CREDIT AGREEMENT
Dated as of March 30, 2006
among
WORLD AIRWAYS, INC., and
NORTH AMERICAN AIRLINES, INC.,
as Borrowers,
EACH OF THE FINANCIAL INSTITUTIONS
INITIALLY A SIGNATORY HERETO,
TOGETHER WITH THOSE ASSIGNEES
PURSUANT TO SECTION 14.5 HEREOF,
as Lenders,
and
WACHOVIA BANK, NATIONAL ASSOCIATION,
as Agent
TABLE OF CONTENTS
Page
---- ARTICLE I DEFINITIONS.................................................... 1
1.1 General Definitions............................................. 1
1.2 Accounting Terms and Determinations............................. 32
1.3 Other Definitional Terms........................................ 33 ARTICLE II LOANS......................................................... 33
2.1 Revolving Loans................................................. 33
2.2 Optional and Mandatory Prepayments; Reduction of Revolving
Credit Committed Amount...................................... 38
2.3 Payments and Computations....................................... 40
2.4 Maintenance of Account.......................................... 42
2.5 Statement of Account............................................ 43
2.6 Taxes........................................................... 43
2.7 Sharing of Payments............................................. 45
2.8 Allocation of Payments; Pro Rata Treatment...................... 46
2.9 Extensions and Conversions...................................... 47
2.10 Replacement of Lenders.......................................... 48 ARTICLE III LETTERS OF CREDIT............................................ 49
3.1 Issuance........................................................ 49
3.2 Notice and Reports.............................................. 50
3.3 Participation................................................... 50
3.4 Reimbursement................................................... 50
3.5 Repayment with Revolving Loans.................................. 51
3.6 [Intentionally Omitted.]........................................ 52
3.7 Uniform Customs and Practices................................... 52
3.8 Indemnification; Nature of Issuing Bank's Duties................ 52
3.9 Responsibility of Issuing Bank.................................. 53
3.10 Conflict with Letter of Credit Documents........................ 54 ARTICLE IV INTEREST AND FEES............................................. 54
4.1 Interest on Loans............................................... 54
4.2 Interest After Event of Default................................. 54
4.3 Unused Line Fee................................................. 55
4.4 Lenders' Fees................................................... 55
4.5 Letter of Credit Fees........................................... 55
4.6 Authorization to Charge Account................................. 55
4.7 Indemnification in Certain Events............................... 56
4.8 Inability To Determine Interest Rate............................ 56
4.9 Illegality...................................................... 57
4.10 Funding Indemnity............................................... 57 ARTICLE V CONDITIONS PRECEDENT........................................... 58
TABLE OF CONTENTS
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5.1 Closing Conditions.............................................. 58
5.2 Condition to all Loans and Letters of Credit.................... 63 ARTICLE VI REPRESENTATIONS AND WARRANTIES................................ 63
6.1 Organization and Qualification.................................. 64
6.2 Solvency........................................................ 64
6.3 Liens; Inventory; Spare Parts................................... 64
6.4 No Conflict..................................................... 65
6.5 Enforceability.................................................. 65
6.6 Financial Data; Forecasts; Material Adverse Change.............. 65
6.7 Locations of Offices, Records and Inventory..................... 66
6.8 Fictitious Business Names....................................... 66
6.9 Subsidiaries.................................................... 66
6.10 No Judgments or Litigation...................................... 67
6.11 No Defaults..................................................... 67
6.12 No Employee Disputes............................................ 67
6.13 Compliance with Law............................................. 67
6.14 ERISA........................................................... 68
6.15 Compliance with Environmental Laws.............................. 68
6.16 Use of Proceeds................................................. 69
6.17 Intellectual Property........................................... 69
6.18 Licenses and Permits............................................ 70
6.19 Title to Property............................................... 70
6.20 Labor Matters................................................... 71
6.21 Investment Company, Etc......................................... 71
6.22 Margin Security................................................. 71
6.23 No Event of Default............................................. 72
6.24 Taxes and Tax Returns........................................... 72
6.25 No Other Indebtedness........................................... 72
6.26 Status of Accounts.............................................. 72
6.27 Representations and Warranties.................................. 72
6.28 Material Contracts.............................................. 73
6.29 Survival of Representations..................................... 73
6.30 Affiliate Transactions.......................................... 73
6.31 Trade Suppliers................................................. 73
6.32 Key Members of Management....................................... 73
6.33 Accuracy and Completeness of Information........................ 73
6.34 Anti-Terrorism Laws............................................. 74
6.35 Deposit Accounts................................................ 75
6.36 Force Majeure................................................... 75
6.37 Dealings With Government........................................ 75 ARTICLE VII AFFIRMATIVE COVENANTS....................................... 75
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7.1 Financial Information........................................... 75
7.2 Inventory; Spare Parts.......................................... 78
7.3 Corporate Existence............................................. 78
7.4 ERISA........................................................... 78
7.5 Proceedings or Adverse Changes.................................. 80
7.6 Environmental Matters........................................... 80
7.7 Books and Records; Inspection................................... 81
7.8 [Intentionally Omitted.]........................................ 82
7.9 Security Interests.............................................. 82
7.10 Insurance; Casualty Loss........................................ 82
7.11 Taxes........................................................... 84
7.12 Compliance With Laws............................................ 84
7.13 Use of Proceeds................................................. 84
7.14 Fiscal Year; Accounting Policies................................ 85
7.15 Notification of Certain Events.................................. 85
7.16 Additional Borrowers and Guarantors............................. 85
7.17 Schedules of Accounts and Purchase Orders....................... 86
7.18 Collection of Accounts.......................................... 86
7.19 Notice; Credit Memoranda; and Returned Goods.................... 87
7.20 Acknowledgment Agreements....................................... 87
7.21 [Intentionally Omitted.]........................................ 87
7.22 Maintenance of Property......................................... 87
7.23 Revisions or Updates to Schedules............................... 87
7.24 Anti-Terrorism Laws............................................. 88 ARTICLE VIII FINANCIAL COVENANTS......................................... 88
8.1 Leverage Ratio.................................................. 88
8.2 Fixed Charge Coverage Ratio..................................... 88
8.3 Capital Expenditures............................................ 89 ARTICLE IX NEGATIVE COVENANTS............................................ 89
9.1 Restrictions on Liens........................................... 89
9.2 Restrictions on Additional Indebtedness......................... 89
9.3 Restrictions on Sale of Assets.................................. 89
9.4 No Corporate Changes............................................ 90
9.5 No Guarantees................................................... 90
9.6 No Restricted Payments.......................................... 90
9.7 No Investments.................................................. 90
9.8 No Affiliate Transactions....................................... 90
9.9 No Prohibited Transactions Under ERISA.......................... 91
9.10 No Additional Bank Accounts..................................... 92
9.11 [Intentionally Omitted.]........................................ 92
9.12 Amendments of Material Contracts................................ 92
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9.13 Additional Negative Pledges..................................... 92
9.14 Subordinated Debt............................................... 92
9.15 Sale and Leaseback.............................................. 93
9.16 Licenses, Etc................................................... 93
9.17 Limitations..................................................... 93
9.18 [Intentionally Omitted.]........................................ 93
9.19 Issuance of Capital Stock....................................... 93
9.20 Hedge Transactions.............................................. 93 ARTICLE X POWERS......................................................... 94
10.1 Appointment as Attorney-in-Fact................................. 94
10.2 Limitation on Exercise of Power................................. 94 ARTICLE XI EVENTS OF DEFAULT AND REMEDIES................................ 95
11.1 Events of Default............................................... 95
11.2 Acceleration.................................................... 97 ARTICLE XII TERMINATION.................................................. 98 ARTICLE XIII THE AGENT................................................... 98
13.1 Appointment of Agent............................................ 98
13.2 Nature of Duties of Agent....................................... 99
13.3 Lack of Reliance on Agent....................................... 99
13.4 Certain Rights of the Agent..................................... 100
13.5 Reliance by Agent............................................... 100
13.6 Indemnification of Agent........................................ 100
13.7 The Agent in its Individual Capacity............................ 100
13.8 Holders of Notes................................................ 101
13.9 Successor Agent................................................. 101
13.10 Collateral Matters.............................................. 102
13.11 Actions with Respect to Defaults................................ 103
13.12 Delivery of Information......................................... 104
13.13 No Reliance on Agent's Customer Identification Program.......... 104
13.14 USA Patriot Act................................................. 104 ARTICLE XIV MISCELLANEOUS................................................ 104
14.1 Waivers......................................................... 104
14.2 JURY TRIAL...................................................... 105
14.3 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE................ 105
14.4 Notices......................................................... 106
14.5 Assignability................................................... 107
14.6 Information..................................................... 110
14.7 Payment of Expenses; Indemnification............................ 110
14.8 Entire Agreement, Successors and Assigns........................ 112
14.9 Amendments, Etc................................................. 112
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14.10 Nonliability of Agent and Lenders............................... 113
14.11 Independent Nature of Lenders' Rights........................... 113
14.12 Counterparts.................................................... 113
14.13 Effectiveness................................................... 113
14.14 Severability.................................................... 114
14.15 Headings Descriptive............................................ 114
14.16 Maximum Rate.................................................... 114
14.17 Right of Setoff................................................. 115
14.18 Concerning Joint and Several Liability of the Borrowers......... 115
14.19 Delegation of Authority......................................... 117
EXHIBITS AND SCHEDULES
EXHIBITS
Exhibit A Form of Acknowledgment Agreement Exhibit B Form of Assignment and Acceptance Exhibit C Form of Guaranty Agreement Exhibit D Form of Landlord Agreement Exhibit E Form of Pledge Agreement Exhibit F Form of Security Agreement Exhibit G Form of Revolving Note Exhibit H Form of Notice of Borrowing and Borrowing Base Certificate Exhibit I-1 Form of Deposit Account Control Agreement Exhibit I-2 Form of Securities Account Control Agreement Exhibit J Form of Notice of Extension/Conversion Exhibit K Form of Compliance Certificate Exhibit L Form of Borrowing Base Certificate Exhibit M Form of Joinder Agreement Exhibit N Form of Solvency Certificate Exhibit O Form of Account Designation Letter Exhibit P Form of Licensor Consent Exhibit Q Form of Contribution Agreement Exhibit R Form of Collateral Disclosure Certificate
SCHEDULES
Schedule 1.1A Lenders and Commitments Schedule 1.1B Liens Schedule 1.1C Indebtedness Schedule 1.1D Investments Schedule 1.1E Existing Letters of Credit Schedule 6.1 Jurisdictions of Organization Schedule 6.8 Fictitious Business Names Schedule 6.7 Collateral Locations Schedule 6.9 Subsidiaries Schedule 6.10 Litigation Schedule 6.14 ERISA Schedule 6.15 Environmental Disclosures Schedule 6.17 Intellectual Property Schedule 6.19 Real Estate Schedule 6.20 Labor Matters Schedule 6.24 Taxes and Tax Returns Schedule 6.28 Material Contracts Schedule 6.30 Affiliate Transactions Schedule 6.31 Trade Suppliers Schedule 6.32 Key Members of Management Schedule 6.35 Bank Accounts
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---- Schedule 14.4 Lenders' Lending Offices and Notice Information
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is entered into as of March 30, 2006, among WORLD AIRWAYS, INC., a
Delaware corporation ("World Airways"), NORTH AMERICAN AIRLINES, INC., a Delaware corporation ("North American"), and any other Subsidiaries of the Parent (as defined in Section 1.1) which may become Borrowers hereunder pursuant to Section 7.16 (each of the foregoing, hereinafter, the "Borrowers" or individually referred to as a "Borrower"), each of the financial institutions identified as Lenders on the signature pages hereto (together with each of their successors and assigns, referred to individually as a "Lender" and, collectively, as the "Lenders"), and WACHOVIA BANK, NATIONAL ASSOCIATION ("Wachovia"), acting in the manner and to the extent described in Article XIII hereof (in such capacity, the "Agent").
WITNESSETH:
WHEREAS, the Borrowers wish to obtain a revolving credit facility to refinance approximately $30,000,000 of U.S. Government guaranteed loans and for the working capital, letter of credit and general corporate needs of the Borrowers; and
WHEREAS, upon the terms and subject to the conditions set forth herein, the Lenders are willing to make loans and advances to the Borrowers;
NOW, THEREFORE, the Borrowers, the Lenders and the Agent hereby agree as follows:
ARTICLE I
DEFINITIONS.
1.1 GENERAL DEFINITIONS.
As used herein, the following terms shall have the meanings herein specified:
"Account Designation Letter" shall mean the Notice of Account Designation Letter dated the Closing Date from the Borrowers to the Agent substantially in the form attached hereto as Exhibit O.
"Accounts" shall mean all of each Credit Party's "accounts" as such term is defined in the UCC, and, in any event, includes, without limitation, (a) all accounts receivable (whether or not specifically listed on schedules furnished to the Agent), and all other rights to payment for property sold, leased, licensed, assigned or otherwise disposed of, for a policy of insurance issued or to be issued, for a secondary obligation incurred or to be incurred, for energy provided or to be provided, for the use or hire of a vessel or aircraft under a charter or other contract, arising out of the use of a credit card or charge card, or for services rendered or to be rendered or in connection with any other transaction (whether or not yet earned by performance), (b) all rights in, to, and under all purchase orders or receipts for goods or services, (c) all rights to any goods represented by any of the foregoing, including, without limitation, all rights of rescission, replevin, reclamation, and stoppage in transit and rights to returned, reclaimed, or repossessed goods, (d) all reserves and credit balances held by each Credit Party with respect to any such
accounts receivable or account debtors, (e) all books, records, computer tapes, programs and ledger books arising therefrom or relating thereto, and (f) all guarantees and collateral security of any kind, given by any account debtor or any other Person with respect to any of the foregoing, all whether now owned or existing or hereafter acquired or arising, by or in favor of, any Credit Party.
"Acknowledgment Agreements" shall mean (a) the acknowledgment agreements, substantially in the form of Exhibit A (or such other form as shall be acceptable to the Agent), between each Credit Party's warehousemen, aircraft lessors and the Agent, (b) Landlord Agreements and (c) Licensor Consents.
"Acquired Company" shall mean the Person (or the assets thereof) which is acquired pursuant to an Acquisition.
"Acquisition" shall mean the purchase of (i) the Capital Stock of a Person (other than pursuant to a stock repurchase program of the Parent permitted under Section 9.6), (ii) the assets of such Person through merger or consolidation with such Person or (iii) the plant, property and equipment of such Person, or a material part thereof, together with the related current assets and intangible assets of such Person.
"Acquisition Documents" shall mean the purchase agreement pursuant to which an Acquisition is made in accordance with the terms hereof and thereof, including the exhibits and schedules thereto, and all agreements, documents and instruments executed and delivered pursuant thereto or in connection therewith.
"Affiliate" shall mean, with respect to any Person, any entity which directly or indirectly controls, is controlled by, or is under common control with, such Person. For purposes of this definition, "control" shall mean the possession, directly or indirectly, of the power to (i) vote thirty-five percent (35%) or more of the securities having ordinary voting power for the election of directors of such Person, or (ii) direct or cause the direction of management and policies of a business, whether through the ownership of voting securities, by contract or otherwise and either alone or in conjunction with others or any group.
"Agent" or "Administrative Agent" shall mean Wachovia as provided in the preamble to this Credit Agreement or any permitted successor to Wachovia acting in such capacity; provided, however, that so long as Wachovia is the only Lender pursuant to this Credit Agreement, all references to the Agent shall mean Wachovia in its capacity as the sole Lender.
"Aggregate Borrowing Base" shall mean, collectively, the NA Borrowing Base and the WA Borrowing Base.
"AMC" shall mean the Air Mobility Command, a unit of the United States Air Force.
"Anti-Terrorism Law" shall mean the USA Patriot Act or any other statute, regulation, executive order, or other law pertaining to the prevention of future acts of terrorism, in each case as such law may be amended from time to time.
"Applicable Percentage" means:
(a) when the Revolver Loans are Base Rate Loans, 0.00% per annum;
(b) when Revolver Loans are LMIR Loans, 2.00% per annum; and
(c) when the Revolver Loans are Eurodollar Loans, 2.00% per annum.
"Approved Assignee" shall mean any Lender, an Affiliate of a Lender or an Approved Fund.
"Approved Banks" shall have the meaning given such term in the definition of "Cash Equivalents" herein.
"Approved Fund" shall mean any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.
"Asset Disposition" shall mean the disposition (other than (x) a disposition described in clauses (a) or (b) of Section 9.3 or (y) a disposition described in clauses (c) or (d) of Section 9.3, so long as the proceeds thereof are used to repair existing assets or acquire other assets or property useful in the relevant Credit Party's business within one hundred eighty (180) days of such disposition or (z) the grant of licenses or sublicenses in the ordinary course of business) of any or all of the assets (including, without limitation, the Capital Stock of a Credit Party or Subsidiary of a Credit Party) of any Credit Party or its Subsidiaries, whether by sale, lease, transfer or otherwise, in a single transaction, or in a series of related transactions.
"Assignment and Acceptance" shall mean an assignment and acceptance entered into by an assigning Lender and an assignee Lender, accepted by the Agent, in accordance with Section 14.5(f), in the form attached hereto as Exhibit B.
"Assignment Act" shall mean, with respect to any US Government Account, the Federal Assignment of Claims Act of 1940, as amended from time to time, and, with respect to any other governmental entity or body, any comparable law, regulation, order, decree, or official pronouncement setting forth any requirements of law as to the attachment, perfection or priority of, or the ability of the Agent to enforce, the Agent's security interest in any Account or other Collateral payable by such entity or body.
"Average Three Month Excess Borrowing Base Availability" shall mean the average Excess Borrowing Base Availability, if any, for a three fiscal month period, determined by averaging the calculations of the Borrowing Base contained in the monthly Borrowing Base Certificates delivered during the three most recently completed fiscal months prior to the date of determination.
"Bank Products" shall mean any one or more of the following types of services or facilities extended to any of the Credit Parties by the Agent or any Affiliate of the Agent in reliance on the Agent's agreement to indemnify such Affiliate: (i) Automated Clearing House (ACH) transactions and other similar money transfer services; (ii) cash management, including
controlled disbursement and lockbox services; (iii) establishing and maintaining deposit accounts; (iv) credit cards or stored value cards; and (v) other similar or related bank products and services identified by the Credit Parties involved and the Agent or any Affiliate of the Agent as being intended to constitute Bank Products hereunder.
"Bankruptcy Code" shall mean Title 11 of the United States Code, as amended from time to time, and any successor statute thereto.
"Base Rate" shall mean, for any day, the rate per annum (rounded upwards, if necessary, to the nearest whole multiple of 1/100 of 1%) equal to the greater of (a) the Federal Funds Rate in effect on such day plus 1/2 of 1% or (b) the Prime Rate in effect on such day. If for any reason the Agent shall have determined (which determination shall be conclusive absent manifest error) that it is unable after due inquiry to ascertain the Federal Funds Rate for any reason, including the inability of the Agent to obtain sufficient quotations in accordance with the terms hereof, the Base Rate shall be determined without regard to clause (a) of the first sentence of this definition until the circumstances giving rise to such inability no longer exist. Any change in the Base Rate due to a change in the Prime Rate or t ...