Exhibit 10.08


 




 





CREDIT AGREEMENT





by and among





HAWAIIAN HOLDINGS, INC.



as Parent and Guarantor



and



HAWAIIAN AIRLINES, INC.



as Borrower,





THE LENDERS THAT ARE SIGNATORIES HERETO



as the Lenders,



and



WELLS FARGO FOOTHILL, INC.



as the Arranger and Administrative Agent





Dated as of June 2, 2005




 





 





















 


TABLE OF CONTENTS


 


	
  1.

  	
  DEFINITIONS AND CONSTRUCTION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.1

  	
  Definitions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.2

  	
  Accounting Terms

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.3

  	
  Code

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.4

  	
  Construction

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.5

  	
  Schedules and Exhibits

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  LOAN AND TERMS OF PAYMENT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.1

  	
  Revolver
  Advances

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.2

  	
  Term
  Loan

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.3

  	
  Borrowing Procedures and Settlements

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.4

  	
  Payments

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.5

  	
  Overadvances

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.6

  	
  Interest Rates and Letter of Credit Fee: Rates,
  Payments, and Calculations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.7

  	
  Cash
  Management

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.8

  	
  Crediting Payments

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.9

  	
  Designated Account

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.10

  	
  Maintenance of Loan Account; Statements of Obligations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.11

  	
  Fees

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.12

  	
  Letters
  of Credit

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.13

  	
  LIBOR
  Option

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.14

  	
  Capital Requirements

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.15

  	
  Registered Notes.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.16

  	
  Securitization.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  CONDITIONS; TERM OF AGREEMENT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.1

  	
  Conditions Precedent to the Initial Extension of
  Credit

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.2

  	
  Conditions Precedent to all Extensions of Credit

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.3

  	
  Term

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.4

  	
  Effect of Termination

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.5

  	
  Early Termination by Borrower

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  REPRESENTATIONS AND WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.1

  	
  No Encumbrances

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.2

  	
  Eligible Accounts

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.3

  	
  Eligible
  Spare Parts

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.4

  	
  Equipment

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.5

  	
  [Intentionally Omitted]

  	
   

  



 





















 


	
   

  	
  4.6

  	
  [Intentionally Omitted]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.7

  	
  State of Incorporation;
  Location of Chief Executive Office; Organizational Identification Number;
  Commercial Tort Claims

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.8

  	
  Due Organization and
  Qualification; Subsidiaries

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.9

  	
  Due Authorization; No
  Conflict

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.10

  	
  Litigation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.11

  	
  No Material Adverse
  Change

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.12

  	
  Fraudulent Transfer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.13

  	
  Employee Benefits

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.14

  	
  Environmental Condition

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.15

  	
  Intellectual Property

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.16

  	
  Leases

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.17

  	
  Deposit Accounts and
  Securities Accounts

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.18

  	
  Complete Disclosure

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.19

  	
  Indebtedness

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.20

  	
  Air Carrier

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.21

  	
  Aircraft,
  Engines, and Propellers

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.22

  	
  Slots, Gates and Routes

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.23

  	
  IRS Claim

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  AFFIRMATIVE COVENANTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.1

  	
  Accounting System

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.2

  	
  Collateral Reporting

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.3

  	
  Financial Statements,
  Reports, Certificates

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.4

  	
  Guarantor Reports

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.5

  	
  Inspection

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.6

  	
  Maintenance of Properties

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.7

  	
  Taxes

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.8

  	
  Insurance

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.9

  	
  Location
  of Inventory and Equipment

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.10

  	
  Compliance with Laws

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.11

  	
  Leases

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.12

  	
  Existence

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.13

  	
  Environmental

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.14

  	
  Disclosure Updates

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.15

  	
  Control Agreements

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.16

  	
  Formation of Subsidiaries

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.17

  	
  Spare Parts

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.18

  	
  Slots, Gates, and Routes

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.19

  	
  Benefit Plans

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  NEGATIVE COVENANTS

  	
   

  



 


ii





















 


	
   

  	
  6.1

  	
  Indebtedness

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.2

  	
  Liens

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.3

  	
  Restrictions
  on Fundamental Changes

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.4

  	
  Disposal of Assets

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.5

  	
  Change Name

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.6

  	
  Nature of Business

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.7

  	
  Prepayments and
  Amendments

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.8

  	
  Change of Control

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.9

  	
  Consignments

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.10

  	
  Distributions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.11

  	
  Accounting Methods

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.12

  	
  Investments

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.13

  	
  Transactions with
  Affiliates

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.14

  	
  Use of Proceeds.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.15

  	
  IRS Tax Claim
  Indebtedness

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.16

  	
  Financial Covenants.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  EVENTS OF DEFAULT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  THE LENDER
  GROUP’S RIGHTS AND REMEDIES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.1

  	
  Rights and Remedies

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.2

  	
  Remedies Cumulative

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  TAXES AND EXPENSES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  WAIVERS; INDEMNIFICATION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.1

  	
  Demand; Protest; etc

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.2

  	
  The
  Lender Group’s Liability for Collateral

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.3

  	
  Indemnification

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  NOTICES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
  CHOICE
  OF LAW AND VENUE; JURY TRIAL WAIVER

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
  ASSIGNMENTS
  AND PARTICIPATIONS; SUCCESSORS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.1

  	
  Assignments and
  Participations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.2

  	
  Successors

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
  AMENDMENTS; WAIVERS

  	
   

  



 


iii





















 


	
   

  	
  14.1

  	
  Amendments and Waivers

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.2

  	
  Replacement of
  Holdout Lender

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.3

  	
  No Waivers;
  Cumulative Remedies

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  15.

  	
  AGENT; THE LENDER GROUP

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15.1

  	
  Appointment
  and Authorization of Agent

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15.2

  	
  Delegation of Duties

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15.3

  	
  Liability of Agent

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15.4

  	
  Reliance by Agent

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15.5

  	
  Notice of Default or Event of
  Default

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15.6

  	
  Credit Decision

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15.7

  	
  Costs and
  Expenses; Indemnification

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15.8

  	
  Agent in Individual
  Capacity

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15.9

  	
  Successor Agent

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15.10

  	
  Lender in
  Individual Capacity

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15.11

  	
  Withholding Taxes

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15.12

  	
  Collateral Matters

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15.13

  	
  Restrictions
  on Actions by Lenders; Sharing of Payments

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15.14

  	
  Agency for Perfection

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15.15

  	
  Payments by Agent to the
  Lenders

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15.16

  	
  Concerning the Collateral
  and Related Loan Documents

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15.17

  	
  Field Audits and Examination
  Reports; Confidentiality; Disclaimers by Lenders; Other Reports and
  Information

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15.18

  	
  Several Obligations; No
  Liability

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15.19

  	
  Intercreditor Agreement

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
  GENERAL PROVISIONS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  16.1

  	
  Effectiveness

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  16.2

  	
  Section Headings

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  16.3

  	
  Interpretation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  16.4

  	
  Severability of
  Provisions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  16.5

  	
  Counterparts;
  Electronic Execution

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  16.6

  	
  Revival
  and Reinstatement of Obligations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  16.7

  	
  Confidentiality

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  16.8

  	
  Integration

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  16.9

  	
  Public Disclosure

  	
   

  



 


iv





















 


CREDIT AGREEMENT


 


THIS CREDIT
AGREEMENT (this “Agreement”),
is entered into as of June 2, 2005, by and among the lenders identified on
the signature pages hereof (such lenders, together with their respective
successors and permitted assigns, are referred to hereinafter each individually
as a “Lender” and collectively as the “Lenders”), WELLS FARGO FOOTHILL, INC., a California
corporation, as the arranger and administrative agent for the Lenders (in such
capacity, together with its successors and assigns in such capacity, “Agent”),
and HAWAIIAN HOLDINGS, INC., a
Delaware corporation (“Parent”), and
HAWAIIAN AIRLINES, INC., a
Delaware corporation (“Borrower”).


 


The parties agree as
follows:


 


1.             DEFINITIONS
AND CONSTRUCTION.


 


1.1           Definitions.  Capitalized terms used in this Agreement
shall have the meanings specified therefor on Schedule 1.1.


 


1.2           Accounting
Terms.  All accounting
terms not specifically defined herein shall be construed in accordance with
GAAP.  When used herein, the term “financial
statements” shall include the notes and schedules thereto.  Whenever the term “Borrower” is used in
respect of a financial covenant or a related definition, it shall be understood
to mean Borrower and its Subsidiaries on a consolidated basis, unless the
context clearly requires otherwise.


 


1.3           Code.  Any terms used in this Agreement that are
defined in the Code shall be construed and defined as set forth in the Code
unless otherwise defined herein; provided, however, that to the
extent that the Code is used to define any term herein and such term is defined
differently in different Articles of the Code, the definition of such term
contained in Article 9 of the Code shall govern.


 


1.4           Construction.  Unless the context of this Agreement or any
other Loan Document clearly requires otherwise, references to the plural include
the singular, references to the singular include the plural, the terms “includes”
and “including” are not limiting, and the term “or” has, except where otherwise
indicated, the inclusive meaning represented by the phrase “and/or.”  The words “hereof,” “herein,” “hereby,” “hereunder,”
and similar terms in this Agreement or any other Loan Document refer to this
Agreement or such other Loan Document, as the case may be, as a whole and not
to any particular provision of this Agreement or such other Loan Document, as
the case may be.  Section, subsection,
clause, schedule, and exhibit references herein are to this Agreement unless
otherwise specified.  Any reference in
this Agreement or in any other Loan Document to any agreement, instrument, or
document shall include all alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and
supplements, thereto and thereof, as applicable (subject to any restrictions on
such alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements set forth herein).  Any reference herein or in any other Loan
Document to the satisfaction or repayment in full of the Obligations shall mean
the repayment in full in cash (or cash collateralization in accordance with the
terms hereof) of all Obligations other than unasserted contingent
indemnification Obligations.  Any
reference herein to any Person shall be construed to include such Person’s
successors and assigns.  Any requirement
of a writing contained herein or in any other Loan Document shall be satisfied
by the transmission of a Record and any Record so transmitted shall constitute
a representation and warranty as to the accuracy and completeness of the
information contained therein.


 


1.5           Schedules
and Exhibits.  All of the
schedules and exhibits attached to this Agreement shall be deemed incorporated
herein by reference.


 





















 


2.             LOAN AND TERMS OF PAYMENT.


 


2.1           Revolver Advances.


 


(a)           Subject to the terms
and conditions of this Agreement, and during the term of this Agreement, each
Lender with a Revolver Commitment agrees (severally, not jointly or jointly and
severally) to make advances (“Advances”) to Borrower in an amount at any
one time outstanding not to exceed such Lender’s Pro Rata Share of an amount
equal to the lesser of (i) the
Maximum Revolver Amount less the
Letter of Credit Usage at such time, or (ii) the Borrowing Base at such
time less the Letter of Credit
Usage at such time.


 


(b)           Anything to the
contrary in this Section 2.1 notwithstanding, Agent shall have the
right to establish reserves against the Borrowing Base in such amounts, and
with respect to such matters, as Agent in its Permitted Discretion shall deem
necessary or appropriate, including reserves with respect to (i) sums that
Borrower is required to pay by any Section of this Agreement or any other
Loan Document (such as taxes, assessments, insurance premiums, or, in the case
of leased assets, rents or other amounts payable under such leases) and has
failed to pay (after giving effect to any applicable grace periods set forth in
this Agreement or any other Loan Document), and (ii) amounts owing by
Parent, Borrower, or Borrower’s Subsidiaries to any Person to the extent
secured by a Lien on, or trust over, any of the Collateral (other than a
Permitted Lien), which Lien or trust, in the Permitted Discretion of Agent
likely would have a priority superior to the Agent’s Liens (such as Liens or
trusts in favor of landlords, warehousemen, carriers, mechanics, materialmen,
laborers, or suppliers, or Liens or trusts for ad
valorem, excise, sales, or other taxes where given priority under
applicable law) in and to such item of the Collateral, provided that the
Agent shall not (x) impose reserves in respect of Dilution other than the EA
Dilution Reserve or the MA Dilution Reserve or (y) establish any reserve that
is duplicative of a reserve that has already been established.


 


(c)           So long as no Event
of Default has occurred and is continuing or would result therefrom, Borrower
has the option, upon not less than 10 days prior written notice to Agent, to
reduce the Maximum Revolver Amount by $5,000,000 once during the term of this
Agreement.  Amounts borrowed pursuant to
this Section 2.1 may be repaid and, subject to the terms and
conditions of this Agreement, reborrowed at any time during the term of this
Agreement.


 


2.2           Term Loan.


 


(a)           Subject to the terms
and conditions of this Agreement, on the Closing Date each Lender with a Term
Loan Commitment agrees (severally, not jointly or jointly and severally) to
make term loans (collectively, the “Term Loan”) to Borrower in an amount
equal to such Lender’s Pro Rata Share of the Term Loan Amount.  The principal of the Term Loan shall be
repaid on the following dates and in the following amounts: 


 


	
  Date

  	
   

  	
  Installment Amount

  	
   

  
	
  September 1,
  2005

  	
   

  	
  $

  	
  2,083,333

  	
   

  
	
  December 1,
  2005

  	
   

  	
  $

  	
  2,083,333

  	
   

  
	
  March 1,
  2006

  	
   

  	
  $

  	
  2,083,333

  	
   

  
	
  June 1,
  2006

  	
   

  	
  $

  	
  2,083,333

  	
   

  
	
  September 1,
  2006

  	
   

  	
  $

  	
  2,083,333

  	
   

  
	
  December 1,
  2006

  	
   

  	
  $

  	
  2,083,333

  	
   

  
	
  March 1,
  2007

  	
   

  	
  $

  	
  2,083,333

  	
   

  
	
  June 1,
  2007

  	
   

  	
  $

  	
  2,083,333

  	
   

  
	
  September 1,
  2007

  	
   

  	
  $

  	
  2,083,333

  	
   

  
	
  December 1,
  2007

  	
   

  	
  $

  	
  2,083,333

  	
   

  
	
  March 1,
  2008

  	
   

  	
  $

  	
  2,083,333

  	
   

  
	
  June 1,
  2008

  	
   

  	
  $

  	
  2,083,333

  	
   

  



 


2





















 


(b)           The outstanding unpaid
principal balance and all accrued and unpaid interest on the Term Loan shall be
due and payable on the earliest of (i) the Maturity Date, (ii) the
date of the acceleration of the Term Loan in accordance with the terms hereof,
and (iii) the date of termination of this Agreement pursuant to Section 8.1(c).  All principal of, interest on, and other
amounts payable in respect of the Term Loan shall constitute Obligations.


 


(c)           Borrower has the
option, at any time, upon not less than 10 days prior written notice to Agent,
to prepay all or any portion of the Term Loan. 
Each such prepayment of the Term Loan shall be applied pro rata against
the remaining installments of the principal of the Term Loan.  Any principal amount of the Term Loan that is
repaid or prepaid pursuant to the provisions of this Agreement may not be
reborrowed.


 


2.3           Borrowing Procedures and Settlements.


 


(a)           Procedure for Borrowing.  Each Borrowing shall be made by an
irrevocable written request by an Authorized Person delivered to Agent.  Unless Swing Lender is not obligated to make
a Swing Loan pursuant to Section 2.3(b) below, such notice
must be received by Agent no later than 10:00 a.m. (California time) on
the Business Day that is the requested Funding Date specifying (i) the
amount of such Borrowing, and (ii) the requested Funding Date, which shall
be a Business Day; provided, however, that if Swing Lender is not
obligated to make a Swing Loan as to a requested Borrowing, such notice must be
received by Agent no later than 10:00 a.m. (California time) on the
Business Day prior to the date that is the requested Funding Date.  At Agent’s election, in lieu of delivering
the above-described written request, any Authorized Person may give Agent
telephonic notice of such request by the required time.  In such circumstances, Borrower agrees that
any such telephonic notice will be confirmed in writing within 24 hours of the
giving of such telephonic notice, but the failure to provide such written
confirmation shall not affect the validity of the request.


 


(b)           Making of Swing Loans.  In the case of a request for an Advance and
so long as either (i) the aggregate amount of Swing Loans made since the
last Settlement Date plus the amount of the requested Advance does not exceed
$5,000,000, or (ii) Swing Lender, in its sole discretion, shall agree to
make a Swing Loan notwithstanding the foregoing limitation, Swing Lender shall
make an Advance in the amount of such Borrowing (any such Advance made solely
by Swing Lender pursuant to this Section 2.3(b) being referred
to as a “Swing Loan” and such Advances being referred to collectively as
“Swing Loans”) available to Borrower on the Funding Date applicable
thereto by transferring immediately available funds to Borrower’s Designated
Account.  Each Swing Loan shall be deemed
to be an Advance hereunder and shall be subject to all the terms and conditions
applicable to other Advances, except that all payments on any Swing Loan shall
be payable to Swing Lender solely for its own account.  Subject to the provisions of Section 2.3(d)(ii),
Swing Lender shall not make and shall not be obligated to make any Swing Loan
if Swing Lender has actual knowledge that (i) one or more of the
applicable conditions precedent set forth in Section 3 will not be
satisfied on the requested Funding Date for the applicable Borrowing, or (ii) the
requested Borrowing would exceed the Availability on such Funding Date.  Swing Lender shall not otherwise be required
to determine whether the applicable conditions precedent set forth in Section 3
have been satisfied on the Funding Date applicable thereto prior to making any
Swing Loan.  The Swing Loans shall be
secured by the Agent’s Liens, constitute


 


3





















 


Obligations hereunder, and
bear interest at the rate applicable from time to time to Advances that are
Base Rate Loans.


 


(c)           Making of Loans.


 


(i)            In the event that
Swing Lender is not obligated to make a Swing Loan, then promptly after receipt
of a request for a Borrowing pursuant to Section 2.3(a), Agent
shall notify the Lenders, not later than 1:00 p.m. (California time) on
the Business Day immediately preceding the Funding Date applicable thereto, by
telecopy, telephone, or other similar form of transmission, of the requested
Borrowing.  Each Lender shall make the
amount of such Lender’s Pro Rata Share of the requested Borrowing available to
Agent in immediately available funds, to Agent’s Account, not later than 10:00 a.m.
(California time) on the Funding Date applicable thereto.  After Agent’s receipt of the proceeds of such
Advances, Agent shall make the proceeds thereof available to Borrower on the
applicable Funding Date by transferring immediately available funds equal to
such proceeds received by Agent to Borrower’s Designated Account; provided,
however, that, subject to the provisions of Section 2.3(d)(ii),
Agent shall not request any Lender to make, and no Lender shall have the
obligation to make, any Advance if Agent shall have actual knowledge that (1) one
or more of the applicable conditions precedent set forth in Section 3
will not be satisfied on the requested Funding Date for the applicable
Borrowing unless such condition has been waived, or (2) the requested
Borrowing would exceed the Availability on such Funding Date.


 


(ii)           Unless Agent
receives notice from a Lender prior to 9:00 a.m. (California time) on the
date of a Borrowing, that such Lender will not make available as and when
required hereunder to Agent for the account of Borrower the amount of that
Lender’s Pro Rata Share of the Borrowing, Agent may assume that each Lender has
made or will make such amount available to Agent in immediately available funds
on the Funding Date and Agent may (but shall not be so required), in reliance
upon such assumption, make available to Borrower on such date a corresponding
amount.  If and to the extent any Lender
shall not have made its full amount available to Agent in immediately available
funds and Agent in such circumstances has made available to Borrower such
amount, that Lender shall on the Business Day following such Funding Date make
such amount available to Agent, together with interest at the Defaulting Lender
Rate for each day during such period.  A
notice submitted by Agent to any Lender with respect to amounts owing under
this subsection shall be conclusive, absent manifest error.  If such amount is so made available, such
payment to Agent shall constitute such Lender’s Advance on the date of
Borrowing for all purposes of this Agreement. 
If such amount is not made available to Agent on the Business Day
following the Funding Date, Agent will notify Borrower of such failure to fund
and, within 2 Business Days of a demand by Agent, Borrower shall pay such
amount to Agent for Agent’s account, together with interest thereon for each
day elapsed since the date of such Borrowing, at a rate per annum equal to the
interest rate applicable at the time to the Advances composing such
Borrowing.  The failure of any Lender to
make any Advance on any Funding Date shall not relieve any other Lender of any
obligation hereunder to make an Advance on such Funding Date, but no Lender
shall be responsible for the failure of any other Lender to make the Advance to
be made by such other Lender on any Funding Date.


 


(iii)          Agent shall not be
obligated to transfer to a Defaulting Lender any payments made by Borrower to
Agent for the Defaulting Lender’s benefit, and, in the absence of such transfer
to the Defaulting Lender, Agent shall transfer any such payments to each other
non-Defaulting Lender member of the Lender Group ratably in accordance with
their Commitments (but only to the extent that such Defaulting Lender’s Advance
was funded by the other members of the Lender Group) or, if so directed by
Borrower and if no Default or Event of Default had occurred and is continuing
(and to the extent such Defaulting Lender’s Advance was not funded by the
Lender Group), retain same to be re-advanced to Borrower as if such Defaulting
Lender had made Advances to Borrower. 
Subject to the foregoing, Agent may hold and, in its Permitted
Discretion, re-lend to Borrower for the account of such Defaulting Lender the
amount of all such payments received and retained by Agent for the account of
such Defaulting Lender.  Solely for the
purposes of voting or consenting to matters with respect to the Loan Documents,
such Defaulting Lender shall be deemed not to be a “Lender” and such Lender’s
Commitment shall be deemed to be zero. 
This Section shall


 


4





















 


remain effective with
respect to such Lender until (x) the Obligations under this Agreement shall
have been declared or shall have become immediately due and payable, (y) the
non-Defaulting Lenders, Agent, and Borrower shall have waived such Defaulting
Lender’s default in writing, or (z) the Defaulting Lender makes its Pro Rata
Share of the applicable Advance and pays to Agent all amounts owing by
Defaulting Lender in respect thereof. 
The operation of this Section shall not be construed to increase or
otherwise affect the Commitment of any Lender, to relieve or excuse the
performance by such Defaulting Lender or any other Lender of its duties and
obligations hereunder, or to relieve or excuse the performance by Borrower of
its duties and obligations hereunder to Agent or to the Lenders other than such
Defaulting Lender.  Any such failure to
fund by any Defaulting Lender shall constitute a material breach by such
Defaulting Lender of this Agreement and shall entitle Agent at its option to
arrange for a substitute Lender to assume the Commitment of such Defaulting
Lender; provided, however, that in the absence of notification by
Agent to Borrower that Agent has arranged for a substitute Lender, Borrower
may, at its option, upon written notice to Agent, arrange for a substitute
Lender to assume the Commitment of such Defaulting Lender, such substitute
Lender to be reasonably acceptable to Agent. 
In connection with the arrangement of such a substitute Lender, the
Defaulting Lender shall have no right to refuse to be replaced hereunder, and
agrees to execute and deliver a completed form of Assignment and Acceptance in
favor of the substitute Lender (and agrees that it shall be deemed to have
executed and delivered such document if it fails to do so) subject only to
being repaid its share of the outstanding Obligations without any premium or
penalty of any kind whatsoever; provided, however, that any such
assumption of the Commitment of such Defaulting Lender shall not be deemed to
constitute a waiver of any of the Lender Groups’ or Borrower’s rights or
remedies against any such Defaulting Lender arising out of or in relation to
such failure to fund.


 


(d)           Protective Advances and Optional Overadvances.


 


(i)            Agent hereby is
authorized by Borrower and the Lenders, from time to time in Agent’s sole discretion,
(A) after the occurrence and during the continuance of a Default or an
Event of Default or at any time that any of the other applicable conditions
precedent set forth in Section 3 are not satisfied, to make
Advances to Borrower on behalf of the Lenders that Agent, in its Permitted
Discretion, deems necessary or desirable to preserve or protect the Collateral,
or any portion thereof, or (B) after the occurrence and during the
continuance of an Event of Default, to make Advances to Borrower on behalf of
the Lenders that Agent, in its Permitted Discretion, deems necessary or
desirable to pay any other amount chargeable to Borrower pursuant to the terms
of this Agreement, including Lender Group Expenses and the costs, fees, and
expenses described in Section 9 (unless such amounts are the
subject of a Permitted Protest) (any of the Advances described in this Section 2.3(d)(i) shall
be referred to as “Protective Advances”).


 


(ii)           Any contrary
provision of this Agreement notwithstanding, the Lenders hereby authorize Agent
or Swing Lender, as applicable, and either Agent or Swing Lender, as
applicable, may, but is not obligated to, knowingly and intentionally, continue
to make Advances (including Swing Loans) to Borrower notwithstanding that an
Overadvance exists or thereby would be created, so long as (A) after
giving effect to such Advances, the outstanding Revolver Usage does not exceed
the Borrowing Base by more than $2,500,000, and (B) after giving effect to
such Advances, the outstanding Revolver Usage (except for and excluding amounts
charged to the Loan Account for interest, fees, or Lender Group Expenses) does
not exceed the Maximum Revolver Amount. 
In the event Agent obtains actual knowledge that the Revolver Usage
exceeds the amounts permitted by the immediately foregoing provisions,
regardless of the amount of, or reason for, such excess, Agent shall notify the
Lenders as soon as practicable (and prior to making any (or any additional)
intentional Overadvances (except for and excluding amounts charged to the Loan
Account for interest, fees, or Lender Group Expenses) unless Agent determines
that prior notice would result in imminent harm to the Collateral or its
value), and the Lenders with Revolver Commitments thereupon shall, together
with Agent, jointly determine the terms of arrangements that shall be
implemented with Borrower intended to reduce, within a reasonable time, the
outstanding principal amount of the Advances to Borrower to an amount permitted
by the preceding paragraph.  In such
circumstances, if any Lender with a Revolver Commitment objects to the proposed
terms of reduction or repayment of any Overadvance, the terms of reduction or
repayment thereof shall be implemented according to the determination of the
Required Lenders.  Each Lender


 


5





















 


with a Revolver Commitment
shall be obligated to settle with Agent as provided in Section 2.3(e) for
the amount of such Lender’s Pro Rata Share of any unintentional Overadvances by
Agent reported to such Lender, any intentional Overadvances made as permitted
under this Section 2.3(d)(ii), and any Overadvances resulting from
the charging to the Loan Account of interest, fees, or Lender Group Expenses.


 


(iii)          Each Protective
Advance and each Overadvance shall be deemed to be an Advance hereunder, except
that no Protective Advance or Overadvance shall be eligible to be a LIBOR Rate
Loan and all payments on the Protective Advances shall be payable to Agent
solely for its own account.  The
Protective Advances and Overadvances shall be repayable on demand, secured by
the Agent’s Liens, constitute Obligations hereunder, and bear interest at the
rate applicable from time to time to Advances that are Base Rate Loans.  The provisions of this Section 2.3(d) are
for the exclusive benefit of Agent, Swing Lender, and the Lenders and are not
intended to benefit Borrower in any way.


 


(iv)          Notwithstanding anything to the contrary contained in this Agreement, the
aggregate amount of Protective Advances and Overadvances outstanding under this
Agreement shall not exceed, at any one time, $3,500,000 without the consent of
all Lenders.


 


(e)           Settlement.  It
is agreed that each Lender’s funded portion of the Advances is intended by the
Lenders to equal, at all times, such Lender’s Pro Rata Share of the outstanding
Advances.  Such agreement
notwithstanding, Agent, Swing Lender, and the other Lenders agree (which
agreement shall not be for the benefit of Borrower) that in order to facilitate
the administration of this Agreement and the other Loan Documents, settlement
among the Lenders as to the Advances, the Swing Loans, and the Protective
Advances shall take place on a periodic basis in accordance with the following
provisions:


 


(i)            Agent shall request
settlement (“Settlement”) with the Lenders on a weekly basis, or on a
more frequent basis if so determined by Agent (1) on behalf of Swing
Lender, with respect to the outstanding Swing Loans, (2) for itself, with
respect to the outstanding Protective Advances, and (3) with respect to Borrower’s
or its Subsidiaries’ Collections received, as to each by notifying the Lenders
by telecopy, telephone, or other similar form of transmission, of such
requested Settlement, no later than 2:00 p.m. (California time) on the
Business Day immediately prior to the date of such requested Settlement (the
date of such requested Settlement being the “Settlement Date”).  Such notice of a Settlement Date shall
include a summary statement of the amount of outstanding Advances, Swing Loans,
and Protective Advances for the period since the prior Settlement Date.  Subject to the terms and conditions contained
herein (including Section 2.3(b)(iii)):  (y) if a Lender’s balance of the Advances
(including Swing Loans and Protective Advances) exceeds such Lender’s Pro Rata
Share of the Advances (including Swing Loans and Protective Advances) as of a
Settlement Date, then Agent shall, by no later than 12:00 p.m. (California
time) on the Settlement Date, transfer in immediately available funds to a
Deposit Account of such Lender (as such Lender may designate), an amount such
that each such Lender shall, upon receipt of such amount, have as of the
Settlement Date, its Pro Rata Share of the Advances (including Swing Loans and
Protective Advances), and (z) if a Lender’s balance of the Advances (including
Swing Loans and Protective Advances) is less than such Lender’s Pro Rata Share
of the Advances (including Swing Loans and Protective Advances) as of a
Settlement Date, such Lender shall no later than 12:00 p.m. (California time)
on the Settlement Date transfer in immediately available funds to the Agent’s
Account, an amount such that each such Lender shall, upon transfer of such
amount, have as of the Settlement Date, its Pro Rata Share of the Advances
(including Swing Loans and Protective Advances).  Such amounts made available to Agent under
clause (z) of the immediately preceding sentence shall be applied against the
amounts of the applicable Swing Loans or Protective Advances and, together with
the portion of such Swing Loans or Protective Advances representing Swing
Lender’s Pro Rata Share thereof, shall constitute Advances of such
Lenders.  If any such amount is not made
available to Agent by any Lender on the Settlement Date applicable thereto to
the extent required by the terms hereof, Agent shall be entitled to recover for
its account such amount on demand from such Lender together with interest
thereon at the Defaulting Lender Rate.


 


6





















 


(ii)           In determining
whether a Lender’s balance of the Advances, Swing Loans, and Protective
Advances is less than, equal to, or greater than such Lender’s Pro Rata Share
of the Advances, Swing Loans, and Protective Advances as of a Settlement Date,
Agent shall, as part of the relevant Settlement, apply to such balance the
portion of payments actually received in good funds by Agent with respect to
principal, interest, fees payable by Borrower and allocable to the Lenders
hereunder, and proceeds of Collateral. 
To the extent that a net amount is owed to any such Lender after such
application, such net amount shall be distributed by Agent to that Lender as
part of such next Settlement.


 


(iii)          Between Settlement
Dates, Agent, to the extent no Protective Advances or Swing Loans are
outstanding, may pay over to Swing Lender any payments received by Agent, that
in accordance with the terms of this Agreement would be applied to the
reduction of the Advances, for application to Swing Lender’s Pro Rata Share of
the Advances.  If, as of any Settlement
Date, Collections of Parent, Borrower, or Borrower’s Subsidiaries received
since the then immediately preceding Settlement Date have been applied to Swing
Lender’s Pro Rata Share of the Advances other than to Swing Loans, as provided
for in the previous sentence, Swing Lender shall pay to Agent for the accounts
of the Lenders, and Agent shall pay to the Lenders, to be applied to the
outstanding Advances of such Lenders, an amount such that each Lender shall,
upon receipt of such amount, have, as of such Settlement Date, its Pro Rata
Share of the Advances.  During the period
between Settlement Dates, Swing Lender with respect to Swing Loans, Agent with
respect to Protective Advances, and each Lender (subject to the effect of
agreements between Agent and individual Lenders) with respect to the Advances
other than Swing Loans and Protective Advances, shall be entitled to interest
at the applicable rate or rates payable under this Agreement on the daily
amount of funds employed by Swing Lender, Agent, or the Lenders, as applicable.


 


(f)            Notation.  Agent
shall record on its books the principal amount of the Advances owing to each
Lender, including the Swing Loans owing to Swing Lender, and Protective
Advances owing to Agent, and the interests therein of each Lender, from time to
time and such records shall, absent manifest error, conclusively be presumed to
be correct and accurate.


 


(g)           Lenders’ Failure to Perform.  All Advances (other than Swing
Loans and Protective Advances) shall be made by the Lenders contemporaneously
and in accordance with their Pro Rata Shares. 
It is understood that (i) no Lender shall be responsible for any
failure by any other Lender to perform its obligation to make any Advance (or
other extension of credit) hereunder, nor shall any Commitment of any Lender be
increased or decreased as a result of any failure by any other Lender to
perform its obligations hereunder, and (ii) no failure by any Lender to
perform its obligations hereunder shall excuse any other Lender from its
obligations hereunder.


 


2.4           Payments.


 


(a)           Payments by Borrower.


 


(i)            Except as otherwise
expressly provided herein, all payments by Borrower shall be made to Agent’s
Account for the account of the Lender Group and shall be made in immediately
available funds, no later than 11:00 a.m. (California time) on the date
specified herein.  Any payment received
by Agent later than 11:00 a.m. (California time) shall be deemed to have
been received on the following Business Day and any applicable interest or fee
shall continue to accrue until such following Business Day.


 


(ii)           Unless Agent
receives notice from Borrower prior to the date on which any payment is due to
the Lenders that Borrower will not make such payment in full as and when
required, Agent may assume that Borrower has made (or will make) such payment
in full to Agent on such date in immediately available funds and Agent may (but
shall not be so required), in reliance upon such assumption, distribute to each
Lender on such due date an amount equal to the amount then due such
Lender.  If and to the extent Borrower
does not make such payment in full to Agent on the date when due, each Lender
severally shall repay to Agent on demand such amount distributed to such
Lender, together with interest thereon at the


 


7





















 


Defaulting Lender Rate for
each day from the date such amount is distributed to such Lender until the date
repaid.


 


(b)           Apportionment and Application.


 


(i)            Except as otherwise
provided with respect to Defaulting Lenders and except as otherwise provided in
the Loan Documents (including agreements between Agent and individual Lenders),
aggregate principal and interest payments shall be apportioned ratably among
the Lenders (according to the unpaid principal balance of the Obligations to
which such payments relate held by each Lender) and payments of fees and
expenses (other than fees or expenses that are for Agent’s separate account,
after giving effect to any agreements between Agent and individual Lenders)
shall be apportioned ratably among the Lenders having a Pro Rata Share of the
type of Commitment or Obligation to which a particular fee relates.  All payments shall be remitted to Agent and
all such payments, and all proceeds of Collateral received by Agent, shall be
applied as follows (provided that so long as no Event of Default has occurred
and is continuing, Agent shall be entitled to apply the proceeds of Collections
to reduce the balance of the Advances outstanding):


 


(A)          first, ratably
to pay any Lender Group Expenses then due to Agent or any of the Lenders under
the Loan Documents, until paid in full,


 


(B)           second,
ratably to pay any fees or premiums then due to Agent or any of the Lenders
under the Loan Documents until paid in full,


 


(C)           third, to pay
interest due in respect of all Protective Advances until paid in full,


 


(D)          fourth, to pay
the principal of all Protective Advances until paid in full,


 


(E)           fifth,
ratably to pay interest due in respect of the Advances (other than Protective
Advances), the Swing Loans, and the Term Loan until paid in full,


 


(F)           sixth,
ratably to pay all principal amounts then due and payable (other than as a
result of an acceleration thereof) with respect to the Term Loan until paid in
full,


 


(G)           seventh, to
pay the principal of all Swing Loans until paid in full,


 


(H)          eighth, so
long as no Event of Default has occurred and is continuing, to pay the
principal of all Advances until paid in full,


 


(I)            ninth, if an
Event of Default has occurred and is continuing, ratably (i) to pay the
principal of all Advances until paid in full, and (ii) to Agent, to be
held by Agent, for the ratable benefit of Issuing Lender and those Lenders
having a Revolver Commitment, as cash collateral in an amount up to 105% of the
Letter of Credit Usage,


 


(J)            tenth, if an
Event of Default has occurred and is continuing, to pay the outstanding
principal balance of the Term Loan (in the inverse order of the maturity of the
installments due thereunder) until the Term Loan is paid in full,


 


(K)          eleventh, if
an Event of Default has occurred and is continuing, to pay any other
Obligations, and


 


(L)           twelfth, to
Borrower (to be wired to the Designated Account) or such other Person entitled
thereto under applicable law.


 


8





















 


(ii)        Agent promptly shall
distribute to each Lender, pursuant to the applicable wire instructions
received from each Lender in writing, such funds as it may be entitled to
receive, subject to a Settlement delay as provided in Section 2.3(e).


 


(iii)       In each instance, so
long as no Event of Default has occurred and is continuing, Section 2.4(b)(i) shall
not apply to any payment made by Borrower to Agent and specified by Borrower to
be for the payment of specific Obligations then due and payable (or prepayable)
under any provision of this Agreement.


 


(iv)       For purposes of Section 2.4(b)(i),
“paid in full” means payment of all amounts owing under the Loan Documents
according to the terms thereof, including loan fees, service fees, professional
fees, interest (and specifically including interest accrued after the
commencement of any Insolvency Proceeding), default interest, interest on
interest, and expense reimbursements, whether or not any of the foregoing would
be or is allowed or disallowed in whole or in part in any Insolvency
Proceeding.


 


(v)        In the event of a
direct conflict between the priority provisions of this Section 2.4
and any other provision contained in any other Loan Document, it is the
intention of the parties hereto that such provisions be read together and
construed, to the fullest extent possible, to be in concert with each
other.  In the event of any actual,
irreconcilable conflict that cannot be resolved as aforesaid, the terms and
provisions of this Section 2.4 shall control and govern.


 


(c)           Mandatory
Prepayments.


 


(i)            Immediately upon
any voluntary or involuntary sale or disposition of property or assets of
Parent (other than Stock owned by Parent that is not the Stock of Borrower or
any of Borrower’s Subsidiaries), Borrower, or any of Borrower’s Subsidiaries
(including casualty losses or condemnations but excluding sales or dispositions
which qualify as Permitted Dispositions), Borrower shall prepay the outstanding
principal balance of the Term Loan in accordance with Section 2.4(d) in
an amount equal to 100% of the Net Cash Proceeds in excess of $250,000 per year
received by all such Persons, in the aggregate, in connection with such sales
or dispositions; provided that, so long as (A) no Event of Default
shall have occurred and is continuing, (B) Borrower shall have given Agent
prior written notice of Parent’s, Borrower, or Borrower’s Subsidiaries’
intention to apply such Net Cash Proceeds to the costs of replacement of the
properties or assets which are the subject of such sale or disposition or the
cost of purchase or construction of other assets useful in the business of
Parent and Borrower and its Subsidiaries, (C) such Net Cash Proceeds are
held in a Deposit Account in which Agent has a perfected first-priority
security interest, and (D) Parent, Borrower, and Borrower’s Subsidiaries
complete such replacement, repair, purchase or construction within 180 days
after the initial receipt of such Net Cash Proceeds (or enter into a commitment
for such replacement, repair, purchase or construction within 180 days after
the initial receipt of such Net Cash Proceeds so long as such replacement,
purchase, or construction is completed within 270 days after the initial
receipt of such Net Cash Proceeds), Parent, Borrower and Borrower’s
Subsidiaries shall have the option to apply such Net Cash Proceeds to the costs
of replacement or repair of the property or assets which are the subject of
such sale or disposition or the costs of purchase or construction of other
assets useful in the business of Parent, Borrower, and Borrower’s Subsidiaries
unless and to the extent that (x) such applicable period shall have expired
without such replacement, repair, purchase or construction being made or
completed or (y) any Event of Default occurs and is continuing (and in the case
of either (x) or (y), any amounts remaining in the cash collateral account
shall be paid to Agent and applied as set forth above).  Nothing contained in this subclause (i) shall
permit Parent, Borrower, or any of Borrower’s Subsidiaries to sell or otherwise
dispose of any property or assets other than in accordance with Section 6.4.


 


(ii)           After the
occurrence and during the continuation of an Event of Default, and immediately
upon the receipt by Parent, Borrower, or any of Borrower’s Subsidiaries of any
Extraordinary Receipts, Borrower shall prepay the outstanding principal balance
of the Term Loan in accordance with clause (d) below in an amount
equal to 100% of such Extraordinary Receipts, net of any fees, commissions, and


 


9





















 


expenses incurred (including
taxes paid, payable, or estimated to be payable) in collecting or receiving
such Extraordinary Receipts.


 


(iii)          Immediately upon
the issuance or incurrence by Parent, Borrower or any of their respective Subsidiaries
of any Indebtedness permitted under Section 6.1(k), to the extent
that such Indebtedness is incurred on or after January 1, 2006, Borrower
shall prepay the outstanding principal balance of the Term Loan in accordance
with clause (d) below, in an amount equal to 100% of the Net Cash
Proceeds of such Indebtedness.


 


(d)           Application of Payments. 
 Each such prepayment
of the Term Loan pursuant to Sections 2.4(c)(i), 2.4(c)(ii) or
2.4(c)(iii) hereof shall be applied against the remaining
installments of principal of the Term Loan in the inverse order of their
maturity.


 


2.5           Overadvances.  If, at any time or for any reason, the
amount of Obligations owed by Borrower to the Lender Group pursuant to Section 2.1
or Section 2.12 is greater than any of the limitations set forth in
Section 2.1 or Section 2.12, as applicable (an “Overadvance”),
Borrower immediately shall pay to Agent, in cash, the amount of such excess,
which amount shall be used by Agent to reduce the Obligations in accordance
with the priorities set forth in Section 2.4(b).  In addition, Borrower hereby promises to pay
the Obligations (including principal, interest, fees, costs, and expenses) in
Dollars in full as and when due and payable under the terms of this Agreement
and the other Loan Documents.


 


2.6           Interest Rates and Letter of Credit Fee:  Rates, Payments, and Calculations.


 


(a)           Interest Rates. 
Except as provided in clause (c) below, all Obligations
(except for undrawn Letters of Credit) that have been charged to the Loan
Account pursuant to the terms hereof shall bear interest on the Daily Balance
thereof as follows (i) if the relevant Obligation is a LIBOR Rate Loan, at
a per annum rate equal to the LIBOR Rate plus the LIBOR Rate Margin, and (ii) otherwise,
at a per annum rate equal to the Base Rate plus the Base Rate Margin.


 


The foregoing
notwithstanding, at no time shall any portion of the Obligations bear interest
on the Daily Balance thereof at a per annum rate less than 5.0%.  To the extent that interest accrued hereunder
at the rate set forth herein would be less than the foregoing minimum daily
rate, the interest rate chargeable hereunder for such day automatically shall
be deemed increased to the minimum rate.


 


(b)           Letter of Credit Fee. 
Borrower shall pay Agent (for the ratable benefit of the
Lenders with a Revolver Commitment, subject to any agreements between Agent and
individual Lenders), a Letter of Credit fee (in addition to the charges,
commissions, fees, and costs set forth in Section 2.12(e)) which
shall accrue at a rate equal to 2.0% per annum times
the Daily Balance of the undrawn amount of all outstanding Letters
of Credit.


 


(c)           Default Rate.  Upon
the occurrence and during the continuation of an Event of Default (and at the
election of Agent or the Required Lenders),


 


(i)            all Obligations
(except for undrawn Letters of Credit) that have been charged to the Loan
Account pursuant to the terms hereof shall bear interest on the Daily Balance
thereof at a per annum rate equal to 2 percentage points above the per annum
rate otherwise applicable hereunder, and


 


(ii)           the Letter of
Credit fee provided for in Section 2.6(b) shall be increased
to 2 percentage points above the per annum rate otherwise applicable hereunder.


 


(d)           Payment.  Except
as provided to the contrary in Section 2.11 or Section 2.13(a),
interest, Letter of Credit fees, and all other fees payable hereunder shall be
due and payable, in arrears, on the first day of each month at any time that
Obligations or Commitments are outstanding. 
Borrower hereby authorizes Agent, from time to time without prior notice
to Borrower, to charge all interest and fees (when due


 


10





















 


and payable), all Lender
Group Expenses (as and when incurred), all charges, commissions, fees, and costs
provided for in Section 2.12(e) (as and when accrued or
incurred), all fees and costs provided for in Section 2.11 (as and
when accrued or incurred), and all other payments as and when due and payable
under any Loan Document (including the amounts due and payable with respect to
the Term Loan) to the Loan Account, which amounts thereafter shall constitute
Advances hereunder and shall accrue interest at the rate then applicable to
Advances that are Base Rate Loans, provided, however, that so
long as no Event of Default has occurred and is continuing, Agent shall not be
authorized to charge the Loan Account for any such payment until Agent has
provided Borrower with notice that such payment is due and such payment is not
received by Agent within 2 Business Days after the date that such notice is
provided (it being understood that nothing in the foregoing proviso shall
affect the date that such payment is due and payable).  Any interest not paid when due shall be compounded
by being charged to the Loan Account and shall thereafter constitute Advances
hereunder and shall accrue interest at the rate then applicable to Advances
that are Base Rate Loans.


 


(e)           Computation.  All
interest and fees chargeable under the Loan Documents shall be computed on the
basis of a 360 day year for the actual number of days elapsed.  In the event the Base Rate is changed from
time to time hereafter, the rates of interest hereunder based upon the Base
Rate automatically and immediately shall be increased or decreased by an amount
equal to such change in the Base Rate.


 


(f)            Intent to Limit Charges to Maximum Lawful Rate.  In no event shall the interest
rate or rates payable under this Agreement, plus any other amounts paid in
connection herewith, exceed the highest rate permissible under any law that a
court of competent jurisdiction shall, in a final determination, deem
applicable.  Borrower and the Lender
Group, in executing and delivering this Agreement, intend legally to agree upon
the rate or rates of interest and manner of payment stated within it; provided,
however, that, anything contained herein to the contrary
notwithstanding, if said rate or rates of interest or manner of payment exceeds
the maximum allowable under applicable law, then, ipso facto, as of the date of this Agreement, Borrower is
and shall be liable only for the payment of such maximum as allowed by law, and
payment received from Borrower in excess of such legal maximum, whenever
received, shall be applied to reduce the principal balance of the Obligations
to the extent of such excess.


 


2.7           Cash
Management.


 


(a)           Parent and Borrower
shall and Borrower shall cause each of its Subsidiaries to (i) establish
on the Closing Date cash management services of a type and on terms
satisfactory to the Required Lenders and maintain from and after the Closing
Date cash management services of a type and on terms similar to those cash
management services established on the Closing Date (it being understood that
the cash management services established on the Closing Date are satisfactory
to the Required Lenders), at one or more of the banks set forth on Schedule 2.7(a) (each
a “Cash Management Bank”), (ii) request in writing and otherwise
take such reasonable steps to ensure that all of its and its Subsidiaries’
Account Debtors and Credit Card Processors forward payment of the amounts owed
by them directly to such Cash Management Bank, and (iii) deposit or cause
to be deposited promptly, and in any event no later than the first Business Day
after the date of receipt thereof, all of their Collections (including those
sent directly by their Account Debtors and Credit Card Processors to Parent,
Borrower, or one of Borrower’s Subsidiaries) into a bank account in Parent’s,
Borrower’s, or such Subsidiary’s name (a “Cash Management Account”) at
one of the Cash Management Banks.


 


(b)           Each Cash Management
Bank shall establish and maintain Cash Management Agreements with Agent,
Parent, Borrower, and Borrower’s Subsidiaries. 
Each such Cash Management Agreement shall provide, among other things,
that (i) the Cash Management Bank will comply with any instructions
originated by Agent directing the disposition of the funds in such Cash
Management Account without further consent by Parent, Borrower, or Borrower’s
Subsidiaries, as applicable, (ii) the Cash Management Bank has no rights
of setoff or recoupment or any other claim against the applicable Cash
Management Account other than for payment of its service fees and other charges
directly related to the administration of such Cash Management Account and for
returned checks or other items of payment, and (iii) from and after the
date that the Cash Management Bank receives written notification from Agent,
the Cash


 


11





















 


Management Bank will
forward, by daily sweep, all amounts in the applicable Cash Management Account
to the Agent’s Account.  Agent agrees
that it shall not provide such written notification to the Cash Management Bank
unless and until either of the following events (each, a “Triggering Event”)
has occurred:  (A) an Event of
Default has occurred and is continuing, or (B) Excess Availability plus
Qualified Cash is less than (i) $50,000,000 at any time during the period
from and after the date of the execution and delivery of this Agreement up to
(but not including) the date that is the first anniversary of the Closing Date,
and (ii) $40,000,000 at any time thereafter.  Once a Triggering Event has occurred, Agent
shall be free to exercise its right to issue such notice and the subsequent
elimination, cure, or waiver of such Triggering Event shall not eliminate the
effectiveness of such notice.


 


(c)           Schedule 2.7(c) sets
forth all of Parent’s, Borrower’s and each of Borrower’s Subsidiaries’ Credit
Card Processors.  Parent and Borrower
shall establish and maintain (and Borrower shall cause its Subsidiaries that
receive Collections through credit card charges to establish and maintain)
Credit Card Agreements with Agent and each Credit Card Processor.  Each such Credit Card Agreement shall
provide, among other things, that each such Credit Card Processor shall
transfer all proceeds of credit card charges for sales by Parent, Borrower, or
such Subsidiary, as applicable, received by it (or other amounts payable by
such Credit Card Processor) into a Cash Management Account on a daily
basis.  Neither Parent, Borrower, nor any
Subsidiary of Borrower may change the designation of a Cash Management Account
in any Credit Card Agreement as the Deposit Account to which all such proceeds
must be transferred without the prior written consent of Agent, and neither
Parent, Borrower, nor any Subsidiary of Borrower shall cause the proceeds of
credit card charges to be transferred to any Deposit Account other than a Cash
Management Account.


 


(d)           So long as no Event
of Default has occurred and is continuing, Borrower may amend Schedule 2.7(a) or
Schedule 2.7(c) to add or replace a Cash Management Bank, Cash
Management Account, or Credit Card Processor; provided, however,
that (i) prior to the time of the opening of such Cash Management Account,
Parent, Borrower (or Borrower’s Subsidiary, as applicable) and such prospective
Cash Management Bank shall have executed and delivered to Agent a Cash
Management Agreement, and (ii) prior to adding or replacing such Credit
Card Processor, Parent, Borrower (or Borrower’s Subsidiary, as applicable) and
such prospective Credit Card Processor shall have executed and delivered to
Agent a Credit Card Agreement.


 


(e)           Each Cash Management
Account shall be subject to a Control Agreement.


 


2.8           Crediting
Payments.  The receipt of
any payment item by Agent (whether from transfers to Agent by the Cash
Management Banks pursuant to the Cash Management Agreements or otherwise) shall
not be considered a payment on account unless such payment item is a wire
transfer of immediately available federal funds made to the Agent’s Account or
unless and until such payment item is honored when presented for payment.  Should any payment item not be honored when
presented for payment, then Borrower shall be deemed not to have made such
payment and interest shall be calculated accordingly.  Anything to the contrary contained herein
notwithstanding, any payment item shall be deemed received by Agent only if it
is received into the Agent’s Account on a Business Day on or before 11:00 a.m.
(California time).  If any payment item
is received into the Agent’s Account on a non-Business Day or after 11:00 a.m.
(California time) on a Business Day, it shall be deemed to have been received
by Agent as of the opening of business on the immediately following Business
Day.


 


2.9           Designated
Account.  Agent is
authorized to make the Advances and the Term Loan, and Issuing Lender is
authorized to issue the Letters of Credit, under this Agreement based upon
telephonic or other instructions received from anyone purporting to be an
Authorized Person or, without instructions, if pursuant to Section 2.6(d).  Borrower agrees to establish and maintain the
Designated Account with the Designated Account Bank for the purpose of
receiving the proceeds of the Advances requested by Borrower and made by Agent
or the Lenders hereunder.  Unless
otherwise specified in writing by Borrower, any Advance, Protective Advance, or
Swing Loan requested by Borrower and made by Agent or the Lenders hereunder
shall be made to the Designated Account.


 


12





















 


2.10         Maintenance
of Loan Account; Statements of Obligations.  Agent shall maintain an account on its
books in the name of Borrower (the “Loan Account”) on which Borrower
will be charged with the Term Loan, all Advances (including Protective Advances
and Swing Loans) made by Agent, Swing Lender, or the Lenders to Borrower or for
Borrower’s account, the Letters of Credit issued by Issuing Lender for Borrower’s
account, and with all other payment Obligations hereunder or under the other
Loan Documents, including, accrued interest, fees and expenses, and Lender
Group Expenses.  In accordance with Section 2.8,
the Loan Account will be credited with all payments received by Agent from
Borrower or for Borrower’s account, including all amounts received in the Agent’s
Account from any Cash Management Bank. 
Agent shall render statements regarding the Loan Account to Borrower,
including principal, interest, fees, and including an itemization of all
charges and expenses constituting Lender Group Expenses owing, and such
statements, absent manifest error, shall be conclusively presumed to be correct
and accurate and constitute an account stated between Borrower and the Lender
Group unless, within 30 days after receipt thereof by Borrower, Borrower shall
deliver to Agent written objection thereto describing the error or errors
contained in any such statements.


 


2.11         Fees.  Borrower shall pay to Agent, as and when
due and payable under the terms of the Fee Letter, the fees set forth in the
Fee Letter.


 


2.12         Letters
of Credit.


 


(a)           Subject to the terms
and conditions of this Agreement, the Issuing Lender agrees to issue letters of
credit for the account of Borrower (each, an “L/C”) or to purchase
participations or execute indemnities or reimbursement obligations (each such
undertaking, an “L/C Undertaking”) with respect to letters of credit
issued by an Underlying Issuer (as of the Closing Date, the prospective
Underlying Issuer is to be Wells Fargo) for the account of Borrower.  Each request for the issuance of a Letter of
Credit, or the amendment, renewal, or extension of any outstanding Letter of
Credit, shall be made in writing by an Authorized Person and delivered to the
Issuing Lender and Agent via hand delivery, telefacsimile, or other electronic
method of transmission reasonably in advance of the requested date of issuance,
amendment, renewal, or extension.  Each
such request shall be in form satisfactory to the Issuing Lender in its Permitted
Discretion and shall specify (i) the amount of such Letter of Credit, (ii) the
date of issuance, amendment, renewal, or extension of such Letter of Credit, (iii) the
expiration date of such Letter of Credit, (iv) the name and address of the
beneficiary thereof (or the beneficiary of the Underlying Letter of Credit, as
applicable), and (v) such other information (including, in the case of an
amendment, renewal, or extension, identification of the outstanding Letter of
Credit to be so amended, renewed, or extended) as shall be necessary to
prepare, amend, renew, or extend such Letter of Credit.  If requested by the Issuing Lender, Borrower
also shall be an applicant under the application with respect to any Underlying
Letter of Credit that is to be the subject of an L/C Undertaking.  The Issuing Lender shall have no obligation
to issue a Letter of Credit if any of the following would result after giving
effect to the issuance of such requested Letter of Credit:


 


(i)            the Letter of
Credit Usage would exceed the Borrowing Base less
the outstanding amount of Advances, or


 


(ii)           the Letter of
Credit Usage would exceed $15,000,000, or


 


(iii)          the Letter of
Credit Usage would exceed the Maximum Revolver Amount less the outstanding amount of Advances.


 


Borrower and the Lender
Group acknowledge and agree that certain Underlying Letters of Credit may be
issued to support letters of credit that already are outstanding as of the
Closing Date.  Each Letter of Credit (and
corresponding Underlying Letter of Credit) shall be in form and substance
acceptable to the Issuing Lender (in the exercise of its Permitted Discretion),
including the requirement that the amounts payable thereunder must be payable
in Dollars.  If Issuing Lender is
obligated to advance funds under a Letter of Credit, Borrower immediately shall
reimburse such L/C Disbursement to Issuing Lender by paying to Agent


 


13





















 


an amount equal to such L/C
Disbursement not later than 11:00 a.m., California time, on the date that
such L/C Disbursement is made, if Borrower shall have received written or
telephonic notice of such L/C Disbursement prior to 10:00 a.m., California
time, on such date, or, if such notice has not been received by Borrower prior
to such time on such date, then not later than 11:00 a.m., California
time, on the Business Day that Borrower receives such notice, if such notice is
received prior to 10:00 a.m., California time, on the date of receipt,
and, in the absence of such reimbursement, the L/C Disbursement immediately and
automatically shall be deemed to be an Advance hereunder and, thereafter, shall
bear interest at the rate then applicable to Advances that are Base Rate Loans
unless and until converted to a LIBOR Rate Loan.  To the extent an L/C Disbursement is deemed
to be an Advance hereunder, Borrower’s obligation to reimburse such L/C
Disbursement shall be discharged and replaced by the resulting Advance.  Promptly following receipt by Agent of any
payment from Borrower pursuant to this paragraph, Agent shall distribute such
payment to the Issuing Lender or, to the extent that Lenders have made payments
pursuant to Section 2.12(b) to reimburse the Issuing Lender,
then to such Lenders and the Issuing Lender as their interests may appear.


 


(b)           Promptly following
receipt of a notice of L/C Disbursement pursuant to Section 2.12(a),
each Lender with a Revolver Commitment agrees to fund its Pro Rata Share of any
Advance deemed made pursuant to the foregoing subsection on the same terms
and conditions as if Borrower had requested such Advance and Agent shall
promptly pay to Issuing Lender the amounts so received by it from the
Lenders.  By the issuance of a Letter of
Credit (or an amendment to a Letter of Credit increasing the amount thereof)
and without any further action on the part of the Issuing Lender or the Lenders
with Revolver Commitments, the Issuing Lender shall be deemed to have granted
to each Lender with a Revolver Commitment, and each Lender with a Revolver
Commitment shall be deemed to have purchased, a participation in each Letter of
Credit, in an amount equal to its Pro Rata Share of the Risk Participation
Liability of such Letter of Credit, and each such Lender agrees to pay to
Agent, for the account of the Issuing Lender, such Lender’s Pro Rata Share of
any payments made by the Issuing Lender under such Letter of Credit.  In consideration and in furtherance of the
foregoing, each Lender with a Revolver Commitment hereby absolutely and
unconditionally agrees to pay to Agent, for the account of the Issuing Lender,
such Lender’s Pro Rata Share of each L/C Disbursement made by the Issuing
Lender and not reimbursed by Borrower on the date due as provided in Section 2.12(a),
or of any reimbursement payment required to be refunded to Borrower for any
reason.  Each Lender with a Revolver
Commitment acknowledges and agrees that its obligation to deliver to Agent, for
the account of the Issuing Lender, an amount equal to its respective Pro Rata
Share of each L/C Disbursement made by the Issuing Lender pursuant to this Section 2.12(b) shall
be absolute and unconditional and such remittance shall be made notwithstanding
the occurrence or continuation of an Event of Default or Default or the failure
to satisfy any condition set forth in Section 3.  If any such Lender fails to make available to
Agent the amount of such Lender’s Pro Rata Share of each L/C Disbursement made
by the Issuing Lender in respect of such Letter of Credit as provided in this
Section, such Lender shall be deemed to be a Defaulting Lender and Agent (for
the account of the Issuing Lender) shall be entitled to recover such amount on
demand from such Lender together with interest thereon at the Defaulting Lender
Rate until paid in full.


 


(c)           Borrower hereby
agrees to indemnify, save, defend, and hold the Lender Group harmless from any
loss, cost, expense, or liability, and reasonable attorneys fees incurred by
the Lender Group arising out of or in connection with any Letter of Credit; provided,
however, that Borrower shall not be obligated hereunder to indemnify for
any loss, cost, expense, or liability to the extent that it is caused by the
gross negligence or willful misconduct of the Issuing Lender or any other
member of the Lender Group.  Borrower
agrees to be bound by the Underlying Issuer’s regulations and interpretations
of any Underlying Letter of Credit or by Issuing Lender’s interpretations of
any L/C issued by Issuing Lender to or for Borrower’s account, even though this
interpretation may be different from Borrower’s own, and Borrower understands
and agrees that the Lender Group shall not be liable for any error, negligence,
or mistake, whether of omission or commission, in following Borrower’s
instructions or those contained in the Letter of Credit or any modifications,
amendments, or supplements thereto. 
Borrower understands that the L/C Undertakings may require Issuing
Lender to indemnify the Underlying Issuer for certain costs or liabilities
arising out of claims by Borrower against such Underlying Issuer.  Borrower hereby agrees to indemnify, save,
defend, and


 


14





















 


hold the Lender Group
harmless with respect to any loss, cost, expense (including reasonable
attorneys fees), or liability incurred by the Lender Group under any L/C
Undertaking; provided, however, that Borrower shall not be
obligated hereunder to indemnify for any loss, cost, expense, or liability to
the extent that it is caused by the gross negligence or willful misconduct of
the Issuing Lender or any other member of the Lender Group.  Borrower hereby acknowledges and agrees that
neither the Lender Group nor the Issuing Lender shall be responsible for
delays, errors, or omissions resulting from the malfunction of equipment in connection
with any Letter of Credit.


 


(d)           Borrower hereby
authorizes and directs any Underlying Issuer to deliver to the Issuing Lender
all instruments, documents, and other writings and property received by such
Underlying Issuer pursuant to such Underlying Letter of Credit and to accept
and rely upon the Issuing Lender’s instructions with respect to all matters
arising in connection with such Underlying Letter of Credit and the related
application.


 


(e)           Any and all issuance
charges, commissions, fees, and costs incurred by the Issuing Lender relating
to Underlying Letters of Credit shall be Lender Group Expenses for purposes of
this Agreement and immediately shall be reimbursable by Borrower to Agent for
the account of the Issuing Lender; it being acknowledged and agreed by Borrower
that, as of the Closing Date, the issuance charge imposed by the prospective
Underlying Issuer is .525% per annum times the undrawn amount of each
Underlying Letter of Credit, that such issuance charge may be changed from time
to time (if and to the extent that the Underlying Issuer changes such issuance
charge generally with respect to its customers), and that the Underlying Issuer
also imposes a schedule of charges for amendments, extensions, drawings,
and renewals.


 


(f)            If by reason of (i) any
change after the Closing Date in any applicable law, treaty, rule, or
regulation or any change in the interpretation or application thereof by any
Governmental Authority, or (ii) compliance by the Underlying Issuer or the
Lender Group with any direction, request, or requirement (irrespective of
whether having the force of law) of any Governmental Authority or monetary
authority including, Regulation D of the Federal Reserve Board as from time to
time in effect (and any successor thereto):


 


(i)         any reserve, deposit,
or similar requirement is or shall be imposed or modified in respect of any
Letter of Credit issued hereunder, or


 


(ii)        there shall be imposed on the Underlying
Issuer or the Lender Group any other condition regarding any Underlying Letter
of Credit or any Letter of Credit issued pursuant hereto, and the result of the
foregoing is to increase, directly or indirectly, the cost to the Lender Group
of issuing, making, guaranteeing, or maintaining any Letter of Credit or to
reduce the amount receivable in respect thereof by the Lender Group, then, and
in any such case, Agent may, at any time within a reasonable period after the
additional cost is incurred or the amount received is reduced, notify Borrower,
and Borrower shall pay on demand such amounts as Agent may specify to be
necessary to compensate the Lender Group for such additional cost or reduced
receipt, together with interest on such amount from the date of such demand
until payment in full thereof at the rate then applicable to Base Rate Loans
hereunder.  The determination by Agent of
any amount due pursuant to this Section, as set forth in a certificate setting
forth the calculation thereof in reasonable detail, shall, in the absence of
manifest or demonstrable error, be final and conclusive and binding on all of the
parties hereto.


 


2.13         LIBOR
Option.


 


(a)           Interest and Interest Payment Dates.  In lieu of having interest charged
at the rate based upon the Base Rate, Borrower shall have the option (the “LIBOR
Option”) to have interest on all or a portion of the Advances or the Term
Loan be charged at a rate of interest based upon the LIBOR Rate.  Interest on LIBOR Rate Loans shall be payable
on the earliest of (i) the last day of the Interest Period applicable
thereto (provided, however, that, subject to the following
clauses (ii) and (iii), in the case of any Interest Period greater than 3
months in duration, interest shall be payable at 3 month intervals after the
commencement of the


 


15





















 


applicable Interest Period
and on the last day of such Interest Period), (ii) the date on which an
Event of Default occurs, or (iii) the date on which this Agreement is
terminated pursuant to the terms hereof. 
On the last day of each applicable Interest Period, unless Borrower
properly has exercised the LIBOR Option with respect thereto, the interest rate
applicable to such LIBOR Rate Loan automatically shall convert to the rate of
interest then applicable to Base Rate Loans of the same type hereunder.  At any time that an Event of Default has
occurred and is continuing, (x) Borrower no longer shall have the option to
request that Advances or the Term Loan bear interest at a rate based upon the
LIBOR Rate, and (y) Agent shall have the right to convert the interest rate on
all outstanding LIBOR Rate Loans to the rate then applicable to Base Rate Loans
hereunder, provided that Borrower shall not be obligated for any loss,
cost, or expense incurred by Agent or any Lender as a result of any such
conversion by Agent.


 


(b)           LIBOR Election.


 


(i)            Borrower may, at
any time and from time to time, so long as no Event of Default has occurred and
is continuing, elect to exercise the LIBOR Option by notifying Agent prior to
11:00 a.m. (California time) at least 3 Business Days prior to the
commencement of the proposed Interest Period (the “LIBOR Deadline”).  Notice of Borrower’s election of the LIBOR
Option for a permitted portion of the Advances or the Term Loan and an Interest
Period pursuant to this Section shall be made by delivery to Agent of a
LIBOR Notice received by Agent before the LIBOR Deadline, or by telephonic
notice received by Agent before the LIBOR Deadline (to be confirmed by delivery
to Agent of a LIBOR Notice received by Agent prior to 5:00 p.m.
(California time) on the same day). 
Promptly upon its receipt of each such LIBOR Notice, Agent shall provide
a copy thereof to each of the Lenders having a Revolver Commitment.


 


(ii)           Each LIBOR Notice
shall be irrevocable and binding on Borrower. 
In connection with each LIBOR Rate Loan, Borrower shall indemnify,
defend, and hold Agent and the Lenders harmless against any loss, cost, or
expense incurred by Agent or any Lender as a result of (a) the payment of
any principal of any LIBOR Rate Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default but
excluding as a result of any mandatory prepayment required to be made pursuant
to Section 2.4(c)), (b) the conversion of any LIBOR Rate Loan
other than on the last day of the Interest Period applicable thereto (except as
provided in Section 2.13(a)(y)), or (c) the failure to borrow,
convert, continue or prepay any LIBOR Rate Loan on the date specified in any
LIBOR Notice delivered pursuant hereto (such losses, costs, or expenses, “Funding
Losses”).  Funding Losses shall, with
respect to Agent or any Lender, be deemed to equal the amount determined by
Agent or such Lender to be the excess, if any, of (i) the amount of
interest that would have accrued on the principal amount of such LIBOR Rate Loan
had such event not occurred, at the LIBOR Rate that would have been applicable
thereto, for the period from the date of such event to the last day of the then
current Interest Period therefor (or, in the case of a failure to borrow,
convert, or continue, for the period that would have been the Interest Period
therefor), minus (ii) the
amount of interest that would accrue on such principal amount for such period
at the interest rate which Agent or such Lender would be offered were it to be
offered, at the commencement of such period, Dollar deposits of a comparable
amount and period in the London interbank market.  A certificate of Agent or a Lender delivered
to Borrower setting forth any amount or amounts that Agent or such Lender is
entitled to receive pursuant to this Section 2.13 shall be
conclusive absent manifest error.


 


(iii)          Borrower shall have
not more than 10 LIBOR Rate Loans in effect at any given time.  Borrower only may exercise the LIBOR Option
for LIBOR Rate Loans of at least $1,000,000 and integral multiples of $500,000
in excess thereof.


 


(c)           Prepayments.  Borrower
may prepay LIBOR Rate Loans at any time; provided, however, that
in the event that LIBOR Rate Loans are prepaid on any date that is not the last
day of the Interest Period applicable thereto, including as a result of any
automatic prepayment (except as provided in Section 2.13(b)(ii)(a))
through the required application by Agent of proceeds of Borrower’s and its
Subsidiaries’ Collections in accordance with Section 2.4(b) or
for any other reason, including early termination of the term of this Agreement
or acceleration of all or any portion of the Obligations pursuant to the terms
hereof,


 


16





















 


Borrower shall indemnify,
defend, and hold Agent and the Lenders and their Participants harmless against
any and all Funding Losses in accordance with clause (b)(ii) above.


 


(d)           Special Provisions Applicable to LIBOR Rate.


 


(i)            The LIBOR Rate may
be adjusted by Agent with respect to any Lender on a prospective basis to take
into account any additional or increased costs to such Lender of maintaining or
obtaining any eurodollar deposits or increased costs, in each case, due to
changes in applicable law occurring subsequent to the commencement of the then
applicable Interest Period and that (A) are applied generally to borrowers
of such Lender, and (B) have not been reimbursed by Borrower pursuant to Section 2.14,
including changes in tax laws (except changes of general applicability in
corporate income tax laws) and changes in the reserve requirements imposed by
the Board of Governors of the Federal Reserve System (or any successor),
excluding the Reserve Percentage, which additional or increased costs would
increase the cost of funding loans bearing interest at the LIBOR Rate.  In any such event, the affected Lender shall
give Borrower and Agent notice of such a determination and adjustment and Agent
promptly shall transmit the notice to each other Lender and, upon its receipt
of the notice from the affected Lender, 
Borrower may, by notice to such affected Lender (y) require such Lender
to furnish to Borrower a statement setting forth the basis for adjusting such
LIBOR Rate and the method for determining the amount of such adjustment, or (z)
repay the LIBOR Rate Loans with respect to which such adjustment is made
(together with any amounts due under Section 2.13(b)(ii)).


 


(ii)           In the event that
any change in market conditions or any law, regulation, treaty, or directive,
or any change therein or in the interpretation of application thereof, shall at
any time after the date hereof, in the reasonable opinion of any Lender, make
it unlawful or impractical for such Lender to fund or maintain LIBOR Advances
or to continue such funding or maintaining, or to determine or charge interest
rates at the LIBOR Rate, such Lender shall give notice of such changed
circumstances to Agent and Borrower and Agent promptly shall transmit the
notice to each other Lender and (y) in the case of any LIBOR Rate Loans of such
Lender that are outstanding, the date specified in such Lender’s notice shall
be deemed to be the last day of the Interest Period of such LIBOR Rate Loans,
and interest upon the LIBOR Rate Loans of such Lender thereafter shall accrue
interest at the rate then applicable to Base Rate Loans, and (z) Borrower shall
not be entitled to elect the LIBOR Option until such Lender determines that it
would no longer be unlawful or impractical to do so.


 


(e)           No Requirement of Matched Funding.  Anything to the contrary contained
herein notwithstanding, neither Agent, nor any Lender, is required actually to
acquire eurodollar deposits to fund or otherwise match fund any Obligation as
to which interest accrues at the LIBOR Rate. 
The provisions of this Section shall apply as if each Lender had
match funded any Obligation as to which interest is accruing at the LIBOR Rate
by acquiring eurodollar deposits for each Interest Period in the amount of the
LIBOR Rate Loans.


 


2.14         Capital
Requirements.  If, after
the date hereof, any Lender determines that (i) the adoption of or change
in any law, rule, regulation or guideline regarding capital requirements for
banks or bank holding companies, or any change in the interpretation or
application thereof by any Governmental Authority charged with the
administration thereof, or (ii) compliance by such Lender or its parent
bank holding company with any guideline, request, or directive of any such
entity regarding capital adequacy (whether or not having the force of law), has
the effect of reducing the return on such Lender’s or such holding company’s
capital as a consequence of such Lender’s Commitments hereunder to a level
below that which such Lender or such holding company could have achieved but
for such adoption, change, or compliance (taking into consideration such Lender’s
or such holding company’s then existing policies with respect to capital
adequacy and assuming the full utilization of such entity’s capital) by any
amount deemed by such Lender to be material, then such Lender may notify
Borrower and Agent thereof.  Following
receipt of such notice, Borrower agrees to pay such Lender on demand the amount
of such reduction of return of capital as and when such reduction is
determined, payable within 90 days after presentation by such Lender of a
statement in the amount and setting forth in reasonable detail such Lender’s
calculation thereof and the assumptions upon which such calculation


 


17





















 


was based (which statement
shall be deemed true and correct absent manifest error); provided, however,
that Borrower shall not be required to compensate such Lender pursuant to this Section 2.14
for such reduction of rate of return of capital incurred more than 180 days
prior to the date that such Lender delivers such statement.  In determining such amount, such Lender may
use any reasonable averaging and attribution methods.


 


2.15         Registered Notes.  Agent agrees to record each Advance,
Letter of Credit, and Term Loan on the Register referenced in Section 13.1(h).  Each Advance, Letter of Credit, and Term Loan
recorded on the Register (each a “Registered Loan”) may not be evidenced
by promissory notes other than Registered Notes (as defined below).  Upon the registration of any Advance, Letter
of Credit, and Term Loan, Borrower agrees, at the request of any Lender, to
execute and deliver to such Lender a promissory note, in conformity with the
terms of this Agreement, in registered form to evidence such Registered Loan,
in form and substance reasonably satisfactory to such Lender, and registered as
provided in Section 13.1(h) (a “Registered Note”),
payable to the order of such Lender and otherwise duly completed, provided that
any Registered Note issued to evidence Advances shall be issued in the
principal amount of the applicable Lender’s Commitment.  Once recorded on the Register, each Advance
may not be removed from the Register so long as it remains outstanding, and a
Registered Note may not be exchanged for a promissory note that it is not a Registered
Note.


 


2.16         Securitization.  Each of Borrower and each Guarantor hereby
acknowledges that the Lenders and each of their Affiliates and Related Funds
may sell or securitize the Borrowings (a “Securitization”) through the
pledge of the Borrowings as collateral security for loans to such Lenders or
their Affiliates or Related Funds or through the sale of the Borrowings or the
issuance of direct or indirect interests in the Borrowings, which loans to such
Lenders or their Affiliates or Related Funds or direct or indirect interests
will be rated by Moody’s, Standard & Poor’s or one or more other
rating agencies (the “Rating Agencies”). 
Each of Borrower and each Guarantor shall use commercially reasonable
efforts to cooperate with such Lenders and their Affiliates and Related Funds
to effect the Securitization, including by (a) amending this Agreement and
the other Loan Documents, (b) executing such additional documents, as
reasonably requested by such Lenders in order to effect the Securitization, provided
that (i) any such cooperation, amendment, or additional
documentation does not impose any additional costs (other than de minimis costs) on Borrower or any Guarantor, (ii) any
such amendment or additional documentation does not materially adversely affect
the rights, or increase the obligations, of Borrower or any Guarantor under the
Loan Documents or change or affect in a manner adverse to Borrower or any
Guarantor the financial terms of the Borrowings or add more restrictive
covenants or defaults, and (iii) such amendment or additional
documentation does not require Borrower or any Guarantor to (x) take any action
which would be illegal or would breach any contractual obligation of Borrower
or any Guarantor existing prior to the Closing Date or (y) indemnify any Person
other than the Agent and the Lenders, (c) providing such information as
may be reasonably requested by such Lenders in connection with the rating of
the Borrowings or the Securitization, and (d) providing in connection with
any rating of the Borrowings a certificate (i) agreeing to indemnify such
Lenders and any of their Affiliates and Related Funds, any of the Rating
Agencies, or any party providing credit support or otherwise participating in
the Securitization (collectively, the “Securitization Parties”) for any
losses, claims, damages or liabilities (the “Securitization Liabilities”)
to which such Lenders or any of their Affiliates or Related Funds, or such
Securitization Parties, may become subject insofar as the Securitization
Liabilities arise out of or are based upon a breach of the representation and
warranty contained in Section 4.18 (as if such representation or warranty
were made to the best of Borrower’s and each Guarantor’s knowledge), and (ii) agreeing
to reimburse such Lenders and their Affiliates and Related Funds, and such
Securitization Parties, for any legal or other expenses reasonably incurred by
such Persons in connection with defending the Securitization Liabilities.


 


3.             CONDITIONS; TERM OF AGREEMENT.


 


3.1           Conditions
Precedent to the Initial Extension of Credit.  The obligation of each Lender to make its
initial extension of credit provided for hereunder, is subject to the
fulfillment, to the satisfaction of Agent and each Lender of each of the
conditions precedent set forth on Schedule 3.1 (the making of such


 


18





















 


initial extension of credit
by a Lender being conclusively deemed to be its satisfaction or waiver of the
conditions precedent ).


 


3.2           Conditions
Precedent to all Extensions of Credit.  The obligation of the Lender Group (or
any member thereof) to make any Advances hereunder (or to extend any other
credit hereunder) at any time shall be subject to the following conditions
precedent:


 


(a)           the representations
and warranties of Borrower and each Guarantor contained in this Agreement or in
the other Loan Documents shall be true and correct in all material respects
(except that such materiality qualifier shall not be applicable to any
representations and warranties that already are qualified or modified by
materiality in the text thereof) on and as of the date of such extension of
credit, as though made on and as of such date (except to the extent that such
representations and warranties relate solely to an earlier date);


 


(b)           no Default or Event
of Default shall have occurred and be continuing on the date of such extension
of credit, nor shall either result from the making thereof;


 


(c)           no injunction, writ,
restraining order, or other order of any nature restricting or prohibiting,
directly or indirectly, the extending of such credit shall have been issued and
remain in force by any Governmental Authority against Borrower, any Guarantor,
Agent, or any Lender; and


 


(d)           the results of
operations or the financial condition of Borrower and Borrower’s Subsidiaries,
taken as a whole, shall not materially and adversely differ from the projected
results of operations or the financial condition of Borrower set forth in the
Projections of Borrower delivered to Agent on or about the Closing Date.


 


3.3           Term.  This Agreement shall continue in full
force and effect for a term ending on June 2, 2008 (the “Maturity Date”).  The foregoing notwithstanding, the Lender
Group, upon the election of the Required Lenders, shall have the right to
terminate its obligations under this Agreement immediately and without notice
upon the occurrence and during the continuation of an Event of Default.


 


3.4           Effect
of Termination.  On the
date of termination of this Agreement, all Obligations (including contingent
reimbursement obligations of Borrower with respect to outstanding Letters of
Credit) immediately shall become due and payable without notice or demand
(including either (i) providing cash collateral to be held by Agent for
the benefit of those Lenders with a Revolver Commitment in an amount equal to
105% of the Letter of Credit Usage, or (ii) causing the original Letters
of Credit to be returned to the Issuing Lender).  No termination of this Agreement, however,
shall relieve or discharge Parent, Borrower, or Borrower’s Subsidiaries of
their duties, Obligations, or covenants hereunder or under any other Loan
Document and the Agent’s Liens in the Collateral shall remain in effect until
all Obligations have been paid in full and the Lender Group’s obligations to provide
additional credit hereunder have been terminated.  When this Agreement has been terminated and
all of the Obligations have been paid in full and the Lender Group’s
obligations to provide additional credit under the Loan Documents have been
terminated irrevocably, Agent will, at Borrower’s sole expense, execute and
deliver any termination statements, Lien releases, mortgage releases,
re-assignments of trademarks, discharges of security interests, and other
similar discharge or release documents (and, if applicable, in recordable form)
as are reasonably necessary to release, as of record, the Agent’s Liens and all
notices of security interests and Liens previously filed by Agent with respect
to the Obligations.


 


3.5           Early
Termination by Borrower.  Borrower
has the option, at any time upon 45 days prior written notice to Agent, to
terminate this Agreement and terminate the Commitments hereunder by paying to
Agent, in cash, the Obligations (including either (i) providing cash
collateral to be held by Agent for the benefit of those Lenders with a Revolver
Commitment in an amount equal to 105% of the Letter of Credit Usage, or (ii) causing
the original Letters of Credit to be returned to the Issuing Lender) in
full.  If Borrower has sent a notice of
termination pursuant to the provisions of this Section, then the Commitments
shall


 


19





















 


terminate and Borrower shall
be obligated to repay the Obligations (including either (i) providing cash
collateral to be held by Agent for the benefit of those Lenders with a Revolver
Commitment in an amount equal to 105% of the Letter of Credit Usage, or (ii) causing
the original Letters of Credit to be returned to the Issuing Lender), in full,
on the date set forth as the date of termination of this Agreement in such
notice.


 


4.             REPRESENTATIONS AND WARRANTIES.


 


In order to induce the
Lender Group to enter into this Agreement, each of Borrower and each Guarantor
makes the following representations and warranties to the Lender Group which
shall be true, correct, and complete (in all material respects, to the extent
not already so qualified), as of the date hereof, and shall be true, correct,
and complete, in all material respects, as of the Closing Date and at and as of
the date of the making of each Advance (or other extension of credit) made
thereafter, as though made on and as of the date of such Advance (or other
extension of credit) (except to the extent that such representations and
warranties relate solely to an earlier date) and such representations and
warranties shall survive the execution and delivery of this Agreement:


 


4.1           No
Encumbrances.  Parent,
Borrower, and Borrower’s Subsidiaries have good and indefeasible title to, or a
valid leasehold interest in, their personal property assets and good and
marketable title to, or a valid leasehold interest in, their Real Property, if
any, in each case, free and clear of Liens except for Permitted Liens.


 


4.2           Eligible
Accounts.  As to each
Account that is identified by Borrower as an Eligible Account in a borrowing
base report submitted to Agent, such Account is, as of the date so identified (a) a
bona fide existing payment obligation of the applicable Account Debtor created
by the sale and delivery of Inventory or the rendition of services to such
Account Debtor in the ordinary course of Borrower’s business, (b) owed to
Borrower without any known defenses, disputes, offsets, counterclaims, or
rights of return or cancellation, and (c) not excluded as ineligible by
virtue of one or more of the excluding criteria set forth in the definition of
Eligible Accounts.


 


4.3           Spare Parts.


 


(a)           Borrower keeps correct and accurate records
itemizing and describing the type, quality, and quantity of its Spare
Parts.  Full legal and beneficial ownership to all Spare Parts are held by
Borrower, free and clear of all Liens in the case of Spare Parts identified by
Borrower as an Eligible Spare Part in the most recent Borrowing Base
Certificate submitted to Agent and free and clear of all Liens other than Permitted
Liens in the case of all other Spare Parts. 
Neither Parent nor any Subsidiaries of Borrower has or will have any
ownership, title, Lien or other interest in any Spare Part.


 


(b)           Each Rotable and Expendable that is
identified by Borrower as an Eligible Spare Part in the most recent
Borrowing Base Certificate submitted to Agent is, as of the date of such
Borrowing Base Certificate (i) of good and merchantable quality, free from
defects, serviceable in accordance with Borrower’s Maintenance Program and its
manufacturer’s recommendations and limits, in good operating condition and
ready for immediate use or operation in accordance with Borrower’s Maintenance
Program and has all serviceability tags applicable thereto and all related
applicable back to birth records and all other documents required by Borrower’s
Maintenance Program, (ii) not excluded as ineligible by virtue of
one or more of the excluding criteria set forth in the definition of Eligible
Spare Parts, and (iii) accurately described in such Borrowing Base
Certificate (including by manufacturer’s serial number or manufacturer’s part
number, as applicable, if a serialized Spare Part and location).


 


(c)           Except to the extent
expressly permitted by Section 5.17(b), the Spare Parts of Borrower
are in the possession and control of Borrower, held for use in Borrower’s
business, and only located at the locations identified on Schedule 4.3
(as such Schedule may be updated pursuant to Section 5.17(b)).


 


20





















 


(d)           Schedule 1.1(S)
of the Engine and Spare Parts Security Agreement contains a true and complete
summary description by type and location of all of the Spare Parts owned by
Borrower that are located in the United States (other than Spare Parts that are
specifically excluded from Schedule 1.1(S) pursuant to the terms of
the Engine and Spare Parts Security Agreement) as of each date that this
representation and warranty is given. 
The Spare Parts on such Schedule 1.1(S) are covered by Warranties
applicable thereto that are at least as extensive as the warranties that are
maintained by similarly situated businesses in accordance with industry
practice, and such Warranties are transferable at least to the extent that
similar warranties are transferable (without the consent of any other Person)
in accordance with industry practice. 
The Spare Parts located in the United States are primarily maintained
for the purposes of installing such Spare Parts on Aircraft, Engines,
Propellers, or Appliances operated by Borrower.


 


(e)           Borrower possesses
all necessary certificates, permits, rights, authorizations and concessions and
consents which are material to the repair, refurbishment or overhaul of any of
the Spare Parts (to the extent Borrower performs any of such actions) or to the
maintenance, use, operation, or sale of any of the Spare Parts.


 


(f)            Borrower uses,
stores, maintains, overhauls, repairs and refurbishes (or causes a duly
authorized FAA repair station to maintain, overhaul, repair and refurbish) all
Spare Parts and maintains books and records with respect thereto in compliance
with the material requirements of applicable law (including the provision of
FAA serviceability tags where applicable) and with the Borrower’s Maintenance
Program, except for such requirements of applicable law the validity or
applicability of which are being protested by Borrower so long as (i) such
protest is instituted promptly and prosecuted diligently by Borrower in good
faith, (ii) there is no material risk of any sale, forfeiture, or loss of
any Spare Part or diminution in value of any Spare Part as a result
of such contest, (iii) there is no risk of any criminal liability, or any
material civil liability, for Borrower, Agent, or any of the Lenders as a
result of such contest, (iv) Agent is satisfied that while such contest is
pending, there is no impairment of the enforceability, validity, or priority of
any of the Agent’s Liens on the Spare Parts, and (v) there is no material
risk of any adverse affect on the ownership interest of Borrower in such Spare
Part.


 


4.4           Equipment
Other than Spare Parts.  Except to the extent expressly permitted by Section 5.9,
the Ground Equipment and each other material item of Borrower’s
Equipment (other than Spare Parts, which are addressed in Section 4.3)
are (a) in the possession and control of Borrower, (b) used or held
for use in Borrower’s business, (c) are in good working order, and (d) are
only located at the locations identified on Schedule 4.4 (as such Schedule may
be updated pursuant to Section 5.9(a)).


 


4.5           [Intentionally
Omitted].


 


4.6           [Intentionally
Omitted].


 


4.7           State
of Incorporation; Location of Chief Executive
Office; Organizational Identification Number; Commercial Tort Claims.


 


(a)           The name of (within
the meaning of Section 9-503 of the Code) and jurisdiction of
organization of Parent, Borrower, and each of Borrower’s Subsidiaries is set
forth on Schedule 4.7(a) (as such Schedule may be updated
from time to time to reflect changes permitted to be made under Section 6.5).


 


(b)           The chief executive
office of Parent, Borrower, and each of Borrower’s Subsidiaries is located at
the address indicated on Schedule 4.7(b) (as such Schedule may
be updated from time to time to reflect changes permitted to be made under Section 5.9).


 


(c)           Parent’s, Borrower’s,
and each of Borrower’s Subsidiaries’ organizational identification numbers, if
any, are identified on Schedule 4.7(c) (as such Schedule may
be updated from time to time to reflect changes permitted to be made under Section 6.5).


 


21





















 


(d)           As of the Closing
Date, Parent, Borrower’s, and Borrower’s Subsidiaries do not hold any
commercial tort claims, except as set forth on Schedule 4.7(d).


 


4.8           Due
Organization and Qualification; Subsidiaries.


 


(a)           Each of Borrower and
each Guarantor is duly organized and existing and in good standing under the
laws of the jurisdiction of its organization and qualified to do business in
any state where the failure to be so qualified reasonably could be expected to
result in a Material Adverse Change.


 


(b)           [Intentionally
Omitted].


 


(c)           Set forth on Schedule 4.8(c) (as
such Schedule may be updated from time to time to reflect changes
permitted to be made under Section 5.16), is a complete and
accurate list of Borrower and each of Borrower’s direct and indirect
Subsidiaries, showing: (i) the jurisdiction of their organization, (ii) the
number of shares of each class of common and preferred Stock authorized for
Borrower and each of such Subsidiaries, and (iii) the number and the
percentage of the outstanding shares of each such class owned directly or
indirectly by Parent (in the case of Borrower) or Borrower (in the case of such
Subsidiaries), as applicable.  All of the
outstanding capital Stock of Borrower and each such Subsidiary has been validly
issued and is fully paid and non-assessable.


 


(d)           Except as set forth
on Schedule 4.8(c), there are no subscriptions, options, warrants,
or calls relating to any shares of Borrower’s or Borrower’s Subsidiaries’
capital Stock, including any right of conversion or exchange under any
outstanding security or other instrument. 
None of Parent, Borrower, or any of Borrower’s Subsidiaries is subject
to any obligation (contingent or otherwise) to repurchase or otherwise acquire
or retire any shares of Borrower’s or Borrower’s Subsidiaries’ capital Stock or
any security convertible into or exchangeable for any such capital Stock.


 


4.9           Due
Authorization; No Conflict.


 


(a)           The execution,
delivery, and performance by Borrower of this Agreement and the Loan Documents
to which it is a party have been duly authorized by all necessary action on the
part of Borrower.


 


(b)           The execution,
delivery, and performance by Borrower of this Agreement and the other Loan
Documents to which it is a party do not and will not (i) violate any
material provision of federal, state, or local law or regulation applicable to
Borrower, the Governing Documents of Borrower, or any material order, judgment,
or decree of any court or other Governmental Authority binding on Borrower, (ii) conflict
with, result in a breach of, or constitute (with due notice or lapse of time or
both) a default under any material contractual obligation of Borrower, (iii) result
in or require the creation or imposition of any Lien of any nature whatsoever
upon any properties or assets of Borrower, other than Permitted Liens, or (iv) require
any approval of Borrower’s interestholders or any approval or consent of any
Person under any material contractual obligation of Borrower, other than
consents or approvals that have been obtained and that are still in force and
effect.


 


(c)           Other than the
filing of financing statements, the recordation of the mortgages (if any), the
recordation of the Engine and Spare Parts Security Agreement, and other filings
or actions necessary to perfect Liens granted to Agent in the Collateral, the
execution, delivery, and performance by Borrower of this Agreement and the
other Loan Documents to which Borrower is a party do not and will not require
any registration with, consent, or approval of, or notice to, or other action
with or by, any Governmental Authority, other than consents or approvals that
have been obtained and that are still in force and effect.


 


(d)           This Agreement and
the other Loan Documents to which Borrower is a party, and all other documents
contemplated hereby and thereby, when executed and delivered by Borrower will
be the legally valid and binding obligations of Borrower, enforceable against
Borrower in accordance with their


 


22





















 


respective terms, except as
enforcement may be limited by equitable principles or by bankruptcy,
insolvency, reorganization, moratorium, or similar laws relating to or limiting
creditors’ rights generally.


 


(e)           The Agent’s Liens
are validly created, perfected, and first priority Liens, subject only to
Permitted Liens.


 


(f)            The execution,
delivery, and performance by each Guarantor of the Loan Documents to which it
is a party have been duly authorized by all necessary action on the part of
such Guarantor.


 


(g)           The execution,
delivery, and performance by each Guarantor of the Loan Documents to which it
is a party do not and will not (i) violate any provision of material
federal, state, or local law or regulation applicable to such Guarantor, the
Governing Documents of such Guarantor, or any material order, judgment, or
decree of any court or other Governmental Authority binding on such Guarantor, (ii) conflict
with, result in a breach of, or constitute (with due notice or lapse of time or
both) a default under any material contractual obligation of such Guarantor, (iii) result
in or require the creation or imposition of any Lien of any nature whatsoever
upon any properties or assets of such Guarantor, other than Permitted Liens, or
(iv) require any approval of such Guarantor’s interestholders or any
approval or consent of any Person under any material contractual obligation of
such Guarantor, other than consents or approvals that have been obtained and
that are still in force and effect.


 


(h)           Other than the
filing of financing statements, the recordation of the mortgages (if any), the
recordation of the Engine and Spare Parts Security Agreement, and other filings
or actions necessary to perfect Liens granted to Agent in the Collateral, the
execution, delivery, and performance by each Guarantor of the Loan Documents to
which such Guarantor is a party do not and will not require any registration
with, consent, or approval of, or notice to, or other action with or by, any
Governmental Authority, other than consents or approvals that have been
obtained and that are still in force and effect.


 


(i)            The Loan Documents
to which each Guarantor is a party, and all other documents contemplated hereby
and thereby, when executed and delivered by such Guarantor will be the legally
valid and binding obligations of such Guarantor, enforceable against such
Guarantor in accordance with their respective terms, except as enforcement may
be limited by equitable principles or by bankruptcy, insolvency, reorganization,
moratorium, or similar laws relating to or limiting creditors’ rights
generally.


 


4.10         Litigation.  Other than those matters disclosed on Schedule 4.10 and
other than matters arising after the Closing Date that reasonably could not be
expected to result in a Material Adverse Change, there are no actions, suits,
or proceedings pending or, to the best knowledge of Parent, threatened against
Parent, Borrower, or any of Borrower’s Subsidiaries.


 


4.11         No Material Adverse
Change.


 


(a)           All financial
statements relating to Parent, Borrower, and Borrower’s Subsidiaries that have
been delivered by Borrower to the Lender Group have been prepared in accordance
with GAAP (except, in the case of unaudited financial statements, for the lack
of footnotes and being subject to year-end audit adjustments) and present
fairly in all material respects, Parent’s, Borrower’s, and Borrower’s
Subsidiaries’ financial condition as of the date thereof and results of
operations for the period then ended.


 


(b)           Neither the results
of operations nor the financial condition of Borrower and Borrower’s
Subsidiaries, taken as a whole, materially and adversely differ from the
projected results of operations and the financial condition of Borrower set
forth in the Projections of Borrower delivered to Agent on or about the Closing
Date.  There is no material impairment of
Parent’s, Borrower’s, or Borrower’s Subsidiaries ability to perform their
obligations under the Loan Documents to which they are parties or of the Lender
Group’s ability to enforce the Obligations or realize upon the Collateral.  There is no material impairment of the
enforceability or priority of the Agent’s Liens with respect to the Collateral
as a result of an action or failure to act on the part of Parent, Borrower, or
Borrower’s Subsidiaries.


 


23





















 


4.12         Fraudulent
Transfer.


 


(a)           Each of Parent,
Borrower, and each of Borrower’s Subsidiaries is Solvent.


 


(b)           No transfer of
property is being made by Parent, Borrower, or Borrower’s Subsidiaries and no
obligation is being incurred by Parent, Borrower, or Borrower’s Subsidiaries in
connection with the transactions contemplated by this Agreement or the other
Loan Documents with the intent to hinder, delay, or defraud either present or
future creditors of Parent, Borrower, or Borrower’s Subsidiaries.


 


4.13         Employee Benefits.  Schedule 4.13
sets forth each Benefit Plan.  Except as
otherwise set forth in Schedule 4.13, which may be updated pursuant
to the requirements of Section 14.1: 
(i) each Benefit Plan (and each related trust, insurance contract,
or fund) is and has at all times been operated in material compliance with its
terms and with all applicable laws, including with out limitation ERISA and the
IRC, (ii) each Benefit Plan (and each related trust, if any) has received
a determination letter from the Internal Revenue Service to the effect that it
meets the requirements of Sections 401(a) and 501(a) of the IRC, (iii) no
Reportable Event has occurred, and to the knowledge of Borrower, Parent,
Borrower’s Subsidiaries and all ERISA Affiliates, no Multiemployer Plan is
insolvent or in reorganization other than an insolvency or reorganization that
could not reasonably be expected to result in liability in excess of $1,000,000
or, if less, an amount that could result in a Material Adverse Change, (iv) there
is no Multiemployer Plan, and neither Borrower, Parent, any of Borrower’s
Subsidiaries nor any ERISA Affiliate maintains, contributes to or has any
liability with respect to a Foreign Pension Plan, (v) no Benefit Plan has
an Unfunded Benefit Liability in excess of $300,000,000 or, if less, an amount
that could result in a Material Adverse Change, (vi) no Benefit Plan has a
material “accumulated funding deficiency”, within the meaning of Section 412
of the IRC or Section 302 of ERISA, or has applied for or received a
waiver of an accumulated funding deficiency or an extension of any amortization
period, within the meaning of Section 412 of the IRC or Section 303
or 304 of ERISA, (vii) all contributions (other than de minimis contributions)
required to be made with respect to a Benefit Plan have been timely made
(including the quarterly contributions required by Section 412 of the IRC
at the times specified in such Section), (viii) neither the Borrower,
Parent, any of Borrower’s Subsidiaries or any ERISA Affiliate has incurred any
material liability (including any indirect, contingent or secondary liability)
to or on account of a Benefit Plan or a Multiemployer Plan pursuant to Section 409,
502(i), 502(l), 515, 4062, 4064, 4069, 4201, 4204, or 4212 of ERISA or expects
to incur any such material liability under any of the foregoing sections and no
condition exists that presents a risk of incurring such material liability; (ix) no
proceedings have been instituted to terminate or appoint a trustee to
administer any Benefit Plan (under ERISA), (x) no action, suit, proceeding,
hearing, audit, or investigation with respect to the administration, operation,
or the investment of assets of any Benefit Plan (other than routine claims for
benefits), which could result in the imposition of liability on Borrower,
Parent, any of Borrower’s Subsidiaries or any ERISA Affiliate in an amount in
excess of $1,000,000, or, if less, an amount that could result in a Material
Adverse Change, is pending, expected or to the knowledge of Borrower, Parent,
any of Borrower’s Subsidiaries or any ERISA Affiliate threatened, (xi) the
aggregate liabilities of the Borrower, Parent, Borrower’s Subsidiaries and all
ERISA Affiliates to all Multiemployer Plans in the event of a complete
withdrawal therefrom, as of the close of the most recent fiscal year of each
such Multiemployer Plan ended prior to the date hereof, based on a computation
of withdrawal liability requested and received from each such Multiemployer
Plan, would not exceed $1,000,000 or, if less, an amount that could result in a
Material Adverse Change, (xii) no Lien has been imposed under the IRC or ERISA
on the assets of Borrower, Parent, any of Borrower’s Subsidiaries or any ERISA
Affiliate, or is likely to arise, on account of any Benefit Plan, (xiii) except
as otherwise required by the termination and funding requirements of ERISA and
the IRC and any applicable collective bargaining agreements, Borrower, Parent,
any of Borrower’s Subsidiaries and any ERISA Affiliate may, at any time and
without material liability, terminate or cease making contributions to any “employee
benefit plan”, within the meaning of Section 3(3) of ERISA, to which
such Person maintains or makes (or has any liability to make) contributions,
and (xiv) each group health plan (as defined in Section 607(l) of ERISA or
Section 4980B(g)(2) of the IRC) which covers or has covered employees
or former employees of Borrower, Parent, any of Borrower’s Subsidiaries or any
ERISA Affiliate has at all times been operated in material compliance with the
provisions of Part 6 of subtitle B of Title I of ERISA and Section 4980B
of the IRC.


 


24





















 


4.14         Environmental Condition.  Except as set forth on Schedule 4.14 and for other matters
that could not reasonably be expected to result in a Material Adverse Change, (a) to
Parent’s knowledge, none of Parent’s, Borrower’s or Borrower’s Subsidiaries’
properties or assets has ever been used by Parent, its Subsidiaries, or by
previous owners or operators in the disposal of, or to produce, store, handle,
treat, release, or transport, any Hazardous Materials, where such use,
production, storage, handling, treatment, release or transport was in violation
of any applicable Environmental Law, (b) to Parent’s knowledge, none of
Parent’s, Borrower’s or Borrower’s Subsidiaries’ properties or assets has ever
been designated or identified in any manner pursuant to any environmental
protection statute as a Hazardous Materials disposal site, (c) none of
Parent, Borrower, or any of Borrower’s Subsidiaries has received notice that a
Lien arising under any Environmental Law has attached to any revenues or to any
Real Property operated by Parent, Borrower, or Borrower’s Subsidiaries, and (d) none
of Parent, Borrower, or Borrower’s Subsidiaries has received a summons,
citation, notice, or directive from the United States Environmental Protection
Agency or any other federal or state governmental agency concerning any action
or omission by Parent, Borrower, or Borrower’s Subsidiaries resulting in the
releasing or disposing of Hazardous Materials into the environment.


 


4.15         Intellectual Property.  Parent, Borrower, and Borrower’s Subsidiaries own, or hold licenses in,
all trademarks, trade names, copyrights, patents, patent rights, and licenses
that are necessary to the conduct of its business as currently conducted, and
attached hereto as Schedule 4.15 (as updated from time to time) is
a true, correct, and complete listing of all material patents, patent
applications, trademarks, trademark applications, copyrights, and copyright
registrations as to which Parent, Borrower, or one of Borrower’s Subsidiaries
is the owner or is an exclusive licensee; provided, however, that
Borrower may amend Schedule 4.15 so long as such amendment occurs
by written notice to Agent not less than 10 days before the date on which
Parent, Borrower, or any Subsidiary of Borrower acquires any such property
after the Closing Date.


 


4.16         Leases.  Parent, Borrower, and Borrower’s Subsidiaries enjoy peaceful and
undisturbed possession under all Material Leases, and all Material Leases are
valid and subsisting.  No default by
Parent, Borrower, or Borrower’s Subsidiaries exists and is continuing beyond
the applicable grace period under any Material Lease, unless such default is
the subject of a Permitted Protest.


 


4.17         Deposit Accounts and Securities Accounts.  Set forth on Schedule 4.17 is a listing of all of Parent’s,
Borrower, and Borrower’s Subsidiaries’ Deposit Accounts and Securities
Accounts, including, with respect to each bank or securities intermediary (a) the
name and address of such Person, and (b) the account numbers of the
Deposit Accounts or Securities Accounts maintained with such Person.


 


4.18         Complete Disclosure.  All factual information (taken as a whole) furnished by or on behalf of
Parent or its Subsidiaries in writing to Agent or any Lender (including all
information contained in the Schedules hereto or in the other Loan Documents
but excluding any information based on or constituting a forecast or
projection) for purposes of or in connection with this Agreement, the other
Loan Documents, or any transaction contemplated herein or therein is, and all
other such factual information (taken as a whole) hereafter furnished by or on
behalf of Parent or its Subsidiaries in writing to Agent or any Lender will be,
true and accurate, in all material respects, on the date as of which such
information is dated or certified and not incomplete by omitting to state any
fact necessary to make such information (taken as a whole) not misleading in
any material respect at such time in light of the circumstances under which
such information was provided.  On the
Closing Date, the Closing Date Projections represent, and as of the date (after
the Closing Date) on which any other Projections are delivered to Agent, such
additional Projections represent Parent’s good faith estimate of its and its
Subsidiaries future performance for the periods covered thereby based upon
assumptions believed by Parent to be reasonable at the time of the delivery
thereof.


 


4.19         Indebtedness.  Set forth on Schedule 4.19 is a true and complete list of
all Indebtedness of Parent, Borrower, and Borrower’s Subsidiaries outstanding
immediately prior to the Closing Date that is to remain outstanding after the
Closing Date and such Schedule accurately sets forth the aggregate
principal amount of such Indebtedness.


 


25





















 


4.20         Air Carrier. 
Borrower is a Certificated Air Carrier. 
Borrower possesses all other necessary certificates, franchises, air
carrier and other licenses, permits, rights, authorizations and concessions and
consents which are material to the operation of Aircraft operated by it and
routes flown by it and the conduct of its business and operations as currently
conducted.


 


4.21         Aircraft, Engines, and
Propellers.  As of the Closing Date, neither Parent nor any of its Subsidiaries owns
or has title to any Aircraft, Engines, or Propellers.


 


4.22         Slots, Gates and Routes.


 


(a)           Set forth on Schedule 4.22
is a complete and accurate list of all Slots, Gates, and Routes used, held by,
contracted or licensed to, Parent and its Subsidiaries as of the Closing Date.


 


(b)           Parent, Borrower,
and Borrower’s Subsidiaries are utilizing the Slots, Gates and Routes in a
manner consistent with applicable contracts governing such Slots, Gates and
Routes and applicable laws (including the rules and regulations of the
FAA, the DOT or any other Governmental Authority or airport authority) in order
to maintain its right to use such Slots, Gates and Routes and where the failure
to so maintain its right to use such Slots, Gates, and Routes would materially
impair the Collateral.  None of Parent,
Borrower, or any of Borrower’s Subsidiaries has received any notice from any
Governmental Authority, or is aware of any other event or circumstance, that
would be reasonably likely to materially impair, or have a potential adverse
effect upon, the utilization of the Slots, Gates and Routes.


 


4.23         IRS Claim. 
Set forth on Schedule 4.23
is Borrower’s repayment plan as of the Closing Date with respect to the IRS Tax
Claim Indebtedness.


 


5.             AFFIRMATIVE COVENANTS.


 


Each of Borrower and each
Guarantor covenants and agrees that, until termination of all of the
Commitments and payment in full of the Obligations, each of Borrower and each
Guarantor shall, and shall cause each of Parent’s Subsidiaries to do all of the
following:


 


5.1           Accounting System.  Maintain a system of accounting that enables Parent to produce
financial statements in accordance with GAAP and maintain records pertaining to
the Collateral that contain information as from time to time reasonably may be
requested by Agent.


 


5.2           Collateral Reporting.  Provide Agent with each of the reports set forth on Schedule 5.2
at the times specified therein. In addition, Borrower agrees to cooperate fully
with Agent to facilitate and implement a system of electronic collateral
reporting in order to provide electronic reporting of each of the items set
forth on Schedule 5.2.


 


5.3           Financial Statements,
Reports, Certificates.  Deliver to Agent, with copies to each Lender, each of the financial
statements, reports, or other items set forth on Schedule 5.3 at
the times specified therein.  In
addition, Parent agrees that Borrower will not have a fiscal year different
from that of Parent.


 


5.4           Guarantor Reports.  Cause each Guarantor to deliver its annual financial statements at the
time when Parent provides its audited financial statements to Agent, but only
to the extent such Guarantor’s financial statements are not consolidated with
Parent’s financial statements.


 


5.5           Inspection. 
Subject to the reimbursement limitations set forth in the Fee Letter,
permit Agent, each Lender, and each of their duly authorized representatives or
agents to visit any of its properties and inspect any of its assets or books
and records, to examine and make copies of its books and records, and to
discuss its affairs, finances, and accounts with, and to be advised as to the
same by, its officers and employees at such reasonable times and intervals as
Agent or any such Lender may designate and, so long as no Default


 


26





















 


or Event of Default exists,
such inspection (a) shall be with reasonable prior notice to Borrower, and
(b) shall not interfere (other than indirectly) with the operation or
maintenance of Borrower’s Aircraft.


 


5.6           Maintenance of
Properties.  Maintain and preserve all of its properties
which are necessary or useful in the proper conduct of its business in good
working order and condition, ordinary wear, tear, and casualty excepted (and
except where the failure to do so could not reasonably be expected to result in
a Material Adverse Change), and comply at all times with the provisions of all
material leases to which it is a party as lessee, where failure to so comply
could reasonably be expected to result in a Material Adverse Change.


 


5.7           Taxes.  Cause all assessments and taxes (other than assessments or taxes in de minimis amounts), whether real, personal, or otherwise,
due or payable by, or imposed, levied, or assessed against Parent, Borrower,
Borrower’s Subsidiaries, or any of their respective assets to be paid in full,
before delinquency or before the expiration of any extension period, except to
the extent that the validity of such assessment or tax shall be the subject of
a Permitted Protest.  Parent and Borrower
will and Borrower will cause its Subsidiaries to make timely payment or deposit
of all tax payments and withholding taxes required of it and them by applicable
laws, including those laws concerning F.I.C.A., F.U.T.A., state disability, and
local, state, and federal income taxes, and will, upon request, furnish Agent
with proof satisfactory to the Required Lenders indicating that Parent,
Borrower, and Borrower’s Subsidiaries have made such payments or deposits.


 


5.8           Insurance.


 


(a)           At Borrower’s
expense, maintain insurance respecting its and its Subsidiaries’ assets
wherever located, covering loss or damage by fire, theft, explosion, and all
other hazards and risks as ordinarily are insured against by other Persons
engaged in the same or similar businesses (including all-risk ground coverage
of Spare Parts).  Borrower also shall
maintain business interruption, public liability, aircraft public liability
insurance (including (i) passenger legal liability, and (ii) if such
insurance is then generally carried by major United States air carriers,
aircraft war risk and allied perils insurance in accordance with London form
AVN52C (as in effect on September 1, 2001 or in accordance with the FAA’s
Chapter 443 Aviation Insurance Policy as in effect on the date hereof) or its
equivalent form reasonably acceptable to the Required Lenders)), cargo
liability insurance, and war risk and allied perils hull (including
confiscation, expropriation, nationalization and seizure by a government other
than the United States), terrorist and hijacking insurance, and product
liability insurance, as well as insurance against larceny, embezzlement, and
criminal misappropriation.  All such
policies of insurance shall be in such amounts, against such risks, in such
form, and with such insurance companies as are reasonably satisfactory to
Required Lenders (it being understood that (x) the insurance coverage reflected
on the certificates of insurance delivered to Agent on the Closing Date is
acceptable to Agent and (y) an insurance company with the same financial
strength, credit rating, and debt rating as the financial strength, credit
rating, and debt rating, as of the Closing Date, of the insurance company that
issues the certificates of insurance on the Closing Date is acceptable to
Agent).  All hull and spares ground
insurance shall be on an “agreed” value basis without right of
replacement.  All deductibles shall be in
an amount reasonably satisfactory to the Required Lenders (it being understood
that the deductibles reflected on the certificates of insurance delivered to Agent
on the Closing Date are acceptable to Agent). 
As soon as practicable after receipt by Borrower thereof, Borrower shall
deliver copies of all such policies to Agent with an endorsement naming Agent
as the sole loss payee (under a satisfactory lender’s loss payable endorsement)
or additional insured, as appropriate. 
Each policy of insurance (except any policy of insurance placed with the
FAA) or endorsement shall contain a clause requiring the insurer to give not
less than 30 days prior written notice (7 in the case of war risk and allied
perils coverage) to Agent in the event of cancellation of the policy for any
reason whatsoever.


 


(b)           Borrower shall give
Agent prompt notice of (i) any loss exceeding $1,000,000 covered by such
insurance, and (ii) any cancellation of any policy of insurance placed
with the FAA.  So long as no Event of
Default has occurred and is continuing, Borrower shall have the exclusive right
to adjust any losses payable under any such insurance policies which are less
than $500,000.  Following the occurrence
and during the continuation of an Event of Default, or in the case of any
losses payable under such insurance


 


27





















 


exceeding $500,000, Agent
shall have the exclusive right to adjust any losses payable under any such
insurance policies, without any liability to Borrower whatsoever in respect of
such adjustments, other than liability that results from Agent’s own willful
misconduct or gross negligence (as finally determined by a court of competent
jurisdiction).


 


5.9           Equipment
(Other than Spare Parts)/Chief Executive Office.


 


Keep Borrower’s and its Subsidiaries’ Equipment (other than Spare
Parts, which are addressed in Section 5.17) only at the locations
identified on Schedule 4.4 (and not permit such Equipment to be
located at the premises of or otherwise put into the possession or control of
any bailee, warehouseman, FAA repair station, servicer, mechanic, vendor,
supplier, or other Person) and their chief executive offices only at the
locations identified on Schedule 4.7(b); provided, however,
that:


 


(a)           Borrower may amend Schedule 4.4
or Schedule 4.7(b) to add additional locations so long as (i) such
amendment occurs by written notice to Agent not less than 10 days prior to the
date on which such Equipment (other than Spare Parts) is moved to such new
location or such chief executive office is relocated, (ii) such new
location is within the United States, and (iii) with respect to any
Equipment (other than Spare Parts) identified by Borrower as Eligible Ground
Equipment in the most recent Borrowing Base Certificate delivered to Agent,
within 90 days after the time of such written notification, Borrower provides
Agent with evidence satisfactory to Agent that Borrower has used its best
efforts to obtain a Collateral Access Agreement with respect to such new
location (provided, however, that so long as Borrower provides
Agent with evidence satisfactory to Agent that Borrower has used its best
efforts to obtain a Collateral Access Agreement with respect to such new
location, if Borrower fails to deliver to Agent such Collateral Access
Agreement within 90 days of the time of such written notification, no Event of
Default shall have occurred and Agent shall have the right to establish a
reserve against the Borrowing Base in an aggregate amount equal to 3 months
rent under the lease for each location for which a Collateral Access Agreement
has not been delivered);


 


(b)           so long as such
transit is in the ordinary course of Borrower’s business, Aircraft, Engines,
and Propellers may be in transit between such locations;


 


(c)           any Equipment that
is not Eligible Ground Equipment may be in the possession of or under the
control of a bailee, warehouseman, FAA repair station, overhaul or maintenance
servicer, mechanic, or similar Person for purposes of repair in the ordinary
course of Borrower’s business so long as either (i) no Event of Default
has occurred and is continuing or would result therefrom, or (ii) no
Overadvance is outstanding or would result therefrom and the aggregate value of
all such Equipment in the possession of or under the control of all such
Persons, in the aggregate, does not exceed $250,000;


 


(d)           so long as such
transit is in the ordinary course of Borrower’s business, Borrower may
move Equipment (other than Spare Parts) that is not Eligible Ground Equipment
from any location in the United States to any other location in the United
States;


 


(e)           so long as (i) no
Event of Default has occurred and is continuing or would result therefrom, (ii) such
transit is in the ordinary course of Borrower’s business, and (iii) the
aggregate value of all Equipment (other than Spare Parts) moved to all such
foreign locations, in the aggregate, does not exceed $100,000, Borrower may
move Equipment (other than Spare Parts) that is not Eligible Ground Equipment
from any location in the United States to any location outside the United
States (including locations outside the United States where such Equipment is
in the possession of or under the control of a bailee, warehouseman, FAA repair
station, overhaul or maintenance servicer, mechanic, or similar Person); and


 


(f)            so long as such
transit is in the ordinary course of Borrower’s business, Borrower may move
Equipment (other than Spare Parts) that is Eligible Ground Equipment from any
location outside the United States to any other location outside the United
States.


 


28





















 


5.10         Compliance
with Laws.  Comply with
the requirements of all applicable laws, rules, regulations, and orders of any
Governmental Authority (including, without limitation, the rules, regulations
standards and policies of the FAA, the DOT and any applicable similar body or
Governmental Authority responsible for the regulation of commercial aviation in
any applicable jurisdiction or having jurisdiction over the Parent, Borrower,
or any of Borrower’s Subsidiaries), other than laws, rules, regulations, and orders
the non-compliance with which, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Change.


 


5.11         Leases.  Pay when due all rents and other amounts
payable under any Material Leases, unless such payments are the subject of a
Permitted Protest.


 


5.12         Existence.  At
all times preserve and keep in full force and effect Parent’s, Borrower’s, and
Borrower’s Subsidiaries valid existence and good standing and any rights and
franchises material to their businesses; provided, however,
solely as a result of the consummation of a Permitted Merger, the Person that
is not the surviving entity may cease to keep in full force and effect its
valid existence and good standing.


 


5.13         Environmental.


 


(a)           Keep any property
either owned or operated by Parent, Borrower, or Borrower’s Subsidiaries free
of any Environmental Liens or post bonds or other financial assurances
sufficient to satisfy the obligations or liability evidenced by such
Environmental Liens, (b) comply, in all material respects, with
Environmental Laws and provide to Agent documentation of such compliance which
Agent reasonably requests, (c) promptly notify Agent of any release of a
Hazardous Material in any reportable quantity, which could reasonably be
expected to result in a Material Adverse Change, from or onto property owned or
operated by Parent or its Subsidiaries and take any Remedial Actions required
of Parent, Borrower, or Borrower’s Subsidiaries to abate said release in
compliance with applicable Environmental Law, and (d) promptly, but in any
event within 5 days of its receipt thereof, provide Agent with written notice
of any of the following:  (i) notice
that an Environmental Lien has been filed against any of the real or personal
property of Parent, Borrower, or Borrower’s Subsidiaries, (ii) commencement
of any Environmental Action against or notice that an Environmental Action will
be filed against Parent, Borrower, or Borrower’s Subsidiaries, and (iii) notice
of a violation of, citation with respect to, or other administrative order with
respect to any Environmental Law which reasonably could be expected to result
in a Material Adverse Change.


 


5.14         Disclosure
Updates.  Promptly and in
no event later than 5 Business Days after obtaining knowledge thereof, notify
Agent if any written information, exhibit, or report furnished to the Lender
Group contained, at the time it was furnished, any untrue statement of a
material fact or omitted to state any material fact necessary to make the
statements contained therein not misleading in light of the circumstances in
which made.  The foregoing to the
contrary notwithstanding, any notification pursuant to the foregoing provision
will not cure or remedy the effect of the prior untrue statement of a material
fact or omission of any material fact nor shall any such notification have the
effect of amending or modifying this Agreement or any of the Schedules hereto.


 


5.15         Control
Agreements.  Subject to the limitations set forth in Section 6.12,
take all reasonable steps in order for Agent to obtain control in
accordance with Sections 8-106, 9-104, 9-105, 9-106, and 9-107 of the Code with
respect to all of its Securities Accounts, Deposit Accounts, electronic chattel
paper, investment property, and letter-of-credit rights.


 


5.16         Formation
of Subsidiaries.  Within 10 days after the time that
Borrower or any of its Subsidiaries forms any direct or indirect Subsidiary or
acquires any direct or indirect Subsidiary after the Closing Date, Borrower or
such Subsidiary, as applicable, shall (a) cause such new Subsidiary to
provide to Agent a joinder to the Guaranty, and the Security Agreement,
together with such other security documents (including (i) mortgages with
respect to any Real Property of such new Subsidiary with a value in excess of
$250,000, and (ii) if required by the Security Agreement, an Engine and
Spare Parts Security Agreement and an Aircraft Security Agreement), as well as
appropriate financing statements (and with respect to all property


 


29





















 


subject to a mortgage,
fixture filings), all in form and substance satisfactory to the Required
Lenders (including being sufficient to grant Agent a first priority Lien
(subject to Permitted Liens) in and to the assets of such newly formed or
acquired Subsidiary), (b) provide to Agent a pledge agreement and
appropriate certificates and powers or financing statements, hypothecating all
of the direct or beneficial ownership interest in such new Subsidiary, in form
and substance satisfactory to the Required Lenders, and (c) provide to
Agent all other documentation, including one or more opinions of counsel
satisfactory to the Required Lenders, which in its opinion is appropriate with
respect to the execution and delivery of the applicable documentation referred
to above (including policies of title insurance or other documentation with
respect to all property with a value in excess of $250,000 subject to a
mortgage).  Any document, agreement, or
instrument executed or issued pursuant to this Section 5.16 shall
be a Loan Document.


 


5.17         Spare Parts.


 


(a)           Keep (i) all
Eligible Spare Parts (other than those set forth on Schedule E-1)
only at Borrower’s primary maintenance and operations facility at Honolulu
International Airport and (ii) all Eligible Spare Parts set forth on Schedule E-1
only at Borrower’s maintenance and operations facility at Los Angeles
International Airport.  All Eligible Spare Parts must be
located in fenced areas with readily visible signage indicating that
the Spare Parts located at such location are subject to a Lien in favor of
Agent.


 


(b)           Keep all Spare Parts
of Borrower not designated as Eligible Spare Parts only at the locations
identified on Schedule 4.3 (and not permit any Spare Parts to be
located at the premises of or otherwise put into the possession or control of
any bailee, warehouseman, FAA repair station, servicer, mechanic, vendor,
supplier, or other Person), provided  that: (i) so long as (A) such
amendment occurs by written notice to Agent not less than 20 days prior to the
date on which such Spare Part is moved to such new location, and (B) such
new location is within the United States, Borrower may amend Schedule 4.3
to add additional locations; (ii) any Spare Part that is not an
Eligible Spare Part may be in the possession of or under the control of a
bailee, warehouseman, FAA repair station, overhaul or maintenance servicer,
mechanic, or similar Person for purposes of repair in the ordinary course of
Borrower’s business so long as either (x) no Event of Default has occurred and
is continuing or would result therefrom, or (y) the aggregate value of all such
Spare Parts in the possession of or under the control of all such Persons, in
the aggregate, does not exceed $1,500,000; (iii) so long as such transit
is in the ordinary course of Borrower’s business, Borrower may move Spare
Parts that are not Eligible Spare Parts from any location in the United States
identified on Schedule 4.3 to any other location in the United
States identified on Schedule 4.3; (iv) so long as (A) no
Event of Default has occurred and is continuing or would result therefrom, (B) such
transit is in the ordinary course of Borrower’s business, and (C) the
aggregate value of all Spare Parts moved to all such foreign locations, in the
aggregate, does not exceed $2,500,000, Borrower may move Spare Parts that are
not Eligible Spare Parts from any location in the United States identified on Schedule 4.3
to any location outside the United States (including locations outside the
United States where such Spare Parts are in the possession of or under the
control of a bailee, warehouseman, FAA repair station, overhaul or maintenance
servicer, mechanic, or similar Person); and (v) so long as such transit is
in the ordinary course of Borrower’s business, Borrower may move Spare
Parts that are not Eligible Spare Parts from any location outside the United
States to any other location outside the United States.


 


(c)           Maintain in effect a
Spare Parts Tracking System.


 


(d)           Maintain all
records, logs, serviceability tags and other documents and materials required
by applicable law, including the FARs, or by Borrower’s Maintenance Program.


 


(e)           Not permit any Spare
Parts to be leased, sold, exchanged, attached or installed on any Aircraft,
Engine, flight simulator, or other Equipment, or otherwise disposed of; provided,
however, that (i) so long as no Overadvance is outstanding or would
result therefrom, Borrower may sell Spare Parts to other airlines in the
ordinary course of Borrower’s business, (ii) so long as no Overadvance is
outstanding or would result therefrom, Borrower may attach or install Spare
Parts to its Aircraft, Engines, flight simulators, or other Equipment in the
ordinary course of business, and (iii) with respect to Spare Parts that
are not Eligible Spare


 


30





















 


Parts, pool, exchange, or
lease such Spare Parts pursuant to a parts pooling, parts exchange, or
short-term parts leasing agreement which is acceptable to the Required Lenders
in their Permitted Discretion so long as (x) no Event of Default has occurred
and is continuing or would result therefrom, or (y) the aggregate value of all
such Spare Parts subject to all such agreements, in the aggregate, does not
exceed $100,000.


 


(f)            Each of Parent,
Borrower, and Borrower, on behalf of each of its Subsidiaries, hereby waives
any and all rights that it has or may have in the future to assert or claim
against Agent or any of the Lenders or any transferee pursuant to the exercise
of remedies under any of the Loan Documents, any mechanic’s, repairer’s,
servicer’s, storer’s or other Lien against any Collateral, including any Spare
Parts.  None of Parent, Borrower, or any
of Borrower’s Subsidiaries shall permit any Spare Parts to be located at the
premises of or otherwise put into the possession or control of any bailee,
warehouseman, FAA repair station, servicer, mechanic, vendor, supplier, or
similar Person; provided, however, that any Spare Part that
is not an Eligible Spare Part may be in the possession of or under the
control of a bailee, warehouseman, FAA repair station, overhaul or maintenance
servicer, mechanic, or similar Person to the extent expressly permitted by (but
without duplication of) the proviso to Section 5.17(b)(ii).


 


5.18         Slots, Gates, and Routes.


 


(a)           Utilize each of its
Slots, Gates, and Routes (or cause to be utilized in case of any sublicence or
sublease thereof permitted by this Agreement) in accordance with applicable
contracts governing such Slot, Gate, or Route and applicable law (including any
minimum utilization requirements under the rules and regulations of the
FAA, the DOT or of any other Governmental Authority or airport authority) in
order to maintain its right to use such Slot, Gate, or Route, as applicable,
and where the failure to so maintain its right to use such Slot, Gate, or
Route, as applicable, would materially impair the value of the Collateral.


 


(b)           Promptly upon
receipt thereof, deliver to Agent copies of (i) each certificate or order
relating to each of its Slots, Gates, and Routes or any other material
certificates or orders that are issued by the DOT or any applicable
Governmental Authority or airport authority, (ii) all filings made by or
on behalf of Parent, Borrower, or any of Borrower’s Subsidiaries with any
Governmental Authority related to preserving and maintaining the value of any
of its Slots, Gates and Routes and (iii) any notices received from any
Person notifying Parent, Borrower, or any of Borrower’s Subsidiaries of an
event or other circumstances that would be reasonably likely to materially
impair, or have a potential material adverse effect upon, any of the Slots,
Gates or Routes.


 


(c)           Parent shall notify
Agent not less than 30 days prior to the termination or cessation of operation
by Parent, Borrower, or any of Borrower’s Subsidiaries in any Slot or on any
Route, if such termination or cessation of operating a Slot or Route is
reasonably likely to have a Material Adverse Change on Parent, Borrower, or any
of Borrower’s Subsidiaries.


 


5.19         Benefit Plans.      Parent shall provide (or cause to be
provided) to Agent (i) promptly and in any event within 5 Business Days
after Borrower, Parent, any of Borrower’s Subsidiaries or any ERISA Affiliate
knows or has reason to know that, with respect to any Benefit Plan, any ERISA
Event or “accumulated funding deficiency” (within the meaning of Section 412
or the IRC or Section 302 of ERISA) has occurred or that an application
has been made to the Secretary of the Treasury for a waiver or modification of
the minimum funding standard (including installment payments) or an extension
of any amortization period under Section 412 of the IRC, a statement of an
Authorized Person setting forth the details of such occurrence and the action,
if any, which Borrower, Parent or such Subsidiary or ERISA Affiliate proposes
to take with respect thereto, (ii) promptly and in any event within 5
Business Days after receipt thereof by Borrower, Parent, any of Borrower’s
Subsidiaries or any ERISA Affiliate from the PBGC, copies of each notice
received by any of them of the PBGC’s intention to terminate any Benefit Plan
or to have a trustee appointed to administer any Benefit Plan, (iii) promptly
and in any event within 5 Business Days after the filing thereof with the
Internal Revenue Service, copies of each Schedule B (Actuarial
Information) to the annual report (Form 5500 Series) with respect to each
Benefit Plan, (iv) promptly and in any event within 5 Business Days after
Borrower, Parent, any of Borrower’s Subsidiaries or any ERISA Affiliate knows
or has reason to know


 


31





















 


that a required installment
within the meaning of Section 412 of the IRC has not been made when due
with respect to a Benefit Plan, a statement of an Authorized Person describing
the failure to make such installment and (vi) promptly and in any event
within 5 Business Days after receipt thereof by Borrower, Parent, any of
Borrower’s Subsidiaries or any ERISA Affiliate from a sponsor of a
Multiemployer Plan or from the PBGC, a copy of each notice received by any such
Person concerning the imposition of withdrawal liability under Section 4202
of ERISA or indicating that a Multiemployer Plan may enter reorganization
status under Section 4241 of ERISA. 
Parent shall timely make (or cause to be timely made) each required
contribution (other than a de minimis
contribution) with respect to each Benefit Plan (including each quarterly
contribution required by Section 412 of the IRC at the time specified in
such section) and shall provide (or cause to be provided) to Agent promptly and
in any event within 5 Business Days of each such contribution, proof that such
contribution was made along with a statement from the Benefit Plan’s actuary
indicating that such contribution constitutes full and timely payment of all
required contributions then due with respect to such Benefit Plan and that
there are no past-due contributions outstanding for any Benefit Plan.  For purposes of the foregoing sentence only,
a contribution that actually is made within 15 Business Days of when it
actually was due shall be considered timely made if (i) the contribution
is less than $1,000,000; (ii) the total outstanding past-due contributions
with respect to all Benefit Plans (determined without regard to this sentence)
do not exceed $1,000,000; and (iii) the PBGC has not perfected a Lien with
respect to any Benefit Plan.


 


6.             NEGATIVE COVENANTS.


 


Each of Borrower and each
Guarantor covenants and agrees that, until termination of all of the
Commitments and payment in full of the Obligations, each of Borrower and each
Guarantor will not and will not permit any of Parent’s Subsidiaries to do any
of the following:


 


6.1           Indebtedness.  Create, incur, assume, suffer to exist, guarantee, or otherwise become
or remain, directly or indirectly, liable with respect to any Indebtedness,
except:


 


(a)           Indebtedness
evidenced by this Agreement and the other Loan Documents, together with
Indebtedness owed to Underlying Issuers with respect to Underlying Letters of
Credit,


 


(b)           Indebtedness set
forth on Schedule 4.19 and any Refinancing Indebtedness in respect
of such Indebtedness,


 


(c)           Permitted Purchase
Money Indebtedness and any Refinancing Indebtedness in respect of such
Indebtedness,


 


(d)           endorsement of
instruments or other payment items for deposit,


 


(e)           Indebtedness
composing Permitted Investments,


 


(f)            the incurrence by
Parent, Borrower, or Borrower’s Subsidiaries of Indebtedness under any Hedge
Agreement that are incurred for the bona fide purpose of hedging (i) interest
rate risk with respect to Indebtedness of Parent, Borrower, or Borrower’s
Subsidiaries permitted to be incurred under this Agreement and which will have
a notional amount no greater than the payments due with respect to the
Indebtedness being hedged thereby, (ii) currency exchange rate risk in
connection with the then existing financial obligations or the acquisition of
goods or services and not for purposes of speculation, or (iii) the cost
of fuel to be used in connection with the operations of the Borrower and not
for purposes of speculation,


 


(g)           the Second Lien
Indebtedness,


 


(h)           the IRS Tax Claim
Indebtedness so long as the repayment terms of such IRS Tax Claim Indebtedness
set forth in the Plan of Reorganization and Schedule 4.23, are
acceptable to the Required Lenders,


 


32





















 


(i)            unsecured
Indebtedness of Parent evidenced by the Subordinated Notes,


 


(j)            other unsecured
Indebtedness of Borrower and Borrower’s Subsidiaries so long as such
Indebtedness (i) is permitted by the Second Lien Credit Agreement, (ii) matures
on a date that is at least one year after the Maturity Date, (iii) no
scheduled principal payments, mandatory prepayments of principal, optional
prepayments of principal, or any other principal payments in respect of such
Indebtedness can be made until the Maturity Date of such Indebtedness, and (iv) the
interest rate is consistent with market terms then existing, or


 


(k)           Permitted Parent
Indebtedness.


 


6.2           Liens.  Create, incur, assume, or suffer to exist, directly or indirectly, any
Lien on or with respect to any of its assets, of any kind, whether now owned or
hereafter acquired, or any income or profits therefrom, except for Permitted
Liens.


 


6.3           Restrictions on Fundamental Changes.


 


(a)           Other than a
Permitted Merger, enter into any merger, consolidation, reorganization, or
recapitalization, or reclassify its Stock,


 


(b)           Other than as a
result of a Permitted Merger, liquidate, wind up, or dissolve itself (or suffer
any liquidation or dissolution),


 


(c)           Other than as a
result of a Permitted Merger, convey, sell, lease, license, assign, transfer,
or otherwise dispose of, in one transaction or a series of transactions, all or
any substantial part of its assets, or


 


(d)           Other than as a
result of a Permitted Merger, suspend or go out of a substantial portion of its
or their business.


 


6.4           Disposal of Assets.  Other than Permitted Dispositions, the Permitted Mergers, and Permitted
Liens, convey, sell, lease, license, assign, transfer, or otherwise dispose of
any of Parent’s, Borrower’s or Borrower’s Subsidiaries assets.


 


6.5           Change Name.  Change Parent’s, Borrower’s, or any of Borrower’s Subsidiaries’ name,
organizational identification number, state of organization or organizational
identity; provided, however, that Parent, Borrower, or any of
Borrower’s Subsidiaries may change their names upon at least 10 days prior
written notice to Agent of such change and so long as, at the time of such
written notification, Parent, Borrower, or Borrower’s Subsidiary provides any
financing statements necessary to perfect and continue perfected the Agent’s
Liens.


 


6.6           Nature of Business.  Make any change in the principal nature of its or their business.


 


6.7           Prepayments and
Amendments.  Except in connection with Refinancing
Indebtedness permitted by Section 6.1,


 


(a)           optionally prepay,
redeem, defease, purchase, or otherwise acquire any Indebtedness of Parent,
Borrower, or Borrower’s Subsidiaries, other than the Obligations in accordance
with this Agreement; provided, however, that so long as no
Default or Event of Default has occurred and is continuing or would result
therefrom, (i) Parent may prepay the Indebtedness described in Section 6.1(i) with
the Net Cash Proceeds of the Permitted Parent Indebtedness that is incurred on
or before December 31, 2005, or a Parent Rights Offering, and (ii) Parent
may prepay the Second Lien Indebtedness with the Net Cash Proceeds of the
Permitted Parent Indebtedness that is incurred on or before December 31,
2005,


 


33





















 


(b)           make any mandatory
payment (if any) on account of (i) the Second Lien Indebtedness to the
extent prohibited under the Intercreditor Agreement, (ii) the Indebtedness
evidenced by the Subordinated Notes to the extent prohibited under the terms of
the Subordinated Notes, or (iii) any other Indebtedness that has been
contractually subordinated in right of payment if such payment is not permitted
at such time under the applicable subordination terms and conditions, or


 


(c)           directly or
indirectly, amend, modify, alter, increase, or change any of the terms or
conditions (i) the Second Lien Loan Documents (to the extent that such
amendment, modification, alteration, increase or change is prohibited under the
Intercreditor Agreement), or (ii) any other agreement, instrument,
document, indenture, or other writing evidencing or concerning Indebtedness
permitted under Sections 6.1(b), (c), (g), or (h); provided,
however, that Parent, Borrower, or any of Borrower’s Subsidiaries may
directly or indirectly amend, modify, alter, increase, or change any of the
terms of conditions of any agreement, instrument, document, indenture, or other
writing evidencing or concerning Indebtedness permitted under Sections
6.1(b), (c), or (h) so long as (A) such amendment,
modification, alteration, increase or change does not result in an increase in
the principal amount of such Indebtedness, (B) after giving effect to such
proposed amendment, modification, alteration, increase or change, the interest
rate with respect to such Indebtedness is consistent with market terms then
existing, (C) such amendment, modification, alteration, increase or change
does not result in a shortening of the average weighted maturity of such
Indebtedness (provided, however, that such amendment,
modification, alteration, increase or change may result in a shortening of the
average weighted maturity of the Indebtedness so refinanced, renewed, or
extended so long as the maturity for all of the principal that is due in
respect of such Indebtedness is a date that is at least 1 year after the
Maturity Date), (D) if the Indebtedness that is the subject of such
amendment, modification, alteration, increase or change was subordinated in
right of payment to the Obligations, then after giving effect to such
amendment, modification, alteration, increase or change, the subordination
terms and conditions of such Indebtedness must be at least as favorable to the
Lender Group as those that were applicable to the Indebtedness prior to such
amendment, modification, alteration, increase or change, and (E) the
Indebtedness that is the subject of such amendment, modification, alteration,
increase or change is not recourse to any Person that is liable on account of
the Obligations other than those Persons which were obligated with respect to
the Indebtedness that is subject of such amendment, modification, alteration,
increase or change.


 


6.8           Change of Control.  Cause, permit, or suffer, directly or indirectly, any Change of
Control.


 


6.9           Consignments.
 Consign any of its or their Inventory or sell any of its or their
Inventory on bill and hold, sale or return, sale on approval, or other
conditional terms of sale.


 


6.10         Distributions.  Other than Permitted Distributions, make any distribution or declare or pay any
dividends (in cash or other property, other than Stock) on, or purchase,
acquire, redeem, or retire any of Borrower’s Stock, of any class, whether now
or hereafter outstanding.


 


6.11         Accounting Methods.
 Modify or change its fiscal year (other than as may be required to
comply with GAAP and any other change so long as Parent and Borrower maintain
the same fiscal year) or its method of accounting (other than as may be
required to conform to GAAP) or enter into, modify, or terminate any agreement
currently existing, or at any time hereafter entered into with any third party
accounting firm or service bureau for the preparation or storage of Parent’s,
Borrower’s, or Borrower’s Subsidiaries’ accounting records without said
accounting firm or service bureau agreeing to provide Agent information
regarding Parent’s, Borrower’s, and Borrower’s Subsidiaries’ financial
condition.


 


6.12         Investments.  Except for Permitted Investments, directly or indirectly, make or
acquire any Investment or incur any liabilities (including contingent
obligations) for or in connection with any Investment; provided, however,
that none of Parent, Borrower, or any of Borrower’s Subsidiaries shall have
Permitted Investments (other than in the Cash Management Accounts) in Deposit
Accounts or Securities Accounts at any securities intermediary or bank in an
aggregate amount at any one time in excess of an amount equal to (i) $2,000,000
plus (ii) solely for any 3 consecutive Business Days, deposits in
Borrower’s payroll Deposit Account, unless Parent, Borrower, or Borrower’s
Subsidiary, as applicable, and the applicable securities


 


34





















 


intermediary or bank have
entered into Control Agreements governing such Permitted Investments in order
to perfect (and further establish) the Agent’s Liens in such Permitted
Investments; provided, further, that none of Parent, Borrower, or
any of Borrower’s Subsidiaries shall have Permitted Investments in Deposit
Accounts or Securities Accounts at Morgan Stanley DWC Inc. or any of its
Affiliates in an aggregate amount at any one time in excess of the Permitted
Morgan Stanley Amount unless Parent, Borrower, or Borrower’s Subsidiary, as
applicable, and the applicable securities intermediary or bank have entered into
Control Agreements governing such Permitted Investments in order to perfect
(and further establish) the Agent’s Liens in such Permitted Investments.  Subject to the foregoing proviso, neither
Parent nor Borrower shall and Borrower shall not permit its Subsidiaries to
establish or maintain any Deposit Account or Securities Account unless Agent
shall have received a Control Agreement in respect of such Deposit Account or
Securities Account.


 


6.13         Transactions
with Affiliates.  Directly or indirectly enter into or permit
to exist any transaction (including the payment of any management fees) with
any Affiliate of Borrower except for:


 


(a)           transactions that (i) are
in the ordinary course of Borrower’s business, (ii) are upon fair and
reasonable terms, (iii) if they involve one or more payments by Parent,
Borrower, or Borrower’s Subsidiaries in excess of $250,000, are fully disclosed
to Agent, and (iv) are no less favorable to Parent, Borrower, or Borrower’s
Subsidiaries, as applicable, than would be obtained in an arm’s length
transaction with a non-Affiliate,


 


(b)           without duplication,
any Permitted Intercompany Advance, any Permitted Distribution, any Permitted
Merger, the transactions contemplated by the Subordinated Documents, and any
guarantee of Indebtedness permitted by Sections 6.1(a), (b), (c), (d), (e), (f) or
(g),  so long as such guarantee
benefits Borrower or any of Borrower’s Subsidiaries, and


 


(c)           so long as no Event
of Default shall have occurred and be continuing or would result therefrom,
Borrower may make distributions to Parent for the sole purpose of allowing
Parent to, and Parent shall use the proceeds thereof solely to (i) pay Mr. Lawrence
Hershfield fair and reasonable compensation in connection with serving as a
director on the Board of Directors or an officer of Parent or Borrower as
determined by independent members (other than Mr. Lawrence Hershfield) of
the Board of Directors, and (ii) pay Mr. Randall L. Jenson fair and
reasonable compensation in connection with serving as a director on the Board
of Directors or an officer of Parent or Borrower as determined by independent
members (other than Mr. Randall L. Jenson) of the Board of Directors.


 


6.14         Use of Proceeds.  Use the proceeds of the Advances and the Term Loan for any purpose
other than (a) on the Closing Date, (i) to fund distributions under
the Plan of Reorganization, and (ii) to pay transactional fees, costs, and
expenses incurred in connection with the Plan of Reorganization, this
Agreement, the other Loan Documents, and the transactions contemplated hereby
and thereby, and (b) thereafter, consistent with the terms and conditions
hereof, for its working capital and other lawful and permitted purposes.


 


6.15         IRS Tax Claim
Indebtedness.  Modify or change
the repayment plan with respect to the IRS Tax Claim Indebtedness set forth on Schedule 4.23
without the prior written consent of the Required Lenders.


 


6.16         Financial
Covenants.


 


(a)           Fail to maintain or
achieve:


 


(i)         Minimum EBITDA. 
EBITDA, measured on a quarter-end basis, of at least the
required amount set forth in the following table for the applicable period set
forth opposite thereto:


 


35





















 


	
  Applicable Amount

  	
   

  	
  Applicable Period

  	
   

  
	
  $

  	
  7,294,000

  	
   

  	
  For the 6 month period ending June 30, 2005

  	
   

  
	
  $

  	
  25,175,000

  	
   

  	
  For the 9 month period ending September 30,
  2005

  	
   

  
	
  $

  	
  25,073,000

  	
   

  	
  For the 12 month period ending December 31,
  2005

  	
   

  
	
  $

  	
  25,000,000

  	
   

  	
  For the 12 month period ending March 31, 2006

  	
   

  
	
  $

  	
  25,000,000

  	
   

  	
  For the 12 month period ending each quarter
  thereafter

  	
   

  



 


provided, however,
that (A) if Excess Availability plus Qualified Cash exceeds $70,000,000 at
all times during the period from June 1, 2005 through June 30, 2005,
EBITDA for the 6 month period ending June 30, 2005 solely for purposes of this
Section 6.16(a)(i) will not be tested, (B) if Excess
Availability plus Qualified Cash exceeds $70,000,000 at all times during the
period from September 1, 2005 through September 30, 2005, EBITDA for
the 9 month period ending September 30, 2005 solely for purposes of this Section 6.16(a)(i) will
not be tested, (C) if Excess Availability plus Qualified Cash exceeds
$70,000,000 at all times during the period from December 1, 2005 through December 31,
2005, EBITDA for the 12 month period ending December 31, 2005 solely for
purposes of this Section 6.16(a)(i) will not be tested, (D) if
Excess Availability plus Qualified Cash exceeds $70,000,000 at all times during
the period from March 1, 2006 through March 31, 2006, EBITDA for the
12 month period ending March 31, 2006 solely for purposes of this Section 6.16(a)(i) will
not be tested, and (E) if Excess Availability plus Qualified Cash exceeds
$70,000,000 at all times during the 30-day period immediately prior to the end
of each quarter thereafter, EBITDA for the 12 month period ending on such
quarter solely for purposes of this Section 6.16(a)(i) will
not be tested; provided, further, however, that if Excess
Availability plus Qualified Cash does not exceed $70,000,000 at any time during
any of the applicable periods specified above (the “EBITDA Event”),
EBITDA for all future periods will be tested whether or not Excess Availability
plus Qualified Cash exceeds $70,000,000 at any time after the EBITDA Event.


 


(ii)           Excess Availability plus Qualified Cash.  Solely with respect to Borrower
and its Subsidiaries, Excess Availability plus Qualified Cash at all times of
at least an amount equal to: (A) during the period from and after the
execution and delivery of this Agreement up to (but not including) the date
that is the first anniversary of the Closing Date, $50,000,000; and (B) from
and including the date that is the first anniversary of the Closing Date up to
(but not including) the Maturity Date, an amount equal to (x) $50,000,000, minus (y) the aggregate amount of amortized payments and
optional prepayments in respect of the Term Loan that have been made since the
Closing Date.


 


(b)           Fail to maintain or
achieve:


 


(i)            First Lien Leverage Ratio. 
Solely with respect to Borrower and its Subsidiaries, a First Lien Leverage
Ratio, measured on a quarter-end basis, of (i) not more than 1.75:1.00
during the period from the Closing Date up to (but excluding) the one year
anniversary of the Closing Date, (ii) not more than 1.60:1.00 during the
period from the one year anniversary of the Closing Date up to (but excluding)
the second year anniversary of the Closing Date, and (iii) not more than
1.25:1.00 thereafter.


 


(ii)           Total Leverage Ratio.  Solely
with respect to Borrower and its Subsidiaries, a Total Leverage Ratio, measured
on a quarter-end basis, of (i) not more than 2.75:1.00 during the period
from the Closing Date up to (but excluding) the one year anniversary of the
Closing Date, (ii) not more than


 


36





















 


2.60:1.00 during the period
from the one year anniversary of the Closing Date up to (but excluding) the
second year anniversary of the Closing Date, and (iii) not more than
2.25:1.00 thereafter.


 


7.             EVENTS OF DEFAULT.


 


Any one or more of the
following events shall constitute an event of default (each, an “Event of
Default”) under this Agreement:


 


7.1           If Borrower fails to
pay when due and payable, or when declared due and payable, (a) all or any
portion of the Obligations consisting of interest, fees, or charges due the
Lender Group, reimbursement of Lender Group Expenses, or other amounts (other
than any portion thereof constituting principal) constituting Obligations
(including any portion thereof that accrues after the commencement of an
Insolvency Proceeding, regardless of whether allowed or allowable in whole or
in part as a claim in any such Insolvency Proceeding), and such failure
continues for a period of 3 Business Days, or (b) all or any portion of
the principal of the Obligations;


 


7.2           If Parent, Borrower,
or any of Borrower’s Subsidiaries:


 


(a)           fails to perform or
observe any covenant or other agreement contained in any of Sections 2.7,
5.2, 5.3, 5.5, 5.8, 5.12, 5.14, 5.16
through 5.19, and 6.1 through 6.8, 6.10, and 6.12
through 6.16 of this Agreement;


 


(b)           fails to perform or
observe any covenant or other agreement contained in any of Sections 5.6,
5.7, 5.9, 5.10, 5.11, 5.15, 6.9, and 6.11
of this Agreement and such failure continues for a period of 10 Business Days
after the earlier of (i) the date on which such failure shall first become
known to any officer of Borrower or (ii) written notice thereof is given
to Borrower by Agent; or


 


(c)           fails to perform or
observe any covenant or other agreement contained in this Agreement, or in any
of the other Loan Documents; in each case, other than any such covenant or
agreement that is the subject of another provision of this Section 7
(in which event such other provision of this Section 7 shall
govern), and such failure continues for a period of 30 days after the earlier
of (i) the date on which such failure shall first become known to any
officer of Borrower or (ii) written notice thereof is given to Borrower by
Agent;


 


7.3           If any material
portion of Parent’s or any of its Subsidiaries’ assets is attached, seized,
subjected to a writ or distress warrant, or is levied upon, and the same is not
discharged before the earlier of 30 days after the date it first arises or 5
days prior to the date on which such property or asset is subject to forfeiture
by Parent or the applicable Subsidiary;


 


7.4           If an Insolvency
Proceeding is commenced by Parent or any of its Subsidiaries;


 


7.5           If an Insolvency
Proceeding is commenced against Parent or any of its Subsidiaries and any of
the following events occur: (a) Parent or such Subsidiary consents to the
institution of such Insolvency Proceeding against it, (b) the petition
commencing the Insolvency Proceeding is not timely controverted, (c) the
petition commencing the Insolvency Proceeding is not dismissed within 60
calendar days of the date of the filing thereof, (d) an interim trustee is
appointed to take possession of all or any substantial portion of the
properties or assets of, or to operate all or any substantial portion of the
business of, Parent or any of its Subsidiaries, or (e) an order for relief
shall have been issued or entered therein;


 


7.6           If Parent or any of
its Subsidiaries is enjoined, restrained, or in any way prevented by court
order from continuing to conduct all or any material part of its business
affairs;


 


37





















 


7.7           If one or more
judgments, orders, or awards involving an aggregate amount of $1,000,000, or
more (except to the extent fully covered by insurance pursuant to which the
insurer has accepted liability therefor in writing) shall be entered or filed
against Parent, Borrower, or any of Borrower’s Subsidiaries or with respect to
any of their respective assets, and the same is not released, discharged,
bonded against, or stayed pending appeal before the earlier of 30 days after
the date it first arises or 5 days prior to the date on which such asset is
subject to being forfeited by Parent, Borrower, or the applicable Subsidiary;


 


7.8           If there is a
default (after giving effect to any applicable grace period) in (a) any of
the Second Lien Loan Documents, (b) any of the Subordinated Documents, (c) the
repayment of the obligations owed to the Internal Revenue Service as set forth
in the Plan of Reorganization and the related orders, (d) one or more
agreements to which Parent or any of its Subsidiaries is a party with one or
more third Persons relative to Parent’s, Borrower’s, or any of Borrower’s
Subsidiaries’ Indebtedness involving an aggregate amount of $1,000,000 or more,
and such default (i) occurs at the final maturity of the obligations
thereunder, or (ii) results in a right by such third Person(s),
irrespective of whether exercised, to accelerate the maturity of Parent’s,
Borrower’s, or the applicable Subsidiary’s obligations thereunder, or (e) one
or more executory contracts or unexpired leases which are proposed to be
assumed pursuant Article VI of the Plan of Reorganization (including any
of those identified on Plan Exhibit A thereto) and which relate to any
lease of real or personal property of any kind with a fair market value
(individually or in the aggregate) of $1,000,000 or more, and any party thereto
(other than the Borrower) asserts in writing that a default has occurred with
respect to any such agreement;


 


7.9           If any warranty,
representation, statement, or Record made herein or in any other Loan Document
or delivered by Parent, Borrower, or any of Borrower’s Subsidiaries to Agent or
any Lender in connection with this Agreement or any other Loan Document proves
to be untrue in any material respect (except that such materiality qualifier
shall not be applicable to any representations and warranties that already are
qualified or modified by materiality in the text thereof) as of the date of
issuance or making or deemed making thereof;


 


7.10         If the obligation of
any Guarantor under the Guaranty is limited or terminated by operation of law
or by such Guarantor, or any such Guarantor becomes the subject of an
Insolvency Proceeding; provided, however, that if the obligation
of a Subsidiary of the Borrower that has issued a Guaranty in favor of Agent is
terminated in connection with the merger of such Subsidiary with and into
Borrower pursuant to a Permitted Merger, the termination of such obligation
will not constitute an Event of Default;


 


7.11         If the Security
Agreement or any other Loan Document that purports to create a Lien, shall, for
any reason, fail or cease to create a valid and perfected and, except to the
extent permitted by the terms hereof or thereof, first priority Lien on or
security interest in the Collateral covered hereby or thereby, except as a
result of a disposition of the applicable Collateral in a transaction permitted
under this Agreement;


 


7.12         Borrower shall at any
time cease to be a Certificated Air Carrier;


 


7.13         Any provision of any
Loan Document shall at any time for any reason be declared to be null and void,
or the validity or enforceability thereof shall be contested by Parent,
Borrower, or Borrower’s Subsidiaries, or a proceeding shall be commenced by
Parent, Borrower, or Borrower’s Subsidiaries, or by any Governmental Authority
having jurisdiction over Parent, Borrower, or Borrower’s Subsidiaries, seeking
to establish the invalidity or unenforceability thereof, or Parent, Borrower,
or Borrower’s Subsidiaries shall deny that Parent, Borrower, or Borrower’s
Subsidiaries has any liability or obligation purported to be created under any
Loan Document; or


 


7.14         (a)           If Borrower, Parent, any of Borrower’s
Subsidiaries or any ERISA Affiliate shall have made a complete or partial
withdrawal from a Multiemployer Plan, and, as a result of such complete or
partial withdrawal, any of them incurs a withdrawal liability in a total amount
exceeding $2,000,000 or, if less, an amount that could result in a Material
Adverse Change; or if a Multiemployer Plan enters reorganization status under Section 4241
of ERISA, and, as a result thereof, Borrower’s, Parent’s, any of Borrower’s


 


38





















 


Subsidiary’s or any ERISA
Affiliate’s total contribution requirement with respect to such Multiemployer
Plan exceeds $2,000,000 or, if less, an amount that could result in a Material
Adverse Change;


 


(b)           An ERISA Event has occurred with
respect to a Benefit Plan and (i) 30 days thereafter, such ERISA Event (if
correctable) shall not have been corrected, and (ii) the then current
Unfunded Benefit Liability of such Benefit Plan exceeds $300,000,000 or, if
less, an amount that could result in a Material Adverse Change (or, in the case
of an ERISA Event involving liability under Section 409, 502(i), 502(l),
515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 4971
or 4975 of the IRC, the liability is in excess of $2,000,000 or, if less, an
amount that could result in a Material Adverse Change); or


 


(c)           The total projected benefit obligation of Borrower,
Parent, Borrower’s Subsidiaries and all ERISA Affiliates, determined as of the
close of any fiscal year of the Parent and in accordance with Financial
Accounting Standards Board Statement No.106 (without regard to continuation
coverage required under Part 6 of subtitle B of Title I of ERISA or Section 4980B
of the IRC), for any post-employment or retiree health benefits, life insurance
coverage, or any other welfare benefits exceeds $70,000,000 or, if less, an
amount that could result in a Material Adverse Change.


 


8.             THE LENDER GROUP’S RIGHTS AND REMEDIES.


 


8.1           Rights and Remedies.  Upon the occurrence, and during the continuation, of an Event of
Default, the Required Lenders (at their election but without notice of their
election and without demand, except as required by law) may authorize and
instruct Agent to do any one or more of the following on behalf of the Lender
Group (and Agent, acting upon the instructions of the Required Lenders, shall
do the same on behalf of the Lender Group), all of which are authorized by
Borrower:


 


(a)           Declare all or any
portion of the Obligations, whether evidenced by this Agreement, by any of the
other Loan Documents, or otherwise, immediately due and payable;


 


(b)           Cease advancing
money or extending credit to or for the benefit of Borrower under this
Agreement, under any of the Loan Documents, or under any other agreement
between Borrower and the Lender Group;


 


(c)           Terminate this
Agreement and any of the other Loan Documents as to any future liability or
obligation of the Lender Group, but without affecting any of the Agent’s Liens
in the Collateral and without affecting the Obligations;


 


(d)           The Lender Group
shall have all other rights and remedies available at law or in equity or
pursuant to any other Loan Document.


 


The foregoing to the
contrary notwithstanding, upon the occurrence of any Event of Default described
in Section 7.4 or Section 7.5, in addition to the
remedies set forth above, without any notice to Borrower or any other Person or
any act by the Lender Group, the Commitments shall automatically terminate and
the Obligations then outstanding, together with all accrued and unpaid interest
thereon and all fees and all other amounts due under this Agreement and the
other Loan Documents, shall automatically and immediately become due and
payable, without presentment, demand, protest, or notice of any kind, all of
which are expressly waived by Borrower.


 


8.2           Remedies Cumulative.  The rights and remedies of the Lender Group under this Agreement, the
other Loan Documents, and all other agreements shall be cumulative.  The Lender Group shall have all other rights
and remedies not inconsistent herewith as provided under the Code, by law, or
in equity.  No exercise by the Lender
Group of one right or remedy shall be deemed an election, and no waiver by the
Lender Group of any Event of Default shall be deemed a continuing waiver.  No delay by the Lender Group shall constitute
a waiver, election, or acquiescence by it.


 


39





















 


9.             TAXES AND EXPENSES.


 


If Borrower fails to pay any
monies (whether taxes, assessments, insurance premiums, or, in the case of
leased properties or assets, rents or other amounts payable under such leases)
due to third Persons, or fails to make any deposits or furnish any required
proof of payment or deposit, all as required under the terms of this Agreement,
then, Agent, in its sole discretion and without prior notice to Borrower, may
do any or all of the following:  (a) make
payment of the same or any part thereof, (b) set up such reserves against
the Borrowing Base or the Maximum Revolver Amount as Agent deems necessary to
protect the Lender Group from the exposure created by such failure, or (c) in
the case of the failure to comply with Section 5.8 hereof, obtain
and maintain insurance policies of the type described in Section 5.8
and take any action with respect to such policies as Agent deems prudent.  Any such amounts paid by Agent shall
constitute Lender Group Expenses and any such payments shall not constitute an
agreement by the Lender Group to make similar payments in the future or a
waiver by the Lender Group of any Event of Default under this Agreement.  Agent need not inquire as to, or contest the
validity of, any such expense, tax, or Lien and the receipt of the usual
official notice for the payment thereof shall be conclusive evidence that the
same was validly due and owing.


 


10.           WAIVERS;
INDEMNIFICATION.


 


10.1         Demand; Protest; etc.  Borrower waives demand, protest, notice of protest, notice of default
or dishonor, notice of payment and nonpayment, nonpayment at maturity, release,
compromise, settlement, extension, or renewal of documents, instruments,
chattel paper, and guarantees at any time held by the Lender Group on which Borrower
may in any way be liable, except for such of the foregoing which Agent has
expressly agreed to provide under this Agreement or any of the other Loan
Documents.


 


10.2         The
Lender Group’s Liability for Collateral.  Borrower hereby agrees that:  (a) so
long as Agent complies with its obligations, if any, under the Code, the Lender
Group shall not in any way or manner be liable or responsible for:  (i) the safekeeping of the Collateral, (ii) any
loss or damage thereto occurring or arising in any manner or fashion from any
cause, (iii) any diminution in the value thereof, or (iv) any act or
default of any carrier, warehouseman, bailee, forwarding agency, or other
Person, and (b) all risk of loss, damage, or destruction of the Collateral
shall be borne by Borrower.


 


10.3         Indemnification.  Borrower shall pay, indemnify, defend, and hold the Agent-Related
Persons, and the Lender-Related Persons (each, an “Indemnified Person”)
harmless (to the fullest extent permitted by law) from and against any and all
claims, demands, suits, actions, investigations, proceedings, and damages, and
all reasonable attorneys fees and disbursements and other reasonable costs and
expenses actually incurred in connection therewith or in connection with the
enforcement of this indemnification (as and when they are incurred and
irrespective of whether suit is brought), at any time asserted against, imposed
upon, or incurred by any of them (a) in connection with or as a result of
or related to the execution, delivery, enforcement, performance, or
administration (including any restructuring or workout with respect hereto) of
this Agreement, any of the other Loan Documents, or the transactions
contemplated hereby or thereby or the monitoring of Parent’s, Borrower’s, and
Borrower’s Subsidiaries’ compliance with the terms of the Loan Documents, and (b) with
respect to any investigation, litigation, or proceeding related to this
Agreement, any other Loan Document, or the use of the proceeds of the credit
provided hereunder (irrespective of whether any Indemnified Person is a party
thereto), or any act, omission, event, or circumstance in any manner related
thereto (each and all of the foregoing, the “Indemnified Liabilities”).  The foregoing to the contrary
notwithstanding, Borrower shall have no obligation to any Indemnified Person
under this Section 10.3 with respect to any Indemnified Liability
that a court of competent jurisdiction finally determines to have resulted from
the gross negligence or willful misconduct of such Indemnified Person or relate
to disputes between or among the Agent and the Lenders.  This provision shall survive the termination
of this Agreement and the repayment of the Obligations.  If any Indemnified Person makes any payment
to any other Indemnified Person with respect to an Indemnified Liability as to
which Borrower was required to indemnify the Indemnified Person receiving such
payment, the Indemnified Person making such payment is entitled to be
indemnified and reimbursed by Borrower with respect thereto.  WITHOUT
LIMITATION, THE FOREGOING


 


40





















 


INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT
TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR
ARISE OUT OF ANY NEGLIGENT (BUT NOT GROSSLY NEGLIGENT) ACT OR OMISSION OF SUCH
INDEMNIFIED PERSON OR OF ANY OTHER PERSON.


 


11.           NOTICES.


 


Unless otherwise provided in
this Agreement, all notices or demands by Parent, Borrower, or Agent to the
other relating to this Agreement or any other Loan Document shall be in writing
and (except for financial statements and other informational documents which
may be sent by first-class mail, postage prepaid) shall be personally delivered
or sent by registered or certified mail (postage prepaid, return receipt
requested), overnight courier, electronic mail (at such email addresses as
Borrower or Agent, as applicable, may designate to each other in accordance
herewith), or telefacsimile to Borrower or Agent, as the case may be, at its
address set forth below:


 


	
  If
  to Parent or

  Borrower:

  	
   

  	
  HAWAIIAN
  AIRLINES, INC.

  
	
   

  	
   

  	
  3375
  Koapaka St., Ste. G-350

  
	
   

  	
   

  	
  Honolulu,
  Hawaii 96819

  
	
   

  	
   

  	
  Attn:
  Mark Dunkerly, Steve Jackson, and the General Counsel

  
	
   

  	
   

  	
  Fax
  No. 808-835-3690

  
	
   

  	
   

  	
   

  
	
  with
  copies to:

  	
   

  	
  HAWAIIAN
  HOLDINGS, INC.

  
	
   

  	
   

  	
  12730
  High Bluff Drive, Suite 180

  
	
   

  	
   

  	
  San
  Diego, CA 92130

  
	
   

  	
   

  	
  Attn:
  Lawrence Hershfield

  
	
   

  	
   

  	
  Fax
  No. 858-523-1899

  
	
   

  	
   

  	
   

  
	
  and:

  	
   

  	
  DECHERT
  LLP

  
	
   

  	
   

  	
  30
  Rockefeller Plaza

  
	
   

  	
   

  	
  New
  York, NY 10112

  
	
   

  	
   

  	
  Attn:
  Charles Weissman, Esq.

  
	
   

  	
   

  	
  Fax
  No. 212-698-3599

  
	
   

  	
   

  	
   

  
	
  If
  to Agent:

  	
   

  	
  WELLS FARGO FOOTHILL, INC.

  
	
   

  	
   

  	
  2450
  Colorado Avenue  Suite 3000
  West

  
	
   

  	
   

  	
  Santa
  Monica, California 90404

  
	
   

  	
   

  	
  Attn:
  Business Finance Division Manager

  
	
   

  	
   

  	
  Fax
  No.: 310-453-7413

  
	
   

  	
   

  	
   

  
	
  with
  copies to:

  	
   

  	
  PAUL,
  HASTINGS, JANOFSKY & WALKER LLP

  
	
   

  	
   

  	
  515
  S. Flower Street

  
	
   

  	
   

  	
  Twenty-fifth
  Floor

  
	
   

  	
   

  	
  Los
  Angeles, California 90071

  
	
   

  	
   

  	
  Attn:
  John Francis Hilson, Esq.

  
	
   

  	
   

  	
  Fax
  No.: 213-627-0705

  



 


Agent and Borrower may
change the address at which they are to receive notices hereunder, by notice in
writing in the foregoing manner given to the other party.  All notices or demands sent in


 


41





















 


accordance with this Section 11,
other than notices by Agent in connection with enforcement rights against the
Collateral under the provisions of the Code, shall be deemed received on the
earlier of the date of actual receipt or 3 Business Days after the deposit
thereof in the mail.  Borrower
acknowledges and agrees that notices sent by the Lender Group in connection
with the exercise of enforcement rights against Collateral under the provisions
of the Code shall be deemed sent when deposited in the mail or personally
delivered, or, where permitted by law, transmitted by telefacsimile or any
other method set forth above.


 


12.           CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.


 


(a)           THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT
IN RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND
ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND
THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED
HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.


 


(b)           THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS
ARISING IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE
TRIED AND LITIGATED ONLY IN THE STATE AND, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW
YORK; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT
AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT’S
OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH
ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND.  BORROWER AND EACH MEMBER OF THE LENDER GROUP
WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE
TO ASSERT THE DOCTRINE OF FORUM  NON  CONVENIENS OR TO
OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS
SECTION 12(b).


 


(c)           BORROWER AND EACH MEMBER OF THE LENDER GROUP HEREBY
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE
TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS.  BORROWER AND EACH MEMBER OF THE LENDER GROUP
REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY
WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.  IN THE EVENT OF LITIGATION, A COPY OF THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.


 


13.           ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.


 


13.1         Assignments and Participations.


 


(a)           Any Lender may
assign and delegate to one or more assignees (each an “Assignee”) that
are Eligible Transferees all, or any ratable portion of all, of the
Obligations, the Commitments and the other rights and obligations of such
Lender hereunder and under the other Loan Documents, in a minimum amount of
$5,000,000 (except that such minimum amount shall not apply to an Affiliate of
a Lender or to a Related Fund); provided, however, that Borrower
and Agent may continue to deal solely and directly with such Lender in
connection with the interest so assigned to an Assignee until (i) written
notice of such assignment, together with payment instructions, addresses, and
related information with respect to the Assignee, have been


 


42





















 


given to Borrower and Agent
by such Lender and the Assignee, (ii) such Lender and its Assignee have
delivered to Borrower and Agent an Assignment and Acceptance and Agent has
notified the assigning Lender of its receipt thereof in accordance with Section 13.1(b),
and (iii) unless waived by Agent, the assigning Lender or Assignee has
paid to Agent for Agent’s separate account a processing fee in the amount of
$3,500.  Anything contained herein to the
contrary notwithstanding, the payment of any fees shall not be required and the
Assignee need not be an Eligible Transferee if (x) such assignment is in
connection with any merger, consolidation, sale, transfer, or other disposition
of all or any substantial portion of the business or loan portfolio of the
assigning Lender, or (y) the assignee is an Affiliate (other than
individual(s)) of a Lender or a Related Fund.


 


(b)           From and after the
date that Agent notifies the assigning Lender (with a copy to Borrower) that it
has received an executed Assignment and Acceptance, if applicable, and payment
of the required processing fee, (i) the Assignee thereunder shall be a
party hereto and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, shall have the
rights and obligations of a Lender under the Loan Documents, and (ii) the
assigning Lender shall, to the extent that rights and obligations hereunder and
under the other Loan Documents have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights (except with respect to Section 10.3
hereof) and be released from any future obligations under this Agreement (and
in the case of an Assignment and Acceptance covering all or the remaining
portion of an assigning Lender’s rights and obligations under this Agreement
and the other Loan Documents, such Lender shall cease to be a party hereto and
thereto), and such assignment shall effect a novation among Borrower, the
assigning Lender, and the Assignee; provided, however, that
nothing contained herein shall release any assigning Lender from obligations
that survive the termination of this Agreement, including such assigning Lender’s
obligations under Article 15 and Section 16.7 of this
Agreement.


 


(c)           By executing and delivering
an Assignment and Acceptance, the assigning Lender thereunder and the Assignee
thereunder confirm to and agree with each other and the other parties hereto as
follows:  (1) other than as provided
in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto, (2) such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of Borrower or the performance or observance by Borrower of any of its
obligations under this Agreement or any other Loan Document furnished pursuant
hereto, (3) such Assignee confirms that it has received a copy of this
Agreement, together with 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, (4) such Assignee will, independently and
without reliance upon Agent, such assigning Lender or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement, (5) such Assignee appoints and authorizes Agent to
take such actions and to exercise such powers under this Agreement as are
delegated to Agent, by the terms hereof, together with such powers as are
reasonably incidental thereto, and (6) such Assignee agrees that it will
perform all of the obligations which by the terms of this Agreement are
required to be performed by it as a Lender.


 


(d)           Immediately upon
Agent’s receipt of the required processing fee, if applicable, and delivery of
notice to the assigning Lender pursuant to Section 13.1(b), this
Agreement shall be deemed to be amended to the extent, but only to the extent,
necessary to reflect the addition of the Assignee and the resulting adjustment
of the Commitments arising therefrom. 
The Commitment allocated to each Assignee shall reduce such Commitments
of the assigning Lender pro tanto.


 


(e)           Any Lender may at
any time sell to one or more commercial banks, financial institutions, or other
Persons (a “Participant”) participating interests in its Obligations,
the Commitment, and the other rights and interests of that Lender (the “Originating
Lender”) hereunder and under the other Loan Documents; provided, however,
that (i) the Originating Lender shall remain a “Lender” for all purposes
of this


 


43





















 


Agreement and the other Loan
Documents and the Participant receiving the participating interest in the
Obligations, the Commitments, and the other rights and interests of the
Originating Lender hereunder shall not constitute a “Lender” hereunder or under
the other Loan Documents and the obligations of the Originating Lender, the
Parent, and the Borrower under this Agreement shall remain unchanged, (ii) the
Originating Lender shall remain solely responsible for the performance of such
obligations, (iii) Borrower, Agent, and the Lenders shall continue to deal
solely and directly with the Originating Lender in connection with the
Originating Lender’s rights and obligations under this Agreement and the other
Loan Documents, (iv) no Lender shall transfer or grant any participating
interest under which the Participant has the right to approve any amendment to,
or any consent or waiver with respect to, this Agreement or any other Loan
Document, except to the extent such amendment to, or consent or waiver with
respect to this Agreement or of any other Loan Document would (A) extend the
final maturity date of the Obligations hereunder in which such Participant is
participating, (B) reduce the interest rate applicable to the Obligations
hereunder in which such Participant is participating, (C) release all or
substantially all of the Collateral or guaranties (except to the extent
expressly provided herein or in any of the Loan Documents) supporting the
Obligations hereunder in which such Participant is participating, (D) postpone
the payment of, or reduce the amount of, the interest or fees payable to such
Participant through such Lender, or (E) change the amount or due dates of
scheduled principal repayments or prepayments or premiums, and (v) all
amounts payable by Borrower hereunder shall be determined as if such Lender had
not sold such participation, except that, if amounts outstanding under this
Agreement are due and unpaid, or shall have been declared or shall have become
due and payable upon the occurrence of an Event of Default, each Participant
shall be deemed to have the right of set off in respect of its participating
interest in amounts owing under this Agreement to the same extent as if the
amount of its participating interest were owing directly to it as a Lender
under this Agreement.  The rights of any
Participant only shall be derivative through the Originating Lender with whom
such Participant participates and no Participant shall have any rights under
this Agreement or the other Loan Documents or any direct rights as to the other
Lenders, Agent, Borrower, the Collections of Parent, Borrower, or Borrower’s
Subsidiaries, the Collateral, or otherwise in respect of the Obligations.  No Participant shall have the right to
participate directly in the making of decisions by the Lenders among
themselves.


 


(f)            In connection with
any such assignment or participation or proposed assignment or participation, a
Lender may, subject to the provisions of Section 16.7,  disclose all documents and information which
it now or hereafter may have relating to Parent, Borrower, and Borrower’s Subsidiaries
and their respective businesses.


 


(g)           Any other provision
in this Agreement notwithstanding, any Lender may at any time create a security
interest in, or pledge, all or any portion of its rights under and interest in
this Agreement in favor of any Federal Reserve Bank in accordance with
Regulation A of the Federal Reserve Bank or U.S. Treasury Regulation 31 CFR
§203.24, and such Federal Reserve Bank may enforce such pledge or security
interest in any manner permitted under applicable law.


 


(h)           Agent (on behalf of
Borrower) shall maintain, or cause to be maintained, a register (the “Register”)
on which it enters the name of a Lender as the registered owner of each Term
Loan held by such Lender.  Other than in
connection with an assignment by a Lender of all or any portion of its Term
Loan to an Affiliate of such Lender or a Related Fund of such Lender (i) a
Registered Loan (and the Registered Note, if any, evidencing the same) may be
assigned or sold in whole or in part only by registration of such assignment or
sale on the Register (and each Registered Note shall expressly so provide) and (ii) any
assignment or sale of all or part of such Registered Loan (and the Registered
Note, if any, evidencing the same) may be effected only by registration of such
assignment or sale on the Register, together with the surrender of the
Registered Note, if any, evidencing the same duly endorsed by (or accompanied
by a written instrument of assignment or sale duly executed by) the holder of
such Registered Note, whereupon, at the request of the designated assignee(s)
or transferee(s), one or more new Registered Notes in the same aggregate
principal amount shall be issued to the designated assignee(s) or
transferee(s).  Prior to the registration
of assignment or sale of any Registered Loan (and the Registered Note, if any
evidencing the same), Borrower shall treat the Person in whose name such Loan
(and the Registered Note, if any, evidencing the same) is


 


44





















 


registered as the owner
thereof for the purpose of receiving all payments thereon and for all other
purposes, notwithstanding notice to the contrary.  In the case of any assignment by a Lender of
all or any portion of its Term Loan to an Affiliate of such Lender or a Related
Fund of such Lender, and which assignment is not recorded in the Register, the
assigning Lender, on behalf of Borrower, shall maintain a register comparable
to the Register.


 


(i)            In the event that a
Lender sells participations in a Registered Loan, such Lender shall maintain a
register on which it enters the name of all participants in the Registered
Loans held by it (the “Participant Register”).  A Registered Loan (and the Registered Note,
if any, evidencing the same) may be participated in whole or in part only by
registration of such participation on the Participant Register (and each
Registered Note shall expressly so provide). 
Any participation of such Registered Loan (and the Registered Note, if
any, evidencing the same) may be effected only by the registration of such
participation on the Participant Register.


 


13.2         Successors.  This Agreement shall bind and inure to the benefit of the respective
successors and assigns of each of the parties; provided, however,
that Borrower may not assign this Agreement or any rights or duties hereunder
without the Lenders’ prior written consent and any prohibited assignment shall
be absolutely void ab initio.  No consent to assignment by the Lenders shall
release Borrower from its Obligations.  A
Lender may assign this Agreement and the other Loan Documents and its rights
and duties hereunder and thereunder pursuant to Section 13.1 hereof
and, except as expressly required pursuant to Section 13.1 hereof,
no consent or approval by Borrower is required in connection with any such
assignment.


 


14.           AMENDMENTS; WAIVERS.


 


14.1         Amendments and Waivers.  No amendment or waiver of any provision of this Agreement or any other
Loan Document, and no consent with respect to any departure by Borrower
therefrom, shall be effective unless the same shall be in writing and signed by
the Required Lenders (or by Agent at the written request of the Required
Lenders) and Borrower and then any such waiver or consent shall be effective,
but only in the specific instance and for the specific purpose for which given;
provided, however, that no such waiver, amendment, or consent
shall, unless in writing and signed by all of the Lenders affected thereby and
Borrower, do any of the following:


 


(a)           increase or extend
any Commitment of any Lender,


 


(b)           postpone or delay
any date fixed by this Agreement or any other Loan Document for any payment of
principal, interest, fees, or other amounts due hereunder or under any other
Loan Document,


 


(c)           reduce the principal
of, or the rate of interest on, any loan or other extension of credit
hereunder, or reduce any fees or other amounts payable hereunder or under any
other Loan Document,


 


(d)           change the Pro Rata
Share that is required to take any action hereunder,


 


(e)           amend or modify this
Section or any provision of the Agreement providing for consent or other
action by all Lenders,


 


(f)            other than as
permitted by Section 15.12, release Agent’s Lien in and to any of
the Collateral,


 


(g)           change the
definition of “Required Lenders” or “Pro Rata Share”,


 


(h)           contractually
subordinate any of the Agent’s Liens,


 


(i)            release Borrower or
any Guarantor from any obligation for the payment of money,


 


45





















 


(j)            change the
definition of Borrowing Base or the definitions of Eligible Accounts, Eligible
Spare Parts, Maximum Revolver Amount, Term Loan Amount, or change Section 2.1(b),
or


 


(k)           amend any of the provisions of Section 15.
and, provided further, however, that no amendment, waiver or
consent shall, unless in writing and signed by Agent, Issuing Lender, or Swing
Lender, as applicable, affect the rights or duties of Agent, Issuing Lender, or
Swing Lender, as applicable, under this Agreement or any other Loan
Document.  The foregoing notwithstanding,
any amendment, modification, waiver, consent, termination, or release of, or
with respect to, any provision of this Agreement or any other Loan Document
that relates only to the relationship of the Lender Group among themselves, and
that does not affect the rights or obligations of Borrower, shall not require
consent by or the agreement of Borrower.


 


14.2         Replacement of Holdout Lender.


 


(a)           If any action to be
taken by the Lender Group or Agent hereunder requires the unanimous consent,
authorization, or agreement of all Lenders, and a Lender (“Holdout Lender”)
fails to give its consent, authorization, or agreement, then Agent, upon at
least 5 Business Days prior irrevocable notice to the Holdout Lender, may
permanently replace the Holdout Lender with one or more substitute Lenders
(each, a “Replacement Lender”), and the Holdout Lender shall have no
right to refuse to be replaced hereunder. 
Such notice to replace the Holdout Lender shall specify an effective
date for such replacement, which date shall not be later than 15 Business Days
after the date such notice is given.


 


(b)           Prior to the
effective date of such replacement, the Holdout Lender and each Replacement
Lender shall execute and deliver an Assignment and Acceptance, subject only to
the Holdout Lender being repaid its share of the outstanding Obligations
(including an assumption of its Pro Rata Share of the Risk Participation
Liability) without any premium or penalty of any kind whatsoever.  If the Holdout Lender shall refuse or fail to
execute and deliver any such Assignment and Acceptance prior to the effective
date of such replacement, the Holdout Lender shall be deemed to have executed
and delivered such Assignment and Acceptance. 
The replacement of any Holdout Lender shall be made in accordance with
the terms of Section 13.1. 
Until such time as the Replacement Lenders shall have acquired all of
the Obligations, the Commitments, and the other rights and obligations of the
Holdout Lender hereunder and under the other Loan Documents, the Holdout Lender
shall remain obligated to make the Holdout Lender’s Pro Rata Share of Advances
and to purchase a participation in each Letter of Credit, in an amount equal to
its Pro Rata Share of the Risk Participation Liability of such Letter of
Credit.


 


14.3         No
Waivers; Cumulative Remedies.  No failure by Agent or any Lender to exercise any right, remedy, or
option under this Agreement or any other Loan Document, or delay by Agent or
any Lender in exercising the same, will operate as a waiver thereof.  No waiver by Agent or any Lender will be
effective unless it is in writing, and then only to the extent specifically
stated.  No waiver by Agent or any Lender
on any occasion shall affect or diminish Agent’s and each Lender’s rights
thereafter to require strict performance by Borrower of any provision of this
Agreement.  Agent’s and each Lender’s
rights under this Agreement and the other Loan Documents will be cumulative and
not exclusive of any other right or remedy that Agent or any Lender may have.


 


15.           AGENT; THE LENDER GROUP.


 


15.1         Appointment
and Authorization of Agent.  Each Lender hereby designates and appoints WFF as its representative
under this Agreement and the other Loan Documents and each Lender hereby
irrevocably authorizes Agent to execute and deliver each of the other Loan Documents
on its behalf and to take such other action on its behalf under the provisions
of this Agreement and each other Loan Document and to exercise such powers and
perform such duties as are expressly delegated to Agent by the terms of this
Agreement or any other Loan Document, together with such powers as are
reasonably incidental thereto.  Agent
agrees to act as such on the express conditions contained in this Section 15.  The provisions of this


 


46





















 


Section 15 (other than the proviso to Section 15.11(a))
are solely for the benefit of Agent, and the Lenders, and Parent, Borrower, and
Borrower’s Subsidiaries shall have no rights as a third party beneficiary of
any of the provisions contained herein. 
Any provision to the contrary contained elsewhere in this Agreement or
in any other Loan Document notwithstanding, Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor shall Agent have
or be deemed to have any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities
shall be read into this Agreement or any other Loan Document or otherwise exist
against Agent; it being expressly understood and agreed that the use of the
word “Agent” is for convenience only, that WFF is merely the representative of
the Lenders, and only has the contractual duties set forth herein.  Except as expressly otherwise provided in
this Agreement, Agent shall have and may use its sole discretion with respect
to exercising or refraining from exercising any discretionary rights or taking
or refraining from taking any actions that Agent expressly is entitled to take
or assert under or pursuant to this Agreement and the other Loan Documents.  Without limiting the generality of the
foregoing, or of any other provision of the Loan Documents that provides rights
or powers to Agent, Lenders agree that Agent shall have the right to exercise
the following powers as long as this Agreement remains in effect:  (a) maintain, in accordance with its
customary business practices, ledgers and records reflecting the status of the
Obligations, the Collateral, the Collections of Parent, Borrower, and Borrower’s
Subsidiaries, and related matters, (b) execute or file any and all
financing or similar statements or notices, amendments, renewals, supplements,
documents, instruments, proofs of claim, notices and other written agreements
with respect to the Loan Documents, (c) make Advances, for itself or on
behalf of Lenders as provided in the Loan Documents, (d) exclusively
receive, apply, and distribute the Collections of Parent, Borrower, and
Borrower’s Subsidiaries as provided in the Loan Documents, (e) open and
maintain such bank accounts and cash management arrangements as Agent deems
necessary and appropriate in accordance with the Loan Documents for the
foregoing purposes with respect to the Collateral and the Collections of
Parent, Borrower, and Borrower’s Subsidiaries, (f) perform, exercise, and
enforce any and all other rights and remedies of the Lender Group with respect
to Borrower, the Obligations, the Collateral, the Collections of Parent,
Borrower, and Borrower’s Subsidiaries, or otherwise related to any of same as
provided in the Loan Documents, and (g) incur and pay such Lender Group
Expenses as Agent may deem necessary or appropriate for the performance and
fulfillment of its functions and powers pursuant to the Loan Documents.


 


15.2         Delegation of Duties.  Agent may execute any of its duties under this Agreement or any other
Loan Document by or through agents, employees or attorneys in fact and shall be
entitled to advice of counsel concerning all matters pertaining to such
duties.  Agent shall not be responsible
for the negligence or misconduct of any agent or attorney in fact that it
selects as long as such selection was made without gross negligence or willful
misconduct.


 


15.3         Liability of Agent.  None of the Agent-Related Persons shall (a) be liable for any
action taken or omitted to be taken by any of them under or in connection with
this Agreement or any other Loan Document or the transactions contemplated
hereby (except for its own gross negligence or willful misconduct), or (b) be
responsible in any manner to any of the Lenders for any recital, statement,
representation or warranty made by Parent, Borrower, or any Subsidiary of
Borrower or Affiliate of Parent or Borrower, or any officer or director
thereof, contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for
in, or received by Agent under or in connection with, this Agreement or any
other Loan Document, or the validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document, or
for any failure of Borrower or any other party to any Loan Document to perform
its obligations hereunder or thereunder. 
No Agent-Related Person shall be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the books and records or properties of Parent, Borrower
or the books or records or properties of any of Borrower’s Subsidiaries or
Affiliates of Parent or Borrower.


 


15.4         Reliance by Agent.  Agent shall be entitled to rely, and shall be fully protected in
relying, upon any writing, resolution, notice, consent, certificate, affidavit,
letter, telegram, telefacsimile or other electronic method of transmission,
telex or telephone message, statement or other document or conversation


 


47





















 


believed by it to be genuine
and correct and to have been signed, sent, or made by the proper Person or
Persons, and upon advice and statements of legal counsel (including counsel to
Borrower or counsel to any Lender), independent accountants and other experts
selected by Agent.  Agent shall be fully
justified in failing or refusing to take any action under this Agreement or any
other Loan Document unless Agent shall first receive such advice or concurrence
of the Lenders as it deems appropriate and until such instructions are
received, Agent shall act, or refrain from acting, as it deems advisable.  If Agent so requests, it shall first be
indemnified to its reasonable satisfaction by the Lenders against any and all
liability and expense that may be incurred by it by reason of taking or
continuing to take any such action. 
Agent shall in all cases be fully protected in acting, or in refraining
from acting, under this Agreement or any other Loan Document in accordance with
a request or consent of the requisite Lenders and such request and any action
taken or failure to act pursuant thereto shall be binding upon all of the
Lenders.


 


15.5         Notice of Default or Event of Default. 
Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default, except with respect to defaults in the payment of principal, interest,
fees, and expenses required to be paid to Agent for the account of the Lenders
and, except with respect to Events of Default of which Agent has actual
knowledge, unless Agent shall have received written notice from a Lender or
Borrower referring to this Agreement, describing such Default or Event of
Default, and stating that such notice is a “notice of default.”  Agent promptly will notify the Lenders of its
receipt of any such notice or of any Event of Default of which Agent has actual
knowledge.  If any Lender obtains actual
knowledge of any Event of Default, such Lender promptly shall notify the other
Lenders and Agent of such Event of Default. 
Each Lender shall be solely responsible for giving any notices to its
Participants, if any.  Subject to Section 15.4,
Agent shall take such action with respect to such Default or Event of Default
as may be requested by the Required Lenders in accordance with Section 9;
provided, however, that unless and until Agent has received any
such request, Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable.


 


15.6         Credit Decision.
 Each Lender acknowledges that none of the Agent-Related Persons has
made any representation or warranty to it, and that no act by Agent hereinafter
taken, including any review of the affairs of Parent, Borrower, Borrower’s
Subsidiaries, and Parent’s and Borrower’s or Affiliates, shall be deemed to
constitute any representation or warranty by any Agent-Related Person to any
Lender.  Each Lender represents to Agent
that it has, independently and without reliance upon any Agent-Related Person
and based on such documents and information as it has deemed appropriate, made
its own appraisal of and investigation into the business, prospects,
operations, property, financial and other condition and creditworthiness of
Borrower and any other Person party to a Loan Document, and all applicable bank
regulatory laws relating to the transactions contemplated hereby, and made its
own decision to enter into this Agreement and to extend credit to
Borrower.  Each Lender also represents
that it will, independently and without reliance upon any Agent-Related Person
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigations as it deems necessary to inform itself as to
the business, prospects, operations, property, financial and other condition
and creditworthiness of Borrower and any other Person party to a Loan
Document.  Except for notices, reports,
and other documents expressly herein required to be furnished to the Lenders by
Agent, Agent shall not have any duty or responsibility to provide any Lender
with any credit or other information concerning the business, prospects,
operations, property, financial and other condition or creditworthiness of Borrower
and any other Person party to a Loan Document that may come into the possession
of any of the Agent-Related Persons.


 


15.7         Costs
and Expenses; Indemnification.  Agent may incur and pay Lender Group Expenses to the extent Agent
reasonably deems necessary or appropriate for the performance and fulfillment
of its functions, powers, and obligations pursuant to the Loan Documents,
including court costs, attorneys fees and expenses, fees and expenses of
financial accountants, advisors, consultants, and appraisers, costs of
collection by outside collection agencies, auctioneer fees and expenses, and
costs of security guards or insurance premiums paid to maintain the Collateral,
whether or not Borrower is obligated to reimburse Agent or Lenders


 


48





















 


for such expenses pursuant
to this Agreement or otherwise.  Agent is
authorized and directed to deduct and retain sufficient amounts from the
Collections of Parent, Borrower, and Borrower’s Subsidiaries received by Agent
to reimburse Agent for such out-of-pocket costs and expenses prior to the
distribution of any amounts to Lenders. 
In the event Agent is not reimbursed for such costs and expenses by
Parent, Borrower, or Borrower’s Subsidiaries, each Lender hereby agrees that it
is and shall be obligated to pay to Agent such Lender’s Pro Rata Share
thereof.  Whether or not the transactions
contemplated hereby are consummated, the Lenders shall indemnify upon demand
the Agent-Related Persons (to the extent not reimbursed by or on behalf of
Borrower and without limiting the obligation of Borrower to do so), according
to their Pro Rata Shares, from and against any and all Indemnified Liabilities;
provided, however, that no Lender shall be liable for the payment
to any Agent-Related Person of any portion of such Indemnified Liabilities
resulting solely from such Person’s gross negligence or willful misconduct nor
shall any Lender be liable for the obligations of any Defaulting Lender in
failing to make an Advance or other extension of credit hereunder.  Without limitation of the foregoing, each
Lender shall reimburse Agent upon demand for such Lender’s Pro Rata Share of
any costs or out of pocket expenses (including attorneys, accountants,
advisors, and consultants fees and expenses) incurred by Agent in connection
with the preparation, execution, delivery, administration, modification,
amendment, or enforcement (whether through negotiations, legal proceedings or
otherwise) of, or legal advice in respect of rights or responsibilities under,
this Agreement, any other Loan Document, or any document contemplated by or
referred to herein, to the extent that Agent is not reimbursed for such
expenses by or on behalf of Borrower. 
The undertaking in this Section shall survive the payment of all
Obligations hereunder and the resignation or replacement of Agent.


 


15.8         Agent
in Individual Capacity.  WFF and its Affiliates may make loans to, issue letters of credit for
the account of, accept deposits from, acquire equity interests in, and generally
engage in any kind of banking, trust, financial advisory, underwriting, or
other business with Parent, Borrower, and Borrower’s Subsidiaries and
Affiliates and any other Person party to any Loan Documents as though WFF were
not Agent hereunder, and, in each case, without notice to or consent of the
other members of the Lender Group.  The
other members of the Lender Group acknowledge that, pursuant to such
activities, WFF or its Affiliates may receive information regarding Parent,
Borrower, or Borrower’s Affiliates and any other Person party to any Loan
Documents that is subject to confidentiality obligations in favor of Borrower
or such other Person and that prohibit the disclosure of such information to
the Lenders, and the Lenders acknowledge that, in such circumstances (and in
the absence of a waiver of such confidentiality obligations, which waiver Agent
will use its reasonable best efforts to obtain), Agent shall not be under any
obligation to provide such information to them. 
The terms “Lender” and “Lenders” include WFF in its individual capacity.


 


15.9         Successor Agent.  Agent may resign as Agent upon 45 days notice to the Lenders.  If Agent resigns under this Agreement, the
Required Lenders shall appoint a successor Agent for the Lenders.  If no successor Agent is appointed prior to
the effective date of the resignation of Agent, Agent may appoint, after
consulting with the Lenders, a successor Agent. 
If Agent has materially breached or failed to perform any material
provision of this Agreement or of applicable law, the Required Lenders may
agree in writing to remove and replace Agent with a successor Agent from among
the Lenders.  So long as no Event of
Default has occurred and is continuing, any successor Agent must be
satisfactory to Borrower; provided, however, that the Borrower’s
right to approve a successor Agent pursuant to this sentence shall not in any
manner affect the right of Agent to resign pursuant to the first sentence of
this Section 15.9.  Upon the
acceptance of its appointment as successor Agent hereunder, such successor
Agent shall succeed to all the rights, powers, and duties of the retiring Agent
and the term “Agent” shall mean such successor Agent and the retiring Agent’s
appointment, powers, and duties as Agent shall be terminated.  After any retiring Agent’s resignation
hereunder as Agent, the provisions of this Section 15 shall inure
to its benefit as to any actions taken or omitted to be taken by it while it
was Agent under this Agreement.  If no
successor Agent has accepted appointment as Agent by the date which is 45 days
following a retiring Agent’s notice of resignation, the retiring Agent’s
resignation shall nevertheless thereupon become effective and the Lenders shall
perform all of the duties of Agent hereunder until such time, if any, as the
Lenders appoint a successor Agent as provided for above.


 


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15.10       Lender
in Individual Capacity.  Any Lender and its respective Affiliates may make loans to, issue
letters of credit for the account of, accept deposits from, acquire equity
interests in and generally engage in any kind of banking, trust, financial
advisory, underwriting, or other business with Parent, Borrower, Borrower’s
Subsidiaries, and Parent’s and Borrower’s Affiliates and any other Person party
to any Loan Documents as though such Lender were not a Lender hereunder without
notice to or consent of the other members of the Lender Group.  The other members of the Lender Group
acknowledge that, pursuant to such activities, such Lender and its respective
Affiliates may receive information regarding Parent, Borrower, or Parent’s or
Borrower’s Affiliates and any other Person party to any Loan Documents that is
subject to confidentiality obligations in favor of Borrower or such other
Person and that prohibit the disclosure of such information to the Lenders, and
the Lenders acknowledge that, in such circumstances (and in the absence of a
waiver of such confidentiality obligations, which waiver such Lender will use
its reasonable best efforts to obtain), such Lender shall not be under any
obligation to provide such information to them. 
With respect to the Swing Loans and Protective Advances, Swing Lender
shall have the same rights and powers under this Agreement as any other Lender
and may exercise the same as though it were not the sub-agent of Agent.


 


15.11       Withholding
Taxes.


 


(a)           All payments made by
Borrower hereunder or under any note or other Loan Document will be made
without setoff, counterclaim, or other defense.  In addition, all such payments will be made
free and clear of, and without deduction or withholding for, any present or
future Taxes, and in the event any deduction or withholding of Taxes is
required, Borrower shall comply with the penultimate sentence of this Section 15.11(a).  “Taxes” shall mean, any taxes, levies,
imposts, duties, fees, assessments or other charges of whatever nature now or
hereafter imposed by any jurisdiction or by any political subdivision or taxing
authority thereof or therein with respect to such payments (but excluding any
franchise tax and tax imposed by any jurisdiction or by any political
subdivision or taxing authority thereof or therein measured by or based on the
net income or net profits of any Lender) and all interest, penalties or similar
liabilities with respect thereto.  If any
Taxes are so levied or imposed, Borrower agrees to pay the full amount of such
Taxes and such additional amounts as may be necessary so that every payment of
all amounts due under this Agreement, any note, or Loan Document, including any
amount paid pursuant to this Section 15.11(a) after
withholding or deduction for or on account of any Taxes, will not be less than
the amount provided for herein; provided, however, that Borrower
shall not be required to increase any such amounts if the increase in such
amount payable (i) results from Agent’s or such Lender’s own willful
misconduct or gross negligence (as finally determined by a court of competent
jurisdiction), (ii) results from an obligation by Agent or such Lender to
withhold, deduct, or pay such amount that existed prior to the date that Agent
or such Lender became a party to this Agreement, or (iii) results from
such Lender’s failure to comply with the provisions of Section 15.11(b).  Borrower will furnish to Agent as promptly as
possible after the date the payment of any Tax is due pursuant to applicable
law certified copies of tax receipts evidencing such payment by Borrower.


 


(b)           If a Lender claims
an exemption from United States withholding tax, Lender agrees with and in
favor of Agent and Borrower, to deliver to Agent:


 


(i)         if such Lender claims
an exemption from United States withholding tax pursuant to its portfolio
interest exception, (A) a statement of the Lender, signed under penalty of
perjury, that it is not a (I) a “bank” as described in Section 881(c)(3)(A) of
the IRC, (II) a 10% shareholder of Borrower (within the meaning of Section 871(h)(3)(B) of
the IRC), or (III) a controlled foreign corporation related to Borrower within
the meaning of Section 864(d)(4) of the IRC, and (B) a properly
completed and executed IRS Form W-8BEN, before receiving its first payment
under this Agreement and at any other time reasonably requested by Agent or
Borrower;


 


(ii)        if such Lender claims
an exemption from, or a reduction of, withholding tax under a United States tax
treaty, properly completed and executed IRS Form W-8BEN before receiving
its first payment under this Agreement and at any other time reasonably
requested by Agent or Borrower;


 


50





















 


(iii)       if such Lender claims
that interest paid under this Agreement is exempt from United States
withholding tax because it is effectively connected with a United States trade
or business of such Lender, two properly completed and executed copies of IRS Form W-8ECI
before receiving its first payment under this Agreement and at any other time
reasonably requested by Agent or Borrower; or;


 


(iv)       such other form or
forms, including IRS Form W-9, as may be required under the IRC or other
laws of the United States as a condition to exemption from, or reduction of,
United States withholding or backup withholding tax before receiving its first
payment under this Agreement and at any other time reasonably requested by Agent
or Borrower.


 


Lender agrees promptly to
notify Agent and Borrower of any change in circumstances which would modify or
render invalid any claimed exemption or reduction.


 


(c)           If a Lender claims
an exemption from withholding tax in a jurisdiction other than the United
States, Lender agrees with and in favor of Agent and Borrower, to deliver to
Agent any such form or forms, as may be required under the laws of such
jurisdiction as a condition to exemption from, or reduction of, foreign
withholding or backup withholding tax before receiving its first payment under
this Agreement and at any other time reasonably requested by Agent or Borrower.


 


Lender agrees promptly to
notify Agent and Borrower of any change in circumstances which would modify or
render invalid any claimed exemption or reduction.


 


(d)           If any Lender claims
exemption from, or reduction of, withholding tax and such Lender sells,
assigns, grants a participation in, or otherwise transfers all or part of the
Obligations of Borrower to such Lender, such Lender agrees to notify Agent and
Borrower of the percentage amount in which it is no longer the beneficial owner
of Obligations of Borrower to such Lender. 
To the extent of such percentage amount, Agent and Borrower will treat
such Lender’s documentation provided pursuant to Sections 15.11(b) or
15.11(c) as no longer valid. 
With respect to such percentage amount, Lender may provide new
documentation, pursuant to Sections 15.11 (b) or 15.11(c), if
applicable.


 


(e)           If any Lender is
entitled to a reduction in the applicable withholding tax, Agent may withhold
from any interest payment to such Lender an amount equivalent to the applicable
withholding tax after taking into account such reduction.  If the forms or other documentation required
by subsection (b) or (c) of this Section 15.11
are not delivered to Agent, then Agent may withhold from any interest payment
to such Lender not providing such forms or other documentation an amount
equivalent to the applicable withholding tax.


 


(f)            If the IRS or any
other Governmental Authority of the United States or other jurisdiction asserts
a claim that Agent did not properly withhold tax from amounts paid to or for
the account of any Lender due to a failure on the part of the Lender (because
the appropriate form was not delivered, was not properly executed, or because
such Lender failed to notify Agent of a change in circumstances which rendered
the exemption from, or reduction of, withholding tax ineffective, or for any
other reason) such Lender shall indemnify and hold Agent harmless for all
amounts paid, directly or indirectly, by Agent, as tax or otherwise, including
penalties and interest, and including any taxes imposed by any jurisdiction on
the amounts payable to Agent under this Section 15.11, together
with all costs and expenses (including attorneys fees and expenses).  The obligation of the Lenders under this subsection shall
survive the payment of all Obligations and the resignation or replacement of
Agent.


 


15.12       Collateral
Matters.


 


(a)           The Lenders hereby
irrevocably authorize Agent, at its option and in its sole discretion, to
release any Lien on any Collateral (i) upon the termination of the
Commitments and payment and satisfaction in full by Borrower of all
Obligations, (ii) constituting property being sold or disposed of if a
release is required or desirable in connection therewith and if Borrower
certifies to Agent that the sale or


 


51





















 


disposition is permitted
under Section 6.4 of this Agreement or the other Loan Documents
(and Agent may rely conclusively on any such certificate, without further
inquiry), (iii) constituting property in which Parent, Borrower, or
Borrower’s Subsidiaries owned no interest at the time the Agent’s Lien was
granted nor at any time thereafter, or (iv) constituting property leased
to Parent, Borrower, or Borrower’s Subsidiaries under a lease that has expired
or is terminated in a transaction permitted under this Agreement.  Except as provided above, Agent will not
execute and deliver a release of any Lien on any Collateral without the prior
written authorization of (y) if the release is of all or substantially all of
the Collateral, all of the Lenders, or (z) otherwise, the Required
Lenders.  Upon request by Agent or
Borrower at any time, the Lenders will confirm in writing Agent’s authority to
release any such Liens on particular types or items of Collateral pursuant to
this Section 15.12; provided, however, that (1) Agent
shall not be required to execute any document necessary to evidence such
release on terms that, in Agent’s opinion, would expose Agent to liability or
create any obligation or entail any consequence other than the release of such
Lien without recourse, representation, or warranty, and (2) such release
shall not in any manner discharge, affect, or impair the Obligations or any
Liens (other than those expressly being released) upon (or obligations of
Borrower in respect of) all interests retained by Borrower, including, the
proceeds of any sale, all of which shall continue to constitute part of the
Collateral.


 


(b)           Agent shall have no
obligation whatsoever to any of the Lenders to assure that the Collateral
exists or is owned by Borrower or is cared for, protected, or insured or has
been encumbered, or that the Agent’s Liens have been properly or sufficiently
or lawfully created, perfected, protected, or enforced or are entitled to any
particular priority, or to exercise at all or in any particular manner or under
any duty of care, disclosure or fidelity, or to continue exercising, any of the
rights, authorities and powers granted or available to Agent pursuant to any of
the Loan Documents, it being understood and agreed that in respect of the
Collateral, or any act, omission, or event related thereto, subject to the terms
and conditions contained herein, Agent may act in any manner it may deem
appropriate, in its sole discretion given Agent’s own interest in the
Collateral in its capacity as one of the Lenders and that Agent shall have no
other duty or liability whatsoever to any Lender as to any of the foregoing,
except as otherwise provided herein.


 


15.13       Restrictions on Actions by Lenders; Sharing of
Payments.


 


(a)           Each of the Lenders
agrees that it shall not, without the express written consent of Agent, and
that it shall, to the extent it is lawfully entitled to do so, upon the written
request of Agent, set off against the Obligations, any amounts owing by such
Lender to Borrower or any deposit accounts of Borrower now or hereafter
maintained with such Lender.  Each of the
Lenders further agrees that it shall not, unless specifically requested to do
so in writing by Agent, take or cause to be taken any action, including, the
commencement of any legal or equitable proceedings, to foreclose any Lien on,
or otherwise enforce any security interest in, any of the Collateral.


 


(b)           If, at any time or
times any Lender shall receive (i) by payment, foreclosure, setoff, or
otherwise, any proceeds of Collateral or any payments with respect to the
Obligations, except for any such proceeds or payments received by such Lender
from Agent pursuant to the terms of this Agreement, or (ii) payments from
Agent in excess of such Lender’s ratable portion of all such distributions by
Agent, such Lender promptly shall (1) turn the same over to Agent, in
kind, and with such endorsements as may be required to negotiate the same to
Agent, or in immediately available funds, as applicable, for the account of all
of the Lenders and for application to the Obligations in accordance with the
applicable provisions of this Agreement, or (2) purchase, without recourse
or warranty, an undivided interest and participation in the Obligations owed to
the other Lenders so that such excess payment received shall be applied ratably
as among the Lenders in accordance with their Pro Rata Shares; provided,
however, that to the extent that such excess payment received by the
purchasing party is thereafter recovered from it, those purchases of
participations shall be rescinded in whole or in part, as applicable, and the
applicable portion of the purchase price paid therefor shall be returned to
such purchasing party, but without interest except to the extent that such
purchasing party is required to pay interest in connection with the recovery of
the excess payment.


 


15.14       Agency for Perfection.
 Agent hereby appoints each other Lender as its agent (and each Lender
hereby accepts such appointment) for the purpose of perfecting the Agent’s
Liens in assets which, in


 


52





















 


accordance with Article 8
or Article 9, as applicable, of the Code can be perfected only by
possession or control.  Should any Lender
obtain possession or control of any such Collateral, such Lender shall notify
Agent thereof, and, promptly upon Agent’s request therefor shall deliver
possession or control of such Collateral to Agent or in accordance with Agent’s
instructions.


 


15.15       Payments by Agent to the Lenders.  All payments to be made by Agent to the Lenders shall be made by bank
wire transfer of immediately available funds pursuant to such wire transfer
instructions as each party may designate for itself by written notice to
Agent.  Concurrently with each such
payment, Agent shall identify whether such payment (or any portion thereof)
represents principal, premium, fees, or interest of the Obligations.


 


15.16       Concerning the Collateral and Related Loan
Documents.  Each member of the Lender Group authorizes
and directs Agent to enter into this Agreement and the other Loan
Documents.  Each member of the Lender
Group agrees that any action taken by Agent in accordance with the terms of
this Agreement or the other Loan Documents relating to the Collateral and the
exercise by Agent of its powers set forth therein or herein, together with such
other powers that are reasonably incidental thereto, shall be binding upon all
of the Lenders.


 


15.17       Field
Audits and Examination Reports; Confidentiality; Disclaimers by
Lenders; Other Reports and Information.  By becoming a party to this Agreement, each
Lender:


 


(a)           is deemed to have
requested that Agent furnish such Lender, promptly after it becomes available,
a copy of each field audit or examination report (each a “Report” and
collectively, “Reports”) prepared by or at the request of Agent, and
Agent shall so furnish each Lender with such Reports,


 


(b)           expressly agrees and
acknowledges that Agent does not (i) make any representation or warranty
as to the accuracy of any Report, and (ii) shall not be liable for any
information contained in any Report,


 


(c)           expressly agrees and
acknowledges that the Reports are not comprehensive audits or examinations,
that Agent or other party performing any audit or examination will inspect only
specific information regarding Borrower and will rely significantly upon Parent’s,
Borrower, and Borrower’s Subsidiaries’ books and records, as well as on
representations of Parent’s personnel,


 


(d)           agrees to keep all
Reports and other material, non-public information regarding Parent, Borrower,
and Borrower’s Subsidiaries and their operations, assets, and existing and
contemplated business plans in a confidential manner in accordance with Section 16.7,
and


 


(e)           without limiting the
generality of any other indemnification provision contained in this Agreement,
agrees:  (i) to hold Agent and any
other Lender preparing a Report harmless from any action the indemnifying
Lender may take or fail to take or any conclusion the indemnifying Lender may
reach or draw from any Report in connection with any loans or other credit
accommodations that the indemnifying Lender has made or may make to Borrower,
or the indemnifying Lender’s participation in, or the indemnifying Lender’s
purchase of, a loan or loans of Borrower, and (ii) to pay and protect, and
indemnify, defend and hold Agent, and any such other Lender preparing a Report
harmless from and against, the claims, actions, proceedings, damages, costs,
expenses, and other amounts (including, attorneys fees and costs) incurred by
Agent and any such other Lender preparing a Report as the direct or indirect
result of any third parties who might obtain all or part of any Report through
the indemnifying Lender.


 


In addition to the
foregoing:  (x) any Lender may from time
to time request of Agent in writing that Agent provide to such Lender a copy of
any report or document provided by Borrower to Agent that has not been
contemporaneously provided by Borrower to such Lender, and, upon receipt of
such request, Agent promptly shall provide a copy of same to such Lender, (y)
to the extent that Agent is entitled, under any provision of the Loan
Documents, to request additional reports or information from Borrower, any
Lender may, from time to


 


53





















 


time, reasonably request
Agent to exercise such right as specified in such Lender’s notice to Agent,
whereupon Agent promptly shall request of Borrower the additional reports or
information reasonably specified by such Lender, and, upon receipt thereof from
Borrower, Agent promptly shall provide a copy of same to such Lender, and (z) any
time that Agent renders to Borrower a statement regarding the Loan Account,
Agent shall send a copy of such statement to each Lender.


 


15.18       Several Obligations; No Liability.  Notwithstanding that certain of the Loan Documents now or hereafter may
have been or will be executed only by or in favor of Agent in its capacity as
such, and not by or in favor of the Lenders, any and all obligations on the
part of Agent (if any) to make any credit available hereunder shall constitute
the several (and not joint) obligations of the respective Lenders on a ratable
basis, according to their respective Commitments, to make an amount of such
credit not to exceed, in principal amount, at any one time outstanding, the
amount of their respective Commitments. 
Nothing contained herein shall confer upon any Lender any interest in,
or subject any Lender to any liability for, or in respect of, the business,
assets, profits, losses, or liabilities of any other Lender.  Each Lender shall be solely responsible for
notifying its Participants of any matters relating to the Loan Documents to the
extent any such notice may be required, and no Lender shall have any
obligation, duty, or liability to any Participant of any other Lender.  Except as provided in Section 15.7,
no member of the Lender Group shall have any liability for the acts of any
other member of the Lender Group.  No
Lender shall be responsible to Borrower or any other Person for any failure by
any other Lender to fulfill its obligations to make credit available hereunder,
nor to advance for it or on its behalf in connection with its Commitment, nor
to take any other action on its behalf hereunder or in connection with the
financing contemplated herein.


 


15.19       Intercreditor Agreement. 
Each Lender hereunder
(i) acknowledges that it has received a copy of the Intercreditor
Agreement, (ii) agrees that it will be bound by and will take no actions
contrary to the provisions of the Intercreditor Agreement and (iii) authorizes
and instructs Agent to enter into the Intercreditor Agreement as agent and on
behalf of such Lender.  Nothing contained
in the Intercreditor Agreement, this Agreement or elsewhere in any of the other
Loan Documents is intended to or shall impair, as between the Borrower and the
Guarantors, on the one hand, and any member of the Lender Group, on the other
hand, the obligation of the Borrower and each Guarantor, which is absolute and
unconditional, to pay to the such member prompt payment in full, when due or
declared due, whether at maturity, acceleration, call for redemption or
otherwise, and at all such times, of any and all amounts owed by the Borrower
with respect to the Obligations, or is intended to or shall affect the relative
rights of the Lenders and creditors of the Borrower or any Guarantor (other than
the Second Lien Agent and the Second Lien Lenders), nor shall anything herein
or therein afford the Borrower or any Guarantor any right or power to contest
the Agent’s or any Lender’s exercise of any and all remedies otherwise
permitted by applicable law upon default under this Agreement or the other Loan
Documents.


 


16.           GENERAL PROVISIONS.


 


16.1         Effectiveness.  This Agreement shall be binding and deemed effective when executed by
Borrower, Agent, and each Lender whose signature is provided for on the signature
pages hereof.


 


16.2         Section Headings.  Headings and numbers have been set forth herein for convenience
only.  Unless the contrary is compelled
by the context, everything contained in each Section applies equally to
this entire Agreement.


 


16.3         Interpretation.  Neither this Agreement nor any uncertainty or ambiguity herein shall be
construed against the Lender Group or Borrower, whether under any rule of
construction or otherwise.  On the
contrary, this Agreement has been reviewed by all parties and shall be
construed and interpreted according to the ordinary meaning of the words used
so as to accomplish fairly the purposes and intentions of all parties hereto.


 


54





















 


16.4         Severability of
Provisions.  Each provision of this Agreement shall be
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.


 


16.5         Counterparts;
Electronic Execution.  This Agreement may be executed in any number of counterparts and by
different parties on separate counterparts, each of which, when executed and
delivered, shall be deemed to be an original, and all of which, when taken
together, shall constitute but one and the same Agreement.  Delivery of an executed counterpart of this
Agreement by telefacsimile or other electronic method of transmission shall be
equally as effective as delivery of an original executed counterpart of this
Agreement.  Any party delivering an
executed counterpart of this Agreement by telefacsimile or other electronic
method of transmission also shall deliver an original executed counterpart of
this Agreement but the failure to deliver an original executed counterpart
shall not affect the validity, enforceability, and binding effect of this
Agreement.  The foregoing shall apply to
each other Loan Document mutatis mutandis.


 


16.6         Revival
and Reinstatement of Obligations.  If the incurrence or payment of the Obligations by Borrower or any
Guarantor or the transfer to the Lender Group of any property should for any
reason subsequently be declared to be void or voidable under any state or
federal law relating to creditors’ rights, including provisions of the
Bankruptcy Code relating to fraudulent conveyances, preferences, or other voidable
or recoverable payments of money or transfers of property (each, a “Voidable
Transfer”), and if the Lender Group is required to repay or restore, in
whole or in part, any such Voidable Transfer, or elects to do so upon the
reasonable advice of its counsel, then, as to any such Voidable Transfer, or
the amount thereof that the Lender Group is required or elects to repay or
restore, and as to all reasonable costs, expenses, and attorneys fees of the
Lender Group related thereto, the liability of Borrower or any Guarantor
automatically shall be revived, reinstated, and restored and shall exist as
though such Voidable Transfer had never been made.


 


16.7         Confidentiality.  Agent and Lenders each individually (and not jointly or jointly and
severally) agree that material, non-public information regarding Parent,
Borrower, and Borrower’s Subsidiaries, their operations, assets, and existing
and contemplated business plans shall be treated by Agent and the Lenders in a
confidential manner, and shall not be disclosed by Agent and the Lenders to
Persons who are not parties to this Agreement, except:  (a) to attorneys for and other advisors,
accountants, auditors, and consultants to any member of the Lender Group who
need such information in connection with their work, (b) to Subsidiaries
and Affiliates of any member of the Lender Group, provided that any such
Subsidiary or Affiliate shall have agreed to receive such information hereunder
subject to the terms of this Section 16.7, (c) as may be
required by statute, decision, or judicial or administrative order, rule, or
regulation, (d) as may be agreed to in advance by Parent, Borrower, or
Borrower’s Subsidiaries or as requested or required by any Governmental
Authority pursuant to any subpoena or other legal process, (e) as to any
such information that is or becomes generally available to the public (other
than as a result of prohibited disclosure by Agent or the Lenders), (f) in
connection with any assignment, prospective assignment, sale, prospective sale,
participation or prospective participations, or pledge or prospective pledge of
any Lender’s interest under this Agreement, provided that any such assignee,
prospective assignee, purchaser, prospective purchaser, participant,
prospective participant, pledgee, or prospective pledgee shall have agreed in
writing to receive such information hereunder subject to the terms of this
Section, and (g) in connection with any litigation or other adversary
proceeding involving parties hereto which such litigation or adversary proceeding
involves claims related to the rights or duties of such parties under this
Agreement or the other Loan Documents. 
The provisions of this Section 16.7 shall survive for 2
years after the payment in full of the Obligations.


 


16.8         Integration.  This Agreement, together with the other Loan Documents, reflects the
entire understanding of the parties with respect to the transactions
contemplated hereby and shall not be contradicted or qualified by any other
agreement, oral or written, before the date hereof.


 


16.9       Public Disclosure. 
Parent and Borrower agree that neither they nor any of their respective
Affiliates will issue any press release or other public disclosure using the
name of Agent, any Lender or any of their respective Affiliates or Related
Funds or referring to this Agreement or any other Loan Document without the
prior written consent of Agent or such Lender, except to the extent that
Parent, Borrower or such


 


55





















 


Affiliate is required to do
so under applicable law (in which event, Parent, Borrower or such Affiliate
will consult with Agent or such Lender before issuing such press release or
other public disclosure).  Agent agrees
that it will consult in advance with Borrower regarding the so-called “tombstone”
(and the marketing materials related thereto) that is created and published for
the purpose of announcing the financing transaction contemplated by this
Agreement.


 


[Signature pages to
follow.]


 


56





















 


IN WITNESS
WHEREOF, the parties
hereto have caused this Agreement to be executed and delivered as of the date
first above written.


 


	
   

  	
  HAWAIIAN
  HOLDINGS, INC., a
  Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Randall L. Jenson

  	
   

  
	
   

  	
  Title:

  	
  Chief
  Financial Officer, Treasurer and Secretary

  	
   

  
	
   

  	
   

  
	
   

  	
  HAWAIIAN
  AIRLINES, INC., a
  Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Stephen Jackson

  	
   

  
	
   

  	
  Title:

  	
  Senior
  Vice President, Chief Financial Officer and Treasurer

  
	
   

  	
   

  
	
   

  	
  WELLS FARGO FOOTHILL, INC.,

  a California
  corporation, as Agent and as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Anna M. Suarez

  	
   

  
	
   

  	
  Title:
  

  	
  Vice
  President - Underwriting

  	
   

  
	
   

  	
   

  
	
   

  	
  D.B.
  ZWIRN SPECIAL OPPORTUNITIES

  FUND, L.P., a
  Delaware limited partnership

  
	
   

  	
   

  
	
   

  	
  By:

  	
  D.B.
  Zwirn Partners, LLC,

  its general partner  

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Zwirn
  Holdings, LLC,

  its managing member

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   By:

  	
  /s/
  Perry A. Gruss 

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BERNARD
  NATIONAL LOAN INVESTORS, LTD.,

  a Cayman Islands
  company 

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Bernard
  Capital Funding, LLC

  its Investment Advisor  

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Perry A. Gruss 

  	
   

  
	
   

  	
  Title:

  
												



 





















 


Table
of Contents


 


EXHIBITS AND SCHEDULES


 


	
  Exhibit A-1

  	
   

  	
  Form of Assignment
  and Acceptance

  
	
  Exhibit B-1

  	
   

  	
  Form of Borrowing
  Base Certificate

  
	
  Exhibit C-1

  	
   

  	
  Form of Compliance
  Certificate

  
	
  Exhibit E-1

  	
   

  	
  Form of
  Engine and Spare Parts Security Agreement

  
	
  Exhibit G-1

  	
   

  	
  Form of
  Guaranty

  
	
  Exhibit I-1

  	
   

  	
  Form of
  Intercompany Subordination Agreement

  
	
  Exhibit L-1

  	
   

  	
  Form of LIBOR Notice

  
	
  Exhibit S-1

  	
   

  	
  Form of
  Security Agreement

  
	
   

  	
   

  	
   

  
	
  Schedule A-1

  	
   

  	
  Agent’s Account

  
	
  Schedule A-2

  	
   

  	
  Authorized
  Persons

  
	
  Schedule C-1

  	
   

  	
  Commitments

  
	
  Schedule D-1

  	
   

  	
  Designated Account

  
	
  Schedule E-1

  	
   

  	
  Eligible
  Spare Parts Located at LAX

  
	
  Schedule P-1

  	
   

  	
  Permitted Liens

  
	
   

  	
   

  	
   

  
	
  Schedule 1.1

  	
   

  	
  Definitions

  
	
  Schedule 2.7(a)

  	
   

  	
  Cash Management Banks

  
	
  Schedule 2.7(c)

  	
   

  	
  Credit
  Card Processors

  
	
  Schedule 3.1

  	
   

  	
  Conditions Precedent

  
	
  Schedule 4.3

  	
   

  	
  Locations of Spare Parts

  
	
  Schedule 4.4

  	
   

  	
  Locations
  of Equipment (other than Spare Parts)

  
	
  Schedule 4.7(a)

  	
   

  	
  States of Organization

  
	
  Schedule 4.7(b)

  	
   

  	
  Chief Executive Offices

  
	
  Schedule 4.7(c)

  	
   

  	
  Organizational
  Identification Numbers

  
	
  Schedule 4.7(d)

  	
   

  	
  Commercial Tort Claims

  
	
  Schedule 4.8(c)

  	
   

  	
  Capitalization of
  Borrower’s Subsidiaries

  
	
  Schedule 4.10

  	
   

  	
  Litigation

  
	
  Schedule 4.13

  	
   

  	
  Employee Benefit Plans

  
	
  Schedule 4.14

  	
   

  	
  Environmental Matters

  
	
  Schedule 4.15

  	
   

  	
  Intellectual Property

  
	
  Schedule 4.17

  	
   

  	
  Deposit Accounts and
  Securities Accounts

  
	
  Schedule 4.19

  	
   

  	
  Permitted Indebtedness

  
	
  Schedule 4.22

  	
   

  	
  Slots,
  Gates, and Routes

  
	
  Schedule 4.23

  	
   

  	
  IRS
  Tax Claim Indebtedness Repayment Plan

  
	
  Schedule 5.2

  	
   

  	
  Collateral Reporting

  
	
  Schedule 5.3

  	
   

  	
  Financial Statements,
  Reports, Certificates

  



 





















 


Schedule 1.1


 


As
used in the Agreement, the following terms shall have the following
definitions:


 


“Account” means an
account (as that term is defined in the Code).


 


“Account Debtor”
means any Person who is obligated on an Account, chattel paper, or a general
intangible.


 


“Advances” has the
meaning specified therefor in Section 2.1(a).


 


“Affiliate” means, as
applied to any Person, any other Person who controls, is controlled by, or is
under common control with, such Person. 
For purposes of this definition, “control” means the possession,
directly or indirectly through one or more intermediaries, of the power to
direct the management and policies of a Person, whether through the ownership
of Stock, by contract, or otherwise; provided, however, that, for
purposes of the definition of Eligible Accounts and Section 6.13 of
the Agreement: (a) any Person which owns directly or indirectly 10% or
more of the Stock having ordinary voting power for the election of directors or
other members of the governing body of a Person or 10% or more of the
partnership or other ownership interests of a Person (other than as a limited
partner of such Person) shall be deemed an Affiliate of such Person, (b) each
director (or comparable manager) of a Person shall be deemed to be an Affiliate
of such Person, and (c) each partnership or joint venture in which a
Person is a partner or joint venturer shall be deemed an Affiliate of such
Person.


 


“Agent” has the
meaning specified therefor in the preamble to the Agreement.


 


“Agent-Related Persons”
means Agent, together with its Affiliates, officers, directors, employees,
attorneys, and agents.


 


“Agent’s Account”
means the Deposit Account of Agent identified on Schedule A-1.


 


“Agent’s Liens” means
the Liens granted by Parent, Borrower, or Borrower’s Subsidiaries to Agent
under the Loan Documents.


 


“Agreement” means the
Credit Agreement to which this Schedule 1.1 is attached.


 


“Aircraft” means any “aircraft”
as defined in Section 40102 of the Federal Aviation Act.


 


“Aircraft Security
Agreement” has the meaning specified therefor in the Security Agreement.


 


“Appliances” means
any “appliance” as defined in Section 40102 of the Federal Aviation Act.


 


“Asset Acquisition”
means the purchase or other acquisition by a Person or its Subsidiaries of any
assets of any other Person.


 


“Assignee” has the
meaning specified therefor in Section 13.1(a).


 


“Assignment and
Acceptance” means an Assignment and Acceptance Agreement substantially in
the form of Exhibit A-1.


 


“Authorized Person”
means any Person listed on Schedule A-2.


 


2





















 


“Availability” means,
as of any date of determination, the amount that Borrower is entitled to borrow
as Advances under Section 2.1 (after giving effect to all then outstanding
Obligations and all sublimits and reserves then applicable hereunder).


 


“Bankruptcy Code”
means title 11 of the United States Code, as in effect from time to time.


 


“Bankruptcy Court”
means the United States Bankruptcy Court for the District of Hawaii.


 


“Base LIBOR Rate”
means the rate per annum, determined by Agent in accordance with its customary
procedures, and utilizing such electronic or other quotation sources as it
considers appropriate (rounded upwards, if necessary, to the next 1/100%), to
be the rate at which Dollar deposits (for delivery on the first day of the
requested Interest Period) are offered to major banks in the London interbank
market 2 Business Days prior to the commencement of the requested Interest
Period, for a term and in an amount comparable to the Interest Period and the
amount of the LIBOR Rate Loan requested (whether as an initial LIBOR Rate Loan
or as a continuation of a LIBOR Rate Loan or as a conversion of a Base Rate
Loan to a LIBOR Rate Loan) by Borrower in accordance with the Agreement, which
determination shall be conclusive in the absence of manifest error.


 


“Base Rate” means,
the rate of interest announced, from time to time, within Wells Fargo at its
principal office in San Francisco as its “prime rate”, with the understanding
that the “prime rate” is one of Wells Fargo’s base rates (not necessarily the
lowest of such rates) and serves as the basis upon which effective rates of
interest are calculated for those loans making reference thereto and is
evidenced by the recording thereof after its announcement in such internal
publications as Wells Fargo may designate.


 


“Base Rate Loan”
means the portion of the Advances or the Term Loan that bears interest at a
rate determined by reference to the Base Rate.


 


“Base Rate Margin”
means 1.50 percentage points.


 


“Benefit Plan” means
a “defined benefit plan” (as defined in Section 3(35) of ERISA), which has
been maintained or contributed to (or to which there has been an obligation to
contribute of) Borrower, Parent, any of Borrower’s Subsidiaries or any ERISA
Affiliate at any time during the prior five years.


 


 “Board of Directors” means the board of
directors (or comparable managers) of Parent or any committee thereof duly
authorized to act on behalf of the board of directors (or comparable managers).


 


 “Borrower” has the meaning specified
therefor in the preamble to the Agreement.


 


 “Borrowing” means a borrowing hereunder
consisting of Advances made on the same day by the Lenders (or Agent on behalf
thereof), or by Swing Lender in the case of a Swing Loan, or by Agent in the
case of an Protective Advance.


 


“Borrowing Base”
means, as of any date of determination, the result of:


 


(a)           the lesser of:


 


(i)            An amount equal to the sum of :


 


(A)          The sum of (I) 85% of the amount of Eligible Electronic
Accounts, less the amount, if any, of the EA
Dilution Reserve, and (II) 75% of the amount of Eligible Manual Accounts, less the amount, if any of the MA Dilution Reserve;


 


3





















 


(B)           The lesser of (I)
50% of the value of Eligible Spare Parts; and (II) 80% of the most recently
determined Net Liquidation Percentage times the book
value of Borrower’s Spare Parts; and


 


(C)           80% of the most recently determined Net Liquidation
Percentage times the book value of Borrower’s
Eligible Ground Equipment; and


 


(ii)           An amount equal to Borrower’s Collections with respect to
Accounts for the immediately preceding 30 day period, minus


 


(b)           the aggregate amount of reserves, if any, established by
Agent under Section 2.1(b).


 


“Borrowing Base
Certificate” means a certificate in the form of Exhibit B-1.


 


“Business Day” means
any day that is not a Saturday, Sunday, or other day on which banks are
authorized or required to close in the state of California, Hawaii, or New
York, except that, if a determination of a Business Day shall relate to a LIBOR
Rate Loan, the term “Business Day” also shall exclude any day on which banks
are closed for dealings in Dollar deposits in the London interbank market.


 


“Capitalized Lease Obligation”
means that portion of the obligations under a Capital Lease that is required to
be capitalized in accordance with GAAP.


 


“Capital Lease” means
a lease that is required to be capitalized for financial reporting purposes in
accordance with GAAP.


 


“Cash Equivalents”
means (a) marketable direct obligations issued by, or unconditionally
guaranteed by, the United States or issued by any agency thereof and backed by
the full faith and credit of the United States, in each case maturing within 1
year from the date of acquisition thereof, (b) marketable direct
obligations issued by any state of the United States or any political
subdivision of any such state or any public instrumentality thereof maturing
within 1 year from the date of acquisition thereof and, at the time of
acquisition, having one of the two highest ratings obtainable from either
Standard & Poor’s Rating Group (“S&P”) or Moody’s Investors
Service, Inc. (“Moody’s”), (c) commercial paper maturing no
more than 270 days from the date of creation thereof and, at the time of
acquisition, having a rating of at least A-1 from S&P or at least P-1 from
Moody’s, (d) certificates of deposit or bankers’ acceptances maturing
within 1 year from the date of acquisition thereof issued by any bank organized
under the laws of the United States or any state thereof having at the date of
acquisition thereof combined capital and surplus of not less than $250,000,000,
(e) Deposit Accounts maintained with (i) any bank that satisfies the
criteria described in clause (d) above, or (ii) any other bank
organized under the laws of the United States or any state thereof so long as
the amount maintained with any such other bank is less than or equal to
$100,000 and is insured by the Federal Deposit Insurance Corporation, and (f) Investments
in money market funds substantially all of whose assets are invested in the
types of assets described in clauses (a) through (e) above.


 


“Cash Management Account”
has the meaning specified therefor in Section 2.7(a).


 


“Cash Management Agreements”
means those certain cash management agreements, in form and substance
satisfactory to Required Lenders, each of which is among Parent, Borrower, or
one of Borrower’s Subsidiaries, Agent, Second Lien Agent, and one of the Cash
Management Banks.


 


“Cash Management Bank”
has the meaning specified therefor in Section 2.7(a).


 


“Certificated Air Carrier”
means an “air carrier” as defined in Section 40102 of the Federal Aviation
Act that holds an air carrier operating certificate issued pursuant to chapter 447
of the Federal Aviation Act for aircraft capable of carrying 10 or more
individuals or 6,000 pounds or more of cargo and is


 


4





















 


certificated for scheduled
passenger operations in interstate commerce using commercial jet aircraft under
Part 121 of the FARs.


 


“Change of Control”
means that (a) at any time, RC Aviation Management, LLC ceases to have
appointed at least 2, or at least 15%, whichever is greater, of the individuals
who compose the Board of Directors of the Parent, (b) at any time, a
Change of Management Event has occurred, (c) Parent fails to own and
control, directly or indirectly, 100%, of the Stock of Borrower, or (d) any
“person” or “group” (within the meaning of Sections 13(d) and 14(d) of
the Exchange Act), other than RC Aviation Management, LLC, becomes the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of 25%, or more, of the Stock of Parent having the
right to vote for the election of members of the Board of Directors.


 


“Change of Management
Event” means (a) Mr. Lawrence Hershfield ceases to be the
chairman of the Board of Directors and a successor to Mr. Lawrence
Hershfield that is reasonably satisfactory to the Required Lenders is not
appointed within 90 days of the date that Mr. Lawrence Hershfield ceases
to be the Chairman of the Board of Directors, or (b) any individual that
is satisfactory to the Required Lenders as the Chairman of the Board of
Directors ceases to be the Chairman of the Board of Directors and a successor
that is reasonably satisfactory to the Required Lenders is not appointed within
90 days of the date that such individual ceases to be the Chairman of the Board
of Directors.


 


“Closing Date” means
the date of the making of the initial Advance (or other extension of credit)
hereunder.


 


 “Code” means the New York Uniform
Commercial Code, as in effect from time to time.


 


“Collateral” means
all assets and interests in assets and proceeds thereof now owned or hereafter
acquired by Parent, Borrower, or Borrower’s Subsidiaries in or upon which a
Lien is granted under any of the Loan Documents.


 


“Collateral Access
Agreement” means a landlord waiver, bailee letter, or acknowledgement
agreement of any lessor, warehouseman, processor, consignee, or other Person in
possession of, having a Lien upon, or having rights or interests in Parent’s,
Borrower, or Borrower’s Subsidiaries’ books and records, Equipment, or
Inventory, in each case, in form and substance satisfactory to Required
Lenders.


 


“Collections” means all cash, checks, notes, instruments, and
other items of payment (including insurance proceeds, proceeds of cash sales,
rental proceeds, and tax refunds).


 


 “Commitment” means, with respect to
each Lender, its Revolver Commitment, its Term Loan Commitment, or its Total
Commitment, as the context requires, and, with respect to all Lenders, their
Revolver Commitments, their Term Loan Commitments, or their Total Commitments,
as the context requires, in each case as such Dollar amounts are set forth
beside such Lender’s name under the applicable heading on Schedule C-1
or in the Assignment and Acceptance pursuant to which such Lender became a
Lender hereunder, as such amounts may be reduced or increased from time to time
pursuant to assignments made in accordance with the provisions of Section 13.1.


 


“Compliance Certificate”
means a certificate substantially in the form of Exhibit C-1
delivered by the chief financial officer of Borrower to Agent.


 


“Confirmation Order”
means the confirmation order entered by the Bankruptcy Court pursuant to the
Chapter 11 bankruptcy case of the Borrower.


 


 “Control Agreement” means a control
agreement, in form and substance satisfactory to Required Lenders and Second
Lien Agent, executed and delivered by Parent, Borrower, or one of Borrower’s


 


5





















 


Subsidiaries, Agent, Second
Lien Agent, and the applicable securities intermediary (with respect to a
Securities Account) or bank (with respect to a Deposit Account).


 


“Credit Card Agreements”
means those certain credit card receipts agreements, each in form and substance
satisfactory to Required Lenders in their Permitted Discretion, executed and
delivered by Parent, Borrower, or one of Borrower’s Subsidiaries, Agent and Second
Lien Agent.


 


“Credit Card Processor”
means any Person (including an issuer of a credit card) that acts as a credit
card clearinghouse for Parent, Borrower, or any of Borrower’s Subsidiaries or
remits to Parent, Borrower, or any of Borrower’s Subsidiaries any payments due
to Parent, Borrower, or any of Borrower’s Subsidiaries with respect to credit
card charges accepted by Parent, Borrower, or any of Borrower’s Subsidiaries.


 


“Daily Balance”
means, as of any date of determination and with respect to any Obligation, the
amount of such Obligation owed at the end of such day.


 


“Default” means an
event, condition, or default that, with the giving of notice, the passage of
time, or both, would be an Event of Default.


 


“Defaulting Lender”
means any Lender that fails to make any Advance (or other extension of credit)
that it is required to make hereunder on the date that it is required to do so
hereunder.


 


“Defaulting Lender Rate”
means (a) for the first 3 days from and after the date the relevant
payment is due, the Base Rate, and (b) thereafter, the interest rate then
applicable to Advances that are Base Rate Loans (inclusive of the Base Rate
Margin applicable thereto).


 


“Deposit Account”
means any deposit account (as that term is defined in the Code).


 


“Designated Account”
means the Deposit Account of Borrower identified on Schedule D-1 or
any other account designated in writing by Borrower to Agent.


 


“Designated Account Bank”
has the meaning specified therefor in Schedule D-1.


 


“Dilution” means, as
of any date of determination, a percentage, based upon the experience of the
immediately prior 90 consecutive days, that is the result of dividing the
Dollar amount of (a) bad debt write-downs, discounts, advertising
allowances, credits, or other dilutive items with respect to Borrower’s
Accounts during such period, by (b) Borrower’s billings with respect to
Accounts during such period.


 


“Dollars” or “$”
means United States dollars.


 


“DOT” means the
United States Department of Transportation and any agency or instrumentality of
the United States government succeeding to its functions, including without
limitation, the National Safety Transportation Board.


 


“EA Dilution Reserve”
means, as of any date of determination, an amount sufficient to reduce the
advance rate against Eligible Electronic Accounts by 1 percentage point for
each percentage point by which Dilution is in excess of 5.0%.


 


“EBITDA” means, with
respect to any fiscal period, Borrower’s and its Subsidiaries’ consolidated net
earnings (or loss), minus extraordinary gains and interest income, plus
non-cash extraordinary losses, non-cash Stock option expenses, interest
expense, income taxes, and depreciation and amortization for such period, in
each case, as determined in accordance with GAAP.


 


6





















 


“Eligible Accounts”
means Eligible Electronic Accounts and Eligible Manual Accounts.


 


“Eligible Electronic
Accounts” means those Accounts (other than Eligible Manual Accounts)
created by Borrower in the ordinary course of its business, that arise out of
Borrower’s rendition of services, that comply with each of the representations
and warranties respecting Eligible Accounts made in the Loan Documents, and
that are not excluded as ineligible by virtue of one or more of the excluding
criteria set forth below; provided, however, that such criteria
may be revised from time to time by Agent in Agent’s Permitted Discretion to
address the results of any audit performed by Agent from time to time after the
Closing Date.  In determining the amount
to be included, Eligible Electronic Accounts shall be calculated without giving
effect to any customer deposits and unapplied cash to the extent that such
customer deposits or unapplied cash are applied in satisfaction of any Account
(in which case, Eligible Electronic Accounts shall be calculated net of such
customers deposits and unapplied cash to such extent).  Eligible Electronic Accounts shall not
include the following:


 


(a)           Accounts that the Account Debtor has failed to pay within
90 days of original invoice date or Accounts with selling terms of more than 60
days,


 


(b)           Accounts owed by an Account Debtor (or its Affiliates)
where 50% or more of all Accounts owed by that Account Debtor (or its
Affiliates) are deemed ineligible under clause (a) above,


 


(c)           Accounts with respect to which the Account Debtor is an
Affiliate of Borrower or an employee or agent of Borrower or any Affiliate of
Borrower,


 


(e)           Accounts that are not payable in Dollars,


 


(f)            Accounts with respect to which the Account Debtor either (i) does
not maintain its chief executive office in the United States, or (ii) is
not organized under the laws of the United States or any state thereof, or (iii) is
the government of any foreign country or sovereign state, or of any state,
province, municipality, or other political subdivision thereof, or of any
department, agency, public corporation, or other instrumentality thereof,
unless (y) the Account is supported by an irrevocable letter of credit
satisfactory to Required Lenders (as to form, substance, and issuer or domestic
confirming bank) that has been delivered to Agent and is directly drawable by
Agent, or (z) the Account is covered by credit insurance in form, substance,
and amount, and by an insurer, satisfactory to Required Lenders,


 


(g)           Accounts in an aggregate amount at any one time exceeding
$250,000 with respect to which the Account Debtor is either (i) the United
States or any department, agency, or instrumentality of the United States
(exclusive, however, of Accounts with respect to which Borrower has complied,
to the reasonable satisfaction of Agent, with the Assignment of Claims Act, 31
USC §3727), or (ii) any state of the United States,


 


(h)           Accounts with respect to which the Account Debtor is a
creditor of Borrower, has or has asserted a right of setoff, or has disputed
its obligation to pay all or any portion of the Account, to the extent of such
claim, right of setoff, or dispute,


 


(i)            Accounts with respect to an Account Debtor whose total
obligations owing to Borrower exceed 10% (such percentage, as applied to a
particular Account Debtor, being subject to reduction by Agent in its Permitted
Discretion if the creditworthiness of such Account Debtor deteriorates) of all
Eligible Accounts, to the extent of the obligations owing by such Account
Debtor in excess of such percentage; provided, however, that, in
each case, the amount of Eligible Accounts that are excluded because they
exceed the foregoing percentage shall be determined by Agent based on all of
the otherwise Eligible Accounts prior to giving effect to any eliminations
based upon the foregoing concentration limit,


 


7





















 


(j)            Accounts with respect to which the Account Debtor is
subject to an Insolvency Proceeding, is not Solvent, has gone out of business,
or as to which Borrower has received notice of an imminent Insolvency
Proceeding or a material impairment of the financial condition of such Account
Debtor,


 


(k)           Accounts, the collection of which, Agent, in its Permitted
Discretion, believes to be doubtful by reason of the Account Debtor’s financial
condition,


 


(l)            Accounts that are not subject to a valid and perfected
first priority Agent’s Lien,


 


(m)          Accounts with respect to which the services giving rise to
such Account have not been performed and billed to the Account Debtor,


 


(n)           Accounts that represent the right to receive progress
payments or other advance billings that are due prior to the completion of
performance by Borrower of the subject contract for goods or services, or


 


(o)           Accounts that are not maintained on Borrower’s electronic
Accounts aging system.


 


“Eligible Ground
Equipment” Ground Equipment that is not excluded as ineligible by virtue of
one or more of the excluding criteria set forth below; provided, however,
that such criteria may be revised from time to time by Agent in Agent’s
Permitted Discretion to address the results of any audit or appraisal performed
by Agent from time to time after the Closing Date.  Ground Equipment shall not be included in
Eligible Ground Equipment if:


 


(a)           Borrower does not have good, valid, and marketable title
thereto,


 


(b)           it is not located at (i) Borrower’s primary
maintenance and operations facility at Honolulu International Airport, or (ii) any
of Borrower’s maintenance and operations facility at Lihue Airport, Maui
(Kahalui) Airport, Hilo Airport, or Kona Airport,


 


(c)           it is located on Real Property leased by Borrower unless
such leased Real Property is subject to a Collateral Access Agreement executed
by the lessor (provided, however, that, (i) during the 90-day
period immediately following the Closing Date, such leased Real Property need
not be subject to a Collateral Access Agreement, and (ii) during all times
thereafter, either such leased Real Property must be subject to a Collateral
Access Agreement or, if such Real Property is not subject to a Collateral
Access Agreement, Agent may, at its election, establish a reserve against the
Borrowing Base in an aggregate amount equal to 3 months rent under the lease for
each Real Property that is not subject to a Collateral Access Agreement).


 


(d)           it is not subject to a valid and perfected first priority
Agent’s Lien or is not free and clear of all Liens (other than a valid and
perfected first priority Agent’s Lien).


 


“Eligible Manual Accounts”
means any Account created by Borrower that does not qualify as an Eligible
Electronic Account solely because such Account is not maintained on Borrower’s
electronic Accounts aging system.


 


“Eligible Spare Parts”
means original equipment manufacturer approved Rotables or Expendables of
Borrower, manufactured and refurbished, as the case may be, in conformity with
the Borrower’s Maintenance Program that comply with each of the representations
and warranties respecting Eligible Spare Parts made in the Loan Documents, and
that is not excluded as ineligible by virtue of one or more of the excluding
criteria set forth below; provided, however, that such criteria
may be revised from time to time by Agent in Agent’s Permitted Discretion to address
the results of any audit or appraisal performed by Agent from time to time
after the Closing Date.  In determining
the amount to be so included, Spare Parts shall


 


8





















 


be valued at the lower of
cost or market on a basis consistent with Borrower’s historical accounting
practices.  A Rotable or Expendable shall
not be included in Eligible Spare Parts if:


 


(a)           Borrower does not have good, valid, and marketable title
thereto,


 


(b)           (i) with respect to the Rotables or Expendables set
forth on Schedule E-1, if such Rotables or Expendables are not
located at Borrower’s maintenance and operations facility at Los Angeles
International Airport from and after the date on which Agent has verified that
such Rotables or Expendables are located at Los Angeles International Airport,
and (ii) with respect to any other Rotables or Expendables, if such
Rotables or Expendables are not located at Borrower’s primary maintenance and
operations facility at Honolulu International Airport,


 


(c)           it is located on Real Property leased by Borrower or in a
contract warehouse, in each case, (i) unless it is subject to a Collateral
Access Agreement executed by the lessor or warehouseman, as the case may be (provided,
however, that, (x) during the 90-day period immediately following the
Closing Date, such leased Real Property or contract warehouse need not be
subject to a Collateral Access Agreement, and (y) during all times thereafter,
either such leased Real Property or contract warehouse must be subject to a
Collateral Access Agreement, or if such leased Real Property or contract
warehouse is not subject to a Collateral Access Agreement, Agent may, at its
election, establish a reserve against the Borrowing Base in an aggregate amount
equal to 3 months rent under the lease for each Real Property (or, if
applicable, 3 months of storage fees under the warehouse agreement for each
contract warehouse) that is not subject to a Collateral Access Agreement), and (ii) unless
it is segregated or otherwise separately identifiable from Spare Parts of
others, if any, stored on the premises,


 


(d)           is not subject to a valid and perfected first priority
Agent’s Lien or is not free and clear of all Liens (other than a valid and
perfected first priority Agent’s Lien),


 


(e)           it is the subject of any warehouse receipt or other
document of title, unless such receipt or other document of title is delivered
to Agent with all necessary endorsements,


 


(f)            it is a Spare Part that is defective, obsolete or
unserviceable, does not comply with all original equipment manufacturer quality
assurance recommendations, is not new or has not been rehabilitated to a fully
serviceable condition, has not been maintained in accordance with the FARs or
Borrower’s Maintenance Program, or is not in a condition for immediate use by
Borrower in its Certificated Air Carrier operations in compliance with the FARs
or Borrower’s Maintenance Program,


 


(g)           it does not have (i) full FAA serviceability tags
(or, if applicable, full back-to-birth traceability), or (ii) all manuals,
documents, and records required by the FARs, the Borrower’s Maintenance
Program, or the manufacturer of such Spare Part,


 


(h)           it has been installed on any airframe, Engine, Propeller,
other Spare Part, or any other item of Equipment or otherwise become an
accession, or is subject to a pooling, exchange, borrowing, leasing,
consignment, or other similar arrangement, or


 


(i)            such Spare Part does not conform in all material
respects to all applicable airworthiness directives, mandatory service
bulletins, or standards, or limits imposed by any Governmental Authority which
has regulatory authority over such Spare Part or its use or by the
manufacturer of such Spare Part and any requirements of the manufacturer
relating to the availability of warranties provided by the manufacturer.


 


“Eligible Transferee”
means (a) a commercial bank organized under the laws of the United States,
or any state thereof, and having total assets in excess of $250,000,000, (b) a
commercial bank organized under the laws of any other country which is a member
of the Organization for Economic Cooperation and


 


9





















 


Development or a political
subdivision of any such country and which has total assets in excess of $250,000,000,
provided that such bank is acting through a branch or agency located in the
United States, (c) a finance company, insurance company, or other
financial institution or fund that is engaged in making, purchasing, or
otherwise investing in commercial loans in the ordinary course of its business
and having (together with its Affiliates) total assets in excess of
$250,000,000, (d) any Affiliate (other than individuals) or Related Fund
of a Lender, (e) so long as no Event of Default has occurred and is
continuing, any other Person approved by Agent and Borrower (which approval of
Borrower shall not be unreasonably withheld, delayed, or conditioned), and (f) during
the continuation of an Event of Default, any other Person approved by Agent.


 


“Engine” means an “aircraft
engine” as defined in Section 40102 of the Federal Aviation Act.


 


“Engine and Spare Parts
Security Agreement” means a security agreement executed and delivered by
Borrower in favor of Agent recorded with the FAA, in substantially the same form
as Exhibit E-1.


 


“Environmental Actions”
means any complaint, summons, citation, notice, directive, order, claim,
litigation, investigation, judicial or administrative proceeding, judgment,
letter, or other communication from any Governmental Authority, or any third
party involving violations of Environmental Laws or releases of Hazardous
Materials (a) from any assets, properties, or businesses of Parent,
Borrower, Borrower’s Subsidiaries, or any of their predecessors in interest, (b) from
adjoining properties or businesses, or (c) from or onto any facilities
which received Hazardous Materials generated by Parent, Borrower, Borrower’s
Subsidiaries, or any of their predecessors in interest and which complaint,
summons, citation, notice, directive, order, claim, litigation, investigation,
judicial or administrative proceeding, judgment, letter, or other written
communication names Parent, Borrower, Borrower’s Subsidiaries, or any of their
predecessors in interest.


 


“Environmental Law”
means any applicable federal, state, provincial, foreign or local statute, law,
rule, regulation, ordinance, code, binding and enforceable guideline, binding
and enforceable written policy, or rule of common law now or hereafter in
effect and in each case as amended, or any judicial or administrative
interpretation thereof, including any judicial or administrative order, consent
decree or judgment, in each case, to the extent binding on Parent, Borrower, or
Borrower’s Subsidiaries, relating to the environment, the effect of the environment
on employee health, or Hazardous Materials, in each case as amended from time
to time.


 


“Environmental
Liabilities” means all liabilities, monetary obligations, losses, damages,
punitive damages, consequential damages, treble damages, costs and expenses
(including all reasonable fees, disbursements and expenses of counsel, experts,
or consultants, and costs of investigation and feasibility studies), fines,
penalties, sanctions, and interest incurred as a result of any claim or demand,
or Remedial Action required, by any Governmental Authority or any third party,
and which relate to any Environmental Action.


 


“Environmental Lien”
means any Lien in favor of any Governmental Authority for Environmental
Liabilities.


 


“Equipment” means
equipment (as that term is defined in the Code).


 


“ERISA” means the
Employee Retirement Income Security Act of 1974, as amended, and any successor
statute thereto and the regulations promulgated and rulings issued thereunder.


 


“ERISA Affiliate”
means any Person (other than Borrower, Parent, or any of their Subsidiaries)
whose employees are treated as employed by the same employer as the employees
of Borrower, Parent or any of their Subsidiaries under IRC Section 414.


 


“ERISA
Event” means (a) a Reportable Event with respect to any Benefit Plan, (b) the
withdrawal of Borrower, Parent, any of Borrower’s Subsidiaries or any ERISA
Affiliate from a Benefit Plan


 


10





















 


during a plan year in which it was a “substantial
employer” (as defined in Section 4001(a)(2) of ERISA), (c) the
providing of notice of intent to terminate a Benefit Plan in a distress
termination (as described in Section 4041(c) of ERISA), (d) the
institution by the PBGC of proceedings to terminate a Benefit Plan, (e) any
event or condition that provides a basis under Section 4042(a)(1), (2), or
(3) of ERISA for the termination of, or the appointment of a trustee to
administer, any Benefit Plan, (f) the termination of a Multiemployer Plan
pursuant to Section 4041A of ERISA, (g) the partial or complete
withdrawal, within the meaning of Sections 4203 and 4205 of ERISA, of Borrower,
Parent, any of Borrower’s Subsidiaries or any ERISA Affiliate from a
Multiemployer Plan, (h) providing any security to any Benefit Plan under Section 401(a)(29)
of the IRC by Borrower, Parent, any of Borrower’s Subsidiaries or any ERISA
Affiliate, or (i) any event that causes Borrower, Parent, any of Borrower’s
Subsidiaries or any ERISA Affiliate to incur liability under Section 409,
502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 4971
or 4975 of the IRC.


 


“Event of Default”
has the meaning specified therefor in Section 7.


 


“Excess Availability”
means, as of any date of determination, the amount equal to Availability minus the aggregate amount, if any, of all
trade payables of Parent, Borrower, and Borrower’s Subsidiaries aged in excess
of 60 days beyond their due date with respect thereto and all book overdrafts
of Parent, Borrower, and Borrower’s Subsidiaries in excess of historical
practices with respect thereto, in each case as determined by Agent in its
Permitted Discretion.


 


“Exchange Act” means
the Securities Exchange Act of 1934, as in effect from time to time.


 


“Expendables” means
those Spare Parts for which no FAA and original equipment manufacturer
authorized refurbishment procedure exists or for which cost of repair or
refurbishment would normally exceed that of replacement.


 


“Extraordinary Receipts”
means any Collections received by Parent, Borrower, or any of Borrower’s
Subsidiaries not in the ordinary course of business (and not consisting of
proceeds described in Section 2.4(c)(i) of the Agreement),
including, (a) foreign, United States, state or local tax refunds, (b) pension
plan reversions, (c) proceeds of insurance (including proceeds of key man
life insurance policies, if any), (d) judgments, proceeds of settlements
or other consideration of any kind in connection with any cause of action, (e) condemnation
awards (and payments in lieu thereof), (f) indemnity payments and (g) any
purchase price adjustment received in connection with any purchase agreement.


 


 “FAA” shall mean the Federal Aviation
Administration of the United States Department of Transportation and any
subdivision or office thereof, and any successor or replacement administrator,
agency or other entity having the same or similar authority and
responsibilities.


 


“FARs” means the rules and
regulations of the FAA, including as set forth in Title 14 of the Code of
Federal Regulations.


 


“Federal Aviation Act”
shall mean Title 49 of the United States Code, as amended from time to time,
together with all rules, regulations, procedures, orders, handbooks, guidelines
and interpretations thereunder or related thereto.


 


 “Fee Letter” means that certain fee
letter between Borrower and Agent, in form and substance satisfactory to
Required Lenders.


 


“First Lien Leverage
Ratio” means, as of any date of measurement, (a) without duplication,
the sum of the outstanding principal amount of Advances, plus the
aggregate drawn, but unreimbursed, amount of all outstanding Letters of Credit,
plus the outstanding principal balance of the Term Loan, divided by
(b) EBITDA of Borrower and its Subsidiaries for the 12 month period most
recently ended.


 


11





















 


“Foreign Pension Plan”
means any plan, fund (including without limitation, any superannuation fund) or
other similar program established or maintained outside the United States by
Borrower, Parent, any of Borrower’s Subsidiaries or any ERISA Affiliate
primarily for the benefit of employees of such Person residing outside the
United States, which plan, fund or other similar program provides, or results
in, retirement income, a deferral of income in contemplation of retirement or
payments to be made upon termination of employment, and which plan is not
subject to ERISA or the IRC.


 


 “Funding Date” means the date on which
a Borrowing occurs.


 


“Funding Losses” has
the meaning specified therefor in Section 2.13(b)(ii).


 


“GAAP” means
generally accepted accounting principles as in effect from time to time in the
United States, consistently applied.


 


“Gates” means the
right to use one or more gates at an airport terminal.


 


“Governing Documents”
means, with respect to any Person, the certificate or articles of
incorporation, by-laws, or other organizational documents of such Person.


 


“Governmental Authority”
means any federal, state, local, or other governmental or administrative body,
instrumentality, board, department, or agency or any court, tribunal,
administrative hearing body, arbitration panel, commission, or other similar
dispute-resolving panel or body.


 


“Ground Equipment”
means Equipment of Borrower consisting of vehicles, ramp Equipment, and ground
service Equipment (including baggage handling equipment, catering equipment,
and maintenance equipment).


 


“Guarantors” means (a) Parent,
and (b) each other Person who guarantees all or any part of the
Obligations, and “Guarantor” means any one of them.


 


 “Guaranty” means that certain general
continuing guaranty executed and delivered by each Guarantor in favor of Agent,
for the benefit of the Lender Group, in substantially the same form as Exhibit G-1.


 


“Hazardous Materials”
means (a) substances that are defined or listed in, or otherwise
classified pursuant to, any applicable laws or regulations as “hazardous
substances,” “hazardous materials,” “hazardous wastes,” “toxic substances,” or
any other formulation intended to define, list, or classify substances by
reason of deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, reproductive toxicity, or “EP toxicity”, (b) oil,
petroleum, or petroleum derived substances, natural gas, natural gas liquids,
synthetic gas, and drilling fluids, (c) any flammable substances or
explosives or any radioactive materials, and (d) asbestos in any form or
electrical equipment that contains any oil or dielectric fluid containing
levels of polychlorinated biphenyls in excess of 50 parts per million.


 


“Hedge Agreement” means
any and all agreements or documents now existing or hereafter entered into by
Parent, Borrower, or any of Borrower’s Subsidiaries that provide for an
interest rate, credit, commodity or equity swap, cap, floor, collar, forward
foreign exchange transaction, currency swap, cross currency rate swap, currency
option, or any combination of, or option with respect to, these or similar
transactions, for the purpose of hedging Parent’s, Borrower’s, or any of
Borrower’s Subsidiaries’ exposure to fluctuations in interest or exchange
rates, loan, credit exchange, security, or currency valuations or commodity
prices.


 


“Holdout Lender” has
the meaning specified therefor in Section 14.2(a).


 


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“Indebtedness” means (a) all
obligations for borrowed money, (b) all obligations evidenced by bonds,
debentures, notes, or other similar instruments and all reimbursement or other
obligations in respect of letters of credit, bankers acceptances, interest rate
swaps, or other financial products, (c) all obligations as a lessee under
Capital Leases, (d) all obligations or liabilities of others secured by a
Lien on any asset of a Person or its Subsidiaries, irrespective of whether such
obligation or liability is assumed, (e) all obligations to pay the
deferred purchase price of assets (other than trade payables incurred in the
ordinary course of business and repayable in accordance with customary trade
practices), (f) all obligations owing under Hedge Agreements, and (g) any
obligation guaranteeing or intended to guarantee (whether directly or
indirectly guaranteed, endorsed, co-made, discounted, or sold with recourse)
any obligation of any other Person that constitutes Indebtedness under any of
clauses (a) through (f) above (it being understood that Indebtedness
shall not include any liability of Borrower arising from Borrower’s so called “air
traffic liability account” regarding any airline ticket that is purchased from
Borrower prior to the time that the individual whose name is on such ticket
redeems such ticket to travel on an Aircraft operated by Borrower).


 


“Indemnified Liabilities”
has the meaning specified therefor in Section 10.3.


 


“Indemnified Person”
has the meaning specified therefor in Section 10.3.


 


“Insolvency Proceeding”
means any proceeding commenced by or against any Person under any provision of
the Bankruptcy Code or under any other state or federal bankruptcy or
insolvency law, assignments for the benefit of creditors, formal or informal
moratoria, compositions, extensions generally with creditors, or proceedings
seeking reorganization, arrangement, or other similar relief.


 


 “Intercompany Subordination Agreement”
means a subordination agreement executed and delivered by Parent, Borrower,
each of Borrower’s Subsidiaries, and Agent, in substantially the same form as Exhibit I-1.


 


“Intercreditor Agreement”
means that certain Intercreditor Agreement, dated as of the Closing Date, by
and between Agent and Second Lien Agent, and acknowledged and consented to by
Borrower and each Guarantor, as amended, modified, supplemented or restated
from time to time.


 


“Interest Expense”
means, for any period, the aggregate of the interest expense of Parent,
Borrower, and Borrower’s Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP.


 


“Interest Period”
means, with respect to each LIBOR Rate Loan, a period commencing on the date of
the making of such LIBOR Rate Loan (or the continuation of a LIBOR Rate Loan or
the conversion of a Base Rate Loan to a LIBOR Rate Loan) and ending 1, 2, 3, or
6 months thereafter; provided, however, that (a) if any
Interest Period would end on a day that is not a Business Day, such Interest
Period shall be extended (subject to clauses (c)-(e) below) to the next
succeeding Business Day, (b) interest shall accrue at the applicable rate
based upon the LIBOR Rate from and including the first day of each Interest
Period to, but excluding, the day on which any Interest Period expires, (c) any
Interest Period that would end on a day that is not a Business Day shall be
extended to the next succeeding Business Day unless such Business Day falls in
another calendar month, in which case such Interest Period shall end on the
next preceding Business Day, (d) with respect to an Interest Period that
begins on the last Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month at the end of
such Interest Period), the Interest Period shall end on the last Business Day
of the calendar month that is 1, 2, 3, or 6 months after the date on which the
Interest Period began, as applicable, and (e) Borrower may not elect an
Interest Period which will end after the Maturity Date.


 


“Inventory” means
inventory (as that term is defined in the Code), including Spare Parts.


 


13





















 


“Investment” means,
with respect to any Person, any investment by such Person in any other Person
(including Affiliates) in the form of loans, guarantees, advances, or capital
contributions (excluding (a) commission, travel, and similar advances to
officers and employees of such Person made in the ordinary course of business,
and (b) bona fide Accounts
arising in the ordinary course of business consistent with past practice),
purchases or other acquisitions of Indebtedness, Stock, or all or substantially
all of the assets of such other Person (or of any division or business line of
such other Person), and any other items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP.


 


“IP Security Documents”
means the Copyright Security Agreement, the Patent Security Agreement, and the
Trademark Security (as each such term is defined in the Security Agreement).


 


“IRC” means the
Internal Revenue Code of 1986, as in effect from time to time, and the
regulations promulgated and rulings issued thereunder.


 


“IRS Tax Claim
Indebtedness” means the unsecured Indebtedness of Borrower owing to the
Internal Revenue Service in an amount not to exceed $32,000,000 as set forth in
the Order Estimating and Capping IRS Priority Income Tax Claim, Allowing IRS
Priority Excise Tax Claim and Disallowing IRS Unsecured Penalty Claim, dated as
of March 28, 2005.


 


“Issuing Lender”
means WFF or any other Lender that, at the request of Borrower and with the
consent of Agent, agrees, in such Lender’s sole discretion, to become an
Issuing Lender for the purpose of issuing L/Cs or L/C Undertakings pursuant to Section 2.12.


 


“L/C” has the meaning
specified therefor in Section 2.12(a).


 


“L/C Disbursement”
means a payment made by the Issuing Lender pursuant to a Letter of Credit.


 


“L/C Undertaking” has
the meaning specified therefor in Section 2.12(a).


 


“Lender” and “Lenders”
have the respective meanings set forth in the preamble to the Agreement, and
shall include any other Person made a party to the Agreement in accordance with
the provisions of Section 13.1.


 


“Lender Group” means,
individually and collectively, each of the Lenders (including the Issuing
Lender) and Agent.


 


“Lender Group Expenses”
means all (a) costs or expenses (including taxes, and insurance premiums)
required to be paid by Parent, Borrower, or Borrower’s Subsidiaries under any
of the Loan Documents that are paid, advanced, or incurred by the Lender Group,
(b) out of pocket fees or charges paid or incurred by Agent in connection
with the Lender Group’s transactions under the Loan Documents with Parent,
Borrower, or Borrower’s Subsidiaries, including, fees or charges for
photocopying, notarization, couriers and messengers, telecommunication, public
record searches (including tax lien, litigation, and UCC searches and including
searches with the patent and trademark office, the copyright office, or the
department of motor vehicles), filing, recording, publication, appraisal
(including periodic collateral appraisals or business valuations to the extent
of the fees and charges (and up to the amount of any limitation) contained in
the Agreement), (c) costs and expenses incurred by Agent in the
disbursement of funds to Borrower or other members of the Lender Group (by wire
transfer or otherwise), (d) charges paid or incurred by Agent resulting
from the dishonor of checks, (e) reasonable costs and expenses paid or
incurred by Agent to correct any default or enforce any provision of the Loan
Documents, or in gaining possession of, maintaining, handling, preserving,
storing, shipping, selling, preparing for sale, or advertising to sell the
Collateral, or any portion thereof, irrespective of whether a sale is
consummated, (f) audit fees and expenses of Agent related to any
inspections or audits to the extent of the fees and charges (and up to the
amount of any limitation) contained in


 


14





















 


the Agreement, (g) [intentionally
omitted], (h) Agent’s reasonable costs and expenses (including attorneys
fees) incurred in advising, structuring, drafting, reviewing, administering,
syndicating, or amending the Loan Documents, (i) Agent’s reasonable costs
and expenses (including attorneys, accountants, consultants, and other advisors
fees and expenses) incurred in terminating and enforcing (including attorneys,
accountants, consultants, and other advisors fees and expenses incurred in
connection with a “workout,” a “restructuring,” or an Insolvency Proceeding
concerning Parent, Borrower, or Borrower’s Subsidiaries or in exercising rights
or remedies under the Loan Documents), or defending the Loan Documents,
irrespective of whether suit is brought, or in taking any Remedial Action
concerning the Collateral, and (j) each Lender’s reasonable costs and expenses
(including attorneys, accountants, consultants, and other advisors fees and
expenses) incurred in connection with a “workout,” a “restructuring,” or an
Insolvency Proceeding concerning Parent, Borrower, or Borrower’s Subsidiaries
or defending the Loan Documents, irrespective of whether suit is brought.


 


“Lender-Related Person”
means, with respect to any Lender, such Lender, together with such Lender’s
Affiliates, officers, directors, employees, attorneys, and agents.


 


“Letter of Credit”
means an L/C or an L/C Undertaking, as the context requires.


 


“Letter of Credit Usage”
means, as of any date of determination, the aggregate undrawn amount of all
outstanding Letters of Credit.


 


“LIBOR Deadline” has
the meaning specified therefor in Section 2.13(b)(i).


 


“LIBOR Notice” means
a written notice in the form of Exhibit L-1.


 


“LIBOR Option” has
the meaning specified therefor in Section 2.13(a).


 


“LIBOR Rate” means,
for each Interest Period for each LIBOR Rate Loan, the rate per annum
determined by Agent (rounded upwards, if necessary, to the next 1/100%) by dividing (a) the Base LIBOR Rate for
such Interest Period, by (b) 100% minus
the Reserve Percentage.  The
LIBOR Rate shall be adjusted on and as of the effective day of any change in
the Reserve Percentage.


 


“LIBOR Rate Loan”
means each portion of an Advance or the Term Loan that bears interest at a rate
determined by reference to the LIBOR Rate.


 


“LIBOR Rate Margin”
means 4.0 percentage points.


 


“Lien” means any
interest in an asset securing an obligation owed to, or a claim by, any Person
other than the owner of the asset, irrespective of whether (a) such
interest is based on the common law, statute, or contract, (b) such
interest is recorded or perfected, and (c) such interest is contingent
upon the occurrence of some future event or events or the existence of some
future circumstance or circumstances. 
Without limiting the generality of the foregoing, the term “Lien”
includes the lien or security interest arising from a mortgage, deed of trust,
encumbrance, notice of Lien, levy or assessment, pledge, hypothecation,
assignment, deposit arrangement, security agreement, conditional sale or trust
receipt, or from a lease, consignment, or bailment for security purposes and
also includes reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases, and other title
exceptions and encumbrances affecting Real Property.


 


“Loan Account” has
the meaning specified therefor in Section 2.10.


 


“Loan Documents”
means the Agreement, the Cash Management Agreements, the Control Agreements,
the Engine and Spare Parts Security Agreement, the Fee Letter, the Guaranty,
the Intercompany Subordination Agreement, the Intercreditor Agreement, the
Letters of Credit, the Post-Closing Matters Agreement, the Security Agreement,
any note or notes executed by Borrower in connection with the


 


15





















 


Agreement and payable to a
member of the Lender Group, and any other agreement entered into, now or in the
future, by Parent, Borrower, or any of Borrower’s Subsidiaries and the Lender
Group in connection with the Agreement.


 


“MA Dilution Reserve”
means, as of any date of determination, an amount sufficient to reduce the
advance rate against Eligible Manual Accounts by 1 percentage point for each
percentage point by which Dilution is in excess of 5.0%.


 


“Maintenance Program”
means an FAA approved maintenance program for Borrower’s Aircraft, Engines, and
Spare Parts in accordance with the applicable manufacturer’s maintenance
planning document and maintenance manuals.


 


“Material Adverse Change”
means (a) a material adverse change in the business, operations, results
of operations, assets, liabilities or condition (financial or otherwise)
specifically (and not due to industry-wide changes) of Parent, Borrower, and
Borrower’s Subsidiaries, taken as a whole, (b) a material impairment of
Parent’s, Borrower’s, and Borrower’s Subsidiaries ability to perform their obligations
under the Loan Documents to which they are parties or of the Lender Group’s
ability to enforce the Obligations or realize upon the Collateral, or (c) a
material impairment of the enforceability or priority of the Agent’s Liens with
respect to the Collateral as a result of an action or failure to act on the
part of Parent, Borrower, or Borrower’s Subsidiaries.


 


“Material Lease”
means (a) the lease for Borrower’s primary maintenance and operations
facility at Honolulu International Airport, and (b) any other lease the
loss of which could reasonably be expected to result in a Material Adverse
Change.


 


“Maturity Date” has
the meaning specified therefor in Section 3.3.


 


“Maximum Revolver Amount”
means $25,000,000; provided, that, if Borrower exercises its
option pursuant to the terms and conditions of Section 2.1(c),
Maximum Revolver Amount means $20,000,000.


 


“Merger” means (a) the
merger of Hawaiian Airlines, Inc., a Hawaii corporation, with and into
HHIC, Inc., a Delaware corporation, as the surviving entity; and (b) immediately
after such merger, the change by HHIC, Inc., a Delaware corporation, of
its name to “Hawaiian Airlines, Inc.”


 


“Merger Certificates”
means the certificates of merger filed in connection with the consummation of
the Merger.


 


“Multiemployer Plan”
means a “multiemployer plan” (as defined in Section 4001(a)(3) of
ERISA) to which Borrower, Parent, any of Borrower’s Subsidiaries or any ERISA
Affiliate has contributed, or was obligated to contribute, at any time.


 


 “Net Cash Proceeds” means:


 


(a) with
respect to any sale or disposition by Parent, Borrower, or any of Borrower’s
Subsidiaries of property or assets, the amount of cash proceeds received
(directly or indirectly) from time to time (whether as initial consideration or
through the payment of deferred consideration) by or on behalf of Parent or
such Subsidiary, in connection therewith after deducting therefrom only (i) the
amount of any Indebtedness secured by any Permitted Lien on any asset (other
than (A) Indebtedness owing to Agent or any Lender under this Agreement or
the other Loan Documents and (B) Indebtedness assumed by the purchaser of
such asset) which is required to be, and is, repaid in connection with such
sale or disposition, (ii) fees, commissions, and expenses related thereto
and required to be paid by Parent, Borrower, or such Subsidiary in connection
with such sale or disposition, (iii) taxes paid or payable or estimated to
be payable to any taxing


 


16





















 


authorities by Parent,
Borrower, or such Subsidiary in connection with such sale or disposition, and (iv) the
amount of any reserves established thereby to fund contingent liabilities, in
each case to the extent, but only to the extent, that the amounts so deducted
are, at the time of receipt of such cash, actually paid or payable to a Person
that is not an Affiliate of Parent, Borrower, or any of Borrower’s
Subsidiaries, and are properly attributable to such transaction; and


 


(b) with
respect to the issuance or incurrence of any Indebtedness by Parent, Borrower,
or any of Borrower’s Subsidiaries, or the issuance by Parent, Borrower, or any
of Borrower’s Subsidiaries of any shares of its Stock, the aggregate amount of
cash received (directly or indirectly) from time to time (whether as initial
consideration or through the payment or disposition of deferred consideration)
by or on behalf of Parent, Borrower, or such Subsidiary in connection with such
issuance or incurrence, after deducting therefrom only (i) reasonable
fees, commissions, and expenses related thereto and required to be paid by
Parent, Borrower, or such Subsidiary in connection with such issuance or
incurrence, (ii) taxes paid or payable or estimated to be payable to any
taxing authorities by Parent, Borrower, or such Subsidiary in connection with
such issuance or incurrence, and (iii) the amount of any reserves
established thereby to fund contingent liabilities, in each case to the extent,
but only to the extent, that the amounts so deducted are, at the time of
receipt of such cash, actually paid or payable to a Person that is not an
Affiliate of Parent, Borrower, or any of Borrower’s Subsidiaries, and are
properly attributable to such transaction.


 


“Net Liquidation
Percentage” means the percentage of the book value of Borrower’s Spare
Parts or Ground Equipment that is estimated to be recoverable in an orderly
liquidation of such Spare Parts or Ground Equipment net of all associated costs
and expenses of such liquidation, such percentage to be as determined from time
to time by a appraisal company selected by Agent.


 


“Obligations” means
all loans (including the Term Loan), Advances, debts, principal, interest
(including any interest that accrues after the commencement of an Insolvency
Proceeding, regardless of whether allowed or allowable in whole or in part as a
claim in any such Insolvency Proceeding), contingent reimbursement obligations
with respect to outstanding Letters of Credit, premiums, liabilities (including
all amounts charged to Borrower’s Loan Account pursuant hereto), obligations
(including indemnification obligations), fees (including the fees provided for
in the Fee Letter), charges, costs, Lender Group Expenses (including any fees
or expenses that accrue after the commencement of an Insolvency Proceeding,
regardless of whether allowed or allowable in whole or in part as a claim in
any such Insolvency Proceeding), lease payments, guaranties, covenants, and
duties of any kind and description owing by Borrower to the Lender Group
pursuant to or evidenced by the Loan Documents and irrespective of whether for
the payment of money, whether direct or indirect, absolute or contingent, due
or to become due, now existing or hereafter arising, and including all interest
not paid when due and all other expenses or other amounts that Borrower is
required to pay or reimburse by the Loan Documents, by law, or otherwise.  Any reference in the Agreement or in the Loan
Documents to the Obligations shall include all or any portion thereof and any
extensions, modifications, renewals, or alterations thereof, both prior and
subsequent to any Insolvency Proceeding.


 


“Originating Lender”
has the meaning specified therefor in Section 13.1(e).


 


“Overadvance” has the
meaning specified therefor in Section 2.5.


 


“Parent”
has the meaning specified therefore in the preamble to the Agreement.


 


“Parent Rights Offering”
means an offering by Parent that is consummated on or before June 1, 2006,
of stock options, warrants, or other purchase rights, in each case with respect
to its common Stock, or any other offering with respect to the common Stock of
Parent, provided that the holder of such common Stock shall not be entitled to
receive any mandatory cash dividends, mandatory cash distributions, or
mandatory cash redemptions, and the provisions with respect to such common
Stock shall otherwise be reasonably satisfactory to the Required Lenders.


 


17





















 


“Participant” has the
meaning specified therefor in Section 13.1(e).


 


“Participant Register”
has the meaning set forth in Section 13.1(i).


 


“PBGC” means the
Pension Benefit Guaranty Corporation established pursuant to Section 4002
of ERISA, or any successor thereto.


 


“Permitted Acquisition”
means any Stock Acquisition or Asset Acquisition by Parent so long as:


 


no Default or Event of Default shall have occurred and be
continuing or would result from the consummation of the proposed Stock
Acquisition, or Asset Acquisition,


 


the assets being acquired, or the Person whose Stock is being
acquired, are useful in or engaged in, as applicable, the business of Borrower
or a business reasonably related thereto, and


 


Parent has provided Agent with written notice of the proposed
Stock Acquisition or Asset Acquisition, as applicable, not less than 15 days
prior to the anticipated closing date of the proposed Stock Acquisition or
Asset Acquisition, as applicable.


 


“Permitted Discretion”
means a determination made with honesty in fact and in the exercise of
reasonable (from the perspective of a secured asset-based lender) business
judgment under the particular facts and circumstances.


 


“Permitted Dispositions”
means (a) sales or other dispositions of Equipment (other than Spare
Parts) that is substantially worn, damaged, or obsolete in the ordinary course
of business,  (b) [intentionally
omitted], (c) so long as no Event of Default has occurred and is
continuing, sales or other dispositions of Equipment that is not substantially
worn, damaged, or obsolete in the ordinary course of business so long as the
aggregate amount of such sales or other dispositions does not exceed $250,000
per year, (d) sales of Inventory (other than Spare Parts) to buyers in the
ordinary course of business, (e) the use or transfer of money or Cash
Equivalents in a manner that is not prohibited by the terms of the Agreement or
the other Loan Documents, (f) the licensing, on a non-exclusive basis, of
patents, trademarks, copyrights, and other intellectual property rights in the
ordinary course of business, (g) the subletting by Borrower of Real Property
leased by Borrower, (h) the dispositions expressly permitted by Section 5.17(e),
and (i) the sale of any assets that are the subject of a Lien that secures
Permitted Purchase Money Indebtedness so long as the Net Cash Proceeds of such
sale are concurrently used to repay such Permitted Purchase Money Indebtedness.


 


“Permitted Distributions” means (a) any Subsidiary of
Borrower may make distributions to Borrower and Borrower may make distributions
to Parent for the sole purpose of allowing Parent to, and Parent shall use the
proceeds thereof solely to (i) pay federal and state income taxes and
franchise taxes solely arising out of the consolidated operations of Parent,
Borrower, and Borrower’s Subsidiaries, after taking into account all available
credits and deductions (provided that no such Subsidiary or Borrower
shall make any distribution to Borrower or Parent, as applicable, in any amount
greater than the share of such taxes arising out of such Subsidiary’s or
Borrower’s, as applicable, net income), (ii) pay customary costs and
expenses of operating a publicly-traded company (including filing fees and
taxes, director fees, and legal fees associated therewith) in an aggregate
amount during any year not to exceed $2,000,000, (iii) pay insurance
expenses incurred by Borrower or any of Borrower’s Subsidiaries or by Parent so
long as attributable solely to the operations of Borrower and its Subsidiaries,
(iv) pay legal fees incurred by Parent to prosecute litigation in favor of
Borrower or its Subsidiaries, to defend litigation filed against Borrower or
its Subsidiaries, or in connection with the representation of Borrower or its
Subsidiaries for a transaction permitted by the Agreement involving Borrower
and its Subsidiaries, and (v) pay accounting fees incurred by Parent that
are solely attributable to the operations of Borrower and its Subsidiaries, by
Borrower, or by any of Borrower’s Subsidiaries, (b) so long as no Event of
Default shall have occurred and be continuing or would result


 


18





















 


therefrom, any Subsidiary of
Borrower may make distributions to Borrower and Borrower may make distributions
to Parent for the sole purpose of allowing Parent to, and Parent shall use the
proceeds thereof solely to, make distributions to current or former employees
on account of purchases or redemptions of Stock of Parent held by such Persons,
provided that no more than $350,000 of such distributions in the
aggregate may be made by Parent’s Subsidiaries to Parent during the term of
this Agreement, and (c) so long as (i) no Event of Default has
occurred and is continuing or would result therefrom, (ii) Borrower
provides Agent with 15 days prior written notice of such distribution, (iii) Borrower
has $70,000,000 of Excess Availability plus Qualified Cash at all times during
the 30 day period immediately prior to the date that the proposed distribution
is made and immediately after giving effect to such distribution, distributions
by any of Borrower’s Subsidiaries to Borrower, and by Borrower to Parent, in an
aggregate amount during the term of this Agreement not to exceed $5,000,000 for
the sole purpose of (x) in the case of distributions to Parent, allowing Parent
to, and Parent shall use the proceeds thereof solely to, make a Permitted
Investment, and (y) in the case of distributions to Borrower, allowing Borrower
to, and Borrower shall use the proceeds thereof solely to, make a Permitted
Loan.


 


“Permitted Intercompany
Advance” means unsecured loans or advances (i) from Parent or Borrower
to any of their respective Subsidiaries, (ii) from any of Borrower’s
Subsidiaries to Borrower, or (iii) from any Subsidiary of Borrower to any
other Subsidiary of Borrower, so long as for each of (i), (ii), or (iii), no
Event of Default has occurred and is continuing and all parties to each such
transaction execute an Intercompany Subordination Agreement.


 


“Permitted Investments”
means (a) Investments in cash and Cash Equivalents, (b) Investments
in negotiable instruments for collection, (c) advances made in connection
with purchases of goods or services in the ordinary course of business, (d) Investments
received in settlement of amounts due to Parent, Borrower, or any of Borrower’s
Subsidiaries effected in the ordinary course of business or owing to Parent,
Borrower, or any of Borrower’s Subsidiaries as a result of Insolvency
Proceedings involving an Account Debtor or upon the foreclosure or enforcement
of any Lien in favor of Parent, Borrower, or Borrower’s Subsidiaries, (e) Permitted
Intercompany Advances, (f) so long as no Event of Default has occurred and
is continuing, loans to employees or officers of Borrower or its Subsidiaries
in an aggregate amount not to exceed $350,000, (g) any guarantee by
Parent, Borrower, or any of Borrower’s Subsidiaries of Indebtedness permitted
by Section 6.1 so long as such guarantee benefits Borrower or any
of Borrower’s Subsidiaries; (h) Permitted Loans, (i) Permitted
Acquisitions, and (j) so long as (i) no Event of Default has occurred and
is continuing or would result therefrom, and (ii) Borrower has complied
with Section 5.16 of the Agreement with respect to such
Subsidiaries, Investments by Borrower in its Subsidiaries.


 


“Permitted Liens”
means (a) Liens held by Agent to secure the Obligations, (b) Liens for
unpaid taxes, assessments, or other governmental charges or levies that either (i) are
not yet delinquent, or (ii) do not have priority over the Agent’s Liens
and the underlying taxes, assessments, or charges or levies are the subject of
Permitted Protests, (c) judgment Liens that do not constitute an Event of
Default under Section 7.7 of the Agreement, (d) Liens set
forth on Schedule P-1, provided that any such Lien only secures the
Indebtedness that it secures on the Closing Date and any Refinancing Indebtedness
in respect thereof, (e) the interests of lessors under operating leases, (f) purchase
money Liens or the interests of lessors under Capital Leases to the extent that
such Liens or interests secure Permitted Purchase Money Indebtedness and so long
as such Lien attaches only to the asset purchased or acquired (and any
accessions, fixtures, and attachments thereto) and the proceeds, substitutions,
and replacements of such asset (and any accessions, fixtures, and attachments
thereto), (g) Liens arising by operation of law in favor of warehousemen,
landlords, carriers, mechanics, materialmen, laborers, or suppliers, incurred
in the ordinary course of business and not in connection with the borrowing of
money, and which Liens either (i) are for sums not yet delinquent, or (ii) are
the subject of Permitted Protests, (h) Liens on amounts deposited in
connection with obtaining worker’s compensation or other unemployment
insurance, (i) Liens on amounts deposited in connection with the making or
entering into of bids, tenders, or leases in the ordinary course of business
and not in connection with the borrowing of money, (j) Liens on amounts
deposited as security for surety or appeal bonds in connection with obtaining
such bonds in the ordinary course of business, (k) with respect to any Real
Property, easements,


 


19





















 


rights of way, and zoning
restrictions that do not materially interfere with or impair the use or
operation thereof, (l) with respect to Spare Parts that are not designated as
Eligible Spare Parts in any Borrowing Base Certificate, parts pooling, parts
exchange and short-term parts leasing agreements entered into by Borrower which
are acceptable to the Required Lenders in their Permitted Discretion, (m) any
interest or title of a licensor, lessor or sublicensor or sublessor under any
lease or license permitted by the Agreement, (n) Liens held by Second Lien
Agent to secure the Second Lien Indebtedness and permitted pursuant to the
Intercreditor Agreement, or (o) the rights of counterparties pursuant to
charters, leases, interchange agreements, pooling agreements and similar
agreements entered into by Borrower in the ordinary course of its business with
respect to Aircraft and aircraft engines owned or leased by the Borrower; provided,
however, that none of (b)(ii) through (o) shall be applicable to
Spare Parts that are designated as Eligible Spare Parts in any Borrowing Base
Certificate, Routes, or Slots.


 


“Permitted Loans”
means so long as (a) no Event of Default has occurred and is continuing or
would result therefrom, (b) Borrower provides Agent with 15 days prior
written notice of such loan, and (c) Borrower has $70,000,000 of Excess
Availability plus Qualified Cash at all times during the 30 day period
immediately prior to the date that the loan is made and immediately after
giving effect to such loan, loans by Parent, Borrower, or any of Borrower’s
Subsidiaries to any Person in an aggregate amount during the term of this
Agreement not to exceed $5,000,000 plus any amount received by Parent (which
amount may be contributed by Parent to Borrower, and by Borrower to any of its
Subsidiaries, for the purpose of making such loan) pursuant to a Permitted
Stock Sale.


 


“Permitted Merger”
means the merger of any Subsidiary of Borrower with and into Borrower, with
Borrower as the surviving Person, so long as (a) no Event of Default has
occurred and is continuing or would result from such merger, and (b) Agent
provides prior written consent to such merger (such consent not to be
unreasonably withheld).


 


“Permitted Morgan Stanley
Amount” means (a) on or before the date that is 30 days after the
Closing Date, $25,000, and (b) thereafter, $0.


 


“Permitted Parent
Indebtedness” means any unsecured Indebtedness, together with all interest,
fees and expenses from time to time accrued thereon, by Parent on arms-length
terms, in an aggregate principal amount not in excess of $100,000,000, which is
subordinated to the Obligations and on other terms that, in each case, are reasonably
satisfactory to the Required Lenders.


 


“Permitted Protest”
means the right of Parent, Borrower, or any of Borrower’s Subsidiaries to
protest any Lien (other than any Lien that secures the Obligations), taxes
(other than payroll taxes or taxes that are the subject of a United States
federal tax lien), or rental payment, provided that (a) a reserve with
respect to such obligation is established on Parent’s, Borrower’s, or Borrower’s
Subsidiaries’ books and records in such amount as is required under GAAP, (b) any
such protest is instituted promptly and prosecuted diligently by Parent,
Borrower, or Borrower’s Subsidiary, as applicable, in good faith, and (c) Agent
is satisfied that, while any such protest is pending, there will be no
impairment of the enforceability, validity, or priority of any of the Agent’s
Liens.


 


“Permitted Purchase Money
Indebtedness” means (a) Spare Parts Purchase Money Indebtedness, and (b) Purchase
Money Indebtedness.


 


“Permitted Stock Sale”
means the sale by Parent of common Stock so long as (a) no Change of
Control would result therefrom; and (b) the proceeds from such sale
are contributed by Parent to Borrower and used by Borrower to make a
Permitted Loan within 30 days of the date that such proceeds are received by
Parent.


 


“Person” means
natural persons, corporations, limited liability companies, limited
partnerships, general partnerships, limited liability partnerships, joint
ventures, trusts, land trusts, business


 


20





















 


trusts, or other
organizations, irrespective of whether they are legal entities, and governments
and agencies and political subdivisions thereof.


 


“Plan of Reorganization”
means the Third Amended Joint Plan of Reorganization of Joshua Gotbaum, as
Chapter 11 Trustee for Hawaiian Airlines, Inc., The Official Committee of
Unsecured Creditors, HHIC, Inc., Hawaiian Holdings, Inc., and RC
Aviation LLC, dated as of March 11, 2005, as amended.


 


“Post-Closing Matters
Agreement” means a post-closing matters agreement, in form and substance
satisfactory to Required Lenders, executed and delivered by Borrower, each
Guarantor, and Agent.


 


“Projections” means
the forecasted (a) balance sheets, (b) profit and loss statements, (c) cash
flow statements, and (d) Availability forecast of Parent, Borrower, and
Borrower’s Subsidiaries, all prepared on a basis consistent with the historical
financial statements of Parent, Borrower, and Borrower’s Subsidiaries, together
with appropriate supporting details and a statement of underlying assumptions.


 


“Propeller” means “propeller”
as defined in Section 40102 of the Federal Aviation Act.


 


“Pro Rata Share”
means, as of any date of determination:


 


(a)           with respect to a Lender’s obligation to make Advances and
right to receive payments of principal, interest, fees, costs, and expenses
with respect thereto, (i) prior to the Revolver Commitments being
terminated or reduced to zero, the percentage obtained by dividing (y) such
Lender’s Revolver Commitment, by (z) the aggregate Revolver Commitments of all
Lenders, and (ii) from and after the time that the Revolver Commitments
have been terminated or reduced to zero, the percentage obtained by dividing
(y) the aggregate outstanding principal amount of such Lender’s Advances by (z)
the aggregate outstanding principal amount of all Advances,


 


(b)           with respect to a Lender’s obligation to participate in
Letters of Credit, to reimburse the Issuing Lender, and right to receive
payments of fees with respect thereto, (i) prior to the Revolver
Commitments being terminated or reduced to zero, the percentage obtained by
dividing (y) such Lender’s Revolver Commitment, by (z) the aggregate Revolver
Commitments of all Lenders, and (ii) from and after the time that the
Revolver Commitments have been terminated or reduced to zero, the percentage
obtained by dividing (y) the aggregate outstanding principal amount of such
Lender’s Advances by (z) the aggregate outstanding principal amount of all
Advances,


 


(c)           with respect to a Lender’s obligation to make the Term
Loan and right to receive payments of interest, fees, and principal with
respect thereto, (i) prior to the making of the Term Loan, the percentage
obtained by dividing (y) such Lender’s Term Loan Commitment, by (z) the
aggregate amount of all Lenders’ Term Loan Commitments, and (ii) from and
after the making of the Term Loan, the percentage obtained by dividing (y) the
principal amount of such Lender’s portion of the Term Loan by (z) the principal
amount of the Term Loan, and


 


(d)           with respect to all other matters as to a particular
Lender (including the indemnification obligations arising under Section 15.7),
the percentage obtained by dividing (i) such Lender’s Revolver Commitment
plus the outstanding principal amount of such Lender’s portion of the Term
Loan, by (ii) the aggregate amount of Revolver Commitments of all Lenders
plus the outstanding principal amount of the Term Loan; provided, however,
that in the event the Revolver Commitments have been terminated or reduced to
zero, Pro Rata Share under this clause shall be the percentage obtained by
dividing (A) the outstanding principal amount of such Lender’s Advances
plus such Lender’s ratable portion of the Risk Participation Liability with
respect to outstanding Letters of Credit plus the outstanding principal amount
of such Lender’s portion of the Term Loan, by (B) the outstanding
principal amount of all Advances plus the aggregate amount of the Risk
Participation Liability with respect to outstanding Letters of Credit plus the
outstanding principal amount of the Term Loan.


 


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“Protective Advances”
has the meaning specified therefor in Section 2.3(d)(i).


 


 “Purchase Money Indebtedness” means
Indebtedness (other than the Obligations, but including Capitalized Lease
Obligations), incurred at the time of, or within 120 days after, the
acquisition of any fixed assets (other than Spare Parts) for the purpose of
financing all or any part of the acquisition cost thereof.


 


“Qualified Cash”
means, as of any date of determination, the amount of unrestricted cash and
Cash Equivalents of Parent, Borrower, and Borrower’s Subsidiaries that is in
Deposit Accounts or in Securities Accounts, or any combination thereof, and
which such Deposit Account or Securities Account is the subject of a Control
Agreement and is maintained by a branch office of a bank or securities
intermediary located within the United States.


 


“Rating Agencies” has
the meaning specified therefore in Section 2.16.


 


“Real Property” means
any estates or interests in real property now owned or hereafter acquired by
Parent, Borrower, or Borrower’s Subsidiaries and the improvements thereto.


 


“Record” means
information that is inscribed on a tangible medium or which is stored in an
electronic or other medium and is retrievable in perceivable form.


 


“Refinancing Indebtedness”
means refinancings, renewals, or extensions of Indebtedness so long as: (a) such
refinancings, renewals, or extensions do not result in an increase in the
principal amount of the Indebtedness so refinanced, renewed, or extended, (b) such
refinancings, renewals, or extensions are at a market rate of interest with
respect to, the Indebtedness so refinanced, renewed, or extended, (c) such
refinancings, renewals, or extensions do not result in a shortening of the
average weighted maturity of the Indebtedness so refinanced, renewed, or
extended (provided, however, that such refinancing, renewal, or
extension may result in a shortening of the average weighted maturity of the
Indebtedness so refinanced, renewed, or extended so long as the maturity for
all of the principal that is due in respect of such Indebtedness is a date that
is at least 1 year after the Maturity Date) (d) if the Indebtedness that
is refinanced, renewed, or extended was subordinated in right of payment to the
Obligations, then the terms and conditions of the refinancing, renewal, or
extension must include subordination terms and conditions that are at least as
favorable to the Lender Group as those that were applicable to the refinanced, renewed,
or extended Indebtedness, and (e) the Indebtedness that is refinanced,
renewed, or extended is not recourse to any Person that is liable on account of
the Obligations other than those Persons which were obligated with respect to
the Indebtedness that was refinanced, renewed, or extended.


 


“Registered Loan” has
the meaning set forth in Section 13.1(h).


 


“Registered Loan” has
the meaning set forth in Section 2.15.


 


“Registered Note” has
the meaning set forth in Section 2.15.


 


“Registration Rights
Agreement” means that certain Registration Rights Agreement, dated as of
the Closing Date, by and between Parent and RC Aviation LLC.


 


“Related Fund” means
a fund, money market account, investment account or other account managed by
Agent or any Lender or an Affiliate of Agent or any Lender or its investment
manager.


 


“Remedial Action”
means all actions taken to (a) clean up, remove, remediate, contain,
treat, monitor, assess, evaluate, or in any way address Hazardous Materials in
the indoor or outdoor environment, (b) prevent or minimize a release or
threatened release of Hazardous Materials so they do not migrate or endanger or
threaten to endanger public health or welfare or the indoor or outdoor
environment, (c) restore or reclaim


 


22





















 


natural resources or the
environment, (d) perform any pre-remedial studies, investigations, or
post-remedial operation and maintenance activities, or (e) conduct any
other actions with respect to Hazardous Materials authorized by Environmental
Laws.


 


“Replacement Lender”
has the meaning specified therefor in Section 14.2(a).


 


“Report” has the
meaning specified therefor in Section 15.17.


 


“Reportable Event”
shall mean an event described in Section 4043(c) of ERISA with
respect to a Benefit Plan that is subject to Title IV of ERISA, other than
those events as to which the 30-day notice period is waived under subsection .22,
..23, .25, .27 or .28 of the PBGC Regulations under Section 4043.


 


“Required Availability”
means that the sum of (a) Excess Availability, plus (b) Qualified Cash exceeds $50,000,000.


 


“Required Lenders”
means, at any time, Lenders (subject to Section 2.3(c)(iii) whose
aggregate Pro Rata Shares (calculated under clause (d) of the definition
of Pro Rata Shares) equal or exceed 66.7%.


 


“Reserve Percentage”
means, on any day, for any Lender, the maximum percentage prescribed by the
Board of Governors of the Federal Reserve System (or any successor Governmental
Authority) for determining the reserve requirements (including any basic,
supplemental, marginal, or emergency reserves) that are in effect on such date
with respect to eurocurrency funding (currently referred to as “eurocurrency
liabilities”) of that Lender, but so long as such Lender is not required or
directed under applicable regulations to maintain such reserves, the Reserve
Percentage shall be zero.


 


“Revolver Commitment”
means, with respect to each Lender, its Revolver Commitment, and, with respect
to all Lenders, their Revolver Commitments, in each case as such Dollar amounts
are set forth beside such Lender’s name under the applicable heading on Schedule C-1
or in the Assignment and Acceptance pursuant to which such Lender became a
Lender hereunder, as such amounts may be reduced or increased from time to time
pursuant to assignments made in accordance with the provisions of Section 13.1.


 


“Revolver Usage”
means, as of any date of determination, the sum of (a) the amount of
outstanding Advances, plus (b) the
amount of the Letter of Credit Usage.


 


“Risk Participation
Liability” means, as to each Letter of Credit, all reimbursement
obligations of Borrower to the Issuing Lender with respect to an L/C
Undertaking, consisting of (a) the amount available to be drawn or which
may become available to be drawn, (b) all amounts that have been paid by
the Issuing Lender to the Underlying Issuer to the extent not reimbursed by
Borrower, whether by the making of an Advance or otherwise, and (c) all
accrued and unpaid interest, fees, and expenses payable with respect thereto.


 


“Rotables” means
those Spare Parts that, in accordance with the FARs and the original equipment
manufacturer’s recommendations, can be repeatedly and economically restored to
a serviceable condition over a period approximating or exceeding the life of
the flight equipment to which they are related.


 


“Routes” means a
right, license, permit, or other authorization whereby an airline is entitled
or permitted to fly between two points, either within one country or between
two countries.


 


“SEC” means the
United States Securities and Exchange Commission and any successor thereto.


 


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“Second Lien Agent”
means Canyon Capital Advisors LLC, as Agent under the Second Lien Credit
Agreement, together with its successors and assigns in such capacity in
accordance with the terms of the Second Lien Credit Agreement.


 


“Second Lien Cash
Management Agreement” means the Cash Management Agreements.


 


“Second Lien Control
Agreements” means the Control Agreements.


 


“Second Lien Copyright
Security Agreement” means the Copyright Security Agreement as such term is
defined in the Second Lien Security Agreement, as such is amended, modified,
supplemented or restated from time to time in accordance with the terms thereof
and the terms of the Agreement and the Intercreditor Agreement.


 


“Second Lien Credit
Agreement” means that certain Credit Agreement dated as of even date
herewith by and among Parent, Borrower, Second Lien Agent, and the lenders from
time to time party thereto, as such is amended, modified, supplemented or
restated from time to time in accordance with the terms thereof and the terms
of the Agreement and the Intercreditor Agreement.


 


“Second Lien Guaranty”
means the Guaranty as such term is defined in the Second Lien Credit Agreement,
as such is amended, modified, supplemented or restated from time to time in
accordance with the terms thereof and the terms of the Agreement and the
Intercreditor Agreement.


 


“Second Lien Indebtedness”
means the Indebtedness incurred by Borrower under the Second Lien Loan
Documents in an aggregate principal amount not to exceed $30,000,000.


 


“Second Lien Intercompany
Subordination Agreement” means the Intercompany Subordination Agreement as
such term is defined in the Second Lien Credit Agreement, as such is amended,
modified, supplemented or restated from time to time in accordance with the
terms thereof and the terms of the Agreement and the Intercreditor Agreement.


 


“Second Lien Lenders”
mean Lenders as such term is defined in the Second Lien Credit Agreement.


 


“Second Lien Loan
Documents” means the Second Lien Cash Management Agreements, the Second
Lien Control Agreements, the Second Lien Copyright Security Agreement, the
Second Lien Spare Parts Security Agreement, the Second Lien Guaranty, the Second
Lien Intercompany Subordination Agreement, the Second Lien Patent Security
Agreement, the Second Lien Post-Closing Matters Agreement, the Second Lien
Security Agreement, the Second Lien Trademark Security Agreement, and any other
agreement entered into, now or in the future, by Parent, Borrower or any of
Borrower’s Subsidiaries and any Second Lien Lender in connection with the
Second Lien Credit Agreement, as such is amended, modified, supplemented or
restated from time to time in accordance with the terms thereof and the terms
of the Agreement and the Intercreditor Agreement.


 


“Second Lien Patent
Security Agreement” means the Patent Security Agreement as such term is
defined in the Second Lien Security Agreement, as such is amended, modified,
supplemented or restated from time to time in accordance with the terms thereof
and the terms of the Agreement and the Intercreditor Agreement.


 


“Second Lien Post-Closing
Matters Agreement” means the Post-Closing Matters Agreement as such term is
defined in the Second Lien Credit Agreement, as such is amended, modified,
supplemented or restated from time to time in accordance with the terms thereof
and the terms of the Agreement and the Intercreditor Agreement.


 


24





















 


“Second Lien Security
Agreement” means the Security Agreement as such term is defined in the
Second Lien Credit Agreement, as such is amended, modified, supplemented or
restated from time to time in accordance with the terms thereof and the terms
of the Agreement and the Intercreditor Agreement.


 


“Second Lien Term Loan”
means the Term Loan as such term is defined in the Second Lien Credit
Agreement.


 


“Second Lien Trademark
Security Agreement” means the Trademark Security Agreement as such term is
defined in the Second Lien Security Agreement, as such is amended, modified,
supplemented or restated from time to time in accordance with the terms thereof
and the terms of the Agreement and the Intercreditor Agreement.


 


“Securities Account”
means a securities account (as that term is defined in the Code).


 


“Securitization” has the meaning specified therefor in
Section 2.16.


 


“Securitization Liabilities” has the meaning specified
therefore in Section 2.16.


 


“Securitization Parties” has the meaning specified
therefor in Section 2.16.


 


“Security Agreement”
means a security agreement, executed and delivered by Borrower to Agent, in
substantially the same form as Exhibit S-1.


 


“Settlement” has the
meaning specified therefor in Section 2.3(e)(i).


 


“Settlement Date” has
the meaning specified therefor in Section 2.3(e)(i).


 


“Slot” means the right and operational
authority of Borrower to conduct landing or takeoff operation during a specific
hour or other periods at airports granted by the relevant airport authority.


 


“Solvent” means, with
respect to any Person on a particular date, that, at fair valuations, the sum
of such Person’s assets is greater than all of such Person’s debts.


 


“Spare Parts” means
any “appliance” or “spare part” as defined in Section 40102 of the Federal
Aviation Act.


 


“Spare Parts Purchase
Money Indebtedness” means Indebtedness (other than the Obligations),
incurred at the time of, or within 120 days after, the acquisition of any Spare
Parts for the purpose of financing all or any part of the acquisition cost
thereof so long as (a) such Spare Parts are specifically identifiable to
the satisfaction of Agent, (b) Borrower provides Agent with 60 days prior
written notice of the acquisition of such Spare Parts, (c) such Spare
Parts are segregated from all other Spare Parts of Borrower to the satisfaction
of Agent, and (d) such Spare Parts are not designated as Eligible Spare
Parts in any Borrowing Base Certificate.


 


“Spare Parts Tracking
System” means the computerized spare parts inventory control and tracking system
operated by Borrower on the Closing Date as such system may be changed after
the Closing Date in a manner acceptable to Agent.


 


“Stock” means all
shares, options, warrants, interests, participations, or other equivalents
(regardless of how designated) of or in a Person, whether voting or nonvoting,
including common stock, preferred stock, or any other “equity security” (as
such term is defined in Rule 3a11-1 of the General Rules and
Regulations promulgated by the SEC under the Exchange Act).


 


25





















 


“Stock Acquisition”
means the purchase or other acquisition by a Person or its Subsidiaries of all
or substantially all or a portion of the Stock of any other Person.


 


“Subordinated Documents”
means the Subordinated Note Purchase Agreement, the Registration Rights
Agreement, the Subordinated Notes, and any other agreement entered into, now or
in the future, by Parent, Borrower, or any of Borrower’s Subsidiaries in
connection with the Subordinated Note Purchase Agreement.


 


“Subordinated Note
Purchase Agreement” means that certain Note Purchase Agreement, dated as of
the Closing Date, by and between Parent and RC Aviation LLC.


 


“Subordinated Notes”
means those certain unsecured subordinated senior notes in an aggregate
principal amount not to exceed $60,000,000, issued by Parent in favor of RC
Aviation LLC pursuant to the Subordinated Note Purchase Agreement.


 


“Subsidiary” of a
Person means a corporation, partnership, limited liability company, or other
entity in which that Person directly or indirectly owns or controls the shares
of Stock having ordinary voting power to elect a majority of the board of
directors (or appoint other comparable managers) of such corporation,
partnership, limited liability company, or other entity.


 


 “Swing Lender” means WFF or any other
Lender that, at the request of Borrower and with the consent of Agent agrees,
in such Lender’s sole discretion, to become the Swing Lender under Section 2.3(b).


 


“Swing Loan” has the
meaning specified therefor in Section 2.3(b).


 


 “Taxes” has the meaning specified
therefor in Section 15.11.


 


“Term Loan” has the
meaning specified therefor in Section 2.2.


 


“Term Loan Amount”
means $25,000,000.


 


“Term Loan Commitment”
means, with respect to each Lender, its Term Loan Commitment, and, with respect
to all Lenders, their Term Loan Commitments, in each case as such Dollar
amounts are set forth beside such Lender’s name under the applicable heading on
Schedule C-1 or in the Assignment and Acceptance pursuant to which
such Lender became a Lender hereunder, as such amounts may be reduced or
increased from time to time pursuant to assignments made in accordance with the
provisions of Section 13.1.


 


“Total Commitment”
means, with respect to each Lender, its Total Commitment, and, with respect to
all Lenders, their Total Commitments, in each case as such Dollar amounts are
set forth beside such Lender’s name under the applicable heading on Schedule C-1
attached hereto or on the signature page of the Assignment and Acceptance
pursuant to which such Lender became a Lender hereunder, as such amounts may be
reduced or increased from time to time pursuant to assignments made in
accordance with the provisions of Section 13.1.


 


“Total Leverage Ratio”
means, as of any date of measurement, (a)  the sum of the outstanding
principal amount of Advances, plus the aggregate drawn, but
unreimbursed, amount of all outstanding Letters of Credit, plus the
outstanding principal balance of the Term Loan, plus the outstanding
principal balance of the Second Lien Term Loan on such date, divided by (b) EBITDA
of Borrower and its Subsidiaries for the 12 month period most recently ended.


 


“Triggering Event”
has the meaning specified therefor in Section 2.7(b).


 


26





















 


“Underlying Issuer”
means a third Person which is the beneficiary of an L/C Undertaking and which
has issued a letter of credit at the request of the Issuing Lender for the
benefit of Borrower.


 


“Underlying Letter of
Credit” means a letter of credit that has been issued by an Underlying
Issuer.


 


“Unfunded Benefit
Liability” of any Benefit Plan means the amount, if any, by which the value
of the benefit liabilities of the Benefit Plan, determined on a plan
termination basis in accordance with actuarial assumptions at such time
consistent with those prescribed by the PBGC for purposes of Section 4044
of ERISA, exceeds the fair market value of all plan assets allocable to such
liabilities under Title IV of ERISA (excluding any accrued but unpaid contributions).


 


 “United States” means the United States
of America.


 


“Voidable Transfer”
has the meaning specified therefor in Section 16.6.


 


“Warranties” means
the rights of Borrower under any existing or hereinafter acquired warranty or
indemnity, express or implied, regarding title, materials, workmanship, design,
or patent infringement or related matters in respect of the Spare Parts.


 


“Wells Fargo” means
Wells Fargo Bank, National Association, a national banking association.


 


“WFF” means Wells
Fargo Foothill, Inc., a California corporation.


 


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