Exhibit 10.12


 




 





CREDIT AGREEMENT





by and among





HAWAIIAN HOLDINGS, INC.



as Parent and Guarantor



and



HAWAIIAN AIRLINES, INC.



as Borrower,



and



the lenders from time to time party hereto,



and



CANYON CAPITAL ADVISORS, LLC,



as 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

  	
  Term
  Loan

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.2

  	
  Payments

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.3

  	
  Interest Rates and Calculations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.4

  	
  Cash
  Management

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.5

  	
  Crediting Payments

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.6

  	
  Capital Requirements

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  CONDITIONS; TERM OF AGREEMENT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.1

  	
  Conditions Precedent to the Term Loan

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.2

  	
  Term

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.3

  	
  Effect of Termination

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.4

  	
  Early Termination by Borrower

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  REPRESENTATIONS AND WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.1

  	
  No Encumbrances

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.2

  	
  [Intentionally Omitted]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.3

  	
  Spare
  Parts

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.4

  	
  Equipment Other than Spare Parts

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  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

  	
   

  



 


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  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

  	
  Equipment (Other than Spare Parts)/Chief Executive
  Office

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  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

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  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

  	
   

  



 


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  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.

  	
  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

  	
  Agent’s and Lender’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

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  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

  	
   

  



 


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  16.8

  	
  Integration

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  16.9

  	
  Public
  Disclosure

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  16.10

  	
  Effect
  of Termination of Bank Credit Agreement

  	
   

  



 


iv





















 


CREDIT AGREEMENT


 


THIS CREDIT
AGREEMENT (this “Agreement”),
is entered into as of June 2, 2005, by and among HAWAIIAN HOLDINGS, INC., a Delaware
corporation (“Parent”), HAWAIIAN
AIRLINES, INC., a Delaware
corporation (“Borrower”), the lenders from time to time party
hereto (collectively, the “Lenders”) and CANYON
CAPITAL ADVISORS LLC, a Delaware limited liability company, in its
capacity as agent for the Lenders (in such capacity, and together with its
successors and assigns in such capacity, the “Agent”), and.


 


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         Term Loan.


 


(a)           Subject to the terms and
conditions of this Agreement, on the Closing Date the each Lender agrees (severally,
not jointly or jointly and severally) to make a term loan to Borrower in an
amount equal to such Lender’s Pro Rata Share of $25,000,000, which amount shall
include such Lender’s Pro Rata Share of the OID Amount (the “Term Loan”).  The amount of the Term Loan funded by Lender
to Borrower on the Closing Date shall be reduced by the OID Amount.  The Term Loan shall be evidenced by a
promissory Note in the form of Exhibit N-1 (the “Note”), and
the Borrower shall execute and deliver the Note to Agent, for the benefit of
the Lenders.  The Note shall represent
the obligation of Borrower to pay to Agent, for the benefit of the Lenders, the
full principal amount of the Term Loan, together with interest therein as
prescribed in Section 2.3.  Interest
on the Term Loan shall be payable quarterly in arrears, on the last Business
Day of each calendar quarter, commencing on September 30, 2005 at the
applicable interest rate set forth in Section 2.3.


 


(b)           The principal and all
accrued but 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(b).  All principal of, interest on, and other
amounts payable in respect of the Term Loan shall constitute Obligations.


 


2.2         Payments.


 


(a)           Payments by Borrower.  Except as otherwise expressly provided
herein, all payments by Borrower to Agent or any Lender shall be made to the
Agent’s Account or Lender’s Account for such Lender, as the case may be, 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 or any Lender, as the case may be, 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.


 


(b)           Apportionment and Application.


 


(i)            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 shall be apportioned ratably among the Lenders in accordance
with their respective Pro Rata Shares. 
All payments shall be remitted by Borrower to the applicable Lender to
the Lender’s Account for such Lender and all such payments, and all proceeds of
Collateral received by Agent, shall be applied as follows:


 


(A)          first, ratably to pay any 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 (including Term Loan Prepayment Fees, if any) 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 the Term Loan until paid in full,


 


2





















 


(D)          fourth, 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,


 


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


 


(ii)        In each instance, so long as
no Event of Default has occurred and is continuing, Section 2.2(b)(i) shall
not apply to any payment made by Borrower and specified by Borrower to be for
the payment of specific Obligations then due and payable (or prepayable) under
any provision of this Agreement.


 


(iii)       For purposes of Section 2.2(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.


 


(iv)       In the event of a direct
conflict between the priority provisions of this Section 2.2 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 2.2 shall control and govern.


 


(c)           Mandatory Prepayments.


 


(i)            From and after the date on
which the Discharge of First Lien Obligation occurs, 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 plus any Term Loan Prepayment Fee 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 and each Lender 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 security interest (subject only to the
security interest under the Bank Credit Documents), 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 each Lender and applied


 


3





















 


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)        From and after the date on
which Discharge of First Lien Obligations occurs, 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 and any applicable Term Loan Prepayment Fee in an amount equal
to 100% of such Extraordinary Receipts, net of any fees, commissions, and expenses
incurred (including taxes paid, payable, or estimated to be payable) in
collecting or receiving such Extraordinary Receipts.


 


(iii)       Notwithstanding Section 2.2(d)(i) below,
so long as no Default or Event of Default (under, and as each such term is
defined in, the Bank Credit Agreement) has occurred and is continuing or would
result therefrom, if at any time prior to December 31, 2005, Parent
consummates a market rate debt financing constituting Permitted Parent
Indebtedness, which debt, by its terms, is convertible or exchangeable by the
investor therein into Stock of Parent (“Convertible Indebtedness”),
Borrower shall (i) if the Net Cash Proceeds of such Indebtedness are less
than or equal to $60,000,000, use such Net Cash Proceeds to permanently prepay
the Subordinated Notes and (ii) if the Net Cash Proceeds are greater than
$60,000,000, use such excess Net Cash Proceeds to permanently prepay the Term Loan
at a prepayment price equal to (i) the then outstanding principal balance
of the Term Loan so prepaid plus (ii) 2.5% of such outstanding
principal balance of the Term Loan.  The
Lenders shall have the right to purchase an aggregate principal amount of such
Convertible Indebtedness of up to $25,000,000 in the aggregate, which purchase
shall be on the same terms and conditions as such Convertible Indebtedness is
offered to the other investors therein. 
In the event Parent proposes consummating such a Convertible
Indebtedness transaction, Parent shall give written notice (each a “Prepayment
Notice”)  to each Lender not fewer
than 15 Business Days prior to the date on which Parent anticipates closing
such transaction, which notice shall (A) specify the proposed closing date
and (B) describe the pertinent business terms of such Convertible
Indebtedness transaction, including aggregate principal amount, conversion or
exchange rate, interest rate and term. Any Lender electing to participate in
the Convertible Indebtedness shall do so by returning the Prepayment Notice to
Parent not fewer than 10 days prior to the proposed closing date set forth in
the Prepayment Notice.


 


(d)           Optional Prepayments.


 


(i)            Borrower has the option, at
any time, upon not less than 10 days prior written notice to each Lender, to
prepay all or any portion of the Term Loan at a prepayment price equal to (i) the
aggregate principal amount so prepaid plus (ii) the then applicable
Term Loan Prepayment Fee.  Any principal
amount of the Term Loan that is repaid or prepaid pursuant to the provisions of
this Agreement may not be reborrowed.


 


(ii)           Any notice of prepayment
delivered by Borrower under this Section 2.2(d) shall be
irrevocable on delivery thereof.


 


(e)           Application
of Payments.  Each such prepayment of the
Term Loan shall be applied as set forth in Section 2.2(b)(i).


 


2.3         Interest Rates and
Calculations.


 


(a)           Interest
Rate.  Except as provided in clause
(b) below, all Obligations shall bear interest at a per annum rate equal
to ten percent (10%).


 


4





















 


(b)           Default
Rate.  Upon the occurrence and
during the continuation of an Event of Default (and at the election of the
Required Lenders), all Obligations of Borrower shall bear interest at a per annum
rate equal to two (2) percentage points above the per annum rate otherwise
applicable hereunder.


 


(c)           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.


 


(d)           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 Lender, 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.


 


2.4         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 2.4(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)           On or prior to
the date hereof, each Cash Management Bank shall establish and maintain Cash
Management Agreements with Bank Credit 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 the Bank Credit 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 the Bank Credit Agent (each,
a “Trigger Notice”), the Cash Management Bank will forward, by daily
sweep, all amounts in the applicable Cash Management Account to the Deposit
Account identified in the Cash Management Agreement as the Bank Credit Agent’s
Deposit Account.  Agent and Lenders agree
that until the date on which the Discharge of First Lien Obligations occurs, a Trigger
Notice shall be delivered to any Cash Management Bank only in accordance with Section 2.7
of the Bank Credit Agreement.


 


5





















 


(c)           Not later than
the date on which the Discharge of First Lien Obligations occurs, each Cash
Management Bank shall establish and maintain Cash Management Agreements with
Agent, Parent, Borrower, and Borrower’s Subsidiaries.  Further, each such Cash Management Agreement
shall provide, among other things, that (i) the Cash Management Bank will
comply with any instructions originated by the 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 a Trigger Notice from
Agent, the Cash Management Bank will forward, by daily sweep, all amounts in
the applicable Cash Management Account to the Deposit Account identified in the
Cash Management Agreement as the Agent’s Deposit Account. Agent  and Lenders agree that from and after the
Discharge of First Lien Obligations, a Trigger Notice shall be delivered to any
Cash Management Bank only upon the occurrence of one of the following events
(each, a “Triggering Event”):  (A) an
Event of Default has occurred and is continuing, or (B) Agent reasonably
believes based upon information available to it that an Event of Default has
occurred and is continuing, or (C) Agent reasonably believes based upon
information available to it that the cash management system described in this Section 2.4
has been compromised.  Once a Triggering
Event has occurred, Agent shall be free to exercise its right to issue such
Trigger Notice and the subsequent elimination, cure, or waiver of such
Triggering Event shall not eliminate the effectiveness of such Trigger Notice.


 


(d)           Schedule 2.4(d) 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 Bank Credit Agent, 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.


 


(e)           So long as no
Event of Default has occurred and is continuing, Borrower may amend Schedule 2.4(a) or
Schedule 2.4(d) 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.


 


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


 


2.5         Crediting Payments.  The receipt of any payment
item by Agent or any Lender 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 Lender’s Account for such Lender, as the case
may be, 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


 


6





















 


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 or such Lender only if it is received
into Agent’s Account or the Lender’s Account for such Lender, as the case may
be, on a Business Day on or before 11:00 a.m. (California time).  If any payment item is received into Agent’s
Account or the Lender’s Account for such Lender, as the case may be, 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 or such Lender, as the case
may be, as of the opening of business on the immediately following Business Day


 


2.6         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
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 2.6 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.


 


3.             CONDITIONS; TERM OF AGREEMENT.


 


3.1         Conditions Precedent to the Term Loan.  The obligation of each
Lender to make the Term Loan, 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 the Term Loan being
conclusively deemed to be its satisfaction or waiver of the conditions
precedent ).


 


3.2         Term. 
This Agreement shall continue in full force and effect for a term
ending on June 2, 2008 (the “Maturity Date”), unless earlier
terminated in accordance with Section 8.


 


3.3         Effect of Termination.  On the date of termination
of this Agreement, all Obligations immediately shall become due and payable
without notice or demand.  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.  When this Agreement has been terminated and
all of the Obligations have been paid in full, 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.


 


7





















 


3.4         Early Termination by Borrower.  Borrower has the option, at
any time upon 45 days prior written notice to Agent and each Lender, to
terminate this Agreement by paying to Lenders, in cash, the Obligations in full,
together with any Term Loan Prepayment Fee. 
If Borrower has sent a notice of termination pursuant to the provisions
of this Section, Borrower shall be obligated to repay the Obligations in full,
on the date set forth as the date of termination of this Agreement set forth in
such notice.


 


4.             REPRESENTATIONS AND WARRANTIES.


 


In order to induce Lenders
to enter into this Agreement, each of Borrower and each Guarantor makes the
following representations and warranties to Lenders 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 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         [Intentionally Omitted].


 


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 in the most recent Bank
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 Bank Borrowing Base Certificate submitted to Agent is, as of
the date of such Bank 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 the most recent Bank 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(c) (as
such Schedule may be updated pursuant to Section 5.17(b)).


 


(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)


 


8





















 


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 Lender 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 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).


 


9





















 


(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.


 


10





















 


(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 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 and perfected Liens, second in priority only to the liens under
the Bank Credit Documents and 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.


 


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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 Agent and Lenders 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 and Lenders 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 Agent’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.


 


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


 


12





















 


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.


 


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 and Lenders 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.


 


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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,
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, is 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 and each Lender, 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.


 


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


 


14





















 


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 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 and each
Lender 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 and 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 and each Lender, but only to the extent
such Guarantor’s financial statements are not consolidated with Parent’s
financial statements.


 


5.5         Inspection.  Permit Agent, each Lender and each of their duly
authorized representatives or agents to visit any of Borrower’s 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 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


 


15





















 


Agent and each Lender 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 Agent (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 an additional
insured.  Following the Discharge of
First Lien Obligations, as soon as practicable after receipt thereof, Borrower
shall deliver copies of all such policies naming Agent as 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 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,


 


16





















 


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
any Bank Borrowing Base Certificate, 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 Borrower shall not
be required to obtain such Collateral Access Agreement to the extent Borrower
would not be required to do so under the Bank Credit Agreement);


 


(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 no Event of Default has occurred and is continuing 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.


 


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.


 


17





















 


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 and each
Lender documentation of such compliance which Agent reasonably requests, (c) promptly
notify Agent and each Lender 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 and each Lender 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 and
each Lender if any written information, exhibit, or report furnished to Agent
or any Lender 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 (or, for so long as
the “Obligations” under and as defined in the Bank Credit Agreement remain
outstanding, control which will spring into effect upon payment and
satisfaction in full of such “Obligations”) 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 subject to a
mortgage, fixture filings), all in form and substance


 


18





















 


satisfactory to the Required
Lenders (including being sufficient to grant Agent a Lien (subject only to
Permitted Liens and subject in priority only to the Bank Credit Agent’s Liens
under the Bank Credit Agreement) 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.


 


19





















 


(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) Borrower may sell Spare Parts to other airlines in
the ordinary course of Borrower’s business, (ii) 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 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 Lender 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 and each Lender 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
and each Lender 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 and each Lender (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


 


20





















 


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 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 and each
Lender 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 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,


 


(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,


 


21





















 


(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)           obligations owing to Banks
and Bank Agents under the Bank Credit Agreement or any of the other Bank Credit
Documents and subject to the execution and delivery of an acknowledgement to
the terms of the Intercreditor Agreement as required by Section 7.a. of the
Intercreditor Agreement, any Indebtedness used to refinance such Indebtedness;


 


(h)           unsecured Indebtedness of
Parent evidenced by the Subordinated Notes;


 


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


 


(j)            other unsecured Indebtedness
of Borrower and Borrower’s Subsidiaries so long as such Indebtedness (i) is
permitted by the Bank Credit Documents, (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.


 


Notwithstanding the
foregoing, in no event shall the Senior Indebtedness permitted under this Section 6.1
(exclusive of Indebtedness incurred under subsections (c) and (h)) exceed
the Maximum Senior 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.


 


22





















 


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, Parent may prepay the
Indebtedness described in Section 6.1(h) with the Net Cash Proceeds
of the Permitted Parent Indebtedness that is incurred on or before December 31,
2005, or a Parent Rights Offering,


 


(b)           make any mandatory payment (if
any) on account of (i) the First Lien Obligations 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
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 of any
agreement, instrument, document, indenture, or other writing evidencing or
concerning Indebtedness permitted under Sections 6.1(b), (c), (g),
or (h); provided, however, that (i) nothing in this Section 6.7(c) shall
prohibit the amendment or modification of any of the Bank Credit Documents (to
the extent such amendment, modification, alteration, increase or change is not
prohibited under the Intercreditor Agreement), and (ii) 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 Lenders 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,


 


23





















 


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 and each Lender 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 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
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 each Lender, 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,


 


24





















 


(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 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:


 


	
  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

  	
   

  



 


25





















 


provided, however, that (A) if Bank Excess
Availability plus Bank 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 Bank Excess Availability plus Bank 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 Bank Excess Availability plus Bank 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 Bank Excess Availability plus Bank 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 Bank Excess Availability plus Bank 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 Bank
Excess Availability plus Bank 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 Bank Excess
Availability plus Bank Qualified Cash exceeds $70,000,000 at any time after the
EBITDA Event.


 


(ii)           Bank Excess Availability plus Bank
Qualified Cash.  Solely with
respect to Borrower and its Subsidiaries, Bank Excess Availability plus Bank 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 under the Bank Credit
Documents that have been made since the Closing Date.


 


(b)           Leverage Ratio.  Solely with respect to Borrower and its
Subsidiaries, maintain a Leverage Ratio, measured on a quarter-end basis, of (i) 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) more than 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) 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
Agent or any Lender, reimbursement of 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;


 


26





















 


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 2.4, 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 any Lender; 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 or any Lender;


 


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;


 


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 Subordinated Documents, (b) any of the Bank Credit 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,


 


27





















 


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, a Lien on or security interest
in the Collateral second only to the Lien under the Bank Credit Documents 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 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


 


28





















 


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.             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 Lenders (and Agent, acting upon the instructions of
the Required Lenders, shall do the same on behalf of the Lenders), 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
Agent or any Lender;


 


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


 


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


 


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


 


29





















 


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) 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 Expenses and any such payments shall not constitute an agreement by the
Agent or any Lender to make similar payments in the future or a waiver by Agent
or such Lender 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 Agent or any Lender 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       Agent’s and Lender’s Liability for Collateral.  Borrower hereby agrees
that:  (a) so long as Agent complies
with its obligations, if any, under the Code, neither Agent nor any Lender
shall 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 INDEMNITY SHALL APPLY TO EACH
INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN
PART ARE


 


30





















 


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, Agent or any Lender
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, Agent or any Lender, as applicable, may designate to each other in
accordance herewith), or telefacsimile to Borrower, Agent or such Lender, 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:

  	
   

  	
  CANYON CAPITAL ADVISORS LLC

  
	
   

  	
   

  	
  9665
  Wilshire Boulevard, Suite 200

  
	
   

  	
   

  	
  Beverly
  Hills, CA 90212

  
	
   

  	
   

  	
  Attn:
  Jack Hersch

  
	
   

  	
   

  	
  Fax
  No. 310-247-2701

  
	
   

  	
   

  	
   

  
	
  with
  copies to:

  	
   

  	
  SIDLEY AUSTIN BROWN & WOOD LLP

  
	
   

  	
   

  	
  555
  West Fifth Street, 40th Floor

  
	
   

  	
   

  	
  Los
  Angeles, CA 90013

  
	
   

  	
   

  	
  Attn:   Catherine E.
  Albright, Esq. and

  Gary J. Cohen, Esq.

  
	
   

  	
   

  	
  Fax
  No. 213-896-6600

  
	
   

  	
   

  	
   

  
	
  If
  to Lender:

  	
   

  	
  The
  address set forth for such Lender on

  
	
   

  	
   

  	
  Schedule C-1.

  



 


31





















 


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 accordance
with this Section 11, other than notices by Agent or any Lender 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 Agent or any Lender 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, AGENT AND EACH LENDER 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, AGENT AND EACH LENDER
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, AGENT AND EACH LENDER 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.


 


32





















 


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 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 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


 


33





















 


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.


 


(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 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 Agreement and the other
Loan Documents and the Participant receiving the participating interest in the
Obligations 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


 


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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)           The Borrower hereby
acknowledges and makes the Term Loan a registered obligation for United States
withholding tax purposes.  The Borrower
shall be the registrar for the Term Loan (the “Registrar”) with full
power of substitution, and hereby appoints the Agent to act as the initial
Registrar.  In the event the Agent
becomes unable or unwilling to act as registrar under this Agreement, the
Borrower shall reasonably designate a successor Registrar.  Notwithstanding any contrary provision
contained in this Agreement or any of the other Loan Documents, neither the
Term Loan nor any interests therein may be sold, transferred, hypothecated,
participated or assigned to any Person except upon satisfaction of the
conditions specified in this Section 13.  Each Lender, by its acceptance of its
interest in the Term Loan, agrees to be bound by the provisions of this Section 13.


 


(i)            The Registrar shall keep at
its principal executive office (or an office or agency designated by it by
notice to the last Registrar) a ledger, in which, subject to such reasonable
regulations as it may prescribe, but at its expense (except as specified
below), it shall provide for the registration and transfer of the Term Loan or
interests therein (the “Register”). 
No sale, transfer, hypothecation, participation or assignment of any
interest in the Term Loan shall be effective for any purpose until it shall be
entered on the Register.  Prior to the
registration of assignment or sale of any interest in the Term Loan, the
Registrar shall treat the Person in whose name such Term Loan is 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 event of a sale, transfer,
hypothecation, participation or assignment of the Term Loan or any interest
therein, the Lender prior to such sale, transfer, hypothecation, participation
or assignment of such interest therein shall provide the Registrar with notice
of such transaction at the time of such transaction.  The Registrar shall record the transfer of
the Term Loan on the Register maintained for this purpose upon receipt by the
Registrar at the office or agency designated by the Registrar of (i) a
written assignment of the Term Loan being assigned (or the applicable interest
therein), (ii) funds sufficient to pay any transfer taxes payable upon the
making of such transfer as well as the cost of reviewing the documents
presented to the Registrar, and (iii) such evidence of due execution as
the Registrar shall reasonably require. 
The Registrar shall record the transfer of the Term Loan on the books
maintained for such purpose at the cost and expense of the assignee.


 


(j)            In the event that any Lender
sells participations in the Term Loan, such Lender shall maintain a register on
which it enters the names of all participants in the Term Loan held by it (the “Participant
Register”).  A Term Loan may be
participated in whole or in part only by registration of such participation on
the Participant Register, and any participation of such Term Loan or transfer
of such participation 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 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


 


35





















 


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)           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,


 


(b)           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,


 


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


 


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


 


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


 


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


 


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


 


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


 


(i)            change the definitions of
Eligible Spare Parts, Term Loan, or change Section 2.1(b), or


 


(j)            amend any of the provisions
of Section 15.1.


 


and, provided further,
however, that no amendment, waiver or consent shall, unless in writing
and signed by Agent affect the rights or duties of Agent 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 Agent and
Lenders 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 Lenders 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.


 


36





















 


(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
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 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 the obligations
hereunder and under the other Loan Documents.


 


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 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 Canyon Capital Advisors LLC 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 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 Canyon Capital Advisors LLC 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) exclusively receive, apply,


 


37





















 


and distribute the
Collections of Parent, Borrower, and Borrower’s Subsidiaries as provided in the
Loan Documents, (d) 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, (e) perform, exercise, and enforce any and all other rights
and remedies of the Agent and Lenders 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 (f) incur and pay such 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
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


 


38





















 


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 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.  Without limitation of the
foregoing, each


 


39





















 


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. 
Canyon Capital Advisors, LLC 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 Canyon Capital Advisors, LLC were not Agent hereunder, and, in each
case, without notice to or consent of the Lenders.  Lenders acknowledge that, pursuant to such
activities, Canyon Capital Advisors, LLC 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 Canyon Capital Advisors, LLC 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.


 


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 Lenders.  The
other Lenders 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


 


40





















 


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.


 


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 (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 (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 (b). 
Borrower will furnish to Agent and each Lender 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 and Borrower:


 


(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;


 


(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;


 


41





















 


(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 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 and
Borrower 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 and 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 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, 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 Sections15.11 (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 and borrower, 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 or Borrower 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) 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 disposition is permitted under Section 6.4
of this Agreement or the other Loan Documents (and Agent may rely conclusively
on any


 


42





















 


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


 


43





















 


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 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 Lender authorizes and directs Agent to
enter into this Agreement and the other Loan Documents.  Each Lender 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


 


44





















 


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, and (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 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.


 


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 Pro Rata Shares, to make an amount not to
exceed their respective Pro Rata Shares of the Term Loan.  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,
neither Agent nor any Lender shall have any liability for the acts of Agent or
any Lender other than themselves any other Lender.  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 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 the Agent and the Lenders, on the other hand,
the obligation of the Borrower and each Guarantor, which is absolute and
unconditional, to pay to the Agent and Lenders 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 Bank Credit Agent and the Bank Credit 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 and Lender.


 


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.


 


45





















 


16.3       Interpretation.  Neither this Agreement nor any
uncertainty or ambiguity herein shall be construed against the Agent, Lenders
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.


 


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 Agent or any Lender 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 Agent or Such Lender 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 Agent or Such Lender is required or elects to repay or
restore, and as to all reasonable costs, expenses, and attorneys fees of Agent
and Such Lender 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
Agent or any member of the Lender Group who need such information in connection
with their work, (b) to Subsidiaries and Affiliates of any Agent or 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 any pledge or prospective pledge of any Lender’s interest
under this Agreement, provided that any such assignee, prospective assignee,
purchaser, prospective purchaser, participant or 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


 


46





















 


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 Affiliate is required to do
so under applicable law (in which event, Parent, Borrower or such Affiliate
will consult with 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.


 


16.10     Effect of Termination of
Bank Credit Agreement.  Borrower and Guarantors agree that, in the
event that the “Obligations” under and as defined in the Bank Credit Agreement
are paid and satisfied in full, in connection therewith, Borrower and
Guarantors will negotiate in good faith with Agent and Lenders  toward a mutually agreed upon amendment to
this Agreement, which amendment amends Sections 5.9 and 6.16, the
definitions of “Bank Borrowing Base Certificate,” “Bank Excess Availability,” “Eligible
Ground Equipment,” “Eligible Spare Parts,” and “Leverage Ratio,” and any other
applicable provision of this Agreement or the other Loan Documents to reflect
such payment and satisfaction of such “Obligations,” it being understood and
agreed that an amendment reflecting terms substantially similar to those
contained in the corresponding provisions of the Bank Credit Agreement will be
mutually agreeable.


 


[Signature
pages to follow.]


 


47





















 


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 & Secretary

  
	
   

  	
   

  
	
   

  	
  HAWAIIAN
  AIRLINES, INC., a Delaware
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Stephen Jackson

  	
   

  
	
   

  	
  Title:

  	
  Senior
  Vice President, Chief Financial Officer &

  Treasurer

  
						



 


 


[additional
signatures appear on the following page]


 


[Signature Page to Credit Agreement - Term B]


 





















 


	
   

  	
  CANYON CAPITAL ADVISORS LLC, as Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Josh Friedman

  	
   

  
	
   

  	
  Title:

  	
  Managing
  Partner

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CANPARTNERS
  INVESTMENTS IV, LLC, as Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Josh Friedman

  	
   

  
	
   

  	
  Title:

  	
  Managing
  Partner

  	
   

  
						



 





















 


TABLE OF CONTENTS


 


EXHIBITS
AND SCHEDULES


 


	
  Exhibit A-1

  	
   

  	
  Form of
  Assignment and Acceptance

  
	
  Exhibit B-1

  	
   

  	
  Form of Bank
  Borrowing Base 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 N-1

  	
   

  	
  Form of
  Note

  
	
  Exhibit S-1

  	
   

  	
  Form of
  Security Agreement

  
	
  Schedule A-2

  	
   

  	
  Authorized
  Persons

  
	
  Schedule E-1

  	
   

  	
  Eligible
  Spare Parts Located at LAX

  
	
  Schedule P-1

  	
   

  	
  Permitted
  Liens

  
	
  Schedule 1.1

  	
   

  	
  Definitions

  
	
  Schedule 2.4(a)

  	
   

  	
  Cash
  Management Banks

  
	
  Schedule 2.4(d)

  	
   

  	
  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.


 


“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 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





















 


“Bank Availability”
means, as of any date of determination, the “Availability” as defined in, and
determined from time to time in accordance with, the Bank Credit Agreement.


 


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


 


“Bank Copyright Security
Agreement” means the Copyright Security Agreement as such term is defined
in the Bank 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.


 


“Bank Credit Agent”
means Wells Fargo Foothill, Inc. in its capacity as Administrative Agent
under the Bank Credit Documents and any successor in that capacity in
accordance with the terms of the Bank Credit Agreement.


 


“Bank Credit Agreement”
means the Credit Agreement by and among the Borrower, Guarantor, the Bank
Credit Agent and the lenders party thereto from time to time (collectively, the
“Bank Credit Lenders”), as the same may be amended, restated,
supplemented, extended, renewed, restructured, replaced, refinanced or
otherwise modified from time to time as permitted herein and in the
Intercreditor Agreement.


 


“Bank Credit Documents”
means the Bank Credit Agreement and the Cash Management Agreements, the Control
Agreements, the Bank Engine and Spare Parts Security Agreement, the Bank
Guaranty, the Bank Intercompany Subordination Agreement, the Intercreditor
Agreement, the Bank Post-Closing Matters Agreement, the Bank Security Agreement,
any note or notes executed by Borrower in connection with the Bank Credit
Agreement and payable to the lenders party thereto, and any other agreement
entered into, now or in the future, by Parent, Borrower, or any of Borrower’s
Subsidiaries and the Bank Credit Agent in connection with the Bank Credit
Agreement.


 


“Bank Credit Lenders”
has the meaning specified therefor in the definition of Bank Credit Agreement.


 


 “Bank Excess Availability” means, as of
any date of determination, the “Excess Availability” as defined in, and
determined from time to time in accordance with, the Bank Credit Agreement.


 


“Bank Guaranty” means
the Guaranty as such term is defined in the Bank 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.


 


“Bank Intercompany
Subordination Agreement” means the Intercompany Subordination Agreement as
such term is defined in the Bank 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.


 


“Bank Patent Security
Agreement” means the Patent Security Agreement as such term is defined in
the Bank 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.


 


“Bank Post-Closing
Matters Agreement” means the Post-Closing Matters Agreement as such term is
defined in the Bank Credit Agreement, as such is amended, modified,
supplemented or


 


3





















 


restated from time to time
in accordance with the terms thereof and the terms of the Agreement and the
Intercreditor Agreement.


 


“Bank 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.


 


“Bank Security Agreement”
means the Security Agreement as such term is defined in the Bank 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.


 


“Bank Spare Parts
Agreement” means the Engine and Spare Parts Security Agreement as such term
is defined in the Bank 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.


 


“Bank 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.


 


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


 


“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.


 


“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.


 


“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


 


4





















 


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 2.4.


 


“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, Bank Credit Agent, Agent, and one
of the Cash Management Banks.


 


“Cash Management Bank”
has the meaning specified therefor in Section 2.4.


 


 “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 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 Term Loan 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.


 


5





















 


“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 Commitment, and, with respect to all Lenders,
their 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.


 


“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 Bank Credit Agent, executed and delivered by Parent, Borrower, or
one of Borrower’s Subsidiaries, Bank Credit Agent, Agent, and the applicable
securities intermediary (with respect to a Securities Account) or bank (with
respect to a Deposit Account).


 


“Controlling Secured Party” has the meaning
specified therefor in Section 2.4.


 


“Convertible Debt”
has the meaning specified therefor in Section 2.2(d).


 


“Convertible Proceeds”
has the meaning specified therefor in Section 2.2(d).


 


“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, Bank Credit
Agent and 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.


 


“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.


 


“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.


 


“Discharge of First Lien
Obligations” has the meaning specified therefor in the Intercreditor
Agreement.


 


6





















 


“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.


 


“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.


 


“Eligible Ground
Equipment” means Ground Equipment that is not excluded as ineligible by
virtue of one or more of the excluding criteria set forth below; provided,
however, that, until such time as the “Obligations” under and as defined
in the Bank Credit Agreement have been paid in full, such criteria may be
revised from time to time by Bank Credit Agent in Bank Credit Agent’s Permitted
Discretion to address the results of any audit or appraisal performed by Bank
Credit Agent from time to time after the Closing Date; provided  further
that, from and after such time as the “Obligations” under and as defined in the
Bank Credit Agreement have been paid in full, 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)           (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 an appraisal on such Rotables or
Expendables has been performed, the results of which are satisfactory to Agent,
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 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 (unless otherwise permitted under the Bank Credit Agreement));
or


 


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


 


“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, until such
time as the “Obligations” under and as defined in the Bank Credit Agreement
have been paid in full, such criteria may be revised from time to time by Bank
Credit Agent in Bank Credit Agent’s Permitted Discretion to address the results
of any audit or appraisal performed by Bank Credit Agent from time to time
after the Closing Date; provided  further that, from and after
such time as the “Obligations” under and as defined in


 


7





















 


the Bank Credit Agreement have been paid in full, 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 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)           it is 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 (unless otherwise permitted under the Bank Credit
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
Bank Credit Agent’s Lien or is not free and clear of all Liens (other than a
valid and perfected first priority Bank Credit Agent’s Lien and 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 Bank Credit 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 Development or a political
subdivision of any such country and which has total assets in


 


8





















 


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 Agent or any 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.


 


9





















 


“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 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.


 


“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.


 


“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 Agent or any Lender, (b) out of
pocket fees or charges paid or incurred by Agent or any Lender in connection
with the 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 to any of the Lenders, (d) charges paid or
incurred by Agent or any Lender 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 the Agreement, (g) Agent’s
and Lenders’ reasonable costs and expenses (including attorneys fees) incurred
in advising, structuring, drafting, reviewing, and negotiating the convertible
notes transaction contemplated by Agent, Lenders, Parent and Borrower as a
portion of Borrower’s exit financing prior to the Term Loan, (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


 


10





















 


(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
attorney’s, 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.


 


 “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 2.2(b)(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.


 


“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.


 


“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).


 


11





















 


“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, 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).


 


“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.


 


12





















 


“Intercompany
Subordination Agreement” means a subordination agreement executed and
delivered by Parent, Borrower, and 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 Bank Credit Agent, and acknowledged and consented to by
Borrower and each Guarantor, as amended, modified, supplemented or restated
from time to time.


 


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


 


“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
Trademark Security Agreement (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.


 


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


 


“Lender’s Account”
means, with respect to each Lender, the Deposit Account for such Lender 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.


 


“Leverage Ratio”
means, as of any date of measurement, the “Leverage Ratio” as defined in, and determined
from time to time in accordance with, the Bank Credit Agreement.


 


“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,


 


13





















 


exceptions, encroachments,
easements, rights-of-way, covenants, conditions, restrictions, leases, and
other title exceptions and encumbrances affecting Real Property.


 


“Loan Documents”
means the Agreement, the Note, the Control Agreements, the Cash Management
Agreements, the Engine and Spare Parts Security Agreement, the Guaranty, the
Intercompany Subordination Agreement, the Intercreditor Agreement, the
Post-Closing Matters Agreement, the Security Agreement, any note or notes
executed by Borrower in connection with the Agreement and payable to any
Lender, and any other agreement entered into, now or in the future, by Parent,
Borrower, or any of Borrower’s Subsidiaries, Agent or any Lender in connection
with the Agreement.


 


“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 Agent’s or
Lenders’ ability to enforce the Obligations or realize upon the Collateral, or (c) a
material impairment of the enforceability or priority of 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 3.2.


 


“Maximum Senior
Indebtedness” means $75,000,000.


 


“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


 


14





















 


(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 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.


 


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


 


“Obligations” means
all loans, 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), premiums, liabilities obligations (including indemnification
obligations), fees, charges, costs, 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 Agent or any Lender 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.


 


“OID Amount” means
Two Hundred Fifty Thousand Dollars ($250,000), which shall be fully earned as
of the Closing Date and shall constitute a portion of the Term Loan.


 


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


 


“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


 


15





















 


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.


 


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


 


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


 


“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:


 


(a)           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,


 


(b)           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


 


(c)           Parent has
provided Agent and each Lender 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


 


16





















 


$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 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 Bank Excess Availability plus Bank 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 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


 


17





















 


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, 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
Bank 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 Bank Credit Agent in connection
with the Bank Credit Documents and permitted pursuant to the terms of 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 Bank 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 Bank
Excess Availability plus Bank 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


 


18





















 


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 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 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,
and (c) cash flow statements, in each case, 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, with respect to each Lender’s obligation to make the Term Loan and right
to receive payments of interest, fees, and principal with respect there to, (i) prior
to making the Term Loan, the percentage obtained by dividing (x) such Lender’s
Commitment, by (y) the aggregate amount of all Lenders’ Commitments and (ii) from
and after the making of the Term Loan, the percentage obtained by dividing (x)
the principal amount of such Lender’s portion of the Term Loan by (y) the
principal amount of the Term Loan.


 


“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.


 


“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.


 


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“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 Lenders 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.


 


“Register” has the
meaning specified therefor in Section 13.1(i).


 


“Registrar” has the
meaning specified therefor in Section 13.1(h).


 


“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 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 Lenders”
means, at any time, the Lenders whose aggregate Pro Rata Shares equal or exceed
66 2/3%.


 


“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


 


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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.


 


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


 


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


 


“Senior Indebtedness” means Indebtedness that
by its terms ranks senior contractually, structurally or by operation of law in
priority of Lien or right of payment to the Indebtedness evidenced by this
Agreement and/or the other Loan Documents.


 


“Shifting Control Notice” has the meaning
specified therefor in Section 2.4.


 


“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 Bank 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).


 


“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.


 


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“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.


 


“Taxes” has the
meaning specified therefor in Section 15.1.


 


“Term Loan” has the
meaning specified therefor in Section 2.1.


 


“Term Loan Prepayment Fee”
means until and including the first anniversary of the Closing Date an amount
equal to 5% of the amount being prepaid; after the first anniversary of the
Closing Date and until and including the second anniversary of the Closing
Date, an amount equal to 2.5% of the amount being prepaid and after the second
anniversary of the Closing Date but prior to and excluding the Maturity Date an
amount equal to 1% of the amount being prepaid.


 


“Triggering Event” has the meaning specified
therefor in Section 2.4.


 


 “Trigger Notice” has the meaning specified therefor in Section 2.4.


 


 “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.


 


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