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1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
/X/ Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended April 2, 2000
/ / Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from ....... to .......
Commission File Number 1-13699
RAYTHEON COMPANY
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 95-1778500
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
141 SPRING STREET, LEXINGTON, MASSACHUSETTS 02421
(Address of Principal Executive Offices) (Zip Code)
(781) 862-6600
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes x No
Number of shares of common stock outstanding as of April 2, 2000: 339,844,000,
consisting of 100,805,000 shares of Class A common stock and 239,039,000 shares
of Class B common stock.
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2
RAYTHEON COMPANY
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
RAYTHEON COMPANY
BALANCE SHEETS
(Unaudited)
April 2, 2000 Dec. 31, 1999
(In millions)
ASSETS
Current assets
Cash and cash equivalents $ 181 $ 230
Accounts receivable, less allowance for
doubtful accounts 834 819
Contracts in process 4,448 4,348
Inventories 1,935 1,950
Deferred federal and foreign income taxes 430 490
Prepaid expenses and other current assets 232 192
Net assets from discontinued operations 127 573
------ ------
Total current assets 8,187 8,602
Property, plant, and equipment, net 2,451 2,387
Goodwill, net 13,562 13,596
Other assets, net 2,802 2,704
------- -------
Total assets $27,002 $27,289
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable and current portion
of long-term debt $ 1,109 $ 2,471
Advance payments, less contracts in
process 993 1,245
Accounts payable 1,114 1,204
Accrued salaries and wages 575 497
Other accrued expenses 1,582 1,716
------- -------
Total current liabilities 5,373 7,133
Accrued retiree benefits and other
long-term liabilities 1,348 1,411
Deferred federal and foreign income taxes 507 488
Long-term debt 9,042 7,298
Stockholders' equity 10,732 10,959
------- -------
Total liabilities and stockholders' equity $27,002 $27,289
======= =======
The accompanying notes are an integral part of the financial statements.
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3
RAYTHEON COMPANY
STATEMENTS OF INCOME (Unaudited)
Three Months Ended
April 2, 2000 April 4, 1999
(In millions except per share amounts)
Net sales $4,231 $4,336
------ ------
Cost of sales 3,481 3,341
Administrative and selling expenses 311 305
Research and development expenses 123 111
------ ------
Total operating expenses 3,915 3,757
------ ------
Operating income 316 579
------ ------
Interest expense, net 180 175
Other (income) expense, net (5) 9
------ ------
Non-operating expense, net 175 184
------ ------
Income from continuing operations
before taxes 141 395
Federal and foreign income taxes 61 155
------ ------
Income from continuing operations 80 240
------ ------
Discontinued operations
Income (loss) from discontinued
operations, net of tax (70) 18
Loss on disposal of discontinued
operations, net of tax (191) -
------ ------
(261) 18
------ ------
Income (loss) before accounting change (181) 258
Cumulative effect of change in accounting
principle, net of tax - 53
------ ------
Net income (loss) $ (181) $ 205
====== ======
Earnings per share from continuing operations
Basic $ 0.24 $ 0.71
Diluted $ 0.24 $ 0.71
Earnings (loss) per share from discontinued operations
Basic $(0.77) $ 0.05
Diluted $(0.77) $ 0.05
Earnings (loss) per common share before accounting change
Basic $(0.54) $ 0.77
Diluted $(0.54) $ 0.76
Earnings (loss) per share
Basic $(0.54) $ 0.61
Diluted $(0.54) $ 0.60
Dividends declared per share $ 0.20 $ 0.20
The accompanying notes are an integral part of the financial statements.
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4
<TABLE>
<CAPTION>
RAYTHEON COMPANY
STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Ended
April 2, 2000 April 4, 1999
(In millions)
<S> <C> <C>
Cash flows from operating activities
Income from continuing operations $ 80 $ 187
Adjustments to reconcile income from continuing
operations to net cash used in operating activities,
net of the effect of divestitures
Depreciation and amortization 171 172
Net gain on sale of operating units (6) -
Increase in accounts receivable (15) (262)
Increase in contracts in process (226) (284)
Increase in inventories (24) (25)
Decrease in current deferred federal and foreign
income taxes 60 62
Increase in prepaid expenses and other current assets (40) (37)
Decrease in advance payments (253) (115)
Decrease in accounts payable (170) (246)
Increase (decrease) in accrued salaries and wages 87 (104)
Decrease in other accrued expenses (131) (210)
Other adjustments, net (68) 4
------- -----
Net cash used in operating activities from continuing
operations (535) (858)
Net cash provided by (used in) operating activities
from discontinued operations 186 (56)
------- -----
Net cash used in operating activities (349) (914)
------- -----
Cash flows from investing activities
Sale of financing receivables 188 241
Origination of financing receivables (209) (302)
Collection of financing receivables not sold 25 4
Expenditures for property, plant, and equipment (140) (81)
Increase in other assets (37) (34)
Proceeds from sale of operating units 160 -
------- -----
Net cash used in investing activities from
continuing operations (13) (172)
Net cash used in investing activities from
discontinued operations (1) (1)
------- -----
Net cash used in investing activities (14) (173)
------- -----
Cash flows from financing activities
Dividends (68) (67)
(Decrease) increase in short-term debt (1,861) 844
Increase (decrease) in long-term debt 2,243 (2)
Purchase of treasury shares - (82)
Proceeds under common stock plans - 31
------- -----
Net cash provided by financing activities 314 724
------- -----
Net decrease in cash and cash equivalents (49) (363)
Cash and cash equivalents at beginning of year 230 421
------- -----
Cash and cash equivalents at end of period $ 181 $ 58
======= =====
</TABLE>
The accompanying notes are an integral part of the financial statements.
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5
RAYTHEON COMPANY
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1. Basis of Presentation
The accompanying unaudited financial statements of Raytheon Company (the
"Company") have been prepared on substantially the same basis as the Company's
annual consolidated financial statements. These interim unaudited financial
statements should be read in conjunction with the Company's Annual Report on
Form 10-K for the year ended December 31, 1999. The information furnished has
been prepared from the accounts of the Company without audit. In the opinion of
management, these financial statements reflect all adjustments, which are of a
normal recurring nature, necessary for a fair presentation of the financial
statements for the interim periods. The financial statements for all periods
presented have been restated for discontinued operations as described in Note 7.
Certain prior year amounts have been reclassified to conform with the current
year presentation.
2. Restructuring
During the first quarter of 2000, the Company's activity related to previously
announced restructuring initiatives at the Electronics businesses were as
follows:
Electronics Electronics
Exit Costs Restructuring
(In millions except employee data)
Accrued liability at December 31, 1999 $ 144 $ 130
----- -----
Costs incurred
Severance and other employee related costs 37 5
Facility closure and related costs 7 4
----- -----
44 9
----- -----
Accrued liability at April 2, 2000 $ 100 $ 121
===== =====
Cash expenditures $ 44 $ 9
Number of employee terminations due to
restructuring actions during the first
quarter of 2000 700 100
Number of square feet exited due to
restructuring actions during the first
quarter of 2000 0.4 0.1
The Company also incurred $35 million of capital expenditures and period
expenses during the first quarter of 2000 related to the Electronics businesses'
restructuring initiatives.
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6
The cumulative number of employee terminations due to restructuring actions for
Electronics exit costs and Electronics restructuring was 7,600, and 4,100,
respectively. The cumulative number of square feet exited due to restructuring
actions for Electronics exit costs and Electronics restructuring was 6.9
million, and 3.0 million, respectively.
3. Business Segment Reporting
The Company operates in six segments: Electronic Systems; Command, Control,
Communication and Information Systems; Technical Services (previously Training
and Services); Aircraft Integration Systems; Commercial Electronics; and
Aircraft. In keeping with the Company's on-going consolidation efforts and to
further simplify its organizational structure, in the first quarter of 2000,
Raytheon Systems Company (RSC) was eliminated and the Defense Systems and
Sensors and Electronic Systems segments were combined into the new Electronic
Systems segment. Additionally, several small organizations from the former RSC
were combined with the Company's existing commercial electronics business.
Certain prior year amounts were reclassified to conform to the current year
presentation including the changes noted above, the break-out of previously
aggregated segments, and the addition of Corporate and Eliminations. Segment net
sales and operating income include intersegment sales and profit recorded at
cost plus a specified fee, which may differ from what the selling entity would
be able to obtain on external sales. Corporate and Eliminations includes
Company-wide accruals and over/under applied overhead that have not been
attributed to a particular segment and intersegment sales and profit
eliminations. In addition, the Engineering and Construction segment was
discontinued. Following is a brief description of each segment:
o Electronic Systems includes Missile Systems, Air and Missile
Defense Systems, Air Combat and Strike Systems, Surveillance and
Reconnaissance Systems, Naval and Maritime Integrated Systems, and
Tactical Systems.
o Command, Control, Communication and Information Systems includes
Imagery and Geospatial Systems, Communications Systems, Strategic
Systems, Air Traffic Control, Command and Control, Military C2 and
Simulation, and System for the Vigilance of the Amazon (SIVAM).
o Technical Services includes Depot Services, Installation Support
Services, and Integrated Logistics.
o Aircraft Integration Systems includes Tactical Reconnaissance
Systems, Maritime Patrol Aircraft, Aircraft Integration and
Modification, and Joint Operations Group.
o Commercial Electronics includes Raytheon Marine, RF Components,
Crosspan(TM) Network Access Technologies, Raytheon Commercial
Infrared, ELCAN Optical Technologies, and Commercial Training.
o Aircraft includes Business Jets and Turboprops, Regional
Airliners, Piston-powered Aircraft, Special Mission Aircraft,
Fractional Aircraft Ownership, and Service and Support.
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7
Segment financial results were as follows:
Net Sales
Three Months Ended
April 2, 2000 April 4, 1999
(In millions)
Electronic Systems $1,878 $2,010
Command, Control, Communication
and Information Systems 846 962
Technical Services 421 449
Aircraft Integration Systems 298 295
Commercial Electronics 174 220
Aircraft 815 626
Corporate and Eliminations (201) (226)
------ ------
Total $4,231 $4,336
====== ======
Operating Income
Three Months Ended
April 2, 2000 April 4, 1999
(In millions)
Electronic Systems $183 $346
Command, Control, Communication
and Information Systems 69 121
Technical Services 27 29
Aircraft Integration Systems 15 42
Commercial Electronics 20 11
Aircraft 30 57
Corporate and Eliminations (28) (27)
---- ----
Total $316 $579
==== ====
Identifiable Assets
April 2, 2000 Dec. 31, 1999
(In millions)
Electronic Systems $11,633 $11,596
Command, Control, Communication
and Information Systems 5,465 5,368
Technical Services 1,650 1,584
Aircraft Integration Systems 1,844 1,852
Commercial Electronics 553 585
Aircraft 3,348 3,264
Corporate 2,382 2,467
------- -------
Total $26,875 $26,716
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8
Net sales includes intersegment sales during the first quarter of 2000 and 1999,
respectively, of $45 million and $55 million for Electronic Systems, $27 million
and $51 million for Command, Control, Communication and Information Systems, $4
million and $7 million for Aircraft Integration Systems, $111 million and $108
million for Technical Services, $12 million and $4 million for Commercial
Electronics, and $2 million and $1 million for Aircraft.
4. Inventories
Inventories consisted of the following at:
April 2, 2000 Dec. 31, 1999
(In millions)
Inventories
Finished goods $ 391 $ 280
Work in process 1,156 1,303
Materials and purchased parts 530 510
Excess of current cost over LIFO values (142) (143)
------ ------
Total inventories $1,935 $1,950
====== ======
5. Special Purpose Entities
In connection with the sales of receivables, the following special purpose
entities continued in existence at April 2, 2000, Raytheon Receivables, Inc.,
Raytheon Aircraft Receivables Corporation, and Raytheon Engineers & Constructors
Receivables Corporation. The balance of receivables sold to banks or financial
institutions outstanding at April 2, 2000 was $2,765 million. No material gain
or loss resulted from the sales of receivables.
6. Stockholders' Equity
Stockholders' equity consisted of the following at:
April 2, 2000 Dec. 31, 1999
(In millions)
Preferred stock, no outstanding shares $ - $ -
Class A common stock, outstanding shares 1 1
Class B common stock, outstanding shares 2 2
Additional paid-in capital 6,483 6,475
Accumulated other comprehensive income (55) (69)
Treasury stock (413) (413)
Retained earnings 4,714 4,963
------- -------
Total stockholders' equity $10,732 $10,959
======= =======
Outstanding shares of common stock 339.8 338.8
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9
During the first quarter of 2000, outstanding shares of common stock were
increased by 1.0 million shares due to common stock plan activity.
Share information used to calculate earnings per share (EPS) is as follows:
Three Months Ended
April 2, 2000 April 4, 1999
(In thousands)
Average common shares outstanding for basic EPS 338,260 336,354
Dilutive effect of stock options and restricted stock 475 3,871
------- -------
Average common shares outstanding for diluted EPS 338,735 340,225
======= =======
Options to purchase 23.9 million and 6.5 million shares of common stock for the
three months ended April 2, 2000 and April 4, 1999, respectively, did not affect
the computation of diluted EPS. The exercise prices for these options were
greater than the average market price of the Company's common stock during the
respective periods.
The components of other comprehensive income for the Company generally include
foreign currency translation adjustments, minimum pension liability adjustments,
and unrealized gains and losses on marketable securities classified as
available-for-sale. The computation of comprehensive income is as follows:
Three Months Ended
April 2, 2000 April 4, 1999
(In millions)
Net income (loss) $(181) $205
Other comprehensive income 14 8
----- ----
Total comprehensive income (loss) $(167) $213
===== ====
7. Discontinued Operations
On April 14, 2000, the Company signed a definitive agreement to sell its
Raytheon Engineers & Constructors (RE&C) subsidiary for approximately $10
million in cash at closing, subject to purchase price adjustments. Pursuant to
the agreement, the Company will retain the responsibility for performance of
four large, fixed price international turnkey projects that are close to
completion, partially indemnify the buyer on the completion of one other
existing project, and retain certain significant assets and liabilities. The
sale is expected to be completed during the second quarter of 2000, however,
there can be no assurance that the sale will be consummated. In the first
quarter of 2000, the Company recorded an estimated loss on disposal of $270
million pretax, or $191 million after-tax, which contemplated that RE&C would
achieve break-even operating performance through the date of sale. Included in
the loss from discontinued operations is an expected gain on curtailment of the
RE&C pension plans of $35 million.
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10
The summary of operating results from discontinued operations is as follows:
Three Months Ended
April 2, 2000 April 4, 1999
(In millions)
Net sales $673 $689
Operating expenses 768 662
---- ----
Operating income (loss) (95) 27
Other expense (income), net 3 (1)
---- ----
Income (loss) before taxes (98) 28
Federal and foreign income taxes (28) 10
---- ----
Income (loss) from discontinued operations $(70) $ 18
==== ====
The components of net assets from discontinued operations are as follows:
April 2, 2000 Dec. 31, 1999
(In millions)
Current assets $ 963 $ 902
Noncurrent assets 498 492
Current liabilities (1,328) (753)
Noncurrent liabilities (6) (68)
------- -----
Net assets from discontinued operations $ 127 $ 573
======= =====
8. Commitments and Contingencies
During October and November 1999, the Company and two of its officers were named
as defendants in class action lawsuits. The complaints principally allege that
the defendants violated federal securities laws by making false and misleading
statements and by failing to disclose material information concerning the
Company's financial performance, thereby causing the value of the Company's
stock to be artificially inflated. The Company was also named as a nominal
defendant and all of its directors (except one) were named as defendants in
derivative lawsuits. The derivative complaints contain allegations similar to
those included in the above complaints and further allege that the defendants
breached fiduciary duties to the Company and allegedly failed to exercise due
care and diligence in the management and administration of the affairs of the
Company. Although the Company believes that it and the other defendants have
meritorious defenses to the claims made in both the derivative complaints and
the other complaints and intends to contest the lawsuits vigorously, an adverse
resolution of the lawsuits could have a material adverse affect on the Company's
financial position, liquidity, and results of operations in the period in which
the lawsuits are resolved. The Company is not presently able to reasonably
estimate potential losses, if any, related to the lawsuits.
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11
The Company merged with the defense business of Hughes Electronics Corporation
("Hughes Defense") in December 1997. Pursuant to the terms of the Master
Separation Agreement (the "Separation Agreement"), which requires an adjustment
based on net assets, the final purchase price for Hughes Defense has not been
determined. Based on the terms and conditions of the Separation Agreement, the
Company believes that it is entitled to a reduction in the purchase price, a
position that Hughes Electronics disputes. The Company and Hughes Electronics
have begun the process of negotiating a possible resolution of this matter. If
the matter is not successfully resolved through negotiation, the Separation
Agreement provides for binding arbitration. Concurrent with the negotiations,
the parties have held initial discussions regarding the selection of a neutral
arbitrator. Accordingly, while the Company expects a reduction in purchase price
from the original terms of the agreement, the amount, timing, and effect on the
Company's financial position are uncertain. As a result of this uncertainty, no
amounts have been recorded in the financial statements related to this expected
reduction in purchase price. Any payment received from Hughes Electronics as a
result of a reduction in purchase price will result in a corresponding reduction
in goodwill and not be reflected in the income statement. Any payment received
from Hughes Electronics for interest accrued on a reduction in purchase price,
as provided in the Separation Agreement, will be reflected in the income
statement in the period of receipt.
In March 2000, the Company and Hughes Electronics participated unsuccessfully in
a mediation pursuant to the alternative dispute resolution process set forth in
the Separation Agreement in connection with a separate claim against Hughes
Electronics concerning the accuracy and completeness of disclosures made by
Hughes Electronics to the Company prior to the merger. The Company and Hughes
Electronics are in the process of choosing arbitrators to resolve the claim
through binding arbitration pursuant to the Separation Agreement.
In November 1999, the Company filed a complaint against Towers, Perrin, Forster
& Crosby (TPF&C). The complaint arises out of a series of events concerning
certain Hughes Electronics pension plans (the "Hughes Plans"), portions of which
were acquired by the Company in connection with the merger with Hughes Defense.
Specifically, the complaint alleges that the Company was damaged by false
representations made to the Company by TPF&C regarding the amount of surplus in
the Hughes Plans and errors committed by TPF&C in providing administrative
services to the Hughes Plans. The complaint seeks damages in an amount to be
determined at trial.
In addition, various claims and legal proceedings generally incidental to the
normal course of business are pending or threatened against the Company. While
the ultimate liability from these proceedings is presently indeterminable, any
additional liability is not expected to have a material effect on the Company's
financial position, liquidity, or results of operations after giving effect to
provisions already recorded.
9. Notes Payable and Long-term Debt
In March 2000, the Company issued $2.25 billion of long-term debt in a private
placement consisting of $200 million of floating rate notes due in 2002, $800
million of 7.9% notes due in 2003, $850 million of 8.2% notes due in 2006, and
$400 million of 8.3% notes due in 2010. Proceeds from the offering were used to
repay outstanding short-term debt, thereby extending the maturity of the
Company's debt obligations.
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12
In July 1999, the Company filed a shelf registration with the Securities and
Exchange Commission registering the issuance of up to $3.0 billion in debt
and/or equity securities. The shelf registration became effective in March 2000.
No securities have been issued in connection with this shelf registration.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Consolidated Results of Continuing Operations
Net sales in the first quarter of 2000 were $4.2 billion, a decrease of 2
percent versus $4.3 billion for the same period in 1999. The decrease in sales
was due primarily to the divestiture of the Company's flight simulation business
in the first quarter of 2000 and its Cedarapids subsidiary in the third quarter
of 1999. Sales to the U.S. Department of Defense were 51 percent of sales in the
first quarter of 2000 versus 53 percent of sales in the first quarter of 1999.
Total first quarter 2000 and 1999 sales to the U.S. government, including
foreign military sales, were 65 and 72 percent of sales, respectively. Total
international sales, including foreign military sales, were 22 percent of sales
in the first quarter of 2000 versus 24 percent of sales in the first quarter of
1999.
Gross margin in the first quarter of 2000 was $750 million or 17.7 percent of
sales versus $995 million or 22.9 percent of sales in the first quarter of 1999.
The decrease in margin as a percent of sales was primarily due to a decline in
higher margin foreign direct and fixed price programs, lower volume from
missiles and missile defense systems, and certain positive non-recurring
contract completion adjustments recorded in the first quarter of 1999, primarily
at the Electronic Systems and Command, Conrol, Communication and Information
Systems segments.
Administrative and selling expenses were $311 million or 7.4 percent of sales in
the first quarter of 2000 versus $305 million or 7.0 percent of sales in the
first quarter of 1999.
Research and development expenses increased to $123 million or 2.9 percent of
sales in the first quarter of 2000 versus $111 million or 2.6 percent of sales
in the first quarter of 1999. The increase was due primarily to new program
investments made during the first quarter of 2000.
Operating income was $316 million or 7.5 percent of sales in the first quarter
of 2000 versus $579 million or 13.4 percent of sales in the first quarter of
1999. The changes in operating income by segment are discussed below.
Interest expense, net in the first quarter of 2000 was $180 million compared to
$175 million in the first quarter of 1999. The increase was due to a slightly
higher average debt level and weighted-average interest rate during the first
quarter of 2000.
Other income, net in the first quarter of 2000 was $5 million, versus other
expense, net of $9 million in the first quarter of 1999. The change was due
primarily to pretax gains on divestitures recorded in the first quarter of 2000.
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13
The effective tax rate was 43.3 percent in the first quarter of 2000 versus 39.2
percent in the first quarter of 1999. The effective tax rate reflects primarily
the United States statutory rate of 35 percent reduced by foreign sales
corporation tax credits and research and development tax credits applicable to
certain government contracts, increased by non-deductible amortization of
goodwill. The higher effective tax rate in the first quarter of 2000 results
from the impact of non-deductible amortization of goodwill on lower taxable
income.
Income from continuing operations was $80 million in the first quarter of 2000,
or $0.24 per diluted share on 338.7 million average shares outstanding versus
income from continuing operations of $240 million in the first quarter of 1999,
or $0.71 per diluted share on 340.2 million average shares outstanding.
On April 14, 2000, the Company signed a definitive agreement to sell its
Raytheon Engineers & Constructors (RE&C) subsidiary for approximately $10
million in cash at closing, subject to purchase price adjustments. Pursuant to
the agreement, the Company will retain the responsibility for four large, fixed
price international turnkey projects that are close to completion, partially
indemnify the buyer on the completion of one other existing project, and retain
certain significant assets and liabilities. The sale is expected to be completed
during the second quarter of 2000, however, there can be no assurance that the
sale will be consummated. In the first quarter of 2000, the Company recorded a
loss from discontinued operations of $261 million after-tax, or $0.77 per
diluted share, which contemplated that RE&C would achieve break-even operating
performance through the date of sale. Included in the loss from discontinued
operations is an estimated gain on curtailment of the RE&C pension plans of
$35 million.
Net loss for the first quarter of 2000 was $181 million, or $0.54 per diluted
share versus net income of $205 million for the first quarter of 1999, or $0.60
per diluted share.
Total employment related to continuing operations was approximately 94,200 at
April 2, 2000, approximately 97,600 at December 31, 1999, and approximately
98,600 at April 4, 1999. The decrease from the prior quarter and prior year is
primarily a result of divestitures and the continuing restructuring initiatives
at the Electronics businesses.
Electronic Systems had sales of $1.9 billion in the first quarter of 2000,
compared with $2.0 billion in the first quarter of 1999. The decrease in sales
was due to a decrease in volume for missiles and missile defense systems.
Operating income was $183 million in the first quarter of 2000 versus $346
million a year ago. The decrease in operating income was primarily due to a
decline in higher margin foreign direct and fixed price programs, lower volume
from missiles and missile defense systems, and certain positive non-recurring
contract completion adjustments recorded in the first quarter of 1999.
Command, Control, Communication and Information Systems had sales of $846
million in the first quarter of 2000, compared with $962 million in the first
quarter of 1999. Sales were lower primarily due to lower volume from
international and air traffic control programs, but are expected to be up
overall for the year. Operating income was $69 million in the first quarter of
2000 compared with $121 million in the first quarter of 1999. Operating income
was down primarily due to lower volume, higher business development expenses,
and certain prior year, non-recurring contract completion adjustments.
<PAGE>
14
Technical Services had first quarter 2000 sales of $421 million, versus $449
million in the first quarter of 1999. Operating income was $27 million in the
first quarter of 2000, compared with $29 million in the first quarter of 1999.
The decline in sales and operating income were due primarily to the sale of the
flight simulator business.
Aircraft Integration Services had sales of $298 million in the first quarter of
2000, compared with sales of $295 million in the first quarter of 1999.
Operating income in the first quarter of 2000 was $15 million, compared with $42
million in the first quarter of 1999. Operating income was down primarily due to
positive contract settlements and termination payments in 1999, as well as cost
growth on one particular program in 2000.
Commercial Electronics had sales of $174 million in the first quarter of 2000,
compared with first quarter 1999 sales of $220 million. The decrease in sales
was due to the divestiture of its Cedarapids subsidiary in the third quarter of
1999. Operating income was $20 million in the first quarter of 2000, compared
with $11 million for the same period last year. Operating income in the first
quarter of 2000 consisted primarily of a favorable settlement on a commercial
training contract. Excluding the favorable settlement, operating income was down
due to a decline in volume for certain high margin Marine products.
Raytheon Aircraft had first quarter 2000 sales of $815 million compared with
$626 million in the first quarter of 1999. Operating income was $30 million in
the first quarter of 2000, compared with $57 million in the first quarter of
1999. Aircraft shipments were 137 in the quarter, up from 93 in the prior year
due in part to shipment of 16 of the 19 planes that were originally expected to
ship in the fourth quarter of 1999. The decrease in operating margin in the
first quarter of 2000 was due primarily to higher production costs, startup
costs associated with the implementation of SAP, higher fuel costs at Raytheon
Travel Air and narrower spreads on customer financing due to higher interest
rates.
Backlog consisted of the following at:
April 2, 2000 Dec. 31, 1999 April 4, 1999
(In millions)
Electronic Systems $10,953 $10,682 $ 9,361
Command, Control, Communication
and Information Systems 4,764 5,135 5,058
Technical Services 1,913 2,335 1,634
Aircraft Integration Systems 2,262 2,029 1,119
Commercial Electronics 603 602 469
Aircraft 4,143 4,282 2,450
------- ------- -------
Total backlog $24,638 $25,065 $20,091
======= ======= =======
U.S. government backlog
included above $15,512 $15,239 $12,464
======= ======= =======
<PAGE>
15
Financial Condition and Liquidity
Net cash used in operating activities in the first quarter of 2000 was $349
million versus $914 million in the first quarter of 1999. Net cash used in
operating activities from continuing operations was $535 million in the first
quarter of 2000 versus $858 million in the first quarter of 1999. The decrease
was due primarily to a decrease in contracts in process at Electronic Systems
due to higher collections on foreign programs and at Aircraft Integration
Systems due to a prior year billing delay related to problems encountered during
a system implementation. Additionally, the volume of payments made subsequent to
year-end was lower in the first quarter of 2000. Net cash provided by operating
activities from discontinued operations was $186 million in the first quarter of
2000 versus net cash used of $56 million in the first quarter of 1999 due to a
significant advance payment received in the first quarter of 2000.
Net cash used in investing activities was $14 million in the first quarter of
2000 versus $173 million in the first quarter of 1999. The decrease was due to
the sale of the Company's flight simulation business for $160 million in
February 2000. Origination and sale of financing receivables in the first
quarter of 2000 were $209 million and $188 million, respectively, versus
origination and sale of financing receivables in the first quarter of 1999 of
$302 million and $241 million, respectively. Capital expenditures were $140
million in the first quarter of 2000 versus $81 million in the first quarter of
1999. The increase was due to higher spending related to the Company's
restructuring initiatives as well as increased investment in facilities. Capital
expenditures related to continuing operations for the full year 2000 are
expected to be approximately $500 million compared to $524 million in 1999.
The Company merged with the defense business of Hughes Electronics Corporation
("Hughes Defense") in December 1997. Pursuant to the terms of the Master
Separation Agreement (the "Separation Agreement"), which requires an adjustment
based on net assets, the final purchase price for Hughes Defense has not been
determined. Based on the terms and conditions of the Separation Agreement, the
Company believes that it is entitled to a reduction in the purchase price, a
position that Hughes Electronics disputes. The Company and Hughes Electronics
have begun the process of negotiating a possible resolution of this matter. If
the matter is not successfully resolved through negotiation, the Separation
Agreement provides for binding arbitration. Accordingly, while the Company
expects a reduction in purchase price from the original terms of the agreement,
the amount, timing and effect on the Company's financial position are uncertain.
As a result of this uncertainty, no amounts have been recorded in the financial
statements related to this expected reduction in purchase price. Any payment
received from Hughes Electronics as a result of a reduction in purchase price
will result in a corresponding reduction in goodwill and not be reflected in the
income statement. Any payment received from Hughes Electronics for interest
accrued on a reduction in purchase price, as provided in the Separation
Agreement, will be reflected in the income statement in the period of receipt.
<PAGE>
16
In March 2000, the Company and Hughes Electronics participated unsuccessfully in
a mediation pursuant to the alternative dispute resolution process set forth in
the Separation Agreement in connection with a separate claim against Hughes
Electronics concerning the accuracy and completeness of disclosures made by
Hughes Electronics to the Company prior to the merger. The Company and Hughes
Electronics are in the process of choosing arbitrators to resolve the claim
through binding arbitration pursuant to the Separation Agreement.
In November 1999, the Company filed a complaint against Towers, Perrin, Forster
& Crosby (TPF&C). The complaint arises out of a series of events concerning
certain Hughes Electronics pension plans (the "Hughes Plans"), portions of which
were acquired by the Company in connection with the merger with Hughes Defense.
Specifically, the complaint alleges that the Company was damaged by false
representations made to the Company by TPF&C regarding the amount of surplus in
the Hughes Plans and errors committed by TPF&C in providing administrative
services to the Hughes Plans. The complaint seeks damages in an amount to be
determined at trial.
Net cash provided by financing activities was $314 million in the first quarter
of 2000 versus $724 million in the first quarter of 1999. Dividends paid to
stockholders in the first quarter of 2000 were $68 million versus $67 million in
the first quarter of 1999. The quarterly dividend rate was $0.20 per share for
both the first quarter of 2000 and the first quarter of 1999. Outstanding shares
were reduced by the repurchase of 1.5 million shares for $82 million during the
first three months of 1999.
In March 2000, the Company issued $2.25 billion of long-term debt in a private
placement consisting of $200 million of floating rate notes due in 2002, $800
million of 7.9 percent notes due in 2003, $850 million of 8.2 percent notes due
in 2006, and $400 million of 8.3 percent notes due in 2010. Proceeds from the
offering were used to repay outstanding short-term debt, thereby extending the
maturity of the Company's debt obligations.
In July 1999, the Company filed a shelf registration with the Securities and
Exchange Commission registering the issuance of up to $3.0 billion in debt
and/or equity securities. The shelf registration became effective in March 2000.
No securities have been issued in connection with this shelf registration.
Total debt was $10.2 billion at April 2, 2000 and $9.8 billion at both December
31, 1999 and April 4, 1999. Total debt, as a percentage of total capital, was
48.6 percent, 47.1 percent, and 47.4 percent at April 2, 2000, December 31,
1999, and April 4, 1999, respectively.
The Company has bank agreement covenants. During the first quarter of 2000, the
Company's most restrictive covenant was amended. The new covenant requires that
earnings before interest, taxes, depreciation, and amortization (EBITDA) be at
least 2.25 times net interest expense for the prior four quarters, through the
second quarter of 2000, and at least 2.5 times net interest expense thereafter.
The Company was in compliance with this covenant during the first quarter of
2000.
Lines of credit with certain commercial banks exist as standby facilities to
support the issuance of commercial paper by the Company. The lines of credit
were $3.0 billion and $4.1 billion at April 2, 2000 and December 31, 1999,
respectively. At April 2, 2000 there were no borrowings under these lines of
credit compared with $1.4 billion outstanding at December 31, 1999.
<PAGE>
17
The Company's need for, cost of, and access to funds are dependent on future
operating results, as well as conditions external to the Company. The Company
believes that its financial position will be sufficient to maintain access to
the capital markets to support current operations.
Quantitative and Qualitative Disclosures About Financial Market Risks
The following discussion covers quantitative and qualitative disclosures about
the Company's market risk. The Company's primary market exposures are to
interest rates and foreign exchange rates.
The Company meets its working capital requirements with a combination of
variable rate short-term and fixed rate long-term financing. The Company enters
into interest rate swap agreements or treasury rate locks with commercial and
investment banks primarily to reduce the impact of changes in interest rates on
financing arrangements. The Company also enters into foreign currency forward
contracts with commercial banks to minimize fluctuations in the value of
payments to international vendors and the value of foreign currency denominated
receipts. The market-risk sensitive instruments used by the Company for hedging
are entered into with commercial and investment banks and are directly related
to a particular asset, liability, or transaction for which a firm commitment is
in place. The Company also sells receivables through various special purpose
entities and retains a partial interest that may include servicing rights,
interest only strips, and subordinated certificates.
Financial instruments held by the Company which are subject to interest rate
risk include notes payable, commercial paper, long-term debt, long-term
receivables, investments, and interest rate swap agreements. The aggregate
hypothetical loss in earnings for one year of those financial instruments held
by the Company at April 2, 2000 and April 4, 1999, which are subject to interest
rate risk resulting from a hypothetical increase in interest rates of 10
percent, was $2 million and $1 million, respectively, after-tax. The
hypothetical loss was determined by calculating the aggregate impact of a 10
percent increase in the interest rate of each variable rate financial instrument
held by the Company at April 2, 2000 and April 4, 1999, which is subject to
interest rate risk. Fixed rate financial instruments were not evaluated, as the
risk exposure is not material.
Accounting Standards
In March 2000, the Financial Accounting Standards Board issued FASB
Interpretation No. 44, Accounting for Certain Transactions involving Stock
Compensation, an interpretation of APB Opinion No. 25 (FIN No. 44). This
interpretation, which is generally effective July 1, 2000, clarifies, among
other issues, the definition of employee for the purposes of applying the
provisions of APB Opinion No. 25, the criteria for determining whether a plan
qualifies as a noncompensatory plan, and the accounting consequence of various
modifications to the terms of a previously fixed stock option or award. The
adoption of FIN No. 44 is not expected to have a material effect on the
Company's financial position or results of operations.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities (SFAS No. 133). This accounting standard, which is
effective for all fiscal quarters of fiscal years beginning after June 15, 2000,
requires that all derivatives be recognized as either assets or liabilities at
estimated fair value. The adoption of SFAS No. 133 is not expected to have a
material effect on the Company's financial position or results of operations.
<PAGE>
18
Forward-Looking Statements
Certain statements made in this report constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995
regarding the Company's future plans, objectives, and expected performance.
Specifically, statements that are not historical facts, including statements
accompanied by words such as "believe," "expect," "anticipate," "estimate,"
"intend," or "plan" are intended to identify forward-looking statements and
convey the uncertainty of future events or outcomes. The Company cautions
readers that any such forward-looking statements are based on assumptions that
the Company believes are reasonable, but are subject to a wide-range of risks,
and there can be no assurance that actual results may not differ materially.
Important factors that could cause actual results to differ include, but are not
limited to: differences in anticipated and actual program results, the ultimate
resolution of contingencies and legal matters, the ability to realize
anticipated cost efficiencies, the ability to contain cost growth, particularly
at Raytheon Aircraft (RAC), timely development and certification of new
aircraft, the ability to finance ongoing operations at attractive rates, the
effect of market conditions, particularly as it affects the general aviation
market, the impact of competitive products and pricing, the impact on recourse
obligations of RAC due to changes in the collateral values of financed aircraft,
risks inherent with large long-term fixed price contracts, particularly at the
Company's Electronics businesses, government customers' budgetary constraints,
government import and export policies, termination of government contracts,
financial and governmental risks related to international transactions, and the
integration of acquisitions, among other things. Further information regarding
the factors that could cause actual results to differ materially from projected
results can be found in the Company's reports filed with the Securities and
Exchange Commission, including "Item 1-Business" in the Company's Annual Report
on Form 10-K for the year ended December 31, 1999.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is a party to or has property subject to litigation and other
proceedings, including matters arising under provisions relating to the
protection of the environment, as specifically described below, in the Company's
Annual Report on Form 10-K for the year ended December 31, 1999, or arising in
the ordinary course of business. In the opinion of management, except as
otherwise indicated below, it is unlikely that the outcome of any such
litigation or other proceedings will have a material adverse effect on the
Company's results of operations or financial position.
The Company is primarily engaged in providing products and services under
contracts with the U.S. Government and, to a lesser degree, under direct foreign
sales contracts, some of which are funded by the U.S. Government. These
contracts are subject to extensive legal and regulatory requirements and, from
time to time, agencies of the U.S. Government investigate whether the Company's
operations are being conducted in accordance with these requirements. U.S.
Government investigations of the Company, whether relating to these contracts or
conducted for other reasons, could result in administrative, civil or criminal
liabilities, including repayments, fines or penalties being imposed upon the
Company, or could lead to suspension or debarment from future U.S. Government
contracting. U.S. Government investigations often take years to complete and
many result in no adverse action against the Company.
<PAGE>
19
The following describes new matters or developments of previously reported
matters that have occurred since filing of the Company's Annual Report on Form
10-K for the year ended December 31, 1999. See the "Legal Proceedings" section
of the Company's Annual Report on Form 10-K for the year ended December 31, 1999
for a description of previously reported matters.
During October and November 1999, the Company and two of its officers were named
as defendants in fourteen purported class action lawsuits. Twelve of the
lawsuits were filed in the United States District Court for the District of
Massachusetts; one was filed in the United States District Court for the
Southern District of New York; and one was filed in the United States District
Court for the District of Maryland (collectively the "Complaints"). The
Complaints principally allege that the defendants violated federal securities
laws by purportedly making false and misleading statements and by failing to
disclose material information concerning the Company's financial performance,
thereby allegedly causing the value of the Company's stock to be artificially
inflated. The Massachusetts Complaints have been consolidated in the United
States District Court for the District of Massachusetts (the "Court"). The Court
has appointed a lead plaintiff and lead counsel and directed that an amended,
consolidated complaint be filed in early May 2000. The Court subsequently
extended the date for filing an amended, consolidated complaint to mid June
2000. The Company will have 45 days after it is served with a copy of the
amended complaint to answer or file a motion to dismiss.
The Company was also named as a nominal defendant and all of its directors
(except one) were named as defendants in purported derivative lawsuits filed on
October 25, 1999 in the Court of Chancery of the State of Delaware in and for
New Castle County by Ralph Mirarchi and others (No. 17495-NC), and on November
24, 1999 in Middlesex County, Massachusetts, Superior Court by John Chevedden
(No. 99-5782). On February 28, 2000, Mr. Chevedden filed another derivative
action in the Delaware Chancery Court entitled John Chevedden v. Daniel P.
Burnham et al (No. 17838-NC) and on March 22, 2000, Mr. Chevedden's
Massachusetts derivative action was dismissed. The Company anticipates that the
two Delaware actions (collectively, the "Derivative Complaints") will be
consolidated in the future. The Derivative Complaints contain allegations
similar to those included in the Complaints and further allege that the
defendants purportedly breached fiduciary duties to the Company and allegedly
failed to exercise due care and diligence in the management and administration
of the affairs of the Company.
Although the Company believes that it and the other defendants have meritorious
defenses to the claims made in both the Derivative Complaints and the other
Complaints and intends to contest the lawsuits vigorously, an adverse resolution
of the lawsuits could have a material adverse affect on the Company's financial
position or results of operations in the period in which the lawsuits are
resolved. The Company is not presently able to reasonably estimate potential
losses, if any, related to the lawsuits.
<PAGE>
20
In December 1999, the SEC issued Staff Accounting Bulletin (SAB) 101, clarifying
the conditions for recognizing revenue on bill and hold transactions. In January
2000, following a review of revenue recognition practices at Raytheon Aircraft
Company, the Company restated its financial results consistent with SAB 101.
Following this restatement, the Company received an informal inquiry from the
SEC Division of Enforcement regarding the restatement. The Company is in the
process of responding to that inquiry.
The U.S. Customs Service has concluded its investigation of the contemplated
sale by Raytheon Canada Ltd., a subsidiary of the Company, of troposcatter radio
equipment to a customer in Pakistan. The Company has produced documents in
response to grand jury subpoenas, and grand jury appearances have taken place.
The Company has cooperated fully with the investigation. The Government has not
reached a final decision with respect to this matter. An adverse decision
relating to this matter could ultimately have a material adverse effect on the
Company's results of operations or financial condition.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations - Financial Condition and Liquidity" and "Note 8 - Commitments and
Contingencies" of the Notes to Financial Statements (Unaudited) included in this
Form 10-Q for a description of the Company's disputes with Hughes Electronics
regarding the following matters: (i) the determination of the final purchase
price for Hughes Defense and (ii) a claim by the Company against Hughes
Electronics concerning the accuracy and completeness of disclosures made by
Hughes Electronics prior to the merger of Raytheon Company and HE Holdings, Inc.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.1 Second Amended and Restated Purchase and Sales Agreement
among Raytheon Aircraft Credit Corporation, Raytheon
Aircraft Receivables Corporation, the Purchasers referred to
herein, Bank of America, N.A., The Chasebank of America,
N.A., The Chase Manhattan Bank, Citibank, N.A.and Credit
Suisse First Boston, and each administrative agent referred
to herein.
10.2 Reaffirmation of Amended and Restated Guarantee.
10.3 Reaffirmation of Amended and Restated Purchase Agreement.
10.4 Letter of Agreement between Raytheon Company and Shay Assad.
27 Financial Data Schedule for the three months ended April 2,
2000 (filed only electronically with the Securities and
Exchange Commission).
99 Restated and amended Financial Data Schedule for the three
months ended April 4, 1999 (filed only electronically with
the Securities and Exchange Commission).
<PAGE>
21
(b) Reports on Form 8-K
On February 25, 2000, the Company filed a Current Report on
Form 8-K with the Securities and Exchange Commission.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
RAYTHEON COMPANY (Registrant)
By: /s/ Franklyn A. Caine
Franklyn A. Caine
Senior Vice President and
Chief Financial Officer
May 17, 2000
Exhibit List
Exhibit No. Description
10.1 Second Amended and Restated Purchase and Sales Agreement
among Raytheon Aircraft Credit Corporation, Raytheon
Aircraft Receivables Corporation, the Purchasers referred to
herein, Bank of America, N.A., The Chasebank of America,
N.A., The Chase Manhattan Bank, Citibank, N.A.and Credit
Suisse First Boston, and each administrative agent referred
to herein.
10.2 Reaffirmation of Amended and Restated Guarantee.
10.3 Reaffirmation of Amended and Restated Repurchase Agreement.
10.4 Letter of Agreement between Raytheon Company and Shay Assad.
27 Financial Data Schedule for the three months ended April 2,
2000 (filed only electronically with the Securities and
Exchange Commission).
99 Restated and amended Financial Data Schedule for the three
months ended April 4, 1999 (filed only electronically with
the Securities and Exchange Commission).
<PAGE>
1
EXHIBIT 10.1
SECOND AMENDED AND RESTATED PURCHASE AND SALE AGREEMENT
among
RAYTHEON AIRCRAFT CREDIT CORPORATION,
as Servicer
RAYTHEON AIRCRAFT RECEIVABLES CORPORATION,
as Seller
THE PURCHASERS REFERRED TO HEREIN
BANK OF AMERICA, N.A.,
as Managing Facility Agent and Documentation Agent
THE CHASE MANHATTAN BANK,
and
BANK OF AMERICA, N.A.,
as Co-Administrative Agents and Co-Arrangers
THE CHASE MANHATTAN BANK,
as Syndication Agent
CITIBANK, N.A.
and
CREDIT SUISSE FIRST BOSTON,
as Co-Syndication Agents
and
EACH ADMINISTRATIVE AGENT REFERRED TO HEREIN
Dated as of March 10, 2000
<PAGE>
2
SCHEDULES AND EXHIBITS
Schedule I Commitments and Purchaser Information
Schedule II UCC Filing Locations
Schedule III Prohibited Foreign Jurisdictions
Exhibit A-1 Form of Assignment
Exhibit A-2 Form of FAA Assignment (Used on the Closing Date -- Loans)
Exhibit A-3 Form of FAA Assignment (To Be Used on Settlement Dates after the
Effective Date -- Loans)
Exhibit A-4 Form of FAA Assignment (Used on the Closing Date -- Leases)
Exhibit A-5 Form of FAA Assignment (To Be Used on Settlement Dates after the
Effective Date -- Leases)
Exhibit B Form of Amended and Restated Guarantee
Exhibit C Form of Settlement Statement
Exhibit D Form of Transfer Supplement
Exhibit E-1 Form of Legal Opinion of General Counsel to the Seller, Raytheon
Credit and RAC
Exhibit E-2 Form of Legal Opinion of General Counsel of Raytheon
Exhibit F-1 Form of Bailment Agreement
Exhibit F-2 Form of Bailment Agreement
Exhibit G Form of Amended and Restated Repurchase Agreement
Exhibit H Form of Special Settlement Date Notice
Exhibit I Form of Purchase Report
<PAGE>
3
SECOND AMENDED AND RESTATED PURCHASE AND SALE AGREEMENT, dated
as of March 10, 2000, among RAYTHEON AIRCRAFT RECEIVABLES CORPORATION, a Kansas
corporation (the "Seller"), RAYTHEON AIRCRAFT CREDIT CORPORATION ("Raytheon
Credit"), as Servicer (as defined herein), the financial institutions and
special purpose corporations from time to time parties to this Agreement (the
"Purchasers"), BANK OF AMERICA, N.A., as Managing Facility Agent for the
Purchasers (in such capacity, the "Managing Facility Agent"), THE CHASE
MANHATTAN BANK and BANK OF AMERICA, N.A., as Co-Administrative Agents for the
Purchasers (in such capacity, a "Co-Administrative Agent"), THE CHASE MANHATTAN
BANK, as Syndication Agent (in such capacity, the "Syndication Agent"),
CITIBANK, N.A. and CREDIT SUISSE FIRST BOSTON, as Co-Syndication Agents (in such
capacity, a "Co-Syndication Agent") and each Administrative Agent referred to
herein.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Seller, Raytheon Credit and certain of the Purchasers
herein are parties to the Amended and Restated Purchase and Sale Agreement,
dated as of March 18, 1999, (as heretofore amended, supplemented or otherwise
modified, the "1999 Agreement") pursuant to which such Purchasers have agreed to
purchase, and have purchased, certain Receivables from the Seller;
WHEREAS, the parties hereto desire to amend the 1999 Agreement to,
among other things, permit certain bulk sales of receivables as described
herein, modify certain of the concentration limits provided in the 1999
Agreement and extend the Expiration Date;
WHEREAS, certain of the Purchasers under the 1999 Agreement (the
"Withdrawing Purchasers") desire to sell their undivided interests in the
Receivables purchased thereunder and to terminate their respective Commitments
under the 1999 Agreement on the Amendment Effective Date;
WHEREAS, the Purchasers under the 1999 Agreement other than the
Withdrawing Purchasers (the "Extending Purchasers") desire to extend the
Expiration Date;
WHEREAS, certain new financial institutions and special purpose
corporations (such other financial institutions and corporations, the "New
Purchasers") desire to become "Purchasers" under the 1999 Agreement as amended
and restated hereby;
WHEREAS, each of the Extending Purchasers and the New Purchasers
desires to extend, increase or decrease its Commitment such that, on the
Amendment Effective Date, the Commitment of each such Purchaser will be as shown
on Annex A hereto opposite the name of such Purchaser; and
WHEREAS, the parties hereto desire to restate the 1999 Agreement as so
amended, modified and supplemented, in its entirety;
NOW THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto hereby agree as follows:
<PAGE>
4
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms shall have
the following meanings:
"Acceptable L/C Issuer": a financial institution whose senior
long-term unsecured debt is rated at least A and A2 by S&P and Moody's,
respectively, if rated by both such agencies, or at least A or A2 by S&P or
Moody's respectively, if rated by only one such agency, or if such senior,
long-term, unsecured debt is not rated, is issued by a bank whose long-term
deposits are rated at least A+ and A1 by S&P and Moody's, respectively, if rated
by both such agencies, or A+ or A1 by S&P or Moody's, respectively, if rated by
only one such agency.
"Accrual Period": (i) with respect to any Settlement Date, the period
from and including the preceding Settlement Date (or, with respect to the
initial Accrual Period, from the Closing Date) to but excluding such Settlement
Date and (ii) a Special Settlement Date Accrual Period.
"Administrative Agent": the collective reference to the Managing
Facility Agent and the Old Administrative Agent, each in its role as
administrative agent hereunder.
"Affiliate": as to any Person, (a) any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person or (b) any other Person who is a director, officer, partner or
shareholder of such Person who, in the case of partners and shareholders, owns,
directly or indirectly, 10% or more of the voting securities (i) of such Person,
(ii) of any Subsidiary of such Person or (iii) of any Person described in the
preceding clause (a). For purposes of this definition, "control" of a Person
means the power, directly or indirectly, either to (i) vote 10% 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 the management and policies of
such Person, whether by contract or otherwise.
"Affiliate Obligor": each Affiliate of Raytheon Credit obligated to
make payments in respect of a Receivable; provided that, such Affiliate is a
special purpose entity created solely for the purpose of entering into
Applicable Leases and does not and is not expected to own any assets or incur
any liabilities except in connection with the performance of its obligations
under the Contracts pursuant to which it acquires Aircraft and the Applicable
Leases of such Aircraft.
"Affiliate Receivable": a Receivable created pursuant to a Contract
(as described in clause (i) of the definition thereof) between Raytheon Credit
and an Affiliate Obligor located (within the meaning of Section 9-103 of the New
York UCC) within the United States which Receivable (i) is created in connection
with the acquisition by such Affiliate Obligor of an Aircraft which is leased by
such Affiliate Obligor, as lessor, to an Unaffiliated Foreign Lessee pursuant to
an Applicable Lease and (ii) is secured by a Lien upon (x) such Aircraft and (y)
such Unaffiliated Foreign Lessee's obligations under such Applicable Lease. In
accordance with subsection 2.27, Affiliate Receivables may be categorized as
Certified Foreign Receivables or Uncertified Foreign Receivables.
"Aggregate Exposure": (a) at any time during the Revolving Period, an
aggregate amount equal to the Commitments in effect at such time and each
Dissenting Purchaser's Outstanding Purchase Price at such time; and (b) at any
time during the Amortization Period, an aggregate amount equal to the
Outstanding Purchase Price of each Purchaser (including each Dissenting
Purchaser) at such time.
<PAGE>
5
"Aggregate Repurchase Obligation": at any time, the sum of the
Repurchase Obligation and the RAC Repurchase Obligation.
"Agreement": this Second Amended and Restated Purchase and Sale
Agreement, as amended, supplemented or otherwise modified from time to time.
"Aircraft": the collective reference to Commuter Aircraft and General
Aviation Aircraft. When used in connection with a Travel Air Receivable,
"Aircraft" shall mean the related Obligor's undivided interest in the applicable
Aircraft.
"Aircraft Accessories": any of the items listed in clause (ii) of the
definition of Commuter Aircraft and General Aviation Aircraft, as applicable.
"Amendment Effective Date": as defined in Section 5.1.
"Amortization Adjustment": the adjustment set forth below for the
number of days since (i) for each Purchaser that is not a Dissenting Purchaser,
the commencement of the Amortization Period or (ii) for each Dissenting
Purchaser, the commencement of amortization of such Dissenting Purchaser's
Outstanding Purchase Price pursuant to Section 2.8(b):
Days Adjustment
1 through 180 0.25% per annum
181 through 360 0.50% per annum
Thereafter 1.00% per annum
"Amortization Event": any of the events described in subsection 8.1,
whether or not any of the actions referred to in subsection 8.2 have been taken.
"Amortization Period": the period beginning on the first day after the
termination of the Revolving Period and ending on the earlier of (i) the day the
Outstanding Purchase Price is reduced to zero as a result of the application of
Collections and other payments and (ii) the day on which the Principal Balance
of all Purchased Receivables has been reduced to zero as a result of Collections
and Net Recoveries.
"Applicable Lease": with respect to any Affiliate Receivable, a lease
contract (substantially in the form described in clause (ii) of the definition
of Contract and which lease contract contains an option to purchase the related
Financed Aircraft by the Unaffiliated Foreign Lessee prior to the expiration of
such lease contract) between the Affiliate Obligor and the Unaffiliated Foreign
Lessee, a Lien upon which secures the repayment of such Affiliate Receivable.
"Applicable Margin": (a) for each Purchaser for any Settlement Period,
the rate per annum set forth below for Raytheon's applicable Debt Rating:
Debt Rating Applicable Margin
A or the equivalent thereof 0.565%
A- or the equivalent thereof 0.600%
BBB+ or the equivalent thereof 0.625%
BBB or the equivalent thereof 0.725%
BBB- or the equivalent thereof 1.000%
BB+ or the equivalent thereof 1.500%
below BB+ or the equivalent thereof 2.000%
(b) For purposes of this definition, changes to the Debt Rating will
be effective for all Settlement Periods commencing on the Settlement Date next
succeeding any such change.
<PAGE>
6
"Applicable Settlement Date": as defined in the definition of
"Ineligible Receivable".
"Assignment": an assignment, substantially in the form of Exhibit A-1
with appropriate insertions and attachments, executed by the Seller or an
Affiliate Obligor, as the case may be, and delivered to the Managing Facility
Agent or the Seller, as the case may be, with respect to each purchase or
substitution.
"Available Commitment": as to any Purchaser at any time, an amount
equal to the excess, if any, of (a) the amount of such Purchaser's Commitment
over (b) the product of such Purchaser's Available Commitment Percentage
multiplied by the aggregate Outstanding Purchase Price (excluding any Dissenting
Purchaser's Outstanding Purchase Price at such time).
"Available Commitment Percentage": as to any Purchaser at any time, a
fraction the numerator of which is the Commitment of such Purchaser at such time
and the denominator of which is the aggregate Commitments at such time.
"Aviation Act": the Federal Aviation Act of 1958, as amended, and all
applicable rules and regulations thereunder.
"Bailee": any Person (other than the Administrative Agent and the
Seller) which enters a Bailment Agreement.
"Bailment Agreement": each agreement, substantially in the form of
Exhibit F-1 or F-2 with such changes thereto as are reasonably satisfactory in
form and substance to the Managing Facility Agent, among an Administrative
Agent, the Seller and the Person therein designated, which Person shall be
acceptable to the Managing Facility Agent in its reasonable discretion, to
maintain custody, as the bailee of the Administrative Agent and the Purchasers,
of the letter of credit related to each L/C Receivable sold or substituted
hereunder on the terms and subject to the conditions set forth therein, as any
of the same may be amended, supplemented or otherwise modified from time to
time.
"Base Rate": for any day, the higher of (a) 0.50% per annum above the
latest Federal Funds Rate and (b) the rate of interest in effect for such day as
publicly announced from time to time by Bank of America, N.A. in Charlotte,
North Carolina, as its "reference rate". The "reference rate" is a rate set by
Bank of America, N.A. based upon various factors including Bank of America,
N.A.'s costs and desired return, general economic conditions and other factors,
and is used as a reference point for pricing some loans, which may be priced at,
above, or below such announced rate. Any change in the reference rate announced
by Bank of America, N.A. shall take effect at the opening of business on the day
specified in the public announcement of such change.
"Benefitted Purchaser": as defined in subsection 11.7(a).
"Bulk Sale": as defined in subsection 11.24(a).
"Bulk Sale Account": as defined in subsection 2.14(d)
"Bulk Sale Buyer": as defined in subsection 11.24(a).
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7
"Bulk Sale Purchase Price": as defined in subsection 11.24(b).
"Bulk Sale Receivable": as defined in subsection 11.24(a).
"Business Day": a day other than a Saturday, Sunday or other day on
which commercial banks in New York, New York, Wichita, Kansas, Boston,
Massachusetts, Charlotte, North Carolina or San Francisco, California are
authorized or required by law to close.
"Buyout Amount": as defined in subsection 2.8(b)(iii).
"Cash Collateral Account": as defined in subsection 2.14(c)(i).
"Cash Equivalents": (a) securities issued or directly and fully
guaranteed or insured by the United States Government or any agency or
instrumentality thereof having maturities not later than the Settlement Date
following the date of acquisition, (b) certificates of deposit and eurodollar
time deposits with maturities not later than the Settlement Date following the
date of acquisition, bankers' acceptances with maturities not later than the
Settlement Date following the date on which such investment is made and
overnight bank deposits, in each case, with any commercial bank (i) the
short-term indebtedness of which is rated at least A-1 or P-1 by S&P or Moody's,
respectively, and (ii) with capital and surplus in excess of $500,000,000, (c)
repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clauses (a) and (b) entered into with any
financial institution meeting the qualifications specified in clause (b) above,
and (d) commercial paper rated at least A-1 or P-1 by S&P or Moody's,
respectively, and in each case with maturities not later than the Settlement
Date following the date of acquisition.
"Cash Flow Cutoff Date": as of any Settlement Date and with respect to
any Extended Term Receivable, (i) so long as no Rating Event has occurred and is
continuing, the date which is thirteen years after such Settlement Date and (ii)
during the continuation of a Rating Event, the date which is ten years after
such Settlement Date.
"Certified Foreign Receivable": each Affiliate Receivable and each
Foreign Receivable (i) in the case of a Foreign Receivable which is not a Lease
Receivable, (x) in respect of which the obligations of the related Obligor are
secured by a Lien on the related Contract and Financed Aircraft in compliance
with subsections 5.2(e)(ii) and (vii), (y) which has been so designated as a
Certified Foreign Receivable in compliance with subsection 2.27 and (z) in
respect of which the Seller has satisfied the conditions specified in subsection
5.2 (including subsection 5.2(e)), (ii) in the case of a Foreign Receivable
which is a Lease Receivable (including a Registerable Lease Receivable with a
Foreign Obligor) (x) in respect of which the obligations of the related Obligor
are secured by a Lien on the related Contract and Financed Aircraft in
compliance with subsections 5.2(e)(iii), (iv) and (vii), (y) which has been so
designated as a Certified Foreign Receivable in compliance with subsection 2.27
and (z) in respect of which the Seller has satisfied the conditions specified in
subsection 5.2 (including subsection 5.2(e)) and (iii) in the case of an
Affiliate Receivable (x) in respect of which the obligations of the related
Obligor are secured by a Lien on the related Contract and Financed Aircraft in
compliance with subsections 5.2(e)(vi) and (vii), (y) which has been so
designated as a Certified Foreign Receivable in compliance with subsection 2.27
and (z) in respect of which the Seller has satisfied the conditions specified in
subsection 5.2 (including subsection 5.2(e)).
<PAGE>
8
"Certified Opinion Delivery Date": as defined in subsection 2.27(c).
"Closing Date": March 24, 1997.
"Code": the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral": as defined in subsection 11.11(b).
"Collection Account": as defined in subsection 2.14(a).
"Collections": with respect to any Purchased Receivable, all cash
collections (including, without limitation, Principal Collections, Finance
Charge Collections and other payments (including penalties, if any)), rent paid
under any Contract (whether as Principal Collections or Finance Charge
Collections), all security deposits (including, without limitation, any engine
reserve account), any payments pursuant to guarantees and all amounts paid by
any Obligor or Unaffiliated Foreign Lessee upon the exercise of any purchase
option under any Contract (including any amounts financed by the Seller), the
amount of drawings under a letter of credit related to such Purchased
Receivable, any insurance paid in respect of an Exim Bank Receivable, any
curtailment payments made by an Obligor in respect of a Wholesale Receivable,
and any other cash proceeds of any Purchased Receivable or proceeds of such
Purchased Receivable, including, without limitation, any proceeds from
realization upon collateral (including, without limitation, any Financed
Aircraft, Applicable Lease, insurance proceeds, letters of credit, security
deposits, curtailment payments, indemnity payments or any other cash payments
under or with respect to the related Contract) and any amounts withdrawn from
the Cash Collateral Account pursuant to subsection 2.14(c).
"Commitment": as to any Purchaser, the obligation of such Purchaser to
purchase undivided interests in Eligible Receivables from the Seller in an
amount at any one time outstanding not to exceed the amount set forth opposite
such Purchaser's name on Schedule I, as reduced from time to time in accordance
with the terms hereof; as to all the Purchasers on the Amendment Effective Date,
not to exceed an aggregate amount of $2,500,000,000.
"Commitment Fee": as defined in subsection 2.17(d).
"Commitment Percentage":
(a) at any time during the Revolving Period and as to any Purchaser other
than a Dissenting Purchaser, a fraction, the numerator of which is the
Commitment of such Purchaser in effect at such time and the denominator of
which is equal to the Aggregate Exposure at such time;
(b) at any time during the Revolving Period and as to a Dissenting
Purchaser, a fraction, the numerator of which is the Outstanding Purchase
Price of such Dissenting Purchaser at such time and the denominator of
which is equal to the Aggregate Exposure at such time; and
(c) at any time during the Amortization Period and as to any Purchaser,
including a Dissenting Purchaser, a fraction the numerator of which is
equal to the Outstanding Purchase Price of such Purchaser at such time and
the denominator of which is equal to the Aggregate Exposure at such time.
"Commitment Transfer Supplement": a Commitment Transfer Supplement,
substantially in the form of Exhibit D.
<PAGE>
9
"Commonly Controlled Entity": with respect to a Person, an entity,
whether or not incorporated, which is under common control with such Person
within the meaning of Section 4001 of ERISA or is part of a group which includes
such Person and which is treated as a single employer under Section 414 of the
Code.
"Commuter Aircraft": the Models 1300, 1900 and 99 Beechcraft
manufactured by RAC and comparable general aviation aircraft used for commuter
airline purposes manufactured by any other Person including, in all cases,
without limitation, (i) any and all airframes, engines, (including, without
limitation, any replacement or substituted engines) and avionics, equipment and
accessories at any time attached to, connected with or located in any such
aircraft and, to the extent covered by the recording system of the Aviation Act,
all logs, manuals and maintenance records with respect thereto and (ii) any and
all avionics, equipment and accessories removed from any Aircraft and, to the
extent not covered by the recording system of the Aviation Act, all logs,
manuals and maintenance records.
"Commuter Receivable": a Receivable the Obligor of which owns and
operates a commuter airline.
"Concentration Account": as defined in subsection 2.14(b).
"Concentration Receivables": as defined in subsection 2.7(b).
"Consolidated Capitalization": at a particular date, the sum of
Consolidated Debt and Consolidated Net Worth at such date.
"Consolidated Debt": at a particular date, all amounts which would be
included as indebtedness (including capitalized leases) on a consolidated
balance sheet of Raytheon and its consolidated Subsidiaries, determined in
accordance with GAAP.
"Consolidated EBITDA": for any period, the sum of (a) Consolidated Net
Income for such period and (b) the aggregate amounts deducted in determining
Consolidated Net Income in respect of (i) Consolidated Net Interest Expense for
such period and (ii) income taxes, depreciation and amortization of Raytheon and
its consolidated Subsidiaries for such period determined in accordance with
GAAP.
"Consolidated Net Income": for any period, the consolidated net income
(or deficit) of Raytheon and its consolidated Subsidiaries for such period,
determined in accordance with GAAP; provided that (i) for the fiscal quarter of
Raytheon and its consolidated Subsidiaries ending December 31, 1997, such
Consolidated Net Income shall be increased by $327,100,000 representing a
restructuring charge taken in connection with Raytheon's acquisition of Hughes
Aircraft Company, (ii) for the fiscal quarter of Raytheon and its consolidated
Subsidiaries ending September 27, 1998, such Consolidated Net Income shall be
increased by $284,000,000 representing restructuring charges and a write-down in
investments taken in such fiscal quarter and (iii) for the fiscal quarter of
Raytheon and its consolidated Subsidiaries ending October 3, 1999, such
Consolidated Net Income shall be increased by $144,000,000 representing
restructuring charges and other non-recurring charges taken in such fiscal
quarter.
"Consolidated Net Interest Expense": for any period, net interest
expense of Raytheon and its consolidated Subsidiaries for such period,
determined in accordance with GAAP.
<PAGE>
10
"Consolidated Net Worth": at a particular date, all amounts which
would, in conformity with GAAP, be included under stockholders' equity on a
consolidated balance sheet of Raytheon and its consolidated Subsidiaries at such
date.
"Contract": with respect to a Receivable, the collective reference to
(a) the promissory notes, security agreements, leases, financing and security
agreements, contracts, documents and instruments between the Seller and the
Obligor thereon on the Seller's standard form therefor (as in effect on the
Closing Date) or such other forms as shall contain substantially similar
provisions to such standard forms, pursuant to which the Seller has (i) lent the
Obligor funds to purchase an Aircraft or, in the case of the Travel Air
Receivables, an undivided interest therein, and the Obligor has agreed to make
installment payments in respect of such purchase, or (ii) leased an aircraft or,
in the case of the Travel Air Receivables, an undivided interest therein; to the
Obligor, in each case, as amended, supplemented or otherwise modified from time
to time and (b) upon the occurrence of an event of the type described in
subsection 8.1(j) affecting the Seller, each and every promissory note, security
agreement, lease, financing and security agreement, contract, document and
instrument executed in replacement or supersession of another Contract described
in clause (a) with the same Obligor, or executed upon extension, modification or
amendment of such Contract, whether in connection with an agreement pursuant to
Section 1110 of the Bankruptcy Code (11 USC ss. 1110) or otherwise. Whenever
used in connection with any Purchased Receivables, unless the context otherwise
requires "Contract" shall include any Applicable Lease securing the obligations
of the Affiliate Obligor under such Purchased Receivable.
"Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Current Receivable": as defined in subsection 2.13(f).
"Credit and Collection Policy": those credit and collection policies
and practices of the Seller and the Servicer existing on the Closing Date
relating to the Receivables (including, without limitation, policies relating to
writeoffs of Receivables and policies and practices maintained by the Seller's
or the Servicer's computer system and policies set forth in the form previously
delivered to the Purchasers, as modified from time to time in accordance with
subsection 7.1(c).
"Dealer": any independent dealer or Affiliate of Raytheon Credit which
markets and sells Aircraft.
"Debt Rating": at any date of determination, Raytheon's long-term
unsecured senior debt rating, determined in accordance with the following:
(a) for purposes of determining a Debt Rating as used in the
definition of "Applicable Margin", if on any date on which a Debt
Rating is to be determined, Moody's and S&P are providing long-term
unsecured senior debt ratings for Raytheon, the Debt Rating will be the
lower of such ratings; provided that (i) if Raytheon's long-term
unsecured senior debt is rated at least BBB- or the equivalent thereof
by both Moody's and S&P and (ii) the differential between the Moody's
and S&P rating is more than one ratings level (i.e. the difference
between A and A+ being one ratings level), then the Debt Rating will
equal the lower of such ratings plus one ratings level.
<PAGE>
11
(b) for all other purposes, if on any date on which a Debt
Rating is to be determined, either one or both of Moody's and S&P are
providing long-term unsecured senior debt ratings for Raytheon, the
Debt Rating will be the higher of the ratings (or the rating, in the
case of a rating by only one of Moody's and S&P) so provided.
A debt rating shall be deemed to be in effect on the date of announcement or
publication by the applicable rating agency. References in this Agreement to
alphabetical rating classifications are references to the S&P ratings.
Notwithstanding the foregoing, the Seller and the Purchasers may at any time and
from time to time agree to utilize a rating agency other than Moody's or S&P to
determine the Debt Rating, in which case the Debt Rating shall be such levels as
quoted by such rating agencies as, in each case, the Seller and the Purchasers,
by unanimous consent, shall agree.
"Debt Ratio": at a particular date, the ratio of Consolidated Debt at
such date to such date.
"Default Rate": as defined in subsection 2.17(c).
"Defaulted Applicable Lease": an Applicable Lease (i) as to which any
payment thereon or part thereof remains unpaid by the Unaffiliated Foreign
Lessee thereon for (x) 120 days in the case of a GA Receivable or (y) 150 days
in the case of a Commuter Receivable, from, in each case, the original due date
for such payment by such Unaffiliated Foreign Lessee, (ii) as to which the
Unaffiliated Foreign Lessee thereof has taken or suffered any action of the type
described in subsection 8.1(j) with respect to such Person or (iii) which,
consistent with the Credit and Collection Policy, would be written off the
Seller's books as uncollectible.
"Defaulted Receivable": a Receivable, (i) in the case of a GA
Receivable or a Travel Air Receivable, as to which any payment on such
Receivable or part thereof remains unpaid by the Obligor thereon for 120 days
from the original due date for such payment by such Obligor, (ii), in the case
of a Commuter Receivable, as to which any payment on such Receivable or part
thereof remains unpaid by the Obligor thereon for 150 days from the original due
date for such payment by such Obligor, (iii) in the case of a Wholesale
Receivable, as to which any payment on such Receivable or part thereof remains
unpaid by the Obligor thereon for 60 days from the original due date for such
payment by such Obligor, (iv) in the case of an Affiliate Receivable, as to
which the Applicable Lease related thereto is a Defaulted Applicable Lease or
(v) any Receivable as to which the Obligor thereof has taken or suffered any
action of the type described in subsection 8.1(j) with respect to such Obligor
or which, consistent with the Credit and Collection Policy, would be written off
the Seller's books as uncollectible.
"Delinquent Receivable": an Eligible Receivable a payment under which
is more than 90 days past due from the original due date therefor, but which is
not otherwise a Defaulted Receivable.
"Discount Event": any time on or prior to the Expiration Date when
Raytheon's Debt Rating is lower than BBB- or the equivalent thereof.
"Dissenting Purchaser": as defined in subsection 2.8(b).
<PAGE>
12
"Domestic Wholesale Receivable": a Receivable arising under a
wholesale financing arrangement between Raytheon Credit and, as Obligor
thereunder, a Dealer which is located (within the meaning of Section 9-103 of
the New York UCC) in the United States.
"Effective Date": as defined in Section 5.1 of the 1997 Agreement.
"Eligible Applicable Lease": (x) with respect to each Affiliate
Receivable other than an Existing Affiliate Receivable, at the time of purchase
or substitution of such Affiliate Receivable pursuant to this Agreement, an
Applicable Lease related thereto:
(a) the Unaffiliated Foreign Lessee of which (i) is not an Affiliate of
Raytheon Credit or the Servicer, (ii) is not located in a Prohibited
Jurisdiction, (iii) is not, except to the extent permitted under subsection
2.7, a Governmental Authority unless the Affiliate Obligor, Raytheon Credit
and the Seller have complied with the requirements of each applicable
Requirement of Law pertaining to the assignment of accounts receivable the
obligor of which is a Governmental Authority, all in a manner satisfactory
to the Managing Facility Agent and the Required Purchasers in their
reasonable discretion and (iv) is not the Unaffiliated Foreign Lessee or
the Obligor, or an Affiliate of an Obligor or Unaffiliated Foreign Lessee,
on any Receivable or Applicable Lease which is a Defaulted Receivable or
Defaulted Applicable Lease, as appropriate;
(b) which is neither more than 30 days past due from the original due date
therefor nor otherwise a Defaulted Applicable Lease;
(c) which arose in the ordinary course of Raytheon Credit's business from
financing the retail purchase or lease financing of an Aircraft and relates
to an Aircraft which will be used for general aviation purposes or with
respect to the ownership and operation of a commuter airline, but not for
military purposes;
(d) which is subject only to adjustment for changes in payments in
accordance with the terms thereof resulting from changes in the interest
rates thereunder and the payment terms of which are identical to the
payment terms set forth in the related Affiliate Receivable;
(e) which is an "account" or a "general intangible" or which constitutes
"chattel paper" within the meaning of the UCC of the State of Kansas or the
law of the state where the Seller or the Servicer maintains the books,
records and documents with respect to such Receivable;
(f) which is denominated and payable only in United States dollars in the
United States;
(g) which (i) has been duly authorized by each party thereto (or, if any
such party is an individual, such party has the capacity to enter into) and
each of the parties thereto is in compliance therewith in all material
respects, (ii) was not originated with any conduct constituting fraud or a
material misrepresentation on the part of the Affiliate Obligor, Raytheon
Credit or the Seller, (iii) was not originated with any conduct
constituting fraud or a material misrepresentation by the Unaffiliated
Foreign Lessee party thereto of which Raytheon Credit, the Seller or the
Affiliate Obligor thereto knew or should have known based on the exercise
of reasonable care, (iv) constitutes the legal, valid and binding
obligation of the Unaffiliated Foreign Lessee thereof enforceable against
such Unaffiliated Foreign Lessee in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law), (v) contains
enforceable provisions such that the rights and remedies of the holder of
the security interest created therein are adequate for the realization of
the benefits of such security interest against the related Unaffiliated
Foreign Lessee and the other collateral therefor and (vi) if the engine for
the related Financed Aircraft has 750 or more rated takeoff horsepower (or
the equivalent of such horsepower), accurately describes the engines of
such Financed Aircraft as provided for in such Applicable Lease;
<PAGE>
13
(h) which is not subject to any existing material dispute, offset,
counterclaim or defense whatsoever (including, but not limited to, breach
of warranty) of which Raytheon Credit, the Seller or the Servicer knows or
should have known;
(i) which does not, or at the time of lease of the Financed Aircraft did
not, contravene any Requirements of Law applicable thereto in any material
respect (including, without limitation, laws, rules and regulations
relating to truth in lending, fair credit billing, fair credit reporting,
equal credit opportunity, fair debt collection practices and privacy) and
with respect to which no party thereto is in violation of any such
Requirement of Law in any material respect;
(j) which was originated in accordance with the Credit and Collection
Policy and satisfied all requirements thereof;
(k) on which either at least one payment or a down payment (including a
trade-in) has been made prior to the Closing Date or the Settlement Date on
which the related Affiliate Receivable is purchased or substituted;
(l) the payment terms of which have not been modified other than (i) in
accordance with the Credit and Collection Policy and (ii) to an extent and
in an amount not in excess of the limitations specified in subsection
7.1(b)(iv)(x); and
(m) of which the Affiliate Obligor, at the time of transfer of the related
Affiliate Receivable to the Purchasers, has good and marketable title, free
and clear of any Lien other than any Permitted Receivable Lien; and
(y) with respect to any Existing Affiliate Receivable, at the date of its
purchase or substitution under the Existing Agreement pursuant to which
such Receivable was sold to the Old Administrative Agent, the Applicable
Lease related thereto was an "Eligible Applicable Lease" (as defined in
such applicable Existing Agreement) at such date.
"Eligible Receivable": (x) with respect to each Receivable other than
an Existing Receivable, at the time of purchase or substitution pursuant to this
Agreement, a Receivable:
(a) except with respect to an Affiliate Receivable, the Obligor of which is
not an Affiliate of Raytheon Credit, the Seller or the Servicer;
(b) except with respect to a Foreign Receivable, the Obligor of which is
located (within the meaning of Section 9-103 of the New York UCC) within
the United States and is a Citizen of the United States (as defined in the
Aviation Act); and, with respect to a Foreign Receivable, the Obligor of
which is not located in a Prohibited Jurisdiction;
(c) except with respect to an ExIm Bank Receivable and except as otherwise
permitted in subsection 2.7(a)(xii), the Obligor of which is not a
Governmental Authority unless each of Raytheon Credit and the Seller has
complied with the requirements of the Federal Assignment of Claims Act or
any other applicable Requirement of Law pertaining to the assignment of
accounts receivable the Obligor of which is a Governmental Authority, all
in a manner satisfactory to the Managing Facility Agent and the Required
Purchasers in their reasonable discretion; provided that if a Rating Event
has occurred and is continuing, any Affiliate Receivable in respect of
which the Unaffiliated Foreign Lessee under the related Applicable Lease is
any Governmental Authority other than a United States Federal Governmental
Authority shall not be eligible for purchase or substitution under this
Agreement regardless of any action taken by Raytheon Credit or the Seller
with respect to the assignment of such Applicable Lease;
<PAGE>
14
(d) the Obligor of which is not the Obligor or an Affiliate of an Obligor
on any other Receivable which is a Defaulted Receivable;
(e) which is neither more than 30 days past due from the original due date
therefor nor otherwise a Defaulted Receivable;
(f) which arose in the ordinary course of Raytheon Credit's business from
financing the retail purchase or lease or, in the case of a Wholesale
Receivable, the wholesale purchase of an Aircraft and relates to an
Aircraft which will be used for general aviation purposes or in connection
with commuter airline operations, but not for military purposes, and which
was purchased by the Seller from Raytheon Credit pursuant to the
Intercompany Purchase Agreement in the ordinary course of the Seller's
business;
(g) with respect to GA Receivables, subject only to adjustment for changes
in payments in accordance with the related Contract resulting from changes
in the interest rates thereunder, (i) which, except as set forth in clause
(ii) below, is required to be paid in consecutive monthly installments or
is a Quarterly Receivable or a Semi-Annual Receivable or (ii) which (A) is
a Nonstandard Receivable or (B) has a maturity within six months from the
date such Receivable becomes a Purchased Receivable, provided that no such
Receivable will have a maturity later than December 31, 2000;
(h) which is an "account" or a "general intangible" or which constitutes
"chattel paper" within the meaning of the UCC of the State of Kansas or the
law of the state where the Seller or the Servicer maintains the books,
records and documents with respect to such Receivable;
(i) which is denominated and payable only in United States dollars in the
United States;
(j) which arises under a Contract which (i) has been duly authorized by
each party thereto (or, if any such party is an individual, such party has
the capacity to enter into) and each party thereto is in compliance
therewith in all material respects, (ii) was not originated with any
conduct constituting fraud or a material misrepresentation on the part of
the Seller or Dealer (if different from the Obligor thereto), (iii) was not
originated with any conduct constituting fraud or a material
misrepresentation by an Obligor party thereto of which the Seller or Dealer
(if different from the Obligor) knew or should have known based on the
exercise of reasonable care, (iv) constitutes the legal, valid and binding
obligation of the Obligor thereof enforceable against such Obligor in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditors' rights generally and by
general equitable principles (whether enforcement is sought by proceedings
in equity or at law), (v) except with respect to each L/C Receivable,
contains enforceable provisions such that the rights and remedies of the
holder of the security interest created thereby are adequate for the
realization of the benefits of such security interest against the related
Financed Aircraft and the other collateral therefor and (vi) accurately
describes the engines, if any, of the related Financed Aircraft having 750
or more rated takeoff horsepower (or the equivalent of such horsepower) as
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15
(k) (i) except with respect to a L/C Receivable, a Lease Receivable, a
Travel Air Receivable and an Unsecured Receivable, which is secured by a
valid and perfected first priority security interest in favor of the Seller
in the Financed Aircraft related thereto (other than, in the case of GA
Receivables, any engines having less than 750 or more rated takeoff
horsepower, or its equivalent) and, with respect to an Affiliate
Receivable, in the related Applicable Lease, (ii) with respect to a
Registerable Lease Receivable and with respect to an ExIm Bank Receivable,
the related Financed Aircraft of which is registered with the FAA Registry
in the name of the Seller and relates to a Financed Aircraft in which the
Seller has a valid ownership interest, (iii) with respect to a Lease
Receivable which is not a Registerable Lease Receivable, the related
Financed Aircraft of which is registered in the name of the Seller in each
jurisdiction necessary to evidence the valid ownership interest of the
Seller in the Financed Aircraft related thereto and (iv) with respect to a
Travel Air Receivable, which is secured by a valid and perfected first
priority security interest in favor of the Seller in the Obligor's
undivided interest in the Financed Aircraft and Travel Air Contracts
related thereto;"
(l) except with respect to a L/C Receivable and an Unsecured Receivable,
the security or ownership interest, as the case may be, of Raytheon
Credit in
the Financed Aircraft related thereto is assignable by Raytheon Credit and,
except as permitted under subsection 2.7(a)(x), has been so assigned as a
first priority security interest to the Seller and by the Seller to the
Administrative Agent for the ratable benefit of the Purchasers to secure
the obligations under the related Receivable and which Financed Aircraft is
subject to no other Liens other than Permitted Aircraft Liens; including
(i) except with respect to a Foreign Receivable (other than a Registerable
Lease Receivable with a Foreign Obligor), of which the security interest
granted by the Obligor in favor of Raytheon Credit and assigned to the
Seller and/or, in the case of a Lease Receivable, by the Seller in favor of
the Administrative Agent (including, with respect to a Registerable Lease
Receivable, the security interest in the Financed Aircraft in favor of the
Administrative Agent) encumbering the related Financed Aircraft (other
than, for GA Receivables, Aircraft Accessories with respect thereto and
engines of such Financed Aircraft, if any, having a rated takeoff power of
750 horsepower or its equivalent) has been duly registered and recorded
with the FAA Registry, (ii) with respect to a Foreign Receivable (other
than a L/C Receivable and a Lease Receivable with a Foreign Obligor) of
which the security interest encumbering the related Financed Aircraft has
been duly filed, registered or recorded with each office in each
jurisdiction in which such filing, registration or recordation is necessary
to perfect the security interest therein granted (x) by the Obligor thereon
in favor of Raytheon Credit, (y) by Raytheon Credit in favor of the Seller
and (z) by the Seller in favor of the Administrative Agent for the ratable
benefit of the Purchasers and (iii) with respect to a Lease Receivable with
a Foreign Obligor (other than a Registerable Lease Receivable with a
Foreign Obligor) of which the security interest encumbering the related
Financed Aircraft has been duly filed, registered or recorded with each
office in each jurisdiction in which such filing, registration or
recordation is necessary to perfect the security interest therein granted
by the Seller in favor of the Administrative Agent for the ratable benefit
of the Purchasers;
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16
(m) as to which, upon the transfer of such Receivable pursuant to this
Agreement, either (i) the Purchasers have a perfected, valid and
enforceable first priority ownership interest in such Receivable or (ii)
the Administrative Agent for the ratable benefit of the Purchasers has a
valid, perfected and first priority security interest in such Receivable,
in each case free and clear of all Liens other than Permitted Receivable
Liens;
(n) of which (i) with respect to each Receivable other than a Lease
Receivable and a Travel Air Receivable, the related Financed Aircraft is
owned by the Obligor on the related Contract, (ii) with respect to each
Lease Receivable, except as permitted under subsection 2.7(a)(x), the
related Financed Aircraft is owned by the Seller and (iii) with respect to
each Travel Air Receivable, an undivided interest in the related Financed
Aircraft is owned by the related Obligor;
(o) of which the related Financed Aircraft is (i) with respect to each
Financed Aircraft registered in the name of the Seller, Raytheon Credit,
Travel Air or the related Obligor with the FAA, duly certified by the FAA
as to type and airworthiness and (ii) in all other cases, duly certified by
the appropriate governmental authorities in the applicable foreign
jurisdiction as to type and airworthiness;
(p) which is not subject to any existing material dispute, offset,
counterclaim or defense whatsoever (including, but not limited to, breach
of warranty) of which Raytheon Credit, the Seller or the Servicer knows or
should have known;
(q) which, together with the Contract and the Financed Aircraft related
thereto, does not, or at the time of sale (or lease, as the case may be) of
the Financed Aircraft did not, contravene any Requirements of Law
applicable thereto in any material respect (including, without limitation,
laws, rules and regulations relating to truth in lending, fair credit
billing, fair credit reporting, equal credit opportunity, fair debt
collection practices and privacy) and with respect to which no party to the
Contract related thereto is in violation of any such Requirement of Law in
any material respect;
(r) which was originated in accordance with the Credit and Collection
Policy and satisfied all requirements thereof and of the related Contract;
(s) which, except for an Extended Term Receivable, has a Final Payment Date
not later than (i) so long as no Rating Event has occurred and is
continuing, thirteen years after the Settlement Date on which such
Receivable is purchased or substituted and (ii) during the continuance of a
Rating Event, ten years after the Settlement Date on which such Receivable
is purchased or substituted;
(t)(i) for Receivables other than those Receivables referred to in clause
(g)(ii)(B) of this definition, the related Financed Aircraft has been
delivered to the Obligor (x) so long as Raytheon's Debt Rating is no lower
than BBB- or the equivalent thereof, no later than the second Settlement
Date following the Settlement Date on which undivided interests in such
Receivable are sold to the Purchasers and (y) in all other cases, no later
than the Settlement Date on which undivided interests in such Receivable
are sold to the Purchasers or (ii) for those Receivables referred to in
clause (g)(ii)(B) of this definition, the related Financed Aircraft has
been delivered to the Obligor no later than December 31, 2000;
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17
(u) except with respect to a Wholesale Receivable, on which either at least
one payment or a down payment (including a trade-in) has been made prior to
the Settlement Date on which it is purchased or substituted;
(v) the payment terms of which have not been modified other than (i) in
accordance with the Credit and Collection Policy and (ii) to an extent and
in an amount not in excess of the limitations specified in subsection
7.1(b)(iv)(x);
(w) of which the related Financed Aircraft is insured against loss, damage,
theft, hull and such other casualties as may be required pursuant to the
related Contract, including without limitation passenger legal liability,
public legal liability and property damages legal liability, the policy or
policies of which shall (i) provide that Raytheon Credit or any Affiliate
Obligor, as the case may be, is named thereunder as loss payee and is
entitled to receive 30 days prior notice of cancellation thereof, (ii)
contain a breach of warranty endorsement in favor of Raytheon Credit or any
Affiliate Obligor as the case may be, (iii) provide for insurance in an
amount, after calculation of any deductible, at least equal to the
outstanding principal of the Contract at any time and (iv) be maintained
with financially sound and reputable insurance companies;
(x) if a Lease Receivable (i) prior to the Settlement Date on which such
Lease Receivable is purchased or substituted, with respect to which all
actions required under the related lease to assign to the Administrative
Agent on behalf of the Purchasers the Seller's and Raytheon Credit's
respective rights thereunder (including, without limitation, any notice to,
consent of or acceptance by the lessee party thereto) shall have been duly
performed, (ii) prior to the Settlement Date on which such Lease Receivable
is purchased or substituted, a determination shall have been made if such
Receivable is a Registerable Lease Receivable in accordance with the
definition of such term, (iii) on the Settlement Date on which such Lease
Receivable is purchased or substituted, no Rating Event shall have occurred
and be continuing and (iv), except to the extent permitted in subsection
2.7(a)(xv), such Lease Receivable is carried on the books of the Seller as
a "sale" under GAAP;
(y) if a L/C Receivable, with respect to which the related letter of credit
(i) either (A) is issued by an Acceptable L/C Issuer or (B) if the issuer
of the related letter of credit is not an Acceptable L/C Issuer, at the
time of purchase or substitution no Rating Event has occurred and is
continuing, (ii) is issued or confirmed by a financial institution located
in the United States or which otherwise provides that drawings thereunder
may be made in the United States, (iii) is an irrevocable standby letter of
credit providing for drawings upon the occurrence of a default under the
related Contract on sight or upon presentation of certificates specified
therein, (iv) at any date of determination has an available amount equal to
the then outstanding Principal Balance of such Receivable, (v) is in full
force and effect and (vi) either (A) has an expiration date which is at
least five Business Days following the last scheduled payment date under
the related Contract or (B) provides for automatic extensions without
amendment, notice or other act by or to any Person or permits the Seller to
draw the aggregate amount then available to be drawn thereunder if not
extended;
<PAGE>
18
(z) intentionally omitted;
(aa) if an ExIm Bank Receivable, (i) at least 85% of the Principal Balance
of which is insured by the related insurance policy and such insurance
policy is in full force and effect and all premiums have been paid in full,
(ii) the related Contract of which requires the Obligor to purchase the
Aircraft at the end of the term thereof, (iii) at the time of purchase or
substitution of which no Rating Event has occurred and is continuing and
(iv) prior to the Settlement Date on which such ExIm Bank Receivable is
purchased or substituted, all actions required to assign to the
Administrative Agent on behalf of the Purchasers the Seller's and Raytheon
Credit's respective rights to amounts payable under the related insurance
policy and the Seller's rights under any lease of the related Aircraft by
an Obligor on such ExIm Bank Receivable (including, without limitation, any
notice to, consent of or acceptance by the insurer or lessee thereunder)
shall have been duly performed;
(bb) if a Wholesale Receivable, (i) the Principal Balance of which
(together with interest thereon) is payable in accordance with the original
terms thereof no later than 180 days after the original date of the
Contract related thereto, and (ii) the original maturity date thereof has
not been extended more than twice;
(cc) if a Domestic Wholesale Receivable, the related Financed Aircraft of
which has not been sold more than once or to more than one other
independent Dealer (exclusive of Dealers owned by Raytheon Credit or RAC);
(dd) if a Nonstandard Receivable, a Rating Event shall not have occurred
and be continuing;
(ee) if an Affiliate Receivable, (x) prior to the Settlement Date on which
such Affiliate Receivable is purchased or substituted, all actions required
to assign (1) to Raytheon Credit, and from Raytheon Credit to the Seller,
the Affiliate Obligor's rights under the Applicable Lease and Financed
Aircraft and (2) to the Administrative Agent, the Seller's rights under the
Financed Aircraft and the Applicable Lease (including, without limitation,
in case of clauses (1) and (2), any notice to, consent of or acceptance by
the Unaffiliated Foreign Lessee party thereto) shall have been duly
performed and the Administrative Agent, for the ratable benefit of the
Purchasers, shall have a valid, perfected and first priority security
interest in such Financed Aircraft and Applicable Lease as collateral
security for the Affiliate Obligor's obligations under such Affiliate
Receivable, free and clear of all Liens other than (i) the Lien created in
favor of Raytheon Credit and the Seller, (ii) the Lien created under this
Agreement in favor of the Administrative Agent for the ratable benefit of
the Purchasers and (iii) any Permitted Receivable Lien, (y) on the
Settlement Date on which such Affiliate Receivable is purchased or
substituted, no Rating Event shall have occurred and be continuing and (z)
the Applicable Lease related thereto is an Eligible Applicable Lease; and
(ff) which is an "Eligible Receivable" under and as defined in the
Intercompany Purchase Agreement; and
(y) with respect to any Existing Receivable, at the date of its purchase or
substitution under the Existing Agreement pursuant to which it was sold to
the Old Administrative Agent, such Receivable which was an "Eligible
Receivable" (as defined in such applicable Existing Agreement) at such
date.
<PAGE>
19
Notwithstanding any provision set forth in this definition of "Eligible
Receivable" (except clause (x)(ff)), any Receivable which otherwise qualifies to
be an "Eligible Receivable" and for which the Financed Aircraft related thereto
receives a conveyance number from the FAA on or prior to the Applicable
Settlement Date after the sale or substitution of such Receivable shall be
deemed to be an "Eligible Receivable. Further, a Receivable (other than an
Existing Receivable) created pursuant to a Contract under which (at the time of
purchase or substitution thereof) the amount scheduled to be outstanding on any
annual anniversary of the execution date of such Contract (assuming all
scheduled payments have been made prior to such date) is greater than the amount
which would have been so outstanding on such date if payments on such Contract
prior to such anniversary had been made on a thirteen year mortgage-type
amortization method, assuming a balloon payment of 30% of the original sales
price scheduled for repayment at the end of the thirteenth year, shall not be an
"Eligible Receivable".
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Excess Mesa Receivables": as of any date of determination, the
Principal Balances of all Purchased Receivables in respect of Mesa and all of
its respective Affiliates to the extent such aggregate Principal Balances exceed
an amount equal to 10% of the Outstanding Purchase Price on such date of
determination (calculated after giving effect to all proposed purchases and
substitutions on such date but excluding the Outstanding Purchase Price of
Wholesale Receivables).
"Excess Spread": as defined in subsection 2.16(b)(vi).
"Excluded Taxes" means, with respect to the Managing Facility Agent,
the Administrative Agent, either Co-Administrative Agent, any Purchaser or any
other recipient of any payment to be made by or on account of any obligation of
the Seller hereunder, (a) income or franchise taxes imposed on (or measured by)
its net income by the United States of America or by the jurisdiction under the
laws of which such recipient is organized or in which its principal office is
located or, in the case of any Purchaser, in which its applicable purchasing
office is located, (b) any branch profits taxes imposed by the United States of
America or any similar tax imposed by any other jurisdiction in which the Seller
is located and (c) in the case of a Foreign Purchaser (other than an assignee
pursuant to a request by the Seller under subsection 2.26(b)), any withholding
tax that is imposed on amounts payable to such Foreign Purchaser at the time
such Foreign Purchaser becomes a party to this Agreement or is attributable to
such Foreign Purchaser's failure or inability to comply with Section 2.23(e),
except to the extent that such Foreign Purchaser's assignor (if any) was
entitled, at the time of assignment, to receive additional amounts from the
Seller with respect to such withholding tax pursuant to Section 2.23(a).
"ExIm Bank": the Export-Import Bank of the United States and any
successor thereto.
"ExIm Bank Receivable": a Receivable, the payments of which are
insured by the ExIm Bank.
"Existing Agreements": the collective reference to the Existing
Commuter Agreement and the Existing GA Agreement.
<PAGE>
20
"Existing Affiliate Receivable": each Existing Receivable which, on
and as of the Effective Date, is an "Affiliate Receivable" under and as defined
in the Existing Agreement pursuant to which the Old Administrative Agent
purchased such Receivable.
"Existing Certified Receivable": each Existing Receivable which, on
and as of the Effective Date, is a "Certified Foreign Receivable" under and as
defined in the Existing Agreement pursuant to which the Old Administrative Agent
purchased such Receivable.
"Existing Commuter Agreement": the Amended and Restated Purchase and
Sale Agreement dated as of March 8, 1996 among Raytheon Credit, the purchasers
referred to therein, Swiss Bank Corporation, New York Branch, as administrative
agent, Bank of America NT&SA, as documentation agent and co-agent, and Swiss
Bank Corporation, New York Branch, as co-agent, as amended, supplemented or
otherwise modified from time to time.
"Existing GA Agreement": the Second Amended and Restated Purchase and
Sale Agreement dated as of March 8, 1996 among Raytheon Credit, the purchasers
referred to therein and Swiss Bank Corporation, New York Branch, as agent, as
amended, supplemented or otherwise modified from time to time.
"Existing Outstanding Balance": as of any date of determination for
any Existing Receivable, the "Outstanding Balance" thereof as determined under
the Existing Agreement pursuant to which such Existing Receivable was purchased
prior to the Effective Date.
"Existing Outstanding Purchase Price": as of any date of determination
for any Purchaser, the sum of such Purchaser's "Outstanding Purchase Price", if
any, under each of the Existing Agreements.
"Existing Principal Balance": as of any date of determination for any
Existing Receivable, the "Principal Balance" thereof as determined under the
Existing Agreement pursuant to which such Existing Receivable was purchased by
the administrative agent or agent under such Existing Agreement.
"Existing Receivables": on the Effective Date, the collective
reference to the outstanding "Purchased Receivables" under and as defined in the
Existing Agreements.
"Existing Registerable Lease Receivables": on the Effective Date, the
collective reference to the outstanding "Registerable Lease Receivables" under
and as defined in the Existing Agreements.
"Existing Uncertified Foreign Receivables": on the Effective Date, the
collective reference to the outstanding "Foreign Uncertified Receivables" under
and as defined in the Existing Agreements.
"Expense Amounts": the collective reference to amounts required to be
paid pursuant to (i) subsections 2.17(a), 2.17(b), 2.17(c) and 2.17(d) and (ii)
subsections 2.22, 2.23, 2.24 and 11.5 (to the extent that the Managing Facility
Agent, the Administrative Agent or a Purchaser has made a demand therefor).
"Expiration Date": March 9, 2001 or, if the Revolving Period is
extended pursuant to subsection 2.8, 364 days after the date of the Expiration
Date in effect at the time of such extension.
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21
"Extended Term Receivable": as of any Settlement Date, any Receivable
the Final Payment Date of which is later than (i) so long as no Rating Event has
occurred and is continuing, thirteen years after such Settlement Date and (ii)
during the continuance of a Rating Event, ten years after such Settlement Date,
and, for purposes of subsection 2.15, any Receivable the Final Payment Date of
which is extended pursuant to subsection 7.1(b)(iv) to such later date.
"FAA": the Federal Aviation Administration or any successor thereto.
"FAA Assignment": the assignment, certificate or other document to be
filed with the FAA Registry on or before the Closing Date or any Settlement Date
with respect to a Financed Aircraft related to an Eligible Receivable to be
purchased on the Closing Date or purchased or substituted on such Settlement
Date, substantially in the form of (i) in the case of an assignment by the
Seller of a security interest in a Financed Aircraft granted by an Obligor in
favor of the Seller, Exhibit A-2 (for filing on the Closing Date) or Exhibit A-3
(for filing on each Settlement Date) or, (ii) with respect to a Registerable
Lease Receivable or an ExIm Bank Receivable, if the Financed Aircraft related
thereto is (or the lessee under the related lease agrees will be) registered
under the Aviation Act, in the case of the grant by the Seller in favor of the
Administrative Agent for the ratable benefit of the Purchasers of a security
interest in a Financed Aircraft and amounts payable under the related lease
entered into with respect to such Lease Receivable or ExIm Bank Receivable,
substantially in the form of Exhibit A-4 (for filing on the Closing Date) or
Exhibit A-5 (for filing on a Settlement Date); in each case, with appropriate
modifications which may be required as a result of changes in any Requirements
of Law after the Closing Date pertaining to filings and recordings with the FAA
Registry.
"FAA Filing Date": as defined in subsection 6.1(n)(ii).
"FAA Registry": the FAA Aircraft Registry maintained on the Closing
Date at the office of the FAA located in Oklahoma City, Oklahoma.
"Final Payment Date": with respect to a Purchased Receivable, the
scheduled final maturity date (which, with respect to a Lease Receivable, shall
be the final scheduled rent payment date under the related Contract) of such
Receivable.
"Finance Charge Collections": (i) with respect to Purchased
Receivables constituting Lease Receivables a portion of the Collections
thereunder representing the interest component of such lease, such interest
component reflecting the interest rate as set forth in such lease and such
portion being calculated in accordance with Credit and Collection Policy, (ii)
with respect to all other Purchased Receivables, Collections on account of
accrued finance charges, late fees and similar items in respect of such
Purchased Receivables calculated, in each case, in accordance with the Credit
and Collection Policy and (iii) Collections deemed by the Managing Facility
Agent to be Finance Charge Collections pursuant to Section 2.16(a).
"Financed Aircraft": the Aircraft, together with all accessions
thereto, securing an Obligor's indebtedness under a Contract; provided that, the
term "Financed Aircraft" when used herein or in any other document, instrument
or certificate delivered pursuant hereto shall mean or refer to, with respect to
a Lease Receivable or an ExIm Bank Receivable, the Aircraft leased under the
Contract pursuant to which such Lease Receivable was created, together with all
accessions thereto.
<PAGE>
22
"Foreign Assignment": with respect to each Foreign Receivable (other
than a L/C Receivable) and each Affiliate Receivable, each document, instrument,
agreement (whether an assignment, security agreement, mortgage or otherwise) and
certificate appropriate for filing in the applicable office in the applicable
jurisdiction and necessary to evidence (i) in the case of Affiliate Receivables
and of Foreign Receivables which are not Lease Receivables, the Lien in the
related Financed Aircraft granted by the Obligor thereon in favor of Raytheon
Credit and the assignment thereof by Raytheon Credit to the Seller and (ii) in
the case of all such Foreign Receivables and all Affiliate Receivables, the Lien
in the related Financed Aircraft granted by the Seller (or, as applicable, the
Lien thereon assigned by the Seller) in favor of the Administrative Agent for
the ratable benefit of the Purchasers; and all other filings and recordings
necessary to perfect the Purchasers' first priority ownership or security
interests in and to the Foreign Receivables or the Affiliate Receivables, as the
case may be, and the related Contracts (including Applicable Leases) and
Financed Aircraft.
"Foreign Obligor": an Obligor which is not located (within the meaning
of Section 9-103 of the New York UCC) within the United States and is not a
citizen of the United States (as defined in the Aviation Act).
"Foreign Purchaser" means any Purchaser that is not organized under
the laws of the United States of America or a state thereof.
"Foreign Receivable": a Receivable the Obligor of which is a Foreign
Obligor.
"Foreign Wholesale Receivable": a Receivable arising under a wholesale
financing arrangement entered into by Raytheon Credit and, as Obligor
thereunder, a Dealer located (within the meaning of Section 9-103 of the New
York UCC) outside the United States.
"Frozen Pool": as defined in subsection 2.8(b)(ii).
"GAAP": generally accepted accounting principles applied on a
consistent basis.
"GA Receivable": a Receivable as to which the related Aircraft is a
General Aviation Aircraft and the Obligor of which does not own and operate a
commuter airline.
"General Aviation Aircraft": the collective reference to any aircraft
manufactured (including sub-assembly) by RAC for general aviation purposes, and
comparable general aviation aircraft manufactured by any other Person including,
in all cases, without limitation, (i) any airframe, engines (whether or not any
such engine has 750 or more rated takeoff horsepower or the equivalent of such
horsepower, and including any replacement or substituted engine), and avionics,
equipment and accessories at any time attached to, connected with or located in
any such aircraft and, to the extent covered by the recording system of the
Aviation Act, all logs, manuals and maintenance records with respect thereto and
(ii) any avionics, equipment and accessories removed from any Aircraft and, to
the extent not covered by the recording system of the Aviation Act, all logs,
manuals and maintenance records.
"Governmental Authority": any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"Great Lakes": Great Lakes Aviation, Ltd., an Iowa corporation.
<PAGE>
23
"Guarantee": the Amended and Restated Guarantee, substantially in the
form of Exhibit B, to be made by Raytheon in favor of the Managing Facility
Agent and the Purchasers, as the same may be amended, supplemented or otherwise
modified from time to time.
"Guarantee Reaffirmation": a letter from the Guarantor dated the
Amendment Effective Date consenting to the execution of this Agreement by the
Seller and the Servicer and reaffirming the Guarantor's obligations under the
Guarantee.
"Guarantor": Raytheon.
"Increasing Purchaser": as defined in Section 5.3.
"Indebtedness": with respect to any Person at any date, (a) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (other than current liabilities incurred in the
ordinary course of business and payable in accordance with customary trade
practices) or which is evidenced by a note, bond, debenture or similar
instrument, (b) all obligations of such Person under capital leases, (c) all
obligations of such Person in respect of acceptances issued or created for the
account of such Person and (d) all liabilities secured by any Lien on any
property owned by such Person even though such Person has not assumed or
otherwise become liable for the payment thereof.
"Indemnified Amounts": as defined in subsection 9.1(a).
"Indemnified Person": as defined in subsection 9.1(a).
"Indemnified Taxes": Taxes other than Excluded Taxes.
"Indemnitee": as defined in subsection 11.5(c).
"Ineligibility Event": with respect to any Purchased Receivable, any
event of the type specified in (1) clauses (i), (ii) or (iii) of subsection 2.11
or (2) clauses (vi) or (xii) of subsection 9.1(a).
"Ineligible Receivable": (a) with respect to any Purchased Receivable
other than an Existing Receivable, such Receivable, (i) at the date of its
purchase or substitution, was not an Eligible Receivable at such date, (ii)
relates to a Financed Aircraft which did not receive a conveyance number from
the FAA on or prior to the third Settlement Date (or if Raytheon's Debt Rating
is no lower than A/A2, the fourth Settlement Date; the third or fourth
Settlement Date, as applicable, the "Applicable Settlement Date") following the
date of its purchase or substitution or (iii) relates to a Financed Aircraft
which becomes a Remarketed Aircraft; and
(b) with respect to any Existing Receivable, such Receivable
(x)(i) at the date of its purchase or substitution under the Existing Agreement
pursuant to which it was sold to the administrative agent or agent under such
Existing Agreement, was not an "Eligible Receivable" (as defined in such
applicable Existing Agreement) at such date or (ii) relates to a Financed
Aircraft which did not receive a conveyance number from the FAA on or prior to
the third Settlement Date (or if Raytheon's Debt Rating is no lower than A/A2,
the fourth Settlement Date following the date of its purchase or substitution
under the applicable Existing Agreement; or
<PAGE>
24
(y) relates to a Financed Aircraft which becomes a Remarketed Aircraft; or
(z) on and as of the Closing Date (after giving effect to the transactions
contemplated under the Intercompany Purchase Agreement on such date) such
Receivable did not satisfy the criteria specified in the following clauses under
the definition of "Eligible Receivable" herein (assuming for purposes hereof,
that such clauses are applicable to the Existing Receivables): clauses (c), (h),
(k), (l) (other than any requirement that the related Financed Aircraft be free
and clear of Liens on such Effective Date), (m) (other than any requirement that
such Receivable be free and clear of Liens on such Effective Date), (n)(ii),
(o)(i), (x)(i), (y)(vi)(B), (aa)(iv) or (ee)(x) except, that, (1) with respect
to Existing Certified Receivables, prior to the Certified Opinion Delivery Date,
and with respect to all Existing Registerable Lease Receivables, prior to the
FAA Filing Date, any such Existing Registerable Lease Receivable which does not
satisfy any of the criteria specified in such clauses (to the extent such
clauses are applicable to Existing Registerable Lease Receivables) solely as a
result of the failure to make any of the filings, if any, required by subsection
6.1(n) shall not be an Ineligible Receivable and (2) with respect to Existing
Uncertified Foreign Receivables, any such Existing Receivable which does not
satisfy any of the criteria specified in such clauses (to the extent such
clauses are applicable to such type of Existing Receivable) solely as a result
of the failure to make any filing, if any, necessary to (x) continue the Lien,
if any, of the Administrative Agent, on behalf of the Purchasers, in such
Receivables, related Financed Aircraft and Applicable Leases (if applicable) and
Collections thereon with the same priority thereon as in effect immediately
prior to the Effective Date or (y) perfect the transfer by Raytheon Credit of
such Receivables, the related Financed Aircraft and Applicable Leases (if
applicable) and Collections thereon to the Seller pursuant to the Intercompany
Purchase Agreement shall not be an Ineligible Receivable.
"Interbank Rate ": for any Special Settlement Date Accrual Period, the
sum of (i) the rate of interest per annum (rounded upward to the next 1/16th of
1%) determined by the Managing Facility Agent as follows:
IBOR 1.00 - Eurodollar Reserve Percentage
plus (ii) the Applicable Margin;
Where,
Eurodollar Reserve Percentage means for any day for any Special Settlement Date
Accrual Period, the maximum reserve percentage (expressed as a decimal, rounded
upward to the next 1/100th of 1%) in effect on such day (whether or not
applicable to any Purchaser) under regulations issued from time to time by the
Board of Governors of the Federal Reserve System for determining the maximum
reserve requirement (including any emergency, supplemental or other marginal
reserve requirement) with respect to Eurocurrency funding (currently referred to
as "Eurocurrency liabilities"); and
IBOR means the rate of interest per annum determined by the Managing Facility
Agent as the rate at which dollar deposits in the approximate amount of the
Managing Facility Agent's Purchase amount for such Special Settlement Date
Accrual Period, would be offered by Bank of America, N.A.'s Grand Cayman Branch,
Grand Cayman B.W.I. (or by Bank of America, N.A.), to major banks in the
offshore dollar interbank market at their request at approximately 11:00 a.m.
(New York City time) two Business Days prior to the commencement of such Special
Settlement Date Accrual Period.
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25
"Intercompany Purchase Agreement": the Intercompany Purchase and
Contribution Agreement, dated as of March 20, 1997, between Raytheon Credit and
the Seller, as amended, supplemented or otherwise modified from time to time.
"Interest Coverage Ratio": for any period, the ratio of Consolidated
EBITDA for such period to Consolidated Net Interest Expense for such period.
"L/C Receivable": a Foreign Receivable which at any time is supported
by a standby letter of credit in an amount at least equal to the outstanding
Principal Balance on such Receivable issued in favor of the Seller and otherwise
satisfying the requirements of clause (y) of the definition of "Eligible
Receivables".
"Lease Collateral": as defined in subsection 11.12(a).
"Lease Obligations": as defined in subsection 11.12(a).
"Lease Receivable": any Receivable (other than an ExIm Bank
Receivable) created pursuant to a Contract which is a lease between Raytheon
Credit, as lessor, and the Obligor thereunder, as lessee, with respect to the
Aircraft described therein, other than any such Receivable which is also a L/C
Receivable.
"LIBO Rate": for any Accrual Period (other than a Special Settlement
Date Accrual Period), (A) the per annum rate (carried to the fifth decimal
place) equal to (i) the rate determined by the Managing Facility Agent to be the
offered rate that appears on the page of the Telerate Screen that displays an
average British Bankers Association Interest Settlement Rate (such page
currently being page number 3750) for deposits (for delivery on the Settlement
Date which is the first day of such Accrual Period) with a term approximately
equivalent to such Accrual Period, determined as of approximately 11:00 a.m.
(London, England time) two Working days prior to the Settlement Date which is
the first day of such Accrual Period or (ii) in the event the rate referenced in
the preceding clause does not appear on such page or service if such page or
service shall cease to be available, the rate determined by the Managing
Facility Agent to be the offered rate on such other page or other service that
displays an average British Bankers Association Interest Settlement Rate for
deposits (for delivery on the Settlement Date which is the first day of such
Accrual Period) with a term approximately equivalent to such Accrual Period,
determined as of approximately 11:00 a.m. (London, England time) two Working
Days prior to the Settlement Date which is the first day of such Accrual Period,
(B) if such rate cannot be calculated in accordance with clause (A), the "LIBO
Rate" for that Accrual Period will be the rate per annum equal to the average
(rounded upward to the nearest 1/16th of 1%) of the respective rates notified to
the Managing Facility Agent by each Reference Bank as the rate at which such
Reference Bank is offered U.S. dollar deposits in the London interbank
eurodollar market for a period comparable in length to such Accrual Period, at
or about 11:00 a.m. (London, England time) two Working Days prior to such
Settlement Date and in an amount comparable to such Reference Bank's pro rata
share of the Outstanding Purchase Price; or (C) if the LIBO Rate is not able to
be determined pursuant to clauses (A) or (B), the rate per annum determined by
the Managing Facility Agent in good faith, after consultation with the
Purchasers, as reasonably reflecting the aggregate funding costs of the
Purchasers.
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26
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), or preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever (including, without limitation, any conditional sale or other title
retention agreement or any financing lease having substantially the same
economic effect as any of the foregoing, and the filing of any financing
statement under the UCC or comparable law of any jurisdiction in respect of any
of the foregoing).
"Liquidity Bank": for any SPC, at any date of determination, the
collective reference to the financial institutions which at such date are
providing liquidity and/or credit facilities to or for the account of such SPC
to fund such SPC's obligations hereunder or to support the securities (if any)
issued by such SPC to fund such obligations.
"Low Wholesale Value": of any Aircraft at any date of determination,
the low wholesale value shown in the Aircraft Blue Book Price Digest most
recently published prior to such date of determination for aircraft of
substantially similar age and with comparable features as such Aircraft.
"Majority Purchasers": at any time, Purchasers the Commitment
Percentages of which aggregate at least 51%; provided that the Commitment
Percentage of any Dissenting Purchaser shall not be included in determinations
of Majority Purchasers with respect to purchases or substitutions of Receivables
or other matters not otherwise affecting Dissenting Purchasers; provided,
further, that any action taken by the Managing Facility Agent and the Purchasers
under subsection 8.2 (with the exception of subsection 8.2(b)) shall be deemed
to affect a Dissenting Purchaser.
"Managing Facility Agent": as defined in the preamble to this
Agreement.
"Material Adverse Effect": (i) with respect to the Seller, a material
adverse effect on (a) the Purchased Receivables taken as a whole, (b) the
ability of the Seller to perform its obligations under this Agreement, (c) the
validity or enforceability of this Agreement or the rights or remedies of the
Managing Facility Agent or the Purchasers under any Purchase Document or (d) the
business, assets, properties or condition (financial or other) of the Seller and
(ii) with respect to the Servicer, a material adverse effect on (a) the
Purchased Receivables taken as a whole, (b) the ability of the Servicer to
perform its obligations under this Agreement, (c) the validity or enforceability
of this Agreement or the rights or remedies of the Managing Facility Agent or
the Purchasers under any Purchase Document or (d) the business, assets,
properties or condition (financial or other) of the Servicer.
"Mesa": Mesa Airlines, Inc., a New Mexico corporation.
"Moody's": Moody's Investors Service, Inc.
"Multiemployer Plan": a Plan which is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.
"Net Recoveries": all monies collected by the Seller, the Servicer or
any other Person (from whatever source, including, without limitation, from the
refinancing of the related Financed Aircraft) on account of a Defaulted
Receivable (including, without limitation, from the sale or other disposition of
the Financed Aircraft) net of any expenses incurred by the Seller, the Servicer
or such Person in connection with the collection on such Defaulted Receivable
and the refurbishment, disposition or disposal of the related Financed Aircraft.
"1997 Agreement": as defined in the recitals hereto.
"90% Repurchase Receivables": at any date of determination, the
collective reference to the following types of Receivables:
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27
(a) L/C Receivables, the related letters of credit of which are not issued
by commercial banks which qualify as Acceptable L/C Issuers at such date,
it being understood that an L/C Receivable shall be a 25% Repurchase
Receivable if the issuer of the related letter of credit does not qualify
as an Acceptable L/C Issuer at the time such Receivable is purchased or
substituted hereunder but does so qualify on such date of determination;
(b) Uncertified Foreign Receivables (including Affiliate Receivables which
are Uncertified Foreign Receivables) which are not L/C Receivables;
(c) Foreign Wholesale Receivables;
(d) Receivables which have not received conveyance numbers from the FAA on
or prior to the Applicable Settlement Date after the sale or substitution
of such Receivable; provided, however, that (i) any such Receivable shall
be repurchased by the Seller on such Applicable Settlement Date and (ii)
Receivables which are subject to this paragraph (d) that are so repurchased
by the Seller shall not be subject to subsection 2.7(a)(viii);
(e) Excess Mesa Receivables;
(f) Operating Lease Receivables; and
(g) all other Receivables which are not 25% Repurchase Receivables or 75%
Repurchase Receivables.
"Nonstandard Receivable": a Receivable (other than a Wholesale
Receivable or a Receivable which has Mesa or Great Lakes as the Obligor) created
pursuant to a Contract under which (at the time of purchase or substitution
thereof) the amount scheduled to be outstanding on any annual anniversary of the
execution date of such Contract (assuming all scheduled payments have been made
prior to such date) is greater than the amount which would have been so
outstanding on such date if payments on such Contract prior to such anniversary
had been made on a thirteen year mortgage-type amortization method, assuming a
balloon payment of 20% (in the case of both a GA Receivable or a Commuter
Receivable) of the original sales price scheduled for repayment at the end of
the thirteenth year.
"Note Rate": with respect to any Accrual Period, a rate per annum
equal to the LIBO Rate plus the Applicable Margin and the Amortization
Adjustment, if any, calculated in accordance with this Agreement.
"Note Rate Amortization Event": an Amortization Event of the type
described in subsection 8.1(b), (c), (d), (e), (f), (g), (h), (i), (j), (l), (m)
or (n).
"Obligations": as defined in the Guarantee.
"Obligor": each Person obligated to make payments in respect of a
Receivable, including each Affiliate Obligor under an Affiliate Receivable.
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28
"Occurrence": as defined in subsection 10.5.
"Old Administrative Agent": UBS AG, Stamford Branch, as successor to
Swiss Bank Corporation, Stamford Branch, as successor to Swiss Bank Corporation,
New York Branch.
"Operating Lease Receivables": as defined in subsection 2.7(a)(xv).
"Other Taxes" means any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement or any other Purchase Document.
"Outstanding Balance": with respect to any Receivable at any date of
determination, the Purchase Price paid with respect to such Receivable less all
Principal Collections applied to such Receivable on and prior to such date of
determination.
"Outstanding Purchase Price": (a) as to all the Purchasers at any date
of determination, the aggregate Purchase Prices which at such date have been
paid to purchase Purchased Receivables (or portions thereof) in accordance with
this Agreement minus the amount of Principal Collections which have been
received by the Purchasers (including, without limitation, Principal Collections
which have been used to purchase additional Eligible Receivables pursuant to
subsection 2.15(b)) minus the amount, if any, of Excess Spread which has been
paid to the Purchasers pursuant to subsection 2.16(b)(vi)(2) and (b) as to any
Purchaser, its pro rata share of the Outstanding Purchase Price, as determined
pursuant to clause (a) above.
"Participant": as defined in subsection 11.6(b).
"Participated Receivable": a Receivable in which the Seller has a
Seller's Interest pursuant to subsection 2.4(a).
"Permitted Aircraft Lien": with respect to any Financed Aircraft which
is related to a Purchased Receivable, (A) any materialman's, mechanic's,
workman's, repairman's or other like Lien which (i) arises in favor of a Person
contracted by and on behalf of the Obligor or the Unaffiliated Foreign Lessee on
the related Contract, (ii) arises in the ordinary course of business and (iii)
(X) has been released or bonded against (or other credit assurances provided) in
favor of the Administrative Agent and the Purchasers in an amount at least equal
to the obligations secured by such Lien and otherwise in a manner reasonably
satisfactory to the Managing Facility Agent and the Required Purchasers not more
than 90 days after the earliest date on which the Seller, the Servicer or RAC
knew of such Lien or (Y) secures obligations which are being contested in good
faith by appropriate proceedings, so long as such proceedings do not involve any
material danger of the sale, forfeiture or loss of such Financed Aircraft or any
interest therein, or (B) any Lien which (i) is involuntary in nature, (ii)
secures either (X) state taxes not yet due by the Obligor on the related
Contract or which are being contested in good faith by appropriate proceedings
by the Obligor or (Y) any judgment or decree entered against such Obligor, (iii)
secures obligations which are immaterial in amount in relation to such Purchased
Receivable and (iv) does not involve any material danger of the sale, forfeiture
or loss of such Financed Aircraft, or (C) solely with respect to a Lease
Receivable, a Lien on the Financed Aircraft related thereto arising under the
related lease if the obligations of the lessee thereunder are, in accordance
with GAAP, required to be capitalized on such lessee's balance sheet or (D)
solely with respect to a Travel Air Receivable, Liens on the undivided
interest(s) in the related Financed Aircraft which are not owned by the Seller,
any affiliate of the Seller, or any Obligor under such Travel Air Receivable.
<PAGE>
29
"Permitted Receivable Lien": with respect to any Purchased Receivable,
if for any reason the Purchased Receivables are held to be the property of the
Seller or the Affiliate Obligor, as the case may be, or if for any other reason
this Agreement and the Assignments are held or deemed not to effect an absolute
sale of the Purchased Receivables, any Lien which (i) is involuntary in nature,
(ii) secures either (A) state taxes not yet due by the Seller or which are being
contested in good faith by appropriate proceedings by the Seller or any of its
Affiliates (so long as adequate reserves with respect thereto are maintained on
the books of the Seller or such Affiliate in conformity with GAAP) or (B) any
judgment or decree entered against the Seller or, with respect to an Affiliate
Receivable, the related Affiliate Obligor, (iii) secures obligations which are
immaterial in amount in relation to the Purchased Receivables taken as a whole
and the related Contracts and Financed Aircraft and (iv) does not involve any
material danger of the sale, forfeiture or loss of any Purchased Receivable, the
Collections with respect thereto and the related Contract (including any
Applicable Lease), and Financed Aircraft or any other Material Adverse Effect.
"Person": an individual, partnership, limited liability company,
corporation, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of whatever
nature.
"Plan": with respect to a Person, at a particular time, any employee
benefit plan which is covered by ERISA and in respect of which such Person or a
Commonly Controlled Entity is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"Principal Balance": at any date of determination, whether before or
after the occurrence and continuance of a Rating Event, the actual unpaid
principal balance (or with respect to a Lease Receivable the aggregate amount of
unpaid lease payments discounted at the lessor's implicit interest rate for the
respective lease Contract) of a Receivable at such date of determination;
provided that the Principal Balance of any Participated Receivable or Extended
Term Receivable shall be a reference only to that portion of the actual unpaid
principal balance of such Participated Receivable or Extended Term Receivable
sold to the Purchasers hereunder at such date of determination.
"Principal Collections": with respect to each Purchased Receivable
during any Settlement Period, Collections on account of such Purchased
Receivable received during such Settlement Period minus the amount of Finance
Charge Collections for such Purchased Receivable for such Settlement Period.
Principal Collections shall include, without limitation, payments by the Seller
in respect of repurchases of Purchased Receivables pursuant to subsections
2.7(b), 2.10, 2.11, 2.12, the first sentence of subsection 2.13 and subsection
7.1(b)(iv) and after the occurrence and continuance of a Rating Event, the
portion of Net Recoveries allocated as Principal Collections pursuant to
subsection 2.15(d).
"Pro Rata Credit": as defined in subsection 2.1(d)(iii).
"Pro Rata Debit": as defined in subsection 2.1(d)(iii).
"Prohibited Jurisdiction": each jurisdiction listed on Schedule III
and any jurisdiction notified from time to time to the Seller and the Servicer
by the Managing Facility Agent, on behalf of the Purchasers, as a jurisdiction
in which any Purchaser (an "Affected Purchaser") is prohibited, as a result of
any conflict with a Requirement of Law or with any policy of such Affected
Purchaser, from making loans or other extensions of credit.
<PAGE>
30
"Purchase Discount": (a) during the continuance of a Rating Event, (i)
with respect to 25% Repurchase Receivables, 35%, (ii) with respect to 75%
Repurchase Receivables, 85% and (iii) with respect to 90% Repurchase
Receivables, 100% and (b) during the continuance of a Discount Event (which is
not also a Rating Event), with respect to all Receivables, 10%.
"Purchase Documents": the collective reference to this Agreement, the
Intercompany Purchase Agreement, each Assignment, each FAA Assignment, each
Foreign Assignment, the Repurchase Agreement and the Guarantee.
"Purchase Price": (a) with respect to any Receivable to be purchased
from the Seller or substituted by the Seller on any Settlement Date, an amount
equal to the Principal Balance of such Receivable on the last day of the
Settlement Period preceding such Settlement Date on which such Receivable is
purchased or substituted, and
(b) with respect to a Substituted Lease Receivable substituted pursuant to
subsection 2.13(e), the amount equal to the Principal Balance of such
Receivable on the date on which such Substituted Lease Receivable is
substituted;
provided that, (x) if a Rating Event has occurred and is continuing as
of such Settlement Date, the Purchase Price for a Wholesale Receivable purchased
or substituted shall be reduced by the amount of the security or other deposit
made by the Obligor thereon and (y) if a Rating Event or a Discount Event has
occurred and is continuing as of such Settlement Date, the Purchase Price for
each Receivable purchased shall be the Principal Balance thereof multiplied by a
percentage equal to 100% less the applicable Purchase Discount (and less amounts
referred to in clause (x), if applicable).
"Purchased Receivable": a Receivable (or a portion thereof in the case
of a Participated Receivable or an Extended Term Receivable) which is purchased
or substituted pursuant to Section 2 (including, without limitation, subsection
2.3).
"Purchase Report": each purchase report, substantially in the form of
Exhibit I, to be delivered by the Seller on each Settlement Date.
"Purchasers": as defined in the preamble of this Agreement.
"Purchasing Party": as defined in subsection 11.6(c).
"Quarterly Receivable": any Receivable which is required to be paid in
quarterly installments.
"RAC": Raytheon Aircraft Company, a Kansas corporation and an
Affiliate of Raytheon Credit.
"RAC Repurchase Obligation": at any time, the aggregate amount of the
"Repurchase Obligation" under and as defined in the Repurchase Agreement.
"Rating Event": any time when (a) Raytheon's Debt Rating is below BBB-
or the equivalent thereof, or if for any reason Raytheon's long-term senior
unsecured debt is not rated (whether by reason of suspension or withdrawal of a
rating, or otherwise) or (b) an Amortization Event described in subsection
8.1(o) shall have occurred and be continuing.
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31
"Raytheon": Raytheon Company, a Delaware corporation and indirect
parent of the Seller, and its successors and assigns (as permitted by the
Guarantee).
"Raytheon Authorized Officers": the Chairman of the Board of
Directors, the President, the Executive Vice President-Chief Financial Officer
and the Senior Vice President-Treasurer of Raytheon.
"Receivable": the right to receive all amounts (including fees and
premiums if any) payable by the Obligor under a Contract including without
limitation any amounts payable by the Obligor or an Unaffiliated Foreign Lessee
upon the exercise of a purchase option or a prepayment option under any
Contract, security deposits, engine reserve accounts and all other right, title
and interest of the Seller under and with respect to a Contract, including,
without limitation, all amounts from time to time payable and all rights to
damages and to exercise remedies thereunder (including fees and premiums, if
any), all collateral security therefor (including, without limitation, any
Applicable Lease related thereto, and the related Financed Aircraft), guarantees
thereof (whether by the Obligor, RAC or any of such Person's Affiliates or by
any financial institution pursuant to a letter of credit issued in favor of the
Seller or any of its Affiliates), rights to payment (whether by the Obligor
thereon, any insurer or letter of credit issuer with respect thereto or any
other Person) with respect thereto and all agreements or inducements made by or
on behalf of RAC with respect to such related Contract or Financed Aircraft and
all proceeds of the foregoing.
"Reference Banks": The Chase Manhattan Bank and Bank of America, N.A.
"Refinanced Aircraft": except with respect to a new Aircraft related
to a Domestic Wholesale Receivable sold or substituted hereunder which has been
sold to more than one Dealer, any Financed Aircraft (i) manufactured (including
subassembly) by RAC, the related Obligor or Unaffiliated Foreign Lessee of which
is not the initial purchaser or lessee thereof (including any Person who has
assumed the obligations of an Obligor or Unaffiliated Foreign Lessee under a
Contract in connection with the transfer of the related Aircraft, but excluding
any Obligor or Unaffiliated Foreign Lessee who is a wholly-owned Affiliate of
such initial purchaser) or (ii) manufactured by any other Person the acquisition
of which has been financed or refinanced by Raytheon Credit.
"Register": as defined in subsection 11.6(d).
"Registerable Lease Receivable": any Lease Receivable the related
Financed Aircraft of which is determined to be property registerable in
accordance with the Aviation Act in the Seller's name with the FAA Registry,
such determination to be made by either (i) an opinion of counsel of the FAA or
(ii) an opinion of Crowe & Dunlevy (or any other law firm acceptable to the
Managing Facility Agent in its reasonable discretion) issued, in each case, as a
result of a review of the related lease prior to filing thereof in accordance
with this Agreement.
"Regulation U": Regulation U of the Board of Governors of the Federal
Reserve System.
"Reimbursable Obligations": as defined in subsection 2.14(c)(iii).
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32
"Remarketed Aircraft": any Financed Aircraft which Raytheon Credit or
any of its Affiliates, at the request of the Obligor or Unaffiliated Foreign
Lessee on the related Contract, has agreed to market and sell on behalf of such
Person after such Person has notified the Seller or any of its Affiliates (in
writing or otherwise) that it is or will be on the date its next scheduled
payment is due unable to continue to meet its obligations under the related
Contract. A Financed Aircraft shall be deemed to be a Remarketed Aircraft on the
date Raytheon Credit or any of its Affiliates agrees to market such Financed
Aircraft on such Person's behalf.
"Remittance Event": any time Raytheon's Debt Rating is below BBB- or
the equivalent thereof, or if for any reason Raytheon's long-term senior
unsecured debt is not rated (whether by reason of suspension or withdrawal of a
rating, or otherwise).
"Removed Receivable": as defined in subsection 2.13(a).
"Replaced Lease Receivable": as defined in subsection 2.13(e).
"Reporting Date": with respect to a Settlement Period, the fifth
Business Day following the last day of such Settlement Period, with the first
such Reporting Date occurring hereunder on April 10, 1997.
"Repurchase Agreement": that certain Amended and Restated Repurchase
Agreement, substantially in the form of Exhibit G, dated as of March 18, 1999,
between RAC and the Managing Facility Agent on behalf of the Purchasers, as
amended, supplemented or otherwise modified from time to time.
"Repurchase Agreement Reaffirmation": the Amendment and Reaffirmation,
dated the Amendment Effective Date, to the Repurchase Agreement whereby RAC will
consent to the execution of this Agreement by the Seller and the Servicer and
will reaffirm its obligations under the Repurchase Agreement.
"Repurchase Factor": an amount equal to A + B, where:
A = 10% of the sum of (i) 25% of the aggregate Outstanding Balances
of the 25% Repurchase Receivables, (ii) 75% of the aggregate
Outstanding Balances of the 75% Repurchase Receivables and (iii)
90% of the aggregate Outstanding Balances of the 90% Repurchase
Receivables, in each case at the time the Repurchase Factor is
calculated;
B = 10% of the sum of (i) 25% of the aggregate Outstanding Balances
of 25% Repurchase Receivables, (ii) 75% of the aggregate
Outstanding Balances of 75% Repurchase Receivables and (iii) 90%
of the aggregate Outstanding Balances of 90% Repurchase
Receivables, in each case which were Defaulted Receivables
repurchased pursuant to subsection 2.10 prior to such time (it
being understood that the purpose of this clause B is to ensure
that the Repurchase Factor is not reduced as a result of
reductions in the Outstanding Purchase Price relating to payments
under the Repurchase Obligation); provided that
(i) if an Amortization Event has occurred and is continuing, the
Repurchase Factor shall be equal to the Repurchase Factor on the date
such Amortization Event occurred,
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(ii) if during the Amortization Period a Rating Event has occurred and is
continuing, the Repurchase Factor shall be equal to the Repurchase
Factor on the date such Rating Event occurred,
(iii) if during the Amortization Period any of the concentration limitations
set forth in subsection 2.7(a) are exceeded then, until each such
breach is cured, the Repurchase Factor shall be equal to the
Repurchase Factor on the date the first such breach occurred,
(iv) notwithstanding clauses (i), (ii) and (iii), the Repurchase Factor
shall not at any time decrease (x) with respect to any Purchaser other
than a Dissenting Purchaser, below an amount equal to the greater of
(1) 1.5% of the maximum aggregate Outstanding Balances of the
Purchased Receivables which existed at any time during the Revolving
Period and (2) 10% of the sum of the Outstanding Balances on the last
day of the Revolving Period of the three Obligors (and all of their
Affiliates) of Purchased Receivables with the largest aggregate
outstanding Principal Balances and (y) with respect to any Dissenting
Purchaser, an amount equal to the greater of (1) 1.5% of the maximum
aggregate Outstanding Balances of the sum of the Purchased Receivables
which existed at any time prior to the date such Purchaser became a
Dissenting Purchaser and (2) 10% of the sum of the Outstanding
Balances on the day on which such Purchaser became a Dissenting
Purchaser of the three Obligors (and all of their Affiliates) of
Purchased Receivables with the largest aggregate outstanding Principal
Balances, and
(v) notwithstanding clauses (i), (ii), (iii) and (iv), the Repurchase
Factor shall not at any time exceed 10% of the Outstanding Purchase
Price.
"Repurchase Percentage": the percentage equivalent of a fraction, the
numerator of which is "A" as used in the definition of the term "Repurchase
Factor" at such time and the denominator of which is the aggregate Outstanding
Balances of the Purchased Receivables at such time.
"Repurchase Obligation": as defined in subsection 2.10(b).
"Repurchase Price":
(a) with respect to a repurchase of or substitution for any
Ineligible Receivable, an amount equal to the Principal Balance of such
Ineligible Receivable on the last day of the Settlement Period
preceding the Settlement Date on which such repurchase or substitution
is to be made (as shown from the Settlement Statement delivered for
such Settlement Period) less, if such Ineligible Receivable was
purchased after the occurrence of a Discount Event or Rating Event at a
discount pursuant to subsection 2.6, an amount equal to such Principal
Balance at such last day times the Purchase Discount in effect on the
Settlement Date such Ineligible Receivable was purchased plus, after a
Trigger Amortization Event, accrued interest;
(b) with respect to a repurchase of or substitution for any
Purchased Receivable which becomes a Defaulted Receivable during the
Revolving Period, an amount equal to the Principal Balance of such
Defaulted Receivable on the last day of the Settlement Period preceding
the Settlement Date on which such repurchase or substitution is to be
made (as shown from the Settlement Statement delivered for such
Settlement Period) less, if such Defaulted Receivable was purchased
after the occurrence of a Discount Event or Rating Event at a discount
pursuant to subsection 2.6, an amount equal to such Principal Balance
at such last day times the Purchase Discount in effect on the
Settlement Date such Defaulted Receivable was purchased; and
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34
(c) with respect to a repurchase of or substitution for any
Purchased Receivable which becomes a Defaulted Receivable during the
Amortization Period, an amount equal to the Principal Balance of such
Defaulted Receivable on the last day of the Settlement Period preceding
the Settlement Date on which such repurchase or substitution is to be
made (as shown from the Settlement Statement delivered for such
Settlement Period).
"Required Purchasers": at any time, Purchasers the Commitment
Percentages of which aggregate at least 67%; provided that the Commitment
Percentage of any Dissenting Purchaser shall not be included in determinations
of Required Purchasers with respect to purchases or substitutions of Receivables
or other matters not otherwise affecting Dissenting Purchasers; provided,
further, that any action taken by the Managing Facility Agent and the Purchasers
under subsection 8.2 (with the exception of subsection 8.2(b)) shall be deemed
to affect a Dissenting Purchaser.
"Requirement of Law": as to any Person, any law, treaty, rule or
regulation or final determination (after exhaustion of all appeals) of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"Responsible Officer": the president or chief credit officer
of the Seller.
"Revolving Period": the period from and including the Amendment
Effective Date to and including the earlier of (i) the Expiration Date and (ii)
the date on which the Revolving Period is terminated pursuant to subsection
8.2(b) as a result of the occurrence of an Amortization Event.
"S&P": Standard & Poor's Ratings Services.
"Secured Lease Receivables": the collective reference to (i) each
Receivable which is a Lease Receivable purchased after the date hereof and in
respect of which the filings referred to in subsection 5.2(e) have been made and
(ii) each Existing Receivable which is a "Registerable Lease Receivable" under
the Existing Agreement pursuant to which such Receivable was purchased by the
Old Administrative Agent and with respect to which all filings required under
subsection 6.1(n)(ii) have been made.
"Security Interest Leases": as defined in subsection 11.12.
"Seller": as defined in the preamble of this Agreement.
"Seller's Interest": an amount equal to the subordinated participating
interest in the Purchased Receivables purchased by the Seller (i) pursuant to
subsection 2.4(a) and subject to the terms of subsection 2.4(b), (ii) pursuant
to subsection 2.5(a) and subject to the terms of subsection 2.5(b) and (iii)
after the occurrence of a Rating Event or Discount Event, pursuant to subsection
2.6(b) and subject to the terms of subsection 2.6(c).
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35
"Semi-Annual Receivable": any Receivable which is required to be paid
in semi-annual payments.
"Servicer": the Person appointed as servicer of the Purchased
Receivables pursuant to subsection 3.1.
"Servicer Letter of Credit": an irrevocable standby letter of credit
issued in favor of the Managing Facility Agent and the Purchasers which:
(a) supports the obligations of the Servicer under this Agreement;
(b) provides for drawings on sight or upon presentation of certificates
specified therein;
(c) is issued by a commercial bank, the short term unsecured indebtedness
of which, at the date the Servicer Letter of Credit is issued and at
all times thereafter, is rated at least A-1 and P-1 by S&P and
Moody's, respectively;
(d) at any date of determination, has an expiration date which is not
earlier than the second succeeding Settlement Date after such date of
determination;
(e) at any date of determination, has an available amount equal to the
aggregate amount of Principal Collections and Finance Charge
Collections for the three Settlement Periods preceding such date of
determination; and
(f) is otherwise in form and substance satisfactory to the Managing
Facility Agent and the Majority Purchasers.
"Servicing Fee": the fee which the Servicer is entitled to receive
pursuant to subsection 3.4.
"Settlement Date": (i) with respect to a Settlement Period, the tenth
Working Day following the last day of such Settlement Period, with the first
such Settlement Date under this Agreement occurring on April 14, 1997 and (ii)
each Special Settlement Date.
"Settlement Period": each fiscal monthly period of the Seller during
each of its fiscal years during the term of this Agreement.
"Settlement Statement": a Settlement Statement delivered by the Seller
pursuant to this Agreement, substantially in the form of Exhibit C for delivery
during the Revolving Period and with appropriate modifications thereto for
delivery during the Amortization Period, in each case with appropriate
insertions.
"75% Repurchase Receivables": at any date of determination, the
collective reference to the following types of Receivables:
(a) Commuter Receivables the Obligor under which is located (within the
meaning of Section 9-103 of the New York UCC) in the United States;
(b) Certified Foreign Receivables (including Affiliate Receivables which
are Certified Foreign Receivables); and
(c) the Travel Air Receivables.
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36
"Solvent": as to any Person at any time, that (a) the fair value of
the property of such Person is greater than the amount of such Person's
liabilities (including disputed, contingent and unliquidated liabilities) as
such value is established and liabilities evaluated for purposes of Section
101(31) of the Bankruptcy Code (11 USC ss. 101(31)); (b) the present fair
saleable value of the property of such Person in an orderly liquidation of such
Person is not less than the amount that will be required to pay the probable
liability of such Person on its debts as they become absolute and matured; (c)
such Person is able to realize upon its property and pay its debts and other
liabilities (including disputed, contingent and unliquidated liabilities) as
they mature in the normal course of business; (d) such Person does not intend
to, and does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature; and (e) such
Person is not engaged in business or a transaction, and is not about to engage
in a business or a transaction, for which such Person's property would
constitute unreasonably small capital.
"SPC": each Purchaser which is a special purpose corporation
identified as such on the signature pages hereto next to the caption "SPC" and
each special purpose corporation identified as such in a Commitment Transfer
Supplement or a Transfer Notice.
"SPC Bank": each Purchaser which is identified as such on the
signature pages hereto next to the caption "SPC Bank" and immediately below the
signature of its SPC.
"Special Settlement Date": each of March 31, 2000, June 30, 2000,
September 29, 2000 and December 29, 2000.
"Special Settlement Date Accrual Period": with respect to any Special
Settlement Date, the period beginning on the third Working Day after such
Special Settlement Date and ending on the next Settlement Date; provided that,
if the notice provided for in Section 2.3 is delivered to the Managing Facility
Agent at least three Working Days before any Special Settlement Date, the
Special Settlement Date Accrual Period with respect to such Special Settlement
Date shall begin on such Special Settlement Date.
"Specified Amortization Event": (i) an Amortization Event of the type
described in subsection 8.1(a), (b), (e), (f), (j) (unless applicable to the
Servicer which is neither Raytheon Credit nor an Affiliate of Raytheon Credit),
(m), (n) or (o), or (ii) an Amortization Event of the type described in
subsection 8.1(d) if such Amortization Event could reasonably be expected to
have a Material Adverse Effect.
"Stipulated Aircraft Value": the Stipulated Aircraft Value as set
forth in any lease Contract with respect to the related Financed Aircraft.
"Subsidiary": 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.
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37
"Substituted Receivable": as defined in subsection 2.13(a).
"Substituted Lease Receivable": as defined in subsection 2.13(e).
"Syndication Materials": the collective reference to (i) the document
dated February 2000 furnished on behalf of the Seller to the Purchasers with
respect to the transactions contemplated by the Purchase Documents and (ii)
those materials relating to the Receivables and related Contracts and Financed
Aircraft and the business and operations of the Seller, RAC, Raytheon Credit and
Raytheon.
"Taxes": means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Transferee": as defined in subsection 11.6(f).
"Transfer Notice": as defined in subsection 11.6(c).
"Transferred Property": as defined in subsection 11.13(a)(i).
"Travel Air": Raytheon Travel Air Company, a Kansas corporation.
"Travel Air Aircraft": Aircraft the undivided interests in which are
sold to Obligors pursuant to Travel Air Contracts.
"Travel Air Contracts": those purchase, management and other
agreements, substantially in the form of Exhibit I hereto, pursuant to which
Travel Air has sold to an Obligor an undivided interest in an aircraft and
agreed to the management (including interchange arrangements) with respect
thereto.
"Travel Air Receivables": the collective reference to each Receivable
secured by the applicable Obligor's rights and interests in and to the Travel
Air Aircraft and the Travel Air Contracts.
"Trigger Amortization Event": any Amortization Event which occurs
during, or which pursuant to subsection 8.2(b) results in the commencement of,
the Amortization Period.
"25% Repurchase Receivables": at any date of determination, the
collective reference to the following types of Receivables:
(a) Receivables arising from the financing of General Aviation Aircraft,
the Obligor under which is located (within the meaning of Section
9-103 of the New York UCC) in the United States;
(b) ExIm Bank Receivables; and
(c) L/C Receivables with a letter of credit issued by an Acceptable L/C
Issuer and held by the Bailee under the Bailment Agreement.
"UCC": with respect to a specified jurisdiction, the Uniform
Commercial Code as from time to time in effect in such jurisdiction.
"Unaffiliated Foreign Lessee": with respect to any Affiliated Receivable,
the lessee under the related Applicable Lease.
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38
"Uncertified Foreign Receivables": Foreign Receivables and Affiliate
Receivables which are not Certified Foreign Receivables.
"Unsecured Foreign Receivable": a Receivable arising from the purchase of
an Aircraft by an Obligor not located (within the meaning of Section 9-103 of
the New York UCC) within the United States, the Principal Balance of which is
less than $500,000 at the time of purchase or substitution hereunder.
"Uncertified Lease Receivables": A Foreign Receivable which is a Lease
Receivable with a Foreign Obligor for which a Lien on the Financed Aircraft has
not been granted by the Seller to the Administrative Agent under Sections
2.27(a)(iii)(A) and 2.27(a)(iii)(B).
"Unsecured Receivables": the collective reference to each Receivable which
is (i) an Unsecured Foreign Receivable, (ii) an Existing Certified Receivable
with respect to which the requirements of subsection 6.1(n)(i) have not been
satisfied, (iii) an Existing Receivable which is an "Uncertified Foreign
Receivable" under and as defined in the Existing Agreement pursuant to which
such Receivable was purchased, (iv) an Existing Receivable which is a
"Registerable Lease Receivable" under the Existing Agreement pursuant to which
such Receivable was purchased and with respect to which the requirements of
subsection 6.1(n)(ii) have not been satisfied and (v) an Uncertified Lease
Receivable.
"Wholesale Receivable": a Domestic Wholesale Receivable or a Foreign
Wholesale Receivable.
"Working Day": any Business Day on which dealings in foreign currencies and
exchange between banks may be carried on in London, England.
1.2 Other Definitional Provisions. (a) Unless otherwise specified therein, all
terms defined in this Agreement shall have the defined meanings when used in any
certificate or other document made or delivered pursuant hereto.
(b) As used herein and in any certificate or other document
made or delivered pursuant hereto, accounting terms relating to the Seller and
its Subsidiaries not defined in subsection 1.1 and accounting terms partly
defined in subsection 1.1, to the extent not defined, shall have the respective
meanings given to them under GAAP.
(c) When used in this Agreement, "purchase" and its
correlative meanings shall refer to purchases of Eligible Receivables by the
Purchasers pursuant to and subject to the terms and conditions of, this
Agreement.
(d) 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, Schedule and Exhibit references are to this Agreement unless
otherwise specified.
(e) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
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39
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Agreement to Purchase and Sell; Special Purpose Purchasers; Initial
Utilization and Pro Ration. (a) Subject to the terms and conditions hereof, the
Seller agrees to sell to each Purchaser, and each Purchaser severally agrees to
purchase from the Seller from time to time during the Revolving Period,
undivided interests in Receivables with an Outstanding Purchase Price at any one
time as to such Purchaser not to exceed the amount of such Purchaser's
Commitment. The Outstanding Purchase Price of all Purchased Receivables
(exclusive of the interests of Dissenting Purchasers) at any one time shall not
exceed the aggregate Commitments then in effect. Each purchase and sale of
Receivables shall, subject to the terms and conditions hereof, take place on the
Closing Date or on any Settlement Date during the Revolving Period. Each
Purchaser's Available Commitment Percentage of the Purchase Price for the
Receivables being purchased on the Closing Date or such Settlement Date shall
not exceed such Purchaser's Available Commitment at such date (calculated before
giving effect to any such purchase). Upon the expiration of the Revolving
Period, the Commitments will be canceled, the Purchasers will have no further
commitment to purchase Receivables hereunder and Collections on the Purchased
Receivables will continue to be applied in respect of the Outstanding Purchase
Price in accordance with the terms of this Agreement.
(b) In consideration of the agreements set forth herein, upon
each purchase of Receivables hereunder, the Seller will sell, assign and
transfer to the Purchasers all of its right, title and interest in and to the
Receivables, the related Contracts (including any Applicable Leases) and
Financed Aircraft.
(c) Except for Three Rivers Funding Corporation, nothing
contained herein shall constitute a commitment by an SPC to make purchases. For
any Purchaser which is an SPC Bank, any purchase to be made by such Purchaser
may from time to time be made by the related SPC in its sole discretion and
nothing herein contained shall constitute a commitment to make purchases by such
SPC; provided that if any SPC elects not to make a purchase, its SPC Bank agrees
it will make such purchase pursuant to the terms hereof. Any purchase by an SPC
shall constitute a utilization of the Commitment of the SPC Bank.
(d) It is expressly agreed that on the Closing Date,
immediately following the purchases and sales provided for above in subsection
2.1(d) of the 1997 Agreement, each Existing Agreement was deemed amended and
restated by the 1997 Agreement.
2.2 Procedures for Making Purchases. The Seller shall give the Managing Facility
Agent irrevocable notice, which notice must be received by the Managing Facility
Agent prior to 10:00 a.m., New York City time, on the Reporting Date prior to
the Settlement Date (other than a Special Settlement Date) on which the Seller
wishes to sell Eligible Receivables hereunder (or, in the case of the initial
purchase, three Working Days prior to the Closing Date). Each such notice of a
proposed purchase shall specify the date of purchase (which shall be the Closing
Date or the Settlement Date next succeeding such Reporting Date), the aggregate
Outstanding Purchase Price of the Purchased Receivables prior to such proposed
purchase (after giving effect to the application of Collections on the related
Settlement Date), the Principal Balance and the Purchase Price for each
Receivable which the Seller proposes to sell on the Closing Date or such
Settlement Date and any other information which the Managing Facility Agent, in
its reasonable discretion, may require prior to the Closing Date or such
Settlement Date. Upon receipt of any such notice from the Seller, the Managing
Facility Agent shall promptly notify each Purchaser thereof. Prior to 11:00
a.m., New York City time, on each such Settlement Date on which a purchase has
been requested to be made, each Purchaser shall make available to the Managing
Facility Agent, in immediately available funds at the Managing Facility Agent's
office specified in subsection 11.2, the amount of such Purchaser's pro rata
share of such aggregate Purchase Price for all Receivables being purchased on
such Settlement Date. Subject to the terms and conditions hereof, the proceeds
of such purchase will then be made available (or deemed made available if
subsection 2.15 is applicable) to the Seller by the Managing Facility Agent
crediting the account of the Seller on the books of such office with the
aggregate of the amounts made available to the Managing Facility Agent by the
Purchasers and in like funds as received by the Managing Facility Agent.
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2.3 Special Settlement Dates. On each Special Settlement Date, the Seller will
be permitted to sell Eligible Receivables to the Purchasers. In connection with
any purchase of Eligible Receivables on any Special Settlement Date, the Seller
shall give the Managing Facility Agent irrevocable notice, which notice must be
received by the Managing Facility Agent prior to 10:00 a.m., New York City time
on the day which is one Business Day prior to such Special Settlement Date. Each
such notice, which shall be in the form of Exhibit H, shall specify (i) the
aggregate Outstanding Purchase Price of the Purchased Receivables prior to such
proposed purchase, (ii) the Principal Balance and the Purchase Price for each
Receivable which the Seller proposes to sell on such Special Settlement Date and
(iii) the amount of 90% Repurchase Receivables, 75% Repurchase Receivables and
25% Repurchase Receivables, respectively, included in the Receivables which the
Seller proposes to sell on such Special Settlement Date. Upon receipt of any
notice from the Seller, the Managing Facility Agent shall promptly notify each
Purchaser thereof. Prior to 11:00 a.m., New York City time, on such Special
Settlement Date, each Purchaser shall make available to the Managing Facility
Agent, in immediately available funds at the Managing Facility Agent's office
specified in Section 11.2, the amount of such Purchaser's pro rata share of the
aggregate Purchase Price for all Receivables being purchased on such Special
Settlement Date. Subject to the terms and conditions hereof, the proceeds of
such purchase will then be made available to the Seller by the Managing Facility
Agent crediting the account of the Seller on the books of such office with the
aggregate of the amounts made available to the Managing Facility Agent by the
Purchasers and in like funds as received by Managing Facility Agent.
2.4 Participated Receivables. (a) In the event that on any Settlement Date the
aggregate Available Commitments are less than the aggregate Purchase Price of
Eligible Receivables the Seller proposes to sell on such Settlement Date, and so
long as no Rating Event has occurred and is continuing, the Purchasers agree,
subject to the terms and conditions in this Agreement, to purchase an interest
in each such Receivable, the Purchase Price of which would otherwise exceed the
amount of the Available Commitments, up to the aggregate Available Commitments
then in effect. The Purchase Price for each such Receivable shall be deemed to
be the Principal Balance able to be purchased under the Available Commitments;
provided that the Available Commitments shall first be applied to purchase
Receivables other than Participated Receivables to the fullest extent available
and next to purchase Participated Receivables. The portion of each such
Receivable not available to be purchased by the Purchasers shall be an interest
of the Seller in such Receivable and shall represent the Seller's Interest in
such Participated Receivable. The Seller's Interest in each Participated
Receivable shall be subordinated and junior to the rights of the Purchasers in
accordance with the terms and conditions of subsection 2.4(b). The portion of
any Participated Receivable representing the Seller's Interest therein shall be,
subject to the terms and conditions of this Agreement, available as a Receivable
for purchase by the Purchasers on subsequent Settlement Dates.
(b) The Seller's Interest in and to each Participated
Receivable shall be subordinate and junior in right of payment and all other
rights to the rights of the Purchasers with respect to such Participated
Receivable, including, but not limited to, the rights of the Purchasers to
receive all Principal Collections and Finance Charge Collections on such
Participated Receivable. Such subordination shall be in effect until the
Principal Balance purchased by the Purchasers of the Participated Receivable,
after application of Principal Collections received on account of such
Participated Receivable, has been reduced to zero and, accordingly, the Seller
shall not (except as provided in subsection 2.16(b)) be entitled to receive any
amounts with respect to a Participated Receivable on account of the Seller's
Interest therein until such time. If the Seller receives any payment on account
of the Seller's Interest in any Participated Receivable prior to the time at
which it is entitled to retain such payment pursuant to this subsection 2.4(b),
the Seller shall hold such payment in trust for the Managing Facility Agent and
the Purchasers and shall immediately deposit such payment into the Concentration
Account.
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41
2.5 Extended Term Receivables. (a) The Purchasers agree, subject to the terms
and conditions of this Agreement, on the Closing Date and any Settlement Date to
purchase Extended Term Receivables, up to each Purchaser's Available Commitment,
for a Purchase Price equal to (a) the actual unpaid Principal Balance of such
Receivable on the last day of the Settlement Period preceding the date of
purchase less (b) the aggregate amount of principal payments scheduled to be
made thereon after the Cash Flow Cutoff Date for such Extended Term Receivable.
The portion of each such Receivable not available to be purchased by the
Purchasers shall be an interest of the Seller in such Receivable and shall
represent the Seller's Interest in such Extended Term Receivable. The Seller's
Interest in each Extended Term Receivable shall be subordinated and junior to
the rights of the Purchasers in accordance with the terms and conditions of
subsection 2.5(b). The portion of the actual unpaid principal balance of any
Extended Term Receivable representing the Seller's Interest therein shall be,
subject to the terms and conditions hereof (including, without limitation, that
principal payments scheduled to be made after the applicable Cash Flow Cutoff
Date at any date of determination are not available for purchase under this
Agreement), available for purchase by the Purchasers on subsequent Settlement
Dates.
(b) The Seller's Interest in and to each Extended Term
Receivable shall be subordinate and junior in right of payment and all other
rights to the rights of the Purchasers with respect to such Extended Term
Receivable, including, but not limited to, the rights of the Purchasers to
receive all Principal Collections and Finance Charge Collections on such
Extended Term Receivable. Such subordination shall be in effect until the
Principal Balance purchased by the Purchasers of the Extended Term Receivable,
after application of Principal Collections received on account of such Extended
Term Receivable, has been reduced to zero and, accordingly, the Seller shall not
be entitled to receive any amounts with respect to a Extended Term Receivable on
account of the Seller's Interest therein until such time. If the Seller receives
any payment on account of the Seller's Interest in any Extended Term Receivable
prior to the time at which it is entitled to retain such payment pursuant to
this subsection 2.5(b), the Seller shall hold such payment in trust for the
Managing Facility Agent and the Purchasers and shall immediately deposit such
payment into the Concentration Account.
2.6 Certain Actions Following a Rating Event and a Discount Event. (a) If a
Rating Event shall occur, then no later than the 20th Business Day following
such occurrence (provided such Rating Event shall then be continuing) the Seller
shall deposit cash into the Cash Collateral Account an amount equal to the
Repurchase Percentage times the aggregate Outstanding Purchase Price (as of the
Settlement Date preceding such date of deposit). As long as any Rating Event
continues, any amounts deposited in the Cash Collateral Account shall be applied
from time to time in accordance with subsection 2.14(c). If such Rating Event
shall cease to continue, the Managing Facility Agent shall, upon written request
of the Seller, withdraw amounts so deposited in the Cash Collateral Account and
deliver such amounts to the Seller (or upon its order).
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(b) On each Settlement Date after the occurrence and during
the continuance of a Discount Event or Rating Event, each purchase of Eligible
Receivables in accordance with the terms and conditions specified in this
Agreement shall be at a discount as specified in the proviso contained in the
definition of "Purchase Price" and the portion of such Receivable's Principal
Balance equal to the sum of the reductions and discounts required pursuant to
such proviso clause shall be an interest of the Seller in such Receivable and
shall constitute the Seller's Interest. The Seller's Interest in each Purchased
Receivable created pursuant to this clause (b) shall be subordinated and junior
to the rights of the Purchasers in accordance with the terms and conditions of
subsection 2.6(c). If a Rating Event or Discount Event is no longer continuing,
the portion of any Receivable representing the Seller's Interest created therein
pursuant to this clause (b) shall, subject to the terms and conditions of this
Agreement, be deemed to be available as a Receivable for purchase by the
Purchasers on subsequent Settlement Dates.
(c) The Seller's Interest in and to each Purchased Receivable
a portion of which is an interest of the Seller pursuant to subsection 2.6(b)
shall be subordinate and junior in right of payment and all other rights to the
rights of the Purchasers with respect to the Purchased Receivables, including,
but not limited to, the rights of the Purchasers to receive all Principal
Collections and Finance Charge Collections on the Purchased Receivables until
the Outstanding Purchase Price has been reduced to zero and all other amounts
owing to the Managing Facility Agent or any Purchaser under any Purchase
Document have been paid in full and, accordingly, the Seller shall not (except
as provided in subsection 2.16(b)) be entitled to receive any amounts on account
of the Seller's Interest in such Purchased Receivables until the Outstanding
Purchase Price has been reduced to zero and all other amounts owing to the
Managing Facility Agent or any Purchaser under any Purchase Document have been
paid in full.
(d) If a Rating Event shall occur and be continuing, Lease
Receivables, 90% Repurchase Receivables, Unsecured Foreign Receivables,
Nonstandard Receivables, ExIm Bank Receivables, Affiliate Receivables and
Receivables (other than Wholesale Receivables) the payments of which are not
required to be made at least monthly and Receivables the Obligor of which is a
Governmental Authority (other than a United States Federal Governmental
Authority) will not be eligible for purchase or substitution hereunder
(including Lease Receivables under subsection 2.13(e)).
(e) If a Rating Event shall occur and be continuing and the
Servicer makes a drawing under any letter of credit related to a L/C Receivable
pursuant to subsection 3.2(a), the Servicer shall deposit the amount of such
drawing in the Collection Account on the date deposits are required to be made
hereunder pursuant to subsection 2.14(a).
(f) If a Rating Event shall occur and be continuing the Seller
will enter into interest rate hedge arrangements in accordance with subsection
6.1(k).
(g) If a Rating Event shall occur or be continuing, the other
provisions of this Agreement regarding such event including, without limitation,
those specified in clause (k) of the definition of "Eligible Applicable Lease",
clauses (c), (x), (y), (aa), (dd) and (ee) of the definition of "Eligible
Receivable", the definition of "Purchase Price", the definition of "Repurchase
Factor", the definition of "Repurchase Price" and subsections 2.4, 2.5, 2.10,
2.11, 2.14, 2.15, 2.16, 6.1(k), 11.1 and 11.7 hereof, shall apply.
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2.7 Concentration Limits. (a) The Seller shall not sell or substitute Eligible
Receivables on any Settlement Date if, and to the extent that, after giving
effect to such sales and substitutions on such date (unless the Managing
Facility Agent and all of the Purchasers otherwise agree with respect to clauses
(i) and (ii) below and unless the Managing Facility Agent and the Required
Purchasers otherwise agree with respect to clauses (iii) through (xvi) below):
(i) the aggregate outstanding Principal Balances of all
Purchased Receivables in respect of a single Obligor and all of its
Affiliates or a single Unaffiliated Foreign Lessee and all of its
Affiliates would exceed an amount equal to 10% of the Outstanding
Purchase Price on such Settlement Date, provided, that (x) if no
Amortization Event has occurred and is continuing, the Seller may
request that the 10% concentration limit with respect to any Obligor be
waived and such waiver may be granted with the unanimous written
consent of the Purchasers; and (y) the 10% concentration limit is
hereby waived with respect to Mesa and a 15% concentration limit shall
be applicable;
(ii) the aggregate outstanding Principal Balances of Purchased
Receivables of the five Obligors and all of their Affiliates with the
largest aggregate outstanding Principal Balances would exceed an amount
equal to 35% of the Outstanding Purchase Price on such Settlement Date;
provided, that the Principal Balances of Receivables having Mesa as the
applicable Obligor shall be excluded from the foregoing concentration
limitations unless Raytheon's Debt Rating is below either BBB- or the
equivalent thereof during which time such Receivables shall be subject
to the foregoing limitations. For purposes of this subsection
2.7(a)(ii), the Obligor under an Affiliate Receivable shall be deemed
to be the Unaffiliated Foreign Lessee thereunder;
(iii) the aggregate outstanding Principal Balances of
Purchased Receivables created in connection with the financing or
refinancing of Refinanced Aircraft would constitute more than 50% of
the Outstanding Purchase Price paid for all Receivables (other than
Wholesale Receivables) on such Settlement Date;
(iv) the aggregate outstanding Principal Balances of all
Nonstandard Receivables would exceed an amount equal to 35% of the
Outstanding Purchase Price on such Settlement Date;
(v) the aggregate outstanding Principal Balances of all
Secured Lease Receivables would exceed an amount equal to 35% of the
Outstanding Purchase Price on such Settlement Date; provided that once
$250,000,000 of Bulk Sales have occurred such concentration limit shall
increase to 45%;
(vi) the aggregate outstanding Principal Balances of all
Uncertified Foreign Receivables (other than L/C Receivables and Foreign
Wholesale Receivables) would exceed an amount equal to 40% of the
Outstanding Purchase Price on such Settlement Date;
(vii) the aggregate outstanding Principal Balances of all
Purchased Receivables which are not required to be paid in consecutive
monthly installments (including, without limitation, Quarterly
Receivables and Semi-Annual Receivables but excluding those Receivables
referred to in clause (g)(ii)(B) of the definition of "Eligible
Receivables") would exceed 20% of the Outstanding Purchase Price on
such Settlement Date;
<PAGE>
44
(viii) the aggregate outstanding Principal Balances of all
Purchased Receivables with respect to which the Financed Aircraft
related thereto are without conveyance numbers from the FAA on such
Settlement Date would exceed, during such times as Raytheon's Debt
Rating is equal to the levels set forth below, the corresponding
percentage of the Outstanding Purchase Price on such Settlement Date:
Concentration
Raytheon Debt Rating Percentage Limit
-------------------- ----------------
BBB- or the equivalent thereof or higher 20%
below BBB- or the equivalent thereof 0%; or
(ix) with respect to each foreign jurisdiction (other than
Brazil, Turkey and Venezuela) whose long-term foreign currency debt
rating is rated below BBB- or the equivalent thereof, the aggregate
outstanding Principal Balances of all Purchased Receivables which are
Foreign Receivables having a Foreign Obligor located in such
jurisdiction would exceed an amount equal to 5% or, in the case of each
of Brazil, Turkey and Venezuela, 10% of the Outstanding Purchase Price
on such Settlement Date. For purposes of this clause (ix), the Obligor
under an Affiliate Receivable shall be deemed to be the Unaffiliated
Foreign Lessee thereunder;
(x) the aggregate outstanding Principal Balances of all
Unsecured Receivables on any Settlement Date would exceed an amount
equal to 30% of the Outstanding Purchase Price on such Settlement Date;
(xi) the aggregate outstanding Principal Balances of all
Wholesale Receivables would exceed an amount equal to 20% of the
Outstanding Purchase Price on such Settlement Date;
(xii) the aggregate outstanding Principal Balances of all
Unsecured Foreign Receivables the Obligor of which is a Governmental
Authority would exceed an amount equal to 2% of the Outstanding
Purchase Price on such Settlement Date;
(xiii) the aggregate outstanding Principal Balances of all
Extended Term Receivables would exceed an amount equal to 50% of the
Outstanding Purchase Price on such Settlement Date;
(xiv) the aggregate outstanding Principal Balances of all
Purchased Receivables with respect to Aircraft manufactured by any
Person other than RAC would exceed an amount equal to 2% of the
Outstanding Purchase Price on such Settlement Date;
(xv) the aggregate outstanding Principal Balances of all
Purchased Receivables which are Lease Receivables which are carried on
the books of Raytheon Credit or the Seller as operating leases
(collectively, "Operating Lease Receivables") would exceed an amount
equal to 2% of the Outstanding Purchase Price on such Settlement Date;
or
(xvi) the aggregate outstanding Principal Balances of all
Purchased Receivables with respect to which the FAA Assignment for the
Financed Aircraft related thereto (if required pursuant to subsection
5.2(e) hereof) is without a conveyance number from the FAA on the
Applicable Settlement Date would exceed an amount equal to 25% of the
Outstanding Purchase Price on such Settlement Date; provided that, if
Raytheon's Debt Rating is below BBB- or the equivalent thereof, then
such limit shall be reduced to 0%; or
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45
(xvii) the aggregate outstanding Principal Balances of all
Travel Air Receivables on any Settlement Date would exceed an amount
equal to 5% of the Outstanding Purchase Price on such Settlement Date.
(b) If any such sale or substitution on any Settlement Date
shall cause a breach of any of the limitations specified in subsections
2.7(a)(i) through 2.7(a)(xvii), the Seller shall, subject to subsection 2.13,
repurchase from the Purchasers, on the Settlement Date immediately following the
date the Managing Facility Agent notifies the Seller of such breach, sufficient
Receivables such that after such repurchase such breach shall have been remedied
(each Receivable so repurchased, a "Concentration Receivable"). The Seller shall
effect such repurchase by depositing into the Concentration Account on such
Settlement Date cash in an amount equal to the aggregate Outstanding Balances of
the Concentration Receivables plus, if a Trigger Amortization Event has occurred
and is continuing, accrued and unpaid interest thereon at the rate under the
related Contract except to the extent (without duplication) of any payment made
pursuant to subsection 2.18 for the Settlement Period during which such interest
accrued and was not paid by the related Obligor. The amount of any such deposit
shall be applied and distributed in accordance with subsections 2.15 and 2.16.
2.8 Term of Revolving Period. (a) So long as no Amortization Event has occurred
and is continuing, no more than 60 and no less than 45 days prior to the
applicable Expiration Date, the Seller may request, through the Managing
Facility Agent, that each Purchaser extend the Revolving Period, which decision
will be made by each Purchaser in its sole discretion. Such request by the
Seller shall be accompanied by an amortization schedule of Purchased Receivables
in form and substance satisfactory to the Managing Facility Agent and the
Purchasers. Upon receipt of any such request, the Managing Facility Agent shall
promptly notify each Purchaser thereof. At least 30 but not more than 45 days
prior to the applicable Expiration Date, each Purchaser shall notify the
Managing Facility Agent of such Purchaser's willingness to extend the Revolving
Period, and the Managing Facility Agent shall notify the Seller of such
willingness by the Purchasers on such 30th day. The approval of the Managing
Facility Agent and at least the Majority Purchasers (calculated as to Purchasers
which are not Dissenting Purchasers prior to the applicable Expiration Date)
shall be required to extend such Expiration Date.
(b)(i) Any Purchaser not wishing to extend the Revolving
Period (a "Dissenting Purchaser") may in its sole discretion elect to terminate
its Commitment on the Expiration Date in effect prior to any such extension of
the Revolving Period. The Dissenting Purchaser shall give the Managing Facility
Agent notice of such election at least 30 days prior to the applicable
Expiration Date, provided that failure to expressly notify the Managing Facility
Agent of a willingness to extend the Expiration Date in accordance with
subsection 2.8(a) shall be deemed an election by such Purchaser to terminate its
Commitment on the Expiration Date. Upon receipt of any notice the Managing
Facility Agent shall promptly notify each other Purchaser and the Seller
thereof. The Seller, by notice to the Managing Facility Agent, may (but shall
not be required to) request one or more other Purchasers, or seek another
financial institution acceptable to the Managing Facility Agent and the Seller,
in their reasonable discretion, to acquire the Commitment of the Dissenting
Purchaser and all amounts payable to it hereunder in accordance with subsection
11.6(c). Unless otherwise specified in connection with a transfer made pursuant
to subsection 11.6(c), a Purchaser shall become a Dissenting Purchaser pursuant
to this subsection 2.8(b) on the first day following the Expiration Date on
which its Commitment is terminated.
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46
(ii) If any Dissenting Purchaser's Commitment is not acquired
pursuant to subsection 11.6(c), such Dissenting Purchaser shall, on each
Settlement Date after the Expiration Date on which its Commitment terminates,
(A) be paid such Dissenting Purchaser's pro rata share of Principal Collections
received after such Expiration Date solely (except as provided in subsection
2.13(c)) on account of Eligible Receivables purchased or substituted on or
before such Expiration Date (based on such Dissenting Purchaser's Commitment
Percentage at the time its Commitment terminated) (as to such Dissenting
Purchaser, its "Frozen Pool"), (B) not purchase any additional Receivables after
such Expiration Date and (C) be paid interest in accordance with subsection 2.17
in respect of its Outstanding Purchase Price.
(iii) So long as the Revolving Period has not expired or
terminated, if on any Settlement Date after a Purchaser becomes a Dissenting
Purchaser its Outstanding Purchase Price is less than 10% (after giving effect
to the application of Collections on such Settlement Date) of such Dissenting
Purchaser's maximum Outstanding Purchase Price at any time prior to the date
such Purchaser became a Dissenting Purchaser, then the Seller may give the
Managing Facility Agent irrevocable notice, which must be received by the
Managing Facility Agent by 10:00 a.m., New York City time, on the Reporting Date
prior to the next succeeding Settlement Date, (A) requesting that each other
Purchaser purchase a pro rata share (based on such other Purchaser's Available
Commitment Percentage as in effect on such next succeeding Settlement Date) of
such Dissenting Purchaser's Outstanding Purchase Price (the "Buyout Amount")
subject to the approval of the Managing Facility Agent and the Majority
Purchasers or (B) stating that the Seller or an Affiliate of the Seller will
repurchase all the Dissenting Purchaser's interests in and to the Receivables in
the Frozen Pool by payment of the Buyout Amount on such next succeeding
Settlement Date; provided that no such purchase by the Purchasers shall be made
if the Buyout Amount to be paid by such Purchasers exceeds the aggregate
Available Commitments in effect on such next succeeding Settlement Date (after
giving effect to purchases from the Seller on such date). Any such purchase of
the Buyout Amount by the Purchasers shall be subject to, and shall be made upon
satisfaction of, the conditions set forth in subsection 5.2 and, in connection
therewith, the Seller shall be deemed to have made the representations and
warranties set forth in subsection 4.2 with respect to the Receivables
constituting the Frozen Pool as if such Receivables were being sold to the
Purchasers on such Settlement Date. Payment for the purchase by the Purchasers
or the repurchase by the Seller of the Frozen Pool, as the case may be, shall be
made to the Managing Facility Agent for the account of such Dissenting Purchaser
on such Settlement Date by deposit into the Concentration Account on the
Settlement Date required by this subsection 2.8(b)(iii).
2.9 Termination or Reduction of Commitments. (a) On any Settlement Date, the
Seller shall have the right to terminate the Commitments or reduce the amount
thereof by notice to the Managing Facility Agent on the preceding Reporting
Date; provided that no such termination or reduction shall be permitted if,
after giving effect thereto and to any distributions on account of the
Outstanding Purchase Price made on such Settlement Date, the then Outstanding
Purchase Price (exclusive of the interests of Dissenting Purchasers) would
exceed the Commitments then in effect. Any such reduction shall be in an amount
equal to $50,000,000 or a multiple of $1,000,000 in excess thereof and shall
permanently reduce the Commitments then in effect.
(b) On each Settlement Date the aggregate Commitment of the
Purchasers shall be reduced by an amount, if positive, equal to (i) the
aggregate amount of Bulk Sales which occurred prior to or during the related
Settlement Period less (ii) $100,000,000 less (iii) the aggregate amount of any
prior reduction of the aggregate Commitment of the Purchasers pursuant to this
subsection 2.9(b).
<PAGE>
47
(c) On the Settlement Date for the Settlement Period in which
the six month anniversary of the initial Bulk Sale occurs, the aggregate
Commitment of the Purchasers shall be reduced by $100,000,000; provided that if
after giving effect to such reduction and any distributions on account of the
Outstanding Purchase Price made on such Settlement Date the then Outstanding
Purchase Price (exclusive of the interests of Dissenting Purchasers) would
exceed the Commitments then in effect, then RARC shall be obligated to
repurchase Receivables with an aggregate Outstanding Balance equal to the amount
of such excess. The reduction of the aggregate Commitment of the Purchasers
pursuant to this subsection 2.9(c) shall be additive to any such reduction
pursuant to subsection 2.9(b).
(d) Each Purchaser's Commitment shall terminate upon the
expiration of the Revolving Period as to such Purchaser.
2.10 Defaulted Receivables; Application of Lease Security Deposits. (a) (i) On
each Settlement Date (other than a Special Settlement Date) the Seller agrees to
repurchase from the Purchasers, up to the Repurchase Obligation, all Receivables
which became Defaulted Receivables during each preceding Settlement Period with
respect to which the Seller has not substituted an Eligible Receivable pursuant
to subsection 2.13, as indicated on the Settlement Statement delivered on the
related Reporting Date. Subject to subsections 2.10(b), 2.13, 2.15(b) and clause
sixth of subsection 2.16(b), the Seller shall repurchase such Defaulted
Receivables by depositing into the Concentration Account on such Settlement Date
cash in an amount equal to the aggregate Outstanding Balances of the Defaulted
Receivables plus, if a Trigger Amortization Event has occurred and is
continuing, accrued and unpaid interest thereon at the rate under the related
Contract except to the extent (without duplication) of any payment made pursuant
to subsection 2.18 for the Settlement Period during which such interest accrued
and was not paid by the Obligor under such Contract. The amount of any such
deposit shall be applied and distributed in accordance with subsections 2.15 and
2.16. If on any Settlement Date the Repurchase Price to be paid by the Seller
for any Defaulted Receivable would cause the Repurchase Obligation then in
effect (determined on such Settlement Date) to be exceeded, the Seller shall be
deemed to acquire only a fractional interest in each Defaulted Receivable
repurchased on such Settlement Date. The numerator of such fraction shall be the
Repurchase Obligation then in effect determined on such Settlement Date and the
denominator thereof shall be the aggregate Repurchase Price for all Defaulted
Receivables on such Settlement Date. Upon any repurchase of a Defaulted
Receivable pursuant to this subsection or the Repurchase Agreement after a
Discount Event or Rating Event, the Seller's Interest shall be reduced by an
amount equal to the Purchase Discount, if any, with respect to such Defaulted
Receivable times the Principal Balance thereof on the last day of the Settlement
Period preceding the Settlement Date on which such repurchase is made. Any
Purchased Receivable related to a Remarketed Aircraft which is repurchased or
substituted for in accordance with subsection 2.11 or 2.13, respectively, shall
not be deemed to be a Defaulted Receivable.
(ii) In the event that a Rating Event occurs and is
continuing, any Net Recoveries received by the Seller (A) on account of any
Defaulted Receivable repurchased by it, RAC or the Guarantor or (B) on account
of any Defaulted Receivable which neither the Seller, RAC nor the Guarantor has
repurchased, shall be deposited into the Cash Collateral Account. In the event
that the Amortization Period ends pursuant to clause (ii) of the definition of
such term, any Net Recoveries received by the Seller after such time (A) on
account of a Defaulted Receivable repurchased by it, RAC or the Guarantor or (B)
on account of any Defaulted Receivable which none of the Seller, RAC nor the
Guarantor has repurchased shall be deposited into the Cash Collateral Account.
The Seller shall make any deposit required to be made by this subsection
2.10(a)(ii) within two Business Days after the Seller's receipt of such Net
Recoveries and such deposits shall be applied in accordance with subsections
2.15 and 2.16. The obligation of the Seller to deposit such Net Recoveries shall
survive the termination of this Agreement.
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48
(iii) The Seller agrees that, to the extent it has received a
security deposit in respect of any Lease Receivable, at the time the Seller
applies any or all of such security deposit or any or all of such security
deposit is applied (in each case pursuant to the related Contract or otherwise)
against the amounts owed in respect of a Receivable, on the next succeeding
Settlement Date the Seller shall be obligated to pay the Purchasers the amount
of such application. The Seller shall pay such obligation by depositing into the
Concentration Account on such Settlement Date cash in an amount equal to such
application. The amount of any such deposit shall be applied and distributed in
accordance with subsections 2.15 and 2.16.
(b) The maximum repurchase obligation of the Seller with
respect to Defaulted Receivables (the "Repurchase Obligation") shall be equal at
any time to (i) the Repurchase Factor in effect on the Settlement Date on which
such repurchase is to be made minus (ii) the aggregate Repurchase Prices of
Defaulted Receivables which were repurchased by the Seller pursuant to
subsection 2.10(a) prior to such time minus (iii) amounts deposited into the
Cash Collateral Account pursuant to subsection 2.14(c)(ii) plus (iv) all Net
Recoveries received by the Seller with respect to such Defaulted Receivables (or
portion thereof) so repurchased by the Seller prior to such time and not
required to be deposited into the Cash Collateral Account pursuant to subsection
2.10(a)(ii).
2.11 Ineligible Receivables. The Seller agrees to repurchase on each Settlement
Date, and the Purchasers agree to sell to the Seller on such date and in
accordance with the terms hereof, any Purchased Receivable if such Receivable is
(i) an Ineligible Receivable, (ii) an Existing Certified Receivable in respect
of which the Old Administrative Agent shall not have received on or prior to the
Certified Opinion Delivery Date (x) an opinion of foreign counsel satisfying the
requirements of subsection 2.27(c) or (y) evidence of the filings, if any,
referred to in subsection 6.1(n)(i) or (iii) an Existing Receivable in respect
of which the Old Administrative Agent shall not have received on or prior to the
FAA Filing Date evidence of the filings, if any, referred to in subsection
6.1(n)(ii) provided that, during the Amortization Period, the Purchasers, by
unanimous consent, in their sole discretion may choose not to sell any
Receivable referred to in clauses (i), (ii) or (iii) to the Seller. The Seller
shall make such repurchase on the Settlement Date first succeeding the earlier
of (x) the date on which the Seller becomes aware of facts and circumstances
giving rise to such event of ineligibility or (y) the date on which the Managing
Facility Agent notifies the Seller that such event of ineligibility has occurred
and is continuing. Subject to subsections 2.13 and 2.15(b), the Seller shall
make such repurchase by depositing in the Concentration Account cash in an
amount equal to the Repurchase Price for such Ineligible Receivable at the date
such deposit is made, except to the extent (without duplication) of any payment
made pursuant to subsection 2.18, for the Settlement Period during which such
interest accrued and was not paid by the Obligor under such Contract. The amount
of any such deposit shall be applied and distributed in accordance with
subsections 2.15 and 2.16. Except as provided in subsection 9.1, the sole
obligation of the Seller with respect to an Ineligible Receivable of the type
described in clause (i) of this subsection 2.11 shall be the requirement to
repurchase or substitute for such Receivable pursuant to this subsection 2.11 or
subsection 2.13, respectively.
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49
2.12 Rebated Receivables. If on any date the Principal Balance of any Purchased
Receivable is, or is deemed to be, reduced or adjusted or no longer payable as a
result of any rebate, discount, refund or other adjustment of such Purchased
Receivable, or any other reduction or adjustment of any payment under any
Purchased Receivable, other than any such rebate, discount refund or adjustment
permitted under subsection 7.1(b)(iv)(x), the Seller shall be deemed to have
received on such day a Collection in respect of such Purchased Receivable in the
amount of such reduction or adjustment or in the amount no longer payable (as
applicable) and shall, subject to subsection 2.15(b), deposit cash into the
Concentration Account on the next succeeding Settlement Date in an amount equal
to such reduction or adjustment or such amount no longer payable (as applicable)
plus if a Trigger Amortization Event has occurred and is continuing, accrued and
unpaid interest thereon at the rate under the related Contract except to the
extent (without duplication) of any payment made pursuant to subsection 2.18 for
the Settlement Period during which such interest accrued and was not paid by the
Obligor under such Contract. The amount of any such deposit shall be applied and
distributed in accordance with subsections 2.15 and 2.16.
2.13 Substitution of Receivables. (a) Whenever the Seller is required to
repurchase Concentration Receivables, Defaulted Receivables, or Ineligible
Receivables pursuant to subsection 2.7(b), 2.10 or 2.11, respectively, the
Seller may, subject to the terms hereof, in lieu of making such repurchase,
substitute one or more Eligible Receivables (each, a "Substituted Receivable")
therefor on the Settlement Date on which the repurchase is required to be made;
provided that the Settlement Statement delivered on the Reporting Date prior to
such Settlement Date shall contain the information required thereby with respect
to such proposed substitution. The option of the Seller to substitute one or
more Substituted Receivables for any Receivables as aforesaid is subject to the
following conditions precedent: (i) no Trigger Amortization Event has occurred
and is then continuing, (ii) if such substitution occurs during the Amortization
Period, and provided that no Trigger Amortization Event has occurred and is then
continuing, the Majority Purchasers have approved such substitution and (iii)
either the Substituted Receivable has a Final Payment Date which is not after
the Final Payment Date of the replaced Receivable (each, replaced Receivable, a
"Removed Receivable"), or if the Final Payment Date of the Substituted
Receivable is after that of the Removed Receivable, then only that portion of
the Principal Balance of such proposed Substituted Receivable which is scheduled
to be paid on or prior to the Final Payment Date of the Removed Receivable shall
be included as a Substituted Receivable. Defaulted Receivables shall be replaced
with Substituted Receivables prior to replacement of Ineligible Receivables or
Concentration Receivables with Substituted Receivables and, in each case, shall
be replaced with Substituted Receivables in the following order of priority: (i)
first, with Substituted Receivables which are 25% Repurchase Receivables, (ii)
second, with Substituted Receivables which are 75% Repurchase Receivables, and
(iii) third, with Substituted Receivables which are 90% Repurchase Receivables.
The making of such substitution shall be subject to the satisfaction of the
conditions set forth in paragraphs subsection 5.2, including, without
limitation, the delivery of an Assignment and, if applicable, an FAA Assignment
or Foreign Assignment.
(b) If the Repurchase Price of the Removed Receivable proposed
to be replaced by one or more Substituted Receivables is greater than the
aggregate Principal Balances of such Substituted Receivables, the Seller shall
deposit cash into the Concentration Account in an amount equal to such excess.
Alternatively, if the Repurchase Price of such Removed Receivable is less than
the aggregate Principal Balances of the corresponding Substituted Receivable or
Receivables, during the Revolving Period the Seller may, so long as no
Amortization Event has occurred and is continuing, request the Purchasers to
purchase such excess, to the extent of the Available Commitments, pursuant to
subsection 2.2. If such excess is not purchased for any reason set forth in this
Agreement, then each Substituted Receivable able to be substituted to the
fullest extent shall first be substituted and any remaining Substituted
Receivable shall be a Participated Receivable subject to the provisions of
subsection 2.4. During the Revolving Period, if any Substituted Receivable is an
Extended Term Receivable, then such Substituted Receivable shall be subject to
subsection 2.5 and the Cash Flow Cutoff Date for such Substituted Receivable
shall be deemed to be, initially, (i) so long as no Rating Event has occurred
and is continuing, thirteen years after the date of substitution of such
Substituted Receivable and (ii) during the continuance of a Rating Event, ten
years after the date of substitution of such Substituted Receivable.
Substitution for a Defaulted Receivable shall not reduce the Repurchase
Obligation.
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50
(c) If a Dissenting Purchaser holds an undivided interest in
any Removed Receivable then:
(i) if such Removed Receivable is an Ineligible Receivable or
a Concentration Receivable, the Seller shall pay to the Managing
Facility Agent for the account of such Dissenting Purchaser an amount
equal to the sum of (A) the product of such Dissenting Purchaser's
Commitment Percentage (determined at the time such Dissenting
Purchaser's Commitment terminated) times the Outstanding Balance for
such Removed Receivable and (B) if a Trigger Amortization Event has
occurred and is continuing, the Dissenting Purchaser's pro rata share
(determined at the time such Dissenting Purchaser's commitment
terminated) of accrued and unpaid interest on such Removed Receivable
at the rate under the related Contract except to the extent (without
duplication) of any payment made pursuant to subsection 2.18 for the
Settlement Period during which such interest accrued and was not paid
by the Obligor under such Contract; and
(ii) if such Removed Receivable is a Defaulted Receivable, (A)
and if the aggregate Available Commitments in effect on the Settlement
Date on which such substitution is to be made exceed an amount equal to
(x) the Dissenting Purchaser's Commitment Percentage (determined at the
time such Dissenting Purchaser's Commitment terminated) times (y) the
Outstanding Balance for such Removed Receivable (the "Dissenting
Purchaser's Share"), each Purchaser other than a Dissenting Purchaser
shall be deemed to purchase its Commitment Percentage of the Dissenting
Purchaser's Share by making funds therefor available to the Managing
Facility Agent for the account of such Dissenting Purchaser on the
Settlement Date on which such substitution is proposed to be made;
provided that such purchases shall be subject to the satisfaction of
the conditions set forth in subsection 5.2 and, in connection
therewith, the Seller shall be deemed to have made the representations
and warranties set forth in subsection 4.2 with respect to the
Purchased Receivables constituting the Dissenting Purchaser's Share as
if the Seller were selling such Receivables to the Purchasers on such
Settlement Date; or (B) if for any reason a purchase cannot be made
pursuant to the foregoing clause (A), the Seller shall repurchase, up
to the amount of the Repurchase Obligation on the date of such
purchase, such Dissenting Purchaser's Share on such Settlement Date up
to such Dissenting Purchaser's Commitment Percentage (determined at the
time such Dissenting Purchaser's Commitment terminated) of the
Aggregate Repurchase Obligation in effect on such Settlement Date (in
each case after giving effect to purchases, substitutions and
repurchases on such Settlement Date) plus, if a Trigger Amortization
Event has occurred and is continuing, the Dissenting Purchaser's pro
rata share (determined at the time such Dissenting Purchaser's
Commitment terminated) of accrued and unpaid interest on such Removed
Receivable at the rate under the related Contract except to the extent
(without duplication) of any payment made pursuant to subsection 2.18
for the Settlement Period during which such interest accrued and was
not paid by the Obligor under such Contract. It is understood that
determinations of the Repurchase Obligation with respect to a
Dissenting Purchaser pursuant to this subsection 2.13(c)(ii) shall be,
with respect to a L/C Receivable, made on the Settlement Date on which
such determination is made in accordance with the definitions of the
terms "90% Repurchase Receivable" and "25% Repurchase Receivable" and
the status of such L/C Receivable at such Settlement Date.
(d) Any repurchases of Receivables made pursuant to subsection
2.13(c) shall be made on the Settlement Date on which the related substitution
of Receivables is to be made.
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51
(e) On any Settlement Date (other than a Special Settlement
Date) the Seller may, with the consent of the Managing Facility Agent,
substitute a Lease Receivable which is an Eligible Receivable (a "Substituted
Lease Receivable") for a Lease Receivable (other than a Lease Receivable which
is a Defaulted Receivable, a Concentration Receivable or an Ineligible
Receivable) which was previously sold or substituted hereunder (a "Replaced
Lease Receivable") if the Seller, in the ordinary course of business and in
accordance with the Credit and Collection Policy, is entering into a new
Contract with the same Person which is the Obligor under the Contract related to
such Replaced Lease Receivable (or an Affiliate of such Person); provided that
during the Amortization Period the prior consent of the Majority Purchasers
shall be required to effect any such substitution; provided, further, that if a
Remittance Event has occurred and is continuing and if the Principal Balance of
a Substituted Lease Receivable is less than the Principal Balance of the
Replaced Lease Receivable such substitution shall occur only on a Settlement
Date and within two Business Days after such substitution is made, the Seller
shall deposit into the Concentration Account an amount equal to the difference
between the Outstanding Balance of the Replaced Lease Receivable and the
Purchase Price of the Substituted Lease Receivable. The Settlement Statement
with respect to the Settlement Period in which such substitution occurs (or the
Settlement Statement delivered with respect to the Settlement Date on which such
substitution occurs, in the case of substitutions made on a Settlement Date in
accordance with the final proviso of the preceding sentence) shall contain the
information required thereby with respect to such substitution. Upon such
substitution, the Principal Balance of the Replaced Lease Receivable shall be
deemed to be reduced to zero. The provisions of subsection 2.13(b) (except for
the first sentence thereof) shall apply as if a Replaced Lease Receivable and a
Substituted Lease Receivable are, respectively, a Removed Receivable and a
Substituted Receivable and the provisions of subsection 2.13(c)(i) (A) (without
regard to clause (B) of subsection 2.13(c)(i)) shall apply as if a Replaced
Lease Receivable is a Removed Receivable; provided that, in accordance with
subsection 2.13(d) and notwithstanding the date of substitution of a Substituted
Lease Receivable in accordance with this subsection 2.13(e), payments shall be
made to the Dissenting Purchaser with respect to a Substituted Lease Receivable
on the Settlement Date related to the Settlement Statement which contains
information with respect to such substitution. The making of such substitution
shall be subject to the satisfaction of the conditions set forth in subsection
5.2, including in each case, without limitation, the delivery of an Assignment
and FAA Assignment or a Foreign Assignment, as applicable, with respect to each
such Substituted Lease Receivable on or before the Business Day such Substituted
Lease Receivable is substituted.
(f) On any Settlement Date (other than a Special Settlement
Date) the Managing Facility Agent may, notwithstanding the provisions of
subsection 11.1 or any other provision regarding the Purchasers' rights to
consent to substitutions, without the consent of any of the Purchasers, allow
the Seller to substitute an Eligible Receivable (a "Current Receivable") for an
Eligible Receivable a payment under which is more than 30 days past due from the
original due date therefor, but which is not otherwise a Defaulted Receivable;
provided that the Settlement Statement delivered on the Reporting Date prior to
such Settlement Date shall contain the information required thereby with respect
to such proposed substitution. In addition to the consent of the Managing
Facility Agent required by the immediately preceding sentence, the Seller's
permission to substitute one or more Current Receivables for any Delinquent
Receivables is subject to the following conditions precedent: (i) no Trigger
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Amortization Event has occurred and is then continuing, (ii) if such
substitution occurs during the Amortization Period, and provided that no Trigger
Amortization Event has occurred and is then continuing, the Majority Purchasers
have approved such substitution and (iii) either the Current Receivable has a
Final Payment Date which is not after the Final Payment Date of the replaced
Delinquent Receivable or if the Final Payment Date of the Current Receivable is
after that of the replaced Delinquent Receivable, then only that portion of the
Principal Balance of such proposed Current Receivable which is scheduled to be
paid on or prior to the Final Payment Date of the replaced Delinquent Receivable
shall be included as a Purchased Receivable. If the Principal Balance of the
Delinquent Receivable proposed to be replaced by one or more Current Receivables
is greater than the aggregate Principal Balances of such Current Receivables,
the Seller shall deposit cash into the Concentration Account in an amount equal
to such excess. Alternatively, if the Principal Balance of such Delinquent
Receivable is less than the aggregate Principal Balances of the corresponding
Current Receivable or Receivables, during the Revolving Period the Seller may,
so long as no Amortization Event has occurred and is continuing, request the
Purchasers to purchase such excess, to the extent of the Available Commitments,
pursuant to subsection 2.2. If such excess is not purchased for any reason set
forth in this Agreement, then each Current Receivable able to be substituted to
the fullest extent shall first be substituted and any remaining Current
Receivable shall be a Participated Receivable subject to the provisions of
subsection 2.4. During the Revolving Period, if any Current Receivable is an
Extended Term Receivable, then such Current Receivable shall be subject to
subsection 2.5 and the Cash Flow Cutoff Date for such Current Receivable shall
be deemed to be, initially, (i) so long as no Rating Event has occurred and is
continuing, thirteen years after the date of substitution of such Current
Receivable and (ii) during the continuance of a Rating Event, ten years after
the date of substitution of such Current Receivable. Substitution for a
Delinquent Receivable shall not reduce the Repurchase Obligation.
2.14 Accounts. (a) On or before the Closing Date the Seller shall establish in
its name a segregated account with a commercial bank satisfactory to the
Managing Facility Agent (the "Collection Account"). Upon the occurrence and
during the continuance of a Remittance Event, and unless the Servicer has
provided a Servicer Letter of Credit in accordance with subsection 2.15(a), the
Seller or the Servicer shall within two Business Days after its receipt, (i)
deposit all Collections received by it directly into the Collection Account and
(ii) transfer or cause to be transferred to the Concentration Account any
Collections so deposited. Any amounts received by the Seller and not related to
the Purchased Receivables or the related Contracts or Financed Aircraft shall
not be deposited into the Collection Account. Any amounts at any time on deposit
in the Collection Account shall be transferred only to the Concentration Account
and to no other deposit or other account (including, but not limited to, any
account or sub-account maintained pursuant to Raytheon's cash management
system). The Seller hereby grants to the Managing Facility Agent for the ratable
benefit of the Purchasers a security interest in the Collection Account and all
amounts from time to time on deposit therein to secure the Obligations. The
Seller shall have no right to withdraw any amounts on deposit in the Collection
Account.
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(b) On or before the Closing Date there shall be established
with and in the name of the Managing Facility Agent a segregated account (the
"Concentration Account") which shall be maintained as a cash collateral account
subject to the exclusive dominion and control of the Managing Facility Agent for
the ratable benefit of the Purchasers. The Seller hereby grants to the Managing
Facility Agent for the ratable benefit of the Purchasers a security interest in
any of its right, title and interest in the Concentration Account and all
amounts from time to time on deposit therein and all income from the investment
of such amounts to secure, in each case, the Obligations. Funds on deposit from
time to time in the Concentration Account shall bear interest at the then
prevailing rate paid by the Managing Facility Agent for deposit accounts with
similar amounts on deposit from time to time. If at any time funds on deposit in
the Concentration Account are greater than $100,000, the Managing Facility Agent
may, but shall not be required to, unless it receives a request from the Seller
or Raytheon, invest such funds in Cash Equivalents with maturities not later
than the next succeeding Settlement Date, to the extent such requested Cash
Equivalents are available for investment. Any investment request by the Seller
or Raytheon shall be given to the Managing Facility Agent one Business Day prior
to the day the investment is to be made (which shall be a Business Day in New
York, New York and San Francisco, California) and shall specify the particular
Cash Equivalents and maturities thereof. Any interest or investment earnings on
amounts in the Concentration Account on related investments shall be retained in
the Concentration Account to be withdrawn in accordance with this subsection
2.14(b). The Managing Facility Agent shall have the right to withdraw amounts
from the Concentration Account to make the payments required to be made
hereunder from Collections. Neither the Managing Facility Agent nor any
Purchaser shall have any responsibility for any such investment and the Managing
Facility Agent shall be permitted to liquidate any such investment, without
liability for any loss occurring by reason of such liquidation, to the extent
necessary to make payments and distributions under this Agreement. The Seller
shall have no right to withdraw amounts on deposit from time to time in the
Concentration Account.
(c) (i) On or before the Closing Date there shall be
established with and in the name of the Managing Facility Agent a segregated
trust account comprised of two segregated sub-accounts, the Seller cash
collateral sub-account (the "Seller Cash Collateral Sub-Account") and the RAC
cash collateral sub-account (the "RAC Cash Collateral Sub-Account", the Seller
Cash Collateral Sub-Account and the RAC Cash Collateral Sub-Account being
referred to collectively as the "Cash Collateral Account") which shall be
maintained as a cash collateral account subject to the exclusive dominion and
control of the Managing Facility Agent for the ratable benefit of the
Purchasers. The Seller hereby grants to the Managing Facility Agent for the
ratable benefit of the Purchasers a first priority security interest in the Cash
Collateral Account and all amounts on deposit from time to time therein and all
income from the investment of such amounts to secure, in each case, the
Obligations. Funds on deposit from time to time in the Seller Cash Collateral
Sub-Account shall bear interest at the then prevailing rate paid by the Managing
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54
Facility Agent for deposit accounts with similar amounts on deposit from time to
time. If at any time funds on deposit in the Seller Cash Collateral Sub-Account
are greater than $100,000, the Managing Facility Agent may, but shall not be
required to, unless it receives a request from the Seller, invest funds on
deposit in the Seller Cash Collateral Sub-Account in Cash Equivalents with
maturities not later than the next succeeding Settlement Date (or such other
maturities as the Seller shall request and the Managing Facility Agent shall
approve), to the extent such requested Cash Equivalents are available for
investment. Any investment request by the Seller shall be given to the Managing
Facility Agent one Business Day prior to the day the investment is to be made
(which shall be a Business Day in New York, New York and San Francisco,
California) and shall specify the particular Cash Equivalents and maturities
thereof. Any interest or investment earnings on amounts in the Seller Cash
Collateral Sub-Account or related investments shall be retained in the Seller
Cash Collateral Sub-Account to be withdrawn in accordance with paragraphs (ii),
(iii) and (iv) of this subsection 2.14(c). Neither the Managing Facility Agent
nor any Purchaser shall have any responsibility for any such investment and the
Managing Facility Agent shall be permitted to liquidate any such investment,
without liability for any loss occurring by reason of such liquidation, to the
extent necessary to make payments and distributions under this Agreement. The
Seller shall have no right to withdraw amounts on deposit from time to time in
the Cash Collateral Account.
(ii) If on any Settlement Date on which the Seller is required
to repurchase Defaulted Receivables pursuant to subsection 2.10 and fails for
any reason to repurchase such Defaulted Receivables or substitute for such
Defaulted Receivables pursuant to subsection 2.13, whether or not RAC fails to
repurchase such Defaulted Receivables under the Repurchase Agreement, the
Managing Facility Agent may withdraw from amounts on deposit in the Seller Cash
Collateral Sub-Account on account of such Defaulted Receivable an amount equal
to the lesser of (A) the Repurchase Price for such Defaulted Receivable plus any
accrued and unpaid interest thereon required to be paid by subsection 2.10 and
(B) the amount then on deposit in the Seller Cash Collateral Sub-Account. It is
specifically understood and agreed that amounts on deposit in the Seller Cash
Collateral Sub-Account, whether on account of 25% Repurchase Receivables, 75%
Repurchase Receivables or 90% Repurchase Receivables, may be withdrawn as
aforesaid on account of any Defaulted Receivable, regardless of the Repurchase
Percentage associated therewith or whether the RAC Repurchase Obligation shall
be outstanding. Any amounts so withdrawn shall be deposited into the
Concentration Account and allocated and distributed pursuant to subsections 2.15
and 2.16, respectively. The Seller agrees with the Managing Facility Agent and
the Purchasers to deposit into the Seller Cash Collateral Sub-Account, without
any requirement for notice or demand therefor, the lesser of the amount
withdrawn therefrom or the sum of the Repurchase Obligation then in effect on
the date such withdrawal is made, plus interest thereon at a rate per annum
equal to the Default Rate for the period from such date of withdrawal to such
date of deposit. Deposit of amounts into the Seller Cash Collateral Sub-Account
pursuant to the preceding sentence shall, to the extent of such deposit, satisfy
the Seller's obligation to repurchase such Defaulted Receivable pursuant to
subsection 2.10.
(iii) If the Seller or the Servicer (if then Raytheon Credit
or any Affiliate thereof) shall fail to make any deposit, payment or transfer of
funds required to be made by the Seller or the Servicer under this Agreement or
any other document executed and delivered in connection herewith, including,
without limitation, any payment, deposit or transfer of funds or payment of any
indemnity required to be made pursuant to subsection 2.7(b), 2.10, 2.11, 2.12,
2.18 or 9.1 (each such payment, deposit or transfer, a "Reimbursable
Obligation"), then the Managing Facility Agent with the consent of the Majority
Purchasers may, in addition to any similar rights in favor of the Managing
Facility Agent under the Repurchase Agreement, withdraw from the Seller Cash
Collateral Sub-Account on the date such Reimbursable Obligation is due hereunder
an amount equal to the lesser of (A) such Reimbursable Obligation and (B) the
amount then on deposit in the Seller Cash Collateral Sub-Account. The Seller
agrees with the Managing Facility Agent and the Purchasers to deposit in the
Seller Cash Collateral Sub-Account, without any requirement for notice or demand
therefor, the amount withdrawn on the date such withdrawal is made, plus
interest thereon at a rate per annum equal to the Default Rate for the period
from such date of withdrawal to such date of deposit.
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(iv) No amounts on deposit in the Seller Cash Collateral
Sub-Account (including interest or investment earnings) shall be released to the
Seller until the Outstanding Purchase Price is reduced to zero and all other
amounts owing to the Managing Facility Agent or any Purchaser hereunder are paid
in full, provided, that,
(x) on each Settlement Date (other than a Special Settlement
Date) occurring during the continuance of a Rating Event, after giving
effect to all collections and distributions on such date, the amounts
on deposit in the Cash Collateral Account in excess of the Aggregate
Repurchase Obligation on such Settlement Date shall be released pro
rata based upon their respective repurchase obligations, to the Seller
and to RAC;
(y) on each Settlement Date occurring during the continuance
of a Rating Event following a Settlement Period during which Finance
Charges on Wholesale Receivables which are Quarterly Receivables have
been paid, the excess of (A) amounts which were on previous Settlement
Dates, pursuant to subsection 2.16(b)(vi), deposited into the Cash
Collateral Account as accrued Finance Charge Collections on such
Quarterly Receivables, over (B) any portion of such amounts so
previously deposited which are on such Settlement Date withdrawn from
the Cash Collateral Account by the Managing Facility Agent and applied
pursuant to subsection 2.14(c) shall be released to the Seller; and
(z) on the Business Day after the date on which the
Outstanding Purchase Price is reduced to zero and all other amounts
owing to the Managing Facility Agent and the Purchasers hereunder have
been paid in full, all amounts on deposit in the Seller Cash Collateral
Sub-Account shall be released to the Seller.
(d) On or before the Amendment Effective Date there shall be
established with and in the name of the Managing Facility Agent a segregated
account (the "Bulk Sale Account") which shall be maintained as a cash collateral
account subject to the exclusive dominion and control of the Managing Facility
Agent for the ratable benefit of the Purchasers. The Seller hereby grants to the
Managing Facility Agent for the ratable benefit of the Purchasers a security
interest in any of its right, title and interest in the Bulk Sale Account and
all amounts, including investments, from time to time on deposit therein and all
income from the investment of such amounts to secure, in each case, the
Obligations. Funds on deposit from time to time in the Bulk Sale Account shall
bear interest at the then prevailing rate paid by the Managing Facility Agent
for deposit accounts with similar amounts on deposit from time to time. If at
any time funds on deposit in the Bulk Sale Account are greater than $100,000,
the Managing Facility Agent may, but shall not be required to, unless it
receives a request from the Seller or Raytheon, invest such funds in Cash
Equivalents with maturities not later than the next succeeding Settlement Date,
to the extent such requested Cash Equivalents are available for investment. Any
such investment shall be made in the name of the Managing Facility Agent. Any
investment request by the Seller or Raytheon shall be given to the Managing
Facility Agent one Business Day prior to the day the investment is to be made
(which shall be a Business Day in New York, New York and San Francisco,
California) and shall specify the particular Cash Equivalents and maturities
thereof. Any interest or investment earnings on amounts in the Bulk Sale Account
on related investments shall be retained in the Bulk Sale Account to be
withdrawn in accordance with subsection 11.24(b). The Managing Facility Agent
shall have the right to withdraw amounts from the Bulk Sale Account to make the
payments required to be made hereunder in accordance with subsection 11.24(b).
Neither the Managing Facility Agent nor any Purchaser shall have any
responsibility for any such investment and the Managing Facility Agent shall be
permitted to liquidate any such investment, without liability for any loss
occurring by reason of such liquidation, to the extent necessary to make
payments and distributions under this Agreement. None of the Seller, the
Servicer, RAC and Raytheon shall have the right to withdraw amounts on deposit
from time to time in the Bulk Sale Account.
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2.15 Remittance and Allocation of Collections. (a) The Seller or the Servicer
shall, subject to subsection 2.14(a), deposit into or transfer to the
Concentration Account all Collections within two Business Days following receipt
thereof; provided that so long as (i) a Remittance Event has not occurred and is
continuing or (ii) following the occurrence and during the continuance of a
Remittance Event, the Servicer has provided a Servicer Letter of Credit, the
Seller or the Servicer shall make such deposit in or transfer to the
Concentration Account not later than the Settlement Date following the
Settlement Period during which such Collections were received; provided,
further, that after the occurrence and during the continuance of a Rating Event,
the Seller or the Servicer shall, at the times required by and otherwise in
accordance with this subsection 2.15(a), also deposit into or transfer to the
Concentration Account interest payments made by RAC on behalf of an Obligor
under a Wholesale Receivable.
(b) On each Reporting Date the Servicer shall allocate all
Collections received on account of the Purchased Receivables during the
preceding Settlement Period between Principal Collections and Finance Charge
Collections. All Finance Charge Collections shall be deposited in the
Concentration Account in accordance with subsection 2.15(a) and distributed
pursuant to subsection 2.16(b). All Principal Collections shall be deposited in
the Concentration Account in accordance with subsection 2.15(a) and applied in
accordance with subsection 2.16(a); provided that (i) if on any Settlement Date
during the Revolving Period the aggregate Purchase Price to be paid for
purchases to be made on such Settlement Date exceeds amounts deposited or to be
deposited into the Concentration Account by the Seller or the Servicer, as the
case may be, on or during the Settlement Period prior to such Settlement Date on
account of Principal Collections, the Seller may retain such Principal
Collections, or to the extent previously deposited into the Concentration
Account shall make payments therefrom, as application for such aggregate
Purchase Price to be paid to the Seller on such Settlement Date and amounts so
retained by or paid to the Seller shall be treated as a payment (in whole or in
part, as applicable) for such Purchase Price and (ii) to the extent the amount
of such Principal Collections exceeds the aggregate Purchase Price of Eligible
Receivables available to be purchased on such Settlement Date, the Seller or the
Servicer, as the case may be, shall deposit, to the extent not previously
deposited, such excess in the Concentration Account on or prior to such
Settlement Date for distribution in accordance with subsection 2.16. Any
purchases made pursuant to the foregoing clause (i) shall be subject to the
satisfaction of the conditions set forth in paragraphs (a) through (h) of
subsection 5.2. During the Amortization Period, all Principal Collections shall
be deposited into the Concentration Account in accordance with subsection
2.15(a) and, on the Settlement Date on or following such date of deposit, shall
be distributed in accordance with subsection 2.16. The portion of any deposit to
be made into the Concentration Account required to be made pursuant to
subsections 2.10, 2.11 or 2.12 or the first sentence of 2.13(b) (including,
without limitation, on account of a Substituted Lease Receivable) representing
the Repurchase Price for any Receivable shall be subject to the provisions of
this subsection 2.15(b).
(c) Any Principal Collections received on account of an
Extended Term Receivable during the Revolving Period shall, subject to the
satisfaction of the conditions set forth in paragraphs (a) through (h) of
subsection 5.2, be applied to purchase the next succeeding monthly payments of
such Receivable which have not been purchased and which are payable prior to the
Cash Flow Cutoff Date then applicable to such Receivable.
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(d) All Net Recoveries required to be deposited in accordance
with subsection 2.10(a)(ii) shall be deposited into the Concentration Account as
Collections. On the Reporting Date following the Settlement Period in which such
deposit is made, such Net Recoveries shall be allocated by the Managing Facility
Agent as Principal Collections and Finance Charge Collections and the Managing
Facility Agent shall notify the Servicer of such allocation the Business Day
following such Reporting Date. Such allocation shall be conclusive in the
absence of manifest error or unless the Managing Facility Agent receives notice
from the Servicer of any error made in such allocation on or before the third
Business Day after such notice is given to the Servicer and, in the event of any
dispute between the Managing Facility Agent and the Servicer with respect to
such allocation, the allocation of such Net Recoveries shall be conclusively
made by the Managing Facility Agent's independent certified public accountants
prior to the next succeeding Reporting Date. Such Net Recoveries shall be
distributed pursuant to subsection 2.16.
2.16 Distribution and Application of Collections. (a) Principal Collections. All
Principal Collections on Purchased Receivables shall be payable to the
Purchasers up to the amount of the Outstanding Purchase Price from time to time.
On each Settlement Date during the Revolving Period, Principal Collections
received during the prior Settlement Period shall be first, applied to the
aggregate Purchase Price of Eligible Receivables purchased on such Settlement
Date in accordance with the terms and conditions of this Agreement and second,
paid to the Purchasers on such Settlement Date and applied in respect of the
Outstanding Purchase Price. On each Settlement Date during the Amortization
Period, Principal Collections received during the prior Settlement Period shall
be paid to the Purchasers on such Settlement Date and applied in respect of the
Outstanding Purchase Price. Following an Amortization Event, Principal
Collections on account of the Purchase Discount applied to the Purchase Price of
Receivables purchased during a Rating Event or a Discount Event may, at the
discretion of the Managing Facility Agent, be deemed Finance Charge Collections
available to be distributed pursuant to subsections 2.16(b)(ii) and (b)(iii).
(b) Finance Charge Collections. On each Settlement Date (other
than a Special Settlement Date) funds on deposit in the Concentration Account
representing Finance Charge Collections in respect of the preceding Settlement
Period shall be distributed by the Managing Facility Agent as follows, to the
extent of funds available therefor:
(i) first, to the Servicer as payment of the Servicing Fee
for the preceding Settlement Period;
(ii) second, to the Purchasers pro rata as payment of all
interest due pursuant to subsection 2.17(a) and (c) for the preceding
Accrual Period;
(iii) third, to the Managing Facility Agent and each
Purchaser which has made a demand prior to the Reporting Date preceding
such Settlement Date, to costs payable pursuant to subsections 2.22,
2.23, 2.24 and 11.5;
(iv) fourth, to the Purchasers pro rata as payment of the
Commitment Fees for the preceding Accrual Period pursuant to subsection
2.17(d) and second, to the Managing Facility Agent as payment of the
fees referred to in subsection 2.17(e) to the extent such fees have not
been paid directly by the Seller;
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(v) fifth, if a Rating Event has occurred and is
continuing, to the extent of funds available therefor, to the Managing
Facility Agent for deposit into the Cash Collateral Account an amount
equal to Finance Charges on those Wholesale Receivables which are
Quarterly Receivables which Finance Charges have accrued during the
preceding Settlement Period and are payable under the related Contract
on a subsequent Settlement Date; and
(vi) sixth, any remaining Finance Charge Collections (such
remainder, "Excess Spread") shall be distributed as follows: (1) so
long as no Trigger Amortization Event has occurred and is continuing,
to the Seller or its designees and (2) in all other cases, 100% thereof
shall be paid to the Purchasers pro rata as payment in respect of the
Outstanding Purchase Price.
(c) All Collections received from an Obligor of any Purchased
Receivable shall be applied to Purchased Receivables of such Obligor in the
order of the age of such Purchased Receivables, starting with the oldest
outstanding amount of such Purchased Receivable (i.e., the most delinquent of
such Purchased Receivables), except if the payment is designated by such Obligor
for application to specific Receivables. All Principal Collections received on
account of any Extended Term Receivable and not used to purchase monthly
payments of such Receivable payable after its most recent Cash Flow Cutoff Date
shall be applied in the direct order of maturity thereof. Payments made by an
Obligor on account of a Receivable shall, except as otherwise specified by such
Obligor or otherwise required by contract or law and unless otherwise instructed
by the Managing Facility Agent and the Required Purchasers, be applied as a
Collection of any Purchased Receivable of such Obligor to the extent of any
amounts then due and payable thereunder before being applied to any other
indebtedness of such Obligor to the Seller or Raytheon Credit.
2.17 Interest and Fees. (a) Except as provided in paragraph (b) below, each
Purchaser's Outstanding Purchase Price shall bear interest for each day during
an Accrual Period at a rate per annum equal to the Note Rate for such Purchaser
and shall be payable on each Settlement Date (other than a Special Settlement
Date) for the immediately preceding Accrual Period. To the extent that the
Outstanding Purchase Price has not been reduced to zero on the date the
Amortization Period ends pursuant to clause (ii) of the definition of such term,
interest shall accrue pursuant to this subsection 2.17(a) regardless of whether
the Seller shall be obligated to pay Expense Amounts under subsection 2.18.
(b) The Outstanding Purchase Price for Receivables purchased
on a Special Settlement Date shall bear interest (i) at a rate per annum equal
to the Base Rate for the first three Working Days following such Special
Settlement Date and (ii) thereafter at a rate per annum equal to the Interbank
Rate for each day of the Special Settlement Date Accrual Period; provided that,
if the Seller provides the Managing Facility Agent with the notice provided for
in Section 2.3 at least three Working Days prior to the applicable Special
Settlement Date, then interest shall be calculated in accordance with clause
(ii) from such Special Settlement Date until the end of the related Special
Settlement Date Accrual Period. Interest payable under this Section 2.17(b)
shall be payable on the next Settlement Date. Beginning with the first
Settlement Date after any Special Settlement Date, interest with respect to the
Receivables purchased on such Special Settlement Date shall be calculated in
accordance with paragraph (a) above.
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(c) If all or any portion of any amount (including interest)
payable by the Seller hereunder shall not be paid when due, such overdue amount
shall bear interest at a rate per annum equal to the Note Rate plus 1% (the
"Default Rate") from the date of such non-payment until such amount is paid in
full (after as well as before judgment). The Outstanding Purchase Price shall
bear interest pursuant to, and at the times specified in, subsection 8.2(a) for
each day during an Accrual Period at a rate per annum equal to the Default Rate
until the Outstanding Purchase Price is reduced to zero (after as well as before
judgment). Any amount payable pursuant to this subsection 2.17(c) shall be
payable on each Settlement Date (other than a Special Settlement Date), or on
demand after any judgment. To the extent that the Outstanding Purchase Price has
not been reduced to zero on the date the Amortization Period ends pursuant to
clause (ii) of the definition of such term, interest shall accrue pursuant to
this subsection 2.17(c) regardless of whether the Seller shall be obligated to
pay Expense Amounts under subsection 2.18. Interest accruing pursuant to this
subsection 2.17(c) shall be payable from time to time on demand.
(d) During the period from and including the Closing Date to
the date on which the Revolving Period ends, a commitment fee (a "Commitment
Fee") shall be payable to the Managing Facility Agent for the account of each
Purchaser, payable monthly in arrears on each Settlement Date (other than a
Special Settlement Date) and computed at the rate of 0.10% per annum from and
after March 18, 1998 (0.13% per annum prior to such date) on the actual daily
amount of the Available Commitment of such Purchaser during each Accrual Period
ending prior to the Settlement Date on which the Commitment Fee is paid,
commencing on the first such Settlement Date to occur after the Closing Date.
(e) The Seller agrees to pay (i) to the Managing Facility
Agent for its account the fees set forth in the Fee Letter, dated March __,
2000, among the Managing Facility Agent, the Seller and the Guarantor in the
amounts and on the dates set forth therein and (ii) to the Syndication Agent for
its account the fees set forth in the Fee Letter, dated February __, 2000, among
the Syndication Agent, the Seller and the Guarantor in the amounts and on the
dates set forth therein.
(f) Interest and fees required to be paid under this
subsection 2.17 shall be payable regardless of whether sufficient Finance Charge
Collections therefore are on deposit in the Concentration Account on the date or
dates such interest or fees are required to be paid.
2.18 Yield Adjustment. If on any Settlement Date (other than a Special
Settlement Date) any Expense Amount is not paid in full on such Settlement Date,
then on such Settlement Date the Seller will pay to the Managing Facility Agent
for the account of each Purchaser the amounts required to pay all such Expense
Amounts in full provided, that the Seller's obligation under this subsection
2.18 in favor of any Purchaser in any calendar year shall not exceed an amount
equal to the product of the applicable Note Rate as of such date times such
Purchaser's Outstanding Purchase Price as of such date. The Seller shall not be
obligated to pay pursuant to this subsection 2.18 any Expense Amounts which
accrue after the date the Amortization Period ends; provided that the Seller
shall remain obligated to pay any Expense Amount which accrued prior to such
date (whether or not claimed prior to such date) so long as a claim for such
Expense Amount is made prior to the times set forth in the subsection hereof
governing such Expense Amount.
2.19 Computations and Payments. (a) All amounts to be paid or deposited by or on
behalf of the Seller hereunder shall be paid or deposited in accordance with the
terms hereof no later than 11:00 a.m., New York City time, on the day when due
in lawful money of the United States of America and in immediately available
funds. All computations of Commitment Fees, interest and other fees and amounts
payable hereunder shall be made on the basis of a year of 360 days for the
actual number of days elapsed (including the first but excluding the last day).
The Managing Facility Agent shall as soon as practicable notify the Seller and
the Purchasers of each determination of a LIBO Rate or an Interbank Rate.
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(b) Each determination of the Note Rate, the Interbank Rate or
the Default Rate by the Managing Facility Agent pursuant to any provision of
this Agreement shall be conclusive and binding on the Seller and the Purchasers
in the absence of manifest error. The Managing Facility Agent shall, at the
request of the Seller, deliver to the Seller a statement showing the quotations
used by the Managing Facility Agent in determining the Note Rate for any Accrual
Period.
(c) If any Reference Bank's Commitment shall terminate for any
reason whatsoever, such Reference Bank shall thereupon cease to be a Reference
Bank, and if, as a result of the foregoing, there shall only be one Reference
Bank remaining, the Managing Facility Agent (after consultation with the Seller
and the Purchasers) shall, by notice to the Seller and the Purchasers, designate
another Purchaser as a Reference Bank so that there shall at all times be at
least two Reference Banks.
(d) Each Reference Bank shall use its best efforts to furnish
quotations of rates to the Managing Facility Agent to the extent contemplated by
the definition of "LIBO Rate". If any Reference Bank shall be unable or shall
otherwise fail to supply such rates to the Managing Facility Agent upon its
request, the LIBO Rate shall be determined on the basis of the quotations of the
remaining Reference Banks or Reference Bank.
2.20 Pro Rata Treatment. (a) Except with respect to payments to a Dissenting
Purchaser pursuant to subsection 2.8(b)(ii) or 2.13(c), (i) each purchase by the
Purchasers hereunder, each payment by the Seller in respect of the Commitment
Fees and any reduction of the Commitments shall be made pro rata according to
the respective Available Commitment Percentages of the Purchasers and (ii) each
payment by the Seller in respect of the Outstanding Purchase Price and interest
thereon and any repurchase of Receivables shall be made pro rata according to
the respective Commitment Percentages of the Purchasers. The Managing Facility
Agent shall distribute payments received by or on behalf of the Seller to the
Purchasers promptly upon receipt in like funds as received.
(b) Unless the Managing Facility Agent shall have been
notified in writing by any Purchaser prior to a Settlement Date that such
Purchaser will not make available to the Managing Facility Agent the amount that
would constitute its Available Commitment Percentage of the aggregate Purchase
Price to be paid on such date, the Managing Facility Agent may assume that such
Purchaser has made such amount available to the Managing Facility Agent on such
Settlement Date, and the Managing Facility Agent may, in reliance upon such
assumption, make available to the Seller a corresponding amount. If such amount
is made available to the Managing Facility Agent on a date after such Settlement
Date, such Purchaser shall pay to the Managing Facility Agent on demand an
amount equal to the product of (i) the daily average Federal funds rate during
such period as quoted by the Managing Facility Agent, times (ii) the amount of
such Purchaser's Available Commitment Percentage of such aggregate Purchase
Price, times (iii) a fraction the numerator of which is the number of days that
elapse from and including such Settlement Date to the date on which such
Purchaser's Available Commitment Percentage of such aggregate Purchase Price
shall have become immediately available to the Managing Facility Agent and the
denominator of which is 360. A certificate of the Managing Facility Agent
submitted to any Purchaser with respect to any amounts owing under this
subsection shall be conclusive in the absence of manifest error. If such
Purchaser's Available Commitment Percentage of such aggregate Purchase Price is
not in fact made available to the Managing Facility Agent by such Purchaser
within three Business Days after such Settlement Date, then on the fourth
Business Day after such Settlement Date the Seller shall be deemed to have
repurchased participating interests in the Receivables in an amount equal to
such Purchaser's Available Commitment Percentage of the aggregate Purchase Price
paid on such Settlement Date, together with interest on such amount at the rate
per annum equal to the LIBO Rate, such repurchase to be made by a cash payment
to the Managing Facility Agent for its own account; provided that such
repurchase shall not limit the rights of the Seller against the Purchaser which
failed to make available its Available Commitment Percentage of such aggregate
Purchase Price.
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2.21 Illegality. Notwithstanding any other provision herein, if any change in
any Requirement of Law or in the interpretation or application thereof shall
make it unlawful for any Purchaser to make or maintain its proportionate share
of the Outstanding Purchase Price based on the LIBO Rate as contemplated by this
Agreement, (a) the Commitment of such Purchaser hereunder to make purchases
shall forthwith be canceled and (b) the Outstanding Purchase Price of such
Purchaser shall be paid on each Settlement Date thereafter as if such Purchaser
were a Dissenting Purchaser under subsection 2.8.
2.22 Requirements of Law. (a) In the event that any change in any Requirement of
Law or in the interpretation or application thereof or compliance by any
Purchaser with any request or directive (whether or not having the force of law)
from any central bank or other Governmental Authority (each, a "Change in Law")
made subsequent to the date hereof (or with respect to a Purchasing Party which
becomes a party hereto pursuant to subsection 11.6(c), made subsequent to the
date such Purchasing Party became a party hereto) shall:
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for
the account of, or credit extended by, any Purchaser (except any such
reserve requirement reflected in the LIBO Rate); or
(ii) impose on any Purchaser or the London interbank market
any other condition affecting this Agreement or the making of purchases
or the maintaining of a proportionate share of the Outstanding Purchase
Price by such Purchaser;
and the result of any of the foregoing shall be to increase the cost to such
Purchaser of making purchases or maintaining its proportionate share of the
Outstanding Purchase Price (or of maintaining its obligation to do any of the
foregoing) or to reduce the amount of any sum received or receivable by such
Purchaser hereunder (whether of principal, interest or otherwise), then the
Seller will pay to such Purchaser such additional amount or amounts as will
compensate such Purchaser for such additional costs incurred or reduction
suffered.
(b) If any Purchaser determines that any Change in Law
regarding capital requirements has or would have the effect of reducing the rate
of return on such Purchaser's capital or on the capital of such Purchaser's
holding company, if any, as a consequence of this Agreement or such Purchaser's
obligations hereunder, to a level below that which such Purchaser or such
Purchaser's holding company could have achieved but for such Change in Law
(taking into consideration such Purchaser's policies and the policies of such
Purchaser's holding company with respect to capital adequacy), then from time to
time the Seller will pay to such Purchaser such additional amount or amounts as
will compensate such Purchaser or such Purchaser's holding company for any such
reduction suffered.
(c) A certificate of a Purchaser setting forth the amount or
amounts necessary to compensate such Purchaser or its holding company, as the
case may be, as specified in paragraph (a) or (b) of this subsection shall be
delivered to the Seller and shall be conclusive absent manifest error. The
Seller shall pay such Purchaser the amount shown as due on any such certificate
within 10 days after receipt thereof.
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(d) Failure or delay on the part of any Purchaser to demand
compensation pursuant to this subsection shall not constitute a waiver of such
Purchaser's right to demand such compensation; provided that the Seller shall
not be required to compensate a Purchaser pursuant to this subsection for any
increased costs or reductions incurred more than six months prior to the date
that such Purchaser notifies the Seller of the Change in Law giving rise to such
increased costs or reductions and of such Purchaser's intention to claim
compensation therefor; provided further that, if the Change in Law giving rise
to such increased costs or reductions is retroactive, then the six-month period
referred to above shall be extended to include the period of retroactive effect
thereof.
2.23 Taxes. (a) Any and all payments by or an account of any obligation of the
Seller hereunder shall be made free and clear of and without deduction for any
Indemnified Taxes or Other Taxes; provided that if the Seller shall be required
to deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the
sum payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this subsection) the Managing Facility Agent, Co-Administrative Agent or
Purchaser (as the case may be) receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Seller shall make such
deductions and (iii) the Seller shall pay the full amount deducted to the
relevant Governmental Authority in accordance with applicable law.
(b) In addition, the Seller shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) The Seller shall indemnify the Managing Facility Agent,
each Co-Administrative Agent and each Purchaser, within 10 days after written
demand therefor, for the full amount of any Indemnified Taxes or Other Taxes
(including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this subsection) paid by the Managing
Facility Agent, such Co-Administrative Agent or such Purchaser, as the case may
be, and any penalties, interest and reasonable expenses arising therefrom or
with respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental Authority.
A certificate as to the amount of such payment or liability delivered to the
Seller by a Purchaser, or by the Managing Facility Agent on its own behalf or on
behalf of a Purchaser or a Co-Administrative Agent shall be conclusive absent
manifest error.
(d) As soon as practicable after any payment of Indemnified
Taxes or Other Taxes by the Seller to a Governmental Authority, the Seller shall
deliver to the Managing Facility Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Managing Facility Agent.
(e) Any Foreign Purchaser that is entitled to an exemption
from or reduction of withholding tax under the law of the jurisdiction in which
the Seller is located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Seller (with a
copy to the Managing Facility Agent), at the time or times prescribed by
applicable law or reasonably requested by the Seller, such properly completed
and executed documentation prescribed by applicable law as will permit such
payments to be made without withholding or at a reduced rate.
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2.24 Reemployment Costs. The Seller agrees to indemnify each Purchaser and to
hold each Purchaser harmless from any loss or expense (including, but not
limited to, any such loss or expense arising from interest or fees payable by a
Purchaser to lenders of funds obtained by it or them to purchase or maintain an
interest in the Purchased Receivables with respect to which the Note Rate is
determined by reference to the LIBO Rate) as a consequence of (a) default by the
Seller in the performance of its obligations hereunder, (b) any reduction in the
Outstanding Purchase Price prior to the last day of any Settlement Period, (c)
the failure of the Seller or the Servicer to make any amounts available to the
Managing Facility Agent when due hereunder or (d) any expenses (excluding legal
expenses) incurred by any Purchaser pursuant to subsection 2.21. A certificate
of such Purchaser submitted to the Seller certifying, in reasonably specific
detail, the basis for, calculation of and amounts of such additional costs shall
be conclusive in the absence of manifest error. This covenant shall survive for
a period of two years following the date on which the Amortization Period ends.
2.25 Seller's Obligations Absolute and Unconditional. The Seller's obligations
under this Section 2 to make payments, deposits and repurchases shall be
absolute and unconditional and shall be performed without regard to any set-off
which the Seller at any time may have available to it.
2.26 Mitigation Obligations; Replacement of Purchaser. (a) If any Purchaser
requests compensation under subsection 2.22, or if the Seller is required to pay
any additional amount to any Purchaser or any Governmental Authority for the
account of any Purchaser pursuant to subsection 2.23, then such Purchaser shall
use reasonable efforts to designate a different lending office for funding or
booking its purchases hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the judgment
of such Purchaser, such designation or assignment (i) would eliminate or reduce
amounts payable pursuant to subsection 2.22 or 2.23, as the case may be, in the
future and (ii) would not subject such Purchaser to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Purchaser. The Seller
hereby agrees to pay all reasonable costs and expenses incurred by any Purchaser
in connection with any such designation or assignment.
(b) If any Purchaser requests compensation under subsection
2.22, or if the Seller is required to pay any additional amount to any Purchaser
or any Governmental Authority for the account of any Purchaser pursuant to
subsection 2.23, or if any Purchaser defaults in its obligation hereunder to
make purchases or maintain its proportionate share of the Outstanding Purchase
Price or if at any time after the Effective Date any Purchaser shall cause the
Managing Facility Agent to notify the Seller and the Servicer of a Prohibited
Jurisdiction, then the Seller may, at its sole expense and effort, upon notice
to such Purchaser and the Managing Facility Agent, require such Purchaser to
assign and delegate, without recourse (in accordance with and subject to the
restrictions contained in subsection 11.6), all its interests, rights and
obligations under this Agreement to an assignee that shall assume such
obligations (which assignee may be another Purchaser, if a Purchaser accepts
such assignment); provided that (i) the Seller shall have received the prior
written consent of the Managing Facility Agent, which consent shall not
unreasonably be withheld, (ii) such Purchaser shall have received payment of an
amount equal to such Purchaser's Outstanding Purchase Price, accrued interest
thereon, accrued fees and all other amounts payable to it hereunder, from the
assignee (to the extent of such outstanding principal and accrued interest and
fees) or the Seller (in the case of all other amounts), (iii) in the case of any
such assignment resulting from a claim for compensation under subsection 2.22 or
payments required to be made pursuant to subsection 2.23, such assignment will
result in a reduction in such compensation or payments and (iv) in the case of
any such assignment resulting from a request to add an additional Prohibited
Jurisdiction, such assignee will not request that such jurisdiction be so
categorized. A Purchaser shall not be required to make any such assignment and
delegation if, prior thereto, as a result of a waiver by such Purchaser or
otherwise, the circumstances entitling the Seller to require such assignment and
delegation cease to apply.
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2.27 Designation of Affiliate Receivables and Foreign Receivables. (a) Each
Affiliate Receivable and each Foreign Receivable (other than L/C Receivables,
Unsecured Foreign Receivables and Existing Receivables) shall be designated as a
Certified Foreign Receivable or an Uncertified Foreign Receivable in accordance
with this subsection 2.27.
Except as provided in subsections 2.27(c) and (d) below, no
less than 45 days prior to the Settlement Date on which the Seller proposes to
sell or substitute an Affiliate Receivable or Foreign Receivable (other than a
L/C Receivable), the Seller shall deliver to the Servicer the following:
(i) with respect to each such Foreign Receivable other than a
Lease Receivable with a Foreign Obligor,
(A) the form(s) of Foreign Assignment(s) with respect to the
Financed Aircraft related to such Receivable, which Foreign
Assignment(s) shall be effective to perfect (A) the Lien
granted by the Obligor thereon in favor of Raytheon Credit,
(B) the assignment thereof by Raytheon Credit in favor of the
Seller and (C) the assignment of such Lien by the Seller in
favor of the Administrative Agent,
(B) the forms of all other filings and recordings (including,
without limitation, any UCC filings with filing offices in the
jurisdictions listed on Schedule II) necessary or advisable,
in the opinion of the Managing Facility Agent or the Servicer,
to perfect the Purchasers' first priority ownership or
security interests in and to such Foreign Receivable and the
related Contracts and Financed Aircraft and the Collections
with respect thereto, and
(C) (x) a form of legal opinion of counsel (a copy of which
shall be delivered to the Managing Facility Agent) admitted to
practice in the foreign jurisdiction in which the related
Foreign Obligor is located (within the meaning of Section
9-103 of the New York UCC), addressed to the Managing Facility
Agent, the Co-Administrative Agents and the Purchasers (1) to
the effect that (x) the Lien granted by the Obligor in favor
of Raytheon Credit in the related Financed Aircraft
constitutes a duly perfected, first priority Lien thereon, (y)
each of the assignment of such Lien by Raytheon Credit to the
Seller and by the Seller in favor of the Administrative Agent
(for the ratable benefit of the Purchasers) in the related
Financed Aircraft constitutes (as of its effectiveness) a duly
perfected, first priority Lien thereon (except as set forth in
paragraph (l) of the definition of "Eligible Receivables") and
(z) the assignment of such Foreign Receivable by Raytheon
Credit to the Seller and by the Seller in favor of the
Administrative Agent (for the ratable benefit of the
Purchasers) constitutes (as of its effectiveness) a duly
perfected, first priority Lien thereon (except for Permitted
Receivables Liens) and (2) covering such other matters as the
Managing Facility Agent shall reasonably request, and in all
respects satisfactory in form and substance to the Managing
Facility Agent and its counsel, or
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(y) if the Obligor of such Receivable is located (within the
meaning of Section 9-103 of the New York UCC) in a
jurisdiction covered by a previously delivered and accepted
(by the Managing Facility Agent on behalf of the Purchasers)
legal opinion, a form of certificate of a Responsible Officer
of the Seller which represents and warrants to the Managing
Facility Agent, for the benefit of the Purchasers, that the
Seller has taken all actions specified in such previously
delivered opinion and all other actions known to the Seller to
ensure that the Liens referenced in clause (A) of this
paragraph (i) are enforceable and have been duly perfected to
the same extent as set forth in such previously delivered and
accepted legal opinion;
(ii) with respect to each such Foreign Receivable which is a
Registerable Lease Receivable with a Foreign Obligor,
(A) the form of FAA Assignment with respect to the Financed
Aircraft related to such Receivable, which FAA Assignment
shall be effective to perfect the Lien granted by the Seller
thereon in favor of the Administrative Agent,
(B) the forms of all other filings and recordings (including,
without limitation, any UCC filings with filing offices in the
jurisdictions listed on Schedule II) necessary or advisable,
in the opinion of the Managing Facility Agent or the Servicer,
to perfect the Purchasers' first priority ownership or
security interests in and to such Foreign Receivable and the
related Contracts and Financed Aircraft and the Collections
with respect thereto, and
(C) (x)(1) a form of legal opinion of special FAA counsel to
the Seller to the effect that (A) the Lien granted by the
Seller in favor of the Administrative Agent (for the ratable
benefit of the Purchasers) in the related Financed Aircraft
constitutes a duly perfected, first priority Lien thereon
(except as set forth in paragraph (l) of the definition of
"Eligible Receivables") and (B) the assignment of such Foreign
Receivable by the Seller in favor of the Administrative Agent
(for the ratable benefit of the Purchasers) constitutes a duly
perfected, first priority Lien thereon (except for Permitted
Receivables Liens) and (2) a form of legal opinion of counsel
(a copy of which shall be delivered to the Managing Facility
Agent) admitted to practice in the foreign jurisdiction in
which the related Foreign Obligor is located (within the
meaning of Section 9-103 of the New York UCC), addressed to
the Managing Facility Agent, the Co-Administrative Agents and
the Purchasers to the effect that the assignment of such
Foreign Receivable by the Seller in favor of the
Administrative Agent (for the ratable benefit of the
Purchasers) constitutes a duly perfected, first priority Lien
thereon (except for Permitted Receivables Liens); each such
opinion shall also cover such other matters as the Managing
Facility Agent shall reasonably request, and shall be in all
respects satisfactory in form and substance to the Managing
Facility Agent and its counsel, or
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(y) if the Foreign Obligor of such Foreign Receivable is so
located in a jurisdiction covered by a previously delivered
and accepted (by the Managing Facility Agent on behalf of the
Purchasers) legal opinion of foreign counsel (as described in
clause (C)(x) above), a form of certificate of a Responsible
Officer of the Seller which represents and warrants to the
Managing Facility Agent, for the benefit of the Purchasers,
that the Seller has taken all actions specified in such
previously delivered opinion and all other actions known to
the Seller to ensure that the assignment of the Foreign
Receivable is enforceable and has been duly perfected to the
same extent as set forth in such previously delivered and
accepted legal opinion;
(iii) with respect to each such Foreign Receivable which is a Lease
Receivable with a Foreign Obligor, but is not a Registerable Lease
Receivable,
(A) the form of Foreign Assignment with respect to the
Financed Aircraft related to such Receivable, which Foreign
Assignment shall be effective to perfect the Lien granted
thereon by the Seller in favor of the Administrative Agent for
the ratable benefit of the Purchasers,
(B) the forms of all other filings and recordings (including,
without limitation, any UCC filings with filing offices in the
jurisdictions listed on Schedule II) necessary or advisable,
in the opinion of the Managing Facility Agent or the Servicer,
to perfect the Purchasers' first priority ownership or
security interests in and to such Foreign Receivable and the
related Contracts and Financed Aircraft and the Collections
with respect thereto, and
(C) (x) a form of legal opinion of counsel (a copy of which
shall be delivered to the Managing Facility Agent) admitted to
practice in the foreign jurisdiction in which the related
Foreign Obligor is located (within the meaning of Section
9-103 of the New York UCC), addressed to the Managing Facility
Agent, the Co-Administrative Agents and the Purchasers (1) to
the effect that (A) the Lien granted by the Seller in favor of
the Administrative Agent (for the ratable benefit of the
Purchasers) in the related Financed Aircraft constitutes a
duly perfected, first priority Lien thereon (except as set
forth in paragraph (l) of the definition of "Eligible
Receivables"), (B) the assignment by the Seller in favor of
the Administrative Agent (for the ratable benefit of the
Purchasers) of such Receivable constitutes a duly perfected,
first priority Lien thereon (except for Permitted Receivables
Liens) and (2) covering such other matters as the Managing
Facility Agent shall reasonably request, and in all respects
satisfactory in form and substance to the Managing Facility
Agent and its counsel, or
(y) if the Foreign Obligor of such Foreign Receivable is so
located in a jurisdiction covered by a previously delivered
and accepted (by the Managing Facility Agent on behalf of the
Purchasers) legal opinion, a form of certificate of a
Responsible Officer of the Seller which represents and
warrants to the Managing Facility Agent, for the benefit of
the Purchasers, that the Seller has taken all actions
specified in such previously delivered opinion and all other
actions known to the Seller to ensure that the Liens
referenced in clause (C)(x)(1)(A) and (B) of this paragraph
(iii) are enforceable and have been duly perfected to the same
extent as set forth in such previously delivered and accepted
legal opinion;
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provided, however, that notwithstanding the provisions of this subsection
2.27(a)(iii), the Seller may, at its option, decline to perform any of the
requirements of this subsection 2.27(a)(iii) with respect to any Uncertified
Lease Receivable; and
(iv) with respect to each Affiliate Receivable,
(A) the form(s) of Foreign Assignment(s) with respect to the
Financed Aircraft related to such Receivable, which Foreign
Assignment(s) shall be effective to perfect (A) the Lien
granted thereon by the Affiliate Obligor in favor of Raytheon
Credit, (B) an assignment of such Lien by Raytheon Credit in
favor of the Seller and (B) an assignment of such Lien by the
Seller in favor of the Administrative Agent for the ratable
benefit of the Purchasers,
(B) the forms of all other filings and recordings (including,
without limitation, any UCC filings with filing offices in the
jurisdictions listed on Schedule II) necessary or advisable,
in the opinion of the Managing Facility Agent or the Servicer,
to perfect (A) Raytheon Credit's first priority perfected
interest in the Applicable Lease related thereto, the Financed
Aircraft and the Collections with respect thereto, (B) the
assignment by Raytheon Credit of such Affiliate Receivable and
Raytheon Credit's interest in the Applicable Lease related
thereto, the Financed Aircraft and the Collections with
respect thereto to the Seller and (C) the Purchasers' first
priority ownership or security interests in and to such
Affiliate Receivable and the related Contracts and Financed
Aircraft and the Collections with respect thereto, and
(C) (x) a form of legal opinion of counsel (a copy of which
shall be delivered to the Managing Facility Agent) admitted to
practice in the foreign jurisdiction in which the related
Unaffiliated Foreign Lessee is located (within the meaning of
Section 9-103 of the New York UCC), addressed to the Managing
Facility Agent, the Co-Administrative Agents and the
Purchasers (1) to the effect that (A) the Lien in favor of
Raytheon Credit in the related Financed Aircraft constitutes a
duly perfected, first priority Lien thereon (except as set
forth in paragraph (l) of the definition of "Eligible
Receivables"), (B) the assignment by Raytheon Credit in favor
of the Seller of such Affiliate Receivable and Raytheon
Credit's interest in the Applicable Lease related thereto, the
Financed Aircraft and the Collections with respect thereto
constitutes a duly perfected assignment thereof and (C) the
assignment thereof by the Seller in favor of the
Administrative Agent, for the ratable benefit of the
Purchasers of such Affiliate Receivable, constitutes a duly
perfected, first priority Lien thereon (except for Permitted
Receivables Liens and except as set forth in paragraph (l) of
the definition of "Eligible Receivables") and (2) covering
such other matters as the Managing Facility Agent shall
reasonably request, and in all respects satisfactory in form
and substance to the Managing Facility Agent and its counsel,
or
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(y) if the Unaffiliated Foreign Lessee of such Affiliate
Receivable is so located in a jurisdiction covered by a
previously delivered and accepted (by the Managing Facility
Agent on behalf of the Purchasers) legal opinion, a form of
certificate of a Responsible Officer of the Seller which
represents and warrants to the Managing Facility Agent, for
the benefit of the Purchasers, that the Seller has taken all
actions specified in such previously delivered opinion and all
other actions known to the Seller to ensure that the Liens
referenced in clause (C)(x)(1)(A), (B) and (C) of this
paragraph (iv) are enforceable and have been duly perfected to
the same extent as set forth in such previously delivered and
accepted legal opinion.
(b) Except as provided in subsection 2.27(c) below, within 30
days of receipt of such forms of assignment, legal opinions and other specified
documents, the Servicer shall notify the Seller whether or not the related
Affiliate Receivables and Foreign Receivables will, subject to the satisfaction
of the conditions specified in subsection 5.2(e), constitute Certified Foreign
Receivables, Uncertified Foreign Receivables or Ineligible Receivables. Subject
to the satisfaction of the conditions specified in subsection 5.2(e), such
designation will be applied from and after the date of such notification. In the
absence of such notification, such Receivable shall constitute an Uncertified
Foreign Receivable, provided, however, that at any time thereafter, the Seller
may request that the Servicer determine whether any Uncertified Foreign
Receivable due to a change of circumstance is eligible to qualify as a Certified
Foreign Receivable. Within 45 days of receipt of such request (or such shorter
period as shall be reasonably practicable) the Servicer shall determine the
eligibility of the Uncertified Foreign Receivable referred to above to qualify
as a Certified Foreign Receivable in accordance with the provisions of this
subsection 2.27 and notify the Seller.
(c) Notwithstanding the foregoing, but subject to the further
provisions of this subsection 2.27(c) and the provisions of subsection 2.27(d),
on the Closing Date Existing Certified Receivables shall be designated Certified
Foreign Receivables hereunder. Within 180 days of the Closing Date (such date,
the "Certified Opinion Delivery Date"), the Seller shall deliver to the Old
Administrative Agent, with respect to each Existing Certified Receivable, a form
of legal opinion of counsel (satisfactory to the Old Administrative Agent)
admitted to practice in the foreign jurisdiction in which the related
Unaffiliated Foreign Lessee is located (within the meaning of Section 9-103 of
the New York UCC), addressed to the Old Administrative Agent and the Purchasers
(x) to the effect that no further action need be taken in order to (1) perfect
the transfer by Raytheon Credit to the Seller of such Existing Certified
Receivable, the related Financed Aircraft and Applicable Lease (if applicable)
and Collections thereon in accordance with the Intercompany Purchase Agreement
and (2) continue the Lien in favor of the Administrative Agent of such Existing
Certified Receivable, the related Financed Aircraft and Applicable Lease (if
applicable) and Collections thereon as a duly perfected Lien having the same
priority as in effect immediately prior to the Effective Date and (y) if any
actions had been required in order to render the opinions set forth in clause
(x), setting forth such actions and (z) covering such other matters as the Old
Administrative Agent shall reasonably request, which opinion shall be in all
respects satisfactory in form and substance to the Old Administrative Agent and
its counsel.
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(d) On the first Settlement Date (other than a Special
Settlement Date) following the Certified Opinion Delivery Date, the Seller shall
repurchase from the Purchasers and the Purchasers agree to sell to the Seller on
such date in accordance with the terms hereof, each Existing Certified
Receivable and each Existing GA Receivable (the Foreign Obligor of which is
located in Canada, France or Australia) as to which the Purchasers shall not
have received a legal opinion to the effect set forth in subsection 2.27(c)
hereof. Subject to subsections 2.13 and 2.15(b), the Seller shall make such
repurchase by depositing in the Concentration Account cash an amount for each
such Receivable equal to the amount set forth in clause (a) of the definition of
"Repurchase Price", calculated at the date such deposit is made, except to the
extent (without duplication) of any payment made pursuant to subsection 2.18,
for the Settlement Period during which such interest accrued and was not paid by
the Foreign Obligor under the related Contract. The amount of any such deposit
shall be applied and distributed in accordance with subsections 2.15 and 2.16.
Except as provided in subsection 9.1, the sole obligation of the Seller with
respect to a Receivable of the type described in this subsection 2.27(d) shall
be the requirement to repurchase or substitute for such Receivable pursuant to
this subsection 2.27(d).
SECTION 3. THE SERVICER AND SERVICING OF PURCHASED RECEIVABLES
3.1 Designation of Servicer; Removal. (a) The servicing, administering and
collection of Purchased Receivables shall be conducted by such Person (the
"Servicer") so designated from time to time in accordance with this subsection
3.1. Until the Required Purchasers give notice to the Seller of the designation
of a new Servicer pursuant to subsection 3.1(b), Raytheon Credit is hereby
designated as, and hereby agrees to perform the duties and obligations of, the
Servicer for the Purchased Receivables sold hereunder. The Servicer may, with
the prior consent of the Required Purchasers, subcontract with any other Person
to perform, in accordance with applicable laws, the servicing, administering or
collecting of Purchased Receivables, provided that the Servicer shall remain
liable for the performance of the duties and obligations of the Servicer
pursuant to the terms hereof. With respect to the Existing Receivables, the
capacity of the Servicer shall be a continuation by Raytheon Credit of its
capacity as Servicer under and as defined in each of the Existing Agreements.
(b) At any time after the occurrence and during the
continuance of a Specified Amortization Event, the Required Purchasers may
remove Raytheon Credit (or any successor Servicer) as the Servicer and appoint
as a successor Servicer any Person to succeed Raytheon Credit (or any successor
Servicer) as Servicer, on the condition that such successor Servicer agrees to
perform the duties and obligations of the Servicer pursuant to the terms hereof.
Any such removal of Raytheon Credit (or any successor Servicer) as the Servicer
shall not become effective until such successor Servicer accepts its appointment
and agrees to be bound by the terms and conditions of this Agreement with
respect to the Servicer in a writing satisfactory in form and substance to the
Managing Facility Agent and the Required Purchasers. The Servicer agrees to
cooperate with the Managing Facility Agent, the Purchasers and any successor
Servicer if the Servicer is terminated under this Agreement, including
transferring to the successor Servicer all cash amounts or documents or
instruments relating to the Purchased Receivables held by the Servicer at the
time of its removal.
(c) The authorization of the Servicer under this Agreement
shall terminate when all the obligations under this Agreement have been paid in
full.
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3.2 Duties of Servicer. (a) The Servicer shall take or cause to be taken all
such actions as may be necessary or advisable to administer, service and collect
each Purchased Receivable from time to time, all in accordance with applicable
laws, rules and regulations, with reasonable care and diligence, and solely in
accordance with the Credit and Collection Policy. The Seller, the Managing
Facility Agent and each Purchaser each agrees that the Servicer may enforce its
rights and interests in and under the Purchased Receivables and the Contracts
and with respect to the Financed Aircraft. The Servicer shall remit Collections
in accordance with subsections 2.14 and 2.15(a) and until such remittances are
made, shall hold such Collections in trust for the account of the Purchasers.
The Servicer may not extend, amend or otherwise modify the terms of any
Purchased Receivable, or amend, modify or waive any term or condition of any
Contract related thereto, or extend, amend or otherwise modify the rights of the
Seller except (i) in accordance with subsection 7.1(b) and (ii) if the Servicer
is not then Raytheon Credit, with the Seller's prior consent. No Servicer (if
not Raytheon Credit) may commence or settle any legal action to enforce
collection of any Purchased Receivable without the prior consent of the Required
Purchasers. The Seller shall deliver to the Servicer (if not the Seller) all
computer tapes or disks and, upon the Managing Facility Agent's request, all
documents, instruments or other records which evidence or relate to Purchased
Receivables (the foregoing, the "Contract Files").
(b) The Servicer (if not Raytheon Credit) shall as soon as
practicable following receipt turn over to the Seller or any other party
entitled thereto the Collections on any Receivable which is not a Purchased
Receivable less all reasonable and appropriate out-of-pocket costs and expenses
of the Servicer of servicing, collecting and administering such Receivable to
the extent not covered by the Servicing Fee received by it. The Servicer, if
other than the Seller, shall as soon as practicable upon demand deliver to the
Seller all documents, instruments and records in its possession which evidence
or relate to Receivables other than Purchased Receivables, and copies of
documents, instruments and records in its possession which evidence or relate to
Receivables other than Purchased Receivables. The Servicer unconditionally and
absolutely agrees to take any and all action requested by the Managing Facility
Agent in connection with the exercise by the Managing Facility Agent and the
Purchasers of their rights under subsection 8.2, 11.11, 11.12 or 11.13.
(c) With respect to any L/C Receivable the related letter of
credit of which expires on the last date of the Contract related thereto, the
Servicer shall prepare any drawing request required under such letter of credit
and, if the payment due under such Contract is not made by the drawing deadline
under such letter of credit, the Servicer shall make a drawing thereunder.
Further, if the expiration date of any letter of credit related to any L/C
Receivable is not extended when a Principal Balance of such Receivable remains
outstanding, the Servicer shall, or shall cause the Seller or Raytheon Credit
to, draw the aggregate available amount under such letter of credit prior to the
expiration thereof.
3.3 Servicer Reports. The Servicer shall deliver to the Managing Facility Agent,
with sufficient copies for each Purchaser:
(a) Within 45 days after the end of each of the first three
fiscal quarters of the Servicer, beginning with the first such quarter
to end after the Closing Date, a report with respect to such fiscal
quarter, certified by a Responsible Officer (if the Seller is then the
Servicer) or by the president or officer responsible for financial
affairs of the Servicer, to the effect that the Servicer has reviewed
its servicing, administration and collection of Purchased Receivables,
Collections with respect thereto and the related Contracts and Financed
Aircraft, that no errors and irregularities were detected with respect
to such servicing, administration and collection and that such
servicing, collection and administration was conducted in compliance
with the applicable provisions of this Agreement; and
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(b) Within 90 days after the last day of each fiscal year of
the Servicer, a report of a firm of nationally recognized independent
public accountants (which may also render other services to the
Servicer, the Seller or Raytheon or any Affiliate thereof) to the
effect that (i) such firm has made a study and evaluation in accordance
with generally accepted auditing standards of the Servicer's internal
accounting controls relative to the servicing, administration and
collection of Purchased Receivables, Collections with respect thereto
and the related Contracts and Financed Aircraft, that such system of
internal accounting controls then in effect with respect to such
servicing procedures performed by the Servicer was sufficient for the
prevention and detection of errors and irregularities and that such
servicing, administration and collection of Purchased Receivables,
Collections with respect thereto and the related Contracts and Financed
Aircraft was conducted in compliance with the provisions of this
Agreement and (ii) such firm has compared the mathematical calculations
of amounts set forth on a statistically representative sample of
Settlement Statements delivered with respect to each Settlement Period
during such fiscal year with the Servicer's computer reports and other
documents which were the source of such amounts and that on the basis
of such comparison, such amounts are in agreement, except in either
case as may be described in such report.
3.4 Servicing Fee. As compensation for its servicing activities hereunder and
reimbursement for its reasonable fees, disbursements and expenses incurred in
connection with its activities hereunder, the Servicer shall be entitled to
receive a per annum servicing fee of .85% of the Outstanding Purchase Price,
payable monthly in arrears on each Settlement Date (other than a Special
Settlement Date) in respect of the Outstanding Purchase Price at the end of the
Accrual Period preceding the Settlement Date on which the Servicing Fee is paid.
The Servicing Fee shall be calculated on the basis of a 360-day year for the
actual number of days elapsed during such Accrual Period.
3.5 Merger or Consolidation of, or Assumption of the Obligations of, the
Servicer. The Servicer shall not consolidate with or merge into any other Person
or convey or transfer its properties and assets substantially as an entirety to
any Person, unless:
(i) the Person formed by such consolidation or into
which the Servicer is merged or the Person which acquires by conveyance
or transfer the properties and assets of the Servicer substantially as
an entirety shall be, if the Servicer is not the surviving entity,
organized and existing under the laws of the United States of America
or any State or the District of Columbia and shall expressly assume, by
an agreement in form reasonably satisfactory to the Managing Facility
Agent and the Required Purchasers, the performance of every covenant
and obligation of the Servicer hereunder, and shall benefit from all
the rights granted to the Servicer, as applicable hereunder;
(ii) the Servicer has delivered to the Managing Facility
Agent a certificate of the Chief Financial Officer or President thereof
and an opinion of counsel (which counsel shall be reasonably
satisfactory to the Managing Facility Agent) each stating that such
consolidation, merger, conveyance or transfer and such agreement comply
with this Section 3.5 and that all conditions precedent herein provided
for relating to such transaction have been complied with and, in the
case of the opinion of counsel, that such agreement is legal, valid and
binding with respect to the Servicer; and
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(iii) after giving effect thereto, no Amortization Event
shall have occurred and be continuing.
3.6 Limitation on Liability of the Servicer and Others. Neither the Servicer
(except as otherwise provided herein) nor any of the directors or officers or
employees or agents of the Servicer shall be under any liability to the Managing
Facility Agent, the Co-Administrative Agents or the Purchasers or any other
Person for any action taken or for refraining from the taking of any action
pursuant to this Agreement whether arising from express or implied duties under
this Agreement; provided, however, that this provision shall not protect the
Servicer against any liability which would otherwise be imposed by reason of its
willful misfeasance, bad faith or gross negligence in the performance of duties
or by reason of its willful misconduct hereunder or by reason of Section 3.7.
The Servicer and any director or officer or employee or agent of the Servicer
may rely in good faith on any document of any kind prima facie properly executed
and submitted by any Person respecting any matters arising hereunder.
3.7 Indemnification of the Seller, the Managing Facility Agent, the
Administrative Agent, the Co-Administrative Agents and each Purchaser. The
Servicer shall indemnify and hold harmless the Seller, the Managing Facility
Agent, the Administrative Agent and each Purchaser from and against any loss,
liability, expense, damage or injury suffered or sustained by reason of any
acts, omissions or alleged acts or omissions of the Servicer with respect to
activities of the Seller or the Purchasers for which the Servicer is responsible
pursuant to this Agreement, including those arising from acts or omissions of
the Servicer pursuant to this Agreement, including, but not limited to any
judgment, award, settlement, reasonable attorneys' fees and other costs or
expenses incurred in connection with the defense of any actual or threatened
action, proceeding or claim. Notwithstanding the foregoing, (i) the Servicer
shall not indemnify the Seller, the Managing Facility Agent, the Administrative
Agent, any Co-Administrative Agent or any Purchaser if such acts, omissions or
alleged acts constitute fraud, gross negligence or breach of fiduciary duty by
such Person; (ii) the Servicer shall not indemnify the Seller, the Managing
Facility Agent, the Administrative Agent, the Co-Administrative Agents or any
Purchaser for any liabilities, costs or expenses with respect to any action
taken by or at the request of any Purchasers, the Managing Facility Agent, the
Administrative Agent, any Co-Administrative Agent, any Co-Agent or any Agent;
(iii) the Servicer shall not indemnify the Seller, the Managing Facility Agent,
the Administrative Agent, the Co-Administrative Agents or any Purchaser as to
any losses, claims or damages incurred by any of them in their capacities as
investors, including without limitation losses incurred as a result of Defaulted
Receivables which are written off as uncollectible; and (iv) the Servicer shall
not indemnify the Seller, the Managing Facility Agent, the Administrative Agent,
the Co-Administrative Agents or any Purchaser for any liabilities, costs or
expenses of any such Person arising under any tax law, including without
limitation any federal, state or local income or franchise taxes or any other
tax imposed on or measured by income (or any interest or penalties with respect
thereto or arising from a failure to comply therewith) required to be paid by
any such Person in connection herewith to any taxing authority. The provisions
of this indemnity shall run directly to and be enforceable by an injured party
subject to the limitations hereof.
The obligations of the Servicer under this subsection 3.7
shall survive the payment in full of the obligations hereunder.
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3.8 The Servicer Not to Resign. The Servicer shall not resign from the
obligations and duties hereby imposed on it except upon determination that (i)
the performance of its duties hereunder is or becomes impermissible under
applicable law and (ii) there is no reasonable action which the Servicer could
take to make the performance of its duties hereunder permissible under
applicable law. Any such determination permitting the resignation of the
Servicer shall be evidenced as to clause (i) above by an opinion of counsel
(satisfactory to the Managing Facility Agent and its counsel) to such effect
delivered to the Managing Facility Agent. No such resignation shall become
effective until a successor Servicer shall have assumed the responsibilities and
obligations of the Servicer hereunder. Any delegation of duties permitted under
subsection 3.1 shall not relieve the Servicer of its liability and
responsibility with respect to such duties, and shall not constitute a
resignation within the meaning of this subsection 3.8.
3.9 Access to Certain Documentation and Information Regarding the Contracts. The
Servicer shall provide to the Managing Facility Agent access to the
documentation regarding the Purchased Receivables (including the Contracts) and
the related Financed Aircraft, such access being afforded without charge but
only (i) upon reasonable request, (ii) during normal business hours, (iii)
subject to the Servicer's normal security and confidentiality procedures and
(iv) at offices designated by the Servicer.
3.10 Marking of Records. The Servicer shall mark the Contract files with a
legend (or, in the case of computer tapes and disks, other appropriate
electronic mark or tag) that such Purchased Receivables have been sold to the
Managing Facility Agent and each Purchaser.
3.11 Additional Covenants of the Servicer. The Servicer hereby covenants that:
(a) Contract Files. The Servicer will, at its own cost and
expense, maintain all Contract files in its possession in trust for the
Seller, the Managing Facility Agent and the Purchasers and in
accordance with the Credit and Collection Policy and customary
standards in the aircraft finance industry. Without limiting the
generality of the preceding sentence, the Servicer will not dispose of
any such items in any manner which is inconsistent with the performance
of its obligations as the Servicer pursuant to this Agreement and will
not dispose of any Contract except as contemplated by this Agreement.
(b) Compliance with Law. The Servicer will comply, in all
material respects, with all laws and regulations of any Governmental
Authority applicable to the Servicer, the Contracts related to the
Purchased Receivables, the related Financed Aircraft and the Contract
Files or any part thereof; provided that the Servicer may contest any
such law or regulation in any reasonable manner which will not
materially and adversely affect the value of (or the rights of the
Managing Facility Agent or the Purchasers, with respect to) the
Purchased Receivables and related Financed Aircraft.
(c) Preservation of Security Interest. The Servicer will
execute and file such financing and continuation statements and any
other documents reasonably requested by the Managing Facility Agent to
be filed or which may be required by any law or regulation of any
Governmental Authority to preserve and protect fully the interest of
the Managing Facility Agent and the Purchasers in, to and under the
Purchased Receivables and related Financed Aircraft (in each case as
contemplated by the other provisions of this Agreement).
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(d) Obligations with Respect to Contracts; Modifications. The
Servicer will duly fulfill and comply with, in all material respects,
all obligations on the part of the Seller to be fulfilled or complied
with under or in connection with each Contract related to Purchased
Receivables and will do nothing to impair the rights of the
Administrative Agent or the Purchasers in, to and under the Purchased
Receivables and the related Financed Aircraft. The Servicer will
perform such obligations under the Contracts and will not change or
modify the Contracts, except as otherwise provided in subsection
7.1(b)(iv) of this Agreement.
(e) No Bankruptcy Petition. Prior to the date that is one year
and one day after the payment in full of all amounts owing hereunder,
the Servicer will not institute against the Seller, or join any other
Person in instituting against the Seller, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or
other similar proceedings under the laws of the United States or any
state of the United States. This Section 3.11(e) will survive the
termination of this Agreement.
SECTION 4. REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties Relating to the Seller. To induce the
Purchasers to enter into this Agreement and to purchase the Receivables the
Seller hereby represents and warrants to the Managing Facility Agent and each
Purchaser on the date hereof, on the Amendment Effective Date and (except as
provided in subsection 4.1(j)) on each Settlement Date (including each Special
Settlement Date) on which a purchase or substitution is made that:
(a) Corporate Existence; Compliance with Law. The Seller (i)
is duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization, (ii) has the corporate power
and authority, and the legal right, to own and operate its property, to
lease the property it operates as lessee and to conduct the business in
which it is currently engaged, (iii) is duly qualified and in good
standing under the laws of each jurisdiction where its ownership, lease
or operation of property or the conduct of its business requires such
qualification except to the extent that failure so to qualify could not
reasonably be expected to have a Material Adverse Effect and (iv) is in
compliance with all Requirements of Law (whether or not the
determination of any arbitrator, court or other Governmental Authority
has been appealed and is final) except to the extent that the failure
to comply therewith could not, in the aggregate, reasonably be expected
to have a Material Adverse Effect.
(b) Corporate Power; Authorization; Enforceable Obligations.
The Seller has the corporate power and authority, and the legal right,
to execute and deliver, and to perform its obligations under, this
Agreement, each Assignment, each FAA Assignment and each Foreign
Assignment and to sell or substitute the Receivables hereunder, to
grant and assign the Liens as contemplated herein and has taken all
necessary corporate action to authorize the sales, purchases and
substitutions and the granting and assigning of Liens in connection
therewith on the terms and conditions of this Agreement and to
authorize the execution, delivery and performance of this Agreement and
each other Purchase Document to which it is a party. No consent or
authorization of, filing with or other act by or in respect of, any
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Governmental Authority or any other Person is required in connection
with the sales, purchases and substitutions to be made hereunder, the
granting and assignment of Liens in connection therewith or with the
execution, delivery, performance, validity or enforceability of this
Agreement or any other Purchase Document to which it is a party. This
Agreement has been, and each Assignment, FAA Assignment and Foreign
Assignment will be, duly executed and delivered on behalf of the
Seller. This Agreement constitutes, and each Assignment, FAA Assignment
and Foreign Assignment when executed and delivered will constitute, a
legal, valid and binding obligation of the Seller enforceable against
the Seller in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors'
rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
(c) No Legal Bar. Each sale and purchase and each substitution
to be made hereunder, the use of the proceeds of any such purchase and
sale, each granting or assigning of the Liens in connection with any
such purchase and sale or substitution and the execution, delivery and
performance of this Agreement and each other Purchase Document to which
it is a party will not violate the Seller's certificate of
incorporation or by-laws or any Requirement of Law (including, but not
limited to, bulk transfer or similar statutory provisions in effect in
any applicable jurisdiction) or Contractual Obligation of the Seller
and will not result in, or require, the creation or imposition of any
Lien on any of its properties or revenues pursuant to the Seller's
certificate of incorporation or by-laws or any such Requirement of Law
or Contractual Obligation, other than the Liens in favor of the
Administrative Agent and the Purchasers created hereby.
(d) No Material Litigation. No litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is
pending by or against the Seller or, to the Seller's knowledge, pending
against RAC, or threatened by or against the Seller or RAC, or against
any of their respective properties or revenues (i) with respect to this
Agreement or any other Purchase Document to which the Seller is a party
or any of the transactions contemplated hereby or thereby or (ii) which
could reasonably be expected to have a Material Adverse Effect.
(e) No Default. Neither the Seller nor, to the Seller's
knowledge, RAC is in default under or with respect to any of its
Contractual Obligations in any respect which could reasonably be
expected to have a Material Adverse Effect.
(f) Federal Regulations. No part of the proceeds of any
purchase will be used for "purchasing" or "carrying" any "margin stock"
within the respective meanings of each of the quoted terms under
Regulation U of the Board of Governors of the Federal Reserve System as
now and from time to time hereafter in effect or for any purpose which
violates the provisions of the Regulations of such Board of Governors.
If requested by any Purchaser or the Managing Facility Agent, the
Seller will furnish to the Managing Facility Agent and each Purchaser a
statement to the foregoing effect in conformity with the requirements
of FR Form U-1 referred to in said Regulation U.
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(g) ERISA. During the five-year period prior to the date on
which this representation is made or deemed made with respect to any
Plan, each Plan has complied in all material respects with the
applicable provisions of ERISA and the Code and neither the Seller nor
any Commonly Controlled Entity has incurred any liability with respect
to any Plan (other than contributions and payments required to be made
in a timely fashion under the terms of such Plan which were so made),
where a failure to comply or such liability could reasonably be
expected to have a Material Adverse Effect. Neither the Seller nor any
Commonly Controlled Entity would become subject to any liability under
ERISA if the Seller or any such Commonly Controlled Entity were to
withdraw completely from all Multiemployer Plans as of the valuation
date most closely preceding the date on which this representation is
made or deemed made which could reasonably be expected to have a
Material Adverse Effect.
(h) Investment Company Act; Other Regulations. The Seller is
not an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act
of 1940, as amended. The Seller is not subject to regulation under any
Federal or State statute or regulation which limits its ability to
incur indebtedness.
(i) Place of Business. The chief place of business and chief
executive office of the Seller and the offices where the Seller keeps
all its books, records and documents evidencing the Purchased
Receivables and the related Contracts are located at the address of the
Seller referred to in subsection 11.2 (or, in the case of books,
records and documents evidencing the Purchased Receivables, at such
other locations, notified to the Managing Facility Agent in accordance
with subsection 11.2, in jurisdictions where all action required by
subsection 6.1(l) has been taken and completed).
(j) Information. All information set forth in the Syndication
Materials is accurate in all material respects on and as of the
Amendment Effective Date and does not contain any untrue statement of a
material fact or omit to state any material fact of which the Seller
knows or should have known which is necessary to make the statements
herein or therein, in light of the circumstances in which they were
made, not misleading.
4.2 Representations and Warranties Relating to the Receivables. To induce the
Purchasers to purchase the Receivables the Seller hereby represents and warrants
to the Managing Facility Agent and each Purchaser with respect to Receivables
being purchased or substituted on each Settlement Date (including each Special
Settlement Date) or the Closing Date that:
(a) Eligible Receivables. Each Purchased Receivable is on
its date of purchase or substitution hereunder an Eligible Receivable.
(b) Ownership or Perfected First Security Interest. Upon each
purchase or substitution, the Purchasers will acquire a valid and
perfected first priority ownership or security interest in each
Purchased Receivable, the Collections with respect thereto and each
related Contract and, except with respect to any Unsecured Receivable
described in clause (i), (iii) or (v) of the definition of "Unsecured
Receivable", the related Financed Aircraft, free and clear of any Lien
other than (i) with respect to such Purchased Receivable and the
related Contracts, the Lien in favor of the Administrative Agent for
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the ratable benefit of the Purchasers and any Permitted Receivable Lien
on such Purchased Receivable and related Contracts, (ii) solely with
respect to a Financed Aircraft, (u) the Lien created by the Obligor
(including an Affiliate Obligor) in favor of Raytheon Credit and
assigned to the Seller, (v) with respect to Existing Certified
Receivables, prior to the Certified Opinion Delivery Date, the Lien
created by the Obligor in favor of Raytheon Credit (but solely to the
extent a filing is required in a foreign jurisdiction to transfer such
Lien to the Seller and such filing has not been made), (w) with respect
to all Existing Receivables, prior to the FAA Filing Date, the Lien
created by the Obligor in favor of Raytheon Credit (but solely to the
extent a filing is required with the FAA to transfer such Lien to the
Seller and such filing has not been made), (x) the assignment of each
such Lien by the Seller in favor of the Administrative Agent for the
ratable benefit of the Purchasers or (y) solely with respect to a Lease
Receivable, the Lien created by the Seller in favor of the
Administrative Agent for the ratable benefit of the Purchasers, and (z)
any Permitted Aircraft Lien on such Financed Aircraft; and no effective
document or instrument covering any Purchased Receivable or Collections
with respect thereto or the related Contract(s) or Financed Aircraft is
on file or of record in any recording office (including, but not
limited to, the FAA Registry or the comparable registry with respect to
any Foreign Receivable (excluding any L/C Receivable)) except (1) the
filings with the appropriate foreign registry with respect to Affiliate
Receivables in order to perfect the Lien in favor of the Seller in the
Applicable Leases and Financed Aircraft related to such Affiliate
Receivables and (2) the filing with the FAA Registry or the comparable
registry with respect to any Foreign Receivable or any Affiliate
Receivable (excluding any L/C Receivable) in order to perfect the Lien
encumbering a Financed Aircraft and any related Applicable Leases which
was granted by the related Obligor in favor of the Seller and (3) as
may be filed in favor of the Administrative Agent for the ratable
benefit of the Purchasers in accordance with this Agreement.
(c) Assignment. The information set forth on Annex I to an
Assignment, with respect to Eligible Receivables to be purchased or
substituted on a Settlement Date or purchased on the Closing Date, is
true and correct on and as of such Settlement Date or the Closing Date.
(d) No Material Adverse Change. Since the date of the last
Settlement Statement, there has been no material adverse change in the
collectibility of the Purchased Receivables taken as a whole.
(e) Substituted Receivables. If on any Settlement Date the
Seller sells or substitutes less than substantially all the Eligible
Receivables available for purchase or substitution on such Settlement
Date, the Seller or the Servicer has not utilized any selection
procedure intended to result in a selection of Purchased Receivables to
be purchased or substituted on such Settlement Date which could be
materially adverse to the rights of the Managing Facility Agent and the
Purchasers as of such Settlement Date.
(f) No Violation. Immediately following each purchase or
substitution, the Seller will not have violated the limitations
contained in subsection 2.7.
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(g) Entitlement to Section 1110 Benefits. With respect to each
Purchased Receivable which is a Commuter Receivable (other than a
Foreign Receivable and an Affiliate Receivable), Raytheon Credit or the
Seller shall be entitled to the benefits of Section 1110 of the
Bankruptcy Code (11 USC ss. 1110) with respect to each Contract and
repossession of the related Financed Aircraft under which each such
Purchased Receivable arises, and the Administrative Agent, for the
ratable benefit of the Purchasers, pursuant to subsection 11.13, shall
be entitled to such Section 1110 benefits of Raytheon Credit and the
Seller after the occurrence and during the continuance of a Specified
Amortization Event or in connection with any action taken pursuant to
subsection 11.11(c) or subsection 11.12(b).
(h) Stipulated Aircraft Value. The Stipulated Aircraft Value
with respect to any Financed Aircraft as set forth in any lease
Contract related to a Receivable at any time is equal to or greater
than the Outstanding Balance of such Receivable at such time assuming
all current payments are made.
(i) Finance Charge Collections. The Finance Charge
Collections have been calculated in compliance with the Credit and
Collection Policy.
4.3 Representations and Warranties Relating to the Servicer. To induce the
Purchasers to enter into this Agreement and to purchase the Receivables the
Servicer hereby represents and warrants to the Managing Facility Agent and each
Purchaser on the date hereof, on the Amendment Effective Date and (except as
provided in subsection 4.3(i)) on each Settlement Date (including each Special
Settlement Date) on which a purchase or substitution is made that:
(a) Corporate Existence; Compliance with Law. The Servicer (i)
is duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization, (ii) has the corporate power
and authority, and the legal right, to own and operate its property, to
lease the property it operates as lessee and to conduct the business in
which it is currently engaged, (iii) is duly qualified and in good
standing under the laws of each jurisdiction where its ownership, lease
or operation of property or the conduct of its business requires such
qualification except to the extent that failure so to qualify could not
reasonably be expected to have a Material Adverse Effect and (iv) is in
compliance with all Requirements of Law (whether or not the
determination of any arbitrator, court or other Governmental Authority
has been appealed and is final) except to the extent that the failure
to comply therewith could not, in the aggregate, reasonably be expected
to have a Material Adverse Effect.
(b) Corporate Power; Authorization; Enforceable Obligations.
The Servicer has the corporate power and authority, and the legal
right, to execute and deliver, and to perform its obligations under,
this Agreement and each other Purchase Document to which it is a party
and has taken all necessary corporate action to authorize the
execution, delivery and performance of this Agreement and each other
Purchase Document to which it is a party. No consent or authorization
of, filing with or other act by or in respect of, any Governmental
Authority or any other Person is required in connection with the
execution, delivery, performance, validity or enforceability of this
Agreement or any other Purchase Document to which it is a party. This
Agreement has been duly executed and delivered on behalf of the
Servicer. This Agreement constitutes, and each other Purchase Document
to which it is a party, when executed and delivered by it, will
constitute, a legal, valid and binding obligation of the Servicer
enforceable against the Servicer in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law).
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(c) No Legal Bar. The execution, delivery and performance of
this Agreement and each other Purchase Document to which it is a party
will not violate the Servicer's certificate of incorporation or by-laws
or any Requirement of Law (including, but not limited to, bulk transfer
or similar statutory provisions in effect in any applicable
jurisdiction) or Contractual Obligation of the Servicer and will not
result in, or require, the creation or imposition of any Lien on any of
its properties or revenues pursuant to the Servicer's certificate of
incorporation or by-laws or any such Requirement of Law or Contractual
Obligation.
(d) No Material Litigation. No litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is
pending by or against the Servicer or, to the Servicer's knowledge,
pending against RAC, or threatened by or against the Servicer or RAC,
or against any of their respective properties or revenues (i) with
respect to this Agreement or any other Purchase Document to which the
Servicer is a party or any of the transactions contemplated hereby or
thereby or (ii) which could reasonably be expected to have a Material
Adverse Effect.
(e) No Default. Neither the Servicer nor, to the Servicer's
knowledge, RAC is in default under or with respect to any of its
Contractual Obligations in any respect which could reasonably be
expected to have a Material Adverse Effect.
(f) ERISA. During the five-year period prior to the date on
which this representation is made or deemed made with respect to any
Plan, each Plan has complied in all material respects with the
applicable provisions of ERISA and the Code and neither the Servicer
nor any Commonly Controlled Entity has incurred any liability with
respect to any Plan (other than contributions and payments required to
be made in a timely fashion under the terms of such Plan which were so
made), where a failure to comply or such liability could reasonably be
expected to have a Material Adverse Effect. Neither the Servicer nor
any Commonly Controlled Entity would become subject to any liability
under ERISA if the Servicer or any such Commonly Controlled Entity were
to withdraw completely from all Multiemployer Plans as of the valuation
date most closely preceding the date on which this representation is
made or deemed made which could reasonably be expected to have a
Material Adverse Effect.
(g) Investment Company Act; Other Regulations. The Servicer is
not an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act
of 1940, as amended. The Servicer is not subject to regulation under
any Federal or State statute or regulation which limits its ability to
incur indebtedness.
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(h) Place of Business. The chief place of business and chief
executive office of the Servicer and the offices where the Servicer
keeps all its books, records and documents evidencing the Purchased
Receivables and the related Contracts are located at the address of the
Servicer referred to in subsection 11.2 (or, in the case of books,
records and documents evidencing the Purchased Receivables, at such
other locations, notified to the Managing Facility Agent in accordance
with subsection 11.2, in jurisdictions where all action required by
subsection 6.1(l) has been taken and completed).
(i) Information. All information set forth in the Syndication
Materials is accurate in all material respects on and as of the
Amendment Effective Date and does not contain any untrue statement of a
material fact or omit to state any material fact of which the Servicer
knows or should have known which is necessary to make the statements
herein or therein, in light of the circumstances in which they were
made, not misleading.
(j) Year 2000. The disclosure with respect to the proper
functioning, in and following the year 2000, of (a) the computer systems of
Raytheon and its Subsidiaries and (b) equipment containing embedded microchips
(including systems and equipment supplied by others or with which Raytheon's
systems interface) as set forth in Raytheon's report on Form 10-Q for the
quarter ended September 27, 1998 filed with the Securities and Exchange
Commission, as the same may be updated from time to time by subsequent reports
filed by Raytheon on Forms 10-K, 10-Q and/or 8-K, is true and correct in all
material respects.
SECTION 5. CONDITIONS PRECEDENT
5.1 Conditions to Effectiveness. The effectiveness of this Agreement is subject
to the satisfaction, of the following conditions precedent (the first date on
which such conditions are satisfied, which shall be a Business Day, being herein
called the "Amendment Effective Date"):
(a) Purchase and Other Documents. The Managing Facility Agent
shall have received, with a copy for each Purchaser, (i) this Agreement
executed and delivered by a duly authorized officer of each party
hereto and (ii) the Repurchase Agreement Reaffirmation executed and
delivered by a duly authorized officer of RAC and (iii) the Guarantee
Reaffirmation executed and delivered by a duly authorized officer of
Raytheon.
(b) Corporate Proceedings and Contracts. The Managing Facility
Agent shall have received, with a counterpart for each Purchaser, a
copy of the resolutions, in form and substance satisfactory to the
Managing Facility Agent, of the Boards of Directors of the Seller,
Raytheon Credit, RAC and Raytheon authorizing, (i) in the case of the
Seller, the execution, delivery and performance of this Agreement, (ii)
in the case of Raytheon Credit, authorizing the execution and delivery
of this Agreement, (iii) in the case of RAC, authorizing the execution
and delivery of the Repurchase Agreement Reaffirmation and (iv), in the
case of Raytheon, acknowledging the execution and delivery of this
Agreement and authorizing the execution and delivery of the Guarantee
Reaffirmation, certified by the Secretary or an Assistant Secretary of
the Seller, Raytheon Credit, RAC or Raytheon, as the case may be, as of
the Amendment Effective Date, which certificate shall state that the
resolutions thereby certified have not been amended, modified, revoked
or rescinded and shall be in form and substance satisfactory to the
Managing Facility Agent.
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(c) Corporate Documents; Good Standing Certificates. The
Managing Facility Agent shall have received, with a copy for each
Purchaser, (i) true and complete copies of the certificate of
incorporation and by-laws of each of the Seller, Raytheon Credit, RAC
and Raytheon, certified by the Secretary or Assistant Secretary thereof
as of the Amendment Effective Date as complete and correct copies
thereof and (ii) good standing certificates with respect to Raytheon
from the Secretary of State of the State of Delaware, with respect to
Raytheon Credit from the Secretary of State of the State of Kansas,
with respect to RAC from the Secretary of State of the State of Kansas
and with respect to the Seller from the Secretary of State of the State
of Kansas.
(d) Evidence of Incumbency. The Managing Facility Agent shall
have received, with a counterpart for each Purchaser, a certificate, in
form and substance satisfactory to the Managing Facility Agent, of the
Secretary or Assistant Secretary of each of the Seller, Raytheon
Credit, RAC and Raytheon certifying as to the names and true signatures
of the officers authorized on such Person's behalf to sign any of this
Agreement, the Repurchase Agreement Reaffirmation and the Guarantee
Reaffirmation to which it is a party.
(e) Officer's Certificates. The Managing Facility Agent shall
have received, with a counterpart for each Purchaser, (i) certificates,
in form and substance satisfactory to the Managing Facility Agent, of a
vice president of each of the Seller, Raytheon, RAC and Raytheon Credit
that the representations and warranties made by such Person in the
Purchase Documents to which it is a party are true and correct on and
as of the Amendment Effective Date as though made on and as of the
Amendment Effective Date and (ii) a certificate of the Vice President
and Treasurer of Raytheon setting forth in the certificate delivered on
behalf of Raytheon the Debt Ratio on the last day of its fiscal quarter
ending December 31, 1999, the Interest Coverage Ratio for the period of
four consecutive fiscal quarters ending December 31, 1999 and
calculations thereof in reasonable detail.
(f) Legal Opinions. The Managing Facility Agent shall have
received, with a counterpart for each Purchaser, the following executed
legal opinions, each dated the Amendment Effective Date and each
addressed to the Managing Facility Agent and the Purchasers:
(i) the executed legal opinion of Wayne Wallace, General
Counsel to Raytheon Credit, RAC and the Seller, substantially in the
form of Exhibit E-1; and
(ii) the executed legal opinion of an in-house attorney of
Raytheon who is satisfactory to the Managing Facility Agent,
substantially in the form of Exhibit E-2.
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by the Purchase Documents as the Managing
Facility Agent may reasonably require.
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(g) Fees. (i) The Seller shall have paid to the Syndication
Agent and the Managing Facility Agent for their respective accounts the
fees set forth in their respective fee letters with the Seller required
to be paid on or prior to the Amendment Effective Date.
(ii) The Seller shall have paid to the Managing Facility
Agent, for the account of each Purchaser, an upfront fee in an amount
agreed to by such Purchaser.
5.2 Conditions to Each Purchase or Substitution. The agreement
of each Purchaser to make any purchase requested to be made by it on the Closing
Date or any Settlement Date (including, without limitation, its initial purchase
and any other purchase the Purchase Price for which is netted from Collections
pursuant to subsections 2.15 and 2.16(a) but excluding the purchases among the
Purchasers contemplated by subsection 2.1(d)) and the right of the Seller to
substitute Receivables pursuant to subsection 2.13 are each subject to the
satisfaction of the following conditions precedent:
(a) Representations and Warranties. The representations and
warranties made by each of the Seller, Raytheon Credit, RAC and
Raytheon in or pursuant to the Purchase Documents to which it is a
party shall be true and correct in all material respects on and as of
such date as if made on and as of such date and the Seller, if
applicable, shall have made the representations and warranties required
by subsection 5.2(f).
(b) Amortization Event. No Amortization Event shall have
occurred and be continuing on such date or after giving effect to the
purchases or substitutions to be made on such date.
(c) Settlement Statement. The Managing Facility Agent shall
have received the Settlement Statement most recently due.
(d) Assignments. On or prior to such date, the Managing
Facility Agent shall have received an Assignment with respect to
Receivables to be purchased or substituted on such date, dated such
date and executed and delivered by a duly authorized Responsible
Officer.
(e) Perfection Matters. The Servicer shall have received
the following:
(i) with respect to Eligible Receivables other than Affiliate
Receivables, Foreign Receivables and Registerable Lease
Receivables, evidence that each FAA Assignment (in the
appropriate form for filing on the Closing Date or such
Settlement Date) with respect to the Financed Aircraft related
to such Eligible Receivables to be purchased on the Closing
Date or purchased or substituted on such Settlement Date,
shall have been filed with the FAA Registry,
(ii) with respect to Eligible Receivables which are Foreign
Receivables (other than Foreign Receivables which are Lease
Receivables with a Foreign Obligor), evidence that each
Foreign Assignment (in the appropriate form for filing on the
Closing Date or such Settlement Date) with respect to the
Financed Aircraft related to such Eligible Receivables to be
purchased on the Closing Date or purchased or substituted on
such Settlement Date, shall have been filed in each office in
each jurisdiction necessary to perfect (A) the Lien granted by
the Obligor thereon in favor of Raytheon Credit, (B) the
transfer of such Lien by Raytheon Credit to the Seller and (C)
the assignment of such Lien by the Seller in favor of the
Administrative Agent for the ratable benefit of the
Purchasers,
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(iii) with respect to Eligible Receivables which are Foreign
Receivables which are Lease Receivables with a Foreign Obligor
(other than any such Receivable which is a Registerable Lease
Receivable with a Foreign Obligor or an Uncertified Lease
Receivable), evidence that each Foreign Assignment (in the
appropriate form for filing on the Closing Date or such
Settlement Date) with respect to the Financed Aircraft related
to such Eligible Receivables to be purchased on the Closing
Date or purchased or substituted on such Settlement Date,
shall have been filed in each office in each jurisdiction
necessary to perfect (x) the transfer by Raytheon Credit of
its ownership interest therein to the Seller and (y) the Lien
granted thereon by the Seller in favor of the Administrative
Agent for the ratable benefit of the Purchasers,
(iv) with respect to Eligible Receivables which are
Registerable Lease Receivables, evidence that each FAA
Assignment (in the appropriate form for filing on the Closing
Date or such Settlement Date) with respect to the Financed
Aircraft related to such Eligible Receivables to be purchased
on the Closing Date or purchased or substituted on such
Settlement Date, shall have been filed with the FAA Registry
in a manner satisfactory to perfect (x) the transfer by
Raytheon Credit of its ownership interest therein to the
Seller and (y) the Lien granted thereon by the Seller in favor
of the Administrative Agent for the ratable benefit of the
Purchasers,
(v) with respect to each L/C Receivable, an acknowledgement,
substantially in the form of Schedule I to the Bailment
Agreement, by the Bailee of its receipt of the related letters
of credit,
(vi) with respect to Eligible Receivables which are Affiliate
Receivables, evidence that each Foreign Assignment (in the
appropriate form for filing on such Settlement Date) with
respect to the Financed Aircraft related to such Eligible
Receivables to be purchased or substituted on such Settlement
Date, shall have been filed in each office in each
jurisdiction necessary to perfect (x) the Lien thereon granted
by the Affiliate Obligor in favor of Raytheon Credit, (y) the
transfer of such Lien by Raytheon Credit to the Seller and (z)
the Lien granted thereon by the Seller in favor of the
Administrative Agent for the ratable benefit of the
Purchasers, and
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(vii) with respect to each of the foregoing Eligible
Receivables, evidence that all other filings and recordings
(including, without limitation, any UCC filings with filing
offices in the jurisdictions listed on Schedule II, filings
with the FAA Registry and filings in other jurisdictions as
applicable) and all other actions necessary or advisable to
perfect (x) the Purchasers' first priority ownership or
security interests in and to such Eligible Receivables to be
sold or substituted on such date and (y) the Purchasers' first
priority security interest and, in the case of an Affiliate
Receivable, the Affiliate Obligor's first priority ownership
interest or the Seller's ownership or security interest, as
applicable, in and to the related Contracts and, with respect
to any Travel Air Receivables, the Travel Air Contracts and,
if required pursuant to the foregoing, Financed Aircraft and
the Collections with respect thereto shall have been duly
taken or made.
From and after the Amendment Effective Date, all filings, assignments
and other similar documents required to perfect a Lien hereunder with
respect to Receivables (and related Aircraft) purchased after such
date, which names the Administrative Agent shall be made in the name of
Bank of America, N.A., as Administrative Agent.
(f) Certificates. With respect to each Certified Foreign
Receivable, the Servicer shall have received an executed certificate
from a Responsible Officer of the Seller to the Managing Facility
Agent, dated the date of such proposed sale and in the form approved by
the Managing Facility Agent pursuant to subsection 2.27.
(g) Marking Records. The Seller shall have, or shall have
caused the Servicer to have, marked its books and records with respect
to the Purchased Receivables to be sold or substituted on such date in
accordance with subsection 6.1(h).
(h) L/C Receivables. On or prior to the related Reporting
Date, a letter of credit shall have been issued in connection with each
L/C Receivable to be purchased or substituted on such Settlement Date
and each such letter of credit shall meet the eligibility criteria set
forth herein.
(i) Refinanced Aircraft. If the Receivable proposed to be
purchased (including, without limitation, a purchase the Purchase Price
for which is netted from Collections pursuant to subsections 2.15 and
2.16(a)) or substituted has been or will be created in connection with
the financing or refinancing of a Refinanced Aircraft, the Seller shall
have caused a Lien search to be made with the FAA Registry with respect
to such Refinanced Aircraft and at the date of such purchase or
substitution, no Lien shall have been recorded at the FAA Registry with
respect to such Refinanced Aircraft other than any Permitted Aircraft
Lien or the Lien created in favor of Raytheon Credit and transferred to
the Seller and assigned to the Administrative Agent for the ratable
benefit of the Purchasers.
(j) Purchase Report. The Managing Facility Agent, with
sufficient copies for each Purchaser, shall have received from the
Seller a Purchase Report in the form of Exhibit I.
(k) Additional Documents. The Managing Facility Agent, with
sufficient copies for each Purchaser, shall have received each
additional document, instrument, legal opinion or item of information
reasonably requested by it.
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(l) Additional Matters. All corporate and other proceedings,
and all documents, instruments and other legal matters in connection
with the transactions contemplated by this Agreement shall be
reasonably satisfactory in form and substance to the Managing Facility
Agent, and the Managing Facility Agent shall have received such other
documents and legal opinions in respect of any aspect or consequence of
the transactions contemplated hereby or thereby as it shall reasonably
request.
Each purchase (including, without limitation, a purchase the Purchase Price for
which is netted from the Collections pursuant to subsections 2.15 and 2.16(a))
and each substitution of Receivables hereunder shall constitute a representation
and warranty by the Seller as of the Closing Date or the Settlement Date
(including a Special Settlement Date, if applicable) on which such purchase or
substitution is made that the conditions contained in paragraphs (a) through (i)
of this subsection 5.2 have been satisfied.
5.3 Reallocation of Commitments; Addition of New Purchasers. On the Amendment
Effective Date, any SPC may assign to its SPC Bank all or any portion of such
SPC's undivided interest in the Purchased Receivables, and any SPC Bank may
asign to its SPC all or any portion of such SPC Bank's undivided interest in the
Purchased Receivables. Such assignments may be evidenced by such documents as
shall be agreeable between the SPC and its SPC Bank. Each SPC Bank participating
in any such assignments shall advise the Managing Facility Agent of such
assignment, the amount thereof and certain administrative information requested
by the Managing Facility Agent. The following allocations and payments shall be
made following the foregoing assignments.
On the Amendment Effective Date each entity identified on the
signature pages hereto as a "New Purchaser" shall be and become a Purchaser
hereunder having a Commitment equal to the amount set forth opposite such New
Purchaser's name on Schedule I hereto and each entity identified on the
signature pages hereto as a "Withdrawing Purchaser" shall cease to be a
Purchaser except to the extent expressly provided otherwise herein.
On the Amendment Effective Date, immediately following the
addition referred to in the immediately preceding paragraph, but subject to the
terms and conditions hereof, each Purchaser shall sell and assign to each other
Purchaser, and each Purchaser shall purchase from each other Purchaser,
undivided interests in each then outstanding Purchased Receivable to the extent
necessary so that, after giving effect to such purchases and sales, each
Purchaser's undivided interest in each Purchased Receivable will equal its
Commitment Percentage (as defined in clause (a) of the definition thereof and
utilizing the Commitments set forth on Schedule I hereto) thereof. Other than
the representation and warranty that each of them is the legal and beneficial
owner of the respective interest being assigned hereby free and clear of any
adverse claim, the selling Purchasers make no representation or warranty to the
purchasing Purchasers and assume no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any instrument or document furnished
pursuant thereto. The amounts payable to each Purchaser whose undivided
interests are being reduced (each, a "Reducing Purchaser") in accordance with
the foregoing (such amount for each such Purchaser, its "Pro Rata Credit"); the
amounts payable by each Purchaser whose undivided interests are being increased
or created (each, an "Increasing Purchaser") in accordance with the foregoing
(such amount for each such Purchaser, its "Pro Rata Debit"), in each case as a
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result of the foregoing sales and purchases; and the amount of each Purchaser's
Outstanding Purchase Price immediately after giving effect to the foregoing
sales and purchases shall be set forth in a letter from the Managing Facility
Agent dated the Amendment Effective Date and satisfactory to each Purchaser.
Prior to 11:00 a.m., New York City time, on the Amendment Effective Date each
Increasing Purchaser shall make available to the Managing Facility Agent, in
immediately available funds at the Managing Facility Agent's office specified in
subsection 11.2 hereto, the amount of such Purchaser's Pro Rata Debit. Promptly
after receipt of the aggregate amount of Pro Rata Debits, the Managing Facility
Agent will transfer to each Reducing Purchaser the amount of such Purchaser's
Pro Rata Credit. Such sales and purchases shall be effective on the Amendment
Effective Date without further act of assignment.
Notwithstanding any contrary provision of this Agreement, on
the Amendment Effective Date, the Managing Facility Agent shall pay to each
Purchaser, including each Withdrawing Purchaser, from funds received from the
Seller pursuant to subsection 2.17, interest on such Purchaser's Outstanding
Purchase Price for the Accrual Period ending on the Amendment Effective Date.
SECTION 6. AFFIRMATIVE COVENANTS
6.1 Affirmative Covenants of the Seller. The Seller hereby agrees that, so long
as the Commitments remain in effect, the Outstanding Purchase Price has not been
reduced to zero or any other amount is owing to any Purchaser or the Managing
Facility Agent hereunder, the Seller shall:
(a) Reporting Requirements. (i) Settlement Statements. On
or before each Reporting Date, furnish or cause the Servicer to
furnish to the Managing Facility Agent, with sufficient copies for
each Purchaser, a Settlement Statement in the form of Exhibit C for
the preceding Settlement Period, setting forth:
(x) information and calculations with respect to (A) the
Purchased Receivables, Collections thereon, the related Contracts and
Financed Aircraft and any Remarketed Aircraft, (B) the Outstanding
Purchase Price (separately identifying the portion thereof representing
the Purchase Price, if any, of Receivables purchased on the most recent
Special Settlement Date), the Note Rate, the Default Rate (if any), the
Interbank Rate (if applicable) and Commitment Fees for the related
Accrual Period, (C) purchases of specified Eligible Receivables
requested to be made on the succeeding Settlement Date (including a
specific reference to any new Foreign Obligors), (D) Defaulted
Receivables, Ineligible Receivables, Substituted Receivables and
adjustments of Receivables made under subsection 2.12, (E) any
Permitted Receivable Liens and Permitted Aircraft Liens, (F) the
Concentration Limits as described in subsection 2.7, (G) any
Receivables of which the scheduled principal payments are being
deferred pursuant to subsection 7.1(b)(iv)(x), (H) the total amount of
the Participated Receivables, (I) the total amount of the Extended Term
Receivables and (J) Net Recoveries; and
(y) such other information with respect to the Receivables
from the Seller and the Servicer as the Managing Facility Agent or any
other Purchaser may from time to time request;
each Settlement Statement shall be certified by a Responsible Officer of the
Servicer as being true and correct;
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(ii) Officer's Certificate. Within 45 days after the end of
each fiscal quarter of the Seller, deliver to the Managing Facility Agent, with
sufficient copies for each Purchaser, a certificate of a Responsible Officer of
the Seller stating that, to the best of such officer's knowledge, after due and
diligent inquiry, the Seller during such period has observed or performed all of
its covenants and other agreements, and satisfied every condition, contained in
this Agreement and that such officer, after due and diligent inquiry, has
obtained no knowledge of any Amortization Event, Discount Event, Rating Event,
Remittance Event or Ineligibility Event or any errors in any amounts or other
information set forth in any Settlement Statement or any Assignment, FAA
Assignment or Foreign Assignment delivered with respect to any Settlement Period
occurring during such fiscal quarter except as specified in such certificate;
(iii) Servicer Reports. Cause the Servicer to deliver the
reports required by subsection 3.3 in accordance with the terms thereof;
(iv) Credit and Collection Policy. Deliver to the Managing
Facility Agent, with sufficient copies for each Purchaser, promptly after
adoption thereof, any change in the Credit and Collection Policy;
(v) Financing Programs. Concurrently with the distribution or
publication to any of Raytheon Credit's Affiliates or Dealers, deliver to the
Managing Facility Agent, with sufficient copies for each Purchaser, a copy of
each report setting forth Raytheon Credit's retail financing programs;
(vi) Additional Information. Furnish to the Managing Facility
Agent and each Purchaser, promptly, such additional financial and other
information, documents, records or reports with respect to the Seller, the
Servicer (if Raytheon Credit or an Affiliate of Raytheon Credit is then the
Servicer) or RAC, any Purchased Receivable or the Contract, Obligor,
Unaffiliated Foreign Lessee or Financed Aircraft with respect thereto, or the
business, operations, property or condition (financial or otherwise) of the
Seller, as the Managing Facility Agent or any Purchaser may from time to time
reasonably request; and
(vii) Notices. Promptly give notice to the Managing Facility
Agent and each Purchaser, after the Seller knows or should have known, of: (1)
the occurrence of any Amortization Event, Discount Event, Rating Event,
Remittance Event or Ineligibility Event; (2) any Lien (other than the security
interest created hereunder in favor of the Administrative Agent and the
Purchasers) on or claim asserted against any Purchased Receivable, the
Collections with respect thereto or the related Contract or material claim
asserted with respect to the related Financed Aircraft; (3) a development or
event which has had a Material Adverse Effect; (4) any loss of a Financed
Aircraft or of the use thereof due to theft, destruction, damage beyond repair
or damage to an extent which makes repair uneconomical, or the confiscation or
seizure of any material portion thereof, or requisition of title to or for the
use thereof by any Governmental Authority; and (5) any litigation, investigation
or proceeding which may exist at any time between the Seller, Raytheon Credit,
RAC or any Person which, in either case, could reasonably be expected to have a
Material Adverse Effect. Each notice pursuant to this subsection shall be
accompanied by a statement of a Responsible Officer setting forth details of the
occurrence referred to therein and stating what action the Seller proposes to
take with respect thereto.
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(viii) Fiscal Months. No later than December 15 of each
calendar year the Seller shall send the Managing Facility Agent written
notification of each of the Seller's fiscal monthly periods for the immediately
following calendar year.
(b) Compliance with Laws, Etc. Comply, and cause each
Affiliate Obligor to comply, in all respects with all applicable Requirements of
Law and all Contractual Obligations with respect to it, its business and
properties and all Purchased Receivables and the related Contracts and Financed
Aircraft except to the extent that failure to comply therewith could not
reasonably be expected to have a Material Adverse Effect.
(c) Conduct of Business and Maintenance of Existence. Continue
to engage in business of the same general type as now conducted by it and
preserve, renew and keep in full force and effect its corporate existence and
take all reasonable actions to maintain all rights, privileges and franchises
necessary or desirable in the normal conduct of its business except where the
failure to preserve and maintain such existence, rights, franchises, privileges
and qualification could not reasonably be expected to have a Material Adverse
Effect.
(d) Maintenance of Property; Insurance. Keep all property
useful and necessary in its business in good working order and condition;
maintain with financially sound and reputable insurance companies insurance on
all its property in at least such amounts and against at least such risks as are
considered reasonable and prudent by the Seller; cause each Financed Aircraft
(including, without limitation, any Financed Aircraft repossessed by the Seller
or the Servicer) related to a Purchased Receivable to be covered by insurance
meeting the requirements of paragraph (w) of the definition of "Eligible
Receivable"; and furnish to each Purchaser, upon request, full information as to
the insurance carried.
(e) Keeping of Records and Books of Account. Maintain and
implement administrative and operating procedures (including, without
limitation, maintaining the ability to recreate records evidencing Purchased
Receivables in the event of the destruction of the originals thereof), and keep
and maintain all documents, books (with true and correct entries in conformity
with generally accepted accounting principles as in effect from time to time and
all material Requirements of Law), records and other information reasonably
necessary or advisable for the administration, servicing and collection of all
Purchased Receivables and the monitoring of the Contracts, the related Obligors
and Unaffiliated Foreign Lessees and Financed Aircraft (including, without
limitation, records adequate to permit the daily identification of all
Collections of and adjustments to each Purchased Receivable).
(f) Location of Records. Keep its chief place of business and
chief executive office, and the offices where it keeps its records concerning
the Purchased Receivables and all Contracts related thereto (and all original
documents relating thereto), at its address referred to in subsection 11.2 or,
upon 30 days' prior written notice to the Managing Facility Agent, at such other
locations in jurisdictions where all actions required by subsection 6.1(l) shall
have been taken and completed.
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(g) Access. From time to time during regular business hours
upon reasonable prior notice, permit the Managing Facility Agent or any
Purchaser, or their respective agents or representatives (a) to examine and make
copies of and abstracts from all books, records and documents (including,
without limitation, computer tapes and disks) in the possession or under the
control of the Seller or its Affiliates relating to Purchased Receivables,
including, without limitation, the related Contracts and Financed Aircraft and
(b) to visit the offices and properties of the Seller, its Affiliates or its
independent certified public accountants for the purpose of examining such
materials described in clause (a) above, and to discuss matters relating to
Purchased Receivables, the Contracts and the Financed Aircraft or the Seller's
or Servicer's (if Raytheon Credit or an Affiliate of Raytheon Credit is then the
Servicer) performance hereunder with any of the officers or employees of the
Seller or its Affiliates having knowledge of such matters and to discuss the
business, operations, properties and financial and other condition of the Seller
with such officers and with its independent certified public accountants;
provided that any information, records and materials obtained by the Managing
Facility Agent or any Purchaser pursuant to this subsection 6.1(g) shall be used
by the Managing Facility Agent or such Purchaser solely in connection with its
participation in the transactions contemplated by the Purchase Documents
(including pursuant to subsections 11.6(b) and (c)) and shall be treated as
confidential by the Managing Facility Agent or such Purchaser in accordance with
subsection 11.22.
(h) Marking of Records. At its expense, mark (or cause the
Servicer to mark) the computer files evidencing the Purchased Receivables and
related Contracts with a legend evidencing that such Purchased Receivables and
related Contracts have been sold in accordance with this Agreement and deliver
evidence satisfactory thereto in form and substance to the Managing Facility
Agent in accordance with subsection 5.2(g).
(i) Credit and Collection Policy. Comply in all material
respects with the Credit and Collection Policy with respect to each Purchased
Receivable (including but not limited to the calculation of the Finance Charge
Collections) and the related Contract and Financed Aircraft.
(j) Performance and Compliance with Receivables and Contracts.
At its own expense, timely and fully perform and comply with, and enforce and
defend, or, with respect to Affiliate Receivables, cause the related Affiliate
Obligor to perform and comply with and enforce and defend, all material
provisions, covenants and other promises (which promises are required to be
observed by it) under the Contracts (other than the payment by such Affiliate
Obligor of the principal of and interest on the promissory note included in such
Contract) and any policy of insurance issued in connection with an ExIm Bank
Receivable and with respect to the Financed Aircraft related to the Purchased
Receivables in accordance with the Credit and Collection Policy; and defend the
right, title and interest of the Administrative Agent and each Purchaser in and
to such Purchased Receivable, the Collections with respect thereto and the
related Contract and Financed Aircraft against the claims and demands of any
Persons whomsoever (other than of the Administrative Agent or any Purchaser).
(k) Interest Rate Protection. Within 30 Business Days after
the occurrence of a Rating Event obtain and maintain interest rate caps or
interest rate swaps (or such other interest rate protection as the Managing
Facility Agent and the Majority Purchasers shall require), at the Seller's own
expense, which shall be satisfactory in form and substance to the Managing
Facility Agent and the Majority Purchasers and the rights of the Seller
thereunder shall be pledged to the Administrative Agent, for the ratable benefit
of the Purchasers, as collateral security for the obligations of the Seller
hereunder.
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(l) Further Action Evidencing Interests of Administrative
Agent and Purchasers. At any time and from time to time, upon the request of the
Managing Facility Agent or the request of the Managing Facility Agent as
directed by the Majority Purchasers and at the sole expense of the Seller,
promptly execute and deliver and cause each Affiliate Obligor to execute and
deliver all further instruments and documents and take all further actions and
cause each Affiliate Obligor to take all further actions that the Managing
Facility Agent or the Managing Facility Agent as directed by the Majority
Purchasers may request in order to perfect, protect or more fully evidence the
ownership or security interests of the Administrative Agent and the Purchasers
in the Purchased Receivables, the Collections with respect thereto and the
related Contracts and Financed Aircraft, or to enable any of them or the
Administrative Agent to exercise or enforce any of their respective rights with
respect thereto, including, but not limited to: (a) execute and file such
financing or continuation statements, or amendments thereto or assignments
thereof, and such other instruments or notices, as may be necessary or
appropriate; and (b) mark conspicuously each invoice evidencing each Purchased
Receivable and the related Contract with a legend, in a form acceptable to the
Managing Facility Agent, evidencing that such Contract has been assigned to the
Administrative Agent for the ratable benefit of the Purchasers and, in
connection therewith, the Seller hereby (x) authorizes the Administrative Agent
to file one or more financing or continuation statements, and amendments thereto
and assignments thereof, relative to all or any of the Purchased Receivables now
existing or hereafter arising without the signature of the Seller or any of its
Affiliates where permitted by law and (y) agrees that if the Seller fails to
perform any of its agreements or obligations under this Agreement, the Managing
Facility Agent may (but shall not be required to) itself perform, or cause
performance of, such agreement or obligation, and the expenses of the Managing
Facility Agent incurred in connection therewith shall be payable by the Seller
as provided in subsection 11.5.
(m) Separate Corporate Existence. (i) Maintain its own
deposit account or accounts, separate from those of any Affiliate, with
commercial banking institutions. The funds of the Seller will not be diverted
to any other Person or for other than corporate uses of the Seller.
(ii) Ensure that, to the extent that it shares the same
officers or other employees as any of its stockholders or Affiliates, the
salaries of and the expenses related to providing benefits to such officers and
other employees shall be fairly allocated among such entities, and each such
entity shall bear its fair share of the salary and benefit costs associated with
all such common officers and employees.
(iii) Ensure that, to the extent that it jointly contracts
with any of its stockholders or Affiliates to do business with vendors or
service providers or to share overhead expenses, the costs incurred in so doing
shall be allocated fairly among such entities, and each such entity shall bear
its fair share of such costs. To the extent that the Seller contracts or does
business with vendors or service providers when the goods and services provided
are partially for the benefit of any other Person, the costs incurred in so
doing shall be fairly allocated to or among such entities for whose benefit the
goods and services are provided, and each such entity shall bear its fair share
of such costs. All material transactions between Seller and any of its
Affiliates shall be only on an arm's length basis.
(iv) Maintain a principal executive and administrative office
through which its business is conducted separate from those of its Affiliates.
To the extent that Seller and any of its stockholders or Affiliates have offices
in the same location, there shall be a fair and appropriate allocation of
overhead costs among them, and each such entity shall bear its fair share of
such expenses.
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(v) Conduct its affairs strictly in accordance with its
Certificate of Incorporation and observe all necessary, appropriate and
customary corporate formalities, including, but not limited to, holding all
regular and special stockholders' and directors' meetings appropriate to
authorize all corporate action, keeping separate and accurate minutes of its
meetings, passing all resolutions or consents necessary to authorize actions
taken or to be taken, and maintaining accurate and separate books, records and
accounts, including, but not limited to, payroll and intercompany transaction
accounts.
(vi) Take or refrain from taking, as applicable, each of the
activities specified in the "non-substantive consolidation" opinion of Sullivan
& Worcester LLP, delivered on the Effective Date, upon which the conclusions
expressed therein are based.
(n) Existing Receivables Perfection Matters. Deliver to the
Managing Facility Agent the following:
(i) with respect to Existing Certified Receivables,
no later than the Certified Opinion Delivery Date, a certificate of a
Responsible Officer certifying that all actions set forth in the legal
opinions described in subsection 2.27(c) and necessary in order to
perfect the Liens and assignments of such Receivables, the related
Financed Aircraft and Applicable Leases (if applicable) and Collections
thereon, to the extent set forth in such subsection, shall have been
taken; and
(ii) with respect to all Existing Receivables, no
later than 90 days after the Effective Date (the "FAA Filing Date"), a
certificate of a Responsible Officer certifying that all filings, if
any, to be made with the FAA as described in the opinion of special FAA
counsel delivered pursuant to subsection 5.1(g)(iv) of the 1997
Agreement and necessary to (x) continue the Lien of the Old
Administrative Agent, on behalf of the Purchasers, in the Existing
Receivables, the related Financed Aircraft and Applicable Leases (if
applicable) and Collections thereon with the same priority thereon as
in effect immediately prior to the Effective Date and (y) perfect the
transfer by Raytheon Credit of the Existing Receivables, the related
Financed Aircraft and Applicable Leases (if applicable) and Collections
thereon to the Seller pursuant to the Intercompany Purchase Agreement
shall have been taken.
6.2 Affirmative Covenants of the Servicer. The Servicer (so long as it is
Raytheon Credit) hereby agrees that, so long as the Commitments remain in
effect, the Outstanding Purchase Price has not been reduced to zero or any other
amount is owing to any Purchaser or the Managing Facility Agent hereunder, the
Servicer shall:
(a) Compliance with Laws, Etc. Comply in all respects with all
applicable Requirements of Law and all Contractual Obligations with respect to
it, its business and properties and all Purchased Receivables and the related
Contracts and Financed Aircraft except to the extent that failure to comply
therewith could not reasonably be expected to have a Material Adverse Effect.
(b) Conduct of Business and Maintenance of Existence. Continue
to engage in business of the same general type as now conducted by it and
preserve, renew and keep in full force and effect its corporate existence and
take all reasonable actions to maintain all rights, privileges and franchises
necessary or desirable in the normal conduct of its business except where the
failure to preserve and maintain such existence, rights, franchises, privileges
and qualification could not reasonably be expected to have a Material Adverse
Effect.
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(c) Maintenance of Property; Insurance. Keep all property
useful and necessary in its business in good working order and condition;
maintain with financially sound and reputable insurance companies insurance on
all its property in at least such amounts and against at least such risks as are
considered reasonable and prudent by the Servicer; cause each Financed Aircraft
(including, without limitation, any Financed Aircraft repossessed by the
Servicer) related to a Purchased Receivable to be covered by insurance meeting
the requirements of paragraph (w) of the definition of "Eligible Receivable";
and furnish to each Purchaser, upon request, full information as to the
insurance carried.
(d) Keeping of Records and Books of Account. Maintain and
implement administrative and operating procedures (including, without
limitation, maintaining the ability to recreate records evidencing Purchased
Receivables in the event of the destruction of the originals thereof), and keep
and maintain all documents, books (with true and correct entries in conformity
with generally accepted accounting principles as in effect from time to time and
all material Requirements of Law), records and other information reasonably
necessary or advisable for the administration, servicing and collection of all
Purchased Receivables and the monitoring of the Contracts, the related Obligors
and Unaffiliated Foreign Lessees and Financed Aircraft (including, without
limitation, records adequate to permit the daily identification of all
Collections of and adjustments to each Purchased Receivable).
(e) Location of Records. Keep its chief place of business and
chief executive office, and the offices where it keeps its records concerning
the Purchased Receivables and all Contracts related thereto (and all original
documents relating thereto), at its address referred to in subsection 11.2 or,
upon 30 days' prior written notice to the Managing Facility Agent, at such other
locations in jurisdictions where all actions required by subsection 6.1(l) shall
have been taken and completed.
(f) Access. From time to time during regular business hours
upon reasonable prior notice, permit the Managing Facility Agent or any
Purchaser, or their respective agents or representatives (i) to examine and make
copies of and abstracts from all books, records and documents (including,
without limitation, computer tapes and disks) in the possession or under the
control of the Servicer or its Affiliates relating to Purchased Receivables,
including, without limitation, the related Contracts and Financed Aircraft and
(ii) to visit the offices and properties of the Servicer, its Affiliates or its
independent certified public accountants for the purpose of examining such
materials described in clause (i) above, and to discuss matters relating to
Purchased Receivables, the Contracts and the Financed Aircraft or the Servicer's
performance hereunder with any of the officers or employees of the Servicer or
its Affiliates having knowledge of such matters and to discuss the business,
operations, properties and financial and other condition of the Servicer with
such officers and with its independent certified public accountants; provided
that any information, records and materials obtained by the Managing Facility
Agent or any Purchaser pursuant to this subsection 6.2(f) shall be used by the
Managing Facility Agent or such Purchaser solely in connection with its
participation in the transactions contemplated by the Purchase Documents
(including pursuant to subsections 11.6(b) and (c)) and shall be treated as
confidential by the Managing Facility Agent or such Purchaser in accordance with
subsection 11.22. The Servicer hereby consents to the disclosure of any
non-public information with respect to it as related to this transaction and the
assets sold hereunder by any SPC to any rating agency, commercial paper dealer,
or provider of a surety, guaranty or credit or liquidity enhancement to that
SPC.
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(g) Credit and Collection Policy. Comply in all material
respects with the Credit and Collection Policy with respect to each Purchased
Receivable (including but not limited to the calculation of the Finance Charge
Collections) and the related Contract and Financed Aircraft.
(i) Ownership of Affiliate Obligors. The Servicer shall at
all times beneficially own, directly or indirectly, 100% of each Affiliate
Obligor.
SECTION 7. NEGATIVE COVENANTS
7.1 Negative Covenants of the Seller. The Seller hereby agrees that, so long as
the Commitments remain in effect, the Outstanding Purchase Price has not been
reduced to zero or any other amount is owing to any Purchaser or the Managing
Facility Agent hereunder, the Seller shall not:
(a) Sales, Liens, Etc. Sell, assign (by operation of law or
otherwise) or otherwise dispose of, or create or suffer to exist any Lien (other
than Permitted Receivable Liens and other than, but solely with respect to a
Financed Aircraft, Permitted Aircraft Liens), upon or with respect to, the
Purchased Receivables, the related Contracts and Financed Aircraft or the
Collections with respect thereto, or assign any right to receive payments in
respect thereof other than to the Managing Facility Agent and the Purchasers
pursuant to this Agreement.
(b) Extension or Amendment of Purchased Receivables. Extend,
amend or otherwise modify the terms of any Purchased Receivable, or amend,
modify or waive any term or condition of any Contract related thereto or permit
the Servicer (if the Seller or an Affiliate of the Seller is then the Servicer)
to do any of the foregoing except in the normal course of the Seller's business
and in accordance with the Credit and Collection Policy or pursuant to
subsection 7.1(b)(iv)(x) (each, a "Modification"); provided that:
(i) any Modification made pursuant to this subsection 7.1(b)
shall be subject to the provisions of subsection 2.12;
(ii) if an Amortization Event shall have occurred and be
continuing, no Modification shall be made without the prior consent of
the Required Purchasers if the effect thereof would be to extend the
then average life of the Purchased Receivables taken as a whole, to
reduce or increase the Principal Balance of any Purchased Receivable or
to reduce the amount or rate of interest thereon or to cause the
Stipulated Aircraft Value under a Contract to be less than the
Outstanding Balance of the Receivable with respect to such Contract;
(iii) if an Amortization Event shall have occurred and be
continuing, no Modification shall be made without the prior consent of
each Purchaser if the effect thereof would be to extend the Final
Payment Date of a Receivable beyond the then latest Final Payment Date
of all Purchased Receivables;
(iv) the Seller shall not modify the payment terms of any
Purchased Receivable except (x) in accordance with the Credit and
Collection Policy, except that, (A) with respect to any GA Receivable,
the Seller shall not modify the payment terms of any such Purchased
Receivable more than once after the Closing Date or Settlement Date on
which such Receivable is sold or substituted pursuant to this Agreement
or an Existing Agreement, and (B) with respect to a Commuter
Receivable, (1) no more than an aggregate of 12 monthly principal
payments may be deferred during the term of any Contract and (2)
subject to the immediately following sentence, the Final Payment Date
may not be extended by more than three years and, (y) so long as no
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Amortization Event has occurred and is continuing, the Servicer may
when necessary to prevent a possible default by the Obligor under any
Contract or in order to enhance the collectibility of any Receivable,
defer any scheduled payment of principal, in part or in whole, to a
later scheduled payment date under such Contract. If, after giving
effect to the extension of the Final Payment Date of a Purchased
Receivable pursuant to clause (iv)(x)(B)(2) of the foregoing proviso,
such extended Final Payment Date exceeds, (I) so long as no Rating
Event has occurred and is continuing, 13 years from the date of such
extension and, (II) during the continuance of a Rating Event, 10 years
from the date of such extension, then on the immediately following
Settlement Date (or if such date is a Settlement Date, then on such
date) the Seller shall deposit in the Concentration Account an amount
equal to the aggregate Principal Collections then scheduled to be paid
after such 13th year or 10th year, as the case may be, plus, if a
Trigger Amortization Event has occurred and is continuing, accrued and
unpaid interest on the amount so deposited at the rate under the
related Contract except to the extent (without duplication) of any
payment made pursuant to subsection 2.18 for the Settlement Period
during which such interest accrued and was not paid by the Obligor
under such Contract. The amount of any such deposit shall be applied
and distributed in accordance with subsections 2.15 and 2.16 provided,
however, that any Purchased Receivable so modified shall be deemed an
Extended Term Receivable for purposes of subsection 2.15;
(v) any Modification made in accordance with this subsection
7.1(b) shall not cause the Principal Balance of the applicable
Purchased Receivable to exceed 50% of the Low Wholesale Value of the
related Financed Aircraft; and
(vi) the Seller shall not make any Modification which permits
the transfer of registered ownership in any Financed Aircraft without
the consent of the Required Purchasers, unless after giving effect to
such transfer (and any payments made under the Contract at the time of
transfer) the related Receivable would satisfy on the date of transfer
the criteria contained in the definition of Eligible Receivable;
provided that the provisions of this subsection 7.1(b)(vi) shall not
apply to a transfer by an Obligor to a wholly-owned Affiliate of such
Obligor.
(c) Change in Business or Credit and Collection Policy. Make
any material change in the character of its business or, without the prior
written consent of the Required Purchasers, notify any Obligor to remit payments
to a location other than that to which such payment would be remitted on the
Closing Date; make any change in the Credit and Collection Policy without prior
notice to the Managing Facility Agent and each Purchaser; provided that, without
the prior consent of the Required Purchasers, the Seller shall not make or
permit to be made any such change to the Credit and Collection Policy if such
change could reasonably be expected to materially adversely affect the
collectibility or maturity of any Purchased Receivable or the interests of the
Administrative Agent and the Purchasers in any Purchased Receivable, the related
Contract and Financed Aircraft or the Collections with respect thereto.
(d) No Actions against Obligors. Except in accordance with
the Credit and Collection Policy, commence or settle any legal action to enforce
collection of any Purchased Receivable.
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(e) Security Interest to Remain in Force. Release, in whole or
in part, any Financed Aircraft, or any other collateral securing or guarantee of
the related Contract (including, but not limited to, any letter of credit
related thereto issued in favor of the Seller), from the security interest
granted by such Contract except, that, the Seller may or may permit the Servicer
to, at its or the Servicer's own expense, (x) substitute engines in accordance
with subsection 7.1(j) and (y) substitute other parts (other than airframes) for
any of the parts on any Financed Aircraft as Seller or Servicer may deem
desirable in the proper conduct of its business; provided, however, that for
purposes of this clause (y), (i) no such substitution(s), individually or in the
aggregate, shall diminish the utility or remaining useful life of such Financed
Aircraft, or materially diminish the value, or impair the condition or
airworthiness, thereof, below the utility, remaining useful life, condition,
airworthiness, or value thereof immediately prior to such substitution, (ii) no
such substitution shall affect adversely the Lien on such Financed Aircraft
(other than the removed avionics) in favor of the Administrative Agent for the
benefit of the Purchasers (as such Lien was in effect immediately prior to such
substitution), (iii) the Administrative Agent shall have a Lien on the
substitute parts with a priority no less than the priority of the Lien in favor
of the Administrative Agent on the removed parts and (iv) the new part shall not
be subject to any Liens other than Permitted Aircraft Liens. Upon substitution
of any engine or other parts on any Financed Aircraft, the Lien thereon of the
Administrative Agent on behalf of the Purchasers shall, without the requirement
for any further act, be automatically released.
(f) Limitations on Fundamental Changes. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of, all or substantially all of its property, business or
assets (except for sales and substitutions of Purchased Receivables pursuant to
this Agreement).
(g) Transactions with Affiliates. Enter into any transaction,
including, without limitation, any purchase, sale, lease or exchange of property
or the rendering of any service, relating to the administration, servicing and
collection of the Purchased Receivables, the Collections with respect thereto
and the related Contracts and Financed Aircraft, with any Affiliate unless such
transaction is otherwise permitted under this Agreement, is in the ordinary
course of the Seller's business and is upon fair and reasonable terms no less
favorable to the Seller than it would obtain in a comparable arm's length
transaction with a Person not an Affiliate.
(h) Fiscal Year. Permit the fiscal year of the Seller to end
on a day other than December 31 without 60 days' prior notice thereof to the
Managing Facility Agent.
(i) Assignment of Contracts. Permit any assignment of any
Contract by either the Seller or Obligor (except for an assignment to the
Guarantor) without the prior written consent of the Required Purchasers,
provided that such consent shall not be unreasonably withheld to the extent the
Contract so provides.
(j) Substitution of Engines. Permit any engine to be
substituted for an engine originally annexed to any Financed Aircraft related to
a Purchased Receivable unless such engine is of the same model number and of the
same or improved utility, performance and efficiency, of equivalent age and
equivalent or greater value as the replaced engine.
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(k) Indebtedness. Create, incur, assume or suffer to exist any
Indebtedness or other liability whatsoever, except (i) Indebtedness owing from
time to time to Raytheon Credit and incurred to finance a portion of the
Purchase Price (as defined in the Intercompany Purchase Agreement) of
Receivables, the payment of which Indebtedness is subordinated to the prior
payment in full of all amounts owing to the Purchasers, (ii) obligations
incurred under this Agreement and (iii) other liabilities incurred in the
ordinary course of business.
(l) Guarantees. Become or remain liable, directly or
contingently, in connection with any Indebtedness or other liability of any
other Person, whether by guarantee, endorsement (other than endorsements of
negotiable instruments for deposit or collection in the ordinary course of
business), agreement to purchase or repurchase, agreement to supply or advance
funds, or otherwise.
(m) Investments. Make or suffer to exist any loans or advances
to, or extend any credit to, or make any investments (by way of transfer of
property, contributions to capital, purchase of stock or securities or evidences
of indebtedness, acquisition of the business or assets, or otherwise) in, any
Person except (i) for purchases of Receivables pursuant to the Intercompany
Purchase Agreement, (ii) for investments in Cash Equivalents in accordance with
the terms of this Agreement and (iii) the holding of the demand note made by RAC
or Raytheon Credit in favor of the Seller.
(n) Distributions. Declare or pay, directly or indirectly, any
dividend or make any other distribution (whether in cash or other property) with
respect to the profits, assets or capital of the Seller or any Person's interest
therein, or purchase, redeem or otherwise acquire for value any of its capital
stock now or hereafter outstanding, except that so long as the Seller would
continue to be Solvent as a result thereof and after giving effect thereto and
no Amortization Event is continuing or would result therefrom, the Seller may
declare and pay dividends on its capital stock.
(o) Agreements. Become a party to, or permit any of its
properties to be bound by, any indenture, mortgage, instrument, contract,
agreement, lease or other undertaking, except the Contracts, this Agreement and
the Intercompany Purchase Agreement or amend or modify the provisions of its
Certificate of Incorporation or issue any power of attorney except to the
Managing Facility Agent or the Servicer.
(p) Intercompany Purchase Agreement. Give any material
consent or fail to exercise in any material respect any right or privilege under
the Intercompany Purchase Agreement.
7.2 Negative Covenants of the Servicer. The Servicer (so long as it is Raytheon
Credit) hereby agrees that, so long as the Commitments remain in effect, the
Outstanding Purchase Price has not been reduced to zero or any other amount is
owing to any Purchaser or the Managing Facility Agent hereunder, the Servicer
shall not:
(a) No Actions against Obligors. Except in accordance with
the Credit and Collection Policy, commence or settle any legal action to enforce
collection of any Purchased Receivable.
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(b) Security Interest to Remain in Force. Except to the extent
permitted in subsection 7.1(e), release, in whole or in part, any Financed
Aircraft, or any other collateral securing or guaranteeing the related Contract
(including, but not limited to, any letter of credit related thereto issued in
favor of the Seller), from the security interest granted by such Contract.
(c) Limitations on Fundamental Changes. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of, all or substantially all of its property, business or
assets (except for sales and substitutions of Receivables pursuant to the
Intercompany Purchase Agreement), except that any Subsidiary of the Servicer may
be merged or consolidated with or into the Servicer (so long as the Servicer is
the surviving or continuing corporation).
(d) Transactions with Affiliates. Enter into any transaction,
including, without limitation, any purchase, sale, lease or exchange of property
or the rendering of any service, relating to the administration, servicing and
collection of the Purchased Receivables, the Collections with respect thereto
and the related Contracts and Financed Aircraft, with any Affiliate unless such
transaction is otherwise permitted under this Agreement, is in the ordinary
course of the Servicer's business and is upon fair and reasonable terms no less
favorable to the Servicer than it would obtain in a comparable arm's length
transaction with a Person not an Affiliate.
(e) Assignment of Contracts. Permit any assignment of any
Contract by either the Seller or Obligor (except for an assignment to the
Guarantor or RAC) without the prior written consent of the Required Purchasers,
provided that such consent shall not be unreasonably withheld to the extent the
Contract so provides.
SECTION 8. AMORTIZATION EVENTS
8.1 Amortization Events. Any of the following shall constitute an Amortization
Event (whether it occurs before or during the Amortization Period) hereunder:
(a) The Seller or the Servicer shall fail to make any deposit
or payment (including any payment of interest) required to be made by
the Seller or the Servicer, as the case may be, under this Agreement or
any other document executed and delivered in connection herewith,
including, without limitation, any payment or deposit required to be
made pursuant to subsection 2.6(a), 2.7(b), 2.10, 2.11, 2.12,
2.14(c)(iii), 2.18 or 7.1(b), or the Seller or the Servicer (if an
Affiliate of the Seller is then the Servicer) shall fail to deliver the
Settlement Statement, or the Seller or the Servicer (if an Affiliate of
the Seller is then the Servicer) shall fail to take any action required
or requested to be taken pursuant to this Agreement after an
Amortization Event has occurred and is continuing, in each case within
five days after any such deposit, payment or delivery is required to be
made or any such action is requested to be taken hereunder; or
(b) Raytheon shall fail to make any payment required under the
Guarantee or RAC shall fail to make any payment required under the
Repurchase Agreement within, in each case, five days after any such
payment is required to be made; or
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(c) intentionally omitted; or
(d) Any representation or warranty made or deemed made by the
Seller, the Servicer (if an Affiliate of the Seller is then the
Servicer) or Raytheon in any Purchase Document to which it is a party
or which is contained in any certificate, document or financial or
other statement furnished at any time under or in connection with this
Agreement shall prove to have been incorrect in any material respect on
or as of the date made or deemed made by the Seller, the Servicer (if
an Affiliate of the Seller is then the Servicer) or Raytheon, and shall
have continued to be incorrect in such material respect for a period of
30 days after such representation or warranty was initially made (other
than any representation and warranty with respect to a Receivable which
has been repurchased or substituted pursuant to subsection 2.7(b),
2.10, 2.11 or 2.13); or
(e) (i) The Seller shall default in the observance or
performance of, or Raytheon shall default under the Guarantee in
causing the Seller to observe or perform, any agreement contained in
subsection 6.1(k) or Section 7.1 or (ii) the Servicer shall default in
the observance or performance of, or Raytheon shall default under the
Guarantee in causing the Servicer to observe or perform, any agreement
contained in subsection 7.2; or
(f) Either of the Seller or the Servicer (if an Affiliate of
the Seller is then the Servicer) shall default in the observance or
performance of any other agreement (other than subsection 6.1(n), the
remedy for which is contained in subsection 2.11) contained in this
Agreement in any material respect or Raytheon shall default in the
observance or performance of any agreement contained in the Guarantee
in any material respect or RAC shall default in the observance or
performance of any agreement contained in the Repurchase Agreement in
any material respect (other than as provided in paragraphs (a) through
(e) of this subsection 8.1), and such default shall continue unremedied
for a period of 30 days after the earlier of (i) notice of such default
from the Managing Facility Agent or the Majority Purchasers or (ii)
knowledge by the Seller, the Servicer (if an Affiliate of the Seller is
then the Servicer) or Raytheon of any such default, or
(g) The Debt Ratio of Raytheon shall be greater than (i) 0.60
to 1.0 on the last day of any fiscal quarter of Raytheon ending on or
before December 31, 2001, (ii) 0.55 to 1.0 on the last day of any
fiscal quarter of Raytheon ending thereafter;
(h) The Interest Coverage Ratio for any period of four
consecutive fiscal quarters ending (i) on or prior to July 2, 2000
shall be less than 2.25 to 1.0 or (ii) after July 2, 2000, shall be
less than 2.5 to 1.0; or
(i) Raytheon, RAC, Raytheon Credit or the Seller shall default
in any payment of principal of or interest of any indebtedness for
borrowed money (or any guarantee thereof) (other than under the
Guarantee or the Repurchase Agreement) with a principal amount in
excess of $25,000,000 when due (whether by acceleration, upon maturity
or otherwise), beyond the period of grace (not to exceed 30 days), if
any, provided in the instrument or agreement under which such
indebtedness (or guarantee) was created; or
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(j) (i) Raytheon, RAC, Raytheon Credit or the Seller shall
commence any case, proceeding or other action (A) under any existing or
future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking to
have an order for relief entered with respect to it, or seeking to
adjudicate it as bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian or other similar
official for it or for all or any substantial part of its assets; or
(ii) there shall be commenced against Raytheon, RAC, Raytheon Credit or
the Seller any case, proceeding or other action of a nature referred to
in clause (i) above which (A) results in the entry of an order for
relief or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of 60 days from the
entry thereof; or (iii) there shall be commenced against Raytheon, RAC,
Raytheon Credit or the Seller any case, proceeding or other action
seeking issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of its assets which
results in the entry of an order for any such relief which shall not
have been vacated, discharged, or stayed or bonded pending appeal
within 60 days from the entry thereof; or (iv) Raytheon, RAC, Raytheon
Credit or the Seller shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the
acts set forth in clause (i), (ii), or (iii) above; or (v) Raytheon,
RAC, Raytheon Credit or the Seller shall make a general assignment for
the benefit of its creditors or shall generally not, or shall be unable
to, or shall admit in writing its inability to, pay its debts as they
become due; or
(k) Any event or condition shall occur or exist with respect
to a Plan that, together with all other such events or conditions, if
any, could reasonably be expected to subject Raytheon or any Commonly
Controlled Entity to any tax, penalty or other liabilities which in the
aggregate could reasonably be expected to have a Material Adverse
Effect or a material adverse effect on the business, assets, property
or condition (financial or other) of Raytheon and its Subsidiaries
taken as a whole; or
(l) One or more judgments or decrees shall be entered against
Raytheon, RAC, Raytheon Credit or the Seller involving in the aggregate
a liability (not paid or fully covered by insurance) of $25,000,000 or
more and all such judgments or decrees shall not have been vacated,
discharged, satisfied, stayed or bonded pending appeal within 60 days
from the entry thereof; provided that no Amortization Event shall be
deemed to occur if any such judgment or decree is being contested in
good faith by appropriate proceedings and with respect to which no
enforcement proceedings to collect any such judgment or enforce any
such decree have been commenced which could reasonably be expected to
have a Material Adverse Effect; or
(m) The Guarantee shall cease to be in full force and effect
or Raytheon shall so assert in writing or the Repurchase Agreement
shall cease to be in full force and effect or RAC shall so assert in
writing or;
(n) The ownership or security interests created under this
Agreement or any Assignment (including to the extent applicable, each
Foreign Assignment) shall cease to be in full force and effect or the
Seller or any of its Affiliates shall so assert in writing, or this
Agreement or any Assignment (including to the extent applicable, each
Foreign Assignment) shall cease, for any reason other than acts or
omissions of the Managing Facility Agent or any Purchaser, to be
effective to grant a perfected first-priority ownership or security
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interest in the Purchased Receivables, the related Contracts and
Financed Aircraft free and clear of any Lien except (i) to the extent
any of the foregoing are violated prior to the dates set forth in
subsection 6.1(n) as a result of the failure to make the filings
referred to therein and required to be made by such dates, (ii) to the
extent a Lien of the first priority on the related Financed Aircraft is
not perfected with respect to L/C Receivables, Unsecured Foreign
Receivables and Existing Uncertified Foreign Receivables, (iii) solely
with respect to a Purchased Receivable, to the extent the Lien thereon
is subject to a Permitted Receivable Lien, (iv) solely with respect to
a Financed Aircraft, to the extent the Lien thereon is subject to
Permitted Aircraft Liens or (v) to the extent provided in subsection
4.2(b); or
(o) (i) Raytheon shall cease to own, directly or indirectly,
100% of the issued and outstanding voting stock of RAC, the Seller or
Raytheon Credit or (ii) Raytheon Credit shall cease to own 100% of the
issued and outstanding voting stock of the Seller; or
(p) On any Settlement Date on which Raytheon's Debt Rating is
less than A-/A3, after giving effect to any sales pursuant to
Subsection 11.25, (i) the aggregate amount of Delinquent Receivables
shall exceed $240,000,000 or (ii) the ratio, expressed as a percentage,
of the aggregate Outstanding Purchase Price of all Delinquent
Receivables to the Outstanding Purchase Price of all Receivables shall
be greater than 10%, provided that once the initial Bulk Sale has
occurred such limit shall be increased to 13% until January 1, 2001; or
(q) Raytheon's Debt Rating shall be less than BBB- or the
equivalent thereof or Raytheon's long-term unsecured senior debt shall
not be rated by both S&P and Moody's or, if the Seller and the Required
Purchasers shall have agreed to use a rating agency other than Moody's
or S&P to determine the Debt Rating, such Debt Rating shall be less
than such level as the Seller and the Purchasers, by unanimous consent,
shall have agreed; or
(r) As of any Settlement Date, the Aggregate Repurchase
Obligation in effect on such Settlement Date, before giving effect to
any purchases and substitutions on such date but after deducting the
Repurchase Price of Defaulted Receivables repurchased on such date
(whether paid by the Seller, RAC or the Guarantor), shall be equal to
or less than 75% of the sum of (i) 25% of the aggregate Outstanding
Balances of the 25% Repurchase Receivables, (ii) 75% of the aggregate
Outstanding Balances of the 75% Repurchase Receivables and (iii) 90% of
the aggregate Outstanding Balances of the 90% Repurchase Receivables,
in effect on such Settlement Date, before giving effect to any
purchases and substitutions on such date and before giving effect to
any reductions of such Aggregate Repurchase Obligation on such date.
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8.2 Rights and Remedies. If an Amortization Event should occur and be
continuing, the Managing Facility Agent and the Purchasers shall have available
the following rights and remedies (unless such Amortization Event is waived
pursuant to subsection 11.1) in addition to any other rights and remedies
available under applicable law, such rights and remedies being cumulative and
not exclusive:
(a) each Purchaser's Outstanding Purchase Price shall bear
interest for the Accrual Period in which such Amortization Event
occurs, payable on demand, at the Default Rate for such Purchaser (i)
if such event is an Amortization Event specified in subsection 8.1(a),
commencing on the date such Amortization Event occurs and (ii) if such
Amortization Event is a Note Rate Amortization Event, commencing on the
date the Revolving Period and the Commitments are terminated pursuant
to subsection 8.2(b) or, if later, on the date such Note Rate
Amortization Event occurs; or
(b) with the consent of the Majority Purchasers, the Managing
Facility Agent may, or upon the request of the Majority Purchasers, the
Managing Facility Agent shall, by notice to the Seller declare the
Revolving Period and the Commitments to be terminated forthwith,
whereupon the Revolving Period and the Commitments shall immediately
terminate; provided that if such event is an Amortization Event
specified in clause (i) or (ii) of subsection 8.1(j), automatically the
Revolving Period and the Commitments shall immediately terminate; or
(c) if such event is a Specified Amortization Event and the
Revolving Period and the Commitments have been terminated pursuant to
subsection 8.2(b), the Majority Purchasers may in their sole discretion
terminate the appointment of Raytheon Credit as the Servicer in
accordance with subsection 3.1; or
(d) if such event is a Specified Amortization Event and the
Revolving Period and the Commitments have been terminated pursuant to
subsection 8.2(b), upon five Business Days' notice to the Seller and
the Servicer and at the Seller's expense, the Managing Facility Agent
may, or upon the request of the Majority Purchasers the Managing
Facility Agent shall, notify, or direct the Seller or the Servicer, as
the case may be, to notify, the Obligors of Purchased Receivables, or
any of them, of the ownership of the Purchased Receivables by the
Purchasers; or
(e) if such event is a Specified Amortization Event and the
Revolving Period and the Commitments have been terminated pursuant to
subsection 8.2(b), the Managing Facility Agent may, or upon the request
of the Majority Purchasers the Managing Facility Agent shall, direct or
request the Seller or the Servicer, as the case may be, to direct the
Obligors of Purchased Receivables, or any of them, that payment of all
amounts payable under any such Purchased Receivable be made directly to
the Managing Facility Agent or its designee for the account of the
Purchasers; or
(f) if the Revolving Period and the Commitments have been
terminated pursuant to subsection 8.2(b), the Managing Facility Agent
may, or upon the request of the Majority Purchasers the Managing
Facility Agent shall, direct the Seller or the Servicer, as the case
may be, to segregate all cash, checks and other instruments received by
it from time to time constituting Collections on account of any
Purchased Receivable in a manner acceptable to the Managing Facility
Agent and to remit promptly upon receipt all such cash, checks and
instruments, duly endorsed or with duly executed instruments of
transfer, to the Managing Facility Agent or its designee for the
account of the Purchasers; or
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(g) if the Revolving Period and the Commitments have been
terminated pursuant to subsection 8.2(b), the Managing Facility Agent
may, or upon the request of the Majority Purchasers the Managing
Facility Agent shall, direct the Seller or the Servicer, as the case
may be, to assemble the documents, instruments and other records
(including, without limitation, computer tapes and disks) which
evidence the Purchased Receivables, the related Contracts and the
related Financed Aircraft, or which are otherwise necessary or
desirable to collect the Purchased Receivables, and to make the same
available to the Managing Facility Agent at a place selected by the
Managing Facility Agent or its designee; or
(h) if the Revolving Period and the Commitments have been
terminated pursuant to subsection 8.2(b), the Managing Facility Agent
may, or upon the request of the Majority Purchasers the Managing
Facility Agent shall, direct the Seller or the Servicer to convert the
Collection Account to a lockbox account into which payments on account
of the Purchased Receivables are remitted or deposited directly and, in
connection therewith, the Seller or the Servicer shall execute and file
such documents and take such actions to transfer to the Managing
Facility Agent or its agent all post office boxes, deposit and other
accounts into which Collections are remitted or deposited and to grant
to the Managing Facility Agent and the Purchasers perfected
first-priority security and/or ownership interests therein; or
(i) if the Revolving Period and the Commitments have been
terminated pursuant to subsection 8.2(b), the Managing Facility Agent
may, or upon the request of the Majority Purchasers the Managing
Facility Agent shall, direct the Seller or the Servicer to take any and
all steps in the name of the Seller or the Servicer and on behalf of
the Managing Facility Agent and the Purchasers which may be necessary
or desirable, in the determination of the Managing Facility Agent (or
the Managing Facility Agent and the Majority Purchasers, if the
Managing Facility Agent is acting at the request of the Majority
Purchasers), to collect all amounts due under any and all Purchased
Receivables and the related Contracts and Financed Aircraft, including,
without limitation, endorsing the name of the Seller on checks and
other instruments representing Collections in respect of such Purchased
Receivables and enforcing such Purchased Receivables and the related
Contracts and Financed Aircraft; or
(j) if the Revolving Period and the Commitments have been
terminated pursuant to subsection 8.2(b), the Managing Facility Agent
may, or upon the request of the Majority Purchasers the Managing
Facility Agent shall, take or direct the Seller to take any and all
steps in the name of the Seller and on behalf of the Managing Facility
Agent and the Purchasers which may be necessary or desirable, in the
determination of the Managing Facility Agent (or the Managing Facility
Agent and the Majority Purchasers, if the Managing Facility Agent is
acting at the request of the Majority Purchasers), to enforce and
protect the rights and remedies of the Managing Facility Agent and the
Purchasers in, to and under the Intercompany Purchase Agreement.
8.3 Waivers. Except as expressly provided herein, presentment, demand, protest
and all other notices of any kind are hereby expressly waived by the Seller and
the Servicer.
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SECTION 9. INDEMNIFICATIONS
9.1 Indemnities of the Seller. (a) Without limiting any other rights which the
Managing Facility Agent, any Purchaser or any Affiliate thereof may have
hereunder or under applicable law, the Seller hereby agrees, subject to the
limitations set forth in this Section 9, to indemnify the Managing Facility
Agent, each Administrative Agent, each Co-Administrative Agent, each Purchaser
and each Affiliate thereof (each, an "Indemnified Person") from and against any
and all damages, losses, claims, liabilities and related costs and expenses,
including reasonable attorneys' fees and disbursements (all of the foregoing,
collectively, "Indemnified Amounts") awarded against or incurred by any
Indemnified Person which arise directly or indirectly from:
(i) any Purchased Receivable which is not an Eligible
Receivable at the date of its purchase or substitution (which date
shall be, for each Existing Receivable, the date such Receivable was
purchased or substituted under the Existing Agreement applicable to
such Existing Receivable) or which is an Ineligible Receivable as
defined in clause (b)(z) of the definition of "Ineligible Receivable";
(ii) reliance on any representation or warranty made by the
Seller (or any of their respective officers) under or in connection
with this Agreement or any Settlement Statement which shall have been
false or incorrect in any material respect when made or deemed made;
(iii) the failure by the Seller, any Affiliate Obligor or
the Servicer to comply with any applicable Requirement of Law in all
material respects with respect to any Purchased Receivable, the related
Contract or Financed Aircraft, or the nonconformity in any material
respect of any Purchased Receivable or the related Contract or Financed
Aircraft with any such applicable Requirement of Law;
(iv) the failure (A) of the Administrative Agent to have a
valid, perfected and first priority security interest in the Financed
Aircraft (including the Aircraft Accessories) other than with respect
to a Registerable Lease Receivable, Unsecured Foreign Receivable,
Existing Uncertified Foreign Receivable or L/C Receivable, (B) with
respect to a Registerable Lease Receivable, of the Administrative Agent
to have a valid, perfected and first priority security interest in the
Financed Aircraft (including the Aircraft Accessories related thereto)
or (C) either (1) to vest and maintain in any Purchaser a perfected,
valid and enforceable first priority ownership interest in any
Purchased Receivable or (2) to create and maintain in favor of the
Administrative Agent for the ratable benefit of the Purchasers a valid,
perfected and first priority security interest in such Receivable;
(v) the failure to file or record any document or
instrument (including, without limitation, any FAA Assignment or any
Foreign Assignment) with respect to any Receivables constituting, or
purporting to constitute, Purchased Receivables, the Contracts or the
Financed Aircraft related thereto (other than the Financed Aircraft
related to the L/C Receivables and the Unsecured Foreign Receivables),
whether at the time of any purchase or at any time thereafter;
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(vi) any dispute, claim, offset or defense (other than
discharge in bankruptcy of the Obligor) of the Obligor to the payment
of any Purchased Receivable or of the Unaffiliated Foreign Lessee to
the payment of any amount under its Applicable Lease (including,
without limitation, a defense based on such Receivable or the related
Contract not being a legal, valid and binding obligation of such
Obligor or Unaffiliated Foreign Lessee enforceable against it in
accordance with its terms or any claims based on the related Financed
Aircraft not conforming to any express or implied warranty);
(vii) any failure of the Seller or the Servicer to perform
its duties or obligations in any capacity in accordance with the
provisions of this Agreement, including, without limitation, the
turnover of amounts pursuant to subsection 2.14 or 2.15;
(viii) any Lien against or with respect to Purchased
Receivables, the Collections with respect thereto or the related
Contract or Financed Aircraft, or any sale, pledge, or assignment (by
operation of law or otherwise) or other disposition of Collections of
Purchased Receivables by the Seller or the Servicer;
(ix) any failure by the Seller, any Affiliate Obligor or
the Servicer to comply (1) in any material respect with any provision,
covenant or other promise required to be observed by any such Person
under any Contract related to any Purchased Receivable or (2), except
as otherwise permitted by this Agreement, with all provisions of the
Credit and Collection Policy in all material respects, which failure
reduces or impairs the rights of the Administrative Agent or any
Purchaser with respect to any Purchased Receivable or the value of any
Purchased Receivable including, but not limited to, failure to comply
with those provisions of the Credit and Collection Policy relating to
the cancellation, extension, amendment, modification, compromise or
settlement of any Purchased Receivable or any term thereof, the
extension, amendment, modification or waiver of any term or condition
of any Contract related thereto, the sale, pledge or assignment of, or
grant of security interest in, any Purchased Receivable or the Contract
or Financed Aircraft related thereto, any change in the character of
its business or in the Credit and Collection Policy or the commencement
or settlement of any legal action to enforce collection of any
Purchased Receivable;
(x) any investigation, litigation, or proceeding related
to any use of the proceeds of any purchase;
(xi) any casualty loss, property loss or product liability
related to (i) the Purchasers' ownership of the Purchased Receivables
or (ii) the Purchasers' security interest in the related Financed
Aircraft;
(xii) the failure of any Purchased Receivable at any time
after its sale or substitution hereunder or, with respect to the
Existing Receivables, under the applicable Existing Agreement to
satisfy the criteria under clause (k) or (l) (including, without
limitation, the failure of a Permitted Receivable Lien or a Permitted
Aircraft Lien to be released or bonded in accordance with the
definition of each such term) of the definition of "Eligible
Receivable" (notwithstanding that such criteria are required to be
satisfied pursuant to such definition on the date a Purchased
Receivable is sold or substituted); or
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(xiii) the execution, delivery, performance, administration
and enforcement of any of the Purchase Documents.
(b) Notwithstanding anything to the contrary contained in
subsection 9.1(a), and with respect to any event of the type described in clause
(vi) or (xii) of subsection 9.1(a), the Managing Facility Agent, the
Administrative Agent, the Co-Administrative Agents and the Purchasers shall be
deemed to have incurred Indemnified Amounts with respect to a Purchased
Receivable as a result of events described in such clause (vi) or (xii) on the
earlier of (1) the date on which the Seller becomes aware of the event or events
of the type described in either of such clauses or (2) the date on which the
Managing Facility Agent notifies the Seller that the event described in either
of such clauses has occurred.
(c) Indemnification payments required to be made hereunder
shall be payable at any time on demand by the Managing Facility Agent at the
request of the applicable Indemnified Persons and shall be promptly deposited in
the Concentration Account and paid out to such Indemnified Persons pro rata with
respect to the Indemnified Amounts incurred and requested by such Indemnified
Persons.
(d) The agreements in this Section 9 shall survive the
completion of the Amortization Period.
9.2 Limitations of Seller's Liability. (a) The Seller shall not be required to
indemnify an Indemnified Person pursuant to subsection 9.1 for:
(i) Indemnified Amounts to the extent resulting from gross
negligence or willful misconduct on the part of such Indemnified
Person; or
(ii) recourse for non-payment by an Obligor (except as
otherwise provided in this Agreement) for Defaulted Receivables; or
(iii) any income, franchise or other similar taxes imposed
on any Indemnified Person as a result of any of the indemnities
provided in subsection 9.1(a) arising out of or as a result of this
Agreement or in respect of any Receivables or any Contract; or
(iv) Indemnified Amounts resulting from actions taken or
failed to be taken by a successor Servicer that is not an Affiliate of
the Seller appointed pursuant to subsection 3.1(b).
(b) Each of the Managing Facility Agent, each Administrative
Agent, each Co-Administrative Agent and each Purchaser hereby waives, to the
maximum extent not prohibited by law, any right it may have to claim or recover
as Indemnified Amounts under this Section 9 any special, exemplary, punitive or
consequential damages; provided that the waiver contained in this subsection
9.2(b) shall not extend to, and the Managing Facility Agent, each Administrative
Agent, each Co-Administrative Agent and each Purchaser does not waive, any right
to claim or recover from the Seller any special, exemplary, punitive or
consequential damages for which an Indemnified Person is liable to any Person
(other than an Affiliate of such Indemnified Person).
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9.3 Proceedings against Indemnified Person. (a) If any action, suit or
proceeding shall be brought against one or more of the Indemnified Persons in
respect of which indemnity may be sought against the Seller, such Indemnified
Person shall, promptly after receipt of notice of commencement of such action,
suit or proceeding, notify the Seller in writing, enclosing a copy of all papers
served upon such Indemnified Person; provided that the failure so to notify the
Seller shall not relieve it from any liability which it may have under
subsection 9.1 except to the extent that the Seller is prejudiced by such
failure. The Seller may, and upon such Indemnified Person's request shall, at
the Seller's expense, resist and defend such action, suit or proceeding, or
cause the same to be resisted or defended by counsel selected by the Seller. In
the event of any failure by the Seller to resist and defend such suit, action or
proceeding or cause the same to be resisted or defended by counsel reasonably
satisfactory to such Indemnified Person, the Seller shall pay all reasonable
costs and expenses (including, without limitation, attorney's fees and
disbursements) incurred by such Indemnified Person in connection with such suit,
action or proceeding. In the event that the Seller does assume the defense of
such suit, action or proceeding, the Seller shall have the sole authority to
negotiate, compromise and settle such claim; provided that such Indemnified
Person shall have the right to employ counsel to represent it in connection with
any claim in respect of which indemnity may be sought by such Indemnified Person
against the Seller under such subsection 9.1 if, in the reasonable judgment of
such Indemnified Person, such Indemnified Person may have a conflict with the
Seller, such Indemnified Person shall be entitled to be represented by separate
counsel, and in that event the fees and expenses of such separate counsel shall
be paid by the Seller. In any event, the Indemnified Person shall retain the
right to employ its own counsel, but the Indemnified Person shall, except as
otherwise provided in this subsection 9.3, bear and shall be solely responsible
for its own costs and expenses.
(b) The Seller shall be subrogated to an Indemnified Person's
rights in any matter with respect to which the Seller has actually reimbursed
such Indemnified Person for any amounts for which the Indemnified Person claims
indemnification hereunder after the Amortization Period ends.
SECTION 10. THE MANAGING FACILITY AGENT AND ADMINISTRATIVE AGENT
10.1 Appointment. Each Purchaser hereby irrevocably designates and appoints Bank
of America, N.A., as the Managing Facility Agent of such Purchaser under this
Agreement and the other Purchase Documents and each such Purchaser irrevocably
authorizes Bank of America, N.A., as the Managing Facility Agent for such
Purchaser, to take such action on its behalf under the provisions of this
Agreement and the other Purchase Documents and to exercise such powers and
perform such duties as are expressly delegated to the Managing Facility Agent by
the terms of this Agreement and the other Purchase Documents, together with such
other powers as are reasonably incidental thereto. Each Purchaser hereby
irrevocably designates and appoints each of Bank of America, N.A. and UBS AG,
Stamford Branch (as successor to Swiss Bank Corporation, Stamford Branch, as
successor to Swiss Bank Corporation, New York Branch) as Administrative Agent
under this Agreement and the other Purchase Documents and to be, or continue to
be, jointly or individually, the named party or the secured party for the
benefit of the Purchasers with respect to the Receivables and the related
Aircraft and in and on all presently existing or hereafter executed financing
statements, assignments and continuation statements, FAA Assignments and other
FAA filings and similar filings in foreign jurisdictions and security interests
granted under this Agreement or any predecessor agreement (including pursuant to
Sections 11.11 and 11.12) relating to the Receivables and the related Aircraft.
Each Administrative Agent shall act solely in accordance with the instructions
of the Managing Facility Agent (including pursuant to Sections 11.10, 11.11 and
11.12) which in the case of the Old Administrative Agent shall be deemed to
include any action taken by the Managing Facility Agent pursuant to a power of
attorney granted by the Old Administrative Agent in favor of the Managing
Facility Agent. Notwithstanding any provision to the contrary elsewhere in this
Agreement, the Managing Facility Agent and each Administrative Agent shall not
have any duties or responsibilities, except those expressly set forth herein, or
any fiduciary relationship with any Purchaser, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or any other Purchase Document or otherwise exist against
the Managing Facility Agent or either Administrative Agent.
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10.2 Delegation of Duties. The Managing Facility Agent and each Administrative
Agent may execute any of its duties under this Agreement and the other Purchase
Documents by or through agents or attorneys-in-fact and shall be entitled to
advice of counsel concerning all matters pertaining to such duties. The Managing
Facility Agent and each Administrative Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
10.3 Exculpatory Provisions. Neither the Managing Facility Agent, each
Administrative Agent, nor any of their respective officers, directors,
employees, agents, attorneys-in-fact or Affiliates shall be (a) liable for any
action lawfully taken or omitted to be taken by it or such Person under or in
connection with this Agreement or any other Purchase Document (except for its or
such Person's own gross negligence or willful misconduct) or (b) responsible in
any manner to any of the Purchasers for any recitals, statements,
representations or warranties made by the Seller, the Servicer or Raytheon or
any officer thereof contained in this Agreement or any other Purchase Document
or in any certificate, report, statement or other document referred to or
provided for in, or received by the Managing Facility Agent or either
Administrative Agent under or in connection with, this Agreement or any other
Purchase Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Purchase Document
or for any failure of the Seller, the Servicer or Raytheon to perform their
respective obligations hereunder or thereunder. The Managing Facility Agent and
each Administrative Agent shall not be under any obligation to any Purchaser to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of (except delivery to it of items
required by Section 5 hereof to be delivered to it), this Agreement or any other
Purchase Document, or to inspect the properties, books or records of the Seller,
the Servicer or Raytheon. Without limiting the foregoing, the Old Administrative
Agent shall not have any liability for (i) any action, or omission to act, which
is made in accordance with the instructions of the Managing Facility Agent or
(ii) the failure to act if it has not received any instructions from the
Managing Facility Agent.
10.4 Reliance by Managing Facility Agent and Administrative Agent. The Managing
Facility Agent and each Administrative Agent shall be entitled to rely, and
shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or
teletype message, statement, order or other document or conversation believed by
it to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to the Seller, the Servicer or Raytheon),
independent accountants and other experts selected by the Managing Facility
Agent or such Administrative Agent. The Managing Facility Agent and each
Administrative Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Purchase Document unless it shall first
receive such advice or concurrence of the Majority Purchasers as it deems
appropriate or it shall first be indemnified to its satisfaction by the
Purchasers against any and all liability and expense which may be incurred by it
by reason of taking or continuing to take any such action. The Managing Facility
Agent and each Administrative Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement and the other
Purchase Documents in accordance with a request of the Required Purchasers or
the Majority Purchasers, as appropriate, and such request and any action taken
or failure to act pursuant thereto shall be binding upon each Purchaser.
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10.5 Notice of Certain Events. Neither the Managing Facility Agent nor any
Administrative Agent shall be deemed to have knowledge or notice of the
occurrence of an Amortization Event, Discount Event, Rating Event, Remittance
Event or Ineligibility Event (each, an "Occurrence") hereunder unless the
Managing Facility Agent has received notice from a Purchaser, the Seller, the
Servicer, RAC or Raytheon referring to this Agreement, describing such
Occurrence and stating that such notice is a notice thereof. In the event that
the Managing Facility Agent receives such a notice, the Managing Facility Agent
shall promptly give notice thereof to the Purchasers. The Managing Facility
Agent shall take such action with respect to any Amortization Event as shall be
reasonably directed by the Majority Purchasers; provided that unless and until
the Managing Facility Agent shall have received such directions, the Managing
Facility Agent may (but shall not be obligated to) take such action, or refrain
from taking such action, with respect to any such Amortization Event as it shall
deem advisable in the best interests of the Purchasers.
10.6 Non-Reliance on Managing Facility Agent, the Administrative Agent, the
Co-Administrative Agents and the Purchasers. Each Purchaser expressly
acknowledges that neither the Managing Facility Agent, either Administrative
Agent, the Co-Administrative Agents nor any of their officers, directors,
employees, agents, attorneys-in-fact or Affiliates has made any representations
or warranties to it and that no act by the Managing Facility Agent, either
Administrative Agent or the Co-Administrative Agents hereafter taken, including
any review of the affairs of the Seller, the Servicer or Raytheon, shall be
deemed to constitute any representation or warranty by the Managing Facility
Agent, either Administrative Agent or the Co-Administrative Agents to any
Purchaser. Each Purchaser represents to the Managing Facility Agent, each
Administrative Agent and the Co-Administrative Agents that it has, independently
and without reliance upon the Managing Facility Agent, either Administrative
Agent, the Co-Administrative Agents or any other Purchaser, and based on such
documents and information as it has deemed appropriate, made its own appraisal
of and investigation into the business, operations, property, financial and
other condition and creditworthiness of the Seller, the Servicer and Raytheon
and made its own decision to make its purchases hereunder and enter into this
Agreement. Each Purchaser also represents that it will, independently and
without reliance upon the Managing Facility Agent, either Administrative Agent
or the Co-Administrative Agents or any Purchaser, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Purchase Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Seller, the Servicer and Raytheon. Except for notices, reports and other
documents expressly required to be furnished to the Purchasers by the Managing
Facility Agent hereunder, neither the Managing Facility Agent, either
Administrative Agent nor the Co-Administrative Agents shall have any duty or
responsibility to provide any Purchaser with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of the Seller or Raytheon which may
come into the possession of the Managing Facility Agent, either Administrative
Agent or the Co-Administrative Agents or any of their officers, directors,
employees, agents, attorneys-in-fact or Affiliates.
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10.7 Indemnification. The Purchasers agree to indemnify the Managing Facility
Agent and each Administrative Agent in its capacity as such (to the extent not
reimbursed by the Seller or Raytheon and without limiting the obligation of the
Seller or Raytheon to do so), ratably according to the respective amounts of
their Commitments, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind whatsoever which may at any time (including, without
limitation, at any time after the Outstanding Purchase Price is reduced to zero)
be imposed on, incurred by or asserted against the Managing Facility Agent or
either Administrative Agent in any way relating to or arising out of this
Agreement, any other Purchase Document or any documents contemplated by or
referred to herein or therein or the transactions contemplated hereby or thereby
or any action taken or omitted by the Managing Facility Agent or either
Administrative Agent under or in connection with any of the foregoing; provided
that no Purchaser shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting solely from the Managing Facility
Agent's or either Administrative Agent's gross negligence or willful misconduct.
The agreements in this subsection shall survive the reduction of the Outstanding
Purchase Price to zero and payment of all other amounts payable hereunder.
10.8 Managing Facility Agent and Administrative Agent in Their Individual
Capacities. The Managing Facility Agent and each Administrative Agent and their
respective Affiliates may make loans to, accept deposits from and generally
engage in any kind of business with the Seller, the Servicer, RAC and Raytheon
and their Affiliates as though the Managing Facility Agent were not the Managing
Facility Agent, or such Administrative Agent was not an Administrative Agent,
hereunder and under the other Purchase Documents. With respect to purchases made
by it, the Managing Facility Agent and each Administrative Agent shall have the
same rights and powers under this Agreement and the other Purchase Documents as
any Purchaser and may exercise the same as though it were not the Managing
Facility Agent or an Administrative Agent, as the case may be, and the terms
"Purchaser" and "Purchasers" shall include the Managing Facility Agent and each
Administrative Agent, each in its individual capacity.
10.9 Successor Managing Facility Agent or Administrative Agent. The Managing
Facility Agent may resign as Managing Facility Agent upon 30 days' notice to the
Purchasers and such resignation shall be effective upon the earlier of (i) the
expiration of such 30 day notice period and (ii) the appointment of a successor
Managing Facility Agent pursuant to the provisions of this Section 10.9.;
provided that, if a successor Managing Facility Agent shall not have been
appointed prior to the end of such 30 day notice period, the Managing Facility
Agent shall remain the Administrative Agent until a successor Managing Facility
Agent is appointed in accordance with this Section 10.9. If the Managing
Facility Agent shall resign as Managing Facility Agent under this Agreement and
the other Purchase Documents, then the Required Purchasers shall appoint from
among the Purchasers a successor agent for the Purchasers, which successor agent
shall, subject to the consent of the Seller and Raytheon (which consent shall
not be unreasonably withheld), succeed to the rights, powers and duties of the
Managing Facility Agent including its rights powers and duties as Administrative
Agent hereunder, and the term "Managing Facility Agent" shall mean such
successor agent effective upon its appointment, and the former Managing Facility
Agent's rights, powers and duties as Managing Facility Agent and as an
Administrative Agent shall be terminated, without any other or further act or
deed on the part of such former Managing Facility Agent or any of the parties to
this Agreement or any holder of an Assignment. After any retiring Managing
Facility Agent's resignation as Managing Facility Agent, the provisions of this
subsection shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Managing Facility Agent under this Agreement and the
other Purchase Documents. The Old Administrative Agent shall have the right to
resign as an Administrative Agent in accordance with the letter, dated March 17,
1999, among the Old Administrative, Raytheon and the Managing Facility Agent,
relating to the Old Administrative Agent's term as an Administrative Agent.
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SECTION 11. MISCELLANEOUS
11.1 Amendments and Waivers. Neither this Agreement nor any other Purchase
Document nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this subsection. Unless
otherwise specifically provided herein, with the written consent of the Majority
Purchasers, the Managing Facility Agent, the Seller, the Servicer, RAC and
Raytheon may, from time to time, enter into written amendments, supplements or
modifications hereto and to the other Purchase Documents for the purpose of
adding or deleting any provisions to this Agreement or the other Purchase
Documents or changing in any manner the rights of the Purchasers, the Seller,
the Servicer, RAC, or Raytheon hereunder or thereunder or waiving, on such terms
and conditions as the Managing Facility Agent may specify in such instrument,
any of the requirements of this Agreement or the other Purchase Documents;
provided, however, that no such waiver and no such amendment, supplement or
modification shall (a) increase the Commitment of any Purchaser or extend the
Expiration Date or reduce the rate or amount of interest or any fee payable to
any Purchaser hereunder or extend (beyond the applicable period of grace) the
scheduled date for any payment or deposit by the Seller or the Servicer (if not
then the Seller) hereunder, in each case without the consent of the Purchaser
affected thereby, or (b) (i) amend, modify or waive any provision of this
subsection or reduce the percentage specified in or amend the definitions of
"Required Purchasers", or "Majority Purchasers", (ii) consent to the assignment
or transfer by the Seller of any rights and obligations under this Agreement and
the other Purchase Documents, (iii) take action with respect to any Purchased
Receivable pursuant to subsection 7.1(b)(iii), (iv) amend the criteria set forth
in the definition of "Eligible Receivable" or "Ineligible Receivable" or any
definition contained in either such definition if the effect thereof is to
decrease the Seller's or RAC's repurchase obligation, (v) after the occurrence
of a Rating Event release or reassign any material interest of the Purchasers in
the Financed Aircraft (except as provided in subsections 11.10, 11.24 or 11.25),
(vi) release Raytheon as Guarantor under the Guarantee or make any material
modification or amendment to the Guarantee or release RAC from its obligations
under the Repurchase Agreement or make any material modification or amendment to
the Repurchase Agreement, (vii) release the interest of the Purchasers in the
Intercompany Purchase Agreement, (viii) amend the definition of "Repurchase
Factor" or amend subsection 2.10(b) or any definition contained therein if the
effect thereof is to decrease the Repurchase Obligation, (ix) amend, modify or
waive any provision of subsection 2.6, 2.18, 2.20(a) or 11.7(a), or (x) amend
the definition of "Purchase Price", without, in each case specified in this
clause (b), the written consent of all the Purchasers, or (c) amend, modify or
waive any provision of Section 10 without the written consent of the then
Managing Facility Agent or (d) waive any Amortization Event (including, any
Trigger Amortization Event, any Specified Amortization Event or any Note Rate
Amortization Event) or its consequences without the written consent of the
Required Purchasers. Any such waiver and any such amendment, supplement or
modification shall apply equally to each of the Purchasers and shall be binding
upon the Seller, the Servicer, the Purchasers and the Managing Facility Agent.
In the case of any waiver, the Seller, the Servicer, RAC, Raytheon, the
Purchasers and the Managing Facility Agent shall be restored to their former
position and rights hereunder and under any other Purchase Documents, and any
Amortization Event (including, any Trigger Amortization Event, any Specified
Amortization Event or any Note Rate Amortization Event) waived shall be deemed
to be cured and not continuing; but no such waiver shall extend to any
subsequent or other Amortization Event, Trigger Amortization Event, Specified
Amortization Event or Note Rate Amortization Event, or impair any right
consequent thereon.
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Notwithstanding any of the provisions of this Section 11.1 no
provision of the Agreement which affects the rights or obligations of the Old
Administrative Agent shall be amended without the written consent of the Old
Administrative Agent.
11.2 Notices. (a) All notices, requests, demands and consents to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy or telex), and, unless otherwise expressly provided herein, shall be
deemed to have been duly given or made when delivered by hand, or three Business
Days after being deposited in the mail, postage prepaid, or, in the case of
telecopy notice, when received, or, in the case of telex notice, when sent,
answerback received, addressed as follows in the case of the Seller and the
Managing Facility Agent, and as set forth in Schedule I in the case of the
Co-Administrative Agents and any Purchaser, or to such other address as may be
hereafter notified by the respective parties hereto:
The Seller: Raytheon Aircraft Receivables Corporation
9709 East Central
Wichita, Kansas 67206
Attention: David Yen
Telephone: (316) 676-7166
Telecopy: (316) 676-6975
The Servicer: Raytheon Aircraft Credit Corporation
9709 East Central Avenue
Wichita, Kansas 67206
Attention: David Yen
Telephone: (316) 676-7673
Telecopy: (316) 676-6975
The Managing
Facility Agent: Bank of America, N.A.
Agency Management 10831
Mail Code: CA5-701-12-09
1455 Market Street, 12th Floor
San Francisco, California 94103
Attention: Patrick W. Zetzman
Telephone: (415) 436-2776
Telecopy: (415) 503-5016
With a copy to:
Bank of America, N.A.
Credit Services - Agency
Mail Code: NC1-001-15-03
One Independence Center
101 North Tyron Street
Charlotte, North Carolina 28255-0001
Attention: Laura Schultz
Telephone: (704) 386-4218
Telecopy: (704) 409-0025
Account No.: 12335-16573
; provided that any notice, request or demand to or upon the Managing Facility
Agent or the Purchasers pursuant to subsection 2.2, 2.3, 2.8 or 2.20 shall not
be effective until received.
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(b) The Managing Facility Agent agrees to promptly notify the
Purchasers of (i) each address of the Seller or the Servicer forwarded to the
Managing Facility Agent under subsection 6.1(f) or 6.2(e), respectively, and
(ii) any change in the fiscal year of the Seller under subsection 7.1(h).
11.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of the Managing Facility Agent, either Administrative
Agent or any Purchaser, any right, remedy, power or privilege hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.
11.4 Survival of Representations and Warranties. All representations and
warranties made hereunder and in any document, certificate or statement
delivered pursuant hereto or in connection herewith shall survive the execution
and delivery of this Agreement.
11.5 Payment of Expenses and Taxes. The Seller agrees (a) to pay or reimburse
the Managing Facility Agent and each Administrative Agent for all its
out-of-pocket costs and expenses incurred in connection with the development,
preparation and execution of, and any amendment, supplement or modification to,
this Agreement, the other Purchase Documents, any Commitment Transfer Supplement
executed and delivered pursuant to subsection 11.6 and any other document
prepared in connection herewith or therewith, and the consummation and
administration of the transactions contemplated hereby and thereby, including,
without limitation, the reasonable fees and disbursements of counsel to the
Managing Facility Agent and such Administrative Agent, (b) to pay or reimburse
each Purchaser, the Managing Facility Agent and each Administrative Agent for
all its respective costs and expenses incurred in connection with the
enforcement or preservation of any rights under this Agreement, the other
Purchase Documents and any such other documents, including, without limitation,
reasonable fees and disbursements of counsel to the Managing Facility Agent,
such Administrative Agent and to the several Purchasers (including, but not
limited to, allocated costs of in-house counsel and costs incurred by counsel
with respect to the Foreign Receivables and the Affiliate Receivables), and (c)
to pay, indemnify, and hold each Purchaser, the Managing Facility Agent, each
Administrative Agent and each Co-Administrative Agent harmless from, any and all
recording and filing fees and any and all liabilities with respect to, or
resulting from any delay in paying, stamp, excise and other taxes, if any, which
may be payable or determined to be payable in connection with the execution and
delivery of, or consummation or administration 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 Purchase Documents
and any such other documents (all the foregoing, collectively, the "indemnified
liabilities"), provided, that the Seller shall have no obligation hereunder to
the Managing Facility Agent, either Administrative Agent or any Purchaser (each,
an "Indemnitee") with respect to indemnified liabilities arising from (i) the
gross negligence or willful misconduct of such Indemnitee, (ii) legal
proceedings commenced against such Indemnitee by any security holder or creditor
thereof arising out of and based upon rights afforded any such security holder
or creditor solely in its capacity as such, or (iii) legal proceedings commenced
against such Indemnitee by any other Purchaser or by any Transferee. The
agreements in this subsection shall survive the completion of the Amortization
Period.
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11.6 Successors and Assigns; Participations; Purchasing Parties.
(a) This Agreement shall be binding upon and inure to the
benefit of the Seller, the Purchasers, the Co-Administrative Agents, the
Managing Facility Agent, the Administrative Agent and their respective
successors and assigns, except that (i) the Seller may not assign or transfer
any of its rights or obligations under this Agreement without the prior written
consent of the Managing Facility Agent, the Administrative Agent and each
Purchaser and (ii) certain governmental authorities in foreign jurisdictions may
require the completion of certain procedures in order for any such assignment to
be effective with respect to the Foreign Receivables and the Affiliate
Receivables.
(b) Any Purchaser may, in the ordinary course of its
commercial banking business and in accordance with applicable law, at any time
sell to one or more banks or other entities ("Participants") participating
interests in such Purchaser's Outstanding Purchase Price, the Commitment of such
Purchaser or any other interest of such Purchaser hereunder and under the other
Purchase Documents. In the event of any such sale by a Purchaser of
participating interests to a Participant, such Purchaser's obligations under
this Agreement to the other parties to this Agreement shall remain unchanged,
such Purchaser shall remain solely responsible for the performance thereof, such
Purchaser shall be the "Purchaser" for all purposes under this Agreement and the
other Purchase Documents, and the Seller and the Managing Facility Agent shall
continue to deal solely and directly with such Purchaser in connection with such
Purchaser's rights and obligations under this Agreement and the other Purchase
Documents. The Seller agrees that, upon the occurrence and continuance of a
Rating Event and an Amortization Event of the type described in subsection
8.1(a), (b), (i) or (j), each Participant shall be deemed to have the right of
setoff in respect of its participating interest in amounts owing under this
Agreement to the same extent as if the amount of its participating interest were
owing directly to it as a Purchaser under this Agreement; provided that such
Participant shall only be entitled to such right of setoff pursuant to this
sentence if it shall have agreed in the agreement pursuant to which it shall
have acquired its participating interest to share with the Purchasers the
proceeds thereof as provided in subsection 11.7. The Seller also agrees that
each Participant shall be entitled to the benefits of subsections 2.22, 2.23 and
2.24 and 11.5 with respect to its participation in the Commitments and the
Outstanding Purchase Price; provided that no Participant shall be entitled to
receive any greater amount pursuant to such subsections than the transferor
Purchaser would have been entitled to receive in respect of the amount of the
participation transferred by such transferor Purchaser to such Participant had
no such transfer occurred. Promptly after the sale of any such participation,
the selling Purchaser shall give the Managing Facility Agent notice of the
amount sold and the identity of the Participant.
(c) Any Purchaser may, in the ordinary course of its
commercial banking business and in accordance with applicable law, at any time
sell to any Purchaser or any affiliate thereof and, with the consent of the
Seller and the Managing Facility Agent (which in each case shall not be
unreasonably withheld), to one or more additional financial institutions (each,
a "Purchasing Party") all or any part of such Purchaser's Outstanding Purchase
Price, the Commitment of such Purchaser or any other interest of such Purchaser
hereunder and under the other Purchase Documents; provided that such assignment
shall be in a minimum amount of $1,000,000 unless such assignment is to a
financial institution not then a party to this Agreement, in which case such
assignment shall be in a minimum amount of $10,000,000. Each such assignment
shall be made pursuant to a Commitment Transfer Supplement executed by such
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Purchasing Party, such Transferor Purchaser and, in the case of a Purchasing
Party that is not then a Purchaser or an Affiliate thereof, by the Seller and
the Managing Facility Agent, and delivered to the Managing Facility Agent for
its acceptance and recording in the Register. Any SPC may, without obtaining any
consent hereunder, assign all or a portion of its interests in any Purchased
Receivable under this Agreement to its SPC Bank, its Liquidity Bank or another
SPC managed by the same SPC Bank as such SPC. Each such assignment shall be made
pursuant to written notice (a "Transfer Notice") delivered to the Managing
Facility Agent for recording in the Register. Upon the execution, delivery,
acceptance (if required) and recording of any Transfer Notice or Commitment
Transfer Supplement, as the case may be, from and after the Transfer Effective
Date determined pursuant to such Commitment Transfer Supplement (or after the
effective date set forth in the Transfer Notice), (x) the Purchasing Party
thereunder shall be a party hereto and, to the extent provided in such
Commitment Transfer Supplement (or such Transfer Notice, as the case may be),
have the rights and obligations of a Purchaser hereunder with a Commitment as
set forth therein, and (y) the transferor Purchaser thereunder shall, to the
extent provided in such Commitment Transfer Supplement (or such Transfer Notice,
as the case may be), be released from its obligations under this Agreement (and,
in the case of a Commitment Transfer Supplement, or Transfer Notice, as the case
may be, covering all or the remaining portion of a transferor Purchaser's rights
and obligations under this Agreement, such transferor Purchaser shall cease to
be a party hereto). Such Commitment Transfer Supplement (or such Transfer
Notice, as the case may be) shall be deemed to amend this Agreement to the
extent, and only to the extent, necessary to reflect the addition of such
Purchasing Party and the resulting adjustment of Commitment Percentages or
Available Commitment Percentages arising from the purchase by such Purchasing
Party of all or a portion of the rights and obligations of such transferor
Purchaser under this Agreement.
(d) The Managing Facility Agent shall maintain at its address
referred to in subsection 11.2 a copy of each Commitment Transfer Supplement and
each Transfer Notice delivered to it and a register (the "Register") for the
recordation of the names and addresses of the Purchasers and the Commitment of,
and proportionate share of the Outstanding Purchase Price from time to time
payable to, each Purchaser from time to time. The entries in the Register shall
be conclusive, in the absence of manifest error, and the Seller, the Managing
Facility Agent and the Purchasers may treat each Person whose name is recorded
in the Register as the holder of the Commitment recorded therein for all
purposes of this Agreement. The Register shall be available for inspection by
the Seller, the Servicer or any Purchaser at any reasonable time and from time
to time upon reasonable prior notice to the Managing Facility Agent.
(e) Upon its receipt of a Commitment Transfer Supplement or a
Transfer Notice executed by a transferor Purchaser and Purchasing Party (and, in
the case of a Purchasing Party that is not then a Purchaser or an Affiliate
thereof, by the Seller and the Managing Facility Agent) and, except in the case
of a transfer from an SPC to its Liquidity Bank, payment by the transferor
Purchaser or the Purchasing Party of a servicing fee of $3,500 to the Managing
Facility Agent, the Managing Facility Agent shall (i) promptly accept such
Commitment Transfer Supplement or Transfer Notice, as the case may be, and (ii)
on the Transfer Effective Date determined pursuant thereto record the
information contained therein in the Register and give notice of such acceptance
and recordation to the Seller, such transferor Purchaser and such Purchasing
Party.
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(f) The Seller authorizes each Purchaser to disclose to any
Participant or Purchasing Party (each, a "Transferee") and any prospective
Transferee any and all financial information in such Purchaser's possession
concerning the Seller and its Affiliates which has been delivered to such
Purchaser by or on behalf of the Seller pursuant to this Agreement or which has
been delivered to such Purchaser by or on behalf of the Seller in connection
with such Purchaser's credit evaluation of the Seller and its Affiliates prior
to becoming a party to this Agreement; provided that such Transferee or such
prospective Transferee shall have agreed in writing to be bound by the same
confidentiality provisions as a Purchaser with respect to all information
delivered hereunder.
(g) If, pursuant to this subsection, any interest in this
Agreement is transferred to any Transferee which is organized under the laws of
any jurisdiction other than the United States or any state thereof, the
transferor Purchaser shall cause such Transferee, concurrently with the
effectiveness of such transfer, (i) to represent to the transferor Purchaser
(for the benefit of the transferor Purchaser, the Managing Facility Agent,
Raytheon, RAC, the Servicer and the Seller) that under applicable law and
treaties no taxes will be required to be withheld by the Managing Facility
Agent, the Seller, Raytheon, RAC, the Servicer or the transferor Purchaser with
respect to any payments to be made to such Transferee in respect of the
Outstanding Purchase Price, (ii) to furnish to the transferor Purchaser (and, in
the case of any Purchasing Party registered in the Register, the Managing
Facility Agent and the Seller) (A) either U.S. Internal Revenue Service Form
4224 or U.S. Internal Revenue Service Form 1001 (wherein such Transferee claims
entitlement to complete exemption from U.S. federal withholding tax on all
interest payments hereunder) and (B) an Internal Revenue Service Form W-8 or W-9
and (iii) to agree (for the benefit of the transferor Purchaser, the Managing
Facility Agent, Raytheon, RAC and the Seller) to provide the transferor
Purchaser (and, in the case of any Purchasing Party registered in the Register,
the Managing Facility Agent and the Seller) a new Form 4224 or Form 1001, or
Form W-8 or W-9, if applicable, upon the expiration or obsolescence of any
previously delivered form and comparable statements in accordance with
applicable U.S. laws and regulations and amendments duly executed and completed
by such Transferee, and to comply from time to time with all applicable U.S.
laws and regulations with regard to such withholding tax exemption.
(h) Nothing herein shall prohibit any Purchaser from pledging
or assigning its interests hereunder to any Federal Reserve Bank in accordance
with applicable law or prohibit any SPC from pledging or assigning its interests
hereunder to its SPC Bank.
11.7 Adjustments; Set-off.
(a) If any Purchaser (a "Benefitted Purchaser") shall at any
time receive any payment of all or part of its Outstanding Purchase Price, or
interest thereon, or receive any collateral in respect thereof (whether
voluntarily or involuntarily, by set-off, pursuant to events or proceedings of
the nature referred to in subsection 8.1(j) or pursuant to the Guarantee, the
Repurchase Agreement or otherwise), in a greater proportion than any such
payment to or collateral received by any other Purchaser, if any, in respect of
such other Purchaser's Outstanding Purchase Price, or interest payable thereon,
such Benefitted Purchaser shall purchase for cash from the other Purchasers such
portion of each such other Purchaser's Outstanding Purchase Price, or shall
provide such other Purchasers with the benefits of any such collateral, or the
proceeds thereof, as shall be necessary to cause such Benefitted Purchaser to
share the excess payment or benefits of such collateral or proceeds ratably with
each of the Purchasers; provided, however, that if all or any portion of such
excess payment or benefits is thereafter recovered from such Benefitted
Purchaser, such purchase shall be rescinded, and the Purchase Price and benefits
returned, to the extent of such recovery, but without interest. The Seller
agrees that each Purchaser so purchasing a portion of another Purchaser's
Outstanding Purchase Price may exercise all rights of payment (including,
without limitation, rights of set-off) with respect to such portion as fully as
if such Purchaser were the direct holder of such portion.
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(b) In addition to any rights and remedies of the Purchasers
provided by law, each Purchaser shall have the right, without prior notice to
the Seller, any such notice being expressly waived by the Seller to the extent
permitted by applicable law, upon the occurrence and continuance of a Rating
Event or an Amortization Event of the type described in subsection 8.1(a), (b),
(i) or (j), to set-off and appropriate and apply against such amount any and all
deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by such Purchaser or any branch or agency
thereof to or for the credit or the account of the Seller. Each Purchaser agrees
promptly to notify the Seller and the Managing Facility Agent after any such
set-off and application made by such Purchaser, provided that the failure to
give such notice shall not affect the validity of such set-off and application.
11.8 Responsibilities of the Seller. Anything herein to the contrary
notwithstanding:
(a) the Seller shall perform all of its obligations under
Contracts related to the Purchased Receivables to the same extent as if
such Purchased Receivables had not been sold hereunder and the exercise
by either Administrative Agent or the Managing Facility Agent or any
Purchaser of any of their rights hereunder shall not relieve the Seller
from such obligations or its obligations with respect to such Purchased
Receivables; and
(b) neither Administrative Agent, nor the Managing Facility
Agent nor any Purchaser shall have any obligation or liability with
respect to any Purchased Receivables or the related Contracts or
Financed Aircraft, nor shall any of them be obligated to perform any of
the obligations of the Seller thereunder.
11.9 Optional Repurchase. If the Outstanding Purchase Price at any time during
the Amortization Period is less than 10% of the maximum Outstanding Purchase
Price at any time during the Revolving Period, then on any Settlement Date
thereafter the Seller may, by 10 days prior irrevocable notice to the Managing
Facility Agent, repurchase the ownership interests in the Purchased Receivables
by payment to the Managing Facility Agent for the account of the Purchasers of
an amount equal to the sum of (i) the Outstanding Purchase Price on such
Settlement Date, (ii) interest accrued to such Settlement Date and (iii) all
other amounts payable to the Managing Facility Agent and the Purchasers under
this Agreement.
11.10 Reassignments. (a) The Purchasers (or a Dissenting Purchaser, as the case
may be) shall assign (subject to the Purchasers' right to receive Net Recoveries
in certain circumstances as described herein) to the Seller all their (or its)
ownership interests in any Purchased Receivable (or portion thereof) sold
hereunder (i) which has been repurchased pursuant to subsection 2.8(b) or
2.13(c) (in the case of repurchases from a Dissenting Purchaser) or subsection
2.7(b), 2.10, 2.11, 2.12, or 11.9 (in all other cases) or for which an indemnity
in an amount satisfactory to the Managing Facility Agent and the Purchasers has
been paid pursuant to subsection 9.1(a)(vi) or 9.1(a)(xii) or (ii) when the
Principal Balance of any such Purchased Receivable has been reduced to zero. In
connection with reassignments pursuant to this subsection 11.10(a), the Managing
Facility Agent, the Administrative Agent and the Purchasers shall promptly
execute and deliver to the Seller, at the Seller's expense, such documents and
instruments of reassignment as the Seller may reasonably request.
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(b) With respect to any Contract for which all amounts
outstanding thereunder (including accrued interest) are paid prior to the Final
Payment Date of such Contract, and upon receipt by the Managing Facility Agent
of certification by the Servicer of such prepayment in full, the Administrative
Agent agrees to execute such documents and instruments (including releases of
security interests) for recording and filing with the FAA Registry which are
necessary to release the Lien on the related Financed Aircraft as a result of
such prepayment in full. In order to facilitate the business operations of the
Seller and the Servicer, the Administrative Agent may provide the Servicer with
a limited number of executed releases; provided that, the Servicer shall not
file any such release without the written consent of the Managing Facility
Agent; provided further that, the Servicer shall promptly return all such
releases to the Managing Facility Agent upon the occurrence of an Amortization
Event or if the Managing Facility Agent shall so request. With respect to any
substitution of Lease Receivables made pursuant to subsection 2.13(e), the
Administrative Agent agrees to execute such documents and instruments (including
releases of security interests) for recording and filing with the FAA Registry
which are necessary (i) to release the Lien on the lease related to the Replaced
Lease Receivable so long as, prior to or concurrently with the recording and
filing with the FAA Registry of any such document or instrument of release, the
conditions contained in subsection 5.2(e) with respect to the lease and the
Financed Aircraft related to the Substituted Lease Receivable substituted for
such Replaced Lease Receivable have been satisfied and (ii) if amounts are
required to be paid pursuant to subsection 2.13(e) because the Outstanding
Balance of the Replaced Lease Receivable is greater than the Purchase Price of
the Substituted Lease Receivable at the time the substitution occurs have been
so paid, to release the Financed Aircraft related to such Replaced Lease
Receivable. Each Purchaser authorizes the Administrative Agent to execute such
documents and instruments in accordance with this subsection 11.10(b) and with
respect to Foreign Receivables and Affiliate Receivables, except for Uncertified
Foreign Receivables, to take whatever action is necessary to release any Liens
in accordance with the intent of this subsection 11.10(b).
(c) In connection with any Receivable not purchased by the
Purchasers hereunder for which an FAA Assignment was filed with respect to the
related Financed Aircraft, the Administrative Agent agrees to promptly execute
such documents and instruments for recording and filing with the FAA Registry
which are necessary to reassign to the Seller the interests covered by such FAA
Assignment in such Financed Aircraft and to take whatever actions with respect
to any Foreign Receivable and any Affiliate Receivables are necessary to effect
a reassignment in the applicable foreign jurisdictions.
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(d) The Purchasers shall assign (subject to the Purchasers'
right to receive Net Recoveries in certain circumstances as described herein) to
Raytheon all of their ownership interests in any Receivable (or portion thereof)
purchased by Raytheon pursuant to paragraph 2(e) of the Guarantee. In addition,
the Purchasers shall assign (subject to the Purchasers' right to receive Net
Recoveries in certain circumstances as described herein) to RAC all of their
ownership interests in any Receivable (or portion thereof) purchased by RAC
pursuant to Section 2 of the Repurchase Agreement. In connection with
reassignments pursuant to this subsection 11.10(d), the Managing Facility Agent,
the Administrative Agent and the Purchasers shall promptly execute and deliver
to Raytheon or RAC, as appropriate, such documents and instruments of
reassignment as Raytheon or RAC, as the case may be, may reasonably request.
(e) All reassignments by the Managing Facility Agent, the
Administrative Agent and the Purchasers pursuant to this Section 11.10 shall be
made without any recourse, representation or warranty whatsoever.
11.11 Intention of the Parties; Lien on Intercompany Purchase Agreement. (a) It
is expressly intended that each purchase hereunder be, and be construed as, an
absolute sale of the Purchased Receivables by the Seller to the Purchasers
conveying good title thereto free and clear of any Lien, and that the Purchased
Receivables not be part of the estate of the Seller in the event of bankruptcy
or insolvency of the Seller. It is further expressly intended that such
conveyance not be deemed a pledge of the Purchased Receivable by the Seller to
the Purchasers or the Administrative Agent for the ratable benefit of the
Purchasers to secure a debt or other obligation of the Seller. However, in the
event that the Purchased Receivables are held to be the property of the Seller,
or if for any other reason this Agreement is held or deemed not to effect an
absolute sale of the Purchased Receivables, then (i) the parties hereto intend
that the extensions of credit from the Purchasers to the Seller shall be a loan
in a principal amount equal to the then Outstanding Purchase Price with interest
payable thereon pursuant to subsection 2.17, (ii) the parties hereto intend that
this Agreement constitute a security agreement and (iii) the Seller hereby
grants to the Administrative Agent for the ratable benefit of the Purchasers, as
collateral security for all of the obligations of the Seller and Raytheon Credit
hereunder, a first priority security interest in all of the right, title and
interest of the Seller whether now owned or hereafter acquired, in and to:
(A) all accounts, contract rights, general intangibles,
chattel paper, instruments, documents, proceeds of a letter of credit
and money consisting of, arising from, constituting or relating to the
Purchased Receivables (including, without limitation, amounts from time
to time on deposit in the Cash Collateral Account or the Concentration
Account);
(B) all of the Seller's rights in, under and to the Contracts
and its interest in the related Financed Aircraft, including any
security interests in such Financed Aircraft, and the Applicable
Leases;
(C) all accounts, contract rights, general intangibles,
chattel paper, instruments, documents and money and other rights
arising from or by virtue of or constituting the Collections; and
(D) all proceeds of the collateral described in the foregoing
clauses A, B and C (clauses A through D, collectively, the "Receivables
Collateral").
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(b) In connection with the transfer of the Receivables
Collateral as aforesaid (whether or not such transfer constitutes a sale or the
grant of a Lien) the Seller hereby grants to the Administrative Agent for the
ratable benefit of the Purchasers, as collateral security for all of the
obligations of the Seller and Raytheon Credit hereunder, a first priority
security interest in all of the right, title and interest of the Seller, whether
now owned or hereafter acquired, in and to the Intercompany Purchase Agreement,
including, without limitation, the obligation of Raytheon Credit to make
repurchases thereunder (together with the Receivables Collateral, the
"Collateral").
(c) In connection herewith, if this Agreement is held or
deemed not to effect on absolute sale of the Purchased Receivables to the
Purchasers, the Managing Facility Agent and each Purchaser shall have all the
rights and remedies of a secured party and a creditor under the UCC and all
other applicable laws in each relevant jurisdiction. Without limiting the
generality of the foregoing, upon the occurrence and during the continuance of a
Trigger Amortization Event, if this Agreement is held or deemed not to effect an
absolute sale of the Purchased Receivables to the Purchasers, with the consent
of the Required Purchasers the Managing Facility Agent may, or at the direction
of the Required Purchasers, the Managing Facility Agent shall, by notice to the
Seller, declare the Outstanding Purchase Price to be immediately due and
payable, whereupon such amount shall become immediately due and payable and, at
such time or at any time after such declaration, the Administrative Agent,
without demand of performance or other demand, presentment, protest,
advertisement or notice of any kind (except any notice required by law referred
to below) to or upon the Seller or any other Person (all and each of which
demands, defenses, advertisements and notices are hereby waived), may in such
circumstances forthwith collect, receive, appropriate and realize upon the
Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give
option or options to purchase, or otherwise dispose of and deliver the
Collateral or any part thereof (or contract to do any of the foregoing), in one
or more parcels at public or private sale or sales, at any exchange, broker's
board or office of the Administrative Agent or any Purchaser or elsewhere upon
such terms and conditions as it may deem advisable and at such prices as it may
deem best, for cash or on credit or for future delivery without assumption of
any credit risk. The Administrative Agent or any Purchaser shall have the right
upon any such public sale or sales, and, to the extent permitted by law, upon
any such private sale or sales, to purchase the whole or any part of the
Collateral so sold, free of any right or equity of redemption in the Seller,
which right or equity is hereby waived or released. The Seller further agrees,
at the Administrative Agent's request, to assemble the Collateral and make it
available to the Administrative Agent at places which the Administrative Agent
shall reasonably select, whether at the Seller's premises or elsewhere. The
Administrative Agent shall apply the net proceeds of any such collection,
recovery, receipt, appropriation, realization or sale, after deducting all
reasonable costs and expenses of every kind incurred therein or incidental to
the care or safekeeping of any of the Collateral or in any way relating to the
Collateral or the rights of the Administrative Agent and the Purchasers
hereunder, including, without limitation, reasonable attorneys' fees and
disbursements, to the payment in whole or in part of the Obligations, in such
order as the Administrative Agent in its reasonable discretion may elect, and
only after such application and after the payment by the Administrative Agent of
any other amount required by any provision of law, including, without
limitation, Section 9-504(1)(c) of the UCC in the relevant jurisdiction, need
the Administrative Agent account for the surplus, if any, to the Seller. To the
extent permitted by applicable law, the Seller waives all claims, damages and
demands it may acquire against the Administrative Agent or any Purchaser arising
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out of the exercise by them of any rights hereunder. If any notice of a proposed
sale or other disposition of Collateral shall be required by law, such notice
shall be deemed reasonable and proper if given at least 10 days before such sale
or other disposition. The Seller shall remain liable for any deficiency if the
proceeds of any sale or other disposition of the Collateral are insufficient to
pay the Obligations and the fees and disbursements of any attorneys employed by
the Administrative Agent or any Purchaser to collect such deficiency. The Seller
authorizes the Administrative Agent and the Purchasers, at any time and from
time to time, to execute, in connection with the sale provided for in this
subsection 11.11(c), any endorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral.
(d) Each Administrative Agent's sole duty with respect to the
custody, safekeeping and physical preservation of the Collateral in its
possession, under Section 9-207 of the UCC in the relevant jurisdiction or
otherwise, shall be to deal with it in the same manner as such Administrative
Agent deals with similar property for its own account. Neither the Managing
Facility Agent, either Administrative Agent, any Co-Administrative Agent, any
Purchaser nor any of their respective directors, officers, employees or agents
shall be liable for failure to demand, collect or realize upon all or any part
of the Collateral or for any delay in doing so or shall be under any obligation
to sell or otherwise dispose of any Collateral upon the request of the Seller or
otherwise. Nothing in this subsection 11.11 shall be construed to prejudice any
rights the Purchasers have as purchasers or owners of the Purchased Receivables.
(e) The foregoing transfer, assignment, set-over and
conveyance does not constitute and is not intended to result in the creation or
an assumption by either Administrative Agent or any Purchaser of any obligation
of the Seller, the Servicer or any other Person in connection with the Purchased
Receivables or any agreement or instrument relating thereto, including, without
limitation, any obligation to any Obligors or insurers, or in connection with
the Intercompany Purchase Agreement.
11.12 Leases; Grant of Security Interest. (a) The Seller agrees to perform and
to cause each Affiliate Obligor to perform all its respective obligations under
(other than the payment by such Affiliate Obligor of the rent payable under such
Lease), and not to terminate or to permit (voluntarily or involuntarily, whether
during a bankruptcy case involving the Seller or such Affiliate Obligor or
otherwise) the termination of, any Applicable Lease or any lease related to a
Lease Receivable (other than in connection with substitutions of Lease
Receivables in accordance with subsection 2.13(e)) or the lease by an Obligor on
an ExIm Bank Receivable (such leases, collectively, the "Security Interest
Leases") sold or substituted hereunder; provided that (i) if a Substituted Lease
Receivable which is substituted on any day other than a Settlement Date in
accordance with subsection 2.13(e) has a Purchase Price less than the related
Replaced Lease Receivable, the Seller agrees to deposit into the Concentration
Account on the Settlement Date following such date of substitution (or, if a
Remittance Event has occurred, within two Business Days after such substitution)
the difference between the Outstanding Balance of such Replaced Lease Receivable
and the Purchase Price of such Substituted Lease Receivable and (ii) if such
Security Interest Lease has been declared to be in default, the Seller may
terminate and may permit any Affiliate Obligor to terminate, such Security
Interest Lease if the Seller pays on the date of termination to the
Administrative Agent for the account of the Purchasers an amount equal to the
aggregate amount of rent payable for the remaining term under such Lease
(including any interest thereon on amounts past due), up to the then Outstanding
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Balance of the related Receivable together with interest on such Outstanding
Balance at the rate set forth in such Lease Receivable or Applicable Lease
related to such Affiliate Receivable for the period from the last date of
payment on such Receivable (all of the foregoing, including any damages
resulting from a breach of the foregoing, collectively, the "Lease
Obligations"). As collateral security for (i) the prompt and complete payment
and performance of the Lease Obligations and (ii) the agreement of the Seller
not to reject or permit an Affiliate Obligor to reject pursuant to 11 U.S.C.
ss.365 any Lease after the occurrence of a bankruptcy case involving the Seller
or such Affiliate Obligor (and all other Obligations under this Agreement) the
Seller does hereby grant, bargain, sell, assign, transfer, convey, mortgage,
pledge, grant a security interest in and confirm unto the Administrative Agent
for the ratable benefit of the Purchasers the following:
(A) each Financed Aircraft subject to a Security Interest
Lease, the related Receivable of which is sold or substituted hereunder
on the Closing Date or on any Settlement Date; and
(B) all proceeds thereof (clauses A and B, collectively, the
"Lease Collateral").
(b) In connection with the foregoing grant, the Administrative
Agent and each Purchaser shall have all the rights and remedies of a secured
party and a creditor under the UCC and all other applicable laws in each
relevant jurisdiction. Without limiting the generality of the foregoing, upon
the occurrence and during the continuance of a Trigger Amortization Event, the
Administrative Agent, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon the Seller or any other Person
(all and each of which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances forthwith collect, receive, appropriate and
realize upon the Lease Collateral, or any part thereof, and/or may forthwith
sell, lease, assign, give option or options to purchase, or otherwise dispose of
and deliver the Lease Collateral or any part thereof (or contract to do any of
the foregoing), in one or more parcels at a public or private sale or sales, at
any exchange, broker's board or office of the Administrative Agent or any
Purchaser or elsewhere upon such terms and conditions as it may deem advisable
and at such prices as it may deem best, for cash or on credit or for future
delivery without assumption of any credit risk. The Administrative Agent or any
Purchaser shall have the right upon any such public sale or sales, and, to the
extent permitted by law, upon any such private sale or sales, to purchase the
whole or any part of the Lease Collateral so sold, free of any right or equity
of redemption in the Seller, which right or equity is hereby waived or released.
The Seller further agrees, at the Administrative Agent's request, to assemble
the Lease Collateral, to the extent available to the Seller under applicable
law, and make it available to the Administrative Agent at places which the
Administrative Agent shall reasonably select, whether at the Seller's premises
or elsewhere. The Administrative Agent shall apply the net proceeds of any such
collection, recovery, receipt, appropriation, realization or sale, after
deducting all reasonable costs and expenses of every kind incurred therein or
incidental to the care or safekeeping of any of the Lease Collateral or in any
way relating to the Lease Collateral or the rights of the Administrative Agent
and the Purchasers hereunder, including, without limitation, reasonable
attorneys' fees and disbursements, to the payment in whole or in part of the
Lease Obligations, in such order as the Administrative Agent in its reasonable
discretion may elect, and only after such application and after the payment by
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the Administrative Agent of any other amount required by any provision of law,
including, without limitation, Section 9-504(1)(c) of the UCC in the relevant
jurisdiction, need the Administrative Agent account for the surplus, if any, to
the Seller. To the extent permitted by applicable law, the Seller waives all
claims, damages and demands it may acquire against the Administrative Agent or
any Purchaser arising out of the exercise by them of any rights hereunder. If
any notice of a proposed sale or other disposition of Lease Collateral shall be
required by law, such notice shall be deemed reasonable and proper if given at
least 10 days before such sale or other disposition. The Seller shall remain
liable for any deficiency if the proceeds of any sale or other disposition of
the Lease Collateral are insufficient to pay the Lease Obligations and the fees
and disbursements of any attorneys employed by the Administrative Agent or any
Purchaser to collect such deficiency. The Seller authorizes the Administrative
Agent and the Purchasers, at any time and from time to time, to execute, in
connection with the sale provided for in this subsection 11.12(b), any
endorsements, assignments or other instruments of conveyance or transfer with
respect to the Lease Collateral.
(c) Each Administrative Agent's sole duty with respect to the
custody, safekeeping and physical preservation of the Lease Collateral in its
possession, under Section 9-207 of the UCC in the relevant jurisdiction or
otherwise, shall be to deal with it in the same manner as such Administrative
Agent deals with similar property for its own account. Neither the Managing
Facility Agent, either Administrative Agent any Co-Administrative Agent or any
Purchaser nor any of their respective directors, officers, employees or agents
shall be liable for failure to demand, collect or realize upon all or any part
of the Lease Collateral or for any delay in doing so or shall be under any
obligation to sell or otherwise dispose of any Lease Collateral upon the request
of the Seller or otherwise.
11.13 Power of Attorney. (a) The Seller hereby irrevocably constitutes and
appoints the Managing Facility Agent and any officer or agent thereof, with full
power of substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of the Seller and in the
name of the Seller or in its own name, from time to time after the occurrence
and during the continuance of a Specified Amortization Event or in connection
with any action taken pursuant to subsection 11.11(c) or subsection 11.12(b) in
the Managing Facility Agent's discretion, for the purpose of carrying out the
terms of this Agreement and obtaining the benefit of the Purchased Receivables,
the Collections with respect thereto and the related Contracts and Financed
Aircraft, to take any and all appropriate action and to execute any and all
documents and instruments which may be necessary to perform the duties and
obligations of the Seller or the Servicer under this Agreement or desirable to
accomplish the purposes of this Agreement, including the power and right, on
behalf of the Seller, without notice to or assent by the Seller, to do the
following after the occurrence and during the continuance of a Specified
Amortization Event or in connection with any action taken pursuant to subsection
11.11(c) or subsection 11.12(b):
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(i) in the name of the Seller or its own name, or
otherwise, to take possession of and endorse and collect any checks,
drafts, notes, acceptances or other instruments for the payment of
moneys due under any Purchased Receivable or on account of Collections
with respect thereto or the related Contract or Financed Aircraft
(collectively, the "Transferred Property") and to file any claim or to
take any other action or proceeding in any court of law or equity or
otherwise deemed appropriate by the Managing Facility Agent for the
purpose of collecting any and all such moneys due under any Purchased
Receivable or with respect to any other Transferred Property whenever
payable;
(ii) to pay or discharge taxes and Liens levied or placed
on or threatened against any of the Transferred Property, to effect any
repairs or any insurance called for by the terms of this Agreement and
to pay all or any part of the premiums therefor and the costs thereof;
and
(iii) to file financing or continuation statements under the
UCC, or with respect to Foreign Receivables and Affiliate Receivables,
excluding Uncertified Foreign Receivables, under the appropriate
foreign statute, in any relevant jurisdiction covering the interests of
the Administrative Agent, the Managing Facility Agent and the
Purchasers in the Transferred Property; and
(iv) (A) to commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent jurisdiction
to collect any of the Transferred Property or any thereof and to
enforce any other right in respect of any Transferred Property; (B) to
defend any suit, action or proceeding brought against the Seller with
respect to any Transferred Property; and (C) to settle, compromise or
adjust any suit, action or proceeding described in clause (B) above
and, in connection therewith, to give such discharges or releases as
the Managing Facility Agent may deem appropriate.
(b) The Seller hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue hereof. This power of attorney is a
power coupled with an interest and shall be irrevocable.
11.14 Counterparts. This Agreement may be executed by one or more of the parties
to this Agreement on any number of separate counterparts, and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument. A set of the copies of this Agreement signed by all the parties
shall be lodged with the Seller and the Managing Facility Agent.
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11.15 Severability; Headings. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. The section and
subsection headings used in this Agreement are for convenience of reference only
and are not to affect the construction hereof or to be taken into consideration
in the interpretation hereof.
11.16 Integration. This Agreement represents the agreement of the Seller, the
Servicer, the Managing Facility Agent, each Administrative Agent, the
Co-Administrative Agents and the Purchasers with respect to the subject matter
hereof, and there are no promises, undertakings, representations or warranties
by the Managing Facility Agent, either Administrative Agent, the
Co-Administrative Agents or any Purchaser relative to subject matter hereof not
expressly set forth or referred to herein.
11.17 GOVERNING LAW. THIS AGREEMENT, THE ASSIGNMENTS AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
11.18 Submission To Jurisdiction; Waivers. Each of the Seller and the Servicer
hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the Assignments, or for
recognition and enforcement of any judgement in respect thereof, to the
non-exclusive general jurisdiction of the courts of the State of New
York, the courts of the United States of America for the Southern
District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought
in such courts and waives any objection that it may now or thereafter
have to the venue of any such action or proceeding in any such court or
that such action or proceeding was brought in an inconvenient court and
agrees not to plead or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to such Person at its address set forth in subsection 11.2 or
at such other address of which the Managing Facility Agent shall have
been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall
limit the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding
referred to in this subsection any special, exemplary, punitive or
consequential damages.
<PAGE>
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11.19 Acknowledgements. (a) The Seller hereby acknowledges with respect to the
transactions contemplated by the Purchase Documents that:
(i) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Purchase
Documents;
(ii) neither the Managing Facility Agent, either
Administrative Agent, any Co-Administrative Agent nor any Purchaser has
any fiduciary relationship to the Seller; and
(iii) no joint venture exists among the Purchasers or among
the Seller and the Purchasers or among the Guarantor, RAC, the
Servicer, the Seller and the Purchasers.
(b) By execution of this Agreement, each Purchaser
acknowledges and agrees to be bound by the provisions of paragraph 18 of the
Guarantee and paragraph 18 of the Repurchase Agreement.
11.20 WAIVERS OF JURY TRIAL. THE SELLER, THE SERVICER, THE MANAGING FACILITY
AGENT, EACH ADMINISTRATIVE AGENT, EACH CO-ADMINISTRATIVE AGENT AND EACH
PURCHASER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER PURCHASE
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
11.21 Bankruptcy Petition. (a) Each of the Seller, the Servicer, the Managing
Facility Agent, each Administrative Agent, each Co-Administrative Agent and each
Purchaser hereby covenants and agrees that, prior to the date which is one year
and one day after the payment in full of all outstanding senior indebtedness of
any SPC, it will not institute against, or join any other Person in instituting
against, such SPC any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings or other similar proceeding under the laws of the United
States or any state of the United States.
(b) Each of the the Servicer, the Managing Facility Agent,
each Administrative Agent, each Co-Administrative Agent and each Purchaser
hereby covenants and agrees that, prior to the date that is one year and one day
after the payment in full of the Outstanding Purchase Price and all amounts
owing with respect thereto and hereunder, it will not institute against the
Seller, or join any other Person in instituting against the Seller, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
or other similar proceedings under the laws of the United States or any state of
the United States.
11.22 Confidentiality. Each of the Managing Facility Agent, the
Co-Administrative Agent and the Purchasers agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its and its Affiliates' directors, officers, employees
and agents, including accountants, legal counsel and other advisors (it being
understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such Information and instructed to keep such
Information confidential), (b) to the extent requested by any regulatory
authority, (c) to the extent required by applicable laws or regulations or by
any subpoena or similar legal process, (d) to any other party to this Agreement,
(e) in connection with the exercise of any remedies hereunder or any suit,
action or proceeding relating to this Agreement or the enforcement of rights
hereunder, (f) subject to an agreement containing provisions substantially the
same as those of this subsection, to any assignee of or Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations
under this Agreement, (g) with the consent of the Seller or (h) to the extent
<PAGE>
126
such Information (i) becomes publicly available other than as a result of a
breach of this subsection by such Person or (ii) becomes available to the
Managing Facility Agent, any Co-Administrative Agent or any Purchaser on a
nonconfidential basis from a source other than Raytheon, RAC, Raytheon Credit or
the Seller. For the purposes of this Section, "Information" means all
information received from Raytheon, RAC, Raytheon Credit or the Seller relating
to Raytheon, RAC, Raytheon Credit or the Seller or their business, other than
any such information that is available to the Managing Facility Agent, any
Co-Administrative or any Purchaser on a nonconfidential basis prior to
disclosure by Raytheon, RAC, Raytheon Credit or the Seller; provided that, in
the case of information received from the Raytheon, RAC, Raytheon Credit or the
Seller after the date hereof, such information is clearly identified at the time
of delivery as confidential. Any Person required to maintain the confidentiality
of Information as provided in this subsection shall be considered to have
complied with its obligation to do so if such Person has exercised the same
degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information. The Seller and the
Servicer hereby consent to the disclosure of any non-public information with
respect to either of them as related to this transaction and the assets sold
hereunder by any SPC to any rating agency, commercial paper dealer, or provider
of a surety, guaranty or credit or liquidity enhancement to that SPC.
11.23 Claims Against SPCs. The obligations of each SPC under this Agreement and
the other Purchase Documents are solely its corporate obligations. No recourse
shall be had for the payment of any amount owing by any SPC under this Agreement
or the other Purchase Documents or for the payment by any SPC of any fee in
respect of this Agreement or the other Purchase Documents or any other
obligations or claim of or against any SPC arising out of or based upon this
Agreement or the other Purchase Documents, against any of the SPC's employees,
officers, directors, incorporators or stockholders. It is further agreed that
each SPC shall be liable for any claims against such SPC in connection with this
Agreement and other Purchase Documents only to the extent that such SPC has, on
any date of determination, excess funds not required to pay or provide for the
payment of all commercial paper notes that such SPC has outstanding. Any and all
claims against any SPC in connection with this Agreement and the other Purchase
Documents shall be subordinate to the claims of the holders of commercial paper
notes issued by such SPC.
11.24 Bulk Sales. (a) At the request of the Seller, the Administrative Agent is
authorized to sell from time to time Receivables with an aggregate Principal
Balance not to exceed $950,000,000 (the "Bulk Sale Receivables") to either (i) a
third party buyer (the "Bulk Sale Buyer") or (ii) the Seller for ultimate sale
to the Bulk Sale Buyer (collectively, the "Bulk Sales"); provided that:
(i) the aggregate Principal Balance of Bulk Sale Receivables
that are GA Receivables shall not exceed $800,000,000;
(ii) the aggregate Principal Balance of Bulk Sale Receivables
that are GA Receivables that were Purchased Receivables on December 31,
1999 shall not exceed $600,000,000;
(iii) the aggregate Principal Balance of Bulk Sale
Receivables that are GA Receivables that are Certified Foreign
Receivables shall not exceed $50,000,000; and
(iv) none of the Bulk Sale Receivables will be Wholesale
Receivables. The Principal Balance of a Bulk Sale Receivable will be
determined at the time of the applicable Bulk Sale.
<PAGE>
127
(b) The sale of any Bulk Sale Receivable by the Administrative
Agent is conditioned upon receipt by the Managing Facility Agent, prior to or
contemporaneously with such sale, of a purchase price in immediately available
funds (the "Bulk Sale Purchase Price") from the Bulk Sale Buyer and/or the
Seller equal to the Outstanding Balance of such Bulk Sale Receivable. The
aggregate Bulk Sale Purchase Price payable on any day will be deposited into the
Bulk Sale Account until the Settlement Date for the month in which the related
Bulk Sale occurred. On such Settlement Date, (i) any amounts on deposit in the
Bulk Sale Account in respect of the Outstanding Balance of Bulk Sale Receivables
shall be considered Principal Collections and shall be distributed in accordance
with Sections 2.15(b) and 2.16(a) and (ii) all other amounts on deposit in the
Bulk Sale Account shall be considered Finance Charge Collections and shall be
distributed in accordance with Sections 2.15(b) and 2.16(b). Each Purchaser's
Outstanding Purchase Price will only be reduced as a result of Bulk Sales in
accordance with the preceding sentence.
(c) The proceeds of Bulk Sales shall reduce the aggregate
Commitment of the Purchasers in accordance with Section 2.9(b).
(d) In connection with the Bulk Sales, the Administrative
Agent is authorized to execute, either directly or through a power of attorney
provided to a representative of the Seller or the Servicer, all documentation
requested by the Seller or the Servicer in order to transfer ownership of the
Bulk Sale Receivables, together with any interest held by the Administrative
Agent in collateral securing the Bulk Sale Receivables, to either the Bulk Sale
Buyer or the Seller.
(e) Any Bulk Sale, and any documentation executed in
connection with a Bulk Sale, shall be made without any representations or
warranties from the Purchasers, except for any representations or warranties
from the Administrative Agent made in such capacity as are agreed upon with the
Seller and the Servicer.
11.25 Repurchase of Delinquent Receivables. On any Settlement Date, the Managing
Facility Agent, at its discretion, may instruct the Administrative Agent to
sell, without any further consent or approval of any of the Purchasers, any
Delinquent Receivable for an amount not less than the Outstanding Balance of
such Delinquent Receivable on the last day of the Settlement Period preceding
such Settlement Date; provided that the Seller or, if the Seller elects not to
repurchase such Delinquent Receivable, RAC, shall have a right of first refusal
to repurchase such Delinquent Receivable on such Settlement Date by depositing
into the Concentration Account cash in an amount equal to the Outstanding
Balance of such Delinquent Receivable. Any amounts received by the
Administrative Agent, or deposited into the Concentration Account, in respect of
Delinquent Receivables sold pursuant to this Subsection 11.25 shall be applied
and distributed in accordance with Subsections 2.15 and 2.16.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered in New York, New York by their
proper and duly authorized officers as of the day and year first above written.
RAYTHEON AIRCRAFT RECEIVABLES CORPORATION,
as Seller
By: /David C. Yen/
Title: President
<PAGE>
128
RAYTHEON AIRCRAFT CREDIT CORPORATION,
as Servicer
By: /John S. Myers/
Title: Vice President
BANK OF AMERICA, N.A.,
as Managing Facility Agent, Co-Administrative Agent
and Administrative Agent
By /Patrick Zetzman/
Title: Vice President
THE CHASE MANHATTAN BANK,
as Co-Administrative Agent and Syndication Agent
By: /John C. Riordan/
Title: Vice President
UBS AG, STAMFORD BRANCH, solely as Administrative Agent
By: /Dorothy McKinley/
Title: Associate Director
By: /Thomas R. Salzano/
Title: Director, Loan Portfolio Support, US
SPC: RECEIVABLES CAPITAL CORPORATION
By: /Stewart L. Cutler/
Title: Vice President
SPC BANK: BANK OF AMERICA, N.A.
By: /Willem Van Beek/
Title: Vice President
THE BANK OF NEW YORK
By: /William G. C. Dakin/
Title: Vice President
SPC: BANNER RECEIVABLES CORPORATION
By: /s/
Title: Treasurer
SPC BANK: BANK OF TOKYO - MITSUBISHI, LTD.
By: /Thomas Fennessey/
Title: Attorney-In fact
BANQUE NATIONALE DE PARIS
By: /Richard L. Sted/
Title: Senior Vice President
By: /Richard Pace/
Title: Vice President
Corporate Banking Division
BAYERISCHE LANDESBANK
By: /Alexander Kohnert/
Title: First Vice President
By: /James H. Boyle/
Title: Vice President
<PAGE>
129
CANADIAN IMPERIAL BANK OF COMMERCE,
NEW YORK AGENCY
By: /Lindsay Gordon/
Title: Executive Director
THE CHASE MANHATTAN BANK
By: /John C. Riordan/
Title: Vice President
SPC: CHARTA CORPORATION
By: CITICORP NORTH AMERICA, INC.,
as Attorney-in-Fact
By: /Michael Fey/
Title: Vice President
SPC BANK: CITIBANK, N.A.
By: /William G. Martens/
Title: Vice President
SPC: FOUR WINDS FUNDING CORPORATION
By: Commerzbank AG, New York Branch,
as Attorney-in-Fact
By: /Carl Jackson/
Title: Senior Vice President
By: /James Ahern/
Title: Senior Vice President
SPC BANK: COMMERZBANK AG, NEW YORK BRANCH
By: /Robert Donahue/
Title: Senior Vice President
By: /Peter Doyle/
Title: Assistant Vice President
SPC: ALPINE SECURITIZATION CORP.
By: CREDIT SUISSE FIRST BOSTON, NEW YORK
BRANCH, as Attorney-in-Fact
By: /s/
Title:
By: /s/
Title:
SPC BANK: CREDIT SUISSE FIRST BOSTON, NEW YORK BRANCH
By: /David W Kratovil/
Title: Director
By: /Jay Chall/
Title: Director
DEN DANSKE BANK AKTIESELSKAB, CAYMAN ISLANDS BRANCH
By: /Dennis T. Shugrue/
Title: Assistant Vice President
By: /John O'Neill/
Title: Vice President
<PAGE>
130
SPC: FALCON ASSET SECURITIZATION CORPORATION
By: /Elizabeth Cohen/
Title: Authorized Signatory
SPC BANK: BANK ONE, NA
By: /Elizabeth Cohen/
Title: Vice President
THE INDUSTRIAL BANK OF JAPAN TRUST COMPANY
By: /J. Kenneth Biegen/
Title: Senior Vice President
SPC: THREE RIVERS FUNDING CORPORATION
By: /Andrew L. Stidd/
Title: President
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By: /Dennis Wilczek/
Title: Associate
WACHOVIA BANK, N.A.
By: /Frances W. Josephic/
Title: Vice President
SPC: QUINCY CAPITAL CORPORATION
By: /Susan Burdice-Brennan/
Title: Vice President
SPC BANK: WESTDEUTSCHE LANDESBANK GIROZENTRALE, NEW YORK BRANCH
By: /John H. Moorhead/
Title: Director, Securitization
By: /Violet Diamant/
Title: Vice President
WELLS FARGO BANK, NATIONAL ASSOCIATION
By: /Robert Carino/
Title: Vice President
SPC: EAGLEFUNDING CAPITAL CORP.
By: /Amy Roberts/
Title: Director
SPC BANK: FLEETBOSTON
By: /Jorge A. Schwartz/
Title: Director
SOCIETE GENERALE
By: /Jose A. Moreno/
Title: Director
SPC: VARIABLE FUNDING CAPITAL CORPORATION
By: First Union Capital Markets, a division of Wheat
First Security Inc., as attorney-in-fact
By: /Darrell R. Baber/
Title: Director
<PAGE>
131
SPC BANK: FIRST UNION NATIONAL BANK
By: /Bill A. Shirley/
Title: Senior Vice President
SPC: ATLANTIC ASSET SECURITIZATION CORP.
By: CREDIT LYONNAIS NEW YORK BRANCH,
as Attorney-in-Fact
By: /Konstantina Kourmpetis/
Title: Director
SPC BANK: CREDIT LYONNAIS NEW YORK BRANCH
By: /Konstantina Kourmpetis
Title: Director
KBC BANK NV
By: /Robert Snauffer/
Title: First Vice President
By: /Robert Surdam/
Title: Vice President
SPC: BAVARIA UNIVERSAL FUNDING CORPORATION
By: /Lori Rezza/
Title: Vice President
SPC BANK: BAYERISCHE HYPO-UND VEREINSBANK AG
By: /Marianne Weinzinger/
Title: Director
By: /Patricia M. Tresnan/
Title: Director
DEUTSCHE BANK AG, NEW YORK A/O CAYMAN ISLAND BRANCHES
By: /Joe Makowski/
Title: Vice President
By: /William W. McGinty/
Title: Director
BANCA COMMERCIALE ITALIANA, NEW YORK BRANCH
By: /Chareles Dougherty/
Title: Vice President
By: /Edward C. Bermant/
Title: First Vice President & Deputy Manager
BANCA POPOLARE DI MILANO
By: /Fluvio Montanari/
Title: First Vice President
By: /Patrick F. Dillon/
Title: Vice President & Chief Credit Officer
<PAGE>
132
NEW PURCHASERS
BANCA NATIONALE DEL LAVORO, S.P.A.
By: /Frederic W. Hall/
Title: Vice President
By: /Leonardo Valentini/
Title: First Vice President
BANK OF NOVA SCOTIA
By: /T.M. Pitcher/
Title: Authorized Signatory
NATIONAL WESTMINSTER BANK Plc
NEW YORK BRANCH
By: /Richard Freedman/
Title: Director, North America
NATIONAL WESTMINSTER BANK Plc
NASSAU BRANCH
By: /Richard Freedman/
Title: Director, North America
BANK HAPOALIM
By: /Laura Anne Raffa/
Title: First Vice President
BANK OF MONTREAL
By: /Kanu Modi/
Title: Director
SAN PAOLO IMI
By: /Carlo Persico/
Title: Deputy General Manager
By: /Luca Sacchi /
Title: Vice President
PARIBAS
By: /Sean Reddington/
Title: Director
By: /Asim Kahn/
Title: Assistant Vice President
<PAGE>
1
EXHIBIT 10.2
REAFFIRMATION OF AMENDED AND RESTATED GUARANTEE
REAFFIRMATION OF AMENDED AND RESTATED GUARANTEE, dated as of
March 10, 2000, (this "Reaffirmation") of the Amended and Restated Guarantee,
dated as of March 18, 1999 (the "Guarantee"), made by Raytheon Company, a
Delaware corporation ("Raytheon", together with its successors and assigns
permitted therein, the "Guarantor"), in favor of the Purchasers referred to
therein and Bank of America National Trust Association, as managing facility
agent (in such capacity, the "Managing Facility Agent") for such Purchasers.
WHEREAS, pursuant to the Amended and Restated Purchase and
Sale Agreement, dated as of March 18, 1999 (as hereto amended, modified or
otherwise supplemented) (the "Purchase Agreement"), among Raytheon Aircraft
Receivables Corporation, a Kansas corporation (the "Seller"), Raytheon Aircraft
Credit Corporation ("Raytheon Credit"), as Servicer (as defined therein), the
financial institutions and special purpose corporations from time to time
parties thereto (the "Purchasers"), Bank of America National Trust and Savings
Association, as Managing Facility Agent (in such capacity, the "Managing
Facility Agent") and Documentation Agent for the Purchasers, Bank of America
National Trust and Savings Association and The Chase Manhattan Bank, as
Co-Administrative Agents for the Purchasers (each in such capacity, a
"Co-Administrative Agent"), The Chase Manhattan Bank, as Syndication Agent (in
such capacity, the "Syndication Agent"), Citibank, N.A. and Credit Suisse First
Boston, as Co-Syndication Agents (each in such capacity, a "Co-Syndication
Agent"), and each Administrative Agent referred to therein, Raytheon entered
into the Guarantee;
WHEREAS, the Purchase Agreement is being amended and restated
by the Second Amended and Restated Purchase and Sale Agreement (the "Amended
Purchase Agreement"), dated as of March 10, 2000, among Raytheon Aircraft
Receivables Corporation, a Kansas corporation (the "Seller"), Raytheon Aircraft
Credit Corporation ("Raytheon Credit"), as Servicer (as defined therein), the
financial institutions and special purpose corporations from time to time
parties thereto (the "Purchasers"), Bank of America, N.A., formerly known as
Bank of America National Trust and Savings Association, as Managing Facility
Agent for the Purchasers (in such capacity, the "Managing Facility Agent"), The
Chase Manhattan Bank and Bank of America, N.A., as Co-Administrative Agents for
the Purchasers (in such capacity, a "Co-Administrative Agent"), The Chase
Manhattan Bank, as Syndication Agent (in such capacity, the "Syndication
Agent"), Citibank, N.A. and Credit Suisse First Boston, as Co-Syndication Agents
(in such capacity, a "Co-Syndication Agent") and each Administrative Agent
referred therein;
WHEREAS, it is a condition precedent to the effectiveness of
the Amended Purchase Agreement that Raytheon shall have executed and delivered
this Reaffirmation to the Managing Facility Agent;
WHEREAS, Raytheon desires to consent to the amendments to the
Purchase Agreement and to reaffirm its obligations under the Guarantee;
<PAGE>
2
NOW THEREFORE, in consideration of the foregoing and to induce
the Managing Facility Agent, the Co-Agents, the Agents and the Purchasers to
enter into the Second Amended and Restated Purchase and Sale Agreement and to
induce the Purchasers to make their respective purchasers from the Seller under
the Second Amended and Restated Purchase and Sale Agreement, Raytheon hereby
agrees as follows:
1. Defined Terms. Capitalized terms used herein but not
defined shall have the meanings given to such terms in the Guarantee.
2. Consent and Reaffirmation. Raytheon hereby consents to the
amendments to the Purchase Agreement and to the execution of the Amended
Purchase Agreement by Raytheon Credit and the Seller and hereby reaffirms it
obligations under the Guarantee.
IN WITNESS WHEREOF, Raytheon has caused this Reaffirmation to be duly
executed and delivered by its proper and duly authorized officer as of the day
and year first written above.
RAYTHEON COMPANY
By: /R. Goglia/
Title: Vice President and Treasurer
Acknowledged By:
BANK OF AMERICA, N.A.,
as Managing Facility Agent
By: /Patrick W. Zetzman/
Name: Patrick W. Zetzman
Title: Vice President
<PAGE>
1
EXHIBIT 10.3
REAFFIRMATION OF AMENDED AND RESTATED REPURCHASE AGREEMENT
REAFFIRMATION OF AMENDED AND RESTATED REPURCHASE AGREEMENT,
dated as of March 10, 2000, (this "Reaffirmation") of the Amended and Restated
Repurchase Agreement, dated as of March 18, 1999 (the "Repurchase Agreement"),
made by Raytheon Aircraft Company, a Kansas corporation ("RAC"), in favor of the
Purchasers referred to therein and Bank of America National Trust and Savings
Association, as managing facility agent (in such capacity, the "Managing
Facility Agent") for such Purchasers.
WHEREAS, pursuant to the Amended and Restated Purchase and
Sale Agreement, dated as of March 18, 1999 (as hereto amended, modified or
otherwise supplemented) (the "Purchase Agreement"), among Raytheon Aircraft
Receivables Corporation, a Kansas corporation (the "Seller"), Raytheon Aircraft
Credit Corporation ("Raytheon Credit"), as Servicer (as defined therein), the
financial institutions and special purpose corporations from time to time
parties thereto (the "Purchasers"), Bank of America National Trust and Savings
Association, as Managing Facility Agent (in such capacity, the "Managing
Facility Agent") and Documentation Agent for the Purchasers, Bank of America
National Trust and Savings Association and the Chase Manhattan Bank, as
Co-Administrative Agents for the Purchasers (each in such capacity, a
"Co-Administrative Agent"), The Chase Manhattan Bank, as Syndication Agent (in
such capacity, the "Syndication Agent"), Citibank, N.A. and Credit Suisse First
Boston, as Co-Syndication Agents (each in such capacity, a "Co-Syndication
Agent"), and each Administrative Agent referred to therein, RAC entered
into the Repurchase Agreement;
WHEREAS, the Purchase Agreement is being amended and restated
by the Second Amended and Restated Purchase and Sale Agreement (the "Amended
Purchase Agreement"), dated as of March 10, 2000, among Raytheon Aircraft
Receivables Corporation, a Kansas corporation (the "Seller"), Raytheon Aircraft
Credit Corporation ("Raytheon Credit"), as Servicer (as defined therein), the
financial institutions and special purpose corporations from time to time
parties thereto (the "Purchasers"), Bank of America, N.A., formerly known as
Bank of America National Trust and Savings Association, as Managing Facility
Agent for the Purchasers (in such capacity, the "Managing Facility Agent"), The
Chase Manhattan Bank and Bank of America, N.A., as Co-Administrative Agents for
the Purchasers (in such capacity, a "Co-Administrative Agent"), The Chase
Manhattan Bank, as Syndication Agent (in such capacity, the "Syndication
Agent"), Citibank, N.A. and Credit Suisse First Boston, as Co-Syndication Agents
(in such capacity, a "Co-Syndication Agent") and each Administrative Agent
referred therein;
WHEREAS, it is a condition precedent to the effectiveness of
the Amended Purchase Agreement that RAC shall have executed and delivered
this Reaffirmation to the Managing Facility Agent;
WHEREAS, RAC desires to consent to the amendments to the
Purchase Agreement and to reaffirm its obligations under the Repurchase
Agreement;
<PAGE>
2
NOW THEREFORE, in consideration of the foregoing and to induce
the Managing Facility Agent, the Co-Agents, the Agents and the Purchasers to
enter into the Second Amended and Restated Purchase and Sale Agreement and to
induce the Purchasers to make their respective purchasers from the Seller under
the Second Amended and Restated Purchase and Sale Agreement, RAC hereby
agrees as follows:
1. Defined Terms. Capitalized terms used herein but not
defined shall have the meanings given to such terms in the Repurchase Agreement.
2. Consent and Reaffirmation. RAC hereby consents to the
amendments to the Purchase Agreement and to the execution of the Amended
Purchase Agreement by Raytheon Credit and the Seller and hereby reaffirms it
obligations under the Purchase Agreement.
3. Amendment to Section 3. Section 3 of the Repurchase
Agreement is hereby amended by deleting "tenth" from the first sentence of
such section and inserting in lieu thereof "twentieth".
IN WITNESS WHEREOF, Raytheon has caused this Reaffirmation to be duly
executed and delivered by its proper and duly authorized officer as of the day
and year first written above.
RAYTHEON AIRCRAFT COMPANY
By: /James E. Gray/
Title: Vice President - Chief Financial Officer
Acknowledged By:
BANK OF AMERICA, N.A.,
as Managing Facility Agent
By: /Patrick W. Zetzman/
Name: Patrick W. Zetzman
Title: Vice President
<PAGE>
1
EXHIBIT 10.4
Keith J. Peden Raytheon Company
Vice President and Deputy Executive Offices
Director Human Resources 141 Spring Street
781 860 2380 Lexington, Massachusetts
781 860 2912 fax 02421 USA
March 13, 2000
Mr. Shay D. Assad
7 School Street
Hopkinton, MA 01748
Re: Retention Bonus
Dear Shay:
Raytheon Company is exploring various alternatives with respect to
Raytheon Engineers and Constructors, Inc. (hereinafter "RE&C"), including its
sale to a third party. This letter sets forth the special incentive arrangement
and conditions for which you will be eligible in connection with your continued
employment and cooperation in the potential sale of RE&C.
Raytheon will decide in its sole discretion if and when it will proceed
with the sale of RE&C, or any portion of the assets of RE&C and the terms and
conditions upon which any sale or sales shall be effected. Nothing contained
herein shall obligate the sale of RE&C, any portion thereof or assets of RE&C at
this or any other time.
1. You agree to assist and fully cooperate with RE&C in all matters
related to its efforts to sell, and to do and perform all tasks reasonably
requested of you to support and bring about such sale. Furthermore, in
recognition of RE&C's desire that you make yourself available for employment
with the eventual buyer should the buyer desire to retain your services, you
agree to review and consider in good faith employment offers, if any, made by
the Buyer.
2. Change In Control. The Company agrees that the successful change in
control of RE&C shall constitute a qualifying event for purposes of your
Raytheon Company Change in Control Severance Agreement ("CIC Agreement") dated
November 22, 1995, as amended. Consequently, you shall be entitled to the
Severance Benefit provided in Section 1.9 and the Excise Tax Payments, if
applicable, as set forth in Section 5. The amount due under the CIC Agreement
shall be paid to you within twenty (20) days of the Closing Date.
3. 1999 Results Based Incentive ("RBI") Bonus. You shall be
eligible for an RBI Bonus consistent with the terms of the performance measures
of the 1999 RBI Bonus Plan.
<PAGE>
2
4. Retention Bonus. If you continue as an employee until the
Closing Date of the sale of RE&C, you will be eligible to participate in the
following Retention Bonus arrangement.
(A) The Retention Bonus shall be two times the annual base salary
rate you are paid as of the Closing Date and two times your
targeted 1999 RBI Bonus. The Retention Bonus is divided into
three parts and is subject to the terms and conditions set
forth below.
(i) Part 1: Part 1 of the Retention Bonus is twenty-five
percent (25%) of one year's base salary and bonus.
You will be paid Part 1 if you continue to be an
active employee as of the Closing Date. Part 1 will
be paid within twenty (20) days of the Closing Date.
(ii) Part 2: Part 2 of the Retention Bonus is seventy-five
percent (75%) of one year's base salary and bonus.
You will be entitled to Part 2 if you are employed by
the Buyer on the first anniversary of the Closing
Date. Part 2 will be paid within twenty (20) days of
this date.
(iii) Part 3: Part 3 of the Retention Bonus is one year's
base salary and bonus. You shall receive Part 3 if
you are employed by the Buyer on the second
anniversary of the Closing Date. Part 3 will be paid
within twenty (20) days of this date.
(B) You shall be entitled to the full Retention Bonus (Parts 1, 2
and 3) as of the Closing Date if:
(i) You are not offered a position with the Buyer, nor are
you offered continued employment with Raytheon Company,
an affiliate or subsidiary, or
(ii) You are offered a position with the Buyer, but the
position does not include a base salary essentially
equivalent to your base salary with RE&C at the time
of the Closing.
(C) You shall be entitled to any unpaid part of the Retention
Bonus if you accept a position with the Buyer and, during the
first twenty-four (24) months of such employment, you are:
(i) Involuntarily separated from employment without cause, as
defined below; or
(ii) Subjected to a substantial reduction in the base
salary paid by the Buyer at the inception of your
employment with the Buyer.
<PAGE>
3
(D) For purposes of this Retention Bonus arrangement, "cause" shall be
defined as:
(i) Failure to perform any of the material duties of the
position with the Buyer, including special projects
and assignments, after notice and a reasonable
opportunity to correct performance; or
(ii) Breach of any material provision of the Buyer's Standards
of Business Behavior and Ethics; or
(iii) Conviction of, or plea of nolo contendere to, any
felony or misdemeanor which has a material impact on
your ability to perform the duties of your position.
(E) If you are entitled to Part 2 or 3 of the Retention Bonus due
to the occurrence of the conditions set forth in paragraphs
4(B)-(C), you shall receive this payment within twenty (20)
days of written demand from you establishing to Raytheon's
satisfaction the occurrence of such condition(s).
5. Termination Prior to Closing. Raytheon retains the right to
terminate your employment prior to the Closing for the reasons set forth below.
In the event of a termination for cause, you shall not be entitled to the
Retention Bonus. Reasons for termination which shall constitute grounds for a
denial of the Retention Bonus are:
(A) Failure to perform any of the material duties of your
position, including special projects and assignments, after
notice and a reasonable opportunity to correct performance; or
(B) Breach of any material provision of the Raytheon's Standards of
Business Behavior and Ethics; or
(C) Breach of any material provision of Raytheon Company Rules and
Regulations.
If you are terminated prior to Closing for a reason other than those
specified in subparagraphs (A), (B) and (C) above, you will be eligible for
Portion 1 of the Retention Bonus set forth in paragraph 4.
6. Benefit Assurance. The company intends to seek agreement with the
Buyer to provide employee benefits reasonably comparable in the aggregate to the
current company benefits. If the company is unable to reach such agreement, you
will receive a one-time lump sum payment as a one-year benefit differential.
<PAGE>
4
7. Stock.
(a) Vested Stock Options at Closing Date: For those stock
options which are vested as of the Closing Date, you
shall have three (3) years from the last day worked
for Raytheon to exercise these options. The procedure
for the exercise of the options will vary depending
upon whether you exercise the options during or after
the first anniversary of your separation from
Raytheon.
(i) First Year Exercise: Exercise of these
options during the first year following your
last day worked for Raytheon shall be
pursuant to the procedure set forth in "A
Guide to Your Raytheon Company Stock Option
Plan" (see page 8 of attached copy).
(ii) Exercise Years 2 and 3: The following terms
and procedures shall govern the exercise of
your options after the first anniversary and
ending on the third anniversary of your last
day worked for Raytheon:
(A) Basis for Separation from Employment:
(1) Involuntarily Without Cause: If you are
involuntarily terminated without cause, as
defined in paragraph 3(D), you may exercise
these options through the third anniversary of
the Closing Date.
(2) Involuntarily With Cause: If you are
terminated for cause, as defined in paragraph
3(D), by the Buyer, you will immediately lose
the right to exercise these options as of the
date terminated by the Buyer.
(3) Voluntary Termination: If you voluntarily
terminate your employment during this period,
you shall have thirty (30) calendar days
following your last day actually worked to
exercise these options.
<PAGE>
5
(B) Procedure:
(i) On any business day you may elect to obtain the
value of all or a portion of these options by
contacting the Stock Administration Group,
Corporate Human Resources, Lexington, MA at
781-860-2903 and making a verbal request
identifying the number of shares you want to
"exercise." This request should be confirmed
by facsimile letter to the Stock Administrator,
Fax No. 781-860-3688 as soon as possible after
the verbal request.
(ii) Raytheon will then calculate the amount due to
you by multiplying the number of shares you
want to exercise by the difference between the
option price and the highest reported trading
price on the date of your request following the
time of your request to the Stock
Administrator.
(iii) Payment of the amount calculated pursuant to
subsection (b) above, subject to applicable
statutory withholdings, will be sent to you by
check, within seven (7) days of your "exercise"
request.
(b) Non-Vested Stock Options at Closing Date. With respect to
your options which have not vested as of the Closing Date, the
company intends to reach an agreement with the Buyer whereby
the unvested options are converted to an equivalent value of
Buyer's common stock. Under the intended agreement, structured
to comply with the applicable provisions of the Internal
Revenue Code (ss. 422 and 424), your current unvested options
in Raytheon stock would be adjusted to constitute a Buyer
option to acquire the number of shares of Buyer's stock equal
to the number of shares of Raytheon stock subject to option
times a fraction, the numerator of which is the average of the
daily average of the high and low trading prices of Raytheon
stock for the three business days prior to the Closing Date,
and the denominator of which is the average of the daily
average of the high and low trading prices of each share of
Buyer common stock for the three business days prior to the
Closing Date.
(c) Restricted Stock. The restrictions on your restricted stock
award will be waived as of the Closing Date, and you will
receive the cash value of these shares at the highest traded
price on that day, payable within twenty (20) days, subject to
normal applicable tax withholdings.
<PAGE>
6
8. Long Term Achievement Program ("LTAP"). You shall continue as an
active participant in the LTAP transition plans for 1999 and 2000; and, the
1999-2001 plan in accordance with LTAP terms. The payout, if any, for the
performance cycles shall be made after the performance cycles in accordance with
each plan's performance measures.
9. Pension. As of the Closing Date, you will be vested in the accrued
benefit as provided pursuant to the terms of the Raytheon Company Pension Plan
for Salaried Employees.
10. Financial and Estate Planning Program. The financial and estate
planning services provided in accordance with the Raytheon Executive Perquisite
Program shall continue through June 30, 2000.
11. Prior to any public announcement concerning the sale of RE&C, you
agree that without the prior consent of Raytheon you will not have any contact
with nor disclose to any person or entity (other than those individuals
identified to you in writing as being active participants in the sale process),
either the fact that discussions or negotiations are taking place or have taken
place regarding the possible sale of RE&C or any of the terms, conditions or
other facts relating to the possible sale, including the status thereof. During
the course of the negotiation of the possible sale of RE&C, you recognize your
continuing duty of loyalty and obligation to act in the best interests of the
Company.
12. Confidentiality. You agree to keep confidential this agreement and
not to disclose either the fact of the agreement or the terms thereof, except
where necessary to members of your immediate family, tax or legal advisors, and
as required in response to a valid subpoena or court order.
13. Arbitration of Claims. The parties agree that any disputes arising
during the term of your employment with Raytheon and/or RE&C, including but not
limited to any claims arising under the terms of this agreement, shall be
subject to final and binding arbitration as the sole and exclusive forum for
dispute resolution. Arbitration under this section shall be conducted pursuant
to the rules of the American Arbitration Association applicable to employment
disputes.
Please acknowledge your acceptance of the terms and conditions of this
Retention Bonus agreement by signing below.
Very truly yours,
Raytheon Company
By
Keith J. Peden
Vice President and Deputy Director
Human Resources
AGREED AND ACCEPTED:
Date:
cc: D. M. Donovan
G. F. Gasperini
<PAGE>
1
EXHIBIT 99
AMENDED AND RESTATED FINANCIAL DATA SCHEDULE
[ARTICLE] 5
[MULTIPLIER] 1,000,000
[S] [C]
[PERIOD-TYPE] 3-MOS
[FISCAL-YEAR-END] DEC-31-1999
[PERIOD-END] APR-04-1999
[CASH] 58
[SECURITIES] 0
[RECEIVABLES] 836
[ALLOWANCES] 0
[INVENTORY] 2,017
[CURRENT-ASSETS] 8,708
[PP&E] 2,222
[DEPRECIATION] 0
[TOTAL-ASSETS] 27,537
[CURRENT-LIABILITIES] 6,280
[BONDS] 8,161
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 3
[OTHER-SE] 10,892
[TOTAL-LIABILITY-AND-EQUITY] 27,537
[SALES] 4,336
[TOTAL-REVENUES] 4,336
[CGS] 3,341
[TOTAL-COSTS] 3,341
[OTHER-EXPENSES] 111
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 175
[INCOME-PRETAX] 395
[INCOME-TAX] 155
[INCOME-CONTINUING] 240
[DISCONTINUED] 18
[EXTRAORDINARY] 0
[CHANGES] (53)
[NET-INCOME] 205
[EPS-BASIC] 0.61
[EPS-DILUTED] 0.60
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> APR-02-2000
<CASH> 181
<SECURITIES> 0
<RECEIVABLES> 834
<ALLOWANCES> 0
<INVENTORY> 1,935
<CURRENT-ASSETS> 8,187
<PP&E> 2,451
<DEPRECIATION> 0
<TOTAL-ASSETS> 27,002
<CURRENT-LIABILITIES> 5,373
<BONDS> 9,042
0
0
<COMMON> 3
<OTHER-SE> 10,729
<TOTAL-LIABILITY-AND-EQUITY> 27,002
<SALES> 4,231
<TOTAL-REVENUES> 4,231
<CGS> 3,481
<TOTAL-COSTS> 3,481
<OTHER-EXPENSES> 123
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 180
<INCOME-PRETAX> 141
<INCOME-TAX> 61
<INCOME-CONTINUING> 80
<DISCONTINUED> (261)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (181)
<EPS-BASIC> (0.54)
<EPS-DILUTED> (0.54)
</TABLE>
