisions of Sections

 

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5.01(a), (b) and (c), 6.16, and 7.01(g), (h), (i) and (j) will apply to the Permitted Holder in the same manner as such sections apply to the Parent (except as may be otherwise provided in such sections).

“ Parked ” shall mean, as to any Airframe, that such Airframe has been removed from service and is not intended to be used for scheduled service for a period in excess of thirty (30) days, including, without limitation, those Airframe that have been Stored, other than Airframe temporarily grounded for maintenance being actively conducted.

“ Participant ” shall have the meaning given such term in Section 10.02(d).

“ Patriot Act ” shall mean the USA Patriot Act, Title III of Pub. L. 107-56, signed into law on October 26, 2001 or any subsequent legislation that amends, supplements or supersedes such Act.

“ Paying Agent ” shall have the meaning set forth in the first paragraph of this Agreement.

“ Payroll Accounts ” shall mean depository accounts used only for payroll.

“ PBGC ” shall mean the Pension Benefit Guaranty Corporation, or any successor agency or entity performing substantially the same functions.

“ Permitted Acquisition ” shall mean any acquisition, whether by purchase, merger, consolidation or otherwise, by (x) the Parent, the Borrower or any other Guarantor of all or any material portion of the assets of, or all the Equity Interests in, a Person or a division, line of business or other business unit of a Person or (y) a Permitted Holder of all or substantially all of the Equity Interests in the Parent, but only so long as:

(g) (i) no Event of Default has occurred and is continuing immediately prior or immediately after giving effect to the proposed transaction and (ii) all transactions related thereto are consummated in all material respects in accordance with applicable laws;

(h) the Borrower has provided the Agents with written notice ten (10) days (or such shorter period as reasonably agreed by the Agents) prior to a Permitted Acquisition and copies of the material acquisition documents promptly after consummation of such acquisition; and

(i) the Borrower and the Guarantors shall be in compliance on a Pro Forma Basis with Sections 6.04 and 6.05; and

(j) the Borrower has delivered to the Agents an Officer’s Certificate to the effect set forth in clause (a) through (c) above, together with supporting financial information demonstrating compliance with Sections 6.04 and 6.05 on a Pro Forma Basis;

 

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“ Permitted Holder ” shall mean any corporation or limited liability company organized under the laws of the United States of America or any state thereof organized for the purpose of consummating any Permitted Acquisition so long as the Controlling Person (as defined in the definition of Affiliate) of such entity, or such entity itself, is a publicly traded major U.S. airline or a holding company which has (or will simultaneously acquire) as its other principal investment another major U.S. airline.

“ Permitted Holder Acquisition ” shall mean an acquisition consummated by a Permitted Holder in accordance with clause (y) of the definition of Permitted Acquisition.

“ Permitted Investments ” shall mean any investment in the ordinary course of business and consistent with the investment policy approved by the board of directors of the applicable Person.

“ Permitted Liens ” shall mean: (a) Liens imposed by law (other than Liens imposed under Environmental Laws and any Lien imposed under ERISA) for taxes, assessments, levies or charges of any Governmental Authority for claims not yet due or which are being contested in good faith by appropriate proceedings and with respect to which adequate reserves or other appropriate provisions are being maintained in accordance with GAAP; (b) Liens of landlords, carriers, warehousemen, consignors, mechanics, materialmen and other Liens (other than Liens imposed under Environmental Laws and any Lien imposed under ERISA) in existence on the Closing Date (which, in the case of Real Property Assets, are specified in the applicable Real Estate Mortgage) or thereafter imposed by law and created in the ordinary course of business and securing obligations that are not overdue or are being contested as set forth in clause (i) of the proviso appearing in Section 5.05; (c) easements (including, without limitation, reciprocal easement agreements and utility agreements), rights-of-way, covenants, reservations, encroachments, land use restrictions or encumbrances, which (i) do not interfere materially with the ordinary conduct of the business of the Borrower or any Guarantor, as the case may be, or their ordinary utilization of such Collateral, (ii) do not materially detract from the value of the property to which they attach or materially impair the use thereof to the Borrower or any Guarantor, as the case may be and (iii) do not materially adversely affect the marketability of the applicable property; (d) in the case of Real Property Assets, those Liens specified in the applicable Real Estate Mortgage; (e) in the case of the Collateral under the Aircraft Mortgage, “Permitted Encumbrances” as such term is defined therein; and (f) extensions, renewals or replacements of any Lien referred to in paragraphs (a) through (d) above, provided , that the principal amount of the obligation secured thereby is not increased and that any such extension, renewal or replacement is limited to the property originally encumbered thereby.

“ Person ” shall mean any natural person, corporation, division of a corporation, partnership, limited liability company, trust, joint venture, association, company, estate, unincorporated organization or Governmental Authority or any agency or political subdivision thereof.

“ Plan ” shall mean a Single Employer Plan or a Multiple Employer Plan that is a pension plan subject to the provisions of Title IV of ERISA, Section 412 of the Code or Section 302 of ERISA.

 

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“ Primary Domestic Slots ” means the Slots set forth on Schedule 1.01(f), as such schedule may be amended from time to time pursuant to Section 5.12.

“ Primary Foreign Slots ” means the Foreign Slots set forth on Schedule 1.01(b), as such Schedule may be amended from time to time pursuant to Section 5.13.

“ Primary Routes ” means the Routes set forth on Schedule 1.01(c), as such Schedule may be amended from time to time pursuant to Section 5.14.

“ Primary Supporting Route Facilities ” shall mean the Supporting Route Facilities of the Borrower and, if applicable, a Guarantor, at the airports listed on Schedule 1.01(d).

“ Prime Rate ” shall mean the rate of interest per annum publicly announced from time to time by JPMCB as its prime rate in effect at its principal office in New York City; each change in the Prime Rate shall be effective from and including the date such change is publicly announced as being effective.

“ Pro Forma Basis ” means, in respect of a Specified Transaction, that such Specified Transaction shall be deemed to have occurred as of the first day of the applicable period of measurement and for the purposes of calculating (a) EBITDAR for any period of four consecutive fiscal quarters (each, a “ Reference Period ”), (i) if at any time during such Reference Period the Borrower or any Subsidiary shall have consummated any disposition, the EBITDAR for such Reference Period shall be reduced by an amount equal to the EBITDAR (if positive) attributable to the property that is the subject of such disposition for such Reference Period or increased by an amount equal to the EBITDAR (if negative) attributable thereto for such Reference Period and (ii) if during such Reference Period the Borrower or any Subsidiary shall have made any acquisition constituting a Specified Transaction, EBITDAR for such Reference Period shall be calculated after giving pro forma effect thereto as if such Specified Transaction occurred on the first day of such Reference Period, and (b) the components of the denominator of the Fixed Charge Coverage Ratio for any Reference Period, if at any time during such Reference Period the Borrower or any Subsidiary shall have incurred or assumed any Indebtedness in connection with a Specified Transaction, such components shall be calculated after giving pro forma effect to such incurrence of Indebtedness as if such Indebtedness was incurred on the first day of such Reference Period.

“ QEC Kits ” shall mean the quick engine change kits of the Borrower and any applicable Guarantor.

“ Real Estate Appraiser ” shall mean, in the case of the Real Property Assets, (a) CB Richard Ellis Inc., with respect to that certain parcel of real property located at 1200 Algonquin Road, Elk Grove Village, Illinois 60007, (b) National Valuation Consultants, Inc., with respect to the Denver Training Facility, or (c) such other appraisal firms as may be retained by the Agents, in consultation with the Borrower, from time to time.

“ Real Estate Mortgages ” shall mean, collectively, (a) that certain Amended and Restated Real Estate Mortgage, Assignment of Leases and Rents, Security Agreement, Fixture Filing and Financing Statement and that certain Amended and Restated Deed of Trust, Assignment of Leases and Rents, Security Agreement, Fixture Filing and Financing Statement,

 

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each dated the date hereof, by the Borrower to the Collateral Agents, in substantially the form of Exhibit A and (b) each other mortgage granted pursuant to the terms hereof, as the same may be amended, restated, modified, supplemented, extended or amended and restated from time to time .

“ Real Property Assets ” shall mean those certain parcels of real property owned in fee by the Borrower and located at (i) 1200 Algonquin Road, Elk Grove Village, Illinois 60007 and (ii) the Denver Training Facility and together with, in each case, all buildings, improvements, facilities, appurtenant fixtures and equipment, easements and other property and rights incidental or appurtenant to the ownership of such parcel of real property (as each such real property is more particularly described in the applicable Real Estate Mortgage) (including, without limitation, all Collateral described in the applicable Real Estate Mortgage) and, from time to time, all Collateral identified in a Real Estate Mortgage granted pursuant to Section 5.15 or any other provision of this Agreement, or designated as Replacement Collateral.

“ Redeemable Stock ” shall mean any class or series of Equity Interests of any Person that by its terms or otherwise (a) is required to be redeemed prior to the Tranche B Maturity Date, (b) may be required to be redeemed at the option of the holder of such class or series of Equity Interests at any time prior to the Tranche B Maturity Date or (c) is convertible into or exchangeable for (i) Equity Interests referred to in clause (a) or (b) above or (ii) Indebtedness having a scheduled maturity prior to the Tranche B Maturity Date.

“ Register ” shall have the meaning set forth in Section 10.02(b)(iv).

“ Related Parties ” shall mean, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, employees, agents and advisors of such Person and such Person’s Affiliates.

“ Release ” shall have the meaning specified in Section 101(22) of CERCLA.

“ Replacement Collateral ” shall mean, at any time, in each case to the extent not already constituting Collateral at such time, (a) cash collateral pledged to the Collateral Agents (and held in a deposit account subject to a Deposit Account Control Agreement), (b) the Ground Support Equipment (to the extent title endorsements are required to perfect the Collateral Agents’ security interest in such Collateral, in form and substance reasonably satisfactory to the Collateral Agents have been delivered to the Collateral Agents), (c) the Primary Domestic Slots, (d) the Eligible Accounts Receivable, (e) Airframes, Engines or Spare Parts or (f) other assets of the Borrower or any Guarantor which shall be reasonably satisfactory to the Collateral Agents, and all of such Ground Support Equipment, Primary Domestic Slots, Eligible Accounts Receivable, Airframes, Engines or Spare Parts or other assets shall (i) be valued by a new Appraisal Report or Field Audit, as the case may be, at the time the Borrower designates such assets as Eligible Collateral and Replacement Collateral and (ii) be subject to a perfected first priority lien and/or mortgage (or comparable lien) in favor of the Collateral Agents (subject to junior Liens permitted hereunder).

“ Required Lenders ” shall mean, at any time, Lenders having Tranche A Commitments at such time (or, if the Total Tranche A Commitment has been terminated,

 

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Lenders holding Tranche A Loans and LC Exposure at such time), and Lenders holding a portion of the Tranche B Loan at such time collectively representing in excess of 50% of the Total Commitment.

“ Responsible Officer ” shall mean the chief executive officer, president, chief financial officer, treasurer, vice president, controller or chief accounting officer of the Borrower or the Guarantor, if applicable, but in any event, with respect to financial matters, the chief financial officer, treasurer, controller or chief accounting officer of the Borrower or a Guarantor, if applicable.

“ Restricted Payment ” shall mean any dividend or other distribution (whether in cash, securities or other property) with respect to any Equity Interests in the Borrower or any Guarantor, 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 Interests in the Borrower or any option, warrant or other right to acquire any such Equity Interests in the Borrower.

“ Rolling Twelve Months ” shall mean, with respect to any date of determination, the month then ended and the eleven (11) immediately preceding months considered as a single period.

“ Routes ” shall mean the routes for which the Borrower or, if applicable, a Guarantor, holds or hereafter acquires the requisite authority to operate foreign air transportation pursuant to Title 49 including, without limitation, applicable frequencies, exemption and certificate authorities, Fifth-Freedom Rights and “behind/beyond rights”.

“ S&P ” shall mean Standard & Poor’s, a division of The McGraw-Hill Companies, Inc.

“ SEC ” shall mean the United States Securities and Exchange Commission.

“ Secured Parties ” shall mean the Agents, the Collateral Agents, the Paying Agent, the Lenders and each of their respective successors and permitted assigns.

“ Security Agreement ” shall mean (a) that certain Security Agreement as defined in Section 4.01(c), and (b) any additional security agreement in form and substance reasonably satisfactory to the Collateral Agents to be executed by the Borrower and/or Guarantors from time to time in connection with delivering the Collateral Agents a perfected first priority Lien in Replacement Collateral, in each case, as the same may be amended, restated, modified, supplemented, extended or amended and restated from time to time.

“ Senior Convertible Note Indenture ” shall mean that certain Indenture, dated as of February 1, 2006, by and among the Parent as issuer, the Borrower as guarantor and The Bank of New York Trust Company, N.A. as Trustee, providing for the Parent’s 5% Senior Convertible Notes due 2021.

“ Senior Convertible Note Indenture 2 ” shall mean that certain Indenture dated as of July 25, 2006 by and among the Parent as issuer, the Borrower as guarantor and The Bank of New York Trust Company, N.A., as Trustee, providing for the issuance of the Parent’s 4.50% Senior Limited-Subordination Convertible Notes due 2021.

 

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“ Senior Note Indenture ” shall mean that certain Indenture, dated as of February 1, 2006 providing for the issuance of the Parent’s 6% Senior Notes due 2031 and 8% Contingent Senior Notes.

“ SGR Security Agreement ” shall mean that certain Slot, Gate and Route Security and Pledge Agreement as defined in Section 4.01(d), as the same may be amended, amended and restated, modified, supplemented, extended or replaced from time to time.

“ Single Employer Plan ” shall mean a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the Borrower or an ERISA Affiliate or (b) was so maintained and in respect of which the Borrower could reasonably be expected to have current liability under Title IV of ERISA in the event such Plan has been or were to be terminated.

“ Slot ” shall mean the right and operational authority to conduct one Instrument Flight Rule (as defined under the regulations of the FAA) or scheduled landing or take-off operation at a specific time or during a specific time period at any airport in the United States at which the landings or take-offs are restricted, including, without limitation, slots, arrival or operating authorizations, whether pursuant to FAA or DOT regulations or orders pursuant to Title 14, Title 49 or other federal statute now or hereinafter in effect.

“ Spare Parts ” shall have the meaning set forth in the Aircraft Mortgage.

“ Specified Event of Default ” shall mean an Event of Default described under Sections 7.01(b), (g), (h), (i), (j) and (k).

“ Specified Transaction ” means (i) any proposed merger or Permitted Acquisition, (ii) any proposed making of a Restricted Payment or (iii) any proposed Investment. Any calculations implemented pursuant to the definition of Pro Forma Basis with respect to any Specified Transaction may include pro forma adjustments in respect of cost savings which are (a) made in compliance with such Regulation S-X under the Securities Act of 1933 or (b) otherwise reasonably acceptable to the Agents.

“ Statutory Reserve Rate ” shall mean a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board to which the Paying Agent is subject with respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Board). Such reserve percentages shall include those imposed pursuant to such Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D or any comparable regulation. The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.

 

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“ Stored ” shall mean, as to any Airframe, Engine or Spare Engine (as each is defined in the Aircraft Mortgage), that such Airframe, Engine or Spare Engine has been stored (a) with a low expectation of a return to service and (b) in a manner intended to minimize the rate of environmental degradation of the structure and components of such Airframe, Engine or Spare Engine (as the case may be) during such period.

“ Subsidiary ” shall mean, with respect to any Person (in this definition referred to as the “ parent ”), any corporation, association or other business entity (whether now existing or hereafter organized) of which at least a majority of the securities or other ownership or membership interests having ordinary voting power for the election of directors is, at the time as of which any determination is being made, owned or controlled by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent.

“ Supporting Route Facilities ” shall mean gates, ticket counters and other facilities assigned, allocated, leased or made available to the Borrower at any airport outside the United States to or from which the Borrower operates service over any of the Primary Routes.

“ Swap Termination Value ” means, in respect of any contract or agreement relating to Indebtedness permitted by 6.03(g), after taking into account the effect of any legally enforceable netting agreement relating to such contract or agreement, (a) for any date on or after the date such contract or agreement has 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 contract or agreement, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such contract or agreement (which may include a Lender or any Affiliate of a Lender).

“ Tax Sharing Agreement ” shall mean an agreement among the Parent and certain of its Subsidiaries providing for tax sharing and/or tax allocation between the parties thereto which agreement shall be reasonably satisfactory to the Agents.

“ Taxes ” shall mean any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any Governmental Authority.

“ Termination Date ” shall mean the earlier to occur of (a) (i) in the case of Tranche A Loans, the Tranche A Maturity Date and (ii) in the case of Tranche B Loans, the Tranche B Maturity Date and (b) the acceleration of the Loans and the termination of the Total Commitment in accordance with the terms hereof.

“ Termination Event ” shall mean (a) any “reportable event”, as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived), (b) an event described in Section 4068 of ERISA, (c) the withdrawal of the Borrower or any ERISA Affiliate from a Multiple Employer Plan during a plan year in which it was a “substantial employer,” as such term is defined in Section 4001(a)(2) of ERISA, (d) the incurrence of liability by the Borrower or any ERISA Affiliate under Section 4064 of ERISA upon the termination of a Multiple Employer Plan, (e) the imposition of Withdrawal Liability or receipt of notice from a Multiemployer Plan that such

 

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liability may be imposed, (f) a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA, (g) providing notice of intent to terminate a Plan pursuant to Section 4041(c) of ERISA or the treatment of a Plan amendment as a termination under Section 4041 of ERISA, if such amendment requires the provision of security, (h) the institution of proceedings to terminate a Plan by the PBGC under Section 4042 of ERISA, (i) the existence with respect to any Plan of an “accumulated funding deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived, (j) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan, or (k) any other event or condition which would reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan, or the imposition of any liability under Title IV of ERISA (other than for the payment of premiums to the PBGC in the ordinary course).

“ Title 14 ” shall mean Title 14 of the United States Code of Federal Regulations, including Part 93, Subparts K and S thereof, as amended from time to time or any successor or recodified regulation.

“ Title 49 ” shall mean 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 or any subsequent legislation that amends, supplements or supersedes such provisions.

“ Total Commitment ” shall mean, at any time, the sum of the Total Tranche A Commitment (or, if the Total Tranche A Commitment has been terminated, the Tranche A Total Commitment Usage at such time) and the Total Tranche B Commitment at such time.

“ Total Commitment Percentage ” shall mean, at any time, with respect to each Tranche A Lender or Tranche B Lender, the percentage obtained by dividing such Lender’s Tranche A Commitment and/or Tranche B Commitment, as the case may be, by the Total Commitment at such time.

“ Total Tranche A Commitment ” shall mean, at any time, the sum of the Tranche A Commitments at such time, as the same may be reduced from time to time pursuant to Section 2.10 and 2.11 or increased pursuant to Section 10.08(c).

“ Total Tranche B Commitment ” shall mean, at any time, the outstanding amount of the Tranche B Loan at such time.

“ Tranche A Commitment ” shall mean the commitment of each Tranche A Lender to make Tranche A Loans hereunder in the amount set forth opposite its name in Annex A hereto or as may be subsequently set forth in the Register from time to time, as the case may be, and as may be reduced from time to time pursuant to Section 2.10 and Section 2.11 or increased pursuant to Section 10.08(c).

“ Tranche A Commitment Percentage ” shall mean, at any time, with respect to each Tranche A Lender, the percentage obtained by dividing its Tranche A Commitment at such time by the Total Tranche A Commitment or, if the Tranche A Commitments have been terminated, the Tranche A Commitment Percentage of each Tranche A Lender that existed immediately prior to such termination.

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“ Tranche A Lender ” shall mean each Lender having a Tranche A Commitment.

“ Tranche A Loan ” shall have the meaning set forth in Section 2.01(a).

“ Tranche A Maturity Date ” shall mean February 1, 2012.

“ Tranche A Total Commitment Usage ” shall mean at any time, the sum of (a) the aggregate outstanding principal amount of all Tranche A Loans and (b) the aggregate LC Exposure at such time.

“ Tranche B Commitment ” shall mean the commitment of each Tranche B Lender to make such amount of the Tranche B Loan hereunder in the amount set forth opposite its name in Annex A hereto or as may be subsequently set forth in the Register from time to time, as the case may be.

“ Tranche B Commitment Percentage ” shall mean, at any time, with respect to each Tranche B Lender, the percentage obtained by dividing its Tranche B Commitment at such time by the Total Tranche B Commitment.

“ Tranche B Lender ” shall mean each Lender having a Tranche B Commitment.

“ Tranche B Loan ” shall have the meaning set forth in Section 2.01(b).

“ Tranche B Maturity Date ” shall mean February 1, 2014.

“ Transactions ” shall mean the execution, delivery and performance by the Borrower and Guarantors of this Agreement and the other Loan Documents to which they may be a party, the creation of the Liens in the Collateral in favor of the Collateral Agents, the borrowing of Loans, the use of the proceeds thereof and the request for and issuance of Letters of Credit hereunder.

“ Type ”, when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.

“ Type A Collateral ” shall mean, at any time, all Collateral consisting of Primary Routes, Primary Foreign Slots, Primary Supporting Route Facilities, Primary Gate Interests, Airframes, Engines, QEC Kits, Spare Parts, Flight Simulators and cash.

“ Type B Collateral ” shall mean, at any time, Collateral consisting of Primary Domestic Slots, Gate Interests, Real Property Assets, Ground Support Equipment and Eligible Accounts Receivable.

“ United States Citizen ” shall have the meaning set forth in Section 3.02(a).

 

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“ Unrestricted Cash ” shall mean all cash and Cash Equivalents of the Borrower or any Guarantor held in an account (other than Escrow Accounts, Payroll Accounts, and proceeds of insurance claims temporarily held pursuant to Section 2.11(b)) maintained at one of the Agents or an account at another bank or financial institution which account is the subject of a Control Agreement that has been executed and delivered to the Collateral Agents.

“ Unused Total Tranche A Commitment ” shall mean, at any time, (a) the Total Tranche A Commitment less (b) the Tranche A Total Commitment Usage.

“ Use or Lose Rule ” shall mean with respect to Slots or Foreign Slots, as the case may be, the terms of 14 C.F.R. Section 93.227 or other applicable utilization requirements issued by the FAA, other Governmental Authorities, any Foreign Aviation Authorities or any Airport Authorities.

“ Withdrawal Liability ” shall have the meaning given such term under Part I of Subtitle E of Title IV of ERISA and shall include liability that results from either a complete or partial withdrawal.

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”. 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, restated, supplemented, extended, amended and restated 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 permitted 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) 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 and (f) “knowledge” or “aware” or words of similar import shall mean, when used in reference to the Borrower or the Guarantors, the actual knowledge of any Responsible Officer.

SECTION 1.03 Accounting Terms; GAAP . Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided that, if the Borrower notifies the Agents 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 either Agent (in consultation with the other 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

 

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before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith. Upon any such request for an amendment, Borrower, the Required Lenders and the Agents agree to consider in good faith any such amendment in order to amend the provisions of this Agreement so as to reflect equitably such accounting changes so that the criteria for evaluating the Borrower’s financial condition shall be the same after such accounting changes as if such accounting changes had not occurred.

SECTION 2. AMOUNT AND TERMS OF CREDIT

SECTION 2.01 Commitments of the Lenders .

(a) Tranche A Revolving Commitment . (i) Each Tranche A Lender severally, and not jointly with the other Tranche A Lenders, agrees, upon the terms and subject to the conditions herein set forth, to make revolving credit loans (each a “ Tranche A Loan ” and collectively, the “ Tranche A Loans ”) to the Borrower at any time and from time to time during the Availability Period in an aggregate principal amount not to exceed, when added to such Tranche A Lender’s Tranche A Commitment Percentage of its LC Exposure, the Tranche A Commitment of such Lender, which Tranche A Loans may be repaid and reborrowed in accordance with the provisions of this Agreement. At no time shall the sum of the then outstanding aggregate principal amount of the Tranche A Loans plus the LC Exposure exceed the Total Tranche A Commitment.

(ii) Each Borrowing of a Tranche A Loan shall be made from the Tranche A Lenders pro rata in accordance with their respective Tranche A Commitments; provided , however , that the failure of any Tranche A Lender to make any Tranche A Loan shall not in itself relieve the other Tranche A Lenders of their obligations to lend.

(b) Tranche B Term Loan Commitment . (i) Each Tranche B Lender, severally and not jointly with the other Tranche B Lenders, agrees, upon the terms and subject to the conditions herein set forth, to make available to the Borrower a term loan in an aggregate principal amount equal to such Tranche B Lender’s Tranche B Commitment (the “ Tranche B Loan ”). Upon the satisfaction (or waiver) of the conditions set forth in Section 4.01, each Tranche B Lender shall make its portion of the Tranche B Loan to the Borrower in the amount equal to such Tranche B Lender’s Tranche B Commitment Percentage of $1,800,000,000. Once repaid, the Tranche B Loan may not be reborrowed and the Total Tranche B Commitment shall be automatically and permanently reduced by an amount equal to the amount so repaid.

(ii) The Tranche B Loan shall be made by the Tranche B Lenders pro rata in accordance with their respective Tranche B Commitment; provided , however , that the failure of any Tranche B Lender to make its Tranche B Loan shall not in itself relieve the other Tranche B Lenders of their obligations to lend.

(c) Type of Borrowing . Other than as otherwise provided in Section 2.03(b), each Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request in accordance herewith. Each Lender at its option may make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement.

 

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(d) Amount of Borrowing . At the commencement of each Interest Period for any Eurodollar Borrowing, such Borrowing shall be in an aggregate amount that is in an integral multiple of $1,000,000 and not less than $1,000,000. At the time that each ABR Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of $1,000,000; provided , that an ABR Borrowing may be in an aggregate amount that is equal to the entire Unused Total Tranche A Commitment or that is required to finance the reimbursement of an LC Disbursement as contemplated by Section 2.02(f). Borrowings of more than one Type may be outstanding at the same time.

(e) Limitation on Interest Period . Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled to request, or to elect to convert or continue, any Borrowing if the Interest Period requested with respect thereto would end after (i) in the case of any request relating to a Tranche A Loan, the Tranche A Maturity Date and (ii) in the case of a request relating to a Tranche B Loan, the Tranche B Maturity Date .

SECTION 2.02 Letters of Credit . (a)  General . Subject to the terms and conditions set forth herein, the Borrower may request the issuance of one or more Letters of Credit for its own account or to support obligations of any Guarantor, in a form reasonably acceptable to the Agents, the Issuing Lender and the Borrower at any time and from time to time during the Availability Period (subject to the provisions of Section 2.02(j) in the case of issuances during the final three (3) calendar months of the Availability Period). In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by the Borrower to, or entered into by the Borrower with, the Issuing Lender relating to any Letter of Credit, the terms and conditions of this Agreement shall control. At no time shall a Letter of Credit be issued if the sum of the then outstanding aggregate principal amount of the Tranche A Loans plus the LC Exposure (inclusive of the amount of such proposed Letter of Credit) would exceed the Total Tranche A Commitment.

(b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions . To request the issuance of a Letter of Credit (or the amendment, renewal or extension of an outstanding Letter of Credit), the Borrower shall either provide (i) telephonic notice promptly followed by written notice or (ii) hand deliver or telecopy (or transmit by electronic communication, if arrangements for doing so have been approved by the Issuing Lender (which approval shall not be unreasonably withheld, delayed or conditioned)) to the Issuing Lender and the Paying Agent (reasonably in advance of the requested date of issuance, amendment, renewal or extension) a notice requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended, renewed or extended, and specifying the date of issuance, amendment, renewal or extension (which shall be a Business Day), the date on which such Letter of Credit is to expire (which shall comply with paragraph (c) of this Section), the amount of such Letter of Credit, the name and address of the beneficiary thereof and such other information as shall be necessary to prepare, amend, renew or extend such Letter of Credit. If reasonably requested by the Issuing Lender, the Borrower also shall submit a letter of credit application on the Issuing Lender’s standard form in connection with any request for a Letter of Credit; provided , that to the extent such standard form is

 

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inconsistent with the Loan Documents, the Loan Documents shall control. A Letter of Credit shall be issued, amended, renewed or extended only if (and upon issuance, amendment, renewal or extension of each Letter of Credit the Borrower shall be deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension the LC Exposure (together with the then outstanding aggregate principal amount of the Tranche A Loans) shall not exceed the Total Tranche A Commitment. No Issuing Lender (other than the Paying Agent or an Affiliate thereof) shall permit any such issuance, renewal, extension or amendment resulting in an increase in the amount of any Letter of Credit to occur without first obtaining written confirmation from either Agent (in consultation with the other Agent) that it is then permitted under this Agreement.

(c) Expiration Date . Each Letter of Credit shall expire at or prior to the close of business on the date that is one year following the Tranche A Maturity Date.

(d) Participations . By the issuance of a Letter of Credit (or an amendment, renewal or extension of a Letter of Credit including any amendment increasing the amount thereof) , and without any further action on the part of the Issuing Lender or the Tranche A Lenders, the Issuing Lender hereby grants to each Tranche A Lender, and each Tranche A Lender hereby acquires from the Issuing Lender, a participation in such Letter of Credit equal to such Tranche A Lender’s Tranche A Commitment Percentage of the aggregate amount available to be drawn under such Letter of Credit. In consideration and in furtherance of the foregoing, each Tranche A Lender hereby absolutely and unconditionally agrees to pay to the Paying Agent, for the account of the Issuing Lender, such Tranche A Lender’s Tranche A Commitment Percentage of each LC Disbursement made by the Issuing Lender and not reimbursed by the Borrower on the date due as provided in paragraph (e) of this Section, or of any reimbursement payment required to be refunded to the Borrower for any reason. Each Tranche A Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence of an Event of Default or reduction or termination of the Tranche A Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.

(e) Reimbursement . If the Issuing Lender shall make any LC Disbursement in respect of a Letter of Credit, the Borrower shall reimburse such LC Disbursement by paying to the Paying Agent an amount equal to such LC Disbursement not later than the first Business Day following the date the Borrower receives notice from the Issuing Lender or the Paying Agent of such LC Disbursement; provided , that, to the extent not reimbursed and, subject to the satisfaction (or waiver) of the conditions to borrowing set forth herein, including, without limitation, making a request in accordance with Section 2.03(a) that such payment shall be financed with an ABR Borrowing in an equivalent amount and, to the extent so financed, the Borrower’s obligation to make such payment shall be discharged and replaced by the resulting ABR Borrowing. If the Borrower fails to make such payment when due (including by a Borrowing), the Paying Agent shall notify each Tranche A Lender of the applicable LC Disbursement, the payment then due from the Borrower in respect thereof and such Tranche A Lender’s Tranche A Commitment Percentage thereof. Promptly following receipt of such notice, each Tranche A Lender shall pay to the Paying Agent its Tranche A Commitment

 

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Percentage of the payment then due from the Borrower, in the same manner as provided in Section 2.04 with respect to Tranche A Loans made by such Tranche A Lender (and Section 2.04 shall apply, mutatis mutandis , to the payment obligations of the Tranche A Lenders), and the Paying Agent shall promptly pay to the Issuing Lender the amounts so received by it from the Tranche A Lenders. Promptly following receipt by the Paying Agent of any payment from the Borrower pursuant to this paragraph, the Paying Agent shall distribute such payment to the Issuing Lender or, to the extent that Tranche A Lenders have made payments pursuant to this paragraph to reimburse the Issuing Lender, then to such Tranche A Lenders and the Issuing Lender as their interests may appear. Any payment made by a Tranche A Lender pursuant to this paragraph to reimburse the Issuing Lender for any LC Disbursement (other than the funding of ABR Loans as contemplated above) shall not constitute a Tranche A Loan and shall not relieve the Borrower of its obligation to reimburse such LC Disbursement.

(f) Obligations Absolute . The Borrower’s obligation to reimburse LC Disbursements as provided in paragraph (e) of this Section shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit or this Agreement, or any term or provision therein or herein, (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by the Issuing Lender under a Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit, or (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of, or provide a right of setoff against, the Borrower’s obligations hereunder . Neither the Paying Agent, the Agents, the Tranche A Lenders nor the Issuing Lender, nor any of their Related Parties, shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of the Issuing Lender; provided , that the foregoing shall not be construed to excuse the Issuing Lender from liability to the Borrower (nor waive any claims the Borrower may have against the Issuing Lender with respect thereto) to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Borrower to the extent permitted by applicable law) suffered by the Borrower that are caused by the Issuing Lender’s failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. The parties hereto expressly agree that, in the absence of gross negligence, bad faith or willful misconduct on the part of the Issuing Lender (as finally determined by a court of competent jurisdiction), the Issuing Lender shall be deemed to have exercised care in each such determination. In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial compliance with the terms of a Letter of Credit, the Issuing Lender may, in its reasonable discretion, either accept and make

 

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payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit.

(g) Disbursement Procedures . The Issuing Lender shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit. The Issuing Lender shall promptly notify the Paying Agent and the Borrower by telephone (confirmed by telecopy) of such demand for payment and whether the Issuing Lender has made or will make an LC Disbursement thereunder; provided , that any failure to give or delay in giving such notice shall not relieve the Borrower of its obligation to reimburse the Issuing Lender and the Tranche A Lenders with respect to any such LC Disbursement in accordance with the terms herein.

(h) Interim Interest . If the Issuing Lender shall make any LC Disbursement, then, unless the Borrower shall reimburse (including by a Borrowing) such LC Disbursement in full not later than the first Business Day following the date such LC Disbursement is made, the unpaid amount thereof shall bear interest, for each day from and including the date such LC Disbursement is made to but excluding the date that the Borrower reimburses such LC Disbursement, at the rate per annum then applicable to ABR Loans. Interest accrued pursuant to this paragraph shall be for the account of the Issuing Lender, except that interest accrued on and after the date of payment by any Tranche A Lender pursuant to paragraph (e) of this Section to reimburse the Issuing Lender shall be for the account of such Tranche A Lender to the extent of such payment.

(i) Replacement of the Issuing Lender . Any Issuing Lender may be replaced at any time by written agreement among the Borrower, the Agents, the replaced Issuing Lender and the successor Issuing Lender. The Agents shall notify the Tranche A Lenders of any such replacement of the Issuing Lender. At the time any such replacement shall become effective, the Borrower shall pay all unpaid fees accrued for the account of the replaced Issuing Lender pursuant to Section 2.20. From and after the effective date of any such replacement, (i) the successor Issuing Lender shall have all the rights and obligations of the Issuing Lender under this Agreement with respect to Letters of Credit to be issued thereafter and (ii) references herein to the term “Issuing Lender” shall be deemed to refer to such successor or to any previous Issuing Lender, or to such successor and all previous Issuing Lenders, as the context shall require. After the replacement of an Issuing Lender hereunder, the replaced Issuing Lender shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Lender under this Agreement with respect to Letters of Credit issued by it prior to such replacement, but shall not be required to issue additional Letters of Credit.

(j) Replacement of Letters of Credit; Cash Collateralization . By no later than three (3) calendar months prior to the Tranche A Maturity Date (and, in the case of any Letter of Credit issued within the three (3) month period prior to the Tranche A Maturity Date if such Letter of Credit has an expiration date or potential expiration date beyond the Tranche A Maturity Date) the Borrower shall (i) cause all Letters of Credit which expire after the Tranche A Maturity Date to be returned to the Issuing Lender undrawn and marked “cancelled” or (ii) if the Borrower is unable to do so in whole or in part either (A) provide one or more “back-

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to-back” letters of credit to one or more Issuing Lenders in a form reasonably satisfactory to each such Issuing Lender that is a beneficiary of such “back-to-back” letter of credit and the Agents, issued by a bank reasonably satisfactory to each such Issuing Lender and the Agents, and/or (B) deposit cash in the Letter of Credit Account, the sum of (A) and (B) of the foregoing sentence to be in an aggregate amount equal to 102% of the then undrawn stated amount of all LC Exposure ( less the amount, if any, then on deposit in the Letter of Credit Account) as collateral security for the Borrower’s reimbursement obligations in connection therewith, such cash to be promptly remitted to the Borrower upon the expiration, cancellation or other termination or satisfaction or provision of a back-to-back Letters of Credit as provided in clause 2.02(j)(i)(A) above of such reimbursement obligations in whole or in part (“ Cash Collateralization ”). The Paying Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account. The Paying Agent may only use the cash in such deposit account to reimburse disbursements with respect to Letters of Credit. Other than any interest earned on the investment of such deposits, which investments shall be made at the option and sole discretion of the Paying Agent (in accordance with its usual and customary practices for investments of this type) and at the Borrower’s risk and reasonable expense, such deposits shall not bear interest. Interest or profits, if any, on such investments shall accumulate in such account. Moneys in such account shall be applied by the Paying Agent to reimburse the Issuing Lender for LC Disbursements for which it has not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of the reimbursement obligations of the Borrower for the LC Exposure at such time and paid over to the Borrower when such Letters of Credit are terminated or cancelled or when the reimbursement obligations have been satisfied, provided no Event of Default has occurred and is continuing.

(k) Issuing Lender Agreements . Unless otherwise requested by the Paying Agent, each Issuing Lender shall report in writing to the Paying Agent (i) on the first Business Day of each week, the daily activity (set forth by day) in respect of Letters of Credit during the immediately preceding week, including all issuances, extensions, amendments and renewals, all expirations and cancellations and all disbursements and reimbursements, (ii) on or prior to each Business Day on which such Issuing Lender expects to issue, amend, renew or extend any Letter of Credit, the date of such issuance, amendment, renewal or extension, and the aggregate face amount of the Letters of Credit to be issued, amended, renewed, or extended by it and outstanding after giving effect to such issuance, amendment, renewal or extension occurred (and whether the amount thereof changed), it being understood that such Issuing Lender shall not permit any issuance, renewal, extension or amendment resulting in an increase in the amount of any Letter of Credit to occur without first obtaining written confirmation from either Agent (in consultation with the other Agent) that it is then permitted under this Agreement, (iii) on each Business Day on which such Issuing Lender makes any LC Disbursement, the date of such LC Disbursement and the amount of such LC Disbursement, (iv) on any Business Day on which a Borrower fails to reimburse an LC Disbursement required to be reimbursed to such Issuing Lender on such day, the date of such failure, and the amount and currency of such LC Disbursement and (v) on any other Business Day, such other information as the Paying Agent shall reasonably request.

 

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SECTION 2.03 Requests for Borrowings .

(a) Tranche A Loans . Unless otherwise agreed to by the Agents in connection with making the initial Loans, to request a Borrowing of Tranche A Loans, the Borrower shall notify the Paying Agent of such request by telephone or electronic transmission (i) in the case of a Eurodollar Borrowing, not later than 2:00 p.m., New York City time, three (3) Business Days before the date of the proposed Borrowing and (ii) in the case of an ABR Borrowing, not later than 12:00 noon, New York City time, on the date of the proposed Borrowing (subject, in the case of an ABR Borrowing, to the last sentence of this Section 2.03(a)). Each such Borrowing Request shall be irrevocable (except to the extent provided in Section 2.08) and shall be confirmed promptly by hand delivery or telecopy to the Paying Agent of a written Borrowing Request in a form approved by the Paying Agent and signed by the Borrower. Each such telephonic or electronic transmission and written Borrowing Request shall specify the following information in compliance with Section 2.01(a):

(i) the aggregate amount of the requested Borrowing (which shall not be less than $1,000,000 (and integral multiples of $1,000,000);

(ii) the date of such Borrowing, which shall be a Business Day;

(iii) whether such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and

(iv) in the case of a Eurodollar Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term “Interest Period”.

If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be an ABR Borrowing. If no Interest Period is specified with respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration. Promptly following receipt of a Borrowing Request in accordance with this Section 2.03(a), the Paying Agent shall advise each Tranche A Lender of the details thereof and of the amount of such Tranche A Lender’s Loan to be made as part of the requested Borrowing.

(b) Tranche B Loan . To request the Borrowing of the Tranche B Loan, the Borrower shall notify the Paying Agent of such request by telephone or electronic transmission (i) in the case of a Eurodollar Borrowing, not later than 2:00 p.m., New York City time, three (3) Business Days before the date of the proposed Borrowing and (ii) in the case of an ABR Borrowing, not later than 12:00 noon, New York City time, on the date of the proposed Borrowing (subject, in the case of an ABR Borrowing, to the last sentence of this Section 2.03(b)). Such telephonic or electronic transmission notice shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Paying Agent of a written Borrowing Request in a form approved by the Paying Agent and signed by the Borrower. Such telephone or electronic transmission and written Borrowing Request shall specify the following information in compliance with Section 2.01:

(i) the aggregate amount of the requested Borrowing (which shall not be less than $1,000,000 (and integral multiples of $1,000,000);

 

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(ii) the date of such Borrowing, which shall be a Business Day;

(iii) the portion of the Borrowing that is to be an ABR Borrowing and that is to be a Eurodollar Borrowing; and

(iv) in the case of such portion of the Borrowing that is a Eurodollar Borrowing, the initial Interest Period applicable thereto, which shall be a period contemplated by the definition of the term “Interest Period”.

If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be an ABR Borrowing. If no Interest Period is specified with respect to any portion of the requested Borrowing that is to be a Eurodollar Borrowing, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration. Promptly following receipt of the Borrowing Request in accordance with this Section 2.03(b), the Paying Agent shall advise each Tranche B Lender of the details thereof and of the amount of such Tranche B Lender’s Loan to be made as part of the requested Borrowing.

SECTION 2.04 Funding of Borrowings . (a) Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds by 3:00 p.m., New York City time, or such earlier time as may be reasonably practicable, to the account of the Paying Agent most recently designated by it for such purpose by notice to the Lenders. The Paying Agent will make such Loans available to the Borrower by promptly crediting the amounts so received, in like funds, to an account of the Borrower maintained with the Paying Agent and designated by the Borrower in the applicable Borrowing Request; provided that ABR Loans made to finance the reimbursement of an LC Disbursement as provided in Section 2.02(e) shall be remitted by the Paying Agent to the Issuing Lender.

(b) Unless the Paying Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to the Paying Agent such Lender’s share of such Borrowing, the Paying Agent may assume that such Lender has made such share available on such date in accordance with paragraph (a) of this Section and may, in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Paying Agent, then the applicable Lender and the Borrower severally agree to pay to the Paying Agent forthwith upon written demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Paying Agent, at (i) in the case of such Lender, the greater of the Federal Funds Effective Rate and a rate determined by the Paying Agent in accordance with banking industry rules on interbank compensation or (ii) in the case of the Borrower, the interest rate applicable to ABR Loans. If such Lender pays such amount to the Paying Agent, then such amount shall constitute such Lender’s Loan included in such Borrowing.

SECTION 2.05 Interest Elections . (a) Each Borrowing of Tranche A Loans and the Borrowing of the Tranche B Loan initially shall be of the Type or, in the case of the Tranche B Loan, Types specified in the applicable Borrowing Request and, in the case of a Eurodollar Borrowing, shall have an initial Interest Period as specified in such Borrowing Request.

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Thereafter, the Borrower may elect to convert such Borrowings to a different Type or to continue such Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in this Section. The Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Tranche A Loans or Tranche B Loan, as the case may be, comprising such Borrowing, and the Tranche A Loans and Tranche B Loan, as the case may be, comprising each such Type shall be considered a separate Borrowing. No more than fifteen (15) Borrowings of Eurodollar Loans may be outstanding at any one time.

(b) To make an Interest Election Request pursuant to this Section, the Borrower shall notify the Paying Agent of such election by telephone or electronic transmission by the time that a Borrowing Request would be required under Section 2.03(a) or Section 2.03(b) if the Borrower were requesting a Borrowing of the Type resulting from such election to be made on the effective date of such election. Each such telephonic or electronic transmission Interest Election Request shall be irrevocable (subject to Section 2.08) and shall be confirmed promptly by hand delivery or telecopy to the Paying Agent of a written Interest Election Request in a form approved by the Paying Agent and signed by the Borrower.

(c) Each telephonic and written Interest Election Request shall specify the following information in compliance with Section 2.01:

(i) the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing);

(ii) the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;

(iii) whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and

(iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term “Interest Period”.

If any such Interest Election Request requests a Eurodollar Borrowing but does not specify an Interest Period, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration.

(d) Promptly following receipt of an Interest Election Request, the Paying Agent shall advise each Lender of the details thereof and of such Lender’s portion of each resulting Borrowing.

(e) If the Borrower fails to deliver a timely Interest Election Request with respect to a Eurodollar Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period

 

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such Borrowing shall, unless the Paying Agent is otherwise instructed by the Borrower in writing (and in all cases subject to Section 2.08), be continued as a Eurodollar Loan with a one (1) month Interest Period. By its execution of this Agreement, the Borrower hereby authorizes and instructs the Paying Agent to, continue all Borrowings into Eurodollar Loans as provided in the preceding sentence, until the Borrower revokes such authorization and instruction in writing. Notwithstanding any contrary provision hereof, Borrowings may be converted to or continued as a Eurodollar Borrowing during the continuance of an Event of Default unless (i) in the case of a Borrowings of Tranche A Loans, Tranche A Lenders holding Tranche A Commitments (or, if none, Tranche A Loans and LC Exposure) in excess of 50% of the Total Tranche A Commitments shall have elected in writing to not permit such continuation or conversion and (ii) in the case of Borrowings of Tranche B Loans, Tranche B Lenders holding in excess of 50% of the Tranche B Loans shall have elected in writing to not permit such continuations or conversions.

SECTION 2.06 Interest on Loans .

(a) Subject to the provisions of Section 2.07, each ABR Loan shall bear interest (computed on the basis of the actual number of days elapsed over a year of 360 days or, when the Alternate Base Rate is based on the Prime Rate, a year with 365 days or 366 days in a leap year) at a rate per annum equal to the Alternate Base Rate plus a margin of (x) 1.00% in the case of Tranche A Loans and (y) 1.00% in the case of Tranche B Loans (as such margins may be adjusted solely in accordance with Section 10.08(c)).

(b) Subject to the provisions of Section 2.07, each Eurodollar Loan shall bear interest (computed on the basis of the actual number of days elapsed over a year of 360 days) at a rate per annum equal, during each Interest Period applicable thereto, to the Adjusted LIBO Rate for such Interest Period in effect for such Borrowing plus a margin of (x) 2.00% in the case of Tranche A Loans and (y) 2.00% in the case of Tranche B Loans (as such margins may be adjusted solely in accordance with Section 10.08(c)).

(c) Accrued interest on all Loans shall be payable in arrears on each Interest Payment Date applicable thereto, on the relevant Termination Date and after the Termination Date on written demand and (with respect to Eurodollar Loans) upon any repayment or prepayment thereof (on the amount prepaid); provided that in the event of any conversion of any Eurodollar Loan to an ABR Loan, accrued interest on such Loan shall be payable on the effective date of such conversion.

SECTION 2.07 Default Interest . If the Borrower or any Guarantor, as the case may be, shall default in the payment of the principal of or interest on any Loan or in the payment of any other amount becoming due hereunder (including, without limitation, the reimbursement pursuant to Section 2.02(e) of any LC Disbursements), whether at stated maturity, by acceleration or otherwise, the Borrower or such Guarantor, as the case may be, shall on written demand of the Paying Agent, from time to time pay interest, to the extent permitted by law, on all Loans and overdue amounts up to (but not including) the date of actual payment (after as well as before judgment) at a rate per annum (computed on the basis of the actual number of days elapsed over a year of 360 days or when the Alternate Base Rate is applicable and is based on the Prime Rate, a year with 365 days or 366 days in a leap year) equal to (a) the rate then applicable for such Borrowings plus 2.0% and (b) in the case of all other amounts, the rate applicable for ABR Loans plus 2.0%.

 

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SECTION 2.08 Alternate Rate of Interest . In the event, and on each occasion, that on the day two Business Days prior to the commencement of any Interest Period for a Eurodollar Loan, the Paying Agent shall have reasonably determined (which determination shall be conclusive and binding upon the Borrower absent manifest error) that reasonable means do not exist for ascertaining the applicable Adjusted LIBO Rate, the Paying Agent shall, as soon as practicable thereafter, give written, facsimile or telegraphic notice of such determination to the Borrower and the Lenders, and any request by the Borrower for a Borrowing of Eurodollar Loans (including pursuant to a refinancing with Eurodollar Loans) pursuant to Section 2.03 may either be (i) revoked by the Borrower or (ii) deemed by the Borrower to be a request for a Borrowing of ABR Loans. After such notice shall have been given and until the circumstances giving rise to such notice no longer exist, each subsequent request for a Borrowing of Eurodollar Loans shall be deemed to be a request for a Borrowing of ABR Loans.

SECTION 2.09 Amortization of Tranche B Loans; Repayment of Loans; Evidence of Debt .

(a) The Borrower shall repay principal of the Tranche B Loan on each semi-annual date set forth below in the aggregate principal amount set forth opposite such date:

 

Once repaid, no portion of the Tranche B Loan may be reborrowed.

(b) The Borrower hereby unconditionally promises to pay to the Paying Agent for the ratable account of each Lender the then unpaid principal amount of each Loan on the relevant Termination Date.

 

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(c) Each Lender shall maintain in accordance with its usual and customary practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.

(d) The Paying Agent shall maintain accounts in which it shall record (i) the amount of each Loan made hereunder, the Type thereof and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Paying Agent hereunder for the account of the Lenders and each Lender’s share thereof. The Borrower shall have the right, upon reasonable notice, to request information regarding the accounts referred to in the preceding sentence.

(e) The entries made in the accounts maintained pursuant to paragraph (c) or (d) of this Section shall be prima facie evidence of the existence and amounts of the obligations recorded therein; provided that the failure of any Lender or the Paying Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay the Loans in accordance with the terms of this Agreement.

(f) Any Lender may reque