EXHIBIT 10.47
CONFIDENTIAL TREATMENT
REQUESTED PURSUANT TO RULE 406
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JUNIOR LOAN AGREEMENT
WITH RESPECT TO SEVEN EMB-145 MODEL EMB-135KL AIRCRAFT
among
CHAUTAUQUA AIRLINES, INC.
As Borrower,
and
EMBRAER-EMPRESA BRASILEIRA DE AERONAUTICA S.A.
Dated as of June 11, 2002
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CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933. THE OMITTED
MATERIALS HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
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JUNIOR LOAN AGREEMENT, dated as of June 11, 2002 between CHAUTAUQUA
AIRLINES, INC., a New York corporation (the "Borrower" or "Chautauqua
Airlines"), and Embraer-Empresa Brasileira de Aeronautica S.A., a Brazilian
Federal public company, with its main offices in ▇▇. ▇▇▇▇. ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇,
▇▇▇▇▇-▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ (the "Lender" or "Manufacturer").
WHEREAS, the Borrower and the Manufacturer have entered into the
Interim Loan Agreements, pursuant to which the Manufacturer has loaned [*] to
the Borrower in order to enable the Borrower to purchase the seven Aircraft from
the Manufacturer (as defined herein);
WHEREAS, the Borrower plans to pay the Lender [*] of each Aircraft as
partial payment of the amounts due under the Interim Loan Agreements, by
borrowing such amounts from FINAME pursuant to the FINAME Loan Agreements;
WHEREAS, Borrower desires to borrow the remaining [*] from the Lender
on the terms of this Junior Loan Agreement, and Borrower and Lender desire to
enter into this Junior Loan Agreement with respect to the loan of such amounts.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
SECTION 1. DEFINITIONS
1.1 DEFINITIONAL PROVISIONS. (a) Unless otherwise specified herein
or therein, all capitalized terms used in this Agreement, the Note or any
certificate or other document made or delivered pursuant hereto shall have the
meanings set forth in Annex A hereto.
(b) As used herein and in the Notes, and any certificate or other
document made or delivered pursuant hereto, accounting terms relating to
Borrower and its Subsidiaries, to the extent not otherwise defined, shall have
the respective meanings given to them under GAAP.
(c) The words "hereof", "herein" 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,
subsection, Annex, Schedule and Exhibit references are to this Agreement unless
otherwise specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
(e) References to any Person shall include such Person's successors
and assigns subject to any limitations provided for herein or in the other
Borrower Loan Documents.
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(f) References to agreements shall include such agreements as
amended, modified or supplemented.
(g) The words "include," "includes" and "including" are not
limiting.
SECTION 2. AMOUNT AND TERMS OF LOAN
2.1 PROCEDURE FOR BORROWING. On the Borrowing Date, the Lender shall
make the Loan with respect to each Aircraft to the Borrower in Dollars in the
amount of the Commitment. The closing (the "CLOSING") of the Loans shall take
place before 12:30 P.M., New York time, on the Borrowing Date at the offices of
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, New York, New York, or at such other time and
place as the parties hereto shall have agreed. The Lender shall make the Loan
with respect to each Aircraft to the Borrower by terminating the Interim
Security Agreement and releasing its Lien with respect to the relevant Aircraft,
and such Loan shall be applied to payment of the remaining amounts Borrower owes
to the Lender pursuant to the Interim Loan Agreement with respect to each
Aircraft and, if any proceeds of the Loans remain after payment of all amounts
due to Lender under the Interim Loan Agreements, such balance shall be paid by
the Lender to the Borrower at the Closing.
2.2 TERMS OF REPAYMENT OF THE LOANS; INTEREST; EVIDENCE OF DEBT.
(a) the Borrower shall make scheduled principal payments on each Loan in monthly
installments in [*] starting with January 31, 2003 (each such date, a "Payment
Date").
(b) On each Payment Date, the Borrower shall pay interest accrued in
respect of the unpaid principal amount of such Loan from the date the proceeds
made thereof are made available to the Borrower until such date, at the Debt
Rate. For the avoidance of doubt, interest shall accrue on each Loan from the
Borrowing Date. The expected amounts of such interest for each Payment Date [*]
with respect to such Loan.
(c) The Borrower hereby unconditionally promises to pay to the
Lender the unpaid principal amount of and accrued interest on the Loans on the
Maturity Date.
(d) Payment of all amounts due to the Lender hereunder or under each
Note shall be payable by the Borrower in Dollars in Immediately Available Funds
to the Lender by wire transfer at such account as is specified by the Lender no
later than 11:30 A.M., New York time, on the due date therefor.
(e) Upon payment in full by the Borrower of the principal of, and
interest on, a Note, and in the case of the last Note to be outstanding, all
other amounts then due and owing under any Borrower Loan Document or as
otherwise agreed in the Borrower Loan Documents, such Note shall be surrendered
by the Lender to the Borrower for cancellation.
(f) The Borrower agrees to execute and deliver to the Lender on the
Borrowing Date a promissory note of the Borrower evidencing the Loan with
respect to each
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Aircraft, each such note to be substantially in the form of Annex B hereto, with
appropriate insertions as to date and principal amount payable to the Lender in
a principal amount in Dollars equal to the principal amount of the Loan with
respect to such Aircraft (each, a "NOTE").
(g) If (i) the principal of a Loan, (ii) any interest payable
thereon or (iii) any other amount relating to the Loan payable hereunder or
under any other Borrower Loan Document shall not be paid when due (whether at
the stated maturity, by acceleration or otherwise and not giving effect to any
grace period in determining when any such amount is due), to the extent
permitted by applicable law, the amount of such overdue principal, interest or
other amount shall bear interest at the Default Rate, in each case from and
including the date of such non-payment until but excluding the date on which
such overdue principal, interest or other amount is paid in full (as well after
as before judgment). Interest accruing pursuant to the preceding sentence of
this Section 2.2(f) shall be payable from time to time on demand.
(h) Interest shall be calculated on the basis of a 360-day year
consisting of 12 months of 30 days each. Any payment hereunder that would
otherwise be due on a day that is not a Business Day shall be due on the next
Business Day.
(i) The Borrower agrees to record separately the name and address
and any other necessary identifying information of Lender in a register
maintained as part of a book-entry system. The Borrower and the Lender shall
treat the party whose name is recorded in such register as Lender with all
entitlements under this Agreement. The Borrower shall record the name of the
transferor, the name of the transferee and the amount of the transfer in the
register in the case of a transfer. Notwithstanding anything to the contrary set
forth in this Agreement or the other Borrower Loan Documents, no assignment or
transfer by the Lender of any rights or obligations under or in respect of the
Loan or a Note shall be effective unless and until the Borrower shall have
recorded such assignment or transfer in the register maintained pursuant to this
paragraph; provided that if any such assignment or transfer occurs while an
Event of Default has occurred and is continuing, Lender may act as Borrower's
agent for effecting registration of such assignment or transfer.
(j) Payments of principal and other amounts due hereunder shall be
applied as follows: FIRST, to the payment of any amount (other than principal
and interest) due to Lender hereunder or under the Borrower Loan Documents;
SECOND, to the payment of accrued and unpaid interest due hereunder; and THIRD,
to the repayment of principal hereunder.
2.3 MUTILATED, DESTROYED, LOST OR STOLEN NOTES. If a Note shall
become mutilated, destroyed, lost or stolen, the Borrower shall, upon the
written request of the registered holder thereof, issue, and deliver in
replacement thereof, a new Note, payable to such registered holder in the same
principal amount, with the same final maturity date, bearing the same interest
rate and dated the same date as the Note so mutilated, destroyed, lost or
stolen. If the Note being replaced has become mutilated, such Note shall be
surrendered to the Borrower. If destroyed, lost or stolen, Lender shall furnish
to the Borrower such indemnity as may be reasonably required by the Borrower to
save the Borrower harmless from any cost, expense, damage, loss and liability
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resulting therefrom, and an affidavit as to the destruction, loss or theft of
such Note and of the ownership thereof.
2.4 MANDATORY AND OPTIONAL PREPAYMENT.
(a) Except as expressly provided in SECTIONS 2.4(b) or 2.4(c), the
Borrower may not prepay a Note.
(b) Upon the occurrence of any of the following events, the Borrower
shall prepay the principal of the relevant Loans together with all accrued and
unpaid interest on such Loan and all other amounts then due with respect to such
Loans: (i) a Total Loss with respect to an Aircraft, in which case prepayment
with respect to the Loan with respect to such Aircraft shall occur on the Loss
Payment Date with respect to such Aircraft; (ii) the issuance of any shares
pursuant to the initial public offering of Republic, in which case prepayment of
all of the Loans shall occur on the first Business Day following such issuance;
and (iii) the sale or transfer of an Aircraft by Borrower (other than to FINAME
or the Security Trustee on the date hereof pursuant to the FINAME Security
Agreement), in which case prepayment of the Loan with respect to such Aircraft
shall occur prior to or simultaneous with such transfer.
(c) The Borrower shall have the right to prepay a Loan in full prior
to the Maturity Date, without premium or penalty, upon five days' prior notice
to the Lender; PROVIDED that no Event of Default shall have occurred and be
continuing, and PROVIDED that if all outstanding Loans are being prepaid, all
other liabilities of the Borrower then due and owing under the Borrower Loan
Documents shall also be paid.
2.5 USE OF PROCEEDS OF THE LOAN. The proceeds of each Loan shall be
applied by the Borrower solely towards payment of amounts due under the relevant
Interim Loan Agreement.
2.6 TAXES. All payments to or for the account of the Lender under
this Agreement or the other Borrower Loan Documents shall be made without
deduction or withholding for or on account of any present or future Indemnified
Taxes whether or not collected by way of withholding or deduction from any
payment thereunder, except to the extent required by Applicable Law. If any
amount payable to the Lender under this Agreement or the other Borrower Loan
Documents becomes subject to any Indemnified Tax imposed by way of withholding
or deduction, the Borrower shall indemnify and hold harmless the Lender against
such Indemnified Taxes and shall pay an additional amount to the Lender so that
the net amount actually received by the Lender, after reduction by withholding
of any such Indemnified Tax, including any reduction for withholding applicable
to additional sums payable under this Section 2.6, shall be equal to the full
amount that the Lender would have otherwise received under this Agreement or the
other Borrower Loan Documents. Whenever any withholding Taxes are paid by the
Borrower, the Borrower shall promptly forward to the Lender an official receipt
(or certified copy thereof) or other documentation reasonably acceptable to the
Lender evidencing such payment to the relevant tax authority. The Lender agrees
to provide to the Borrower, not later than the Borrowing Date, and at reasonable
times thereafter upon the request
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of the Borrower, an IRS Form W-8 BEN properly completed and executed by the
Lender or any substantively identical successor form, provided that such Form
W-8 BEN shall only be required after the Borrowing Date if payments under this
Agreement to the Lender would not otherwise be exempt from withholding and the
Lender is legally entitled to provide such form; provided, however, that each
Loan Transferee or Loan Participant agrees to provide to Borrower upon its
request, either IRS Form W-9, IRS Form W-8 BEN or such other IRS Form W-8, as
appropriate, but such form will only be required from a Loan Transferee or Loan
Participant if payments under this Agreement to the Loan Transferee or the Loan
Participant would not otherwise be exempt from withholding.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE BORROWER
3.1 CORPORATE EXISTENCE; COMPLIANCE WITH LAW. The Borrower (1) is a
corporation duly incorporated, validly existing and in good standing pursuant to
the laws of the State of New York, (2) is duly qualified to do business as a
foreign corporation in good standing in all jurisdictions in which failure so to
qualify would have a Material Adverse Effect, (3) is a Citizen of the United
States and a Certificated Air Carrier, (4) holds all licenses, certificates,
permits and franchises from the appropriate agencies of the United States of
America and/or all other Governmental Authorities having jurisdiction necessary
to authorize it to engage in air transport and to carry on scheduled passenger
service as presently conducted (except for any of the foregoing the failure of
the Borrower to hold or maintain which would not have a Material Adverse
Effect), (5) has its chief place of business and chief executive office (as such
terms are defined in Article 9 of the Uniform Commercial Code) at ▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, (6) has the corporate power and authority to
carry on its business as currently conducted, and (7) except for "code sharing"
arrangements with other airlines, does not conduct business under a trade,
assumed or fictitious name.
3.2 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. The
execution, delivery and performance by the Borrower of this Agreement have been
duly authorized by all necessary corporate action on the part of the Borrower,
do not require any stockholder approval, or approval or consent of any trustee
or holders of any indebtedness or obligations of the Borrower except such as
have been duly obtained, and this Agreement does not contravene any law,
judgment, government rule, regulation or order now binding on the Borrower, or
the Articles of Incorporation or Bylaws of the Borrower, or contravene the
provisions of, or constitute a default under, or result in the creation of any
Lien upon the property of the Borrower under its Articles of Incorporation or
Bylaws or any indenture, mortgage, contract or other agreement to which the
Borrower is a party or by which it or any of its properties is bound or
affected. Neither the execution and delivery by the Borrower of this Agreement
nor the performance by the Borrower of its obligations hereunder require the
consent, approval or authorization of, the giving of notice to, or the
registration with, or the taking of any other action in respect of any federal,
state or foreign Governmental Authority (other than a Brazilian Governmental
Authority) or agency on the part of the Borrower in connection with the
borrowing of the Loan or with the execution, delivery, performance, validity or
enforceability of the Borrower Loan Documents to which the Borrower is a party.
Assuming due authorization, execution and delivery of this
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Agreement by Lender, this Agreement, when entered into by the Borrower, will
constitute a valid and legally binding obligation of the Borrower enforceable
against the Borrower 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.
3.3 PURPOSE OF THE LOAN. The proceeds of the Loans will be used by
the Borrower to pay amounts it owes the Lender pursuant to the Interim Loan
Agreements.
3.4 [intentionally left blank];
3.5 LITIGATION. (a) There is no pending or, to the knowledge of the
Borrower, threatened action or proceeding before any court or administrative
agency, and there are no final judgments of record against the Borrower which,
either individually or in the aggregate in the case of any group of related
lawsuits, is reasonably likely to have a Material Adverse Effect;
(b) The Borrower is not in default of any material obligation for
the payment of borrowed money, for the deferred purchase price of property or
for the payment of any rent, nor is there any event which has occurred and is
continuing that, under the terms of the indenture, mortgage, loan agreement or
other agreement or instrument relating to such obligation, with the lapse of
time or the giving of notice, or both, would constitute a default thereunder,
which default(s), either individually or in the aggregate, would be reasonably
likely to have a Material Adverse Effect; and
(c) The Borrower is not in violation of any law, order, injunction,
decree, rule or regulation applicable to the Borrower of any court or
administrative body, which violation would be reasonably likely to have a
Material Adverse Effect;
3.6 NO DEFAULT. There has not occurred any event which constitutes a
Default or an Event of Default under this Agreement which is presently
continuing;
3.7 TAXES. The Borrower has filed or caused to be filed all U.S.
federal, state and local and non-U.S. tax returns that are required to be filed
by them and have paid or caused to be paid all taxes shown to be due on such
return or on any assessment received by the Borrower, except any that are being
contested diligently and in good faith by appropriate proceedings and for which
adequate reserves have been provided in accordance with GAAP;
3.8 ERISA. (a) No "employee benefit plan" (as defined in Section
3(3) of ERISA) maintained by the Borrower or any ERISA Affiliate of either has
incurred an "accumulated funding deficiency" (within the meaning of ERISA) and
neither the Borrower nor any ERISA Affiliate of either has incurred any material
liability to the Pension Benefit Guaranty Corporation;
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(b) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code (including all provisions thereof,
compliance with which is required for any intended favorable Tax treatment)
and other federal or state law, except where such non-compliance is not
reasonably be expected to have a Material Adverse Effect. Each Plan which
is intended to qualify under Section 401(a) of the Code has received a
favorable determination letter from the IRS and, to the best knowledge of
the Borrower, nothing has occurred that would cause the loss of such
qualification. The Borrower and each ERISA Affiliate have made all required
contributions to any Plan subject to Section 412 of the Code, and no
application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any Plan.
There are no pending or, to the best knowledge of the Borrower, threatened
claims, actions or lawsuits, or action by any Governmental Authority, with
respect to any Plan that has resulted, or is reasonably expected to result,
in a Material Adverse Effect. There has been no prohibited transaction or
violation of the fiduciary responsibility rules with respect to any Plan
which has resulted or could reasonably be expected to result in a Material
Adverse Effect; and
(c) The Borrower's interest in the Aircraft does not and will not
constitute the assets of any "employee benefit plan" as defined in Section
3(3) of ERISA or any "plan" within the meaning of Section 4975(e)(1) of the
Code;
3.9 [INTENTIONALLY LEFT BLANK];
3.10 INVESTMENT COMPANY. None of the Borrower or any subsidiary or
Affiliate of it is an "investment company" required to be registered under the
Investment Company Act of 1940, as amended;
3.11 MARGIN STOCK. The Borrower is not engaged principally in the
business of extending credit for the purpose of buying or carrying margin stock
(within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System ("REGULATION U")) and none of the proceeds from the issuance of
the Note will be used directly or indirectly by the Borrower to purchase or
carry "margin stock" as such term is defined in Regulation G of the Board of
Governors of the Federal Reserve System;
3.12 FINANCIAL STATEMENTS. The financial statements and any related
notes of the Borrower of the fiscal year ended December 31, 2001 have been
prepared in accordance with GAAP, and fairly present in all material respects in
accordance with GAAP the financial condition of the Borrower as at such date and
the results of its operations for the periods covered by such statements, and
since December 31, 2001, there has been no change in such condition or
operations which would result in any Material Adverse Effect;
SECTION 4. CONDITIONS PRECEDENT TO THE LENDER'S OBLIGATIONS
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The agreement of the Lender to make the Loans requested to be made by
it to the Borrower on the Borrowing Date is subject to the satisfaction, or
waiver by the Lender, of the following conditions precedent prior to or
concurrently with the making of the Loans:
4.1 MATERIAL ADVERSE CHANGE. (a) no event shall have occurred that
would result in a Material Adverse Change since December 31, 2001, in the
business, operations or financial condition of the Borrower which change has a
material adverse impact on the Borrower's ability to perform any of its
obligations under the Borrower Loan Documents to which it is a party.
(b) No change shall have occurred after the date of the execution
and delivery of this Junior Loan Agreement in Applicable Law which would make it
a violation of law or regulations for (1) the Borrower or the Lender to execute,
deliver and/or perform the Borrower Loan Documents to which any of them is a
party or (2) the Lender to make its Commitment available.
4.2 FEES AND EXPENSES. (a) On the Borrowing Date, the Lender shall
have received from Borrower all amounts then accrued and payable to Lender
pursuant to Section 9.11.
4.3 DOCUMENTS. Assuming due authorization, execution and delivery by
the Lender and each other party other than the Borrower of the Borrower Loan
Documents to which it is a party, each of the Borrower Loan Documents shall have
been duly authorized, executed and delivered by the Borrower and shall be in
full force and effect and executed counterparts shall have been delivered to the
Borrower and the Lender, and their respective counsel, PROVIDED that only the
Lender shall receive executed originals of the Note.
4.4 [INTENTIONALLY LEFT BLANK]
4.5 AUTHORIZATION. On the Borrowing Date, the Lender shall have
received the following, in each case in form and substance reasonably
satisfactory to it:
(a) a copy of the Articles of Incorporation of the Borrower
certified by the Secretary of State of the State of New York and a copy of
the Bylaws and resolutions of the board of directors of the Borrower
certified by the Secretary or Assistant Secretary of the Borrower, duly
authorizing the execution, delivery and performance by the Borrower of each
of the Borrower Loan Documents to which the Borrower is a party, and an
incumbency certificate as to the Person or Persons authorized to execute
and deliver such documents on its behalf and including specimens of the
signatures of such Person or Persons; and
(b) such other documents and evidence with respect to the Borrower
as the Lender or its counsel may reasonably request in order to establish
the authority of the Borrower to consummate the Borrower Loan Documents to
which it is a party and the taking of all corporate proceedings in
connection therewith.
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4.6 GOVERNMENTAL APPROVAL. All appropriate action required to have
been taken by Borrower on or prior to the Borrowing Date by any governmental or
political agency, subdivision or instrumentality of the United States or Brazil
in connection with the transactions contemplated by this Agreement shall have
been taken, and all orders, permits, waivers, authorizations, exemptions and
approvals of such entities required to be in effect on the Borrowing Date in
connection with the transactions contemplated by this Agreement shall have been
issued, and all such orders, permits, waivers, authorizations, exemptions and
approvals shall be in full force and effect on the Borrowing Date.
4.7 FINAME LOAN MATTERS. On the Borrowing Date the following
statements shall be true, and the Lender shall have received evidence reasonably
satisfactory to it to the effect that all conditions to the closing of the
FINAME Loan Agreements shall have been either been waived by FINAME or
satisfied, and FINAME shall be prepared to provide all funds immediately for the
FINAME Loan with respect to all of the Aircraft.
4.8 REPRESENTATIONS. The representations and warranties of the
Borrower contained herein and in the other Borrower Loan Documents to which the
Borrower is a party shall be true and accurate as though made on and as of such
date except to the extent that such representations and warranties relate solely
to an earlier date (in which case such representations and warranties shall have
been true and accurate on and as of such date), and the Lender shall have
received a certificate of a Responsible Officer of the Borrower to such effect.
4.9 ADDITIONAL CONDITIONS. On the Borrowing Date,
(a) no event shall have occurred and be continuing, or be reasonably
likely to result from the purchase, sale or mortgage of the Aircraft, which
constitutes a default or a breach under the Solitair Purchase Agreement, the
Republic Purchase Agreement, or the Partial Assignment of Purchase Agreement;
(b) no Material Adverse Change shall have occurred, or other event
that would have a Material Adverse Effect; and
(c) [intentionally left blank]
4.10 OPINIONS. On the Borrowing Date the Lender shall have received
an opinion addressed to it from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇, LLP, counsel for the
Borrower, in form and substance reasonably satisfactory to it.
4.11 CERTIFICATES. The Lender shall have received a certificate
signed by an officer of the Borrower dated the Borrowing Date addressed to the
Lender and certifying as to the fulfillment of all conditions in Section 4.6
(insofar as it relates to the United States), Section 4.8 and Section 4.14 (to
the knowledge of the Borrower).
4.12 [INTENTIONALLY LEFT BLANK]
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4.13 TOTAL LOSS. On the Borrowing Date no Total Loss (or event which
with the passage of time would be reasonably likely to become a Total Loss) with
respect to the Airframe or any Engine shall have occurred.
4.14 LITIGATION. No action or proceeding shall have been instituted
nor shall governmental action be threatened before any court or Governmental
Authority, nor shall any order, judgment or decree have been issued or proposed
to be issued by any court or Governmental Authority at the time of the Borrowing
Date to set aside, restrain, enjoin or prevent the completion and consummation
of this Agreement or any of the transactions contemplated hereby.
4.15 CLOSING DOCUMENTS. All proceedings taken in connection with the
transactions contemplated hereby and the other Borrower Loan Documents and all
documents and papers relating thereto shall be reasonably satisfactory to the
Lender and its counsel, and the Lender and its counsel shall have received
copies of such documents and papers as the Lender or its counsel may reasonably
request in connection therewith or as a basis for such counsel's closing
opinion, all in form and substance reasonably satisfactory to the Lender and its
counsel.
4.16 [INTENTIONALLY LEFT BLANK]
SECTION 5. [INTENTIONALLY LEFT BLANK]
SECTION 6. [INTENTIONALLY LEFT BLANK]
SECTION 7. COVENANTS OF THE BORROWER
7.1 COVENANTS OF THE BORROWER. The Borrower hereby agrees that, so
long as the Loan is owing to the Lender hereunder, it shall furnish to the
Lender:
(a) (i) within 45 days after the end of each of the first three
quarterly fiscal periods in each fiscal year of the company, a
consolidated balance sheet of the Borrower (and its consolidated
subsidiaries, if any) prepared by it as of the close of such period,
together with the related consolidated statements of income and
changes in cash flow for such period, together with a certificate of
an authorized officer of the Borrower that such financial statements
present fairly in all material respects in accordance with generally
accepted accounting principles the information contained therein
subject to year end adjustments and the absence of required footnote,
(ii) within 120 days after the close of each fiscal year of the
Borrower, a consolidated balance sheet of the Borrower (and its
consolidated subsidiaries, if any) as of the close of such fiscal
year, together with the related consolidated
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statements of income and changes in cash flow for such fiscal year, as
audited by independent public accountants.
(b) together with the delivery of each set of financial statements
pursuant to paragraphs (a) above, a certificate executed by an authorized
officer of the Borrower stating that, to his knowledge, no Default or Event
of Default has occurred thereunder or if any has occurred specifying the
nature thereof and the steps proposed to be taken to cure such Default or
Event of Default, if curable;
(c) such other reports and information regarding the Borrower as
Lender shall reasonably request;
(d) [intentionally left blank]
(e) Promptly upon receipt thereof by the Borrower, copies of all
communications regarding any event that could reasonably be expected to
result in a Material Adverse Effect, received by the Borrower from the
manufacturer of any of the Engines or the Borrower's insurance carrier or
broker, as the case may be, and promptly upon sending the same, copies of
all notices and communications regarding events described above sent by the
Borrower to such manufacturer of such Engines or such insurance carrier or
broker.
7.2 COVENANTS OF THE BORROWER. The Borrower will not consolidate
with or merge into any other person under circumstances in which Borrower
is not the surviving corporation, or convey, transfer or lease in one or
more transactions all or substantially all of its assets to any other
Person, unless:
(a) such Person is organized, existing and in good standing
under the Laws of the United States, any State of the United States or the
District of Columbia and, upon consummation of such transaction, such
person will be a Certificated Air Carrier;
(b) such Person executes and delivers to the Lender a duly
authorized, legal, valid, binding and enforceable agreement, reasonably
satisfactory in form and substance to Lender, containing an effective
assumption by such person of the due and punctual performance and
observance of each covenant, agreement and condition in the Borrower Loan
Documents to be performed or observed by Borrower;
(c) such Person makes such filings and recordings with the FAA
pursuant to the Transportation Code as shall be necessary to evidence such
consolidation or merger;
(d) immediately after giving effect to such consolidation or
merger no Event of Default shall have occurred and be continuing; and
11
(e) the net worth (as determined under GAAP) of such Person
immediately after giving effect to such transaction is not materially less
than the greater of (x) the net worth (determined as aforesaid) of the
Borrower immediately prior to such transaction or (y) the net worth
(determined as aforesaid) of the Borrower on December 31, 2001.
Upon any such consolidation or merger of Borrower with or into,
or the conveyance, transfer or lease by Borrower of all or substantially
all of its assets to, any person in accordance with this Section 7.2, such
Person will succeed to, and be substituted for, and may exercise every
right and power of, Borrower under the Borrower Loan Documents with the
same effect as if such Person had been named as "Borrower" therein. No such
consolidation or merger, or conveyance, transfer or lease, shall have the
effect of releasing Borrower or such Person from any of the obligations,
liabilities, covenants or undertakings of Borrower under the Borrower Loan
Documents.
7.3 CERTAIN ADDITIONAL COVENANTS OF BORROWER. The Borrower agrees
and covenants that it will:
(a) EXISTENCE AND CITIZENSHIP. At all times maintain (a) subject to
Section 7.2, its corporate existence in good standing under the laws of its
charter jurisdiction and keep current all necessary filings related
thereto, (b) its status as a Citizen of the United States, (c) its status
as a Certificated Air Carrier, (d) its right to transact business in each
jurisdiction in which the character of the properties owned or leased by it
or the business conducted by it makes such qualification necessary, except
to the extent failure to comply with this clause (d) will not have a
Material Adverse Effect and (e) all licenses, certificates, permits and
franchises necessary to authorize the Borrower to engage in the business of
air transport and the carrying on of scheduled passenger service as
presently conducted.
(b) PAYMENT OF TAXES AND CLAIMS. Pay when due all Taxes, assessments
and other liabilities payable by the Borrower, except (other than with
respect to Taxes collected by withholding) as contested in good faith and
by appropriate proceedings, PROVIDED reserves reasonably deemed appropriate
by the Borrower have been established with respect thereto, and except to
the extent that failure to comply with this Section 7.3(b) will not have a
Material Adverse Effect.
(c) NOTICE OF LITIGATION. Give prompt written notice to the Lender
in reasonable detail of any litigation or governmental proceeding pending
or, to its knowledge, threatened against the Borrower that Borrower would
have had to have report if it were subject to, the reporting requirements
of the Securities Exchange Act of 1934, as amended.
(d) SALE OF THE AIRCRAFT. Not sell, transfer, convey, lease or
otherwise dispose of (or enter into any commitment to sell, transfer,
convey, lease or otherwise dispose of)
12
all or part of any of the Aircraft (whether in one or a series of
transactions), except as permitted pursuant to the FINAME Security
Agreement.
(e) LOCATION OF CHIEF PLACE OF BUSINESS. Not change the location of
its chief place of business or chief executive office without 30 days'
prior written notice to Lender (which relocation shall not occur to a
jurisdiction in which the Uniform Commercial Code has not been enacted or
is not in full force and effect).
(f) CODE-SHARING. Except for "code sharing" arrangements with other
airlines, shall not conduct business under a trade, assumed or fictitious
name without 10 days' prior written notice to Lender.
7.4 CERTAIN ADDITIONAL COVENANTS OF THE BORROWER. The Borrower
covenants and agrees with the Lender, as follows:
(a) [intentionally left blank]
(b) [intentionally left blank].
(c) [intentionally left blank].
(d) [intentionally left blank].
SECTION 8. EVENTS OF DEFAULT
8.1 EVENTS OF DEFAULT. Each of the following shall constitute an
"EVENT OF DEFAULT":
(a) (i) The Borrower shall fail to make the payment of principal of
or interest on any Loan within five (5) Business Days after the same shall
become due or (ii) the Borrower shall fail to make any payment when the
same shall become due of any other amount due from Borrower under this
Agreement and such failure shall continue unremedied for ten (10) days
after the receipt by the Borrower of written demand therefor from the
Lender, as the case may be; or
(b) The Borrower shall fail to carry and maintain on or with respect
to the Aircraft (or cause to be carried and maintained) insurance required
to be maintained in accordance with the provisions of the FINAME Security
Agreement; or
(c) The Borrower shall have failed to perform or observe (or caused
to be performed and observed) in any material respect any other covenant or
agreement to be performed or observed by it under any Borrower Loan
Document, and, if it is possible to remedy such a failure, such failure
shall continue unremedied for a period of 30 days after written notice
thereof by Lender; PROVIDED, that if the Borrower shall have undertaken to
cure any such failure which relates to maintenance, service, repair,
overhaul or
13
modifications, and, notwithstanding the reasonable diligence of the
Borrower in attempting to cure such failure, such failure cannot be cured
by the payment of money or otherwise within said 30-day period but is
curable with future due diligence, there shall exist no Event of Default
under this Section 8.1(c) so long as the Borrower is proceeding with due
diligence to cure such failure, and the Lender's rights and interests in
the Aircraft are not adversely affected thereby in any material respect,
and such failure is cured within an additional period of 90 days; or
(d) Any representation or warranty made by the Borrower herein or in
any other Borrower Loan Document or any other document or certificate
furnished by the Borrower in connection herewith or therewith or pursuant
hereto or thereto shall prove to have been incorrect in any material
respect as of the time made or deemed made, PROVIDED, that no such Event of
Default shall be deemed to have occurred if the effect of such
incorrectness is capable of being cured and is cured within a period of 30
days after the receipt by the Borrower of a written notice from Lender
notifying the Borrower, of the existence of such incorrectness, and the
Borrower's and the Lender's rights and interests in the Aircraft are not
adversely affected thereby in any material respect; or
(e) The commencement of an involuntary case or other proceeding in
respect of the Borrower under the federal bankruptcy laws, as now or
hereafter constituted, or any other applicable federal or state bankruptcy,
insolvency or other similar law in the United States or seeking the
appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Borrower for all or substantially
all of its property, or seeking the winding-up or liquidation of its
affairs and the continuation of any such case or other proceeding
undismissed or unstayed for a period of 60 consecutive days, or an order
for relief under Chapter 11 of the Bankruptcy Code with respect to the
Borrower as debtor or any other order, judgment or decree shall be entered
in any proceeding by any court of competent jurisdiction appointing,
without the consent of the Borrower, a receiver, trustee or liquidator of
the Borrower or for all or substantially all of its property, or
sequestering of all or substantially all of the property of the Borrower
and any such order, judgment or decree or appointment or sequestration
shall be final or shall remain in force undismissed, unstayed or unvacated
for a period of 60 consecutive days after the date of entry thereof; or
(f) (i) The Borrower shall consent to the appointment of a
custodian, receiver, trustee or liquidator (or other similar official) of
itself, the Aircraft or of a substantial part of its property, or shall
admit in writing its inability to pay its debts generally as they come due,
or a court of competent jurisdiction shall determine that the Borrower is
generally not paying its debts as such debts become due, or the Borrower
shall make a general assignment for the benefit of creditors, or the
Borrower shall take any corporate action to authorize any of the foregoing;
or
(ii) The Borrower shall file a voluntary petition in bankruptcy or a
voluntary petition or an answer seeking reorganization in a proceeding
under any bankruptcy laws (as now or hereafter in effect) or an answer
admitting the material allegations of a petition
14
filed against the Borrower in any such proceeding, or the Borrower shall,
by voluntary petition, answer or consent, seek relief under the provisions
of any now existing or future bankruptcy or other similar law providing for
the reorganization or winding-up of debtors, or providing for an agreement,
composition, extension or adjustment with its creditors, or the Borrower
shall take any corporate action to authorize any of the foregoing; or
(iii) The commencement of proceedings to liquidate or dissolve the
Borrower; or
(g) The Borrower shall have failed to perform or observe (or caused
to be performed and observed) in any material respect any other covenant or
agreement to be performed or observed by it pursuant to Article 10, and
such failure shall continue unremedied for a period of 10 days;
(h) An "Event of Default" (as defined in any loan agreement referred
to below in this Section 8.1(h)) shall have occurred and be continuing
under any other loan agreement between the Lender and the Borrower pursuant
to which the Lender has provided aircraft financing to the Borrower (but
only so long as the initial Lender is the Lender), or under any of the
FINAME Loan Agreements; or
(i) the Borrower shall cease to be a Certificated Air Carrier; or
(j) the Borrower shall receive a notice of default or exercise of
remedies with respect to the payment or performance of any indebtedness or
other obligation to any third party and any such default or exercise of
remedies results in an acceleration of such indebtedness or obligations;
provided that the aggregate amount of any such indebtedness or obligation
is in excess of $500,000 (determined in the case of borrowed money by the
amount outstanding under the agreement pursuant to which such borrowed
money was borrowed, in the case of a deferred purchase price by the
remaining balance and in the case of a lease by the present value of the
remaining rent payable thereunder).
then, and in any such event, (A) if such event is an Event of Default specified
in paragraphs (e) or (f) of this Section 8.1, the Loan (with accrued interest
thereon) and all other amounts owing under this Agreement and the Note shall
immediately become due and payable, and (B) if such event is another Event of
Default, at any time while such Event of Default is continuing, the Lender may,
by written notice to the Borrower, declare the Loan (with accrued interest
thereon) and all other amounts owing under this Agreement and the Note to be due
and payable forthwith, whereupon the same shall immediately become due and
payable and the Lender may exercise the rights and remedies provided in the
Borrower Loan Documents. Except as expressly provided above in this Section 8.1,
presentment, demand, protest and all other notices of any kind with respect to
an Event of Default are hereby expressly waived.
SECTION 9. MISCELLANEOUS
15
9.1 AMENDMENTS AND WAIVERS. This Agreement or any terms hereof may
only be amended, supplemented or modified with the prior written consent of the
Borrower and the Lender. The Lender may, from time to time, waive, on such terms
and conditions as the Lender may specify in such instrument, any of the
requirements of this Agreement or any Event of Default and its consequences. In
the case of any waiver the Borrower and the Lender shall be restored to their
former positions and rights hereunder, and any Event of Default waived shall be
deemed to be cured and not continuing; no such waiver shall extend to any
subsequent or other Event of Default or impair any right consequent on such
subsequent or other Event of Default. Any amendment or waiver effected in
accordance with this Section 9.1 shall be binding upon the Lender and any
subsequent Lender and the Borrower.
9.2 NOTICES; CONSENT TO JURISDICTION; JOINDER.
(a) All notices, demands, instructions and other communications of
any kind required or permitted to be given to or made upon any Party pursuant
hereto or in respect of this Agreement shall be made in English, in writing, and
shall be personally delivered or sent by registered or certified mail, postage
prepaid, by facsimile device, or by overnight service or prepaid courier
service, and shall be deemed to be given for purposes hereof (A) if delivered in
person or by overnight service or prepaid courier service, on the day that such
writing is delivered, (B) if given by registered or certified mail, on the date
of receipt, or (C) if made by fax, upon receipt by the sender of transmission
confirmation (PROVIDED, that any such fax transmission shall be confirmed by
mailing a copy of such notice or transmission by registered mail). Unless
otherwise specified in a notice sent or delivered in accordance with the
foregoing provisions of this Section 9.2(a), notices, demands, instructions and
other communications in writing shall be given to or made upon the respective
Parties hereto at their respective addresses (or to their respective facsimile
numbers) as follows: (i) if to the Borrower or Lender, to the respective
addresses set forth in Section 9.2(e), or to such other address as any such
Party indicates by notice to the other Party; or (ii) if to any subsequent
Lender, addressed to such subsequent Lender at such address as such subsequent
Lender shall have furnished by notice to the parties hereto.
(b) Each Party hereby irrevocably agrees that any legal suit, action
or proceeding brought by any other Party or any Indemnitee that is not a Party,
which arises out of or relates to the Borrower Loan Documents or any of the
transactions contemplated hereby or thereby or any document referred to herein
or therein, may be instituted in the United States District Court for the
Southern District of New York and the state courts of the State of New York
sitting in the City of New York, and without prejudice to any Party's right to
remove to the federal courts, appellate courts from any thereof (collectively,
the "STIPULATED COURTS"), and each Party hereby expressly submits itself to the
exclusive personal jurisdiction of such Stipulated Courts and waives any
objection that it may now or hereafter have to the personal jurisdiction or
venue of any action in any such Stipulated Court or that any such action was
brought in an inconvenient forum, and agrees not to plead or claim the same by
way of motion as a defense or otherwise. EACH PARTY HEREBY IRREVOCABLY WAIVES
TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM, WHETHER IN
CONTRACT OR TORT, AT LAW OR IN EQUITY, ARISING OUT OF OR IN
16
ANY WAY RELATED TO THIS AGREEMENT, ANY OTHER BORROWER LOAN DOCUMENT OR THE
ENFORCEMENT HEREOF OR THEREOF.
(c) [intentionally left blank]
(d) Each Party hereby irrevocably and unconditionally waives
personal service of process and consents that service of process upon it may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, at its address for notice
as determined in Section 9.2(e), or by personal service, and service so made
shall be deemed completed when such service is received at such address;
PROVIDED, that nothing herein shall affect the right to serve process in any
other manner permitted by Applicable Law.
(e) Any such notice or communication to a party hereto shall be made
in English, in writing, by registered mail, fax, telex or cable, as permitted
under applicable law, and shall be given as follows:
Borrower: Chautauqua Airlines, Inc.
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
With a Copy to:
Wexford Capital LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Lender/Manufacturer Embraer - Empresa Brasileira de Aeronautica S.A.
▇▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇
12227-901 Sao ▇▇▇▇ dos ▇▇▇▇▇▇, ▇▇
Brazil
Attention: Director - Contracts
Tel: (▇▇▇) ▇▇▇▇-▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇▇-▇▇▇▇-▇▇▇▇
(f) Any party listed above may change its address and the
transmission numbers for notices by notice in the manner provided in this
Section 9.2.
17
9.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made hereunder and in any document or certificate delivered
pursuant hereto or in connection herewith shall survive the execution and
delivery of this Agreement and the making of the Loan hereunder.
9.4 LOAN ASSIGNMENTS AND TRANSFERS. The Lender may assign and
transfer its right, title and interest in the Loan, and the Note, including all
of its rights and obligations therein and in the Borrower Loan Documents in
whole or in part ("LOAN TRANSFEREES") or grant participations therein to ("LOAN
PARTICIPANTS") in private nonpublic placements pursuant to Section 4(2) of the
United States Securities Act of 1933, as amended, or Rule 144A ("Rule 144A")
thereunder or similar laws or regulations, and the Borrower shall cooperate
reasonably and in good faith in accordance with the following provisions in
assisting the Lender in effecting such assignment, transfer or grant, PROVIDED
that the Borrower shall have no greater obligation or liability (including any
increased payment pursuant to Section 2.6) to any transferee than it would have
had to the initial Lender or as a result of any grant of a participation. The
Borrower hereby waives any right of set-off it may have against such entity with
respect to claims against the Lender, the Manufacturer and other third parties.
A Loan Transferee may create a perfected lien on the Junior Loan Agreement and
the other documents to secure the indebtedness of the Loan Transferee to its
lenders. The Parties agree that each Loan Transferee, upon any such assignment
and transfer, shall be and have all beneficial rights of Lender to the extent of
the interest so assigned and transferred and shall to such extent accede to all
rights of Lender under all the Borrower Loan Documents upon execution and
delivery to the Borrower of a lender transfer notice, and that no consent,
approval or other notice of or to any party to the Borrower Loan Documents is
necessary in connection therewith. Without limiting the generality of the
foregoing, the Borrower authorizes Lender to disclose to any actual or
prospective Loan Transferee or Loan Participant any and all financial
information in Lender's possession concerning the Borrower, which has been
delivered to Lender pursuant to the Borrower Loan Documents or in connection
with Lender's credit evaluation of the Borrower prior to entering into the
Borrower Loan Documents.
This Junior Loan Agreement shall be binding upon and inure to the
benefit of the Borrower, Lender and their respective successors and permitted
assigns. Except as otherwise expressly permitted or required by the provisions
of the Borrower Loan Documents, the Borrower may not assign any of its rights or
obligations hereunder or under any Borrower Loan Document without the prior
written consent of Lender.
9.5 CONTRACTUAL CURRENCY. (a) All payments of the unpaid balance of
the Loan and interest thereon and any other amount payable hereunder or under
any other Loan Document shall be paid in Dollars.
(b) If any expense required to be reimbursed pursuant to this Junior
Loan Agreement or any other Borrower Loan Documents is originally incurred in a
currency other than Dollars, the Borrower shall nonetheless make reimbursement
of that expense in Dollars, in an amount equal to the amount in Dollars that
would have been required for the person that incurred
18
that expense to have purchased, in accordance with normal banking procedures,
the sum paid in such other currency (after any premium and costs of exchange) on
the date of payment of such expenses.
9.6 SEVERABILITY. Any provision of this Junior Loan Agreement which
is prohibited or unenforceable shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof.
9.7 ENTIRE AGREEMENT. The Borrower Loan Documents embody the entire
agreement and understanding between Lender and the Borrower and supersede all
prior agreements and understandings relating to the subject matter thereof.
9.8 GOVERNING LAW.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES TO THE LOAN DOCUMENTS SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW
YORK, UNITED STATES OF AMERICA. All obligations of the Borrower and the rights
of Lender and any holder of any Note shall be in addition to, and not in
limitation of, those provided by Applicable Law.
9.9 WAIVER OF IMMUNITIES. The Lender agrees that, to the extent that
the Lender or any of its property is or becomes entitled at any time to any
immunity on the grounds of sovereignty or otherwise from (a) any legal action,
suit, arbitration proceeding or other proceeding, (b) set-off or counterclaim,
(c) the jurisdiction of any court of competent jurisdiction, (d) service of
process, (e) relief by way of injunction, order for specific performance or for
recovery of property, (f) attachment of its assets prior to judgment or after
judgment, (g) attachment in aid of execution or levy, (h) execution or
enforcement of any decree or judgment, (i) judgment or jurisdiction or from any
other legal process in any jurisdiction, the Lender, for itself and its
property, does, to the full extent permitted by Applicable Law, rule or
regulation, hereby irrevocably and unconditionally waive all rights to, and
agrees not to plead or claim, any such immunity with respect to its obligations,
liabilities or any other matter under or arising out of or in connection with
this Agreement or the other Borrower Loan Documents, or the subject matter
hereof or thereof. Such agreement shall be irrevocable and not subject to
withdrawal in any and all jurisdictions or under any statute, including the
Foreign Sovereign Immunities Act of 1976 of the United States of America. The
foregoing waiver shall constitute a present waiver of immunity at any time any
action is initiated against the Lender with respect to this Agreement.
9.10 CONFIDENTIALITY. Each of the Borrower and Lender hereby assumes
the obligation to maintain in total and absolute confidentiality the terms and
conditions of the Borrower Loan Documents not required by the terms of any of
the Borrower Loan Documents to be filed or recorded in the public record and
shall not disclose or reproduce the same by any means or for any purpose, except
as follows: (1) as otherwise required or contemplated by the Borrower Loan
Documents, (2) to its accountants, lawyers and financial and other professional
advisors, (3) to its employees, its Affiliates and their employees, and to each
other party to the
19
Borrower Loan Documents, (4) as required by force of law (including applicable
securities laws), (5) as required by judicial or administrative decision of a
Governmental Authority, (6) for the purpose of effecting any transfer or
participation permitted pursuant to Section 9.4 hereof, PROVIDED that in case of
a disclosure referred to in Clauses (4) and (5) above, the party requiring
disclosure shall use its reasonable best efforts to limit the extent of such
disclosure to the extent permitted by law. Without limiting its obligations
pursuant to the preceding sentence, Borrower agrees that if it is required, in
the reasonable opinion of its counsel, to file publicly or otherwise disclose
the terms of this Agreement under applicable federal and/or state securities or
other laws, it shall promptly (but in no case less than four (4) Business Days
prior to the proposed filing in question) notify Lender so that Lender has a
reasonable opportunity to contest or limit the scope of such required
disclosure, and Borrower shall request, and shall use its best reasonable
efforts to obtain, confidential treatment for such sections of this Agreement as
Lender may designate. Borrower further agrees that it shall not in any
circumstances file publicly or otherwise disclose the terms of this Agreement
under applicable federal and/or state securities or other laws if it has not
complied with its obligations pursuant to the previous sentence.
9.11 EXPENSES OF LENDER AND TRANSACTION EXPENSES.
Except as otherwise provided herein, the Borrower agrees (a) to pay or
reimburse the Lender for all its reasonable out-of-pocket costs and expenses
incurred in connection with the preparation and execution of this Agreement and
the other Borrower Loan Documents, and any amendment, supplement or modification
provided for in this Agreement or any other Borrower Loan Document, or requested
by the Borrower to, this Agreement and the other Borrower Loan Documents and any
other documents prepared in connection herewith or therewith, and the
consummation of the transactions contemplated hereby and thereby, including,
without limitation, the reasonable fees and disbursements of counsel to the
Lender and (b) to pay, indemnify, and hold the Lender harmless from, any and all
United States recording and filing fees and any and all liabilities with respect
to, or resulting from any delay in paying such United States recording and
filing fees, if any, which may be payable or determined to be payable in
connection with the execution and delivery of, or consummation of any of the
transactions contemplated by, or any amendment, supplement or modification of,
or any waiver or consent under or in respect of, this Agreement, the other
Borrower Loan Documents and any such other documents relating thereto.
9.12 GENERAL INDEMNITY. (a) The Borrower hereby agrees to indemnify
on an After-Tax Basis each Indemnitee against, and agrees to protect, save and
hold harmless each of them from any and all Expenses imposed on, incurred by or
asserted against any Indemnitee, in any way relating to or arising out of or
which would not have occurred but for (1) the Borrower Loan Documents and the
consummation of the transactions contemplated thereby or any Default or Event of
Default thereunder and the enforcement of any of the terms thereof;
(2)[intentionally left blank]; PROVIDED that the foregoing indemnity of an
Indemnitee shall only apply for claims relating to Lender in its capacity as
lender under the Borrower Loan Documents and not to Lender in its capacity, if
any, as manufacturer, repairer, supplier or aircraft servicing agent, or any
Expense to the extent resulting from or arising out of or which would not have
occurred but for one or more of the following: (A) any express representation or
warranty by such Indemnitee
20
in the Borrower Loan Documents being incorrect; or (B) the failure by such
Indemnitee to perform or observe any express agreement, covenant or condition in
any of the Borrower Loan Documents except to the extent such failure by such
Indemnitee proximately results from any failure by the Borrower to observe any
covenant, agreement or condition applicable to the Borrower in any Borrower Loan
Document; or (C) the willful misconduct or the gross negligence of or violation
of law by such Indemnitee (other than any of the foregoing imputed to such
Indemnitee solely by reason of its interest in the Aircraft or being party to
the Borrower Loan Documents); or (D) a disposition (voluntary or involuntary) of
all or any part of its interest in any Note or in any of the Borrower Loan
Documents other than, in each case, during the continuance of a Specified
Default or an Event of Default under this Junior Loan Agreement or (E) any Tax,
or any loss of Tax benefits or increase in Tax liability under any Tax law,
PROVIDED, HOWEVER, that this CLAUSE (E) shall not apply to any obligation of the
Borrower under Section 2.b or to Taxes arising from making any payment pursuant
to this SECTION 9.12 on an After-Tax Basis; or (F) the authorization or giving
or withholding of any future amendments, supplements, waivers or consents with
respect to any of the Borrower Loan Documents which amendments, supplements,
waivers or consents (x) are not or were not requested by the Borrower, (y) are
not occasioned by a specific requirement of the Borrower Loan Documents and (z)
are not entered into pursuant to a Default or an Event of Default; or (H) except
to the extent resulting from a breach of the Borrower representations contained
in SECTION 3.2, the offer, sale or delivery by such Indemnitee in violation of
the Securities Act or a violation by such Indemnitee of any other applicable law
or regulation relating to the transfer of any Note, or (I) except to the extent
caused by acts or events occurring prior thereto, acts or events which occur
after the earlier of: (x) the payment by the Borrower of all amounts required to
be paid under the Borrower Loan Documents following a Total Loss and termination
of the Loan; or (y) termination of the Loan and payment by the Borrower of all
amounts required to be paid by Borrower pursuant to the terms of the Borrower
Loan Documents.
(b) If a claim is made against an Indemnitee involving one or more
Expenses and such Indemnitee has notice thereof, such Indemnitee shall promptly
after receiving such notice give notice of such claim to the Borrower; provided,
that the failure to provide such notice shall not diminish any of the Borrower's
obligations to indemnify hereunder except to the extent the Borrower's right to
contest the imposition of such Expense shall be prejudiced or to the extent such
failure otherwise adversely affects the Borrower. The Borrower shall be
entitled, at its cost and expense (and acting through counsel reasonably
acceptable to the respective Indemnitee) (1) in any judicial or administrative
proceeding that involves solely a claim for one or more Expenses, to assume
responsibility for and control thereof, (2) in any judicial or administrative
proceeding involving a claim for one or more Expenses and other claims related
or unrelated to the transactions contemplated by the Borrower Loan Documents, to
assume responsibility for and control of such claim for Expenses to the extent
that the same may be and is severed from such other claims (and such Indemnitee
shall use its best efforts to obtain such severance), and (3) in any other case,
to be consulted by such Indemnitee with respect to judicial proceedings subject
to the control of such Indemnitee and to be allowed, at the Borrower's sole
expense, to participate therein. Notwithstanding any of the foregoing to the
contrary, the Borrower shall not be entitled to assume responsibility for and
control of any such judicial or administrative proceedings if (A) any Specified
Default or Event of Default shall have occurred and be continuing, (B) such
21
proceedings will involve a material risk of the sale, forfeiture or loss of, or
the creation of any Lien (other than a Lien permitted under the Borrower Loan
Documents) on, the Aircraft or any material part thereof unless in such an event
the Borrower shall have posted a bond or other security reasonably satisfactory
to the relevant Indemnitees in respect to such risk or (C) such proceedings are
reasonably likely to involve the imposition of criminal liability, or material
civil penalty for which such Indemnitee is not indemnified hereunder, on an
Indemnitee; PROVIDED, HOWEVER, no such proceeding shall be compromised or
settled on a basis that admits gross negligence or misconduct on the part of
such Indemnitee without such Indemnitee's prior written consent. The Indemnitee
may participate at its own expense and with its own counsel in any judicial
proceeding controlled by the Borrower pursuant to the preceding provisions so
long as such participation shall not materially interfere with the Borrower's
conduct or the defense of any such proceeding.
(c) The Indemnitee shall cooperate in good faith with the Borrower
and, at the Borrower's expense, shall supply the Borrower with such information
reasonably requested by the Borrower as is necessary or advisable for the
Borrower to control or participate in any proceeding to the extent permitted by
this SECTION 9.12. Such Indemnitee shall not (unless such Indemnitee waives its
right to be indemnified with respect to such Expense under this SECTION 9.12)
enter into a settlement or other compromise with respect to any Expense without
the prior written consent of the Borrower (except during the continuance of an
Event of Default when such consent shall not be required if the Indemnitee has
given the Borrower at least 15 days prior written notice of the nature and scope
of the proposed settlement or compromise), which consent shall not be
unreasonably withheld, conditioned or delayed.
(d) The Borrower shall supply the Indemnitee with such information
(which may, in the case of confidential or proprietary information be supplied
subject to a reasonable confidentiality requirement) reasonably requested by the
Indemnitee as is necessary or advisable for the Indemnitee to control or
participate in any proceeding to the extent permitted by this SECTION 9.12.
(e) So long as no Specified Default or Event of Default under this
Junior Loan Agreement shall have occurred and be continuing, upon payment of any
Expense pursuant to this SECTION 9.12, the Borrower, without any further action,
shall be subrogated to, and may pursue, any claims the Indemnitee may have
relating thereto other than claims against any Brazilian government entity. Each
Indemnitee hereby agrees to give, at the Borrower's expense, such further
assurances or agreements and to cooperate with the Borrower to permit the
Borrower to pursue such claims, if any, to the extent reasonably requested by
the Borrower.
(f) The Borrower's obligations under the indemnities provided for in
this Agreement shall be those of a primary obligor, whether or not the Person
indemnified shall also be indemnified with respect to the same matter under the
terms of any other document or instrument, and the Person seeking
indemnification from the Borrower pursuant to any provision of this Agreement
may proceed directly against the Borrower without first seeking to enforce any
other right of indemnification.
22
(g) To the extent permitted by applicable law, interest at the Debt
Rate plus the Default Rate shall be paid, on demand, on any amount or indemnity
not paid when due pursuant to this SECTION 9.12 until the same shall be paid.
Such interest shall be paid in the same manner as the unpaid amount in respect
of which such interest is due.
SECTION 10. SPECIAL PROVISIONS RE LIENS
10.1 REPRESENTATIONS AND WARRANTIES. The Borrower represents and
warrants that as of the Closing, and immediately upon the Closings:
(a) it has granted no security interests with respect to the
Collateral other than the FINAME Security Agreements;
(b) there are and will upon Closing be no Liens on any of the
Collateral other than Permitted Liens; and;
(c) there are and will upon Closing be no Permitted Liens of the
kind described in Section 3.1(h) of the FINAME Security Agreements on any of the
Collateral.
10.2 COVENANT AND AGREEMENTS. The Borrower covenants and agrees that
(a) it shall not enter into any agreement granting a security
interest in any of the Collateral other than the FINAME Security Agreements;
(b) it shall maintain all of the Collateral free of Liens other than
Permitted Liens;
(c) it shall maintain all of the Collateral free of Permitted Liens
of the kind described in Section 3.1(h) of the FINAME Security Agreements; and
(d) it shall make reasonable best efforts to agree upon the terms of
security agreements with the Lender (and such other agreements reasonably
requested by the Lender) that grant a security interest in the Collateral to
secure the Borrower's obligations under this Agreement, and that the terms of
such security agreements shall, to the extent consented to by FINAME, be no less
beneficial to the Lender than the terms of the FINAME Security Agreements are to
FINAME and the Security Trustee (including, for the avoidance of doubt, a
perfected security interest in and Liens over all of the Collateral); provided
that the Liens of the Lender shall in all respects be subordinate to those of
FINAME and the Security Trustee, and that it shall take all actions reasonably
requested by the Lender in order to grant such interests to the Lender.
23
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
CHAUTAUQUA AIRLINES, INC.
By:
---------------------------------
Name:
Title:
EMBRAER-EMPRESA BRASILEIRA DE
AERONAUTICA S.A.
By:
---------------------------------
Name:
Title:
By:
---------------------------------
Name:
Title:
WITNESS:
24
Schedule 1
TO JUNIOR LOAN AGREEMENT
[TO BE ATTACHED TO EACH NOTE]
[*]
25
--------------
* Confidential
Schedule 2
TO JUNIOR LOAN AGREEMENT
CERTAIN FINANCIAL TERMS
"COMMITMENT" means, for each Aircraft, [*]
"DEBT RATE" means an annual rate of seven point five percent (7.5%)
"DEFAULT RATE" means the Debt Rate [*]
"MATURITY DATE" means December 31, 2003
"TOTAL INVOICE COST" for each Aircraft, has the meaning [*]
26
--------------
* Confidential
ANNEX A
TO JUNIOR LOAN AGREEMENT
FINANCING OF SEVEN
EMBRAER EMB-145 MODEL EMB-135 KL AIRCRAFT
DEFINITIONS RELATING TO LOAN AGREEMENT
"AFFILIATE" means with respect to a specified Person, any other Person
directly or indirectly Controlling or Controlled by or under direct or indirect
common Control with such Person.
"AIRCRAFT" means each Airframe, the Engines and the Parts.
"AIRFRAME" means (i) each of the seven Embraer EMB-145 model EMB-135
KL aircraft identified in Schedule 3 to the Junior Loan Agreement having the
United States registration number and Manufacturer's serial number set forth in
that Schedule (except Engines and engines installed thereon) and (ii) and any
and all Parts so long as the same shall be incorporated or installed in or
attached to the Airframe.
"AFTER-TAX BASIS" means, with respect to any payment to be received or
accrued by any Person, the amount of such payment supplemented, if necessary, by
a further payment or payments so that the sum of all such payments, after
deduction of all Taxes actually payable to any taxing authority as a result of
the receipt or accrual of such payments shall be equal to the payment to be
received or accrued, after taking into account any Tax savings realized as a
result of the indemnified liability.
"APPLICABLE LAW" means all applicable laws, treaties, judgments,
decrees, injunctions, writs and orders of any Governmental Authority having
jurisdiction over the applicable party hereto and rules, regulations, orders,
directives, licenses and permits of any Governmental Authority having
jurisdiction over the applicable party hereto and all interpretations,
implementation and enforcement of any of the foregoing by any Governmental
Authority, in each case having the force of law.
"BORROWER" has the meaning set forth in the recitals hereto.
"BORROWER LOAN DOCUMENTS" means the Junior Loan Agreement and any
other agreement or instrument specifically agreed by the Parties hereto to be
identified as a "Borrower Loan Document" for purposes hereof.
"BORROWING DATE" means the date of this Agreement.
27
"BRAZIL" means the Federative Republic of Brazil.
"BUSINESS DAY" means any day other than a Saturday, Sunday or a day on
which commercial banks are authorized or required by law, regulation or
executive order to be closed in New York, New York, or Rio de Janeiro, Brazil.
"CERTIFICATED AIR CARRIER" means a Citizen of the United States
holding an air carrier operating certificate issued under Chapter 447 of the
Transportation Code for aircraft capable of carrying ten or more individuals or
6,000 pounds or more of cargo, or if such certification shall cease to be
available, an air carrier eligible for certification as to the matters
contemplated by such certification.
"CHANGE IN U.S. TAX LAW" means (a) any change after the Borrowing Date
to the Code, the Regulations or administrative guidance or (b) any formal or
informal change in any Internal Revenue Service position with respect to, or
interpretation of, U.S. Tax Law, regardless of how and when such change is
advanced, announced or articulated.
"CITIZEN OF THE UNITED STATES" has the meaning set forth in Section
40102(a)(15) of the Transportation Code.
"CLOSING" has the meaning set forth in Section 2.1 of the Junior Loan
Agreement.
"CODE" means the United States Internal Revenue Code of 1986, as
amended from time to time.
"COLLATERAL" has the meaning provided in the FINAME Security Agreement
with respect to each Aircraft.
"COMMITMENT" has the meaning set forth in Schedule 2 to the Junior
Loan Agreement.
"DEBT RATE" has the meaning set forth on Schedule 2 to the Junior Loan
Agreement
"DEFAULT" means an event that, with the giving of notice or the lapse
of time or both, would become an Event of Default.
"DEFAULT RATE" has the meaning set forth in Schedule 2 to the Junior
Loan Agreement.
"DOLLARS" and "$" mean the lawful currency of the United States.
"ENGINE" means (i) unless and until replaced by a Replacement Engine
pursuant to the FINAME Security Agreement each of the two Rolls-Royce AE3007A1/3
engines, having the
28
manufacturer's serial numbers set forth in Schedule 3 to the Junior Loan
Agreement, whether or not from time to time installed on the relevant Airframe
or installed on any other airframe or any other aircraft, or (ii) any
Replacement Engine substituted for an Engine under the FINAME Security
Agreement, together in each case with any and all Parts incorporated or
installed in or attached thereto.
"EQUIPMENT" means the Aircraft, the Airframe, any Engine and/or any
Part.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EXCLUDED TAXES" means (i) Taxes imposed by a jurisdiction within
which Lender is incorporated or maintains its principal place of business and
(ii) Taxes that would not have been imposed but for a connection between the
Lender and the taxing jurisdiction other than the transactions contemplated
hereby, and (iii) Taxes that would not have been imposed but for Lender's, Loan
Transferee's or Loan Participant's failure to provide Borrower with any
certification in accordance with Section 2.6 of the Junior Loan Agreement.
"EVENT OF DEFAULT" means any of the events set forth in Section 8.1 of
the Junior Loan Agreement.
"EXPENSES" means any and all liabilities, obligations, losses,
damages, settlements, penalties, claims (including, but not limited to,
negligence, strict or absolute liability, liability in tort and liabilities
arising out of violation of laws or regulatory requirements of any kind),
actions, suits, out-of-pocket costs, expenses and disbursements (including
reasonable legal fees, costs of investigation of whatsoever kind and nature and
expenses, and out-of-pocket costs and expenses relating to enforcement of, and
reasonable out-of-pocket costs and expenses relating to amendments, supplements,
waivers and consents to and under the Borrower Loan Documents.
"FAA" means the U.S. Federal Aviation Administration and any agency or
instrumentality of the U.S. Government succeeding to its functions.
"FINAME" means Agencia Especial de Financiamento Industrial-Finame
and, where the context so requires, its security trustee pursuant to the FINAME
Loan Agreement.
"FINAME LOAN" means the loans made by FINAME to the Borrower pursuant
to each FINAME Loan Agreement.
"FINAME LOAN AGREEMENT" means each Loan Agreement with respect to an
Aircraft, dated as of June 11, 2002, between FINAME and the Borrower.
"FINAME SECURITY AGREEMENT" means each Aircraft Security Agreement
with respect to an Aircraft, dated as of June 11, 2002 between the Security
Trustee and the Borrower.
29
"GAAP" means generally accepted accounting principles in the United
States.
"GOVERNMENT" means the government of the United States and any
instrumentality or agency thereof.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof and entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"IMMEDIATELY AVAILABLE FUNDS" means funds with good value on the day
and in the city in which payment is received.
"INDEMNIFIED TAXES" means any Taxes other than Excluded Taxes.
"INDEMNITEE" means Lender and its officers, directors, employees,
agents, servants, successors and permitted assigns of any of the foregoing
Persons.
"IRS" means the United States Internal Revenue Service or any agency
or instrumentality of the U.S. Government succeeding to its functions.
"JUNIOR LOAN AGREEMENT" means the Junior Loan Agreement, dated as of
June 11, 2002, between the Borrower and the Lender.
"LENDER" has the meaning set forth in the introductory paragraph of
the Junior Loan Agreement.
"LIEN" means any mortgage, lease, security interest, lien, title
retention arrangement or other claim or encumbrance.
"LOAN" means, in the case of any Aircraft, the loan in the amount of
the Commitment for such Aircraft made by the Lender, such Loan to be evidenced
by the Junior Loan Agreement and the relevant Note.
"INTERIM LOAN AGREEMENT" means each Interim Loan Agreement with
respect to an Aircraft, dated as of the initial delivery date, between the
Borrower and the Lender, as further set forth in Schedule 3 to the Junior Loan
Agreement.
"LOSS PAYMENT DATE" has the meaning with respect to any Aircraft
provided in the FINAME Security Agreement relating to such Aircraft.
"MANUFACTURER" means Embraer - Empresa Brasileira de Aeronautica S.A.,
and its successors and permitted assigns.
30
"MATERIAL ADVERSE CHANGE" means a material adverse change since the
date of the last audited financial statements of the Borrower in the business,
operations or financial condition of the Borrower, which change has a material
adverse impact on the Borrower's ability to perform any of its obligations under
the Borrower Loan Documents to which it is a party. Without limiting the
generality of the foregoing, a material adverse change shall have occurred
within the meaning of the immediately preceding sentence if any of the following
shall occur: (i) a material financial or material non-financial default of the
Borrower in any obligation owed to Lender, (ii) any event described in Section
8.1(e) or (f) of the Junior Loan Agreement, (iii) the termination of any of the
Borrower's existing code-sharing agreements with US Airways, Inc., America West
Airlines, Inc., or American Airlines, Inc. (or, as applicable, with any
affiliate of such companies) and the non-replacement of such agreements by
code-sharing or other revenue generating arrangements of substantially
equivalent value within a period of one (1) month after such termination, or
(iv) the material and adverse grounding of all or a substantial portion of
Borrower's fleet of aircraft or the imposition of operating restrictions on
Borrower by any order or administrative action by the FAA or any other aviation
authority, and such order or administrative action is not applicable to regional
air carriers generally; and notwithstanding the specificity of the foregoing
clauses (i) to (iv), the first sentence of this paragraph shall be interpreted
non-exclusively in accordance with normal commercial practices.
"MATERIAL ADVERSE EFFECT" means (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties or financial
condition of the Borrower or the Borrower and its Affiliates taken as a whole;
(b) a material impairment of the ability of the Borrower to perform its
obligations under any Borrower Loan Document; or (c) a material adverse effect
upon (i) the legality, validity, binding effect or enforceability against the
Borrower of any Borrower Loan Document to which it is a party or (ii) the
protections that would be afforded Lender under Section 1110 of the United
States Bankruptcy Code if Lender and Borrower had entered into security
agreements with respect to the Aircraft (other than a change in United States
law which would make such benefits unavailable to aircraft leases or secured
loans generally under United States law).
"MATURITY DATE" has the meaning provided in Schedule 2 to the Junior
Loan Agreement.
"MOODY'S" means ▇▇▇▇▇'▇ Investor Service, Inc.
"NOTE" means each Note, dated the Borrowing Date, in the amount of the
Commitment with respect to the relevant Aircraft and executed by the Borrower in
favor of the Lender pursuant to Section 2.2 of the Junior Loan Agreement.
"PARTIAL ASSIGNMENT" means the Partial Assignment of Purchase
Agreement dated April 19, 2002, among Solitair, Republic and Embraer.
"PARTS" means all parts, appliances, components, instruments,
accessories and furnishings (other than complete engines) which are from time to
time be installed in or attached to the Airframe or to any Engine.
31
"PARTY" means each party to the Junior Loan Agreement.
"PAYMENT DATE" has the meaning provided in Section 2.2(a) of the
Junior Loan Agreement.
"PERMITTED LIENS" has the meaning provided in the FINAME Security
Agreements.
"PERSON" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint stock company, trust,
trustee(s) of a trust, unincorporated organization or Governmental Authority.
"SECURITY TRUSTEE" means JPMORGAN CHASE BANK, a New York banking
corporation (together with its permitted successors and assigns), as security
trustee under the FINAME Security Agreement.
"SOLITAIR" means Solitair Corp.
"SOLITAIR PURCHASE AGREEMENT" means that Purchase Agreement No.
GCT-025/98 dated June 17, 1998 (together with all amendments and supplements
thereto other than the Republic Purchase Agreement and the Partial Assignment of
Purchase Agreement), between Solitair and Manufacturer relating to certain
Embraer EMB-145 aircraft, including the Aircraft.
"REPLACEMENT ENGINE" means a Rolls-Royce AE3007A1/3 engine or an
improved model having a value, utility, condition and remaining useful life at
least equal to the replaced Engine (assuming that such Engine was in the
condition required by the Security Agreement), and being suitable for
installation and use on the Airframe that is substituted for an Engine pursuant
to the FINAME Security Agreement.
"REPUBLIC" means Republic Airways Holdings, Inc.
"REPUBLIC PURCHASE AGREEMENT" means that Amended and Restated Purchase
Agreement No. GCT-025/98 dated April 19, 2002 (together with all amendments and
supplements thereto), between Republic and Manufacturer relating to certain
Embraer EMB-145 aircraft.
"RESPONSIBLE OFFICER" means, with respect to any corporation, its
Chairman of the Board, its President, any Senior Vice President, the Chief
Financial Officer, any Vice President or the Treasurer, or any other management
employee (a) whose power to take the action in question has been authorized,
directly or indirectly, by the Board of Directors of such corporation, (b)
working under the supervision of such Chairman of the Board, President, Senior
Vice President, Chief Financial Officer, Vice President or Treasurer and (c)
whose responsibilities include the administration of the transactions and
agreements contemplated by the Junior Loan Agreement and the Security Agreement.
32
"SECTION 1110" means Section 1110 of the United States Bankruptcy
Code, or any successor or replacement provision of the United States Bankruptcy
Code.
"SPECIFIED DEFAULT" means (a) an event or condition described in
Section 3.3.1(a), (e) or (f) that, after the giving of notice or lapse of time,
or both, would become an Event of Default, or (b) any Event of Default.
"SUBSIDIARY" means, as to any Person, a corporation, partnership or
other entity of which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other ownership interests having
such power only by reason of the happening of a contingency) to elect a majority
of the board of directors or other managers of such corporation, partnership or
other entity are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries, or both,
by such Person.
"TAX" and "TAXES" mean any and all fees and taxes imposed or asserted
by any Governmental Authority, including income, gross receipts, sales, rents,
use, turnover, value added, property, excise and stamp taxes, license, levies,
imposts, duties, recording charges or fees, charges, assessments or withholding
of any nature whatsoever, together with any assessments, penalties, fines,
additions to tax and interest thereon.
"TERM" means the period between the Borrowing Date and the Maturity
Date.
"TOTAL INVOICE COST" has the meaning provided on Schedule 2 to the
Junior Loan Agreement.
"TOTAL LOSS" means, in the case of any Aircraft, an "Event of Loss"
with respect to such Aircraft, as defined in the FINAME Security Agreement
relating to such Aircraft.
"TRANSPORTATION CODE" means 49 U.S.C. subtitle VII, as amended, and
any successor statute thereto.
"UNITED STATES" and "U.S." each means the United States of America.
"UNITED STATES PERSON" shall have the meaning given such term in
Section 7701(a)(30) of the Code.
"U.S. TAX LAW" includes the Code, any regulations promulgated or
proposed thereunder (the "Regulations") and any private letter rulings as of
November 30, 2001 (as though such rulings have the force of law), in each case.
33
ANNEX B
TO JUNIOR LOAN AGREEMENT
THIS PROMISSORY NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES
ACT OF 1933, AS AMENDED, OR PURSUANT TO THE SECURITIES LAWS OF ANY STATE.
ACCORDINGLY, THIS PROMISSORY NOTE MAY NOT BE SOLD, UNLESS EITHER REGISTERED
UNDER SUCH ACT AND SUCH APPLICABLE STATE LAWS OR UNLESS AN EXEMPTION FROM
SUCH REGISTRATION IS AVAILABLE.
PROMISSORY NOTE
Relating to One (1) Embraer EMB-145 model EMB-135 KL Aircraft
U.S. Registration No. ________
Manufacturer's Serial Number ________
$ ______________ June __, ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇., ▇ ▇▇▇ ▇▇▇▇, ▇.▇.▇. corporation
("BORROWER"), for value received, hereby promises to pay to Embraer - Empresa
Brasileira de Aeronautica S.A., a Brazilian corporation, or its registered
assigns ("LENDER"), at Caixa Postal 343, CEP 12227-901, Sao ▇▇▇▇ dos ▇▇▇▇▇▇, Sao
Paulo, Brazil (or at such other location as Lender may from time to time
designate in writing to Borrower), the principal sum of ________________ dollars
(US $ ______________ ) (the " LOAN"), or such other amount as shall equal the
aggregate unpaid principal amount of the Loan made by Lender to Borrower under
that certain Junior Loan Agreement dated as of June __, 2002 (as at any time
hereafter amended, the "JUNIOR LOAN AGREEMENT"), by and among Borrower and
Lender, in lawful money of the United States of America and Immediately
Available Funds.
The Borrower shall make scheduled principal payments on the Loan in
monthly installments in the amounts and on the dates identified on Schedule 1
hereto (each such date, a "Payment Date"). On each Payment Date, the Borrower
shall pay interest accrued in respect of the unpaid principal amount of the Loan
from the date the proceeds made thereof are made available to the Borrower until
such date, at the Debt Rate. The expected amounts of such interest for each
Payment Date are stated on Schedule 1 hereto. The Borrower shall pay the unpaid
principal amount of and accrued interest on the Loan on December 31, 2003 (the
"Maturity Date").
Any payment of interest, principal or any other payment not paid to
Lender when due and payable hereunder shall, from the date when due and payable
until the date when fully paid, bear interest at the Default Rate.
All payments of principal, interest and other amounts to be made by
Borrower to Lender hereunder shall be made to the account specified and in the
manner provided in the Junior Loan
34
Agreement. Lender shall apply the payment of principal and other amounts due on
this Promissory Note as follows: FIRST, to the payment of any amount (other than
principal and interest) due to Lender hereunder or under the Borrower Loan
Documents with respect to the Loan; SECOND, to the payment of accrued and unpaid
interest due on this Promissory Note; and THIRD, to the payment of principal
under this Promissory Note.
This Promissory Note and the Loan may be prepaid in full at any time
or from time to time without penalty, premium or prepayment fee, provided that
such prepayment is of all principal outstanding on the Loan, and all other
liabilities of the Borrower with respect to the Loan then due under the Borrower
Loan Documents. Borrower may be obligated to prepay this Promissory Note as
specified in the Junior Loan Agreement and subject to the requirements thereof.
Borrower agrees to record separately the name and address and any
other necessary identifying information of Lender in a register maintained as
part of a book-entry system. Borrower and Lender shall treat the party whose
name is recorded in such register as Lender hereunder with all entitlements
under this Promissory Note. Notwithstanding anything to the contrary set forth
in this Promissory Note or the other Borrower Loan Documents, no assignment by
Lender of any rights or obligations under or in respect of the Loan or the Note
shall be effective unless and until Borrower shall have recorded such assignment
in the register maintained pursuant to the preceding paragraph; PROVIDED that if
any such transfer occurs while an Event of Default has occurred and is
continuing, Lender may act as Borrower's agent for effecting registration of
such transfer. Borrower shall record the name of the transferor, the name of the
transferee and the amount of the transfer in the register in the case of a
transfer that complies with the requirements of the Junior Loan Agreement.
This Promissory Note is a Note referred to in the Junior Loan
Agreement.
Upon the occurrence of an Event of Default and for so long as such
Event of Default shall continue, the principal hereof and accrued interest
hereon may be declared to be or may automatically become forthwith due and
payable, and Lender shall be entitled to recover, in addition to all other sums
due hereunder, all of the reasonable costs and expenses, including, without
limitation, court costs and attorney fees, incurred by Lender in enforcing its
rights hereunder.
Borrower waives diligence, demand, presentment, notice of nonpayment
and protest, all in the sole discretion of Lender and without notice and without
affecting in any manner the liability of Borrower.
Capitalized terms used herein that are not otherwise defined herein
shall have the meanings ascribed to them in the Junior Loan Agreement.
THIS PROMISSORY NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
35
IN WITNESS WHEREOF, Borrower has caused this Promissory Note
(_________) to be executed by one of its authorized officers as of the date
hereof.
CHAUTAUQUA AIRLINES, INC.
By:
Name:
Title:
36
Schedule 3
TO JUNIOR LOAN AGREEMENT
TOTAL INVOICE COST
---------------------------------------------------------------------------------
U.S. Manufacturer's Engine Serial Engine Serial [*]
Registration No. Serial Number Number #1 Number #2
---------------------------------------------------------------------------------
N372SK 145538 CAE312019 CAE312020 [*]
N373SK 145543 CAE312026 CAE312021 [*]
N374SK 145544 CAE312032 CAE312031 [*]
N375SK 145569 CAE312062 CAE312065 [*]
N376SK 145578 CAE312079 ▇▇▇▇▇▇▇▇▇ [*]
N377SK 145579 CAE312091 CAE312100 [*]
N378SK 145593 CAE312048 CAE312049 [*]
---------------------------------------------------------------------------------
-----------
*Confidential
