Document:

Exhibit 10.17

 

EXECUTION COPY

 

 

 

FIRST-LIEN SECURITY AGREEMENT

 

made by

 

GLOBAL AVIATION HOLDINGS INC.,

 

NORTH AMERICAN AIRLINES, INC.,

 

WORLD AIRWAYS, INC.

 

and

 

THE OTHER GRANTORS IDENTIFIED HEREIN

 

in favor of

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,
 as Collateral Agent

 

Dated as of August 13, 2009

 

 

 

 

TABLE OF CONTENTS

 

	     
    	     
    	    Page
    
	     
    	     
    	     
    
	    SECTION 1.
    	    DEFINED TERMS
    	    1
    
	    1.1.
    	    Definitions
    	    1
    
	    1.2.
    	    Other Definitional Provisions
    	    6
    
	     
    	     
    	     
    
	    SECTION 2.
    	    GRANT OF SECURITY INTEREST
    	    6
    
	     
    	     
    	     
    
	    SECTION 3.
    	    REPRESENTATIONS AND WARRANTIES
    	    8
    
	    3.1.
    	    Title; No Other Liens
    	    8
    
	    3.2.
    	    Perfected Liens
    	    9
    
	    3.3.
    	    Jurisdiction of Organization
    	    9
    
	    3.4.
    	    Inventory and Equipment
    	    10
    
	    3.5.
    	    Farm Products
    	    10
    
	    3.6.
    	    Investment Property
    	    10
    
	    3.7.
    	    Receivables
    	    10
    
	    3.8.
    	    Intellectual Property
    	    10
    
	    3.9.
    	    Commercial Tort Claims
    	    11
    
	    3.10.
    	    Deposit Accounts, Etc.
    	    11
    
	     
    	     
    	     
    
	    SECTION 4.
    	    COVENANTS
    	    11
    
	    4.1.
    	    Delivery of Instruments, Certificated Securities and   Chattel Paper
    	    11
    
	    4.2.
    	    Maintenance of Insurance
    	    11
    
	    4.3.
    	    Maintenance of Perfected Security Interest; Further   Documentation
    	    11
    
	    4.4.
    	    Changes in Locations, Name, etc.
    	    12
    
	    4.5.
    	    Notices
    	    12
    
	    4.6.
    	    Investment Property
    	    12
    
	    4.7.
    	    Receivables
    	    13
    
	    4.8.
    	    Intellectual Property
    	    14
    
	    4.9.
    	    Commercial Tort Claims
    	    16
    
	    4.10.
    	    Deposit Accounts
    	    16
    
	    4.11.
    	    Overriding Provisions with respect to Collateral
    	    16
    
	     
    	     
    	     
    
	    SECTION 5.
    	    REMEDIAL PROVISIONS
    	    17
    
	    5.1.
    	    Certain Matters Relating to Receivables
    	    17
    
	    5.2.
    	    Communications with Obligors; Grantors Remain Liable
    	    17
    
	    5.3.
    	    Pledged Equity
    	    18
    
	    5.4.
    	    Proceeds to be Turned Over to Collateral Agent
    	    19
    
	    5.5.
    	    Application of Proceeds
    	    19
    
	    5.6.
    	    Code and Other Remedies
    	    20
    
	    5.7.
    	    Registration Rights
    	    21
    
	    5.8.
    	    Deficiency
    	    22
    
	    5.9.
    	    Notice of Sole Control
    	    22
    
	     
    	     
    	     
    
	    SECTION 6.
    	    THE COLLATERAL AGENT
    	    22
    

 

i

 

	    6.1.
    	    Collateral Agent’s Appointment as   Attorney-in-Fact, etc.
    	    22
    
	    6.2.
    	    Duty of Collateral Agent
    	    24
    
	    6.3.
    	    Execution of Financing Statements
    	    24
    
	    6.4.
    	    Authority of Collateral Agent
    	    25
    
	     
    	     
    	     
    
	    SECTION 7.
    	    MISCELLANEOUS
    	    25
    
	    7.1.
    	    Amendments in Writing
    	    25
    
	    7.2.
    	    Notices
    	    25
    
	    7.3.
    	    No Waiver by Course of Conduct; Cumulative Remedies
    	    25
    
	    7.4.
    	    Enforcement Expenses; Indemnification. (a)
    	    25
    
	    7.5.
    	    Successors and Assigns
    	    26
    
	    7.6.
    	    Counterparts
    	    26
    
	    7.7.
    	    Severability
    	    26
    
	    7.8.
    	    Section Headings
    	    26
    
	    7.9.
    	    Integration
    	    26
    
	    7.10.
    	    GOVERNING LAW
    	    26
    
	    7.11.
    	    Submission To Jurisdiction; Waivers
    	    26
    
	    7.12.
    	    Acknowledgments
    	    27
    
	    7.13.
    	    Additional Grantors
    	    27
    
	    7.14.
    	    Releases
    	    27
    
	    7.15.
    	    WAIVER OF JURY TRIAL
    	    28
    

 

	    SCHEDULES
    
	     
    	     
    
	    Schedule   1
    	    Investment   Property
    
	    Schedule   2
    	    Perfection   Matters
    
	    Schedule   3
    	    Jurisdictions   of Organization
    
	    Schedule   4
    	    Inventory   and Equipment Locations
    
	    Schedule   5
    	    Intellectual   Property
    
	    Schedule   6
    	    Commercial   Tort Claims
    
	    Schedule   7
    	    Deposit   Accounts
    

 

Acknowledgment and Consent

 

ii

 

FIRST-LIEN SECURITY AGREEMENT, dated as of August 13, 2009, made by each of the signatories hereto (together with any other entity that may become a party hereto as provided herein, the “Grantors”), in favor of Wells Fargo Bank, National Association, as collateral agent for the Secured Parties (as defined below).

 

W I T N E S S E T H:

 

WHEREAS, Global Aviation Holdings Inc., a Delaware corporation (“Parent”), North American Airlines, Inc., a Delaware corporation (“NAA”), World Airways, Inc., a Delaware corporation (“WAI” and, together with Parent and NAA, each an “Notes Issuer” and, collectively, the “Notes Issuers”), the guarantors party thereto (the “Guarantors”) and Wells Fargo Bank, National Association, as trustee (in such capacity and together with its successors and assigns in such capacity, the “Trustee”) and collateral agent (in such capacity and together with its successors and assigns in such capacity, the “Collateral Agent”), have entered into an Indenture, dated as of August 13, 2009 (as amended, supplemented or otherwise modified from time to time, the “Indenture”), and in connection therewith, the Notes Issuers are issuing and the Guarantors are guaranteeing $175,000,000 aggregate principal amount of 14% Senior Secured First Lien Notes due 2013 (together with all notes issued in exchange or replacement therefor as provided in the Indenture, the “Notes”);

 

WHEREAS, in order to induce the initial purchaser of the Notes to purchase the Notes, the Grantors have agreed to grant a continuing security interest in and to the Collateral (as hereinafter defined) in order to secure the prompt and complete payment, observance and performance of, among other things, their respective Obligations (as hereinafter defined);

 

WHEREAS, each Grantor will obtain benefits from the issuance of the Notes under the Indenture and, accordingly, desires to execute this Agreement; and

 

WHEREAS, the Collateral Agent has agreed to act as agent for the benefit of the Secured Parties (as hereinafter defined) in connection with the transactions contemplated by the Indenture and this Agreement;

 

NOW, THEREFORE, in consideration of the recitals made above and other good and valuable consideration, the receipt, sufficiency and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

 

SECTION 1.           DEFINED TERMS

 

1.1.          Definitions.  (a)  Unless otherwise defined herein, terms defined in the Indenture and used herein shall have the meanings given to them in the Indenture, and the following terms are used herein as defined in the New York UCC:  Accounts, Certificated Security, Chattel Paper, Commercial Tort Claims, Commodity Account, Commodity Intermediary, Documents, Equipment, Farm Products, Fixtures, General Intangibles, Instruments, Inventory, Letter of Credit Rights, Securities Account, Securities Intermediary and Supporting Obligations.

 

(b)           The following terms shall have the following meanings:

 

 

“Agreement”:  this First-Lien Security Agreement, as the same may be amended, supplemented or otherwise modified from time to time.

 

“ATA Collateral”:  as defined in the Intercreditor Agreement.

 

“Collateral”:  as defined in Section 2.

 

“Collateral Account”:  any collateral account established by the Collateral Agent as provided in Section 5.1 or 5.4.

 

“Collateral Deposit Account”:  any Deposit Account other than an Excluded Account.

 

“Copyrights”:  (i) all copyrights arising under the laws of the United States, any other country or any political subdivision thereof, whether registered or unregistered and whether published or unpublished (including, without limitation, those listed in Schedule 5), all registrations and recordings thereof, and all applications in connection therewith, including, without limitation, all registrations, recordings and applications in the United States Copyright Office, and (ii) the right to obtain all renewals thereof.

 

“Copyright Licenses”:  any written agreement naming any Grantor as licensor or licensee, granting any right under any Copyright, including, without limitation, the grant of rights to manufacture, distribute, exploit and sell materials derived from any Copyright.

 

“Deposit Account”:  as defined in the Uniform Commercial Code of any applicable jurisdiction and, in any event, including, without limitation, any demand, time savings, passbook or like account maintained with a depositary institution.

 

“Deposit Account Control Agreement”:  an agreement in form and substance reasonably satisfactory to the Collateral Agent, among any Grantor, a banking institution holding such Grantor’s funds, and the Collateral Agent with respect to collection and control of all deposits and balances held in a Collateral Deposit Account maintained by any Grantor with such banking institution.

 

“Discharge of Second-Lien Obligations”:  as defined in the Intercreditor Agreement.

 

“Domestic Subsidiary”:  any Subsidiary of Parent other than a Foreign Subsidiary.

 

“Excluded Accounts”:  (i) Deposit Accounts exclusively used for payroll, payroll taxes and other employee wage and benefit payments and any Deposit Account, Securities Account or Commodity Account with an average annual balance of less than $1,000,000, or that is exclusively used to hold Excluded Cash, (ii) Trust Tax Accounts, and (iii) Lessor Maintenance Reserve Accounts.

 

“Excluded Cash”:  cash and Cash Equivalents pledged or deposited in accordance with clause (iv), (v), (xiii), (xv), (xvii), (xviii), (xx), (xxi) or (xxii) of the definition of Permitted Liens in the Indenture.

 

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“Excluded Property”:  as defined in Section 2.

 

“FAA Act”:  the collective reference to the U.S. Transportation Code (currently codified at Subtitle VII of Title 49 of the U.S. Code) as amended, supplemented, or otherwise modified from time to time, and all FARs and other rules, regulations, directives and orders issued or promulgated from time to time thereunder.

 

“FAA Collateral”:  Collateral as to which filing of a security interest requires compliance with filing requirements of the FAA Act.

 

“FARs”:  the FAA Regulations as in effect from time to time under Title 14 of the U.S. Code of Federal Regulations, including, without limitation, the Special Federal Aviation Regulations (as applicable), as amended, supplemented or otherwise modified from time to time.

 

“Foreign Subsidiary”: any Subsidiary of Parent that is a “controlled foreign corporation,” within the meaning of section 957 of the U.S. Tax Code.

 

“Foreign Subsidiary Voting Stock”:  the voting Equity Interests of any Foreign Subsidiary and of any Domestic Subsidiary substantially all of whose assets consist of voting Equity Interests of one or more Foreign Subsidiaries.

 

“Governmental Authority” shall mean any federal, state, local and other governmental authority, governmental or regulatory agency, body, court, arbitrator or self-regulatory organization, domestic or foreign.

 

“Intellectual Property”:  the collective reference to all rights, priorities and privileges relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including, without limitation, the Copyrights, the Copyright Licenses, the Patents, the Patent Licenses, the Trademarks and the Trademark Licenses, and all rights to sue at law or in equity for any infringement or other impairment thereof, including the right to receive all proceeds and damages therefrom.

 

“Intercompany Note”:  any promissory note evidencing loans made by any Grantor to Parent or any of its Subsidiaries.

 

“Intercreditor Agreement”:  means the Intercreditor Agreement among the Notes Issuers, the Guarantors, the Collateral Agent and the Second Lien Collateral Agent, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms and the terms of this Indenture.

 

“Investment Property”:  the collective reference to (i) all “investment property” as such term is defined in Section 9-102(a)(49) of the New York UCC (other than any Foreign Subsidiary Voting Stock) and (ii) whether or not constituting “investment property” as so defined, all Pledged Debt and all Pledged Equity.

 

“Indenture Documents”:  means, collectively, the Indenture, the Notes, this Agreement and each other agreement, document or instrument to which the Trustee is or may 

 

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become a party in its capacity as Trustee, Collateral Agent, Paying Agent or Registrar, as each may be amended, supplement or otherwise modified from time to time.

 

“Issuers”:  the collective reference to each issuer of any Investment Property.

 

“Material Adverse Effect” means a material adverse effect on (A) the properties, business, operations, earnings, assets, liabilities or condition (financial or otherwise) of Parent and its subsidiaries, taken as a whole, (B) the performance of the Indenture Documents in all material respects by the Grantors and (C) the consummation, in all material respects, of the transactions contemplated by the Indenture Documents.

 

“New York UCC”:  the Uniform Commercial Code as from time to time in effect in the State of New York.

 

“Obligations”:  the collective reference to the unpaid principal of and interest and premium on the Notes and all other monetary obligations and liabilities of the Grantors (including, without limitation, interest accruing at the then applicable rate provided in the Indenture Documents after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to any of the Grantors, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) to the Secured Parties, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, or pursuant to, the Indenture Documents or any other document made, delivered or given in connection with any of the foregoing, in each case whether on account of principal, interest, reimbursement obligations, premium, fees, indemnities, costs, expenses or otherwise (including, without limitation, all fees and disbursements of counsel to the Secured Parties that are required to be paid by the Grantors pursuant to the terms of any of the foregoing agreements) and all guaranties of the foregoing amounts.

 

“Parent”:  as defined in the preamble.

 

“Patents”:  (i) all letters patent of the United States, any other country or any political subdivision thereof, all reissues and extensions thereof and all goodwill associated therewith, including, without limitation, any of the foregoing referred to in Schedule 5, (ii) all applications for letters patent of the United States or any other country and all divisions, continuations and continuations-in-part thereof, including, without limitation, any of the foregoing referred to in Schedule 5, and (iii) all rights to obtain any reissues or extensions of the foregoing.

 

“Patent License”:  all agreements, whether written or oral, providing for the grant by or to any Grantor of any right to manufacture, use or sell any invention covered in whole or in part by a Patent, including, without limitation, any of the foregoing referred to in Schedule 5.

 

“Pledged Debt”:  all promissory notes listed on Schedule 1, all Intercompany Notes at any time issued to any Grantor and all other promissory notes issued to or held by any Grantor, including all such promissory notes issued to Global Aviation Ventures SPV LLC under the Existing Credit Agreement (other than promissory notes issued in connection with extensions of trade credit by any Grantor in the ordinary course of business).

 

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“Pledged Equity”:  the Equity Interests listed on Schedule 1, together with any other shares, stock certificates, options or rights of any nature whatsoever in respect of the Equity Interests of any Person that may be issued or granted to, or held by, any Grantor while this Agreement is in effect; provided that in no event shall more than 65% of the issued and outstanding Foreign Subsidiary Voting Stock of any Foreign Subsidiary or of any Domestic Subsidiary substantially all of whose assets consist of voting Equity Interests of one or more Foreign Subsidiaries be required to be pledged hereunder.

 

“Proceeds”:  all “proceeds” as such term is defined in Section 9-102(a)(64) of the New York UCC and, in any event, shall include, without limitation, all dividends or other income from the Investment Property, collections thereon or distributions or payments with respect thereto.

 

“Receivable”:  any right to payment for goods sold or leased or for services rendered, whether or not such right is evidenced by an Instrument or Chattel Paper and whether or not it has been earned by performance (including, without limitation, any Account).

 

“Second-Lien Collateral Agent”:  as defined in the Intercreditor Agreement.

 

“Second-Lien Documents”:  as defined in the Intercreditor Agreement.

 

“Second-Lien Obligations”:  as defined in the Intercreditor Agreement.

 

“Second-Lien Obligations Termination Date”:  that date upon which the Discharge of Second-Lien Obligations shall have occurred.

 

“Secured Parties”:  the collective reference to the Trustee, the Collateral Agent and the Holders.

 

“Securities Act”:  the Securities Act of 1933, as amended.

 

“Third-Lien Creditors”:  as defined in the Intercreditor Agreement.

 

“Third-Lien Obligations”:  as defined in the Intercreditor Agreement.

 

“Trademarks”:  (i) all trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, logos and other source or business identifiers, and all goodwill associated therewith, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all applications in connection therewith, whether in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof or any other country or any political subdivision thereof, or otherwise, and all common-law rights related thereto, including, without limitation, any of the foregoing referred to in Schedule 5, and (ii) the right to obtain all renewals thereof.

 

“Trademark License”:  any agreement, whether written or oral, providing for the grant by or to any Grantor of any right to use any Trademark.

 

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1.2.          Other Definitional Provisions.  (a)  The words “hereof,” “herein,” “hereto” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section and Schedule references are to this Agreement unless otherwise specified.

 

(b)           The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.

 

(c)           Where the context requires, terms relating to the Collateral or any part thereof, when used in relation to a Grantor, shall refer to such Grantor’s Collateral or the relevant part thereof.

 

SECTION 2.           GRANT OF SECURITY INTEREST

 

Each Grantor hereby assigns and transfers to the Collateral Agent, and hereby grants to the Collateral Agent, for the ratable benefit of the Secured Parties, a security interest in, all of the following property now owned or at any time hereafter acquired by such Grantor or in which such Grantor now has or at any time in the future may acquire any right, title or interest other than Excluded Property (collectively, the “Collateral”), as collateral security for the prompt and complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of such Grantor’s Obligations:

 

(a)           all Accounts;

 

(b)           all Chattel Paper;

 

(c)           all Deposit Accounts, Securities Accounts and Commodity Accounts;

 

(d)           all Documents;

 

(e)           all Equipment;

 

(f)            all Fixtures;

 

(g)           all General Intangibles;

 

(h)           all Instruments;

 

(i)            all Intellectual Property;

 

(j)            all Inventory;

 

(k)           all Investment Property;

 

(l)            all Letter of Credit Rights;

 

(m)          all Commercial Tort Claims with respect to the matters described on Schedule 6, as well as all Commercial Tort Claims provided for in Section 4.9;

 

6

 

(n)           all other personal property not otherwise described above;

 

(o)           all ATA Collateral;

 

(p)           all books and records pertaining to the Collateral; and

 

(q)           to the extent not otherwise included, all Proceeds, Supporting Obligations and products of any and all of the foregoing and all collateral security and guarantees given by any Person with respect to any of the foregoing;

 

provided, however, that notwithstanding any of the other provisions set forth in this Section 2, the term Collateral and the terms set forth in this Section defining the components of Collateral shall not include, and this Agreement shall not constitute a grant of a security interest in, any of the following (the “Excluded Property”):  (i) any property to the extent that such grant of a security interest is prohibited by any applicable law of a Governmental Authority, requires a consent not obtained of any Governmental Authority pursuant to such law or is prohibited by, or constitutes a breach or default under or results in the termination of or gives rise to a right on the part of the parties thereto other than Parent and its Subsidiaries to terminate (or materially modify) or requires any consent not obtained under any contract, license, agreement, instrument or other document evidencing or giving rise to such property or to a Lien on such property permitted to be incurred pursuant to the Indenture Documents or, in the case of any Investment Property, Pledged Equity or Pledged Debt, any applicable shareholder or similar agreement, except to the extent that such law or the term in such contract, license, agreement, instrument or other document or shareholder or similar agreement providing for such prohibition, breach, default or right of termination or modification or requiring such consent is ineffective under applicable law, (ii) any property owned by any Grantor on the date hereof or hereafter acquired that is subject to a Lien securing a purchase money or capital or finance lease obligation permitted to be incurred pursuant to the Indenture Documents if the contract or other agreement in which such Lien is granted (or the documentation providing for such purchase money, project financing or capital or finance lease obligation) prohibits the creation of any other Lien on such property, (iii) any trucks, trailers, tractors, service vehicles, automobiles, rolling stock or other registered mobile equipment or equipment covered by certificates of title or ownership of any Grantor to the extent that a security interest cannot be perfected solely by filing a UCC-1 financing statement (or similar instrument), (iv) Excluded Accounts, (v) the Equity Interests of any joint venture in respect of which Parent or any of its Subsidiaries holds Equity Interests if (and only so long as), in any case, the grant of any such security interest is prohibited by, or constitutes a breach or default under or results in the termination of or gives rise to a right on the part of the parties thereto other than Parent and its Subsidiaries to terminate (or materially modify) or requires any consent not obtained under any contract, license, agreement, instrument or other document evidencing or giving rise to such property or any applicable shareholder, joint venture or similar agreement, (vi) FAA Collateral to the extent that a security interest cannot be perfected solely by filing a UCC-1 financing statement (or similar instrument), and (vii) Excluded Cash; provided, however, that Excluded Property shall not include any Proceeds, substitutions or replacements of any Excluded Property referred to above and such Proceeds shall not constitute “Excluded Property” (unless such Proceeds, substitutions or replacements would constitute Excluded Property referred to above).  If an Event of Default shall have occurred and be continuing, each Grantor shall, if requested to do so by the Collateral Agent, use

 

7

 

 

commercially reasonable efforts to obtain any required consent that is reasonably obtainable with respect to Collateral which the Collateral Agent reasonably determines to be material.

 

In addition, any Collateral consisting of Equity Interests or other securities of a Subsidiary shall be deemed to constitute Excluded Property to the extent that the pledge of such Equity Interests or other securities results in Parent being required to file separate financial statements of such Subsidiary with the SEC, but only to the extent necessary to not be subject to such requirement and only for so long as such requirement is in existence.  In addition, in the event that Rule 3-16 of Regulation S-X under the Securities Act is amended, modified or interpreted by the SEC to require (or is replaced with another rule or regulation or another law, rule or regulation is adopted which would require) the filing with the SEC (or another governmental agency) of separate financial statements of any Subsidiary of Parent due to the fact that the Subsidiary’s Equity Interests or other securities secure any Obligations under the Indenture Documents, then the Equity Interests or other securities of such Subsidiary will automatically be deemed Excluded Property, but only to the extent securing such Obligations and necessary to not be subject to such requirement and only for so long as is required to not be subject to such requirement.  In such event, this Agreement may be amended or modified, without the consent of any Secured Party, to the extent necessary to release the security interests in the shares of Equity Interests or other securities that are so deemed to constitute Excluded Property.  In the event that Rule 3-16 of Regulation S-X under the Securities Act is amended, modified or interpreted by the SEC to permit (or is replaced with another rule or regulation, or any other law, rule or regulation is adopted which would permit) such Subsidiary’s Equity Interests or other securities to secure the Obligations under the Indenture Documents in excess of the amount then pledged without the filing with the SEC (or any other governmental agency) of separate financial statements of such Subsidiary, then the Equity Interests or other securities of such Subsidiary will automatically be deemed to no longer constitute Excluded Property but only to the extent necessary to not be subject to any such financial statement requirement.

 

NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, THE LIEN AND SECURITY INTEREST GRANTED TO THE COLLATERAL AGENT BY THIS AGREEMENT AND THE RIGHTS AND REMEDIES OF (AND ANY EXERCISE THEREOF BY) THE COLLATERAL AGENT AND THE SECURED PARTIES HEREUNDER SHALL BE SUBJECT TO AND GOVERNED BY THE TERMS OF THE INTERCREDITOR AGREEMENT AT ANY TIME THE INTERCREDITOR AGREEMENT IS IN EFFECT.  IN THE EVENT OF ANY INCONSISTENCY BETWEEN THE TERMS HEREOF AND THE TERMS OF THE INTERCREDITOR AGREEMENT, THE TERMS OF THE INTERCREDITOR AGREEMENT SHALL CONTROL AT ANY TIME THE INTERCREDITOR AGREEMENT IS IN EFFECT.

 

SECTION 3.           REPRESENTATIONS AND WARRANTIES

 

Each Grantor hereby represents and warrants to the Collateral Agent and each other Secured Party that:

 

3.1.          Title; No Other Liens.  Except for the security interest granted to the Collateral Agent for the ratable benefit of the Secured Parties pursuant to this Agreement and the other Liens permitted to exist on the Collateral by the Indenture Documents, such Grantor owns 

 

8

 

each item of the Collateral free and clear of any and all Liens.  No effective financing statement or other public notice with respect to all or any part of the Collateral is on file or of record in any public office, except such as have been filed in favor of the Collateral Agent, for the ratable benefit of the Secured Parties, pursuant to this Agreement or as are permitted by the Indenture Documents or as to which documentation to terminate the same shall have been delivered to the Collateral Agent.  For the avoidance of doubt, it is understood and agreed that any Grantor may, as part of its business, grant licenses to third parties to use Intellectual Property owned or developed by a Grantor.  For purposes of this Agreement and the other Indenture Documents, such licensing activity shall not constitute a “Lien” on such Intellectual Property.  Each of the Collateral Agent and each other Secured Party understands that any such licenses may be exclusive to the applicable licensees, and such exclusivity provisions may limit the ability of the Collateral Agent to utilize, sell, lease or transfer the related Intellectual Property or otherwise realize value from such Intellectual Property pursuant hereto.

 

3.2.          Perfected Liens.  Subject to the terms of the Intercreditor Agreement, the security interests granted pursuant to this Agreement (i) upon completion of the filings and other actions specified on Schedule 2 (x) will constitute valid perfected security interests in all of the Collateral (other than Intellectual Property) in favor of the Collateral Agent, for the ratable benefit of the Secured Parties, as collateral security for such Grantor’s Obligations, enforceable in accordance with the terms hereof against all creditors of such Grantor and any Persons purporting to purchase any Collateral from such Grantor, to the extent a security interest therein may be perfected by filing, recording or registration in the United States pursuant to the New York UCC, (y) will constitute valid perfected security interests in all of the Collateral consisting of Intellectual Property in favor of the Collateral Agent, for the ratable benefit of the Secured Parties, as collateral security for such Grantor’s Obligations, enforceable in accordance with the terms hereof against all creditors of such Grantor and any Persons purporting to purchase any Collateral from such Grantor, to the extent a security interest therein may be perfected by filings to be made in the United States Patent and Trademark Office and the United States Copyright Office, and (z) will constitute valid perfected security interests in each Collateral Deposit Account in favor of the Collateral Agent, for the ratable benefit of the Secured Parties, as collateral security for such Grantor’s Obligations, enforceable in accordance with the terms hereof upon the Collateral Agent obtaining “control” of such Collateral Deposit Account for purposes of the New York UCC, to the extent a security interest therein may be perfected by obtaining “control” pursuant to the New York UCC, and (ii) are prior to all other Liens on the Collateral in existence on the date hereof except for Liens permitted by the Indenture Documents which have priority over the Liens on the Collateral by operation of law (including the priority rules under the New York UCC) or which, in the case of Collateral consisting of Pledged Equity and Pledged Debt, are nonconsensual Liens permitted pursuant to the Indenture Documents to be prior to the security interests granted pursuant to this Agreement or which, in the case of Collateral other than Pledged Equity and Pledged Debt, are permitted pursuant to the Indenture Documents to be prior to the security interests granted pursuant to this Agreement.

 

3.3.          Jurisdiction of Organization.  On the date hereof, such Grantor’s jurisdiction of organization and identification number from the jurisdiction of organization (if any) are specified on Schedule 3.  Such Grantor has furnished to the Collateral Agent a certified charter, certificate of incorporation or other organization document and long-form good standing certificate as of a date which is recent to the date hereof.

 

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3.4.          Inventory and Equipment.  On the date hereof, the Inventory and the Equipment of each Grantor (other than aircraft and Inventory and Equipment on any aircraft) are kept at the locations listed on Schedule 4.  The provisions of this Section 3.4 shall not apply to Equipment or Inventory in transit, that has been sold (including sales on consignment or approval in the ordinary course of business), that is out for repair, that is at other locations for purposes of onsite maintenance or repair, or that is at airports to permit onsite maintenance or repair of aircraft or aircraft engines, or to Equipment and Inventory at locations with less than $2,000,000 in aggregate value.

 

3.5.          Farm Products.  None of the Collateral constitutes, or is the Proceeds of, Farm Products.

 

3.6.          Investment Property.  (a)  On the date hereof, the shares of Pledged Equity pledged by such Grantor hereunder constitute all the issued and outstanding shares of all classes of the Equity Interests of each Subsidiary owned by such Grantor or, in the case of Subsidiaries that are Foreign Subsidiaries or Domestic Subsidiaries substantially all of whose assets consist of voting Equity Interests of one or more Foreign Subsidiaries, the shares of such Issuers pledged by such Grantor constitute 65% of the outstanding Foreign Subsidiary Voting Stock of each such Issuer (or, if such Grantor owns less than 65% of the outstanding Foreign Subsidiary Voting Stock of any such Issuer, constitute all the Foreign Subsidiary Voting Stock of such Issuer owned by such Grantor).

 

(b)           All the shares of the Pledged Equity as to which Parent or a Subsidiary of Parent is the Issuer have been duly and validly issued and are fully paid and nonassessable.

 

(c)           To the best of such Grantor’s knowledge, each of the Pledged Debt constitutes the legal, valid and binding obligation of the obligor with respect thereto, enforceable in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing.

 

(d)           Such Grantor is the beneficial owner of, and has good and marketable title to, the Investment Property pledged by it hereunder, free of any and all Liens or options in favor of any other Person, except the security interest created by this Agreement, by the Second-Lien Documents, any security interest securing any Third-Lien Obligations or nonconsensual Liens permitted pursuant to the Indenture Documents.

 

3.7.          Receivables.  No amount payable to such Grantor under or in connection with any Receivable of an amount greater than $2,000,000 is evidenced by any Instrument or Chattel Paper which has not been delivered to the Collateral Agent.

 

3.8.          Intellectual Property.  Schedule 5 lists all Intellectual Property that is registered in the United States or for which application for registration in the United States has been filed and that is material to the operation of the business of Parent and its Subsidiaries taken as a whole owned by such Grantor in its own name on the date hereof.  Such Intellectual Property is valid and enforceable, the use thereof does not infringe, misappropriate or otherwise 

 

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violate the Intellectual Property rights of any third party and, to the knowledge of such Grantor, as of the date hereof, no third party has or is infringing, misappropriating or otherwise violating Grantor’s rights in and to such Intellectual Property, except to the extent that the invalidity or unenforceability of such Intellectual Property or such infringement, misappropriation or violation could not reasonably be expected to have a Material Adverse Effect.

 

3.9.          Commercial Tort Claims.  On the date hereof, except to the extent listed in Section 2 above, no Grantor has knowledge of rights in any Commercial Tort Claim as to which it reasonably expects to recover more than $2,000,000.

 

3.10.        Deposit Accounts, Etc.  All of such Grantor’s Deposit Accounts, Securities Accounts and Commodity Accounts (other than Excluded Accounts) as of the date hereof are listed on Schedule 7.

 

SECTION 4.           COVENANTS

 

Each Grantor covenants and agrees with the Collateral Agent and the other Secured Parties that, from and after the date of this Agreement until the Obligations (other than contingent indemnification and contingent expense reimbursement obligations) shall have been paid in full:

 

4.1.          Delivery of Instruments, Certificated Securities and Chattel Paper.  (a)  If (i) any amount in excess of $2,000,000 owed by Parent or any of its Subsidiaries to any Grantor or (ii) any other amount in excess of $2,000,000 payable under or in connection with any of the Collateral shall be or become evidenced by any Instrument, Certificated Security or Chattel Paper, such Instrument, Certificated Security or Chattel Paper shall, subject to the terms of the Intercreditor Agreement, be delivered as soon as reasonably practicable to the Collateral Agent, duly indorsed in a manner reasonably satisfactory to the Collateral Agent, to be held as Collateral pursuant to this Agreement.

 

(b)           Any Pledged Debt required to be subordinated pursuant to the Indenture Documents shall, in each case, be fully subordinated to the payment in full of the Obligations.

 

4.2.          Maintenance of Insurance.  (a)  Such Grantor will maintain the insurance required by the Indenture Documents.

 

(b)           All such insurance shall (i) provide that no cancellation, material reduction in amount or material change in coverage thereof shall be effective until at least 30 days or, in the case of insurance existing as of the date hereof, at least 10 days after receipt by the Collateral Agent of written notice thereof and (ii) name the Collateral Agent as insured party or loss payee (as applicable).

 

4.3.          Maintenance of Perfected Security Interest; Further Documentation.  (a)  Such Grantor shall take all actions as may be reasonably necessary to maintain the security interest created by this Agreement as a security interest having at least the perfection and priority described in Section 3.2 and shall take all commercially reasonable actions to defend such security interest against the claims and demands of all Persons whomsoever, subject in each case to, nonconsensual Liens permitted by the Indenture Documents and, in the case of Collateral 

 

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other than Pledged Equity and Pledged Debt, Liens permitted by the Indenture Documents and to the rights of such Grantor under the Indenture Documents to dispose of the Collateral.

 

(b)           Such Grantor will furnish to the Collateral Agent from time to time statements and schedules further identifying and describing the assets and property of such Grantor and such other reports in connection therewith as the Collateral Agent may reasonably request, all in reasonable detail.

 

(c)           At any time and from time to time, upon the written request of the Collateral Agent, and at the sole expense of such Grantor, such Grantor will promptly and duly execute and deliver, and have recorded, such further instruments and documents and take such further actions as the Collateral Agent may reasonably request for the purpose of obtaining or preserving the full benefits of this Agreement and of the rights and powers herein granted, including, without limitation, (i) filing any financing or continuation statements under the Uniform Commercial Code (or other similar laws) in effect in any jurisdiction with respect to the security interests created hereby and (ii) in the case of Investment Property not issued by Parent or its Subsidiaries, Deposit Accounts, Securities Accounts, Commodity Accounts, Letter of Credit Rights and any other relevant Collateral, using commercially reasonable efforts to take, at any time after the occurrence and during the continuation of an Event of Default, any actions necessary to enable the Collateral Agent to obtain “control” (within the meaning of the applicable Uniform Commercial Code) with respect thereto.

 

4.4.          Changes in Locations, Name, etc.  Such Grantor will not, except upon 10 days’ prior written notice to the Collateral Agent (or such shorter notice as shall be reasonably satisfactory to the Collateral Agent) and delivery to the Collateral Agent of all additional executed financing statements and other documents reasonably requested by the Collateral Agent to maintain the validity, perfection and priority of the security interests provided for herein, (i) change its jurisdiction of organization from that referred to in Section 3.3 or (ii) change its name.

 

4.5.          Notices.  Such Grantor will advise the Collateral Agent promptly, in reasonable detail, of:

 

(a)           any Lien (other than security interests created hereby or Liens permitted under the Indenture Documents) on any of the Collateral which would adversely affect the ability of the Collateral Agent to exercise any of its remedies hereunder; and

 

(b)           the occurrence of any other event which could reasonably be expected to have a Material Adverse Effect on the aggregate value of the Collateral or on the security interests created hereby.

 

4.6.          Investment Property.  (a)  If such Grantor shall become entitled to receive or shall receive any certificate (including, without limitation, any certificate representing a dividend or a distribution in connection with any reclassification, increase or reduction of capital or any certificate issued in connection with any reorganization), option or rights in respect of the Equity Interests of any Subsidiary, whether in addition to, in substitution of, as a conversion of, or in exchange for, any shares of the Pledged Equity, or otherwise in respect thereof, such Grantor shall accept the same as the agent of the Collateral Agent and the other Secured Parties, 

 

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hold the same in trust for the Collateral Agent and the other Secured Parties and deliver the same forthwith to the Collateral Agent, in the exact form received, duly indorsed by such Grantor to the Collateral Agent, if required, together with an undated stock power covering such certificate duly executed in blank by such Grantor, to be held by the Collateral Agent, subject to the terms hereof, as additional collateral security for the Obligations.  If an Event of Default shall have occurred and be continuing, and any distribution of capital to a Grantor (other than cash) required to be included in Collateral shall be made on or in respect of the Investment Property or any property (other than cash) required to be included in Collateral shall be distributed to a Grantor upon or with respect to the Investment Property pursuant to the recapitalization or reclassification of the capital of any Issuer or pursuant to the reorganization thereof, such Grantor shall, unless such distribution of capital or property is otherwise subject to a perfected security interest in favor of the Collateral Agent, use commercially reasonable efforts to cause it to be subject to a perfected security interest in favor of the Collateral Agent to the extent and in the manner required pursuant to Section 4.3.  If any such property so distributed in respect of the Investment Property shall be received by such Grantor, such Grantor shall, until such property is delivered to the Collateral Agent, hold such property in trust for the Collateral Agent and the other Secured Parties as additional collateral security for the Obligations.

 

(b)           Without the prior written consent of the Collateral Agent, such consent not to be unreasonably withheld, such Grantor will not (i) sell, assign, transfer, exchange, or otherwise dispose of, or grant any option with respect to, the Investment Property or Proceeds thereof (except pursuant to a transaction permitted by the Indenture Documents), (ii) create, incur or permit to exist any Lien or option in favor of, or any claim of any Person with respect to, any of the Investment Property or Proceeds thereof, or any interest therein, except for the security interests created by this Agreement or permitted under the Indenture Documents or (iii) except as permitted by the Indenture Documents, enter, subsequent to the date upon which such Investment Property becomes Collateral hereunder, into any agreement (other than the Indenture Documents) or undertaking restricting the right or ability of such Grantor or the Collateral Agent to sell, assign or transfer any of the Investment Property required to be included in Collateral or Proceeds thereof.

 

(c)           In the case of each Grantor which is an Issuer, such Issuer agrees that (i) it will be bound by the terms of this Agreement relating to the Investment Property required to be included in Collateral issued by it and will comply with such terms insofar as such terms are applicable to it, (ii) it will notify the Collateral Agent promptly in writing of the occurrence of any of the events described in Section 4.6(a) with respect to such Investment Property issued by it and (iii) the terms of Sections 5.3(c) and 5.7 shall apply to it, mutatis  mutandis, with respect to all actions that may be required of it pursuant to Sections 5.3(c) and 5.7 with respect to such Investment Property issued by it.

 

(d)           No Grantor shall permit any security interest in certificated Pledged Equity of any Issuer that is not a Subsidiary to be perfected by possession in favor of a Person other than the Collateral Agent and, subject to the terms of the Intercreditor Agreement, the Second-Lien Collateral Agent and any agent for the Third-Lien Creditors.

 

4.7.          Receivables.  (a)  Other than in the ordinary course of business, such Grantor will not (i) grant any extension of the time of payment of any Receivable required to be 

 

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included in Collateral, (ii) compromise or settle any Receivable required to be included in Collateral for less than the full amount thereof, (iii) release, wholly or partially, any Person liable for the payment of any Receivable required to be included in Collateral, (iv) allow any credit or discount whatsoever on any Receivable required to be included in Collateral or (v) amend, supplement or modify any Receivable required to be included in Collateral in any manner that could adversely affect the value thereof.

 

(b)           Such Grantor will deliver to the Collateral Agent a copy of each material demand, notice or document received by it that questions or calls into doubt the validity or enforceability of more than 20% of the aggregate amount of the then-outstanding Receivables.

 

(c)           Notwithstanding anything herein or in any other Indenture Document to the contrary, such Grantor shall not be required to comply with the requirements of the Federal Assignment of Claims Act of 1940 unless reasonably requested to do so by the Collateral Agent upon the occurrence and during the continuation of an Event of Default.

 

4.8.          Intellectual Property.  (a)  Such Grantor (either itself or through licensees) will (i) continue to use each Trademark that is material to the operation of the business of Parent and its Restricted Subsidiaries taken as a whole on each and every trademark class of goods applicable to its current line as reflected in its current catalogs, brochures and price lists in order to maintain such Trademark in full force free from any claim of abandonment for non-use, (ii) maintain as in the past the quality of products and services offered under such Trademark, (iii) use such Trademark with the appropriate notice of registration and all other notices and legends required by applicable law, (iv) not adopt or use any mark which is confusingly similar or a colorable imitation of such Trademark unless the Collateral Agent, for the ratable benefit of the Secured Parties, shall obtain a perfected security interest in such mark pursuant to this Agreement and (v) not (and not permit any licensee or sublicensee thereof to) do any act or knowingly omit to do any act whereby such Trademark may become invalidated or impaired in any material respect.

 

(b)           Such Grantor (either itself or through licensees) will not do any act, or omit to do any act, whereby any Patent that is material to the operation of the business of Parent and its Restricted Subsidiaries taken as a whole may become forfeited, abandoned or dedicated to the public.

 

(c)           Such Grantor (either itself or through licensees) (i) will employ each Copyright that is material to the operation of the business of Parent and its Restricted Subsidiaries taken as a whole and (ii) will not (and will not permit any licensee or sublicensee thereof to) do any act or knowingly omit to do any act whereby any portion of the Copyrights that is material to the operation of the business of Parent and its Restricted Subsidiaries taken as a whole may become invalidated or otherwise impaired.  Such Grantor will not (either itself or through licensees) do any act whereby any portion of the Copyrights that is material to the operation of the business of Parent and its Restricted Subsidiaries taken as a whole may fall into the public domain.

 

(d)           Such Grantor (either itself or through licensees) will not do any act that knowingly uses any Intellectual Property that is material to the operation of the business of 

 

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Parent and its Restricted Subsidiaries taken as a whole to infringe the intellectual property rights of any other Person.

 

(e)           Such Grantor will notify the Collateral Agent immediately if it knows, or has reason to know, that any application or registration relating to any Intellectual Property that is material to the operation of the business of Parent and its Restricted Subsidiaries taken as a whole may become forfeited, abandoned or dedicated to the public, or of any adverse determination or development (including, without limitation, the institution of, or any such determination or development in, any proceeding in the United States Patent and Trademark Office, the United States Copyright Office or any court or tribunal in any country) regarding such Grantor’s ownership of, or the validity of, any such Intellectual Property or such Grantor’s right to register the same or to own and maintain the same.

 

(f)            In the event such Grantor, either by itself or through any agent, employee, licensee or designee, shall in any fiscal year file an application for the registration of any Intellectual Property that is material to the operation of Parent and its Restricted Subsidiaries taken as a whole with the United States Patent and Trademark Office, the United States Copyright Office or any similar office or agency in any other country or any political subdivision thereof, such Grantor shall report such filing to the Collateral Agent at the time of delivery of annual financial statements with respect to such fiscal year pursuant to the Indenture Documents.  Such Grantor shall execute and deliver, and have recorded, any and all agreements, instruments, documents, and papers as may be reasonably necessary to evidence the Collateral Agent’s and the other Secured Parties’ security interest in any such Copyright, Patent or Trademark and the goodwill and general intangibles of such Grantor relating thereto or represented thereby.

 

(g)           Such Grantor will take all reasonable and necessary steps, including, without limitation, in any proceeding before the United States Patent and Trademark Office, the United States Copyright Office or any similar office or agency in any other country or any political subdivision thereof, to maintain and pursue each application (and to obtain the relevant registration) and to maintain each registration of the Intellectual Property that is material to the operation of the business of Parent and its Restricted Subsidiaries taken as a whole, including, without limitation, filing of applications for renewal, affidavits of use and affidavits of incontestability.

 

(h)           In the event that any Intellectual Property that is material to the operation of the business of Parent and its Restricted Subsidiaries taken as a whole is infringed, misappropriated or diluted by a third party, such Grantor shall (i) take such actions as such Grantor shall reasonably deem appropriate under the circumstances to protect such Intellectual Property and (ii) if such Intellectual Property is of material economic value, promptly notify the Collateral Agent after it learns thereof and sue for infringement, misappropriation or dilution, to seek injunctive relief where appropriate and to recover any and all damages for such infringement, misappropriation or dilution.

 

(i)            Notwithstanding anything to the contrary in this Agreement, subject to the provisions of the Indenture Documents, nothing shall prevent any Grantor in the ordinary course of business from abandoning, ceasing to use or otherwise impairing or disposing of any Intellectual Property if such Grantor reasonably believes that doing so is in its business interests.  

 

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For the avoidance of doubt, nothing in this Section 4.8 shall prohibit a sale, transfer or disposition of any Intellectual Property made in accordance with the provisions of the Indenture Documents.

 

(j)            No Grantor shall, and the Grantors in the aggregate shall not, make filings in the United States Copyright Office or the United States Trademark Office to perfect any security interest in all or substantially all of the Copyright Licenses held by the Grantors in the aggregate or all or substantially all of the Trademark Licenses held by the Grantors in the aggregate (other than to perfect the security interest in such Copyright Licenses and Trademark Licenses securing the Obligations, the Second-Lien Obligations and any Third-Lien Obligations).

 

(k)           Upon and during the continuance of an Event of Default, each Grantor shall use all commercially reasonable efforts to obtain all requisite consents or approvals under each Copyright License, Patent License and Trademark License reasonably requested by the Collateral Agent to effect the assignment of all such Grantor’s right, title and interest thereunder to the Collateral Agent or its designee.

 

4.9.          Commercial Tort Claims.  If such Grantor shall obtain an interest in any Commercial Tort Claim as to which it determines that it reasonably expects to recover more than $2,000,000, such Grantor shall within 30 days of making such determination (or such other period reasonably satisfactory to the Collateral Agent) sign and deliver documentation reasonably acceptable to the Collateral Agent granting a security interest under the terms and provisions of this Agreement in and to such Commercial Tort Claim.

 

4.10.        Deposit Accounts.  (a)  Each Grantor shall execute and deliver to the Collateral Agent Deposit Account Control Agreements for each Collateral Deposit Account identified on Schedule 7 within 60 days after the Closing Date, or such longer period as is reasonably acceptable to the Collateral Agent.

 

(b)           Before opening or replacing any Collateral Deposit Account, each Grantor shall give five Business Days’ prior notice to the Collateral Agent (or such other period reasonably satisfactory to the Collateral Agent) and shall cause each bank or financial institution in which it seeks to open a Collateral Deposit Account, to enter into a Deposit Account Control Agreement with the Collateral Agent in order to give the Collateral Agent control of such Deposit Account.

 

4.11.        Overriding Provisions with respect to Collateral.  Notwithstanding anything to the contrary contained above in this Section 4 or elsewhere in this Agreement or any other Indenture Document, to the extent the provisions of this Agreement (or any other Indenture Document) require the delivery or endorsement of, or control over, the ATA Collateral to be granted to the Collateral Agent at any time prior to the Second-Lien Obligations Termination Date, then delivery or endorsement of the ATA Collateral (or control with respect thereto) shall instead be granted to the Second-Lien Collateral Agent, to be held in accordance with the Intercreditor Agreement.  Furthermore, at all times prior to the Second-Lien Obligations Termination Date and in accordance with the terms of the Intercreditor Agreement, the Collateral Agent is authorized by the parties hereto to effect transfers of the ATA Collateral at any time in 

 

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its possession (and any “control” or similar agreements with respect to the ATA Collateral) to the Second-Lien Collateral Agent.  Any such endorsement or delivery of, or granting of control with respect to, the ATA Collateral to the Second-Lien Collateral Agent shall be deemed an endorsement, delivery or granting of control to the Collateral Agent for all purposes hereunder.  If any Grantor shall pledge any assets or undertake any actions to perfect or protect any Liens on any assets pledged in connection with the Indenture Documents, such Grantor may simultaneously pledge such assets or undertake such actions with respect to such assets as necessary to comply with the provisions set forth in the Intercreditor Agreement, without further request or consent by the Secured Parties. Any provision of any Indenture Document to the contrary notwithstanding, no Grantor shall be required to act or refrain from acting in a manner that is inconsistent with the terms and provisions of the Intercreditor Agreement.

 

SECTION 5.           REMEDIAL PROVISIONS

 

5.1.          Certain Matters Relating to Receivables.  (a)  Subject to the terms of the Intercreditor Agreement, the Collateral Agent hereby authorizes each Grantor to collect such Grantor’s Receivables required to be included in Collateral and the Collateral Agent may curtail or terminate said authority at any time after the occurrence and during the continuance of an Event of Default.  Subject to the terms of the Intercreditor Agreement, if required by the Collateral Agent at any time after the occurrence and during the continuance of an Event of Default, any payments of such Receivables, when collected by any Grantor, (i) shall be forthwith (and, in any event, within two Business Days) deposited by such Grantor in the exact form received, duly indorsed by such Grantor to the Collateral Agent if required, in a Collateral Account maintained under the sole dominion and control of the Collateral Agent, subject to withdrawal by the Collateral Agent for the account of the other Secured Parties only as provided in Section 5.5, and (ii) until so turned over, shall be held by such Grantor in trust for the Collateral Agent and the other Secured Parties, segregated from other funds of such Grantor.  Each such deposit of Proceeds of Receivables required to be included in Collateral shall be accompanied by a report identifying in reasonable detail the nature and source of the payments included in the deposit.

 

(b)           If an Event of Default has occurred and is continuing, at the Collateral Agent’s request, each Grantor shall deliver to the Collateral Agent all original and other documents evidencing, and relating to, the agreements and transactions which gave rise to the Receivables required to be included in Collateral, including, without limitation, all original orders, invoices and shipping receipts.

 

5.2.          Communications with Obligors; Grantors Remain Liable.  (a)  The Collateral Agent in its own name or in the name of others may at any time when an Event of Default has occurred and is continuing, communicate with obligors under the Receivables required to be included in Collateral to verify with them to the Collateral Agent’s satisfaction the existence, amount and terms of any such Receivables.

 

(b)           Upon the request of the Collateral Agent at any time after the occurrence and during the continuance of an Event of Default, each Grantor shall notify obligors on the Receivables required to be included in Collateral that such Receivables have been assigned to the

 

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Collateral Agent for the ratable benefit of the Secured Parties and that payments in respect thereof shall be made directly to the Collateral Agent.

 

(c)           Anything herein to the contrary notwithstanding, each Grantor shall remain liable under each of the Receivables required to be included in the Collateral to observe and perform all the conditions and obligations to be observed and performed by it thereunder, all in accordance with the terms of any agreement giving rise thereto.  Neither the Collateral Agent nor any other Secured Party shall have any obligation or liability under any such Receivable (or any agreement giving rise thereto) by reason of or arising out of this Agreement or the receipt by the Collateral Agent or any other Secured Party of any payment relating thereto, nor shall the Collateral Agent or any other Secured Party be obligated in any manner to perform any of the obligations of any Grantor under or pursuant to any such Receivable (or any agreement giving rise thereto), to make any payment, to make any inquiry as to the nature or the sufficiency of any payment received by it or as to the sufficiency of any performance by any party thereunder, to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times.

 

5.3.          Pledged Equity.  (a)  Unless an Event of Default shall have occurred and be continuing and the Collateral Agent shall have given notice to the relevant Grantor of the Collateral Agent’s intent to exercise its corresponding rights pursuant to Section 5.3(b), each Grantor shall be permitted to receive all dividends (other than dividends payable in Equity Interests) paid in respect of the Pledged Equity and all payments made in respect of the Pledged Debt, in each case to the extent permitted in the Indenture Documents, and to exercise all voting and corporate or other organizational rights with respect to the Investment Property; provided, however, that such Grantor will not be entitled to exercise any such right if the result thereof could materially and adversely affect the rights inuring to a holder of the Investment Property or the rights and remedies of the Collateral Agent or the other Secured Parties under any Indenture Document or the ability of the Collateral Agent or the other Secured Parties to exercise the same.

 

(b)           Subject to the terms of the Intercreditor Agreement, if an Event of Default shall occur and be continuing and the Collateral Agent shall give notice of its intent to exercise such rights to the relevant Grantor or Grantors, (i) the Collateral Agent shall have the right to receive any and all cash dividends, payments (including sums paid upon the liquidation or dissolution of any Issuer or in connection with any distribution of capital) or other Proceeds paid in respect of the Investment Property and make application thereof to the Obligations in accordance with the provisions of this Agreement and (ii) any or all of the Investment Property shall be registered in the name of the Collateral Agent or its nominee, and the Collateral Agent or its nominee may thereafter exercise (x) all voting, corporate and other rights pertaining to such Investment Property at any meeting of shareholders of the relevant Issuer or Issuers or otherwise and (y) any and all rights of conversion, exchange and subscription and any other rights, privileges or options pertaining to such Investment Property as if it were the absolute owner thereof (including, without limitation, the right to exchange at its discretion any and all of the Investment Property upon the merger, consolidation, reorganization, recapitalization or other fundamental change in the corporate or other organizational structure of any Issuer, or upon the exercise by any Grantor or the Collateral Agent of any right, privilege or option pertaining to such Investment Property, and in connection therewith, the right to deposit and deliver any and 

 

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all of the Investment Property with any committee, depositary, transfer agent, registrar or other designated agency upon such terms and conditions as the Collateral Agent may determine), all without liability except to account for property actually received by it, but the Collateral Agent shall have no duty to any Grantor to exercise any such right, privilege or option and shall not be responsible for any failure to do so or delay in so doing.  If any sums of money paid or distributed in respect of Investment Property, which the Collateral Agent shall be entitled to receive pursuant to clause (i) above, shall be received by a Grantor, such Grantor shall, until such money is paid to the Collateral Agent, hold such money in trust for the Collateral Agent and the other Secured Parties as additional collateral for the Obligations.

 

(c)           Each Grantor hereby authorizes and instructs each Issuer of any Investment Property pledged by such Grantor hereunder to (i) comply with any instruction received by it from the Collateral Agent in writing that (x) states that an Event of Default has occurred and is continuing and (y) is otherwise in accordance with the terms of this Agreement, without any other or further instructions from such Grantor, and each Grantor agrees that each Issuer shall be fully protected in so complying, and (ii) unless otherwise expressly permitted hereby, pay any dividends or other payments with respect to the Investment Property directly to the Collateral Agent.

 

5.4.          Proceeds to be Turned Over to Collateral Agent.  Subject to the terms of the Intercreditor Agreement, if an Event of Default occurs and is continuing, all Proceeds received by any Grantor consisting of cash, checks and other near-cash items shall be held by such Grantor in trust for the Collateral Agent and the other Secured Parties, segregated from other funds of such Grantor, and, if requested by the Collateral Agent, shall, forthwith upon receipt by such Grantor, be turned over to the Collateral Agent in the exact form received by such Grantor (duly indorsed by such Grantor to the Collateral Agent, if required).  All Proceeds received by the Collateral Agent hereunder shall be held by the Collateral Agent in a Collateral Account maintained under its sole dominion and control.  All Proceeds while held by the Collateral Agent in a Collateral Account (or by such Grantor in trust for the Collateral Agent and the other Secured Parties) shall continue to be held as collateral security for all the Obligations and shall not constitute payment thereof until applied as provided in Section 5.5.

 

5.5.          Application of Proceeds.

 

(a)           Subject to the terms of the Intercreditor Agreement, at such intervals as may be agreed upon by Parent and the Collateral Agent, or, if an Event of Default has occurred and is continuing, at any time at the Collateral Agent’s election, the Collateral Agent shall apply all or any part of Proceeds from the Collateral (other than the ATA Collateral), whether or not held in any Collateral Account, as follows:

 

First, to pay Obligations in respect of incurred and unpaid fees and expenses of the Collateral Agent and the Trustee under the Indenture Documents;

 

Second, towards payment of amounts then due and owing and remaining unpaid in respect of the Obligations, pro rata among the Secured Parties according to the amounts of the Obligations then due and owing and remaining unpaid to the Secured Parties;

 

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Third, towards payment of any remaining Obligations, pro rata among the Secured Parties according to the amounts of the Obligations then held by the Secured Parties;

 

Fourth, if the Second-Lien Obligations Termination Date has not theretofore occurred, towards the payment of any remaining Second-Lien Obligations in accordance with the Intercreditor Agreement; and

 

Fifth, any balance remaining after the Obligations and the Second-Lien Obligations shall have been paid in full shall be paid over to the Notes Issuers or to whomsoever may be lawfully entitled to receive the same.

 

(b)           Subject to the terms of the Intercreditor Agreement, at such intervals as may be agreed upon by Parent and the Collateral Agent, or, if an Event of Default has occurred and is continuing, at any time at the Collateral Agent’s election, the Collateral Agent shall apply all or any part of Proceeds from the ATA Collateral, whether or not held in any Collateral Account, as follows:

 

First, in accordance with Section 4.1 of the Intercreditor Agreement, to the Second-Lien Collateral Agent for application to Second-Lien Obligations until same have been repaid in full; and

 

Second, as otherwise provided in Section 5.5(a) hereof.

 

5.6.          Code and Other Remedies.  Subject to the terms of the Intercreditor Agreement, if an Event of Default occurs and is continuing, the Collateral Agent, on behalf of the Secured Parties, may exercise, in addition to all other rights and remedies granted to them in this Agreement and in any other instrument or agreement securing, evidencing or relating to the Obligations, all rights and remedies of a secured party under the New York UCC or any other applicable law.  Without limiting the generality of the foregoing, subject to the terms of the Intercreditor Agreement, if an Event of Default occurs and is continuing, the Collateral Agent, without demand of performance or other demand, presentment, protest, advertisement or notice of any kind (except any notice required by law referred to below) to or upon any Grantor or any other Person (all and each of which demands, defenses, advertisements and notices are hereby waived), may in such circumstances forthwith collect, receive, appropriate and realize upon the Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give option or options to purchase, or otherwise dispose of and deliver the Collateral or any part thereof (or contract to do any of the foregoing), in one or more parcels at public or private sale or sales, at any exchange, broker’s board or office of the Collateral Agent or any other Secured Party or elsewhere upon such terms and conditions as it may deem advisable and at such prices as it may deem best, for cash or on credit or for future delivery without assumption of any credit risk.  The Collateral Agent or any other Secured Party shall have the right upon any such public sale or sales, and, to the extent permitted by law, upon any such private sale or sales, to purchase the whole or any part of the Collateral so sold, free of any right or equity of redemption in any Grantor, which right or equity is hereby waived and released.  Each Grantor further agrees, at the Collateral Agent’s request following and during the continuance of an Event of Default, to assemble the Collateral and make it available to the Collateral Agent at places which the Collateral Agent 

 

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shall reasonably select, whether at such Grantor’s premises or elsewhere.  The Collateral Agent shall apply the net proceeds of any action taken by it pursuant to this Section 5.6, after deducting all reasonable out-of-pocket costs and expenses of every kind incurred in connection therewith or incidental to the care or safekeeping of any of the Collateral or in any way relating to the Collateral or the rights of the Collateral Agent and the other Secured Parties hereunder, including, without limitation, reasonable attorneys’ fees and disbursements, to the payment in whole or in part of the Obligations, in the order set forth in Section 5.5, and only after such application and after the payment by the Collateral Agent of any other amount required by any provision of law, including, without limitation, Section 9-615(a)(3) of the New York UCC, need the Collateral Agent account for the surplus, if any, to any Grantor.  To the extent permitted by applicable law, each Grantor waives all claims, damages and demands it may acquire against the Collateral Agent or any other Secured Party arising out of the exercise by them of any rights hereunder.  If any notice of a proposed sale or other disposition of Collateral shall be required by law, such notice shall be deemed reasonable and proper if given at least 10 days before such sale or other disposition.

 

5.7.          Registration Rights.  (a)  Subject to the terms of the Intercreditor Agreement, if the Collateral Agent shall determine to exercise its rights to sell all or any of the Pledged Equity pursuant to Section 5.6, and if, in the opinion of the Collateral Agent, it is necessary or advisable to have the Pledged Equity, or that portion thereof to be sold, registered under the provisions of the Securities Act, the relevant Grantor will cause the Issuer thereof to (i) execute and deliver, and cause the directors and officers of such Issuer to execute and deliver, all such instruments and documents, and do or cause to be done all such other acts as may be, in the opinion of the Collateral Agent, necessary or advisable to register the Pledged Equity, or that portion thereof to be sold, under the provisions of the Securities Act, (ii) use its best efforts to cause the registration statement relating thereto to become effective and to remain effective for a period of one year from the date of the first public offering of the Pledged Equity, or that portion thereof to be sold, and (iii) make all amendments thereto and/or to the related prospectus which, in the opinion of the Collateral Agent, are necessary or advisable, all in conformity with the requirements of the Securities Act and the rules and regulations of the SEC applicable thereto.  Each Grantor agrees to cause such Issuer to comply with the provisions of the securities or “Blue Sky” laws of any and all jurisdictions which the Collateral Agent shall designate and to make available to its security holders, as soon as practicable, an earnings statement (which need not be audited) which will satisfy the provisions of Section 11(a) of the Securities Act.

 

(b)           Each Grantor recognizes that the Collateral Agent may be unable to effect a public sale of any or all the Pledged Equity, by reason of certain prohibitions contained in the Securities Act and applicable state securities laws or otherwise, and may be compelled to resort to one or more private sales thereof to a restricted group of purchasers which will be obliged to agree, among other things, to acquire such securities for their own account for investment and not with a view to the distribution or resale thereof.  Each Grantor acknowledges and agrees that any such private sale may result in prices and other terms less favorable than if such sale were a public sale and, notwithstanding such circumstances, agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner.  The Collateral Agent shall be under no obligation to delay a sale of any of the Pledged Equity for the period of time necessary to permit the Issuer thereof to register such securities for public sale under the Securities Act, or under applicable state securities laws, even if such Issuer would agree to do so.

 

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(c)           Each Grantor agrees to use its best efforts to do or cause to be done all such other acts as may be necessary to make such sale or sales of all or any portion of the Pledged Equity pursuant to this Section 5.7 valid and binding and in compliance with any and all other applicable law.  Each Grantor further agrees that a breach of any of the covenants contained in this Section 5.7 will cause irreparable injury to the Collateral Agent and the other Secured Parties, that the Collateral Agent and the other Secured Parties have no adequate remedy at law in respect of such breach and, as a consequence, that each and every covenant contained in this Section 5.7 shall be specifically enforceable against such Grantor, and such Grantor hereby waives, to the fullest extent permitted by applicable law, and agrees not to assert any defenses against an action for specific performance of such covenants except for a defense that no Event of Default has occurred and is continuing under the Indenture.

 

5.8.          Deficiency.  Each Grantor shall remain liable for any deficiency if the proceeds of any sale or other disposition of the Collateral are insufficient to pay its Obligations and the reasonable fees and disbursements of any attorneys employed by the Collateral Agent or any other Secured Party to collect such deficiency.

 

5.9.          Notice of Sole Control.  Subject to the terms of the Intercreditor Agreement, upon the occurrence and during the continuance of an Event of Default, the Collateral Agent may give notice of sole control or any other instruction under any Deposit Account Control Agreement with respect to any Collateral Deposit Account or and other control agreement with any Securities Intermediary with respect to any Securities Account or with any Commodity Intermediary with respect to any Commodity Account and take any action therein with respect to such Collateral, and the Collateral Agent agrees not to give any such notice or instruction unless there is an occurrence and continuance of an Event of Default.  The Collateral Agent agrees to withdraw any such notice of sole control as soon as practicable upon any such Event of Default ceasing to exist (or, if any such notice of sole control may not be withdrawn, to terminate the applicable control agreement and enter into a new control agreement on the same terms).

 

SECTION 6.           THE COLLATERAL AGENT

 

6.1.          Collateral Agent’s Appointment as Attorney-in-Fact, etc.  (a)  Each Grantor hereby irrevocably constitutes and appoints the Collateral Agent and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of such Grantor and in the name of such Grantor or in its own name, for the purpose of carrying out the terms of this Agreement, to take any and all appropriate action and to execute any and all documents and instruments which may be necessary or desirable to accomplish the purposes of this Agreement, and, without limiting the generality of the foregoing, each Grantor hereby gives the Collateral Agent the power and right, on behalf of such Grantor, without notice to or assent by such Grantor, to do any or all of the following:

 

(i)            in the name of such Grantor or its own name, or otherwise, take possession of and indorse and collect any checks, drafts, notes, acceptances or other instruments for the payment of moneys due under any Receivable required to be included in Collateral hereunder or with respect to any other Collateral and file any claim or take 

 

22

 

any other action or proceeding in any court of law or equity or otherwise deemed appropriate by the Collateral Agent for the purpose of collecting any and all such moneys due under any such Receivable or with respect to any other Collateral whenever payable;

 

(ii)           in the case of any Intellectual Property required to be included in Collateral hereunder, execute and deliver, and have recorded, any and all agreements, instruments, documents and papers as may be necessary or as the Collateral Agent may reasonably request to evidence the Collateral Agent’s and the other Secured Parties’ security interest in such Intellectual Property and the goodwill and general intangibles of such Grantor relating thereto or represented thereby;

 

(iii)          pay or discharge taxes and Liens levied or placed on or threatened against the Collateral, effect any repairs or any insurance called for by the terms of this Agreement and pay all or any part of the premiums therefor and the costs thereof;

 

(iv)          execute, in connection with any sale provided for in Sections 5.6 or 5.7, any indorsements, assignments or other instruments of conveyance or transfer with respect to the Collateral; and

 

(v)           (1) direct any party liable for any payment under any of the Collateral to make payment of any and all moneys due or to become due thereunder directly to the Collateral Agent or as the Collateral Agent shall direct; (2) ask or demand for, collect, and receive payment of and receipt for, any and all moneys, claims and other amounts due or to become due at any time in respect of or arising out of any Collateral; (3) sign and indorse any invoices, freight or express bills, bills of lading, storage or warehouse receipts, drafts against debtors, assignments, verifications, notices and other documents in connection with any of the Collateral; (4) commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect the Collateral or any portion thereof and to enforce any other right in respect of any Collateral; (5) defend any suit, action or proceeding brought against such Grantor with respect to any Collateral; (6) settle, compromise or adjust any such suit, action or proceeding and, in connection therewith, give such discharges or releases as the Collateral Agent may reasonably deem appropriate; (7) subject to any licenses (and the rights granted therein) existing at the time of such assignment, assign any Copyright, Patent or Trademark (along with the goodwill of the business to which any such Copyright, Patent or Trademark pertains), throughout the world for such term or terms, on such conditions, and in such manner, as the Collateral Agent shall in its sole discretion determine; and (8) generally, sell, transfer, pledge and make any agreement with respect to or otherwise deal with any of the Collateral as fully and completely as though the Collateral Agent were the absolute owner thereof for all purposes, and do, at the Collateral Agent’s option and such Grantor’s expense, at any time, or from time to time, all acts and things which the Collateral Agent deems necessary to protect, preserve or realize upon the Collateral and the Collateral Agent’s and the other Secured Parties’ security interests therein and to effect the intent of this Agreement, all as fully and effectively as such Grantor might do.

 

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Anything in this Section 6.1(a) to the contrary notwithstanding, the Collateral Agent agrees that it will not exercise any rights under the power of attorney provided for in this Section 6.1(a) unless an Event of Default shall have occurred and be continuing.

 

(b)           If any Grantor fails to perform or comply with any of its agreements contained herein, the Collateral Agent, at its option, but without any obligation so to do, may perform or comply, or otherwise cause performance or compliance, with such agreement.

 

(c)           The reasonable out-of-pocket expenses of the Collateral Agent incurred in connection with actions undertaken as provided in this Section 6.1, together with interest thereon payable on past due Notes under the Indenture, from the date of payment by the Collateral Agent to the date reimbursed by the relevant Grantor, shall be payable by such Grantor to the Collateral Agent on demand.  This Section 6.1(c) shall survive repayment of the Obligations and all other amounts payable under the Indenture and the other Indenture Documents.

 

(d)           Each Grantor hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof.  All powers, authorizations and agencies contained in this Agreement are coupled with an interest and are irrevocable until this Agreement is terminated and the security interests created hereby are released.

 

6.2.          Duty of Collateral Agent.  The Collateral Agent’s sole duty with respect to the custody, safekeeping and physical preservation of the Collateral in its possession, under Section 9-207 of the New York UCC or otherwise, shall be to deal with it in the same manner as the Collateral Agent deals with similar property for its own account.  Neither the Collateral Agent, any other Secured Party nor any of their respective officers, directors, employees or agents shall be liable for failure to demand, collect or realize upon any of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of any Grantor or any other Person or to take any other action whatsoever with regard to the Collateral or any part thereof.  The powers conferred on the Collateral Agent and the other Secured Parties hereunder are solely to protect the Collateral Agent’s and the other Secured Parties’ interests in the Collateral and shall not impose any duty upon the Collateral Agent or any other Secured Party to exercise any such powers.  The Collateral Agent and the other Secured Parties shall be accountable only for amounts that they actually receive as a result of the exercise of such powers, and neither they nor any of their officers, directors, employees or agents shall be responsible to any Grantor for any act or failure to act hereunder, except for their own gross negligence or willful misconduct.  The Grantors and each Secured Party, by acceptance of the benefits hereof, agrees that references to the Trustee in Sections 7.01(b), (e) and (f), 7.02, 7.03, 7.04, 7.07 and 7.08 of the Indenture shall be understood to include the Collateral Agent when acting under this Agreement and the other Collateral Agreements, and that said Sections are hereby incorporated herein in their entirety, mutatis mutandis.

 

6.3.          Execution of Financing Statements.  Pursuant to any applicable law, each Grantor authorizes the Collateral Agent to file or record financing statements and other filing or recording documents or instruments with respect to the Collateral without the signature of such Grantor in such form and in such offices as the Collateral Agent determines appropriate to perfect the security interests of the Collateral Agent under this Agreement.  Each Grantor 

 

24

 

authorizes the Collateral Agent to use the collateral description “all personal property” or “all assets” in any such financing statements.  Each Grantor hereby ratifies and authorizes the filing by the Collateral Agent of any financing statement with respect to the Collateral made prior to the date hereof; provided that, at the reasonable request of any Grantor, the Collateral Agent shall amend any such statement (and any other financing statement filed by the Collateral Agent in connection with this Agreement) to exclude any property that is released from, or otherwise not included in, the Collateral.  The Collateral Agent agrees promptly to furnish copies of all such filings to Parent.

 

6.4.          Authority of Collateral Agent.  Each Grantor acknowledges that the rights and responsibilities of the Collateral Agent under this Agreement with respect to any action taken by the Collateral Agent or the exercise or non-exercise by the Collateral Agent of any option, voting right, request, judgment or other right or remedy provided for herein or resulting or arising out of this Agreement shall, as between the Collateral Agent and the other Secured Parties, be governed by the Indenture and by such other agreements with respect thereto as may exist from time to time among them, but, as between the Collateral Agent and the Grantors, the Collateral Agent shall be conclusively presumed to be acting as agent for the Secured Parties with full and valid authority so to act or refrain from acting, and no Grantor shall be under any obligation, or entitlement, to make any inquiry respecting such authority.

 

SECTION 7.           MISCELLANEOUS

 

7.1.          Amendments in Writing.  None of the terms or provisions of this Agreement may be waived, amended, supplemented or otherwise modified except in accordance with Sections 9.01 or 9.02 of the Indenture.

 

7.2.          Notices.  All notices, requests and demands to or upon the Collateral Agent or any Grantor hereunder shall be effected in the manner provided for in Section 12.02 of the Indenture.

 

7.3.          No Waiver by Course of Conduct; Cumulative Remedies.  Neither the Collateral Agent nor any other Secured Party shall by any act (except by a written instrument pursuant to Section 7.1), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any Default or Event of Default.  No failure to exercise, nor any delay in exercising, on the part of the Collateral Agent or any other Secured Party, any right, power or privilege hereunder shall operate as a waiver thereof.  No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  A waiver by the Collateral Agent or any other Secured Party of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which the Collateral Agent or such Secured Party would otherwise have on any future occasion.  The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any other rights or remedies provided by law.

 

7.4.          Enforcement Expenses; Indemnification.         (a)  Each Grantor jointly and severally agrees to pay, and to save the Collateral Agent and the other Secured Parties harmless from, any and all liabilities with respect to, or resulting from any delay in paying, any and all 

 

25

 

stamp, excise, sales or other taxes which may be payable or determined to be payable with respect to any of the Collateral or in connection with any of the transactions contemplated by this Agreement.

 

(b)           The agreements in this Section 7.4 shall survive repayment of the Obligations and all other amounts payable under the Indenture and the other Indenture Documents.

 

7.5.          Successors and Assigns.  This Agreement shall be binding upon the permitted successors and assigns of each Grantor and shall inure to the benefit of the Collateral Agent and the other Secured Parties and their permitted successors and assigns; provided that no Grantor may, except pursuant to a merger or consolidation permitted by the Indenture Documents, assign, transfer or delegate any of its rights or obligations under this Agreement without the prior written consent of the Collateral Agent.

 

7.6.          Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.  Delivery by telecopier of an executed counterpart of a signature page to this Agreement shall be effective as delivery of an original executed counterpart of this Agreement.

 

7.7.          Severability.  If any provision of this Agreement is held to be illegal, invalid or unenforceable, the legality, validity and enforceability of the remaining provisions of this Agreement shall not be affected or impaired thereby.  The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

7.8.          Section Headings.  The Section headings used in this Agreement are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof.

 

7.9.          Integration.  This Agreement, together with the other Indenture Documents, comprises the complete and integrated agreement of the parties on the subject matter hereof and thereof and supersedes all prior agreements, written or oral, on such subject matter.

 

7.10.        GOVERNING LAW.  THE INTERNAL LAW OF THE STATE OF NEW YORK WILL GOVERN AND BE USED TO CONSTRUE THIS AGREEMENT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

 

7.11.        Submission To Jurisdiction; Waivers.  (a)  Any legal action or proceeding arising under any Indenture Document or in any way connected with or related or incidental to the dealings of the parties hereto or any of them with respect to any Indenture Document, or the transactions related thereto, in each case whether now existing or hereafter arising, may be brought in the courts of the State of New York sitting in New York County or of the United States for the Southern District of such State, and by execution and delivery of this Agreement, each Grantor and the Collateral Agent consents, for itself and in respect of its property, to the 

 

26

 

non-exclusive jurisdiction of those courts.  Each Grantor and the Collateral Agent irrevocably waives any objection, including any objection to the laying of venue or based on the grounds of forum non conveniens, which it may now or hereafter have to the bringing of any action or proceeding in such courts in respect of any Indenture Document or other document related thereto.

 

(b)           Each Grantor hereby irrevocably and unconditionally:

 

(i)            agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such Grantor at its address referred to in Section 7.2 or at such other address of which the Collateral Agent shall have been notified pursuant thereto;

 

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

 

(iii)          waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this Section any special, exemplary, punitive or consequential damages.

 

7.12.        Acknowledgments.  Each Grantor hereby acknowledges that:

 

(a)           it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Indenture Documents to which it is a party;

 

(b)           neither the Collateral Agent nor any other Secured Party has any fiduciary relationship with or duty to any Grantor arising out of or in connection with this Agreement or any of the other Indenture Documents, and the relationship between the Grantors, on the one hand, and the Collateral Agent and the other Secured Parties, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and

 

(c)           no joint venture is created hereby or by the other Indenture Documents or otherwise exists by virtue of the transactions contemplated hereby among the Secured Parties or among the Grantors and the Secured Parties.

 

7.13.        Additional Grantors.  Each Subsidiary of Parent that is required to become a party to this Agreement pursuant to the Indenture Documents shall become a Grantor for all purposes of this Agreement upon execution and delivery by such Subsidiary of a Joinder Agreement.

 

7.14.        Releases.  (a)  At such time as the Notes and the other Obligations (other than contingent indemnification and contingent expense reimbursement obligations) shall have been paid in full, the Collateral shall be released from the Liens created hereby, and this Agreement and all obligations (other than those expressly stated to survive such termination) of the Collateral Agent and each Grantor hereunder shall terminate, all without delivery of any instrument or performance of any act by any party, and all rights to the Collateral shall revert to 

 

27

 

the Grantors.  At the request and sole expense of any Grantor following any such termination, the Collateral Agent shall deliver to such Grantor any Collateral held by the Collateral Agent hereunder and execute and deliver to such Grantor such documents as such Grantor shall reasonably request to evidence such termination.  In addition, if a Legal Defeasance, Covenant Defeasance or satisfaction and discharge of the Indenture shall have occurred in accordance with the terms of the Indenture, the security interests in all of the Collateral that secure the Notes shall be automatically released, and the terms of the immediately preceding sentence shall apply as if all of the Obligations had been paid (other than contingent indemnification obligations not yet due and payable) in full in cash.

 

(b)           If any of the Collateral shall be sold, transferred or otherwise disposed of by any Grantor in a transaction permitted by the Indenture Documents, then (i) the Liens created hereby on such Collateral shall automatically be released and (ii) the Collateral Agent, at the request and sole expense of such Grantor, shall execute and deliver to such Grantor all releases or other documents reasonably necessary or desirable for the release of the Liens created hereby on such Collateral.  In addition, at the request and at the sole expense of the Grantors, the Collateral Agent agrees to (x) provide to each Grantor a power of attorney to execute any document reasonably required to permit any sale permitted by the Indenture Documents of any asset, the perfection of which is governed by a certificate-of-title statute, free of the Liens created by the Collateral Agreements and (y) with respect to any jurisdiction in which releases executed pursuant to such power of attorney are insufficient to release such Liens, (1) execute in blank any document reasonably required to permit any sale permitted by the Indenture Documents of any asset, the perfection of which is governed by a certificate-of-title statute, free of the Liens created by the Collateral Agreements and (2) authorize such Grantor to fill in the relevant information to release such Lien.  At the request and sole expense of the Grantors, a Grantor shall be released from its obligations hereunder in the event that all the Equity Interests of such Grantor shall be sold, transferred or otherwise disposed of in a transaction permitted by the Indenture Documents; provided that Parent shall have delivered to the Collateral Agent, at least five Business Days prior to the date of the proposed release, a written request for release identifying the relevant Grantor and the terms of the sale or other disposition in reasonable detail, including the price thereof and any expenses in connection therewith, together with a certification by Parent stating that such transaction is in compliance with the Indenture and the other Indenture Documents.

 

7.15.        WAIVER OF JURY TRIAL.  EACH GRANTOR AND THE COLLATERAL AGENT HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE INDENTURE, THE NOTES OR THIS AGREEMENT.

 

* * *

 

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IN WITNESS WHEREOF, each of the undersigned has caused this Security Agreement to be duly executed and delivered as of the date first above written.

 

 

	     
    	    GLOBAL   AVIATION HOLDINGS INC.
    
	     
    	     
    	     
    
	     
    	     
    	     
    
	     
    	    By:
    	    /s/   Mark M. McMillin
    
	     
    	     
    	    Name:
    	    Mark   M. McMillin
    
	     
    	     
    	    Title:
    	    Sr.   VP, General Counsel:
    

 

[Signature Page to Security Agreement]

 

 

 

	
   

  	
  NEW
  ATA INVESTMENT INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Mark M. McMillin

  
	
   

  	
   

  	
  Name:

  	
  Mark
  M. McMillin

  
	
   

  	
   

  	
  Title:

  	
  Sr.
  VP, General Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  NEW
  ATA ACQUISITION INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Mark M. McMillin

  
	
   

  	
   

  	
  Name:

  	
  Mark
  M. McMillin

  
	
   

  	
   

  	
  Title:

  	
  Sr.
  VP, General Counsel 

  

 

[Signature Page to First-Lien Security Agreement]

 

 

	
   

  	
   

  	
  WORLD
  AIR HOLDINGS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Mark M. McMillin

  
	
   

  	
   

  	
  Name:

  	
  Mark
  M. McMillin

  
	
   

  	
   

  	
  Title:

  	
  Sr.
  VP, General Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  NORTH
  AMERICAN AIRLINES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Mark M. McMillin

  
	
   

  	
   

  	
  Name:

  	
  Mark
  M. McMillin

  
	
   

  	
   

  	
  Title:

  	
  Sr.
  VP, General Counsel

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  WORLD
  AIRWAYS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Mark M. McMillin

  
	
   

  	
   

  	
  Name:

  	
  Mark
  M. McMillin

  
	
   

  	
   

  	
  Title:

  	
  Sr.
  VP, General Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  WORLD
  AIRWAYS PARTS COMPANY, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Mark M. McMillin

  
	
   

  	
   

  	
  Name:

  	
  Mark
  M. McMillin

  
	
   

  	
   

  	
  Title:

  	
  Sr.
  VP, General Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GLOBAL
  AVIATION VENTURES SPV LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Mark M. McMillin

  
	
   

  	
   

  	
  Name:

  	
  Mark
  M. McMillin

  
	
   

  	
   

  	
  Title:

  	
  Sr.
  VP, General Counsel

  

 

[Signature Page to First-Lien Security Agreement]

 

 

	
   

  	
  WELLS
  FARGO BANK, NATIONAL ASSOCIATION,

  
	
   

  	
  as
  Collateral Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Elizabeth T. Wagner

  
	
   

  	
   

  	
  Name:
  

  	
  Elizabeth
  T. Wagner

  
	
   

  	
   

  	
  Title:
  

  	
  Vice
  President

  

 

[Signature Page to First-Lien Security Agreement]

 

 

ACKNOWLEDGMENT AND CONSENT***

 

The undersigned hereby acknowledges receipt of a copy of the First-Lien
Security Agreement, dated as of August 13, 2009 (the “Agreement”),
made by the Grantors parties thereto for the benefit of WELLS FARGO BANK,
NATIONAL ASSOCIATION, as Collateral Agent. 
The undersigned agrees for the benefit of the Collateral Agent and the
other Secured Parties as follows:

 

1.             The undersigned will be bound by
the terms of the Agreement and will comply with such terms insofar as such
terms are applicable to the undersigned.

 

2.             The undersigned will notify the
Collateral Agent promptly in writing of the occurrence of any of the events
described in Section 4.6(a) of the Agreement.

 

3.             The terms of Sections 5.3(c) and
5.7 of the Agreement shall apply to it, mutatis  mutandis,
with respect to all actions that may be required of it pursuant to Sections
5.3(c) or 5.7 of the Agreement.

 

 

	
   

  	
  CAROLINA
  LINKAGES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Lucy M. Duncan-Scheman

  
	
   

  	
   

  	
  Name:
  Lucy M. Duncan-Scheman

  
	
   

  	
   

  	
  Title:
  President & Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
  Address
  for Notices:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Fax:

  

 

***                           This consent is necessary
only with respect to any Issuer which is not also a Grantor.  This consent may be modified or eliminated
with respect to any Issuer that is not controlled by a Grantor.

 

 

ACKNOWLEDGMENT AND CONSENT***

 

The undersigned hereby acknowledges receipt of a copy of the First-Lien
Security Agreement, dated as of August 13, 2009 (the “Agreement”),
made by the Grantors parties thereto for the benefit of WELLS FARGO BANK,
NATIONAL ASSOCIATION, as Collateral Agent. 
The undersigned agrees for the benefit of the Collateral Agent and the
other Secured Parties as follows:

 

1.             The undersigned will be bound by
the terms of the Agreement and will comply with such terms insofar as such
terms are applicable to the undersigned.

 

2.             The undersigned will notify the
Collateral Agent promptly in writing of the occurrence of any of the events
described in Section 4.6(a) of the Agreement.

 

3.             The terms of Sections 5.3(c) and
5.7 of the Agreement shall apply to it, mutatis  mutandis,
with respect to all actions that may be required of it pursuant to Sections
5.3(c) or 5.7 of the Agreement.

 

 

	
   

  	
  WORLD
  RISK SOLUTIONS, LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Reid C. Gibson

  
	
   

  	
   

  	
  Name:
  Reid C. Gibson

  
	
   

  	
   

  	
  Title:
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address
  for Notices:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Fax:

  

 

***                           This consent is necessary
only with respect to any Issuer which is not also a Grantor.  This consent may be modified or eliminated
with respect to any Issuer that is not controlled by a Grantor.Exhibit 10.18

 

$175,000,000

 

Global Aviation Holdings, Inc.

North American Airlines, Inc.

World Airways, Inc.

 

14% Senior Secured First Lien Notes due 2013

 

REGISTRATION RIGHTS AGREEMENT

 

August 13, 2009

 

Jefferies & Company, Inc.
 520 Madison Avenue
 New York, New York 10022

 

Ladies and Gentlemen:

 

Global Aviation Holdings, Inc. (the “Company”), North American Airlines, Inc. and World Airways, Inc. (each, a Delaware corporation and collectively, the “Issuers”), are issuing and selling to Jefferies & Company, Inc. (the “Initial Purchaser”), upon the terms set forth in the Purchase Agreement dated August 6, 2009, by and among the Issuers, the Initial Purchaser and the subsidiary guarantors named therein (the “Guarantors”) (the “Purchase Agreement”), $175,000,000 aggregate principal amount of 14% Senior Secured First Lien Notes due 2013 of the Issuers (the “Notes”) and guaranteed by the Guarantors.  As an inducement to the Initial Purchaser to enter into the Purchase Agreement, each of the Issuers and the Guarantors agree with the Initial Purchaser, for the benefit of the Holders (as defined below) of the Notes (including, without limitation, the Initial Purchaser), as follows:

 

1.                                       Definitions

 

Capitalized terms that are used herein without definition and are defined in the Purchase Agreement shall have the respective meanings ascribed to them in the Purchase Agreement.  As used in this Agreement, the following terms shall have the following meanings:

 

Additional Interest:  See Section 4(a).

 

Advice:  See Section 6(v).

 

Affiliate:  Shall have the meaning specified in Rule 405 under the Securities Act, and for purposes of this definition, the terms “control” and “controlling” shall have meanings correlative thereto.

 

Agreement:  This Registration Rights Agreement, dated as of the Closing Date, by and among the Issuers, the Guarantors and the Initial Purchaser.

 

Applicable Period:  See Section 2(e).

 

 

Blackout Period:  See Section 3(c).

 

Business Day:  A day that is not a Saturday, a Sunday or a day on which banking institutions in the City of New York are authorized or required by law or executive order to be closed.

 

Closing Date:  August 13, 2009.

 

Company:  See the introductory paragraph to this Agreement.

 

Day:  Unless otherwise expressly provided, a calendar day.

 

Effectiveness Period:  See Section 3(a).

 

Effectiveness Target Date:  See Section 3(a).

 

Exchange Act:  The Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder.

 

Exchange Notes:  The $175,000,000 aggregate principal amount of the Issuers’ 14% senior secured first lien notes due 2013, identical in all material respects to the Notes, including the guarantees endorsed thereon, except for references to restricted legends and Additional Interest.

 

Exchange Offer:  See Section 2(a).

 

Exchange Offer Effectiveness Target Date:  See Section 2(a).

 

Exchange Offer Filing Deadline:  See Section 2(a).

 

Exchange Registration Statement:  See Section 2(a).

 

Filing Deadline:  See Section 3(a).

 

FINRA:  The Financial Industry Regulatory Authority, Inc.

 

Freely Tradable:  With respect to a Security, a Security that at any time of determination (i) may be sold to the public in accordance with Rule 144 by a person that is not an “affiliate” (as defined in Rule 144) of any of the Issuers where no conditions of Rule 144 are then applicable (other than the holding period requirement in paragraph (d)(1)(ii) of Rule 144 so long as such holding period requirement is satisfied at such time of determination) and (ii) that does not bear any restrictive legends relating to the Securities Act or a restricted CUSIP number.

 

Guarantee:  Shall have the meaning set forth in the Indenture.

 

Guarantors:  See the introductory paragraph to this Agreement.

 

Holder:  Any registered holder of Registrable Notes.

 

2

 

Indemnified Party:  See Section 8(c).

 

Indemnifying Party:  See Section 8(c).

 

Indenture:  The Indenture, dated as of the Closing Date, among the Issuers, the Guarantors and  Wells Fargo Bank, National Association, as trustee, pursuant to which the Notes are being issued, as amended or supplemented from time to time in accordance with the terms hereof.

 

Initial Purchaser:  See the introductory paragraph to this Agreement.

 

Initial Shelf Registration:  See Section 3(a).

 

Inspectors:  See Section 6(o).

 

Issue Date:  August 13, 2009.

 

Issuers:  See the introductory paragraph to this Agreement.

 

Lien:  Shall have the meaning set forth in the Indenture.

 

Losses:  See Section 8(a).

 

Notes:  See the introductory paragraph to this Agreement.

 

Participating Broker-Dealer:  See Section 2(e).

 

Person:  An individual, trustee, corporation, partnership, limited liability company, joint stock company, trust, unincorporated association, union, business association, firm, government or agency or political subdivision thereof, or other legal entity.

 

Private Exchange:  See Section 2(f).

 

Private Exchange Notes:  See Section 2(f).

 

Prospectus:  The prospectus included in any Registration Statement (including, without limitation, a prospectus that discloses information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Notes covered by such Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.

 

Purchase Agreement:  See the introductory paragraph to this Agreement.

 

Records:  See Section 6(o).

 

Registrable Notes:  Each Note, until the earliest to occur of (a) the date on which such Note is exchanged in the Exchange Offer for an Exchange Note entitled to be resold to the public

 

3

 

by the Holder thereof without complying with the prospectus delivery requirements of the Securities Act, (b) the date on which such Note has been effectively registered under the Securities Act and disposed of in accordance with a Shelf Registration and (c) the date on which such Note is distributed to the public pursuant to Rule 144 or by a broker-dealer pursuant to the “Plan of Distribution” contemplated by the Exchange Registration Statement (including delivery of the Prospectus contained therein).

 

Registration Default:  See Section 4(a).

 

Registration Default Date:  See Section 4(b).

 

Registration Statement:  Any registration statement of the Issuers and the Guarantors filed with the SEC under the Securities Act (including, but not limited to, the Exchange Registration Statement, the Shelf Registration and any subsequent Shelf Registration) that covers any of the Registrable Notes pursuant to the provisions of this Agreement, including the Prospectus, amendments and supplements to such registration statement, including post-effective amendments, all exhibits and all material incorporated by reference or deemed to be incorporated by reference in such registration statement.

 

Rule 144:  Rule 144 promulgated under the Securities Act, as such Rule may be amended from time to time, or any similar rule (other than Rule 144A) or regulation hereafter adopted by the SEC providing for offers and sales of securities made in compliance therewith resulting in offers and sales by subsequent holders that are not Affiliates of an issuer or such securities being free of the registration and prospectus delivery requirements of the Securities Act.

 

Rule 144A:  Rule 144A promulgated under the Securities Act, as such Rule may be amended from time to time, or any similar rule (other than Rule 144) or regulation hereafter adopted by the SEC.

 

Rule 415:  Rule 415 promulgated under the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC.

 

Rule 430A:  Rule 430A promulgated under the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC.

 

SEC:  The Securities and Exchange Commission.

 

Securities:  The Notes, the Exchange Notes and the Private Exchange Notes.

 

Securities Act:  The Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder.

 

Security Documents:  Shall have the meaning set forth in the Indenture.

 

Shelf Registration Filing Deadline:  See Section 3(a).

 

Shelf Registration:  See Section 3(b).

 

4

 

Shelf Registration Effectiveness Target Date:  See Section 3(a).

 

Subsequent Shelf Registration:  See Section 3(b).

 

TIA:  The Trust Indenture Act of 1939, as amended.

 

Trustee:  The trustee under the Indenture and, if existent, the trustee under any indenture governing the Exchange Notes and Private Exchange Notes (if any).

 

Underwritten Registration or Underwritten Offering:  A registration in which securities of any of the Issuers are sold to an underwriter for reoffering to the public.

 

2.                                       Exchange Offer

 

(a)                                  To the extent not prohibited by applicable law, the Issuers shall (and shall cause each Guarantor to) use commercially reasonable efforts (i) to file with the SEC no later than June 30, 2010, a registration statement (the “Exchange Registration Statement”) on an appropriate form under the Securities Act with respect to an offer (the “Exchange Offer”) to the Holders of Notes to issue and deliver to such Holders, in exchange for the Notes, a like principal amount of Exchange Notes (such date on which the Exchange Registration Statement is required to be filed, the “Exchange Offer Filing Deadline”), (ii) to cause the Exchange Registration Statement to become effective under the Securities Act no later than (a) 90 days after the date of the Exchange Offer Filing Deadline or (b) September 30, 2010, if such date is later than the end of such 90-day period (such date by which the Exchange Registration Statement must be declared effective, the “Exchange Offer Effectiveness Target Date”), (iii) to keep the Exchange Registration Statement effective until the consummation of the Exchange Offer in accordance with its terms and (iv) cause the Exchange Offer to be completed within 30 Business Days after the date on which the Exchange Registration Statement is declared effective.  The Issuers shall issue Exchange Notes in exchange for all Notes validly tendered and not withdrawn in the Exchange Offer.  The Exchange Offer shall not be subject to any conditions, other than that the Exchange Offer does not violate applicable law or any applicable interpretation of the staff of the SEC.

 

(b)                                 The Exchange Notes shall be issued under, and entitled to the benefits of, (i) the Indenture or a trust indenture that is identical to the Indenture (other than such changes as are necessary to comply with any requirements of the SEC to effect or maintain the qualifications thereof under the TIA) and (ii) the Security Documents.

 

(c)                                  Interest on each Exchange Note and Private Exchange Note will accrue (A) from the later of (i) the last interest payment date on which interest was paid on the Note surrendered in exchange therefor, or (ii) if the Note is surrendered for exchange on a date in a period which includes the record date for an interest payment date to occur on or after the date of such exchange and as to which interest will be paid, the date of such interest payment date; or (B) if no interest has been paid on such Note, from the Issue Date.  Each Exchange Note and

 

5

 

Private Exchange Note, if any, shall bear interest at the rate set forth thereon; provided, that interest with respect to the period prior to the issuance thereof shall accrue at the rate borne by the Notes from time to time during such period.

 

(d)                                 Each Holder, as a condition to participation in the Exchange Offer, shall be required to represent (i) that any Exchange Notes received by it will be acquired in the ordinary course of its business, (ii) that at the time of the commencement of the Exchange Offer such Holder has not entered into any arrangement or understanding with any Person to participate in the distribution (within the meaning of the Securities Act) of the Exchange Notes in violation of the provisions of the Securities Act, (iii) that either such Holder is not an Affiliate of any of the Issuers or, if such Holder is an Affiliate, that it will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable to it, (iv) if such Holder is not a broker-dealer, that it is not engaged in, and does not intend to engage in, the distribution of the Exchange Notes and (v) if such Holder is a Participating Broker-Dealer, that it will deliver a Prospectus (or to the extent permitted by law, make available a Prospectus to purchasers) in connection with any resale of the Exchange Notes.

 

(e)                                  The Issuers shall include within the Prospectus contained in the Exchange Registration Statement a section entitled “Plan of Distribution” reasonably acceptable to the Initial Purchaser which shall contain a summary statement of the positions taken or policies made by the staff of the SEC with respect to the potential “underwriter” status of any broker-dealer that is the beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of Exchange Notes received by such broker-dealer in the Exchange Offer for its own account in exchange for Notes that were acquired by it as a result of market-making or other trading activity (a “Participating Broker-Dealer”), whether such positions or policies have been publicly disseminated by the staff of the SEC or such positions or policies, in the judgment of the Initial Purchaser, represent the prevailing views of the staff of the SEC.  Such “Plan of Distribution” section shall also allow, to the extent permitted by applicable policies and regulations of the SEC, the use of the Prospectus by all Persons subject to the prospectus delivery requirements of the Securities Act, including, to the extent so permitted, all Participating Broker-Dealers, and include a statement describing the manner in which Participating Broker-Dealers may resell the Exchange Notes.  The Issuers shall use commercially reasonable efforts to keep the Exchange Registration Statement effective and to amend and supplement the Prospectus contained therein, in order to permit such Prospectus to be lawfully delivered by all Persons subject to the prospectus delivery requirements of the Securities Act for such period of time as such Persons must comply with such requirements in order to resell the Exchange Notes (the “Applicable Period”).

 

(f)                                    If, upon consummation of the Exchange Offer, the Initial Purchaser holds any Notes acquired by it and having the status of an unsold allotment in the initial distribution, the Issuers (upon the written request from the Initial Purchaser) shall, simultaneously with the delivery of the Exchange Notes in the Exchange Offer,

 

6

 

issue and deliver to the Initial Purchaser, in exchange (the “Private Exchange”) for the Notes, as the case may be, held by the Initial Purchaser, a like principal amount of senior secured first lien notes that are substantially identical in all material respects to the Exchange Notes except for the existence of restrictions on transfer thereof under the Securities Act and securities laws of the several states of the United States (such notes being referred to as the “Private Exchange Notes”) (and which are issued pursuant to the same indenture as the Exchange Notes).  The Private Exchange Notes shall bear the same CUSIP number as the Exchange Notes.

 

(g)                                 In connection with the Exchange Offer, the Issuers shall use commercially reasonably efforts to (and shall use commercially reasonable efforts to cause each Guarantor to):

 

(i)                                     mail to each Holder a copy of the Prospectus forming part of the Exchange Registration Statement, together with an appropriate letter of transmittal that is an exhibit to the Exchange Registration Statement, and any related documents;

 

(ii)                                  keep the Exchange Offer open for not less than 20 Business Days after the date notice thereof is mailed to the Holders (or longer if required by applicable law);

 

(iii)                               utilize the services of a depository for the Exchange Offer with an address in the Borough of Manhattan, in the City of New York, which depository may be the Trustee or an Affiliate thereof;

 

(iv)                              permit Holders to withdraw tendered Registrable Notes at any time prior to the close of business, New York City time, on the last Business Day on which the Exchange Offer shall remain open; and

 

(v)                                 otherwise comply in all material respects with all applicable laws.

 

(h)                                 Promptly after the close of the Exchange Offer or the Private Exchange, as the case may be, the Issuers shall:

 

(i)                                     accept for exchange all Registrable Notes validly tendered pursuant to the Exchange Offer or the Private Exchange, as the case may be, and not validly withdrawn;

 

(ii)                                  deliver to the Trustee for cancellation all Registrable Notes so accepted for exchange; and

 

(iii)                               cause the Trustee to authenticate and deliver promptly to each Holder tendering such Registrable Notes, Exchange Notes or Private Exchange Notes, as the case may be, equal in principal amount to the Notes of such Holder so accepted for exchange.

 

7

 

(i)                                     The Exchange Notes and the Private Exchange Notes may be issued under (i) the Indenture or (ii) an indenture substantially identical in all material respects to the Indenture (other than such changes as are necessary to comply with any requirements of the SEC to effect or maintain the qualification thereof under the TIA), which in either event will provide that the Exchange Notes will not be subject to the transfer restrictions set forth in the Indenture, that the Private Exchange Notes will be subject to the transfer restrictions set forth in the Indenture, and that the Exchange Notes, the Private Exchange Notes and the Notes, if any, will be deemed one class of security (subject to the provisions of the Indenture) and entitled to participate in all the security granted by the Issuers pursuant to the Security Documents and in any Guarantee on an equal and ratable basis.

 

(j)                                     If: (i) the Issuers and the Guarantors are not permitted to consummate the Exchange Offer because the Exchange Offer is not permitted by applicable law or SEC policy, or (ii) within 20 days following the consummation of the Exchange Offer, any Holder of Registrable Notes notifies the Issuers that (a) it is prohibited by applicable law or SEC policy from participating in the Exchange Offer; (b) it may not resell the Exchange Notes acquired by it in the Exchange Offer to the public without delivering a prospectus (other than by reason of such Holder’s status as an Affiliate of any of the Issuers) and the Prospectus contained in the Exchange Registration Statement is not appropriate or available for such resales or (c) it is a broker-dealer and owns Notes acquired directly from the Issuers or an Affiliate of any of the Issuers, the Issuers shall file an Initial Shelf Registration pursuant to Section 3 hereof, provided, that in no event shall the Issuers and the Guarantors have any obligation to file such Initial Shelf Registration prior to the Shelf Registration Filing Deadline.

 

3.                                       Shelf Registration

 

Upon consummation of the Exchange Offer in accordance with Section 2 hereof, the provisions of this Section 3 shall apply solely with respect to (i) Notes held by any Holder thereof not permitted to participate in the Exchange Offer and that are not Freely Tradable, (ii) Notes held by any broker-dealer that acquired such Notes directly from the Issuers or any of their respective Affiliates and that are not Freely Tradable and (iii) Exchange Notes as contemplated by Section 2(j) hereof and that are not Freely Tradable, provided in the case of each of clause (i), (ii) and (iii), that the relevant Holder has duly notified the Issuers within 20 days of the consummation of the Exchange Offer as required by Section 2(j)(ii) hereof.

 

(a)                                  Initial Shelf Registration.  To the extent called for by Section 2(j) hereof, the Issuers shall (and shall cause each Guarantor to) file with the SEC a Registration Statement for an offering to be made on a continuous basis pursuant to Rule 415 covering all of the Registrable Notes (the “Initial Shelf Registration”).  If the Issuers have not yet filed an Exchange Registration Statement, the Issuers shall (and shall cause each Guarantor to) file with the SEC the Initial Shelf Registration on or prior to the Exchange Offer Filing Deadline and shall use commercially reasonable efforts to cause such Initial Shelf Registration to be declared effective

 

8

 

under the Securities Act on or prior to the Exchange Offer Effectiveness Target Date.  Otherwise, the Issuers shall (and shall cause each Guarantor to) use commercially reasonable efforts to file with the SEC the Initial Shelf Registration within 45 days of the delivery of the notification described in Section 2(j) hereof (such date by which the Shelf Registration must be filed, the “Shelf Registration Filing Deadline”, and together with the Exchange Offer Filing Deadline, the “Filing Deadline”) and use commercially reasonable efforts to cause such Initial Shelf Registration to be declared effective under the Securities Act as promptly as practicable thereafter (but in no event more than 90 days after the Shelf Registration Filing Deadline) (such date by which the Shelf Registration must be declared effective, the “Shelf Registration Effectiveness Target Date”, and together with the Exchange Offer Effectiveness Target Date, the “Effectiveness Target Date”).  The Shelf Registration shall be on an appropriate form under the Securities Act permitting registration of such Registrable Notes for resale by Holders in the manner or manners reasonably designated by them (including, without limitation, one or more underwritten offerings).  The Issuers and the Guarantors shall not permit any securities other than the Registrable Notes to be included in any Shelf Registration.  The Issuers shall (and shall cause each Guarantor to) use commercially reasonable efforts to keep the Shelf Registration continuously effective under the Securities Act until it is no longer required to permit unrestricted sales of the Notes (the “Effectiveness Period”), or such shorter period ending when (i) all Registrable Notes covered by the Initial Shelf Registration have been sold in the manner set forth and as contemplated in the Initial Shelf Registration (ii) a Subsequent Shelf Registration covering all of the Registrable Notes covered by and not sold under the Initial Shelf Registration or an earlier Subsequent Shelf Registration has been declared effective under the Securities Act or (iii) there cease to be any outstanding Registrable Notes.

 

(b)                                 Subsequent Shelf Registrations.  If the Initial Shelf Registration or any Subsequent Shelf Registration ceases to be effective for any reason at any time during the Effectiveness Period (other than because of the sale of all of the securities registered thereunder or because the securities registered thereunder cease to be outstanding), the Issuers shall (and shall cause each Guarantor to) use their commercially reasonable efforts to obtain the prompt withdrawal of any order suspending the effectiveness thereof, and in any event shall within 30 days of such cessation of effectiveness amend such Shelf Registration in a manner to obtain the withdrawal of the order suspending the effectiveness thereof, or file (and cause each Guarantor to file) an additional Registration Statement pursuant to Rule 415 covering all of the Registrable Notes (a “Subsequent Shelf Registration”).  If a Subsequent Shelf Registration is filed, the Issuers shall (and shall cause each Guarantor to) use commercially reasonable efforts to cause the Subsequent Shelf Registration to be declared effective as soon as practicable after such filing and to keep such Subsequent Shelf Registration continuously effective during the Effectiveness Period.  As used herein the term “Shelf Registration” means the Initial Shelf Registration and any Subsequent Shelf Registrations.

 

9

 

(c)                                  Notwithstanding anything to the contrary in this Agreement, upon notice to Holders of the Notes, the Issuers shall be entitled to suspend the use of the Prospectus in any Shelf Registration, in the event that, and for a period of time (a “Blackout Period”) not to exceed an aggregate of 90 days in any 12-month period, the board of directors of the Company determines, in good faith, that (i) the disclosure of an event, occurrence or other item at that time would reasonably be expected to have a material adverse effect on the business, operations or prospects of the Company and the subsidiaries or (ii) the disclosure otherwise relates to a material business transaction or development that has not yet been publicly disclosed and the board of directors also determines, in good faith, that any disclosure thereof would jeopardize the success of the transaction or that disclosure of the transaction is prohibited by the terms thereof.

 

(d)                                 Supplements and Amendments.  The Issuers shall promptly supplement and amend any Shelf Registration if required by the rules, regulations or instructions applicable to the registration form used for such Shelf Registration, if required by the Securities Act, or if reasonably requested in writing by the Holders of a majority in aggregate principal amount of the Registrable Notes covered by such Shelf Registration with respect to information relating to such Holders or by any underwriter of such Registrable Notes.

 

(e)                                  Provision of Information.  No Holder of Registrable Notes shall be entitled to include any of its Registrable Notes in any Shelf Registration pursuant to this Agreement unless such Holder furnishes to the Issuers and the Trustee in writing, within 20 days after receipt of a written request therefor, such information as the Issuers and the Trustee, after conferring with counsel with regard to information relating to Holders that would be required by the SEC to be included in such Shelf Registration or Prospectus included therein, may reasonably request for inclusion in any Shelf Registration or Prospectus included therein, and no such Holder shall be entitled to Additional Interest pursuant to Section 4 hereof unless and until such Holder shall have provided such information.

 

4.                                       Additional Interest

 

(a)                                  Each of the Issuers and the Guarantors acknowledges and agrees that the Holders of Registrable Notes will suffer damages if any of the Issuers or the Guarantors fails to fulfill its material obligations under Sections 2 or 3 hereof and that it would not be feasible to ascertain the extent of such damages with precision. Accordingly, the Issuers and the Guarantors agree to pay additional cash interest on the applicable Notes (“Additional Interest”) under the circumstances and to the extent set forth below (each event described in clauses (i) through (iii) below, a “Registration Default” and each of which shall be given independent effect):

 

(i)                                     if (A) neither the Exchange Registration Statement nor the Initial Shelf Registration (if required to be filed), has been filed on or prior to the applicable Filing Deadline as specified herein or (B) notwithstanding that the Issuers and the Guarantors have consummated or will consummate an

 

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Exchange Offer, the Issuers and the Guarantors are required to file a Shelf Registration and such Shelf Registration is not filed on or prior to the applicable Filing Deadline as specified herein;

 

(ii)                                  if (A) neither the Exchange Registration Statement nor the Initial Shelf Registration relating to the Notes is declared effective by the SEC on or prior to the applicable Effectiveness Target Date as specified herein or (B) notwithstanding that the Issuers and the Guarantors have consummated or will consummate an Exchange Offer, the Issuers and the Guarantors are required to file a Subsequent Shelf Registration and such Subsequent Shelf Registration is not declared effective by the SEC on or prior to the Effectiveness Target Date as specified herein; or

 

(iii)                               if (A) the Issuers (and any Guarantor) have not exchanged Exchange Notes for all Notes validly tendered in accordance with the terms of the Exchange Offer on or prior to the date that is 30 Business Days after the Exchange Offer Effectiveness Target Date, (B) the Exchange Registration Statement ceases to be effective at any time prior to the consummation of the Exchange Offer or (C) if applicable, a Shelf Registration has been declared effective and such Shelf Registration ceases to be effective at any time during the Effectiveness Period (other than during a Blackout Period or after such time as all Notes have been disposed of thereunder);

 

then Additional Interest shall accrue on the principal amount of the outstanding Notes over and above any stated interest, from and including the date on which any Registration Default shall occur to but excluding the date on which all Registration Defaults have been cured, at a rate of 0.25% per annum for the first 90-day period immediately following the occurrence of a Registration Default, and such rate will increase by an additional 0.25% per annum with respect to each subsequent 90-day period until all Registration Defaults have been cured; provided, however, that the maximum Additional Interest rate on the Notes may not exceed at any one time in the aggregate 1.00% per annum.  Following the cure of a particular Registration Default, the accrual of Additional Interest with respect to such Registration Default will cease.  Notwithstanding the foregoing, (x) the amount of Additional Interest payable shall not increase because more than one Registration Default has occurred and is pending, and (y) Additional Interest shall be payable for Registration Defaults related to a failure of the Issuers and the Guarantors to cause a Shelf Registration to be declared effective, only to those Holders who sought to have their Registrable Notes registered pursuant to Section 3 hereof.  All obligations of the Issuers and the Guarantors set forth in this Section 4(a) that are outstanding with respect to any Registrable Note at the time such security ceases to be a Registrable Note shall survive until such time as all such obligations with respect to such security shall have been satisfied in full.  Additional Interest pursuant to this Section 4 constitutes liquidated damages with respect to a Registration Default and shall be the exclusive monetary remedy available to the Holders with respect to a Registration Default.

 

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(b)                                 The Issuers shall notify the Trustee within three Business Days after each and every date on which Registration Default occurs in respect of which Additional Interest is required to be paid (a “Registration Default Date”).  Any accrued amounts of Additional Interest due pursuant to clause (a)(i), (a)(ii) or (a)(iii) of this Section 4 will be payable in cash in arrears on each Interest Payment Date (as defined in the Notes) and in the manner provided in the Indenture.  The amount of Additional Interest will be determined by multiplying the applicable Additional Interest rate by the principal amount of the Notes, multiplied by a fraction, the numerator of which is the number of days such Additional Interest rate was applicable during such period (determined on the basis of a 360-day year comprised of twelve 30-day months and, in the case of a partial month, the actual number of days elapsed), and the denominator of which is 360.

 

5.                                       Hold-Back Agreements

 

Each of the Issuers agrees that it will not effect any public or private sale or distribution (including a sale pursuant to Regulation D under the Securities Act) of any securities of the same class as those covered by a Registration Statement filed pursuant to Sections 2 or 3 hereof, or any securities convertible into or exchangeable or exercisable for such securities, during the 10 days prior to, and during the 90-day period beginning on, the effective date of any Registration Statement filed pursuant to Sections 2 and 3 hereof unless the Holders of a majority in the aggregate principal amount of the Registrable Notes included or to be included in such Registration Statement consent or, if there is one, if the managing underwriter or underwriters in an Underwritten Offering thereof so request(s) in writing.

 

6.                                       Registration Procedures

 

In connection with the filing of any Registration Statement pursuant to Sections 2 or 3 hereof, the Issuers shall (and shall cause each Guarantor to) effect such registrations to permit the sale of such securities covered thereby in accordance with the intended method or methods of disposition thereof, and pursuant thereto and in connection with any Registration Statement filed by the Issuers hereunder, the Issuers shall (and shall cause each Guarantor to):

 

(a)                                  If (1) a Shelf Registration is required to be filed pursuant to Section 3 hereof or (2) a Prospectus contained in an Exchange Registration Statement filed pursuant to Section 2 hereof is required to be delivered under the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period relating thereto, before filing any Registration Statement or Prospectus or any amendments or supplements thereto the Issuers shall (and shall cause each Guarantor to), if requested, furnish to and afford the Holders of the Registrable Notes to be registered pursuant to such Shelf Registration, each Participating Broker-Dealer, the managing underwriters in an Underwritten Offering, if any, and each of their respective counsel, a reasonable opportunity to review copies of all such documents (including copies of any documents to be incorporated by reference therein and all exhibits thereto) proposed to be filed (in each case at least three Business Days prior to such filing).  The Issuers and the Guarantors shall not file any such Registration Statement or Prospectus, or any

 

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amendments or supplements thereto in respect of which the Holders must provide information for the inclusion therein, without the Holders being afforded an opportunity to review such documentation if the holders of a majority in aggregate principal amount of the Registrable Notes covered by such Registration Statement, or any such Participating Broker-Dealer, as the case may be, the managing underwriters in an Underwritten Offering, if any, or any of their respective counsel shall reasonably object in writing on a timely basis. A Holder shall be deemed to have reasonably objected to such filing if such Holder objects in writing in a timely manner and such Registration Statement, amendment, Prospectus or supplement, as applicable, as proposed to be filed, contains an untrue statement of a material fact or omits to state any material fact necessary to make the statements therein not misleading or fails to comply with the applicable requirements of the Securities Act.

 

(b)                                 Provide an indenture trustee for the Registrable Notes, the Exchange Notes or the Private Exchange Notes, as the case may be, and cause the Indenture (or other indenture relating to the Registrable Notes) to be qualified under the TIA not later than the effective date of the first Registration Statement; and in connection therewith, to effect such changes to such indenture as may be required for such indenture to be so qualified in accordance with the terms of the TIA; and execute, and use commercially reasonable efforts to cause such trustee to execute, all documents as may be required to effect such changes, and all other forms and documents required to be filed with the SEC to enable such indenture to be so qualified in a timely manner.

 

(c)                                  Prepare and file with the SEC any amendments to each Shelf Registration or Exchange Registration Statement, as the case may be, as may be necessary to keep such Registration Statement continuously effective for the Effectiveness Period or the Applicable Period, as the case may be; cause the related Prospectus to be supplemented by any Prospectus supplement required by applicable law, and as so supplemented to be filed pursuant to Rule 424 (or any similar provisions then in force) under the Securities Act; and comply with the provisions of the Securities Act and the Exchange Act applicable to them with respect to the disposition of all securities covered by such Registration Statement as so amended or in such Prospectus as so supplemented and with respect to the subsequent resale of any securities being sold by a Participating Broker-Dealer covered by any such Prospectus.

 

(d)                                 Furnish to such selling Holders and Participating Broker-Dealers who so request in writing (i) upon the Issuers’ receipt, a copy of the order of the SEC declaring such Registration Statement and any post effective amendment thereto effective, (ii) such reasonable number of copies of such Registration Statement and of each amendment and supplement thereto (in each case including any documents incorporated therein by reference and all exhibits, unless such documents or exhibits are publicly available), (iii) such reasonable number of copies of the Prospectus included in such Registration Statement (including each preliminary Prospectus) and each amendment and supplement thereto, and such reasonable

 

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number of copies of the final Prospectus as filed by the Issuers and Guarantors pursuant to Rule 424(b) under the Securities Act, in conformity with the requirements of the Securities Act and each amendment and supplement thereto, and (iv) such other documents (including any amendments required to be filed pursuant to clause (c) of this Section 6), as any such Person may reasonably request in writing. Each of the Issuers and the Guarantors hereby consents to the use of the Prospectus by each of the selling Holders of Registrable Notes or each such Participating Broker-Dealer, as the case may be, and the underwriters or agents, if any, and dealers, if any, in connection with the offering and sale of the Registrable Notes covered by, or the sale by Participating Broker-Dealers of the Exchange Notes pursuant to, such Prospectus and any amendment or supplement thereto.

 

(e)                                  If (1) a Shelf Registration is filed pursuant to Section 3 hereof, or (2) a Prospectus contained in an Exchange Registration Statement filed pursuant to Section 2 is required to be delivered under the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period relating thereto, the Issuers shall notify in writing the selling Holders of Registrable Notes, or each such Participating Broker-Dealer, as the case may be, the managing underwriters in an Underwritten Offering, if any, and each of their respective counsel promptly (i) when a Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to a Registration Statement or any post-effective amendment, when the same has become effective, (ii) of the issuance by the SEC of any stop order suspending the effectiveness of a Registration Statement or of any order preventing or suspending the use of any Prospectus or the initiation of any proceedings for that purpose, (iii) of the receipt by any of the Issuers or Guarantors of any notification with respect to the suspension of the qualification or exemption from qualification of a Registration Statement or any of the Registrable Notes or the Exchange Notes to be sold by any Participating Broker-Dealer for offer or sale in any jurisdiction, or the initiation or threatening of any proceeding for such purpose, (iv) of the happening of any event, the existence of any condition or any information known to the Issuers that makes any statement made in such Registration Statement or related Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires the making of any changes in, or amendments or supplements to, such Registration Statement, Prospectus or documents so that, in the case of the Registration Statement and the Prospectus, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, (v) of any reasonable determination by the Issuers or the Guarantors that a post-effective amendment to a Registration Statement would be appropriate and (vi) of any request by the SEC for amendments to the Registration Statement or supplements to the Prospectus or for additional information relating thereto.

 

(f)                                    Use commercially reasonable efforts to obtain, as soon as practicable, the withdrawal of any order suspending the effectiveness of a Registration Statement,

 

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any order preventing or suspending the use of a Prospectus or any order suspending the qualification (or exemption from qualification) of any of the Registrable Notes or the Exchange Notes to be sold by any Participating Broker-Dealer for sale in any jurisdiction.

 

(g)                                 If (A) a Shelf Registration is filed pursuant to Section 3 hereof, (B) a Prospectus contained in an Exchange Registration Statement filed pursuant to Section 2 hereof is required to be delivered under the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period or (C) reasonably requested in writing by the managing underwriters in an Underwritten Offering, if any, or the Holders of a majority in aggregate principal amount of the Registrable Notes being sold in connection with an Underwritten Offering, (i) use commercially reasonable efforts to incorporate in a Prospectus supplement or post-effective amendment such information or revisions to information therein relating to such underwriters or selling Holders as the managing underwriters in an Underwritten Offering, if any, or such Holders or any of their respective counsel reasonably request in writing to be included or made therein and (ii) make all required filings of such Prospectus supplement or such post-effective amendment as soon as practicable after the Issuers have received notification of the matters to be incorporated in such Prospectus supplements or post-effective amendment.

 

(h)                                 Prior to any public offering of Registrable Notes or any delivery of a Prospectus contained in the Exchange Registration Statement by any Participating Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, use commercially reasonable efforts to register or qualify, and to cooperate with the selling Holders of Registrable Notes or each such Participating Broker-Dealer, as the case may be, the underwriters, if any, and their respective counsel in connection with the registration or qualification (or exemption from such registration or qualification) of such Registrable Notes or Exchange Notes, as the case may be, for offer and sale under the securities or Blue Sky laws of such jurisdictions within the United States as any selling Holder, Participating Broker-Dealer or any managing underwriter or underwriters in an Underwritten Offering, if any, reasonably request in writing; provided that neither the Issuers nor any Guarantor shall be required to (A) qualify generally to do business in any jurisdiction where it is not then so qualified, (B) take any action that would subject it to general service of process in any such jurisdiction where it is not then so subject or (C) subject itself to taxation in any such jurisdiction where it is not then so subject.

 

(i)                                     If (A) a Shelf Registration is filed pursuant to Section 3 hereof or (B) a Prospectus contained in an Exchange Registration Statement filed pursuant to Section 2 hereof is requested to be delivered under the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, cooperate with the selling Holders of Registrable Notes and the managing underwriter or underwriters in an Underwritten Offering, if any, to facilitate the timely preparation and delivery of certificates representing the Registrable Notes

 

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to be sold, which certificates shall not bear any restrictive legends and shall be in a form eligible for deposit with The Depository Trust Company, and enable such Registrable Notes to be in such denominations as permitted by the Indenture and registered in such names as the managing underwriter or underwriters in an Underwritten Offering, if any, or Holders may reasonably request.

 

(j)                                     Use commercially reasonable efforts to cause the Registrable Notes covered by any Registration Statement to be registered with or approved by such governmental agencies or authorities as may be required to enable the seller or sellers thereof or the underwriter, if any, to consummate the disposition of such Registrable Notes, except as may be required solely as a consequence of the nature of such selling Holder’s business, in which case the Issuers shall (and shall cause each Guarantor to) cooperate in all reasonable respects with the filing of such Registration Statement and the granting of such approvals; provided that neither the Issuers nor any existing Guarantor shall be required to (A) qualify generally to do business in any jurisdiction where it is not then so qualified, (B) take any action that would subject it to general service of process in any jurisdiction where it is not then so subject or (C) subject itself to taxation in any such jurisdiction where it is not then so subject.

 

(k)                                  If (1) a Shelf Registration is filed pursuant to Section 3 hereof or (2) a Prospectus contained in an Exchange Registration Statement filed pursuant to Section 2 hereof is required to be delivered under the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, upon the occurrence of any event contemplated by Sections 6(e)(iv) or 6(e)(v) hereof, as promptly as practicable, prepare and file with the SEC, at the expense of the Issuers and the Guarantors, a supplement or post-effective amendment to the Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Notes being sold thereunder or to the purchasers of the Exchange Notes to whom such Prospectus will be delivered by a Participating Broker-Dealer, such Prospectus will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and, if SEC review is required, use commercially reasonable efforts to cause such post-effective amendment to be declared effective as soon as possible.

 

(l)                                     Use commercially reasonable efforts to cause the Registrable Notes covered by a Registration Statement, to the extent not already rated, to be rated with such appropriate rating agencies, if so requested in writing by the Holders of a majority in aggregate principal amount of the Registrable Notes covered by such Registration Statement or the managing underwriter or underwriters in an Underwritten Offering, if any.

 

(m)                               Prior to the initial issuance of the Exchange Notes, (i) provide the Trustee with one or more certificates for the Registrable Notes in a form eligible for deposit

 

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with The Depository Trust Company and (ii) provide a CUSIP number for the Exchange Notes.

 

(n)                                 If a Shelf Registration is filed pursuant to Section 3 hereof, enter into such agreements (including an underwriting agreement in form, scope and substance as is customary in underwritten offerings of debt securities similar to the Notes, as may be appropriate in the circumstances) and take all such other actions in connection therewith (including those reasonably requested in writing by the managing underwriters in an Underwritten Offering, if any, or the Holders of a majority in aggregate principal amount of the Registrable Notes being sold) in order to expedite or facilitate the registration or the disposition of such Registrable Notes, and in such connection, (i) make such representations and warranties to the Holders and the underwriters, if any, with respect to the business of the Company and its subsidiaries as then conducted, and the Registration Statement, Prospectus and documents, if any, incorporated or deemed to be incorporated by reference therein, in each case, in form, substance and scope as are customarily made by issuers to underwriters in underwritten offerings of debt securities similar to the Notes, as may be appropriate in the circumstances, and confirm the same if and when reasonably required; (ii) obtain an opinion of counsel to the Company and updates thereof (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the managing underwriters in an Underwritten Offering, if any, to counsel, if any, and to the Holders of a majority in aggregate principal amount of the Registrable Notes being sold), addressed to each selling Holder and each of the underwriters, if any, covering the matters customarily covered in opinions of counsel to the Company requested in underwritten offerings of debt securities similar to the Notes, as may be appropriate in the circumstances; (iii) obtain “cold comfort” letters and updates thereof (which letters and updates (in form, scope and substance) shall be reasonably satisfactory to the managing underwriters in an Underwritten Offering, if any) from the independent certified public accountants of the Company (and, if necessary, any other independent certified public accountants of any subsidiary of the Company or of any business acquired by the Company for which financial statements and financial data are, or are required to be, included in the Registration Statement), addressed to each of the underwriters , if any, such letters to be in customary form and covering matters of the type customarily covered in “cold comfort” letters in connection with underwritten offerings of debt securities similar to the Notes, as may be appropriate in the circumstances, and such other matters as reasonably requested in writing by the underwriters; and (iv) deliver such documents and certificates as may be reasonably requested in writing by the Holders of a majority in aggregate principal amount of the Registrable Notes being sold and the managing underwriters in an Underwritten Offering, if any, to evidence the continued validity of the representations and warranties of the Issuers and the Guarantors made pursuant to clause (i) above and to evidence compliance with any conditions contained in the underwriting agreement or other similar agreement entered into by the Issuers or any Guarantor.

 

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(o)                                 If (1) a Shelf Registration is filed pursuant to Section 3 hereof, or (2) a Prospectus contained in an Exchange Registration Statement filed pursuant to Section 2 hereof is required to be delivered under the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, make available for inspection by any selling Holder of such Registrable Notes being sold, or each such Participating Broker-Dealer, as the case may be, any underwriter participating in any such disposition of Registrable Notes, if any, and any attorney, accountant or other agent, in each case, designated by a majority in aggregate principal amount of the Registrable Notes being sold or each such Participating Broker-Dealer, as the case may be, or underwriter (collectively, the “Inspectors”), at the offices where normally kept, during reasonable business hours and in a reasonable manner, all pertinent financial and other records and pertinent corporate documents of the Company and its subsidiaries (collectively, the “Records”) as shall be reasonably requested by them and necessary to enable them to exercise any applicable due diligence responsibilities, and cause the officers, directors and employees of the Company and its subsidiaries to supply all information reasonably requested in writing by any such Inspector in connection with such Registration Statement; provided that the foregoing inspection and information gathering on behalf of the Holders shall be coordinated by one counsel designated by and on behalf of the Holders.  Each Inspector shall agree in writing that it will keep the Records confidential and not disclose any of the Records unless (i) the disclosure of such Records is necessary to avoid or correct a misstatement or omission in such Registration Statement, (ii) the release of such Records is ordered pursuant to a subpoena or other order from a court of competent jurisdiction, (iii) the information in such Records is public or has been made generally available to the public other than as a result of a disclosure or failure to safeguard by such Inspector or (iv) disclosure of such information is, in the reasonable written opinion of counsel for any Inspector, necessary in connection with any action, claim, suit or proceeding, directly or indirectly, involving such Inspector and arising out of, based upon, related to, or involving this Agreement, or any transaction contemplated hereby or arising hereunder.  Each selling Holder of such Registrable Notes and each such Participating Broker-Dealer will be required to agree that information obtained by it as a result of such inspections shall be deemed confidential and shall not be used by it as the basis for any market transactions in the securities of any of the Issuers unless and until such is made generally available to the public.  Each Inspector, each selling Holder of such Registrable Notes and each such Participating Broker-Dealer will be required to further agree that it will, upon learning that disclosure of such Records is sought in a court of competent jurisdiction, give notice to the Issuers and, to the extent practicable, use its best efforts to allow the Issuers, at their expense, to undertake appropriate action to prevent disclosure of the Records deemed confidential at its expense.

 

(p)                                 Use commercially reasonable efforts to comply with all applicable rules and regulations of the SEC and make generally available to the security holders of the any of the Issuers with regard to any applicable Registration Statement earning statements satisfying the provisions of section 11(a) of the Securities Act and

 

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Rule 158 thereunder (or any similar rule promulgated under the Securities Act) no later than 45 days after the end of any 12-month period (or 90 days after the end of any 12-month period if such period is a fiscal year) (i) commencing at the end of any fiscal quarter in which Registrable Notes are sold to underwriters in a firm commitment or best efforts underwritten offering and (ii) if not sold to underwriters in such an offering, commencing on the first day of the first fiscal quarter of the Issuers after the effective date of a Registration Statement, which statements shall cover said 12-month periods.

 

(q)                                 Upon consummation of an Exchange Offer or Private Exchange as the case may be, obtain an opinion of counsel to the Company (in form, scope and substance reasonably satisfactory to the Initial Purchaser), addressed to the Trustee for the benefit of all Holders participating in the Exchange Offer or Private Exchange, as the case may be, in customary form and substance to the effect that, among other things, (i) the Issuers and the Guarantors have duly authorized, executed and delivered the Exchange Notes or the Private Exchange Notes, as the case may be, and the Indenture and (ii) the Exchange Notes or the Private Exchange Notes, as the case may be, and the Indenture constitute legal, valid and binding obligations of each of the Issuers and the Guarantors, enforceable against each of the Issuers and the Guarantors in accordance with their respective terms, except as such enforcement may be subject to customary United States and foreign exceptions.

 

(r)                                    Cooperate with each seller of Registrable Notes covered by any Registration Statement and each underwriter, if any, participating in the disposition of such Registrable Notes and their respective counsel in connection with any filings required to be made with FINRA.

 

(s)                                  Use commercially reasonable efforts to cause all Notes covered by a Registration Statement to be listed on each securities exchange, if any, on which similar debt securities issued by the Issuers are then listed, if requested by Holders of a majority in aggregate principal amount of the Registrable Notes outstanding, to the extent such Registrable Notes satisfy applicable listing requirements.

 

(t)                                    Use commercially reasonable efforts to take all other steps reasonably necessary to effect the registration of the Registrable Notes covered by a Registration Statement contemplated hereby.

 

(u)                                 The Issuers may require each seller of Registrable Notes or Participating Broker-Dealer as to which any registration is being effected to furnish to the Issuers such information regarding such seller or Participating Broker-Dealer and the distribution of such Registrable Notes as the Issuers may, from time to time, reasonably request in writing.  The Issuers may exclude from such registration the Registrable Notes of any seller who fails to furnish such information within a reasonable time (which time in no event shall exceed 20 days, subject to Section 3(e) hereof) after receiving such request.  Each seller of Registrable Notes or Participating Broker-Dealer as to which any registration is being effected agrees to furnish promptly to the Issuers all information required to be disclosed in order

 

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to make the information previously furnished by such seller not materially misleading.

 

(v)                                 Each Holder of Registrable Notes and each Participating Broker-Dealer agrees by acquisition of such Registrable Notes or Exchange Notes to be sold by such Participating Broker-Dealer, as the case may be, that, upon receipt of any notice from the Issuers of the happening of any event of the kind described in Sections 6(e)(ii), 6(e)(iii), 6(e)(iv), or 6(e)(v) hereof, such Holder will forthwith discontinue disposition of such Registrable Notes covered by a Registration Statement and such Participating Broker-Dealer will forthwith discontinue disposition of such Exchange Notes pursuant to any Prospectus and, in each case, forthwith discontinue dissemination of such Prospectus until such Holder’s or Participating Broker-Dealer’s receipt of the copies of the supplemented or amended Prospectus contemplated by Section 6(k) hereof, or until it is advised in writing (the “Advice”) by the Issuers and the Guarantors that the use of the applicable Prospectus may be resumed, and has received copies of any amendments or supplements thereto and, if so directed by the Issuers and the Guarantors, such Holder or Participating Broker-Dealer, as the case may be, will deliver to the Issuers all copies, other than permanent file copies, then in such Holder’s or Participating Broker-Dealer’s possession, of the Prospectus covering such Registrable Notes current at the time of the receipt of such notice.  In the event the Issuers and the Guarantors shall give any such notice, the Applicable Period shall be extended by the number of days during such periods from and including the date of the giving of such notice to and including the date when each Participating Broker-Dealer shall have received (x) the copies of the supplemented or amended Prospectus contemplated by Section 6(k) hereof or (y) the Advice.

 

7.                                       Registration Expenses

 

(a)                                  All fees and expenses incident to the performance of or compliance with this Agreement by the Issuers and the Guarantors shall be borne by the Issuers and the Guarantors, whether or not a Exchange Registration Statement or Shelf Registration is filed or becomes effective, including, without limitation, (i) all registration and filing fees, including, without limitation, (A) fees with respect to filings required to be made with FINRA in connection with any Underwritten Offering and (B) fees and expenses of compliance with state securities or Blue Sky laws as provided in Section 6(h) hereof (including, without limitation, reasonable fees and disbursements of one counsel in connection with Blue Sky qualifications of the Registrable Notes or Exchange Notes), (ii) printing expenses, including, without limitation, expenses of printing Prospectuses if the printing of Prospectuses is requested by the managing underwriter or underwriters in an Underwritten Offering, if any, or by the Holders of a majority in aggregate principal amount of the Registrable Notes included in any Registration Statement or by any Participating Broker-Dealer during the Applicable Period, as the case may be (except that in the case of Participating Broker-Dealers, the Issuers and the Guarantors shall only be responsible for printing expenses for up to 500,000

 

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Prospectuses), (iii) messenger, telephone and delivery expenses incurred in connection with the performance of their obligations hereunder, (iv) fees and disbursements of counsel for the Company and, subject to Section 7(b) hereof, the Holders, (v) fees and disbursements of all independent certified public accountants referred to in Section 6 hereof (including, without limitation, the expenses of any special audit and “cold comfort” letters required by or incident to such performance), (vi) rating agency fees and the fees and expenses incurred in connection with the listing of the Securities to be registered on any securities exchange, (vii) Securities Act liability insurance, if the Issuers and the Guarantors desire such insurance, (viii) fees and expenses of all other Persons retained by the Issuers and the Guarantors, (ix) fees and expenses of any “qualified independent underwriter” or other independent appraiser that is required to be retained in accordance with the rules and regulations of FINRA, but only where the need for such a “qualified independent underwriter” arises due to a relationship with the Issuers and the Guarantors, (x) internal expenses of the Issuers and the Guarantors (including, without limitation, all salaries and expenses of officers and employees of the Issuers or the Guarantors performing legal or accounting duties), (xi) the expense of any annual audit, (xii) the fees and expenses of the Trustee and the Exchange Agent and (xiii) the expenses relating to printing, word processing and distributing all Registration Statements, underwriting agreements, securities sales agreements, indentures and any other documents necessary in order to comply with this Agreement.

 

(b)                                 The Issuers and the Guarantors shall reimburse the Holders for the reasonable fees and disbursements of not more than one counsel chosen by the Holders of a majority in aggregate principal amount of the Registrable Notes to be included in any Registration Statement.  The Issuers and the Guarantors shall pay all documentary, stamp, transfer or other transactional taxes attributable to the issuance or delivery of the Exchange Notes or Private Exchange Notes in exchange for the Notes; provided that the Issuers and the Guarantors shall not be required to pay taxes payable in respect of any transfer involved in the issuance or delivery of any Exchange Security or Private Exchange Note in a name other than that of the Holder of the Registrable Security in respect of which such Exchange Security or Private Exchange Note is being issued.  The Issuers and the Guarantors shall reimburse the Holders for fees and expenses (including reasonable fees and expenses of counsel to the Holders) relating to any enforcement of any rights of the Holders under this Agreement.

 

8.                                       Indemnification

 

(a)                                  Indemnification by the Issuers and the Guarantors.  Each of the Issuers and the Guarantors, jointly and severally, agrees to indemnify and hold harmless each Holder of Registrable Notes, Exchange Notes or Private Exchange Notes and each Participating Broker-Dealer selling Exchange Notes during the Applicable Period, each Person, if any, who controls each such Holder (within the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act) and the officers, directors and partners of each such Holder, Participating Broker-Dealer

 

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and controlling person, to the fullest extent lawful, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, reasonable costs of preparation and reasonable attorneys’ fees as provided in this Section 8) and expenses (including, without limitation, reasonable costs and expenses incurred in connection with investigating, preparing, pursuing or defending against any of the foregoing) (collectively, “Losses”), as incurred, directly or indirectly caused by, related to, based upon, arising out of or in connection with any untrue or alleged untrue statement of a material fact contained in any Registration Statement, Prospectus or form of prospectus, or in any amendment or supplement thereto, or in any preliminary prospectus, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, except insofar as such Losses resulted primarily from information relating to such Holder or Participating Broker-Dealer and furnished in writing to the Issuers (or reviewed and approved in writing) by such Holder or Participating Broker-Dealer or their counsel expressly for use therein; provided, however, that the Issuers and the Guarantors will not be liable to any Indemnified Party (as defined below) under this Section 8 to the extent Losses were solely caused by an untrue statement or omission or alleged untrue statement or omission that was contained or made in any preliminary prospectus and corrected in the Prospectus or any amendment or supplement thereto if (i) the Prospectus does not contain any other untrue statement or omission or alleged untrue statement or omission of a material fact that was the subject matter of the related proceeding, (ii) any such Losses resulted from an action, claim or suit by any Person who purchased Registrable Notes or Exchange Notes which are the subject thereof from such Indemnified Party and (iii) it is established in the related proceeding that such Indemnified Party failed to deliver or provide a copy of the Prospectus (as amended or supplemented) to such Person with or prior to the confirmation of the sale of such Registrable Notes or Exchange Notes sold to such Person if required by applicable law, unless such failure to deliver or provide a copy of the Prospectus (as amended or supplemented) was a result of noncompliance by the Issuers with Section 6 of this Agreement.  The Issuers and the Guarantors also agree to indemnify underwriters, selling brokers, dealer managers and similar securities industry professionals participating in the distribution, their officers, directors, agents and employees and each Person, if any, who controls such Persons (within the meaning of Section 5 of the Securities Act or Section 20(a) of the Exchange Act) to the same extent as provided above with respect to the indemnification of the Holders or the Participating Broker-Dealer.

 

(b)                                 Indemnification by Holder.  In connection with any Registration Statement, Prospectus or form of prospectus, any amendment or supplement thereto, or any preliminary prospectus in which a Holder is participating, such Holder shall furnish to the Issuers and the Guarantors in writing such information as the Issuers and the Guarantors reasonably request for use in connection with any Registration Statement, Prospectus or form of prospectus, any amendment or supplement thereto, or any preliminary prospectus and shall indemnify and hold

 

22

 

harmless the Issuers, the Guarantors, their respective officers, directors, agents, employees and each Person, if any, who controls the Issuers and the Guarantors (within the meaning of Section 15 of the Securities Act and Section 20(a) of the Exchange Act), and the officers, directors and employees of such controlling persons, to the fullest extent lawful, from and against all Losses arising out of or based upon any untrue or alleged untrue statement of a material fact contained in any Registration Statement, Prospectus or form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading to the extent, but only to the extent, that such losses are finally judicially determined by a court of competent jurisdiction in a final, unappealable order to have resulted primarily from an untrue statement or alleged untrue statement of a material fact or omission or alleged omission of a material fact contained in or omitted from any information so furnished in writing by such Holder to the Issuers and the Guarantors expressly for use therein.  Notwithstanding the foregoing, in no event shall the liability of any selling Holder be greater in amount than such Holder’s Maximum Contribution Amount (as defined below).

 

(c)                                  Conduct of Indemnification Proceedings.  If any action or proceeding shall be brought or asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such Indemnified Party shall promptly notify the party or parties from which such indemnity is sought (the “Indemnifying Party” or “Indemnifying Parties”, as applicable) in writing; provided, that the failure to so notify the Indemnifying Parties shall not relieve the Indemnifying Parties from any obligation or liability except to the extent (but only to the extent) that it shall be finally determined by a court of competent jurisdiction (which determination is not subject to appeal) that the Indemnifying Parties have been prejudiced materially by such failure.

 

The Indemnifying Party shall have the right, exercisable by giving written notice to an Indemnified Party, within 20 Business Days after receipt of written notice from such Indemnified Party of such proceeding, to assume, at its expense, the defense of any such proceeding, provided, that an Indemnified Party shall have the right to employ separate counsel in any such proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or parties unless: (1) the Indemnifying Party has agreed to pay such fees and expenses; or (2) the Indemnifying Party shall have failed promptly to assume the defense of such proceeding or shall have failed to employ counsel reasonably satisfactory to such Indemnified Party; or (3) the named parties to any such proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party or any of its Affiliates or controlling persons, and such Indemnified Party shall have been advised by counsel that there may be one or more defenses available to such Indemnified Party that are in addition to, or in conflict with, those defenses available to the Indemnifying Party or such Affiliate or controlling person (in which case, if such Indemnified Party notifies the Indemnifying Parties in writing that it elects to employ separate counsel at the expense of the Indemnifying Parties, the Indemnifying Parties shall not have the right to assume

 

23

 

the defense and the reasonable fees and expenses of such counsel shall be at the expense of the Indemnifying Party; it being understood, however, that, the Indemnifying Party shall not, in connection with any one such proceeding or separate but substantially similar or related proceedings in the same jurisdiction, arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one separate firm of attorneys (together with appropriate local counsel) at any time for such Indemnified Party).

 

No Indemnifying Party shall be liable under this Section 8 for any settlement of any such proceeding effected without its written consent, which shall not be unreasonably withheld, but if settled with its written consent, or if there be a final judgment for the plaintiff in any such proceeding, each Indemnifying Party jointly and severally agrees, subject to the exceptions and limitations set forth above, to indemnify and hold harmless each Indemnified Party from and against any and all Losses by reason of such settlement or judgment.  The Indemnifying Party shall not consent to the entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to each Indemnified Party of a release, in form and substance reasonably satisfactory to the Indemnified Party, from all liability in respect of such proceeding for which such Indemnified Party would be entitled to indemnification hereunder (whether or not any Indemnified Party is a party thereto).

 

(d)                                 Contribution.  If the indemnification provided for in this Section 8 is unavailable to an Indemnified Party or is insufficient to hold such Indemnified Party harmless for any Losses in respect of which this Section 8 would otherwise apply by its terms (other than by reason of exceptions provided in this Section 8), then each applicable Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall have a joint and several obligation to contribute to the amount paid or payable by such Indemnified Party as a result of such Losses, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party, on the one hand, and such Indemnified Party, on the other hand, in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party, on the one hand, and Indemnified Party, on the other hand, shall be determined by reference to, among other things, whether any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent any such statement or omission.  The amount paid or payable by an Indemnified Party as a result of any Losses shall be deemed to include any legal or other fees or expenses incurred by such party in connection with any proceeding, to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for in Section 8(a) or 8(b) was available to such party.

 

The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 8(d) were determined by pro rata allocation or by other method of allocation that does not take account of the equitable considerations referred to in the immediately preceding paragraph.  Notwithstanding the provisions of this Section 8(d), a selling Holder shall not be required to contribute, in the aggregate, any amount in excess of such Holder’s Maximum

 

24

 

Contribution Amount.  A selling Holder’s “Maximum Contribution Amount” shall equal the excess of (i) the aggregate proceeds received by such Holder pursuant to the sale of such Registrable Notes or Exchange Notes over (ii) the aggregate amount of damages that such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.  No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. The Holders’ obligations to contribute pursuant to this Section 8(d) are several in proportion to the respective principal amount of the Registrable Notes held by each Holder hereunder and not joint.  The Issuers’ and Guarantors’ obligations to contribute pursuant to this Section 8(d) are joint and several.

 

The indemnity and contribution agreements contained in this Section 8 are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties.

 

9.                                       Rules 144 and 144A

 

Each of the Issuers covenants that it shall (a) use its commercially reasonable efforts to file the reports required to be filed by it (if so required) under the Securities Act and the Exchange Act in a timely manner and, if at any time the Issuer is not required to file such reports, it will, upon the written request of any Holder of Registrable Notes, make publicly available other information necessary to permit sales pursuant to Rule 144 and 144A and (b) take such further action as any Holder may reasonably request in writing, all to the extent required from time to time to enable such Holder to sell Registrable Notes without registration under the Securities Act pursuant to the exemptions provided by Rule 144 and Rule 144A.  Upon the request of any Holder, the Issuers shall deliver to such Holder a written statement as to whether it has complied with such information and requirements.

 

10.                                 Underwritten Registrations of Registrable Notes

 

If any of the Registrable Notes covered by any Shelf Registration are to be sold in an Underwritten Offering, the investment banker or investment bankers and manager or managers that will manage the offering will be selected by the Holders of a majority in aggregate principal amount of such Registrable Notes included in such offering; provided, however, that such investment banker or investment bankers and manager or managers must be reasonably acceptable to the Issuers.

 

No Holder of Registrable Notes may participate in any Underwritten Registration hereunder unless such Holder (a) agrees to sell such Holder’s Registrable Notes on the basis provided in any underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements and (b) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements.

 

11.                                 Miscellaneous

 

(a)                                  Remedies. In the event of a breach by any of the Issuers or the Guarantors of any of their respective obligations under this Agreement, each Holder, in addition to being entitled to exercise all rights provided herein, in the Indenture or, in the case

 

25

 

of the Initial Purchaser, in the Purchase Agreement, or granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Agreement.  The Issuers and the Guarantors agree that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by any of the Issuers or Guarantors of any of the provisions of this Agreement and hereby further agree that, in the event of any action for specific performance in respect of such breach, the Issuers shall (and shall cause each Guarantor to) waive the defense that a remedy at law would be adequate.

 

(b)                                 No Inconsistent Agreements.  None of the Issuers and the Guarantors has entered, as of the date hereof, and each of the Issuers and the Guarantors shall not enter, after the date of this Agreement, into any agreement with respect to any of its securities that is inconsistent with the rights granted to the Holders of Registrable Notes in this Agreement or otherwise conflicts with the provisions hereof.  None of the Issuers and Guarantors has entered, and each of the Issuers and Guarantors will not enter, into any agreement with respect to any of its securities that will grant to any Person piggy-back rights with respect to a Registration Statement.

 

(c)                                  Adjustments Affecting Registrable Notes.  The Issuers shall not, directly or indirectly, take any action with respect to the Registrable Notes as a class that would adversely affect the ability of the Holders to include such Registrable Notes in a registration undertaken pursuant to this Agreement.

 

(d)                                 Amendments and Waivers.  The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, otherwise than by the Issuers and the Guarantors with the prior written consent of the Holders of not less than a majority in aggregate principal amount of the then outstanding Registrable Notes in circumstances that would adversely affect any Holders of Registrable Notes; provided, however, that Section 8 hereof and this Section 11(d) may not be amended, modified or supplemented without the prior written consent of each Holder.  Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of Holders of Registrable Notes whose securities are being tendered pursuant to the Exchange Offer or sold pursuant to a Notes Registration Statement and that does not directly or indirectly affect, impair, limit or compromise the rights of other Holders of Registrable Notes may be given by Holders of at least a majority in aggregate principal amount of the Registrable Notes being tendered or being sold by such Holders pursuant to such Notes Registration Statement.

 

(e)                                  Notices.  All notices and other communications provided for or permitted hereunder shall be made in writing by hand delivery, registered first-class mail, next-day air courier or telecopier:

 

(i)                                     if to a Holder of Registrable Notes or to any Participating Broker-Dealer, at the most current address of such Holder or Participating Broker-Dealer,

 

26

 

as the case may be, set forth on the records of the registrar of the Notes, with a copy in like manner to the Initial Purchaser as follows:

 

Jefferies & Company, Inc.
 520 Madison Avenue
 New York, New York 10022

Attention: General Counsel

 

(ii)                                  if to the Initial Purchaser, at the address specified in Section 11(e)(1) hereof;

 

(iii)                               if to the Issuers or any Guarantor, as follows:

 

Global Aviation Holdings, Inc.

101 World Drive

Peachtree, Georgia 30269

Attention: General Counsel

 

with a copy to:

 

Cravath, Swaine & Moore LLP

Worldwide Plaza

825 Eighth Avenue

New York, New York 10019

Attention: Ronald Cami

 

All such notices and communications shall be deemed to have been duly given: when delivered by hand, if personally delivered; five business days after being deposited in the United States mail, postage prepaid, if mailed, one business day after being deposited in the United States mail, postage prepaid, if mailed; one business day after being timely delivered to a next-day air courier guaranteeing overnight delivery; and when receipt is acknowledged by the addressee, if telecopied.

 

Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Trustee under the Indenture at the address specified in such Indenture.

 

(f)                                    Successors and Assigns.  This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties hereto, including, without limitation and without the need for an express assignment, subsequent Holders of Registrable Notes.

 

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

 

27

 

(h)                                Headings.  The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

 

(i)                                    Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAW.  EACH OF THE ISSUERS HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND IRREVOCABLY ACCEPTS FOR ITS AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS.  EACH OF THE ISSUERS IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.  EACH OF THE ISSUERS IRREVOCABLY CONSENTS, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE ISSUERS AT THEIR SAID ADDRESS, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING.  NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY HOLDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY OF THE ISSUERS IN ANY OTHER JURISDICTION.

 

(j)                                    Severability.  If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use reasonably best efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction.  It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

 

28

 

(k)                                 Registrable Notes Held by the Issuers or Affiliates.  Whenever the consent or approval of Holders of a specified percentage of Registrable Notes is required hereunder, Registrable Notes held by any of the Issuers or their respective Affiliates shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage.

 

(l)                                    Third Party Beneficiaries.  Holders and Participating Broker-Dealers are intended third party beneficiaries of this Agreement and this Agreement may be enforced by such Persons.

 

(m)                              Entire Agreement.  This Agreement, together with the Purchase Agreement, the Indenture and the Security Documents, is intended by the parties as a final and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein and therein and any and all prior oral or written agreements, representations, or warranties, contracts, understanding, correspondence, conversations and memoranda between the Initial Purchaser on the one hand and the Issuers and the Guarantors on the other, or between or among any agents, representatives, parents, subsidiaries, Affiliates, predecessors in interest or successors in interest with respect to the subject matter hereof and thereof are merged herein and replaced hereby.

 

29

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

 

	     
    	    GLOBAL AVIATION HOLDINGS,   INC.
    
	     
    	     
    
	     
    	     
    
	     
    	    By:
    	    /s/ Mark M. McMillin
    
	     
    	     
    	    Name: Mark M. McMillin
    
	     
    	     
    	    Title: Sr. VP, General   Counsel
    
	     
    	     
    
	     
    	     
    
	     
    	    NORTH AMERICAN AIRLINES,   INC.
    
	     
    	     
    
	     
    	     
    
	     
    	    By:
    	    /s/ Mark M. McMillin
    
	     
    	     
    	    Name: Mark M. McMillin
    
	     
    	     
    	    Title: Sr. VP, General   Counsel
    
	     
    	     
    
	     
    	     
    
	     
    	    WORLD AIRWAYS, INC.
    
	     
    	     
    
	     
    	     
    
	     
    	    By:
    	    /s/ Mark M. McMillin
    
	     
    	     
    	    Name: Mark M. McMillin
    
	     
    	     
    	    Title: Sr. VP, General   Counsel
    

 

 

Registration Rights Agreement

 

S-1

 

	     
    	    Each of the following   entities, as Guarantors:
    
	     
    	     
    
	     
    	     
    
	     
    	    NEW ATA INVESTMENT INC.
    
	     
    	     
    
	     
    	     
    
	     
    	    By:
    	    /s/ Mark M. McMillin
    
	     
    	     
    	    Name:
    	    Mark M. McMillin
    
	     
    	     
    	    Title:
    	    Sr. VP, General Counsel
    
	     
    	     
    
	     
    	     
    
	     
    	    NEW ATA ACQUISITION INC.
    
	     
    	     
    
	     
    	     
    
	     
    	    By:
    	    /s/ Mark M. McMillin
    
	     
    	     
    	    Name:
    	    Mark M. McMillin
    
	     
    	     
    	    Title:
    	    Sr. VP, General Counsel
    
	     
    	     
    
	     
    	     
    
	     
    	    WORLD AIR HOLDINGS, INC.
    
	     
    	     
    
	     
    	     
    
	     
    	    By:
    	    /s/ Mark M. McMillin
    
	     
    	     
    	    Name:
    	    Mark M. McMillin
    
	     
    	     
    	    Title:
    	    Sr. VP, General Counsel
    
	     
    	     
    
	     
    	     
    
	     
    	    GLOBAL AVIATION VENTURES   SPV LLC
    
	     
    	     
    
	     
    	     
    
	     
    	    By:
    	    /s/ Mark M. McMillin
    
	     
    	     
    	    Name:
    	    Mark M. McMillin
    
	     
    	     
    	    Title:
    	    Sr. VP, General Counsel
    
	     
    	     
    
	     
    	     
    
	     
    	    WORLD AIRWAYS PARTS   COMPANY, LLC
    
	     
    	     
    
	     
    	     
    
	     
    	    By:
    	    /s/ Mark M. McMillin
    
	     
    	     
    	    Name:
    	    Mark M. McMillin
    
	     
    	     
    	    Title:
    	    Sr. VP, General Counsel
    
					

 

 

Registration Rights Agreement

 

S-2

 

	    ACCEPTED AND AGREED TO:
    	     
    
	     
    	     
    
	    JEFFERIES &   COMPANY, INC.
    	     
    
	     
    	     
    
	     
    	     
    
	    By:
    	    /s/ Craig Zapa
    	     
    
	     
    	    Name: Craig Zapa
    	     
    
	     
    	    Title: MD
    	     
    

 

 

Registration Rights Agreement

 

S-3

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