Exhibit 10.1

EXECUTION VERSION

 

 

 

$600,000,000 COMPETITIVE ADVANCE AND REVOLVING CREDIT FACILITY

AGREEMENT

among

SOUTHWEST AIRLINES CO.,

THE BANKS PARTY HERETO,

CITIBANK, N.A.,

as Syndication Agent,

BARCLAYS BANK PLC,

DEUTSCHE BANK SECURITIES INC.,

GOLDMAN SACHS BANK USA

and

MORGAN STANLEY BANK, N.A.,

as Documentation Agents,

and

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent

As of September 29, 2009

J.P. MORGAN SECURITIES INC.

and

CITIGROUP GLOBAL MARKETS INC.,

as Co-Lead Arrangers and Joint Bookrunners

 

 

 

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Table of Contents

 

          Page ARTICLE I DEFINITIONS AND ACCOUNTING TERMS    1    Section 1.1
Certain Defined Terms    1    Section 1.2 Computation of Time Periods    14
ARTICLE II LOANS    14    Section 2.1 Commitments    14    Section 2.2
Competitive Bid Procedure    14    Section 2.3 Committed Borrowing Procedure   
16    Section 2.4 Refinancings; Conversions    17    Section 2.5 Fees    18   
Section 2.6 Termination and Reduction of Commitments    18    Section 2.7 Loans
   18    Section 2.8 Loan Accounts    19    Section 2.9 Interest on Loans    20
   Section 2.10 Interest on Overdue Amounts    20    Section 2.11 Alternate Rate
of Interest    21    Section 2.12 Prepayment of Loans    21    Section 2.13
Reserve Requirements; Change in Circumstances    21    Section 2.14 Change in
Legality    23    Section 2.15 Indemnity    24    Section 2.16 Pro Rata
Treatment    24    Section 2.17 Sharing of Setoffs    25    Section 2.18
Payments    25    Section 2.19 Tax Forms    27    Section 2.20 Calculation of
LIBO Rates    28    Section 2.21 Booking Loans    28    Section 2.22 Quotation
of Rates    28    Section 2.23 Defaulting Banks    28    Section 2.24 Mitigation
Obligations; Replacement of Banks    30 ARTICLE III LETTERS OF CREDIT    31   
Section 3.1 L/C Commitment    31    Section 3.2 Procedure for Issuance of Letter
of Credit    31    Section 3.3 Fees and Other Charges    32    Section 3.4 L/C
Participations    32    Section 3.5 Reimbursement Obligation of the Company   
33    Section 3.6 Obligations Absolute    33    Section 3.7 Letter of Credit
Payments    33    Section 3.8 Applications    34 ARTICLE IV CONDITIONS OF
LENDING    34    Section 4.1 Conditions Precedent    34    Section 4.2
Conditions Precedent to Each Committed Borrowing    35    Section 4.3 Conditions
Precedent to Each Competitive Borrowing    35    Section 4.4 Conditions
Precedent to Each Letter of Credit Issuance    35    Section 4.5 Legal Details
   36

 

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ARTICLE V REPRESENTATIONS AND WARRANTIES

   36    Section 5.1 Organization, Authority and Qualifications    36    Section
5.2 Financial Statements    37    Section 5.3 Compliance with Agreement and Laws
   37    Section 5.4 Authorization; No Breach; and Valid Agreements    37   
Section 5.5 Litigation and Judgments    37    Section 5.6 Ownership of
Properties    37    Section 5.7 Taxes    37    Section 5.8 Approvals Required   
37    Section 5.9 Business; Status as Air Carrier    38    Section 5.10 ERISA
Compliance    38    Section 5.11 Insurance    38    Section 5.12 Purpose of Loan
   38    Section 5.13 Investment Company Act    38    Section 5.14 General    38
ARTICLE VI COVENANTS    38    Section 6.1 Performance of Obligations    38   
Section 6.2 Compliance with Laws    38    Section 6.3 Maintenance of Existence,
Licenses and Franchises: Compliance With Agreements    39    Section 6.4
Maintenance of Properties    39    Section 6.5 Maintenance of Books and Records
   39    Section 6.6 Inspection    39    Section 6.7 Insurance    40    Section
6.8 Appraisals    40    Section 6.9 Coverage Ratio    40    Section 6.10
Reporting Requirements    40    Section 6.11 Use of Proceeds    41    Section
6.12 Pool Assets    41    Section 6.13 Restrictions on Liens    42    Section
6.14 Mergers and Dissolutions    43    Section 6.15 Assignment    43 ARTICLE VII
EVENTS OF DEFAULT; REMEDIES    43    Section 7.1 Events of Default    43   
Section 7.2 Remedies Upon Default    45    Section 7.3 Remedies in General    45
ARTICLE VIII THE AGENTS    45    Section 8.1 Authorization and Action    45   
Section 8.2 Agents’ Reliance, Etc.    46    Section 8.3 Rights of Agents as
Banks    46    Section 8.4 Bank Credit Decision    46    Section 8.5 Agents’
Indemnity    47    Section 8.6 Successor Administrative Agent    47    Section
8.7 Notice of Default    48    Section 8.8 Documentation Agents and Syndication
Agent    48 ARTICLE IX MISCELLANEOUS    48    Section 9.1 Amendments, Etc.    48
   Section 9.2 Notices, Etc.    48    Section 9.3 No Waiver; Remedies    49

 

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   Section 9.4 Costs, Expenses and Taxes    49    Section 9.5 Indemnity    50   
Section 9.6 Right of Setoff    50    SECTION 9.7 GOVERNING LAW    51   
Section 9.8 Submission To Jurisdiction; Waivers    51    Section 9.9 Survival of
Representations and Warranties    51    Section 9.10 Binding Effect    51   
Section 9.11 Successors and Assigns; Participations    51    Section 9.12
Independence of Covenants    54    Section 9.13 Severability    54   
Section 9.14 Integration    54    Section 9.15 Descriptive Headings    54   
Section 9.16 Execution in Counterparts    54    Section 9.17 WAIVERS OF JURY
TRIAL    54    Section 9.18 No Fiduciary Duty    55    Section 9.19 USA Patriot
Act    55

 

SCHEDULES    Location of Lending Office; Notice Information    Schedule I Pool
Assets    Schedule II EXHIBITS    Form of Competitive Bid Request    Exhibit A-1
Form of Notice of Committed Borrowing    Exhibit A-2 Form of Notice to Banks of
Competitive Bid Request    Exhibit B Form of Competitive Bid    Exhibit C Form
of Competitive Note    Exhibit D-1 Form of Committed Note    Exhibit D-2 Form of
Company’s Internal Counsel Opinion    Exhibit E-1 Form of Company’s Outside
Counsel Opinion    Exhibit E-2 Form of Agents’ Counsel Opinion    Exhibit E-3
Form of Financial Report Certificate    Exhibit F Form of Assignment and
Acceptance    Exhibit G Form of Appraisal    Exhibit H Form of U.S. Tax
Compliance Certificate    Exhibit I

 

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COMPETITIVE ADVANCE AND

REVOLVING CREDIT FACILITY AGREEMENT

COMPETITIVE ADVANCE AND REVOLVING CREDIT FACILITY AGREEMENT, dated as of
September 29, 2009, among SOUTHWEST AIRLINES CO. (the “Company”), the Banks,
JPMORGAN CHASE BANK, N.A., as administrative agent for the Banks (in such
capacity, the “Administrative Agent”), CITIBANK, N.A., as syndication agent for
the Banks (in such capacity, the “Syndication Agent”), and Barclays Bank PLC,
Deutsche Bank Securities Inc., Goldman Sachs Bank USA and Morgan Stanley Bank,
N.A., as documentation agents for the Banks (collectively, in such capacity, the
“Documentation Agents”).

The Company has requested the Banks to extend credit to the Company in order to
enable it to borrow on a revolving credit basis and to obtain letters of credit
on and after the Effective Date and at any time and from time to time prior to
the Termination Date (each as herein defined) in an aggregate principal amount
not in excess of $600,000,000 at any time outstanding. The Company has also
requested the Banks to provide a procedure pursuant to which the Company may
designate that all of the Banks be invited to bid on an uncommitted basis on
borrowings by the Company scheduled to mature on or prior to the Termination
Date. The Banks are willing to extend such credit to the Company on the terms
and conditions herein set forth. Accordingly, the Company, the Agents, and the
Banks agree as follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

Section 1.1 Certain Defined Terms. As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):

“Adjusted Pre-Tax Income” of any Person means, with respect to any period,
income before taxes of such Person for such period, but excluding (i) any gain
or loss arising from the sale of capital assets other than capital assets
consisting of Aircraft, (ii) any gain or loss arising from any write-up or
write-down of assets, (iii) income or loss of any other Person, substantially
all of the assets of which have been acquired by such Person in any manner, to
the extent that such income or loss was realized by such other Person prior to
the date of such acquisition, (iv) income or loss of any other Person (other
than a Subsidiary) in which such Person has an ownership interest, (v) the
income or loss of any other Person to which assets of such Person shall have
been sold, transferred, or disposed of, or into which such Person shall have
merged, to the extent that such income or loss arises prior to the date of such
transaction, (vi) any gain or loss arising from the acquisition of any
securities of such Person, (vii) gains or losses reported as extraordinary in
accordance with GAAP not previously excluded in clauses (i) through (vi), and
(viii) the cumulative effect of changes in accounting methods permitted by GAAP
during such period. Notwithstanding the foregoing, for the purposes of
determining income before taxes for any period, the component of Operating
expenses consisting of GAAP Fuel and oil expense and the component of Other
expenses (income) consisting of GAAP Other (gains) losses, shall be adjusted by
the amount specified for the relevant period as “Add/(Deduct) : Net Impact from
Fuel Contracts” in the Company’s quarterly earnings report “Note regarding use
of non-GAAP financial measures” contained in “RECONCILIATION OF REPORTED AMOUNTS
TO NON-GAAP ITEMS” as filed on the Company’s Form 8-K; which adjustment excludes
from economic results certain gains or losses associated with derivatives that
settled in a prior period or will settle in a future period (i.e, the impact of
ineffectiveness

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for future period instruments, and changes in market value for future period
derivatives that no longer qualify for special hedge accounting, such terms as
defined in SFAS 133 , “Accounting for Derivative Instruments and Hedging
Activities,” as amended).

“Administrative Agent” is defined in the introduction to this Agreement.

“Administrative Questionnaire” means an Administrative Questionnaire in a form
satisfactory to the Administrative Agent, which each Bank shall complete and
provide to the Administrative Agent.

“Affiliate” means a Person that directly, or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with
another Person.

“Agents” means the Administrative Agent, the Syndication Agent and the
Documentation Agents.

“Agreed Maximum Rate” means, for any date, 2% per annum above the interest rate
then applicable to Alternate Base Loans.

“Agreement” means this Competitive Advance and Revolving Credit Facility
Agreement, as the same may be amended, supplemented, or modified from time to
time.

“Aircraft” means, collectively, airframes and aircraft engines now owned or
hereafter acquired by the Company, together with all appliances, equipment,
instruments, and accessories (including radio and radar) from time to time
belonging to, installed in, or appurtenant to such airframes and aircraft
engines; provided, however, the term “Aircraft” shall not include airframes and
engines leased by the Company.

“Aircraft Rentals” means the operating expense attributable to rental of
aircraft, calculated in accordance with the line item described as such in the
Current Financials.

“Alternate Base Loan” means any Committed Loan with respect to which the Company
shall have selected an interest rate based on the Alternate Base Rate in
accordance with the provisions of Article II.

“Alternate Base Rate” means, for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greater of (a) the Prime Rate in
effect on such day, (b) the LIBO Rate for a one-month Interest Period on such
day (or if such day is not a Business Day, the immediately preceding Business
Day) plus 1%, and (c) the Federal Funds Effective Rate in effect on such day
plus  1/2 of 1%. For purposes hereof: “Prime Rate” shall mean the rate of
interest per annum publicly announced from time to time by JPMorgan Chase Bank,
N.A. as its prime rate in effect at its principal office in New York City (the
Prime Rate not being intended to be the lowest rate of interest charged by
JPMorgan Chase Bank, N.A. in connection with extensions of credit to debtors).
Any change in the Alternate Base Rate due to a change in the Prime Rate, the
LIBO Rate or the Federal Funds Effective Rate shall be effective as of the
opening of business on the effective day of such change in the Prime Rate, the
LIBO Rate or the Federal Funds Effective Rate, respectively.

“Applicable Lending Office” means, with respect to each Bank, such Bank’s
Domestic Lending Office in the case of an Alternate Base Loan or a Fixed Rate
Loan and such Bank’s Eurodollar Lending Office in the case of a Eurodollar Loan.

“Applicable Rate” means, as of any date, with respect to (a) any Eurodollar Loan
that is a Committed Loan, a rate per annum equal to the Credit Default Swap
Spread in effect for Eurodollar

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Loans on such day, (b) any Alternate Base Loan that is a Committed Loan, a rate
per annum equal to the Credit Default Swap Spread in effect for Alternate Base
Loans on such day less 1.0% or (c) commitment fees payable hereunder, the
applicable rate per annum set forth below under the caption “Commitment Fee
Rate” determined by reference to the Index Debt Rating in effect on such date as
set forth below. Notwithstanding the foregoing, the Applicable Rate for
Eurodollar Loans and Alternate Base Loans in effect at any time shall not be
less than the “Minimum Applicable Rate” (less 1.0% in the case of Alternate Base
Loans), and shall not exceed the “Maximum Applicable Rate” (less 1.0% in the
case of Alternate Base Loans), determined by reference to the Index Debt Rating
in effect on such date as set forth below.

 

Index Debt Ratings
S&P/Moody’s

  

Minimum
Applicable Rate

   

Maximum
Applicable Rate

   

Commitment Fee

Rate

 

A/A2 or better

   1.50 %    3.50 %    0.25 % 

A-/A3

   1.50 %    3.50 %    0.35 % 

BBB+/Baa1

   2.00 %    4.50 %    0.45 % 

BBB/Baa2

   2.00 %    4.50 %    0.55 % 

BBB-/Baa3

   3.00 %    5.50 %    0.65 % 

BB+/Ba1 or below

   3.00 %    5.50 %    0.75 % 

Each change in the Applicable Rate shall apply during the period commencing on
the effective date of such change and ending on the date immediately preceding
the effective date of the next such change. If the rating system of Moody’s or
S&P shall change, the Company and the Banks shall negotiate in good faith to
amend this definition to reflect such changed rating system and, pending the
effectiveness of any such amendment, the Applicable Rate shall be determined by
reference to the rating most recently in effect prior to such change.

“Application” means an application, in such form as the Issuing Bank may specify
from time to time, requesting the Issuing Bank to open a Letter of Credit. Each
Issuing Bank shall furnish to the Company a form of Application satisfactory to
it promptly following the request therefor by the Company.

“Appraisal” means a “desk-top” appraisal report addressed to the Administrative
Agent and substantially in the form of Exhibit H, which will not include
physical inspection of aircraft, engines or maintenance records and will assume
the equipment is half life in its maintenance cycle, dated the date of delivery
thereof to the Banks pursuant to the terms of this Agreement, by one or more
independent appraisal firms of recognized national standing selected by the
Company (such firm to be reasonably satisfactory, at the time of such Appraisal,
to the Administrative Agent) setting forth the fair market value, as determined
in accordance with the definition of “current market value” promulgated by the
International Society of Transport Aircraft Trading, as of the date of such
appraisal, of each Pool Asset or a proposed Pool Asset, as the case may be.

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“Appraisal Delivery Date” means (a) the Effective Date, (b) each anniversary of
the Effective Date (other than such date falling in 2012) and (c) each date of
replacement, removal or addition of any Pool Asset if such Pool Asset is an
airframe or an airframe and one or more engines installed thereon.

“Appraised Value” means, as of any date of determination, the aggregate current
market value as of such date of each Pool Asset or proposed Pool Asset, as the
case may be, as provided in the most recently delivered Appraisal.

“Assignment and Acceptance” is defined in Section 9.11(c).

“Auditors” means independent certified public accountants of recognized national
standing selected by the Company.

“Available Revolving Commitment” means, as to any Bank at any time, an amount
equal to the excess, if any, of (a) such Bank’s Commitment then in effect over
(b) such Bank’s Revolving Credit Exposure then outstanding; provided that any
Competitive Loans shall not be included in the calculation of such Bank’s
Available Revolving Commitment for the purposes of Section 2.5.

“Banks” means those banks and other financial institutions signatory hereto and
other banks or financial institutions which from time to time become party
hereto pursuant to the provisions of this Agreement.

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

“Borrowing” means a Competitive Borrowing or a Committed Borrowing.

“Borrowing Date” means the Business Day on which the proceeds of any Borrowing
are to be made available to the Company.

“Business Day” means a day other than a Saturday, Sunday or other day on which
commercial banks in New York City are authorized or required by law to close,
provided, that with respect to notices and determinations in connection with,
and payments of principal and interest on, Eurodollar Loans, such day is also a
day for trading in London, England by and between banks in dollar deposits in
the Eurodollar Interbank Market.

“CDS Determination Date” means (a) as to any Eurodollar Loan, the second
Business Day prior to the Business Day such Eurodollar Loan is borrowed and, if
applicable, the last Business Day prior to the continuation of such Eurodollar
Loan, provided, that, in the case of any Eurodollar Loan having an Interest
Period of greater than three months, the last Business Day prior to each
three-month period succeeding such initial three-month period shall also be a
CDS Determination Date with respect to any such Eurodollar Loan, with the
applicable Credit Default Swap Spread, as so determined, to be in effect as to
such Eurodollar Loan for each day commencing with the first day of the
applicable Interest Period until subsequently re-determined in accordance with
the foregoing, and (b) as to Alternate Base Loans, initially on the Effective
Date and thereafter on the first Business Day of each succeeding calendar
quarter.

“Collateral Coverage Test” means, on any date, the requirement that the
Appraised Value of the Pool Assets on such date shall not be less than an amount
equal to 1.5 times the Total Commitment on such date (or, after termination of
the Commitments, the sum of the aggregate outstanding amount of Loans and L/C
Obligations).

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“Commitment” means, with respect to each Bank, the obligation of such Bank to
make Loans and to issue or participate in Letters of Credit in the aggregate
principal and/or face amount set forth opposite the name of such Bank on the
signature pages hereof, and, if applicable, amendments hereto, as such amount
may be permanently terminated or reduced from time to time pursuant to
Section 2.6, Section 2.13(d) and Section 7.2, and as such amount may be
increased or reduced from time to time by assignment or assumption pursuant to
Section 2.13(d) and Section 9.11(c). The Commitments shall automatically and
permanently terminate on the Termination Date.

“Commitment Fee” is defined in Section 2.5.

“Committed Borrowing” means a borrowing consisting of simultaneous Committed
Loans from each of the Banks distributed ratably among the Banks in accordance
with their respective Commitments.

“Committed Loan” means a loan by a Bank to the Company pursuant to Section 2.1,
and shall be either a Eurodollar Loan or an Alternate Base Loan.

“Committed Note” means a promissory note which a Bank may require the Company to
execute in accordance with Section 2.8(b), payable to the order of such Bank, in
substantially the form of Exhibit D-2 hereto, with the blanks appropriately
completed, to evidence the aggregate indebtedness of the Company to such Bank
resulting from the Committed Loans made by such Bank to the Company, together
with all modifications, extensions, renewals, and rearrangements thereof.

“Communications” is defined in Section 9.2.

“Company” is defined in the introduction to this Agreement.

“Competitive Bid” means an offer by a Bank to make a Competitive Loan pursuant
to Section 2.2.

“Competitive Bid Rate” means, as to any Competitive Bid made by a Bank pursuant
to Section 2.2(b), (i) in the case of a Eurodollar Loan, the Margin (which will
be added to or subtracted from the LIBO Rate), and (ii) in the case of a Fixed
Rate Loan, the fixed rate of interest, in each case, offered by the Bank making
such Competitive Bid.

“Competitive Bid Request” means a request for Competitive Bids made pursuant to
Section 2.2(a) substantially in the form of Exhibit A-l.

“Competitive Borrowing” means a borrowing consisting of a single Competitive
Loan from a Bank or simultaneous Competitive Loans from one or more of the
Banks, in each case, whose Competitive Bid as all or as a part of such
Borrowing, as the case may be, has been accepted by the Company under the
bidding procedure described in Section 2.2.

“Competitive Loan” means a loan from a Bank to the Company pursuant to the
bidding procedure described in Section 2.2, and shall be either a Eurodollar
Loan or a Fixed Rate Loan.

“Competitive Note” means a promissory note which a Bank may require the Company
to execute in accordance with Section 2.8(b), payable to the order of such Bank,
in substantially the form of Exhibit D-l hereto, with the blanks appropriately
completed, to evidence the aggregate indebtedness of the Company to such Bank
resulting from the Competitive Loans made by such Bank to the Company, together
with all modifications, extensions, renewals, and rearrangements thereof.

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“Competitive Reduction” is defined in Section 2.1.

“Consolidated Long-Term Debt” means, as of any date, all consolidated Debt of
the Company and its Subsidiaries which is classified as “long term” in
accordance with GAAP, together with the aggregate of all portions of
Consolidated Long-Term Debt classified as “current maturities” in accordance
with GAAP.

“Coverage Ratio” means, as of any date, the ratio of (i) for the four fiscal
quarter period for which the Company’s annual or quarterly Financial Statements
have been most recently required to have been delivered pursuant to
Section 6.10(a) and Section 6.10(b) (and after taking into account any Form 8-K
of the Company that provides for the adjustment to such Financial Statements as
provided in the definition of “Adjusted Pre-Tax Income”), the Company’s and its
Subsidiaries’ consolidated Adjusted Pre-Tax Income, plus Aircraft Rentals, plus
consolidated Net Interest Expense, depreciation, and amortization, and minus
cash dividends paid by the Company, to (ii) consolidated Net Interest Expense
and Aircraft Rentals paid within such four-quarter period.

“Credit Default Swap Spread” means, at any CDS Determination Date, the credit
default swap spread applicable to Index Debt of the Company interpolated for a
period to the Original Termination Date, determined as of the close of business
on the Business Day immediately preceding such CDS Determination Date, as
reported and interpolated by Markit Group Limited or any successor thereto;
provided, that if such period is for less than one year, the spread shall be
that shown for one year. If at any time the Credit Default Swap Spread is
unavailable, the Company and the Banks shall negotiate in good faith (for a
period of up to thirty days after the Credit Default Swap Spread becomes
unavailable (such thirty-day period, the “Negotiation Period”)) to agree on an
alternative method for establishing the Applicable Rate for Eurodollar Loans and
Alternate Base Loans. The Applicable Rate for Eurodollar Loans and Alternate
Base Loans for any day which falls during the Negotiation Period shall be based
upon the Credit Default Swap Spread determined as of the close of business on
the Business Day immediately preceding the last CDS Determination Date falling
prior to the Negotiation Period. If no such alternative method is agreed upon
during the Negotiation Period, the Applicable Rate for Eurodollar Loans and
Alternate Base Loans for any day subsequent to the end of the Negotiation Period
shall be a rate per annum equal to the “Maximum Applicable Rate” set forth in
the definition of “Applicable Rate” based upon the ratings by Moody’s and S&P,
respectively, applicable on such date to the Index Debt.

“Current Financials” means the Financial Statements of the Company and its
Subsidiaries for the fiscal year ended December 31, 2008.

“Debt” means, without duplication, (a) any indebtedness for borrowed money or
incurred in connection with the acquisition or construction of any Property,
(b) any obligation under any lease of any Property entered into after the date
of this Agreement which is required under GAAP to be capitalized on the lessee’s
balance sheet, and (c) any direct or indirect guarantee or assumption of
indebtedness or obligations described in clause (a) or (b), including without
limitation any agreement to provide funds to or otherwise assure the ability of
an obligor to repay indebtedness or meet its obligations.

“Debtor Relief Laws” means the Bankruptcy Code of the United States of America
and all other applicable liquidation, conservatorship, bankruptcy, moratorium,
rearrangement, receivership, insolvency, reorganization, fraudulent transfer or
conveyance, suspension of payments, or similar Laws from time to time in effect
affecting the Rights of creditors generally.

“Default” means the occurrence of any event which with the giving of notice or
the passage of time or both would become an Event of Default.

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“Defaulting Bank” means any Bank, as determined by the Administrative Agent,
that has (a) failed, in the determination of the Administrative Agent, which
determination shall be conclusive subject to manifest error, to fund any portion
of its Loans or participations in Letters of Credit within three Business Days
of the date required to be funded by it hereunder, (b) notified the Company, the
Administrative Agent, the Issuing Bank or any Bank in writing that it does not
intend to comply with any of its funding obligations under this Agreement or has
made a public statement to the effect that it does not intend to comply with its
funding obligations under this Agreement or generally under agreements in which
it has committed to extend credit, (c) failed, within three Business Days after
written request by the Administrative Agent (whether acting on its own behalf or
at the reasonable request of the Company (it being understood that the
Administrative Agent shall comply with any such reasonable request)), to confirm
that it will comply with the terms of this Agreement relating to its obligations
to fund prospective Loans and participations in then outstanding Letters of
Credit; provided that any such Bank shall cease to be a Defaulting Bank under
this clause (c) upon receipt of such confirmation by the Administrative Agent,
(d) otherwise failed to pay over to the Administrative Agent or any other Bank
any other amount required to be paid by it hereunder within three Business Days
of the date when due, unless the subject of a good faith dispute, or (e) become
the subject of a bankruptcy or insolvency proceeding, or has had a receiver,
conservator, trustee or custodian appointed for it, or has a parent company that
has become the subject of a bankruptcy or insolvency proceeding, or has had a
receiver, conservator, trustee or custodian appointed for it. No Bank shall be a
Defaulting Bank solely by virtue of the ownership or acquisition of any equity
interest in such Bank or a parent company thereof by a Governmental Authority or
an instrumentality thereof.

“Documentation Agents” is defined in the introduction to this Agreement.

“dollars” and the symbol “$” mean the lawful currency of the United States of
America.

“Domestic Lending Office” means, with respect to any Bank, the office of such
Bank specified as its “Domestic Lending Office” on Schedule I to this Agreement
or such other office of such Bank as such Bank may from time to time specify to
the Company and the Administrative Agent.

“Effective Date” means the date on which the conditions set forth in Section 4.1
are first met, which date is September 29, 2009.

“Eligible Affiliate Assignee” means, with respect to any Bank, an Affiliate
thereof that is: (i) a commercial bank organized under the Laws of the United
States, or any state thereof, and having total assets in excess of
$1,000,000,000; (ii) a commercial bank organized under the Laws of France,
Germany, the Netherlands or the United Kingdom, or under the Laws of a political
subdivision of any such country, and having total assets in excess of
$1,000,000,000; provided that such bank is acting through a branch or agency
located in such country or the United States; or (iii) a commercial bank
organized under the Laws of any other country which is a member of the OECD, or
under the Laws of a political subdivision of any such country, and having total
assets in excess of $1,000,000,000; provided that such bank is acting through a
branch or agency located in the United States.

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

“Eurocurrency Liabilities” is defined in Regulation D.

“Eurodollar Interbank Market” means the London eurodollar interbank market.

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“Eurodollar Lending Office” means, with respect to each Bank, the branches or
affiliates of such Bank which such Bank has designated on Schedule I as its
“Eurodollar Lending Office” or may hereafter designate from time to time as its
“Eurodollar Lending Office” by notice to the Company and the Administrative
Agent.

“Eurodollar Loan” means any loan with respect to which the Company shall have
selected an interest rate based on the LIBO Rate in accordance with the
provisions of Article II.

“Event of Default” means any of the events described in Article VII, provided
there has been satisfied any requirement in connection therewith for the giving
of notice, lapse of time, or happening of any further condition, event, or act.

“Existing Credit Agreement” means the Competitive Advance and Revolving Credit
Facility Agreement, dated as of April 20, 2004, as amended, among the Company,
the banks party thereto and the agents referred to therein.

“Federal Funds Effective Rate” means, for any day, the weighted average of the
rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published 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 of the
quotations for the day of such transactions received by JPMorgan Chase Bank,
N.A. from three federal funds brokers of recognized standing selected by it.

“Financial Report Certificate” means a certificate substantially in the form of
Exhibit F.

“Financial Statements” means balance sheets, income and loss statements,
statements of stockholders’ equity, and statements of cash flow prepared in
accordance with GAAP and in comparative form to the corresponding period of the
preceding fiscal year.

“Fixed Rate Loan” means any Competitive Loan made by a Bank pursuant to
Section 2.2 based upon an actual percentage rate per annum offered by such Bank,
expressed as a decimal (to no more than four decimal places), and accepted by
the Company.

“Foreign Bank” is defined in Section 2.19.

“GAAP” means generally accepted accounting principles of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
the Financial Accounting Standards Board which are applicable as of the date in
question for the purpose of the definition of “Financial Statements.”

“Governmental Authority” means 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
or other entity exercising executive, legislative, judicial, taxing, regulatory
or administrative powers or functions of or pertaining to government.

“Index Debt” means senior, unsecured, non-credit enhanced debt with an original
term of longer than one year issued by the Company.

“Index Debt Rating” means, as of any date, the rating that has been most
recently announced by S&P and Moody’s for the Index Debt of the Company. For
purposes of the foregoing, (a) if only one of S&P and Moody’s shall have in
effect an Index Debt Rating, the Applicable Rate shall be determined by
reference to the available rating; (b) if the Index Debt Ratings established by
S&P and Moody’s shall fall

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within different levels, the Applicable Rate shall be based upon the higher
rating, except that if the difference is two or more levels, the Applicable Rate
shall be based on the rating that is one level below the higher rating; (c) if
any Index Debt Rating established by S&P or Moody’s shall be changed, such
change shall be effective as of the date on which such change is first announced
publicly by the rating agency making such change; (d) if S&P or Moody’s shall
change the basis on which ratings are established, each reference to the rating
for the Index Debt announced by S&P or Moody’s, as the case may be, shall refer
to the then equivalent rating by S&P or Moody’s, as the case may be; and (e) if
neither S&P nor Moody’s shall have in effect an Index Debt Rating, the
Applicable Rate shall be set in accordance with the lowest level rating and
highest percentage rate set forth in the table in the definition of “Applicable
Rate”.

“Interest Payment Date” means (i) with respect to any Alternate Base Loan, each
Quarterly Payment Date, or if earlier the Termination Date or the date of
prepayment of such Loan or conversion of such Loan to a Eurodollar Loan,
(ii) with respect to any Eurodollar Loan, the last day of the Interest Period
applicable thereto and, in addition in the case of a Eurodollar Loan with an
Interest Period longer than three months each day that would have been the
Interest Payment Date for such Loan had successive Interest Periods of three
months been applicable to such Loan, and (iii) in the case of a Fixed Rate Loan,
the last day of the Interest Period applicable thereto and, in the case of a
Fixed Rate Loan with an Interest Period of more than 90 days, on the numerically
corresponding day which occurs during such Interest Period every three months
from the first day of such Interest Period (or, if there is no such
corresponding day in any such month, the last day of such month).

“Interest Period” means:

(i) as to any Eurodollar Loan, the period commencing on the date of such Loan
and ending on the numerically corresponding day (or if there is no corresponding
day, the last day) in the calendar month that is one, two, three or six, or, if
agreed to by all Banks, nine or twelve, months thereafter, as the Company may
elect; and

(ii) as to any Fixed Rate Loan, the period commencing on the date of such Loan
and ending on the date specified in the Competitive Bid in which the offer to
make the Fixed Rate Loan was extended; provided, however, that each such period
shall have a duration of not less than seven calendar days nor more than 360
calendar days;

provided, further, that (x) 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, with respect to Eurodollar Loans only, 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 (y) no
Interest Period may be selected that ends later than the Termination Date.
Interest shall accrue from and including the first day of an Interest Period to
but excluding the last day of such Interest Period.

“Issuing Bank” means JPMorgan Chase Bank, N.A., Citibank, N.A. and any other
Bank that has agreed in writing to act as an “Issuing Bank” hereunder. Each
reference herein to “the Issuing Bank” shall be deemed to be a reference to the
relevant Issuing Bank.

“Laws” means all applicable statutes, laws, treaties, ordinances, rules,
regulations, orders, writs, injunctions, decrees, judgments, or opinions of any
Tribunal.

“L/C Commitment” means $150,000,000.

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“L/C Obligations” means at any time, an amount equal to the sum of (a) the
aggregate then undrawn and unexpired amount of the then outstanding Letters of
Credit, if any, and (b) the aggregate amount of drawings under Letters of Credit
that have not then been reimbursed pursuant to Section 3.5.

“L/C Participants” means the collective reference to all the Banks other than
the Issuing Bank.

“Letters of Credit” is defined in Section 3.1(a).

“LIBO Rate” means, for any Eurodollar Loan for any Interest Period therefor, the
rate appearing on the LIBOR Reuters Screen LIBOR01 page (or on any successor or
substitute page or any successor to or substitute therefor, providing rate
quotations comparable to those currently provided on such page, as determined by
the Administrative 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 (or as soon thereafter as practicable),
two Business Days before the first day 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 Loan for such Interest Period shall be the
annual rate of interest at which dollar deposits approximately equal in
principal amount to JPMorgan Chase Bank, N.A.’s portion of the Committed
Borrowing of which such Eurodollar Loan forms a part (or, in the case of a
Competitive Loan, a principal amount which would have been JPMorgan Chase Bank,
N.A.’s portion of the Committed Borrowing of which such Eurodollar Loan would
have formed a part had such Competitive Borrowing been a Committed Borrowing)
and with a maturity equal to the applicable Interest Period are offered in
immediately available funds to the principal office of JPMorgan Chase Bank, N.A.
in London, England (or if JPMorgan Chase Bank, N.A. does not at the time any
such determination is to be made maintain an office in London, England, the
principal office of any Affiliate of JPMorgan Chase Bank, N.A. in London,
England), in the Eurodollar Interbank Market, at approximately 11:00a.m., London
time (or as soon thereafter as practicable), two Business Days before the first
day of such Interest Period. The LIBO Rate for the Interest Period for each
Eurodollar Loan comprising part of the same Borrowing shall be determined by the
Administrative Agent.

“Lien” means any mortgage, lien, pledge, adverse claim, charge, security
interest or other encumbrance in or on, or any interest or title of any vendor,
lessor, lender or other secured party to or of any Person under, any conditional
sale or other title retention agreement or lease with respect to, any Property
or asset of such Person. For avoidance of doubt, the filing of a Uniform
Commercial Code financing statement by a Person that is not entitled or
authorized in accordance with the applicable Uniform Commercial Code to file
such financing statement shall not, in and of itself, constitute a Lien.

“Litigation” means any action conducted, pending, or threatened by or before any
Tribunal.

“Loan” means a Competitive Loan, a Committed Loan, a Eurodollar Loan, a Fixed
Rate Loan, or an Alternate Base Loan.

“Loan Papers” means (i) this Agreement, certificates delivered pursuant to this
Agreement and exhibits and schedules hereto, (ii) any notes, security documents,
guaranties, and other agreements in favor of the Agents and Banks, or any or
some of them, ever delivered in connection with this Agreement, and (iii) all
renewals, extensions, or restatements of, or amendments or supplements to, any
of the foregoing.

“Majority Banks” means, at any time, Banks having Revolving Credit Exposures
(excluding Competitive Loans) and unused Commitments representing more than 50%
of the sum of the total Revolving Credit Exposures (excluding Competitive Loans)
and unused Commitments at such time;

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provided that, for purposes of declaring the Loans to be due and payable
pursuant to Article VII, and for all purposes after the Loans become due and
payable pursuant to Article VII or the Commitments expire or terminate, the
outstanding Competitive Loans of the Banks shall be included in their respective
Revolving Credit Exposures in determining the Majority Banks.

“Margin” means, as to any Competitive Bid made by a Bank relating to a
Eurodollar Loan, the margin (expressed as a percentage rate per annum in the
form of a decimal to no more than four decimal places) to be added to or
subtracted from the LIBO Rate for any such Loan in order to determine the
interest rate acceptable to such Bank with respect to such Eurodollar Loan.

“Margin Stock” means “margin stock” within the meaning of Regulation T, U, or X
of the Board.

“Material Adverse Change” or “Material Adverse Effect” means an act, event or
circumstance which materially and adversely affects the business, financial
condition or results of operations of the Company and its Subsidiaries on a
consolidated basis or the ability of the Company to perform its obligations
under this Agreement or any Loan Paper.

“Material Subsidiary” means, at any time, any Subsidiary of the Company having
at such time either (i) total assets, as of the last day of the preceding fiscal
quarter, having a net book value greater than or equal to 10% of the total
assets of the Company and all of its Subsidiaries on a consolidated basis or
(ii) Adjusted Pre-Tax Income, as of the last day of the preceding fiscal
quarter, greater than or equal to 10% of the total Adjusted Pre-Tax Income of
the Company and all of its Subsidiaries on a consolidated basis.

“Moody’s” means Moody’s Investors Service, Inc.

“Net Interest Expense” means interest expense minus interest income, excluding
in either case capitalized interest, but including payments in the nature of
interest under capital leases if and to the extent characterized as such in
accordance with GAAP.

“Note” means a Competitive Note or a Committed Note.

“Notice of Committed Borrowing” is defined in Section 2.3.

“Obligation” means all present and future indebtedness, obligations, and
liabilities, and all renewals, extensions, and modifications thereof, owed to
the Agents and Banks, or any or some of them, by the Company, arising pursuant
to any Loan Paper, together with all interest thereon and costs, expenses, and
reasonable attorneys’ fees incurred in the enforcement or collection thereof.

“OECD” means the Organization for Economic Cooperation and Development as
constituted on the date hereof (excluding Mexico, Poland and the Czech
Republic).

“Officer’s Certificate” means a certificate signed in the name of the Company by
either its Chairman, its Chief Executive Officer, its Chief Financial Officer,
its President, one of its Vice Presidents, its Treasurer, or its Assistant
Treasurer, in each case without personal liability.

“Original Termination Date” means October 5, 2012.

“Permitted Liens” means: (a) Liens for taxes, assessments and governmental
charges or levies which either are not yet due and payable or are being
contested in good faith by appropriate proceedings and for which adequate
reserves are established in accordance with GAAP; (b) Liens securing judgments,

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but only to the extent, for an amount and for a period not resulting in an Event
of Default under Section 7.1(d); (c) Liens arising under this Agreement;
(d) Liens constituting normal operational usage of the affected Property,
including charter, third party maintenance, storage, leasing, pooling or
interchange thereof; and (e) Liens imposed by law such as materialmen’s,
mechanics’, carriers’, workmen’s and repairmen’s Liens and other similar Liens
arising in the ordinary course of business securing obligations that (i) are not
overdue for a period of more than 30 days, provided that no enforcement,
collection, execution, levy or foreclosure proceeding shall have been commenced
with respect thereto, or (ii) are being contested in good faith and for which
adequate reserves are established in accordance with GAAP.

“Person” means and includes an individual, partnership, joint venture,
corporation, trust, limited liability company or other entity, Tribunal,
unincorporated organization, or government, or any department, agency, or
political subdivision thereof.

“Plan” means any plan defined in Section 4021(a) of ERISA in respect of which
the Company is an “employer” or a “substantial employer” as such terms are
defined in ERISA.

“Pool Assets” means assets of the Company listed on Schedule II, to the extent
modified pursuant to Section 6.12 and shall include only Stage 3 Equipment owned
legally by the Company.

“Prime Rate” is defined in the definition of the term Alternate Base Rate.

“Principal Office” of the Administrative Agent means 270 Park Avenue, New York,
New York, 10017, or such other office as the Administrative Agent may hereafter
designate from time to time as its “Principal Office” by notice to the Company
and the Banks.

“Property” means all types of real, personal, tangible, intangible, or mixed
property.

“Quarterly Payment Date” means the 15th day of each March, June, September and
December of each year, the first of which shall be the first such day after the
Effective Date.

“Register” is defined in Section 9.11(e).

“Regulation D” means Regulation D of the Board, as the same is from time to time
in effect, and all official rulings and interpretations thereunder or thereof.

“Regulatory Change” means, with respect to any Bank, (a) any adoption or change
after the Effective Date of or in United States federal, state or foreign laws,
rules, regulations (including Regulation D) or guidelines applying to a class of
banks including such Bank, (b) the adoption or making after the Effective Date
of any interpretations, directives or requests applying to a class of banks
including such Bank of or under any United States federal, state or foreign
laws, rules, regulations or guidelines (whether or not having the force of law)
by any Tribunal, monetary authority, central bank, or comparable agency charged
with the interpretation or administration thereof, or (c) any change in the
interpretation or administration of any United States federal, state or foreign
laws, rules, regulations or guidelines applying to a class of banks including
such Bank by any Tribunal, monetary authority, central bank, or comparable
agency charged with the interpretation or administration thereof.

“Reimbursement Obligation” means the obligation of the Company to reimburse the
Issuing Bank pursuant to Section 3.5 for amounts drawn under Letters of Credit.

“Reserve Percentage” of any Bank for the Interest Period for any Eurodollar Loan
means the reserve percentage applicable during such Interest Period under
regulations issued from time to time by

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13

 

the Board (or if more than one such percentage shall be so applicable, the daily
average of such percentages for those days in such Interest Period during which
any such percentage shall be so applicable) for determining the maximum reserve
requirement (including, without limitation, any marginal reserve requirement)
for such Bank with respect to liabilities or assets consisting of or including
Eurocurrency Liabilities having a term equal to such Interest Period.

“Revolving Credit Exposure” means, with respect to any Bank at any time, the sum
of the outstanding principal amount of such Bank’s Loans and its L/C Obligations
at such time. For the purposes of this definition each Bank shall be deemed to
hold a pro rata share of the total L/C Obligations based on the percentage which
its Commitment represents of the aggregate Commitments.

“Rights” means rights, remedies, powers, and privileges.

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

“Stage 3 Airframes” and “Stage 3 Engines” mean airframes or engines,
respectively, owned by the Company and, when taken together (i.e., one airframe
and two engines), qualifying as Stage 3 airplanes, as set forth in Federal
Aviation Regulation 36.1(f)(6), 14 C.F.R. §36.1(f)(6) or any successor
regulation, as amended; and “Stage 3 Engines” also include spare engines which
are suitable for use on Stage 3 Airframes and are being maintained according to
the Company’s normal and customary standards.

“Stage 3 Equipment” means Stage 3 Airframes and not less than two nor more than
four Stage 3 Engines per Stage 3 Airframe.

“Stated Rate” is defined in Section 9.8.

“Subsidiary” of a Person means any entity of which an aggregate of more than 50%
(in number of votes) of the stock (or equivalent interests) is owned of record
or beneficially, directly or indirectly, by such Person.

“Syndication Agent” is defined in the introduction to this Agreement.

“Taxes” means all taxes, assessments, fees, or other similar charges at any time
imposed by any Laws or Tribunal, including any interest, additions to tax or
penalties applicable thereto.

“Termination Date” means, at any time, the Original Termination Date or the
earlier date of termination in whole of the Total Commitment pursuant to
Section 2.6 or Section 7.2.

“Total Commitment” means at any time the aggregate amount of the Banks’
Commitments, as in effect at such time.

“Tribunal” means any municipal, state, commonwealth, federal, foreign,
territorial, or other court, governmental body, subdivision, agency, department,
commission, board, bureau, or instrumentality.

“Type” refers to the distinction between Committed Loans that are Alternate Base
Loans and Committed Loans that are Eurodollar Loans.

“United States” and “U.S.” each means United States of America.

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“U.S. Tax Compliance Certificate” is defined in Section 2.19.

Section 1.2 Computation of Time Periods. In this Agreement in the computation of
periods of time from a specified date to a later specified date, the word “from”
means “from and including” and the words “to” and “until” each means “to but
excluding.”

ARTICLE II

LOANS

Section 2.1 Commitments. Subject to the terms and conditions and relying upon
the representations and warranties herein set forth, each Bank, severally and
not jointly, agrees to make revolving credit loans to the Company, at any time
and from time to time on and after the Effective Date and until the earlier of
the Termination Date and the termination of the Commitment of such Bank in
accordance with the terms hereof. Notwithstanding the foregoing, (a) the
aggregate principal amount at any time outstanding of all Committed Loans of a
Bank shall not exceed such Bank’s Commitment and (b) the Total Commitment shall
be deemed used from time to time to the extent of the aggregate principal amount
of the Competitive Loans then outstanding, and such deemed use of the Total
Commitment shall be applied to the Banks ratably according to their respective
Commitments (such deemed use of the Total Commitment being a “Competitive
Reduction”) and (c) the Total Commitment shall be deemed further used from time
to time to the extent of the L/C Obligations, and such deemed use of the Total
Commitment shall be applied to the Banks ratably according to their respective
Commitments, subject, however, to the conditions that (i) at no time shall
(A) the sum of (x) the outstanding aggregate principal amount of all Committed
Loans made by all Banks, (y) the outstanding aggregate principal amount of all
Competitive Loans made by all Banks and (z) the L/C Obligations exceed (B) the
Total Commitment, and (ii) at all times the outstanding aggregate principal
amount of all Committed Loans made by a Bank shall equal the product of (x) the
percentage which its Commitment represents of the Total Commitment times (y) the
outstanding aggregate principal amount of all Committed Loans obligated to have
been made by all Banks.

Within the foregoing limits, the Company may borrow, repay, prepay, and reborrow
hereunder, on and after the Effective Date and prior to the Termination Date,
subject to the terms, provisions, and limitations set forth herein.

Section 2.2 Competitive Bid Procedure

(a) In order to request Competitive Bids, the Company shall hand deliver or
telecopy to the Administrative Agent a duly completed Competitive Bid Request,
to be received by the Administrative Agent (i) in the case of Eurodollar Loans,
not later than 10:00 a.m., New York City time, four Business Days before the
Borrowing Date specified for a proposed Competitive Borrowing and (ii) in the
case of Fixed Rate Loans, not later than 10:00 a.m., New York City time, one
Business Day before the Borrowing Date specified for a proposed Competitive
Borrowing. No Alternate Base Loan shall be requested in, or, except pursuant to
Section 2.14, made pursuant to, a Competitive Bid Request. A Competitive Bid
Request that does not conform substantially to the format of Exhibit A-1 may be
rejected at the Administrative Agent’s sole discretion, and the Administrative
Agent shall promptly notify the Company of such rejection by telecopier. Each
Competitive Bid Request shall in each case refer to this Agreement and specify
(x) whether the Competitive Loans then being requested are to be Eurodollar
Loans or Fixed Rate Loans, (y) the Borrowing Date of such Competitive Loans
(which shall be a Business Day) and the aggregate principal amount thereof
(which shall not be less than $10,000,000 or greater than the unused Total
Commitment on such Borrowing Date and shall be an integral multiple of

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15

 

$1,000,000), and (z) the Interest Period with respect thereto (which may not end
after the Termination Date). Promptly after its receipt of a Competitive Bid
Request that is not rejected as aforesaid, the Administrative Agent shall invite
by telecopier (substantially in the form set forth in Exhibit B hereto) the
Banks to bid, on the terms and conditions of this Agreement, to make Competitive
Loans pursuant to such Competitive Bid Request.

(b) Each Bank may, in its sole discretion, make one or more Competitive Bids to
the Company responsive to each Competitive Bid Request. Each Competitive Bid by
a Bank must be received by the Administrative Agent via telecopier,
substantially in the form of Exhibit C hereto, (i) in the case of Eurodollar
Loans, not later than 10:00 a.m., New York City time, three Business Days before
the Borrowing Date specified for a proposed Competitive Borrowing and (ii) in
the case of Fixed Rate Loans, not later than 9:30 a.m., New York City time, on
the day of a proposed Competitive Borrowing. Competitive Bids that do not
conform substantially to the format of Exhibit C may be rejected by the
Administrative Agent after conferring with, and upon the instruction of, the
Company, and the Administrative Agent shall notify the non-conforming Bank of
such rejection as soon as practicable. Each Competitive Bid shall refer to this
Agreement and (x) specify the principal amount (which shall be in a minimum
principal amount of $5,000,000 and in an integral multiple of $1,000,000 and
which may equal the entire principal amount of the Competitive Borrowing
requested by the Company) of the Competitive Loan the Bank is willing to make to
the Company, (y) specify the Competitive Bid Rate(s) at which the Bank is
prepared to make the Competitive Loan and (z) confirm the Interest Period with
respect thereto specified by the Company in its Competitive Bid Request. A
Competitive Bid submitted by a Bank pursuant to this paragraph (b) shall be
irrevocable.

(c) The Administrative Agent shall promptly notify the Company by telecopier of
all the Competitive Bids made, the Competitive Bid Rate and the principal amount
of each Competitive Loan in respect of which a Competitive Bid was made and the
identity of the Bank that made each bid. The Administrative Agent shall send a
copy of all Competitive Bids to the Company for its records as soon as
practicable after completion of the bidding process set forth in this
Section 2.2.

(d) The Company may in its sole and absolute discretion, subject only to the
provisions of this Section 2.2(d), accept or reject any or all of the
Competitive Bids referred to in paragraph (c) above; provided, however, that the
aggregate amount of the Competitive Bids so accepted by the Company may not
exceed the principal amount of the Competitive Borrowing requested by the
Company. The Company shall notify the Administrative Agent by telecopier whether
and to what extent it has decided to accept or reject any or all of the bids
referred to in paragraph (c) above, (i) in the case of Eurodollar Loans, not
later than 12:00 noon, New York City time, three Business Days before the
Borrowing Date specified for a proposed Competitive Borrowing and (ii) in the
case of Fixed Rate Loans, not later than 10:30 a.m., New York City time, on the
day specified for a proposed Competitive Borrowing; provided, however, that
(w) the failure by the Company to give such notice shall be deemed to be a
rejection of all the bids referred to in paragraph (c) above, (x) the Company
shall not accept a bid made at a particular Competitive Bid Rate if the Company
has decided to reject a bid made at a lower Competitive Bid Rate, (y) if the
Company shall accept bids made at a particular Competitive Bid Rate but shall be
restricted by other conditions hereof from borrowing the full principal amount
of Competitive Loans in respect of which bids at such Competitive Bid Rate have
been made or shall not require the full amount offered thereby, then the Company
shall accept a pro rata portion of each bid made at such Competitive Bid Rate
based as nearly as possible on the respective principal amounts of Competitive
Loans for which such bids were made and (z) no bid shall be accepted for a
Competitive Loan unless such Competitive Loan is in a minimum principal amount

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16

 

of $5,000,000 and an integral multiple of $1,000,000. Notwithstanding the
foregoing clause (z), if it is necessary for the Company to accept a pro rata
allocation of the bids made in response to a Competitive Bid Request (whether
pursuant to the events specified in clause (y) above or otherwise) and the
available principal amount of Competitive Loans to be allocated among the Banks
is not sufficient to enable Competitive Loans to be allocated to each Bank in a
minimum principal amount of $5,000,000 and in integral multiples of $1,000,000,
then the Company shall select the Banks to be allocated such Competitive Loans
and shall round allocations up or down to the next higher or lower multiple of
$500,000 as it shall deem appropriate. A notice given by the Company pursuant to
this paragraph (d) shall be irrevocable.

(e) The Administrative Agent shall promptly notify each bidding Bank whether or
not its Competitive Bid has been accepted (and if so, in what amount and at what
Competitive Bid Rate) by telecopier, and each successful bidder will thereupon
become bound, subject to the other applicable conditions hereof, to make the
Competitive Loan in respect of which its bid has been accepted. After completing
the notifications referred to in the immediately preceding sentence, the
Administrative Agent shall notify each Bank of the aggregate principal amount of
all Competitive Bids accepted.

(f) Upon receipt from the Administrative Agent of the LIBO Rate applicable to
any Eurodollar Loan to be made by any Bank pursuant to a Competitive Bid that
has been accepted by the Company pursuant to Section 2.2(d), the Administrative
Agent shall notify such Bank of (i) the applicable LIBO Rate and (ii) the sum of
the applicable LIBO Rate plus the Margin bid by such Bank.

(g) No Competitive Bid Request shall be made within five Business Days of the
date of any other Competitive Bid Request, unless the Company and the
Administrative Agent shall mutually agree otherwise.

(h) If the Administrative Agent shall at any time have a Commitment hereunder
and shall elect to submit a Competitive Bid in its capacity as a Bank, it shall
submit such bid directly to the Company one quarter of an hour earlier than the
latest time at which the other Banks are required to submit their bids to the
Administrative Agent pursuant to paragraph (b) above.

(i) All notices required by this Section 2.2 shall be made in accordance with
Section 9.2.

Section 2.3 Committed Borrowing Procedure. In order to effect a Committed
Borrowing, the Company shall hand deliver or telecopy to the Administrative
Agent a duly completed request for Committed Borrowing, substantially in the
form of Exhibit A-2 hereto (a “Notice of Committed Borrowing”), (i) in the case
of Eurodollar Loans, not later than 11:00 a.m., New York City time, three
Business Days before the Borrowing Date specified for a proposed Committed
Borrowing, and (ii) in the case of Alternate Base Loans, not later than 11:00
a.m., New York City time, on the Business Day which is the Borrowing Date
specified for a proposed Committed Borrowing. No Fixed Rate Loan shall be
requested or made pursuant to a Notice of Committed Borrowing. Such notice shall
be irrevocable and shall in each case refer to this Agreement and specify
(x) whether the Loans then being requested are to be Eurodollar Loans, or
Alternate Base Loans, (y) the Borrowing Date of such Loans (which shall be a
Business Day) and the aggregate amount thereof (which shall not be less than
$10,000,000 and shall be an integral multiple of $1,000,000) and (z) in the case
of a Eurodollar Loan, the Interest Period with respect thereto (which shall not
end later than the Termination Date). If no Interest Period with respect to any
Eurodollar Loan is specified in any such Notice of Committed Borrowing, then the
Company shall be deemed to have selected an Interest Period of one month’s
duration. Promptly, and

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17

 

in any event on the same day the Administrative Agent receives a Notice of
Committed Borrowing pursuant to this Section 2.3 if such notice is received by
11:00 a.m., New York City time on a Business Day and otherwise on the next
succeeding Business Day, the Administrative Agent shall advise the other Banks
of such Notice of Committed Borrowing and of each Bank’s portion of the
requested Committed Borrowing by telecopier. Each Committed Borrowing shall
consist of Loans of the same Type made on the same day and having the same
Interest Period.

Section 2.4 Refinancings; Conversions

(a) The Company may refinance all or any part of any Loan with a Loan of the
same or a different type made pursuant to Section 2.2 or Section 2.3, subject to
the conditions and limitations set forth herein and elsewhere in this Agreement,
including, without limitation, refinancings of Competitive Loans with Committed
Loans and Committed Loans with Competitive Loans. Any Loan or part thereof so
refinanced shall be deemed to be repaid in accordance with Section 2.18 with the
proceeds of a new Borrowing hereunder and the proceeds of the new Loan, to the
extent they do not exceed the principal amount of the Loan being refinanced,
shall not be paid by the Banks to the Administrative Agent or by the
Administrative Agent to the Company pursuant to Section 2.7(c); provided,
however, that (i) if the principal amount extended by a Bank in a refinancing is
greater than the principal amount extended by such Bank in the Borrowing being
refinanced, then such Bank shall pay such difference to the Administrative Agent
for distribution to the Banks described in (ii) below, (ii) if the principal
amount extended by a Bank in the Borrowing being refinanced is greater than the
principal amount being extended by such Bank in the refinancing, the
Administrative Agent shall return the difference to such Bank out of amounts
received pursuant to (i) above, (iii) to the extent any Bank fails to pay the
Administrative Agent amounts due from it pursuant to (i) above, any Loan or
portion thereof being refinanced shall not be deemed repaid in accordance with
Section 2.18 to the extent of such failure and the Company shall pay such amount
to the Administrative Agent pursuant to Section 2.18 and (iv) to the extent the
Company fails to pay to the Administrative Agent any amounts due in accordance
with Section 2.18 as a result of the failure of a Bank to pay the Administrative
Agent any amounts due as described in (iii) above, the portion of any refinanced
Loan deemed not repaid shall be deemed to be outstanding solely to the Bank
which has failed to pay the Administrative Agent amounts due from it pursuant to
(i) above to the full extent of such Bank’s portion of such refinanced Loan.

(b) Subject to the conditions and limitations set forth in this Agreement, the
Company shall have the right from time to time to convert all or part of one
Type of Committed Loan into another Type of Committed Loan or to continue all or
a part of any Committed Loan that is a Eurodollar Loan from one Interest Period
to another Interest Period by giving the Administrative Agent written notice (by
means of a Notice of Committed Borrowing) (i) in the case of Eurodollar Loans,
not later than 11:00 a.m., New York City time, three Business Days before the
date specified for such proposed conversion or continuation, and (ii) in the
case of Alternate Base Loans, not later than 11:00 a.m., New York City time, on
the Business Day which is the date specified for such proposed conversion or
continuation. Such notice shall specify (A) the proposed date for conversion or
continuation, (B) the amount of the Committed Loan to be converted or continued,
(C) in the case of conversions, the Type of Committed Loan to be converted into,
and (D) in the case of a continuation of or conversion into a Eurodollar Loan,
the duration of the Interest Period applicable thereto; provided that
(1) Eurodollar Loans may be converted only on the last day of the applicable
Interest Period, (2) except for conversions to Alternate Base Loans, no
conversion shall be made while a Default or Event of Default has occurred and is
continuing and no continuations of any Eurodollar Loan from one Interest Period
to another Interest Period shall be made while a Default or Event of Default has
occurred and is

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18

 

continuing, unless such conversion or continuation has been approved by Majority
Banks, and (3) each such conversion or continuation shall be in an amount not
less than $10,000,000 and shall be an integral multiple of $1,000,000. All
notices given under this Section shall be irrevocable. If the Company shall fail
to give the Administrative Agent the notice as specified above for continuation
or conversion of a Eurodollar Loan prior to the end of the Interest Period with
respect thereto, such Eurodollar Loan shall automatically be converted into an
Alternate Base Loan on the last day of the Interest Period for such Eurodollar
Loan.

Section 2.5 Fees. The Company agrees to pay to each Bank, through the
Administrative Agent, on each Quarterly Payment Date and on the Termination Date
in arrears, in immediately available funds, a commitment fee (a “Commitment
Fee”) calculated by multiplying the Applicable Rate by the amount of the average
daily Available Revolving Commitment of such Bank during the preceding
three-month period (or shorter period commencing with the Effective Date and/or
ending with the Termination Date). All Commitment Fees shall be computed by the
Administrative Agent on the basis of the actual number of days elapsed in a year
of 360 days, and shall be conclusive and binding for all purposes, absent
manifest error. The Commitment Fee due to each Bank shall commence to accrue on
the Effective Date and shall cease to accrue on the Termination Date or, if
earlier, the date of the termination of the Commitment of such Bank as provided
herein.

Section 2.6 Termination and Reduction of Commitments

(a) Subject to Section 2.12(b), the Company may permanently terminate, or from
time to time in part permanently reduce, the Total Commitment, in each case upon
at least three Business Days’ prior (or, in the case of a refinancing or new
facility with one or more of the Agents, on a same-day basis with) written
notice to the Administrative Agent (who shall promptly forward a copy thereof to
each Bank). Such notice shall specify the date and the amount of the termination
or reduction of the Total Commitment. Each such partial reduction of the Total
Commitment shall be in a minimum aggregate principal amount of $10,000,000 and
in an integral multiple of $1,000,000.

(b) On the Termination Date the Total Commitment shall be zero.

(c) Each reduction in the Total Commitment pursuant to this Section 2.6 shall be
made ratably among the Banks in accordance with their respective Commitments.
Simultaneously with any termination of Commitments pursuant to this Section, the
Company shall pay to the Administrative Agent for account of the Banks the
Commitment Fees on the amount of the Total Commitment so terminated, accrued
through the date of such termination.

Section 2.7 Loans

(a) Each Borrowing made by the Company on any date shall be (i) in the case of
Competitive Loans, in an integral multiple of $1,000,000 and in a minimum
aggregate principal amount of $5,000,000 and (ii) in the case of Committed
Loans, in an integral multiple of $1,000,000 and in a minimum aggregate
principal amount of $10,000,000. Competitive Loans shall be made by the Banks in
accordance with Section 2.2(d), and Committed Loans shall be made by the Banks
ratably in accordance with their respective Commitments on the Borrowing Date of
the Committed Borrowing; provided, however, that the failure of any Bank to make
any Loan shall not in itself relieve any other Bank of its obligation to lend
hereunder.

(b) Each Competitive Loan shall be a Eurodollar Loan or a Fixed Rate Loan, and
each Committed Loan shall be a Eurodollar Loan or an Alternate Base Loan, as the
Company

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19

 

may request subject to and in accordance with Section 2.2, Section 2.3 or
Section 2.4(b), as applicable. Each Bank may at its option make any Eurodollar
Loan by causing a foreign branch or Affiliate of such Bank to make such Loan;
provided, however, that any exercise of such option shall not affect the
obligation of the Company to repay such Loan in accordance with the terms of
this Agreement or increase the Company’s obligations to such Bank hereunder.
Loans of more than one interest rate option may be outstanding at the same time;
provided, however, that the Company shall not be entitled to request any Loan
which, if made, would result in an aggregate of more than ten separate Interest
Periods being outstanding hereunder at any one time. For purposes of the
foregoing, Loans having different Interest Periods, regardless of whether they
commence on the same date, shall be considered separate Loans.

(c) Subject to Section 2.4, each Bank shall make its portion of each Competitive
Borrowing and each Committed Borrowing on the proposed Borrowing Date thereof by
paying the amount required to the Administrative Agent at the Principal Office
in immediately available funds not later than 1:00 p.m., New York City time, and
the Administrative Agent shall by 2:00 p.m., New York City time, credit the
amounts so received to the general deposit account of the Company with the
Administrative Agent or, if Loans are not made on such date because any
condition precedent to a Borrowing herein specified shall not have been met,
return the amounts so received to the respective Banks as soon as practicable;
provided, however, if and to the extent the Administrative Agent fails to return
any such amounts to a Bank on the Borrowing Date for such Borrowing, the
Administrative Agent shall pay interest on such unreturned amounts, for each day
from such Borrowing Date to the date such amounts are returned to such Bank, at
the Federal Funds Effective Rate.

(d) The outstanding principal amount of each Competitive Loan shall be due and
payable on the last day of the Interest Period applicable to such Competitive
Loan, and the outstanding principal balance of each Committed Loan shall be due
and payable on the Termination Date.

Section 2.8 Loan Accounts

(a) The Loans made by each Bank shall be evidenced by one or more loan accounts
or records maintained by such Bank in the ordinary course of business. Absent
manifest error, the loan accounts or records maintained by the Administrative
Agent and each Bank shall be prima facie evidence of the amount of the Loans
made by the Banks to the Company and the interest and payments thereon. Any
failure so to record or any error in doing so shall not, however, limit or
otherwise affect the obligation of the Company hereunder to pay any amount owing
with respect to the Loans.

(b) Upon the request of any Bank made through the Administrative Agent, the
Loans made by such Bank may be evidenced by one or more Notes, instead of or in
addition to loan accounts, and upon any such request the Company shall execute
and deliver such Notes to such Bank. Each such Bank shall, and is hereby
authorized by the Company to, endorse on the schedule attached to the relevant
Note held by such Bank (or on a continuation of such schedule attached to each
such Note and made a part thereof) or in its records relating to such Note an
appropriate notation evidencing the date and amount of each Competitive Loan or
Committed Loan, as applicable, of such Bank, each payment or prepayment of
principal of any Competitive Loan or Committed Loan, as applicable, and the
other information provided for on such schedule. The failure of any Bank to make
such a notation or any error therein shall not in any manner affect the
obligation of the Company to repay the Competitive Loans or Committed Loans, as
applicable, made by such Bank in accordance with the terms of the relevant Note.

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20

 

Section 2.9 Interest on Loans

(a) Subject to the provisions of Section 2.10, each Eurodollar Loan shall bear
interest at a rate per annum (computed on the basis of the actual number of days
elapsed over a year of 360 days) equal to the LIBO Rate for the Interest Period
in effect for such Loan (A) plus or minus, as the case may be, in the case of
each Competitive Loan, the Margin specified by a Bank with respect to such Loan
in its Competitive Bid submitted pursuant to Section 2.2(b) or (B) plus in the
case of each Committed Loan, the Applicable Rate. Interest on each Eurodollar
Loan shall be payable on each Interest Payment Date applicable thereto. The
applicable LIBO Rate for each Interest Period shall be determined by the
Administrative Agent, and such determination shall be conclusive absent manifest
error.

(b) Subject to the provisions of Section 2.10, each Alternate Base Loan shall
bear interest at the rate per annum equal to the Alternate Base Rate plus the
Applicable Rate (if the Alternate Base Rate is based on the Prime Rate, computed
on the basis of the actual number of days elapsed over a year of 365 or 366
days, as the case may be; if the Alternate Base Rate is based on the LIBO Rate
or the Federal Funds Effective Rate, computed on the basis of the actual number
of days elapsed over a year of 360 days). Interest on each Alternate Base Loan
shall be payable on each Interest Payment Date applicable thereto. The
applicable Alternate Base Rate shall be determined by the Administrative Agent,
and such determination shall be conclusive absent manifest error.

(c) Subject to the provisions of Section 2.10, each Fixed Rate Loan shall bear
interest at a rate per annum (computed on the basis of the actual number of days
elapsed over a year of 360 days) equal to the fixed rate of interest offered by
the Bank making such Loan and accepted by the Company pursuant to Section 2.2.
Interest on each Fixed Rate Loan shall be payable on each Interest Payment Date
applicable thereto.

(d) The Company shall pay to the Administrative Agent for the account of each
Bank that has made a Eurodollar Loan to the Company, so long as such Bank shall
be required under regulations of the Board to maintain reserves with respect to
liabilities or assets consisting of or including Eurocurrency Liabilities,
additional interest on the unpaid principal amount of each such Eurodollar Loan
of such Bank, from the date of such Loan until such principal amount is paid in
full, at an interest rate per annum for such number of days during the Interest
Period for such Loan as shall be pertinent equal to the remainder obtained by
subtracting (i) the LIBO Rate for such Interest Period from (ii) the rate
obtained by dividing such LIBO Rate referred to in clause (i) above by that
percentage equal to 100% minus the Reserve Percentage of such Bank for such
Interest Period, payable on the next Interest Payment Date applicable to such
Loan. Such additional interest shall be determined by such Bank as, if and to
the extent incurred, and shall be payable as aforesaid upon notification thereof
by such Bank to the Company through the Administrative Agent. Each determination
by a Bank of additional interest under this Section 2.9(d) shall be conclusive
and binding for all purposes in the absence of manifest error.

Section 2.10 Interest on Overdue Amounts. If the Company shall default in the
payment of the principal of or interest on any Loan or any other amount becoming
due hereunder, the Company shall on demand from time to time pay interest, to
the extent permitted by Law, on such defaulted amount up to (but not including)
the date of actual payment (after as well as before judgment) at a rate per
annum equal to (i) in the case of the principal amount of any Eurodollar Loan or
any Competitive Loan, 2% above the rate otherwise applicable thereto and (ii) in
all other cases, the Agreed Maximum Rate (if the Alternate Base Rate is based on
the Prime Rate, computed on the basis of the actual number of days elapsed over
a year of 365 or 366 days, as the case may be; if the Alternate Base Rate is
based on the LIBO Rate or the Federal Funds Effective Rate, computed on the
basis of the actual number of days elapsed over a year of 360 days).

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21

 

Section 2.11 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 that is a Committed Loan, the Administrative Agent
shall have determined that dollar deposits in the amount of the requested
principal amount of such Eurodollar Loan are not generally available in the
Eurodollar Interbank Market, or that dollar deposits are not generally available
in the Eurodollar Interbank Market for the requested Interest Period, or that
the rate at which such dollar deposits are being offered will not adequately and
fairly reflect the cost to the Majority Banks of making or maintaining such
Eurodollar Loan during such Interest Period, or that reasonable means do not
exist for ascertaining the LIBO Rate, the Administrative Agent shall, as soon as
practicable thereafter, give telecopy notice of such determination to the
Company and the Banks. In the event of any such determination, any request by
the Company for a Eurodollar Loan that is a Committed Loan shall, until the
circumstances giving rise to such notice no longer exist, be deemed to be a
request for an Alternate Base Loan. Each determination by the Administrative
Agent hereunder shall be conclusive absent manifest error.

Section 2.12 Prepayment of Loans

(a) Prior to the Termination Date, the Company shall have the right at any time
to prepay any Committed Borrowing, in whole or in part, subject to the
requirements of Section 2.15 or Section 2.16 but otherwise without premium or
penalty, upon at least five Business Days prior written notice to the
Administrative Agent; provided, however, that each such partial prepayment shall
be in an integral multiple of $1,000,000 and in a minimum aggregate principal
amount of $5,000,000. Each notice of prepayment shall specify the prepayment
date and the aggregate principal amount of each Borrowing to be prepaid, shall
be irrevocable and shall commit the Company to prepay such Borrowing by the
amount stated therein. The Company shall not have the right to prepay any
Competitive Borrowing.

(b) On the date of any termination or reduction of the Total Commitment pursuant
to Section 2.6(a), the Company shall pay or prepay so much of the Loans as shall
be necessary in order that the sum of (x) the aggregate principal amount of the
Loans outstanding and (y) the L/C Obligations will not exceed the Total
Commitment following such termination or reduction. Subject to the foregoing,
any such payment or prepayment shall be applied to such Borrowing or Borrowings
as the Company shall select. All prepayments under this paragraph shall be
subject to Section 2.15 and Section 2.16.

(c) All prepayments under this Section 2.12 shall be accompanied by accrued
interest on the principal amount being prepaid to the date of prepayment.

Section 2.13 Reserve Requirements; Change in Circumstances

(a) Notwithstanding any other provision herein, if after the date of this
Agreement any Regulatory Change (i) shall change the basis of taxation of
payments to any Bank of the principal of or interest on any Eurodollar Loan or
Fixed Rate Loan made by such Bank or any other fees or amounts payable hereunder
(other than (x) Taxes imposed on or measured by the capital, receipts or
franchises of such Bank or the overall gross or net income of such Bank by the
jurisdiction in which such Bank has its principal office or by any political
subdivision or taxing authority therein (or any Tax which is enacted or adopted
by such jurisdiction, political subdivision, or taxing authority as a direct
substitute for any such Taxes) or (y) any Tax, assessment, or other governmental
charge that would not have been imposed but for the failure of

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22

 

any Bank to comply with any certification, information, documentation, or other
reporting requirement), (ii) shall impose, modify, or deem applicable any
reserve, special deposit, or similar requirement with respect to any Eurodollar
Loan against assets of, deposits with or for the account of, or credit extended
by, such Bank under this Agreement (without duplication of any amounts paid
pursuant to Section 2.9(d)), or (iii) with respect to any Eurodollar Loan, shall
impose on such Bank or the Eurodollar Interbank Market any other condition
affecting this Agreement or any Eurodollar Loan made by such Bank, and the
result of any of the foregoing shall be to materially increase the actual cost
to such Bank of maintaining its Commitment or of making or maintaining any
Eurodollar Loan or Fixed Rate Loan or to materially reduce the amount of any sum
received or receivable by such Bank hereunder (whether of principal, interest,
or otherwise) in respect thereof, then the Company shall pay to the
Administrative Agent for the account of such Bank, within ten days following
delivery to the Company of the certificate specified in paragraph (c) below by
such Bank, such additional amount or amounts as will reimburse such Bank for
such increase or reduction to such Bank to the extent reasonably allocable to
this Agreement.

(b) If any Bank shall have determined in good faith that any Regulatory Change
regarding capital adequacy or compliance by any Bank (or its parent or any
lending office of such Bank) with any request or directive issued subsequent to
the Effective Date regarding capital adequacy (whether or not having the force
of Law) of any Tribunal, monetary authority, central bank, or comparable agency,
has or would have the effect of reducing the rate of return on such Bank’s (or
its parent’s) capital as a consequence of its obligations hereunder to a level
below that which such Bank (or its parent) could have achieved but for such
Regulatory Change, or compliance (taking into consideration such Bank’s policies
with respect to capital adequacy) by an amount deemed by such Bank to be
material, then from time to time, the Company shall pay to the Administrative
Agent for the account of such Bank, within ten days following delivery to the
Company of the certificate specified in paragraph (c) below by such Bank, such
additional amount or amounts as will reimburse such Bank (or its parent) for
such reduction.

(c) Each Bank shall notify the Company of any event occurring after the date
hereof entitling such Bank to compensation under paragraph (a) or (b) of this
Section 2.13 (together with a good faith estimate of the amounts it would be
entitled to claim in respect of such event) as promptly as practicable, but in
any event on or before the date which is 60 days after the related Regulatory
Change or other event; provided that (i) if such Bank fails to give such notice
by such date, such Bank shall, with respect to compensation payable pursuant to
paragraph (a) or (b) of this Section 2.13 in respect of any costs resulting from
such Regulatory Change or other event, only be entitled to payment under
paragraph (a) or (b) of this Section 2.13 for costs incurred from and after the
date of such notice and (ii) such Bank will take such reasonable actions, if any
(including the designation of a different Applicable Lending Office for the
Loans of such Bank affected by such event) to avoid the need for, or reduce the
amount of, such compensation so long as such actions will not, in the reasonable
opinion of such Bank, be materially disadvantageous to such Bank. A certificate
of a Bank setting forth in reasonable detail (i) the Regulatory Change or other
event giving rise to any costs, (ii) such amount or amounts as shall be
necessary to reimburse such Bank (or participating banks or other entities
pursuant to Section 9.11) as specified in paragraph (a) or (b) of this
Section 2.13, as the case may be, and (iii) the calculation of such amount or
amounts, shall be delivered to the Company (with a copy to the Administrative
Agent) promptly after such Bank determines it is entitled to payment under this
Section 2.13, and shall be conclusive and binding absent manifest error. In
preparing such certificate, such Bank may employ such assumptions and
allocations of costs and expenses as it shall in good faith deem reasonable and
may use any reasonable averaging and attribution method.

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23

 

(d) In the event any Bank shall seek payment pursuant to this Section 2.13 or
the events contemplated under Section 2.11 or Section 2.14 shall have occurred
with respect to any Bank, the Company may, provided no Event of Default has
occurred and is continuing, give notice to such Bank (with copies to the Agents)
that it wishes to seek one or more assignees (which may be one or more of the
Banks, but which may not be a Person who would be entitled at such time to claim
payment pursuant to this Section 2.13 or with respect to which any of the events
contemplated under Section 2.11 or Section 2.14 would exist at such time if such
Person were a Bank under this Agreement) to assume the Commitment of such Bank
and to purchase its outstanding Loans and Notes (if any). Each Bank requesting
payment pursuant to this Section 2.13, or with respect to which any of the
events contemplated under Section 2.11 or Section 2.14 have occurred, agrees to
sell its Commitment, Loans, Notes (if any), and interest in this Agreement and
the other Loan Papers pursuant to Section 9.11(c) to any such assignee approved
by the Company and the Administrative Agent for an amount equal to the sum of
the outstanding unpaid principal of and accrued interest on such Loans and Notes
(if any) plus all other fees and amounts (including, without limitation, any
payment claimed by such Bank under this Section, 2.13 and as to which such Bank
has delivered the certificate required by Section 2.13(c) on or before the date
such Commitment, Loans, and Notes (if any) are purchased) due such Bank
hereunder calculated, in each case, to the date such Commitment, Loans, Notes
(if any) and interest are purchased, whereupon such Bank shall have no further
Commitment or other obligation to the Company hereunder or under any other Loan
Paper.

(e) Notwithstanding anything herein to the contrary, no Bank or participant
shall be entitled to any payment under this Section 2.13 with respect to any
Competitive Loan.

(f) Without prejudice to the survival of any other obligations of the Company
hereunder, the obligations of the Company under this Section 2.13 shall survive
for one year after the termination of this Agreement and/or the payment or
assignment of any of the Loans or Notes.

Section 2.14 Change in Legality

(a) Notwithstanding anything to the contrary herein contained, if any Regulatory
Change shall make it unlawful for any Bank to make or maintain any Eurodollar
Loan or to give effect to its obligations in respect of Eurodollar Loans as
contemplated hereby, then, by prompt written notice to the Company and to the
Administrative Agent, such Bank may:

(i) declare that Eurodollar Loans will not thereafter be made by such Bank
hereunder, whereupon the Company shall be prohibited from requesting Eurodollar
Loans from such Bank hereunder unless such declaration is subsequently
withdrawn; and

(ii) if such unlawfulness shall be effective prior to the end of any Interest
Period of an outstanding Eurodollar Loan, require that all outstanding
Eurodollar Loans with such Interest Periods made by it be converted to Alternate
Base Loans, in which event (A) all such Eurodollar Loans shall be automatically
converted to Alternate Base Loans as of the effective date of such notice as
provided in paragraph (b) below and (B) all payments and prepayments of
principal which would otherwise have been applied to repay the converted
Eurodollar Loans shall instead be applied to repay the Alternate Base Loans
resulting from the conversion of such Eurodollar Loans.

(b) For purposes of this Section 2.14, a notice to the Company (with a copy to
the Administrative Agent) by any Bank pursuant to paragraph (a) above shall be
effective on the date

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24

 

of receipt thereof by the Company. Any Bank having furnished such a notice
agrees to withdraw the same promptly following any Regulatory Change that makes
it lawful for such Bank to make and maintain Eurodollar Loans.

(c) If, with respect to any Bank, a condition arises or an event occurs which
would, or would upon the giving of notice, result in the payment of amounts
pursuant to Section 2.13 or permit such Bank, pursuant to this Section 2.14, to
suspend its obligation to make Eurodollar Loans, such Bank, promptly upon
becoming aware of the same, shall notify the Company thereof and shall take such
steps as may reasonably be available to it (including, without limitation,
changing its Applicable Lending Office) to mitigate the effects of such
condition or event, provided that such Bank shall be under no obligation to take
any step that, in its good faith opinion, would (a) result in its incurring any
additional costs in performing its obligations hereunder and under any
outstanding Loan (unless the Company has notified such Bank of the Company’s
agreement to reimburse it for the same) or (b) be otherwise adverse to such Bank
in a material respect.

Section 2.15 Indemnity. The Company shall indemnify each Bank against any loss
or reasonable expense which such Bank may sustain or incur as a consequence of
(a) any failure by the Company to fulfill on the date of any Borrowing hereunder
the applicable conditions set forth in Article IV, (b) any failure by the
Company to borrow hereunder after a Notice of Committed Borrowing pursuant to
Article II has been given or after Competitive Bids have been accepted, (c) any
payment, prepayment, or conversion of a Eurodollar Loan or Fixed Rate Loan
required by any other provision of this Agreement or otherwise made on a date
other than the last day of the applicable Interest Period for any reason,
including without limitation the acceleration of outstanding Loans as a result
of any Event of Default or (d) any failure by the Company for any reason
(including without limitation the existence of a Default or an Event of Default)
to pay, prepay or convert a Eurodollar Loan on the date for such payment,
prepayment or conversion, specified in the relevant notice of payment,
prepayment or conversion under this Agreement. The indemnity of the Company
pursuant to the immediately preceding sentence shall include, but not be limited
to, any loss or reasonable expense sustained or incurred or to be sustained or
incurred in liquidating or employing deposits from third parties acquired to
effect or maintain such Loan or any part thereof as a Eurodollar Loan or Fixed
Rate Loan. Such loss or reasonable expense shall include, without limitation, an
amount equal to the excess, if any, as reasonably determined by each Bank of
(i) its cost of obtaining the funds for the Loan being paid, prepaid, or
converted or not borrowed, paid, prepaid or converted (based on the LIBO Rate
or, in the case of a Fixed Rate Loan, the fixed rate of interest applicable
thereto) for the period from the date of such payment, prepayment, or conversion
or failure to borrow, pay, prepay or convert to the last day of the Interest
Period for such Loan (or, in the case of a failure to borrow, pay, prepay or
convert, the Interest Period for the Loan which would have commenced on the date
of such failure to borrow, pay, prepay or convert) over (ii) the amount of
interest (as reasonably determined by such Bank) that would be realized by such
Bank in reemploying the funds so paid, prepaid, or converted or not borrowed,
paid, prepaid or converted for such period or Interest Period, as the case may
be. A certificate of each Bank setting forth any amount or amounts and, in
reasonable detail, the computations thereof, which such Bank is entitled to
receive pursuant to this Section 2.15 shall be delivered to the Company (with a
copy to the Administrative Agent) and shall be conclusive, if made in good
faith, absent manifest error. The Company shall pay to the Administrative Agent
for the account of each Bank the amount shown as due on any certificate within
30 days after its receipt of the same.

Section 2.16 Pro Rata Treatment. Except as permitted under Section 2.9(d),
Section 2.13(c) and Section 2.15 with respect to interest, (a) each payment or
prepayment of principal and each payment of interest with respect to a
Competitive Borrowing (at a particular Competitive Bid Rate) or a Committed
Borrowing shall be made pro rata among the Banks in accordance with the
respective

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principal amounts of the Loans extended by each Bank, if any, with respect to
such Competitive Borrowing or Committed Borrowing, and (b) conversions of
Committed Loans to Committed Loans of another Type, continuations of Committed
Loans that are Eurodollar Loans from one Interest Period to another Interest
Period, refinancings of Competitive Loans with Committed Loans, and Committed
Loans which are not refinancings of other Loans shall be made pro rata among the
Banks in accordance with their respective Commitments.

Section 2.17 Sharing of Setoffs. Each Bank agrees that if it shall through the
exercise of a right of banker’s lien, setoff, or counterclaim against the
Company (pursuant to Section 9.6 or otherwise), including, but not limited to, a
secured claim under Section 506 of Title 11 of the United States Code or other
security or interest arising from, or in lieu of, such secured claim, received
by such Bank under any applicable Debtor Relief Law or otherwise, obtain payment
(voluntary or involuntary) in respect of the Committed Loans held by it (other
than pursuant to Section 2.9(d), Section 2.13, or Section 2.15) as a result of
which the unpaid principal portion of the Committed Loans held by it shall be
proportionately less than the unpaid principal portion of the Committed Loans
held by any other Bank, it shall be deemed to have simultaneously purchased from
such other Bank a participation in the Committed Loans held by such other Bank,
so that the aggregate unpaid principal amount of the Committed Loans and
participations in Committed Loans pursuant to this Section 2.17 held by each
Bank shall be in the same proportion to the aggregate unpaid principal amount of
all Committed Loans then outstanding as the principal amount of the Committed
Loans held by it prior to such exercise of banker’s lien, setoff, or
counterclaim was to the principal amount of all Committed Loans outstanding
prior to such exercise of banker’s lien, setoff, or counterclaim; provided,
however, that if any such purchase or purchases or adjustments shall be made
pursuant to this Section 2.17 and the payment giving rise thereto shall
thereafter be recovered, such purchase or purchases or adjustments shall be
rescinded to the extent of such recovery and the purchase price or prices or
adjustment restored without interest. The Company expressly consents to the
foregoing arrangements and agrees that any Bank holding a participation in a
Committed Loan deemed to have been so purchased may exercise any and all rights
of banker’s lien, setoff, or counterclaim with respect to any and all moneys
owing by the Company to such Bank as fully as if such Bank had made a Committed
Loan directly to the Company in the amount of such participation.

Section 2.18 Payments

(a) The Company shall make each payment hereunder and under any instrument
delivered hereunder not later than 12:00 noon (New York City time) on the day
when due in dollars to the Administrative Agent at its Principal Office for the
account of the Banks, in federal or other immediately available funds. The
Administrative Agent will promptly thereafter cause to be distributed like funds
relating to the payment of principal of or interest on Committed Loans (other
than pursuant to Section 2.9(d), Section 2.13, and Section 2.15) or Commitment
Fees ratably to the Banks and like funds relating to the payment of any other
amount (including, without limitation, payments of principal or interest on
Competitive Loans which are not made ratably to the Banks) payable to any Bank
to such Bank for the account of its Applicable Lending Office, in each case to
be applied in accordance with the terms of this Agreement.

(b) Whenever any payment hereunder or under any Note shall be stated to be due
on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in all such cases be
included in the computation of payment of interest or Commitment Fee, as the
case may be; provided, however, if such extension would cause payment of
interest on or principal of a Eurodollar Loan to be made in the next following
calendar month, such payment shall be made on the next preceding Business Day.

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(c) Unless the Administrative Agent shall have received notice from the Company
prior to the date on which any payment is due to the Banks hereunder that the
Company will not make such payment in full, the Administrative Agent may assume
that the Company has made or will make such payment in full to the
Administrative Agent on such date and the Administrative Agent may, in reliance
upon such assumption, cause to be distributed to each Bank on such due date an
amount equal to the amount then due such Bank. If and to the extent the Company
shall not have so made such payment in full to the Administrative Agent, each
Bank shall repay to the Administrative Agent forthwith on demand such amount
distributed to such Bank together with interest thereon, for each day from the
date such amount is distributed to such Bank until the date such Bank repays
such amount to the Administrative Agent, at the Federal Funds Effective Rate.

(d) (i) Except as expressly provided in this Section 2.18 or Section 2.19, all
payments (whether of principal, interest, fees, reimbursements, or otherwise) by
the Company under this Agreement shall be made without setoff or counterclaim
and shall be made free and clear of and without deduction for any present or
future Tax, levy, impost, or any other charge, if any, of any nature whatsoever
now or hereafter imposed by any Tribunal. Except as otherwise provided in this
Section 2.18 or Section 2.19, if the making of such payments by the Company is
prohibited by Law, unless such a Tax, levy, impost, or other charge is deducted
or withheld therefrom, the Company shall pay to the Administrative Agent, on the
date of each such payment, such additional amounts (without duplication of any
other amounts required to be paid by the Company pursuant to Section 2.13) as
may be necessary in order that the net amounts received by the Banks after such
deduction or withholding shall equal the amounts which would have been received
if such deduction or withholding were not required. The Company shall confirm
that all applicable Taxes, if any, imposed on this Agreement or transactions
hereunder shall have been properly and legally paid by it to the appropriate
taxing authorities by sending official Tax receipts or notarized copies of such
receipts to the Administrative Agent within 30 days after payment of any
applicable Tax.

(ii) The Company shall indemnify the Administrative Agent, each Bank and the
Issuing Bank, within 30 days after demand therefor, for the full amount of Taxes
(including, without limitation, any Taxes imposed or asserted on or attributable
to amounts payable under this Section 2.18 and Section 2.19) payable by the
Administrative Agent, such Bank (or its beneficial owner) or the Issuing Bank,
as the case may be, and any reasonable expenses arising therefrom or with
respect thereto, whether or not such Taxes were correctly or legally imposed or
asserted by the relevant Tribunal. A certificate as to the amount of such
payment or liability delivered to the Company by a Bank or the Issuing Bank
(with a copy to the Administrative Agent), or by the Administrative Agent on its
own behalf or on behalf of a Bank or the Issuing Bank, shall be conclusive, if
made in good faith, absent manifest error.

(iii) Each Bank shall indemnify the Administrative Agent within 10 days after
demand therefor, for the full amount of any Taxes attributable to such Bank that
are payable or paid by the Administrative Agent, and reasonable expenses arising
therefrom or with respect thereto, whether or not such Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority. A
certificate as to the amount of such payment or liability delivered to any Bank
by the Administrative Agent shall be conclusive absent manifest error. For the
avoidance of doubt, there shall be no double recovery under this paragraph where
the indemnified party has been indemnified for the same loss under a separate
provision of the agreement.

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The provisions of this Section 2.18(d) shall survive the termination of this
Agreement and/or the payment or assignment of any of the Loans or Notes.

Section 2.19 Tax Forms. Any Bank that is entitled to an exemption from or
reduction of any applicable withholding Tax with respect to payments hereunder
or under any other Loan Papers shall deliver to the Company (with a copy to the
Administrative Agent), at the time or times requested by the Company or the
Administrative Agent or as otherwise required by law, such properly completed
and executed documentation prescribed by Law as will permit such payments to be
made without withholding or at a reduced rate of withholding. In addition, any
Bank, if requested by the Company or the Administrative Agent, shall deliver
such other documentation prescribed by Law or requested by the Company or the
Administrative Agent as will enable the Company or the Administrative Agent to
determine whether or not such Bank is subject to backup withholding or
information reporting requirements. Notwithstanding anything to the contrary in
the preceding two sentences, in the case of any withholding Tax other than the
U.S. federal withholding Tax, the completion, execution and submission of such
forms shall not be required if in the Bank’s good faith judgment such
completion, execution or submission would subject such Bank to any material
unreimbursed cost or expense, unless indemnified by the Company in an amount
reasonably satisfactory to such Bank, or would materially prejudice the legal or
commercial position of such Bank.

Without limiting the generality of the foregoing, any Bank organized under the
Laws of a jurisdiction outside the United States (a “Foreign Bank”) shall, to
the extent it is legally entitled to do so, deliver to the Company and the
Administrative Agent (in such number of copies as shall be requested by the
recipient) on or prior to the date on which such Foreign Bank becomes a lender
under this Agreement (and from time to time thereafter upon the request of the
Company or the Administrative Agent), whichever of the following is applicable:

(a) duly completed copies of Internal Revenue Service Form W-8BEN claiming
eligibility for benefits of an income tax treaty to which the United States of
America is a party,

(b) duly completed copies of Internal Revenue Service Form W-8ECI,

(c) in the case of a Foreign Bank claiming the benefits of the exemption for
portfolio interest under section 881(c) of the Code, (x) a certificate
substantially in the Form of Exhibit I to the effect that (i) such Foreign Bank
is not (A) a “bank” within the meaning of section 881(c)(3)(A) of the Code,
(B) a “10 percent shareholder” of the Company within the meaning of section
881(c)(3)(B) of the Code, and (C) a “controlled foreign corporation” described
in section 881(c)(3)(C) of the Code, and (ii) the interest payments in question
are not effectively connected with the United States trade or business conducted
by such Bank (a “U.S. Tax Compliance Certificate”) and (y) duly completed copies
of Internal Revenue Service Form W-8BEN,

(d) to the extent a Foreign Bank is not the beneficial owner (for example, where
the Foreign Bank is a partnership or participating Bank granting a typical
participation), an Internal Revenue Service Form W-8IMY, accompanied by a Form
W-8ECI, W-8BEN, U.S. Tax Compliance Certificate, Form W-9, and/or other
certification documents from each beneficial owner, as applicable; provided
that, if the Foreign Bank is a partnership (and not a participating Bank) and
one or more beneficial owners of such Foreign Bank are claiming the portfolio
interest exemption, such Foreign Bank may provide a U.S. Tax Compliance
Certificate on behalf of each such beneficial owner, or

(e) any other form prescribed by Law as a basis for claiming exemption from or a
reduction in U.S. federal withholding Tax duly completed together with such
supplementary documentation as may be prescribed by applicable law to permit the
Company to determine the withholding or deduction required to be made.

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Each Bank agrees that if any form or certification previously delivered by it
expires or becomes obsolete or inaccurate in any respect, it shall update such
form or certification or promptly notify the Company and the Agent in writing of
its legal inability to do so. Notwithstanding anything to the contrary in
Section 2.18 or this Section 2.19, unless the Company and the Administrative
Agent have received such forms or such documents indicating that payments
hereunder are not subject to United States withholding Tax, the Company or the
Administrative Agent (after notice from the Administrative Agent to such Bank of
such non-receipt) shall withhold Taxes from such payments at the applicable
statutory rate (or any reduced applicable Tax treaty rate) in the case of
payments to or for any Bank organized under the Laws of a jurisdiction outside
the United States; provided that, should a Foreign Bank which is otherwise
exempt from or subject to a reduced rate of withholding Tax become subject to
Taxes because of its failure to deliver a form required pursuant to this
Section 2.19, the Company shall take such steps as such Foreign Bank shall
reasonably request to assist such Foreign Bank to recover such Taxes at the cost
and expense of such Bank.

The provisions of this Section 2.19 shall survive the termination of this
Agreement and/or the payment or assignment of any of the Loans or Notes.

Section 2.20 Calculation of LIBO Rates. The provisions of this Agreement
relating to calculation of the LIBO Rate are included only for the purpose of
determining the rate of interest or other amounts to be paid hereunder that are
based upon such rate, it being understood that each Bank shall be entitled to
fund and maintain its funding of all or any part of a Eurodollar Loan as it sees
fit. All such determinations hereunder, however, shall be made as if each Bank
had actually funded and maintained funding of each Eurodollar Loan through the
purchase in the Eurodollar InterBank Market of one or more eurodollar deposits
in an amount equal to the principal amount of such Loan and having a maturity
corresponding to the Interest Period for such Loan.

Section 2.21 Booking Loans. Subject to Section 2.19, any Bank may make, carry,
or, transfer Loans at, to, or for the account of any of its branch offices or
the office of any Affiliate.

Section 2.22 Quotation of Rates. It is hereby acknowledged that the Company may
call the Administrative Agent on or before the date on which notice of a
Borrowing is to be delivered by the Company in order to receive an indication of
the rate or rates then in effect, but that such projection shall not be binding
upon the Administrative Agent or any Bank nor affect the rate of interest which
thereafter is actually in effect when the election is made.

Section 2.23 Defaulting Banks. Notwithstanding any provision of this Agreement
to the contrary, if any Bank becomes a Defaulting Bank, the Administrative Agent
shall deliver written notice to such effect, upon the Administrative Agent’s
obtaining knowledge of such event, to the Company and such Defaulting Bank, and
the following provisions shall apply for so long as such Bank is a Defaulting
Bank:

(a) Commitment Fees shall cease to accrue with respect to the Commitment of such
Defaulting Bank pursuant to Section 2.5.

(b) The Commitment and Revolving Credit Exposure of such Defaulting Bank shall
not be included in determining whether all Banks or the Majority Banks have
taken or may take any action hereunder (including any consent to any amendment
or waiver pursuant to Section 9.1), provided that any waiver, amendment or
modification requiring the consent of all Banks or each affected Bank which
affects such Defaulting Bank differently than other affected Banks shall require
the consent of such Defaulting Bank.

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(c) If any L/C Obligations exist at the time a Bank becomes a Defaulting Bank,
then:

(i) all or any part of such L/C Obligations shall be reallocated among the
non-Defaulting Banks ratably in accordance with their respective Commitments but
only to the extent that (x) the sum of all non-Defaulting Banks’ Revolving
Credit Exposures does not then exceed the total of all non-Defaulting Banks’
Commitments and (y) the conditions set forth in Section 4.4 are satisfied at
such time;

(ii) if the reallocation described in clause (i) above cannot, or can only
partially, be effected, the Company shall within one Business Day following
notice by the Administrative Agent cash collateralize the percentage such
Defaulting Bank’s Commitment represents of the Total Commitment of the L/C
Obligations (after giving effect to any partial reallocation pursuant to clause
(i) above) in accordance with the procedures set forth in Section 7.2 for so
long as such L/C Obligations are outstanding;

(iii) if the Company cash collateralizes any portion of such Defaulting Bank’s
L/C Obligations pursuant to this Section 2.23(c), the Company shall not be
required to pay any fees to such Defaulting Bank pursuant to Section 3.3 with
respect to such Defaulting Bank’s portion of the L/C Obligations during the
period of such collateralization;

(iv) if the L/C Obligations of the non-Defaulting Banks are reallocated pursuant
to this Section 2.23(c), then the fees payable to the Banks pursuant to
Section 3.3 shall be adjusted ratably in accordance with their respective
Commitments; and

(v) if any Defaulting Bank’s L/C Obligations are neither cash collateralized nor
reallocated pursuant to this Section 2.23(c), then, without prejudice to any
rights or remedies of the applicable Issuing Bank or any Bank hereunder, all
Commitment Fees that otherwise would have been payable to such Defaulting Bank
(solely with respect to the portion of such Defaulting Bank’s Commitment that
was utilized by such L/C Obligations) and letter of credit fees payable under
Section 3.3 with respect to such Defaulting Bank’s L/C Obligations shall be
payable to the applicable Issuing Bank until such L/C Obligations are cash
collateralized and/or reallocated.

(d) So long as any Bank is a Defaulting Bank, the Issuing Bank shall not be
required to issue, amend or increase any Letter of Credit, unless it is
satisfied that the related exposure will be 100% covered by the Commitments of
the non-Defaulting Banks and/or cash collateral will be provided by the Company
in accordance with this Section 2.23(c), and participating interests in any such
newly issued or increased Letter of Credit shall be allocated among
non-Defaulting Banks in a manner consistent with Section 2.23(c)(i) (and
Defaulting Banks shall not participate therein).

(e) Any amount payable to such Defaulting Bank hereunder (whether on account of
principal, interest, fees or otherwise and including any amount that would
otherwise be payable to such Defaulting Bank pursuant to Section 2.17, but
excluding amounts payable pursuant to Section 2.24) shall, in lieu of being
distributed to such Defaulting Bank, subject to any applicable requirements of
law, be applied at such time or times as may be determined by the Administrative
Agent (i) first, to the payment of any amounts owing by such Defaulting Bank to
the

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Administrative Agent hereunder, (ii) second, pro rata, to the payment of any
amounts owing by such Defaulting Bank to the Issuing Bank hereunder,
(iii) third, if so determined by the Administrative Agent or requested by an
Issuing Bank, held in such account as cash collateral for future funding
obligations of the Defaulting Bank in respect of any existing or future
participating interest in any Letter of Credit, (iv) fourth, to the funding of
any Loan in respect of which such Defaulting Bank has failed to fund its portion
thereof as required by this Agreement, as determined by the Administrative
Agent, (v) fifth, if so determined by the Administrative Agent and the Company,
held in such account as cash collateral for future funding obligations of the
Defaulting Bank in respect of any Loans under this Agreement, (vi) sixth, to the
payment of any amounts owing to the Banks or an Issuing Bank as a result of any
judgment of a court of competent jurisdiction obtained by any Bank or such
Issuing Bank against such Defaulting Bank as a result of such Defaulting Bank’s
breach of its obligations under this Agreement, (vii) seventh, to the payment of
any amounts owing to the Company as a result of any judgment of a court of
competent jurisdiction obtained by the Company against such Defaulting Bank as a
result of such Defaulting Bank’s breach of its obligations under this Agreement,
and (viii) eighth, to such Defaulting Bank or as otherwise directed by a court
of competent jurisdiction, provided, with respect to this clause (viii), that if
such payment is (x) a prepayment of the principal amount of any Loans or
reimbursement obligations in respect of any drafts paid by an Issuing Bank under
any Letters of Credit which a Defaulting Bank has funded its participation
obligations and (y) made at a time when the conditions set forth in Section 4.4
are satisfied, such payment shall be applied solely to prepay the Loans of, and
reimbursement obligations owed to, all non-Defaulting Banks pro rata prior to
being applied to the prepayment of any Loans, or reimbursement obligations owed
to, any Defaulting Bank.

In the event that the Administrative Agent, the Issuing Bank and the Company
each agrees that a Defaulting Bank has adequately remedied all matters that
caused such Bank to be a Defaulting Bank or upon receipt by the Administrative
Agent of the confirmation referred to in clause (c) of the definition of
“Defaulting Bank”, as applicable, then on such date such Bank shall purchase at
par such portion of the Loans of the other Banks (other than Competitive Loans)
as the Administrative Agent shall determine may be necessary in order for such
Bank to hold such Loans ratably in accordance with its Commitment.

Section 2.24 Mitigation Obligations; Replacement of Banks.

(a) If any Bank requests compensation under Section 2.13 or 2.18(d), or if the
Company is required to pay any additional amount to any Bank or any Governmental
Authority for the account of any Bank pursuant to Section 2.13 or 2.18(d), then
such Bank shall use reasonable efforts to designate a different lending office
for funding or booking its Loans hereunder or to assign its rights and
obligations hereunder to another of its offices, branches or affiliates, if, in
the judgment of such Bank, such designation or assignment (i) would eliminate or
reduce amounts payable pursuant to Section 2.13 or 2.18(d) in the future and
(ii) would not subject such Bank to any unreimbursed cost or expense and would
not otherwise be disadvantageous to such Bank. The Company hereby agrees to pay
all reasonable costs and expenses incurred by any Bank in connection with any
such designation or assignment.

(b) If any Bank requests compensation under Section 2.13 or 2.18(d), or if the
Company is required to pay any additional amount to any Bank or any Governmental
Authority for the account of any Bank pursuant to Section 2.13 or 2.18(d), or if
any Bank becomes a Defaulting Bank, then the Company may, at its sole expense
and effort, upon notice to such Bank and the Administrative Agent, require such
Bank to assign and delegate, without recourse (in accordance with and subject to
the restrictions contained in Section 9.10), all its interests, rights and
obligations under this Agreement (other than any outstanding Competitive Loans
held by it)

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to an assignee that shall assume such obligations (which assignee may be another
Bank, if a Bank accepts such assignment); provided that (i) the Company shall
have received the prior written consent of the Administrative Agent, which
consent shall not unreasonably be withheld, (ii) such Bank shall have received
payment of an amount equal to the outstanding principal of its Loans (other than
Competitive Loans) and participations in any drafts paid by an Issuing Bank
under any Letters of Credit, accrued interest thereon, accrued fees and all
other amounts payable to it hereunder, from the assignee (to the extent of such
outstanding principal and accrued interest and fees) or the Company (in the case
of all other amounts) and (iii) in the case of any such assignment resulting
from a claim for compensation under Section 2.13 or 2.18(d) or payments required
to be made pursuant to Section 2.13 or 2.18(d), such assignment will result in a
reduction in such compensation or payments. A Bank shall not be required to make
any such assignment and delegation if, prior thereto, as a result of a waiver by
such Bank or otherwise, the circumstances entitling the Company to require such
assignment and delegation cease to apply.

ARTICLE III

LETTERS OF CREDIT

Section 3.1 L/C Commitment

(a) Subject to the terms and conditions hereof, the Issuing Bank, in reliance on
the agreements of the other Banks set forth in Section 3.4(a), agrees to issue
letters of credit (“Letters of Credit”) for the account of the Company on any
Business Day on and after the Effective Date and until the termination of the
Commitment of the Issuing Bank in accordance with the terms hereof, in such form
as may be approved from time to time by the Issuing Bank; provided that the
Issuing Bank shall not issue any Letter of Credit if, after giving effect to
such issuance, (i) the L/C Obligations would exceed the L/C Commitment or
(ii) the excess of the Total Commitment over the aggregate amount of Loans and
L/C Obligations then outstanding would be less than zero. Each Letter of Credit
shall (i) be denominated in dollars and (ii) expire no later than the earlier of
(x) the first anniversary of its date of issuance and (y) the date that is five
Business Days prior to the Original Termination Date, provided that any Letter
of Credit with a one-year term may provide for the renewal thereof for
additional one-year periods (which shall in no event extend beyond the date
referred to in clause (y) above).

(b) The Issuing Bank shall not at any time be obligated to issue any Letter of
Credit if such issuance would conflict with, or cause the Issuing Bank or any
L/C Participant to exceed any limits imposed by, any applicable Laws.

Section 3.2 Procedure for Issuance of Letter of Credit. The Company may from
time to time request that the Issuing Bank issue a Letter of Credit by
delivering to the Issuing Bank at its address for notices specified herein an
Application therefor, completed to the reasonable satisfaction of the Issuing
Bank, and such other certificates, documents and other papers and information as
the Issuing Bank may reasonably request. Upon receipt of any Application, the
Issuing Bank will process such Application and the certificates, documents and
other papers and information delivered to it in connection therewith in
accordance with its customary procedures and shall promptly issue the Letter of
Credit requested thereby (but in no event shall the Issuing Bank be required to
issue any Letter of Credit earlier than three Business Days after its receipt of
the Application therefor and all such other certificates, documents and other
papers and information relating thereto) by issuing the original of such Letter
of Credit to the beneficiary thereof or as otherwise may be agreed by the
Issuing Bank and the Company. The Issuing Bank shall furnish a copy of such
Letter of Credit to the Company promptly following the

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issuance thereof. The Issuing Bank shall promptly furnish to the Administrative
Agent, which shall in turn promptly furnish to the Banks, notice of the issuance
of each Letter of Credit (including the amount thereof).

Section 3.3 Fees and Other Charges

(a) The Company will pay to the Administrative Agent for the ratable benefit of
the Banks on each Quarterly Payment Date after the issuance date and on the
Termination Date a fee on all outstanding Letters of Credit at a per annum rate
equal to the Applicable Rate then in effect with respect to Eurodollar Loans. In
addition, the Company shall pay to the Issuing Bank for its own account a
fronting fee at a per annum rate separately agreed upon between the Company and
the Issuing Bank (which fee, in the case of JPMorgan Chase Bank, N.A., is
reflected in the fee letter dated August 5, 2009, between the Company and
JPMorgan Chase Bank, N.A. and, in the case of Citibank, N.A., is reflected in
the fee letter dated August 5, 2009, between the Company and Citibank, N.A.) on
the undrawn and unexpired amount of each Letter of Credit, payable quarterly in
arrears on each Quarterly Payment Date after the issuance date and on the
Termination Date. Fees payable pursuant this Section 3.3(a) shall be calculated
on the basis of a 360-day year for the actual days elapsed.

(b) In addition to the foregoing fees, the Company shall pay or reimburse the
Issuing Bank for such normal and customary costs and expenses as are incurred or
charged by the Issuing Bank in issuing, negotiating, effecting payment under,
amending or otherwise administering any Letter of Credit.

Section 3.4 L/C Participations

(a) The Issuing Bank irrevocably agrees to grant and hereby grants to each L/C
Participant, and, to induce the Issuing Bank to issue Letters of Credit, each
L/C Participant irrevocably agrees to accept and purchase and hereby accepts and
purchases from the Issuing Bank, on the terms and conditions set forth below,
for such L/C Participant’s own account and risk an undivided interest, equal to
the percentage which such L/C Participant’s Commitment represents of the Total
Commitment, in the Issuing Bank’s obligations and rights under and in respect of
each Letter of Credit and the amount of each draft paid by the Issuing Bank
thereunder. Each L/C Participant unconditionally and irrevocably agrees with the
Issuing Bank that, if a draft is paid under any Letter of Credit for which the
Issuing Bank is not reimbursed in full by the Company in accordance with the
terms of this Agreement, such L/C Participant shall pay to the Issuing Bank upon
demand a fraction of the amount of such draft, or any part thereof, that is not
so reimbursed, equal to the percentage which such L/C Participant’s Commitment
represents of the Total Commitment.

(b) If any amount required to be paid by any L/C Participant to the Issuing Bank
pursuant to Section 3.4(a) in respect of any unreimbursed portion of any payment
made by the Issuing Bank under any Letter of Credit is paid to the Issuing Bank
within three Business Days after the date such payment is due, such L/C
Participant shall pay to the Issuing Bank on demand an amount equal to the
product of (i) such amount, times (ii) the daily average Federal Funds Effective
Rate during the period from and including the date such payment is required to
the date on which such payment is immediately available to the Issuing Bank,
times (iii) a fraction the numerator of which is the number of days that elapse
during such period and the denominator of which is 360. If any such amount
required to be paid by any L/C Participant pursuant to Section 3.4(a) is not
made available to the Issuing Bank by such L/C Participant within three Business
Days after the date such payment is due, the Issuing Bank shall be entitled to
recover from such

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L/C Participant, on demand, such amount with interest thereon calculated from
such due date at the rate per annum applicable to Alternate Base Loans. A
certificate of the Issuing Bank submitted to any L/C Participant with respect to
any amounts owing under this Section shall be conclusive in the absence of
manifest error.

(c) Whenever, at any time after the Issuing Bank has made payment under any
Letter of Credit and has received from any L/C Participant its pro rata share of
such payment in accordance with Section 3.4(a), the Issuing Bank receives any
payment related to such Letter of Credit (whether directly from the Company or
otherwise, including proceeds of collateral applied thereto by the Issuing
Bank), or any payment of interest on account thereof, the Issuing Bank will
distribute to such L/C Participant its pro rata share thereof; provided,
however, that in the event that any such payment received by the Issuing Bank
shall be required to be returned by the Issuing Bank, such L/C Participant shall
return to the Issuing Bank the portion thereof previously distributed by the
Issuing Bank to it.

Section 3.5 Reimbursement Obligation of the Company. If any draft is paid under
any Letter of Credit, the Company shall reimburse the Issuing Bank for the
amount of (a) the draft so paid and (b) any Taxes, fees, charges or other costs
or expenses incurred by the Issuing Bank in connection with such payment, not
later than 12:00 noon, New York City time, on (i) the Business Day that the
Company receives notice of such draft, if such notice is received on such day
prior to 10:00 a.m., New York City time, or (ii) if clause (i) above does not
apply, the Business Day immediately following the day that the Company receives
such notice. Each such payment shall be made to the Issuing Bank at its address
for notices referred to herein in dollars and in immediately available funds.
Interest shall be payable on any such amounts from the date on which the
relevant draft is paid until payment in full at the rate set forth in (x) until
the Business Day next succeeding the date of the relevant notice, Section 2.9(b)
and (y) thereafter, Section 2.10.

Section 3.6 Obligations Absolute. The Company’s obligations under this Article
III shall be absolute and unconditional under any and all circumstances and
irrespective of any setoff, counterclaim or defense to payment that the Company
may have or have had against the Issuing Bank, any beneficiary of a Letter of
Credit or any other Person. The Company also agrees with the Issuing Bank that
the Issuing Bank shall not be responsible for, and the Company’s Reimbursement
Obligations under Section 3.5 shall not be affected by, among other things, the
validity or genuineness of documents or of any endorsements thereon, even though
such documents shall in fact prove to be invalid, fraudulent or forged, or any
dispute between or among the Company and any beneficiary of any Letter of Credit
or any other party to which such Letter of Credit may be transferred or any
claims whatsoever of the Company against any beneficiary of such Letter of
Credit or any such transferee. The Issuing Bank shall not be liable for any
error, omission, interruption or delay in transmission, dispatch or delivery of
any message or advice, however transmitted, in connection with any Letter of
Credit, except for errors or omissions found by a final and nonappealable
decision of a court of competent jurisdiction to have resulted from the gross
negligence or willful misconduct of the Issuing Bank. The Company agrees that
any action taken or omitted by the Issuing Bank under or in connection with any
Letter of Credit or the related drafts or documents, if done in the absence of
gross negligence or willful misconduct and in accordance with the standards of
care specified in the Uniform Commercial Code of the State of New York, shall be
binding on the Company and shall not result in any liability of the Issuing Bank
to the Company.

Section 3.7 Letter of Credit Payments. If any draft shall be presented for
payment under any Letter of Credit, the Issuing Bank shall promptly notify the
Company of the date and amount thereof. The responsibility of the Issuing Bank
to the Company in connection with any draft presented for payment under any
Letter of Credit shall, in addition to any payment obligation expressly provided
for in

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such Letter of Credit, be limited to determining that the documents (including
each draft) delivered under such Letter of Credit in connection with such
presentment are substantially in conformity with such Letter of Credit.

Section 3.8 Applications. To the extent that any provision of any Application
related to any Letter of Credit is inconsistent with the provisions of this
Article III, the provisions of this Article III shall apply.

ARTICLE IV

CONDITIONS OF LENDING

Section 4.1 Conditions Precedent. The effectiveness of this Agreement is subject
to the satisfaction of the following conditions precedent:

(a) The Administrative Agent shall have received the following, each dated
(unless otherwise indicated) the Effective Date:

(i) Officer’s Certificates dated the Effective Date certifying, inter alia,
(i) true and correct copies of resolutions adopted by the Board of Directors or
Executive Committee, as appropriate, of the Company authorizing the Company to
borrow and effect other transactions hereunder, (ii) a true and correct copy of
the Company’s bylaws in effect on the date hereof, (iii) the incumbency and
specimen signatures of the Persons executing any documents on behalf of the
Company, (iv) the truth of the representations and warranties made by the
Company in this Agreement (or, if any such representation or warranty is
expressly stated to have been made as of a specific date, as of such specific
date), and (v) the absence of the occurrence and continuance of any Default or
Event of Default.

(ii) A copy of the Company’s charter and all amendments thereto, accompanied by
certificates that such copy is correct and complete, one certificate dated
within a reasonable time prior to the Effective Date and issued by the Secretary
of State of Texas and one certificate dated the Effective Date and executed by
the corporate secretary or assistant secretary of the Company.

(iii) Certificates (dated within twenty days prior to the Effective Date) of
existence and good standing of the Company from appropriate officials of Texas.

(iv) The written opinions of internal and outside counsel to the Company and
counsel to the Agents, substantially in the form set out in Exhibits E-1, E-2
and E-3, respectively, each dated the Effective Date.

(v) An Administrative Questionnaire (dated any date prior to the Effective Date)
completed by each Bank which is a party hereto on the Effective Date.

(vi) Such other agreements, documents, instruments, opinions, certificates, and
evidences as the Administrative Agent may reasonably request prior to the
Effective Date.

(b) Any fees required to be paid on or before the Effective Date shall have been
paid.

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(c) The commitments under the Existing Credit Agreement shall have been
terminated and all amounts owing thereunder shall have been paid in full. Each
party hereto that is also a party to the Existing Credit Agreement hereby waives
any requirement under the Existing Credit Agreement of advance notice for any
such termination or payment.

Section 4.2 Conditions Precedent to Each Committed Borrowing. The obligation of
each Bank to make a Committed Loan on the occasion of any Committed Borrowing
(including the initial Committed Borrowing, but excluding any Committed
Borrowing used exclusively to finance the payment of any Reimbursement
Obligation) shall be subject to the further conditions precedent that on the
date of such Committed Borrowing the following statements shall be true (and
each of the giving of the applicable Notice of Committed Borrowing and the
acceptance by the Company of the proceeds of such Committed Borrowing shall
constitute a representation and warranty by the Company that on the date of such
Committed Borrowing such statements are true):

(a) The representations and warranties contained in Article V (except the last
sentence of Section 5.2 and except Section 5.5) are correct in all material
respects on and as of the date of such Committed Borrowing (or, if any such
representation or warranty is expressly stated to have been made as of a
specific date, as of such specific date), before and after giving effect to such
Committed Borrowing, as though made on and as of such date;

(b) No event has occurred and is continuing, or would result from such Committed
Borrowing, which constitutes either a Default or an Event of Default; and

(c) Following the making of such Committed Borrowing and all other Borrowings to
be made on the same day under this Agreement, the sum of the aggregate principal
amount of all Loans then outstanding and of the L/C Obligations shall not exceed
the Total Commitment.

Section 4.3 Conditions Precedent to Each Competitive Borrowing. The obligation
of each Bank to make a Competitive Loan as part of a Competitive Borrowing
(including the initial Competitive Borrowing) is subject to the further
conditions precedent that (a) the Administrative Agent shall have received a
Competitive Bid Request with respect thereto, and (b) on the date of such
Competitive Borrowing the following statements shall be true (and each of the
giving of the applicable Competitive Bid Request and the acceptance by the
Company of the proceeds of such Competitive Borrowing shall constitute a
representation and warranty by the Company that on the date of such Competitive
Borrowing such statements are true):

(a) The representations and warranties contained in Article V (except the last
sentence of Section 5.2 and except Section 5.5) are correct in all material
respects on and as of the date of such Competitive Borrowing (or if any such
representation or warranty is expressly stated to have teen made as of a
specific date, as of such specific date), before and after giving effect to such
Competitive Borrowing, as though made on and as of such date;

(b) No event has occurred and is continuing, or would result from such
Competitive Borrowing, which constitutes either a Default or an Event of
Default; and

(c) Following the making of such Competitive Borrowing and all other Borrowings
to be made on the same day under this Agreement, the sum of the aggregate
principal amount of all Loans then outstanding and of the L/C Obligations shall
not exceed the Total Commitment.

Section 4.4 Conditions Precedent to Each Letter of Credit Issuance. The
obligation of the Issuing Bank to issue a Letter of Credit (including the
initial Letter of Credit) shall be subject to the

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further conditions precedent that on the date of the issuance of such Letter of
Credit the following statements shall be true (and each delivery of an
Application by the Company shall constitute a representation and warranty by the
Company that on the date of such Application such statements are true):

(a) The representations and warranties contained in Article V (except the last
sentence of Section 5.2 and except Section 5.5) are correct in all material
respects on and as of the date of the issuance of such Letter of Credit (or, if
any such representation or warranty is expressly stated to have been made as of
a specific date, as of such specific date), before and after giving effect to
such issuance, as though made on and as of such date;

(b) No event has occurred and is continuing, or would result from the issuance
of such Letter of Credit, which constitutes either a Default or an Event of
Default; and

(c) Following the issuance of such Letter of Credit and the making of any
Borrowings to be made on the same day under this Agreement, the sum of the
aggregate principal amount of all Loans then outstanding and of the L/C
Obligations shall not exceed the Total Commitment.

Section 4.5 Legal Details. All documents executed or submitted pursuant hereto
by the Company shall be reasonably satisfactory in form and substance to the
Administrative Agent and its counsel. The Administrative Agent shall, promptly
following satisfaction of the conditions specified in Section 4.1, notify the
Company and each of the Banks of such satisfaction and the date of the Effective
Date. The Administrative Agent and its counsel shall receive all information,
and such counterpart originals or certified or other copies of such materials,
as they may reasonably deem necessary or appropriate. All legal matters incident
to the transactions contemplated by this Agreement (including without limitation
matters arising from time to time as a result of changes occurring with respect
to any Laws) shall be reasonably satisfactory to counsel to the Administrative
Agent.

ARTICLE V

REPRESENTATIONS AND WARRANTIES

The Company represents and warrants to the Agents and Banks as follows:

Section 5.1 Organization, Authority and Qualifications

(a) The Company and each of its Material Subsidiaries is a Person duly
organized, validly existing, and in good standing under the Laws of the
jurisdiction of its organization;

(b) The Company has the corporate power and authority to execute, deliver, and
perform this Agreement and the other Loan Papers and to borrow hereunder;

(c) On the Effective Date, the Company and each of its Material Subsidiaries is
duly qualified as a foreign Person to do business and is in good standing in
every jurisdiction where the character of its Properties or nature of its
activities make such qualification necessary, except where the failure to be so
qualified or in good standing would not have a Material Adverse Effect; and

(d) On the Effective Date, the Company has no Material Subsidiaries.

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Section 5.2 Financial Statements. The Current Financials present fairly the
consolidated financial position of the Company and its Subsidiaries on the date
thereof and the consolidated results of operations and changes in financial
position of the Company and its Subsidiaries for the period then ended, all in
conformity with GAAP. Except for transactions related to or contemplated by the
Loan Papers and transactions disclosed in Forms 10-Q and 8-K that the Company
shall have filed with the Securities and Exchange Commission before the
Effective Date, there has been no Material Adverse Change since December 31,
2008.

Section 5.3 Compliance with Agreement and Laws. On the Effective Date, neither
the Company nor any of its Material Subsidiaries is in default in any material
respect under the provisions of any instrument evidencing any material
obligation, indebtedness, or liability of the Company or any of its Material
Subsidiaries or of any agreement relating thereto. Neither the Company nor any
of its Material Subsidiaries is in violation of any Law, which default or
violation would have a Material Adverse Effect.

Section 5.4 Authorization; No Breach; and Valid Agreements. The execution,
delivery, and performance of this Agreement, the borrowings hereunder, and the
execution, delivery, and performance of the other Loan Papers by the Company
have been duly authorized by all requisite corporate action on the part of the
Company and will not violate its charter or bylaws and will not violate any Law
or any order of any Tribunal, and will not conflict with, result in a breach of
the provisions of or constitute a default under, or result in the imposition of
any Lien upon the Property of the Company pursuant to the provisions of, any
material loan agreement, credit agreement, indenture, mortgage, deed of trust,
franchise, permit, license, note, contract, or other material agreement or
instrument to which the Company is now a party. The Loan Papers that include
obligations of the Company are the valid and binding obligations of the Company
and are enforceable in accordance with their respective terms.

Section 5.5 Litigation and Judgments. Except as previously disclosed to the
Administrative Agent in writing, neither the Company nor any of its Subsidiaries
is either party to or aware of the threat of any Litigation which has, in the
Company’s opinion, a reasonable probability of success and which, if determined
adversely to the Company or such Subsidiary, would have a Material Adverse
Effect. To the knowledge of the Company, on the Effective Date there is no
outstanding unsatisfied money judgment against the Company or any of its
Subsidiaries in an amount in excess of $50,000,000, and there are no outstanding
unsatisfied money judgments against the Company or any of its Subsidiaries which
individually or in the aggregate have or would have a Material Adverse Effect.

Section 5.6 Ownership of Properties. The Company and each of its Material
Subsidiaries has good and marketable title (except for Permitted Liens) to all
of the Pool Assets, and owns or has valid leasehold (or, in the case of
Intellectual Property, license) interests in all of its other material
Properties which are owned or used in connection with its business.

Section 5.7 Taxes. To the extent that failure to do so would have a Material
Adverse Effect, the Company and each of its Material Subsidiaries has filed all
Tax returns or reports required of it and has paid all Tax liability shown
thereon as due to the extent the same has become due and before it may have
become delinquent (except to the extent being contested in good faith by
appropriate proceedings and for which adequate reserves have been established).
As of the Effective Date, the federal income tax liability of the Company and
its Subsidiaries has been audited by the Internal Revenue Service and has been
finally determined and satisfied for all taxable years up to and including the
taxable year ended December 31, 2004.

Section 5.8 Approvals Required. Neither the execution and delivery of this
Agreement and the other Loan Papers by the Company, nor the consummation by the
Company of any of the transactions contemplated hereby or thereby requires the
consent or approval of, the giving of notice to, or

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the registration, recording, or filing of any document with, or the taking of
any other action in respect of any Tribunal except for the routine filing of
copies of this Agreement and certain other Loan Papers with the Securities and
Exchange Commission, except for any of the foregoing required of any Bank or
Agent.

Section 5.9 Business; Status as Air Carrier. The Company is an air carrier
engaged in scheduled air transportation and is in all material respects duly
qualified and licensed under all applicable Laws to carry on its business as a
scheduled airline currently subject to regulation by the Federal Aviation
Administration and the Department of Transportation.

Section 5.10 ERISA Compliance. The Company is in compliance in all material
respects with ERISA and the rules and regulations thereunder. No Plan of the
Company has materially failed to satisfy the “minimum funding standards” of
ERISA or is in “at risk” status (within the meaning of ERISA).

Section 5.11 Insurance. The Company maintains with insurance companies or
associations of recognized responsibility (or, as to workers’ compensation or
similar insurance, with an insurance fund or by self-insurance authorized by the
jurisdictions in which it operates) insurance concerning its Properties and
businesses against such casualties and contingencies and of such types and in
such amounts (and with co-insurance, self-insurance and deductibles) as is
customary in the case of same or similar businesses.

Section 5.12 Purpose of Loan. The proceeds of the Loans will be used for general
corporate purposes, including acquisitions, and no part of the proceeds of any
Loan will be used for any purpose which would violate, or be inconsistent with,
any of the margin regulations of the Board.

Section 5.13 Investment Company Act. Neither the Company nor any of its
Subsidiaries is an “investment company”, or a company “controlled” by an
“investment company”, within the meaning of the Investment Company Act of 1940,
as amended.

Section 5.14 General. As of the Effective Date, there is no material fact or
condition relating to the Loan Papers or the financial condition and business of
the Company and its Subsidiaries which has a Material Adverse Effect and which
has not been related, in writing, to the Administrative Agent, other than
industry-wide risks in the ordinary course of business associated with the types
of business conducted by the Company and its Subsidiaries. All writings
exhibited or delivered to any of the Agents and Banks by or on behalf of the
Company are and will be genuine and in all material respects what they purport
and appear to be.

ARTICLE VI

COVENANTS

So long as the Company may borrow hereunder and until the Obligations have been
paid in full, the Company covenants as follows:

Section 6.1 Performance of Obligations. The Company shall duly and punctually
pay and perform each of the Obligations under this Agreement and the other Loan
Papers under which the Company has Obligations.

Section 6.2 Compliance with Laws. The Company shall comply, and shall cause each
of its Material Subsidiaries to comply, in all material respects with all
applicable Laws, except for any noncompliance which individually or in the
aggregate would not have a Material Adverse Effect, and

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such compliance shall include, without limitation, paying before the same become
delinquent all Taxes imposed upon the Company or any of its Material
Subsidiaries or its or their Properties, except to the extent contested
diligently and in good faith by proper proceedings, and for which adequate
reserves are established in accordance with GAAP.

Section 6.3 Maintenance of Existence, Licenses and Franchises: Compliance With
Agreements. Except to the extent otherwise permitted in Article VI, the Company
shall maintain, and shall cause each of its Material Subsidiaries to maintain,
its existence, and the Company shall preserve and maintain, and shall cause each
of its Material Subsidiaries to preserve and maintain, all material licenses,
privileges, franchises, certificates, authorizations, and other permits and
agreements necessary for the operation of its business. The Company shall
comply, and shall cause each of its Material Subsidiaries to comply, with all
material agreements binding on it or affecting its properties or business,
except for any noncompliance which individually or in the aggregate would not
have a Material Adverse Effect.

Section 6.4 Maintenance of Properties. The Company shall, and shall cause each
of its Material Subsidiaries to, cause all of its Properties used or useful in
the conduct of its business to be maintained and kept in good condition, repair,
and working order, and supplied with all necessary equipment, and cause to be
made all necessary repairs, renewals, replacements, betterments, and
improvements thereof, all as in the judgment of the Company may be necessary so
that the business carried on in connection therewith may be properly and
advantageously conducted at all times. Subject to the provisions of this
Section 6.4, the Company shall, at its expense, maintain, service, repair,
overhaul, improve, and rebuild the Aircraft so as to keep all Aircraft in as
good a condition as presently exists or as when acquired by the Company if any
Aircraft are hereafter acquired (in each case, ordinary wear and tear excepted),
and as required to meet, no later than the applicable termination date (i.e.,
the date by which compliance with such standards is required), the
air-worthiness standards of the Federal Aviation Administration and the
Department of Transportation (to the extent such standards are applicable to the
Aircraft) or the standards observed by the Company with respect to Property of
similar type, whichever is higher. The Company shall maintain, service, repair
and overhaul the Aircraft in compliance with its Federal Aviation
Administration’s approved maintenance program. The Company shall comply with all
Laws of Tribunals having jurisdiction over the Company or the Aircraft,
including all applicable requirements of the Federal Aviation Administration and
the Department of Transportation as to operation, maintenance, or use of the
Aircraft, except non-compliance shall be permitted in the case of immaterial or
non-recurring violations with respect to which corrective measures are taken
promptly upon discovery thereof. In the event that any such Law requires
alteration of any Aircraft, the Company shall conform thereto or obtain
conformance therewith at no expense to the Agents or the Banks no later than the
applicable termination date (i.e., the date by which such alteration is
required) and will maintain such Aircraft in good operating condition under such
Laws; provided, however, that the Company may, in good faith, contest the
validity or application of any such Law in any reasonable manner. As to any
Aircraft, nothing in this Section 6.4 shall prohibit the Company from placing
such Aircraft in storage in accordance with the Company’s standard storage
procedures.

Section 6.5 Maintenance of Books and Records. The Company shall, and shall cause
each of its Subsidiaries to, maintain proper books of record and account in
which full, true, and correct entries in accordance with GAAP consistently
applied (except for any change with which the Company’s independent auditors
concur) will be made of all dealings and transactions in relation to their
business and activities.

Section 6.6 Inspection. At reasonable times and upon reasonable notice, the
Company shall permit, and shall cause each of its Material Subsidiaries to
permit, any employees and other representatives of the Administrative Agent or
any Bank to visit and inspect any Properties, to examine

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all books of account, records, reports, and other papers, to make copies and
extracts therefrom (subject to any confidentiality agreements, copyright
restrictions, and similar limitations), and to discuss the Company’s and
Material Subsidiaries’ affairs, finances, Properties, condition (financial or
otherwise) and accounts with the Company’s and Material Subsidiaries’ officers,
employees and independent certified public accountants, at such times and as
often as may be reasonably requested; provided, however, that (a) any such
inspection of Aircraft shall be limited to the Pool Assets unless a Default or
Event of Default has occurred and is continuing, (b) any such inspection which
includes Aircraft shall be a visual, walk-around inspection and may not include
opening any panels, bays or the like of any Aircraft, (c) no exercise of any
inspection rights provided for in this Section 6.6 shall interfere with the
normal operation or maintenance of the Aircraft by, or the business of, the
Company, and (d) the Administrative Agent and each Bank shall cause their
respective employees and representatives to hold in strict confidence all
information acquired pursuant to such Agent’s or Bank’s Rights under this
Section 6.6, except for necessary disclosure to participants in the Loans or
Commitments, disclosure in connection with disputes relating to the Loan Papers,
or disclosure compelled by judicial or administrative process or by other
requirements of Law.

Section 6.7 Insurance. The Company shall maintain insurance on its Properties
with insurers of recognized standing in such amounts (including by way of
self-insurance) as it determines to be prudent and consistent with its insurance
and loss prevention policies, and in such forms and covering such risks as may
then be customary with airlines of a comparable credit standing flying equipment
and routes comparable to the Company. Without in any way limiting the foregoing,
the Company shall maintain such insurance on the Aircraft, including “all-risk”
hull insurance and aviation liability insurance.

Section 6.8 Appraisals. On each Appraisal Delivery Date, the Company shall
submit an Appraisal of the Pool Assets to the Administrative Agent (for onward
distribution to the Banks) as of the date which is no more than 30 days prior to
such Appraisal Delivery Date; provided that the Appraisal to be delivered on the
Effective Date may be dated as of August 4, 2009; and provided, however, that if
such Appraisal is to be delivered on such Appraisal Delivery Date as a
consequence of clause (c) of the definition thereof, the Appraisal to be
delivered on such date shall only be in respect of the assets to be removed from
and/or added to the Pool Assets.

Section 6.9 Coverage Ratio. The Company shall maintain at all times a Coverage
Ratio of not less than 1.25 to 1.0.

The Company shall have the option to reduce the required Coverage Ratio to 0.80
to 1.0 for two consecutive fiscal quarters by written notice to the Banks. If
such notice is given, the Company shall be irrevocably obligated to pay to each
Bank a quarterly fee equal to 0.25% of such Bank’s Commitment for each quarter
(with the amount of such Commitment being determined on an average basis if such
Commitment has changed during such quarter), payable on each date on which
financial statements for the two relevant fiscal quarters are required to be
delivered; provided that (i) such option may be exercised no more than once
between the Effective Date and the Termination Date and (ii) such fee shall be
payable in respect of any quarter only if the Coverage Ratio for such quarter is
less than 1.25 to 1.0.

Section 6.10 Reporting Requirements. The Company shall furnish to the
Administrative Agent (with sufficient copies for each Bank):

(a) Within 120 days after the last day of each fiscal year of the Company,
Financial Statements (it being understood that delivery of the Company’s annual
report on Form 10-K for any fiscal year as filed with the Securities and
Exchange Commission pursuant to the Securities

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41

 

Exchange Act of 1934, as amended, will satisfy this requirement with respect to
such fiscal year) showing the consolidated financial condition and results of
operations of the Company and its Subsidiaries as of, and for the year ended on,
such last day, accompanied by (i) the opinion, without material qualification,
of Auditors, based on an audit using generally accepted auditing standards, that
such Financial Statements were prepared in accordance with GAAP and present
fairly the consolidated financial condition and results of operations of the
Company and its consolidated Subsidiaries and (ii) a Financial Report
Certificate;

(b) Within 60 days after the last day of each of the first three fiscal quarters
of the Company (i) Financial Statements showing the consolidated financial
condition and results of operations of the Company and its consolidated
Subsidiaries as of. and for the period from the beginning of the current fiscal
year to, such last day (it being understood that delivery of the Company’s
quarterly report on Form 10-Q for any fiscal quarter as filed with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended, will satisfy this requirement with respect to such fiscal
quarter and, if applicable, the portion of the Company’s fiscal year ended at
the end of such quarter), and (ii) a Financial Report Certificate;

(c) (i) Promptly after mailing, true copies of all reports, statements,
documents, plans, and other written communications furnished by or on behalf of
the Company or any of its Subsidiaries to stockholders generally and
(ii) promptly upon the filing thereof, copies of all registration statements
(other than the exhibits thereto and any registration statements on Form S-8 or
its equivalent) and reports on Forms 10-K, 10-Q and 8-K (or their equivalents)
which the Company shall have filed with the Securities and Exchange Commission;

(d) Notice, promptly after the Company or any of its Material Subsidiaries knows
or has reason to know of a Default or Event of Default, specifying the nature
thereof and what action the Company or any Subsidiary has taken, is taking, or
proposes to take with respect thereto;

(e) Prompt notice of any legal or arbitral proceedings, and of all proceedings
by or before any governmental or regulatory authority or agency, and any
material development in respect of such legal or other proceedings, affecting
the Company, except proceedings which, if adversely determined, would not have a
Material Adverse Effect or proceedings with respect to which the Company, in
good faith and upon consultation with outside counsel, believes an adverse
determination in respect thereof to be unlikely; and

(f) Promptly upon the Administrative Agent’s reasonable request, such other
relevant information (not otherwise required to be furnished under the Loan
Papers) respecting the business affairs, assets, and liabilities of the Company
and any of its Material Subsidiaries.

In the case of paragraphs (a), (b) and (c) above (other than the Financial
Report Certificate) the Company may satisfy the reporting requirements in
respect thereof by making the documents referred to therein available to the
Banks on its website. Notwithstanding the foregoing, the Company shall deliver
hard copies of any such documents to any Bank that notifies the Company that
such delivery is required by any Laws applicable to such Bank.

Section 6.11 Use of Proceeds. Proceeds advanced hereunder shall be used only as
represented herein.

Section 6.12 Pool Assets. The Company (i) will ensure that the Appraised Value
of the Pool Assets shall satisfy the Collateral Coverage Test (based upon the
most recent Appraisal delivered to the Administrative Agent and the Banks
pursuant to the provisions of Section 6.8), and (ii) will not

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convey, sell, lease, transfer or otherwise dispose of, whether voluntarily or
involuntarily (it being understood that loss of property due to theft,
destruction, confiscation, prohibition on use or similar event shall constitute
a disposal for purposes of this covenant), or remove or substitute, any Pool
Asset (or any engine included in the Pool Assets unless such engine is replaced
by another working engine or engines of comparable value, assuming half-time
condition) or agree to do any of the foregoing in respect of the Pool Assets at
any future time, except that:

(a) so long as no Event of Default exists, the Company may replace a Pool Asset
with another asset of the Company (and Schedule II shall be modified to reflect
such replacement), provided that (A) such replacement shall be made on at least
a dollar-for-dollar basis based upon (x) in the case of the asset being removed
from the Pool Assets, the Appraised Value of such Pool Asset (as determined by
the most recently delivered Appraisal with respect to such Pool Asset) and
(y) in the case of the asset being added to the Pool Assets, the Appraised Value
of such asset (as determined by an Appraisal performed at the time of such
replacement), and (B) prior to effecting the replacement, the Company shall have
delivered an Officer’s Certificate to the Administrative Agent certifying
compliance with this Section 6.12 and attaching to such certificate the
Appraisal required by Section 6.8;

(b) so long as no Event of Default exists or would result therefrom, the Company
may remove an asset from the Pool Assets (and Schedule II shall be modified to
reflect such removal), provided that (A) after giving effect to such removal,
the Appraised Value of the remaining Pool Assets (as determined by an Appraisal
of all Pool Assets performed at the time of such removal) shall satisfy the
Collateral Coverage Test, and (B) prior to effecting the removal, the Company
shall have delivered an Officer’s Certificate to the Administrative Agent
certifying that, and providing calculations demonstrating that, after giving
effect to such removal, the Appraised Value of the Pool Assets shall satisfy the
Collateral Coverage Test, and otherwise certifying compliance with this
Section 6.12 and attaching to such certificate Appraisals of all Pool Assets
obtained in connection with such removal; and

(c) in the event (x) that an Appraisal furnished pursuant to Section 6.8
discloses that the Collateral Coverage Test is not satisfied or (y) the
Collateral Coverage Test is not satisfied following an involuntary disposal of
any Pool Asset (or any engine included in the Pool Assets unless such engine is
replaced by another working engine or engines of comparable value, assuming
half-time condition) (whether by loss of property due to theft, destruction,
confiscation, prohibition on use, any similar event or otherwise), based upon
the most recent Appraisal of the Pool Assets (from which the appraised values of
the Pool Assets which are the subject of the involuntary disposition shall be
subtracted) furnished pursuant to Section 6.8, the Company shall within 60 days
after the date of such Appraisal or involuntary disposal, as the case may be,
designate additional assets as Pool Assets to the extent that, after giving
effect to such designation the Appraised Value of the Pool Assets, based on the
most recently delivered Appraisal with respect to assets already constituting
Pool Assets and based on an Appraisal performed at the time of such addition
with respect to assets being added to Pool Assets, shall satisfy the Collateral
Coverage Test (and Schedule II shall be modified to reflect such addition),
provided that (A) at the time of such addition, the Administrative Agent and the
Banks shall have received an Officer’s Certificate certifying that the
conditions set forth in this Section 6.12 shall have been satisfied after giving
effect to such addition and attaching thereto such Appraisal, and (B) the asset
being added shall constitute Stage 3 Equipment.

Section 6.13 Restrictions on Liens. (a) The Company will not, nor will it permit
any Subsidiary to, create, assume or suffer to exist any Lien upon or with
respect to the Pool Assets, or enter into any arrangement with any Person that
would materially negatively impact the value of any Pool

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Asset realizable by any third party or assign any right to receive the proceeds
from the sale, transfer or disposition of any of the Pool Assets, or file or
authorize the filing with respect to any of the Pool Assets of any financing
statement naming the Company or any Subsidiary as debtor under the Uniform
Commercial Code or any similar notice of Lien naming the Company or any
Subsidiary as debtor under any similar recording or notice statute (including,
without limitation, any filing under Title 49, United States Code,
Section 44107), other than Permitted Liens affecting Pool Assets.

(b) The Company will not enter into or suffer to exist, and will not permit any
of its Subsidiaries to enter into or suffer to exist, any agreement prohibiting
or conditioning the creation or assumption of any Lien upon any Pool Asset.

Section 6.14 Mergers and Dissolutions. The Company will not merge or consolidate
with any Person other than any merger or consolidation whereby the Company is
the surviving corporation and no Default or Event of Default exists or would
result therefrom. The Company will not liquidate, wind up, or dissolve itself
(or suffer any liquidation or dissolution).

Section 6.15 Assignment. The Company will not assign or transfer any of its
Rights, duties, or obligations under any of the Loan Papers.

ARTICLE VII

EVENTS OF DEFAULT; REMEDIES

Section 7.1 Events of Default. Any one or more of the following events shall be
“Events of Default” hereunder (which shall include by definition the expiration
of any grace period with respect thereto), whether the same shall occur and be
continuing for any reason whatsoever (and whether such occurrence shall be
voluntary or involuntary or come about or be effected by operation of Law or
otherwise):

(a) Payment of Obligation. Failure to pay any installment of principal on any
Loan or any Reimbursement Obligation when due whether at maturity, by
declaration as authorized by this Agreement, or otherwise; or failure to pay,
within 5 Business Days after the due date thereof, any interest on any Loan or
any Reimbursement Obligation; or failure to pay, within 5 Business Days after
the due date thereof, or if no due date therefor is herein specified within 5
Business Days after written demand therefor is given to the Company by the
Administrative Agent, any fee or other amount payable by the Company hereunder
or under any of the other Loan Papers.

(b) Covenants. Default shall be made in the observance or performance of any
other of the covenants, conditions, and agreements on the part of the Company
contained herein, or in any other Loan Papers and such default shall continue
for a period of 30 days (or, in the case of Section 6.9, 5 Business Days) after
the Administrative Agent shall have given the Company notice thereof in writing.

(c) Debtor Relief. The Company or any Material Subsidiary shall file a voluntary
petition in bankruptcy or a petition or answer seeking reorganization,
arrangement, composition, liquidation, receivership, or similar relief under any
Debtor Relief Law, or shall file a petition to take advantage of any Debtor
Relief Law, or shall make an assignment for the benefit of creditors, or shall
admit in writing its inability to pay its debts as they become due, or shall
fail generally to pay its debts as they become due, or shall consent to the
appointment of any receiver, trustee, custodian or liquidator of it or all or a
substantial part of its Property; or a proceeding or action shall be instituted
or commenced against the Company or any Material Subsidiary seeking

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an order for relief or a reorganization, arrangement, composition, liquidation,
receivership, or similar relief under any Debtor Relief Law or seeking the
appointment, without the consent of the Company or any Material Subsidiary, of
any receiver, trustee, custodian or liquidator of it or all or a substantial
part of the Property of the Company or any Material Subsidiary and such
proceeding or action shall remain undismissed or unstayed for a period of 90
days; or an order, decree, or judgment for an involuntary petition adjudicating
the Company or any Subsidiary insolvent shall be entered by any court of
competent jurisdiction and shall remain undismissed or unstayed for a period of
90 days.

(d) Payment of Judgments. The Company or any of its Material Subsidiaries fails
to pay any judgment or order for the payment of money in excess of $50,000,000
rendered against it or any of its assets (exclusive of judgment amounts fully
covered by insurance where the insurer has admitted liability in respect
thereof) and either (i) any enforcement proceedings shall have been commenced by
any creditor upon such judgment or order or (ii) the same shall not be
discharged (or provisions shall not be made for such discharge), or a stay of
execution thereof shall not be procured, within 30 days from the date of entry
thereof and the Company or the relevant Material Subsidiary shall not, within
said period of 30 days, or such longer period during which execution of the same
shall have been stayed, appeal therefrom and cause the execution thereof to be
stayed during such appeal.

(e) Default on Other Debt or Security. The Company or any Material Subsidiary
shall (i) fail to pay any principal of or interest on any Debt (other than the
Obligation) the principal or face amount of which exceeds $50,000,000 when due
(or, where permitted, within any applicable grace period), whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise and such
default continues unremedied for five Business Days after such due date or
applicable grace period, or (ii) fail to perform or observe any other provision
(other than a provision that is substantially identical to a provision in this
Agreement) contained in any agreement securing or relating to such Debt (or any
other breach or default under such Debt agreement occurs) if the effect of such
failure to perform or observe such other provisions (or breach or default) is to
cause such Debt to become due prior to its stated maturity; provided, however,
that if any such failure, breach or default shall be waived or cured (as
evidenced by a writing from such holder or trustee) then, to the extent of such
waiver or cure, the Event of Default hereunder by reason of such failure, breach
or default shall be deemed likewise to have been thereupon waived or cured.

(f) ERISA. Any “Reportable Event” as such term is defined in ERISA under any
Plan, or the appointment by an appropriate Tribunal of a trustee to administer
any Plan, or the termination of any Plan within the meaning of Title IV of
ERISA, and any of the foregoing results in a material liability to the Pension
Benefit Guaranty Corporation; or any Plan fails to satisfy the “minimum funding
standards” of ERISA or is determined to be in “at risk” status (within the
meaning of ERISA).

(g) Misrepresentation. Any representation or warranty made by the Company is
untrue in any material respect, or any certificate, schedule, statement, report,
notice or writing (excluding any Appraisal, for which the Company makes no
representation) furnished by the Company to the Agents or to the Banks, or any
of them, is untrue in any material respect on the date as of which the facts set
forth are stated or certified, shall remain material at the time of discovery
and shall, if curable, remain incorrect in any material respect after 30 days
after written notice thereof to the Company (any failure to include within any
such schedule, statement, report, notice, or writing information which failure
would cause the material included to be misleading shall be as much an untruth
as a false statement contained therein).

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Section 7.2 Remedies Upon Default. If an Event of Default specified in
Section 7.l(c) occurs, the Commitments of the Banks shall thereupon
automatically terminate and the aggregate unpaid principal balance of and
accrued interest on the Obligation shall thereupon become due and payable
concurrently therewith, without any action by the Administrative Agent or any
Bank and without diligence, presentment, demand, protest, notice of protest or
intent to accelerate, or notice of any other kind, all of which are hereby
expressly waived. Except as set forth in the preceding sentence, should any
other Event of Default occur and be continuing, the Administrative Agent may,
and if requested by the Majority Banks, shall, do any one or more of the
following:

(a) Acceleration. Declare (by written notice to the Company) the entire unpaid
balance of the Obligation, or any part thereof, immediately due and payable,
whereupon it shall be due and payable, without diligence, presentment, demand,
protest, notice of protest or intent to accelerate, or other notice of any kind
(except any notice or demand specified in this Agreement), all of which are
hereby expressly waived.

(b) Termination. Terminate the Commitments by written notice to the Company.

(c) Judgment. Reduce any claim to judgment.

(d) Rights. Exercise any and all legal and equitable Rights available to it.

With respect to all Letters of Credit with respect to which presentment for
honor shall not have occurred at the time of an acceleration pursuant to this
Section 7.2, the Company shall, upon any such acceleration, deposit in a cash
collateral account opened by the Administrative Agent an amount equal to the
aggregate then undrawn and unexpired amount of such Letters of Credit. Amounts
held in such cash collateral account shall be applied by the Administrative
Agent to the payment of drafts drawn under such Letters of Credit, and the
unused portion thereof after all such Letters of Credit shall have expired or
been fully drawn upon, if any, shall be applied to repay other obligations of
the Company hereunder and under the other Loan Papers. After all such Letters of
Credit shall have expired or been fully drawn upon, all Reimbursement
Obligations shall have been satisfied and all other obligations of the Company
hereunder and under the other Loan Papers shall have been paid in full, the
balance, if any, in such cash collateral account shall be returned to the
Company (or such other Person as may be lawfully entitled thereto).

Section 7.3 Remedies in General. If any Event of Default shall occur and be
continuing, the Administrative Agent may immediately proceed to protect and
enforce all or any Rights with respect thereto contained in this Agreement or
any other Loan Papers or may enforce any other legal or equitable Rights. Any
Right may be exercised from time to time, independently or concurrently, and as
often as shall be deemed expedient. No waiver of any Event of Default shall
extend to any subsequent Event of Default.

ARTICLE VIII

THE AGENTS

Section 8.1 Authorization and Action. Each Bank hereby irrevocably appoints and
authorizes (a) JPMorgan Chase Bank, N.A. to act as its Administrative Agent
hereunder and under each of the other Loan Papers, (b) Citibank, N.A. to act as
Syndication Agent hereunder and (c) Barclays Bank PLC, Deutsche Bank Securities
Inc., Goldman Sachs Bank USA and Morgan Stanley Bank, N.A. to act as
Documentation Agents hereunder. JPMorgan Chase Bank, N.A. consents to such
appointment and agrees to perform the duties of the Administrative Agent
hereunder and under the other Loan Papers. Citibank,

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N.A. consents to such appointment and agrees, in consultation with the Company
and the Administrative Agent, to select a syndicate of Banks to participate in
the Commitments. Each Bank authorizes and directs the Administrative Agent to
act on its behalf and to exercise such powers under this Agreement as are
specifically delegated to or required of such Agent by the terms hereto,
together with such powers as are reasonably incidental thereto. As to any
matters not expressly provided for by this Agreement or the other Loan Papers
(including, without limitation, enforcement or collection of the Loans or
Notes), the Administrative Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Majority Banks, and such instructions shall be
binding upon all Banks and all holders of Loans or Notes; provided, however,
that no Agent shall be required to take any action which exposes such Agent to
personal liability or which is contrary to this Agreement or applicable Law.

Section 8.2 Agents’ Reliance, Etc. None of the Agents and none of their
respective Affiliates, directors, officers, agents, or employees shall be liable
for any action taken or omitted to be taken by it or them under or in connection
with the Loan Papers (i) with the consent or at the request of the Majority
Banks (or all the Banks, if required) or (ii) in the absence of its or their own
gross negligence or willful misconduct (it being the express intention of the
parties that the Agents and their respective directors, officers, agents, and
employees shall have no liability for actions and omissions under this
Section 8.2 resulting from their ordinary contributory negligence). Without
limitation of the generality of the foregoing, each Agent (i) may treat the
payee of each Loan or Note as the holder thereof until such Agent receives
written notice of the assignment or transfer thereof signed by such payee and in
form satisfactory to such Agent; (ii) may consult with legal counsel (including
counsel for the Company), independent public accountants, and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with the advice of such counsel,
accountants, or experts; (iii) makes no warranty or representation to any Bank
and shall not be responsible to any Bank for any statements, warranties, or
representations made by or on behalf of the Company in or in connection with any
Loan Paper; (iv) except as otherwise expressly provided herein, shall not have
any duty to ascertain or to inquire as to the performance or observance of any
of the terms, covenants, or conditions of any Loan Paper or to inspect the
property (including the books and records) of the Company or any of its
Subsidiaries; (v) shall not be responsible to any Bank for the due execution,
legality, validity, enforceability, genuineness, sufficiency, or value of any
Loan Paper or any other instrument or document furnished pursuant hereto or
thereto; and (vi) shall incur no liability under or in respect of any Loan Paper
by acting upon any notice, consent, certificate, or other instrument or writing
(which may be by telecopier) reasonably believed by it to be genuine and signed
or sent by the proper party or parties.

Section 8.3 Rights of Agents as Banks. With respect to their Commitments, the
Loans, if any, made by them and the Notes, if any, issued to them, each Bank
that is an Agent (including any Agent that hereafter becomes a holder of a Loan
or Note) and its Affiliates shall have the same rights and powers under this
Agreement or any other Loan Paper as any other Bank and may exercise the same as
though it were not an Agent; and the term “Bank” or “Banks” shall, unless
otherwise expressly indicated, include each Bank that is an Agent (including any
Agent that hereafter becomes a holder of a Loan or Note), in its individual
capacity. Each Bank that is an Agent (including any Agent that hereafter becomes
a holder of a Loan or Note) and its Affiliates may accept deposits from, lend
money to, act as trustee under indentures of, and generally engage in any kind
of business with, the Company, any of the Subsidiaries and any Person who may do
business with or own securities of the Company or of the Subsidiaries, all as if
such Bank were not an Agent, and without any duty to account therefor to the
Banks.

Section 8.4 Bank Credit Decision. Each Bank acknowledges and agrees that it has,
independently and without reliance upon any of the Agents or any other Bank and
based on the Current Financials and such other documents and information as it
has deemed appropriate, made its own credit

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analysis and decision to enter into this Agreement. Each Bank also acknowledges
and agrees that it will, independently and without reliance upon any of the
Agents or any other Bank and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement.

Section 8.5 Agents’ Indemnity. None of the Agents shall be required to take any
action hereunder or to prosecute or defend any suit in respect of this Agreement
or the Loans or Notes unless indemnified to such Agent’s satisfaction by the
Banks against loss, cost, liability, and expense. If any indemnity furnished to
such Agent shall become impaired, it may call for additional indemnity and cease
to do the acts indemnified against until such additional indemnity is given. In
addition, the Banks agree to indemnify the Administrative Agent (to the extent
not reimbursed by the Company), ratably according to the respective principal
amounts of the Committed Loans then held by each of them (or if no Committed
Loans are at the time outstanding, ratably according to either (i) the
respective amounts of their Commitments, or (ii) if the Commitments have
terminated, the respective amounts of the Commitments immediately prior to such
termination; provided that, in the case of Section 2.23, when a Defaulting Bank
shall exist, any such Defaulting Bank’s Commitment shall be disregarded in the
calculation), from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses, or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by, or
asserted against such Agent in any way relating to or arising out of this
Agreement or any action taken or omitted by such Agent under this Agreement or
the other Loan Papers (including, without limitation, any action taken or
omitted under ARTICLE II of this Agreement); provided that no Bank shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses, or disbursements
resulting from such Agent’s fraud, gross negligence or willful misconduct. Each
Bank agrees, however, that it expressly intends, under this Section 8.5, to
indemnify each Agent ratably as aforesaid for all such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses, and
disbursements arising out of or resulting from such Agent’s ordinary or
contributory negligence. Without limitation of the foregoing, each Bank agrees
to reimburse the Administrative Agent promptly upon demand for its ratable share
of any out-of-pocket expenses (including reasonable counsel fees) incurred by
such Agent in connection with the preparation, execution, administration, or
enforcement of, or legal advice in respect of rights or responsibilities under,
this Agreement and the other Loan Papers to the extent that such Agent is not
reimbursed for such expenses by the Company. The provisions of this Section 8.5
shall survive the termination of this Agreement and/or the payment or assignment
of any of the Loans or Notes.

Section 8.6 Successor Administrative Agent. The Administrative Agent may resign
at any time by giving written notice thereof to the Banks and the Company and
may be removed as Administrative Agent under this Agreement and the other Loan
Papers at any time with or without cause by the Majority Banks. Upon any such
resignation or removal, the Majority Banks shall have the right, with the
consent of the Company (provided that the Company’s consent shall not be
required during the continuance of a Default or an Event of Default), to appoint
a successor Administrative Agent. If no successor Administrative Agent shall
have been so appointed and shall have accepted such appointment within 30
calendar days after the retiring Administrative Agent’s giving notice of
resignation or the Majority Banks’ removal of the retiring Administrative Agent,
then the retiring Administrative Agent may, on behalf of the Banks, with the
consent of the Company (provided that the Company’s consent shall not be
required during the continuance of a Default or Event of Default), appoint a
successor Administrative Agent, which shall be a commercial bank organized under
the Laws of the United States of America or of any state thereof and having a
combined capital and surplus of at least $500,000,000. Upon the acceptance of
any appointment as Administrative Agent hereunder and under the other Loan
Papers by a successor Administrative Agent, such successor Administrative Agent
shall thereupon succeed to and become vested with all rights, powers, privileges
and duties of the retiring Administrative Agent, and the retiring Administrative
Agent shall be discharged from its duties and obligations under

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this Agreement and the other Loan Papers. After any retiring Administrative
Agent’s resignation or removal as the Administrative Agent hereunder and under
the other Loan Papers, the provisions of this Article VIII shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was the
Administrative Agent under this Agreement and the other Loan Papers.

Section 8.7 Notice of Default. The Administrative Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Administrative Agent shall have received notice from a Bank
or the Company referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a “notice of default.” If the
Administrative Agent receives such a notice, the Administrative Agent shall give
notice thereof to the Banks; provided, however, if such notice is received from
a Bank, the Administrative Agent also shall give notice thereof to the Company.
The Administrative Agent shall be entitled to take action or refrain from taking
action with respect to such Default or Event of Default as provided in
Section 8.1 and Section 8.2.

Section 8.8 Documentation Agents and Syndication Agent. Neither the
Documentation Agents nor the Syndication Agent shall have any duties or
responsibilities hereunder in its capacity as such.

ARTICLE IX

MISCELLANEOUS

Section 9.1 Amendments, Etc No amendment or waiver of any provision of this
Agreement or any other Loan Paper, nor consent to any departure by the Company
herefrom or therefrom, shall in any event be effective unless the same shall be
in writing and signed by the Majority Banks (or the Administrative Agent with
the consent of the Majority Banks) in all cases, and then, in any case, such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that no amendment, waiver,
or consent shall, unless in writing and signed by each Bank directly affected
thereby (or the Administrative Agent with the consent of all the Banks), do any
of the following: (a) increase the amount of the Commitments of any Banks or
subject any Banks to any additional obligations, (b) reduce the principal of, or
rate or amount of interest applicable to, any Loan other than as provided in
this Agreement, or any fees hereunder, (c) postpone any date fixed for any
payment of principal of, or interest on, the Loans or any fees hereunder,
(d) eliminate or reduce the voting rights of any Bank under this Section 9.1, or
(e) change the percentage of the Commitments or of the aggregate unpaid
principal amount of the Loans, or the number of Banks, which shall be required
for the Banks or any of them to take any action hereunder; provided, further,
that no amendment waiver, or consent shall modify or waive any provision of
Section 2.23, Article III or Section 4.4 without the written consent of the
Issuing Bank; and provided, further, that no amendment, waiver, or consent
shall, unless in writing and signed by the Administrative Agent in addition to
the Banks required above to take such action, affect the rights or duties of the
Administrative Agent under this Agreement or any other Loan Paper, or modify or
waive any provision of Section 2.23.

Section 9.2 Notices, Etc. Any Agent, any Bank, or the holder of any Loan or Note
giving consent or notice or making any request of the Company provided for
hereunder, shall notify each Bank and the Administrative Agent thereof. In the
event that the holder of any Loan or Note (including any Bank) shall transfer
such Loan or Note, it shall promptly so advise the Administrative Agent which
shall be entitled to assume conclusively that no transfer of any Loan or Note
has been made by any holder (including any Bank) unless and until such Agent
receives written notice to the contrary. Notices, consents, requests, approvals,
demands, and other communications (collectively “Communications”) provided for
herein shall be in writing (including telecopy Communications) and mailed,
telecopied or delivered:

(a) If to the Company, to it at:

Southwest Airlines Co.

P.O. Box 36611

Love Field

Dallas, Texas 75235

Telecopy Number: (214) 932-1328

Attention: Scott Topping

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(b) If to the Administrative Agent, to it at:

JPMorgan Chase Bank Loan and Agency Service

1111 Fannin, 10th Floor

Houston, Texas 77002

Telecopy Number: (713) 750-2938

Attention: Lawrence Chin

with a copy to (other than in the case of funding matters):

JPMorgan Chase Bank, N.A.

270 Park Avenue

New York, New York 10017

Telecopy Number: (212) 270-5100

Attention: Matthew Massie

(c) If to any Bank or any other Agent, as specified on Schedule I hereto or, in
the case of any party, such other address or telecopy number as such party may
hereafter specify for such purpose by notice to the other parties. All
Communications shall, when mailed, telecopied or delivered, be effective and
shall be deemed to have been duly given when sent by telecopier to any party or
the telecopier number as set forth herein or on the signature pages hereof (or
other telecopy number designated by such party in a written notice to the other
parties hereto), or five days after being mailed to the address as set forth
herein (or such other address designated by such party in a written notice to
the other parties hereto) respectively, or when delivered to such address;
provided, however, Communications to any Agent pursuant to Article II or Article
VIII shall not be effective until received by such Agent.

Section 9.3 No Waiver; Remedies. No failure on the part of any Bank or any Agent
to exercise, and no delay in exercising, any Right hereunder or under any other
Loan Paper shall operate as a waiver thereof; nor shall any single or partial
exercise of any such Right, or any abandonment or discontinuance of any steps to
enforce such Right, preclude any other or further exercise thereof or the
exercise of any other Right. No notice to or demand on the Company in any case
shall entitle the Company to any other or further notice or demand in similar or
other circumstances. The Rights herein provided are cumulative and not exclusive
of any Rights provided by Law.

Section 9.4 Costs, Expenses and Taxes. The Company agrees to pay or reimburse
the Agents for paying: (i) all reasonable costs and expenses of the Agents in
connection with (A) the preparation, execution, delivery, and administration of
this Agreement and the other Loan Papers, including, without limitation, the
reasonable fees and out-of-pocket expenses of counsel for the Agents

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with respect thereto and with respect to advising the Agents as to their
respective Rights and responsibilities under this Agreement and the other Loan
Papers, and (B) any amendment, modification, supplement, or waiver of any of the
terms of this Agreement, and (ii) all reasonable costs and expenses of the Banks
and the Agents (including reasonable counsel’s fees, and including reasonable
allocated in-house counsel fees for any Bank or any Agent) in connection with
the enforcement of this Agreement and the other Loan Papers. In addition, the
Company shall pay any and all Taxes payable or determined to be payable in
connection with the execution and delivery of this Agreement and the other Loan
Papers, and agrees to save the Agents and each Bank harmless from and against
any and all liabilities with respect to or resulting from any delay in paying or
omitting to pay such Taxes, if any, which may be payable or determined to be
payable in connection with the execution and delivery of this Agreement or any
other Loan Paper. The obligations of the Company under this Section 9.4 shall
survive the termination of this Agreement and/or repayment of the Loans.

Section 9.5 Indemnity. The Company agrees to indemnify and hold harmless the
Agents and the Banks and each of their respective Affiliates, officers,
directors, employees, agents, advisors and representatives against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, deficiencies, expenses, and disbursements of any kind or nature
whatsoever which may be imposed on, incurred by or asserted against any Agent,
any Bank, or any of their respective Affiliates, officers, directors, employees,
agents, advisors or other representatives in any way relating to or arising out
of the Loan Papers, any transaction related hereto, or any act, omission, or
transaction of the Company, its Subsidiaries, and Affiliates, or any of their
employees, officers, directors or other representatives, to the extent that any
of the same results, directly or indirectly, from any claims made or actions,
suits, or proceedings commenced by or on behalf of any person other than an
Agent or a Bank.

The obligation of the Company under this section shall continue for a period of
one year after payment of the Obligation and termination of any or all Loan
Papers, and SHALL APPLY WHETHER OR NOT SUCH LOSSES, CLAIMS, DAMAGES, LIABILITIES
AND RELATED EXPENSES ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN PART,
UNDER ANY CLAIM OR THEORY OF STRICT LIABILITY OR CAUSED, IN WHOLE OR IN PART BY
ANY NEGLIGENT ACT OR OMISSION OF ANY KIND BY ANY AGENT OR ANY BANK;

provided, however, that although each indemnified party shall have the right to
be indemnified from its own ordinary negligence, no indemnified party shall have
the right to be indemnified hereunder for willful misconduct or gross negligence
to the extent found by a final, non-appealable judgment of a court of competent
jurisdiction.

Section 9.6 Right of Setoff. If any Event of Default shall have occurred and is
continuing, each Bank and each of its Affiliates is hereby authorized at any
time and from time to time, to the fullest extent permitted by Law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time owing by such Bank
or Affiliate to or for the credit or the account of the Company against any and
all obligations of the Company now or hereafter existing under this Agreement
and the Loans held by such Bank or Affiliate, irrespective of whether or not
such Bank or Affiliate shall have made any demand under this Agreement or any
Note and although such obligations may be unmatured. Each Bank agrees promptly
to notify the Company and the Administrative Agent after any such setoff and
application made by such Bank or Affiliate, but the failure to give such notice
shall not affect the validity of such setoff and application. The Rights of each
Bank under this Section 9.6 are in addition to the Rights and remedies
(including, without limitation, other Rights of setoff) which such Bank may
have.

--------------------------------------------------------------------------------

51

 

SECTION 9.7 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

Section 9.8 Submission To Jurisdiction; Waivers. The Company hereby irrevocably
and unconditionally:

(a) submits for itself and its property in any legal action or proceeding
relating to this Agreement and the other Loan Papers to which it is a party, or
for recognition and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the courts of the State of New York, the
courts of the United States for the Southern District of New York, and appellate
courts from any thereof;

(b) consents that any such action or proceeding may be brought in such courts
and waives any objection that it may now or hereafter have to the venue of any
such action or proceeding in any such court or that such action or proceeding
was brought in an inconvenient court and agrees not to plead or claim the same;

(c) agrees that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to the Company, as the
case may be at its address set forth in Section 9.2 or at such other address of
which the Administrative Agent shall have been notified pursuant thereto; and

(d) agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law or shall limit the right to sue in
any other jurisdiction.

Section 9.9 Survival of Representations and Warranties. All representations and
warranties contained herein or made in writing by the Company in connection
herewith shall survive the execution and delivery of this Agreement and the
other Loan Papers, and no investigation by any Agent or any Bank or any closing
shall affect the representations and warranties or the Right of any Agent or any
Bank to rely upon them.

Section 9.10 Binding Effect. This Agreement shall become effective when it shall
have been executed by the Company, the Agents, and each Bank and thereafter
shall be binding upon and inure to the benefit of the Company (subject to the
provisions of Section 9.11), the Agents, each Bank and their respective
successors and assigns.

Section 9.11 Successors and Assigns; Participations

(a) Whenever in this Agreement any of the parties hereto is referred to, such
reference shall be deemed to include the successors and permitted assigns of
such party, and all covenants, promises, agreements, representations and
warranties by or on behalf of the Company, the Agents or the Banks that are
contained in this Agreement shall bind and inure to the benefit of their
respective successors and assigns. The Company may not assign or transfer any
its rights or obligations hereunder without the prior written consent of all of
the Banks.

(b) Each Bank may without the consent of the Company sell participations to one
or more banks or other entities in all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Commitment and the Loans owing to it and

--------------------------------------------------------------------------------

52

 

any Note or Notes held by it); provided, however, that (i) such Bank’s
obligations under this Agreement shall remain unchanged, (ii) such Bank shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (iii) such Bank shall remain the holder of its Loans and Notes
(if any) for all purposes of this Agreement, (iv) the participating banks or
other entities shall be entitled to the cost protection provisions contained in
Article II and Section 9.4, but only to the extent that such protection would
have been available to such Bank, calculated as if no such participations had
been sold, and the indemnity protection provisions contained in Section 9.5,
(v) the Company, the Agents, and the other Banks shall continue to deal solely
and directly with such Bank in connection with such Bank’s rights and
obligations under this Agreement, and (vi) such Bank shall not sell a
participation that conveys to the participant the right to vote or give or
withhold consents under this Agreement or any other Loan Papers, other than the
right to vote upon or consent to (y) amendments, modifications, or waivers with
respect to any fees payable hereunder (including the dates fixed for the payment
of any such fees) or the amount of principal or the rate of interest payable on,
or the dates fixed for any payment of principal of or interest on, the Loans and
(z) any extension of the Termination Date. Each Bank that sells a participation
shall, acting solely for this purpose as an agent of the Company, maintain a
register on which it enters the name and address of each participant and the
principal amounts (and stated interest) of each participant’s interest in the
Loans or other obligations under this Agreement (the “Participant Register”).
Notwithstanding the foregoing, no Bank is required to disclose, or otherwise
share, its Participant Register with the Company. The entries in the Participant
Register shall be conclusive absent manifest error, and such Bank shall treat
each person whose name is recorded in the Participant Register as the owner of
such participation for all purposes of this Agreement notwithstanding any notice
to the contrary.

(c) Each Bank may assign to one or more Persons (other than a Defaulting Bank),
all or a portion of its interests, rights, and obligations under this Agreement
(including, without limitation, all or a portion of its Commitment and the same
portion of the Committed Loans at the time owing to it); provided, however, that
(i) such assignment, if not to a Bank or an Eligible Affiliate Assignee of the
assigning Bank, shall be consented to by the Company (which consent shall not be
unreasonably withheld and shall not be required after the occurrence or during
the continuance of a Default or Event of Default) and the Administrative Agent,
(ii) each Bank’s Commitment (including Loans owing to it and its pro rata share
of the L/C Obligations) shall not be less than $5,000,000 minus reductions
pursuant to Section 2.6(a) unless (x) otherwise agreed by the Company and the
Administrative Agent or (y) in the case of the assigning Bank, such amount is
reduced to zero pursuant to such assignment, (iii) each such assignment shall be
of a constant, and not a varying, percentage of all the assigning Bank’s rights
and obligations under this Agreement (other than any Competitive Loans, any
Competitive Notes and any right to make Competitive Loans), (iv) the assignee
thereof shall deliver to the Company and the Administrative Agent any Internal
Revenue Service forms required by Section 2.19, and (v) the parties to each such
assignment shall execute and deliver to the Administrative Agent, for its
acceptance and recording in the Register (as defined below), an Assignment and
Acceptance substantially in the form of Exhibit G hereto (an “Assignment and
Acceptance”), together with a properly completed Administrative Questionnaire,
any Note or Notes subject to such assignment and a processing and recordation
fee of $3,500 (or such lesser amount as shall be acceptable to the
Administrative Agent); provided, however, no such fee shall be required in the
case of any assignment requested by the Company pursuant to Article II of this
Agreement. Upon such execution, delivery, acceptance, and recording, from and
after the effective date specified in each Assignment and Acceptance, which
effective date shall be at least five Business Days after the execution thereof
(unless a shorter period shall be agreed to by the Company, the Administrative
Agent, and the assignor Bank), (x) the assignee thereunder shall be a party
hereto and, to the extent provided in such Assignment and Acceptance, have the
rights and obligations of a Bank

--------------------------------------------------------------------------------

53

 

hereunder and under the other Loan Papers and (y) the assignor Bank thereunder
shall, to the extent provided in such Assignment and Acceptance, be released
from its obligations under this Agreement and the other Loan Papers (and, in the
case of an Assignment and Acceptance covering all of the remaining portion of an
assigning Bank’s rights and obligations under this Agreement and the other Loan
Papers, such Bank shall cease to be a party hereto and thereto).

(d) By executing and delivering an Assignment and Acceptance, the Bank assignor
thereunder and the assignee confirm to and agree with each other and the other
parties hereto as follows: (i) other than the representation and warranty that
it is a legal and beneficial owner of the interest being assigned thereby free
and clear of any adverse claim, such Bank assignor makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties, or representations made in or in connection with this Agreement or
any other Loan Paper or the execution, legality, validity, enforceability,
genuineness, sufficiency, or value of this Agreement, any other Loan Paper or
any other instrument or document furnished pursuant hereto; (ii) such Bank
assignor makes no representation or warranty and assumes no responsibility with
respect to the financial condition of the Company or the performance or
observance of its respective obligations under this Agreement, any other Loan
Paper or any other instrument or document furnished pursuant hereto or thereto;
(iii) such assignee confirms that it has received a copy of this Agreement
together with copies of financial information and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such assignee will,
independently and without reliance upon the Agents, such Bank assignor, or any
other Bank and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement; (v) such assignee appoints and
authorizes the Administrative Agent to take such action on behalf of such
assignee and to exercise such powers under this Agreement and the other Loan
Papers as are delegated to each such Agent by the terms hereof and thereof,
together with such powers as are reasonably incidental thereto; and (vi) such
assignee agrees that it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Bank.

(e) The Administrative Agent shall maintain at its office a copy of each
Assignment and Acceptance delivered to it and a register for the recordation of
the names and addresses of the Banks and the Commitment of, and principal amount
of the Loans and L/C Obligations owing to, each Bank from time to time (the
“Register”). The entries in the Register shall be conclusive, in the absence of
manifest error, and the Company, the Agents, and the Banks may treat each Person
whose name is recorded in the Register as a Bank hereunder for all purposes of
this Agreement. The Register shall be available for inspection by the Company,
any Bank or the Administrative Agent at any reasonable time and from time to
time upon reasonable prior notice.

(f) Upon its receipt of an Assignment and Acceptance executed by an assigning
Bank and an assignee together with any Note or Notes subject to such assignment
and the written consent to such assignment, the Administrative Agent shall, if
such Assignment and Acceptance has been completed and is substantially in the
form of Exhibit G hereto, (i) accept such Assignment and Acceptance, (ii) record
the information contained therein in the Register, and (iii) give prompt notice
thereof to the Banks, the Administrative Agent and the Company. Within five
Business Days after receipt of such notice, the Company, at its own expense,
shall execute and deliver to the Administrative Agent in exchange for the
surrendered Note or Notes, if any, (x) a new Committed Note or Committed Notes
to the order of such assignee in an amount equal to its portion of the
Commitment assumed by it pursuant to such Assignment and Acceptance, (y) if the
assigning Bank has retained its Competitive Note, a new Competitive Note to the
order of the assignee, and (z) if the assigning Bank has retained any Commitment
hereunder, new Committed

--------------------------------------------------------------------------------

54

 

Notes to the order of the assigning Bank in an amount equal to the Commitment
retained by it hereunder. Such new Committed Notes shall be in an aggregate
principal amount equal to the aggregate principal amount of such surrendered
Committed Notes. Such new Committed Notes and Competitive Notes shall be dated
the effective date of such Assignment and Acceptance and shall otherwise be in
substantially the form of Exhibit D-1 or D-2 as applicable, hereto. Cancelled
Notes shall be returned to the Company.

(g) Notwithstanding any other provision herein, any Bank may, in connection with
any assignment or participation or proposed assignment or participation pursuant
to this Section 9.11, disclose to the assignee or participant or proposed
assignee or participant any information relating to the Company and its
Subsidiaries furnished to such Bank by or on behalf of the Company; provided,
that prior to any such disclosure, each such assignee or participant or proposed
assignee or participant shall agree for the benefit of the Company to preserve
the confidentiality of any confidential information relating to the Company
received from such Bank.

(h) Notwithstanding any other provision set forth in this Agreement, any Bank
may at any time create a security interest in all or any portion of its Rights
under this Agreement (including, without limitation, the Loans owing to it and
any Notes held by it) in favor of any Federal Reserve Bank in accordance with
Regulation A of the Board.

Section 9.12 Independence of Covenants. All covenants contained in this
Agreement shall be given independent effect so that if a particular action or
condition is not permitted by any such covenants, the fact that such action or
condition would be permitted by an exception to, or otherwise be within the
limitations of, another covenant shall not avoid the occurrence of a Default or
Event of Default if such action is taken or condition exists.

Section 9.13 Severability. Should any clause, sentence, paragraph, or Section of
this Agreement be judicially declared to be invalid, unenforceable, or void,
such decision will not have the effect of invalidating or voiding the remainder
of this Agreement, and the parties hereto agree that the part or parts of this
Agreement so held to be invalid, unenforceable, or void will be deemed to have
been stricken herefrom and the remainder will have the same force and
effectiveness as if such part or parts had never been included herein.

Section 9.14 Integration. This Agreement and the other Loan Papers represent the
entire agreement of the Company, the Administrative Agent and the Banks with
respect to the subject matter hereof and thereof, and there are no promises,
undertakings, representations or warranties by the Administrative Agent or any
Bank relative to the subject matter hereof not expressly set forth or referred
to herein or in the other Loan Papers.

Section 9.15 Descriptive Headings. The section headings appearing in this
Agreement have been inserted for convenience only and shall be given no
substantive meaning or significance whatever in construing the terms and
provisions of this Agreement.

Section 9.16 Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.

Section 9.17 WAIVERS OF JURY TRIAL. THE COMPANY, THE ADMINISTRATIVE AGENT AND
THE BANKS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN PAPER
AND FOR ANY COUNTERCLAIM THEREIN.

--------------------------------------------------------------------------------

55

 

Section 9.18 No Fiduciary Duty. The Administrative Agent, each Bank and their
Affiliates (collectively, solely for purposes of this paragraph, the “Banks”),
may have economic interests that conflict with those of the Company, its
stockholders and/or its affiliates. The Company agrees that nothing in the Loan
Papers or otherwise will be deemed to create an advisory, fiduciary or agency
relationship or fiduciary or other implied duty between any Bank, on the one
hand, and the Company, its stockholders or its affiliates, on the other. The
Company acknowledges and agrees that (i) the transactions contemplated by the
Loan Papers (including the exercise of rights and remedies hereunder and
thereunder) are arm’s-length commercial transactions between the Banks, on the
one hand, and the Company, on the other, and (ii) in connection therewith and
with the process leading thereto, (x) no Bank has assumed an advisory or
fiduciary responsibility in favor of the Company, its stockholders or its
affiliates with respect to the transactions contemplated hereby (or the exercise
of rights or remedies with respect thereto) or the process leading thereto
(irrespective of whether any Bank has advised, is currently advising or will
advise the Company, its stockholders or its affiliates on other matters) or any
other obligation to the Company except the obligations expressly set forth in
the Loan Papers and (y) each Bank is acting solely as principal and not as the
agent or fiduciary of the Company, its management, stockholders, creditors or
any other Person. The Company acknowledges and agrees that it has consulted its
own legal and financial advisors to the extent it deemed appropriate and that it
is responsible for making its own independent judgment with respect to such
transactions and the process leading thereto. The Company agrees that it will
not claim that any Bank has rendered advisory services of any nature or respect,
or owes a fiduciary or similar duty to it, in connection with such transaction
or the process leading thereto.

Section 9.19 USA Patriot Act. Each Bank hereby notifies the Company that
pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56
(signed into law October 26, 2001)) (the “Act”), it is required to obtain,
verify, and record information that identifies each borrower, guarantor or
grantor (the “Loan Parties”), which information includes the name and address of
each Loan Party and other information that will allow such Bank to identify such
Loan Party in accordance with the Act. The Company agrees to provide such
information as each Bank or the Administrative Agent reasonably requests in
order to perform its “know your customer” due diligence.

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.

 

SOUTHWEST AIRLINES CO. By:  

/s/ Scott Topping

  Name:   Scott Topping   Title:   VP Treasurer

--------------------------------------------------------------------------------

$80,000,000    

JPMORGAN CHASE BANK, N.A., as a Bank, an Issuing Bank and as Administrative
Agent

    By:  

/s/ Matthew H. Massie

      Name:   Matthew H. Massie       Title:   Managing Director $80,000,000    

CITIBANK, N.A., as a Bank, an Issuing Bank and as Syndication Agent

    By:  

/s/ Andrew Sidford

      Name:   Andrew Sidford       Title:   Vice President $60,000,000    

BARCLAYS BANK PLC, as a Bank and as a Documentation Agent

    By:  

/s/ David Barton

      Name:   David Barton       Title:   Director    

DEUTSCHE BANK SECURITIES INC., as a Documentation Agent

    By:  

/s/ Wolfgang Winter

      Name:   Wolfgang Winter       Title:   Managing Director     By:  

/s/ Stefan Freckmann

      Name:   Stefan Freckmann       Title:   Vice President $60,000,000    

DEUTSCHE BANK AG NEW YORK BRANCH

    By:  

/s/ Wolfgang Winter

      Name:   Wolfgang Winter       Title:   Managing Director     By:  

/s/ Stefan Freckmann

      Name:   Stefan Freckmann       Title:   Vice President

--------------------------------------------------------------------------------

$60,000,000    

GOLDMAN SACHS BANK USA, as a Bank and as a Documentation Agent

    By:  

/s/ Mark Walton

      Name:   Mark Walton       Title:   Authorized Signatory $60,000,000    

MORGAN STANLEY BANK, N.A., as a Bank and as a Documentation Agent

    By:  

/s/ Ryan Vetsch

      Name:   Ryan Vetsch       Title:   Authorized Signatory $40,000,000    

BNP PARIBAS

    By:  

/s/ Bertrand Dehouck

      Name:   Bertrand Dehouck       Title:   Vice President     By:  

/s/ Robert Papas

      Name:   Robert Papas       Title:   Director $40,000,000    

COMERICA BANK

    By:  

/s/ Catherine Young

      Name:   Catherine Young       Title:   Vice President $40,000,000    

SOCIÉTÉ GÉNÉRALE

    By:  

/s/ Matthew Vickerstaff

      Name:   Matthew Vickerstaff       Title:   Managing Director

--------------------------------------------------------------------------------

$40,000,000    

UBS AG, STAMFORD BRANCH

    By:  

/s/ Irja R. Otsa

      Name:   Irja R. Otsa       Title:   Associate Director     By:  

/s/ Mary E. Evans

      Name:   Mary E. Evans       Title:   Associate Director $40,000,000    

WELLS FARGO BANK, N.A.

    By:  

/s/ Stephen C. Melton

      Name:   Stephen C. Melton       Title:   Senior Vice President

--------------------------------------------------------------------------------

SCHEDULE I

SOUTHWEST AIRLINES CO.

$600,000,000 Competitive Advance and Revolving Credit Agreement

 

Name

  

Notice and Contact

Information

   Lending Offices Barclays Bank PLC   

Bryan Meskell

Barclays Capital Services LLC

70 Hudson Street, 10th Floor

Jersey City, NJ 07302

Phone: 1 201 499 3869

Fax: 1 212 412 7401

Bryan.Meskell@barcap.com

   Domestic

Barclays Bank PLC,

      New York Branch

200 Park Avenue

New York, NY 10166

 

Eurodollar

Same as Domestic

BNP Paribas   

Andy Garcia

525 Washington Blvd.

Jersey City, NJ 07310

Phone: 1 201 850 5706

Fax: 1 201 850 4025

nyk_nyls.ecep.support

      @us.bnpparibas.com

   Domestic

BNP Paribas

787 Seventh Avenue

New York, NY 10019

Phone #: 212 841 2000

Fax#: 212 841 2146

 

Eurodollar

Same as Domestic

Citibank, N.A.   

Tom Schmitt

1615 Brett Road, Ops III

New Castle, DE 19720

Phone: 1 302 894-6088

Fax: 1 212 994 0847

Thomas.Schmitt@citi.com

   Domestic

Citibank, N.A.

388 Greenwich Street, 34th Fl

New York, NY 10013

 

Eurodollar

Same as Domestic

Comerica Bank   

Emily Purvis

Comerica Bank

Global Corporate Banking

1717 Main Street, 4th Floor

Dallas, TX 75201

Phone: 1 214 462 4358

Fax: 1 214 462 4240

ekpurvis@comerica.com

   Domestic

See Notice Information

 

Eurodollar

See Notice Information

Deutsche Bank AG New York Branch;

Deutsche Bank Securities Inc.

  

Jasvir Sighra

DB Services New Jersey, Inc.

5022 Gate Parkway, Suite 100

Jacksonville, FL 32256

Phone: 1 904 527 6343

Fax: 1 904 746 4798

jasvir.sihra@db.com

   Domestic

Deutsche Bank AG

      New York Branch

60 Wall Street

New York, NY 10005

 

Eurodollar

Same as Domestic

--------------------------------------------------------------------------------

Name

  

Notice and Contact

Information

   Lending Offices Goldman Sachs Bank USA   

Muhammad Khan

Goldman Sachs Bank USA

85 Broad Street

New York, NY 10004

Phone: 1 212 357 4350

Fax: 1 212 357 4597

ficc-wsops@gs.com

   Domestic

Goldman Sachs Bank USA

85 Broad Street

New York, NY 10004

 

Eurodollar

Same as Domestic

JPMorgan Chase Bank, N.A.   

Matthew Massie

270 Park Avenue

New York, NY 10017

Phone: 1-212-270-5432

Fax: 1-212-270-5100

matthew.massie@jpmorgan.com

   Domestic Office

JPMorgan Chase Bank, N.A

1111 Fannin Street, 10th Fl

Houston, TX 77002

 

Eurodollar

Same as Domestic

Morgan Stanley Bank, N.A.   

Morgan Stanley Loan Servicing

1000 Lancaster Street

Baltimore, MD 21202

Phone: 1 443 627 4355

Fax: 1 718 233 2140

msloanservicing

@morganstanley.com

   Domestic

Morgan Stanley Bank, N.A.

One Utah Center

201 South Main Street, 5th Fl

Salt Lake City, Utah 84111

 

Eurodollar

Same as Domestic

Société Générale   

June Won

480 Washington Blvd. 20th Floor

Jersey City, NJ 07310

Phone: 1 201 839 8437

Fax: 1 201 839 8116

   Domestic

Société Générale

1221 Avenue of the Americas

New York, NY 10020

 

Eurodollar

Same as Domestic

UBS AG, Stamford Branch   

Denise Bushee

UBS Loan Finance LLC

677 Washington Boulevard

Stamford, CT 06901

Phone: 1 203 719 3167

Fax: 1 203 719 3888

denise.bushee@ubs.com

   Domestic

See Notice Information

 

Eurodollar Office

See Notice Information

Wells Fargo Bank, N.A.   

Evelyn Lucas

201 3rd St., 8th Floor

San Francisco, CA. 94103

Phone: 1 415 477-5426

Fax: 1 415 979-0675

Evelynlucas@wellsfargo.com

   Domestic

Well Fargo Bank, N.A.

1445 Ross Ave, 23rd Fl

Suite 2320

Dallas, TX 75202

 

Eurodollar

Same as Domestic

--------------------------------------------------------------------------------

SCHEDULE II

POOL ASSETS (in US Millions)

 

No.

  

Type

  

Tail #

  

Serial #

  

Mfr. Date

  

Engines

   Base
Value    Current
Market
Value

1

   737-300    N657SW    23331    5/1/1985    CFM56-3B1    $ 5.5    $ 4.2

2

   737-300    N659SW    23229    5/1/1985    CFM56-3B2      5.5      4.2

3

   737-300    N686SW    23175    5/7/1985    CFM56-3B1      5.5      4.2

4

   737-300    N658SW    23332    6/1/1985    CFM56-3B1      5.0      3.7

5

   737-300    N307SW    22947    10/30/1985    CFM56-3B1      5.0      3.6

6

   737-300    N310SW    22949    12/20/1985    CFM56-3B1      5.0      3.6

7

   737-300    N312SW    23334    3/14/1986    CFM56-3B1      5.0      3.6

8

   737-300    N313SW    23335    3/17/1986    CFM56-3B1      5.0      3.6

9

   737-300    N682SW    23496    4/11/1986    CFM56-3B1      5.9      4.5

10

   737-300    N308SA    23498    5/28/1986    CFM56-3B1      5.9      4.5

11

   737-300    N340LV    23738    3/26/1987    CFM56-3B2      6.4      4.9

12

   737-300    N345SA    23786    5/13/1987    CFM56-3B1      6.2      4.7

13

   737-300    N326SW    23690    6/29/1987    CFM56-3B1      5.4      3.9

14

   737-300    N327SW    23691    6/29/1987    CFM56-3B1      5.4      3.9

15

   737-300    N317WN    24068    2/11/1988    CFM56-3B1      6.7      5.1

16

   737-300    N697SW    23838    3/2/1988    CFM56-3B1      6.7      5.1

17

   737-300    N328SW    23692    3/24/1988    CFM56-3B1      5.7      4.1

18

   737-300    N329SW    23693    3/28/1988    CFM56-3B1      5.7      4.1

19

   737-300    N330SW    23694    3/29/1988    CFM56-3B1      5.7      4.1

20

   737-300    N334SW    23938    5/20/1988    CFM56-3B1      5.8      4.2

21

   737-300    N335SW    23939    5/27/1988    CFM56-3B1      5.8      4.2

22

   737-300    N336SW    23940    5/31/1988    CFM56-3B1      5.8      4.2

23

   737-300    N339SW    24090    8/24/1988    CFM56-3B1      5.9      4.3

24

   737-300    N341SW    24091    8/24/1988    CFM56-3B1      5.9      4.3

25

   737-300    N343SW    24151    3/23/1989    CFM56-3B1      6.1      4.5

26

   737-300    N344SW    24152    3/23/1989    CFM56-3B1      6.1      4.5

27

   737-300    N346SW    24153    3/27/1989    CFM56-3B1      6.2      4.5

28

   737-300    N342SW    24133    3/31/1989    CFM56-3B1      7.1      5.5

29

   737-300    N347SW    24374    5/10/1989    CFM56-3B1      6.3      4.6

30

   737-300    N348SW    24375    5/12/1989    CFM56-3B1      6.3      4.6

31

   737-300    N349SW    24408    6/22/1989    CFM56-3B1      6.3      4.6

32

   737-300    N350SW    24409    8/10/1989    CFM56-3B1      6.4      4.7

33

   737-300    N351SW    24572    11/9/1989    CFM56-3B1      6.5      4.8

34

   737-500    N503SW    24180    2/28/1990    CFM56-3B1      6.1      4.4

35

   737-500    N504SW    24181    3/5/1990    CFM56-3B1      6.1      4.4

36

   737-500    N505SW    24182    4/3/1990    CFM56-3B1      6.2      4.5

37

   737-500    N501SW    24178    9/7/1990    CFM56-3B1      6.4      4.7

38

   737-300    N352SW    24888    11/6/1990    CFM56-3B1      7.0      5.1

39

   737-300    N353SW    24889    11/9/1990    CFM56-3B1      7.0      5.1

40

   737-500    N512SW    24189    5/31/1991    CFM56-3B1      6.6      4.8

41

   737-500    N513SW    24190    6/5/1991    CFM56-3B1      6.5      4.7

42

   737-300    N354SW    25219    6/23/1991    CFM56-3B1      7.6      5.7

43

   737-300    N355SW    25250    8/6/1991    CFM56-3B1      7.7      5.8

44

   737-300    N356SW    25251    8/9/1991    CFM56-3B1      7.7      5.8

45

   737-500    N519SW    25318    9/17/1991    CFM56-3B1      6.7      4.9

46

   737-500    N521SW    25320    10/4/1991    CFM56-3B1      6.9      5.0

47

   737-500    N520SW    25319    10/7/1991    CFM56-3B1      6.9      5.0

48

   737-500    N522SW    26564    1/21/1992    CFM56-3B1      7.0      5.1

49

   737-500    N523SW    26565    1/23/1992    CFM56-3B1      7.0      5.1

50

   737-500    N524SW    26566    2/27/1992    CFM56-3B1      7.0      5.1

51

   737-500    N526SW    26568    5/22/1992    CFM56-3B1      7.1      5.2

52

   737-500    N525SW    26567    5/26/1992    CFM56-3B1      7.1      5.2

53

   737-300    N357SW    26594    5/27/1992    CFM56-3B1      8.1      6.1

--------------------------------------------------------------------------------

54

   737-500    N527SW    26569    5/28/1992    CFM56-3B1    7.1    5.2

55

   737-500    N528SW    26570    5/29/1992    CFM56-3B1    7.1    5.2

56

   737-300    N358SW    26595    6/1/1992    CFM56-3B1    8.7    6.7

57

   737-300    N366SW    26577    5/5/1993    CFM56-3B1    9.3    7.1

58

   737-300    N367SW    26578    5/7/1993    CFM56-3B1    9.3    7.1

59

   737-300    N368SW    26579    5/13/1993    CFM56-3B1    9.3    7.1

60

   737-300    N369SW    26580    5/21/1993    CFM56-3B1    9.3    7.1

61

   737-300    N370SW    26597    7/2/1993    CFM56-3B1    9.4    7.2

62

   737-300    N371SW    26598    7/13/1993    CFM56-3B1    9.4    7.3

63

   737-300    N372SW    26599    7/21/1993    CFM56-3B1    9.4    7.3

64

   737-300    N373SW    26581    8/2/1993    CFM56-3B1    9.4    7.2

65

   737-300    N374SW    26582    8/12/1993    CFM56-3B1    9.4    7.2

66

   737-300    N375SW    26583    9/7/1993    CFM56-3B1    10.0    7.8

67

   737-300    N376SW    26584    1/21/1994    CFM56-3B1    10.3    8.0

68

   737-300    N378SW    26585    2/18/1994    CFM56-3B1    10.3    8.0

69

   737-300    N379SW    26586    2/22/1994    CFM56-3B1    10.3    8.0

70

   737-300    N391SW    27378    9/2/1994    CFM56-3B1    10.5    8.3

71

   737-300    N392SW    27379    9/8/1994    CFM56-3B1    10.5    8.3

72

   737-300    N394SW    27380    9/12/1994    CFM56-3B1    10.5    8.3

73

   737-300    N395SW    27689    11/4/1994    CFM56-3B1    10.7    8.4

74

   737-300    N606SW    27926    7/24/1995    CFM56-3B1    11.1    8.7

75

   737-300    N607SW    27927    7/26/1995    CFM56-3B1    11.1    8.7

76

   737-300    N608SW    27928    7/31/1995    CFM56-3B1    11.1    8.7

77

   737-300    N609SW    27929    8/4/1995    CFM56-3B1    11.1    8.7

78

   737-300    N610WN    27696    8/24/1995    CFM56-3B1    11.1    8.7

79

   737-300    N611SW    27697    9/12/1995    CFM56-3B1    11.1    8.7

80

   737-300    N612SW    27930    9/22/1995    CFM56-3B1    11.1    8.7

81

   737-300    N613SW    27931    9/26/1995    CFM56-3B1    11.1    8.7

82

   737-300    N614SW    28033    9/29/1995    CFM56-3B1    11.1    8.7

83

   737-300    N615SW    27698    10/6/1995    CFM56-3B1    11.3    8.8

84

   737-300    N616SW    27699    10/10/1995    CFM56-3B1    11.3    8.8

85

   737-300    N617SW    27700    10/27/1995    CFM56-3B1    11.3    8.8

86

   737-300    N618WN    28034    11/1/1995    CFM56-3B1    11.3    8.8

87

   737-300    N619SW    28035    11/9/1995    CFM56-3B1    11.3    8.8

88

   737-300    N624SW    27934    3/27/1996    CFM56-3B1    11.4    9.0

89

   737-300    N630WN    27705    6/5/1996    CFM56-3B1    11.6    9.1

90

   737-300    N629SW    27704    6/6/1996    CFM56-3B1    11.6    9.1

91

   737-300    N631SW    27706    6/10/1996    CFM56-3B1    11.6    9.1

92

   737-300    N632SW    27707    6/13/1996    CFM56-3B1    11.6    9.1

93

   737-300    N633SW    27936    7/29/1996    CFM56-3B1    11.8    9.2

94

   737-300    N634SW    27937    8/5/1996    CFM56-3B1    11.8    9.2

95

   737-300    N637SW    27710    10/3/1996    CFM56-3B1    11.9    9.3

96

   737-300    N638SW    27711    10/4/1996    CFM56-3B1    11.9    9.3

97

   737-300    N639SW    27712    10/7/1996    CFM56-3B1    11.9    9.3

98

   737-300    N640SW    27713    12/19/1996    CFM56-3B1    11.9    9.3

99

   737-300    N641SW    27714    12/20/1996    CFM56-3B1    11.9    9.3

100

   737-300    N642WN    27715    1/8/1997    CFM56-3B1    12.1    9.5

101

   737-300    N643SW    27716    1/13/1997    CFM56-3B1    12.1    9.5

102

   737-300    N644SW    28329    3/31/1997    CFM56-3B1    12.1    9.5

103

   737-300    N645SW    28330    4/2/1997    CFM56-3B1    12.3    9.6

104

   737-300    N646SW    28331    4/4/1997    CFM56-3B1    12.3    9.6

105

   737-700    N700GS    27835    2/27/1997    CFM56-7B22    17.1    16.6

106

   737-700    N701GS    27836    4/10/1997    CFM56-7B22    17.4    16.9

107

   737-700    N703SW    27837    7/24/1997    CFM56-7B22    17.7    17.2

108

   737-700    N704SW    27838    8/25/1997    CFM56-7B22    17.7    17.2

109

   737-700    N710SW    27844    1/23/1998    CFM56-7B22    18.3    17.8

110

   737-700    N705SW    27839    9/30/1997    CFM56-7B22    17.7    17.2

111

   737-700    N711HK    27845    2/12/1998    CFM56-7B22    18.3    17.8

112

   737-700    N798SW    28436    3/3/1998    CFM56-7B22    18.3    17.8

113

   737-700    N706SW    27840    10/20/1997    CFM56-7B22    18.1    17.5

114

   737-700    N712SW    27846    4/13/1998    CFM56-7B22    18.7    18.1

--------------------------------------------------------------------------------

115

   737-700    N713SW    27847    4/1/1998    CFM56-7B22    18.7      18.1

116

   737-700    N714CB    27848    5/1/1998    CFM56-7B22    18.7      18.1

117

   737-700    N715SW    27849    5/1/1998    CFM56-7B22    18.7      18.1      
         Grand Total    $1,116.8    $ 900.3

--------------------------------------------------------------------------------

EXHIBIT A–1

FORM OF COMPETITIVE BID REQUEST

                         .         

JPMorgan Chase Bank, N.A.,

    as Administrative Agent under the

    Credit Agreement referred to below

1111 Fannin, 10th Floor

Houston, Texas 77002

Attention:                     

Dear Sirs:

Reference is made to the $600,000,000 Competitive Advance and Revolving Credit
Facility Agreement dated as of September 29, 2009 (as amended, modified,
supplemented, renewed, or extended from time to time, the “Credit Agreement”),
among Southwest Airlines Co., the Banks parties thereto, JPMorgan Chase Bank,
N.A., as Administrative Agent, Citibank, N.A., as Syndication Agent, and
Barclays Bank PLC, Deutsche Bank Securities Inc., Goldman Sachs Bank USA and
Morgan Stanley Bank, N.A., as Documentation Agents. Capitalized terms used
herein and not otherwise defined herein shall have the meanings assigned to such
terms in the Credit Agreement. The undersigned hereby gives you notice pursuant
to Section 2.2 of the Credit Agreement that it requests a Competitive Borrowing
under the Credit Agreement, and in that connection sets forth below the terms on
which such Competitive Borrowing is requested to be made:

 

(A)    Borrowing Date of Competitive Borrowing (a Business Day)   

                     

(B)    Principal Amount of Competitive Borrowing1   

                     

(C)    Interest rate basis2   

                     

(D)    Interest Period and the last day thereof3   

                     

 

1

Not less than $10,000,000 or greater than the unused Total Commitment and in
integral multiples of $1,000,000.

2

Eurodollar Loan or Fixed Rate Loan.

3

Which shall have a duration (i) in the case of a Eurodollar Loan, of one, two,
three, six, nine, or twelve months, and (ii) in the case of a Fixed Rate Loan,
of not less than seven calendar days nor more than 360 calendar days, and which,
in either case, shall end not later than the Termination Date.

--------------------------------------------------------------------------------

Very truly yours, SOUTHWEST AIRLINES CO. By:  

 

Name:   Title:  

--------------------------------------------------------------------------------

EXHIBIT A-2

FORM OF NOTICE OF COMMITTED BORROWING

                         .         

JPMorgan Chase Bank, N.A.,

    as Administrative Agent under the

    Credit Agreement referred to below

1111 Fannin, 10th Floor

Houston, Texas 77002

Attention:                     

Dear Sirs:

Reference is made to the $600,000,000 Competitive Advance and Revolving Credit
Facility Agreement dated as of September 29, 2009 (as amended, modified,
supplemented, renewed, or extended from time to time, the “Credit Agreement”),
among Southwest Airlines Co., the Banks parties thereto, JPMorgan Chase Bank,
N.A., as Administrative Agent, Citibank, N.A., as Syndication Agent, and
Barclays Bank PLC, Deutsche Bank Securities Inc., Goldman Sachs Bank USA and
Morgan Stanley Bank, N.A., as Documentation Agents. Capitalized terms used
herein and not otherwise defined herein shall have the meanings assigned to such
terms in the Credit Agreement. The undersigned hereby (check whichever is
applicable):

 

             

  

1.      Gives you notice pursuant to Section 2.3 of the Credit Agreement that it
requests a Committed Borrowing under the Credit Agreement, and in that
connection sets forth below the terms on which such Committed Borrowing is
requested to be made:

     

(A)   Borrowing Date of Committed Borrowing (a Business Day)

  

                     

  

(B)   Principal Amount of Committed Borrowing1

  

                     

  

(C)   Interest rate basis2

  

                     

  

(D)   Interest Period and the last day thereof3

  

                     

             

  

2.      Gives you notice pursuant to Section 2.4(b) that it requests the
conversion of Committed Loans that are Eurodollar Loans into Alternate Base
Loans in the amount of $                    .4

             

  

3.      Gives you notice pursuant to Section 2.4(b) of the Credit Agreement that
it requests the conversion of Committed Loans that are Alternate Base Loans into
Eurodollar Loans in the amount of $                    4, having an Interest
Period of                    months3.

 

1

Not less than $10,000,000 or greater than the unused Total Commitment and in
integral multiples of $1,000,000.

2

Eurodollar Loan or Alternate Base Loan.

3

Applicable only to Eurodollar Loans. Interest Periods shall have a duration of
one, two, three, six, nine, or twelve months and shall end not later than the
Termination Date.

4

Not less than $10,000,000 and in integral multiples of $1,000,000.

--------------------------------------------------------------------------------

             

  

4.      Gives you notice pursuant to Section 2.4(b) of the Credit Agreement that
it requests the continuation of Eurodollar Loans in the amount of
$                    4 to another Interest Period of                    months3.

 

Very truly yours, SOUTHWEST AIRLINES CO. By:  

 

Name:  

 

Title:  

 

 

A2-2

--------------------------------------------------------------------------------

EXHIBIT B

FORM OF NOTICE TO BANKS OF COMPETITIVE BID REQUEST

                             .         

[Name of Bank]

[Address of Bank]

Attention:                                 

Dear Sirs:

Reference is made to the $600,000,000 Competitive Advance and Revolving Credit
Facility Agreement dated as of September 29, 2009 (as amended, modified,
supplemented, renewed, or extended from time to time, the “Credit Agreement”),
among Southwest Airlines Co., the Banks parties thereto, JPMorgan Chase Bank,
N.A., as Administrative Agent, Citibank, N.A., as Syndication Agent, and
Barclays Bank PLC, Deutsche Bank Securities Inc., Goldman Sachs Bank USA and
Morgan Stanley Bank, N.A., as Documentation Agents. Capitalized terms used
herein and not otherwise defined herein shall have the meanings assigned to such
terms in the Credit Agreement. The Company delivered a Competitive Bid Request
dated                                  , pursuant to Section 2.2(a) of the
Credit Agreement, and in that connection you are invited to submit a Competitive
Bid by [Date] / [Time].1 Your Competitive Bid must comply with Section 2.2(b) of
the Credit Agreement and the terms set forth below on which the Notice of
Competitive Borrowing was made:

 

(A)   

Borrowing Date of Competitive Borrowing (a Business Day)

  

                     

(B)   

Principal Amount of Competitive Borrowing

  

                     

(C)   

Interest rate basis

  

                     

(D)   

Interest Period and the last day thereof

  

                     

 

Very truly yours, JPMORGAN CHASE BANK, N.A., Administrative Agent By:     Name:
  Title:  

 

1

The Competitive Bid must be received by the Administrative Agent (i) in the case
of Eurodollar Loans, not later than 9:00 a.m., New York City time, three
Business Days before a proposed Competitive Borrowing, and (ii) in the case of
Fixed Rate Loans, not later than 8:30 a.m., New York City time, on the day of a
proposed Competitive Borrowing.

--------------------------------------------------------------------------------

EXHIBIT C

FORM OF COMPETITIVE BID

                             .         

JPMorgan Chase Bank, N.A.,

as Administrative Agent

for the Banks as defined in the

Credit Agreement referred to below

1111 Fannin, 10th Floor

Houston, Texas 77002

Attention:                                 

Sirs:

The undersigned, [Name of Bank], refers to the $600,000,000 Competitive Advance
and Revolving Credit Facility Agreement dated as of September 29, 2009 (as
amended, modified, supplemented, renewed, or extended from time to time, the
“Credit Agreement”), among Southwest Airlines Co. (the “Company”), the Banks
parties thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, Citibank,
N.A., as Syndication Agent, and Barclays Bank PLC, Deutsche Bank Securities
Inc., Goldman Sachs Bank USA and Morgan Stanley Bank, N.A., as Documentation
Agents. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Credit Agreement. The
undersigned hereby makes a Competitive Bid pursuant to Section 2.2(b) of the
Credit Agreement, in response to the Competitive Bid Request made by the Company
on                         ,         , and in that connection sets forth below
the terms on which such Competitive Bid is made:

 

(A)

  

Principal Amount1

  

                     

(B)

  

Competitive Bid Rate2

  

                     

(C)

  

Interest Period and the last day thereof3

  

                     

The undersigned hereby confirms that it is prepared to extend credit to the
Company upon acceptance by the Company of this bid in accordance with
Section 2.2(d) of the Credit Agreement.

 

Very truly yours, [NAME OF BANK] By:     Name:     Title:    

 

1

Not less than $5,000,000 or greater than the amount of the Competitive Borrowing
requested by the Company nor the available Total Commitment and in integral
multiples of $1,000,000. Multiple bids will be accepted by the Auction
Administration Agent.

2

LIBO Rate + or -                 %, in the case of Eurodollar Loans, or
                %, in the case of Fixed Rate Loans (in each case, expressed in
the form of a decimal to no more than four decimal places).

3

The Interest Period must be the Interest Period specified in the Competitive Bid
Request.

--------------------------------------------------------------------------------

EXHIBIT D–1

FORM OF COMPETITIVE NOTE

 

$600,000,000                                , 2009

FOR VALUE RECEIVED, the undersigned, SOUTHWEST AIRLINES CO., a Texas corporation
(the “Company”), hereby promises to pay to the order of
                                         (the “Bank”) on or before the
Termination Date the lesser of (i) Six Hundred Million and No/100 Dollars
($600,000,000.00) and (ii) the aggregate amount of Competitive Loans made by the
Bank to the Company and outstanding on the Termination Date. The principal
amount of each Competitive Loan made by the Bank to the Company pursuant to the
Credit Agreement (as hereinafter defined) shall be due and payable on the last
day of the Interest Period for such Loan.

The Company promises to pay interest on the unpaid principal amount of each
Competitive Loan from the date of such Competitive Loan until such principal
amount is paid in full, at such interest rates, and payable at such dates and
times, as are specified in the $600,000,000 Competitive Advance and Revolving
Credit Facility Agreement dated as of September 29, 2009 (as amended, modified,
supplemented, renewed, or extended from time to time, the “Credit Agreement,”
the terms defined therein and not otherwise defined herein being used herein as
therein defined), among the Company, the Bank, certain other banks party
thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, Citibank, N.A., as
Syndication Agent, and Barclays Bank PLC, Deutsche Bank Securities Inc., Goldman
Sachs Bank USA and Morgan Stanley Bank, N.A., as Documentation Agents.

Both principal and interest are payable in immediately available funds in lawful
money of the United States of America to JPMorgan Chase Bank, N.A., as
Administrative Agent, at its Principal Office. The amount and type of each
Competitive Loan made by the Bank to the Company and the maturity thereof, the
rate of interest applicable thereto and all payments made on account of
principal and interest hereof shall be recorded by the Bank and, prior to any
transfer hereof, endorsed on the grid attached hereto which is part of this
promissory note; provided, however, any failure by the holder hereof to make any
such endorsement shall not limit or otherwise affect the Company’s obligations
hereunder.

This promissory note may be held by the Bank for the account of its Domestic
Lending Office or its Eurodollar Lending Office and may be transferred from one
to the other from time to time as the Bank may determine.

This promissory note is one of the Competitive Notes referred to in, and is
entitled to the benefits of, the Credit Agreement. The Credit Agreement, among
other things, (i) provides for the making of Committed Loans and Competitive
Loans by the Bank to the Company from time to time, the indebtedness of the
Company resulting from each such Competitive Loan being evidenced by this
promissory note, and (ii) contains provisions for acceleration of the maturity
hereof upon the happening of certain stated events, also for prepayments on
account of principal hereof prior to the maturity hereof upon the terms and
conditions therein specified.

Except as expressly provided in the Credit Agreement, the Company and any and
all endorsers, guarantors, and sureties severally waive demand, presentment for
payment, notice of dishonor or default or intent to accelerate, protest and
notice of protest and diligence in collecting and bringing of suit against any
party hereto, and agree to all renewals, extensions. or partial payments hereon
and to any release or substitution of security herefor, in whole or in part,
with or without notice, before or after maturity.

--------------------------------------------------------------------------------

THIS PROMISSORY NOTE AND THE RIGHTS AND OBLIGATIONS ARISING HEREUNDER SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK.

 

SOUTHWEST AIRLINES CO. By:     Name:     Title:    

 

D1–2

--------------------------------------------------------------------------------

SCHEDULE TO COMPETITIVE NOTE DATED                         

OF SOUTHWEST AIRLINES CO. TO [BANK]

 

    Date    

       Loan            Type          Maturity        Interest  
Rate    Principal
  Repayment      Interest
  Payments        Balance      $                         $           
$                $                                                     $      
      $    $    $                                         $             $    $
   $                                         $             $    $    $          
                              $             $    $    $                         
               $             $    $    $                                        
$             $    $    $                                         $            
$    $    $                                         $             $    $    $  
                                      $             $    $    $                 
                       $             $    $    $                                
        $             $    $    $                                         $   
         $    $    $                                         $             $   
$    $                                         $             $    $    $       
                                 $             $    $    $                      
                  $             $    $    $                                     
   $             $    $    $                                         $         
   $    $    $                                         $             $    $    $
                                        $             $    $    $               
                         $             $    $    $                              
          $             $    $    $                                     

 

D1–3

--------------------------------------------------------------------------------

EXHIBIT D–2

FORM OF COMMITTED NOTE

 

$                                                    , 2009

FOR VALUE RECEIVED, the undersigned, SOUTHWEST AIRLINES CO., a Texas corporation
(the “Company”), hereby promises to pay to the order of
                                         (the “Bank”) on or before the
Termination Date the lesser of (i) the amount of the Bank’s Commitment and
(ii) the aggregate amount of Committed Loans made by the Bank to the Company and
outstanding on the Termination Date.

The Company promises to pay interest on the unpaid principal amount of each
Committed Loan from the date of such Committed Loan until such principal amount
is paid in full, at such interest rates, and payable at such dates and times, as
are specified in the $600,000,000 Competitive Advance and Revolving Credit
Facility Agreement dated as of September 29, 2009 (as amended, modified,
supplemented, renewed, or extended from time to time, the “Credit Agreement,”
the terms defined therein and not otherwise defined herein being used herein as
therein defined), among the Company, the Bank, certain other banks party
thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, Citibank, N.A., as
Syndication Agent, and Barclays Bank PLC, Deutsche Bank Securities Inc., Goldman
Sachs Bank USA and Morgan Stanley Bank, N.A., as Documentation Agents.

Both principal and interest are payable in immediately available funds in lawful
money of the United States of America to JPMorgan Chase Bank, N.A., as
Administrative Agent, at its Principal Office. The amount and type of each
Committed Loan made by the Bank to the Company and the maturity thereof, the
rate of interest applicable thereto and all payments made on account of
principal and interest hereof shall be recorded by the Bank and, prior to any
transfer hereof, endorsed on the grid attached hereto which is part of this
promissory note; provided, however, any failure by the holder hereof to make any
such endorsement shall not limit or otherwise affect the Company’s obligations
hereunder.

This promissory note may be held by the Bank for the account of its Domestic
Lending Office or its Eurodollar Lending Office and may be transferred from one
to the other from time to time as the Bank may determine.

This promissory note is one of the Committed Notes referred to in, and is
entitled to the benefits of, the Credit Agreement. The Credit Agreement, among
other things, (i) provides for the making of Committed Loans and Competitive
Loans by the Bank to the Company from time to time, the indebtedness of the
Company resulting from each such Committed Loan being evidenced by this
promissory note, and (ii) provisions for acceleration of the maturity hereof
upon the happening of certain stated events, also for prepayment on account of
principal hereof prior to the maturity hereof upon the terms and conditions
therein specified.

Except as expressly provided in the Credit Agreement, the Company and any and
all endorsers, guarantors and sureties severally waive demand, presentment for
payment notice of dishonor or default or intent to accelerate, protest and
notice of protest and diligence in collecting and bringing of suit against any
party hereto, and agree to all renewals, extensions. or partial payments hereon
and to any release or substitution of security herefor, in whole or in part,
with or without notice, before or after maturity.

THIS PROMISSORY NOTE AND THE RIGHTS AND OBLIGATIONS ARISING HEREUNDER SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK.

--------------------------------------------------------------------------------

SOUTHWEST AIRLINES CO. BY:  

 

Name:   Title:  

 

D2–2

--------------------------------------------------------------------------------

SCHEDULE TO COMMITTED NOTE DATED                         

OF SOUTHWEST AIRLINES CO. TO [BANK]

 

    Date    

       Loan            Type          Maturity        Interest  
Rate    Principal
  Repayment      Interest
  Payments        Balance      $                         $           
$                $                                                     $      
      $    $    $                                         $             $    $
   $                                         $             $    $    $          
                              $             $    $    $                         
               $             $    $    $                                        
$             $    $    $                                         $            
$    $    $                                         $             $    $    $  
                                      $             $    $    $                 
                       $             $    $    $                                
        $             $    $    $                                         $   
         $    $    $                                         $             $   
$    $                                         $             $    $    $       
                                 $             $    $    $                      
                  $             $    $    $                                     
   $             $    $    $                                         $         
   $    $    $                                         $             $    $    $
                                        $             $    $    $               
                         $             $    $    $                              
          $             $    $    $                                     

 

D2–3

--------------------------------------------------------------------------------

EXHIBIT E–1

FORM OF COMPANY’S INTERNAL COUNSEL OPINION

September     , 2009

The Banks and the Agents

Referred to Below

c/o JPMorgan Chase Bank, N.A.,

as Administrative Agent

1111 Fannin, 10th Floor

Houston, Texas 77002

 

RE: Loans to Southwest Airlines Co.

Ladies and Gentlemen:

This opinion is furnished pursuant to Section 4.1(a)(iv) of the $600,000,000
Competitive Advance and Revolving Credit Facility Agreement dated as of
September 29, 2009 (as amended, modified, supplemented, renewed, or extended
from time to time, the “Credit Agreement”), among Southwest Airlines Co., the
Banks parties thereto, JPMorgan Chase Bank, N.A., as Administrative Agent,
Citibank, N.A., as Syndication Agent, and Barclays Bank PLC, Deutsche Bank
Securities Inc., Goldman Sachs Bank USA and Morgan Stanley Bank, N.A., as
Documentation Agents. Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to such terms in the Credit Agreement.

I am Associate General Counsel of the Company and solely in such capacity have
examined, either personally or through attorneys under my supervision,
originals, or copies certified to my satisfaction, of the Credit Agreement, each
Note executed on or as of the date hereof, if any (collectively, the “Notes”)
and such other corporate records, certificates of corporate officials as to
certain matters of fact, and instruments and documents as I have deemed
necessary or advisable as a basis for the opinions set forth herein.

In such examination, I have assumed (i) the genuineness of all signatures (other
than the signatures of Persons signing on behalf of the Company), the
authenticity and completeness of all documents, certificates, instruments and
records submitted to me as originals and the conformity to the original
instruments of all documents submitted to me as copies, and the authenticity and
completeness of the originals of such copies, (ii) the due authorization,
execution and delivery by each of the Agents and the Banks of the Credit
Agreement, (iii) that each of the Agents and the Banks has all requisite power
and authority to execute, deliver and perform the Credit Agreement and (iv) the
enforceability of the Credit Agreement against each of the Banks.

In addition, in rendering this opinion, I have relied upon, as to certain
matters of fact, certificates of officers of the Company and certificates of
public officials, without any independent investigation of such matters.

Based upon the foregoing, and relying upon the correctness of all statements of
fact contained in the documents, certificates and records that I have examined
either personally or through attorneys under my supervision, I am of the opinion
that:

 

  1. The Company is a corporation duly incorporated, validly existing and in
good standing under the laws of the state of its incorporation, and is duly
qualified to do business in each jurisdiction in which the character or location
of its properties or the nature or conduct of its business makes such
qualification necessary, except for those jurisdictions where the failure to be
so qualified would not have a material adverse effect on the consolidated
financial condition of the Company and its Subsidiaries, taken as a whole. The
Company has the corporate power to own its properties and to carry on its
businesses as now conducted.

--------------------------------------------------------------------------------

  2. The execution, delivery and performance by the Company of the Credit
Agreement and the Notes are within its corporate powers, have been duly
authorized by all necessary corporate action, and do not conflict with or
constitute a default under (i) any law, rule, regulation, order or judgment
known to me or contractual restriction of the Company known to me, the violation
of which would have a Material Adverse Effect, or (ii) the Articles of
Incorporation or the Bylaws, as amended, of the Company.

 

  3. No authorization or approval or other action by, and no notice to or filing
with, any governmental authority or regulatory body is required by the laws of
the State of Texas, or the federal laws of the United States of America for the
due execution, delivery and performance by the Company of the Credit Agreement
other than routine filings of copies of the Credit Agreement and the Notes with
the Securities and Exchange Commission.

 

  4. To my knowledge, except as set forth in the Company’s Annual Report on Form
10-K for the year ended December 31, 2008, there are no legal or governmental
proceedings or investigations pending or threatened against the Company or any
Subsidiary or any property of the Company or any Subsidiary which individually
or, to the extent involving related claims, in the aggregate. involve a material
risk of a material adverse effect on (i) the financial condition of the Company
and its Subsidiaries considered as a whole, or (ii) the ability of the Company
to perform its obligations under the Credit Agreement or the Notes.

This opinion is for the sole benefit of the Agents and the Banks and may not be
relied upon by any other Person without the express prior written consent of the
undersigned.

I am licensed to practice law only in the State of Texas and I express no
opinion as to matters not governed by the laws of the United States of America
or the laws of the State of Texas (except for the usury laws and choice-of-laws
provisions of the State of Texas, as to which I express no opinion).

Very truly yours,

 

E1–2

--------------------------------------------------------------------------------

EXHIBIT E–2

FORM OF COMPANY’S OUTSIDE COUNSEL OPINION

September     , 2009

To the Banks and the Agents

referred to below

c/o JPMorgan Chase Bank, N.A.,

as Administrative Agent

1111 Fannin, 10th Floor

Houston, Texas 77002

 

  Re: Southwest Airlines Co. $600,000,000

Competitive Advance and Revolving Credit Facility

Ladies and Gentlemen:

This opinion is furnished pursuant to Section 4.1(a)(iv) of the $600,000,000
Competitive Advance and Revolving Credit Facility Agreement dated as of
September 29, 2009 (the “Credit Agreement”), among Southwest Airlines Co. (the
“Company”), the Banks parties thereto, JPMorgan Chase Bank, N.A., as
Administrative Agent, Citibank, N.A., as Syndication Agent, and Barclays Bank
PLC, Deutsche Bank Securities Inc., Goldman Sachs Bank USA and Morgan Stanley
Bank, N.A., as Documentation Agents. For convenience of reference, terms defined
in the Credit Agreement are used herein with the same meanings.

We have acted as special New York counsel of the Company in connection with the
negotiation, documentation and consummation of the financing as contemplated by
the Credit Agreement, and in this connection, we have examined, among other
things, the following documents:

 

  (i) an executed copy of the Credit Agreement; and

 

  (ii) an executed copy of each Note executed on or as of the date hereof, if
any (collectively, the “Notes”).

We have also reviewed such other documents and certificates and such matters of
law as we have considered relevant hereto. We have assumed, for purposes of our
opinion hereinafter set forth (i) that each of the Credit Agreement and the
Notes has been duly authorized, executed and delivered by each of the parties
thereto and that, except as expressly made the subject of our opinions in
paragraphs (a) and (b) below, each of the Credit Agreement and the Notes
constitutes the legal, valid, binding and enforceable obligation of each of the
parties thereto. As to any other facts material to our opinions expressed
herein, we have relied upon the representations and warranties contained in the
Credit Agreement and related documents and certificates and upon originals or
copies, certified or otherwise identified to our satisfaction, of such corporate
records, documents, certificates and other instruments as in our judgment are
necessary or appropriate to enable us to render this opinion. We have assumed
the genuineness of all signatures, the authenticity of all documents submitted
to us as originals and the conformity with the authentic originals of all
documents submitted to us as copies.

--------------------------------------------------------------------------------

Based upon and subject to the foregoing and having regard to legal
considerations which we deem relevant, and subject to the comments and
qualifications set forth below, we are of the opinion that:

(a) each of the Credit Agreement and the Letter Agreements constitutes the
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms; and

(b) the Notes delivered today (assuming execution and delivery thereof for
value) constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms;

except that no opinion is expressed herein as to (A) whether a court outside of
the State of New York would give effect to the choice of New York law provided
for in the Credit Agreement or the Notes, (B) any provision in any of the Credit
Agreement or the Notes relating to the severability of provisions in such
documents, (C) any provision of any of the Credit Agreement or the Notes that
requires any amendment or waiver thereof to be in writing, (D) the effect of any
provision of the Credit Agreement imposing penalties or forfeitures,
(E) Section 2.17 of the Credit Agreement, (F) Section 9.8 of the Credit
Agreement insofar as it relates to submission to the jurisdiction of United
States Federal Courts or (G) Section 9.17 of the Credit Agreement. Further, we
wish to point out that provisions of any Note or the Credit Agreement that
permit any party thereto to make determinations or to take actions may be
subject to a requirement that such determinations be made, and that such actions
be taken, on a reasonable basis in good faith.

The opinions above are subject to:

(i) the application of general principles of equity (regardless of whether
considered in a proceeding of equity or at law), including, without limitation,
(x) the possible unavailability of specific performance, injunctive relief or
any other equitable remedy and (y) concepts of materiality, reasonableness, good
faith and fair dealing;

(ii) all applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or similar laws, decrees or regulations affecting the
enforcement of creditors’ rights generally; and

(iii) with respect to indemnity provisions contained in the Credit Agreement,
limitations based upon public policy considerations.

--------------------------------------------------------------------------------

We are members of the bar of the State of New York and we do not herein express
any opinion as to matters governed by any laws other than the law of the State
of New York and the Federal law of the United States of America. Further, we
express no opinion as to the Company’s interest in any Pool Assets or any
security interest, or grant thereof, in any property.

Very truly yours,

--------------------------------------------------------------------------------

EXHIBIT E–3

FORM OF AGENTS’ COUNSEL OPINION

SEPTEMBER     , 2009

JPMorgan Chase Bank, N.A., as Administrative Agent under

the Credit Agreement, as hereinafter

defined (the “Administrative Agent”)

and

The Banks listed on Schedule I hereto

which are parties to the Credit Agreement

on the date hereof

 

  Re: $600,000,000 Competitive Advance and Revolving Credit Facility Agreement,
dated as of September 29, 2009, among Southwest Airlines Co. (the “Company”),
Citibank, N.A., as Syndication Agent, and Barclays Bank PLC, Deutsche Bank
Securities Inc., Goldman Sachs Bank USA and Morgan Stanley Bank, N.A., as
Documentation Agents (the “Credit Agreement”), the lending institutions
identified in the Credit Agreement (the “Banks”) and the Administrative Agent

Ladies and Gentlemen:

We have acted as counsel to the Administrative Agent in connection with the
preparation, execution and delivery of the Credit Agreement.

Unless otherwise indicated, capitalized terms used but not defined herein shall
have the respective meanings set forth in the Credit Agreement. This opinion is
furnished to you pursuant to Section 4.1(a)(iv) of the Credit Agreement.

In connection with this opinion, we have examined the Credit Agreement, signed
by the Company and by the Administrative Agent and certain of the Banks.

We also have examined the originals, or duplicates or certified or conformed
copies, of such records, agreements, instruments and other documents and have
made such other investigations as we have deemed relevant and necessary in
connection with the opinions expressed herein. As to questions of fact material
to this opinion, we have relied upon certificates of public officials and of
officers and representatives of Company. In addition, we have examined, and have
relied as to matters of fact upon, the representations made in the Credit
Agreement.

In rendering the opinion set forth below, we have assumed the genuineness of all
signatures, the legal capacity of natural persons, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as duplicates or certified or conformed copies,
and the authenticity of the originals of such latter documents.

--------------------------------------------------------------------------------

In rendering the opinion set forth below we have assumed that (1) the Credit
Agreement is a valid and legally binding obligation of each party thereto other
than the Company, (2) (a) the Company is validly existing and in good standing
under the laws of its jurisdiction of organization and has duly authorized,
executed and delivered the Credit Agreement in accordance with its Certificate
of Incorporation and By-Laws or other organizational documents, (b) execution,
delivery and performance by the Company of the Credit Agreement does not violate
the laws of the State of Texas or any other applicable laws and (c) the
execution, delivery and performance by the Company of the Credit Agreement does
not constitute a breach or violation of any agreement or instrument which is
binding upon the Company and (3) the Company is not “investment company” within
the meaning of and subject to regulation under the Investment Company Act of
1940.

Based upon and subject to the foregoing, and subject to the qualifications and
limitations set forth herein, we are of the opinion that the Credit Agreement
constitutes the valid and legally binding obligation of the Company enforceable
against the Company in accordance with its terms.

Our opinion set forth above is subject to (i) the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors’ rights generally, (ii) general
equitable principles (whether considered in a proceeding in equity or at law)
and (iii) an implied covenant of good faith and fair dealing.

We express no opinion with respect to:

(A) the effect of any provision of the Credit Agreement which is intended to
permit modification thereof only by means of an agreement in writing by the
parties thereto;

(B) the effect of any provision of the Credit Agreement insofar as it provides
that any Person purchasing a participation from a Bank or other Person may
exercise set-off or similar rights with respect to such participation or that
any Bank or other Person may exercise set-off or similar rights other than in
accordance with applicable law;

(C) the effect of any provision of the Credit Agreement imposing penalties or
forfeitures;

(D) the enforceability of any provision of the Credit Agreement to the extent
that such provision constitutes a waiver of illegality as a defense to
performance of contract obligations;

(E) the effect of any provision of the Credit Agreement relating to
indemnification or exculpation in connection with violations of any securities
laws or relating to indemnification, contribution or exculpation in connection
with willful, reckless or criminal acts or gross negligence of the indemnified
or exculpated Person or the Person receiving contribution.

In connection with the provisions of the Agreement whereby the parties submit to
the jurisdiction of the courts of the United States of America located in the
State of New York, we note the limitations of 28 U.S.C. §§ 1331 and 1332 on
subject matter jurisdiction of the Federal courts. In connection with the
provisions of the Agreement which relate to forum selection (including, without
limitation, any waiver of any objection to venue or any objection that a court
is an inconvenient forum), we note that under NYCPLR § 510 a New York State
court may have discretion to transfer the place of trial, and under 28 U.S.C. §
1404(a) a United States District Court has discretion to transfer an action from
one Federal court to another.

We are members of the Bar of the State of New York, and we do not express any
opinion herein concerning any law other than the law of the State of New York.

--------------------------------------------------------------------------------

This opinion letter is rendered to you in connection with the above described
transactions. This opinion letter may not be relied upon by you for any other
purpose, or relied upon by, or furnished to, any other person, firm or
corporation without our prior written consent.

 

Very truly yours,

 

SIMPSON THACHER & BARTLETT LLP

--------------------------------------------------------------------------------

  THE BANKS   SCHEDULE I

--------------------------------------------------------------------------------

EXHIBIT F

FINANCIAL REPORT CERTIFICATE

FOR                     ENDED             ,         

 

ADMINISTRATIVE AGENT:    JPMorgan Chase Bank, N.A., BORROWER:    Southwest
Airlines Co. RE:    $600,000,000 Competitive Advance and Revolving
Credit Facility Agreement DATE:                                    ,         

This certificate is delivered pursuant to Section 6.10 of the $600,000,000
Competitive Advance and Revolving Credit Facility Agreement dated as of
September 29, 2009 (as amended. modified, supplemented, renewed, or extended
from time to time, the “Credit Agreement”), among Southwest Airlines Co. (the
“Company”), the Banks parties thereto, JPMorgan Chase Bank, N.A., as
Administrative Agent, Citibank, N.A., as Syndication Agent, and Barclays Bank
PLC, Deutsche Bank Securities Inc., Goldman Sachs Bank USA and Morgan Stanley
Bank, N.A., as Documentation Agents. Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to such terms in the
Credit Agreement.

I certify to the Agents and the Banks that I am the
                                                  (president, chief financial
officer, treasurer, or assistant treasurer) of the Company on the date hereof
and that:

1. The Financial Statements attached hereto were prepared in accordance with
GAAP, and present fairly the consolidated and consolidating financial condition
and results of operations of the Company and its Subsidiaries as of, and for the
                     ending on                     ,          (the “Subject
Period”).

2. A review of the activities of the Company and its Subsidiaries during the
Subject Period has been made under my supervision with a view to determining
whether, during the Subject Period, each such entity has kept, observed,
performed, and fulfilled all of its obligations under the Loan Papers, and
during the Subject Period, to my knowledge, each such entity kept, observed,
performed, and fulfilled each and every covenant and condition of the Loan
Papers (except for any deviations set forth on the attached schedule).

3. During the Subject Period, no Default or Event of Default has occurred which
has not been cured or waived (except for any Defaults or Events of Default set
forth on the attached schedule).

4. The status of compliance by the Company with Section 6.9 of the Credit
Agreement as of the last day of the Subject Period is set forth on the attached
schedule.

5. This certificate is being delivered on behalf of the Company. No person or
entity other than the Agents and the Banks (collectively, the “Subject
Recipients”) shall be entitled to receive or rely upon this certificate for any
purpose. The Subject Recipients agree by their acceptance hereof that (a) they
shall look solely to the Company for any loss, cost, damage, expense, claim,
demand, suit, or cause of action arising out of or relating in any way to this
certificate or its preparation and delivery, and (b) the undersigned shall not
under any circumstances have any personal liability whatsoever for the
preparation or execution of this certificate.

 

 

Name: Title

--------------------------------------------------------------------------------

The status of compliance by the Company with Section 6.9 of the Credit Agreement
as of the last day of the Subject Period is set forth below:

Section 6.9 — Coverage Ratio:

 

Consolidated Adjusted Pre-Tax Income*

   $                 (1)

Aircraft Rentals*

   $                 (2)

Net Interest Expense*

   $                 (3)

Depreciation and amortization*

   $                 (4)

Cash dividends paid*

   $                 (5)

Sum of lines (1), (2), (3), and (4), minus line (5)

   $                 (6)

Net Interest Expense*

   $                 (7)

Aircraft Rentals*

   $                 (8)

Sum of lines (7) and (8)

   $                 (9)

Ratio of line (6) to line (9)

            to         

Minimum Ratio

   1.25 to 1.00

 

* For four fiscal quarter period ending on last day of Subject Period.

 

G–2

--------------------------------------------------------------------------------

EXHIBIT G

FORM OF ASSIGNMENT AND ASSUMPTION

Reference is made to the $600,000,000 Competitive Advance and Revolving Credit
Facility Agreement dated as of September 29, 2009 (as amended, modified,
supplemented, renewed, or extended from time to time, the “Credit Agreement”),
among Southwest Airlines Co., the Banks parties thereto, JPMorgan Chase Bank,
N.A., as Administrative Agent, Citibank, N.A., as Syndication Agent, and
Barclays Bank PLC, Deutsche Bank Securities Inc., Goldman Sachs Bank USA and
Morgan Stanley Bank, N.A., as Documentation Agents. Capitalized terms used
herein and not otherwise defined herein shall have the meanings assigned to such
terms in the Credit Agreement.

The Assignor identified on Schedule l hereto (the “Assignor”) and the Assignee
identified on Schedule l hereto (the “Assignee”) agree as follows:

1. The Assignor hereby irrevocably sells and assigns to the Assignee without
recourse to the Assignor, and the Assignee hereby irrevocably purchases and
assumes from the Assignor without recourse to the Assignor, as of the Effective
Date (as defined below), the interest described in Schedule 1 hereto (the
“Assigned Interest”) in and to the Assignor’s rights and obligations under the
Credit Agreement with respect to those credit facilities contained in the Credit
Agreement as are set forth on Schedule 1 hereto (individually, an “Assigned
Facility”; collectively, the “Assigned Facilities”), in a principal amount for
each Assigned Facility as set forth on Schedule 1 hereto.

2. The Assignor (a) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or with respect to the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Credit Agreement, any other Loan Paper or any other instrument or
document furnished pursuant thereto, other than that the Assignor has not
created any adverse claim upon the interest being assigned by it hereunder and
that such interest is free and clear of any such adverse claim and (b) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Company, any of its Affiliates or any other obligor
or the performance or observance by the Company, any of its Affiliates or any
other obligor of any of their respective obligations under the Credit Agreement
or any other Loan Paper or any other instrument or document furnished pursuant
hereto or thereto.

3. The Assignee (a) represents and warrants that it is legally authorized to
enter into this Assignment and Assumption; (b) confirms that it has received a
copy of the Credit Agreement, together with copies of the financial statements
delivered pursuant to Section 6.10 thereof and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Assumption; (c) agrees that it will,
independently and without reliance upon the Assignor, the Agents or any Bank and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Credit Agreement, the other Loan Papers or any other instrument or
document furnished pursuant hereto or thereto; (d) appoints and authorizes the
Agents to take such action as agent on its behalf and to exercise such powers
and discretion under the Credit Agreement, the other Loan Papers or any other
instrument or document furnished pursuant hereto or thereto as are delegated to
the Agents by the terms thereof, together with such powers as are incidental
thereto; and (e) agrees that it will be bound by the provisions of the Credit
Agreement and will perform in accordance with its terms all the obligations
which by the terms of the Credit Agreement are required to be performed by it as
a Bank including, if it is organized under the laws of a jurisdiction outside
the United States, its obligation pursuant to Section 2.19 of the Credit
Agreement.

--------------------------------------------------------------------------------

4. The effective date of this Assignment and Assumption shall be the Effective
Date of Assignment described in Schedule 1 hereto (the “Effective Date”).
Following the execution of this Assignment and Assumption, it will be delivered
to the Administrative Agent for acceptance by it and recording by the
Administrative Agent pursuant to the Credit Agreement, effective as of the
Effective Date (which shall not, unless otherwise agreed to by the
Administrative Agent, be earlier than five Business Days after the date of such
acceptance and recording by the Administrative Agent).

5. Upon such acceptance and recording, from and after the Effective Date, the
Administrative Agent shall make all payments in respect of the Assigned Interest
(including payments of principal, interest, fees and other amounts) to the
Assignor for amounts which have accrued to the Effective Date and to the
Assignee for amounts which have accrued subsequent to the Effective Date.

6. From and after the Effective Date, (a) the Assignee shall be a party to the
Credit Agreement and, to the extent provided in this Assignment and Assumption,
have the rights and obligations of a Bank thereunder and under the other Loan
Papers and shall be bound by the provisions thereof and (b) the Assignor shall,
to the extent provided in this Assignment and Assumption, relinquish its rights
and be released from its obligations under the Credit Agreement.

7. This Assignment and Assumption shall be governed by and construed in
accordance with the laws of the State of New York.

IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Assumption to be executed as of the date first above written by their respective
duly authorized officers on Schedule 1 hereto.

 

2

--------------------------------------------------------------------------------

Schedule 1

to Assignment and Assumption with respect to

the $600,000,000 Competitive Advance and Revolving Agreement, dated as of
September 29, 2009,

among Southwest Airlines Co., the Banks parties thereto, JPMorgan Chase Bank,
N.A., as Administrative

Agent, Citibank, N.A., as Syndication Agent, and Barclays Bank PLC, Deutsche
Bank Securities Inc.,

Goldman Sachs Bank USA and Morgan Stanley Bank, N.A., as Documentation Agents.

Name of Assignor:                                         

Name of Assignee:                                         

Effective Date of Assignment:                             

 

Credit Facility Assigned

   Principal
Amount Assigned    Commitment Percentage Assigned    $                       
        .                    %

 

[Name of Assignee]

    [Name of Assignor] By:  

 

    By:  

 

Title:       Title:   Accepted for Recordation in the Register:     Required
Consents (if any): JPMorgan Chase Bank, N.A., as Administrative Agent    
Southwest Airlines Co. By:  

 

    By:  

 

Title:       Title:         JPMorgan Chase Bank, N.A., as Administrative Agent  
    By:  

 

      Title:  

--------------------------------------------------------------------------------

EXHIBIT H

FORM OF APPRAISAL OF POOL ASSETS

[Date]

JPMorgan Chase Bank, N.A.,

as Administrative Agent

1111 Fannin, 10th Floor

Houston, Texas 77002

Attention:                                     

 

Re: $600,000,000 Competitive Advance and Revolving Credit Facility Agreement for
Southwest Airlines Co.

Ladies and Gentlemen:

The undersigned has been requested to provide an opinion as to the current
half-time Current Market Value (“CMV”) of the 737 type aircraft or engines, or
both, currently operated by Southwest Airlines Co. that are listed on Figure 1.

Based upon our knowledge of the Boeing 737 type of aircraft, its capabilities
and the uses to which it has been put in various areas of the world; the current
supply and demand for aircraft: our knowledge of the marketing of new and used
transport aircraft and the factors affecting the current market values thereof,
and our familiarity with the aviation industry generally, it is our opinion as
of the date of this letter that the CMV of each aircraft and engine listed in
Figure 1 is as stated therein.

In giving our opinion, we have assumed that each aircraft and engine is in good
airworthy condition, is clean by normal scheduled airline standards, is at
half-time between major maintenance events and is in a typical mid-time
condition with respect to all maintenance time-controlled components.

According to the International Society of Transport Aircraft Trading’s (“ISTAT”)
definition of Current Market Value, to which we subscribe, the Current Market
Value is the appraiser’s opinion of the most likely trading price that may be
generated for an aircraft under the market circumstances that are perceived to
exist at the time in question. The Current Market Value assumes that the
aircraft is valued for its highest, best use, that the parties to the
hypothetical sale transaction are willing, able prudent and knowledgeable, and
under no unusual pressure for a prompt sale, and that the transaction would be
negotiated in an open and unrestricted market on an arm’s length basis, for cash
or equivalent consideration, and given an adequate amount of time for effective
exposure to prospective buyers, which we consider to be three to six months.

[Use and describe the most appropriate methodology: for example, sales of
comparable aircraft; replacement cost less an allowance for usage; or models
based on historical data, adjusted for perceived current market conditions, or a
combination of the foregoing.]

We have no present or contemplated future interest in the appraised aircraft,
nor any interest that would preclude our making a fair and unbiased estimate.
This appraisal is prepared for the use of the addressee and the present and
future lenders for which it is Administrative Agent.

 

Sincerely,

[Name of Appraiser]

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Figure 1

Aircraft Current Half-Time Current Market Values

 

No.

   Aircraft    Registration    Mfg.
Serial No.    Date of
Mfgr.    Engine    CMV ($Mils.) 1)    B737-                N                    
            ,         CFM56-         

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EXHIBIT H

FORM OF U.S. TAX COMPLIANCE CERTIFICATE

Reference is made to the $600,000,000 Competitive Advance and Revolving Credit
Facility Agreement dated as of September 29, 2009 (as amended, modified,
supplemented, renewed, or extended from time to time, the “Credit Agreement”),
among Southwest Airlines Co., the Banks parties thereto, JPMorgan Chase Bank,
N.A., as Administrative Agent, Citibank, N.A., as Syndication Agent, and
Barclays Bank PLC, Deutsche Bank Securities Inc., Goldman Sachs Bank USA and
Morgan Stanley Bank, N.A., as Documentation Agents. Capitalized terms used
herein and not otherwise defined herein shall have the meanings assigned to such
terms in the Credit Agreement.                                          (the
“Non-U.S. Lender”) is providing this certificate pursuant to Section 2.19(c) of
the Credit Agreement. The Non-U.S. Lender hereby represents and warrants that:

1. The Non-U.S. Lender is the sole record and beneficial owner of the Loans in
respect of which it is providing this certificate.

2. The Non-U.S. Lender is not a “bank” for purposes of Section 881(c)(3)(A) of
the Internal Revenue Code of 1986, as amended (the “Code”). In this regard, the
Non-U.S. Lender further represents and warrants that:

(a) the Non-U.S. Lender is not subject to regulatory or other legal requirements
as a bank in any jurisdiction; and

(b) the Non-U.S. Lender has not been treated as a bank for purposes of any tax,
securities law or other filing or submission made to any Governmental Authority,
any application made to a rating agency or qualification for any exemption from
tax, securities law or other legal requirements.

3. The Non-U.S. Lender is not a 10-percent shareholder of the Borrower within
the meaning of Section 881(c)(3)(B) of the Code.

4. The Non-U.S. Lender is not a controlled foreign corporation receiving
interest from a related person within the meaning of Section 881(c)(3)(C) of the
Code.

IN WITNESS WHEREOF, the undersigned has duly executed this certificate.

 

[NAME OF NON-U.S. LENDER] By:  

 

Name:   Title:         Date: