<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 14, 1994
REGISTRATION NO. 33 -
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________________________
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
_________________________________
ALASKA AIR GROUP, INC. AND ALASKA AIRLINES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
ALASKA- ALASKA AIRLINES, INC. 92-0009235-ALASKA AIRLINES, INC.
DELAWARE-ALASKA AIR GROUP, INC. 91-1292054-ALASKA AIR GROUP, INC.
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION
INCORPORATION OR ORGANIZATION) NO.)
19300 PACIFIC HIGHWAY SOUTH, SEATTLE, WASHINGTON 98188
(206) 433-3200
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
MARJORIE E. LAWS
VICE PRESIDENT/CORPORATE AFFAIRS AND CORPORATE SECRETARY
19300 PACIFIC HIGHWAY SOUTH, SEATTLE, WASHINGTON 98188
(206) 433-3131
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF AGENT FOR SERVICE)
COPIES TO:
STEPHEN A. MCKEON, ESQ.
JACK L. SIEMERING, ESQ.
PERKINS COIE
1201 THIRD AVENUE, 40TH FLOOR
SEATTLE, WASHINGTON 98101-3099
Approximate date of commencement of proposed sale to the public:
From time to time after the effective date of this Registration Statement.
If any of the securities being registered on this form are to be offered
pursuant to dividend reinvestment plans, please check the following box. / /
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended, other than securities offered only in connection with dividend
or interest reinvestment plans, check the following box. /X/
___________________________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
TITLE OF EACH CLASS OF AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) OFFERING PRICE PER UNIT(2) AGGREGATE OFFERING PRICE(2) REGISTRATION FEE
- --------------------------- ------------- ------------------------- --------------------------- ----------------
<S> <C> <C> <C> <C>
Convertible Debt Securities
of Alaska Air
Group, Inc.. . . . . . . . 100%
Common Stock, $1.00 par
value, of Alaska Air
Group, Inc.(3) . . . . . . -
Guarantees of Alaska Air
Group, Inc.(4). . . . . . -
Debt Securities of Alaska
Airlines, Inc.. . . . . . 100%
Equipment Trust
Certificates of Alaska
Airlines, Inc.. . . . . . 100%
------------- --------------------------- ----------------
Total . . . . . . . . . . . $200,000,000 $200,000,000 $68,966
------------- --------------------------- ----------------
------------- --------------------------- ----------------
<FN>
- -------------
(1) If any of these securities are issued at an original issue discount, the
principal amount will be increased such that the aggregate proceeds will
equal $200,000,000.
(2) Estimated solely for the purpose of computing the registration fee.
(3) Such indeterminate number of shares of Common Stock as may be issuable upon
conversion of Convertible Debt Securities. Includes rights to purchase
Series A Participating Preferred Stock of Alaska Air Group, Inc. associated
with the Common Stock.
(4) To be issued in connection with Debt Securities of Alaska Airlines, Inc.
</TABLE>
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until this Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
<PAGE>
EXPLANATORY NOTE
This Registration Statement consists of three separate forms of Prospectuses,
covering securities to be registered as follows:
(1) Convertible Debt Securities of Alaska Air Group, Inc.
(2) Debt Securities of Alaska Airlines, Inc. and Guarantees, if any, of
Alaska Air Group, Inc.
(3) Equipment Trust Certificates of Alaska Airlines, Inc.
None of these Prospectuses will be used to consummate sales of securities unless
accompanied by a Prospectus Supplement applicable to the securities offered.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED FEBRUARY 14, 1994
PROSPECTUS
- ----------
ALASKA AIR GROUP, INC.
CONVERTIBLE DEBT SECURITIES
________________
Alaska Air Group, Inc. ("Air Group") may from time to time offer its
convertible debt securities (the "Convertible Debt Securities"), consisting of
debentures, notes and/or other evidences of indebtedness representing unsecured
obligations of Air Group convertible into Common Stock, par value $1.00 per
share ("Common Stock"). The Convertible Debt Securities offered pursuant to
this Prospectus may be issued in one or more series or issuances and will be
limited to $200,000,000 aggregate public offering price. Certain specific terms
of the Convertible Debt Securities in respect of which this Prospectus is being
delivered are set forth in the accompanying Prospectus Supplement (the
"Prospectus Supplement"), including, where applicable, the specific designation,
aggregate principal amount, the denomination, maturity, premium, if any, the
rate (which may be fixed or variable), time and method of calculating payment of
interest, if any, the place or places where principal of, premium, if any, and
interest, if any, on such Convertible Debt Securities will be payable, any terms
of redemption at the option of Air Group or the holder, any sinking fund
provisions, terms for conversion into Common Stock, the initial public offering
price and other special terms. The Prospectus Supplement will indicate whether
the Convertible Debt Securities will be Convertible Senior Debt Securities,
which will rank equally with all other unsubordinated and unsecured indebtedness
of Air Group, or as Convertible Subordinated Debt Securities which will be
subordinated in right of payment to all Senior Indebtedness of Air Group (as
hereinafter defined). See "Description of Convertible Debt Securities--
Subordination of Convertible Subordinated Debt Securities."
_______________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
________________
Air Group may sell the Convertible Debt Securities to or through
underwriters, through dealers or agents or directly to purchasers. See "Plan of
Distribution." The accompanying Prospectus Supplement sets forth the names of
any underwriters, dealers or agents involved in the sale of the Convertible Debt
Securities in respect of which this Prospectus is being delivered, and any
applicable fee, commission or discount arrangements with them.
This Prospectus may not be used to consummate sales of Convertible Debt
Securities unless accompanied by a Prospectus Supplement applicable to the
Convertible Debt Securities being sold.
________________
The date of this Prospectus is , 1994.
<PAGE>
No dealer, salesperson or other individual has been authorized to give any
information or to make any representations not contained in this Prospectus in
connection with the offering covered by this Prospectus. If given or made, such
information or representations must not be relied upon as having been authorized
by Air Group or the Underwriter. This Prospectus does not constitute an offer
to sell, or a solicitation of an offer to buy, the Convertible Debt Securities
in any jurisdiction where, or to any person to whom, it is unlawful to make such
offer or solicitation. Neither the delivery of this Prospectus nor any sale
made hereunder shall, under any circumstances, create an implication that there
has not been any change in the facts set forth in this Prospectus or in the
affairs of Air Group since the date hereof.
AVAILABLE INFORMATION
Air Group is subject to the reporting requirements of the Securities Exchange
Act of 1934, as amended (the "1934 Act"), and, in accordance therewith, files
reports and other information with the Securities and Exchange Commission (the
"Commission"). Such reports and other information may be inspected and copied
at the public reference facilities maintained by the Commission at Room 1024,
450 Fifth Street, N.W., Washington, D.C. 20549; 75 Park Place, 14th Floor, New
York, New York 10007; and Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of such material may also be
obtained at prescribed rates from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. In addition, such
material filed by Air Group may be inspected and copied at the offices of the
New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.
This Prospectus constitutes a part of a registration statement on Form S-3
(together with all amendments and exhibits, the "Registration Statement") filed
by Air Group and Alaska Airlines, Inc. ("Alaska") with the Commission under the
Securities Act of 1933, as amended (the "Securities Act"). This Prospectus does
not contain all of the information included in the Registration Statement,
certain parts of which are omitted in accordance with the rules and regulations
of the Commission. Statements contained herein concerning the provisions of any
document do not purport to be complete and, in each instance, reference is made
to the copy of such document filed as an exhibit to the Registration Statement
or otherwise filed with the Commission. Each such statement is subject to and
qualified in its entirety by such reference. Reference is made to such
Registration Statement and to the exhibits relating thereto for further
information with respect to Air Group and the Convertible Debt Securities
offered hereby.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed with the Commission pursuant to the
1934 Act and are incorporated into this Prospectus by reference and made a part
hereof: Air Group's Annual Report on Form 10-K for the fiscal year ended
December 31, 1993.
All documents filed by Air Group pursuant to Section 13(a), 13(c), 14 or
15(d) of the 1934 Act subsequent to the date of this Prospectus and prior to the
termination of this offering shall be deemed to be incorporated by reference in
this Prospectus, and to be a part hereof from the date of filing of such
documents. Any statement incorporated by reference herein shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus. Air Group will provide without charge to each person to whom a copy
of this Prospectus is delivered, upon the written or oral request of such
person, a copy of any document incorporated by reference in this Prospectus
(other than exhibits to such documents unless such exhibits are specifically
incorporated by reference to such documents). Requests for such copies should
be directed to the office of the Corporate Secretary, Alaska Air Group, Inc.,
P.O. Box 68947, Seattle, Washington 98168 (telephone (206) 433-3131).
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<PAGE>
AIR GROUP AND ALASKA
Air Group is a holding company whose principal subsidiary is Alaska. Alaska
accounted for approximately 80% of Air Group's consolidated 1993 operating
revenues and 91% of its total assets at December 31, 1993. Alaska's all jet
fleet provides scheduled air transportation to 37 airports in six states
(Alaska, Washington, Oregon, California, Nevada and Arizona), five cities in
Mexico and three cities in Russia. Air Group also owns Horizon Air Industries,
Inc. ("Horizon"), a regional airline operating in the Pacific Northwest and
western Canada. The principal executive offices of Air Group are located at
19300 Pacific Highway South, Seattle, Washington 98188 (telephone (206) 433-
3200).
In 1993 Alaska carried 6.4 million passengers. In each year since 1973,
Alaska has carried more passengers between Alaska and the U.S. mainland than any
other airline. Passenger traffic in the intra-Alaska markets and between Alaska
and the U.S. mainland accounted for 29% of Alaska's total revenue passenger
miles during 1993, while west coast traffic accounted for 59% and the Mexico
markets 12%. Based on passenger enplanements, Alaska's leading airports are
Seattle, Portland, Anchorage and Los Angeles. Based on revenues, the leading
nonstop routes were Seattle-Anchorage, Seattle-Los Angeles and Seattle-
San Francisco. Alaska's operating fleet at December 31, 1993 consisted of 66
jet aircraft.
USE OF PROCEEDS
Unless otherwise indicated in the accompanying Prospectus Supplement, the net
proceeds to Air Group from the sale of the Convertible Debt Securities offered
hereby will be added to the working capital of Air Group and will be available
for general corporate purposes, among which may be the repayment of outstanding
indebtedness and financing of capital expenditures by Alaska and Horizon,
including the acquisition of aircraft and related equipment.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for Air
Group for the periods indicated. Earnings represents earnings before accounting
change, income tax expense and fixed charges (excluding interest capitalized).
Fixed charges consist of interest and the portion of rental expense deemed
representative of the interest factor.
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------
1993 1992 1991 1990 1989
---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C>
Ratio ......................... (a) (a) 1.10 1.32 2.30
<FN>
- ------------------
(a) For the years ended December 31, 1993 and 1992, Air Group's earnings were
inadequate to cover fixed charges by $46.3 million and $131.8 million,
respectively.
</TABLE>
DESCRIPTION OF CONVERTIBLE DEBT SECURITIES
The Convertible Senior Debt Securities are to be issued under an Indenture
between Air Group and a Trustee (the "Convertible Senior Debt Indenture"). The
Convertible Subordinated Debt Securities are to be issued under an Indenture
between Air Group and a Trustee (the "Convertible Subordinated Debt Indenture").
The Convertible Senior Debt Securities Indenture and the Convertible
Subordinated Debt Securities Indenture are referred to herein individually as
the "Indenture" and collectively as the "Indentures." A copy of each Indenture
is filed as an exhibit to the Registration Statement. Information regarding
the Trustee will be set forth in the applicable Prospectus Supplement.
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<PAGE>
The Convertible Debt Securities offered pursuant to this Prospectus will be
limited to $200,000,000 aggregate principal amount (or such greater amount, if
Convertible Debt Securities are issued at an original issue discount, as shall
result in aggregate proceeds of $200,000,000 to Air Group). The statements
herein relating to the Convertible Debt Securities and the Indentures are
summaries and are subject to the detailed provisions of the Indentures. The
following summaries of certain provisions of the Indentures do not purport to be
complete and are subject to, and are qualified in their entirety by reference
to, all the provisions of the Indentures, including the definitions therein of
certain terms capitalized in this Prospectus. Whenever particular Sections or
defined terms of the Indentures are referred to herein or in a Prospectus
Supplement, such Sections or defined terms are incorporated herein or therein by
reference.
GENERAL
The Indentures do not limit the aggregate principal amount of Convertible
Debt Securities which may be issued thereunder and provide that Convertible Debt
Securities may be issued from time to time in one or more series. The
Convertible Senior Debt Securities will be unsecured and unsubordinated
obligations of Air Group and will rank on a parity with all other unsecured and
unsubordinated indebtedness of Air Group. The Convertible Subordinated Debt
Securities will be unsecured obligations of Air Group and, as set forth below
under "Subordination of Convertible Debt Securities," will be subordinated in
right of payment to all Senior Indebtedness. The Indenture does not limit Air
Group's right to incur additional Senior Indebtedness. As of December 31, 1993,
Senior Indebtedness of Air Group on a consolidated basis aggregated
approximately $308,700,000.
Reference is made to the Prospectus Supplement which accompanies this
Prospectus for a description of the specific series of Convertible Debt
Securities being offered thereby, including: (1) the specific designation of
such Convertible Debt Securities; (2) any limit upon the aggregate principal
amount of such Convertible Debt Securities; (3) the date or dates on which the
principal of such Convertible Debt Securities will mature or the method of
determining such date or dates; (4) the rate or rates (which may be fixed or
variable) at which such Convertible Debt Securities will bear interest, if any,
or the method of calculating such rate or rates; (5) the date or dates from
which interest, if any, will accrue or the method by which such date or dates
will be determined; (6) the date or dates on which interest, if any, will be
payable and the record date or dates therefor; (7) the place or places where
principal of, premium, if any, and interest, if any, on such Convertible Debt
Securities will be payable; (8) the period or periods within which, the price or
prices at which, and the terms and conditions upon which, such Convertible Debt
Securities may be redeemed, in whole or in part, at the option of Air Group;
(9) the obligation, if any, of Air Group to redeem or purchase such Convertible
Debt Securities pursuant to any sinking fund or analogous provisions, upon the
happening of a specified event or at the option of a holder thereof and the
period or periods within which, the price or prices at which and the terms and
conditions upon which, such Convertible Debt Securities shall be redeemed or
purchased, in whole or in part, pursuant to such obligations; (10) the
denominations in which such Convertible Debt Securities are authorized to be
issued; (11) the terms and conditions upon which conversion will be effected,
including the conversion price, the conversion period and other conversion
provisions in addition to or in lieu of those described below; (12) if other
than the principal amount thereof, the portion of the principal amount of such
Convertible Debt Securities which will be payable upon declaration of the
acceleration of the maturity thereof or the method by which such portion shall
be determined; (13) the person to whom any interest on any such Convertible Debt
Security shall be payable if other than the person in whose name such
Convertible Debt Security is registered on the applicable record date; (14) any
addition to, or modification or deletion of, any Event of Default (as
hereinafter defined) or any covenant of Air Group specified in the Indenture
with respect to such Convertible Debt Securities; (15) the application, if any,
of such means of covenant defeasance as may be specified for such Convertible
Debt Securities; (16) if applicable, provisions related to the issuance of
Convertible Debt Securities in book entry form; (17) any addition to, or
modification or deletion of, any provision of the Indenture related to the
subordination of such Convertible Debt Securities; and (18) any other special
terms pertaining to such Convertible Debt Securities. Unless otherwise
specified in the applicable Prospectus Supplement, the Convertible Debt
Securities will not be listed on any securities exchange. (Section _____.)
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<PAGE>
Unless otherwise specified in the applicable Prospectus Supplement,
Convertible Debt Securities will be issued in fully registered form without
coupons. Where Convertible Debt Securities of any series are issued in bearer
form, the special restrictions and considerations, including special offering
restrictions and special federal income tax considerations, applicable to any
such Convertible Debt Securities and to payment on and transfer and exchange of
such Convertible Debt Securities will be described in the applicable Prospectus
Supplement.
Convertible Debt Securities may be sold at a substantial discount below
their stated principal amount, bearing no interest or interest at a rate which
at the time of issuance is below market rates. Certain federal income tax
consequences and special considerations applicable to any such Convertible Debt
Securities will be described in the applicable Prospectus Supplement.
The general provisions of the Indentures do not afford holders of the
Convertible Debt Securities protection in the event of a highly leveraged or
other transaction involving Air Group or Alaska that may adversely affect
holders of Convertible Debt Securities. Any covenants or other provisions
included in a supplement or amendment to any Indenture for the benefit of the
holders of any particular series of Convertible Debt Securities will be
described in the applicable Prospectus Supplement.
PAYMENT, REGISTRATION, TRANSFER AND EXCHANGE
Unless otherwise provided in the applicable Prospectus Supplement, payments
in respect of the Convertible Debt Securities will be made at the office or
agency of Air Group maintained for that purpose, as Air Group may designate from
time to time, except that, at the option of Air Group, interest payments, if
any, on Convertible Debt Securities in registered form may be made by (i) checks
mailed by the Trustee to the holders of Convertible Debt Securities entitled
thereto at their registered addresses or (ii) wire transfer to an account
maintained by the Person entitled thereto as specified in the Register.
(Sections ____ and ____.) Unless otherwise indicated in an applicable
Prospectus Supplement, payment of any installment of interest on Convertible
Debt Securities in registered form will be made to the Person in whose name such
Convertible Debt Security is registered at the close of business on the regular
record date for such interest. (Section ____.)
Unless otherwise provided in the applicable Prospectus Supplement,
Convertible Debt Securities in registered form will be transferable or
exchangeable at the agency of Air Group maintained for such purpose as
designated by Air Group from time to time. (Sections ___ and ___.) Convertible
Debt Securities may be transferred or exchanged without service change, other
than any tax or other governmental charge imposed in connection therewith.
(Section ____.)
CONVERSION RIGHTS
The terms on which Convertible Debt Securities of any series are
convertible into Common Stock will be set forth in the Prospectus Supplement
relating thereto. Such terms shall include provisions as to whether conversion
is mandatory, at the option of the holder, or at the option of Air Group, and
may include provisions in which the number of shares of Common Stock to be
received by the holders of Convertible Debt Securities would be calculated
according to the market price of Common Stock as of a time stated in the
Prospectus Supplement.
SUBORDINATION OF CONVERTIBLE SUBORDINATED DEBT SECURITIES
Unless otherwise provided in the applicable Prospectus Supplement, the
obligation of Air Group to make payment on account of the principal of, and
premium, if any, and interest on Convertible Subordinated Debt Securities will
be subordinated and junior in right of payment, as set forth in the Convertible
Subordinated Debt Securities Indenture and described below, to the prior payment
in full of all Senior Indebtedness.
"Senior Indebtedness" means all Indebtedness of Air Group unless such
Indebtedness, by its terms or the terms of the instrument creating or evidencing
it, is subordinate in right of payment to or PARI PASSU with the
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<PAGE>
Convertible Subordinated Debt Securities. (Section ____.) Air Group's 7-1/4%
Convertible Subordinated Notes Due 2006, 7-3/4% Convertible Subordinated
Debentures Due 2010 and 6-7/8% Convertible Subordinated Debentures Due 2014 do
not constitute Senior Indebtedness. "Indebtedness," when used with respect to
Air Group, means, without duplication, the principal of, and premium, if any,
and accrued and unpaid interest (including post-petition interest) on
(i) indebtedness of Air Group for money borrowed, (ii) Indebtedness guarantees
by Air Group of indebtedness for money borrowed by any other person,
(iii) indebtedness of Air Group evidenced by notes, debentures, bonds or other
instruments of indebtedness for payment of which Air Group is responsible or
liable, by Indebtedness guarantees or otherwise, (iv) obligations for the
reimbursement of any obligor on any letter of credit, bankers' acceptance or
similar credit transaction, (v) obligations of Air Group under Capital Leases
and Flight Equipment leases, (vi) obligations under interest rate and currency
swaps, caps, collars, options, forward or spot contracts or similar arrangements
or with respect to foreign currency hedges, and (vii) commitment and other bank
financing fees under contractual obligations associated with bank debt;
PROVIDED, HOWEVER, that Indebtedness shall not include amounts owed to trade
creditors in the ordinary course of business. (Section ____.)
No payment on account of principal of, or premium, if any, or interest on,
the Convertible Subordinated Debt Securities may be made if (i) any Senior
Indebtedness is not paid when due or (ii) the maturity of any Senior
Indebtedness is accelerated unless, in either case, (a) such failure to pay or
acceleration relates to such Senior Indebtedness in an aggregate amount equal to
less than $25 million, (b) the default has been cured or waived or has ceased to
exist, (c) such acceleration has been rescinded, or (d) such Senior Indebtedness
has been paid in full. During the continuance of any default (other than a
default described in the preceding sentence) on Senior Indebtedness pursuant to
which the maturity thereof may be accelerated immediately (I.E., without further
notice and after the expiration of any applicable grace periods) and upon notice
by holders of at least $25 million of Senior Indebtedness to Air Group and the
Trustee (a "Payment Notice"), Air Group may not make any payments (a "Payment
Block") on the Convertible Subordinated Debt Securities until 120 days have
elapsed following the receipt of such Payment Notice. After 120 days Air Group
may resume payment on the Convertible Subordinated Debt Securities unless
payment is prohibited by the first sentence of this paragraph. No more than one
Payment Notice is permitted for any one default on Senior Indebtedness (which
shall not bar subsequent Payment Notices for other such defaults). All events
of default on Senior Indebtedness occurring within a 30-day period shall be
treated as one event of default on such Senior Indebtedness for purposes of the
preceding sentence. No more than two Payment Blocks are permitted within any
12-month period. Except as provided in the next paragraph, a failure to make
any payment with respect to the Convertible Subordinated Debt Securities as a
result of the foregoing provisions will not limit the right of the holders of
the Convertible Subordinated Debt Securities to accelerate the maturity thereof
as a result of such payment default. (Section ____.)
Upon any distribution of the assets of Air Group upon any dissolution,
total or partial liquidation or reorganization of or similar proceeding relating
to Air Group, the holders of Senior Indebtedness will be entitled to receive
payment in full before the holders of the Convertible Subordinated Debt
Securities are entitled to receive any payment. Upon any Event of Default with
respect to the Convertible Subordinated Debt Securities, the Trustee or holders
of 25% of the Convertible Subordinated Debt Securities must give notice of such
Event of Default and the intention to accelerate to Air Group and any other
holders of Senior Indebtedness which have theretofore requested such notice, and
such acceleration shall not become effective unless and until such Event of
Default is continuing on the 60th day after the date of delivery of such notice
of intention to accelerate; PROVIDED, HOWEVER, that the Convertible Subordinated
Debt Securities shall become immediately due and payable upon notice in the
event of a bankruptcy or insolvency of Air Group. (Section ____.) By reason of
such subordination, in the event of insolvency, creditors of Air Group who are
holders of Senior Indebtedness or of other unsubordinated Indebtedness of Air
Group may recover more, ratably, than the holders of the Convertible
Subordinated Debt Securities.
CONSOLIDATION, MERGER OR SALE BY THE ISSUER
The Indentures provides that Air Group may, without the consent of the
holders of Convertible Debt Securities, merge or consolidate with or into any
other corporation or sell, convey, transfer or otherwise dispose of
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<PAGE>
all or substantially all of its assets to any person, firm or corporation, if
(i) (a) in the case of a merger or consolidation, Air Group is the surviving
corporation or (b) in the case of a merger or consolidation where Air Group is
not the surviving corporation and in the case of such a sale, conveyance or
other disposition, the successor or acquiring corporation is a corporation
organized and existing under the laws of the Untied States of America or a State
thereof and such corporation expressly assumes by supplemental indenture all the
obligations of Air Group under the Convertible Debt Securities and any coupons
appertaining thereto and under the Indentures, and (ii) immediately after giving
effect to such merger or consolidation, or such sale, conveyance, transfer or
other disposition, no Default (as hereinafter defined) or Event of Default shall
have occurred and be continuing. In the event a successor corporation assumes
the obligations of Air Group, such successor corporation shall succeed to and be
substituted for Air Group under the Indentures and under the Convertible Debt
Securities and any coupons appertaining thereto and all obligations of Air Group
shall terminate. (Section ____.)
EVENTS OF DEFAULT, NOTICE AND CERTAIN RIGHTS ON DEFAULT
The Indentures provide that, if an Event of Default specified therein
occurs with respect to the Convertible Debt Securities of any series issued
thereunder and is continuing, the Trustee for such series or the holders of 25%
in aggregate principal amount of all of the outstanding Convertible Debt
Securities of that series, by written notice to Air Group (and to the Trustee
for such series, if notice is given by such holders of Convertible Debt
Securities), may declare the principal (or, if the Convertible Debt Securities
of that series are original issue discount Convertible Debt Securities or
indexed Convertible Debt Securities, such portion of the principal amount
specified in the Prospectus Supplement) of all the Convertible Debt Securities
of that series to be due and payable, subject in the case of Convertible
Subordinated Debt Securities to the 60 day prior notice requirement described
above under "Subordination of Convertible Subordinated Debt Securities,"
PROVIDED that Convertible Debt Securities shall become immediately due and
payable without prior notice upon a bankruptcy or insolvency of Air Group.
(Section ____.)
"Events of Default" with respect to Convertible Debt Securities of any
series issued thereunder are defined in the Indentures as being: default for
30 days in payment of any interest on any Convertible Debt Security of that
series or any coupon appertaining thereto or any additional amount payable with
respect to Convertible Debt Securities of such series as specified in the
applicable Prospectus Supplement when due; default for ten days in payment of
principal, premium, if any, or on redemption or otherwise, or in the making of a
mandatory sinking fund payment of any Convertible Debt Securities of that series
when due; default for 60 days after notice to Air Group by the Trustee for such
series, or by the holders of 25% in aggregate principal amount of the
Convertible Debt Securities of such series then outstanding, in the performance
of any other agreement in the Convertible Debt Securities of that series, in the
Indentures or in any supplemental indenture or board resolution referred to
therein under which the Convertible Debt Securities of that series may have been
issued; default resulting in acceleration of other indebtedness of Air Group for
borrowed money where the aggregate principal amount so accelerated exceeds
$25 million and such acceleration is not rescinded or annulled within ten days
after the written notice thereof to Air Group by the Trustee or to Air Group and
the Trustee by the holders of 25% in aggregate principal amount of the
Convertible Debt Securities of such series then outstanding, PROVIDED that such
Event of Default will be cured or waived if the default that resulted in the
acceleration of such other indebtedness is cured or waived; and certain events
of bankruptcy, insolvency or reorganization of Air Group. (Section ____.)
Events of Default with respect to a specified series of Convertible Debt
Securities may be added to the Indenture under which the series is issued and,
if so added, will be described in the applicable Prospectus Supplement.
(Sections ____ and ____.)
The Indentures provide that the Trustee for any series of Convertible Debt
Securities shall, within 90 days after the occurrence of a Default with respect
to Convertible Debt Securities of that series, give to the holder of the
Convertible Debt Securities of that series notice of all uncured Defaults known
to it, PROVIDED that, except in the case of default in payment on the
Convertible Debt Securities of that series, the Trustee may withhold the notice
if and so long as a committee of its Responsible Officers (as described therein)
in good faith determines that withholding such notice is in the interest of the
holders of the Convertible Debt Securities of that series.
-7-
<PAGE>
(Section ____.) "Default" means any event which is, or, after notice or passage
of time or both, would be, an Event of Default. (Section ____.)
The Indentures provide that the holders of a majority in aggregate
principal amount of the Convertible Debt Securities of each series affected
(with each such series voting as a class) may direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee for such
series, or exercising any trust or power conferred on such Trustee.
(Section ____.)
The Indenture includes a covenant that Air Group will file annually with
the Trustee a certificate as to Air Group's compliance with all conditions and
covenants of the applicable Indenture. (Section ____.)
The holders of a majority in aggregate principal amount of any series of
Convertible Debt Securities by notice to the Trustee for such series may waive,
on behalf of the holders of all Convertible Debt Securities of such series, any
past Default or Event of Default with respect to that series and its
consequences except a Default or Event of Default in the payment of the
principal of, premium, if any, or interest, if any, on any Convertible Debt
Security and certain other defaults. (Section ____.)
MODIFICATION OF THE INDENTURES
The Indenture contains provisions permitting Air Group and the Trustee to
enter into one or more supplemental indentures without the consent of the
holders of any of the Convertible Debt Securities in order (i) to evidence the
succession of another corporation to Air Group and the assumption of the
covenants of Air Group by a successor to Air Group; (ii) to add to the covenants
of Air Group or surrender any right or power of Air Group; (iii) to add
additional Events of Default with respect to any series; (iv) to add or change
any provisions to such extent as necessary to permit or facilitate the issuance
of Convertible Debt Securities in bearer form; (v) to add to, change or
eliminate any provision affecting Convertible Debt Securities not yet issued;
(vi) to secure the Convertible Debt Securities; (vii) to establish the form or
terms of Convertible Debt Securities; (viii) to evidence and provide for
successor Trustees; (ix) if allowed without penalty under applicable laws and
regulations, to permit payment in respect of Convertible Debt Securities in
bearer form in the United States; (x) to correct or supplement any inconsistent
provisions or to make any other provisions with respect to matters or questions
arising under the Indentures, PROVIDED that such action does not adversely
affect the interests of any holder of Convertible Debt Securities of any series
issued under such Indentures; or (xi) to cure any ambiguity or correct any
mistake. (Section ____.)
The Indenture also contains provisions permitting Air Group and the
Trustee, with the consent of the holders of a majority in aggregate principal
amount of the outstanding Convertible Debt Securities of each series affected by
such supplemental indenture, to execute supplemental indentures adding any
provisions to or changing or eliminating any of the provisions of the Indenture
or any supplemental indenture or modifying the rights of the holders of
Convertible Debt Securities of such series, except that no such supplemental
Indenture may, without the consent of the holder of each Convertible Debt
Security so affected; (i) change the time for payment of principal or interest
on any Convertible Debt Security; (ii) reduce the principal of, or any
installment of principal of, or interest on any Convertible Debt Security;
(iii) reduce the amount of premium, if any, payable upon the redemption of any
Convertible Debt Security; (iv) reduce the amount of principal payable upon
acceleration of the maturity of an Original Issue Discount Convertible Debt
Security; (v) impair the right to institute suit for the enforcement of any
payment on or with respect to any Convertible Debt Security; (vi) reduce the
percentage in principal amount of the outstanding Convertible Debt Securities of
any series the consent of whose holders is required for modification or
amendment of the Indenture or for waiver of compliance with certain provisions
of the Indentures or for waiver of certain defaults; (vii) change the obligation
of Air Group to maintain an office or agency in the places and for the purposes
specified in the Indentures; or (viii) modify the provisions relating to waiver
of certain defaults or any of the foregoing provisions. (Section ____.)
-8-
<PAGE>
COVENANT DEFEASANCE
If indicated in the Prospectus Supplement, Air Group may elect to be
released from its obligations with respect to certain covenants applicable to
the Convertible Debt Securities of or within any series ("covenant defeasance"),
upon the deposit with the Trustee for such series (or other qualifying trustee),
in trust for such purpose, of money and/or Government Obligations which through
the payment of principal and interest in accordance with their terms will
provide money in the amount sufficient to pay the principal of and any premium
or interest on such Convertible Debt Securities to Maturity or redemption, as
the case may be, and any mandatory sinking fund or analogous payment thereon.
Upon the occurrence of a covenant defeasance, Air Group will be released only
from its obligations to comply with certain covenants contained in the Indenture
relating to such Convertible Debt Securities, will continue to be obligated in
all other respects under such Convertible Debt Securities and will continue to
be contingently liable with respect to the payment of principal, interest, if
any, and premium, if any, with respect to such Convertible Debt Securities.
Unless otherwise specified in the applicable Prospectus Supplement and
except as described below, the conditions to covenant defeasance are as follows:
(i) such covenant defeasance must not result in a breach or violation of, or
constitute a Default or Event of Default under, the Indentures, or result in a
breach or violation of, or constitute a default under, any other material
agreement or instrument of Air Group; (ii) certain bankruptcy related Defaults
or Events of Default with respect to Air Group must not have occurred and be
continuing during the period commencing on the date of the deposit of the trust
funds to covenant defease such Convertible Debt Securities and ending on the
91st day after such date; (iii) Air Group must deliver to the Trustee an Opinion
of Counsel to the effect that the holders of such Convertible Debt Securities
will not recognize income, gain or loss for federal income tax purposes as a
result of such covenant defeasance and will be subject to federal
income tax on the same amounts and in the same manner and at all the same times
as would have been the case if such covenant defeasance had not occurred;
(iv) Air Group must deliver to the Trustee an Officers' Certificate and an
Opinion of Counsel with respect to compliance with the conditions precedent to
such covenant defeasance; and (v) any additional conditions to such covenant
defeasance which may be imposed on Air Group pursuant to the Indentures.
(Article ____ of the Indentures.) The Indenture requires that a nationally
recognized firm of independent public accountants deliver to the Trustee a
written certification as to the sufficiency of the trust funds deposited for the
covenant defeasance of such Convertible Debt Securities. The Indenture does not
provide the holders of such Convertible Debt Securities with recourse against
such firm. As described above, in the event of a covenant defeasance, Air Group
remains contingently liable with respect to the payment of principal, interest,
if any, and premium, if any, with respect to the Convertible Debt Securities.
If Air Group exercises its covenant defeasance option, payment of such
Convertible Debt Securities may not be accelerated by reason of a Default or an
Event of Default with respect to the covenants to which such covenant defeasance
is applicable. However, if such acceleration were to occur, the realizable
value at the acceleration date of the money and Government Obligations in the
defeasance trust could be less than the principal and interest then due on such
Convertible Debt Securities, in that the required deposit in the defeasance
trust is based upon scheduled cash flow rather than market value, which will
vary depending upon interest rates and other factors.
DESCRIPTION OF CAPITAL STOCK
Air Group is authorized to issue 30,000,000 shares of Common Stock, $1.00
par value, and 5,000,000 shares of preferred stock.
VOTING RIGHTS. Each holder of Common Stock is entitled to one vote per
share on all matters submitted to a vote of such class. Holders of Common Stock
do not have cumulative rights. The Board of Directors is classified into three
classes, with three or four Directors elected each year to three-year terms. A
vote of three-fourths of the shares present at a meeting is required to elect
each nominee as a Director and to approve any other matter brought before the
stockholders for a vote.
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<PAGE>
DIVIDEND RIGHTS. Holders of Common Stock share ratably in dividends that
may be declared by the Board of Directors out of funds legally available
therefor.
LIQUIDATION RIGHTS. Upon any liquidation of Air Group, the holders of
Common Stock are entitled to share ratably in the net assets of Air Group
available for distribution on the Common Stock.
OTHER. The Common Stock has no preemptive or conversion rights and there
are no redemption provisions applicable thereto. The Common Stock is listed on
the New York Stock Exchange and the Pacific Stock Exchange. The registrar and
transfer agent for the Common Stock is The First National Bank of Boston.
POTENTIAL RIGHTS OF PREFERRED STOCK. Under Air Group's Certificate of
Incorporation, the Board of Directors has authority to issue up to 5,000,000
shares of preferred stock. Such shares would have such voting, dividend,
liquidation, conversion, redemption and other rights as may be determined by the
Board of Directors, subject to the provisions of the Certificate of
Incorporation. Shares of Common Stock would be subject to the preferences,
rights and powers of any such shares of preferred stock as set forth in Air
Group's Certificate of Incorporation and in the resolutions establishing one or
more series of preferred stock. No preferred stock was outstanding at the date
of this Prospectus.
CERTAIN OTHER PROVISIONS. Air Group's Certificate of Incorporation
contains certain provisions sometimes referred to as "anti-takeover" provisions.
In the event that Air Group at any time has a stockholder who is a beneficial
owner of more than 15% of the voting power of Air Group, these provisions would
require the affirmative vote of the holders of not less than 80% of the
outstanding shares of voting stock to approve a consolidation or merger of Air
Group with any other corporation, the conveyance to any corporation or other
person or any other disposition of all or substantially all of Air Group's
assets, or the disposition by Air Group of all or substantially all of the stock
or assets of any major subsidiary; provided, however, that this 80% voting
requirement does not apply to a transaction which is approved by 80% of the
disinterested members of the Board of Directors.
Air Group is party to a Rights Agreement designed to deter partial and two-
tier tender offers, stock accumulation programs and other coercive tactics that
might be used to gain control without giving the Board of Directors the
opportunity to negotiate on behalf of the stockholders. In accordance with the
Rights Agreement, one right is attached to each share of outstanding Common
Stock. A holder of a right may, under certain circumstances, purchase at a
discount from market value either shares of a special class of voting preferred
stock of Air Group or shares of capital stock of a corporate entity attempting
to acquire Air Group or surviving a merger or consolidation with Air Group.
PLAN OF DISTRIBUTION
Air Group may sell Convertible Debt Securities to one or more underwriters
for public offering and sale by them or may sell Convertible Debt Securities to
investors or other persons directly or through agents. Any such underwriter or
agent involved in the offer and sale of the Convertible Debt Securities will be
named in an applicable Prospectus Supplement.
Underwriters may offer and sell the Convertible Debt Securities at a fixed
price or prices, which may be changed, or at prices related to prevailing market
prices or at negotiated prices. Air Group also may offer and sell the
Convertible Debt Securities in exchange for one or more of its outstanding
issues of debt securities. Air Group also may, from time to time, authorize
underwriters acting as Air Group's agents to offer and sell the Convertible Debt
Securities upon the terms and conditions as shall be set forth in any Prospectus
Supplement. In connection with the sale of Convertible Debt Securities,
underwriters may be deemed to have received compensation from Air Group in the
form of underwriting discounts or commission and may also receive commissions
from purchasers of Convertible Debt Securities for whom they may act as agent.
Underwriters may sell Convertible Debt Securities to
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<PAGE>
or through dealers, and such dealers may receive compensation in the form of
discounts, concessions or commissions from the underwriters and/or commissions
(which may be changed from time to time) from the purchasers for whom they may
act as agent.
Any underwriting compensation paid by Air Group to underwriters or agents
in connection with the offering of Convertible Debt Securities, and any
discounts, concessions or commissions allowed by underwriters to participating
dealers, will be set forth in an applicable Prospectus Supplement.
Underwriters, dealers and agents participating in the distribution of the
Convertible Debt Securities may be deemed to be underwriters, and any discounts
and commissions received by them and any profit realized by them on resale of
the Convertible Debt Securities may be deemed to be underwriting discounts and
commissions under the Securities Act. Underwriters, dealers and agents may be
entitled, under agreements with Air Group, to indemnification against and
contribution toward certain civil liabilities, including liabilities under the
Securities Act, and to reimbursement by Air Group for certain expenses.
Underwriters, dealers and agents may engage in transactions with, or
perform services for, Air Group and its subsidiaries in the ordinary course of
business.
LEGAL OPINIONS
Unless otherwise indicated in the applicable Prospectus Supplement, the
validity of the Convertible Debt Securities offered hereby will be passed upon
for Air Group by Perkins Coie, Seattle, Washington.
EXPERTS
The financial statements and schedules of Air Group incorporated by
reference in this Prospectus and in the Registration Statement have been audited
by Arthur Andersen & Co., independent public accountants, as indicated in their
reports with respect thereto, and are incorporated herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
reports.
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<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED FEBRUARY 14, 1994
PROSPECTUS
- ----------
ALASKA AIRLINES, INC.
DEBT SECURITIES
________________
Alaska Airlines, Inc. ("Alaska") may from time to time offer its Debt
Securities, consisting of debentures, notes and/or other evidences of
indebtedness representing unsecured obligations of Alaska, in amounts, at prices
and on terms to be determined at the time of offering. The Debt Securities
offered pursuant to this Prospectus may be issued in one or more series and will
be limited to $200,000,000 aggregate principal amount (or such greater amount,
if Debt Securities are issued at an original issue discount, as shall result in
aggregate proceeds of $200,000,000). Certain specific terms of the Debt
Securities in respect of which this Prospectus is being delivered are set forth
in the accompanying Prospectus Supplement (the "Prospectus Supplement"),
including, where applicable, the specific designation, aggregate principal
amount, the denomination, maturity, premium, if any, the rate (which may be
fixed or variable), time and method of calculating payment of interest, if any,
the place or places where principal of, premium, if any, and interest, if any,
on such Debt Securities will be payable, any terms of redemption at the option
of Alaska or the holder, any sinking fund provisions, the terms of any guarantee
by Alaska Air Group, Inc. ("Air Group"), the initial public offering price and
other special terms, together with any other terms in connection with the
offering and sale of the Debt Securities, and the net proceeds to Alaska from
such offering. The Debt Securities may be issued in registered form or bearer
form, or both.
________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
________________
Alaska may sell the Debt Securities to or through underwriters, through
dealers or agents or directly to purchasers. See "Plan of Distribution." The
accompanying Prospectus Supplement sets forth the names of any underwriters,
dealers or agents involved in the sale of the Debt Securities in respect of
which this Prospectus is being delivered and any applicable fee, commission or
discount arrangements with them.
This Prospectus may not be used to consummate sales of Debt Securities
unless accompanied by a Prospectus Supplement.
________________
The date of this Prospectus is , 1994.
<PAGE>
No dealer, salesperson or other individual has been authorized to give any
information or to make any representations not contained in this Prospectus in
connection with the offering covered by this Prospectus. If given or made, such
information or representations must not be relied upon as having been authorized
by Air Group, Alaska or the Underwriter. This Prospectus does not constitute an
offer to sell, or a solicitation of an offer to buy, the Debt Securities in any
jurisdiction where, or to any person to whom, it is unlawful to make such offer
or solicitation. Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create an implication that there has
not been any change in the facts set forth in this Prospectus or in the affairs
of Alaska since the date hereof.
AVAILABLE INFORMATION
Each of Alaska and Air Group is subject to the reporting requirements of
the Securities Exchange Act of 1934, as amended (the "1934 Act"), and, in
accordance therewith, files reports and other information with the Securities
and Exchange Commission (the "Commission"). Such reports and other information
may be inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549; 75 Park
Place, 14th Floor, New York, New York 10007; and Northwestern Atrium Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material may also be obtained at prescribed rates from the Public Reference
Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. In
addition, such material filed by Air Group may be inspected and copied at the
offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New
York 10005.
This Prospectus constitutes a part of a registration statement on Form S-3
(together with all amendments and exhibits, the "Registration Statement") filed
by Alaska and Air Group with the Commission under the Securities Act of 1933, as
amended (the "Securities Act"). This Prospectus does not contain all of the
information included in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission.
Statements contained herein concerning the provisions of any document do not
purport to be complete and, in each instance, reference is made to the copy of
such document filed as in exhibit to the Registration Statement or otherwise
filed with the Commission. Each such statement is subject to and qualified in
its entirety by such reference. Reference is made to such Registration
Statement and to the exhibits relating thereto for further information with
respect to Alaska, Air Group and the Debt Securities offered hereby.
So long as Alaska is subject to such periodic reporting requirements, it
will continue to furnish the information required thereby to the Commission and
will furnish copies of such reports and other information to the holders of
Certificates. Alaska's obligation to file periodic reports with the Commission
will be suspended if each class of Alaska's securities is held of record by
fewer than 300 holders at the beginning of any fiscal year of Alaska other than
a fiscal year in which a registration statement with respect to any such
securities becomes effective. Accordingly, in such case, Alaska may cease to
file reports with the Commission in respect of such fiscal year. In the event
Alaska ceases to file periodic reports with the Commission, Alaska is obligated
pursuant to the Indenture (as hereinafter defined) to distribute to the holders
of Debt Securities annual reports containing audited consolidated financial
statements and a report thereon by Alaska's independent public accountants and
quarterly reports for the first three quarters of each fiscal year containing
unaudited condensed financial information.
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<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed with the Commission pursuant to the
1934 Act and are incorporated into this Prospectus by reference and made a part
hereof: Each of Alaska's and Air Group's Annual Report on Form 10-K for the
fiscal year ended December 31, 1993.
All documents filed by Alaska and Air Group pursuant to Section 13(a),
13(c), 14 or 15(d) of the 1934 Act subsequent to the date of this Prospectus and
prior to the termination of this offering shall be deemed to be incorporated by
reference in this Prospectus, and to be a part hereof from the date of filing of
such documents. Any statement incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent that
a statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus. Alaska and Air Group will provide without charge to each person to
whom a copy of this Prospectus is delivered, upon the written or oral request of
such person, a copy of any document incorporated by reference in this Prospectus
(other than exhibits to such documents unless such exhibits are specifically
incorporated by reference to such documents). Requests for such copies should
be directed to the office of the Corporate Secretary, Alaska Airlines, Inc.,
P.O. Box 68947, Seattle, Washington 98168 (telephone (206) 433-3131).
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<PAGE>
ALASKA AND AIR GROUP
Alaska is a wholly owned subsidiary of Air Group, a holding company.
Alaska accounted for approximately 80% of Air Group's consolidated 1993
operating revenues and 91% of its total assets at December 31, 1993. Alaska's
all jet fleet provides scheduled air transportation to 37 airports in six states
(Alaska, Washington, Oregon, California, Nevada and Arizona), five cities in
Mexico and three cities in Russia. Air Group also owns Horizon Air Industries,
Inc. ("Horizon"), a regional airline operating in the Pacific Northwest and
western Canada. The principal executive offices of Alaska and Air Group are
located at 19300 Pacific Highway South, Seattle, Washington 98188 (telephone
(206) 433-3200).
In 1993 Alaska carried 6.4 million passengers. In each year since 1973,
Alaska has carried more passengers between Alaska and the U.S. mainland than any
other airline. Passenger traffic in the intra-Alaska markets and between Alaska
and the U.S. mainland accounted for 29% of Alaska's total revenue passenger
miles during 1993, while west coast traffic accounted for 59% and the Mexico
markets 12%. Based on passenger enplanements, Alaska's leading airports are
Seattle, Portland, Anchorage and Los Angeles. Based on revenues, the leading
nonstop routes were Seattle-Anchorage, Seattle-Los Angeles and Seattle-
San Francisco. Alaska's operating fleet at December 31, 1993 consisted of 66
jet aircraft.
USE OF PROCEEDS
Unless otherwise indicated in the accompanying Prospectus Supplement, the
net proceeds to Alaska from the sale of the Debt Securities offered hereby will
be added to the working capital of Alaska and will be available for general
corporate purposes, among which may be repayment of outstanding indebtedness and
the financing of capital expenditures by Alaska, including the acquisition by
Alaska of aircraft and related equipment.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for
Alaska and Air Group for the periods indicated. Earnings represents earnings
before accounting change, income tax expense and fixed charges (excluding
interest capitalized). Fixed charges consist of interest and the portion of
rental expense deemed representative of the interest factor.
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------
1993 1992 1991 1990 1989
---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C>
Alaska ..................... (a) (a) 1.14 1.35 2.67
Air Group................... (b) (b) 1.10 1.32 2.30
<FN>
- ---------------------
(a) For the years ended December 31, 1993 and 1992, Alaska's earnings were
inadequate to cover fixed charges by $44.5 million and $126.4 million,
respectively.
(b) For the years ended December 31, 1993 and 1992, Air Group's earnings were
inadequate to cover fixed charges by $46.3 million and $131.8 million,
respectively.
</TABLE>
DESCRIPTION OF DEBT SECURITIES
The Debt Securities are to be issued under an Indenture between Alaska, Air
Group and a Trustee (the "Indenture"). In the event that any Debt Securities
are guaranteed by Air Group (see "Guarantees of Debt Securities"), the
applicable Indenture will be supplemented by a Supplemental Indenture among
Alaska, as issuer, Air Group, as Guarantor, and the Trustee (each, a
"Supplemental Indenture"). A copy of the Indenture is filed as an exhibit to
the
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<PAGE>
Registration Statement. Any such Supplemental Indenture will be filed as an
exhibit to a Current Report on Form 8-K, Quarterly Report on Form l0-Q or Annual
Report on Form l0-K to be filed by Alaska with the Commission following the
issuance of such series of guaranteed Debt Securities. Information regarding
the Trustee will be set forth in the applicable Prospectus Supplement.
The Debt Securities offered pursuant to this Prospectus will be limited to
$200,000,000 aggregate principal amount (or such greater amount, if Debt
Securities are issued at an original issue discount, as shall result in
aggregate proceeds of $200,000,000). The statements herein relating to the Debt
Securities and the Indenture are summaries and reference is made to the detailed
provisions of the Indenture, including the definitions therein of certain terms
capitalized in this Prospectus. Whenever particular Sections or defined terms
of the Indenture are referred to herein or in a Prospectus Supplement, such
Sections or defined terms are incorporated herein or therein by reference.
GENERAL
The Indenture does not limit the aggregate principal amount of Debt
Securities which may be issued thereunder. Debt Securities may be issued from
time to time in one or more series. The Debt Securities will be unsecured and
unsubordinated obligations of Alaska and will rank on a parity with all other
unsecured and unsubordinated indebtedness of Alaska.
Reference is made to the Prospectus Supplement which accompanies this
Prospectus for a description of the specific series of Debt Securities being
offered thereby including: (l) the specific designation of such Debt Securities;
(2) any limit upon the aggregate principal amount of such Debt Securities;
(3) the date or dates on which the principal of such Debt Securities will mature
or the method of determining such date or dates; (4) the rate or rates (which
may be fixed or variable) at which such Debt Securities will bear interest, if
any, or the method of calculating such rate or rates; (5) the date or dates from
which interest, if any, will accrue or the method by which such date or dates
will be determined; (6) the date or dates on which interest, if any, will be
payable and the record date or dates therefor; (7) the place or places where
principal of, premium, if any, and interest, if any, on such Debt Securities
will be payable; (8) the period or periods within which, the price or prices at
which, and the terms and conditions upon which, such Debt Securities may be
redeemed, in whole or in part, at the option of Alaska; (9) the obligation, if
any, of Alaska to redeem or purchase such Debt Securities pursuant to any
sinking fund or analogous provisions, upon the happening of a specified event,
or at the option of a holder thereof and the period or periods within which, the
price or prices at which and the terms and conditions upon which, such Debt
Securities shall be redeemed or purchased, in whole or in part, pursuant to such
obligations; (10), if applicable, the terms of any Guarantee; (11) the
denominations in which such Debt Securities are authorized to be issued; (12) if
other than the principal amount thereof, the portion of the principal amount of
such Debt Securities which will be payable upon declaration of the acceleration
of the maturity thereof or the method by which such portion shall be determined;
(13) the person to whom any interest on any such Debt Security shall be payable
if other than the person in whose name such Debt Security is registered on the
applicable record date; (14) any addition to, or modification or deletion of,
any Event of Default (as hereinafter defined) or any covenant of Alaska
specified in the Indenture with respect to such Debt Securities; (15) the
application, if any, of such means of defeasance or covenant defeasance as maybe
specified for such Debt Securities; (16) if applicable, provisions related to
the issuance of Debt Securities in book entry form; and (17) any other special
terms pertaining to such Debt Securities. Unless otherwise specified in the
applicable Prospectus Supplement, the Debt Securities will not be listed on any
securities exchange. (Section 3.1.)
Unless otherwise specified in the applicable Prospectus Supplement, Debt
Securities will be issued in fully registered form without coupons. Where Debt
Securities of any series are issued in bearer form, the special restrictions and
considerations, including special offering restrictions and special Federal
income tax considerations, applicable to any such Debt Securities and to payment
on and transfer and exchange of such Debt Securities will be described in the
applicable Prospectus Supplement.
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<PAGE>
Debt Securities may be sold at a substantial discount below their stated
principal amount, bearing no interest or interest at a rate which at the time of
issuance is below market rates. Certain Federal income tax consequences and
special considerations applicable to any such Debt Securities will be described
in the applicable Prospectus Supplement.
The general provisions of the Indenture do not afford holders of the Debt
Securities protection in the event of a highly leveraged or other transaction
involving Air Group or Alaska that may adversely affect holders of Debt
Securities. Any covenants or other provisions included in a supplement or
amendment to any Indenture for the benefit of the holders of any particular
series of Debt Securities will be described in the applicable Prospectus
Supplement.
PAYMENT, REGISTRATION, TRANSFER AND EXCHANGE
Unless otherwise provided in the applicable Prospectus Supplement, payments
in respect of the Debt Securities will be made at the office or agency of Alaska
maintained for that purpose as Alaska may designate from time to time except
that, at the option of Alaska, interest payments, if any, on Debt Securities in
registered form may be made by (i) checks mailed by the Trustee to the holders
of Debt Securities entitled thereto at their registered addresses or (ii) wire
transfer to an account maintained by the Person entitled thereto as specified in
the Register. (Sections 3.7(a) and 9.2.) Unless otherwise indicated in an
applicable Prospectus Supplement, payment of any installment of interest on Debt
Securities in registered form will be made to the Person in whose name such Debt
Security is registered at the close of business on the regular record date for
such interest. (Section 3.7(a).)
Unless otherwise provided in the applicable Prospectus Supplement, Debt
Securities in registered form will be transferable or exchangeable at the agency
of Alaska maintained for such purpose as designated by Alaska from time to time.
(Sections 3.5 and 9.2.) Debt Securities may be transferred or exchanged without
service charge, other than any tax or other governmental charge imposed in
connection therewith. (Section 3.5.)
GUARANTEES OF DEBT SECURITIES
Air Group shall unconditionally guarantee to the holders from time to time
of any series of Debt Securities that is not Investment Grade at the time of
issuance the full and prompt payment of principal, premium, if any, and interest
when and as the same shall become due and payable, whether at maturity, upon
redemption or otherwise. The terms of any such guarantees (each, a "Guarantee")
will be set forth in the applicable Supplemental Indenture. Any such Guarantee
will be an unsecured obligation of Air Group. A series of Debt Securities shall
be "Investment Grade" if so designated by at least one nationally recognized
statistical rating organization (as that term is used in
Rule 15c3-1(c)(2)(vi)(F) under the 1934 Act).
If a Guarantee is applicable to Debt Securities offered hereby, reference
is made to the related Supplemental Indenture and the accompanying Prospectus
Supplement for a description of the specific terms of such Guarantee, including
events of default relating thereto and, where applicable, subordination
provisions of such Guarantee and covenants of Air Group.
The consolidated financial statements of Air Group are incorporated by
reference herein. See "Incorporation of Certain Documents by Reference." As
indicated by comparison of such consolidated financial statements with those of
Alaska, the total assets, revenues and shareholders' equity of Alaska comprise a
substantial portion of the consolidated total assets, revenues and shareholders'
equity of Air Group.
CONSOLIDATION, MERGER OR SALE BY ALASKA
The Indenture provides that Alaska may merge or consolidate with or into
any other corporation or sell, convey, transfer or otherwise dispose of all or
substantially all of its assets to any person, firm or corporation, if (i) (a)
in the case of a merger or consolidation, Alaska is the surviving corporation or
(b) in the case of a merger or
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consolidation where Alaska is not the surviving corporation and in the case of
such a sale, conveyance or other disposition, the successor or acquiring
corporation is a corporation organized and existing under the laws of the United
States of America or a State thereof and such corporation expressly assumes by
supplemental indenture all the obligations of Alaska under the Debt Securities
and any coupons pertaining thereto and under the Indenture, and (ii) immediately
after giving effect to such merger or consolidation, or such sale, conveyance,
transfer or other disposition, no Default (as hereinafter defined) or Event of
Default shall have occurred and be continuing. In the event a successor
corporation assumes the obligations of Alaska, such successor corporation shall
succeed to and be substituted for Alaska under the Indenture and under the Debt
Securities and any coupons appertaining thereto and all obligations of Alaska
shall terminate. (Section 7.1.)
EVENTS OF DEFAULT, NOTICE AND CERTAIN RIGHTS ON DEFAULT
The Indenture provides that, if an Event of Default specified therein
occurs with respect to the Debt Securities of any series issued thereunder and
is continuing, the Trustee for such series or the holders of 25% in aggregate
principal amount of all of the outstanding Debt Securities of that series, by
written notice to Alaska (and to the Trustee for such series, if notice is given
by such holders of Debt Securities), may declare the principal (or, if the Debt
Securities of that series are original issue discount Debt Securities or indexed
Debt Securities, such portion of the principal amount specified in the
Prospectus Supplement) of all the Debt Securities of that series to be due and
payable.
"Events of Default" with respect to Debt Securities of any series issued
thereunder are defined in the Indenture as being: default for 30 days in
payment of any interest on any Debt Security of that series or any coupon
appertaining thereto or any additional amount payable with respect to Debt
Securities of such series as specified in the applicable Prospectus Supplement
when due; default for ten days in payment of principal, premium, if any, or on
redemption or otherwise, or in the making of a mandatory sinking fund payment of
any Debt Securities of that series when due; default for 60 days after notice to
Alaska by the Trustee for such series, or by the holders of 25% in aggregate
principal amount of the Debt Securities of such series then outstanding, in the
performance of any other agreement in the Debt Securities of that series, in the
Indenture or in any supplemental indenture or board resolution referred to
therein under which the Debt Securities of that series may have been issued;
default resulting in acceleration of other indebtedness of Alaska for borrowed
money where the aggregate principal amount so accelerated exceeds $25 million
and such acceleration is not rescinded or annulled within ten days after the
written notice thereof to Alaska by the Trustee or to Alaska and the Trustee by
the holders of 25% in aggregate principal amount of the Debt Securities of such
series then outstanding, PROVIDED that such Event of Default will be cured or
waived if the default that resulted in the acceleration of such other
indebtedness is cured or waived; and certain events of bankruptcy, insolvency or
reorganization of Alaska. (Section 5.1 of the Indenture.) Events of Default
with respect to a specified series of Debt Securities may be added to the
Indenture and, if so added, will be described in the applicable Prospectus
Supplement. (Sections 3.1 and 5.1(7) of the Indenture.)
The Indenture provides that the Trustee for any series of Debt Securities
shall, within ninety days after the occurrence of a Default with respect to Debt
Securities of that series, give to the holder of the Debt Securities of that
series notice of all uncured Defaults known to it, PROVIDED that, except in the
case of default in payment on the Debt Securities of that series, the Trustee
may withhold the notice if and so long as a committee of its Responsible
Officers (as defined therein) in good faith determines that withholding such
notice is in the interest of the holders of the Debt Securities of that series.
(Section 6.5.) "Default" means any event which is, or, after notice or passage
of time or both, would be, an Event of Default. (Section 1.1.)
The Indenture provides that the holders of a majority in aggregate
principal amount of the Debt Securities of each series affected (with each such
series voting as a class) may direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee for such series, or
exercising any trust or power conferred on such Trustee. (Section 5.8.)
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The Indenture includes a covenant that Alaska will file annually with the
Trustee a certificate as to Alaska's compliance with all conditions and
covenants of the Indenture. (Section 9.7.)
The holders of a majority in aggregate principal amount of any series of
Debt Securities by notice to the Trustee for such series may waive, on behalf of
the holders of all Debt Securities of such series, any past Default or Event of
Default with respect to that series and its consequences except a Default or
Event of Default in the payment of the principal of, premium, if any, or
interest, if any, on any Debt Security and certain other defaults.
(Section 5.7.)
MODIFICATION OF THE INDENTURES
The Indenture contains provisions permitting Alaska and the Trustee to
enter into one or more supplemental indentures without the consent of the
holders of any of the Debt Securities in order (i) to evidence the succession of
another corporation to Alaska and the assumption of the covenants of Alaska by a
successor to Alaska; (ii) to add to the covenants of Alaska or surrender any
right or power of Alaska; (iii) to add additional Events of Default, with
respect to any series; (iv) to add to, change or eliminate any provision
affecting Debt Securities not yet issued; (v) to secure the Debt Securities;
(vi) to establish the form or terms of Debt Securities; (vii) to evidence and
provide for successor Trustees; (viii) if allowed without penalty under
applicable laws and regulations, to permit payment in respect of Debt Securities
in bearer form in the United States; (ix) to correct or supplement any
inconsistent provisions or to make any other provisions with respect to matters
or questions arising under the Indenture, provided that such action does not
adversely affect the interests of any holder of Debt Securities of any series
issued under the Indenture; or (x) to cure any ambiguity or correct any mistake.
(Section 8.1.)
The Indenture also contains provisions permitting Alaska and the Trustee,
with the consent of the holders of a majority in aggregate principal amount of
the outstanding Debt Securities of each series affected by such supplemental
Indenture, to execute supplemental indentures adding any provisions to or
changing or eliminating any of the provisions of the indentures or any
supplemental indenture or modifying the rights of the holders of Debt Securities
of such series, except that no such supplemental indenture may, without the
consent of the holder of each Debt Security so affected, (i) change the time for
payment of principal or interest on any Debt Security; (ii) reduce the principal
of, or any installment of principal of or interest on any Debt Security;
(iii) reduce the amount of premium, if any, payable upon the redemption of any
Debt Security; (iv) reduce the amount of principal payable upon acceleration of
the maturity of an Original Issue Discount Debt Security; (v) impair the right
to institute suit for the enforcement of any payment on or with respect to any
Debt Security; (vi) reduce the percentage in principal amount of the outstanding
Debt Securities of any series the consent of whose holders is required for
modification or amendment of the Indenture or for waiver of compliance with
certain provisions of the Indenture or for waiver of certain defaults;
(vii) change the obligation of Alaska to maintain an office or agency in the
places and for the purposes specified in the Indenture; or (viii) modify the
provisions relating to waiver of certain defaults or any of the foregoing
provisions. (Section 8.2 of the Indenture.)
DEFEASANCE AND COVENANT DEFEASANCE
If indicated in the Prospectus Supplement, Alaska may elect either (i) to
defease and be discharged from any and all obligations with respect to the Debt
Securities of or within any series (except as described below) ("defeasance") or
(ii) to be released from its obligations with respect to certain covenants
applicable to the Debt Securities of or within any series ("covenant
defeasance"), upon the deposit with the Trustee for such series (or other
qualifying trustee), in trust for such purpose, of money and/or Government
Obligations which through the payment of principal and interest in accordance
with their terms will provide money in the amount sufficient to pay the
principal of and any premium or interest on such Debt Securities to Maturity or
redemption, as the case may be, and any mandatory sinking fund or analogous
payments thereon. Upon the occurrence of a defeasance, Alaska will be deemed to
have paid and discharged the entire indebtedness represented by such Debt
Securities and any coupons appertaining thereto and to have satisfied all of its
other obligations under such Debt Securities and any coupons appertaining
thereto (except for (i) the rights of holders of such Debt Securities to
receive, solely from the
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trust funds deposited to defease such Debt Securities, payments in respect of
the principal of, premium, if any, and interest, if any, on such Debt Securities
or any coupons appertaining thereto when such payments are due and (ii) certain
other obligations as provided in the Indenture). Upon the occurrence of a
covenant defeasance, Alaska will be released only from its obligations to comply
with certain covenants contained in the Indenture relating to such Debt
Securities, will continue to be obligated in all other respects under such Debt
Securities and will continue to be contingently liable with respect to the
payment of principal, interest, if any, and premium, if any, with respect to
such Debt Securities.
Unless otherwise specified in the applicable Prospectus Supplement and
except as described below, the conditions to both defeasance and covenant
defeasance are as follows: (i) such defeasance or covenant defeasance must not
result in a breach or violation of, or constitute a Default or Event of Default
under, the Indenture, or result in a breach or violation of, or constitute a
default under, any other material agreement or instrument of Alaska;
(ii) certain bankruptcy related Defaults or Events of Default with respect to
Alaska must not have occurred and be continuing during the period commencing on
the date of the deposit of the trust funds to defease such Debt Securities and
ending on the 91st day after such date; (iii) Alaska must deliver to the Trustee
an Opinion of Counsel to the effect that the holders of such Debt Securities
will not recognize income, gain or loss for Federal income tax purposes a result
of such defeasance or covenant defeasance and will be subject to Federal income
tax on the same amounts and in the same manner and at all the same times as
would have been the case if such defeasance or covenant defeasance had not
occurred; (iv) Alaska must deliver to the Trustee an Officers' Certificate and
an Opinion of Counsel with respect to compliance with the conditions precedent
to such defeasance or covenant defeasance; and (v) any additional conditions to
such defeasance or covenant defeasance which may be imposed on Alaska pursuant
to the Indenture. (Article 4.) The Indenture requires that a nationally
recognized firm of independent public accountants deliver to the Trustee a
written certification as to the sufficiency of the trust funds deposited for the
defeasance or covenant defeasance of such Debt Securities. The Indentures do
not provide the holders of such Debt Securities with recourse against such firm.
If indicated in the Prospectus Supplement, in addition to obligations of the
United States or an agency or instrumentality thereof, Government Obligations
may include obligations of the government or an agency or instrumentality of the
government issuing the currency in which Debt Securities of such series are
payable. (Sections 1.1 and 3.1.) In the event that Government Obligations
deposited with the Trustee for the defeasance of such Debt Securities decrease
in value or default subsequent to their being deposited, Alaska will have no
further obligation, and the holders of such Debt Securities will have no
additional recourse against Alaska, as a result of such decrease in value or
default. As described above, in the event of a covenant defeasance, Alaska
remains contingently liable with respect to the payment of principal, interest,
if any, and premium, if any, with respect to the Debt Securities.
Alaska may exercise its defeasance option with respect to such Debt
Securities notwithstanding its prior exercise of its covenant defeasance option.
If Alaska exercises its defeasance option, payment of such Debt Securities may
not be accelerated because of a Default or an Event of Default. If Alaska
exercises its covenant defeasance option, payment of such Debt Securities may
not be accelerated by reason of a Default or an Event of Default with respect to
the covenants to which such covenant defeasance is applicable. However, if such
acceleration to occur, the realizable value at the acceleration date of the
money and Government Obligations in the defeasance trust could be less than the
principal and interest then due on such Debt Securities, in that the required
deposit in the defeasance trust is based upon scheduled cash flow rather than
market value, which will vary depending upon interest rates and other factors.
PLAN OF DISTRIBUTION
Alaska may sell Debt Securities to one or more underwriters for public
offering and sale by them or may sell Debt Securities to investors or other
persons directly or through agents. Any such underwriter or agent involved in
the offer and sale of the Debt Securities will be named in an applicable
Prospectus Supplement.
Underwriters may offer and sell the Debt Securities at a fixed price or
prices, which may be changed, or from time to time at market prices prevailing
at the time of sale, at prices related to such prevailing market prices or
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at negotiated prices. Alaska also may offer and sell the Debt Securities in
exchange for one or more of its outstanding issues of debt securities. Alaska
also may, from time to time, authorize underwriters acting as Alaska's agents to
offer and sell the Debt Securities upon the terms and conditions as shall be set
forth in any Prospectus Supplement. In connection with the sale of Debt
Securities, underwriters may be deemed to have received compensation from Alaska
in the form of underwriting discounts or commissions and may also receive
commissions from purchasers of Debt Securities for whom they may act as agent.
Underwriters may sell Debt Securities to or through dealers, and such dealers
may receive compensation in the form of discounts, concessions or commissions
from the underwriters and/or commissions (which may be changed from time to
time) from the purchasers for whom they may act as agent.
Any underwriting compensation paid by Alaska to underwriters or agents in
connection with the offering of Debt Securities, and any discounts, concessions
or commissions allowed by underwriters to participating dealers, will be set
forth in an applicable Prospectus Supplement. Underwriters, dealers and agents
participating in the distribution of the Debt Securities may be deemed to be
underwriters, and any discounts and commissions received by them and any profit
realized by them on resale of the Debt Securities may be deemed to be
underwriting discounts and commissions under the Securities Act. Underwriters,
dealers and agents may be entitled, under agreements with Alaska, to
indemnification against and contribution toward certain civil liabilities,
including liabilities under the Securities Act, and to reimbursement by Alaska
for certain expenses.
Underwriters, dealers and agents may engage in transactions with, or
perform services for, Alaska and its subsidiaries in the ordinary course of
business.
LEGAL OPINIONS
Unless otherwise indicated in the applicable Prospectus Supplement, the
validity of the Debt Securities offered hereby will be passed upon for Alaska by
Perkins Coie, Seattle, Washington.
EXPERTS
The financial statements and schedules of Air Group and of Alaska
incorporated by reference in this Prospectus and in the Registration Statement
have been audited by Arthur Andersen & Co., independent public accountants, as
indicated in their reports with respect thereto, and are incorporated herein in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said reports.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED FEBRUARY 14, 1994
PROSPECTUS
ALASKA AIRLINES, INC.
EQUIPMENT TRUST CERTIFICATES
________________
Up to $200,000,000 aggregate principal amount of Equipment Trust
Certificates (or such greater amount if Certificates are issued at an original
issue discount, as shall result in aggregate proceeds of $200,000,000) may be
offered for sale from time to time pursuant to this Prospectus and related
Prospectus Supplements (as hereinafter defined). Certificates may be issued in
one or more series in amounts, at prices and on terms to be determined at the
time of the offering. Certificates will be issued (a) on a nonrecourse basis by
one or more Owner Trustees (as hereinafter defined) pursuant to separate
leveraged lease transactions (the "Leased Aircraft Certificates") to finance or
refinance a portion of the equipment cost of aircraft, including engines (each,
a "Leased Aircraft" and collectively, the "Leased Aircraft"), which have been or
will be leased to Alaska Airlines, Inc. ("Alaska") or (b) with recourse to
Alaska (the "Owned Aircraft Certificates" and, together with any Leased Aircraft
Certificates, the "Certificates") to finance all or a portion of the equipment
cost of aircraft, including engines (each, an "Owned Aircraft" and collectively,
the "Owned Aircraft" and, together with the Leased Aircraft, the "Aircraft"),
which have been or will be purchased and owned by Alaska.
Certain specific terms of the particular Certificates in respect of which
this Prospectus is being delivered are set forth in the accompanying Prospectus
Supplement (the "Prospectus Supplement"), including, where applicable, the
specific designation, form, aggregate principal amount, initial public offering
price, maturity, premium, if any, the rate (which may be fixed or variable),
time and method of calculating payment of interest, if any, mandatory or
optional redemption by the applicable Owner Trustee or Alaska, the Aircraft
relating to such Certificates, the leveraged lease transactions or financing
arrangements, as the case may be, related thereto and other special terms
relating to such Certificates and the net proceeds from the offering of such
Certificates. The Certificates shall be issued in registered form only and may,
if so specified in the applicable Prospectus Supplement, be issued in accordance
with a book-entry system.
Certificates may be issued in respect of an Aircraft in one or more series,
each series having its own interest rate and final maturity date. The
Certificates issued with respect to each Aircraft will be secured by a security
interest in such Aircraft and, in the case of the Leased Aircraft, by a security
interest in the lease relating thereto, including the right to receive rentals
payable in respect of such Leased Aircraft by Alaska. Although the Leased
Aircraft Certificates will not be direct obligations of, or guaranteed by,
Alaska, the amounts unconditionally payable by Alaska for lease of Leased
Aircraft will be sufficient to pay in full when due all payments required to be
made on the corresponding Leased Aircraft Certificates.
________________
<PAGE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
________________
The Certificates may be sold to or through underwriters, through dealers or
agents or directly to purchasers. See "Plan of Distribution." The accompanying
Prospectus Supplement sets forth the names of any underwriters, dealers or
agents involved in the sale of the Certificates in respect of which this
Prospectus is being delivered and any applicable fee, commission or discount
arrangements with them. See "Plan of Distribution" for information concerning
secondary trading of the Certificates.
This Prospectus may not be used to consummate sales of Certificates unless
accompanied by a Prospectus Supplement.
________________
The date of this Prospectus is , 1994.
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No dealer, salesperson or other individual has been authorized to give any
information or to make any representations not contained in this Prospectus in
connection with the offering covered by this Prospectus. If given or made, such
information or representations must not be relied upon as having been authorized
by Alaska or the Underwriter. This Prospectus does not constitute an offer to
sell, or a solicitation of an offer to buy, the Certificates in any jurisdiction
where, or to any person to whom, it is unlawful to make such offer or
solicitation. Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create an implication that there has
not been any change in the facts set forth in this Prospectus or in the affairs
of Alaska since the date hereof.
AVAILABLE INFORMATION
Alaska is subject to the reporting requirements of the Securities Exchange
Act of 1934, as amended (the "1934 Act"), and, in accordance therewith, files
reports and other information with the Securities and Exchange Commission (the
"Commission"). Such reports and other information may be inspected and copied
at the public reference facilities maintained by the Commission at Room 1024,
450 Fifth Street, N.W., Washington, D.C. 20549; 75 Park Place, 14th Floor, New
York, New York 10007; and Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of such material may also be
obtained at prescribed rates from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549.
This Prospectus constitutes a part of a registration statement on Form S-3
(together with all amendments and exhibits, the "Registration Statement") filed
by Alaska and Alaska Air Group, Inc. ("Air Group") with the Commission under the
Securities Act of 1933, as amended (the "Securities Act"). This Prospectus does
not contain all of the information included in the Registration Statement,
certain parts of which are omitted in accordance with the rules and regulations
of the Commission. Statements contained herein concerning the provisions of any
document do not purport to be complete and, in each instance, reference is made
to the copy of such document filed as an exhibit to the Registration Statement
or otherwise filed with the Commission. Each such statement is subject to and
qualified in its entirety by such reference. Reference is made to such
Registration Statement and to the exhibits relating thereto for further
information with respect to Alaska and the Certificates offered hereby.
So long as Alaska is subject to such periodic reporting requirements, it
will continue to furnish the information required thereby to the Commission and
will furnish copies of such reports and other information to the holders of
Certificates. Alaska's obligation to file periodic reports with the Commission
will be suspended if each class of Alaska's securities is held of record by
fewer than 300 holders at the beginning of any fiscal year of Alaska other than
a fiscal year in which a registration statement with respect to any such
securities becomes effective. Accordingly, in such case, Alaska may cease to
file reports with the Commission in respect of such fiscal year. In the event
Alaska ceases to file periodic reports with the Commission, Alaska is obligated
pursuant to the Indentures (as hereinafter defined) to distribute to the holders
of Certificates annual reports containing audited consolidated financial
statements and a report thereon by Alaska's independent public accountants and
quarterly reports for the first three quarters of each fiscal year containing
unaudited condensed financial information.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed with the Commission pursuant to the
1934 Act and are incorporated into this Prospectus by reference and made a part
hereof: Alaska's Annual Report on Form 10-K for the fiscal year ended
December 31, 1993.
All documents filed by Alaska pursuant to Section 13(a), 13(c), 14 or 15(d)
of the 1934 Act subsequent to the date of this Prospectus and prior to the
termination of this offering shall be deemed to be incorporated by reference in
this Prospectus, and to be a part hereof from the date of filing of such
documents. Any statement incorporated by reference herein shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement modified or
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superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus. Alaska will provide without charge to
each person to whom a copy of this Prospectus is delivered, upon the written or
oral request of such person, a copy of any document incorporated by reference in
this Prospectus (other than exhibits to such documents unless such exhibits are
specifically incorporated by reference to such documents). Requests for such
copies should be directed to the office of the Corporate Secretary, Alaska
Airlines, Inc., P.O. Box 68947, Seattle, Washington 98168 (telephone (206) 433-
3131).
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THE COMPANY
Alaska is a wholly owned subsidiary of Air Group, a holding company.
Alaska accounted for approximately 80% of Air Group's consolidated 1993
operating revenues and 91% of its total assets at December 31, 1993. Alaska's
all jet fleet provides scheduled air transportation to 37 airports in six states
(Alaska, Washington, Oregon, California, Nevada and Arizona), five cities in
Mexico and three cities in Russia. The principal executive offices of Alaska
and Air Group are located at 19300 Pacific Highway South, Seattle, Washington
98188 (telephone (206) 433-3200).
In 1993 Alaska carried 6.4 million passengers. In each year since 1973,
Alaska has carried more passengers between Alaska and the U.S. mainland than any
other airline. Passenger traffic in the intra-Alaska markets and between Alaska
and the U.S. mainland accounted for 29% of Alaska's total revenue passenger
miles during 1993, while west coast traffic accounted for 59% and the Mexico
markets 12%. Based on passenger enplanements, Alaska's leading airports are
Seattle, Portland, Anchorage and Los Angeles. Based on revenues, the leading
nonstop routes were Seattle-Anchorage, Seattle-Los Angeles and Seattle-
San Francisco. Alaska's operating fleet at December 31, 1993 consisted of 66
jet aircraft.
USE OF PROCEEDS
The proceeds from the sale of the Certificates offered pursuant to any
Prospectus Supplement will be used (a) with respect to any Leased Aircraft
Certificates, by the respective Owner Trustee or Owner Trustees to finance or
refinance the debt portion of and, in certain cases, to refinance some of the
equity portion of the equipment cost of the related Leased Aircraft as described
in the applicable Prospectus Supplement, or (b) with respect to any Owned
Aircraft Certificates, by Alaska to finance all or a portion of the aggregate
principal amount of debt to be issued, or the purchase of all or a portion of
the aggregate principal amount of the debt previously issued, by Alaska in
respect of the equipment cost of the related Owned Aircraft as described in the
applicable Prospectus Supplement.
With respect to each Leased Aircraft, the related Owner Participant will
have provided or will provide from sources other than the Leased Aircraft
Certificates a portion (as specified in the applicable Prospectus Supplement) of
the equipment cost of the related Leased Aircraft. No Owner Participant,
however, will be personally liable for any amount payable under the related
Leased Aircraft Indenture or the Leased Aircraft Certificates issued thereunder.
Simultaneously with the acquisition of each Leased Aircraft, the related Owner
Trustee leased or will lease such Aircraft to Alaska pursuant to a separate
lease agreement (each such lease agreement being herein referred to as a
"Lease").
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RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for
Alaska for the periods indicated. Earnings represents earnings before
accounting change, income tax expense and fixed charges (excluding interest
capitalized). Fixed charges consist of interest and the portion of rental
expense deemed representative of the interest factor.
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------
1993 1992 1991 1990 1989
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio................ (a) (a) 1.14 1.35 2.67
<FN>
- ---------------
(a) For the years ended December 31, 1993 and 1992, Alaska's earnings were
inadequate to cover fixed charges by $44.5 million, and $126.4 million,
respectively.
</TABLE>
DESCRIPTION OF THE CERTIFICATES
The Certificates offered pursuant to this Prospectus will be limited to
$200,000,000 aggregate principal amount (or such greater amount if Certificates
are issued at an original issue discount, as shall result in aggregate proceeds
of $200,000,000).
The Leased Aircraft Certificates will be issued under a separate Supplement
(each, a "Leased Aircraft Indenture Supplement") among Alaska, an Indenture
Trustee and an institution specified in the related Prospectus Supplement
acting, not in its individual capacity, but solely as owner trustee (an "Owner
Trustee") of a separate trust for the benefit of one or more institutional
investors (each, an "Owner Participant") and Alaska to the Trust Indenture and
Security Agreement between the Indenture Trustee and Alaska with respect to
Leased Aircraft (the "Leased Aircraft Indenture"). Information regarding the
Indenture Trustee and Owner Trustee will be set forth in the applicable
Prospectus Supplement.
The Owned Aircraft Certificates will be issued under a separate Supplement
(each, an "Owned Aircraft Indenture Supplement," any Owned Aircraft Indenture
Supplement or Leased Aircraft Indenture Supplement being an "Indenture
Supplement") to the Trust Indenture and Security Agreement between the Indenture
Trustee, as trustee thereunder, and Alaska with respect to Owned Aircraft (the
"Owned Aircraft Indenture," any Owned Aircraft Indenture or Leased Aircraft
Indenture being an "Indenture"). A copy of each Indenture is filed as an
exhibit to the Registration Statement.
The statements made under this caption are summaries and do not purport to
be complete. The summaries relate to each of the Indentures and each of the
Indenture Supplements and the Certificates of each series, except to the extent,
if any, described in the applicable Prospectus Supplement. The summaries
include descriptions of material terms and are qualified in their entirety by
reference to all of the provisions of the Indentures. The Indenture Supplement
relating to each series of Certificates, and, with respect to Leased Aircraft
Certificates, the related Lease, Trust Agreement and Participation Agreement
will be filed as exhibits to a Current Report on Form 8-K, Quarterly Report on
Form 10-Q or Annual Report on Form 10-K to be filed by Alaska with the
Commission following the issuance of such series of Certificates. Where no
distinction is made between the Leased Aircraft Certificates and the Owned
Aircraft Certificates or between their respective Indentures, such summaries
refer to any Certificates and either Indenture.
GENERAL
Reference is made to the Prospectus Supplement that accompanies this
Prospectus for a description of the specific series of Certificates being
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offered thereby, including: (1) the Aircraft in which a security interest is
being granted to secure payment of the Certificates of such series; (2) the
specific designation of such Certificates, including whether such Certificates
are serial or installment Certificates; (3) if the Certificates are serial
Certificates, the dates on which the principal of the Certificates of the series
shall be payable; (4) if the Certificates are installment certificates, the
dates on which each installment payment of principal of the Certificates shall
be payable and the percentage of principal of the Certificates payable on each
such date; (5) the rate or rates at which the Certificates shall bear interest
or the method of calculating such rate or rates, the date or dates from which
interest will accrue or the method by which such dates shall be determined and
the date or dates on which interest will be payable and the record date or dates
therefor; (6) the period or periods within which, the price or prices at which
and the terms and conditions upon which such Certificates may or must be
redeemed, in whole or in part, by Alaska; (7) the events of default, the
remedies exercisable upon the occurrence of such events of default and any
limitations on the exercise of such remedies with respect to such Certificates;
(8) the application, if any, of such means of defeasance as may be specified for
such Certificates; (9) if applicable, provisions related to the issuance of
Certificates in book entry form; and (10) any other special terms pertaining to
such Certificates.
Additionally, with respect to any Prospectus Supplement that relates to the
offering of Leased Aircraft Certificates, such Prospectus Supplement will
include the following: (1) the names of the related Owner Trustees; (2) the
Leases in which an assignment is being granted to secure payment of the
Certificates of such series; (3) the period or periods within which, the price
or prices at which and the terms and conditions upon which such Certificates may
or must be redeemed, in whole or in part, by the Owner Trustee; (4) the extent,
if any, to which the provisions of the operative documents applicable to the
Certificates of the series may be amended by the parties thereto without the
consent of the holders of, or only upon the consent of the holders of a
specified percentage of the aggregate principal amount of, the Certificates of
such series; and (5) any other special terms pertaining to such Certificates.
With respect to each Leased Aircraft, the related Owner Trustee has
acquired or will acquire such Aircraft from Alaska, or the manufacturer of such
Aircraft, as the case may be, has granted or will grant a security interest in
such Aircraft to the Indenture Trustee as security for the payment of the
Certificates of the series related thereto, and has leased or will lease such
Aircraft to Alaska under the related Lease which was or will be assigned to the
Indenture Trustee. Pursuant to each Lease, Alaska will be obligated to make or
cause to be made rental and other payments to the related Indenture Trustee on
behalf of the related Owner Trustee in amounts that will be sufficient to make
payments of the principal, interest and premium, if any, required to be made in
respect of the series of Certificates issued with respect to such Aircraft when
and as due and payable.
The rental obligations of Alaska under each Lease and the obligations of
Alaska under the Owned Aircraft Indenture and the Owned Aircraft Certificates
will be general obligations of Alaska. Except in certain circumstances
involving Alaska's purchase of a Leased Aircraft and the assumption of the
Leased Aircraft Certificates related thereto, the Leased Aircraft Certificates
are not obligations of, or guaranteed by, Alaska.
Payments in respect of Certificates will be made at the principal corporate
trust office of the Indenture Trustee or at such other office of the Indenture
Trustee or another institution maintained for such purpose (the "Paying Agent")
as the Indenture Trustee shall provide for pursuant to the Indenture or the
applicable Indenture Supplement; payment of interest and installments of
principal, if any, on each installment payment date other than at maturity, may,
however, be made at the option of the Indenture Trustee or the Paying Agent by
check mailed to the address of the person entitled thereto, as such address
appears in the Register. (Sections ____ and ____.)
The Certificates will be issued in fully registered form only in
denominations as set forth in the applicable Prospectus Supplement.
Certificates may be surrendered for registration of transfer or exchange for
Certificates of the same series and maturity at the principal corporate trust
office of the Indenture Trustee with respect to such series or the office of the
Registrar. No service charge will be made for any registration of any transfer
or exchange of Certificates, but payment may be required of any tax or other
governmental charges that may be imposed in connection therewith.
(Sections ____ and ____.)
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SECURITY
The Leased Aircraft Certificates will be secured by (i) an assignment by
the related Owner Trustee to the Indenture Trustee of such Owner Trustee's
rights (except for certain rights, including those described below) under the
Lease with respect to such Aircraft, including the right to receive payments of
rent thereunder, (ii) a mortgage granted to the Indenture Trustee on such
Aircraft, subject to the rights of Alaska under such Lease, and (iii) an
assignment to the Indenture Trustee of certain of such Owner Trustee's rights
with respect to such Aircraft under the purchase agreement between Alaska and
the related manufacturer. Under the terms of each Lease, Alaska's obligations
in respect of each Leased Aircraft will be those of a lessee under a "net
lease." Accordingly, Alaska will be obligated, among other things and at its
expense, to cause each Leased Aircraft to be duly registered, to pay all costs
of operating such Aircraft and to maintain, service, repair and overhaul (or
cause to be maintained, serviced, repaired and overhauled) such Aircraft.
The Owned Aircraft Certificates will be secured by a mortgage granted to
the Indenture Trustee of all of Alaska's right, title and interest in and to
such Owned Aircraft and an assignment to the Indenture Trustee of certain of
Alaska's rights with respect to such Aircraft under the purchase agreement
between Alaska and the related manufacturer. Under the terms of the Owned
Aircraft Indenture, Alaska will be obligated, among other things and at its
expense, to cause each Owned Aircraft to be duly registered, to pay all costs of
operating such Aircraft and to maintain, service, repair and overhaul (or cause
to be maintained, serviced, repaired and overhauled) such Aircraft.
Alaska will be required, except under certain circumstances, to keep each
Aircraft registered under the Federal Aviation Act of 1958, as amended (the
"Aviation Act"), and to record the Indenture and the Lease, if any, among other
documents, with respect to each Aircraft under the Aviation Act. Such
recordation of the Indenture, the Lease, if any, and other documents with
respect to each Aircraft will give the related Indenture Trustee a first
priority perfected security interest in the related Aircraft wherever it is
located in the United States or any of its territories and possessions; the
Convention on the International Recognition of Rights in Aircraft (the
"Convention") provides that such security will also be recognized, with certain
limited exceptions, in those jurisdictions that have ratified or adhere to the
Convention. Although Alaska has no current intention to do so, Alaska will have
the right, subject to certain conditions, at its own expense to register each
Aircraft in countries other than the United States. Unless otherwise specified
in the applicable Prospectus Supplement, prior to any such change in the
jurisdiction of registry, the related Indenture Trustee shall have received an
opinion of Alaska's counsel that, among other things, confirms the perfected
status of the lien of the related Indenture and, in the case of Leased Aircraft,
confirms the validity and enforceability of the related Lease in such
jurisdiction, in each case subject, in certain cases, to certain filings,
recordations or other actions. Each Aircraft may also be operated by Alaska or
under lease, sublease or interchange arrangements in countries that are not
parties to the Convention. The extent to which the related Indenture Trustee's
security interest would be recognized in an Aircraft located in a country that
is not a party to the Convention, and the extent to which such security interest
would be recognized in a jurisdiction adhering to the Convention if the Aircraft
is registered in a jurisdiction not a party to the Convention, is uncertain.
Moreover, in the case of an event of default under an Indenture, the ability of
the related Indenture Trustee to realize upon its security interest in an
Aircraft could be adversely affected as a legal or practical matter if such
Aircraft were registered or located outside the United States.
The Certificates are not cross-collateralized and consequently the
Certificates issued in respect of any one Aircraft will not be secured by any
other Aircraft or, in the case of Leased Aircraft Certificates, the Lease
related thereto. With respect to the Leased Aircraft, the assignment by the
related Owner Trustee to the Indenture Trustee of its rights under the related
Lease will exclude, among other things, rights of such Owner Trustee and the
related Owner Participant relating to indemnification by Alaska for certain
matters, insurance proceeds payable to such Owner Trustee in its individual
capacity and to such Owner Participant under liability insurance maintained by
Alaska pursuant to such Lease or by such Owner Trustee or such Owner
Participant, insurance proceeds payable to such Owner Trustee in its individual
capacity or to such Owner Participant under certain casualty insurance
maintained by such Owner Trustee or such Owner Participant pursuant to such
Lease, and any rights of such
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<PAGE>
Owner Participant or such Owner Trustee to enforce payment of the foregoing
amounts and their respective rights to the proceeds of the foregoing.
Unless otherwise specified in the applicable Prospectus Supplement, Alaska
will, at its expense, maintain or cause to be maintained all-risk aircraft hull
insurance covering each Aircraft, fire and extended coverage and, to the extent
available at reasonable cost, all-risk property damage insurance covering
engines and parts while temporarily removed from an Aircraft and not replaced by
similar components, at all times in an amount not less than, with respect to any
Leased Aircraft, the applicable stipulated loss value (which will be an amount
at least equal to the aggregate unpaid principal of, together with all unpaid
interest accrued on, the outstanding Leased Aircraft Certificates related to
such Aircraft) or, with respect to any Owned Aircraft, the aggregate unpaid
principal of, together with all unpaid interest accrued on, the applicable Owned
Aircraft Certificates. Unless otherwise specified in the applicable Prospectus
Supplement, during any period when an Aircraft is on the ground and not in
operation Alaska may carry or cause to be carried, in lieu of the insurance
required by the previous sentence, insurance otherwise conforming with the
provisions of said sentence except that the scope of the risks covered and the
type of insurance shall be the same as are from time to time applicable to
aircraft owned or leased by Alaska of the same type as such Aircraft similarly
on the ground and not in operation, in an amount at least equal to, with respect
to any Leased Aircraft, the applicable stipulated loss value or, with respect to
any Owned Aircraft, the aggregate unpaid principal of, together with the accrued
interest on, the applicable Owned Aircraft Certificates. All policies covering
loss of or damage to an Aircraft shall be made payable to the applicable
Indenture Trustee for any loss in excess of that certain amount specified in the
applicable Prospectus Supplement. Alaska may self-insure a portion of these
risks, but in no case will the self-insurance with respect to all of the
aircraft in Alaska's fleet (including the Aircraft) exceed the lesser of 50% of
the largest replacement value of any single aircraft in Alaska's fleet or 1 1/2%
of the average aggregate insurable value (during the preceding calendar year) of
all aircraft on which Alaska carries insurance. In addition, unless otherwise
specified in the applicable Prospectus Supplement, Alaska will, at its expense,
maintain or cause to be maintained comprehensive airline liability (including,
without limitation, passenger, contractual, bodily injury and property damage
liability) insurance (exclusive of manufacturer's product liability insurance)
and cargo liability insurance with respect to each Aircraft (i) in amounts that
are not less than the greater of the comprehensive airline liability insurance
as is from time to time applicable to aircraft owned and operated by Alaska of
the same type as such Aircraft, and an amount specified in the applicable
Prospectus Supplement, and (ii) of the types and covering the same risks as are
from time to time applicable to aircraft owned or operated by Alaska of the same
type as such Aircraft and which is maintained in effect with insurers of
recognized responsibility, provided that Alaska need not maintain cargo
liability insurance, or may maintain such insurance in an amount less than that
specified above for the respective Aircraft as long as the amount of cargo
liability insurance, if any, maintained with respect to such Aircraft is the
same as the cargo liability insurance, if any, maintained for other aircraft of
the same model as such Aircraft owned or operated by Alaska. Unless otherwise
specified in the applicable Prospectus Supplement, during any period when an
Aircraft is on the ground and not in operation Alaska may carry or cause to be
carried, in lieu of the insurance required by the previous sentence, insurance
otherwise conforming with the provisions of said sentence except that the
amounts of coverage shall not be required to exceed the amounts of comprehensive
airline liability insurance, and the scope of risks covered and type of
insurance shall be the same, as are from time to time in effect with respect to
aircraft owned or leased by Alaska of the same type as such Aircraft similarly
on the ground and not in operation. Alaska may also self-insure a portion of
these risks subject to the same limitations described above for insurance for
risks of loss of or damage to the Aircraft. The applicable Indenture Trustee,
any applicable Owner Participant and any applicable Owner Trustee, in its
individual capacity and as owner of the Aircraft, and Alaska will each be named
as insured parties under all liability insurance policies required with respect
to the related Aircraft. In addition, the insurance policies maintained under
the Lease (with respect to any Leased Aircraft) or the Indenture (with respect
to any Owned Aircraft), as the case may be, will provide that, in respect of the
respective interests of the applicable Indenture Trustee, any applicable Owner
Participant, and any Owner Trustee, relating to such Aircraft, the insurance
shall not be invalidated by any action or inaction of Alaska and shall insure
the respective interests of such Indenture Trustee, Owner Participant or Owner
Trustee, as they appear, regardless of any breach or violation of any warranty,
declaration or condition contained in such policies by Alaska.
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Funds, if any, held from time to time by the Indenture Trustee, prior to
the distribution thereof, will be invested and reinvested by the Indenture
Trustee. Such investment and reinvestment will be at the direction of Alaska
(except, with respect to a Leased Aircraft, in the case of an event of default
under the applicable Lease or, with respect to an Owned Aircraft, in the case of
an event of default under the Owned Aircraft Indenture) in certain investments
described in the related Indenture. The net amount of any loss resulting from
such investments will be paid by Alaska. (Section ____.)
Section 1110 of title 11 of the United States Code (the "Bankruptcy Code")
provides that the right of lessors, conditional vendors and holders of purchase
money security interests with respect to aircraft, air carriers operating under
certificates issued under Section 401 or 418 of the Aviation Act, to take
possession of such aircraft in compliance with the provisions of the lease,
conditional sale contract or purchase money equipment security agreement, as
the case may be, is not affected by (i) the automatic stay provision of the
Bankruptcy Code, which provision enjoins repossessions by creditors for the
duration of the reorganization period, (ii) the provision of the Bankruptcy
Code allowing the debtor in possession and/or the bankruptcy trustee to use
property of the bankruptcy estate during the bankruptcy case and (iii) any
power of the bankruptcy court to enjoin a repossession. Section 1110 provides,
however, that the right of a lessor, conditional vendor or holder of a purchase
money equipment security interest to take possession of an aircraft in the
event of any event of default may not be exercised for 60 days following the
date of commencement of the reorganization proceedings (unless specifically
permitted by the bankruptcy court) and may not be exercised at all if, within
such 60-day period, the debtor in possession and/or the bankruptcy trustee
agrees to perform the debtor's obligations that become due on or after such
date and cures all existing defaults (other than defaults resulting solely from
the financial condition, bankruptcy, insolvency or reorganization of the
debtor).
In connection with any issuance of Certificates under this Prospectus and
the applicable Prospectus Supplement, Alaska shall have received an opinion from
its General Counsel to the effect that (i) with respect to any Leased Aircraft,
the related Owner Trustee, as lessor under the related Lease, and the related
Indenture Trustee, as assignee of such Owner Trustee's rights under such Lease
pursuant to the related Indenture, should be entitled to the benefits of
Section 1110 of the Bankruptcy Code with respect to the Aircraft initially
delivered under such Lease and subjected to the related Indenture or (ii) with
respect to any Owned Aircraft, the related Indenture Trustee under the related
Indenture should be entitled to the benefits of Section 1110 of the Bankruptcy
Code with respect to the Aircraft initially subjected to the related Indenture.
Such opinions will not address the possible replacement of an Aircraft after an
Event of Loss in the future.
PAYMENTS AND LIMITATION OF LIABILITY
Each Leased Aircraft will be leased separately by the related Owner Trustee
to Alaska for a term commencing on the delivery date thereof to such Owner
Trustee and expiring on a date not earlier than the latest maturity date of the
Leased Aircraft Certificates, unless previously terminated as permitted by the
terms of the related Lease. The basic rent and other payments under each such
Lease will be payable by Alaska in accordance with the terms specified in the
applicable Prospectus Supplement, and will be assigned by the related Owner
Trustee under the related Indenture to provide the funds necessary to pay
principal of, premium, if any, interest due from such Owner Trustee or the
Leased Aircraft Certificates issued under such Indenture. In certain cases, the
basic rent payments under a Lease may be adjusted, but each Lease will provide
that under no circumstances will rent payments by Alaska be less than the
scheduled payments on the related Leased Aircraft Certificates. The balance of
any basic rent payment under each Lease, after payment of amounts due on the
Leased Aircraft Certificates issued under the Indenture corresponding to such
Lease, will be paid over to the applicable Owner Participant. Alaska's
obligation to pay rent and to cause other payments to be made under each Lease
will be general obligations of Alaska.
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With respect to the Leased Aircraft Certificates, except in certain
circumstances involving Alaska's purchase of a Leased Aircraft and the
assumption of the Leased Aircraft Certificates related thereto, the Leased
Aircraft Certificates will not be obligations of, or guaranteed by, Alaska.
With respect to the Leased Aircraft Certificates, none of the Owner Trustees,
the Owner Participants or the Indenture Trustee shall be personally liable to
any holder of such Certificate for any amounts payable under such Certificates
or, except as provided in the Indentures relating thereto in the case of the
Owner Trustees and the Indenture Trustees, for any liability under such
Indentures. Except in the circumstances referred to above, all amounts payable
under the Leased Aircraft Certificates (other than payments made in connection
with an optional redemption or purchase by the related Owner Trustee or the
related Owner Participant) will be payable only from the assets subject to the
lien of the Leased Aircraft Indenture or the income and proceeds received by the
Indenture Trustee therefrom (including rent payable by Alaska under the related
Lease). (Section 2.10 of the Leased Aircraft Indenture.)
With respect to the Leased Aircraft Certificates, except as otherwise
provided in the Leased Aircraft Indenture, no Owner Trustee shall be personally
liable for any amount payable or for any statements, representations,
warranties, agreements or obligations made under such Indenture or under such
Leased Aircraft Certificates except for its own willful misconduct or gross
negligence. None of the Owner Participants shall have any duty or
responsibility under the Leased Aircraft Indenture or under such Leased Aircraft
Certificates to the Indenture Trustee or to any holder of any such Certificate.
(Leased Aircraft Indenture, Section ____)
Alaska's obligations under the Owned Aircraft Indenture and under the Owned
Aircraft Certificates will be general obligations of Alaska.
MERGER, CONSOLIDATION AND TRANSFER OF ASSETS
Alaska will be prohibited from consolidating with or merging into any other
corporation or transferring substantially all of its assets as an entirety to
any other corporation unless (i) the surviving successor or transferee
corporation shall (a) be a "citizen of the United States" as defined in the
Aviation Act, (b) be a United States certificated air carrier and (c) expressly
assume all of the obligations of Alaska contained in the Indentures, and, with
respect to the Leased Aircraft Certificates, the Participation Agreements and
the Leases, and any other operative documents; (ii) immediately after giving
effect to such transaction, no Indenture event of default (with respect to the
Owned Aircraft Certificates) or Lease event of default (with respect to the
Leased Aircraft Certificates) shall have occurred and be continuing; and
(iii) Alaska shall have delivered a certificate and an opinion or opinions of
counsel indicating that such transaction, in effect, complies with such
conditions. (Section ____.)
The Indentures do not contain any covenants or provisions which may afford
holders of Certificates issued thereunder protection in the event of a highly
leveraged transaction, including transactions effected by management or
affiliates, which may or may not result in a change in control of Alaska. No
other instrument or agreement currently evidencing other indebtedness of Alaska
contains covenants or provisions affording holders of Debt protection in the
event of a change in control of Alaska.
EVENTS OF DEFAULT, NOTICE AND WAIVER
The applicable Prospectus Supplement will set forth the events of default
applicable to a Leased Aircraft or an Owned Aircraft. There are no cross-
default provisions in the Indentures. Therefore, events resulting in a default
with respect to one series of Certificates will not in itself result in the
occurrence of an event of default with respect to any other series of
Certificates.
Each Indenture provides that the Indenture Trustee thereunder shall, after
the occurrence of any event known to it to be an event of default with respect
to such series of Certificates, promptly send written notice thereof to Alaska
and, with respect to Leased Aircraft, the related Owner Trustee and the related
Owner Participant, and within 90 days after the occurrence thereof if such
default remains uncured, and notice thereof to the holders of outstanding
Certificates of such series, but such Indenture Trustee may withhold such
notice, except in the case of a
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default in the payment of the principal of, premium, if any, or interest on any
Certificates of such series, if it in good faith determines that withholding
such notice is in the interest of such holders. (Section ____.)
The holders of at least a majority in principal amount of outstanding
Certificates of the series to which an event of default relates, by notice to
the applicable Indenture Trustee, may on behalf of all of such holders waive any
existing event of default or default and its consequences except an event of
default or a default in the payment of the principal of, premium, if any, or
interest on any such Certificates or a default in respect of certain other
matters. (Section ____.)
REMEDIES
If an event of default with respect to a series of Certificates shall occur
and be continuing, the Indenture Trustee thereunder or the holders of not less
than 25% in unpaid principal amount of outstanding Certificates of such series
may declare the principal of all Certificates of such series immediately due and
payable. The holders of a majority in unpaid principal amount of all
outstanding Certificates of such series may annul any such declaration by such
Indenture Trustee or by the holders at any time prior to the sale of the related
Aircraft after such an event of default if (i) there has been deposited with
such Indenture Trustee an amount sufficient to pay all installments of principal
of, and premium, if any, on any such Certificates that have become due otherwise
than by such declaration of acceleration, and any interest thereon and interest
due or past due, if any, and certain expenses, (ii) such annulment will not
conflict with any judgment or decree and (iii) all other events of default and
defaults have been cured or waived. (Section ____.)
Each Indenture provides that, if an event of default under such Indenture
has occurred and is continuing, the Indenture Trustee thereunder may exercise
certain rights or remedies available to it under applicable law, including, with
respect to Leased Aircraft (if an event of default under the related Lease has
occurred and is continuing) one or more of the remedies with respect to the
related Aircraft afforded to the applicable Owner Trustee by the related Lease
for events of default thereunder. The applicable Prospectus Supplement will
describe any limitation on the exercise of remedies by the Indenture Trustee.
(Section ____.)
The holders of a majority in principal amount of outstanding Certificates
of each series may direct the time, method and place of conducting any
proceeding for any remedy available to the related Indenture Trustee with
respect to such series or of exercising any trust or power conferred on such
Indenture Trustee, but in such event such Indenture Trustee shall be entitled to
be indemnified by the holders of Certificates of such series before proceeding
so to act and such Indenture Trustee may not be held liable for any such action
taken in good faith. (Sections ____ and ____.)
The right of any holder of Certificates of any series to institute an
action for any remedy with respect to such Certificates (except the right to
enforce payment of the principal of, premium, if any, and interest on its
Certificates when due) is subject to certain conditions precedent, including a
request to the related Indenture Trustee by the holders of not less than 25% in
principal amount of outstanding Certificates of the applicable series to take
action, and an offer to such Indenture Trustee of satisfactory indemnification
against liabilities incurred by it in so doing. (Sections ____ and ____.)
If an event of default with respect to any series of Certificates occurs
and is continuing, any sums held or received by the Indenture Trustee thereunder
may be applied to reimburse such Indenture Trustee for any tax, expense or other
loss incurred by it and to pay any other amounts due such Indenture Trustee
prior to any payments to holders of such series. (Section ____.)
With respect to a Leased Aircraft, in the event of insolvency proceedings
involving an Owner Participant, the related Aircraft and the related Lease could
become part of such insolvency proceedings. In such event, payments under such
Lease or on the related Certificates might be interrupted and the ability of the
Indenture Trustee to exercise its remedies under the applicable Indenture might
be restricted, although the Indenture
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Trustee would retain its status as a secured creditor in respect of the Lease
and the Aircraft.
MODIFICATION OF AGREEMENTS
Without the consent of holders of a majority in principal amount of
outstanding Certificates of a series, the provisions of the Indentures may be
amended or modified (a) to cure any ambiguity, defect or inconsistency or to
make any change consistent with the provisions of the Indenture and related
supplement, PROVIDED that such change does not adversely affect the interests of
any holder of such series of Certificates in any material respect, (b) to
provide for a successor Indenture Trustee and, with respect to Leased Aircraft
Certificates, a successor Owner Trustee, (c) to establish the forms or terms of
Certificates of any series as permitted by the Indenture, (d) to facilitate the
defeasance and discharge or a series of Certificates, PROVIDED that such change
does not adversely affect the interests of the holders of such series of
Certificates or any other series of Certificates in any material respect, (e) to
convey, transfer, assign, mortgage or pledge any property to or with the
Indenture Trustee or to make any other provisions with respect to matters or
questions arising hereunder so long as such action shall not adversely affect
the interests of the holders of such series of Certificates, (f) to correct or
amplify the description of any property at any time subject to the lien of the
Indenture or better to assure, convey and confirm until the Indenture Trustee
any property subject to the lien of the Indenture, (g) to add to the covenants
of Alaska and, with respect to Leased Aircraft Certificates, the Owner Trustee,
or to surrender any rights or powers conferred upon, with respect to Owned
Aircraft Certificates, Alaska and, with respect to Leased Aircraft Certificates,
the related Owner Trustee or Owner Participant, (h) to comply with any
requirements of the Commission, (i) to add to the rights of the holders of such
series of Certificates, (j) with respect to Leased Aircraft Certificates, to
provide for the assumption by Alaska of the obligations of the related Owner
Trustee and (k) to include on the Certificates of any series any legend required
by law. (Section ____.)
The Indenture also contain provisions permitted Alaska, the Indenture
Trustee and, with respect to Leased Aircraft Certificates, the related Owner
Trustee, with the consent of the holders of the Certificates of any series
aggregating not less than a majority interest of such series of Certificates, to
execute supplemental indentures adding any provisions to or changing or
eliminating any of the provisions of the Indentures, to the extent relating to
such series of Certificates, or modifying the rights of the Certificate holders
of such series, except that no such supplemental indenture may, without the
consent of the holder of each outstanding Certificate of a series affected
thereby, (a) reduce the principal amount, premium, if any, or any payment of
interest due on any Certificate of such series, (b) change the date on which any
principal, premium, if any, or interest is due or payable on any Certificate of
such series, (c) create any security interest with respect to the property
subject to the lien of the Indenture ranking prior to or on a parity with the
security interest created by the Indenture or deprive any holder of a
Certificate of such series of the lien of the Indenture upon the property
subject thereto, (d) reduce the percentage in principal amount of outstanding
Certificates of such series necessary to modify or amend any provision of such
Indenture or to waive compliance therewith or (e) modify any of the provisions
relating to the rights of holders in respect of the waiver of events or default
or receipt of payment. (Section ____.)
With respect to Leased Aircraft Certificates, certain provisions of the
Leases, the Participation Agreements and the Trust Agreements related thereto
may not be modified by the parties thereto without the consent of the holders of
all or a portion of the outstanding Certificates of the series related thereto
as is specified in the applicable Prospectus Supplement. (Section ____ of the
Leased Aircraft Indenture.)
DEFEASANCE OF THE INDENTURES AND THE CERTIFICATES IN CERTAIN CIRCUMSTANCES
Unless otherwise specified in the applicable Prospectus Supplement, the
applicable Indenture provides that the obligation of the Indenture Trustee and,
with respect to any series of Leased Aircraft Certificates, the Owner Trustee,
and, with respect to any series of Owned Aircraft Certificates, Alaska under the
applicable Indenture and Indenture Supplement with respect to such series shall
be deemed to have been discharged and paid in full (except for certain
obligations, including the obligation to register the transfer or exchange of
Certificates, to replace stolen,
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<PAGE>
lost, destroyed or mutilated Certificates and to maintain paying agencies and
hold money for payment in trust) on the 91st day after the date of irrevocable
deposit with the related Indenture Trustee of money or certain United
States government obligations which, through the payment of principal and
interest in respect thereof in accordance with their terms, will provide money
in an aggregate amount sufficient to pay when due (including as a consequence of
redemption in respect of which notice is given on or prior to the date of such
deposit) principal of, premium, if any, and interest on all Certificates of such
series issued thereunder in accordance with the terms of such Indenture and the
applicable Indenture Supplement. Such discharge may occur only if, among other
things, Alaska has delivered to the Indenture Trustee an Opinion of Counsel to
the effect that holders of such Certificates will not recognize income, gain or
loss for federal income tax purposes as a result of such deposit, defeasance and
discharge and will be subject to federal income tax on the same amount and in
the same manner and at the same time as would have been the case if such
deposit, defeasance and discharge had not yet occurred. (Sections ____ and
____.)
Upon such defeasance, or upon payment in full of the principal of, premium,
if any, and interest on all Certificates in a series on the maturity date of
such Certificates or deposit with the applicable Indenture Trustee of money
sufficient therefor no earlier than one year prior to the date of such maturity,
the holders of such Certificates will have no beneficial interest in or other
rights with respect to the related Aircraft or other assets subject to the line
of the Indenture and the related Indenture Supplement and such lien shall
terminate. (Section ____.)
ASSUMPTION OF OBLIGATIONS BY ALASKA
Unless otherwise specified by the applicable Prospectus Supplement, with
respect to Leased Aircraft, upon the exercise by Alaska of any purchase options
it may have under the related Lease prior to the end of the term of such Lease,
Alaska may assume on a full recourse basis all of the obligations of the Owner
Trustee (other than its obligations in its individual capacity) under the
indenture with respect to such Aircraft, including the obligations to make
payments in respect of the related Leased Aircraft Certificates. In such event,
certain relevant provisions of the related Lease, including (among others)
provisions relating to maintenance, possession and use of the related Aircraft,
liens, insurance and events of default will be incorporated into such Indenture,
and the Leased Aircraft Certificates issued under such Indenture Supplement will
not be redeemed and will continue to be secured by such Aircraft. It is a
condition to such assumption that, if such Aircraft is registered under the laws
of the United States, an opinion of counsel be delivered at the time of such
assumption substantially to the effect that the Indenture Trustee should,
immediately following such assumption, be entitled to the benefits of
Section 1110 of the Bankruptcy Code with respect to such Aircraft (including the
engines related thereto), but such opinion need not be delivered to the extent
that the benefits of such Section 1110 are not available to the Indenture
Trustee with respect to such Aircraft or any engine related thereto immediately
prior to such assumption. (Section ____ of the Leased Aircraft Indenture.)
THE INDENTURE TRUSTEE
The Indenture Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights or
powers. The Indenture Trustee shall be under no obligation to exercise any of
its rights or powers under such Indenture unless it receives indemnity
satisfactory to it for any loss, liability or expense. The Indentures provide
that the Indenture Trustee in its individual or any other capacity may acquire
and hold Certificates issued thereunder and, subject to certain conditions, may
otherwise deal with Alaska and, with respect to Leased Aircraft, with any Owner
Trustee with the same rights it would have if it were not the Indenture Trustee.
(Sections ____ and ____.)
The Indenture Trustee may resign with respect to the Certificates of any
series at any time, in which event Alaska or, with respect to any Leased
Aircraft Certificates, the related Owner Trustee, will be obligated to appoint a
successor indenture trustee. The holders of a majority in principal amount of
the outstanding Certificates of any series may remove the related Indenture
Trustee by giving at least 30 days' prior written notice to such Indenture
Trustee and Alaska and, with respect to any Leased Aircraft Certificates, the
related Owner Trustee, and may appoint a successor Indenture Trustee with the
consent of Alaska and, with respect to any Leased Aircraft
-14-
<PAGE>
Certificates, the related Owner Trustee. If an Indenture Trustee ceases to be
eligible to continue as Indenture Trustee with respect to a series of
Certificates or becomes incapable of acting as Indenture Trustee or becomes
insolvent, Alaska or, with respect to any Leased Aircraft Certificates, the
related Owner Trustee, may remove such Indenture Trustee. Any resignation or
removal of such Indenture Trustee and appointment of a successor indenture
trustee for a series of Certificates does not become effective until acceptance
of the appointment by the successor indenture trustee. (Section ____.)
Pursuant to such resignation and successor indenture trustee provisions, it is
possible that a different indenture trustee could be appointed to act as the
successor indenture trustee with respect to each series of Certificates. All
references in this Prospectus to the Indenture Trustee should be read to take
into account the possibility that each series of Certificates could have
different successor indenture trustees in the event of such a resignation or
removal.
The Indentures provide that Alaska or, with respect to any Leased Aircraft
Certificates, the related Owner Trustee will pay the Indenture Trustee's fees
and expenses. (Section ____.)
FEDERAL INCOME TAX CONSIDERATIONS
The following is a general discussion of the anticipated material United
States federal income tax consequences to the initial holders of the
certificates of the purchase, ownership and disposition of the Certificates
and should be read in conjunction with any additional discussion of federal
income tax consequences included in the applicable Prospectus Supplement.
The discussion is based on laws, regulations, rulings and decisions, all as
in effect on the date of this Prospectus and all of which are subject to
change or different interpretations. The discussion below does not purport
to address all of the federal income tax consequences that may be applicable
to particular categories of investors, some of which (for example, insurance
companies and foreign investors) may be subject to special rules. The
statements of law and legal conclusions set forth herein are based upon the
opinion of Perkins Coie, counsel to Alaska. Investors should consult their
own tax advisors in determining the federal, state, local, foreign and any
other tax consequences to them of the purchase, ownership and disposition of
the Certificates.
PAYMENT OF INTEREST
Subject to the discussion below under "Original Issue Discount," interest
on a Certificate will generally be includible in income by a holder as ordinary
income at the time it is accrued or received in accordance with the holder's
method of accounting.
-15-
<PAGE>
SALES OF CERTIFICATES
A holder that sells a Certificate should recognize gain or loss equal to
the difference between its adjusted tax basis in the Certificate and the amount
realized on the sale (except to the extent attributable to accrued and unpaid
interest, which should be taxable as ordinary income). Any such gain or loss
will be capital gain or loss if the Certificate was held as a capital asset and
will be long-term capital gain or loss if the Certificate was held for more
than one year. Net capital gain (the excess of net long-term capital gain over
net short-term capital loss) of individuals is, under certain circumstances,
taxed at lower rates than items of ordinary income.
ORIGINAL ISSUE DISCOUNT
Certificates may be issued with original issue discount ("OID"),
which may require the holders to include such OID in gross income in
advance of receipt or accrual of the stated interest on such Certificates.
The Prospectus Supplement will state whether the Certificates are issued with
OID. Generally, a holder of a debt instrument issued with OID that is not de
minimis (i.e., is not less than one-quarter of 1% of the redemption price at
maturity multiplied by the number of complete years to maturity) must include
such OID in income for federal income tax purposes as it accrues, in advance
of the receipt of the cash attributable to such income, under a method that
takes into account the compounding of interest.
BACKUP WITHHOLDING
Payments made on the Certificates, and proceeds from the sale of the
Certificates to or through certain brokers, may be subject to a "backup"
withholding tax of 31% unless the holder complies with certain reporting
procedures or is exempt from such requirements under section 3406 of
the Code. Any such withheld amounts are allowed as a credit against the
holder's federal income tax.
INFORMATION REPORTING
Information reports will be made by the Indenture Trustee to the Internal
Revenue Service, and to holders of record that are not exempt from the reporting
requirements, annually or as otherwise required with respect to interest paid
(or OID accrued, if any) on the Certificates.
ERISA CONSIDERATIONS
Unless otherwise indicated in the applicable Prospectus Supplement, the
Certificates may, subject to certain legal restrictions, be purchased and held
by an employee benefit plan (a "Plan") subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or an individual
retirement account or an employee benefit plan subject to section 4975 of the
Code. A fiduciary of a Plan must determine that the purchase and holding of a
Certificate is consistent with its fiduciary duties under ERISA and does not
result in a non-exempt prohibited transaction as defined in section 406 of ERISA
or section 4975 of the Code. Employee benefit plans which are governmental
plans (as defined in section 3(32) of ERISA) and certain church plans (as
defined in section 3(33) of ERISA) are not subject to Title I of ERISA or
section 4975 of the Code. The Certificates may, subject to certain legal
restrictions, be purchased and held by such plans.
PLAN OF DISTRIBUTION
The Certificates being offered hereby may be sold in any one or more of the
following ways from time to time: (i) through agents; (ii) to or through
underwriters; (iii) through dealers; and (iv) directly to other purchasers.
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<PAGE>
The distribution of the Certificates may be effected from time to time in
one or more transactions at a fixed price or prices, which may be changed, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
Offers to purchase the Certificates may be solicited by agents designated
by Alaska from time to time. Any such agent involved in the offer or sale of
the Certificates in respect of which this Prospectus is delivered will be named,
and any commissions payable by Alaska to such agent will be set forth in the
applicable Prospectus Supplement. Unless otherwise indicated in such Prospectus
Supplement, any such agent will be acting on a best efforts basis for the period
of its appointment. Any such agent may be deemed to be an underwriter, as that
term is defined in the Securities Act, of the Certificates so offered and sold.
If the Certificates are sold by means of an underwritten offering, Alaska
will execute an underwriting agreement with an underwriter or underwriters at
the time an agreement for such sale is reached, and the names of the specific
managing underwriter or underwriters, as well as any other underwriters, and the
terms of the transaction, including commissions, discounts and any other
compensation of the underwriters and dealers, if any, will be set forth in the
Prospectus Settlement which will be used by the underwriters to make offers and
sales of the Certificates in respect of which this Prospectus is delivered to
the public. If underwriters are utilized in the sale of the Certificates in
respect of which this Prospectus is delivered, the Certificates will be acquired
by the underwriters for their own account and may be resold from time to time in
one or more transactions, including negotiated transactions, at fixed public
offering prices or at varying prices determined by the underwriters at the time
of sale. The Certificates may be offered to the public either through
underwriting syndicates represented by managing underwrites or directly by the
managing underwriters. If any underwriter or underwriters are utilized in the
sale of the Certificates, unless otherwise indicated in the Prospectus
Supplement, the underwriting agreement will provide that the obligations of the
underwriters are subject to certain conditions precedent and that the
underwriters with respect to a sale of Certificates will be obligated to
purchase all such Certificates if any are purchased. Alaska does not intend to
apply for listing of the Certificates on a national securities exchange. If the
Certificates are sold by means of an underwritten offering, the underwriters may
make a market in the Certificates as permitted by applicable laws and
regulations. No underwriter would be obligated, however, to make a market in
the Certificates and any such market making could be discontinued at any time at
the sole discretion of such underwriter. Accordingly, no assurance can be given
as to the liquidity of, or trading markets for, the Certificates.
If a dealer is utilized in the sale of the Certificates in respect of which
this Prospectus is delivered, such Certificates will be sold to the dealer as
principal. The dealer may then resell such Certificates to the public at
varying prices to be determined by such dealer at the time of resale. Any such
dealer may be deemed to be an underwriter, as such term is defined in the
Securities Act, of the Certificates so offered and sold. The name of the dealer
and the terms of the transactions will be set forth in the Prospectus Supplement
relating thereto.
Offers to purchase the Certificates may be solicited directly and the sale
thereof may be made directly to institutional investors or others, who may be
deemed to be underwriters within the meaning of the Securities Act with respect
to any resale thereof. The terms of any such sales will be described in the
Prospectus Supplement relating thereto.
Agents, underwriters and dealers may be entitled under relevant agreements
to indemnification or contribution by Alaska against certain liabilities,
including liabilities under the Securities Act.
Agents, underwriters and dealers may engage in transactions with, or
perform services for, Air Group, Alaska and Air Group's other subsidiaries in
the ordinary course of business.
LEGAL OPINIONS
Unless otherwise indicated in the applicable Prospectus Supplement, the
validity of the Certificates offered hereby will be passed upon for Alaska by
Perkins Coie, Seattle, Washington. Unless otherwise indicated in the
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<PAGE>
applicable Prospectus Supplement, Perkins Coie will rely on the opinion of
counsel for the Owner Trustee for each series of Certificates as to certain
matters relating to the authorization, execution and delivery of such series of
Certificates by, and the valid and binding effect thereof on, such Owner
Trustee.
EXPERTS
The financial statements and schedules of Alaska incorporated by reference
in this Prospectus and in the Registration Statement have been audited by
Arthur Andersen & Co., independent public accountants, as indicated in their
reports with respect thereto, and are incorporated herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
reports.
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses in connection with the issuance and distribution of
the securities being registered, other than underwriting discounts and
commissions, are set forth in the following table.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee..... $ 68,966
Blue Sky fees and expenses.............................. *
Printing and engraving expenses......................... *
Legal fees and expenses................................. *
Rating agency fees...................................... *
Accounting fees and expenses............................ *
Owner Trustee fees and expenses......................... *
Indenture Trustee fees and expenses..................... *
Miscellaneous........................................... *
---------
Total............................................... $ *
---------
---------
<FN>
___________________
*Information to be added by amendment.
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of Delaware and Section
10.06.490 of the Alaska Corporations Code each provide that a corporation may
indemnify directors and officers as well as other employees and individuals
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by the person in connection with
specified actions or proceedings, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation--a
"derivative action"), if they acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe their conduct was unlawful. A similar standard is
applicable in the case of derivative actions, except that indemnification only
extends to expenses (including attorneys' fees) actually and reasonably incurred
by the person in connection with the defense or settlement of such action, and
the statutes require court approval before there can be any indemnification
where the person seeking indemnification has been found liable for negligence or
misconduct in the performance of the person's duty to the corporation. The
statutes provide that they are not exclusive of other indemnification that may
be granted by a corporation's bylaws, agreement, vote of shareholders or
disinterested directors or otherwise.
Article VIII of Air Group's By-Laws and Article VI of Alaska's Bylaws
require indemnification to the full extent permitted by the Delaware Corporation
Law and the Alaska Corporations Code, respectively. Subject to any restrictions
imposed by Delaware or Alaska law, respectively, the Bylaws of Air Group and
Alaska provide a right to indemnification for all expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by any person in connection with any actual or threatened action, suit
or proceeding by reason of the fact that such person is or was a director or
officer of Air Group or Alaska or is or was serving at the request of Air Group
or Alaska as a director or officer of another corporation. The Bylaws of Air
Group and Alaska also provide that each of them may, by action of its Board of
Directors, approve indemnification of any other person whom they have the power
to indemnify under the Delaware Corporation Law and the Alaska Corporations
Code, respectively.
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<PAGE>
Officers and directors of Air Group and Alaska are covered by insurance
(with certain exceptions and within certain limitations) which indemnifies them
against losses and liabilities arising from certain alleged "wrongful acts,"
including alleged errors or misstatements, or certain other alleged wrongful
acts or omissions constituting neglect or breach of duty.
The Underwriting Agreements, filed as Exhibits 1(a), 1(b) and 1(c) hereto,
contain provisions whereby the Underwriters agree to indemnify the registrant,
its directors and certain officers and certain other persons, and are
incorporated herein by reference.
ITEM 16. EXHIBITS
(a) The following Exhibits are filed as part of this Registration
Statement:
<TABLE>
<S> <C>
Exhibit 1(a) Form of Underwriting Agreement for Convertible Debt
Securities of Air Group*
Exhibit 1(b) Form of Underwriting Agreement for Debt Securities of Alaska
Exhibit 1(c) Form of Underwriting Agreement for Equipment Trust
Certificates of Alaska*
Exhibit 4(a)(1) Form of Convertible Senior Debt Securities Indenture for Air
Group*
Exhibit 4(a)(2) Form of Convertible Senior Debt Securities of Air Group
(included in Exhibit 4(a)(1))*
Exhibit 4(a)(3) Form of Convertible Subordinated Debt Securities Indenture
for Air Group*
Exhibit 4(a)(4) Form of Convertible Subordinated Debt Securities of Air
Group (included in Exhibit 4(a)(3))*
Exhibit 4(b)(1) Form of Debt Securities Indenture for Alaska
Exhibit 4(b)(2) Form of Debt Securities of Alaska (included in
Exhibit 4(b)(1))
Exhibit 4(c)(1) Forms of Trust Indenture and Security Agreement among the
Owner Trustee, the Indenture Trustee and Alaska relating to
Equipment Trust Certificates of Alaska*
Exhibit 4(c)(2) Form of Equipment Trust Certificate of Alaska (included in
Exhibit 4(c)(1))*
Exhibit 4(d) Certificate of Incorporation of Alaska Air Group, Inc., as
amended to date
Exhibit 4(e) Bylaws of Alaska Air Group, Inc., as amended to date
(incorporated by reference to Exhibit 3.(ii) to Form 10-K
of Alaska Air Group, Inc. for the year ended
December 31, 1993)
Exhibit 4(f) Rights Agreement dated as of December 2, 1986 between Alaska
Air Group, Inc. and The First National Bank of Boston, as
Rights Agent (incorporated by reference to Exhibit No. 1 to
Form 8-A of Alaska Air Group, Inc. filed December 12, 1986)
Exhibit 5(a) Opinion of Perkins Coie, counsel for Alaska*
Exhibit 5(b) Form of Opinion of counsel for Owner Trustee**
Exhibit 5(c) Opinion of Steven G. Hamilton, General Counsel for Alaska*
Exhibit 8 Tax Opinion of Perkins Coie**
Exhibit 12(a) Computation of Ratio of Earnings to Fixed Charges of Air
Group
Exhibit 12(b) Computation of Ratio of Earnings to Fixed Charges of Alaska
Exhibit 23(a) Consent of Perkins Coie (included in Exhibit 5(a))*
</TABLE>
II-2
<PAGE>
<TABLE>
<S> <C>
Exhibit 23(b) Consent of counsel for Owner Trustee (included in Exhibit
5(b))**
Exhibit 23(c) Consent of Steven G. Hamilton (included in Exhibit 5(c))*
Exhibit 23(d) Consent of Perkins Coie (included in Exhibit 8)**
Exhibit 23(e) Consent of Arthur Andersen & Co.
Exhibit 25 Power of Attorney (included on signature pages to the
Registration Statement)
Exhibit 26(a) Form T-1 Statement of Eligibility of Trustee under
Convertible Debt Securities Indenture of Air Group**
Exhibit 26(b) Form T-1 Statement of Eligibility of Trustee under Debt
Securities Indenture of Alaska**
Exhibit 26(c) Form T-1 Statement of Eligibility of Trustee under Trust
Indenture and Security Agreement relating to Equipment
Trust Certificates of Alaska**
<FN>
_______________
* To be filed by amendment.
** To be filed on Form 8-K pursuant to Item 601(b)(1) of Regulation S-K.
</TABLE>
ITEM 17. UNDERTAKINGS
A. The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(a) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "1933 Act");
(b) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the registration statement;
(c) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
provided, however, that paragraphs A(1)(a) and A(1)(b) do not apply if the
information required to be included in such post-effective amendment is
contained in a periodic report filed by the registrant pursuant to section 13 or
section 15(d) of the Securities Exchange Act of 1934, as amended (the "1934
Act"), and incorporated by reference in this registration statement.
(2) That, for the purpose of determining any liability under the 1933
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
B. The undersigned hereby undertake that, for purposes of determining any
liability under the 1933 Act, each filing of the registrant's annual report
pursuant to section 13(a) or section 15(d) of the 1934 Act (and, where
applicable, each filing of an employee benefits plan's annual report pursuant to
Section 15(d) of the 1934 Act) that is incorporated by reference in the
registration statement shall be deemed to be a new
II-3
<PAGE>
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
C. Insofar as indemnification for liabilities arising under the 1933 Act
may be permitted to directors, officers and controlling persons of the
registrants pursuant to the foregoing provisions described under Item 15 above,
or otherwise, the registrants have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the 1933 Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrants in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrants will, unless
in the opinion of their counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the 1933 Act
and will be governed by the final adjudication of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Alaska Air Group, Inc. certifies that it has reasonable grounds to believe that
it meets all the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Seattle, Washington, this 14th day of February, 1994.
ALASKA AIR GROUP, INC.
By: Raymond J. Vecci
-----------------------------------------
Raymond J. Vecci
Chairman of the Board, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities indicated on this 14th day of February, 1994. Each person whose
signature appears below hereby constitutes and appoints Raymond J. Vecci and
J. Ray Vingo, and each of them, his true and lawful attorneys and agents, with
full power of substitution, each with power to act alone, to sign, execute, and
file with the Securities and Exchange Commission on behalf of the undersigned in
any and all capacities any amendment or amendments to this registration
statement on Form S-3, including any post-effective amendments, and each of the
undersigned does hereby ratify and confirm all that each of said attorneys and
agents, or his substitutes, shall do or cause to be done by virtue hereof.
Signature Title
Chief Executive Officer:
Chairman of the Board, President and
Raymond J. Vecci Chief Executive Officer
- -----------------------------------
(Raymond J. Vecci)
Chief Financial Officer:
Vice President/Finance, Chief Financial
J. Ray Vingo Officer and Director
- -----------------------------------
(J. Ray Vingo)
Chief Accounting Officer:
Kathleen H. Iskra Controller
- -----------------------------------
(Kathleen H. Iskra)
William H. Clapp Director
- -----------------------------------
(William H. Clapp)
Ronald F. Cosgrave Director
- -----------------------------------
(Ronald F. Cosgrave)
Mary Jane Fate Director
- -----------------------------------
(Mary Jane Fate)
John F. Kelly Director
- -----------------------------------
(John F. Kelly)
II-5
<PAGE>
Bruce R. Kennedy Director
- -----------------------------------
(Bruce R. Kennedy)
R. Marc Langland Director
- -----------------------------------
(R. Marc Langland)
Byron I. Mallott Director
- -----------------------------------
(Byron I. Mallott)
Robert L. Parker, Jr. Director
- -----------------------------------
(Robert L. Parker, Jr.)
Richard A. Wien Director
- -----------------------------------
(Richard A. Wien)
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Alaska Airlines, Inc. certifies that it has reasonable grounds to believe that
it meets all the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Seattle, Washington, this 14th day of February, 1994.
ALASKA AIRLINES, INC.
By: Raymond J. Vecci
------------------------------------
Raymond J. Vecci
Chairman of the Board, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities indicated on this 14th day of February, 1994. Each person whose
signature appears below hereby constitutes and appoints Raymond J. Vecci and
J. Ray Vingo, and each of them, his true and lawful attorneys and agents, with
full power of substitution, each with power to act alone, to sign, execute, and
file with the Securities and Exchange Commission on behalf of the undersigned in
any and all capacities any amendment or amendments to this registration
statement on Form S-3, including any post-effective amendments, and each of the
undersigned does hereby ratify and confirm all that each of said attorneys and
agents, or his substitutes, shall do or cause to be done by virtue hereof.
Signature Title
Chief Executive Officer:
Chairman of the Board, President and
Raymond J. Vecci Chief Executive Officer
- -----------------------------------
(Raymond J. Vecci)
Chief Financial Officer:
Vice President/Finance, Chief
J. Ray Vingo Financial Officer and Director
- -----------------------------------
(J. Ray Vingo)
Chief Accounting Officer:
Kathleen H. Iskra Controller
- -----------------------------------
(Kathleen H. Iskra)
William H. Clapp Director
- -----------------------------------
(William H. Clapp)
Ronald F. Cosgrave Director
- -----------------------------------
(Ronald F. Cosgrave)
R. Marc Langland Director
- -----------------------------------
(R. Marc Langland)
II-7
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Sequentially
Numbered
Exhibit No. Exhibit Page
- ----------- -------------------------------------------------------------------- ------------
<S> <C> <C>
Exhibit 1(a) Form of Underwriting Agreement for Convertible Debt Securities of
Air Group*
Exhibit 1(b) Form of Underwriting Agreement for Debt Securities of Alaska
Exhibit 1(c) Form of Underwriting Agreement for Equipment Trust Certificates of
Alaska*
Exhibit 4(a)(1) Form of Convertible Senior Debt Securities Indenture for Air Group*
Exhibit 4(a)(2) Form of Convertible Senior Debt Securities of Air Group (included in
Exhibit 4(a)(1))*
Exhibit 4(a)(3) Form of Convertible Subordinated Debt Securities Indenture for Air
Group*
Exhibit 4(a)(4) Form of Convertible Subordinated Debt Securities of Air Group
(included in Exhibit 4(a)(3))*
Exhibit 4(b)(1) Form of Debt Securities Indenture for Alaska
Exhibit 4(b)(2) Form of Debt Securities of Alaska (included in Exhibit 4(b)(1))
Exhibit 4(c)(1) Forms of Trust Indenture and Security Agreement among the Owner
Trustee, the Indenture Trustee and Alaska relating to Equipment
Trust Certificates of Alaska*
Exhibit 4(c)(2) Form of Equipment Trust Certificate of Alaska (included in Exhibit
4(c)(1))*
Exhibit 4(d) Certificate of Incorporation of Alaska Air Group, Inc., as amended
to date
Exhibit 4(e) Bylaws of Alaska Air Group, Inc., as amended to date
(incorporated by reference to Exhibit 3.(ii) to Form 10-K of
Alaska Air Group, Inc. for the year ended December 31, 1993)
Exhibit 4(f) Rights Agreement dated as of December 2, 1986 between Alaska Air
Group, Inc. and The First National Bank of Boston, as Rights Agent
(Exhibit No. 1 to Form 8-A of Alaska Air Group, Inc. filed
December 12, 1986)
Exhibit 5(a) Opinion of Perkins Coie, counsel for Alaska*
Exhibit 5(b) Form of Opinion of counsel for Owner Trustee**
Exhibit 5(c) Opinion of Steven G. Hamilton, General Counsel for Alaska*
Exhibit 8 Tax Opinion of Perkins Coie**
Exhibit 12(a) Computation of Ratio of Earnings to Fixed Charges of Air Group
Exhibit 12(b) Computation of Ratio of Earnings to Fixed Charges of Alaska
Exhibit 23(a) Consent of Perkins Coie (included in Exhibit 5(a))*
Exhibit 23(b) Consent of counsel for Owner Trustee (included in Exhibit 5(b))**
Exhibit 23(c) Consent of Steven G. Hamilton (included in Exhibit 5(c))*
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Exhibit 23(d) Consent of Perkins Coie (included in Exhibit 8)**
Exhibit 23(e) Consent of Arthur Andersen & Co.
Exhibit 25 Power of Attorney (included on signature page to the Registration
Statement)
Exhibit 26(a) Form T-1 Statement of Eligibility of Trustee under Convertible Debt
Securities Indenture of Air Group**
Exhibit 26(b) Form T-1 Statement of Eligibility of Trustee under Debt Securities
Indenture of Alaska**
Exhibit 26(c) Form T-1 Statement of Eligibility of Trustee under Trust
Indenture and Security Agreement relating to Equipment Trust
Certificates of Alaska**
<FN>
_______________
* To be filed by amendment.
** To be filed on Form 8-K pursuant to Item 601(b)(1) of Regulation S-K.
</TABLE>
<PAGE>
EXHIBIT 1(b)
S&C Draft of February 10, 1994
ALASKA AIRLINES, INC.
ALASKA AIR GROUP, INC.
(GUARANTOR)
GUARANTEED DEBT SECURITIES
UNDERWRITING AGREEMENT
, 19
---------------------- ---
[GOLDMAN, SACHS & CO.,
[[NAMES OF CO-REPRESENTATIVE(S),]
C/O GOLDMAN, SACHS & CO.,]
85 BROAD STREET,
NEW YORK, NEW YORK 10004.]
[TO THE REPRESENTATIVES OF THE
SEVERAL UNDERWRITERS NAMED IN THE
RESPECTIVE PRICING AGREEMENTS
HEREINAFTER DESCRIBED.]
Dear Sirs:
From time to time Alaska Airlines, Inc., an Alaska corporation (the
"Company"), and Alaska Air Group, Inc., a Delaware corporation (the "Guarantor"
or "Air Group"), propose to enter into one or more Pricing Agreements in the
form of Annex I hereto, with such additions and deletions as the parties thereto
may determine, and, subject to the terms and conditions stated herein and
therein, the Company proposes to issue and sell to the firms named in Schedule I
to the applicable Pricing Agreement (such firms constituting the "Underwriters"
with respect to such Pricing Agreement and the securities specified therein)
certain of its debt securities (the "Securities"), with the guarantees (the
"Guarantees") endorsed thereon of the Guarantor, specified in Schedule II to
such Pricing Agreement (with respect to such Pricing Agreement, such Securities
and Guarantees are called the "Designated Securities").
The terms and rights of any particular issuance of Designated
Securities shall be as specified in the Pricing Agreement relating thereto and
in or pursuant to the indenture (the "Indenture") identified in such Pricing
Agreement.
The Securities and the Guarantees are among the securities registered
pursuant to the Registration Statement (hereinafter defined), all of which are
herein called the "Registered Securities".
1. Particular sales of Designated Securities may be made from time to
time to the Underwriters of such Securities, for whom the firms designated as
representatives of the Underwriters of such Securities in the Pricing Agreement
relating thereto will act as representatives (the "Representatives"). The term
"Representatives" also refers to a single firm
<PAGE>
acting as sole representative of the Underwriters and to Underwriters who act
without any firm being designated as their representative. This Underwriting
Agreement shall not be construed as an obligation of the Company to sell any of
the Securities or as an obligation of any of the Underwriters to purchase the
Securities. The obligation of the Company to issue and sell any of the
Securities and the obligation of any of the Underwriters to purchase any of the
Securities shall be evidenced by the Pricing Agreement with respect to the
Designated Securities specified therein. Each Pricing Agreement shall specify
the aggregate principal amount of such Designated Securities, the initial public
offering price of such Designated Securities, the purchase price to the
Underwriters of such Designated Securities, the names of the Underwriters of
such Designated Securities, the names of the Representatives of such
Underwriters and the principal amount of such Designated Securities to be
purchased by each Underwriter and shall set forth the date, time and manner of
delivery of such Designated Securities and payment therefor. The Pricing
Agreement shall also specify (to the extent not set forth in the Indenture and
the registration statement and prospectus with respect thereto) the terms of
such Designated Securities. A Pricing Agreement shall be in the form of an
executed writing (which may be in counterparts), and may be evidenced by an
exchange of telegraphic communications or any other rapid transmission device
designed to produce a written record of communications transmitted. The
obligations of the Underwriters under this Agreement and each Pricing Agreement
shall be several and not joint.
2. The Company and the Guarantor represent and warrant to, and agree
with, each of the Underwriters that:
(a) A registration statement (No. 33- ) in respect of the
Registered Securities has been filed with the Securities and Exchange
Commission (the "Commission"); such registration statement and any post-
effective amendment thereto, each in the form heretofore delivered or to be
delivered to the Representatives and, excluding exhibits to such
registration statement, but including all documents incorporated by
reference in the prospectus contained therein, to the Representatives for
each of the other Underwriters, have been declared effective by the
Commission in such form; no other document with respect to such
registration statement or document incorporated by reference therein has
heretofore been filed or transmitted for filing with the Commission; and no
stop order suspending the effectiveness of such registration statement has
been issued and no proceeding for that purpose has been initiated or
threatened by the Commission (any preliminary prospectus included in such
registration statement or filed with the Commission pursuant to Rule 424(a)
of the rules and regulations of the Commission under the Securities Act of
1933, as amended (the "Act"), being hereinafter called a "Preliminary
Prospectus"; the various parts of such registration statement, including
all exhibits thereto and the documents incorporated by reference in the
prospectus contained in the registration statement at the time such part of
the registration statement become effective but excluding Form T-1, each as
amended at the time such part of the registration statement become
effective, being hereinafter called the "Registration Statement"; the
prospectus relating to the Designated Securities, in the form in which it
has most recently been filed, or transmitted for filing, with the
Commission on or prior to the date of this Agreement, being hereinafter
called the "Prospectus"; any reference herein to any Preliminary Prospectus
or the Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to the applicable form under the
Act, as of the date of such Preliminary Prospectus or Prospectus, as the
case may be; any reference to any amendment or supplement to any
Preliminary Prospectus or the Prospectus shall be deemed to refer to and
include any documents filed after the date of such Preliminary Prospectus
or Prospectus, as the case may be, under the Securities
2
<PAGE>
Exchange Act of 1934, as amended (the "Exchange Act"), and incorporated by
reference in such Preliminary Prospectus or Prospectus, as the case may be;
any reference to any amendment to the Registration Statement shall be
deemed to refer to and include any annual report of the Company filed
pursuant to Section 13(a) or 15(d) of the Exchange Act after the effective
date of the Registration Statement that is incorporated by reference in the
Registration Statement; and any reference to the Prospectus as amended or
supplemented shall be deemed to refer to the Prospectus as amended or
supplemented in relation to the applicable Designated Securities in the
form in which it is filed with the Commission pursuant to Rule 424(b) under
the Act in accordance with Section 5(a) hereof, including any documents
incorporated by reference therein as of the date of such filing);
(b) The documents incorporated by reference in the Prospectus, when
they became effective or were filed with the Commission, as the case may
be, conformed in all material respects to the requirements of the Act or
the Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder, and none of such documents contained an untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; and any further documents so filed and incorporated by
reference in the Prospectus or any further amendment or supplement thereto,
when such documents become effective or are filed with the Commission, as
the case may be, will conform in all material respects to the requirements
of the Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder and will not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading; provided, however, that this representation and warranty shall
not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by an
Underwriter of Designated Securities through the Representatives expressly
for use in the Prospectus as amended or supplemented relating to such
Designated Securities;
(c) The Registration Statement and the Prospectus conform, and any
further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of
the Act and the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act") and the rules and regulations of the Commission thereunder
and do not and will not, as of the applicable effective date as to the
Registration Statement and any amendment thereto and as of the applicable
filing date as to the Prospectus and any amendment or supplement thereto,
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in reliance
upon and in conformity with information furnished in writing to the Company
by an Underwriter of Designated Securities through the Representatives
expressly for use in the Prospectus as amended or supplemented relating to
such Designated Securities;
(d) The Company, the Guarantor and its subsidiaries, taken as a
whole, have not sustained since the date of the latest audited financial
statements included or incorporated by reference in the Prospectus any
material loss or interference with their business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from any
labor dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Prospectus; and, since the
3
<PAGE>
respective dates as of which information is given in the Registration
Statement and the Prospectus, there has not been any material change in the
capital stock or long-term debt of the Company, the Guarantor and its
subsidiaries, taken as a whole, or any material adverse change, or any
development involving a prospective material adverse change, in or
affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company, the Guarantor
and its subsidiaries, taken as a whole, otherwise than as set forth or
contemplated in the Prospectus;
(e) Each of the Company and the Guarantor is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus and has
been duly qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each other jurisdiction
in which it owns or leases properties, or conducts any business, so as to
require such qualification, or is subject to no material liability or
disability by reason of the failure to be so qualified in any such
jurisdiction; and each other subsidiary of the Guarantor has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation; the Company is an "air
carrier" and a "citizen of the United States" within the meaning of the
Federal Aviation Act of 1958, as amended, and is "an air carrier operating
under a certificate of convenience and necessity issued by the Civil
Aeronautics Board" within the meaning of 11 U.S.C. Section 1110. All of
the outstanding shares of capital stock of the Company have been duly
authorized and validly issued and are fully paid and nonassessable and are
owned by the Guarantor directly, free and clear of any pledge, lien,
security interest, charge, claim, equity or encumbrance of any kind; and
all of the issued shares of capital stock of Horizon Air Industries, Inc.
("Horizon") have been duly and validly authorized and issued, are fully
paid and non-assessable and (except for directors' qualifying shares and
except as otherwise set forth in the Prospectus) are owned directly or
indirectly by the Guarantor, free and clear of all liens, encumbrances,
equities or claims;
(f) The Guarantor has an authorized capitalization as set forth in
the Prospectus, and all of the issued shares of capital stock of the
Guarantor have been duly and validly authorized and issued and are fully
paid and non-assessable;
(g) The Securities and the Guarantees have been duly authorized, and,
when Designated Securities are issued and delivered pursuant to this
Agreement and the Pricing Agreement with respect to such Designated
Securities, such Securities and the related Guarantees will have been duly
executed, authenticated, issued and delivered and will constitute valid and
legally binding obligations to the Company and the Guarantor, respectively,
entitled to the benefits provided by the Indenture, which will be
substantially in the form filed as an exhibit to the Registration
Statement; the Indenture has been duly authorized and duly qualified under
the Trust Indenture Act and, at the Time of Delivery for such Designated
Securities (as defined in Section 4 hereof), the Indenture will constitute
a valid and legally binding instrument, enforceable in accordance with its
terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles; and the
Indenture conforms, and the Designated Securities will conform, to the
descriptions thereof contained in the Prospectus as amended or supplemented
with respect to such Designated Securities;
4
<PAGE>
(h) The issue and sale of the Securities and Guarantees and the
compliance by the Company and the Guarantor with all of the provisions of
the Securities, the Guarantees, the Indenture, this Agreement and any
Pricing Agreement, and the consummation of the transactions herein and
therein contemplated will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, sale/leaseback agreement,
loan agreement or other agreement or instrument to which the Company or the
Guarantor is a party or by which the Company or the Guarantor is bound or
to which any of the property or assets of the Company or the Guarantor is
subject, nor will such action result in any violation of the provisions of
the Certificate of Incorporation or By-laws of the Company or the Guarantor
or any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or the
Guarantor or any of their properties; and no consent, approval,
authorization, order, registration or qualification of or with any such
court or governmental agency or body is required for the issue and sale of
the Securities and Guarantees or the consummation by the Company or the
Guarantor of the transactions contemplated by this Agreement or any Pricing
Agreement or the Indenture, except such as have been, or will have been
prior to the Time of Delivery, obtained under the Act and the Trust
Indenture Act and such consents, approvals, authorizations, registrations
or qualifications as may be required under state securities or Blue Sky
laws in connection with the purchase and distribution of the Securities and
Guarantees by the Underwriters;
(i) Other than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or the Guarantor or
any of its subsidiaries is a party or of which any property of the Company
or the Guarantor or any of its subsidiaries is the subject which, if
determined adversely to the Company or the Guarantor or any of its
subsidiaries, would individually or in the aggregate have a material
adverse effect on the consolidated financial position, stockholders' equity
or results of operations of the Company, the Guarantor and its
subsidiaries, taken as a whole; and, to the best of the Company's and the
Guarantor's knowledge, no such proceedings are threatened or contemplated
by governmental authorities or threatened by others;
(j) The Company, the Guarantor and Horizon have good and marketable
title in fee simple to all real property and good and marketable title to
all personal property owned by them, in each case free and clear of all
liens, encumbrances and defects except such as are described in the
Prospectus or such as do not materially affect the value of such property
and do not interfere with the use made and proposed to be made of such
property by the Company, the Guarantor and Horizon; and any real property
and buildings held under lease by the Company, the Guarantor and Horizon
are held by them under valid, subsisting and enforceable leases with such
exceptions as are not material and do not interfere with the use made and
proposed to be made of such property and buildings by the Company, the
Guarantor and Horizon; and
(k) Arthur Andersen & Co., who have certified certain financial
statements of the Company and its subsidiaries, and of the Guarantor and
its subsidiaries, are independent public accountants as required by the Act
and the rules and regulations of the Commission thereunder.
3. Upon the execution of the Pricing Agreement applicable to any
Designated Securities and authorization by the Representatives of the release of
such Designated
5
<PAGE>
Securities, the several Underwriters propose to offer such Designated Securities
for sale upon the terms and conditions set forth in the Prospectus as amended or
supplemented.
4. Designated Securities to be purchased by each Underwriter pursuant
to the Pricing Agreement relating thereto, in definitive form to the extent
practicable, and in such authorized denominations and registered in such names
as the Representatives may request upon at least forty-eight hours' prior notice
to the Company, shall be delivered by or on behalf of the Company to the
Representatives for the account of such Underwriter, against payment by such
Underwriter or on its behalf of the purchase price therefor by certified or
official bank check or checks, payable to the order of the Company in the funds
specified in such Pricing Agreement, all at the place and time and date
specified in such Pricing Agreement or at such other place and time and date as
the Representatives and the Company may agree upon in writing, such time and
date being herein called the "Time of Delivery" for such Securities.
5. The Company and the Guarantor agree with each of the Underwriters
of any Designated Securities:
(a) To prepare the Prospectus as amended and supplemented in relation
to the applicable Designated Securities in a form approved by the
Representatives and to file such Prospectus pursuant to Rule 424(b) under
the Act not later than the Commission's close of business on the second
business day following the execution and delivery of the Pricing Agreement
relating to the applicable Designated Securities or, if applicable, such
earlier time as may be required by Rule 424(b); to make no further
amendment or any supplement to the Registration Statement or Prospectus as
amended or supplemented after the date of the Pricing Agreement relating to
such Securities and prior to the Time of Delivery for such Securities which
shall be disapproved by the Representatives for such Securities promptly
after reasonable notice thereof; to advise the Representatives promptly of
any such amendment or supplement after such Time of Delivery and furnish
the Representatives with copies thereof; to file promptly all reports and
any definitive proxy or information statements required to be filed by the
Company or the Guarantor with the Commission pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act for so long as the delivery of a
prospectus is required in connection with the offering or sale of such
Securities, and during such same period to advise the Representatives,
promptly after it receives notice thereof, of the time when any amendment
to the Registration Statement has been filed or becomes effective or any
supplement to the Prospectus or any amended Prospectus has been filed with
the Commission, of the issuance by the Commission of any stop order or of
any order preventing or suspending the use of any prospectus relating to
the Registered Securities, of the suspension of the qualification of such
Securities for offering or sale in any jurisdiction, of the initiation or
threatening of any proceeding for any such purpose, or of any request by
the Commission for the amending or supplementing of the Registration
Statement or Prospectus or for additional information; and, in the event of
the issuance of any such stop order or of any such order preventing or
suspending the use of any prospectus relating to the Registered Securities
or suspending any such qualification, to use promptly its best efforts to
obtain its withdrawal;
(b) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify the Registered Securities
for offering and sale under the securities laws of such jurisdictions as
the Representatives may request and to comply with such laws so as to
permit the continuance of sales and dealings therein in such jurisdictions
for as long as may be necessary to complete the distribution of such
6
<PAGE>
Securities, provided that in connection therewith the Company and the
Guarantor shall not be required to qualify as a foreign corporation or to
file a general consent to service of process in any jurisdiction;
(c) To furnish the Underwriters with copies of the Prospectus as
amended or supplemented in such quantities as the Representatives may from
time to time reasonably request, and, if the delivery of a prospectus is
required at any time in connection with the offering or sale of the
Designated Securities and if at such time any event shall have occurred as
a result of which the Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made when such Prospectus
is delivered, not misleading, or, if for any other reason it shall be
necessary during such same period to amend or supplement the Prospectus or
to file under the Exchange Act any document incorporated by reference in
the Prospectus in order to comply with the Act, the Exchange Act or the
Trust Indenture Act, to notify the Representatives and upon their request
to file such document and to prepare and furnish without charge to each
Underwriter and to any dealer in securities as many copies as the
Representatives may from time to time reasonably request of an amended
Prospectus or a supplement to the Prospectus which will correct such
statement or omission or effect such compliance;
(d) To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158(c)),
earning statements of the Company and the Guarantor (which need not be
audited) complying with Section 11(a) of the Act and the rules and
regulations of the Commission thereunder (including at the option of the
Company and the Guarantor Rule 158);
(e) During the period beginning from the date of the Pricing
Agreement for such Designated Securities and continuing to and including
the later of (i) the termination of trading restrictions for such
Designated Securities, as notified to the Company by the Representatives
and (ii) the Time of Delivery for such Designated Securities, not to offer,
sell, contract to sell or otherwise dispose of any debt securities of the
Company or the Guarantor which mature more than one year after such Time of
Delivery and which are substantially similar to such Designated Securities,
without the prior written consent of the Representatives;
(f) To furnish to the holders of the Designated Securities as soon as
practicable after the end of each fiscal year an annual report (including a
balance sheet and statements of income, stockholders' equity and cash flows
of the Company and its consolidated subsidiaries, and the Guarantor and its
consolidated subsidiaries, certified by independent public accounts) and,
as soon as practicable after the end of each of the first three quarters of
each fiscal year (beginning with the fiscal quarter ending after the
effective date of the Registration Statement), consolidated summary
financial information of the Company and its subsidiaries, and the
Guarantor and its consolidated subsidiaries, for such quarter in reasonable
detail; and
(g) During a period of five years from the effective date of the
Registration Statement, to furnish to the Representatives copies of all
reports or other communications (financial or other) furnished to
stockholders, and deliver to the Representatives (i) as soon as they are
available, copies of any reports and financial statements furnished to or
filed with the Commission or any national securities
7
<PAGE>
exchange on which the Designated Securities or any class of securities of
the Company or the Guarantor is listed; and (ii) such additional
information concerning the business and financial condition of the Company
or the Guarantor as the Representatives may from time to time reasonably
request (such financial statements to be on a consolidated basis to the
extent the accounts of the Company and its subsidiaries, or the Guarantor
and its subsidiaries, are consolidated in reports furnished to its
stockholders generally or to the Commission).
6. The Company and the Guarantor covenant and agree with the several
Underwriters that the Company and the Guarantor will pay or cause to be paid the
following: (i) the fees, disbursements and expenses of the Company's and the
Guarantor's counsel and accountants in connection with the registration of the
Registered Securities under the Act and all other expenses in connection with
the preparation, printing and filing of the Registration Statement, any
Preliminary Prospectus and the Prospectus and amendments and supplements thereto
and the mailing and delivering of copies thereof to the Underwriters and
dealers; (ii) the cost of printing or producing any Agreement among
Underwriters, this Agreement, any Pricing Agreement, any Indenture, any Blue Sky
and Legal Investment Memoranda and any other documents in connection with the
offering, purchase, sale and delivery of the Designated Securities, including
any corporate histories or bound volumes prepared for the Company or the
Guarantor, their counsel and their accountants; (iii) all expenses in connection
with the qualification of the Registered Securities for offering and sale under
state securities laws as provided in Section 5(b) hereof, including the fees and
disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky and legal investment surveys;
(iv) any fees charged by securities rating services for rating such Securities;
(v) any filing fees incident to any required review by the National Association
of Securities Dealers, Inc. of the terms of the sale of such Securities; (vi)
the cost of preparing the Designated Securities; (vii) the fees and expenses of
any Trustee and any agent of any Trustee and the fees and disbursements of
counsel for any Trustee in connection with any Indenture and the Designated
Securities; and (viii) all other costs and expenses incident to the performance
of its obligations hereunder which are not otherwise specifically provided for
in this Section. It is understood, however, that, except as provided in this
Section, Section 8 and Section 11 hereof, the Underwriters will pay all of their
own costs and expenses, including the fees of their counsel, transfer taxes on
resale of any of the Designated Securities by them, and any advertising expenses
connected with any offers they may make.
7. The obligations of the Underwriters of any Designated Securities
under the Pricing Agreement relating to such Designated Securities shall be
subject, in the discretion of the Representatives, to the condition that all
representations and warranties and other statements of the Company and the
Guarantor in or incorporated by reference in the Pricing Agreement relating to
such Designated Securities are, at and as of the Time of Delivery for such
Designated Securities, true and correct, the condition that the Company and the
Guarantor shall have performed all of their obligations hereunder theretofore to
be performed, and the following additional conditions:
(a) The Prospectus as amended or supplemented in relation to the
applicable Designated Securities shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed for
such filing by the rules and regulations under the Act and in accordance
with Section 5(a) hereof; no stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have been issued and no
proceeding for that purpose shall have been initiated or threatened by the
Commission; and all requests for additional information on the part
8
<PAGE>
of the Commission shall have been complied with to the Representatives'
reasonable satisfaction;
(b) Counsel for the Underwriters shall have furnished to the
Representatives such opinion or opinions, dated the Time of Delivery for
such Designated Securities, with respect to the incorporation of the
Company and the Guarantor, the validity of the Indenture, the Designated
Securities, the Registration Statement, the Prospectus as amended or
supplemented and other related matters as the Representatives may
reasonably request, and such counsel shall have received such papers and
information as they may reasonably request to enable them to pass upon such
matters;
(c) Counsel for the Company and the Guarantor satisfactory to the
Representatives, which may include Steven G. Hamilton, Vice President and
General Counsel of the Company and the Guarantor, and Perkins Coie, counsel
to the Company and the Guarantor, it being understood that such counsel may
divide the following clauses as appropriate so long as [allocation to come]
and so long as they both shall include clause (x) in their respective
opinions, shall have furnished to the Representatives their written opinion
or opinions, dated the Time of Delivery for such Designated Securities, in
form and substance satisfactory to the Representatives, to the effect that:
(i) Each of the Company and the Guarantor is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, with corporate power and authority
to own its properties and conduct its business as described in the
Prospectus as amended or supplemented; the Company is an "air carrier"
and a "citizen of the United States" within the meaning of the
Aviation Act and is "an air carrier operating under a certificate of
convenience and necessity issued by the Civil Aeronautics Board"
within the meaning of 11 U.S.C. Section 1110; each of the Company and
the Guarantor has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each
other jurisdiction in which it owns or leases properties, or conducts
any business, so as to require such qualification, or is subject to no
material liability or disability by reason of the failure to be so
qualified in any such jurisdiction (such counsel being entitled to
rely in respect of the opinion in this clause upon opinions of local
counsel and in respect of matters of fact upon certificates of
officers of the Company or the Guarantor, provided that such counsel
shall state that they believe that both the Underwriters and they are
justified in relying upon such opinions and certificates; and Horizon
has been duly incorporated and is validly existing as a corporation in
good standing under the laws of its jurisdiction of incorporation; and
all of the issued shares of capital stock of the Company and of
Horizon have been duly and validly authorized and issued, are fully
paid and non-assessable, and (except for directors' qualifying shares)
are owned directly or indirectly by the Guarantor, free and clear of
all liens, encumbrances, equities or claims (such counsel being
entitled to rely in respect of the opinion in this clause upon
opinions of local counsel and in respect of matters of fact upon
certificates of officers of the Guarantor or its subsidiaries,
provided that such counsel shall state that they believe that both the
Underwriters and they are justified in relying upon such opinions and
certificates).
(ii) The Guarantor has an authorized capitalization as set
forth in the Prospectus as amended or supplemented and all of the
issued shares of
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<PAGE>
capital stock of the Guarantor have been duly and validly authorized
and issued and are fully paid and non-assessable;
(iii) To the best of such counsel's knowledge and other
than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or the Guarantor
or any of its subsidiaries is a party or of which any property of the
Company or the Guarantor or any of its subsidiaries is the subject
which, if determined adversely to the Company, the Guarantor or any of
its subsidiaries, would individually or in the aggregate have a
material adverse effect on the consolidated financial position,
stockholders' equity or results of operations of the Company, the
Guarantor and its subsidiaries, taken as a whole, and, to the best of
such counsel's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;
(iv) This Agreement and the Pricing Agreement with respect
to the Designated Securities have been duly authorized, executed and
delivered by the Company and the Guarantor;
(v) The Securities and the related Guarantees being
delivered at such Time of Delivery have been duly authorized,
executed, authenticated, issued and delivered and constitute valid and
legally binding obligations of the Company and the Guarantor,
respectively, entitled to the benefits provided by the Indenture; and
the Designated Securities and the Indenture conform to the
descriptions thereof in the Prospectus as amended or supplemented;
(vi) The Indenture has been duly authorized, executed and
delivered by the parties thereto and constitutes a valid and legally
binding instrument, enforceable in accordance with its terms, subject,
as to enforcement, to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting creditors'
rights and to general equity principles; and the Indenture has been
duly qualified under the Trust Indenture Act;
(vii) The issue and sale of the Designated Securities and
the compliance by the Company and the Guarantor with all of the
provisions of the Designated Securities, the Indenture, this
Agreement and the Pricing Agreement with respect to the Designated
Securities and the consummation of the transactions herein and
therein contemplated will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust,
sale/leaseback agreement, loan agreement or other agreement or
instrument known to such counsel to which the Company or the
Guarantor is a party or by which the Company or the Guarantor is
bound or to which any of the property or assets of the Company or
the Guarantor is subject, nor will such actions result in any
violation of the provisions of the Certificate of Incorporation or
By-laws of the Company or the Guarantor or any statute or any order,
rule or regulation known to such counsel of any court or governmental
agency or body having jurisdiction over the Company or the Guarantor
or any of their properties;
(viii) No consent, approval, authorization, order,
registration or qualification of or with any such court or
governmental agency or body is
10
<PAGE>
required for the issue and sale of the Designated Securities or the
consummation by the Company or the Guarantor of the transactions
contemplated by this Agreement or such Pricing Agreement or the
Indenture, except such as have been obtained under the Act and the
Trust Indenture Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under state
securities or Blue Sky laws in connection with the purchase and
distribution of the Designated Securities by the Underwriters;
(ix) The documents incorporated by reference in the
Prospectus as amended or supplemented (other than the financial
statements and related schedules therein, as to which such counsel
need express no opinion), when they became effective or were filed
with the Commission, as the case may be, complied as to form in all
material respects with the requirements of the Act or the Exchange
Act, as applicable, and the rules and regulations of the Commission
thereunder; and they have no reason to believe that any of such
documents, when they became effective or were so filed, as the case
may be, contained, in the case of a registration statement which
became effective under the Act, an untrue statement of a material fact
or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or, in the
case of other documents which were filed under the Act or the Exchange
Act with the Commission, an untrue statement of a material fact or
omitted to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made when such documents were so filed, not misleading; and
(x) The Registration Statement and the Prospectus as amended
or supplemented and any further amendments and supplements thereto
made by the Company or the Guarantor prior to the Time of Delivery for
the Designated Securities (other than the financial statements and
related schedules therein, as to which such counsel need express no
opinion) comply as to form in all material respects with the
requirements of the Act and the Trust Indenture Act and the rules and
regulations thereunder; they have no reason to believe that, as of its
effective date, the Registration Statement or any further amendment
thereto made by the Company or the Guarantor prior to the Time of
Delivery (other than the financial statements and related schedules
therein, as to which such counsel need express no opinion) contained
an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading or that, as of its date, the Prospectus as
amended or supplemented or any further amendment or supplement thereto
made by the Company or the Guarantor prior to the Time of Delivery
(other than the financial statements and related schedules therein, as
to which such counsel need express no opinion) contained an untrue
statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading or that, as of
the Time of Delivery, either the Registration Statement or the
Prospectus as amended or supplemented or any further amendment or
supplement thereto made by the Company or the Guarantor prior to the
Time of Delivery (other than the financial statements and related
schedules therein, as to which such counsel need express no opinion)
contains an untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading; and
11
<PAGE>
they do not know of any amendment to the Registration Statement
required to be filed or any contracts or other documents of a
character required to be filed as an exhibit to the Registration
Statement or required to be incorporated by reference into the
Prospectus as amended or supplemented or required to be described in
the Registration Statement or the Prospectus as amended or
supplemented which are not filed or incorporated by reference or
described as required;
(d) On the date of the Pricing Agreement for such Designated
Securities and at the Time of Delivery for such Designated Securities, the
independent accountants of the Company and the Guarantor who have certified
the financial statements of the Company and its subsidiaries, and the
Guarantor and its subsidiaries, included or incorporated by reference in
the Registration Statement shall have furnished to the Representatives a
letter or letters, dated the effective date of the Registration Statement
or the date of the most recent report filed with the Commission containing
financial statements and incorporated by reference in the Registration
Statement, if the date of such report is later than such effective date,
and a letter or letters dated such Time of Delivery, respectively, to the
effect set forth in Annex II hereto, and with respect to such letter or
letters dated such Time of Delivery, as to such other matters as the
Representatives may reasonably request and in form and substance
satisfactory to the Representatives;
(e) (i) The Company, the Guarantor and its subsidiaries, taken as a
whole, shall not have sustained since the date of the latest audited
financial statements included or incorporated by reference in the
Prospectus as amended or supplemented any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or contemplated in the
Prospectus as amended or supplemented, and (ii) since the respective dates
as of which information is given in the Prospectus as amended or
supplemented there shall not have been any change in the capital stock or
long-term debt of the Company, the Guarantor and its subsidiaries, taken as
a whole, or any change, or any development involving a prospective change,
in or affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company, the Guarantor
and its subsidiaries, taken as a whole, otherwise than as set forth or
contemplated in the Prospectus as amended or supplemented, the effect of
which, in any such case described in Clause (i) or (ii), is in the judgment
of the Representatives so material and adverse as to make it impracticable
or inadvisable to proceed with the public offering or the delivery of the
Designated Securities on the terms and in the manner contemplated in the
Prospectus as amended or supplemented;
(f) On or after the date of the Pricing Agreement relating to the
Designated Securities (i) no downgrading shall have occurred in the rating
accorded the Company's or the Guarantor's debt securities by any nationally
recognized statistical rating organization," as that term is defined by the
Commission for purposes of Rule 436(g)(2) under the Act and (ii) no such
organization shall have publicly announced that it has under surveillance
or review, with possible negative implications, its rating of any of the
Company's or the Guarantor's debt securities;
(g) On or after the date of the Pricing Agreement relating to the
Designated Securities there shall not have occurred any of the following:
(i) a suspension or material limitation in trading in securities generally
on the New York Stock Exchange;
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<PAGE>
(ii) a general moratorium on commercial banking activities in New York
declared by either Federal or New York State authorities; (iii) the
outbreak or escalation of hostilities involving the United States or the
declaration by the United States of a National Emergency or war, if the
effect of any such event specified in this clause (iii) in the judgment of
the Representatives makes it impracticable or inadvisable to proceed with
the public offering or the delivery of the Designated Securities on the
terms and in the manner contemplated by the Prospectus as amended and
supplemented; or (iv) the occurrence of any material adverse change in the
existing financial, political or economic conditions in the United States
or elsewhere which, in the judgment of the Representatives would materially
and adversely affect the financial markets or the market for the Designated
Securities and other debt securities; and
(h) The Company and the Guarantor shall have furnished or caused to
be furnished to the Representatives at the Time of Delivery for the
Designated Securities a certificate or certificates of officers of the
Company and the Guarantor satisfactory to the Representatives as to the
accuracy of the representations and warranties of the Company and the
Guarantor herein at and as of such Time of Delivery, as to the performance
by the Company and the Guarantor of all of their obligations hereunder to
be performed at or prior to such Time of Delivery, as to the matters set
forth in subsections (a) and (e) of this Section and as to such other
matters as the Representatives may reasonably request.
8. (a) The Company and the Guarantor, jointly and severally, will
indemnify and hold harmless each Underwriter against any losses, claims, damages
or liabilities, joint or several, to which such Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, any preliminary prospectus supplement, the Registration
Statement, the Prospectus as amended or supplemented and any other prospectus
relating to the Registered Securities, or any amendment or supplement thereto,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse each Underwriter for any
legal or other expenses reasonably incurred by such Underwriter in connection
with investigating or defending any such action or claim as such expenses are
incurred; provided, however, that the Company and the Guarantor shall not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in any Preliminary Prospectus,
any preliminary prospectus supplement, the Registration Statement, the
Prospectus as amended or supplemented and any other prospectus relating to the
Registered Securities, or any such amendment or supplement in reliance upon and
in conformity with written information furnished to the Company by any
Underwriter of Designated Securities through the Representatives expressly for
use in the Prospectus as amended or supplemented relating to such Securities.
(b) Each Underwriter will indemnify and hold harmless the Company and
the Guarantor against any losses, claims, damages or liabilities to which the
Company or the Guarantor may become subject, under the Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged untrue statement
of a material fact contained in any Preliminary Prospectus, any preliminary
prospectus supplement, the Registration Statement, the Prospectus as amended or
supplemented and any other prospectus relating to the Registered Securities, or
any amendment or supplement thereto, or arise out of or are based upon the
omission or
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<PAGE>
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in any Preliminary
Prospectus, any preliminary prospectus supplement, the Registration Statement,
the Prospectus as amended or supplemented and any other prospectus relating to
the Registered Securities, or any such amendment or supplement in reliance upon
and in conformity with written information furnished to the Company by such
Underwriter through the Representatives expressly for use therein; and will
reimburse the Company and the Guarantor for any legal or other expenses
reasonably incurred by the Company or the Guarantor in connection with
investigating or defending any such action or claim as such expenses are
incurred.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party under such subsection for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Guarantor on the one hand and
the Underwriters of the Designated Securities on the other from the offering of
the Designated Securities to which such loss, claim, damage or liability (or
action in respect thereof) relates. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law or if the
indemnified party failed to give the notice required under subsection (c) above,
then each indemnifying party shall contribute to such amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect not only
such relative benefits but also the relative fault of the Company and the
Guarantor on the one hand and the Underwriters of the Designated Securities on
the other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions in respect thereof), as well
as any other relevant equitable considerations. The relative benefits received
by the Company and the Guarantor on the one hand and such Underwriters on the
other shall be deemed to be in the same proportion as the total net proceeds
from such offering (before deducting expenses) received by the Company bear to
the total underwriting discounts and commissions received by such Underwriters.
The relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company and the Guarantor on the one
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<PAGE>
hand or such Underwriters on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Guarantor and the Underwriters agree
that it would not be just and equitable if contribution pursuant to this
subsection (d) were determined by pro rata allocation (even if the Underwriters
were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this subsection (d). The amount paid or payable by an indemnified
party as a result of the losses, claims, damages or liabilities (or actions in
respect thereof) referred to above in this subsection (d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (d), no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the applicable Designated Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The obligations of the
Underwriters of Designated Securities in this subsection (d) to contribute are
several in proportion to their respective underwriting obligations with respect
to such Securities and not joint.
(e) The obligations of the Company and the Guarantor under this
Section 8 shall be in addition to any liability which the Company and the
Guarantor may otherwise have and shall extend, upon the same terms and
conditions, to each person, if any, who controls any Underwriter within the
meaning of the Act; and the obligations of the Underwriters under this Section 8
shall be in addition to any liability which the respective Underwriters may
otherwise have and shall extend, upon the same terms and conditions, to each
officer and director of the Company or the Guarantor and to each person, if any,
who controls the Company or the Guarantor within the meaning of the Act.
9. (a) If any Underwriter shall default in its obligation to
purchase the Designated Securities which it has agreed to purchase under the
Pricing Agreement relating to such Designated Securities, the Representatives
may in their discretion arrange for themselves or another party or other parties
to purchase such Designated Securities on the terms contained herein. If within
thirty-six hours after such default by any Underwriter the Representatives do
not arrange for the purchase of such Designated Securities, then the Company
shall be entitled to a further period of thirty-six hours within which to
procure another party or other parties satisfactory to the Representatives to
purchase such Designated Securities on such terms. In the event that, within
the respective prescribed period, the Representatives notify the Company that
they have so arranged for the purchase of such Designated Securities, or the
Company notifies the Representatives that it has so arranged for the purchase of
such Designated Securities, the Representatives or the Company shall have the
right to postpone the Time of Delivery for such Designated Securities for a
period of not more than seven days, in order to effect whatever changes may
thereby be made necessary in the Registration Statement or the Prospectus as
amended or supplemented, or in any other documents or arrangements, and the
Company and the Guarantor agree to file promptly any amendments or supplements
to the Registration Statement or the Prospectus which in the opinion of the
Representatives may thereby be made necessary. The term "Underwriter" as used
in this Agreement shall include any person substituted under this Section with
like effect as if such person had originally been a party to the Pricing
Agreement with respect to such Designated Securities.
15
<PAGE>
(b) If, after giving effect to any arrangements for the purchase of
the Designated Securities of a defaulting Underwriter or Underwriters by the
Representatives and the Company as provided in subsection (a) above, the
aggregate principal amount of such Designated Securities which remains
unpurchased does not exceed one-eleventh of the aggregate principal amount of
the Designated Securities, then the Company shall have the right to require each
non-defaulting Underwriter to purchase the principal amount of Designated
Securities which such Underwriter agreed to purchase under the Pricing Agreement
relating to such Designated Securities and, in addition, to require each non-
defaulting Underwriter to purchase its pro rata share (based on the principal
amount of Designated Securities which such Underwriter agreed to purchase under
such Pricing Agreement) of the Designated Securities of such defaulting
Underwriter or Underwriters for which such arrangements have not been made; but
nothing herein shall relieve a defaulting Underwriter from liability for its
default.
(c) If, after giving effect to any arrangements for the purchase of
the Designated Securities of a defaulting Underwriter or Underwriters by the
Representatives and the Company as provided in subsection (a) above, the
aggregate principal amount of Designated Securities which remains unpurchased
exceeds one-eleventh of the aggregate principal amount of the Designated
Securities, as referred to in subsection (b) above, or if the Company shall not
exercise the right described in subsection (b) above to require non-defaulting
Underwriters to purchase Designated Securities of a defaulting Underwriter or
Underwriters, then the Pricing Agreement relating to such Designated Securities
shall thereupon terminate, without liability on the part of any non-defaulting
Underwriter or the Company or the Guarantor, except for the expenses to be borne
by the Company and the Guarantor and the Underwriters as provided in Section 6
hereof and the indemnity and contribution agreements in Section 8 hereof; but
nothing herein shall relieve a defaulting Underwriter from liability for its
default.
10. The respective indemnities, agreements, representations,
warranties and other statements of the Company and the Guarantor and the several
Underwriters, as set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall remain in full force and effect,
regardless of any investigation (or any statement as to the results thereof)
made by or on behalf of any Underwriter or any controlling person of any
Underwriter, or the Company or the Guarantor, or any officer or director or
controlling person of the Company or the Guarantor, and shall survive delivery
of and payment for the Securities.
11. If any Pricing Agreement shall be terminated pursuant to Section
9 hereof, or due to a failure of condition under Section 7(g) hereof, the
Company and the Guarantor shall not then be under any liability to any
Underwriter with respect to the Designated Securities covered by such Pricing
Agreement except as provided in Section 6 and Section 8 hereof; but, if for any
other reason Designated Securities are not delivered by or on behalf of the
Company and the Guarantor as provided herein, the Company and the Guarantor will
reimburse the Underwriters through the Representatives for all out-of-pocket
expenses approved in writing by the Representatives, including fees and
disbursements of counsel, reasonably incurred by the Underwriters in making
preparations for the purchase, sale and delivery of such Designated Securities,
but the Company and the Guarantor shall then be under no further liability to
any Underwriter with respect to such Designated Securities except as provided in
Section 6 and Section 8 hereof.
12. In all dealings hereunder, the Representatives of the
Underwriters of Designated Securities shall act on behalf of each of such
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf
16
<PAGE>
of any Underwriter made or given by such Representatives jointly or by such of
the Representatives, if any, as may be designated for such purpose in the
Pricing Agreement.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Representatives as set forth in the
Pricing Agreement; and if to the Company or the Guarantor shall be delivered or
sent by mail, telex or facsimile transmission to the address of the Company or
the Guarantor set forth in the Registration Statement: Attention: Secretary;
provided, however, that any notice to an Underwriter pursuant to Section 8(c)
hereof shall be delivered or sent by mail, telex or facsimile transmission to
such Underwriter at its address set forth in its Underwriters' Questionnaire, or
telex constituting such Questionnaire, which address will be supplied to the
Company and the Guarantor by the Representatives upon request. Any such
statements, requests, notices or agreements shall take effect upon receipt
thereof.
13. This Agreement and each Pricing Agreement shall be binding upon,
and inure solely to the benefit of, the Underwriters, the Company, the Guarantor
and, to the extent provided in Section 8 and Section 10 hereof, the officers and
directors of the Company or the Guarantor and each person who controls the
Company or the Guarantor or any Underwriter, and their respective heirs,
executors, administrators, successors and assigns, and no other person shall
acquire or have any right under or by virtue of this Agreement or any such
Pricing Agreement. No purchaser of any of the Securities from any Underwriter
shall be deemed a successor or assign by reason merely of such purchase.
14. Time shall be of the essence of each Pricing Agreement. As used
herein, "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
15. This Agreement and each Pricing Agreement shall be governed by
and construed in accordance with the laws of the State of New York.
16. This Agreement and each Pricing Agreement may be executed by any
one or more of the parties hereto and thereto in any number of counterparts,
each of which shall be deemed to be an original, but all such respective
counterparts shall together constitute one and the same instrument.
17
<PAGE>
If the foregoing is in accordance with your understanding, please sign
and return to us several counterparts hereof.
Very truly yours,
ALASKA AIRLINES, INC.
By: ______________________
Name:
Title:
ALASKA AIR GROUP, INC.
By: ______________________
Name:
Title:
[ACCEPTED AS OF THE DATE HEREOF:
[Goldman, Sachs & Co.
[Name(s) of Co-Representative(s)]]
[By:] _________________________________
(Goldman, Sachs & Co.)
[[Name(s) of Co-Representative Corporation(s)]
By: ___________________________________
Name:
Title:
_______________________________________
[(Name(s) of Co-Representative
Partnership(s))]]
18
<PAGE>
ANNEX I
PRICING AGREEMENT
Goldman, Sachs & Co.,
[NAMES OF CO-REPRESENTATIVE(S),(1)]
As Representatives of the several
Underwriters named in Schedule I hereto,
[C/O GOLDMAN, SACHS & CO., (1)]
85 Broad Street,
New York, New York 10004.
_______, 19__
Dear Sirs:
Alaska Airlines, Inc., an Alaska corporation (the "Company"),
proposes, subject to the terms and conditions stated herein and in the
Underwriting Agreement, dated ________, 19__ (the "Underwriting Agreement"),
[between the Company and Alaska Air Group, Inc., a Delaware corporation (the
"Guarantor" or "Air Group") on the one hand and Goldman, Sachs & Co. [and (names
of Co-Representatives named therein)] on the other hand], to issue and sell to
the Underwriters named in Schedule I hereto (the "Underwriters") the Securities
and the related Guarantees specified in Schedule II hereto (the "Designated
Securities"). Each of the provisions of the Underwriting Agreement is
incorporated herein by reference in its entirety, and shall be deemed to be a
part of this Agreement to the same extent as if such provisions had been set
forth in full herein; and each of the representations and warranties set forth
therein shall be deemed to have been made at and as of the date of this Pricing
Agreement, except that each representation and warranty which refers to the
Prospectus in Section 2 of the Underwriting Agreement shall be deemed to be a
representation or warranty as of the date of the Underwriting Agreement in
relation to the Prospectus (as therein defined), and also a representation and
warranty as of the date of this Pricing Agreement in relation to the Prospectus
as amended or supplemented relating to the Designated Securities which are the
subject of this Pricing Agreement. Each reference to the Representatives herein
and in the provisions of the Underwriting Agreement so incorporated by reference
shall be deemed to refer to you. Unless otherwise defined herein, terms defined
in the Underwriting Agreement are used herein as therein defined. The
Representatives designated to act on behalf of the Representatives and on behalf
of each of the Underwriters of the Designated Securities pursuant to Section 12
of the Underwriting Agreement and the address of the Representatives referred to
in such Section 12 are set forth at the end of Schedule II hereto.
An amendment to the Registration Statement, or a supplement to the
Prospectus, as the case may be, relating to the Designated Securities, in the
form heretofore delivered to you is now proposed to be filed with the
Commission.
Subject to the terms and conditions set forth herein and in the
Underwriting Agreement incorporated herein by reference, the Company and, with
respect to the related Guarantees, the Guarantor agree to issue and sell to each
of the Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase from the Company and the
<PAGE>
Guarantor, at the time and place and at the purchase price to the Underwriters
set forth in Schedule II hereto, the principal amount of Designated Securities
set forth opposite the name of such Underwriter in Schedule I hereto.
If the foregoing is in accordance with your understanding, please sign
and return to us several counterparts hereof, and upon acceptance hereof by you,
on behalf of each of the Underwriters, this letter and such acceptance hereof,
including the provisions of the Underwriting Agreement incorporated herein by
reference, shall constitute a binding agreement between each of the Underwriters
and the Company and the Guarantor. It is understood that your acceptance of
this letter on behalf of each of the Underwriters is or will be pursuant to the
authority set forth in a form of Agreement among Underwriters, the form of which
shall be submitted to the Company and the Guarantor for examination upon
request, but without warranty on the part of the Representatives as to the
authority of the signers thereof.
Very truly yours,
ALASKA AIRLINES, INC.
By: _____________________
Name:
Title:
ALASKA AIR GROUP, INC.
By: _____________________
Name:
Title:
Accepted as of the date hereof:
[GOLDMAN, SACHS & CO.
[NAME(S) OF CO-REPRESENTATIVE(S)]]
[BY:] ________________________________
(Goldman, Sachs & Co.)
[[NAME(S) OF CO-REPRESENTATIVE
CORPORATION(S)]
BY: __________________________________
[(NAME(S) OF CO-REPRESENTATIVE
PARTNERSHIP(S))]]
On behalf of each of the Underwriters
-2-
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
Principal
Amount of
Designated
Securities
to be
Underwriter Purchased
----------- ---------
<S> <C>
Goldman, Sachs & Co. . . . . . . . . . . . . . . . . . $
[Name(s) of Co-Representative(s)]. . . . . . . . . . .
[Names of other Underwriters]. . . . . . . . . . . . .
---------------
Total. . . . . . . . . . . . . . . . . . . . $
-----------
-----------
</TABLE>
-3-
<PAGE>
SCHEDULE II
TITLE OF DESIGNATED SECURITIES:
[ %] Guaranteed [Floating Rate] [Zero Coupon] [Notes]
[Debentures] due
AGGREGATE PRINCIPAL AMOUNT:
[$]
PRICE TO PUBLIC:
__% of the principal amount of the Designated
Securities, plus accrued interest from to [and accrued
amortization, if any, from to ]
PURCHASE PRICE BY UNDERWRITERS:
__% of the principal amount of the Designated
Securities, plus accrued interest from to [and accrued
amortization, if any, from to ]
SPECIFIED FUNDS FOR PAYMENT OF PURCHASE PRICE:
[New York] Clearing House funds
INDENTURE:
Indenture dated , 19 , between the Company, the Guarantor
and , as Trustee
MATURITY:
INTEREST RATE:
[ %] [Zero Coupon] [See Floating Rate Provisions]
INTEREST PAYMENT DATES:
[months and dates]
REDEMPTION PROVISIONS:
[No provisions for redemption]
[The Designated Securities may be redeemed, otherwise
than through the sinking fund, in whole or in part at the option of the
Company, in the amount of [$] or an integral multiple thereof,
-4-
<PAGE>
[on or after , at the following redemption prices
(expressed in percentages of principal amount). If [redeemed on or
before , %, and if] redeemed during the 12-month period
beginning ,
REDEMPTION
YEAR PRICE
---- --------
and thereafter at 100% of their principal amount, together in each case with
accrued interest to the redemption date.]
[on any interest payment date falling in or after , , at
the election of the Company, at a redemption price equal to the principal
amount thereof, plus accrued interest to the date of redemption.]
[Other possible redemption provisions, such as mandatory redemption upon
occurrence of certain events or redemption for changes in tax law]
[Restriction on refunding]
SINKING FUND PROVISIONS:
[No sinking fund provisions]
[The Designated Securities are entitled to the benefit of a sinking fund to
retire [$] principal amount of Designated Securities on
in each of the years through at 100% of their principal amount
plus accrued interest][,together with [cumulative] [noncumulative]
redemptions at the option of the Company to retire an additional [$]
principal amount of Designated Securities in the years through at
100% of their principal amount plus accrued interest].
[IF SECURITIES ARE EXTENDABLE DEBT SECURITIES, INSERT--
EXTENDABLE PROVISIONS:
Securities are repayable on , [insert date and years], at the
option of the holder, at their principal amount with accrued interest.
Initial annual interest rate will be %, and thereafter annual interest
rate will be adjusted on , and to a rate not less
than % of the effective annual interest rate on U.S. Treasury obligations
with -year maturities as of the [insert date 15 days prior to
maturity date] prior to such [insert maturity date].]
-5-
<PAGE>
[IF SECURITIES ARE FLOATING RATE DEBT SECURITIES, INSERT--
FLOATING RATE PROVISIONS:
Initial annual interest rate will be % through and thereafter will be
adjusted [monthly] [on each , ,
________________ and ] [to an annual rate of % above the
average rate for -year [month] [securities] [certificates of deposit]
issued by and [insert names of banks].] [and the
annual interest rate [thereafter] [from through ]
will be the interest yield equivalent of the weekly average per annum market
discount rate for -month Treasury bills plus % of Interest Differential
(the excess, if any, of (i) then current weekly average per annum secondary
market yield for -month certificates of deposit over (ii) then current
interest yield equivalent of the weekly average per annum market discount
rate for -month Treasury bills); [from and thereafter the rate
will be the then current interest yield equivalent plus % of Interest
Differential].]
DEFEASANCE PROVISIONS:
TIME OF DELIVERY:
CLOSING LOCATION:
NAMES AND ADDRESSES OF REPRESENTATIVES:
Designated Representatives:
Address for Notices, etc.:
[OTHER TERMS]*:
- -----------------------
* A description of particular tax, accounting or other unusual features (such
as the addition of event risk provisions) of the Securities should be set
forth, or referenced to an ATTACHED and ACCOMPANYING description, if
necessary to ensure agreement as to the terms of the Securities to be
purchased and sold. Such a description might appropriately be in the form in
which such features will be described in the Prospectus Supplement for the
offering.
-6-
<PAGE>
ANNEX II
Pursuant to Section 7(d) of the Underwriting Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with
respect to the Company and its subsidiaries, and the Guarantor and its
subsidiaries, within the meaning of the Act and the applicable
published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules audited (and, if
applicable, prospective financial statements and/or pro forma
financial information examined) by them and included or incorporated
by reference in the Registration Statement or the Prospectus comply as
to form in all material respects with the applicable accounting
requirements of the Act or the Exchange Act, as applicable, and the
related published rules and regulations thereunder; and, if
applicable, they have made a review in accordance with standards
established by the American Institute of Certified Public Accounts of
the consolidated interim financial statements, selected financial
data, pro forma financial information, prospective financial
statements and/or condensed financial statements derived from audited
financial statements of the Company or the Guarantor for the periods
specified in such letter, as indicated in their reports thereon,
copies of which have been furnished to the representatives of the
Underwriters (the "Representatives");
(iii) The unaudited selected financial information with
respect to the consolidated results of operations and financial
position of the Company and the Guarantor for the five most recent
fiscal years included in the Prospectus and included or incorporated
by reference in Item 6 of the Company's or the Guarantor's Annual
Report on Form 10-K for the most recent fiscal year agrees with the
corresponding amounts (after restatement where applicable) in the
audited consolidated financial statements for five such fiscal years
which were included or incorporated by reference in the Company's or
the Guarantor's Annual Reports on Form 10-K for such fiscal years;
(iv) On the basis of limited procedures, not constituting
an audit in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and
other information referred to below, a reading the latest available
interim financial statements of the Company or the Guarantor and its
subsidiaries, inspection of the minute books of the Company and the
Guarantor and its subsidiaries since the date of the latest audited
financial statements included or incorporated by reference in the
Prospectus, inquiries of officials of the Company and the Guarantor
and its subsidiaries responsible for financial and accounting matters
and such other inquiries and procedures as may be specified in such
letter, nothing came to their attention that caused them to believe
that:
(A) the unaudited condensed consolidated statements of
income, consolidated balance sheets and consolidated statements
of cash flows included or incorporated by reference in the
Company's or the Guarantor's Quarterly Reports on Form 10-Q
incorporated by reference in the Prospectus do not comply as to
form in all material
-1-
<PAGE>
respects with the applicable accounting requirements of the
Exchange Act as it applies to Form 10-Q and the related published
rules and regulations thereunder or are not in conformity with
generally accepted accounting principles applied on a basis
substantially consistent with the basis for the audited
consolidated statements of income, consolidated balance sheets
and consolidated statements of cash flows included or
incorporated by reference in the Company's or the Guarantor's
Annual Report on Form 10-K for the most recent fiscal year;
(B) any other unaudited income statement data and balance
sheet items included in the Prospectus do not agree with the
corresponding items in the unaudited consolidated financial
statements from which such data and items were derived, and any
such unaudited data and items were not determined on a basis
substantially consistent with the basis for the corresponding
amounts in the audited consolidated financial statements included
or incorporated by reference in the Company's or the Guarantor's
Annual Report on Form 10-K for the most recent fiscal year;
(C) the unaudited financial statements which were not
included in the Prospectus but from which were derived the
unaudited condensed financial statements referred to in clause
(A) and any unaudited income statement data and balance sheet
items included in the Prospectus and referred to in Clause (B)
were not determined on a basis substantially consistent with the
basis for the audited financial statements included or
incorporated by reference in the Company's or the Guarantor's
Annual Report on Form 10-K for the most recent fiscal year;
(D) any unaudited pro forma consolidated condensed
financial statements included or incorporated by reference in the
Prospectus do not comply as to form in all material respects with
the applicable accounting requirements of the Act and the
published rules and regulations thereunder or the pro forma
adjustments have not been properly applied to the historical
amounts in the compilation of those statements;
(E) as of a specified date not more than five days prior
to the date of such letter, there have been any changes in the
consolidated capital stock (other than issuances of capital stock
upon exercise of options and stock appreciation rights, upon
earn-outs of performance shares and upon conversions of
convertible securities, in each case which were outstanding on
the date of the latest balance sheet included or incorporated by
reference in the Prospectus) or any increase in the consolidated
long-term debt of the Company and its subsidiaries, or the
Guarantor and its subsidiaries, or any decreases in consolidated
net current assets or net assets or other items specified by the
Representatives, or any increases in any items specified by the
Representatives, in each case as compared with amounts shown in
the latest balance sheet included or incorporated by reference in
the
-2-
<PAGE>
Prospectus of the Company or the Guarantor, as the case may be,
except in each case for changes, increases or decreases which the
Prospectus discloses have occurred or may occur or which are
described in such letter; and
(F) for the period from the date of the latest financial
statements included or incorporated by reference in the
Prospectus to the specified date referred to in Clause (E) there
were any decreases in consolidated net revenues or operating
profit or the total or per share amounts of consolidated net
income or other items specified by the Representatives, or any
increases in any items specified by the Representatives, in each
case as compared with the comparable period of the preceding year
and with any other period of corresponding length specified by
the Representatives, except in each case for increases or
decreases which the Prospectus discloses have occurred or may
occur or which are described in such letter; and
(v) In addition to the audit referred to in their report(s)
included or incorporated by reference in the Prospectus and the
limited procedures, inspection of minute books, inquiries and other
procedures referred to in paragraphs (iii) and (iv) above, they have
carried out certain specified procedures, not constituting an audit in
accordance with generally accepted auditing standards, with respect to
certain amounts, percentages and financial information specified by
the Representatives which are derived from the general accounting
records of the Company and its subsidiaries, or the Guarantor and its
subsidiaries, which appear in the Prospectus (excluding documents
incorporated by reference), or in Part II of, or in exhibits and
schedules to, the Registration Statement specified by the
Representatives or in documents incorporated by reference in the
Prospectus specified by the Representatives, and have compared certain
of such amounts, percentages and financial information with the
accounting records of the Company and its subsidiaries, or the
Guarantor and its subsidiaries, and have found them to be in
agreement.
All references in this Annex II to the Prospectus shall be deemed to refer
to the Prospectus (including the documents incorporated by reference therein) as
defined in the Underwriting Agreement as of the date of the letter delivered on
the date of the Pricing Agreement for purposes of such letter and to the
Prospectus as amended or supplemented (including the documents incorporated by
reference therein) in relation to the applicable Designated Securities for
purposes of the letter delivered at the Time of Delivery for such Designated
Securities.
3
<PAGE>
EXHIBIT 4(b)(1)
- -------------------------------------------------------------------------------
ALASKA AIRLINES, INC., ISSUER
AND
ALASKA AIR GROUP, INC., GUARANTOR
TO
___________________, TRUSTEE
____________________
INDENTURE
DATED AS OF ___________ ___, 1994
_____________________
DEBT SECURITIES
- -------------------------------------------------------------------------------
<PAGE>
Reconciliation and tie between Indenture, dated as of ____________ ___, 1994,
and the Trust Indenture Act of 1939, as amended.
<TABLE>
<CAPTION>
Trust Indenture Act Indenture
of 1939 Section Section
- -------------------- ----------
<S> <C>
310(a)(1)................................. 6.12
(a)(2)................................. 6.12
(a)(3)................................. TIA
(a)(4)................................. Not applicable
(a)(5)................................. TIA
(b).................................... 6.10; 6.12; TIA
311(a).................................... TIA
(b).................................... TIA
312(a).................................... 6.8
(b).................................... TIA
(c).................................... TIA
313(a).................................... 6.7; TIA
(b).................................... TIA
(c).................................... TIA
(d).................................... TIA
314(a).................................... 9.6; 9.7; TIA
(b).................................... Not applicable
(c)(1)................................. 1.2
(c)(2)................................. 1.2
(c)(3)................................. Not applicable
(d).................................... Not applicable
(e).................................... TIA
(f).................................... TIA
315(a).................................... TIA
(b).................................... 6.6
(c).................................... TIA
(d)(1)................................. TIA
(d)(2)................................. TIA
(d)(3)................................. TIA
(e).................................... TIA
316(a)(last sentence)..................... 1.1
(a)(1)(A).............................. 5.2; 5.8
(a)(1)(B).............................. 5.7
(b).................................... 5.9; 5.10
(c).................................... TIA
</TABLE>
<PAGE>
<TABLE>
<S> <C>
317(a)(1)................................. 5.3
(a)(2)................................. 5.4
(b).................................... 9.3
318(a).................................... 1.11
(b).................................... TIA
(c).................................... 1.11; TIA
</TABLE>
- ---------------
This reconciliation and tie section does not constitute part of the
Indenture.
<PAGE>
CONTENTS
<TABLE>
<S> <C>
ARTICLE 1 Definitions and Other Provisions of General Application.. 1
Section 1.1 Definitions...................................... 1
Section 1.2 Compliance Certificates and Opinions............. 7
Section 1.3 Form of Document Delivered to Trustee............ 8
Section 1.4 Acts of Holders.................................. 9
Section 1.5 Notices, etc., to Trustee, Company and Guarantor. 10
Section 1.6 Notice to Holders; Waiver........................ 10
Section 1.7 Headings and Table of Contents................... 11
Section 1.8 Successors and Assigns........................... 11
Section 1.9 Separability..................................... 11
Section 1.10 Benefits of Indenture............................ 11
Section 1.11 Governing Law.................................... 11
Section 1.12 Legal Holidays................................... 11
ARTICLE 2 Security Forms........................................... 12
Section 2.1 Forms Generally.................................. 12
Section 2.2 Form of Face of Security......................... 12
Section 2.3 Form of Reverse of Security...................... 14
Section 2.4 Form of Trustee's Certificate of Authentication.. 17
Section 2.5 Form of Guarantee................................ 18
ARTICLE 3 The Securities........................................... 19
Section 3.1 Amount Unlimited; Issuable in Series............. 19
Section 3.2 Denominations.................................... 22
Section 3.3 Execution, Authentication, Delivery and Dating... 22
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Section 3.4 Temporary Securities............................. 24
Section 3.5 Registration, Registration of Transfer and
Exchange......................................... 25
Section 3.6 Replacement Securities........................... 26
Section 3.7 Payment of Interest; Interest Rights Preserved... 27
Section 3.8 Persons Deemed Owners............................ 28
Section 3.9 Cancellation..................................... 29
Section 3.10 Computation of Interest.......................... 29
Section 3.11 CUSIP Numbers.................................... 29
ARTICLE 4 Satisfaction, Discharge and Defeasance................... 29
Section 4.1 Termination of Company's Obligations Under
the Indenture.................................... 29
Section 4.2 Application of Trust Funds....................... 31
Section 4.3 Applicability of Defeasance Provisions;
Company's Option to Effect Defeasance or
Covenant Defeasance.............................. 31
Section 4.4 Defeasance and Discharge......................... 31
Section 4.5 Covenant Defeasance.............................. 32
Section 4.6 Conditions to Defeasance or Covenant Defeasance.. 32
Section 4.7 Deposited Money and Government Obligations to
Be Held in Trust................................. 34
Section 4.8 Transfers and Distribution at Company Request.... 34
ARTICLE 5 Defaults and Remedies................................... 35
Section 5.1 Events of Default................................ 35
Section 5.2 Acceleration, Rescission and Annulment........... 37
Section 5.3 Collection of Indebtedness and Suits for
Enforcement by Trustee........................... 37
Section 5.4 Trustee May File Proofs of Claim................. 38
</TABLE>
-ii-
<PAGE>
<TABLE>
<S> <C>
Section 5.5 Trustee May Enforce Claims Without Possession
of Securities.................................... 38
Section 5.6 Delay or Omission Not Waiver..................... 38
Section 5.7 Waiver of Past Defaults.......................... 38
Section 5.8 Control by Majority.............................. 38
Section 5.9 Limitation on Suits by Holders................... 39
Section 5.10 Rights of Holders to Receive Payment............. 39
Section 5.11 Application of Money Collected................... 40
Section 5.12 Restoration of Rights and Remedies............... 40
Section 5.13 Rights and Remedies Cumulative................... 40
ARTICLE 6 The Trustee.............................................. 40
Section 6.1 Certain Duties and Responsibilities.............. 40
Section 6.2 Rights of Trustee................................ 42
Section 6.3 Trustee May Hold Securities...................... 43
Section 6.4 Money Held in Trust.............................. 43
Section 6.5 Trustee's Disclaimer............................. 43
Section 6.6 Notice of Defaults............................... 43
Section 6.7 Reports by Trustee to Holders.................... 44
Section 6.8 Securityholder Lists............................. 44
Section 6.9 Compensation and Indemnity....................... 44
Section 6.10 Replacement of Trustee........................... 45
Section 6.11 Acceptance of Appointment by Successor........... 46
Section 6.12 Eligibility; Disqualification.................... 47
Section 6.13 Merger, Conversion, Consolidation or
Succession to Business........................... 48
</TABLE>
-iii-
<PAGE>
<TABLE>
<S> <C>
Section 6.14 Appointment of Authenticating Agent.............. 48
Section 6.15 Trustee's Application for Instructions From
the Company...................................... 50
ARTICLE 7 Consolidation, Merger or Sale by the Company and
the Guarantor............................................ 50
Section 7.1 Consolidation, Merger or Sale of Assets by
the Company Permitted............................ 50
Section 7.2 Consolidation, Merger or Sale of Assets by
the Guarantor Permitted.......................... 50
ARTICLE 8 Supplemental Indentures.................................. 51
Section 8.1 Supplemental Indentures Without Consent of
Holders.......................................... 51
Section 8.2 With Consent of Holders.......................... 52
Section 8.3 Compliance With Trust Indenture Act.............. 53
Section 8.4 Execution of Supplemental Indentures............. 53
Section 8.5 Effect of Supplemental Indentures................ 53
Section 8.6 Reference in Securities to Supplemental
Indentures....................................... 54
ARTICLE 9 Covenants............................................... 54
Section 9.1 Payment of Principal, Premium, if Any, and
Interest......................................... 54
Section 9.2 Maintenance of Office or Agency.................. 54
Section 9.3 Money for Securities to Be Held in Trust;
Unclaimed Money.................................. 55
Section 9.4 Corporate Existence.............................. 56
Section 9.5 Insurance........................................ 56
Section 9.6 Reports by the Company and the Guarantor......... 56
Section 9.7 Annual Review Certificate; Notice of Default..... 57
Section 9.8 Provision of Financial Statements................ 57
ARTICLE 10 Redemption............................................. 58
Section 10.1 Applicability of Article......................... 58
</TABLE>
-iv-
<PAGE>
<TABLE>
<S> <C>
Section 10.2 Election to Redeem; Notice to Trustee............ 58
Section 10.3 Selection of Securities to Be Redeemed........... 58
Section 10.4 Notice of Redemption............................. 59
Section 10.5 Deposit of Redemption Price...................... 60
Section 10.6 Securities Payable on Redemption Date............ 60
Section 10.7 Securities Redeemed in Part...................... 60
ARTICLE 11 Sinking Funds........................................... 61
Section 11.1 Applicability of Article......................... 61
Section 11.2 Satisfaction of Sinking Fund Payments With
Securities....................................... 61
Section 11.3 Redemption of Securities for Sinking Fund........ 61
ARTICLE 12 Optional Guarantee of Securities........................ 62
Section 12.1 Guarantor's Option to Guarantee Securities....... 62
Section 12.2 Unconditional Guarantee.......................... 62
Section 12.3 Execution of Guarantees.......................... 63
</TABLE>
-v-
<PAGE>
INDENTURE, dated as of __________ __, 1994, from ALASKA AIRLINES, INC., an
Alaska corporation (the "Company"), as issuer, and ALASKA AIR GROUP, INC., a
Delaware corporation ("Air Group"), as guarantor (the "Guarantor"), to
_________________, a ____________ corporation, as Trustee (the "Trustee").
RECITALS
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured
debentures, notes or other evidences of indebtedness ("Securities") to be issued
in one or more series as herein provided.
All things necessary to make the Securities, when executed by the Company,
the valid obligations of the Company, and to make this Indenture a valid
agreement of the Company, in accordance with their and its terms, have been
done.
The Guarantor has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time, at the option of the
Guarantor, of guarantees (the "Guarantees") to be endorsed on the Securities of
one or more series as herein provided.
All things necessary to make the Guarantees, when endorsed on the
Securities to which they relate and executed by the Guarantor, the valid
obligations of the Guarantor, and to make this Indenture a valid agreement of
the Guarantor, in accordance with their and its terms, have been done.
For and in consideration of the premises and the purchase of the Securities
by the Holders thereof, it is mutually covenanted and agreed as follows for the
equal and ratable benefit of the Holders of the Securities:
ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 1.1 DEFINITIONS
(a) For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles; and
<PAGE>
(4) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
"AFFILIATE" of any specified Person means any Person directly or indirectly
controlling or controlled by, or under direct or indirect common control with
such specified Person. For purposes of this definition, "control" when used
with respect to any specified Person means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"AGENT" means any Paying Agent or Registrar.
AUTHENTICATING AGENT" means any authenticating agent appointed by the
Trustee pursuant to Section 6.13.
"AUTHORIZED NEWSPAPER" means a newspaper of general circulation, in the
English language, customarily published on each Business Day whether or not
published on Saturdays, Sundays or holidays, and of general circulation in the
place in connection with which the term is used or in the financial community of
such place. Whenever successive publications in an Authorized Newspaper are
required hereunder they may be made (unless otherwise expressly provided herein)
on any Business Day and in the same or different Authorized Newspapers.
"BOARD" or "BOARD OF DIRECTORS" means the Board of Directors of the
Company, the Executive Committee or any other duly authorized committee thereof.
"BOARD RESOLUTION" means a copy of a resolution of the Board of Directors,
certified by the Corporate Secretary or an Assistant Secretary of the Company to
have been duly adopted by the Board of Directors and to be in full force and
effect on the date of such certification, and delivered to the Trustee.
"BUSINESS DAY", when used with respect to any Place of Payment or any other
particular location referred to in this Indenture or in the Securities, means,
unless otherwise specified with respect to any Securities pursuant to
Section 3.1, each Monday, Tuesday, Wednesday, Thursday and Friday which is not a
day on which banking institutions in that Place of Payment or particular
location are authorized or obligated by law or executive order to close.
"COMMISSION" means the Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934, or, if at
any time after the execution of this Indenture such Commission is not existing
and performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties at such time.
-2-
<PAGE>
"COMPANY" means the Person named as the Company in the first paragraph of
this Indenture until one or more successor corporations shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter means
such successors.
"COMPANY ORDER" and "COMPANY REQUEST" mean, respectively, a written order
or request signed in the name of the Company by the Chairman of the Board, the
President, any Executive Vice President or any Senior Vice President, signing
alone, by any Vice President signing together with the Treasurer, any Assistant
Treasurer, the Corporate Secretary or any Assistant Secretary of the Company,
or, with respect to Sections 3.3, 3.4, 3.5 and 6.1, any other employee of the
Company named in an Officers' Certificate delivered to the Trustee.
"CORPORATE TRUST OFFICE" means the principal office of the Trustee at which
at any particular time its corporate trust business shall be principally
administered.
"CORPORATION" includes corporations, associations, companies and business
trusts.
"DEFAULT" means any event which is, or after notice or passage of time, or
both, would be, an Event of Default.
"GOVERNMENT OBLIGATIONS" means securities which are (i) direct obligations
of the United States or (ii) obligations of a Person controlled or supervised by
and acting as an agency or instrumentality of the United States the payment of
which is unconditionally guaranteed as a full faith and credit obligation by the
United States, which are not callable or redeemable at the option of the issuer
thereof, and shall also include a depositary receipt issued by a bank or trust
company as custodian with respect to any such Government Obligation or a
specific payment of interest on or principal of any such Government Obligation
held by such custodian for the account of the holder of a depositary receipt,
PROVIDED that (except as required by law) such custodian is not authorized to
make any deduction from the amount payable to the holder of such depositary
receipt from any amount received by the custodian in respect of the Government
Obligation evidenced by such depositary receipt.
"GUARANTEE" means the Guarantor's unconditional guarantee of the payment of
Securities of one or more series as more fully described in Article 12.
"GUARANTOR" means the Person named as the "Guarantor" in the first
paragraph of this instrument until a successor corporation shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter
"Guarantor" shall mean such successor corporation.
"GUARANTOR ORDER" and "GUARANTOR REQUEST" mean, respectively, a written
order or request signed in the name of the Guarantor by its Chairman of the
Board, its Vice Chairman of the Board, its President, any Executive Vice
President or any Senior Vice President, signing alone, or by any Vice President
signing together with the Treasurer, any Assistant Treasurer, the Corporate
Secretary or any Assistant Secretary of the Guarantor, or with respect to
Sections 3.3, 3.4, 3.5 and 6.1, any other employee of the Guarantor named in an
Officers' Certificate delivered to the Trustee.
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<PAGE>
"HOLDER" means, a person in whose name a Security is registered on the
Register.
"INDENTURE" means this Indenture as originally executed or as amended or
supplemented from time to time and shall include the forms and terms (but not
defined terms established in an Officers' Certificate or a Board Resolution) of
particular series of Securities established as contemplated by Section 2.1 and
Section 3.1.
"INDEXED SECURITY" means a Security the terms of which provide that the
principal amount thereof payable at Stated Maturity may be more or less than the
principal face amount thereof at original issuance.
"INTEREST", when used with respect to an Original Issue Discount Security
which by its terms bears interest only after maturity, means interest payable
after maturity.
"INTEREST PAYMENT DATE", when used with respect to any Security, means the
Stated Maturity of an installment of interest on such Security.
"MATURITY", when used with respect to any Security, means the date on which
the principal of such Security or an installment of principal becomes due and
payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
"OFFICER" means the Chairman of the Board of Directors, the President, any
Executive Vice President, any Senior Vice President, any Vice President or the
Corporate Secretary of the Company.
"OFFICERS' CERTIFICATE" means a certificate signed by the Chairman of the
Board, the President, any Executive Vice President or any Senior Vice President,
signing alone, or by any Vice President signing together with the Corporate
Secretary, any Assistant Secretary, the Treasurer or any Assistant Treasurer of
the Company, or the Guarantor, as the case may be.
"OPINION OF COUNSEL" means a written opinion of legal counsel, who may be
(a) the senior attorney employed by the Company, (b) Perkins Coie, or (c) other
counsel designated by the Company and who shall be reasonably acceptable to the
Trustee.
"ORIGINAL ISSUE DISCOUNT SECURITY" means any Security which provides for an
amount less than the stated principal amount thereof to be due and payable upon
declaration of acceleration of the Maturity thereof pursuant to Section 5.2.
"OUTSTANDING", when used with respect to Securities, means, as of the date
of determination, all Securities theretofore authenticated and delivered under
this Indenture, except:
(i) Securities theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation;
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<PAGE>
(ii) Securities, or portions thereof, for whose payment or redemption
money in the necessary amount has been theretofore deposited with the
Trustee or any Paying Agent (other than the Company) in trust or set aside
and segregated in trust by the Company (if the Company shall act as its own
Paying Agent) for the Holders of such Securities PROVIDED that, if such
Securities are to be redeemed, notice of such redemption has been duly
given pursuant to this Indenture or provisions therefor satisfactory to the
Trustee have been made;
(iii) Securities, except to the extent provided in Sections 4.4
and 4.5, with respect to which the Company has effected defeasance and/or
covenant defeasance as provided in Article 4; and
(iv) Securities which have been paid pursuant to Section 3.6 or in
exchange for or in lieu of which other Securities have been authenticated
and delivered pursuant to this Indenture, other than any such Securities in
respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Securities are held by a bona fide purchaser
in whose hands such Securities are valid obligations of the Company;
PROVIDED, HOWEVER, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, or whether
sufficient funds are available for redemption or for any other purpose, and for
the purpose of making the calculations required by section 313 of the Trust
Indenture Act, (x) the principal amount of any Original Issue Discount
Securities that may be counted in making such determination or calculation and
that shall be deemed to be Outstanding for such purpose shall be equal to the
amount of principal thereof that would be (or shall have been declared to be)
due and payable, at the time of such determination, upon a declaration of
acceleration of the maturity thereof pursuant to Section 5.2, and (y) Securities
owned by the Company, the Guarantor or any other obligor upon the Securities or
any Affiliate of the Company or the Guarantor or of such other obligor shall be
disregarded and deemed not to be outstanding, except that, in determining
whether the Trustee shall be protected in making such calculation or in relying
upon any such request, demand, authorization, direction, notice, consent or
waiver, only Securities which the Trustee knows to be so owned shall be so
disregarded. Securities so owned which have been pledged in good faith may be
regarded as outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Securities and that
the pledgee is not the Company, the Guarantor or any other obligor upon the
Securities or any Affiliate of the Company, the Guarantor or of such other
obligor.
"PAYING AGENT" means any Person authorized by the Company to pay the
principal of, premium, if any, or interest on any Securities on behalf of the
Company.
"PERIODIC OFFERING" means an offering of Securities of a series from time
to time the specific terms of which Securities, including, without limitation,
the rate or rates of interest or formula for determining the rate or rates of
interest thereon, if any, the Stated Maturity or
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<PAGE>
Stated Maturities thereof, the original issue date or dates thereof, the
redemption provisions, if any, with respect thereto, and any other terms
specified as contemplated by Section 3.1 with respect thereto, are to be
determined by the Company upon the issuance of such Securities.
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"PLACE OF PAYMENT", when used with respect to the Securities of or within
any series, means the place or places where, subject to the provisions of
Section 9.2 the principal of, premium, if any, and interest on such Securities
are payable as specified as contemplated by Section 3.1.
"PREDECESSOR SECURITY" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 3.6 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"REDEMPTION DATE", when used with respect to any Security to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture.
"REDEMPTION PRICE", when used with respect to any Security to be redeemed,
in whole or in part, means the price at which it is to be redeemed pursuant to
this Indenture.
"REGULAR RECORD DATE" for the interest payable on any Interest Payment Date
on the Securities of or within any series means the date specified for that
purpose as contemplated by Section 3.1.
"RESPONSIBLE OFFICER", when used with respect to the Trustee, shall mean
the chairman or any vice chairman of the board of directors, the chairman or any
vice chairman of the executive committee of the board of directors, the chairman
of the trust committee, the president, any senior vice president, any vice
president, any assistant vice president, the secretary, the treasurer, any
assistant treasurer, the cashier, any assistant cashier, any senior trust
officer, any trust officer, the controller, any assistant controller, or any
other officer of the Trustee customarily performing functions similar to those
performed by the persons who at the time shall be such officers, respectively,
and also means, with respect to a particular corporate trust matter, any other
officer to whom such corporate trust matter is referred because of his knowledge
of and familiarity with the particular subject.
"SECURITY" or "SECURITIES" has the meaning stated in the first recital of
this Indenture and more particularly means any Security or Securities of the
Company issued, authenticated and delivered under this Indenture.
"SPECIAL RECORD DATE" for the payment of any Defaulted Interest on the
Securities of any issue means a date fixed by the Trustee pursuant to
Section 3.7.
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<PAGE>
"STATED MATURITY", when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
in such Security as the fixed date on which the principal of such Security or
such installment of principal or interest is due and payable.
"SUBSIDIARY" means any corporation of which the Company at the time owns or
controls, directly or indirectly, more than 50% of the shares of outstanding
stock having general voting power under ordinary circumstances to elect a
majority of the Board of Directors of such corporation (irrespective of whether
or not at the time stock of any other class or classes of such corporation shall
have or might have voting power by reason of the happening of any contingency).
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939, as amended, as
in effect on the date of this Indenture, except as provided in Section 8.3.
"TRUSTEE" means the party named as such in the first paragraph of this
Indenture until a successor Trustee replaces it pursuant to the applicable
provisions of this Indenture, and thereafter means such successor Trustee and
if, at any time, there is more than one Trustee, "Trustee" as used with respect
to the Securities of any series shall mean the Trustee with respect to the
Securities of that series.
"YIELD TO MATURITY" means the yield to maturity, calculated by the Company
at the time of issuance of a series of Securities or, if applicable, at the most
recent determination of interest on such series, in accordance with accepted
financial practice.
(b) The following terms shall have the meanings specified in the Sections
referred to opposite such term below:
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
"Act" 1.4(a)
"Bankruptcy Law" 5.1
"Custodian" 5.1
"Defaulted Interest" 3.7(b)
"Event of Default" 5.1
"Register" 3.5
"Registrar" 3.5
"Valuation Date" 3.7(c)
</TABLE>
SECTION 1.2 COMPLIANCE CERTIFICATES AND OPINIONS
Upon any application or request by the Company or the Guarantor to the
Trustee to take any action under any provision of this Indenture, the Company or
the Guarantor shall furnish to the Trustee an Officers' Certificate stating that
all conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with and an Opinion of Counsel stating that
in the opinion of such counsel all such conditions precedent, if any, have been
complied with, except that in the case of any such application or request as to
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<PAGE>
which the furnishing of such documents is specifically required by any provision
of this Indenture relating to such particular application or request, no
additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than pursuant to Sections 2.3,
3.3 and 9.7) shall include:
(1) a statement that each individual signing such certificate or
opinion has read such condition or covenant and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such condition or covenant
has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 1.3 FORM OF DOCUMENT DELIVERED TO TRUSTEE
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificates or opinions of an officer of the Company or the Guarantor
may be based, insofar as it relates to legal matters, upon a certificate or
opinion of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate or Opinion of Counsel may
be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Company or the
Guarantor stating that the information with respect to such factual matters is
in the possession of the Company or the Guarantor, unless such counsel knows, or
in the exercise of reasonable care should know, that the certificate or opinion
or representations as to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
-8-
<PAGE>
SECTION 1.4 ACTS OF HOLDERS
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by Holders may
be embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by agent duly appointed in writing.
Except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee and,
where it is hereby expressly required, to the Company. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Holders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Indenture
and conclusive in favor of the Trustee and the Company and the Guarantor, if
made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where
such execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other reasonable manner which the Trustee deems sufficient.
(c) The ownership of Securities shall be proved by the Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Security shall bind every future Holder of the
same Security and the holder of every Security issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee or the Company or
the Guarantor in reliance thereon, whether or not notation of such action is
made upon such Security.
(e) If the Company shall solicit from the Holders any request, demand,
authorization, direction, notice, consent, waiver or other Act, the Company may,
at its option, by or pursuant to an Officers' Certificate delivered to the
Trustee, fix in advance a record date for the determination of Holders entitled
to give such request, demand, authorization, direction, notice, consent, waiver
or other Act, but the Company shall have no obligation to do so. If such a
record date is fixed, such request, demand, authorization, direction, notice,
consent, waiver or other Act may be given before or after such record date, but
only the Holders of record at the close of business on such record date shall be
deemed to be Holders for the purposes of determining whether Holders of the
requisite proportion of Outstanding Securities have authorized or agreed to
consented to such request, demand, authorization, direction, notice, consent,
waiver or other Act, and for that purpose the Outstanding Securities shall be
computed as of such record date; PROVIDED that no such authorization, agreement
or
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<PAGE>
consent by the Holders on such record date shall be deemed effective unless it
shall become effective pursuant to the provisions of clause (a) of this
Section 1.4 not later than six months after the record date.
SECTION 1.5 NOTICES, ETC., TO TRUSTEE, COMPANY AND GUARANTOR
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or permitted by this Indenture to be
made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company or the Guarantor
shall be sufficient for every purpose hereunder if made, given, furnished
or filed in writing to or with the Trustee at its [Corporate Trust Office,
Attention: Corporate Trust Trustee Administration], or
(2) the Company or the Guarantor by the Trustee or by any Holder
shall be sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage prepaid,
to the Company or the Guarantor addressed to it at Alaska Airlines, Inc.,
P.O. Box 68947, Seattle, Washington 98168, Attention: Vice President-
Finance or at any other address previously furnished in writing to the
Trustee by the Company or the Guarantor, respectively.
SECTION 1.6 NOTICE TO HOLDERS; WAIVER
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided
or otherwise agreed to by a Holder) if in writing and mailed, first-class
postage prepaid, to each Holder affected by such event, at his address as it
appears in the Register, within the time prescribed for the giving of such
notice.
In any case where notice to Holders is given by mail, neither the failure
to mail such notice, nor any defect in any notice so mailed, to any particular
Holder shall affect the sufficiency of such notice with respect to other
Holders. Any notice mailed to a Holder in the manner herein prescribed shall be
conclusively deemed to have been received by such Holder, whether or not such
Holder actually receives such notice.
If by reason of the suspension of regular mail service or by reason of any
other cause it shall be impracticable to give such notice as provided above,
then such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by the Person entitled to receive such notice, either before
or after the event, and such waiver shall be equivalent of such notice. Waivers
of notice by Holders shall be filed with the Trustee, but such filing shall not
be a condition precedent to the validity of any action taken in reliance upon
such waiver.
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<PAGE>
SECTION 1.7 HEADINGS AND TABLE OF CONTENTS
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 1.8 SUCCESSORS AND ASSIGNS
All covenants and agreements in this Indenture by the Company and the
Guarantor shall bind its successors and assigns, whether so expressed or not.
SECTION 1.9 SEPARABILITY
In case any provision of this Indenture or the Securities or the Guarantees
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
SECTION 1.10 BENEFITS OF INDENTURE
Nothing in this Indenture or in the Securities or the Guarantees, expressed
or implied, shall give to any Person, other than the parties hereto and their
successors hereunder and the Holders, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
SECTION 1.11 GOVERNING LAW
THIS INDENTURE, THE SECURITIES AND THE GUARANTEES ENDORSED THEREON SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
This Indenture is subject to the Trust Indenture Act and if any provision hereof
limits, qualifies or conflicts with the Trust Indenture Act, the Trust Indenture
Act shall control.
SECTION 1.12 LEGAL HOLIDAYS
In any case where any Interest Payment Date, Redemption Date, sinking fund
payment date, Stated Maturity or Maturity of any Security shall not be a
Business Day at any Place of Payment, then (notwithstanding any other provision
of this Indenture of any Security other than a provision in the Securities of
any series which specifically states that such provision shall apply in lieu of
this Section) payment of principal, premium, if any, or interest need not be
made at such Place of Payment on such date, but may be made on the next
succeeding Business Day at such Place of Payment with the same force and effect
as if made on such date; PROVIDED that no interest shall accrue on the amount so
payable for the period from and after such Interest Payment Date, Redemption
Date, sinking fund payment date, Stated Maturity or Maturity, as the case may
be.
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<PAGE>
ARTICLE 2
SECURITY FORMS
SECTION 2.1 FORMS GENERALLY
The Securities of each series and the Guarantees endorsed thereon shall be
in substantially the forms set forth in this Article, or in such other form or
forms as shall be established by delivery to the Trustee of an Officers'
Certificate or in one or more indentures supplemental hereto, in each case with
such appropriate insertions, omissions, substitutions and other variations as
are required or permitted by this Indenture, and may have such letters, numbers
or other marks of identification and such legends or endorsements placed thereon
as may be required to comply with the rules of any securities exchange or as
may, consistently herewith, be determined by the officers executing such
Securities and Guarantees as evidenced by their execution of the Securities and
Guarantees. If temporary Securities of any series are issued as permitted by
Section 3.4, the form thereof also shall be established as provided in the
preceding sentence. If the form of Securities and Guarantees of any series are
established by an Officers' Certificate, such Officers' Certificate shall be
delivered to the Trustee at or prior to the delivery of the Company Order
contemplated by Section 3.3 for the authentication and delivery of such
Securities.
The permanent Securities shall be printed, lithographed or engraved or
produced by any combination of these methods or may be produced in any other
manner, all as determined by the officers executing such Securities as evidenced
by their execution of such Securities.
SECTION 2.2 FORM OF FACE OF SECURITY
[IF THE SECURITY IS AN ORIGINAL ISSUE DISCOUNT SECURITY, INSERT--FOR
PURPOSES OF SECTIONS 1273 AND 1275 OF THE UNITED STATES INTERNAL REVENUE CODE,
THE AMOUNT OF ORIGINAL ISSUE DISCOUNT ON THIS SECURITY IS % OF ITS PRINCIPAL
AMOUNT AND THE ISSUE DATE IS , 19 [, -- AND] THE YIELD TO MATURITY IS
%. [THE METHOD USED TO DETERMINE THE YIELD IS AND THE AMOUNT
OF ORIGINAL ISSUE DISCOUNT APPLICABLE TO THE SHORT ACCRUAL PERIOD OF
, 19 TO , 19 IS % OF THE PRINCIPAL AMOUNT OF THIS
SECURITY.]]
ALASKA AIRLINES, INC.
$ No.
ALASKA AIRLINES, INC., a corporation duly organized and existing under the
laws of the State of Alaska (herein called the "Company," which term includes
any successor corporation under the Indenture hereinafter referred to), for
value received, hereby promises to pay to
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<PAGE>
or registered assigns, the principal sum of Dollars
on [IF THE SECURITY IS TO BEAR INTEREST PRIOR TO MATURITY,
INSERT--, and to pay interest thereon from or from the most recent
Interest Payment Date to which interest has been paid or duly provided for,
semiannually on and in each year, commencing
, [IF THE SECURITY IS TO BEAR INTEREST AT A FIXED RATE, INSERT-
- -at the rate of % per annum] [IF THE SECURITY IS TO BEAR INTEREST AT AN
ADJUSTABLE RATE, INSERT--at a rate per annum computed or determined in
accordance with the provisions below], until the principal hereof is paid or
made available for payment [IF APPLICABLE, INSERT--, and (to the extent that the
payment of such interest shall be legally enforceable) at the rate of % per
annum on any overdue principal and premium and on any overdue installment of
interest]. The interest so payable, and punctually paid or duly provided for,
on any Interest Payment Date will, as provided in such Indenture, be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the or (whether or not a Business Day), as the
case may be, next preceding such Interest Payment Date. Any such interest not
so punctually paid or duly provided for will forthwith cease to be payable to
the Holder on such Regular Record Date and may either be paid to the Person in
whose name this Security (or one or more Predecessor Securities) is registered
at the close of business on a Special Record Date for the payment of such
Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to
Holders of Securities of this series not less than 10 days prior to such Special
Record Date, or be paid at any time in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the Securities of this
series may be listed, and upon such notice as may be required by such exchange,
all as more fully provided in said Indenture].
[IF THE SECURITY IS NOT TO BEAR INTEREST PRIOR TO MATURITY, INSERT--The
principal of this Security shall not bear interest except in the case of a
default in payment of principal upon acceleration or redemption or at the Stated
Maturity and in such case the overdue principal of this Security shall bear
interest at the rate of % per annum (to the extent that the payment of
such interest shall be legally enforceable), which shall accrue from the date of
such default in payment to the date payment of such principal has been made or
duly provided for. Interest on any overdue principal shall be payable on
demand. Any such interest on any overdue principal that is not so paid on
demand shall bear interest at the rate of % per annum (to the extent
that the payment of such interest shall be legally enforceable), which shall
accrue from the date of such demand for payment to the date payment of such
interest has been made or duly provided for, and such interest shall also be
payable on demand.]
Payment of the principal of (and premium, if any, on) and [IF APPLICABLE,
INSERT--any such] interest on this Security will be made at the office or agency
of the Company maintained for that purpose in the City and State of New York in
such coin or currency of the United States of America as at the time of payment
is legal tender for payment of public and private debts [IF APPLICABLE, INSERT--
; PROVIDED, HOWEVER, that at the option of the Company payment of interest may
be made by check mailed on or before the relevant Interest Payment Date to the
address of the Person entitled thereto as such address shall appear in the
Register].
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<PAGE>
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
Dated:
ALASKA AIRLINES, INC.
By __________________________________
Attest:
SECTION 2.3 FORM OF REVERSE OF SECURITY
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities") issued and to be issued in one or more
series under an Indenture, dated as of ___________, 1994 (herein called the
"Indenture"), between the Company (which term includes any successor corporation
under the Indenture) [, Alaska Air Group, Inc., as Guarantor (the "Guarantor")]
and _________________________, as Trustee (herein called the "Trustee," which
term includes any successor trustee under the Indenture with respect to the
series of which this Security is a part), to which the Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the Holders of the Securities and of the terms upon
which the Securities are, and are to be, authenticated and delivered. This
Security is one of the series designated on the face hereof[, limited in
aggregate principal amount to $ ].
[IF APPLICABLE, INSERT--The Securities of this series are subject to redemption
upon not less than 30 days' notice by mail, [IF APPLICABLE, INSERT--(1) on
___________ in any year commencing with the year __________ and ending with the
year _________ at a Redemption Price equal to % of the principal amount and
(2)] at any time [on or after 19 ], as a whole or in part, at the election of
the Company, at the following Redemption Prices (expressed as percentages of the
principal amount): If redeemed [on or before ______, %, and if redeemed]
during the 12-month period beginning _________ of the years indicated,
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<TABLE>
<CAPTION>
Year Redemption Price Year Redemption Price
---- ---------------- ---- ----------------
<S> <C> <C> <C>
</TABLE>
and thereafter at a Redemption Price equal to __% of the principal amount,
together in the case of any such redemption with accrued interest to the
Redemption Date, but interest installments whose Stated Maturity is on or prior
to such Redemption Date will be payable to the Holders of such Securities, or
one or more Predecessor Securities, of record at the close of business on the
relevant Regular Record Dates referred to on the face hereof, all as provided in
the Indenture.]
[IF APPLICABLE, INSERT--The Securities of this series are subject to redemption
upon not less than 30 days' notice by mail, (1) on ___________ in any year
commencing with the year ____________ and ending with the year _________ through
operation of the sinking fund for this series at the Redemption Prices for
redemption through operation of the sinking fund (expressed as percentages of
the principal amount) set forth in the table below and (2) at any time [on or
after ____________], as a whole or in part, at the election of the Company, at
the Redemption Prices for redemption otherwise than through operation of the
sinking fund (expressed as percentages of the principal amount) set forth in the
table below: If redeemed during the 12-month period beginning _____________ of
the years indicated,
<TABLE>
<CAPTION>
Redemption Price for Redemption Redemption Price for Redemption
Through Operation of the Otherwise Than Through
Year Sinking Fund Operation of the Sinking Fund
- ---- ------------------------------- -------------------------------
<S> <C> <C>
</TABLE>
and thereafter at a Redemption Price equal to ____% of the principal amount,
together in the case of any such redemption (whether through operation of the
sinking fund or otherwise) with accrued interest to the Redemption Date, but
interest installments whose Stated Maturity is on or prior to such Redemption
Date will be payable to the Holders of such Securities, or one or more
Predecessor Securities, of record at the close of business on the relevant
Regular Record Dates referred to on the face hereof, all as provided in the
Indenture.]
[Notwithstanding the foregoing, the Company may not, prior to __________,
redeem any Securities of this series as contemplated by [Clause (2) of] the
preceding paragraph as a part of, or in anticipation of, any refunding operation
by the application, directly or indirectly, of moneys borrowed having an
interest cost to the Company (calculated in accordance with generally accepted
financial practice) of less than ___% per annum.]
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[The sinking fund for this series provides for the redemption on __________
in each year beginning with the year _______________ and ending with the year
____________ of [not less than] $____________ [("mandatory sinking fund")] and
not more than $____________ aggregate principal amount of Securities of this
series. [Securities of this series acquired or redeemed by the Company
otherwise than through [mandatory] sinking fund payments may be credited against
subsequent [mandatory] sinking fund payments otherwise required to be made in
the [DESCRIBE ORDER] order in which they become due.]]
[In the event of redemption of this Security in part only, a new Security
or Securities of this series for the unredeemed portion hereof will be issued in
the name of the Holder hereof upon the cancellation hereof.]
[IF APPLICABLE, INSERT--The Securities of this series are subject to the
[defeasance] [covenant defeasance] [defeasance and covenant defeasance]
provisions set forth in Article Four of the Indenture.]
[IF THE SECURITY IS NOT AN ORIGINAL ISSUE DISCOUNT SECURITY, INSERT--If an
Event of Default with respect to Securities of this series shall occur and be
continuing, the principal of the Securities of this series may be declared due
and payable in the manner and with the effect provided in the Indenture.]
[IF THE SECURITY IS AN ORIGINAL ISSUE DISCOUNT SECURITY, INSERT--If an
Event of Default with respect to Securities of this series shall occur and be
continuing, an amount of principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture. Such amount shall be equal to--INSERT FORMULA FOR DETERMINING THE
AMOUNT. Upon payment (i) of the amount of principal so declared due and payable
and (ii) of interest on any overdue principal and overdue interest (in each case
to the extent that the payment of such interest shall be legally enforceable),
all the Company's obligations in respect of the payment of the principal of and
interest, if any, on the Securities of this series shall terminate.]
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of a majority in principal amount of the Outstanding
Securities of each series to be affected. The Indenture also contains
provisions permitting the Holders of specified percentages in principal amount
of the Outstanding Securities of each series, on behalf of the Holders of all
Outstanding Securities of such series, to waive compliance by the Company with
certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon the registration
of transfer hereof or in exchange or in lieu hereof, whether or not notation of
such consent or waiver is made upon this Security.
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<PAGE>
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the amount of principal of (and premium, if
any, on) and interest, if any, on this Security herein provided, and at the
times, place and rate, and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Security is registrable in the Security Register,
upon surrender of this Security for registration of transfer at the office or
agency of the Company in any place where the principal of (and premium, if any,
on) and interest, if any, on this Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities of
this series, of authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or transferees.
The Securities of this series are issuable only in registered form without
coupons in denominations of $___________ and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Securities of this series are exchangeable for a like aggregate principal amount
of Securities of this series of different authorized denominations as requested
by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company nor
the Trustee nor any such agent shall be affected by notice to the contrary.
All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
SECTION 2.4 FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION
The Trustee's certificate of authentication shall be in substantially the
following form:
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<PAGE>
This is one of the Securities of a series issued under the within-mentioned
Indenture.
___________________________,
as Trustee
By _________________________
Authorized Signatory
SECTION 2.5 FORM OF GUARANTEE
The Guarantee, if applicable, shall be in substantially the following form:
ALASKA AIR GROUP, INC. (the "Guarantor") hereby unconditionally guarantees
(the "Guarantee") the due and punctual payment of the principal of and premium,
if any, and interest on, any Redemption Price with respect to, this Security,
when and as the same shall become due and payable, whether at maturity, by
acceleration or redemption or otherwise, in accordance with the terms of this
Security and of the Indenture. In case of the failure of the Company punctually
to pay any such principal, premium or interest payment or Redemption Price, the
Guarantor hereby agrees to cause any such payment to be made punctually when and
as the same shall become due and payable, whether at maturity, upon acceleration
or redemption or otherwise, and as if such payment were made by the Company.
The Guarantor hereby agrees that its obligations hereunder shall be as
principal and not merely as surety, and shall be absolute and unconditional,
irrespective of, and shall be unaffected by, any invalidity, irregularity or
failure to enforce the provisions of this Security or the Indenture, or any
waiver, modification, consent or indulgence granted to the Company with respect
thereto (unless the same shall also be provided the Guarantor), by the Holder of
such Security or the Trustee, the recovery of any judgment against the Company
or any action to enforce the same, or any other circumstances which may
otherwise constitute a legal or equitable discharge of a surety or guarantor.
The Guarantor hereby waives diligence, presentment, demand of payment, filing of
claims with a court in the event of merger, insolvency or bankruptcy of the
Company, any right to require a proceeding first against the Company, protest or
notice with respect to any such Security or the indebtedness evidenced thereby
and all demands whatsoever, and covenants that this Guarantee will not be
discharged, except by payment in full of the principal, premium, if any, and
interest on, and any Redemption Price in respect of, the Securities and the
complete performance of all other obligations contained in the Securities.
The Guarantor shall be subrogated to all rights of the Holder of any
Security against the Company in respect of any amounts paid to such Holder by
the Guarantor pursuant to the provisions of this Guarantee; PROVIDED, HOWEVER,
that the Guarantor shall not be entitled to enforce, or to receive any payments
arising out of or based upon, such right of subrogation
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<PAGE>
until the principal of, premium, if any, and interest on, and any Redemption
Price in respect of all Securities shall have been paid in full.
Dated:
ALASKA AIR GROUP, INC.
By:___________________________________
ARTICLE 3
THE SECURITIES
SECTION 3.1 AMOUNT UNLIMITED; ISSUABLE IN SERIES
(a) The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is unlimited. The Securities
may be issued from time to time in one or more series.
(b) The following matters shall be established and (subject to
Section 3.3) set forth, or determined in the manner provided, in an Officers'
Certificate and a Board Resolution of the Company and, if the Guarantor
guarantees such Securities in accordance with Section 12.1, an Officer's
Certificate and a Board Resolution of the Guarantor, or one or more indentures
supplemental hereto:
(1) the title of the Securities of the series (which title shall
distinguish the Securities of the series from all other Securities);
(2) any limit upon the aggregate principal amount of the Securities
of the series which may be authenticated and delivered under this Indenture
(which limit shall not pertain to (i) Securities authenticated and
delivered upon registration of transfer of, or in exchange for, or in lieu
of, other Securities of the series pursuant to Section 3.4, 3.5, 3.6, 8.6,
or 10.7 and (ii) any Securities which, pursuant to the last paragraph of
Section 3.3, are deemed never to have been authenticated and delivered
thereunder);
(3) the date or dates on which the principal of the Securities of the
series is payable or the method of determination thereof;
(4) the rate or rates at which the Securities of the series shall
bear interest, if any, or the method of calculating such rate or rates of
interest, the date or dates from which such interest shall accrue or the
method by which such date or dates shall be
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<PAGE>
determined, the Interest Payment Dates on which any such interest shall be
payable and the Regular Record Date, if any, for the interest payable on
any Interest Payment Date;
(5) the place or places where, subject to the provisions of
Section 9.2, the principal of, premium, if any, and interest, if any, on
Securities of the series shall be payable;
(6) the period or periods within which, the price or prices at which,
and the other terms and conditions upon which, Securities of the series may
be redeemed, in whole or in part, at the option of the Company and, if
other than as provided in Section 10.3, the manner in which the particular
Securities of such series (if less than all Securities of such series are
to be redeemed) are to be selected for redemption;
(7) the obligation, if any, of the Company to redeem or purchase
Securities of the series pursuant to any sinking fund or analogous
provisions or upon the happening of a specified event or at the option of a
Holder thereof and the period or periods within which, the price or prices
at which, and the other terms and conditions upon which, Securities of the
series shall be redeemed or purchased, in whole or in part, pursuant to
such obligation;
(8) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which Securities of the series shall be
issuable;
(9) if the amount of payments or principal of, premium, if any, and
interest, if any, on the Securities of the series shall be determined with
reference to an index, formula or other method, the index, formula or other
method by which such amounts shall be determined;
(10) if other than the principal amount thereof, the portion of the
principal amount of such Securities of the series which shall be payable
upon declaration of the acceleration thereof pursuant to Section 5.2 or the
method by which such portion shall be determined;
(11) if other than as provided in Section 3.7, the Person to whom any
interest on any Security of the series shall be payable and the extent to
which, or the manner in which (including any certification requirement and
other terms and conditions under which), any interest payable on a
temporary Security on an Interest Payment Date will be paid if other than
in the manner provided in Section 3.4, as applicable;
(12) provisions, if any, granting special rights to the Holders of
Securities of the series upon the occurrence of such events as may be
specified;
(13) any deletions from, modifications of or additions to the Events
of Default set forth in Section 5.1 or covenants of the Company and/or the
Guarantor set forth in Article 9 pertaining to the Securities of the
series;
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<PAGE>
(14) under what circumstances, if any, the Company or the Guarantor
will pay additional amounts on the Securities of that series held by a
Person who is not a U.S. Person in respect of taxes or similar charges
withheld or deducted and, if so, whether the Company will have the option
to redeem such Securities rather than pay such additional amounts (and the
terms of any such option);
(15) the date as of which any temporary Security representing
outstanding Securities of the series shall be dated if other than the date
of original issuance of the first Security of the series to be issued;
(16) the applicability, if any, to the Securities of or within the
series of Sections 4.4 and 4.5, or such other means of defeasance or
covenant defeasance as may be specified for the Securities of such series;
(17) if other than the Trustee, the identity of the Registrar and any
Paying Agent;
(18) any terms which may be related to warrants issued by the Company
in connection with, or for the purchase of, Securities of such series,
including whether and under what circumstances the Securities of any series
may be used toward the exercise price of any such warrants;
(19) whether Guarantees will be endorsed on Securities of the series,
and, if so, the terms of the Guarantees if other than as specified in
Section 12.2; and
(20) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture), including any terms
which may be required by or advisable under United States laws or
regulations or advisable in connection with the marketing of Securities of
the series.
(c) All Securities of any one series shall be substantially identical
except as to denomination and the rate or rates of interest, if any, and Stated
Maturity, the date from which interest, if any, shall accrue and except as may
otherwise be provided in or pursuant to an Officers' Certificate pursuant to
this Section 3.1 or in an indenture supplemental hereto. All Securities of any
one series need not be issued at the same time and, unless otherwise provided, a
series may be reopened, without the consent of the Holders, for issuances of
additional Securities of such series or for the establishment of additional
terms with respect to the Securities of such series.
(d) If any of the terms of the Securities of any series and the Guarantees
endorsed thereon are established by action taken pursuant to a Board Resolution,
a copy of such Board Resolution shall be certified by the Corporate Secretary or
an Assistant Secretary of the Company or the Guarantor and delivered to the
Trustee at or prior to the delivery of the Officers' Certificate of the Company
or the Guarantor setting forth, or providing the manner for determining, the
terms of the Securities of such series and the Guarantees endorsed
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<PAGE>
thereon, and an appropriate record of any action taken pursuant thereto in
connection with the issuance of any Securities of such series and the Guarantees
endorsed thereon shall be delivered to the Trustee prior to the authentication
and delivery thereof. With respect to Securities of a series and the Guarantees
endorsed thereon subject to a Periodic Offering, such Board Resolution or
Officers' Certificate may provide general terms for Securities of such series
and the Guarantees endorsed thereon and provide either that the specific terms
of particular Securities of such series and the Guarantees endorsed thereon
shall be specified in a Company Order and a Guarantor Order or that such terms
shall be determined by the Company and the Guarantor, or one or more of the
Company's agents designated in an Officers' Certificate, in accordance with the
Company Order and the Guarantor Order as contemplated by the first proviso of
the third paragraph of Section 3.3
SECTION 3.2 DENOMINATIONS
The Securities of each series shall be issuable only in definitive
registered form without coupons and in such denominations as shall be specified
as contemplated by Section 3.1. In the absence of any such provisions with
respect to the Securities of any series, the Securities of such series shall be
issuable in denominations of $1,000 and any integral multiple thereof.
SECTION 3.3 EXECUTION, AUTHENTICATION, DELIVERY AND DATING
Securities shall be executed on behalf of the Company and the Guarantees
endorsed thereon shall be executed on behalf of the Guarantor, respectively, by
their respective Chairman, President or Chief Executive Officer and attested to
by the Secretary of the Company or the Guarantor, as the case may be. The
Company's and the Guarantor's seal shall be affixed to the Securities and the
Guarantees, respectively, or a facsimile of such seal shall be engraved,
printed, or otherwise reproduced on the Securities and the Guarantees. The
signatures of such officers on the Securities or the Guarantees, as the case may
be may be manual or facsimile signatures of the present or any future such
authorized officers and may be imprinted or otherwise reproduced on the
Securities and the Guarantees.
Securities and Guarantees bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company or the
Guarantor shall bind the Company and the Guarantor, respectively,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities and Guarantees.
At any time and from time to time, the Company may deliver Securities,
together with the Guarantees endorsed thereon executed by the Guarantor, of any
series executed by the Company to the Trustee for authentication, together with
a Company Order for the authentication and make available for delivery such
Securities, and the Trustee in accordance with the Company Order shall
authenticate and deliver such Securities; PROVIDED, HOWEVER, that in the case of
Securities offered in a Periodic Offering, the Trustee shall authenticate and
deliver such Securities from time to time in accordance with such other
procedures (including, without limitation, the receipt by the Trustee of oral or
electronic instructions from the
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<PAGE>
Company or its duly authorized agents, promptly confirmed in writing) acceptable
to the Trustee as may be specified by or pursuant to a Company Order delivered
to the Trustee prior to the time of the first authentication of Securities of
such series.
If the form or terms of the Securities of a series have been established by
or pursuant to one or more Officers' Certificates as permitted by Sections 2.1
and 3.1, in authenticating such Securities and accepting the additional
responsibilities under this Indenture in relation to such Securities, the
Trustee shall be entitled to receive, and (subject to section 315(a) through (d)
of the Trust Indenture Act) shall be fully protected in relying upon, an Opinion
of Counsel stating,
(1) that the forms and terms of such Securities and the Guarantees
endorsed thereon have been established in conformity with the provisions of
this Indenture; and
(2) that such Securities and the Guarantees endorsed thereon, when
authenticated and delivered by the Trustee and issued by the Company in the
manner and subject to any conditions specified in such Opinion of Counsel,
will constitute valid and legally binding obligations of the Company and
the Guarantor, enforceable in accordance with their terms, subject to
customary exceptions;
PROVIDED, HOWEVER, that, with respect to Securities of a series subject to a
Periodic Offering, the Trustee shall be entitled to receive such Opinion of
Counsel only once at or prior to the time of the first authentication of
Securities of such series and that the Opinion of Counsel above may state:
(x) that the forms of such Securities and the Guarantees endorsed
thereon have been, and the terms of such Securities and the Guarantees
endorsed thereon (when established in accordance with such procedures as
may be specified from time to time in a Company Order, all as contemplated
by and in accordance with a Board Resolution or an Officers' Certificate
pursuant to Section 3.1, as the case may be) will have been, established in
conformity with the provisions of this Indenture; and
(y) that such Securities and the Guarantees endorsed thereon, when
(1) executed by the Company and the Guarantor, (2) completed, authenticated
and delivered by the Trustee in accordance with this Indenture, and
(3) issued by the Company in the manner and subject to any conditions
specified in such Opinion of Counsel, will constitute valid and legally
binding obligations of the Company and the Guarantor, enforceable in
accordance with their terms, subject to customary exceptions.
With respect to Securities of a series subject to a Periodic Offering, the
Trustee may conclusively rely, as to the authorization by the Company and the
Guarantor of any of such Securities and Guarantees, respectively, the form and
terms thereof and the legality, validity, binding effect and enforceability
thereof, upon the Opinion of Counsel and other documents delivered pursuant to
Sections 2.1 and 3.1 of this Section, as applicable, at or prior to the time of
the first authentication of Securities of such series unless and until it has
received written
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<PAGE>
notification that such opinion or other documents have been superseded or
revoked. In connection with the authentication and delivery of Securities of a
series subject to a Periodic Offering, the Trustee shall be entitled to assume
that the Company's instructions to authenticate and deliver such Securities do
not violate any rules, regulations or orders of any governmental agency or
commission having jurisdiction over the Company.
Reference is made to Section 12.2 concerning the execution and delivery of
the Guarantees.
If the form or terms of the Securities of a series have been established by
or pursuant to one or more Officers' Certificates as permitted by Sections 2.1
and 3.1, the Trustee shall have the right to decline to authenticate such
Securities if the issue of such Securities pursuant to this Indenture will
adversely affect the Trustee's own rights, duties or immunities under this
Indenture or otherwise in a manner which is not reasonably acceptable to the
Trustee.
Notwithstanding the provisions of Section 3.1 and of the two preceding
paragraphs, if all of the Securities of any series are not to be issued at one
time, it shall not be necessary to deliver the Officers' Certificate otherwise
required pursuant to Section 3.1 at or prior to the time of the authentication
of each Security of such series if the Officers' Certificate is delivered at or
prior to the authentication upon original issuance of the first Security of such
series to be issued.
Each Security shall be dated the date of its authentication.
No Security or Guarantee endorsed thereon shall be entitled to any benefits
under this Indenture or be valid or obligatory for any purpose until
authenticated by the manual signature of one of the authorized signatories of
the Trustee or an Authenticating Agent. Such signature upon any Security shall
be conclusive evidence, and the only evidence, that such Security has been duly
authenticated and delivered under this Indenture and is entitled to the benefits
of this Indenture.
Notwithstanding the foregoing, if any Security shall have been
authenticated and delivered hereunder but never issued and sold by the Company,
and the Company shall deliver such Security to the Trustee for cancellation as
provided in Section 3.9 together with a written statement (which need not comply
with Section 1.2 and need not be accompanied by an Opinion of Counsel) stating
that such Security has never been issued and sold by the Company, for all
purposes of this Indenture such Security shall be deemed never to have been
authenticated and delivered hereunder and shall not be entitled to the benefits
of this Indenture.
SECTION 3.4 TEMPORARY SECURITIES
Pending the preparation of definitive Securities of any series, the Company
may execute and, upon Company Order, the Trustee shall authenticate and deliver
temporary Securities of such series (having Guarantees endorsed thereon) which
are printed, lithographed, typewritten, mimeographed or otherwise produced, in
any authorized
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denomination, substantially of the tenor and form of the definitive Securities
in lieu of which they are issued and with such appropriate insertions,
omissions, substitutions and other variations as the officers executing such
Securities may determine, as conclusively evidenced by their execution of such
Securities.
If temporary Securities of any series are issued, the Company will cause
permanent Securities of such series to be prepared without unreasonable delay.
After preparation of such permanent Securities, the temporary Securities shall
be exchangeable for such permanent Securities of like tenor upon surrender of
the temporary Securities of such series at the office or agency of the Company
pursuant to Section 9.2 in a Place of Payment for such series, without charge to
the Holder. Upon surrender for cancellation of any one or more temporary
Securities of any series (accompanied by the Guarantees endorsed thereon), the
Company shall execute and the Trustee shall authenticate and deliver in exchange
therefor a like principal amount of Permanent Securities of the same series of
authorized denominations and of like tenor. Until so exchanged, the temporary
Securities of any series and the Guarantees endorsed thereon shall in all
respects be entitled to the same benefits under this Indenture as permanent
Securities of such series except as otherwise specified as contemplated by
Section 3.1.
SECTION 3.5 REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE
The Company shall cause to be kept at the Corporate Trust Office of the
Trustee or in any office or agency to be maintained by the Company in accordance
with Section 9.2 in a Place of Payment a register (the "Register") in which,
subject to such reasonable regulations as it may prescribe, the Company shall
provide for the registration of Securities and the registration of transfers of
Securities. The Register shall be in written form or any other form capable of
being converted into written form within a reasonable time. The Trustee is
hereby appointed "Registrar" for the purpose of registering Securities and
transfers of Securities as herein provided.
Upon surrender for registration of transfer of any Security of any series
at the office or agency maintained pursuant to Section 9.2 in a Place of Payment
for that series, the Company shall execute, and the Trustee shall authenticate
and deliver, in the name of the designated transferee or transferees, one or
more new Securities of the same series (having Guarantees duly endorsed
thereon), of any authorized denominations and of a like aggregate principal
amount and tenor.
At the option of the Holder, Securities of any series may be exchanged for
other Securities of the same series, of any authorized denominations and of like
aggregate principal amount containing identical terms and provisions, upon
surrender of the Securities to be exchanged at such office or agency. Whenever
any Securities are so surrendered for exchange, the Company shall execute, and
the Trustee shall authenticate and deliver, the Securities which the Holder
making the exchange is entitled to receive and the Guarantor shall execute the
Guarantees endorsed thereon.
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Whenever any Securities are surrendered for exchange, the Company shall
execute, and the Trustee shall authenticate and deliver, the Securities which
the Holder making the exchange is entitled to receive, having endorsed thereon a
Guarantee duly executed by the Guarantor.
All Securities, and the Guarantees thereon, issued upon any registration of
transfer or upon any exchange of Securities shall be the valid obligations of
the Company and the Guarantor, evidencing the same debt, and entitled to the
same benefits under this Indenture, as the Securities surrendered upon such
registration of such transfer or exchange.
Every Security presented or surrendered for registration of transfer or for
exchange shall (if so required by the Company, the Registrar or the Trustee) be
duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to those of the Company, the Registrar and the Trustee requiring
such written instrument of transfer duly executed by the Holder thereof or his
attorney duly authorized in writing.
No service change shall be made for any registration of transfer or for any
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration or transfer or exchange of Securities, other than
exchanges pursuant to Section 3.4 or 10.7 not involving any transfer.
The Company shall not be required (i) to issue, register the transfer of,
or exchange any Securities for a period beginning at the opening of business 15
days before any selection for redemption of Securities of like tenor and of the
series of which such Security is a part and ending at the close of business on
the earliest date on which the relevant notice of redemption is deemed to have
been given to all Holders of Securities of like tenor and of such series to be
redeemed or (ii) to register the transfer of or exchange of any Security so
selected for redemption, in whole or in part, except the unredeemed portion of
any Security being redeemed in part.
SECTION 3.6 REPLACEMENT SECURITIES
If a mutilated Security is surrendered to the Trustee, together with, in
proper cases, such security or indemnity as may be required by the Company or
the Trustee to save each of them harmless, the Company shall execute and the
Trustee shall authenticate and deliver a replacement Security (with a Guarantee
duly endorsed thereon) of the same series and date of maturity, if the Trustee's
requirements are met.
If there shall be delivered to the Company, the Guarantor and the Trustee
(i) evidence to their satisfaction of the destruction, loss or theft of any
Security and (ii) such security or indemnity as may be required by them to save
each of them and any agency of either of them harmless, then, in the absence of
notice to the Company, the Guarantor or the Trustee that such Security has been
acquired by a bona fide purchaser, the Company shall execute and the Trustee
shall authenticate and deliver in lieu of any such destroyed, lost or stolen
Security, a
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replacement Security (with a Guarantee duly endorsed thereon) of the same series
and principal amount, containing identical terms and provisions and bearing a
number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee connected therewith).
Every new Security of any series issued pursuant to this Section in lieu of
any destroyed, lost or stolen Security, shall constitute an original additional
contractual obligation of the Company guaranteed by the Guarantor, whether or
not the destroyed, lost or stolen Security shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Securities and Guarantees of that series
duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
SECTION 3.7 PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED
Unless otherwise provided as contemplated by Section 3.1, interest, if any,
on any Security which is payable, and is punctually paid or duly provided for,
on any Interest Payment Date shall be paid to the Person in whose name that
Security (or one or more Predecessor Securities) is registered at the close of
business on the Regular Record Date for such interest at the office or agency
maintained for such purpose pursuant to Section 9.2; PROVIDED, HOWEVER, that, at
the option of the Company or the Guarantor, interest on any series of Securities
that bear interest may be paid (i) by check mailed to the address of the Person
entitled thereto as it shall appear on the Register of Holders of Securities of
such series or (ii) to the extent specified as contemplated by Section 3.1, by
wire transfer to an account maintained by the Person entitled thereto as
specified in the Register of Holders of Securities of such series.
Unless otherwise provided as contemplated by Section 3.1, any interest on
any Security of any series which is payable, but is not punctually paid or duly
provided for, on any interest payment date (herein called "Defaulted Interest")
shall forthwith cease to be payable to the Holder on the relevant Regular Record
Date by virtue of having been such Holder, and such Defaulted Interest may be
paid by the Company or the Guarantor, at its election in each case, as provided
in clause (1) or (2) below:
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(1) The Company or the Guarantor may elect to make payment of any
Defaulted Interest to the Persons in whose names the Securities of such
series (or their respective Predecessor Securities) are registered at the
close of business on a Special Record Date for the payment of such
Defaulted Interest, which shall be fixed in the following manner. The
Company or the Guarantor shall deposit with the Trustee an amount of money
equal to the aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to the trustee
for such deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons entitled to
such Defaulted Interest as in this clause (1) provided. Thereupon the
Trustee shall fix a Special Record Date for the payment of such Defaulted
Interest which shall be not more than 15 days and not less than 10 days
prior to the date of the proposed payment and not less than 10 days after
the receipt by the Trustee of the notice of the proposed payment. The
Trustee shall promptly notify the Company or the Guarantor of such Special
Record Date and, in the name and at the expense of the Company or the
Guarantor, as the case may be, shall cause notice of the proposed payment
of such Defaulted Interest and the Special Record Date therefor to be
mailed, first-class postage prepaid, to each Holder of Securities of such
series at his address as it appears in the Register, not less than 10 days
prior to such Special Record Date. Notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor having been so
mailed, such Defaulted Interest shall be paid to the Persons in whose names
the Securities of such series (or their respective Predecessor Securities)
are registered at the close of business on such Special Record Date and
shall no longer be payable pursuant to the following clause (2).
(2) The Company or the Guarantor may make payment of any Defaulted
Interest to the Persons in whose names the Securities of such series (or
their respective Predecessor Securities) are registered at the close of
business on a specified date in any other lawful manner not inconsistent
with the requirements of any securities exchange on which such Securities
may be listed, and upon such notice as may be required by such exchange,
if, after notice given by the Company to the Trustee of the proposed
payment pursuant to this clause (2), such manner of payment shall be deemed
practicable by the Trustee.
Subject to the foregoing provisions of this Section and Section 3.5, each
Security delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Security shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Security.
SECTION 3.8 PERSONS DEEMED OWNERS
Prior to due presentment of any Security for registration of transfer, the
Company, the Guarantor, the Trustee and any agent of the Company, the Guarantor
or the Trustee may treat the Person in whose name such Security is registered as
the owner of such Security for the purpose of receiving payment of principal of,
premium, if any, and (subject to Section 3.7)
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interest on such Security and for all other purposes whatsoever, whether or not
such Security be overdue, and neither the Company, the Guarantor, the Trustee
nor any agent of the Company, the Guarantor or the Trustee shall be affected by
notice to the contrary.
SECTION 3.9 CANCELLATION
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and any Paying Agent shall forward to the Trustee
any Securities surrendered to them for replacement, for registration of
transfer, or for exchange or payment. The Trustee shall cancel all Securities
surrendered for replacement, for registration of transfer, or for exchange,
payment, redemption or cancellation and may dispose of cancelled Securities and
issue a certificate of destruction to the Company. The Company may not issue
new Securities to replace Securities that it has paid or delivered to the
Trustee for cancellation, except as expressly permitted in the terms of
Securities for any particular series or as permitted pursuant to the terms of
this Indenture.
SECTION 3.10 COMPUTATION OF INTEREST
Except as otherwise specified as contemplated by Section 3.1 (i) interest
of any Securities that bear interest at a fixed rate shall be computed on the
basis of a 360-day year of twelve 30 day months and (ii) interest on any
Securities the bear interest at a variable rate shall be computed on the basis
of the actual number of days in an interest period divided by 360 or the actual
number of days in the year.
SECTION 3.11 CUSIP NUMBERS
The Company in issuing the Securities may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers (in
addition to the other identification numbers printed on the Securities) in
notices of redemption as a convenience to Holders; PROVIDED that any such notice
may state that no representation is made as to the correctness of such numbers
either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be affected
by any defect in or omission of such numbers.
ARTICLE 4
SATISFACTION, DISCHARGE AND DEFEASANCE
SECTION 4.1 TERMINATION OF COMPANY'S OBLIGATIONS UNDER THE INDENTURE
Except as otherwise provided as contemplated by Section 3.1, this Indenture
shall upon Company Request or Guarantor Request cease to be of further effect
with respect to Securities of or within any series (except as to any surviving
rights of registration of transfer or exchange of such Securities and
replacement of such Securities which may have been lost, stolen or mutilated as
herein expressly provided for) and the Trustee, at the expense of the Company or
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the Guarantor, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture with respect to such Securities when
(1) either
(A) all such Securities previously authenticated and delivered
(other than (i) such Securities which have been destroyed, lost or
stolen and which have been replaced or paid as provided in
Section 3.6, and (ii) such Securities for whose payment money has
theretofore been deposited in trust or segregated and held in trust by
the Company and thereafter repaid to the Company or discharged from
such trust, as provided in Section 9.3) have been delivered to the
Trustee for cancellation; or
(B) all Securities of such series not theretofore delivered to
the Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity
within one year, or
(iii) if redeemable at the option of the Company, are to
be called for redemption within one year under arrangements
satisfactory to the Trustee for giving of notice of redemption by
the Trustee in the name, and at the expense, of the Company or
the Guarantor, as the case may be,
and the Company or the Guarantor, in the case of (i), (ii) or (iii)
above, has irrevocably deposited or caused to be deposited with the
Trustee as trust funds in trust for the purpose an amount sufficient
to pay and discharge the entire indebtedness on such Securities not
theretofore delivered to the Trustee for cancellation, for principal,
premium, if any, and interest, with respect thereto, to the date of
such deposit (in the case of Securities which have become due and
payable) or to the Stated Maturity or Redemption Date, as the case may
be;
(2) the Company or the Guarantor has paid or caused to be paid all
other sums payable hereunder by the Company or the Guarantor; and
(3) the Company and the Guarantor have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent herein provided for relating to the satisfaction and
discharge of this Indenture as to such series have been complied with.
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Notwithstanding the satisfaction and discharge of this Indenture, the obligation
of the Company and the Guarantor to the Trustee and any predecessor Trustee
under Section 6.8, the obligations of the Company to any Authenticating Agent
under Section 6.13 and, if money shall have been deposited with the Trustee
pursuant to subclause (B) of clause (1) of this Section, the obligations of the
Trustee under Section 4.2 and the last paragraph of Section 9.3 shall survive.
SECTION 4.2 APPLICATION OF TRUST FUNDS
Subject to the provisions of the last paragraph of Section 9.3, all money
deposited with the Trustee pursuant to Section 4.1 shall be held in trust and
applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal, premium, if any,
and any interest for whose payment such money has been deposited with or
received by the Trustee, but such money need not be segregated from other funds
except to the extent required by law.
SECTION 4.3 APPLICABILITY OF DEFEASANCE PROVISIONS; COMPANY'S OPTION TO
EFFECT DEFEASANCE OR COVENANT DEFEASANCE
If pursuant to Section 3.1 provision is made for either or both of
(i) defeasance of the Securities of or within a series under Section 4.4 or
(ii) covenant defeasance of the Securities of or within a series under
Section 4.5, then the provisions of such Section or Sections, as the case may
be, together with the provisions of Sections 4.6 through 4.9 inclusive, with
such modifications thereto as may be specified pursuant to Section 3.1 with
respect to any Securities, shall be applicable to such Securities, and the
Company may at its option by Board Resolution, at any time, with respect to such
Securities, elect to have Section 4.4 (if applicable) or Section 4.5 (if
applicable) be applied to such Outstanding Securities upon compliance with the
conditions set forth below in this Article.
SECTION 4.4 DEFEASANCE AND DISCHARGE
Upon the Company's exercise of the option specified in Section 4.3
applicable to this Section with respect to the Securities of or within a
series, the Company and the Guarantor shall be deemed to have been discharged
from its obligations with respect to such Securities on the date the conditions
set forth in Section 4.6 are satisfied (hereinafter "defeasance"). For this
purpose, such defeasance means that the Company shall be deemed to have paid and
discharged the entire indebtedness represented by such Securities which shall
thereafter be deemed to be "Outstanding" only for the purposes of Section 4.7
and the other Sections of this Indenture referred to in clause (ii) of this
Section, and to have satisfied all its other obligations under such Securities
and this Indenture insofar as such Securities are concerned (and the Trustee, at
the expense of the Company, shall on Company Order execute proper instruments
acknowledging the same), except the following which shall survive until
otherwise terminated or discharged hereunder: (i) the rights of Holders of such
Securities to receive, solely from the trust funds described in Section 4.6(a)
and as more fully set forth in such Section, payments in
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respect of the principal of, premium, if any, and interest, if any, on such
Securities when such payments are due; (ii) the Company's and the Guarantor's
obligations with respect to such Securities under Sections 3.5, 3.6, 9.2 and 9.3
and with respect to the payment of additional amounts, if any, payable with
respect to such Securities as specified pursuant to Section 3.1(b)(16);
(iii) the rights, powers, trusts, duties and immunities of the Trustee
hereunder; and (iv) this Article 4. Subject to compliance with this Article 4,
the Company may exercise its option under this Section notwithstanding the prior
exercise of its option under Section 4.5 with respect to such Securities.
Following a defeasance, payment of such Securities may not be accelerated
because of an Event of Default.
SECTION 4.5 COVENANT DEFEASANCE
Upon the Company's exercise of the option specified in Section 4.3
applicable to this Section with respect to any Securities of or within a series,
the Company and the Guarantor shall be released from its obligations under
Sections 7.1, 9.4 and 9.5, and, if specified pursuant to Section 3.1, its
obligations under any other covenant, with respect to such Securities on and
after the date the conditions set forth in Section 4.6 are satisfied
(hereinafter, "covenant defeasance"), and such Securities shall thereafter be
deemed to be not "Outstanding" for the purposes of any direction, waiver,
consent or declaration or Act of Holders (and the consequences of any thereof)
in connection with Sections 7.1, 9.4 and 9.5, or such other covenant, but shall
continue to be deemed "Outstanding" for all other purposes hereunder. For this
purpose, such covenant defeasance means that, with respect to such Securities,
the Company and the Guarantor may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
Section or such other covenant, whether directly or indirectly, by reason of any
reference elsewhere herein to any such Section or such other covenant or by
reason of reference in any such Section or such other covenant to any other
provision herein or in any other document and such omission to comply shall not
constitute a Default or an Event of Default under Section 5.1(3) or 5.1(7) or
otherwise, as the case may be, but, except as specified above, the remainder of
this Indenture and such Securities and the related Guarantees shall be
unaffected thereby.
SECTION 4.6 CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE
The following shall be the conditions to application of Section 4.4 or
Section 4.5 to any Securities of or within a series:
(a) The Company or the Guarantor shall have deposited or caused to be
deposited irrevocably with the Trustee (or another trustee satisfying the
requirements of Section 6.11 who shall agree to comply with, and shall be
entitled to the benefits of, the provisions of Sections 4.3 through 4.9
inclusive and the last paragraph of Section 9.3 applicable to the Trustee,
for purposes of such Sections also a "Trustee") as trust funds in trust for
the purpose of making the payments referred to in clauses (x) and (y) of
this Section 4.6(a), specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of such Securities, with instructions
to the Trustee as to the application thereof, (A) money in an amount, or
(B) if Securities of such series are
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not subject to repayment at the option of Holders, Government Obligations
which through the payment of interest and principal in respect thereof in
accordance with their terms will provide, not later than one day before the
due date of any payment referred to in clause (x) or (y) of this
Section 4.6(a), money in an amount or (C) a combination thereof in an
amount, sufficient, in the opinion of a nationally recognized firm of
independent certified public accountants expressed in a written
certification thereof delivered to the Trustee, to pay and discharge, and
which shall be applied by the Trustee to pay and discharge, (x) the
principal of, premium, if any, and interest, if any, on such Securities on
the Maturity of such principal or installment of principal or interest and
(y) any mandatory sinking fund payments applicable to such Securities on
the day on which such payments are due and payable in accordance with the
terms of this Indenture and such Securities. Before such a deposit the
Company may make arrangements satisfactory to the Trustee for the
redemption of Securities at a future date or dates in accordance with
Article 10 which shall be given effect in applying the foregoing.
(b) Such defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a Default or Event of Default under,
this Indenture or result in a breach or violation of, or constitute a
default under, any other material agreement or instrument to which the
Company or the Guarantor is a party or by which it is bound.
(c) No Default or Event of Default under Section 5.1(5) or 5.1(6)
with respect to such Securities shall have occurred and be continuing
during the period commencing on the date of such deposit and ending on the
91st day after such date (it being understood that this condition shall not
be deemed satisfied until the expiration of such period).
(d) In the case of an election under Section 4.4, the Company shall
have delivered to the Trustee an Officers' Certificate and an Opinion of
Counsel to the effect that (i) the Company has received from, or there has
been published by, the Internal Revenue Service a ruling, or (ii) since the
date of execution of this Indenture, there has been a change in the
applicable Federal income tax law, in either case to the effect that, and
based thereon such opinion shall confirm that, the Holders of such
Securities will not recognize income, gain or loss for Federal income tax
purposes as a result of such defeasance and will be subject to Federal
income tax on the same amount and in the same manner and at the same times,
as would have been the case if such deposit, defeasance and discharge had
not occurred.
(e) In the case of an election under Section 4.5, the Company shall
have delivered to the Trustee an Opinion of Counsel to the effect that the
Holders of such Securities will not recognize income, gain or loss for
Federal income tax purposes as a result of such covenant defeasance and
will be subject to Federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such covenant
defeasance had not occurred.
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(f) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent to the defeasance under Section 4.4 or the covenant defeasance
under Section 4.5 (as the case may be) have been complied with and an
Opinion of Counsel to the effect that either (i) as a result of a deposit
pursuant to subsection (a) above and the related exercise of the Company's
option under Section 4.4 or Section 4.5 (as the case may be), registration
is not required under the Investment Company Act of 1940, as amended, by
the Company, with respect to the trust funds representing such deposit or
by the trustee for such trust funds or (ii) all necessary registrations
under said act have been effected.
(g) Such defeasance or covenant defeasance shall be effected in
compliance with any additional or substitute terms, conditions or
limitations which may be imposed on the Company or the Guarantor in
connection therewith as contemplated by Section 3.1.
SECTION 4.7 DEPOSITED MONEY AND GOVERNMENT OBLIGATIONS TO BE HELD IN
TRUST
Subject to the provisions of the last paragraph of Section 9.3, all money
and Government Obligations (or other property as may be provided pursuant to
Section 3.1) (including the proceeds thereof) deposited with the Trustee
pursuant to Section 4.6 in respect of any Securities of any series shall be held
in trust and applied by the Trustee, in accordance with the provisions of such
Securities and this Indenture, to the payment, either directly or through any
Paying Agent (including the Company acting as its own Paying Agent) as the
Trustee may determine, to the Holders of such Securities of all sums due and to
become due thereon in respect of principal, premium, if any, and interest, if
any, but such money need not be segregated from other funds except to the extent
required by law.
SECTION 4.8 TRANSFERS AND DISTRIBUTION AT COMPANY REQUEST
To the extent permitted by the Financial Accounting Standards Board
Statement of Financial Accounting Standards No. 76, as amended or interpreted by
the Financial Accounting Standards Board from time to time, or any successor
thereto ("Standard No. 76"), or to the extent permitted by the Commission, the
Trustee shall, from time to time, take one or more of the following actions as
specified in a Company Request:
(a) Retransfer, reassign and deliver to the Company or the Guarantor
any securities deposited with the Trustee pursuant to Section 4.6(a),
provided that the Company or the Guarantor shall in substitution therefor,
simultaneously transfer, assign and deliver to the Trustee other Government
Obligations appropriate to satisfy the Company's obligations in respect of
the relevant Securities; and
(b) The Trustee (and any Paying Agent) shall promptly pay to the
Company or the Guarantor upon Company Request or Guarantor Request any
excess money or securities held by them at any time, including, without
limitation, any assets deposited
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with the Trustee pursuant to Section 4.6(a) exceeding those necessary for
the purposes of Section 4.6(a).
The Trustee shall not take the actions described in subsections (a) and (b)
of this Section 4.8 unless it shall have first received a written report of
Arthur Andersen & Co., or another nationally recognized independent public
accounting firm, (i) expressing their opinion that the contemplated action is
permitted by Standard No. 76 or the Commission, for transactions accounted for
as extinguishment of debt under the circumstances described in paragraph 3.c of
Standard No. 76 or any successor provision and (ii) verifying the accuracy,
after giving effect to such action or actions, of the computations which
demonstrate that the amounts remaining to be earned on the Government
Obligations deposited with the Trustee pursuant to Section 4.6(a) will be
sufficient for purposes of Section 4.6(a).
ARTICLE 5
DEFAULTS AND REMEDIES
SECTION 5.1 EVENTS OF DEFAULT
An "Event of Default" occurs with respect to the Securities of any series
if (whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(1) the Company defaults in the payment of interest on any Security
of that series or any additional amount payable with respect to any
Security of that series as specified pursuant to Section 3.1(b)(14) when
the same becomes due and payable and such default continues for a period of
30 days;
(2) the Company defaults in the payment of the principal of or any
premium on any Security of that series when the same becomes due and
payable at its Maturity or on redemption or otherwise, or in the payment of
a mandatory sinking fund payment when and as due by the terms of the
Securities of that series, and in each case such default continues for a
period of ten days;
(3) the Company or the Guarantor defaults in the performance of, or
breaches, any covenant or warranty of the Company or the Guarantor in this
Indenture with respect to any Security or any Guarantee endorsed thereon of
that series (other than a covenant or warranty a default in whose
performance or whose breach is elsewhere in this Section specifically dealt
with), and such default or breach continues for a period of 60 days after
there has been given, by registered or certified mail, to the Company and
the Guarantor by the Trustee or to the Company, the Guarantor and the
Trustee by the Holders of at least 25% in principal amount of the
Outstanding Securities of that series, a written notice specifying such
default or breach and requiring it to be remedied and stating that such
notice is a "Notice of Default" hereunder;
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(4) the Company or the Guarantor defaults under the terms of any
agreement or instrument evidencing or under which the Company has at the
date of this Indenture or hereafter outstanding any indebtedness for
borrowed money and such indebtedness shall be accelerated so that the same
shall be or become due and payable prior to the date on which the same
would otherwise become due and payable and the aggregate principal amount
thereof so accelerated exceeds $25,000,000 and such acceleration is not
rescinded or annulled within ten days after there has been given, by
registered or certified mail, to the Company and the Guarantor by the
Trustee or to the Company, the Guarantor and the Trustee by the Holders of
at least 25% in aggregate principal amount of the Outstanding Securities of
that series a written notice specifying such default and stating that such
notice is a "Notice of Default" hereunder; (it being understood, however,
that, subject to the provisions of Section 6.1, the Trustee shall not be
deemed to have knowledge of such default under such agreement or instrument
unless either (A) a Responsible Officer of the Trustee shall have actual
knowledge of such default or (B) a Responsible Officer of the Trustee shall
have received written notice thereof from the Company, from the Guarantor,
from any Holder, from the holder of any such indebtedness or from the
trustee under any such agreement or other instrument); PROVIDED, HOWEVER,
that if such default under such agreement or instrument is remedied or
cured by the Company or waived by the holders of such indebtedness, then
the Event of Default hereunder by reason thereof shall be deemed likewise
to have been thereupon remedied, cured or waived without further action
upon the part of either the Trustee or any of such Holders;
(5) the Company or the Guarantor pursuant to or within the meaning of
any Bankruptcy Law (A) commences a voluntary case, (B) consents to the
entry of an order for relief against it in an involuntary case,
(C) consents to the appointment of a Custodian of it or for all or
substantially all of its property, or (D) makes a general assignment for
the benefit of its creditors;
(6) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that (A) is for relief against the Company or the
Guarantor in an involuntary case, (B) appoints a Custodian of the Company
or the Guarantor or for all or substantially all of its property, or
(C) orders the liquidation of the Company; and the order or decree remains
unstayed and in effect for 90 consecutive days; or
(7) any other Event of Default provided as contemplated by
Section 3.1 with respect to Securities of that series.
The term "Bankruptcy Law" means Title 11, U.S. Code, or any similar federal
or state law for the relief of debtors. The term "Custodian" means any
receiver, trustee, assignee, liquidator or similar official under any Bankruptcy
Law.
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SECTION 5.2 ACCELERATION, RESCISSION AND ANNULMENT
If an Event of Default with respect to the Securities of any series at the
time Outstanding occurs and is continuing, the Trustee or the Holders of at
least 25% in aggregate principal amount of all of the outstanding Securities of
that series, by written notice to the Company and the Guarantor (and, if given
by the Holders, to the Trustee), may declare the principal (or, if the
Securities of that series are Original Issue Discount Securities or Indexed
Securities, such portion of the principal amount as may be specified in the
terms of that series) of all the Securities of that series to be due and payable
and upon any such declaration such principal (or, in the case of original Issue
Discount Securities or Indexed Securities, such specified amount) shall be
immediately due and payable.
At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in this
Article provided, the Holders of a majority in aggregate principal amount of the
outstanding Securities of that series, by written notice to the Trustee, may
rescind and annul such declaration and its consequences if all existing Defaults
and Events of Default with respect to Securities of that series, other than the
nonpayment of the principal of Securities of that series which have become due
solely by such declaration of acceleration, have been cured or waived as
provided in Section 5.7. No such rescission shall affect any subsequent default
or impair any right consequent thereon.
SECTION 5.3 COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE
The Company covenants that if
(1) default is made in the payment of any interest on any Security
when such interest becomes due and payable and such default continues for a
period of 30 days, or
(2) default is made in the payment of the principal of (or premium,
if any, on) any Security at the Maturity thereof and such default continues
for a period of 10 days,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal, premium, if any, and interest and, to the extent that
payment of such interest shall be legally enforceable, interest on any overdue
principal, premium, if any, and on any overdue interest, at the rate or rates
prescribed therefor in such Securities, and, in addition thereto, such further
amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel.
If an Event of Default with respect to Securities of any series occurs and
is continuing, the Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Holders of Securities of such series by such
appropriate judicial proceedings as the Trustee
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shall deem most effectual to protect and enforce any such rights, whether for
the specific enforcement of any covenant or agreement in this Indenture or in
aid of the exercise of any power granted herein, or to enforce any other proper
remedy.
SECTION 5.4 TRUSTEE MAY FILE PROOFS OF CLAIM
The Trustee may file such proofs of claim and other papers or documents as
may be necessary or advisable in order to have the claims of the Trustee and the
Holders of Securities allowed in any judicial proceedings relating to the
Company or the Guarantor, its creditors or its property.
SECTION 5.5 TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES
All rights of action and claims under this Indenture or the Securities or
the Guarantees may be prosecuted and enforced by the Trustee without the
possession of any of the Securities or the production thereof in any proceeding
relating thereto.
SECTION 5.6 DELAY OR OMISSION NOT WAIVER
No delay or omission by the Trustee or any Holder of any Securities to
exercise any right or remedy accruing upon an Event of Default shall impair any
such right or remedy or constitute a waiver of or acquiescence in any such Event
of Default.
SECTION 5.7 WAIVER OF PAST DEFAULTS
The Holders of a majority in aggregate principal amount of Outstanding
Securities of any series by notice to the Trustee may waive on behalf of the
Holders of all Securities of such series a past Default or Event of Default with
respect to that series and its consequences except (i) a Default or Event of
Default in the payment of the principal of, premium, if any, or interest on any
Security of such series or (ii) in respect of a covenant or provision hereof
which pursuant to Section 8.2 cannot be amended or modified without the consent
of the Holder of each outstanding Security of such series adversely affected.
Upon any such waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture.
SECTION 5.8 CONTROL BY MAJORITY
The Holders of a majority in aggregate principal amount of the Outstanding
Securities of each series affected (with each such series voting as a class)
shall have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on it with respect to Securities of that series; PROVIDED,
HOWEVER, that (i) the Trustee may refuse to follow any direction that conflicts
with law or this Indenture, (ii) the Trustee may refuse to follow any direction
that is unduly prejudicial to the rights of the Holders of Securities of such
series not consenting, or that would in the good-faith judgment of the Trustee
have a substantial likelihood of involving the
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Trustee in personal liability and (iii) the Trustee may take any other action
deemed proper by the Trustee which is not inconsistent with such direction.
SECTION 5.9 LIMITATION ON SUITS BY HOLDERS
No Holder of any Security of any series shall have any right to institute
any proceeding, judicial or otherwise, with respect to this Indenture, or for
the appointment of a receiver or trustee, or for any other remedy hereunder,
unless:
(1) the Holder has previously given written notice to the Trustee of
a continuing Event of Default with respect to the Securities of that
series;
(2) the Holders of at least 25% in aggregate principal amount of the
Outstanding Securities of that series have made a written request to the
Trustee to institute proceedings in respect of such Event of Default in its
own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or expense to be,
or which may be, incurred by the Trustee in pursuing the remedy;
(4) the Trustee for 60 days after its receipt of such notice, request
and the offer of indemnity has failed to institute any such proceedings;
and
(5) during such 60-day period, the Holders of a majority in aggregate
principal amount of the Outstanding Securities of that series has not given
to the Trustee a direction inconsistent with such written request.
No one or more Holders shall have any right in any manner whatever by
virtue of, or by availing of, any provision of this Indenture to affect, disturb
or prejudice the rights of any other of such Holders, or to obtain or to seek to
obtain priority or preference over any other of such Holders or to enforce any
right under this Indenture, except in the manner herein provided and for the
equal and ratable benefit of all of such Holders.
SECTION 5.10 RIGHTS OF HOLDERS TO RECEIVE PAYMENT
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Security to receive payment of principal of, premium, if any, and,
subject to Section 3.7, interest on the Security, on or after the respective due
dates expressed in the Security (or, in case of redemption, on the redemption
dates), or, subject to Section 5.9, to bring suit for the enforcement of any
such payment on or after such respective dates, shall not be impaired or
affected without the consent of such Holder.
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SECTION 5.11 APPLICATION OF MONEY COLLECTED
If the Trustee collects any money pursuant to this Article, it shall pay
out the money in the following order, at the date or dates fixed by the Trustee
and, in case of the distribution of such money on account of principal, premium,
if any, or interest, upon presentation of the Securities and the notation
thereon of the payment if only partially paid and upon surrender thereof if
fully paid:
FIRST: to the Trustee for amounts due under Section 6.9;
SECOND: to Holders of Securities in respect of which or for the
benefit of which such money has been collected for amounts due and unpaid
on such Securities for principal of, premium, if any, and interest,
ratably, without preference or priority of any kind, according to the
amounts due and payable on such Securities for principal, premium, if any,
and interest, respectively; and
THIRD: to the Company.
SECTION 5.12 RESTORATION OF RIGHTS AND REMEDIES
If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee or
to such Holder, then and in every such case, subject to any determination in
such proceeding, the Company, the Guarantor, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
SECTION 5.13 RIGHTS AND REMEDIES CUMULATIVE
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities in the last paragraph of Section
3.6, no right or remedy herein conferred upon or reserved to the Trustee or the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
ARTICLE 6
THE TRUSTEE
SECTION 6.1 CERTAIN DUTIES AND RESPONSIBILITIES
(a) Except during the continuance of an Event of Default,
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(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture; but in
the case of any such certificates or opinions which by any provision hereof
are specifically required to be furnished to the Trustee, the Trustee shall
be under a duty to examine the same to determine whether or not they
conform to the requirements of this Indenture.
(b) In case an Event of Default has occurred and is continuing with
respect to the Securities of any series, the Trustee shall exercise such of the
rights and powers vested in it by this Indenture with respect to the Securities
of such series, and use the same degree of care and skill in their exercise, as
a prudent person would exercise or use under the circumstances in the conduct of
his own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, EXCEPT that:
(1) this subjection shall not be construed to limit the effect of
subsection (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction
of the Holders of a majority in principal amount of the Outstanding
Securities of any series relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Indenture with respect to the Securities of such series.
(d) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder, or in the exercise of any of its rights or
powers, if it shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it.
(e) Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section.
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SECTION 6.2 RIGHTS OF TRUSTEE
Subject to the provisions of the Trust Indenture Act:
(a) The Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or
parties.
(b) Any request or direction of the Company or the Guarantor
mentioned herein shall be sufficiently evidenced by a Company Request or
Company Order or a Guarantor Request or Guarantor Order, as the case may be
(other than delivery of any Security, together with the Guarantees endorsed
thereon, to the Trustee for authentication and delivery pursuant to Section
3.3, which shall be sufficiently evidenced as provided therein) and any
resolution of the Board of Directors may be sufficiently evidenced by a
Board Resolution.
(c) Whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officers' Certificate.
(d) The Trustee may consult with counsel of its selection and the
written advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon.
(e) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Holders pursuant to this Indenture, unless such Holders shall
have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in compliance
with such request or direction.
(f) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note or other paper or document, but the Trustee, in its
discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit, and, if the Trustee shall determine to make
such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company and the Guarantor, personally or
by agent or attorney.
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(g) The Trustee may act through agents or attorneys and shall not be
responsible for the misconduct or negligence of any agent or attorney
appointed with due care.
(h) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its
rights or powers.
(i) The Trustee shall not be required to expend or risk its own funds
or otherwise incur any financial liability in the performance of any of its
duties hereunder, or in the exercise of its rights or powers, if it shall
have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured
to it.
SECTION 6.3 TRUSTEE MAY HOLD SECURITIES
The Trustee, any Paying Agent, any Registrar or any other agent of the
Company or the Guarantor, in its individual or any other capacity, may become
the owner or pledgee of Securities and, subject to Sections 310(b) and 311 of
the Trust Indenture Act, may otherwise deal with the Company, an Affiliate or
Subsidiary and the Guarantor with the same rights it would have if it were not
Trustee, Paying Agent, Registrar or such other agent.
SECTION 6.4 MONEY HELD IN TRUST
Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed with the Company or the Guarantor.
SECTION 6.5 TRUSTEE'S DISCLAIMER
The recitals contained herein and in the Securities, except the Trustee's
certificate of authentication, shall be taken as the statements of the Company
and the Guarantor, and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representation as to the validity or adequacy
of this Indenture or the Securities or the Guarantees. The Trustee shall not be
accountable for the Company's use of the proceeds from the Securities or for
monies paid over to the Company or the Guarantor pursuant to the Indenture.
SECTION 6.6 NOTICE OF DEFAULTS
If a Default occurs and is continuing with respect to the Securities of any
series and if it is known to the Trustee, the Trustee shall, within 90 days
after it occurs, transmit, in the manner and to the extent provided in Section
313(c) of the Trust Indenture Act, notice of all uncured Defaults known to it;
PROVIDED, HOWEVER, that, in the case of a Default in payment on the Securities
of any series, the Trustee may withhold the notice if and so long as the board
of directors, the executive committee or a committee of its Responsible Officers
in good faith determines that withholding such notice is in the interests of
Holders of Securities of that
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series; PROVIDED FURTHER that, in the case of any default or breach of the
character specified in Section 5.1(3) with respect to the Securities of such
series, no such notice to Holders shall be given until at least 60 days after
the occurrence thereof.
SECTION 6.7 REPORTS BY TRUSTEE TO HOLDERS
Within 60 days after each May 15 of each year commencing with the first May
15 after the first issuance of Securities pursuant to this Indenture, the
Trustee shall transmit by mail to all Holders of Securities as provided in
Section 313(c) of the Trust Indenture Act a brief report dated as of such May 15
if required by Section 313(a) of the Trust Indenture Act. The Trustee also
shall comply with Section 313(b) and (d) of the Trust Indenture Act.
SECTION 6.8 SECURITYHOLDER LISTS
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders of Securities of each series. If the Trustee is not the Registrar, the
Company shall furnish to the Trustee semiannually on or before the last day of
June and December in each year, and at such other times as the Trustee may
request in writing, a list, in such form and as of such date as the Trustee may
reasonably require, containing all the information in the possession of the
Registrar, the Company or any of its Paying Agents other than the Trustee as to
the names and addresses of Holders of Securities of each such series.
SECTION 6.9 COMPENSATION AND INDEMNITY
(a) The Company shall pay to the Trustee from time to time such
compensation as shall be agreed between the Company and the Trustee for all
services rendered by it hereunder. The Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. The
Company shall reimburse the Trustee upon request for all reasonable out-of-
pocket expenses incurred by it in connection with the performance of its duties
under this Indenture, except any such expense as may be attributable to its
negligence or bad faith. Such expenses shall include the reasonable
compensation and expenses of the Trustee's agents and counsel.
(b) The Company shall indemnify the Trustee for, and hold it harmless
against, any loss, liability or expense incurred by it without negligence or bad
faith on its part arising out of or in connection with its acceptance or
administration of the trust or trusts hereunder. The Trustee shall notify the
Company promptly of any claim for which it may seek indemnity. The Company
shall defend the claim and the Trustee shall cooperate in the defense. The
Trustee may have separate counsel and the Company shall pay the reasonable fees
and expenses of such counsel. The Company need not pay for any settlement made
without its consent.
(c) The Company need not reimburse any expense or indemnify against any
loss or liability incurred by the Trustee through negligence or bad faith.
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(d) To secure the payment obligations of the Company pursuant to this
Section, the Trustee shall have a lien prior to the Securities of any series on
all money or property held or collected by the Trustee, except that held in
trust to pay principal, premium, if any, and interest on particular Securities.
(e) when the Trustee incurs expenses or renders services in connection
with an Event of Default specified in Section 5.1(5) or Section 5.1(6), the
expenses (including the reasonable charges and expenses of its counsel) and the
compensation for the services are intended to constitute expenses of
administration under any applicable Federal or state bankruptcy, insolvency or
other similar law.
(f) The provisions of this Section shall survive the termination of this
Indenture.
SECTION 6.10 REPLACEMENT OF TRUSTEE
(a) The resignation or removal of the Trustee and the appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in Section 6.11.
(b) The Trustee may resign at any time with respect to the Securities of
any series by giving written notice thereof to the Company and the Guarantor.
If the instrument of acceptance by a successor Trustee required by Section 6.11
shall not have been delivered to the Trustee within 30 days after the giving of
such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee with respect
to the Securities or such series.
(c) The Holders of a majority in aggregate principal amount of the
Outstanding Securities of any series may remove the Trustee with respect to that
series by so notifying the Trustee and the Company and the Guarantor and may
appoint a successor Trustee for such series with the Company's and the
Guarantor's consent.
(d) If at any time:
(1) the Trustee fails to comply with Section 310(b) of the Trust
Indenture Act after written request therefor by the Company or the
Guarantor or by any Holder who has been a bona fide Holder of a Security
for at least six months; or
(2) the Trustee shall cease to be eligible under Section 310(a) of
the Trust Indenture Act and shall fail to resign after written request
therefor by the Company, the Guarantor or by any Holder of a Security who
has been a bona fide Holder of a Security for at least six months; or
(3) the Trustee becomes incapable of acting, is adjudged a bankrupt
or an insolvent or a receiver or public officer takes charge of the Trustee
or its property or affairs for the purpose of rehabilitation, conservation
or liquidation, then, in any such case, (i) the Company or the Guarantor by
or pursuant to a Board Resolution may
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remove the Trustee with respect to all Securities, or (ii) subject to
Section 315(e) of the Trust Indenture Act, any Holder who has been a bona
fide Holder of a Security for at least six months may, on behalf of himself
and all other similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee with respect to all Securities
and the appointment of a successor Trustee or Trustees.
(e) If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, with respect to Securities of one or more
series, the Company or the Guarantor, by or pursuant to Board Resolution, shall
promptly appoint a successor Trustee with respect to the Securities of that or
those series (it being understood that any such successor Trustee may be
appointed with respect to the Securities of one or more or all of such series
and that at any time there shall be only one Trustee with respect to the
Securities of any particular series) and shall comply with the applicable
requirements of Section 6.11. If, within one year after such resignation,
removal or incapability, or the occurrence of such vacancy, a successor Trustee
with respect to the Securities of any series shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding Securities of such
series delivered to the Company and the retiring Trustee, the successor Trustee
so appointed shall, forthwith upon its acceptance of such appointment in
accordance with the applicable requirements of Section 6.11, become the
successor Trustee with respect to the Securities of such series and to that
extent supersede the successor Trustee appointed by the Company or the
Guarantor. If no successor Trustee with respect to the Securities of any series
shall have been so appointed by the Company or the Guarantor or the Holders and
accepted appointment in the manner required by Section 6.11, any Holder who has
been a bona fide Holder of a Security of such series for at least six months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the appointment of a successor Trustee with
respect to the Securities of such series.
SECTION 6.11 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR
(a) In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee shall execute,
acknowledge and deliver to the Company, the Guarantor and to the retiring
Trustee an instrument accepting such appointment. Thereupon, the resignation or
removal of the retiring Trustee shall become effective, and the successor
Trustee, without further act, deed or conveyance, shall become vested with all
the rights, powers and duties of the retiring Trustee; but, on the request of
the Company, the Guarantor or the successor Trustee, such retiring Trustee
shall, upon payment of its charges, execute and deliver an instrument
transferring to such successor Trustee all the rights, powers and trusts of the
retiring Trustee and shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Company, the
Guarantor, the retiring Trustee and such successor Trustee shall execute and
deliver an indenture supplemental hereto wherein such successor Trustee shall
accept such appointment and which (i) shall contain such provisions as shall be
necessary or desirable to transfer and confirm to, and to vest in, such
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successor Trustee all the rights, powers, trusts and duties of the retiring
Trustee with respect to the Securities of that or those series to which the
appointment of such successor Trustee relates, (ii) if the retiring Trustee is
not retiring with respect to all Securities, shall contain such provisions as
shall be deemed necessary or desirable to confirm that all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of that
or those series as to which the retiring Trustee is not retiring shall continue
to be vested in the retiring Trustee, and (iii) shall add to or change any of
the provisions of this Indenture as shall be necessary to provide for or
facilitate the administration of the trusts hereunder by more than one Trustee,
it being understood that nothing herein or in such supplemental indenture shall
constitute such Trustees co-trustees of the same trust and that each such
Trustee shall be trustee of a trust or trusts hereunder separate and apart from
any trust or trusts hereunder administered by any other such Trustee and upon
the execution and delivery of such supplemental indenture the resignation or
removal of the retiring Trustee shall become effective to the extent provided
therein and each such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Trustee with respect to the Securities of that or those series
to which the appointment of such successor Trustee relates; but, on request of
the Company, the Guarantor or any successor Trustee, such retiring Trustee shall
duly assign, transfer and deliver to such successor Trustee all property and
money held by such retiring Trustee hereunder with respect to the Securities of
that or those series to which the appointment of such successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company and the
Guarantor shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Trustee all such rights, powers and
trusts referred to in paragraph (a) or (b) of this Section, as the case may be.
(d) No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
the Trust Indenture Act.
(e) The Company shall give notice of each resignation and each removal of
the Trustee with respect to the Securities of any series and each appointment of
a successor Trustee with respect to the Securities of any series in the manner
provided for notices to the Holders of Securities in Section 1.6. Each notice
shall include the name of the successor Trustee with respect to the securities
of such series and the address of its Corporate Trust office.
SECTION 6.12 ELIGIBILITY; DISQUALIFICATION
There shall at all times be a Trustee hereunder which shall be eligible to
act as Trustee under Section 310(a)(1) of the Trust Indenture Act and shall have
a combined capital and surplus of at least $50,000,000. If such corporation
publishes reports of condition at least annually, pursuant to law or the
requirements of Federal, State Territorial or District of Columbia supervising
or examining authority, then for the purposes of this Section, the combined
capital and surplus of such corporation shall be deemed to be its combined
capital
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and surplus as set forth in its most recent report of condition so published.
If at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect hereinafter specified in this Article.
SECTION 6.13 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities.
SECTION 6.14 APPOINTMENT OF AUTHENTICATING AGENT
The Trustee may appoint an Authenticating Agent or Agents with respect to
one or more series of Securities which shall be authorized to act on behalf of
the Trustee to authenticate Securities of such series issued upon original issue
exchange, registration of transfer or partial redemption thereof, and Securities
so authenticated shall be entitled to the benefits of this Indenture and shall
be valid and obligatory for all purposes as if authenticated by the Trustee
hereunder. Any such appointment shall be evidenced by an instrument in writing
signed by a Responsible Officer of the Trustee, a copy of which instrument shall
be promptly furnished to the Company and the Guarantor. Wherever reference is
made in this Indenture to the authenticating and delivery of Securities by the
Trustee or the Trustee's certificate of authentication, such reference shall be
deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and the Guarantor and, except as may otherwise be
provided pursuant to Section 3.1, shall at all times be a bank or trust company
or corporation organized and doing business and in good standing under the laws
of the United States of America or of any State or the District of Columbia,
authorized under such laws to act as Authenticating Agent, having a combined
capital and surplus of not less than $10,000,000 and subject to supervision or
examination by Federal or State authorities. If such Authenticating Agent
publishes reports of condition at least annually, pursuant to law or the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. In case at any
time an Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this Section.
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Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, PROVIDED, such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or further act
on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent for any series of Securities may at any time resign
by giving written notice of resignation to the Trustee for such series and to
the Company and the Guarantor. The Trustee for any series of Securities may at
any time terminate the agency of an Authenticating Agent by giving written
notice of termination to such Authenticating Agent and to the Company and the
Guarantor. Upon receiving such a notice of resignation or upon such a
termination, or in case at any time such Authenticating Agent shall cease to be
eligible in accordance with the provisions of this Section, the Trustee for such
series may appoint a successor Authenticating Agent which shall be acceptable to
the Company and shall give notice of such appointment to all Holders of
Securities of the series with respect to which such Authenticating Agent will
serve in the manner set forth in Section 1.6. Any successor Authenticating
Agent upon acceptance of its appointment hereunder shall become vested with all
the rights, powers and duties of its predecessor hereunder, with like effect as
if originally named as an Authenticating Agent herein. No successor
Authenticating Agent shall be appointed unless eligible under the provisions of
this Section.
The Company agrees to pay to each Authenticating Agent from time to time
reasonable compensation, including reimbursement of its reasonable expenses for
its services under this Section.
If an appointment with respect to one or more series is made pursuant to
this Section, the Securities of such series may have endorsed thereon, in
addition to or in lieu of the Trustee's certificate of authentication, an
alternate certificate of authentication substantially in the following form:
This is one of the Securities of a series issued under the within-mentioned
Indenture.
_________________________________,
as Trustee
By ___________________________
as Authenticating Agent
By ___________________________
Authorized Officer
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SECTION 6.15 TRUSTEE'S APPLICATION FOR INSTRUCTIONS FROM THE COMPANY
Any application by the Trustee for written instructions from the Company or
the Guarantor may, at the option of the Trustee, set forth in writing any action
proposed to be taken or omitted by the Trustee under this Indenture and the date
on and/or after which such action shall be taken or such omission shall be
effective. The Trustee shall not be liable for any action taken by, or omission
of, the Trustee in accordance with a proposal included in such application on or
after the date specified in such application (which date shall not be less than
fifteen Business Days after the date any officer of the Company or the Guarantor
actually receives such application, unless any such officer shall have consented
in writing to any earlier date) unless prior to taking any such action (or the
effective date in the case of an omission), the Trustee shall have received
written instructions in response to such application specifying the action to be
taken or omitted.
ARTICLE 7
CONSOLIDATION, MERGER OR SALE BY THE COMPANY AND THE GUARANTOR
SECTION 7.1 CONSOLIDATION, MERGER OR SALE OF ASSETS BY THE COMPANY PERMITTED
The Company may merge or consolidate with or into any other corporation or
sell, convey, transfer or otherwise dispose of all or substantially all of its
assets to any person, firm or corporation, if (i) (A) in the case of a merger or
consolidation, the Company is the surviving corporation or (B) in the case of a
merger or consolidation where the Company is not the surviving corporation and
in the case of any such sale, conveyance or other disposition, the successor or
acquiring corporation is a corporation organized and existing under the laws of
the United States or a State thereof and such corporation expressly assumes by
supplemental indenture all of the obligations of the Company under the
Securities and under this Indenture, (ii) immediately thereafter, giving effect
to such merger or consolidation, or such sale, conveyance, transfer or other
disposition, no Default or Event of Default shall have occurred and be
continuing and (iii) the company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating that such merger or
consolidation, or such sale, conveyance, transfer or other disposition, complies
with this Article and that all conditions precedent herein provided for relating
to such transaction have been complied with. In the event of the assumption by
a successor corporation of the obligations of the Company as provided in clause
(i)(B) of the immediately preceding sentence, such successor corporation shall
succeed to and be substituted for the Company hereunder and under the Securities
and all such obligations of the Company shall terminate.
SECTION 7.2 CONSOLIDATION, MERGER OR SALE OF ASSETS BY THE GUARANTOR
PERMITTED
The Guarantor may merge or consolidate with or into any other corporation
or sell, convey, transfer or otherwise dispose of all or substantially all of
its assets to any person, firm or corporation, if (i)(A) in the case of a merger
or consolidation, the Guarantor is the surviving
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corporation or (B) in the case of merger or consolidation where the Guarantor is
not the surviving corporation and in the case of any such sale, conveyance or
other disposition, the successor or acquiring corporation is a corporation
organized and existing under the laws of the United States or a State thereof
and such corporation expressly assumes by supplemental indenture all the
obligations of the Guarantor under the Guarantees and under this Indenture,(ii)
immediately thereafter, giving effect to such merger or consolidation, or such
sale, conveyance, transfer or other disposition, no Default or Event of Default
shall have occurred and be continuing and (iii) the Guarantor has delivered to
the Trustee an Officers' Certificate and an Opinion of Counsel each stating that
such merger or consolidation, or such sale, conveyance, transfer or other
disposition complies with this Article and that all conditions precedent herein
provided for relating to such transaction have been complied with. In the event
of the assumption by a successor corporation of the obligations of the Guarantor
as provided in clause (i)(B) of the immediately preceding sentence, such
successor corporation shall succeed to and be substituted for the Guarantor
hereunder and under the Guarantees, and all such obligations of the Guarantor
shall terminate.
ARTICLE 8
SUPPLEMENTAL INDENTURES
SECTION 8.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS
Without the consent of any Holders, the Company, when authorized by a Board
Resolution, and the Trustee, at any time and from time to time, may enter into
indentures supplemental hereto, in form reasonably satisfactory to the Trustee,
for any of the following purposes:
(1) to evidence the succession of another corporation to the Company
and the assumption by any such successor of the covenants of the Company
herein and in the Securities; or
(2) to add to the covenants of the Company for the benefit of the
Holders of all or any series of Securities (and if such covenants are to be
for the benefit of less than all series of Securities, stating that such
covenants are expressly being included solely for the benefit of such
series) or to surrender any right or power herein conferred upon the
Company; or
(3) to add any additional Events of Default with respect to all or
any series of Securities; or
(4) to add to or change any of the provisions of this Indenture to
such extent as shall be necessary to facilitate the issuance of Securities
in bearer form, registrable or not registrable as to principal, and with or
without interest coupons, or to facilitate the issuance of Securities in
global form; or
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(5) to add to, change or eliminate any of the provisions of this
Indenture, PROVIDED that any such addition, change or elimination shall
become effective only when there is no Security Outstanding of any series
created prior to the execution of such supplemental indenture which is
entitled to the benefit of such provision; or
(6) to secure the Securities or the Guarantees; or
(7) to establish the form or terms of Securities and the Guarantees
of any series as permitted by Sections 2.1 and 3.2; or
(8) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one or
more series and to add to or change any of the provisions of this Indenture
as shall be necessary to provide for or facilitate the administration of
the trusts hereunder by more than one Trustee, pursuant to the requirements
of Section 6.10; or
(9) to correct or supplement any provision herein which may be
inconsistent with any other provision herein or to make any other
provisions with respect to matters or questions arising under this
Indenture, PROVIDED such action shall not adversely affect the interests of
the Holders of Securities of any series, or to cure any ambiguity or
correct any mistake.
SECTION 8.2 WITH CONSENT OF HOLDERS
With the written consent of the Holders of a majority of the aggregate
principal amount of the Outstanding Securities of each series adversely affected
by such supplemental indenture, the Company, the Guarantor and the Trustee may
enter into an indenture or indentures supplemental hereto to add any provisions
to or to change or eliminate any provisions of this Indenture or of any other
indenture supplemental hereto or to modify the rights of the Holders of
Securities of each such series; PROVIDED, HOWEVER, that without the consent of
the Holder of each Outstanding Security affected thereby, an amendment under
this Section may not:
(1) change the Stated Maturity of the principal of, or any
installment of principal of or interest on, any Security, or reduce the
principal amount thereof or the rate of interest thereon or any premium
payable upon the redemption thereof, or reduce the amount of the principal
of an Original Issue Discount Security that would be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section
5.2, or change the coin or currency in which, any Securities or any premium
or the interest thereon is payable, or impair the right to institute suit
for the enforcement of any such payment on or after the Stated Maturity
thereof (or, in the case of redemption, on or after the Redemption Date);
(2) reduce the percentage in principal amount of the Outstanding
Securities of any series, the consent of whose Holders is required for any
such supplemental indenture, or the consent of whose Holders is required
for any waiver (of compliance
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with certain provisions of this Indenture or certain defaults hereunder and
their consequences) provided for in this Indenture;
(3) change any obligation of the Company to maintain an office or
agency in the places and for the purposes specified in Section 9.2; or
(4) make any change in Section 5.7 or this 8.2(a) except to increase
any percentage or to provide that certain other provisions of this
Indenture cannot be modified or waived with the consent of the Holders of
each Outstanding Security affected thereby.
A supplemental indenture that changes or eliminates any covenant or other
provision of this Indenture, which has expressly been included solely for the
benefit of one or more particular series of Securities, or that modifies the
rights of the Holders of Securities of such series with respect to such covenant
or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.
It is not necessary under this Section 8.2 for the Holders to consent to
the particular form of any proposed supplemental indenture, but it is sufficient
if they consent to the substance thereof.
SECTION 8.3 COMPLIANCE WITH TRUST INDENTURE ACT
Every supplemental indenture executed pursuant to this Article shall comply
with the requirements of the Trust Indenture Act as then in effect.
SECTION 8.4 EXECUTION OF SUPPLEMENTAL INDENTURES
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modification thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and shall be fully protected in relying upon, an Opinion of Counsel stating that
the execution of such supplemental indenture is authorized or permitted by this
Indenture. The Trustee may, but shall not be obligated to, enter into any such
supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
SECTION 8.5 EFFECT OF SUPPLEMENTAL INDENTURES
Upon the execution of any supplemental indenture under this article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
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SECTION 8.6 REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES
Securities of any series authenticated and delivered after the execution of
any supplemental indenture pursuant to this Article may, and shall if required
by the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities of any series so modified as to conform, in the opinion of the
Trustee and the Company, to any such supplemental indenture may be prepared and
executed by the Company and authenticated and delivered by the Trustee in
exchange for Outstanding Securities.
ARTICLE 9
COVENANTS
SECTION 9.1 PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST
The Company covenants and agrees for the benefit of the Holders of each
series of Securities that it will duly and punctually pay the principal of,
premium, if any, and interest on the Securities of that series in accordance
with the terms of the Securities of such series and this Indenture. An
installment of principal or interest shall be considered paid on the date it is
due if the Trustee or Paying Agent holds on that date money designated for and
sufficient to pay the installment.
SECTION 9.2 MAINTENANCE OF OFFICE OR AGENCY
The Company or the Guarantor will maintain in each Place of Payment for any
series of Securities an office or agency where Securities of that series may be
presented or surrendered for payment, where Securities of that series may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Company in respect of the Securities of that series and
this Indenture may be served. The Company or the Guarantor will give prompt
written notice to the Trustee of the location, and any change in the location,
of any such office or agency. If at any time the Company or the Guarantor shall
fail to maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Office of the Trustee, and
the Company and the Guarantor hereby appoints the Trustee as its agent to
receive all such presentations, surrenders, notices and demands.
The Company or the Guarantor may also from time to time designate one or
more other offices or agencies where the Securities of one or more series may be
presented or surrendered for any or all such purposes and may from time to time
rescind such designations; PROVIDED, HOWEVER, that no such designation or
rescission shall in any manner relieve the Company or the Guarantor of its
obligation to maintain an office or agency in each Place of Payment for
Securities of any series for such purposes. The Company or the Guarantor will
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency.
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Unless otherwise specified as contemplated by Section 3.1, the Trustee
shall initially serve as Paying Agent.
SECTION 9.3 MONEY FOR SECURITIES TO BE HELD IN TRUST; UNCLAIMED MONEY
If the Company or the Guarantor shall at any time act as its own Paying
Agent with respect to any series of Securities, it will, on or before each due
date of the principal of, premium, if any, or interest on any of the Securities
of that series, segregate and hold in trust for the benefit of the Persons
entitled thereto a sum sufficient to pay the principal, premium, if any, or
interest so becoming due until such sums shall be paid to such persons or
otherwise disposed of as herein provided and will promptly notify the Trustee in
writing of its action or failure so to act.
The Company or the Guarantor will cause each Paying Agent for any series of
Securities other than the Trustee to execute and deliver to the Trustee an
instrument in which such Paying Agent shall agree with the Trustee, subject to
the provisions of this Section, that such Paying Agent will:
(1) hold all sums held by it for the payment of the principal of,
premium, if any, or interest on Securities of that series in trust for the
benefit of the Persons entitled thereto until such sums shall be paid to
such Persons or otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company or the
Guarantor (or any other obligor upon the Securities of that series) in the
making of any payment of principal, premium, if any, or interest on the
Securities; and
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
The Company or the Guarantor may at any time, for the purpose of obtaining
the satisfaction and discharge of this Indenture or for any other purpose, pay,
or by Company Order or by Guarantor Order, as the case may be, direct any paying
Agent to pay, to the Trustee all sums held in trust by the Company or the
Guarantor or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company or the
Guarantor or such Paying Agent; and, upon such payment by any Paying Agent to
the Trustee, such Paying Agent shall be released from all further liability with
respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company or the Guarantor, in trust for the payment of any principal, premium
or interest on any Security of any series and remaining unclaimed for two years
after such principal, premium, if any, or interest has become due and payable
shall be paid to the Company on Company Request (or, if deposited by the
Guarantor, paid to the Guarantor on Guarantor
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Request), or (if then held by the Company or the Guarantor) shall be discharged
from such trust; and the Holder of such Security shall thereafter, as an
unsecured general creditor, look only to the Company or the Guarantor for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company or the Guarantor
as trustee thereof, shall thereupon cease; PROVIDED, HOWEVER, that the Trustee
or such Paying Agent, before being required to make any such repayment, may at
the expense of the Company or the Guarantor cause to be published once, in a
newspaper published in the English language, customarily published on each
Business Day and of general circulation in The City of New York, or cause to be
mailed to such Holder, notice that such money remains unclaimed and that, after
a date specified therein, which shall not be less than 30 days from the date of
such publication, any unclaimed balance of such money then remaining will be
repaid to the Company or the Guarantor.
SECTION 9.4 CORPORATE EXISTENCE
Subject to Article 7, the Company and the Guarantor each will at all times
do or cause to be done all things necessary to preserve and keep in full force
and effect its corporate existence and its rights and franchises; PROVIDED that
nothing in this Section 9.4 shall prevent the abandonment or termination of any
right or franchise of the Company or the Guarantor if, in the opinion of the
Company or the Guarantor, as the case may be, such abandonment or termination is
in the best interests of the Company or the Guarantor, as the case may be and
does not materially adversely affect the ability of the Company or the
Guarantor, as the case may be, to operate its business or to fulfill its
obligations hereunder.
SECTION 9.5 INSURANCE
The Company and the Guarantor each covenants and agrees that it will
maintain, and cause each of its Subsidiaries to maintain, insurance with
responsible and reputable insurance companies or associations or through a
program of self-insurance in such amounts and covering such risks as are
consistent with sound business practice for corporations engaged in the same or
a similar business similarly situated.
SECTION 9.6 REPORTS BY THE COMPANY AND THE GUARANTOR
The Company and the Guarantor each covenants:
(a) to file with the Trustee, within 30 days after the Company is
required to file the same with the Commission, copies of the annual reports
and of the information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may from time to time by
rules and regulations prescribe) which the Company may be required to file
with the Commission pursuant to section 13 or section 15(d) of the
Securities Exchange Act of 1934, as amended; or, if the Company is not
required to file information, documents or reports pursuant to either of
such sections, then to file with the Trustee and the Commission, in
accordance with rules and regulations prescribed from time to time by the
Commission, such of the
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supplementary and periodic information, documents and reports which may be
required pursuant to section 13 of the Securities Exchange Act of 1934, as
amended, in respect of a security listed and registered on a national
securities exchange as may be prescribed from time to time in such rules
and regulations;
(b) to file with the Trustee and the Commission, in accordance with
the rules and regulations prescribed from time to time by the Commission,
such additional information, documents and reports with respect to
compliance by the Company with the conditions and covenants provided for in
this Indenture, as may be required from time to time by such rules and
regulations; and
(c) to transmit to all Holders of Securities, within 30 days after
the filing thereof with the Trustee, in the manner and to the extent
provided in section 313(c) of the Trust Indenture Act, such summaries of
any information, documents and reports required to be filed by the Company
pursuant to subsections (a) and (b) of this Section 9.6, as may be required
by rules and regulations prescribed from time to time by the Commission.
SECTION 9.7 ANNUAL REVIEW CERTIFICATE; NOTICE OF DEFAULT
(a) The Company covenants and agrees to deliver to the Trustee, within 120
days after the end of each fiscal year of the Company, a brief certificate from
the principal executive officer, principal financial officer, or principal
accounting officer as to his or her knowledge of the Company's compliance with
all conditions and covenants under this Indenture. For purposes of this Section
9.7, such compliance shall be determined without regard to any period of grace
or requirement of notice provided under this Indenture. The Company shall file
with the Trustee written notice of occurrence of any Event of Default within
thirty Business Days of its becoming aware of any such Event of Default.
(b) The Guarantor covenants and agrees to deliver to the Trustee, within
120 days after the end of each fiscal year of the Guarantor, a brief certificate
from the principal executive officer, principal financial officer, or principal
accounting officer as to his or her knowledge of the Company's compliance with
all conditions and covenants under this Indenture. For purposes of this Section
9.7, such compliance shall be determined without regard to any period of grace
or requirement of notice provided under this Indenture. The Guarantor shall
file with the Trustee written notice of occurrence of any Event of Default
within 30 Business Days of its becoming aware of any such Event of Default.
SECTION 9.8 PROVISION OF FINANCIAL STATEMENTS
If the Company is not required to file with the Commission periodic reports
and other information pursuant to section 13(a), 13(c) or 15(d) of the
Securities Exchange Act of 1934, the Company shall furnish without cost to each
Holder and file with the Trustee (i) within 135 days after the end of each
fiscal year, annual reports containing the information required to be contained
in Items 1, 2, 3, 5, 6, 7, 8 and 9 of Form 10-K promulgated under the Securities
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Exchange Act of 1934, or substantially the same information required to be
contained in comparable items of any successor form, (ii) within 60 days after
the end of each of the first three fiscal quarters of each fiscal year,
quarterly reports containing the information required to be contained in Form
10-Q promulgated under the Securities Exchange Act of 1934, or substantially the
same information required to be contained in any successor form and (iii)
promptly from the time after the occurrence of an event required to be therein
reported, such other reports containing information required to be contained in
Form 8-K promulgated under the Securities Exchange Act of 1934, or substantially
the same information required to be contained in any successor form. The
Company shall also make such reports available to prospective purchasers of the
Securities, securities analysts and broker-dealers upon their request.
ARTICLE 10
REDEMPTION
SECTION 10.1 APPLICABILITY OF ARTICLE
Securities of any series which are redeemable before their Stated Maturity
shall be redeemable in accordance with their terms and (except as otherwise
specified as contemplated by Section 3.1 for Securities of any series) in
accordance with this Article.
SECTION 10.2 ELECTION TO REDEEM; NOTICE TO TRUSTEE
The election of the Company to redeem any Securities shall be evidenced by
or pursuant to a Board Resolution or any Officers' Certificate. In the case of
any redemption at the election of the Company of less than all the Securities,
if any, of any series, the Company shall, at least 60 days prior to the
Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of such Redemption Date, of the
principal amount of Securities of such series to be redeemed and, if applicable,
of the tenor of the Securities to be redeemed. In the case of any redemption of
Securities (i) prior to the expiration of any restriction on such redemption
provided in the terms of such Securities or elsewhere in this Indenture or (ii)
pursuant to an election of the Company which is subject to a condition specified
in the terms of such Securities, the Company shall furnish the Trustee with an
Officers' Certificate evidencing compliance with such restriction or condition.
SECTION 10.3 SELECTION OF SECURITIES TO BE REDEEMED
Unless otherwise specified as contemplated by Section 3.1, if less than all
the Securities of a series with the same original issue date, interest rate and
Stated Maturity are to be redeemed, the Trustee, not more than 45 days prior to
the redemption date, shall select the Securities of the series to be redeemed in
such manner as the Trustee shall deem fair and appropriate. The Trustee shall
make the selection from Securities of the series that are Outstanding and that
have not previously been called for redemption and may provide for the selection
for redemption of portions (equal to the minimum authorized denomination for
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Securities of that series or any integral multiple thereof) of the principal
amount of Securities of such series of a denomination larger than the minimum
authorized denomination for Securities of that series. The Trustee shall
promptly notify the Company in writing of the Securities selected by the Trustee
for redemption and, in the case of any Securities selected for partial
redemption, the principal amount thereof to be redeemed.
For purposes of this Indenture, unless the context otherwise requires, all
provisions relating to the redemption of Securities shall relate, in the case of
any Securities redeemed or to be redeemed only in part, to the portion of the
principal amount of such Securities which has been or is to be redeemed.
SECTION 10.4 NOTICE OF REDEMPTION
Unless otherwise specified as contemplated by Section 3.1, notice of
redemption shall be given in the manner provided in Section 1.6 not less than 30
days nor more than 60 days prior to the Redemption Date to the Holders of the
Securities to be redeemed.
All notices of redemption shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) if fewer than all the Outstanding Securities of a series are to
be redeemed, the identification (and, in the case of partial redemption,
the principal amounts) of the particular Security or Securities to be
redeemed;
(4) in case any Security is to be redeemed in part only, the notice
which relates to such Security shall state that on and after the Redemption
Date, upon surrender of such Security, the holder will receive, without a
charge, a new Security or Securities of authorized denominations for the
principal amount thereof remaining unredeemed;
(5) the Place or Places of Payment where such Securities maturing
after the Redemption Date, are to be surrendered for payment for the
Redemption Price;
(6) that Securities of the series called for redemption must be
surrendered to the Paying Agent to collect the redemption price;
(7) that, on the Redemption Date, the Redemption Price will become
due and payable upon each such Security, or the portion thereof, to be
redeemed and, if applicable, that interest thereon will cease to accrue on
and after said date:
(8) that the redemption is for a sinking fund, if such is the case;
and
(9) CUSIP number.
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Notice of redemption of Securities to be redeemed shall be given by the
Company or, at the Company's request, by the Trustee in the name and at the
expense of the Company.
SECTION 10.5 DEPOSIT OF REDEMPTION PRICE
On or prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 9.3) an amount of
money sufficient to pay on the Redemption Date the Redemption Price of, and
(unless the Redemption Date shall be an Interest Payment Date) interest accrued
to the Redemption Date on, all Securities or portions thereof which are to be
redeemed on that date.
Unless any Security by its terms prohibits any sinking fund payment
obligation from being satisfied by delivering and crediting Securities
(including Securities redeemed otherwise than through a sinking fund), the
Company may deliver such Securities to the Trustee for crediting against such
payment obligation in accordance with the terms of such Securities and this
Indenture.
SECTION 10.6 SECURITIES PAYABLE ON REDEMPTION DATE
Notice of redemption having been given as aforesaid, the Securities so to
be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Except as provided in
the next succeeding paragraph, upon surrender of any such Security for
redemption in accordance with said notice, such Security shall be paid by the
Company at the Redemption Price, together with accrued interest to the
Redemption Date; PROVIDED, HOWEVER, that, unless otherwise specified as
contemplated by Section 3.1, installments of interest on Securities whose Stated
Maturity is prior to the Redemption Date shall be payable to the Holders of such
Securities, or one or more Predecessor Securities, registered as such at the
close of business on the relevant Record Dates according to their terms and the
provisions of Section 3.7.
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal (and premium, if any) shall, until paid,
bear interest from the Redemption Date at the rate prescribed therefor in the
Security.
SECTION 10.7 SECURITIES REDEEMED IN PART
Upon surrender of a Security that is redeemed in part at any Place of
Payment therefor (with, if the Company or the Trustee so required, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), the Company shall execute and the Trustee shall
authenticate and deliver to the Holder of that Security, without service charge,
a new Security or Securities of the same series with a Guarantee or Guarantees
endorsed thereon, the
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same form and the same Maturity in any authorized denomination equal in
aggregate principal amount to the unredeemed portion of the principal of the
Security surrendered.
ARTICLE 11
SINKING FUNDS
SECTION 11.1 APPLICABILITY OF ARTICLE
The provisions of this Article shall be applicable to any sinking fund for
the retirement of Securities of a series except as otherwise specified as
contemplated by Section 3.1 for Securities of such series.
The minimum amount of any sinking fund payment provided for by the terms of
Securities of any series is herein referred to as a "mandatory sinking fund
payment," and any payment in excess of such minimum amount provided for by the
terms of Securities of any series is herein referred to as an "optional sinking
fund payment." If provided for by the terms of Securities of any series, the
cash amount of any sinking fund payment may be subject to reduction as provided
in Section 11.2. Each sinking fund payment shall be applied to the redemption
of Securities of any series as provided for by the terms of Securities of such
series.
SECTION 11.2 SATISFACTION OF SINKING FUND PAYMENTS WITH SECURITIES
The Company (i) may deliver Outstanding Securities of a series (other than
any previously called for redemption) and (ii) may apply as a credit Securities
of a series which have been redeemed either at the election of the Company
pursuant to the terms of such Securities or through the application of permitted
optional sinking fund payments pursuant to the terms of such Securities, in each
case in satisfaction of all or any part of any sinking fund payment with respect
to the Securities of such series required to be made pursuant to the terms of
such Securities as provided for by the terms of such series; PROVIDED that such
Securities have not been previously so credited. Such Securities shall be
received and credited for such purpose by the Trustee at the Redemption Price
specified in such Securities for redemption through operation of the sinking
fund and the amount of such sinking fund payment shall be reduced accordingly.
SECTION 11.3 REDEMPTION OF SECURITIES FOR SINKING FUND
Not less than 60 days prior to each sinking fund payment date for any
series of Securities, the Company will deliver to the Trustee an Officers'
Certificate specifying the amount of the next ensuing sinking fund payment for
that series pursuant to the terms of that series, the portion thereof, if any,
which is to be satisfied by payment of cash and the portion thereof, if any,
which is to be satisfied by delivering and crediting Securities of that series
pursuant to Section 11.2 and will also deliver to the Trustee any Securities to
be so delivered. Not less than 30 days before each such sinking fund payment
date, the Trustee shall select the Securities to be redeemed upon such sinking
fund payment date in the manner specified in
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Section 10.3 and cause notice of the redemption thereof to be given in the name
of and at the expense of the Company in the manner provided in Section 10.4.
Such notice having been duly given, the redemption of such Securities shall be
made upon the terms and in the manner stated in Sections 10.6 and 10.7.
ARTICLE 12
OPTIONAL GUARANTEE OF SECURITIES
SECTION 12.1 GUARANTOR'S OPTION TO GUARANTEE SECURITIES
The Guarantor may, at its option, elect to guarantee Securities of one or
more series. An election to guarantee Securities of a particular series, and
the terms of such Guarantees if different from those contained in this Article
12, shall be set forth in an Officers' Certificate and Board Resolution of the
Guarantor or one or more indentures supplemental hereto delivered pursuant to
Section 3.1 in connection with the issuance of Securities of such series.
Notwithstanding anything to the contrary contained in this Indenture, the
Guarantor shall have no obligation under this Article 12 or any other provision
of this Indenture, and any provision of this Indenture to the extent applicable
to the Guarantor or any Guarantee (other than this Section 12.1) shall be of no
force and effect, until such time, if any, as the Guarantor shall have elected
to guarantee Securities of one or more series as described in this Section 12.1.
Thereafter, the Guarantor's obligations hereunder, and any provision hereof
applicable to the Guarantor or any Guarantee, shall be in full force and effect,
but only with respect to the particular Securities as to which the Guarantor has
made such election.
SECTION 12.2 UNCONDITIONAL GUARANTEE
The Guarantor hereby unconditionally guarantees to each Holder of a
Security of any series authenticated and delivered by the Trustee or
Authenticating Agent, the due and punctual payment of the principal of and
premium, if any, and interest on, any Redemption Price with respect to, such
Security, when and as the same shall become due and payable, whether at
maturity, by acceleration or redemption or otherwise, in accordance with the
terms of such Security and of this Indenture. In case of the failure of the
Company punctually to pay any such principal, premium or interest payment or
Redemption Price, the Guarantor hereby agrees to cause any such payment to be
made punctually when and as the same shall become due and payable, whether at
maturity, upon acceleration or redemption or otherwise, and as if such payment
were made by the Company.
The Guarantor hereby agrees that its obligations hereunder shall be as
principal and not merely as surety, and shall be absolute and unconditional,
irrespective of, and shall be unaffected by, any invalidity, irregularity or
failure to enforce the provisions of any such Security or this Indenture, or any
waiver, modification, consent or indulgence granted to the Company with respect
thereto (unless the same shall also be provided the Guarantor), by the Holder of
such Security or the Trustee, the recovery of any judgment against the Company
or any action to enforce the same, or any other circumstances which may
otherwise constitute a
-62-
<PAGE>
legal or equitable discharge of a surety or guarantor. The Guarantor hereby
waives diligence, presentment, demand of payment, filing of claims with a court
in the event of merger, insolvency or bankruptcy of the Company, any right to
require a proceeding first against the Company, protest or notice with respect
to any such Security or the indebtedness evidenced thereby and all demands
whatsoever, and covenants that this Guarantee will not be discharged, except by
payment in full of the principal, premium, if any, and interest on, and any
Redemption Price in respect of, the Securities and the complete performance of
all other obligations contained in the Securities.
The Guarantor shall be subrogated to all rights of the Holder of any
Security against the Company in respect of any amounts paid to such Holder by
the Guarantor pursuant to the provisions of this Guarantee; PROVIDED, HOWEVER,
that the Guarantor shall not be entitled to enforce, or to receive any payments
arising out of or based upon, such right of subrogation until the principal of,
premium, if any, and interest on, and any Redemption Price in respect of all
Securities shall have been paid in full.
SECTION 12.3 EXECUTION OF GUARANTEES
To evidence its Guarantee to the Holders specified in Section 12.2, the
Guarantor hereby agrees to execute the Guarantee in substantially the form above
recited to be endorsed on each Security authenticated and delivered by the
Trustee. Each such Guarantee shall be executed on behalf of the Guarantor and
dated as set forth in Section 3.3 prior to the authentication of the Security on
which it is endorsed, and the delivery of such Security on which it is endorsed,
and the delivery of such Security by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of such Guarantee on behalf of
the Guarantor.
The Guarantee set forth in this Article shall not be valid or become
obligatory for any purpose with respect to a Security until the certificate of
authentication on such Security shall have been signed by the Trustee or
Authenticating Agent.
This Indenture may be executed in any number of counterparts, each of which
shall be an original, but such counterparts shall together constitute but one
instrument.
-63-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
ALASKA AIRLINES, INC.
By: ________________________________
Title: Vice President - Finance
[Seal]
Attest:
- -----------------------------------
Title: Vice President
ALASKA AIR GROUP, INC.
By: ________________________________
Title: Vice President - Finance
[Seal]
Attest
- -----------------------------------
Title: Vice President
________________________, TRUSTEE
By: _______________________________
Title:
-64-
<PAGE>
[Seal]
Attest:
___________________________________
Title:
-65-
<PAGE>
EXHIBIT 4(d)
RESTATED CERTIFICATE OF INCORPORATION
Alaska Air Group, Inc., a corporation organized and existing under the laws
of the State of Delaware, hereby certifies as follows:
1. The name of the corporation is:
ALASKA AIR GROUP, INC.
The date of filing its original Certificate of Incorporation with the
Secretary of State was March 15, 1985.
2. This Restated Certificate of Incorporation restates and integrates and
further amends the Certificate of Incorporation of this corporation by adding
Article 11 to limit the liability of the directors.
3. The text of the Certificate of Incorporation as amended or
supplemented heretofore is further amended hereby to read as herein set forth in
full:
CERTIFICATE OF INCORPORATION
OF
ALASKA AIR GROUP, INC.
ARTICLE 1. NAME
The name of this corporation is Alaska Air Group, Inc.
ARTICLE 2. REGISTERED OFFICE AND AGENT
The address of the initial registered office of this corporation is
Corporation Trust Center, 1209 Orange Street, Wilmington, County of New Castle,
Delaware 19801, and the name of its initial registered agent at such address is
The Corporation Trust Company.
ARTICLE 3. PURPOSES
The purpose of this corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of the
State of Delaware.
ARTICLE 4. SHARES
4.1 AUTHORIZED CAPITAL. The total number of shares of all classes of
stock which this corporation shall have authority to issue is 35,000,000
shares, of which 5,000,000 shares shall be preferred stock having a par value
of $1.00 per share and 30,000,000 shares shall be common stock having a par
value of $1.00 per share.
<PAGE>
Certificate of Incorporation of
Alaska Air Group, Inc.
Page 2
4.2 ISSUANCE OF PREFERRED STOCK IN SERIES. The Board of Directors of this
corporation (the "Board of Directors") is expressly authorized to adopt, from
time to time, a resolution or resolutions providing for the issuance of
preferred stock in one or more series, to fix the number of shares in each such
series and to fix the designations and the powers, preferences and relative,
participating, optional or other special rights, and the qualifications,
limitations and restrictions, of each such series, including, but not limited
to, dividend rates, conversion rights, rights and terms of redemption (including
sinking fund provisions), the redemption price or prices and liquidation
preferences. Any of the voting powers, designations, preferences, rights and
qualifications, limitations or restrictions of any such series may be made
dependent upon facts ascertainable outside of this Certificate of Incorporation
or of any amendment hereto, or outside the resolution or resolutions providing
for the issuance of such series adopted by the Board of Directors, provided that
the manner in which such facts shall operate upon the voting powers,
designations, preferences, rights and qualifications, limitations or
restrictions of such series is clearly and expressly set forth in the resolution
or resolutions providing for the issuance of such series adopted by the Board of
Directors.
4.3 DIVIDENDS. Subject to any preferential rights granted for any series
of preferred stock, the holders of shares of the common stock shall be entitled
to receive dividends, out of the funds of this corporation legally available
therefor, at such rates and at such times as may be determined by the Board of
Directors. The holders of shares of the preferred stock shall be entitled to
receive dividends to the extent determined by the Board of Directors in
designating the particular series of preferred stock.
4.4 VOTING. The holders of shares of the common stock, on the basis of
one vote per share, shall have the right to vote for the election of members of
the Board of Directors and the right to vote on all other matters, except those
matters in which a separate class of stockholders vote by class or series. To
the extent provided in a resolution of the Board of Directors authorizing the
issue of a series of preferred stock, the holders of each such series shall
have the right to vote for the election of members of the Board of Directors and
the right to vote on all other matters, except those matters in which a
separate class of stockholders vote by class or series.
ARTICLE 5. INCORPORATOR
The name and mailing address of the incorporator is:
Jan David Blais
19300 Pacific Highway South
Seattle, Washington 98188
<PAGE>
Certificate of Incorporation of
Alaska Air Group, Inc.
Page 3
ARTICLE 6. DIRECTORS
The Board of Directors shall be composed of no less than nine and no more
than fifteen Directors, the specific number to be set by resolution of the
Board of Directors; provided, that the Board of Directors may be less than nine
until vacancies are filled. The Board of Directors shall be divided into three
classes, with said classes to be as equal in number as may be possible. The
term of office of each class shall initially be as follows:
<TABLE>
<CAPTION>
Class Term
----- ----
<C> <S>
Class 1 Until the 1986 annual meeting of stockholders
Class 2 Until the 1987 annual meeting of stockholders
Class 3 Until the 1988 annual meeting of stockholders
</TABLE>
Subsequent to the expiration of the initial term, a Director's term shall
be three years, and each Director shall serve for the term for which he was
elected or until his successor shall have been elected and qualified, whichever
is later, or until his death, resignation or removal from office.
ARTICLE 7. INITIAL BOARD OF DIRECTORS
The powers of the incorporator shall terminate upon the filing of this
Certificate of Incorporation with the Secretary of State of the State of
Delaware. The names, mailing addresses and classifications of the persons who
are to serve as Directors until the annual meeting of stockholders at which
their term expires or until their successors are elected and qualify are:
<TABLE>
<CAPTION>
Name Mailing Address Class
---- --------------- -----
<S> <C> <C>
William H. Clapp 19300 Pacific Highway South 1
Seattle, Washington 98188
Charles Q. Conway 19300 Pacific Highway South 1
Seattle, Washington 98188
Ronald F. Cosgrave 19300 Pacific Highway South 1
Seattle, Washington 98188
Richard A. Wien 19300 Pacific Highway South 2
Seattle, Washington 98188
Byron I. Mallott 19300 Pacific Highway South 2
Seattle, Washington 98188
</TABLE>
<PAGE>
Certificate of Incorporation of
Alaska Air Group, Inc.
Page 4
<TABLE>
<S> <C> <C>
Robert L. Parker, Jr. 19300 Pacific Highway South 2
Seattle, Washington 98188
Bruce R. Kennedy 19300 Pacific Highway South 2
Seattle, Washington 98188
O.F. Benecke 19300 Pacific Highway South 3
Seattle, Washington 98188
Mary Jane Fate 19300 Pacific Highway South 3
Seattle, Washington 98188
</TABLE>
ARTICLE 8. BYLAWS
The Board of Directors shall have the power to adopt, amend or repeal the
Bylaws for this corporation, at a duly called meeting or by written consent in
accordance with Article 9, subject to the power of the stockholders to adopt,
amend or repeal such Bylaws, and, to the extent, if any, provided by resolution
of the Board of Directors providing for the issue of a series of preferred
stock, by the affirmative vote of the holders of not less than a majority of the
outstanding shares of each such series entitled to vote thereon.
ARTICLE 9. ACTION BY STOCKHOLDERS WITHOUT A
MEETING
Any action which could be taken at any annual or special meeting of the
stockholders may be taken without a meeting, without prior notice and without a
vote, if a written consent setting forth the action so taken is signed by all
stockholders entitled to vote with respect to the subject matter thereof.
ACTION 10. SPECIAL VOTING
If this corporation has a "controlling stockholder", the affirmative vote
of the holders of not less than 80% of the outstanding shares of voting stock
shall be required for this corporation to (a) consolidate with, or merge with
any other corporation, (b) convey to any corporation or other person or
otherwise dispose of all or substantially all of its assets, or (c) dispose of
by any means all or substantially all of the stock or assets of any major
subsidiary. For purposes of this Article, a controlling stockholder is a person
who, including associates of such person, is the beneficial owner of more than
15% of the voting power of this corporation. This voting requirement shall not
be applicable if 80% of the disinterested members (not representing or being
associated with the controlling stockholder) of this corporation's full Board of
Directors have voted in favor of the proposed consolidation, merger, conveyance,
or disposition.
<PAGE>
Certificate of Incorporation of
Alaska Air Group, Inc.
Page 5
If there is a controlling stockholder, this Article 10 can be amended only
by the affirmative vote of 80% of the voting power of this corporation. Any
determination made by the Board of Directors, on the basis of information at the
time available to it, as to whether any person is an associate of a controlling
stockholder, shall be conclusive and binding for all purposes of this Article
10.
The Board of Directors, when evaluating any offer of another party to (a)
make a tender or exchange offer for any equity security of this corporation, (b)
merge or consolidate this corporation with another corporation, or (c) purchase
or otherwise acquire all or substantially all of the properties and assets of
this corporation, shall, in connection with the exercise of its judgment in
determining what is in the best interests of this corporation and its
stockholders, give due consideration to all relevant factors, including, without
limitation, the social and economic effects on the employees, customers and
other constituents of this corporation.
ARTICLE 11. LIMITATION OF DIRECTOR LIABILITY
To the full extent that the Delaware General Corporation Law, as it exists
on the date hereof or may hereafter be amended, permits the limitation or
elimination of the liability of directors, a Director of the corporation shall
not be liable to the corporation or it's stockholders for monetary damages for
conduct as a Director. Any amendment to or repeal of this Article 11 shall not
adversely affect any right or protection of a Director of the corporation for or
with respect to any acts or omissions of such Director occurring prior to such
amendment or repeal.
Terms of the masculine gender used for convenience in this Certificate of
Incorporation should be understood in the feminine gender where appropriate.
I, Jan David Blais, being the incorporator hereinbefore named for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, do make this certificate, hereby declaring and certifying
that this is my act and deed and the facts herein stated are true, and
accordingly I have hereunto set my hand this 15th day of March, 1985.
Jan David Blais, Incorporator
-----------------------------
Jan David Blais, Incorporator
<PAGE>
Certificate of Incorporation of
Alaska Air Group, Inc.
Page 6
IN WITNESS WHEREOF, said Alaska Air Group, Inc. has caused this certificate
to be signed by its Chairman, Chief Executive Officer and President, and
attested by its Secretary this 29th day of June, 1987.
Alaska Air Group, Inc.
By Bruce R. Kennedy
---------------------------
Bruce R. Kennedy
Chairman, Chief Executive
Officer and President
ATTEST:
By Marjorie E. Laws
-------------------------
Marjorie E. Laws, Secretary
<PAGE>
EXHIBIT 12(a)
ALASKA AIR GROUP, INC.
STATEMENT RE COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(in thousands, except ratios)
<TABLE>
<CAPTION>
1993 1992 1991 1990 1989
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Earnings:
Income (loss) before income
tax expense and acounting
change . . . . . . . . . . . $ (45,812) $ (125,706) $ 16,207 $ 127,918 $ 69,367
Less: Capitalized interest. . . (446) (6,102) (8,301) (9,024) (3,768)
Add:
Interest on indebtedness . . . . 37,624 43,223 40,180 20,266 19,432
Amortization of debt expense 690 643 519 440 182
Portion of rent under long-term
operating leases
representative of an interest
factor . . . . . . . . . . . . 60,136 49,889 41,327 38,346 30,791
-------- --------- ------- -------- --------
Earnings Available for Fixed
Charges. . . . . . . . . . . . $ 52,192 $ (38,053) $ 89,932 $ 77,946 $ 116,004
-------- --------- -------- -------- --------
-------- --------- -------- -------- --------
Fixed Charges:
Interest . . . . . . . . . . . . $ 37,624 $ 43,223 $ 40,180 $ 20,266 $ 19,432
Amortization of debt expense 690 643 519 440 182
Portion of rent under long-term
operating leases
representative of an interest
factor . . . . . . . . . . . . 60,136 49,889 41,327 38,346 30,791
-------- --------- ------- -------- --------
Total Fixed Charges. . . . . . . $ 98,450 $ 93,755 $ 82,026 $ 59,052 $ 50,405
-------- --------- -------- -------- --------
-------- --------- -------- -------- --------
Ratio of Earnings to Fixed
Charges. . . . . . . . . . . . . 0.53 (0.41) 1.10 1.32 2.30
-------- --------- -------- -------- --------
-------- --------- -------- -------- --------
Coverage deficiency. . . . . . . $ 46,258 $ 131,808 -- -- --
-------- --------- -------- -------- --------
-------- --------- -------- -------- --------
</TABLE>
-1-
<PAGE>
EXHIBIT 12(b)
ALASKA AIRLINES, INC.
STATEMENT RE COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(in thousands, except ratios)
<TABLE>
<CAPTION>
1993 1992 1991 1990 1989
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Earnings:
Income (loss) before income
tax expense and acounting
change . . . . . . . . . . . $ (44,539) $ (120,815) $ 16,588 $ 24,466 $ 67,174
Less: Capitalized interest. . . -- (5,581) (7,449) (8,866) (3,548)
Add:
Interest on indebtedness . . . . 28,777 33,747 31,703 13,171 14,070
Amortization of debt expense . . 72 315 66 66 68
Portion of rent under long-term
operating leases
representative of an interest
factor . . . . . . . . . . . . 49,719 40,185 32,884 30,843 23,921
-------- -------- --------- -------- --------
Total Earnings Available for
Fixed Charges. . . . . . . . . $ 34,029 $ (52,149) $ 73,792 $ 59,680 $ 101,685
-------- -------- --------- -------- --------
-------- -------- --------- -------- --------
Fixed Charges:
Interest . . . . . . . . . . . . $ 28,777 $ 33,747 $ 31,703 $ 13,171 $ 14,070
Amortization of debt expense . . 72 315 66 66 68
Portion of rent under long-term
operating leases
representative of an interest
factor . . . . . . . . . . . . 49,719 40,185 32,884 30,843 23,921
-------- -------- -------- -------- --------
Total Fixed Charges. . . . . . . $ 78,568 $ 74,247 $ 64,653 $ 44,080 $ 38,059
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Ratio of Earnings to Fixed
Charges . . . . . . . . . . . . 0.43 (0.70) 1.14 1.35 2.67
-------- -------- --------- -------- --------
-------- -------- --------- -------- --------
Deficiency . . . . . . . . . . . $ 44,539 $ 126,396 -- -- --
-------- -------- --------- -------- --------
-------- -------- --------- -------- --------
</TABLE>
-2-
<PAGE>
Exhibit 23(e)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this Registration Statement of our report dated January 25, 1994
included in Alaska Airlines, Inc.'s Form 10-K for the year ended December 31,
1993 and our report dated January 25, 1994 included in Alaska Air Group, Inc.'s
Form 10-K for the year ended December 31, 1993 and to all references to our Firm
included in this Registration Statement.
Seattle, Washington ARTHUR ANDERSEN & CO.
February 14, 1994
