Document:

Exhibit 10.21

 

EXECUTION COPY

 

	     
    

 

SECOND-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 September 29, 2009

 

	     
    

 

 

TABLE OF CONTENTS

 

	     
    	     
    	    Page
    
	     
    	     
    	     
    
	    SECTION 1.
    	    DEFINED TERMS
    	    1
    
	    1.1.
    	    Definitions
    	    1
    
	    1.2.
    	    Other Definitional Provisions
    	    5
    
	     
    	     
    	     
    
	    SECTION 2.
    	    GRANT OF SECURITY INTEREST
    	    6
    
	     
    	     
    	     
    
	    SECTION 3.
    	    REPRESENTATIONS AND WARRANTIES
    	    9
    
	    3.1.
    	    Title; No Other Liens
    	    9
    
	    3.2.
    	    Perfected Liens
    	    9
    
	    3.3.
    	    Jurisdiction of Organization
    	    10
    
	    3.4.
    	    Inventory and Equipment
    	    10
    
	    3.5.
    	    Farm Products
    	    10
    
	    3.6.
    	    Investment Property
    	    10
    
	    3.7.
    	    Receivables
    	    11
    
	    3.8.
    	    Intellectual Property
    	    11
    
	    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
    	    12
    
	    4.4.
    	    Changes in Locations, Name, etc.
    	    12
    
	    4.5.
    	    Notices
    	    13
    
	    4.6.
    	    Investment Property
    	    13
    
	    4.7.
    	    Receivables
    	    14
    
	    4.8.
    	    Intellectual Property
    	    14
    
	    4.9.
    	    Commercial Tort Claims
    	    16
    
	    4.10.
    	    Deposit Accounts
    	    17
    
	    4.11.
    	    Overriding Provisions with respect to Collateral
    	    17
    
	     
    	     
    	     
    
	    SECTION 5.
    	    REMEDIAL PROVISIONS
    	    17
    
	    5.1.
    	    Certain Matters Relating to Receivables
    	    17
    
	    5.2.
    	    Communications with Obligors; Grantors Remain Liable
    	    18
    
	    5.3.
    	    Pledged Equity
    	    19
    
	    5.4.
    	    Proceeds to be Turned Over to Collateral Agent
    	    20
    
	    5.5.
    	    Application of Proceeds
    	    20
    
	    5.6.
    	    Code and Other Remedies
    	    21
    
	    5.7.
    	    Registration Rights
    	    22
    
	    5.8.
    	    Deficiency
    	    23
    
	    5.9.
    	    Notice of Sole Control
    	    23
    

 

 

	    SECTION 6.
    	    THE COLLATERAL AGENT
    	    23
    
	    6.1.
    	    Collateral Agent’s Appointment as   Attorney-in-Fact, etc.
    	    23
    
	    6.2.
    	    Duty of Collateral Agent
    	    25
    
	    6.3.
    	    Execution of Financing Statements
    	    25
    
	    6.4.
    	    Authority of Collateral Agent
    	    26
    
	     
    	     
    	     
    
	    SECTION 7.
    	    MISCELLANEOUS
    	    26
    
	    7.1.
    	    Amendments in Writing
    	    26
    
	    7.2.
    	    Notices
    	    26
    
	    7.3.
    	    No Waiver by Course of Conduct; Cumulative Remedies
    	    26
    
	    7.4.
    	    Enforcement Expenses; Indemnification. (a)
    	    27
    
	    7.5.
    	    Successors and Assigns
    	    27
    
	    7.6.
    	    Setoff
    	    27
    
	    7.7.
    	    Counterparts
    	    28
    
	    7.8.
    	    Severability
    	    28
    
	    7.9.
    	    Section Headings
    	    28
    
	    7.10.
    	    Integration
    	    28
    
	    7.11.
    	    GOVERNING LAW
    	    28
    
	    7.12.
    	    Submission To Jurisdiction; Waivers
    	    28
    
	    7.13.
    	    Acknowledgments
    	    29
    
	    7.14.
    	    Additional Grantors
    	    29
    
	    7.15.
    	    Releases
    	    29
    
	    7.16.
    	    WAIVER OF JURY TRIAL
    	    30
    

 

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

 

 

SECOND-LIEN SECURITY AGREEMENT, dated as of September 29, 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 (in such capacity and together with its successors and assigns in such capacity, the “Collateral Agent”) for the Secured Parties (as defined below).

 

W I T N E S S E T H:

 

WHEREAS, pursuant to the Second-Lien Term Loan Credit Agreement, dated as of September 29, 2009 (as amended, supplemented or otherwise modified from time to time, the “Term Loan Agreement”), among 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 a “Borrower” and, collectively, the “Borrowers”), the Guarantors from time to time party thereto, the lenders from time to time party thereto (the “Lenders”),  Wells Fargo Bank, National Association, as administrative agent (in such capacity and together with its successors and assigns in such capacity, the “Administrative Agent”), the Collateral Agent and the other parties thereto, the Lenders have severally agreed to make Loans to the Borrowers (which are guaranteed by the other Grantors) upon the terms and subject to the conditions set forth therein;

 

WHEREAS, pursuant to the Term Loan Agreement, Loans made by the Lenders may be exchanged for Exchange Notes issued pursuant to the Exchange Note Indenture at the times and upon the terms and subject to the conditions set forth therein;

 

WHEREAS, the Borrowers and the other Grantors are engaged in related businesses, and each Grantor will derive substantial direct and indirect benefit from the making of the Loans under the Term Loan Agreement; and

 

WHEREAS, it is a condition precedent to the obligation of the Lenders to make their respective Loans to the Borrowers under the Term Loan Agreement that the Grantors shall have executed and delivered this Agreement to the Collateral Agent for the ratable benefit of the Secured Parties;

 

NOW, THEREFORE, in consideration of the premises and to induce the Collateral Agent and the Lenders to enter into the Term Loan Agreement and to induce the Lenders to make their respective Loans to the Borrowers thereunder, each Grantor hereby agrees with the Collateral Agent, for the ratable benefit of the Secured Parties, as follows:

 

SECTION 1.           DEFINED TERMS

 

1.1.          Definitions.  (a)  Unless otherwise defined herein, terms defined in the Term Loan Agreement and used herein shall have the meanings given to them in the Term Loan Agreement, 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.

 

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

 

“Agreement”:  this Second-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 First-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, (ii) any Deposit Account, Securities Account or Commodity Account with an average annual balance of less than $1,000,000, (iii) any Deposit Account, Securities Account or Commodity Account that is exclusively used to hold Excluded Cash, (iv) Trust Tax Accounts, and (v) Lessor Maintenance Reserve Accounts.

 

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“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 Term Loan Agreement.

 

“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.

 

“Financing Documents”:  the Term Loan Agreement, this Agreement, the other Loan Documents, and, if Exchange Notes are outstanding, the Exchange Note Indenture and the Exchange Notes.

 

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

 

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

 

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

 

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

 

“First-Lien Security Agreement”: as defined in the Intercreditor Agreement.

 

“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.

 

“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.

 

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

 

“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.

 

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

 

“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 Loans, any Exchange Notes and all other monetary obligations and liabilities of the Grantors (including, without limitation, interest accruing at the then applicable rate provided in the Term Loan Agreement or, if Exchange Notes are outstanding, the Exchange Note Indenture, as applicable, after the maturity of the Loans or the Exchange Notes, as the case may be, and interest accruing at the then applicable rate provided in the Term Loan Agreement or the Exchange Notes, as applicable, 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 Financing 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 SPV under the Existing Credit Agreement 

 

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(other than promissory notes issued in connection with extensions of trade credit by any Grantor in the ordinary course of business).

 

“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).

 

“Secured Parties”:  the collective reference to the Administrative Agent, the Collateral Agent, each other Agent, the Lenders and, if Exchange Notes are outstanding, the Exchange Note Trustee and the Exchange Note 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.

 

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.

 

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(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;

 

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

 

(o)           all ATA Collateral;

 

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

 

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(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 in such property (a) is prohibited by any applicable law of a Governmental Authority, (b) requires a consent not obtained of any Governmental Authority pursuant to such law or (c) 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 Financing Documents or, in the case of any Investment Property, Pledged Equity or Pledged Debt, any applicable shareholder or similar agreement, in each case (a) through (c) 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 Financing 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 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 issued by a Subsidiary shall be deemed to constitute Excluded Property to the extent that the pledge of 

 

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such Equity Interests or other securities secures the Obligations under the Exchange Note Indenture (and shall not constitute Excluded Property for purposes of the other Obligations) and 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 Exchange Note Indenture, then such Equity Interests or other securities of such Subsidiary will automatically be deemed Excluded Property, 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 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 only from the Lien created hereunder to the extent securing the Obligations under the Exchange Note Indenture.  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 Exchange Note Indenture 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.

 

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 such Equity Interests or other securities constitute “Excluded Property” under (and as defined in) the First-Lien Documents by virtue of the second paragraph of Section 2 of the First-Lien Security Agreement (as in effect on the date hereof).  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 such shares of Equity Interests or other securities that are so deemed to constitute Excluded Property.

 

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.

 

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SECTION 3.           REPRESENTATIONS AND WARRANTIES

 

To induce the Collateral Agent and the Lenders to enter into the Term Loan Agreement and to induce the Lenders to make their respective Loans to the Borrowers thereunder, 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 Financing Documents, such Grantor owns 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 Financing 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 Financing 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 Financing 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 

 

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and Pledged Debt, are Liens created by the First-Lien Documents, or are nonconsensual Liens permitted pursuant to the Financing 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 Financing 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.

 

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, except that, 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, all 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 First-Lien 

 

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Documents, any security interest securing any Third-Lien Obligations or nonconsensual Liens permitted pursuant to the Financing 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 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 Financing 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 Financing Documents.

 

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(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 reasonably requested by the Collateral Agent 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, in the case of Collateral consisting of Pledged Equity and Pledged Debt, Liens created under the First-Lien Documents (but otherwise subject to the terms of the Intercreditor Agreement) or nonconsensual Liens permitted by the Financing Documents and, in the case of Collateral other than Pledged Equity and Pledged Debt, Liens permitted by the Financing Documents and to the rights of such Grantor under the Financing 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.  Each year, at the time of delivery of annual financial statements with respect to the preceding fiscal year pursuant to the Financing Documents, Parent shall deliver to the Collateral Agent a certificate executed by the associate general counsel or the chief legal officer of Parent setting forth, as of the date of such certificate, the information required pursuant to Schedules 1, 3, 5, 6 and 7 hereto and Schedule 3.02 to the Term Loan Agreement or confirming that there has been no change in such information since (i) such information was furnished or otherwise updated, amended, changed or supplemented, or (ii) the date of the most recent certificate delivered pursuant to this Section 4.3(b).

 

(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 

 

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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 Financing 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, hold the same in trust for the Collateral Agent and the other Secured Parties and deliver the same forthwith to the Collateral Agent or to the extent required by the Intercreditor Agreement, the First-Lien Collateral Agent, in the exact form received, duly indorsed by such Grantor to the Collateral Agent (or the First-Lien Collateral Agent, as applicable), 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 (or the First-Lien Collateral Agent, as applicable), 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 (or the First-Lien Collateral Agent, as applicable), 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 Financing Documents), (ii) create, 

 

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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 Financing Documents or (iii) except as permitted by the Financing Documents, enter, subsequent to the date upon which such Investment Property becomes Collateral hereunder, into any agreement (other than the Financing 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 Section 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 First-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 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 Financing 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) 

 

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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 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 Financing Documents.  Upon reasonable request of the Collateral Agent, such Grantor shall execute and deliver, and have recorded, any and all agreements, instruments, documents, and papers as the Collateral 

 

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Agent may reasonably request 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 Financing 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.  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 Financing 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 First-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 

 

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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, if requested by the Collateral Agent, 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.  In the case of Collateral Deposit Accounts maintained with Lenders, the terms of such letter shall be subject to the provisions of the Term Loan Agreement or this Agreement regarding setoffs.

 

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 Financing Document, to the extent the provisions of this Agreement (or any other Financing Document) require the delivery or endorsement of, or control over, Collateral to be granted to the Collateral Agent at any time prior to the First-Lien Obligations Termination Date, then delivery or endorsement of such Collateral (or control with respect thereto) shall instead be granted to the First-Lien Collateral Agent, to be held in accordance with the Intercreditor Agreement.  Furthermore, at all times prior to the First-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 Collateral at any time in its possession (and any “control” or similar agreements with respect to Collateral) to the First-Lien Collateral Agent.  Any such endorsement or delivery of, or granting of control with respect to, Collateral to the First-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 Financing 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 Financing 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)  The Collateral Agent shall have the right annually (or, if an Event of Default has occurred and is continuing, at any time) to make test verifications of the Receivables required to be included in Collateral in any manner and through any medium that it reasonably considers advisable, and each Grantor shall furnish all such assistance and information as the Collateral Agent may require in connection with such test verifications.  Annually (or, if an Event of Default has occurred and is continuing, at any 

 

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time), upon the Collateral Agent’s reasonable request and at the expense of the relevant Grantor, such Grantor shall use commercially reasonable efforts to cause independent public accountants or others satisfactory to the Collateral Agent to furnish to the Collateral Agent reports showing reconciliations, aging and test verifications of, and trial balances for, such Receivables.

 

(b)           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.

 

(c)           Subject to the terms of the Intercreditor Agreement, 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)           Subject to the terms of the Intercreditor Agreement, 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 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 

 

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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 Financing 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 Financing 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 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.

 

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(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 and the Collateral Agent so requests, 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 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.  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, whether or not held in any Collateral Account, as follows:

 

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

 

Second, to pay Obligations in respect of incurred and unpaid fees and expenses of the Administrative Agent, the Collateral Agent and the Exchange Note Trustee (if any) under the Financing Documents (or, if such Proceeds are insufficient to pay in full all such Obligations, (i) first to pay the Obligations of the Collateral Agent incurred in connection with the Collateral Agreements, including in connection with the enforcement thereof, and (ii) second, to the extent in excess thereof, pro  rata among the Administrative Agent, the Collateral Agent and the Exchange Note Trustee according to the amounts of such Obligations then due and owing and remaining unpaid to such Secured Parties);

 

Third, 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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Fourth, 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; and

 

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

 

To the extent that the Obligations in respect of the Exchange Note Indenture are not secured by any Equity Interests or other securities of a Subsidiary as provided in the third to last paragraph of Section 2, any distributions that would otherwise be required to be made under this Section 5.5 to the Obligations under the Exchange Note Indenture if such Obligations were so secured shall instead be made to the other Obligations in accordance with the provisions set forth herein.

 

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 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 such order as the Collateral Agent may elect, 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 

 

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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 Securities and Exchange Commission 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.

 

(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 

 

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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 Term Loan Agreement.

 

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 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 

 

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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 Section 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.

 

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.

 

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(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 at a rate per annum equal to the rate per annum then payable on past due Loans under the Term Loan Agreement, 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.

 

(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.  Whenever reference is made in this Agreement to any action by, consent, designation, specification, requirement or approval of, notice, request or other communication from, or other direction given or action to be undertaken or to be (or not to be) suffered or omitted by the Collateral Agent or to any election, decision, opinion, acceptance, use of judgment, expression of satisfaction or other exercise of discretion, rights or remedies to be made (or not to be made) by the Collateral Agent, it is understood that in all cases the Collateral Agent shall be fully justified in failing or refusing to take any such action under this Agreement if it shall not have received such advice or concurrence of the Required Lenders (acting in accordance with the Term Loan Agreement and other Loan Documents), as it deems appropriate.  This provision is intended solely for the benefit of the Collateral Agent and its successors and permitted assigns and is not intended to and will not entitle the other parties hereto to any defense, claim or counterclaim, or confer any rights or benefits on any party hereto.

 

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 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 

 

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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 Term Loan Agreement, and, if Exchange Notes are outstanding, as between the Exchange Note Trustee and the Exchange Note Holders, by the Exchange Note Indenture, and in each case 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.  (a)  None of the terms or provisions of this Agreement may be waived, amended, supplemented or otherwise modified except in accordance with Section 9.02 of the Term Loan Agreement and any comparable provision of the Exchange Note Indenture.

 

(b)           The parties hereto agree to amend, or amend and restate, this Agreement or any other Collateral Agreement upon the request of the Collateral Agent in connection with the issuance of Exchange Notes and the execution and delivery of the Exchange Note Indenture in order, as may be reasonably requested or necessary, to (i) replace the Collateral Agent with the Exchange Note Trustee or its designee (unless any Loans remain outstanding after the issuance of the Exchange Notes) and (ii) to facilitate compliance of this Agreement and the Exchange Note Indenture, or of the Exchange Note Trustee, with the Trust Indenture Act of 1939 or any other Federal or state securities laws applicable to this Agreement, the Indenture or the Exchange Notes or the Exchange Note Trustee.

 

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 9.01 of the Term Loan Agreement.

 

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 

 

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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 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 Term Loan Agreement and the other Financing 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 Financing 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.          Setoff.  In addition to any rights and remedies of the Secured Parties provided by law, upon the occurrence and during the continuance of any Event of Default, each Secured Party and its Affiliates is authorized at any time and from time to time, without prior notice to any Grantor, any such notice being waived by each Grantor to the fullest extent permitted by applicable law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held by, and other Indebtedness at any time owing by, such Secured Party and its Affiliates to or for the credit or the account of any Grantor against any and all Obligations owing to such Secured Party and its Affiliates hereunder or under any other Financing Document, now or hereafter existing, irrespective of whether or not such Secured Party or Affiliate shall have made demand under this Agreement or any other Financing Document and although such Obligations may be contingent or unmatured or denominated in a currency different from that of the applicable deposit or Indebtedness; provided that, in the case of any such deposits or other Indebtedness for the credit or the account of any Foreign Subsidiary, such set off may only be against any Obligations of Foreign Subsidiaries.  Each Secured Party agrees promptly to notify such Grantor and the Collateral Agent after any such set off and application made by such Secured Party; provided, that the failure to give such notice shall not affect the validity of such setoff and application.  The rights of the Collateral Agent and each other Secured Party under this Section 7.6 are in addition to other rights and remedies (including other rights of setoff) that the Collateral Agent and such other Secured Party may have.

 

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7.7.          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.

 

7.8.          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.

 

7.9.          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.

 

7.10.        Integration.  This Agreement, together with the other Financing 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.

 

7.11.        GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

7.12.        Submission To Jurisdiction; Waivers.  (a)  Any legal action or proceeding arising under any Financing 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 Financing 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 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 Financing 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

 

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(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.

 

7.13.        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 Financing 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 Financing 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 Financing Documents or otherwise exists by virtue of the transactions contemplated hereby among the Secured Parties or among the Grantors and the Secured Parties.

 

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

 

7.15.        Releases.  (a)  At such time as the Loans, the Exchange Notes and the other Obligations (other than contingent indemnification and contingent expense reimbursement obligations) shall have been paid in full, the Collateral Agent shall release all Collateral 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 and all rights to the Collateral shall revert to 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.

 

(b)           If any of the Collateral shall be sold, transferred or otherwise disposed of by any Grantor to a Person other than a Grantor in a transaction permitted by the Financing 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.  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 to a Person other than a Grantor in a transaction permitted by the Financing 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 

 

29

 

connection therewith, together with a certification by Parent stating that such transaction is in compliance with the Term Loan Agreement and the other Financing Documents.

 

7.16.        WAIVER OF JURY TRIAL.  EACH GRANTOR HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY FINANCING 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 FINANCING DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 7.16 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

 

* * *

 

30

 

IN WITNESS WHEREOF, each of the undersigned has caused this 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:   General Counsel & Corporate Secretary
    

 

Signature Page to Second-Lien Security Agreement

 

 

	     
    	    NEW   ATA INVESTMENT INC.
    
	     
    	     
    
	     
    	     
    
	     
    	    By:
    	    /s/   Mark M. McMillin
    
	     
    	     
    	    Name:   Mark M. McMillin
    
	     
    	     
    	    Title:   General Counsel & Corporate Secretary
    
	     
    	     
    
	     
    	     
    
	     
    	    NEW   ATA ACQUISITION INC.
    
	     
    	     
    
	     
    	     
    
	     
    	    By:
    	    /s/   Mark M. McMillin
    
	     
    	     
    	    Name:   Mark M. McMillin
    
	     
    	     
    	    Title:   General Counsel & Corporate Secretary
    

 

Signature Page to Second-Lien Security Agreement

 

 

	     
    	    WORLD   AIR HOLDINGS, INC.
    
	     
    	     
    
	     
    	     
    	     
    
	     
    	    By:
    	    /s/   Mark M. McMillin
    
	     
    	     
    	    Name:   Mark M. McMillin
    
	     
    	     
    	    Title:   General Counsel & Corporate Secretary
    
	     
    	     
    	     
    
	     
    	     
    	     
    
	     
    	    NORTH   AMERICAN AIRLINES, INC.
    
	     
    	     
    	     
    
	     
    	     
    	     
    
	     
    	    By:
    	    /s/   Mark M. McMillin
    
	     
    	     
    	    Name:   Mark M. McMillin
    
	     
    	     
    	    Title:   General Counsel & Corporate Secretary
    
	     
    	     
    	     
    
	     
    	     
    	     
    
	     
    	    WORLD   AIRWAYS, INC.
    
	     
    	     
    	     
    
	     
    	     
    	     
    
	     
    	    By:
    	    /s/   Mark M. McMillin
    
	     
    	     
    	    Name:   Mark M. McMillin
    
	     
    	     
    	    Title:   General Counsel & Corporate Secretary
    
	     
    	     
    	     
    
	     
    	     
    	     
    
	     
    	    WORLD   AIRWAYS PARTS COMPANY, LLC
    
	     
    	     
    	     
    
	     
    	     
    	     
    
	     
    	    By:
    	    /s/   Mark M. McMillin
    
	     
    	     
    	    Name:   Mark M. McMillin
    
	     
    	     
    	    Title:   General Counsel & Corporate Secretary
    

 

Signature Page to Second-Lien Security Agreement

 

 

	     
    	    GLOBAL   AVIATION VENTURES SPV LLC
    
	     
    	     
    
	     
    	     
    
	     
    	    By:
    	    /s/   Mark M. McMillin
    
	     
    	     
    	    Name:   Mark M. McMillin
    
	     
    	     
    	    Title:   General Counsel & Corporate Secretary
    

 

Signature Page to Second-Lien Security Agreement

 

 

	     
    	    WELLS   FARGO BANK, NATIONAL ASSOCIATION,
    
	     
    	    as   Collateral Agent
    
	     
    	     
    
	     
    	     
    
	     
    	    By:
    	    /s/   David Bergstrom
    
	     
    	     
    	    Name:   David Bergstrom
    
	     
    	     
    	    Title:   Assistant Vice President
    

 

Signature Page to Second-Lien Security AgreementExhibit 10.24

 

WARRANT AGREEMENT

 

 

WARRANT AGREEMENT

 

Dated as of February 28, 2006

 

by and between

 

NEW ATA HOLDINGS INC.

 

and

 

REGISTRAR AND TRANSFER COMPANY

 

as Warrant Agent

 

 

 

WARRANT AGREEMENT

 

TABLE OF CONTENTS’

 

	    SECTION 1.
    	    Appointment   of Warrant Agent
    	    1
    
	     
    	     
    	     
    
	    SECTION 2.
    	    Warrant   Certificates
    	    1
    
	     
    	     
    	     
    
	    SECTION 3.
    	    Issuance   of Warrants
    	    2
    
	     
    	     
    	     
    
	    SECTION 4.
    	    Execution   of Warrant Certificates
    	    2
    
	     
    	     
    	     
    
	    SECTION 5.
    	    Registration   and Countersignature
    	    2
    
	     
    	     
    	     
    
	    SECTION 6.
    	    Registration   of Transfers and Exchanges
    	    3
    
	     
    	     
    	     
    
	    SECTION 7.
    	    Terms   of Warrants; Exercise of Warrants
    	    3
    
	     
    	     
    	     
    
	    SECTION 8.
    	    Automatic   Conversion Upon Qualified IPO
    	    5
    
	     
    	     
    	     
    
	    SECTION 9.
    	    Payment   of Taxes
    	    6
    
	     
    	     
    	     
    
	    SECTION 10.
    	    Mutilated   or Missing Warrant Certificates
    	    6
    
	     
    	     
    	     
    
	    SECTION 11.
    	    Reservation   of Shares of Common Stock
    	    6
    
	     
    	     
    	     
    
	    SECTION 12.
    	    Obtaining   Stock Exchange Listings
    	    7
    
	     
    	     
    	     
    
	    SECTION 13.   
    	    Adjustment of Exercise Price and Number of Shares of Common Stock   Issuable
    	    7
    
	     
    	     
    	     
    
	     
    	    (a)
    	    Adjustment   for Change in Capital Stock
    	    7
    
	     
    	    (b)
    	    Adjustment   for Rights Issue
    	    8
    
	     
    	    (c)
    	    Current   Market Price
    	    9
    
	     
    	    (d)
    	    When   De Minimis Adjustment May Be Deferred
    	    9
    
	     
    	    (e)
    	    When   No Adjustment Required
    	    10
    
	     
    	    (f)
    	    Notice   of Certain Transactions
    	    10
    
	     
    	    (g)
    	    Reorganization   of the Company
    	    11
    
	     
    	    (h)
    	    Adjustment   in Number of Shares
    	    11
    
	     
    	    (i)
    	    Form of   Warrants
    	    12
    
	     
    	    (j)
    	    The   Company Determination Final
    	    12
    
	     
    	    (k)
    	    Warrant Agent’s Disclaimer
    	    12
    
	     
    	     
    	     
    	     
    
	    SECTION 14.
    	    Priority   Adjustments, Further Actions
    	    12
    
	     
    	     
    	     
    
	    SECTION 15.
    	    Fractional Interests
    	    13
    

 

(I) This Table of Contents does not constitute a part of this Warrant Agreement or have any bearing upon the interpretation of any of its terms or provisions

 

 

	    SECTION 16.
    	    Notices   to Warrant Holders
    	    13
    
	     
    	     
    	     
    
	    SECTION 17.
    	    Financial   and Business Information
    	    13
    
	     
    	     
    	     
    
	    SECTION 18.
    	    Merger,   Consolidation or Change of Name of Warrant Agent
    	    14
    
	     
    	     
    	     
    
	    SECTION 19.
    	    Warrant   Agent
    	    14
    
	     
    	     
    	     
    
	    SECTION 20.
    	    Expenses
    	    17
    
	     
    	     
    	     
    
	    SECTION 21.
    	    Change   of Warrant Agent
    	    17
    
	     
    	     
    	     
    
	    SECTION 22.
    	    Notices   to the Company and Warrant Agent
    	    18
    
	     
    	     
    	     
    
	    SECTION 23.
    	    Supplements   and Amendments
    	    19
    
	     
    	     
    	     
    
	    SECTION 24.
    	    Successors
    	    19
    
	     
    	     
    	     
    
	    SECTION 25.
    	    Termination
    	    19
    
	     
    	     
    	     
    
	    SECTION 26.
    	    Governing   Law; Jurisdiction
    	    19
    
	     
    	     
    	     
    
	    SECTION 27.
    	    Benefits   of this Warrant Agreement
    	    20
    
	     
    	     
    	     
    
	    SECTION 28.
    	    Counterparts
    	    20
    
	     
    	     
    	     
    
	    SECTION 29.
    	    Further   Assurances
    	    20
    
	     
    	     
    	     
    
	    SECTION 30.
    	    Entire   Agreement
    	    20
    
	     
    	     
    	     
    
	    Exhibit A —   Form of Warrant Certificate
    	    A-1
    

 

 

ii

 

WARRANT AGREEMENT (this “Warrant Agreement”) dated as of February 28, 2006, between NEW ATA HOLDINGS INC., a Delaware corporation (the “Company”), and REGISTRAR AND TRANSFER COMPANY, a New Jersey corporation, as Warrant Agent (the “Warrant Agent”).

 

WHEREAS, pursuant to the terms and conditions of the First Amended Joint Chapter 11 Plan for Reorganization (ATA Holdings Corp. and certain subsidiaries thereof), dated December 14, 2005, as the same may be amended and restated from time to time (the “Plan”) relating to the reorganization under Chapter 11 of the Bankruptcy Reform Act of 1978, as codified in Title 11 of the United States Code, 11 US.C. ss.ss. 101-1330 (the “Bankruptcy Code”) of ATA Holdings Corp. and certain of its subsidiaries, the holders of Allowed Class 6 Claims (as defined in the Plan) are to be issued warrants (the “Warrants”) that are exercisable, within the five-year period beginning on the date hereof (the “Effective Date”), into 448,029 (four hundred forty eight thousand and twenty nine) shares of Class A Common Stock, par value $0.0001 per share, of the Company (“Common Stock”);

 

WHEREAS, the Warrants are being issued pursuant to, and upon the terms and conditions set forth in, the Plan in an offering in reliance on the exemption afforded by section 1145 of the Bankruptcy Code from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), and of any applicable state securities or “blue sky” laws;

 

WHEREAS, the Company desires the Warrant Agent to act on behalf of the Company, and the Warrant Agent is willing so to act, in connection with the issuance of Warrant certificates and other matters as provided herein; and

 

WHEREAS, for purposes of this Warrant Agreement, “person” shall be interpreted broadly to include an individual, corporation, partnership, joint venture, association, joint stock company, limited liability company, limited liability partnership, national banking association, trust, trustee, estate, unincorporated organization, government, governmental unit, agency, or political subdivision thereof, or other entity.

 

NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties hereto agree as follows:

 

SECTION 1. Appointment of Warrant Agent. The Company hereby appoints the Warrant Agent to act as warrant agent for the Company in accordance with the express (and no implied) instructions set forth hereinafter in this Warrant Agreement, and the Warrant Agent hereby accepts such appointment.

 

SECTION 2. Warrant Certificates. The certificates evidencing the Warrants to be delivered pursuant to this Warrant Agreement shall be in registered form only and shall be substantially in the form set forth in Exhibit A attached hereto (“Warrant Certificates”) and may have such letters, numbers, or other marks of identification or designation and such legends or endorsements printed, lithographed or engraved thereon as the officers of the Company executing the same may approve (with execution thereof to be conclusive evidence of such approval) and as are not inconsistent with the provisions of this Warrant Agreement, or as may

 

 

be required to comply with any applicable law or with any rule or regulation made pursuant thereto or with any rule or regulation of any exchange, inter-dealer quotation system or regulated quotation service on which the Warrants may be listed or quoted, as the case may be.

 

SECTION 3. Issuance of Warrants. Upon issuance in accordance with Section 5, each Warrant Certificate shall evidence one or more Warrants. Each Warrant evidenced thereby entitles the holder, upon proper exercise to receive from the Company, as adjusted as provided herein, one share of Common Stock at the Exercise Price.

 

SECTION 4. Execution of Warrant Certificates. Warrant Certificates shall be signed on behalf of the Company by its Chairman of the Board, Chief Executive Officer, President or any Vice President and by the Secretary or any Assistant Secretary. Each such signature upon any Warrant Certificate may be in the form of a facsimile signature of the present or any future Chairman of the Board, Chief Executive Officer, President, Vice President, Secretary or Assistant Secretary and may be imprinted or otherwise reproduced on the Warrant Certificates and for that purpose the Company may adopt and use the facsimile signature of any person who shall have been Chairman of the Board, Chief Executive Officer, President, Vice President, Secretary or Assistant Secretary at the time of entering into this Warrant Agreement, notwithstanding the fact that at the time any Warrant Certificate shall be countersigned by the Warrant Agent and delivered or disposed of by the Company he or she shall have ceased to hold such office, so long as, and the Company hereby represents that, under the Company’s charter and by-laws, any Warrants or shares of Common Stock so issued would be validly issued. Any Warrant Certificate may be signed on behalf of the Company by any person who, at the actual date of the execution of such Warrant Certificate, shall be a proper officer of the Company to sign such Warrant Certificate, although at the date of the execution of this Warrant Agreement any such person was not such officer, so long as, and the Company hereby represents that, under the Company’s charter and by-laws, any Warrants or shares of Common Stock so issued would be validly issued.

 

Warrant Certificates shall be dated the date of countersignature by the Warrant Agent and shall represent one or more whole Warrants.

 

SECTION 5. Registration and Countersignature. The Warrant Agent, on behalf of the Company, shall number and register the Warrant Certificates in a Warrant register as they are issued by the Company. The Warrant register will show the names and addresses of the respective holders of the Warrants, the numbers of Warrants evidenced on the face of each Warrant Certificate and the date of each Warrant Certificate.

 

Warrant Certificates shall be manually countersigned by the Warrant Agent and shall not be valid for any purpose unless so countersigned. The Warrant Agent shall, upon written instructions of the Chairman of the Board, Chief Executive Officer, President, Vice President, Secretary or Assistant Secretary of the Company, initially countersign and deliver Warrants entitling the holders thereof to purchase not more, nor less, than the number of shares, of Common Stock referred to above in the first recital hereof (but subject to adjustment as hereinafter provided) and shall countersign and deliver Warrants as otherwise provided in this Warrant Agreement.

 

2

 

The Company and the Warrant Agent may deem and treat the registered holder(s) of the Warrant Certificates as the absolute owner(s) thereof (notwithstanding any notation of ownership or other writing thereon made by anyone), for all purposes, and neither the Company nor the Warrant Agent shall be affected by any notice to the contrary.

 

SECTION 6. Registration of Transfers and Exchanges. The Warrant Agent shall from time to time register the transfer of any outstanding Warrant Certificates upon the records to be maintained by it for that purpose, upon surrender thereof accompanied by a written instrument or instruments of transfer in form satisfactory to the Warrant Agent, duly executed by the registered holder or holders thereof or by the duly appointed legal representative thereof or by a duly authorized attorney. Upon any such registration of transfer, a new Warrant Certificate shall be issued to the transferee(s) and the surrendered Warrant Certificate shall be cancelled by the Warrant Agent. Cancelled Warrant Certificates shall thereafter be disposed of by or at the direction of the Company in accordance with applicable law.

 

Warrant Certificates may be exchanged at the option of the registered holder(s) thereof, when surrendered to the Warrant Agent at the Warrant Agent Office during normal business hours for another Warrant Certificate or other Warrant Certificates of like tenor and representing in the aggregate a like number of Warrants. Warrant Certificates surrendered for exchange shall be cancelled by the Warrant Agent. Such cancelled Warrant Certificates shall then be disposed of by or at the direction of the Company in accordance with applicable law.

 

The Warrant Agent is hereby directed and authorized to countersign, in accordance with the provisions of this Section 6, the new Warrant Certificates issued pursuant to the provisions of this Section 6.

 

SECTION 7. Terms of Warrants; Exercise of Warrants. Subject to the terms of this Warrant Agreement, each Warrant holder shall have the right, which may be exercised from the date of original issuance of the Warrant Certificates pursuant to the terms of this Warrant Agreement and prior to 5:00 p.m. New York City Time, on February 28, 2011 (the “Expiration  Date”), to exercise each Warrant and receive from the Company the number of fully paid and nonassessable shares of Common Stock which the holder may at the time be entitled to receive on exercise of such Warrants and payment of the aggregate Exercise Price then in effect for such shares of Common Stock. In addition, prior to the delivery of any shares of Common Stock that the Company shall be obligated to deliver upon proper exercise of the Warrants, the Company shall comply with all applicable federal and state laws, rules and regulations which require action to be taken by the Company. Each Warrant, when exercised, will entitle the holder thereof to purchase one share of Common Stock at the Exercise Price. Each Warrant not exercised or converted pursuant to this Warrant Agreement prior to the Expiration Date shall become void and all rights thereunder and all rights in respect thereof under this Warrant Agreement shall cease as of such time.

 

A Warrant may be exercised upon surrender to the Company at the Warrant Agent Office referred to in Section 22 (the “Warrant Agent Office”) of the Warrant Certificate or Warrant Certificates evidencing the Warrants to be exercised, together with the form of election to purchase on the reverse thereof (the “Notice of Exercise”) duly and properly completed and signed, which signature shall be guaranteed by an “Eligible Guarantor Institution” as defined in

 

3

 

Rule 17Ad-15(2) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and upon payment to the Warrant Agent for the account of the Company of the exercise price of $10.00 (the “Exercise Price”), as adjusted from time to time as herein provided, for each share of Common Stock to be purchased. Payment of the aggregate Exercise Price for all shares of Common Stock being exercised in respect of a Warrant shall be made (a) in United States Dollars or (b) by certified or official bank check for United States Dollars made payable to the order of the Company. In lieu of payment of the aggregate Exercise Price as aforesaid and subject to applicable law, the holder of a Warrant may elect to receive from the Company a number of shares of Common Stock equal to the “Spread” by indicating such election in the Notice of Exercise delivered by such Warrant holder. The “Spread” shall, subject to Section 15, be paid by the Company by delivering to such Warrant holder a number of shares of Common Stock equal to (a)(i) the product of (x) the Current Market Price (as defined in Section 13(c) below) per share of Common Stock as of the date of receipt of the Notice of Exercise by the Company multiplied by (y) the number of shares of Common Stock underlying the Warrants being exercised, minus (ii) the product of (x) the Exercise Price, multiplied by (y) the number of shares of Common Stock underlying the Warrants being exercised, divided by (b) the Current Market Price per share of Common Stock as of the date of receipt of the Notice of Exercise to the Company.

 

Subject to the provisions of Section 9 below and Article Eleventh of the Certificate of Incorporation of the Company, upon such surrender of Warrants and payment of the aggregate Exercise Price, the Company shall issue and cause to be delivered promptly to or upon the written order of the Warrant holder and in such name or names, as the Warrant holder may designate, a certificate or certificates for the number of full shares of Common Stock issuable upon the exercise of such Warrants together with cash as provided in Section 15; provided, however, that if any Fundamental Transaction (as defined in Section 13(g)) is proposed to be effected by the Company or there is pending any tender offer or an exchange offer for shares of Common Stock, upon such surrender of Warrants and payment of the Exercise Price as aforesaid, the Company shall, as soon as possible, but in any event not later than two business days thereafter, issue and cause to be delivered the number of full shares of Common Stock issuable upon the exercise of such Warrants in the manner described in this sentence together with any cash as provided in Section 15. For purposes of this Warrant Agreement, a “business day” means any day other than a Saturday, Sunday or a day on which banking institutions in New York City are authorized or obligated by law, regulation or executive order to close or remain closed. Such certificate or certificates shall be deemed to have been issued and any person so designated to be named therein shall be deemed to have become a holder of record of such shares of Common Stock as of the close of business on the date of the surrender of such Warrants and payment of the aggregate Exercise Price. In accordance with Section 15, no fractional shares shall be issued upon exercise of any Warrants.

 

The Warrants shall be exercisable, at the election of the holders thereof, either in full or from time to time in part (in whole shares of Common Stock) and, in the event that a Warrant Certificate evidencing Warrants is exercised in respect of fewer than all of the shares of Common Stock issuable on such exercise at any time prior to the Expiration Date, a new Warrant Certificate evidencing the remaining Warrant or Warrants will be promptly issued, and the Warrant Agent is hereby irrevocably authorized and directed to countersign and to deliver the required new Warrant Certificate or Warrant Certificates pursuant to the provisions of this

 

4

 

Section 7 and of Section 5, and the Company, whenever required by the Warrant Agent or under this Warrant Agreement, will supply the Warrant Agent with Warrant Certificates duly executed on behalf of the Company for such purpose.

 

All Warrant Certificates surrendered upon exercise of Warrants shall be cancelled by the Warrant Agent. Such cancelled Warrant Certificates shall then be disposed of by or at the direction of the Company in accordance with applicable law. The Warrant Agent shall (x) advise an authorized representative of the Company as directed by the Company by the end of each day on which Warrants were exercised (i) the number of shares of Common Stock issued upon exercise of a Warrant, (ii) delivery of Warrant Certificates evidencing the balance, if any, of the shares of Common Stock issuable after such exercise of the Warrant and (iii) such other information as the Company shall reasonably require and (y) concurrently pay to the Company all funds received by the Warrant Agent in payment of the aggregate Exercise Price. The Warrant Agent shall promptly confirm such information to the Company in writing.

 

The Warrant Agent shall keep copies of this Warrant Agreement and any notices given or received hereunder available for inspection by the holders of the Warrants during normal business hours at the Warrant Agent Office. The Company shall supply the Warrant Agent from time to time with such numbers of copies of this Warrant Agreement as the Warrant Agent may request.

 

SECTION 8. Automatic Conversion Upon Qualified IPO. Upon the closing of a Qualified IPO (as defined below), subject to Article Eleventh of the Certificate of Incorporation of the Company, each outstanding Warrant shall automatically be converted into a number of shares of Common Stock determined pursuant to the following formula:

 

C =N x (P - E)  P

 

where:

 

the number of shares of Common Stock into which the Warrant is to be converted.

 

the number of shares of Common Stock issuable upon exercise of the Warrant immediately prior to such closing.

 

the price per share at which Common Stock is being sold in the Qualified IPO.

 

the current Exercise Price.

 

For the purposes of this Section 8, a “Qualified IPO” means an underwritten public offering of Common Stock at a price per share that is at least fifteen percent (15%) greater than the then current Exercise Price.

 

Upon any automatic conversion of the Warrants into shares of Common Stock pursuant to this Section 8, the Company shall give written notice thereof to each holder of

 

5

 

Warrants, which notice shall include instructions for the surrender by such holders of the Warrant Certificates evidencing the Warrants held by them. Upon the surrender by any Warrant holder of such Warrant Certificate or Warrant Certificates, the Company shall issue and cause to be delivered promptly to such holder a certificate or certificates for the number of full shares of Common Stock issuable to such holder pursuant to this Section 8 together with cash as provided in Section 15. In accordance with Section 15, no fractional shares shall be issued upon any such conversion of the Warrants.

 

SECTION 9. Payment of Taxes. No service charge shall be made to any holder of a Warrant for any exercise, conversion, exchange or registration of transfer of Warrant Certificates, and the Company will pay all documentary stamp taxes attributable to the initial issuance of shares of Common Stock upon the exercise or conversion of Warrants; provided, however, that neither the Company nor the Warrant Agent shall be required to pay any tax or taxes which may be payable in respect of any transfer involved in the issue of any Warrant Certificates or any certificates for shares of Common Stock in a name other than that of the registered holder of a Warrant Certificate surrendered upon the exercise or conversion of a Warrant, and the Company shall not be required to issue or deliver such Warrant Certificates or the certificates representing the shares of Common Stock unless or until the person or persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid.

 

SECTION 10. Mutilated or Missing Warrant Certificates. If any of the Warrant Certificates shall be mutilated, lost, stolen or destroyed, the Company shall issue and the Warrant Agent shall countersign, in exchange and substitution for and upon cancellation of the mutilated Warrant Certificate, or in lieu of and substitution for the Warrant Certificate lost, stolen or destroyed, a new Warrant Certificate of like date and tenor and representing an equivalent number of Warrants, but only upon receipt of evidence satisfactory to the Company and the Warrant Agent of such loss, theft or destruction of such Warrant Certificate and such indemnity and security therefor as is customary and reasonably satisfactory to the Company and the Warrant Agent. Applicants for such substitute Warrant shall also comply with such other reasonable regulations and pay such other reasonable charges as the Company or the Warrant Agent may prescribe.

 

SECTION 11. Reservation of Shares of Common Stock. The Company will at all times reserve and keep available, free from preemptive rights, out of the aggregate of its authorized but unissued shares of Common Stock, for the purpose of enabling it to satisfy any obligation to issue shares of Common Stock upon exercise or conversion of Warrants, the maximum number of shares of Common Stock which may then be deliverable upon the exercise of all outstanding Warrants.

 

The Company or the transfer agent for Common Stock and every subsequent transfer agent for any shares of the Company’s capital stock issuable upon the exercise or of any of the rights of purchase represented by the Warrants as aforesaid (the “Transfer Agent”) will be irrevocably authorized and directed at all times to reserve such number of authorized shares as shall be required for such purpose. The Company will keep a copy of this Warrant Agreement on file with the Transfer Agent for any shares of the Company’s capital stock issuable upon the exercise of the rights of purchase represented by the Warrants. The Warrant Agent is hereby

 

6

 

irrevocably authorized and directed to requisition from time to time from such Transfer Agent the stock certificates required to honor outstanding Warrants upon exercise or conversion thereof in accordance with the terms of this Warrant Agreement. The Company will supply such Transfer Agent with duly executed certificates for such purposes and will, upon request, provide or otherwise make available any cash which may be payable as provided in Section 15. The Company will furnish such Transfer Agent a copy of all notices of adjustments and certificates related thereto, transmitted to the Warrant Agent and each holder pursuant to Section 16.

 

Before taking any action which would cause an adjustment pursuant to Section 13 to reduce the Exercise Price below the then par value (if any) of a share of Common Stock, the Company will take all corporate action necessary, in the opinion of its counsel (which may be counsel employed by the Company), in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock at the Exercise Price as so adjusted.

 

The Company covenants that all shares of Common Stock which may be issued upon exercise or conversion of Warrants will be, upon payment of the aggregate Exercise Price and issuance thereof (in the case of an exercise), fully paid, nonassessable, free of preemptive rights and free from all taxes, liens, charges and security interests with respect to the issue thereof (other than any liens, charges and security interests created by the Warrant holder or the person to which the shares of Common Stock are to be issued).

 

SECTION 12. Obtaining Stock Exchange Listings. The Company shall also from time to time take all action reasonably necessary so that the shares of Common Stock, immediately upon their issuance upon the exercise or conversion of Warrants, will be listed or quoted, as the case may be, on the primary exchange, inter-dealer quotation system or regulated quotation service, if any, on which shares of Common Stock are then listed or quoted, subject to the rules and regulations thereof. If the shares of Common Stock are not so listed or quoted, the Company shall not be obligated to obtain or maintain a listing or quotation, as the case may be, of the shares of Common Stock or shares of Common Stock issuable upon the exercise or conversion of Warrants on any exchange, inter-dealer quotation system or regulated quotation service.

 

SECTION 13. Adjustment of Exercise Price and Number of Shares of Common Stock Issuable. The Exercise Price and the number of shares of Common Stock issuable upon the exercise of each Warrant are subject to adjustment from time to time upon the occurrence of the events enumerated in this Section 13, without duplication. For purposes of this Section 13, “Common Stock” means the shares of Common Stock from time to time authorized and any other stock of the Company, however designated, the holders of which have the right (subject to any prior rights of any class or series of preferred stock) to participate in any distribution of the assets or earnings of the Company without limit as to per share amount.

 

(a)           Adjustment for Change in Capital Stock.

 

If on or after the date of this Warrant Agreement and prior to the Expiration Date, the Company:

 

7

 

(1)             pays a dividend in shares of Common Stock or makes a distribution on its Common Stock in shares of Common Stock;

 

(2)             subdivides its outstanding shares of Common Stock into a greater number of shares;

 

(3)             combines its outstanding shares of Common Stock into a smaller number of shares;

 

(4)           makes a distribution on its Common Stock in shares of its capital stock other than Common Stock; or

 

(5)           issues by reclassification of its Common Stock any shares of its capital stock,

 

then the Exercise Price in effect immediately prior to such action shall be proportionately adjusted so that the holder of any Warrant thereafter exercised may receive the aggregate number and kind of shares of capital stock of the Company which such holder would have owned immediately following such action if such Warrant had been exercised immediately prior to such action.

 

The adjustment shall become effective immediately after the record date in the case of a dividend or distribution and immediately after the effective date in the case of a subdivision, combination or reclassification.

 

If after an adjustment a holder of a Warrant upon exercise or conversion thereof may receive shares of two or more classes or series of capital stock of the Company, the Company, in good faith, shall determine the allocation of the adjusted Exercise Price between the classes or series of capital stock based on the relative fair market values thereof (as determined in good faith by the Board of Directors of the Company). After such allocation, the exercise privilege and the Exercise Price of each class or series of capital stock shall thereafter again be subject to adjustment on terms comparable to those applicable to shares of Common Stock in this Section 13.

 

Such adjustment shall be made successively whenever any event listed above shall occur.

 

(b)              Adjustment for Rights Issue.

 

If on or after the date of this Warrant Agreement and prior to the Expiration Date, the Company distributes any rights, options or warrants (however classified) to all holders of its Common Stock entitling them to purchase shares of Common Stock at a price per share less than the Current Market Price (as defined below) per share on the record date referred to below, the Exercise Price shall be adjusted in accordance with the following formula:

 

0+ N x P Et 
 = E x ______ 0 
 + N

 

8

 

where:

 

	    E’
    	    =
    	    the adjusted Exercise Price.
    
	     
    	     
    	     
    
	    E
    	    =
    	    the current Exercise Price.
    
	     
    	     
    	     
    
	    0
    	    =
    	    the number of shares of Common Stock outstanding on   the record date.
    
	     
    	     
    	     
    
	    N
    	    =
    	    the number of additional shares of Common Stock   offered.
    
	     
    	     
    	     
    
	    P
    	     
    	    the offering price per share of the additional   shares.
    
	     
    	     
    	     
    
	    M
    	    =
    	    the Current   Market Price per share of Common Stock on the record date.
    

 

The adjustment shall be made successively whenever any such rights, options or warrants are issued and shall become effective immediately after the record date for the determination of stockholders entitled to receive the rights, options or warrants, provided that in the case of rights issued pursuant to any stockholder rights plan adopted by the Company, no adjustment shall be made pursuant to this Section 13(b) until such rights become exercisable. If at the end of the period during which such rights, options or warrants are exercisable, not all rights, options or warrants shall have been exercised, the Exercise Price shall be immediately readjusted to what it would have been if “N” in the above formula had been the number of shares actually issued.

 

(c)             Current Market Price.

 

As used in Sections 7, 14, 15 and in this Section 13, the term “Current Market Price” shall mean, with respect to any security (including the Common Stock), as of a specified date (the “date of calculation”): (x) the average closing price of such security for the ten consecutive trading days immediately preceding, but not including, the date of calculation, as reported on the principal national securities exchange on which such security is listed or admitted to trading or (y) if not listed or admitted to trading on any national securities exchange, the average of the closing bid and asked prices during such ten trading day period in the over-the- counter market as reported by the NASD Automated Quotation System (“Nasdaq”) National Market or any comparable system or (z) in all other cases, as determined in good faith by the Board of Directors of the Company based on a written valuation by an independent investment bank of national standing selected by the Board of Directors and reasonably acceptable to the holders of a majority of the outstanding Warrants (an “Investment Bank”) and described in a reasonably detailed statement filed with the Warrant Agent.

 

(d)           When De Minimis Adjustment May Be Deferred.

 

No adjustment in the Exercise Price need be made unless the adjustment would require an increase or decrease of at least one percent (1%) in the Exercise Price. Any

 

9

 

adjustments that are not made shall be carried forward and taken into account in any subsequent adjustment.

 

All calculations under this Section 13 shall be made to the nearest cent or to the nearest 1/100th of a share, as the case may be.

 

(e)                                  When No Adjustment Required.

 

No adjustment need be made for a transaction referred to in Section 13(a) or Section 13(b) if Warrant holders participate in such transaction on a basis and with notice that the Board of Directors determines to be fair and appropriate in light of the basis and notice on which holders of Common Stock participate in the transaction.

 

No adjustment need be made for rights to purchase Common Stock pursuant to a Company plan for reinvestment of dividends or interest.

 

No adjustment need be made for a change in the par value or no par value of the Common Stock.

 

Notwithstanding any other provision of this Section 13, no adjustment to the Exercise Price shall result in zero or in a negative number.

 

To the extent the Warrants become convertible upon exercise into cash, no adjustment need be made thereafter as to the cash. Interest will not accrue on the cash.

 

(f)                                    Notice of Certain Transactions. If:

 

(i)            the Company takes any action that would require an adjustment to the Exercise Price pursuant to Section 13(a) and Section 13(b) and if the Company does not arrange for Warrant holders to participate pursuant to Section 13(e);

 

(ii)           the Company takes any action that would require a supplemental Warrant Agreement pursuant to Section 13(g); or

 

(iii)          there is a liquidation or dissolution of the Company,

 

the Company shall mail to Warrant holders a notice stating the proposed record date for a dividend or distribution or the proposed effective date of a subdivision, combination, reclassification, consolidation, merger, transfer, lease, liquidation or dissolution. The Company shall mail the notice at least fifteen (15) days before such date. Failure to mail the notice or any defect in it shall not affect the validity of the transaction.

 

Whenever the Exercise Price is adjusted, the Company shall also provide the notices required by Section 16.

 

10

 

(g)             Reorganization
of the Company.

 

If the Company consolidates or merges with or into,
or transfers or leases all or substantially all its assets to, any person (each
a “Fundamental Transaction”), upon consummation of such transaction the
Warrants shall automatically become exercisable in accordance with the terms
hereof for the kind and amount of securities, cash or other assets which the
holder of a Warrant would have owned immediately after the consolidation,
merger, transfer or lease if the holder had exercised the Warrant immediately
before the effective date of the transaction. Concurrently with the
consummation of such transaction, the corporation formed by or surviving any
such consolidation or merger if other than the Company, or the person to which
such sale or conveyance shall have been made, shall enter into a supplemental
Warrant Agreement with the Warrant Agent so providing and further providing for
adjustments which shall be as nearly equivalent as may be practical to the
adjustments provided for in this Section 13. The successor entity shall
mail to Warrant holders a notice describing the supplemental Warrant Agreement.

 

If the issuer of securities deliverable upon
exercise of Warrants under the supplemental Warrant Agreement is an affiliate of
the formed, surviving, transferee or lessee entity, that issuer shall join in
the supplemental Warrant Agreement.

 

If this Section 13(g) applies, Section 13(a) and
Section 13(b) do not apply.

 

(h)             Adjustment
in Number of Shares.

 

Upon each adjustment of the Exercise Price pursuant
to this Section 13, each Warrant outstanding prior to the making of the
adjustment in the Exercise Price shall thereafter evidence the right to receive
upon payment of the adjusted Exercise Price that number of shares of Common
Stock (calculated to the nearest hundredth) obtained from the following
formula:

 

N’ = N x —E

 

E’ where:

 

	
  N’

  	
   

  	
  the adjusted number of shares of Common Stock issuable upon exercise
  of a Warrant by payment of the adjusted Exercise Price.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  the number of shares of Common Stock previously issuable upon
  exercise of a Warrant by payment of the Exercise Price prior to adjustment.

  
	
   

  	
   

  	
   

  
	
  E’

  	
   

  	
  the adjusted Exercise Price.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  the Exercise Price prior to adjustment.

  

 

11

 

(i)              Form of
Warrants.

 

The Company may, but shall
not be required to, issue new certificates or make a notation on any
outstanding certificates to reflect any adjustment under this Section 13.
Irrespective of any adjustments in the Exercise Price or the number or kind of
shares purchasable upon the exercise of the Warrants, Warrants theretofore or
thereafter issued may continue to express the same price and number and kind of
shares as are stated in the Warrants initially issuable pursuant to this
Warrant Agreement.

 

(j)              The
Company Determination Final.

 

Except with regard to the
selection of an Investment Bank, which must be reasonably acceptable to the
holders of a majority of the outstanding Warrants, any determination that the
Company or the Board of Directors must make pursuant to this Section 13 is
(absent manifest error) conclusive if such determination is made in good faith.

 

(k)             Warrant
Agent’s Disclaimer.

 

The Warrant Agent has no
duty to determine when an adjustment under this Section 13 should be made
(if at all), how it should be made or what it should be. The Warrant Agent has
no duty to determine whether any provisions of a supplemental Warrant Agreement
under Section 13(g) are correct. The Warrant Agent makes no
representation as to the validity or value of any securities or assets issued
upon exercise or conversion of Warrants. The Warrant Agent shall not be
responsible for the Company’s failure to comply with this Section 13. The
Warrant Agent shall not be deemed to have knowledge of any adjustment under
this Section 13 until it has received notice thereof pursuant to Section 16.

 

SECTION 14. Priority
Adjustments, Further Actions. (a) If any single action would require
adjustment of the Exercise Price pursuant to more than one subsection of Section 13,
only one adjustment shall be made and such adjustment shall be the amount of
adjustment that has the highest, relative to the rights and interests of the
registered holders of the Warrants then outstanding, absolute value.

 

(b)             The Company will not, by amendment
of its charter or through any consolidation, merger, reorganization, transfer
of assets, dissolution, issue or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
of the Warrants, but will at all times in good faith assist in the carrying out
of all such terms. Without limiting the generality of the foregoing, the
Company (i) will take all such action as may be necessary or appropriate
in order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock on the exercise or conversion of the
Warrants from time to time outstanding and (ii) will not take any action
which results in any adjustment of the Exercise Price if the total number of
shares of Common Stock issuable after the action upon the exercise of all of
the Warrants would exceed the total number of shares of Common Stock then
authorized by the Company’s Articles of Incorporation and available for the
purposes of issue upon such exercise. A consolidation, merger, reorganization
or transfer of assets involving the Company covered by Section 13(g) shall
not be prohibited by this Section 14.

 

12

 

SECTION 15. Fractional
Interests. The Company shall not be required to issue fractional shares of
Common Stock on the exercise or conversion of Warrants. If more than one
Warrant shall be presented for exercise in full or conversion at the same time
by the same holder, the number of full shares of Common Stock which shall be
issuable upon the exercise thereof shall be computed on the basis of the
aggregate number of shares of Common Stock purchasable on exercise or
conversion (as applicable) of all of the Warrants so presented. If any fraction
of a share of Common Stock would, except for the provisions of this Section 15,
be issuable on the exercise or conversion of any Warrants (or specified portion
thereof), the Company shall notify the Warrant Agent in writing of the amount
to be paid in lieu of the fraction of a share of Common Stock and concurrently
pay or provide to the Warrant Agent for repayment to the Warrant holder an
amount in cash equal to the product of (i) such fraction of a share of
Common Stock and (ii) the excess of (x) the Current Market Price of a
share of Common Stock for the day the Warrant was presented for exercise
pursuant to Section 7 or was surrendered upon conversion of the Warrants
into Common Stock pursuant to Section 8 over (y) the Exercise Price.

 

SECTION 16. Notices
to Warrant Holders. Upon any adjustment of the Exercise Price pursuant to Section 13,
the Company shall within twenty-five (25) days thereafter (i) cause to be
delivered to the Warrant Agent a certificate of a firm of independent public
accountants of a national standing selected by the Board of Directors setting
forth the Exercise Price after such adjustment and setting forth in reasonable
detail the method of calculation and the facts upon which such calculations are
based and setting forth the number of shares of Common Stock (or portion
thereof) issuable after such adjustment in the Exercise Price, upon exercise of
a Warrant and payment of the adjusted aggregate Exercise Price, which
certificate shall be conclusive evidence (absent manifest error) of the
correctness of the matters set forth therein and (ii) cause to be given to
each of the registered holders of the Warrant Certificates at such registered
holder’s address appearing on the Warrant register written notice of such
adjustments by first- class mail, postage prepaid. Where appropriate, such
notice may be given in advance and included as a part of the notice required to
be mailed under the other provisions of this Warrant Agreement.

 

Nothing contained in this Warrant Agreement or in any
of the Warrant Certificates shall be construed as conferring upon the holders
thereof the right to vote or to consent or to receive notice as stockholders in
respect of the meetings of stockholders or the election of Directors of the
Company or any other matter, or any rights whatsoever as stockholders of the
Company.

 

SECTION 17. Financial
and Business Information. Until the Expiration Date, the Company shall
deliver to each holder of Warrants one copy of each of the following items:

 

(i) as soon as available,
and in any event within sixty (60) days after the end of each of the quarters
of each fiscal year, unaudited interim consolidated balance sheets of the
Company and its Subsidiaries as at the end of such quarter and the related
consolidated statements of income, cash flow, stockholders equity and changes
in financial position of the Company and its subsidiaries as at the end of and
for such quarter, setting forth in each case in comparative form the
corresponding figures for and as at the end of the corresponding quarter of the
preceding fiscal year, all in reasonable detail and certified by a principal
financial officer of

 

13

 

the Company, as prepared in
accordance with generally accepted accounting principles (“GAAP”) consistently
applied (subject to year end adjustments and the absence of footnotes), and
fairly presenting the consolidated financial position and results of operations
of the Company and its subsidiaries for such periods; and

 

(ii) within ninety (90)
days after the end of each fiscal year of the Company, consolidated balance
sheets of the Company and its subsidiaries as at the end of such year and the
related consolidated statements of income, stockholders’ equity and changes in
financial position of the Company and its subsidiaries for such fiscal year,
setting forth in each case in comparative form the consolidated figures for the
previous fiscal year, all in reasonable detail and accompanied by a report
thereon of independent public accountants of recognized national standing
selected by the Company, which report shall state that such consolidated
financial statements present fairly the financial position of the Company and
its subsidiaries as at the dates indicated and the results of their operations
and changes in their financial position for the periods indicated in conformity
with GAAP applied on a basis consistent with prior years (except as otherwise
specified in such report) and that the audit by such accountants in connection
with such consolidated financial statements has been made in accordance with
generally accepted auditing standards.

 

SECTION 18. Merger,
Consolidation or Change of Name of Warrant Agent. Any person into which the
Warrant Agent may be merged or converted or with which it may be consolidated,
or any person resulting from any merger, conversion or consolidation to which
the Warrant Agent shall be a party, or any person succeeding to all or
substantially all of the corporate trust or agency business of the Warrant Agent,
shall be the successor to the Warrant Agent hereunder without the execution or
filing of any paper or any further act on the part of any of the parties
hereto. If, at the time such successor to the Warrant Agent by merger or
consolidation succeeds to the agency created by this Warrant Agreement, any of
the Warrant Certificates shall have been countersigned but not delivered, any
such successor to the Warrant Agent may adopt the countersignature of the
original Warrant Agent; and if, at that time any of the Warrant Certificates
shall not have been countersigned, any such successor to the Warrant Agent may
countersign such Warrant Certificates either in the name of the predecessor
Warrant Agent or in the name of the successor to the Warrant Agent; and in all
such cases such Warrant Certificates shall have the full force and effect
provided in the Warrant Certificates in this Warrant Agreement.

 

SECTION 19. Warrant
Agent. The Warrant Agent undertakes only the duties and obligations imposed
by this Warrant Agreement upon the following terms and conditions, by all of
which the Company and the holders of Warrants, by their acceptance thereof,
shall be bound:

 

(a)            The statements contained herein and
in the Warrant Certificates shall be taken as statements of the Company. The
Warrant Agent assumes no responsibility for the correctness of any of the same
except such as describe the Warrant Agent or action taken or to be taken by it.
The Warrant Agent assumes no responsibility with respect to the distribution of
the Warrant Certificates except as herein otherwise provided.

 

14

 

(b)             Whenever in the performance of its
duties under this Agreement the Warrant Agent deems it necessary or desirable
that any fact or matter be proved or established by the Company prior to
taking, suffering or omitting to take any action hereunder, such fact or matter
may be deemed to be conclusively proved and established by a certificate signed
by the Company’s Chairman of the Board, Chief Executive Officer, President or
any Vice President and delivered to the Warrant Agent; and in reliance upon
such certificate, the Warrant Agent shall take any action or omit to take any
action authorized under the provisions of this Agreement. In the event the
Warrant Agent reasonably believes any ambiguity or uncertainty exists hereunder
or in any notice, instruction, direction, request or other communication, paper
or document received by the Warrant Agent hereunder, or is uncertain of any
action to take hereunder, the Warrant Agent, may, following prior written
notice to the Company, refrain from taking any action, and shall be fully
protected and shall not be liable in any way to the Company or any other person
or entity for refraining from taking such action, unless the Warrant Agent
receives written instructions signed by the Company which eliminates such
ambiguity or uncertainty to the reasonable satisfaction of the Warrant Agent.

 

(c)             The Warrant Agent shall not be
responsible for any failure of the Company to comply with any of the covenants
contained in this Warrant Agreement (including, without limitation, any
adjustment of the Exercise Price pursuant to Section 13, the authorization
or reservation of shares of Common Stock pursuant to Section 11 or the due
execution and delivery by the Company of this Warrant Agreement or any Warrant
Certificate) or in the Warrant Certificates to be complied with by the Company.

 

(d)             The Warrant Agent may consult at
any time with counsel satisfactory to it (who may be counsel for the Company or
an employee of the Warrant Agent) and the Warrant Agent shall incur no
liability or responsibility to the Company or to any holder of any Warrant
Certificate in respect of any action taken, suffered or omitted by it hereunder
in good faith and in accordance with the opinion or the advice of such counsel.

 

(e)             The Warrant Agent shall incur no
liability or responsibility to the Company or to any holder of any Warrant
Certificate for any action taken in reliance on any Warrant Certificate,
certificate representing shares of Common Stock, notice, resolution, waiver,
consent, order, certificate, or other paper, document or instrument believed by
it to be genuine and to have been signed, sent or presented by the proper party
or parties. The Warrant Agent shall not be bound by any notice or demand, or
any waiver, modification, termination or revision of this Warrant Agreement or
any of the terms hereof, unless evidenced by a writing between the Company and
the Warrant Agent. The Warrant Agent shall not be required to take instructions
or directions except those given in accordance with this Warrant Agreement.

 

(f)            The Warrant Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either
itself or by or through its attorneys, accountants, agents or other experts,
and the Warrant Agent will not be answerable or accountable for any act,
default, neglect or unintentional misconduct of any such attorneys or agents or
for any loss to the Company or the holders of the

 

15

 

Warrants resulting from any
such act, default, neglect or unintentional misconduct, absent gross
negligence, willful misconduct or bad faith (as each is determined by a final
non- appealable order of a court of competent jurisdiction) in the selection
and continued employment thereof.

 

(g)              The Warrant Agent will not be under any duty or
responsibility to insure compliance with any applicable federal or state
securities laws in connection with the issuance, transfer or exchange of
Warrant Certificates.

 

(h)             The Warrant Agent shall not incur
any liability for not performing any act, duty, obligation or responsibility by
reason of any occurrence beyond the control of the Warrant Agent (including
without limitation any act or provision of any present or future law or
regulation or governmental authority, any act of God, war, civil disorder or
failure of any means of communication).

 

(i)              The Company agrees to pay to the
Warrant Agent reasonable compensation for all services rendered by the Warrant
Agent in the execution of this Warrant Agreement, to reimburse the Warrant
Agent for all expenses (including reasonable counsel fees), taxes (including
withholding taxes) and governmental charges and other charges of any kind and
nature actually incurred by the Warrant Agent in the execution, delivery and
performance of its responsibilities under this Warrant Agreement and to
indemnify the Warrant Agent and save it harmless against any and all liabilities,
including judgments, costs and counsel fees, for anything done or omitted by
the Warrant Agent in the execution, delivery and performance of its
responsibilities under this Warrant Agreement except as a result of its gross
negligence, bad faith or willful misconduct (as each is determined by a final
non-appealable order of a court of competent jurisdiction).

 

(j)              The Warrant Agent, shall be under
no obligation to institute any action, suit or legal proceeding or to take any
other action likely to involve expense unless the Company or one or more
registered holders of Warrant Certificates shall furnish the Warrant Agent with
reasonable security and indemnity for any costs and expenses which may be
incurred, but this provision shall not affect the power of the Warrant Agent to
take such action as it may consider proper, whether with or without any such
security or indemnity All rights of action under this Warrant Agreement or
under any of the Warrants may be enforced by the Warrant Agent without the possession
of any of the Warrant Certificates or the production thereof at any trial or
other proceeding relative thereto, and any such action, suit or proceeding
instituted by the Warrant Agent shall be brought in its name as Warrant Agent
and any recovery of judgment shall be for the ratable benefit of the registered
holders of the Warrants, as their respective rights or interests may appear.

 

(k)           Except as otherwise prohibited by applicable law, the
Warrant Agent, and any stockholder, director, officer or employee of the
Warrant Agent, may buy, sell or deal in any of the Warrants or other securities
of the Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company or otherwise
act as fully and freely as

 

16

 

though it were not Warrant Agent under this Warrant
Agreement. Nothing herein shall preclude the Warrant Agent from acting in any
other capacity for the Company or for any other legal entity.

 

(1)             The Warrant Agent shall act hereunder solely as agent
for the Company, and its duties shall be determined solely by the express
provisions hereof. The Warrant Agent shall not be liable for anything which it
may do or refrain from doing in connection with this Warrant Agreement, except
for its own gross negligence, bad faith or willful misconduct (as each is
determined by a final non-appealable order of a court of competent
jurisdiction); provided that in no event shall the Warrant Agent be liable for
special, indirect or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Warrant Agent has been
advised of the likelihood of such loss or damage and regardless of the form of
action.

 

(m)            The Warrant Agent shall not at any time be under any duty
or responsibility to any holder of any Warrant Certificate to make or cause to
be made any adjustment of the Exercise Price or number of the shares of Common
Stock or other securities or property deliverable as provided in this Warrant
Agreement, or to determine whether any facts exist which may require any of
such adjustments, or with respect to the nature or extent of any such
adjustments, when made, or with respect to the method employed in making the
same. The Warrant Agent shall not be accountable with respect to the validity
or value or the kind or amount of any shares of Common Stock or of any
securities or property which may at any time be issued or delivered upon the
exercise or conversion of any Warrant or with respect to whether any such
shares of Common Stock or other securities will when issued be validly issued
and fully paid and nonassessable, and makes no representation with respect
thereto. The Warrant Agent shall not be accountable with respect to the
calculation of the “Spread” pursuant to Section 7.

 

(n)             All rights and obligations contained in this Section 19
and Section 20 shall survive the termination of this Warrant Agreement and
the resignation or removal of the Warrant Agent.

 

SECTION 20. Expenses. All expenses
incident to the Company’s performance of or compliance with this Warrant
Agreement will be borne by the Company, including without limitation: (i) all
expenses of printing Warrant Certificates; (ii) messenger and delivery
services and telephone calls; (iii) all fees and disbursements of counsel
for the Company; (iv) all fees and disbursements of independent certified
public accountants or knowledgeable experts selected by the Company; and (v) the
Company’s internal expenses (including, without limitation, all salaries and
expenses of their officers and employees performing legal or accounting
duties).

 

SECTION 21. Change of Warrant Agent. If
the Warrant Agent shall become incapable of acting as Warrant Agent or shall
resign as provided below, the Company shall appoint a successor to such Warrant
Agent. If the Company shall fail to make such appointment within a period of 30
days after it has been notified in writing of such resignation or incapacity by
the Warrant Agent, then the registered holder of any Warrant Certificate may
apply to any court of competent jurisdiction for the appointment of a successor
to the Warrant Agent. Pending appointment of a successor to such Warrant Agent,
either by the Company or by such a

 

17

 

court, the duties of the Warrant Agent shall be carried out by the
Company. The registered holders of a majority of the unexercised Warrants shall
be entitled at any time to remove the Warrant Agent for cause and appoint a
successor to such Warrant Agent; provided that the Warrant Agent so
appointed shall be reasonably acceptable to the Company. After appointment, the
successor to the Warrant Agent shall be vested with the same powers, rights,
duties and responsibilities as if it had been originally named as Warrant Agent
without further act or deed; but the former Warrant Agent shall deliver and
transfer to the successor to the Warrant Agent any property at the time held by
it hereunder and execute and deliver any further assurance, conveyance, act or
deed necessary for the purpose. Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the legality
or validity of the appointment of a successor to the Warrant Agent.

 

The Warrant Agent may resign at any time and be
discharged from the obligations hereby created by so notifying the Company in
writing at least 30 days in advance ofthe proposed effective date of its
resignation. If no successor Warrant Agent accepts the engagement hereunder by
such time, the Company shall act as Warrant Agent.

 

SECTION 22. Notices to the Company and
Warrant Agent. Any notice or demand authorized or permitted by this Warrant
Agreement to be given or made by the Warrant Agent or by the registered holder
of any Warrant Certificate to or on the Company shall be sufficiently given or
made when and if deposited in the mail, first class or registered, postage
prepaid, addressed (until another address is filed in writing by the Company
with the Warrant Agent), as follows:

 

New ATA Holdings Inc.

7337 West Washington Street 

Indianapolis, IN 46231-1300 

Telephone No.: (317) 282-7840 

Fax: (317) 282-7211

Attention: John Denison, CEO

 

with a copy to (which shall not constitute notice to the Company):

 

Baker & Daniels LLP

300 North Meridian Street, Suite 2700 

Indianapolis, IN 46204

Telephone No.: (317) 237-1131 

Fax: (317) 237-1000

Attention: James A. Aschleman

 

Sidley Austin LLP

787 Seventh Avenue

New York, NY 10019

Telephone No.: (212) 839-5300 

Fax: (212) 839-5599

 

18

 

Attention: Duncan N. Darrow
L. 

Gilles Sion

 

Any notice pursuant to this
Warrant Agreement to be given by the Company or by the registered holder(s) of
any Warrant Certificate to the Warrant Agent shall be sufficiently given when
and if deposited in the mail, first-class or registered, postage prepaid,
addressed (until another address is filed in writing by the Warrant Agent with
the Company) to the Warrant Agent at the Warrant Agent Office as follows:

 

Registrar & Transfer Company

10 Commerce Drive

Cranford, NJ 07016

Telephone No.: 800 525-7686 ext 2547 

Fax: (908) 497-2314

Attention: Bill Tatler, Compliance Officer

 

SECTION 23. Supplements
and Amendments. The Company and the Warrant Agent may from time to time
supplement or amend this Warrant Agreement without the approval of any holders
of Warrant Certificates in order to cure any ambiguity or to correct or
supplement any provision contained herein which may be defective or
inconsistent with any other provision herein, or to make any other provisions
in regard to matters or questions arising hereunder which the Company and the
Warrant Agent may deem necessary or desirable and which shall not in any way
adversely affect the rights or interests of the holders of Warrant
Certificates. Any amendment or supplement to this Warrant Agreement that has an
adverse effect on the rights or interests of holders of the Warrants shall
require the written consent of registered holders of a majority of the then
outstanding Warrants (excluding Warrants held by the Company or any of its
controlled affiliates). The consent of each holder of a Warrant affected shall
be required for any amendment of this Warrant Agreement pursuant to which the Exercise
Price would be increased or the number of shares of Common Stock purchasable
upon exercise of the Warrants would be decreased. The Warrant Agent shall have
no duty to determine whether any such amendment would have an adverse effect on
the rights or interests of the holders of the Warrants. The Warrant Agent may,
but shall not be obligated to, execute any amendment or supplement which
adversely affects the rights or increases the duties or obligations of the
Warrant Agent.

 

SECTION 24. Successors.
All the covenants and provisions of this Warrant Agreement by or for the
benefit of the Company or the Warrant Agent shall bind and inure to the benefit
of their respective successors and assigns hereunder.

 

SECTION 25. Termination.
This Warrant Agreement shall terminate at 5:00 p.m., New York City
time, on the Expiration Date. Notwithstanding the foregoing, this Warrant
Agreement will terminate on such earlier date on which all outstanding Warrants
have been exercised or converted. The provisions of Section 19 shall
survive such termination.

 

SECTION 26. Governing Law; Jurisdiction. This
Warrant Agreement and each Warrant Certificate issued hereunder shall be deemed
to be a contract made under the laws of the State of New York and for all
purposes shall be governed by and construed in accordance with

 

19

 

the internal laws of said state. The parties hereto irrevocably consent
to the jurisdiction of the courts of the State of New York and any federal
court located in such state in connection with any action, suit or proceeding
arising out of or relating to this Warrant Agreement.

 

SECTION 27.
Benefits of this Warrant Agreement. Nothing in this Warrant Agreement
shall be construed to give to any person other than the Company, the Warrant
Agent and the registered holders of the Warrant Certificates any legal or
equitable right, remedy or claim under this Warrant Agreement; but this Warrant
Agreement shall be for the sole and exclusive benefit of the Company, the Warrant
Agent and the registered holders of the Warrant Certificates.

 

SECTION 28. Counterparts. This Warrant
Agreement may be executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original, and all such counterparts
shall together constitute but one and the same instrument.

 

SECTION 29.
Further Assurances. From time to time on and after the date hereof, the
Company shall deliver or cause to be delivered to the Warrant Agent such
further documents and instruments and shall do and cause to be done such
further acts as the Warrant Agent shall reasonably request (it being understood
that the Warrant Agent shall have no obligation to make such request) to carry
out more effectively the provisions and purposes of this Warrant Agreement, to
evidence compliance herewith or to assure itself that it is protected
hereunder.

 

SECTION 30. Entire Agreement. This
Warrant Agreement and the Warrant Certificates constitute the entire agreement
of the Company, the Warrant Agent and the registered holders of the Warrant
Certificates with respect to the subject matter hereof and supersedes all prior
agreements and undertakings, both written and oral, among the Company, the
Warrant Agent and the registered holders of the Warrant Certificates with
respect to the subject matter hereof.

 

20

 

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

 

	
   

  	
  NEW ATA HOLDINGS INC., as the Company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ John Denison

  
	
   

  	
  Name: John Denison

  
	
   

  	
  Title: President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  REGISTRAR AND TRANSFER COMPANY, as Warrant Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ William P. Tatler

  
	
   

  	
  Name: Williams P. Tatler

  
	
   

  	
  Title: Vice President

  

 

 

EXHIBIT A

 

Form of Warrant
Certificate 

[Face of Warrant
Certificate]

 

EXERCISABLE ON OR AFTER THE
DATE OF THIS CERTIFICATE AND

PRIOR TO 5:00 P.M., NEW
YORK CITY TIME, ON FEBRUARY 28, 2011 AND

ONLY IF COUNTERSIGNED BY THE
WARRANT AGENT

 

NEW ATA HOLDINGS INC.

INCORPORATED UNDER THE LAWS
OF THE STATE OF DELAWARE

 

	
  No. W

  	
   

  	
  Warrants

  

 

WARRANTS

 

This certifies that                                                  ,
or registered assigns, is the registered holder of                      
warrants
(the “Warrants”), to purchase shares of Class A Common Stock, par
value $0.0001 per share (the “Common Stock”), of New ATA Holdings Inc.,
a Delaware corporation (the “Company”). Each Warrant entitles the holder
upon exercise at any time on or after the date of this Warrant Certificate and
prior to 5:00 p.m., New York City Time, on February 28, 2011 to
receive from the Company one (1) fully paid and nonassessable share of
Common Stock for each Warrant at the initial exercise price (the “Exercise
Price”) of $10.00 per share payable (i) in United States dollars or (ii) by
certified or official bank check for United States Dollars made payable to the
order of the Company. In lieu of payment of the aggregate Exercise Price as
aforesaid and subject to applicable law, the holder of a Warrant may request
the payment by the Company of the “Spread”, which shall, subject to Section 15
of the Warrant Agreement, dated as of February 28, 2006, by and between
the Company and Registrar and Transfer Company, as Warrant Agent (the “Warrant
Agreement”), be paid by the Company by delivering to such Warrant holder a
number of shares of Common Stock equal to (a)(i) the product of (x) the
Current Market Price (as defined in Section 13(c) of the Warrant
Agreement) per share of Common Stock as of the date of receipt of the request
by the Company, multiplied by (y) the number of shares of Common Stock
underlying the Warrants being exercised, minus (ii) the product of (x) the
Exercise Price, multiplied by (y) the number of shares of Common Stock
underlying the Warrants being exercised, divided by (b) the Current Market
Price per share of Common Stock as of the date of receipt of the request by the
Company. The Exercise Price and number of shares of Common Stock issuable upon
exercise of the Warrants are subject to adjustment upon the occurrence of
certain events set forth in the Warrant Agreement. All Warrants will automatically
be converted into shares of Common Stock upon the closing of a Qualified IPO,
as provided in Section 8 of the Warrant Agreement. No Warrant may be
exercised after 5:00 p.m., New York City Time, on February 28, 2011,
and to the extent not exercised of converted by such time such Warrants shall
become void. This Warrant Certificate shall not be valid unless countersigned
by the Warrant Agent, as such term is used in the Warrant Agreement. Reference
is made to the further provisions of this Warrant Certificate set forth on the
reverse hereof, which further provisions shall for all purposes have the same
effect as though fully set forth at this place. This Warrant Certificate shall
be governed and construed in accordance with the internal laws of the State of
New York.

 

A-1

 

IN WITNESS WHEREOF, New ATA Holdings Inc. has caused
this Warrant Certificate to be signed by the undersigned President and the
undersigned Secretary of the Company.

 

 

Dated:

 

NEW ATA HOLDINGS INC.

 

 

	
  By:

  	
   

  	
   

  	
   

  
	
  President

  	
   

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Countersigned:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  REGISTRAR AND TRANSFER COMPANY

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  WARRANT AGENT

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Authorized Officer

  	
   

  	
   

  

 

A-2

 

[Reverse of Warrant Certificate]

 

NEW ATA HOLDINGS INC.
(WARRANT)

 

By accepting a Warrant
Certificate, each holder shall be bound by all of the terms and provisions of
the Warrant Agreement (a copy of which is available on request to the Secretary
of the Company) and any amendments thereto as fully and effectively as if such
holder had signed the same.

 

The Warrants evidenced by
this Warrant Certificate are part of a duly authorized issue of Warrants by the
Company expiring at 5:00 p.m., New York City Time, on February 28,
2011, entitling the holder upon proper exercise to receive shares of Common
Stock and are issued or to be issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in and made a part of
this instrument and is hereby referred to for a description of the rights,
limitation of rights, obligations, duties and immunities thereunder of the
Warrant Agent, the Company and the holders (the words “holders” or “holder”
meaning the registered holders or registered holder) of the Warrants.

 

Subject to the restrictions
set forth in Article Eleventh of the Company’s Certificate of
Incorporation, the holder of the Warrants evidenced by this Warrant Certificate
may exercise any or all of such Warrants by surrendering this Warrant Certificate,
with the form of election to purchase set forth below on this Warrant
Certificate properly completed and executed, together with payment of the
aggregate Exercise Price in accordance with the provisions set forth on the
face of this Warrant Certificate. In the event that upon any exercise of
Warrants evidenced hereby the number of Warrants exercised shall be less than
the total number of Warrants evidenced hereby, there shall be issued to the
holder hereof or his assignee a new Warrant Certificate evidencing the number
of Warrants not exercised.

 

The Warrant Agreement
provides that upon the occurrence of certain events the Exercise Price and the
number of shares of Common Stock issuable upon exercise of this Warrant, in
each case, set forth on the face hereof may, subject to certain conditions, be
adjusted. If the Exercise Price is adjusted, the Warrant Agreement provides
that the number of shares of Common Stock issuable upon the exercise of each
Warrant will also be adjusted. No fractions of a share of Common Stock will be
issued upon the exercise or conversion of any Warrant, but the Company will pay
the cash value in lieu thereof determined as provided in the Warrant Agreement.

 

Warrant Certificates, when
surrendered at the principal corporate trust office of the Warrant Agent by the
registered holder thereof in person or by legal representative or attorney duly
authorized in writing, may be exchanged, in the manner and subject to the
limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of like
tenor evidencing in the aggregate a like number of Warrants.

 

Upon due presentation for
registration of transfer of this Warrant Certificate at the Warrant Agent Office,
a new Warrant Certificate or Warrant Certificates of like tenor and evidencing
in the aggregate a like number of Warrants shall be issued to the transferee(s) in

 

A-3

 

exchange for this Warrant Certificate, subject to the limitations
provided in the Warrant Agreement, without charge except for any tax or other
governmental charge imposed in connection therewith.

 

The Company and the Warrant Agent may deem and treat
the registered holder(s) hereof as the absolute owner(s) of this
Warrant Certificate (notwithstanding any notation of ownership or other writing
hereon made by anyone), for the purpose of any exercise or conversion hereof,
of any distribution to the holder(s) hereof, and for all other purposes, and
neither the Company nor the Warrant Agent shall be affected by any notice to
the contrary. Neither the Warrants nor this Warrant Certificate entitles any
holder hereof to any rights of a stockholder of the Company.

 

The Warrant Agreement permits, with certain
exceptions therein provided, the supplementing or amendment thereof at any time
by the Company and the Warrant Agent with the written consent of registered
holders of a majority of the then outstanding Warrants (excluding Warrants held
by the Company or any of its controlled affiliates). Any such consent by or on
behalf of a holder of a Warrant shall be conclusive and binding upon such
holder and upon all future holders of this Warrant and any Warrant issued upon
the registration of transfer thereof or in exchange thereof whether or not
notation of such consent is made upon such Warrant or any other Warrant.

 

A-4

 

Form of Assignment

 

[Form of Assignment to
be Executed if Holder

Desires to Transfer Warrants
Evidenced Hereby]

 

ASSIGNMENT

(To Be Executed by the
Registered Holder in Order to Assign Warrants)

 

	
  FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and
  transfer(s) unto 

  
	
   

  
	
  PLEASE INSERT SOCIAL
  SECURITY

  
	
  OR OTHER IDENTIFYING
  NUMBER OF ASSIGNEE

  
	
   

  
	
  (PLEASE PRINT OR TYPE NAME AND ADDRESS, INCLUDING POSTAL ZIP CODE OF
  ASSIGNEE)

  
	
   

  
	
  of the Warrants represented by this Warrant Certificate, and hereby
  irrevocably constitutes and appoints

  
	
                                                                                                                                                                                     Attorney
  to transfer this Warrant Certificate on the books of the Company, with full
  power of substitution in the premises.

  

 

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature(s) *

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Social Security or Taxpayer Identification Number)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature(s)
  Guaranteed*

  	
   

  	
   

  

 

A-5

 

Form of Election to
Purchase

[To Be Executed Upon
Exercise Of Warrant]

 

NOTICE OF EXERCISE

(To Be Executed by the
Registered Holder in Order to Exercise Warrants)

 

The undersigned hereby
irrevocably elects to exercise the right, represented by this Warrant
Certificate, to receive shares of Common Stock and herewith tenders payment for
such shares to the order of the Company in the amount of $10.00 per share of
Common Stock (subject to adjustment) in accordance with the terms of the
Warrant Agreement, in cash or by certified or official bank check made payable
to the order of the Company.

 

 

REQUEST FOR PAYMENT OF
SPREAD

 

o                                    Please check if the undersigned, in lieu of
tendering the cash payment, as aforesaid, hereby requests the payment of the “Spread”
within the meaning of Section 7 of the Warrant Agreement.

 

 

The undersigned requests that a certificate for such
shares be registered in the name of:

 

PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING
NUMBER

 

	
  and be delivered to:

  	
   

  
	
   

  	
  (PLEASE PRINT OR TYPE NAME
  AND ADDRESS, INCLUDING POSTAL ZIP CODE)

  

 

 

and, if such number of Warrants shall not be all the Warrants evidenced
by this Warrant Certificate, that a new Warrant Certificate for the balance of
such Warrants be registered in the name of, and delivered to, the Registered
Holder at the address stated below:

 

(PLEASE PRINT OR TYPE ADDRESS)

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature(s)*

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Social Security or Taxpayer Identification Number)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature(s)
  Guaranteed*

  	
   

  	
   

  

 

THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST
CORRESPOND TO THE NAME AS WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN
EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER,
AND MUST BEAR A SIGNATURE GUARANTEED BY AN “ELIGIBLE GUARANTOR INSTITUTION’ AS
DEFINED IN RULE 17Ad-15(2) PROMULGATED UNDER THE SECURITIES EXCHANGE ACT
OF 1934, AS AMENDED,

 

A-6

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