Document:

ex10_4.htm

Exhibit 10.4

 

EXECUTION VERSION

TRUSTEE DESIGNATION AGREEMENT

This Trustee Designation Agreement (this “Agreement”), dated as of August 4, 2009, by and among  Real Estate Investment Group L.P. (the “Investor”), a Bermuda limited partnership,
whose general partner and majority limited partner is Tyrus S.A., a Uruguayan sociedad anónima wholly-owned by IRSA Inversiones y Representaciones Sociedad Anónima, an Argentine sociedad anónima (“IRSA”), IRSA and Hersha Hospitality Trust, a Maryland real estate investment trust (the “Company”).

W I T N E S S E T H:

WHEREAS, on or about the date hereof, the Investor is purchasing from the Company 5,700,000 shares (the “Primary Shares”) of the Company’s Priority Class A common shares of beneficial interest, par value $0.01 per share (“Common
Shares”) pursuant that certain Purchase Agreement (the “Purchase Agreement”), dated as of August 4, 2009, by and among the Investor, IRSA, the Company and Hersha Hospitality Limited Partnership, L.P., a Virginia limited partnership (the “Operating Partnership”);

WHEREAS, in connection with the sale and purchase of the Primary Shares, the Company and the Investor intend to enter into that certain Investor Rights  and Option Agreement, of even date herewith, by and among the Investor and the Company (the “Investor Rights and
Option Agreement”), pursuant to which the Company shall grant the Investor the option (the “Option”) to purchase 5,700,000 additional Common Shares (the “Option Shares”) on the terms contained therein;

WHEREAS, in connection with the transactions contemplated by the Purchase Agreement and the Investor Rights and Option Agreement, the Company has agreed to designate a representative designated by Investor as a trustee of the Company, upon the terms and subject to the conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the promises and the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, each intending to be legally bound, hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01.  Certain Defined Terms.  In addition to the terms defined elsewhere herein, for purposes of this Agreement, the terms below shall have the following meanings:

“Affiliate” means, with respect to any specified Person, any other Person that directly, or indirectly through one or more intermediaries, controls or is controlled by or is under common control with such specified Person.  For purposes of this Agreement,
with respect to Investor, “Affiliate” shall not include the Company or any other Person that is directly, or indirectly through one or more intermediaries, controlled by the Company and, with respect to the Company, “Affiliate” shall not include Investor or any other Person that is directly, or indirectly through one or more intermediaries, controlled by Investor.

  

  

  

“Beneficially Own,” “Beneficially Owned” or “Beneficial Ownership” means, with respect to any securities,
having beneficial ownership of such securities (as determined pursuant to Rule 13d-3 under the Exchange Act.

“Board of Trustees” means the Board of Trustees of the Company.

“Closing Date” means August 4, 2009, date upon which the Investor will purchase the Primary Shares and deliver to the Company the purchase price.

“Designation Notice” shall mean written notice from Investor to the Company pursuant to which Investor shall notify the Company of its exercise of its right to designate a Qualified Replacement Designee to serve as a trustee of the Company, which notice shall
identify such Person.

“D&O Questionnaire” means the questionnaire form attached hereto as Exhibit A.

“FINRA Questionnaire” means the questionnaire form attached hereto as Exhibit B.

“Independence Standards” means the categorical independence standards adopted by the Company and set forth in the Schedule 14A Proxy Statement of the Company dated April 15, 2009.

“Investor Trustee” means Mr. Eduardo S. Elsztain or any Qualified Replacement designated by Investor in a Designation Notice and appointed or elected to the Board of Trustees as a “Class II” trustee pursuant to this Agreement.

“Person” means any individual, corporation, partnership (general or limited), limited liability company, joint venture, association, joint-stock company, trust or unincorporated organization.

“Qualified Replacement” means any Person designated by the Investor in a Designation Notice that (i) qualifies as a trustee under the Company’s Corporate Governance Guidelines, as the same may be amended from time to time and (ii) completes the normal and
customary background check and similar processes customary for appointments of directors of New York Stock Exchange listed companies, including completion of the D&O Questionnaire and the FINRA Questionnaire.

“Qualifying Ownership Period” means the period commencing on the Closing Date and ending on the date upon which the Investor or its Affiliates cease to Beneficially Own at least 10% of the Common Shares (excluding solely for purposes this definition any Common
Shares issued after the date hereof upon redemption of Operating Partnership units held at any time at or prior to such redemption by trustees or officers of the Company or the entities they control or of which they Beneficially Own 100% of the outstanding equity securities).

  

  

  

ARTICLE II

BOARD DESIGNATION

Section 2.01.  Elsztain as Trustee.  The Company agrees to take, or cause to be taken, all actions necessary to elect or appoint (or cause to be elected or appointed) Mr. Eduardo S. Elsztain (“Elsztain”)
to the Board of Trustees as a Class II trustee effective as of the Closing Date.  The Company also agrees to permit Elsztain, as of the Closing Date, to participate as an independent trustee in all decisions regarding transactions that require the approval of independent trustees under applicable law or the Corporate Governance Guidelines of the Company, the annual Schedule 14A Proxy Statement of the Company and other relevant materials, and to allow Elsztain to attend meetings of any committee of the
Board of Trustees as a non-voting observer.  Elsztain shall be granted the same rights and shall be subject to the same restrictions applicable to all trustees of the Company generally.  Accordingly, Elsztain shall be eligible for appointment to one or more committees of the Board of Trustees to be proposed by him in due course in connection with the annual committee appointment process that the Nominating and Corporate Governance Committee will next conduct in 2010.

Section 2.02.  Board Observer.  During the Qualifying Ownership Period, the Company hereby agrees to take, or cause to be taken, all actions necessary to enable the Investor to appoint one of Mr. Saul Zang, Mr. Daniel Elzstain and Alejandro Elsztain, who
are officers of the Investor, as a non-voting observer (each, an “Observer”) to attend meetings of the Board of Trustees and to attend meetings of independent trustees regarding transactions that require the approval of independent trustees under the Corporate Governance Guidelines of the Company, the annual Schedule 14A Proxy Statement of the Company and other relevant materials; provided, however,
that (i) a single Observer may attend any meeting of the Board of Trustees, but only to the extent that Elsztain or a Qualified Replacement appointed or elected to the Board of Trustees pursuant to Section 2.03 or Section 2.04 below is unable to attend such meeting in person or by telephone or if at any time during the relevant meeting, Elsztain or a Qualified Replacement is unable
to continue attending such meeting and (ii) the Company reserves the right to exclude any Observer from information or access to any meeting or portion thereof if the Company in good faith believes upon the advice of counsel that such exclusion is reasonably necessary to preserve attorney-client privilege or for other legal or regulatory matters.

Section 2.03.  Replacement Trustee.  Subject to applicable law, and applicable stock exchange and securities market rules and regulations, during the Qualifying Ownership Period, in the event that Elsztain is unable to serve as a trustee of the Company
(due to death, disability or otherwise), or is no longer an officer, director or significant shareholder of Investor, such Investor Trustee’s replacement shall be nominated and designated by Investor pursuant to a Designation Notice, and the Company agrees to take, or cause to be taken, all actions necessary to cause such Qualified Replacement to be promptly appointed or elected to serve as a trustee of the Company, with the same rights provided in Section 2.01.

Section 2.04.  Recommendation and Solicitation of Proxies.  At each shareholder vote for the general election of trustees of the Company held (whether by a meeting or written consent of the stockholders of the Company) during the Qualifying Ownership Period,
the Company and the Nominating and Corporate Governance Committee of the Company shall nominate and recommend for approval by its shareholders Elsztain or, to the extent that Elsztain is unable to serve as a trustee of the Company (due to death, disability or incapacity), or is no longer an officer, director or significant shareholder of Investor, any Qualified Replacement for election as a trustee of the Company, and the Company shall also solicit proxies for Elsztain or such Qualified Replacement to the same
extent as it does for any of its other nominees to the Board of Trustees; provided that (1) in the event that the Investor fails to send a timely Designation Notice in order for the Company to nominate a new Investor Trustee, the Investor Trustee currently serving as a trustee shall be deemed to be the new Investor Trustee and (2) to the extent that the Board of Trustees reasonably determines, based upon NYSE rules, that the proposed Investor Trustee
does not qualify as a Qualified Replacement, Investor shall be permitted to propose additional Persons until such time that the Board of Trustees that a proposed Investor Trustee qualifies as a Qualified Replacement to serve as a trustee of the Company.

  

  

  

Section 2.05.  Declaration of Bylaws.

(a)      Subject to compliance with applicable laws, rules and regulations, the Company shall take or cause to be taken all lawful action necessary to ensure that, at all times during the Qualifying Ownership Period, Amended and Restated Declaration of Trust of the Company, as amended (the “Declaration”)
and the Bylaws of the Company, as amended from time to time (the “Bylaws”) are not inconsistent with the provisions of this Agreement.

(b)      The Declaration and Bylaws shall continue to allow attendance at meetings of the Board of Trustees and the Related Party Transaction Committee through telephone conference or video conference.

Section 2.06.  Indemnification and Insurance.

(a)      The Company shall make available to the Designee, if elected as a Investor Trustee, indemnification consistent with its current practices with respect to other trustees of the Company, including entering into an indemnification agreement consistent with those entered into with the Company’s other
trustees.

(b)      The Company shall continue to maintain in full force and effect director and officer liability insurance for the benefit of the Investor Trustee consistent with its current practices with respect to other trustees of the Company.

Section 2.07.  Further Obligations by the Company.  The Company hereby agrees that during the Qualifying Ownership Period it shall: (i) provide the Investor Trustee at least five (5) business days advance written notice to any meeting of the Board of Trustees
or the Related Party Commitees, notice which shall include the agenda proposed by the Chairman of the Board of Trustees and any documents or information to be addressed or discussed during such meeting; and (ii) furnish the Investor Trustee with such financial and operating data and other information with respect to the business, finance and properties of the Company as the Company prepares and compiles for members of its Board of Trustees in the ordinary course.

Section 2.08.  Obligations of Elsztain or Qualified Replacement.  Prior to appointment or election to the Board of Trustees, Elsztain and any individual that the Investor proposes as a potential Qualified Replacement shall complete, to the reasonable satisfaction
of the Nominating and Corporate Governance Committee of the Board of Trustees, the D&O Questionnaire and the FINRA Questionnaire.

  

  

  

Section 2.09.  Independent Trustee Matters.  If at any time during the Qualifying Ownership Period, the Investor Trustee ceases to be considered as an “independent” trustee under applicable law, NYSE rules, or the Corporate Governance Guidelines
of the Company the Company shall provide that the decisions or recommendations of the Board of Trustees requiring unanimous approval from the independent trustees shall also require the approval of the Investor Trustee.  Notwithstanding the foregoing, the approval of the Investor Trustee shall not be required to the extent that the Investor Trustee is absent from a meeting at which an independent trustee vote takes place; provided that
the Company complied with its obligations under Section 2.07 hereof.

Section 2.10.  Injunctive Relief.  The parties hereto hereby agree that it is impossible to measure in money the damages which will be suffered or incurred by Investor by reason of any breach or violation by the Company of its obligations set forth in
this Article II.  Accordingly, in the event of any such breach or violation, in addition to any other remedy at law or in equity that Investor may have available to it, Investor shall have the right to specific performance of such obligations.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company hereby represents and warrants to Investor as follows:

Section 3.01.  Trust Organization.  The Company is duly organized, validly existing and in good standing under the laws of the State of Maryland and has all requisite trust power to own its properties and assets and to conduct its business as now conducted.

Section 3.02.  Authorization and Validity of Agreement.  The Company has the requisite trust power and authority to execute, deliver and perform its obligations under this Agreement and to consummate the transactions contemplated hereby.  The
execution and delivery of this Agreement by the Company and the performance by the Company of its obligations hereunder and the consummation of the transactions contemplated hereby have been duly authorized by the Board and all other necessary trust action on the part of the Company, and no other trust proceedings on the part of the Company are necessary to authorize this Agreement and the transactions contemplated hereby.  This Agreement has been duly and validly executed and delivered by the Company
and, assuming due execution and delivery by Investor, constitutes a legal, valid and binding obligation of the Company, enforceable against it in accordance with its terms.

Section 3.03.  No Conflict or Violation.  The execution, delivery and performance by the Company of this Agreement does not and will not (i) violate or conflict with any provision of the declaration of trust or bylaws of the Company (in each case, as amended
and in effect on the date hereof), (ii) violate any provision of law, or any order, judgment or decree of any governmental entity, or (iii) violate or result in a breach of or constitute (with due notice or lapse of time or both) a default under any contract, agreement or instrument to which the Company or any of its subsidiaries is a party or by which any of them is bound or to which any of their respective properties or assets is subject.

  

  

  

ARTICLE IV

ADDITIONAL AGREEMENTS

Section 4.01.  Term.  This Agreement shall be effective as of the date hereof and shall continue in force and effect until the expiration of the Qualifying Ownership Period, at which time this Agreement shall be of no further force or effect.

Section 4.02.  Notices.  All notices, requests, claims, demands and other communications required or permitted hereunder shall be in writing and shall be given (and shall be deemed to have been duly received if so given) by facsimile, hand delivery, mail
(registered or certified mail, postage prepaid, return receipt requested) or any courier service, in each case providing reasonable proof of delivery.  All communications hereunder shall be delivered to the respective parties at the following addresses and facsimile numbers:

If to Investor:

Real Estate Investment Group L.P.

c/o IRSA Inversiones y Representaciones S.A.

Bolivar 108

C1091AAQ, Buenos Aires

Argentina

Attention:  Mr. Eduardo S. Elsztain

Facsimile: +54 (11) 4323-7499

with copies to:

Zang, Bergel & Viños Abogados

Florida 537, 18th Floor

C1005AAK, Buenos Aires

Argentina

Attention:  Pablo Vergara del Carril

Facsimile:  +55 (11) 5166-7070

and

Clifford Chance US LLP

31 West 52nd Street

New York, NY  10019

United States

Attention:  Jay L. Bernstein, Esq.

Facsimile:  +1 (212) 878-8375

  

  

  

If to the Company, to:

Hersha Hospitality Trust

510 Walnut Street, 9th Floor

Philadelphia, PA  19106

United States

Attention:  Ashish R. Parikh

Facsimile:  +1 (717) 774-7383

with a copy to:

Hunton & Williams LLP

951 East Byrd Street

Richmond, VA  23219

United States

Attention:  James S. Seevers, Jr.

Facsimile:  +1 (804) 788-8218

Section 4.03.  CHOICE OF LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ITS PRINCIPLES OF CONFLICTS OF LAWS.

Section 4.04.  Limitations on Rights of Third Parties.  Except as otherwise set forth herein, nothing in this Agreement is intended or shall be construed to confer upon or give any Person, other than the parties hereto and their respective successors,
any rights or remedies under or by reason of this Agreement or any transaction contemplated hereby.

Section 4.05.  Assignment.  This Agreement and the rights and obligations hereunder may not be assigned without the prior written consent of the parties hereto and any purported or attempted assignment or other transfer of rights or obligations under this
Agreement without such consent shall be void and of no force or effect.

Section 4.06.  No Joint Venture or Business Entity.  Nothing expressed or implied in this Agreement is intended or shall be construed to create or establish a joint venture, partnership or other business entity by, among or between the parties hereto.

Section 4.07.  Amendments.  This Agreement may not be amended, modified or altered, and no provision hereof may be waived, in any such case in whole or in part, except by a subsequent writing signed by the parties hereto.

Section 4.08.  Severability.  In the event that any part of this Agreement is declared by any court or other judicial or administrative body of competent jurisdiction to be null, void or unenforceable, said provision shall survive to the extent it is not
so declared, and all of the other provisions of this Agreement shall remain in full force and effect.

Section 4.09.  Headings.  The headings contained in this Agreement are included for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement.

  

  

  

Section 4.10.  Counterparts.  This Agreement may be executed and delivered (including by facsimile transmission) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed and delivered shall be
deemed to be an original but all of which taken together shall constitute one and the same agreement.

[Signature page follows.]

  

  

  

IN WITNESS WHEREOF, the parties hereto have caused this Trustee Designation Agreement to be duly executed as of the day and year first above written.

	 	
REAL ESTATE INVESTMENT GROUP L.P.

	 	  
	 	  
	 	
By:
	
Tyrus S.A., its sole general partner

	 	  	  
	 	  	  
	 	
By:
	/s/ Eduardo S. Elsztain
	 	  	
Name:

	 	  	
Title:

	 	  
	 	  
	 	  
	 	
IRSA INVERSIONES Y REPRESENTACIONES SOCIEDAD ANÓNIMA

	 	  
	 	  
	 	
By:
	/s/ Eduardo S. Elsztain
	 	  	
Name:

	 	  	
Title:

	 	  
	 	  
	 	  
	 	
HERSHA HOSPITALITY TRUST

	 	  
	 	  
	 	
By:
	/s/ Ashish R. Parikh
	 	  	
Name: Ashish R. Parikh

	 	  	
Title: Chief Financial Officer

Trustee Designation Agreement Signature PageEXHIBIT
10.62(d)

      CONFIDENTIAL
TREATMENT

      REQUESTED
PURSUANT TO RULE 24b-2

      Certain
portions of this exhibit have been omitted pursuant to a request for
confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934.  The omitted materials have been filed separately with the
Securities and Exchange Commission.

    

     

     

    AMENDMENT
NO. 3 TO AMENDED AND RESTATED CREDIT AGREEMENT

     

    AMENDMENT
NO. 3, dated as of June 2, 2009 (this “Amendment”), to the
Amended and Restated Senior Secured Credit Agreement, dated as of September 3,
2008 (as amended by Amendment No. 1 to Amended and Restated Credit Agreement,
dated as of October 28, 2008, and Amendment No. 2 to Amended and Restated Credit
Agreement, dated as of January 28, 2009, the “Credit Agreement”),
among Midwest Airlines, Inc. (the “Borrower”), Midwest
Air Group, Inc. (“Parent”), each of the
subsidiaries of the Borrower from time to time party thereto (together with the
Parent, the “Guarantors”), each
lender from time to time party thereto (the “Lenders”), Wells
Fargo Bank Northwest, National Association (“Wells Fargo”), as
administrative agent (in such capacity, the “Administrative
Agent”) and Wells Fargo, as collateral agent (the “Collateral
Agent”).

     

    W I T N E S S E T
H:

     

    WHEREAS,
subject to the terms and conditions of this Amendment, the parties hereto wish
to amend the Credit Agreement as provided herein.

     

    NOW,
THEREFORE, in consideration of the premises and the agreements, provisions and
covenants herein contained, the parties hereto agree as follows:

     

    SECTION
1.                                Definitions.  Unless
otherwise defined herein, terms defined in the Credit Agreement and used herein
shall have the meanings given to them in the Credit Agreement.

     

    SECTION
2.                                Amendment of the Credit
Agreement.  The Credit Agreement is hereby amended as
follows:

     

    2.1.           Amendment to
Schedules.  The Credit Agreement is hereby amended by (i)
replacing Schedule 2.01 to the Credit Agreement with Schedule 2.01 hereto and
(ii) inserting Schedule I hereto as a new Schedule V to the Credit
Agreement.

     

    2.2.           Amendments to Article
I.

     

    (a)           Section
1.01 of the Credit Agreement is hereby amended by amending and restating the
definition of “Term Loan” as follows:

     

    “Term Loan” means (x)
the Existing Term Loans and (y) any extension of credit by a Lender to the
Borrower pursuant to Section 2.01(a),
Section 2.01(c)
or Section
2.01(e).

     

    (b)           Section
1.01 of the Credit Agreement is hereby further amended by inserting the
following new definitions in appropriate alphabetical order:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    “Additional Loan”
means any extension of credit by a Lender to the Borrower pursuant to Section
2.01(e).

     

    “Additional Loan Advance
Date” has the meaning set forth in Section 4.03
hereof.

     

    “Additional Loan
Commitment” means, as to each Lender, its obligation to make Additional
Loans pursuant to Section 2.01(e) in an
aggregate principal amount at any one time outstanding not to exceed the amount
set forth opposite such Lender’s name on Schedule 2.01(e).

     

    “Additional Loan
Notice” has the meaning set forth in Section 4.03
hereof.

     

    “Amendment No. 3 Effective
Date” has the meaning set forth in that certain Amendment No. 3 to
Amended and Restated Credit Agreement dated as of June 2, 2009 by and among the
Loan Parties, the Lenders, the Administrative Agent and the Collateral
Agent.

     

    [*].

     

    “Permitted Payment”
means each of the payments described and in the amounts set forth on Schedule V
hereto.

     

    [*].

     

    2.3.           Amendment to Article
II.  Article II of the Credit Agreement is hereby amended by
inserting the following new Sections 2.01(e) and 2.01(f):

     

    (e)           Borrowing of Additional
Loans.  Subject to the terms and conditions hereof (including,
without limitation, the satisfaction of the conditions set forth in 4.03), each
Lender severally agrees to make Additional Loans to the Borrower on the
Amendment No. 3 Effective Date in an aggregate maximum amount not to exceed such
Lender’s Additional Loan Commitment.  Any amount advanced under this
Section 2.01(e)
and subsequently repaid or prepaid may not be reborrowed.  Each
Lender’s Additional Loan Commitment shall terminate immediately and without
further action upon the earlier of (i) the Maturity Date and (ii) the full
funding of such Lender’s Additional Loan Commitment.

    
       

    

    (f)           Borrowing Mechanics of
Additional Loans.  Borrower shall deliver to Administrative
Agent a fully executed Additional Loan Notice no later than 10:00 a.m. (New York
City time) on the date that is at least one (1) Business Day prior to the
Additional Loan Advance Date.  Promptly upon receipt by Administrative
Agent of such Additional Loan Notice, Administrative Agent shall notify each
Lender of its Pro Rata Share of the proposed Additional Loan.  Each
Lender shall, subject to the continued satisfaction of the conditions set forth
in Section
4.03, advance an amount equal to its Pro Rata Share of such Additional
Loan to the Special Controlled Account not later than 3:00 p.m. (New York City
time) on the Additional Loan Advance Date.

     

    *Confidential

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    2.4.           Amendment to Article
IV.  Article IV of the Credit Agreement is hereby amended by
adding the following new Section 4.03:

     

    4.03           Additional Loan
Conditions.  No Lender shall be obligated to make any
Additional Loan hereunder unless each of the following conditions precedent is
satisfied to the satisfaction of each Lender making an Additional
Loan:

     

    (a)           [*].

     

    (b)           The
Borrower shall have delivered a notice (the “Additional Loan
Notice”) to the Administrative Agent in accordance with Section 2.01(f)
setting forth the proposed date for such Additional Loan (the “Additional Loan Advance
Date”).

     

    (c)           The
Borrower shall have delivered to the Administrative Agent and each Lender making
an Additional Loan a certificate from a Responsible Officer of the Borrower
certifying that the conditions set forth in this Section 4.03 shall
have been satisfied (except as to matters that require the approval or
satisfaction of the Administrative Agent, the Collateral Agent and/or the
Lenders), together with such evidence with respect thereto as the Administrative
Agent or any Lender making an Additional Loan may request.

     

    (d)           The
representations and warranties of the Borrower and each other Loan Party
contained in Article
V and each other Loan Document, and which are contained in any document
furnished at any time under or in connection herewith or therewith, shall be
true and correct in all material respects on and as of the Additional Loan
Advance Date, except to the extent that such representations and warranties
specifically refer to an earlier date, in which case they shall be true and
correct in all material respects as of such earlier date.

     

    (e)           No
Default shall exist or would result from the making of the Additional Loans
pursuant to Sections 2.01(e) and 2.01(f).

    
       

    

    (f)           No
event or circumstance shall have occurred since the Amendment and Restatement
Effective Date that, in the view of each of Lender making an Additional Loan, in
each of their sole discretion, has resulted in a Material Adverse Effect that is
continuing or that would be reasonably expected to result in a Material Adverse
Effect.

     

    *Confidential

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    2.5.           Amendments to Article
VI.

     

    (a)           Article
VI of the Credit Agreement is hereby amended by amending and restating Section
6.11 as follows:

     

    6.11           Use of
Proceeds.  Use the proceeds of the Term Loans to provide
general working capital and to pay ordinary operating costs and expense of the
Loan Parties; provided that, Additional
Loans may only be used for the purpose of making Permitted
Payments.

     

    (b)           Article
VI of the Credit Agreement is hereby further amended by adding a new Section
6.21 as follows:

     

    6.21           [*].

     

    2.6.           Amendment to Article
VIII.  Article VIII of the Credit Agreement is hereby amended
by deleting clauses “First” through “Last” in Section 8.03
thereof and inserting the following:

     

    “First, to payment of
that portion of the Secured Credit Obligations constituting fees, indemnities,
expenses and other amounts (including Attorney Costs) payable to the
Administrative Agent and the Collateral Agent in their capacities as
such;

     

    Second, to payment of
that portion of the Secured Credit Obligations (excluding any Additional Loans)
constituting amounts payable under Article III of this Agreement and Article III
of the Reimbursement Agreement ratably among the Northwest Parties and the
Lenders in proportion to the amounts described in this clause Second payable to
them;

    
       

    

    Third, to payment of
that portion of the Secured Credit Obligations constituting Reimbursement
Obligations up to a maximum principal amount of $10,000,000 (whether currently
owing or contingent) and any accrued and unpaid interest thereon (less the sum
(without duplication) of (i) the amount of any portion thereof that has been
cash collateralized pursuant to this Agreement or the Reimbursement Agreement
and (ii) the amount of funds on deposit in the Reimbursement Obligation
Collateral Account at such time prior to giving effect to the release of such
funds pursuant to the penultimate sentence of the last paragraph in this Section
8.03), principal on the Term Loans up to a maximum principal amount of
$50,000,000 (whether currently due and payable or not), and accrued and unpaid
interest on the Term Loans (excluding any Additional Loans), ratably among the
Northwest Parties and the Lenders in proportion to the respective amounts
described in this clause Third payable to
them;

     

    *Confidential

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Fourth, to the
payment of all other Secured Credit Obligations of the Loan Parties owing under
or in respect of the Secured Credit Documents on such date (including any
Reimbursement Obligations in excess of a principal amount of $10,000,000
(whether currently owing or contingent) and any accrued and unpaid interest
thereon less the sum (without duplication) of (i) the amount of any portion
thereof that has been cash collateralized pursuant to this Agreement or the
Reimbursement Agreement and (ii) the amount of funds on deposit in the
Reimbursement Obligation Collateral Account at such time prior to giving effect
to the release of such funds pursuant to the penultimate sentence of the last
paragraph in this Section 8.03), ratably among the Northwest Parties and the
Lenders in proportion to the respective amounts described in this clause Fourth payable to
them, but specifically excluding from any amounts payable under this clause
Fourth any
amounts of principal or interest relating to the Additional Loans;

     

    Fifth, the payment of
all other Secured Credit Obligations of the Loan Parties owing to the Lenders
under or in respect of the Secured Credit Documents on such date, ratably among
the Lenders in proportion to the respective amounts described in this clause
Fifth payable
to them, it being acknowledged that all amounts of principal or interest
relating to the Additional Loans shall only be payable under this clause Fifth;

     

    Sixth, to the payment
of all Airline Service Agreement Obligations that are unpaid and outstanding on
such date payable to Republic; and

     

    Last, the balance, if
any, after all of the Secured Credit Obligations have been indefeasibly paid in
full, to the Borrower or as otherwise required by Law.”

     

    SECTION
3.                                Effectiveness.                                This
Amendment shall become effective as of the date (the “Amendment No. 3 Effective
Date”) on which the Administrative Agent shall have
received:

     

    (a)           duly
executed and completed counterparts hereof (in the form provided and specified
by the Administrative Agent) that, when taken together, bear the signatures of
(i) the Administrative Agent and Collateral Agent, (ii) the Borrower, (iii) each
Guarantor and (iv) the Lenders;

     

    (b)           evidence
reasonably satisfactory to each Lender making an Additional Loan that the
transactions contemplated by this Amendment have been duly authorized by all
necessary corporate action on behalf of the Borrower and each
Guarantor;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (c)           an
officer’s certificate of the Borrower and each other Loan Party certifying that
the representations and warranties are contained in Article V and each
other Loan Document true and correct in all material respects on and as of the
Amendment No. 3 Effective Date, except to the extent that such representations
and warranties specifically refer to an earlier date, in which case they shall
be true and correct in all material respects as of such earlier date;
and

     

    (d)           a
favorable written opinion of counsel to the Borrower and the other Loan Parties,
in form and substance satisfactory to each Lender obligated to provide an
Additional Loan.

     

    SECTION
4.                                Representations and
Warranties.  Each Loan Party represents and warrants as
follows:

     

    4.1.           Power; Authorization;
Enforceable Obligations.  Each Loan Party has the requisite
power and authority to enter into and deliver this Amendment.  The
execution, delivery and performance of this Amendment has been duly authorized
by all necessary action on the part of each Loan Party.  Each of this
Amendment and the Credit Agreement, as amended prior to the date hereof and by
this Amendment, constitutes a legal, valid and binding obligation of each Loan
Party, enforceable against each Loan Party, in accordance with its terms, except
as may be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws relating to or limiting creditors’ rights generally or by equitable
principles relating to enforceability.

     

    4.2.           No Legal
Bar.  The execution, delivery and performance of this Amendment
do not and will not (i) violate any provision of any law or any governmental
rule or regulation applicable to any Loan Party, any of the Organizational
Documents of any Loan Party, or any order, judgment or decree of any court or
other Governmental Authority binding on any Loan Party or any material
contractual obligation of any Loan Party or (ii) result in or require the
creation or imposition of any Lien upon any of the properties or assets of any
Loan Party (other than the Liens created by the Secured Credit
Documents).

     

    4.3.           Accuracy of Representations
and Warranties.  The representations and warranties of each
Loan Party set forth in the Secured Credit Documents are true and correct in all
material respects on and as of the Amendment No. 3 Effective Date (except to the
extent that such representations and warranties specifically refer to an earlier
date, in which case they are true and correct in all material respects as of
such earlier date).

     

    4.4.           No Default or Event of
Default.  As of the date hereof, after giving effect to this
Amendment, no Default or Event of Default has occurred and is
continuing.

     

    SECTION
5.                                Validity of Obligations and
Liens.

     

    5.1.           Validity of
Obligations.  The Borrower and each Guarantor acknowledge and
agree that, notwithstanding the effectiveness of this Amendment, each of the
Borrower and each Guarantor is indebted to the Lenders and the Agents for the
Secured Credit Obligations, without defense, counterclaim or offset of any kind,
and each of the Borrower and each Guarantor hereby ratifies and reaffirms the
validity, enforceability and binding nature of such Secured Credit
Obligations.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    5.2.           Validity of
Guarantees.  Each Guarantor hereby confirms and agrees that
notwithstanding the effectiveness of this Amendment, the Guaranty is, and shall
continue to be, in full force and effect and each is hereby ratified and
confirmed in all respects.

     

    5.3.           Validity of Liens and Loan
Documents.  Each of the Borrower and each Guarantor ratifies
and reaffirms the validity and enforceability (without defense, counterclaim or
offset of any kind) of the Liens and security interests granted to secure any of
the Secured Credit Obligations by each of the Borrower and each Guarantor to the
Collateral Agent, for the benefit of the Secured Parties, pursuant to the
Secured Credit Documents to which any such Borrower or Guarantor is a party and
hereby confirms and agrees that notwithstanding the effectiveness of this
Amendment each Secured Credit Document is, and shall continue to be, in full
force and effect and each is hereby ratified and confirmed in all
respects.

     

    SECTION
6.                                Effect of Amendment;
Consent.

     

    6.1.           Applicability.  Except
as expressly set forth herein, this Amendment shall not by implication or
otherwise limit, impair, constitute a waiver of or otherwise affect the rights
and remedies of the Lenders, the other Secured Parties or the Administrative
Agent under the Credit Agreement or any other Secured Credit Document, and shall
not alter, modify, amend or in any way affect any of the terms, conditions,
obligations, covenants or agreements contained in the Credit Agreement or any
other provision of the Credit Agreement or of any other Secured Credit Document,
all of which are ratified and affirmed in all respects and shall continue in
full force and affect.  Nothing herein shall be deemed to entitle the
Borrower to a consent to, or a waiver, amendment, modification or other change
of, any of the terms, conditions, obligations, covenants or agreements contained
in the Credit Agreement or any other Secured Credit Document in similar or
different circumstances.

     

    6.2.           Loan
Document.  This Amendment shall constitute a “Loan Document”
for all purposes of the Credit Agreement and the other Secured Credit
Documents.

     

    6.3.           [*].

     

    SECTION
7.                                Miscellaneous.

     

    7.1.           GOVERNING
LAW.  THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

     

    7.2.           Costs and
Expenses.  The Borrower agrees to reimburse the Administrative
Agent and the Lenders for their reasonable out-of-pocket costs and expenses in
connection with this Amendment, including the reasonable fees, charges and
disbursements of counsel for the Lenders and the Administrative
Agent.

     

    *Confidential

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    7.3.           Counterparts.  This
Amendment may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed and delivered
shall be deemed an original, but all such counterparts together shall constitute
but one and the same instrument.  Delivery of any executed counterpart
of a signature page of this Amendment by facsimile or electronic transmission
shall be as effective as delivery of a manually executed counterpart
hereof.

     

    7.4.           Headings.  The
headings of this Amendment are for purposes of reference only and shall not
limit or otherwise affect the meaning hereof.

     

    [remainder of page intentionally left
blank]

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered by their respective duly authorized officers as of the
day and year first above written.

     

    MIDWEST
AIRLINES, INC.

    

    By:  /s/ Christopher S.
Hennessy

    Name:  Christopher
S. Hennessy

    Title:    Vice
President and Controller

    

    MIDWEST
AIR GROUP, INC.

    

    By:  /s/ Christopher S.
Hennessy

    Name:  Christopher
S. Hennessy

    Title:    Vice
President and Controller

    

    SKYWAY
AIRLINES, INC.

    

    By:  /s/ Christopher S.
Hennessy

    Name:  Christopher
S. Hennessy

    Title:    Vice
President and Controller

    

    BESTCARE
HOLDINGS, INC.

    

    By:  /s/ Christopher S.
Hennessy

    Name:  Christopher
S. Hennessy

    Title:    Vice
President and Controller

    

    MIDWEST
EXPRESS SERVICES – KANSAS CITY, INC.

    

    By:  /s/ Christopher S.
Hennessy

    Name:  Christopher
S. Hennessy

    Title:    Vice
President and Controller

    

    MIDWEST
EXPRESS SERVICES – OMAHA, INC.

    

    By:  /s/ Christopher S.
Hennessy

    Name:  Christopher
S. Hennessy

    Title:    Vice
President and Controller

    

    YX
PROPERTIES, LLC

    By:
Midwest Express Services – Omaha, Inc., its sole member

    

    By:  /s/ Christopher S.
Hennessy

    Name:  Christopher
S. Hennessy

    Title:    Vice
President and Controller

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    WELLS
FARGO BANK NORTHWEST,

    NATIONAL
ASSOCIATION, as Administrative Agent and as Collateral Agent

    

    By:  /s/ Val T.
Orton

    Name: 
Val T. Orton

    Title:  Vice
President

    

    TPG
MIDWEST US V, LLC, as Lender

    

    By:                 TPG
Advisors V, Inc.

    Its:                 Managing
Member

    

    

    By:  /s/ Clive
Bode

    Name:  Clive
Bode

    Title:

    

    

    TPG
MIDWEST INTERNATIONAL V, LLC, as Lender

    

    By:                 TPG
GenPar V, L.P.

    Its:                 Managing
Member

    By:           TPG
Advisors V, Inc.

    Its:           General
Partner

    

    

    By:  /s/ Clive
Bode

    Name:  Clive
Bode

    Title:

    

    

    REPUBLIC
AIRWAYS HOLDINGS INC., as a Lender

    

    By: /s/ Bryan
Bedford

    Name:  Bryan
Bedford

    Title:  President
and CEO

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    SCHEDULE 2.01
TO

    AMENDED AND
RESTATED

    CREDIT
AGREEMENT

    

    

    SCHEDULE
2.01(a)

    

    TERM
COMMITMENTS AND PRO RATA SHARES –

    AMENDMENT
AND RESTATEMENT EFFECTIVE DATE

    

    

    
      
        
          
            	
                    Lender

                  	 	
                    Term
      Commitment

                  	 	 	
                    Term
      Commitment Pro Rata Share

                  	 
	
                    Republic
      Airways Holdings Inc.

                  	 	$	15,000,000.00	 	 	 	100.00	%
	
                    Total

                  	 	$	15,000,000.00	 	 	 	100	%

          

        

      

    

    

    

    SCHEDULE
2.01(c)

    

    TERM
COMMITMENTS AND PRO RATA SHARES –

    MILESTONE
ACHIEVEMENT DATE

    

    

    
      
        
          
            
              
                
                  	
                          Lender

                        	 	
                          Term
      Commitment

                        	 	 	
                          Term
      Commitment Pro Rata Share

                        	 
	
                          [*]

                        	 	$	[	*]	 	 	[	*]%
	
                          [*]

                        	 	$	[	*]	 	 	[	*]%
	
                          Republic
      Airways Holdings Inc.

                        	 	$	10,000,000.00	 	 	 	[	*]%
	 
      	 	 	 	 	 	 	 	 
	
                          Total

                        	 	$	[	*]	 	 	100	%

                

              

            

          

        

      

    

    

    SCHEDULE
2.01(e)

    

    ADDITIONAL
LOAN COMMITMENTS AND PRO RATA SHARES

    

    

    
      
        
          
            
              	
                      Lender

                    	 	
                      Term
      Commitment

                    	 	 	
                      Term
      Commitment Pro Rata Share

                    	 
	
                      [*]

                    	 	$	[	*]	 	 	[	*]%
	
                      [*]

                    	 	$	[	*]	 	 	[	*]%
	
                      Republic
      Airways Holdings Inc.

                    	 	$	6,000,000.00	 	 	 	[	*]%
	
                      Total

                    	 	$	[	*]	 	 	100	%

            

          

        

      

    

    
       

      *Confidential

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    SCHEDULE V
TO

    AMENDED AND
RESTATED

    CREDIT
AGREEMENT

    

    

    PERMITTED
PAYMENTS

    

    
      	
               

              Payee

            	
               

              Description

            	
               

              Amount1

            	
               

              Date2

            
	
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              [*]

            	
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    1 Amounts
are approximate.  Final amounts may change due to timing of payment,
interim interest, or final amounts of reimbursable fees or
expenses.

    

    2 Some
payment dates are contingent on satisfaction of certain conditions precedent and
may therefore be slightly earlier or later than the date shown.

     

     

    *Confidential

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