EXHIBIT 10.21
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LOAN AND SECURITY AGREEMENT
by and among
WORLD AIRWAYS, INC.
and
EACH OF ITS SUBSIDIARIES THAT ARE SIGNATORIES HERETO
as Borrowers,
THE LENDERS THAT ARE SIGNATORIES HERETO
as the Lenders,
and
FOOTHILL CAPITAL CORPORATION
as the Arranger and Administrative Agent
Dated as of December 12, 2002
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1. DEFINITIONS AND CONSTRUCTION...................................................................... 1
1.1 Definitions.............................................................................. 1
1.2 Accounting Terms......................................................................... 23
1.3 Code..................................................................................... 23
1.4 Construction............................................................................. 23
1.5 Schedules and Exhibits................................................................... 24
2. LOAN AND TERMS OF PAYMENT......................................................................... 24
2.1 Revolver Advances........................................................................ 24
2.2 [Intentionally Omitted].................................................................. 25
2.3 Borrowing Procedures and Settlements..................................................... 25
2.4 Payments................................................................................. 32
2.5 Overadvances............................................................................. 34
2.6 Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations.............. 35
2.7 Cash Management.......................................................................... 37
2.8 Crediting Payments; Float Charge......................................................... 38
2.9 Designated Account....................................................................... 38
2.10 Maintenance of Loan Account; Statements of Obligations................................... 38
2.11 Fees..................................................................................... 39
2.12 Letters of Credit........................................................................ 40
2.13 [Intentionally Omitted].................................................................. 43
2.14 Capital Requirements..................................................................... 43
2.15 Joint and Several Liability of Borrowers................................................. 43
3. CONDITIONS; TERM OF AGREEMENT..................................................................... 46
3.1 Conditions Precedent to the Initial Extension of Credit.................................. 46
3.2 Conditions Subsequent to the Initial Extension of Credit................................. 49
3.3 Conditions Precedent to all Extensions of Credit......................................... 49
3.4 Term..................................................................................... 50
3.5 Effect of Termination.................................................................... 50
3.6 Early Termination by Borrowers........................................................... 50
4. CREATION OF SECURITY INTEREST..................................................................... 51
4.1 Grant of Security Interest............................................................... 51
4.2 Negotiable Collateral.................................................................... 51
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4.3 Collection of Accounts, General Intangibles, and Negotiable Collateral................... 51
4.4 Delivery of Additional Documentation Required............................................ 51
4.5 Power of Attorney........................................................................ 52
4.6 Right to Inspect; Verification........................................................... 52
4.7 Control Agreements....................................................................... 53
5. REPRESENTATIONS AND WARRANTIES.................................................................... 53
5.1 No Encumbrances.......................................................................... 53
5.2 Eligible Accounts........................................................................ 53
5.3 Eligible Inventory....................................................................... 53
5.4 Equipment................................................................................ 53
5.5 Location of Inventory and Equipment...................................................... 53
5.6 Inventory Records........................................................................ 54
5.7 Location of Chief Executive Office; FEIN................................................. 54
5.8 Due Organization and Qualification; Subsidiaries......................................... 54
5.9 Due Authorization; No Conflict........................................................... 54
5.10 Litigation............................................................................... 55
5.11 No Material Adverse Change............................................................... 55
5.12 Fraudulent Transfer...................................................................... 55
5.13 Employee Benefits; Labor Matters......................................................... 56
5.14 Environmental Condition.................................................................. 56
5.15 Brokerage Fees........................................................................... 56
5.16 Intellectual Property.................................................................... 56
5.17 Leases................................................................................... 56
5.18 DDAs..................................................................................... 56
5.19 Complete Disclosure...................................................................... 56
5.20 Indebtedness............................................................................. 57
6. AFFIRMATIVE COVENANTS............................................................................. 57
6.1 Accounting System........................................................................ 57
6.2 Collateral Reporting..................................................................... 57
6.3 Financial Statements, Reports, Certificates.............................................. 58
6.4 Consultant............................................................................... 61
6.5 Return................................................................................... 61
6.6 Maintenance of Properties................................................................ 62
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6.7 Taxes.................................................................................... 62
6.8 Insurance................................................................................ 62
6.9 Location of Inventory and Equipment...................................................... 63
6.10 Compliance with Laws..................................................................... 63
6.11 Leases................................................................................... 63
6.12 Brokerage Commissions.................................................................... 63
6.13 Existence................................................................................ 64
6.14 Environmental............................................................................ 64
6.15 Disclosure Updates....................................................................... 64
6.16 Extension of Subordinated Debt........................................................... 64
6.17 Master Assignment Agreement.............................................................. 64
6.18 Credit Memo.............................................................................. 64
7. NEGATIVE COVENANTS................................................................................ 65
7.1 Indebtedness............................................................................. 65
7.2 Liens.................................................................................... 66
7.3 Restrictions on Fundamental Changes...................................................... 66
7.4 Disposal of Assets....................................................................... 66
7.5 Change Name.............................................................................. 66
7.6 Guarantee................................................................................ 67
7.7 Nature of Business....................................................................... 67
7.8 Prepayments and Amendments............................................................... 67
7.9 Change of Control........................................................................ 67
7.10 Consignments............................................................................. 67
7.11 Distributions............................................................................ 67
7.12 Accounting Methods....................................................................... 67
7.13 Investments.............................................................................. 68
7.14 Transactions with Affiliates............................................................. 68
7.15 Suspension............................................................................... 68
7.16 [Intentionally Omitted].................................................................. 68
7.17 Use of Proceeds.......................................................................... 68
7.18 Change in Location of Chief Executive Office; Inventory and Equipment with Bailees....... 68
7.19 Securities Accounts...................................................................... 69
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7.20 Financial Covenants...................................................................... 69
8. EVENTS OF DEFAULT................................................................................. 71
9. THE LENDER GROUP'S RIGHTS AND REMEDIES............................................................ 73
9.1 Rights and Remedies...................................................................... 73
9.2 Remedies Cumulative...................................................................... 75
10. TAXES AND EXPENSES................................................................................ 75
11. WAIVERS; INDEMNIFICATION.......................................................................... 76
11.1 Demand; Protest; etc..................................................................... 76
11.2 The Lender Group's Liability for Collateral.............................................. 76
11.3 Indemnification.......................................................................... 76
12. NOTICES........................................................................................... 77
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER........................................................ 78
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS........................................................ 79
14.1 Assignments and Participations........................................................... 79
14.2 Successors............................................................................... 81
15. AMENDMENTS; WAIVERS............................................................................... 82
15.1 Amendments and Waivers................................................................... 82
15.2 Replacement of Holdout Lender............................................................ 83
15.3 No Waivers; Cumulative Remedies.......................................................... 83
16. AGENT; THE LENDER GROUP........................................................................... 83
16.1 Appointment and Authorization of Agent................................................... 83
16.2 Delegation of Duties..................................................................... 84
16.3 Liability of Agent....................................................................... 84
16.4 Reliance by Agent........................................................................ 85
16.5 Notice of Default or Event of Default.................................................... 85
16.6 Credit Decision.......................................................................... 85
16.7 Costs and Expenses; Indemnification...................................................... 86
16.8 Agent in Individual Capacity............................................................. 86
16.9 Successor Agent.......................................................................... 87
16.10 Lender in Individual Capacity............................................................ 87
16.11 Withholding Taxes........................................................................ 88
16.12 Collateral Matters....................................................................... 89
16.13 Restrictions on Actions by the Lenders; Sharing of Payments.............................. 90
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16.14 Agency for Perfection.................................................................... 91
16.15 Payments by Agent to the Lenders......................................................... 91
16.16 Concerning the Collateral and Related Loan Documents..................................... 91
16.17 Field Audits and Examination Reports; Confidentiality; Disclaimers by the Lenders;
Other Reports and Information............................................................ 91
16.18 Several Obligations; No Liability........................................................ 93
16.19 Legal Representation of Agent............................................................ 93
17. GENERAL PROVISIONS................................................................................ 93
17.1 Effectiveness............................................................................ 93
17.2 Section Headings......................................................................... 93
17.3 Interpretation........................................................................... 93
17.4 Severability of Provisions............................................................... 94
17.5 Amendments in Writing.................................................................... 94
17.6 Counterparts; Telefacsimile Execution.................................................... 94
17.7 Revival and Reinstatement of Obligations................................................. 94
17.8 Integration.............................................................................. 94
17.9 Parent as Agent for Borrowers............................................................ 94
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EXHIBITS AND SCHEDULES
Exhibit A-1 Form of Assignment and Acceptance
Exhibit C-1 Form of Compliance Certificate
Schedule A-1 Agent's Account
Schedule C-1 Revolver Commitments
Schedule D-1 Designated Account
Schedule E-1 Eligible Inventory Locations
Schedule P-1 Permitted Liens
Schedule R-1 Real Property Collateral
Schedule 2.7(a) Cash Management Banks
Schedule 5.5 Locations of Inventory and Equipment
Schedule 5.7 Chief Executive Office; FEIN
Schedule 5.8(b) Capitalization of Borrowers
Schedule 5.8(c) Capitalization of Borrowers' Subsidiaries
Schedule 5.8(e) Affiliates
Schedule 5.10 Litigation
Schedule 5.14 Environmental Matters
Schedule 5.16 Intellectual Property
Schedule 5.18 Demand Deposit Accounts
Schedule 5.20 Permitted Indebtedness
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement"), is entered
into as of December 12, 2002 by and among, on the one hand, FOOTHILL CAPITAL
CORPORATION, a California corporation, and the other lenders identified on the
signature pages hereof (such lenders, together with their respective successors
and assigns, are referred to hereinafter each individually as a "Lender" and
collectively as the "Lenders"), FOOTHILL CAPITAL CORPORATION, a California
corporation, as the arranger and administrative agent for the Lenders ("Agent"),
and, on the other hand, WORLD AIRWAYS, INC., a Delaware corporation ("Parent")
and WORLD AIRWAYS PARTS COMPANY, LLC, a Delaware limited liability company
("World Parts"; World Parts and Parent are referred to hereinafter each
individually as a "Borrower," and individually and collectively, jointly and
severally, as "Borrowers").
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. As used in this Agreement, the following terms
shall have the following definitions:
"Account Debtor" means any Person who is or who may become
obligated under, with respect to, or on account of, an Account, chattel paper,
or a General Intangible.
"Accounts" means all of Borrowers' now owned or hereafter
acquired right, title, and interest with respect to "accounts" (as that term is
defined in the Code), and any and all supporting obligations in respect thereof.
"ACH Transactions" means any cash management or related services
(including the Automated Clearing House processing of electronic funds transfers
through the direct Federal Reserve Fedline system) provided by ▇▇▇▇▇ Fargo or
its Affiliates for the account of Administrative Borrower or its Subsidiaries.
"Additional Documents" has the meaning set forth in Section 4.4.
"Adjustment Date" has the meaning set forth in Section 2.6.
"Administrative Borrower" has the meaning set forth in Section
17.9.
"Advances" has the meaning set forth in Section 2.1.
"Affiliate" means, as applied to any Person, any other Person
who, directly or indirectly, controls, is controlled by, or is under common
control with, such Person. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to direct the management and
policies of a Person, whether through the ownership of Stock, by contract, or
otherwise; provided, however, that, for purposes of the definition of Eligible
Accounts and Section 7.14 hereof: (a) any Person which owns directly or
indirectly 10% or more
of the securities having ordinary voting power for the election of directors or
other members of the governing body of a Person or 10% or more of the
partnership or other ownership interests of a Person (other than as a limited
partner of such Person) shall be deemed to control such Person, (b) each
director (or comparable manager) of a Person shall be deemed to be an Affiliate
of such Person, and (c) each partnership or joint venture in which a Person is a
partner or joint venturer shall be deemed to be an Affiliate of such Person.
"Agent" means Foothill, solely in its capacity as agent for the
Lenders hereunder, and any successor thereto.
"Agent's Account" means the account identified on Schedule A-1.
"Agent Advances" has the meaning set forth in Section 2.3(e)(i).
"Agent's Liens" means the Liens granted by Borrowers to Agent
for the benefit of the Lender Group under this Agreement or the other Loan
Documents.
"Agent-Related Persons" means Agent, together with its
Affiliates, officers, directors, employees, and agents.
"Agreement" has the meaning set forth in the preamble hereto.
"Aircraft Leases" means, collectively, those certain Aircraft
Lease Agreements between World Airways, Inc. and (a) International Lease Finance
Corporation regarding N271WA, dated as of September 30, 1992; (b) First Security
Bank of Utah, DPF Airlease, Inc. VIII, Potomac Capital Investment Corporation
regarding N107WA, dated as of January 15, 1991; (g) International Lease Finance
Corporation regarding N272WA, dated as of September 30, 1992; (d) International
Lease Finance Corporation regarding N275WA, dated as of September 30, 1992; (e)
International Lease Finance Corporation regarding N276WA, dated as of September
30, 1992; (f) MDFC Knoxville Company, MDFC-Memphis Company regarding N277WA,
dated as of March 11, 1996; (g) MDFC Knoxville Company, MDFC-Memphis Company
regarding N278WA, dated as of March 11, 1996; (h) CBSA Partners LLC regarding
N279WA, dated as of May 16, 2002; (i) International Lease Finance Corporation
regarding N273WA, dated as of September 30, 1992; (j) International Lease
Finance Corporation regarding N274WA, dated as of September 30, 1992; (k) MDFC
Knoxville Company, MDFC-Memphis Company regarding N526MD, dated as of April 6,
2001; (l) ▇▇▇▇▇ Fargo Bank Northwest regarding N541SA, dated as of October 18,
2000; (m) International Lease Finance Corporation regarding N303WL, dated as of
September 29, 2000; (n) International Lease Finance Corporation regarding
N304WL, dated as of September 29, 2000; (o) Polaris Holding Company regarding
N352WL, dated as of May 31, 2001; and (p) Continental Airlines, Inc. regarding
N14075, dated as of September 15, 2000, in each case as amended, restated,
supplemented or otherwise modified from time to time through the Closing Date.
"Aircraft Lessor Intercreditor Agreements" means, each certain
intercreditor agreement to be entered into after the Closing Date by and among
Parent, Agent and each lessor of aircraft leased to Parent.
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"Air Mobility Command" means the Air Mobility Command unit of
the United States Department of the Air Force.
"Air Mobility Command Agreement" means that certain agreement
identified as contract number F11626-02-D-0007 between the Air Mobility Command
and the North American Airlines Contractor Team (of which Parent is a member).
"Applicable Prepayment Premium" means, as of any date of
determination, an amount equal to (a) during the period of time from and after
the date of the execution and delivery of this Agreement up to the date that is
the first anniversary of the Closing Date, 5% times the Maximum Revolver Amount,
(b) during the period of time from and including the date that is the first
anniversary of the Closing Date up to the date that is the second anniversary of
the Closing Date, 4% times the Maximum Revolver Amount, (c) during the period of
time from and including the date that is the second anniversary of the Closing
Date up to the date that is the third anniversary of the Closing Date, 3% times
the Maximum Revolver Amount, (d) during the period of time from and including
the date that is the third anniversary of the Closing Date up to the date that
is the fourth anniversary of the Closing Date, 2% times the Maximum Revolver
Amount, and (e) during the period of time from and including the date that is
the fourth anniversary of the Closing Date up to the Maturity Date, 1% times the
Maximum Revolver Amount.
"Assignee" has the meaning set forth in Section 14.1.
"Assignment and Acceptance" means an Assignment and Acceptance
in the form of Exhibit A-1.
"Authorized Person" means any officer or other employee of
Administrative Borrower.
"Availability" means, as of any date of determination, if such
date is a Business Day, and determined at the close of business on the
immediately preceding Business Day, if such date of determination is not a
Business Day, the amount that Borrowers are entitled to borrow as Advances under
Section 2.1 (after giving effect to all then outstanding Obligations (other than
Bank Product Obligations) and all sublimits and reserves applicable hereunder).
"Average Unused Line Amount" means, as of any date of
determination, the amount equal to (a) the lesser of (i) the Maximum Revolver
Amount as of the last day of the immediately preceding month, or (ii) the
average amount of the Borrowing Base during such immediately preceding month
less (b) the sum of (i) the average Daily Balance of Advances that were
outstanding during the immediately preceding month, plus (ii) the average Daily
Balance of the Letter of Credit Usage during the immediately preceding month.
"Average Unused Line Percentage" means, as of any date of
determination, the percentage equal to (a) the sum of (i) the average Daily
Balance of Advances that were outstanding during the immediately preceding
month, plus (ii) the average Daily Balance of the Letter of Credit Usage during
the immediately preceding month, divided by (b) the lesser of (i) the Maximum
Revolver Amount as of the last day of the immediately preceding month, or (ii)
the average amount of the Borrowing Base during such immediately preceding
month.
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"Bank Product Agreements" means those certain cash management
service agreements entered into from time to time by Administrative Borrower or
its Subsidiaries in connection with any of the Bank Products.
"Bank Product Obligations" means all obligations, liabilities,
contingent reimbursement obligations, fees, and expenses owing by Administrative
Borrower or its Subsidiaries to ▇▇▇▇▇ Fargo or its Affiliates pursuant to or
evidenced by the Bank Product Agreements and irrespective of whether for the
payment of money, whether direct or indirect, absolute or contingent, due or to
become due, now existing or hereafter arising, and including all such amounts
that a Borrower is obligated to reimburse to Agent or any member of the Lender
Group as a result of Agent or such member of the Lender Group purchasing
participations or executing indemnities or reimbursement obligations with
respect to the Bank Products provided to Administrative Borrower or its
Subsidiaries pursuant to the Bank Product Agreements.
"Bank Products" means any service or facility extended to
Administrative Borrower or its Subsidiaries by ▇▇▇▇▇ Fargo or any Affiliate of
▇▇▇▇▇ Fargo including: (a) credit cards, (b) credit card processing services,
(c) debit cards, (d) purchase cards, (e) ACH Transactions, (f) cash management,
including controlled disbursement, accounts or services, or (g) Hedge
Agreements.
"Bank Product Reserves" means, as of any date of determination,
the amount of reserves that Agent has established (based upon ▇▇▇▇▇ Fargo's or
its Affiliate's reasonable determination of the credit exposure in respect of
then extant Bank Products) for Bank Products then provided or outstanding.
"Bankruptcy Code" means the United States Bankruptcy Code, as in
effect from time to time.
"Base Rate" means, the rate of interest announced within ▇▇▇▇▇
Fargo at its principal office in San Francisco as its "prime rate", with the
understanding that the "prime rate" is one of ▇▇▇▇▇ Fargo's base rates (not
necessarily the lowest of such rates) and serves as the basis upon which
effective rates of interest are calculated for those loans making reference
thereto and is evidenced by the recording thereof after its announcement in such
internal publication or publications as ▇▇▇▇▇ Fargo may designate.
"Base Rate Loan" means each portion of an Advance that bears
interest at a rate determined by reference to the Base Rate.
"Base Rate Margin" means 2 percentage points, as such amount may
be adjusted pursuant to Section 2.6 hereof.
"Benefit Plan" means a "defined benefit plan" (as defined in
Section 3(35) of ERISA) for which any Borrower or any Subsidiary or ERISA
Affiliate of any Borrower has been an "employer" (as defined in Section 3(5) of
ERISA) within the past six years.
"Board of Directors" means the board of directors (or comparable
managers) of Parent or any committee thereof duly authorized to act on behalf
thereof.
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"Books" means all of each Borrower's and its Subsidiaries' now
owned or hereafter acquired books and records (including all of its Records
indicating, summarizing, or evidencing its assets (including the Collateral) or
liabilities, all of each Borrower's or its Subsidiaries' Records relating to its
or their business operations or financial condition, and all of its or their
goods or General Intangibles related to such information).
"Borrower" and "Borrowers" have the respective meanings set
forth in the preamble to this Agreement.
"Borrowing" means a borrowing hereunder consisting of Advances
made on the same day by the Lenders (or Agent on behalf thereof), or by Swing
Lender in the case of a Swing Loan, or by Agent in the case of an Agent Advance,
in each case, to Administrative Borrower.
"Borrowing Base" has the meaning set forth in Section 2.1.
"Business Day" means any day that is not a Saturday, Sunday, or
other day on which national banks are authorized or required to close.
"Capital Lease" means a lease that is required to be capitalized
for financial reporting purposes in accordance with GAAP.
"Capitalized Lease Obligation" means any Indebtedness
represented by obligations under Capital Lease.
"Cash Equivalents" means (a) marketable direct obligations
issued or unconditionally guaranteed by the United States or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within 1 year from the date of acquisition thereof, (b)
marketable direct obligations issued by any state of the United States or any
political subdivision of any such state or any public instrumentality thereof
maturing within 1 year from the date of acquisition thereof and, at the time of
acquisition, having the highest rating obtainable from either S&P or ▇▇▇▇▇'▇,
(c) commercial paper maturing no more than 270 days from the date of acquisition
thereof and, at the time of acquisition, having a rating of A-1 or P-1, or
better, from S&P or ▇▇▇▇▇'▇, and (d) certificates of deposit or bankers'
acceptances maturing within 1 year from the date of acquisition thereof either
(i) issued by any bank organized under the laws of the United States or any
state thereof which bank has a rating of A or A2, or better, from S&P or
▇▇▇▇▇'▇, or (ii) certificates of deposit less than or equal to $100,000 in the
aggregate issued by any other bank insured by the Federal Deposit Insurance
Corporation.
"Cash Management Bank" has the meaning set forth in Section
2.7(a).
"Cash Management Account" has the meaning set forth in Section
2.7(a).
"Cash Management Agreements" means those certain cash management
service agreements, in form and substance satisfactory to Agent, each of which
is among Administrative Borrower, Agent, and one of the Cash Management Banks.
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"Change of Control" means (a) any "person" or "group" (within
the meaning of Sections 13(d) and 14(d) of the Exchange Act), becomes the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of 49%, or more, of the Stock of Parent having the right to vote for
the election of members of the Board of Directors, or (b) a majority of the
members of the Board of Directors do not constitute Continuing Directors, or (c)
any Borrower ceases to directly own and control 100% of the outstanding capital
Stock of each of its Subsidiaries extant as of the Closing Date.
"Closing Date" means the date of the making of the initial
Advance (or other extension of credit) hereunder.
"Closing Date Business Plan" means the set of Projections of
Borrowers for the remaining months of the then current fiscal year and for the
next succeeding year (on a month by month basis), in form and substance
(including as to scope and underlying assumptions) reasonably satisfactory to
Agent.
"Code" means the Georgia Uniform Commercial Code, as in effect
from time to time.
"Collateral" means all of each Borrower's now owned or hereafter
acquired right, title, and interest in and to each of the following:
(a) Accounts,
(b) Books,
(c) Equipment,
(d) General Intangibles,
(e) Inventory,
(f) Investment Property,
(g) Negotiable Collateral,
(h) Real Property Collateral,
(i) money or other assets of each such Borrower that now or
hereafter come into the possession, custody, or control of any member of the
Lender Group, and
(j) the proceeds and products, whether tangible or
intangible, of any of the foregoing, including proceeds of insurance covering
any or all of the foregoing, and any and all Accounts, Books, Equipment, General
Intangibles, Inventory, Investment Property, Negotiable Collateral, Real
Property, money, deposit accounts, or other tangible or intangible property
resulting from the sale, exchange, collection, or other disposition of any of
the foregoing, or any portion thereof or interest therein, and the proceeds
thereof.
6
"Collateral Access Agreement" means a landlord waiver, bailee
letter, or acknowledgement agreement of any lessor, warehouseman, processor,
consignee, or other Person in possession of, having a Lien upon, or having
rights or interests in the Equipment or Inventory, in each case, in form and
substance reasonably satisfactory to Agent.
"Collections" means all cash, checks, notes, instruments, and
other items of payment (including insurance proceeds, proceeds of cash sales,
rental proceeds, and tax refunds) of Borrowers.
"Compliance Certificate" means a certificate substantially in
the form of Exhibit C-1 delivered by the chief financial officer of Parent to
Agent.
"Continuing Director" means (a) any member of the Board of
Directors who was a director of Parent on the Closing Date, and (b) any
individual who becomes a member of the Board of Directors after the Closing Date
if such individual was appointed or nominated for election to the Board of
Directors by a majority of the Continuing Directors, but excluding any such
individual originally proposed for election in opposition to the Board of
Directors in office at the Closing Date in an actual or threatened election
contest relating to the election of the directors of Parent (as such terms are
used in Rule 14a-11 under the Exchange Act) and whose initial assumption of
office resulted from such contest or the settlement thereof.
"Control Agreement" means a control agreement, in form and
substance reasonably satisfactory to Agent, executed and delivered by the
applicable Borrower, Agent, and the applicable securities intermediary with
respect to a Securities Account or the applicable bank with respect to a deposit
account.
"Credit Memo" means a memorandum issued by Parent for each month
to DFAS reconciling, with respect to Parent's accounts payable, actual fuel
costs to estimated fuel costs for such month.
"Daily Balance" means, with respect to each day during the term
of this Agreement, the amount of an Obligation owed at the end of such day.
"DDA" means any checking or other demand deposit account
maintained by any Borrower.
"Default" means an event, condition, or default that, with the
giving of notice, the passage of time, or both, would be an Event of Default.
"Defaulting Lender" means any Lender that fails to make any
Advance (or other extension of credit) that it is required to make hereunder on
the date that it is required to do so hereunder.
"Defaulting Lender Rate" means (a) the Base Rate for the first 3
days from and after the date the relevant payment is due, and (b) thereafter, at
the interest rate then applicable to Advances (inclusive of the Base Rate Margin
applicable thereto).
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"Designated Account" means each of those certain DDA of
Administrative Borrower identified on Schedule D-1.
"Designated Appraiser" means ▇▇▇▇-▇▇▇▇▇▇▇▇, Inc. or such other
appraiser designated by and acceptable to Agent in its Permitted Discretion,
from time to time, following consultation by Agent with Administrative Borrower
with respect to the fees and expenses to be charged by such appraiser.
"DFAS" means the Defense Finance and Account Service or any
successor-in-interest thereto.
"DFAS Contra Amount" means (a) if the aggregate amount of DFAS
Past Due Payables equals or exceeds $1,000,000, the amount of all DFAS Payables,
or (b) if the aggregate amount of DFAS Past Due Payables is less than
$1,000,000, the amount equal to the sum of (i) all DFAS Past Due Payables plus
(ii) the amount that is the difference between (A) $1,000,000 minus the DFAS
Past Due Payables, and (B) the DFAS Current Payables.
"DFAS Current Payables" means all accounts payable owed by
Borrowers, or any of them, to DFAS which are not more than 45 days of the
original invoice date.
"DFAS Past Due Payables" means, collectively, all accounts
payable owed by Borrowers, or any of them, to DFAS which have not been paid
within 45 days of the original invoice date, plus the aggregate amount, if any,
of all sums owing by Parent to DFAS under any Credit Memo 45 days or more after
the issuance of each Credit Memo (and without reduction for any amounts that may
be owing by DFAS to Parent).
"DFAS Payables" means collectively, the DFAS Current Payables
and the DFAS Past Due Payables.
"Dilution" means, as of any date of determination, a percentage,
based upon the experience of the greater of (a) the immediately prior 90 days or
(b) the immediately prior 12 months, that is the result of dividing the Dollar
(or Dollar equivalent) amount of (i) bad debt write-downs, discounts,
advertising allowances, credits, or other dilutive items with respect to the
Accounts of Borrowers during such period, by (ii) Borrowers' gross ▇▇▇▇▇▇▇▇ with
respect to Accounts during such period (excluding extraordinary items).
"Dilution Reserve" means, as of any date of determination, an
amount sufficient to reduce the advance rate against Eligible Accounts by one
percentage point for each percentage point by which Dilution is in excess of 5%.
"Disbursement Letter" means an instructional letter executed and
delivered by Administrative Borrower to Agent regarding the extensions of credit
to be made on the Closing Date, the form and substance of which is satisfactory
to Agent.
"Dollars" or "$" means United States dollars.
8
"Due Diligence Letter" means the due diligence letter sent by
Agent's counsel to Administrative Borrower, together with Administrative
Borrower's completed responses to the inquiries set forth therein, the form and
substance of such responses to be satisfactory to Agent.
"EBITDA" means, with respect to any fiscal period, Parent's and
its Subsidiaries consolidated net earnings (or loss), minus extraordinary gains,
plus interest expense, income taxes, extraordinary losses and depreciation and
amortization for such period, as determined in accordance with GAAP, plus with
respect to any calculation for any measurement period that includes the fiscal
quarter ending December 31, 2002, any non-cash charge, not to exceed $1,200,000,
taken by Parent during such fiscal quarter with respect to any non-performance
of Invicta under its sublease with Parent.
"Eligible Accounts" means those Accounts of Borrowers that arise
out of its sale of goods or rendition of services in the ordinary course of its
business, that comply with each of the representations and warranties respecting
Eligible Accounts made by Borrowers under the Loan Documents, and that are not
excluded as ineligible by virtue of one or more of the criteria set forth below;
provided, however, that such criteria may be fixed and revised at any time and
from time to time by Agent in Agent's Permitted Discretion to address the
results of any audit performed by Agent at any time and from time to time after
the Closing Date. In determining the amount to be included, Eligible Accounts
shall be calculated net of customer deposits and unapplied cash remitted to
Borrowers. Eligible Accounts shall not include the following:
(a) Accounts that the Account Debtor has failed to pay
within 30 days of original invoice date or Accounts with selling terms of more
than 30 days;
(b) Accounts owed by an Account Debtor (or its Affiliates)
where 50% or more of all Accounts owed by that Account Debtor (or its
Affiliates) are deemed ineligible under clause (a) above;
(c) Accounts with respect to which the Account Debtor is an
employee, Affiliate, or agent of any Borrower;
(d) Accounts arising in a transaction wherein goods are
placed on consignment or are sold pursuant to a guaranteed sale, a sale or
return, a sale on approval, a ▇▇▇▇ and hold, or any other terms by reason of
which the payment by the Account Debtor may be conditional;
(e) Accounts that are not payable in Dollars;
(f) Accounts with respect to which the Account Debtor either
(i) does not maintain its chief executive office in the United States, or (ii)
is not organized under the laws of the United States or any state thereof, or
(iii) is the government of any foreign country or sovereign state, or of any
state, province, municipality, or other political subdivision thereof, or of any
department, agency, public corporation, or other instrumentality thereof, unless
(y) the Account is supported by an irrevocable letter of credit satisfactory to
Agent (as to form, substance, and issuer or domestic confirming bank) that has
been delivered to Agent and is directly drawable by Agent, or (z) the Account is
covered by credit insurance in form, substance, and amount, and by an insurer,
satisfactory to Agent;
9
(g) Accounts with respect to which the Account Debtor is
either (i) the United States or any department, agency, or instrumentality of
the United States (exclusive, however, of Accounts with respect to which the
applicable Borrower has complied, to the reasonable satisfaction of Agent, with
the Assignment of Claims Act, 31 USC Section 3727), or (ii) any state of the
United States (exclusive, however, of (y) Accounts owed by any state that does
not have a statutory counterpart to the Assignment of Claims Act, or (z)
Accounts owed by any state that does have a statutory counterpart to the
Assignment of Claims Act as to which the applicable Borrower has complied to
Agent's satisfaction);
(h) Accounts with respect to which the Account Debtor is a
creditor of any Borrower, has or has asserted a right of setoff, has disputed
its liability, or has made any claim with respect to its obligation to pay the
Account, but only to the extent of such claim, right of setoff, or dispute
(except that with respect to Accounts with respect to which the Account Debtor
is Air Mobility Command and which are subject to any right of setoff for amounts
owed by Borrowers to DFAS, such Accounts shall only be deemed ineligible up to
the DFAS Contra Amount);
(i) Accounts with respect to an Account Debtor (other than
Air Mobility Command) whose total obligations owing to Borrowers exceed 10%
(such percentage as applied to a particular Account Debtor being subject to
reduction by Agent in its Permitted Discretion if the creditworthiness of such
Account Debtor deteriorates) of all Eligible Accounts, but only to the extent of
the obligations owing by such Account Debtor in excess of such percentage;
(j) Accounts with respect to which the Account Debtor is
subject to an Insolvency Proceeding, is not Solvent, has gone out of business,
or as to which a Borrower has received notice of an imminent Insolvency
Proceeding or a material impairment of the financial condition of such Account
Debtor;
(k) Accounts with respect to which the Account Debtor is
located in the states of New Jersey, Minnesota, or West Virginia (or any other
state that requires a creditor to file a business activity report or similar
document in order to bring suit or otherwise enforce its remedies against such
Account Debtor in the courts or through any judicial process of such state),
unless the applicable Borrower has qualified to do business in New Jersey,
Minnesota, West Virginia, or such other states, or has filed a business
activities report with the applicable division of taxation, the department of
revenue, or with such other state offices, as appropriate, for the then-current
year, or is exempt from such filing requirement;
(l) Accounts, the collection of which, Agent, in its
Permitted Discretion, believes to be doubtful by reason of the Account Debtor's
financial condition;
(m) Accounts that are not subject to a valid and perfected
first priority Agent's Lien;
(n) Accounts with respect to which (i) the goods giving rise
to such Account have not been shipped and billed to the Account Debtor, or (ii)
the services giving rise to such Account have not been performed and billed to
the Account Debtor;
10
(o) Accounts that represent the right to receive progress
payments or other advance ▇▇▇▇▇▇▇▇ that are due prior to the completion of
performance by the applicable Borrower of the subject contract for goods or
services; or
(p) Without the consent of Agent, Accounts with respect to
which the Account Debtor is not Air Mobility Command.
"Eligible Inventory" means Inventory of Borrowers consisting of
first quality finished goods held for sale or to be used by Borrowers in the
ordinary course of Borrowers' business located at one of the business locations
of Borrowers set forth on Schedule E-1 (or Schedule 5.5 to the extent Agent
receives a Collateral Access Agreement executed by the lessor, warehouseman, or
other third party, as the case may be, for such location) (or in-transit between
any such locations), that complies with each of the representations and
warranties respecting Eligible Inventory made by Borrowers in the Loan
Documents, and that is not excluded as ineligible by virtue of the one or more
of the criteria set forth below; provided, however, that such criteria may be
fixed and revised at any time and from time to time by Agent in Agent's
Permitted Discretion to address the results of any audit or appraisal performed
by Agent. In determining the amount to be so included, Inventory shall be valued
at the Net Orderly Liquidation Value. An item of Inventory shall not be included
in Eligible Inventory if:
(a) a Borrower does not have good, valid, and marketable
title thereto,
(b) it is not located at one of the locations in the United
States set forth on Schedule E-1 (or Schedule 5.5 to the extent Agent receives a
Collateral Access Agreement executed by the lessor, warehouseman, or other third
party, as the case may be, for such location) or in transit from one such
location to another such location,
(c) it is located on real property leased by a Borrower or
in a contract warehouse, in each case, unless it is subject to a Collateral
Access Agreement executed by the lessor, warehouseman, or other third party, as
the case may be, and unless it is segregated or otherwise separately
identifiable from goods of others, if any, stored on the premises,
(d) it is not subject to a valid and perfected first
priority security Agent's Lien,
(e) it consists of goods returned or rejected by a
Borrower's customers, or
(f) it consists of goods that are obsolete or slow moving as
determined by Borrowers, or are determined to be goods installed upon, or
attached or affixed to aircraft, or are restrictive or custom items,
work-in-process, raw materials, goods under repair or Fly-Away Kits, packaging
and shipping materials, supplies used or consumed in a Borrower's business, ▇▇▇▇
and hold goods, defective goods, "seconds," or Inventory acquired on
consignment; provided further that with respect to any Inventory placed on
consignment and otherwise satisfying the criteria set forth herein (including
delivery of a waiver agreement, in form and substance satisfactory to Agent,
duly executed by the consignee of such Inventory), the value of such Inventory
in an amount not to exceed $750,000 (in the aggregate) as determined by the
Designated Appraiser shall not be deemed ineligible hereunder.
11
"Eligible Transferee" means (a) a commercial bank organized
under the laws of the United States, or any state thereof, and having total
assets in excess of $250,000,000, (b) a commercial bank organized under the laws
of any other country which is a member of the Organization for Economic
Cooperation and Development or a political subdivision of any such country and
which has total assets in excess of $250,000,000, provided that such bank is
acting through a branch or agency located in the United States, (c) a finance
company, insurance company, or other financial institution or fund that is
engaged in making, purchasing, or otherwise investing in commercial loans in the
ordinary course of its business and having (together with its Affiliates) total
assets in excess of $250,000,000, (d) any Affiliate (other than individuals) of
a Lender that was party hereto as of the Closing Date, (e) so long as no Event
of Default has occurred and is continuing, any other Person approved by Agent
and Administrative Borrower, and (f) during the continuation of an Event of
Default, any other Person approved by Agent.
"Environmental Actions" means any complaint, summons, citation,
notice, directive, order, claim, litigation, investigation, judicial or
administrative proceeding, judgment, letter, or other communication from any
Governmental Authority, or any third party involving violations of Environmental
Laws or releases of Hazardous Materials from (a) any assets, properties, or
businesses of any Borrower or any predecessor in interest, (b) from adjoining
properties or businesses, or (c) from or onto any facilities which received
Hazardous Materials generated by any Borrower or any predecessor in interest.
"Environmental Law" means any applicable federal, state,
provincial, foreign or local statute, law, rule, regulation, ordinance, code,
binding and enforceable guideline, binding and enforceable written policy, or
rule of common law now or hereafter in effect and in each case as amended, or
any judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, to the extent binding on
Borrowers, relating to the environment, employee health and safety, or Hazardous
Materials, including CERCLA; RCRA; the Federal Water Pollution Control Act, 33
USC Section 1251 et seq.; the Toxic Substances Control Act, 15 USC, Section 2601
et seq.; the Clean Air Act, 42 USC Section 7401 et seq.; the Safe Drinking Water
Act, 42 USC. Section 3803 et seq.; the Oil Pollution Act of 1990, 33 USC.
Section 2701 et seq.; the Emergency Planning and the Community Right-to-Know Act
of 1986, 42 USC. Section 11001 et seq.; the Hazardous Material Transportation
Act, 49 USC Section 1801 et seq.; and the Occupational Safety and Health Act, 29
USC. Section651 et seq. (to the extent it regulates occupational exposure to
Hazardous Materials); any state and local or foreign counterparts or
equivalents, in each case as amended from time to time.
"Environmental Liabilities and Costs" means all liabilities,
monetary obligations, Remedial Actions, losses, damages, punitive damages,
consequential damages, treble damages, costs and expenses (including all actual
and reasonable fees, disbursements and expenses of counsel, experts, or
consultants and costs of investigation and feasibility studies), fines,
penalties, sanctions, and interest incurred as a result of any claim or demand
by any Governmental Authority or any third party, and which relate to any
Environmental Action.
"Environmental Lien" means any Lien in favor of any Governmental
Authority for Environmental Liabilities and Costs.
12
"Equipment" means all of Borrowers' now owned or hereafter
acquired right, title, and interest with respect to equipment, machinery,
machine tools, motors, furniture, furnishings, fixtures, vehicles (including
motor vehicles but excluding aircraft), tools, parts, goods (other than consumer
goods, farm products, or Inventory), wherever located, including all
attachments, accessories, accessions, replacements, substitutions, additions,
and improvements to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute thereto.
"ERISA Affiliate" means (a) any Person subject to ERISA whose
employees are treated as employed by the same employer as the employees of a
Borrower under IRC Section 414(b), (b) any trade or business subject to ERISA
whose employees are treated as employed by the same employer as the employees of
a Borrower under IRC Section 414(c), (c) solely for purposes of Section 302 of
ERISA and Section 412 of the IRC, any organization subject to ERISA that is a
member of an affiliated service group of which a Borrower is a member under IRC
Section 414(m), or (d) solely for purposes of Section 302 of ERISA and Section
412 of the IRC, any Person subject to ERISA that is a party to an arrangement
with a Borrower and whose employees are aggregated with the employees of a
Borrower under IRC Section 414(o).
"Event of Default" has the meaning set forth in Section 8.
"Excess Availability" means the amount, as of the date any
determination thereof is to be made, equal to Availability minus the aggregate
amount, if any, of all trade payables of Borrowers (other than payables relating
to aircraft maintenance pending reimbursement from aircraft lessors in
accordance with the terms of Parent's aircraft lease agreements) aged in excess
of their historical levels with respect thereto and all book overdrafts in
excess of their historical practices with respect thereto, in each case as
determined by Agent in its Permitted Discretion.
"Exchange Act" means the Securities Exchange Act of 1934, as in
effect from time to time.
"Existing Lender" means GMAC Commercial Credit, LLC.
"FAA" means the Federal Aviation Administration or any
successor agency or instrumentality thereto.
"Fee Letter" means that certain fee letter, dated as of even
date herewith, between Borrowers and Agent, in form and substance satisfactory
to Agent.
"FEIN" means Federal Employer Identification Number.
"Fly-Away Kits" means Inventory typically located on an aircraft
comprised of critical, frequently-used Rotable Parts and Non-Rotable Parts for
use in aircraft maintenance.
"Foothill" means Foothill Capital Corporation, a California
corporation.
"Funding Date" means the date on which a Borrowing occurs.
13
"Funding Losses" has the meaning set forth in Section
2.13(b)(ii).
"GAAP" means generally accepted accounting principles as in
effect from time to time in the United States, consistently applied.
"General Intangibles" means all of Borrowers' now owned or
hereafter acquired right, title, and interest with respect to general
intangibles (including payment intangibles, contract rights, rights to payment,
rights arising under common law, statutes, or regulations, choses or things in
action, goodwill, patents, trade names, trademarks, servicemarks, copyrights,
blueprints, drawings, purchase orders, customer lists, monies due or recoverable
from pension funds, route lists, rights to payment and other rights under any
royalty or licensing agreements, infringement claims, computer programs,
information contained on computer disks or tapes, software, literature, reports,
catalogs, money, deposit accounts, insurance premium rebates, tax refunds, and
tax refund claims), and any and all supporting obligations in respect thereof,
and any other personal property other than goods, Accounts, Investment Property,
and Negotiable Collateral.
"Governing Documents" means, with respect to any Person, the
certificate or articles of incorporation, by-laws, or other organizational
documents of such Person.
"Governmental Authority" means any federal, state, local, or
other governmental or administrative body, instrumentality, department, or
agency or any court, tribunal, administrative hearing body, arbitration panel,
commission, or other similar dispute-resolving panel or body.
"Hazardous Materials" means (a) substances that are defined or
listed in, or otherwise classified pursuant to, any applicable laws or
regulations as "hazardous substances," "hazardous materials," "hazardous
wastes," "toxic substances," or any other formulation intended to define, list,
or classify substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.
"Hedge Agreement" means any and all transactions, agreements, or
documents now existing or hereafter entered into between Administrative Borrower
or its Subsidiaries and ▇▇▇▇▇ Fargo or its Affiliates, which provide for an
interest rate, credit, commodity or equity swap, cap, floor, collar, forward
foreign exchange transaction, currency swap, cross currency rate swap, currency
option, or any combination of, or option with respect to, these or similar
transactions, for the purpose of hedging Administrative Borrower's or its
Subsidiaries' exposure to fluctuations in interest or exchange rates, loan,
credit exchange, security or currency valuations or commodity prices.
14
"Indebtedness" means (a) all obligations for borrowed money, (b)
all obligations evidenced by bonds, debentures, notes, or other similar
instruments and all reimbursement or other obligations in respect of letters of
credit, bankers acceptances, interest rate swaps, or other financial products,
(c) all obligations under Capital Leases, (d) all obligations or liabilities of
others secured by a Lien on any asset of Administrative Borrower or its
Subsidiaries, irrespective of whether such obligation or liability is assumed,
(e) all obligations for the deferred purchase price of assets (other than trade
debt incurred in the ordinary course of business and repayable in accordance
with customary trade practices), and (f) any obligation guaranteeing or intended
to guarantee (whether directly or indirectly guaranteed, endorsed, co-made,
discounted, or sold with recourse) any obligation of any other Person.
"Indemnified Liabilities" has the meaning set forth in Section
11.3.
"Indemnified Person" has the meaning set forth in Section 11.3.
"Insolvency Proceeding" means any proceeding commenced by or
against any Person under any provision of the Bankruptcy Code or under any other
state or federal bankruptcy or insolvency law, assignments for the benefit of
creditors, formal or informal moratoria, compositions, extensions generally with
creditors, or proceedings seeking reorganization, arrangement, or other similar
relief.
"Intangible Assets" means, with respect to any Person, that
portion of the book value of all of such Person's assets that would be treated
as intangibles under GAAP.
"Inventory" means all Borrowers' now owned or hereafter acquired
right, title, and interest with respect to inventory, including goods held for
sale or lease or to be furnished under a contract of service, goods that are
leased by a Borrower as lessor, goods that are furnished by a Borrower under a
contract of service, and raw materials, work in process, or materials used or
consumed in a Borrower's business.
"Investment" means, with respect to any Person, any investment
by such Person in any other Person (including Affiliates) in the form of loans,
guarantees, advances, or capital contributions (excluding bona fide Accounts
arising in the ordinary course of business consistent with past practices),
purchases or other acquisitions for consideration of Indebtedness or Stock, and
any other items that are or properly would be classified as investments on a
balance sheet prepared in accordance with GAAP.
"Investment Property" means all of Borrowers' now owned or
hereafter acquired right, title, and interest with respect to "investment
property" as that term is defined in the Code, and any and all supporting
obligations in respect thereof.
"IRC" means the Internal Revenue Code of 1986, as in effect from
time to time.
"Issuing Lender" means Foothill or any other Lender that, at the
request of Administrative Borrower and with the consent of Agent agrees, in such
Lender's sole discretion, to become an Issuing Lender for the purpose of issuing
L/Cs or L/C Undertakings pursuant to Section 2.12.
15
"L/C" has the meaning set forth in Section 2.12(a).
"L/C Disbursement" means a payment made by the Issuing Lender
pursuant to a Letter of Credit.
"L/C Undertaking" has the meaning set forth in Section 2.12(a).
"Lender" and "Lenders" have the respective meanings set forth in
the preamble to this Agreement, and shall include any other Person made a party
to this Agreement in accordance with the provisions of Section 14.1.
"Lender Group" means, individually and collectively, each of the
Lenders (including the Issuing Lender) and Agent.
"Lender Group Expenses" means all (a) costs or expenses
(including taxes, and insurance premiums) required to be paid by a Borrower
under any of the Loan Documents that are paid or incurred by the Lender Group,
(b) fees or charges paid or incurred by Agent in connection with the Lender
Group's transactions with Borrowers, including, fees or charges for
photocopying, notarization, couriers and messengers, telecommunication, public
record searches (including tax lien, litigation, and UCC searches and including
searches with the patent and trademark office, the copyright office, or the
department of motor vehicles), filing, recording, publication, appraisals
(including monthly Inventory appraisals and other periodic Collateral appraisals
or business valuations to the extent of the fees and charges (and up to the
amount of any limitation) contained in this Agreement), real estate surveys,
real estate title policies and endorsements, and environmental audits, (c) costs
and expenses incurred by Agent in the disbursement of funds to or for the
account of Borrowers (by wire transfer or otherwise), (d) charges paid or
incurred by Agent resulting from the dishonor of checks, (e) reasonable costs
and expenses paid or incurred by the Lender Group to correct any default or
enforce any provision of the Loan Documents, or in gaining possession of,
maintaining, handling, preserving, storing, shipping, selling, preparing for
sale, or advertising to sell the Collateral, or any portion thereof,
irrespective of whether a sale is consummated, (f) audit fees and expenses of
Agent related to audit examinations of the Books to the extent of the fees and
charges (and up to the amount of any limitation) contained in this Agreement,
(g) reasonable costs and expenses of third party claims or any other suit paid
or incurred by the Lender Group in enforcing or defending the Loan Documents or
in connection with the transactions contemplated by the Loan Documents or the
Lender Group's relationship with any Borrower or any guarantor of the
Obligations, (h) Agent's reasonable fees and expenses (including reasonable
attorneys fees) actually incurred in advising, structuring, drafting, reviewing,
administering, or amending the Loan Documents, and (i) Agent's and each Lender's
reasonable fees and expenses (including reasonable attorneys fees) actually
incurred in terminating, enforcing (including attorneys fees and expenses
actually incurred in connection with a "workout," a "restructuring," or an
Insolvency Proceeding concerning any Borrower or in exercising rights or
remedies under the Loan Documents), or defending the Loan Documents,
irrespective of whether suit is brought, or in taking any Remedial Action
concerning the Collateral.
16
"Lender-Related Person" means, with respect to any Lender, such
Lender, together with such Lender's Affiliates, and the officers, directors,
employees, and agents of such Lender.
"Letter of Credit" means an L/C or an L/C Undertaking, as the
context requires.
"Letter of Credit Usage" means, as of any date of determination,
the aggregate undrawn amount of all outstanding Letters of Credit plus 100% of
the amount of outstanding time drafts accepted by an Underlying Issuer as a
result of drawings under Underlying Letters of Credit.
"Lien" means any interest in an asset securing an obligation
owed to, or a claim by, any Person other than the owner of the asset, whether
such interest shall be based on the common law, statute, or contract, whether
such interest shall be recorded or perfected, and whether such interest shall be
contingent upon the occurrence of some future event or events or the existence
of some future circumstance or circumstances, including the lien or security
interest arising from a mortgage, deed of trust, encumbrance, pledge,
hypothecation, assignment, deposit arrangement, security agreement, conditional
sale or trust receipt, or from a lease, consignment, or bailment for security
purposes and also including reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases, and other title
exceptions and encumbrances affecting Real Property.
"Loan Account" has the meaning set forth in Section 2.10.
"Loan Documents" means this Agreement, the Aircraft Lessor
Intercreditor Agreement, the Bank Product Agreements, the Cash Management
Agreements, the Control Agreements, the Disbursement Letter, the Due Diligence
Letter, the Fee Letter, the Letters of Credit, the Mortgages, the Officers'
Certificate, the Stock Pledge Agreement, the Trademark Security Agreement, any
note or notes executed by a Borrower in connection with this Agreement and
payable to a member of the Lender Group, and any other agreement entered into,
now or in the future, by any Borrower and the Lender Group in connection with
this Agreement.
"Master Assignment Agreement" means that certain Master
Assignment of Inventory, dated as of the Closing Date, between Parent and World
Parts.
"Material Adverse Change" means (a) a material adverse change in
the business, prospects, operations, results of operations, assets, liabilities
or condition (financial or otherwise) of Borrowers taken as a whole, (b) a
material impairment of a Borrower's ability to perform its obligations under the
Loan Documents to which it is a party or of the Lender Group's ability to
enforce the Obligations or realize upon the Collateral, or (c) a material
impairment of the enforceability or priority of the Agent's Liens with respect
to the Collateral as a result of an action or failure to act on the part of a
Borrower.
"Maturity Date" has the meaning set forth in Section 3.4.
"Maximum Revolver Amount" means $30,000,000.
17
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc., a Delaware
corporation, and its successors.
"Mortgages" means, individually and collectively, one or more
mortgages, deeds of trust, or deeds to secure debt, executed and delivered by a
Borrower in favor of Agent from time to time, for the benefit of the Lender
Group, in form and substance satisfactory to Agent, that encumber the Real
Property Collateral and the related improvements thereto.
"Negotiable Collateral" means all of Borrowers' now owned and
hereafter acquired right, title, and interest with respect to letters of credit,
letter of credit rights, instruments, promissory notes, drafts, documents, and
chattel paper (including electronic chattel paper and tangible chattel paper),
and any and all supporting obligations in respect thereof.
"Net Orderly Liquidation Value" means the value of Borrowers'
Inventory that is estimated to be recoverable in an orderly liquidation of such
Inventory, less any estimated fees and expenses that may be incurred in
connection with such orderly liquidation, such value to be as determined from
time to time by the Designated Appraiser.
"Net Worth" means, as of any date of determination, the result
of (a) the total stockholder's equity of Parent and its Subsidiaries, minus (b)
all amounts due to Parent and its Subsidiaries from Affiliates.
"Non-Rotable Parts" means those parts constituting Inventory of
any Borrower other than Rotable Parts.
"Obligations" means (a) all loans, Advances, debts, principal,
interest (including any interest that, but for the provisions of the Bankruptcy
Code, would have accrued), contingent reimbursement obligations with respect to
outstanding Letters of Credit, premiums, liabilities (including all amounts
charged to Borrowers' Loan Account pursuant hereto), obligations, fees
(including the fees provided for in the Fee Letter), charges, costs, Lender
Group Expenses (including any fees or expenses that, but for the provisions of
the Bankruptcy Code, would have accrued), lease payments, guaranties, covenants,
and duties of any kind and description owing by Borrowers to the Lender Group
pursuant to or evidenced by the Loan Documents and irrespective of whether for
the payment of money, whether direct or indirect, absolute or contingent, due or
to become due, now existing or hereafter arising, and including all interest not
paid when due and all Lender Group Expenses that Borrowers are required to pay
or reimburse by the Loan Documents, by law, or otherwise, and (b) all Bank
Product Obligations. Any reference in this Agreement or in the Loan Documents to
the Obligations shall include all amendments, changes, extensions,
modifications, renewals replacements, substitutions, and supplements, thereto
and thereof, as applicable, both prior and subsequent to any Insolvency
Proceeding.
"Officers' Certificate" means the representations and warranties
of officers form submitted by Agent to Administrative Borrower, together with
Borrowers' completed responses to the inquiries set forth therein, the form and
substance of such responses to be reasonably satisfactory to Agent.
"Originating Lender" has the meaning set forth in Section
14.1(e).
18
"Overadvance" has the meaning set forth in Section 2.5.
"Parent" has the meaning set forth in the preamble to this
Agreement.
"Participant" has the meaning set forth in Section 14.1(e).
"Pay-Off Letter" means a letter, in form and substance
reasonably satisfactory to Agent, from Existing Lender to Agent and Parent
respecting the amount necessary to repay in full all of the obligations of
Borrowers owing to Existing Lender and obtain a release of all of the Liens
existing in favor of Existing Lender in and to the assets of Borrowers.
"Permanent Availability Block" means an amount equal to
$5,000,000.
"Permitted Discretion" means a determination made in good faith
and in the exercise of reasonable (from the perspective of a secured asset-based
lender) business judgment.
"Permitted Dispositions" means (a) sales or other dispositions
by Administrative Borrower or its Subsidiaries of Equipment that is
substantially worn, damaged, or obsolete in the ordinary course of business, (b)
sales to buyers or use by Administrative Borrower or its Subsidiaries of
Inventory in the ordinary course of business, (c) the use or transfer of money
or Cash Equivalents by Administrative Borrower or its Subsidiaries in a manner
that is not prohibited by the terms of this Agreement or the other Loan
Documents, (d) the licensing by Administrative Borrower or its Subsidiaries, on
a non-exclusive basis, of patents, trademarks, copyrights, and other
intellectual property rights in the ordinary course of business, and (e)
transfers of Inventory constituting spare parts Inventory by Parent to World
Parts, and prior to an Event of Default, by World Parts to Parent, in each case
pursuant to the Master Assignment Agreement.
"Permitted Investments" means (a) investments in Cash
Equivalents, (b) investments in negotiable instruments for collection, (c)
advances made in connection with purchases of goods or services in the ordinary
course of business, (d) investments by any Borrower in any other Borrower
provided that if any such investment is in the form of Indebtedness, such
Indebtedness investment shall be subject to the terms and conditions of the
Subordination Agreement (e) employee relocation expenses in an amount not to
exceed $100,000 in the aggregate, and commission, travel and similar advances to
officers and employees of any Borrower in the ordinary course of business and
(f) investments or contributions between Parent and World Parts made pursuant to
the Master Assignment Agreement.
"Permitted Liens" means (a) Liens held by Agent for the benefit
of Agent and the Lenders, (b) Liens for unpaid taxes that either (i) are not yet
delinquent, or (ii) do not constitute an Event of Default hereunder and are the
subject of Permitted Protests, (c) Liens set forth on Schedule P-1, (d) the
interests of lessors under operating leases, (e) the Liens arising by operation
of law in favor of warehousemen, landlords, carriers, mechanics, materialmen,
laborers, or suppliers, incurred in the ordinary course of business and not in
connection with the borrowing of money, and which Liens either (i) are for sums
not yet delinquent, or (ii) are the subject of Permitted Protests, (f) Liens
arising from deposits made in connection with obtaining worker's compensation or
other unemployment insurance, (g) Liens or deposits to secure
19
performance of bids, tenders, or leases incurred in the ordinary course of
business and not in connection with the borrowing of money, (h) Liens granted as
security for surety or appeal bonds in connection with obtaining such bonds in
the ordinary course of business, (i) Liens resulting from any judgment or award
that is not an Event of Default hereunder, (j) Liens with respect to the Real
Property Collateral that are exceptions to the commitments for title insurance
issued in connection with the Mortgages, as accepted by Agent, (k) with respect
to any Real Property that is not part of the Real Property Collateral,
easements, rights of way, and zoning restrictions that do not materially
interfere with or impair the use or operation thereof, and (l) Liens securing
Purchase Money Indebtedness to the extent such Purchase Money Indebtedness is
permitted in Section 7.1(c) so long as such Lien attaches only to the asset
purchased or acquired and the proceeds thereof.
"Permitted Protest" means the right of Administrative Borrower
or any of its Subsidiaries, as applicable, to protest any Lien (other than any
such Lien that secures the Obligations), taxes (other than payroll taxes or
taxes that are the subject of a United States federal tax lien), or rental
payment, provided that (a) a reserve with respect to such obligation is
established on the Books in such amount as is required under GAAP, (b) any such
protest is instituted promptly and prosecuted diligently by Administrative
Borrower or any of its Subsidiaries, as applicable, in good faith, and (c) Agent
is satisfied that, while any such protest is pending, there will be no
impairment of the enforceability, validity, or priority of any of the Agent's
Liens.
"Person" means natural persons, corporations, limited liability
companies, limited partnerships, general partnerships, limited liability
partnerships, joint ventures, trusts, land trusts, business trusts, or other
organizations, irrespective of whether they are legal entities, and governments
and agencies and political subdivisions thereof.
"Personal Property Collateral" means all Collateral other than
Real Property.
"Projections" means Parent's forecasted (a) balance sheets, (b)
profit and loss statements, and (c) cash flow statements, all prepared on a
consistent basis with Parent's historical financial statements, together with
appropriate supporting details and a statement of underlying assumptions.
"Pro Rata Share" means:
(a) with respect to a Lender's obligation to make Advances
and receive payments of principal, interest, fees, costs, and expenses with
respect thereto, the percentage obtained by dividing (i) such Lender's Revolver
Commitment, by (ii) the aggregate Revolver Commitments of all Lenders,
(b) with respect to a Lender's obligation to participate in
Letters of Credit, to reimburse the Issuing Lender, and to receive payments of
fees with respect thereto, the percentage obtained by dividing (i) such Lender's
Revolver Commitment, by (ii) the aggregate Revolver Commitments of all Lenders,
and
(c) with respect to all other matters (including the
indemnification obligations arising under Section 16.7), the percentage obtained
by dividing (i) such Lender's Revolver
20
Commitment, by (ii) the aggregate amount of Revolver Commitments of all Lenders;
provided, however, that, in each case, in the event all Revolver Commitments
have been terminated, Pro Rata Share shall be determined according to the
Revolver Commitments in effect immediately prior to such termination.
"Purchase Money Indebtedness" means Indebtedness (other than the
Obligations, but including Capitalized Lease Obligations), incurred at the time
of the acquisition of any fixed assets for the purpose of financing all or any
part of the acquisition cost thereof.
"Real Property" means any estates or interests in real property
now owned or hereafter acquired by any Borrower and the improvements thereto.
"Real Property Collateral" means the parcel or parcels of Real
Property, if any, identified on Schedule R-1 and any Real Property hereafter
acquired by a Borrower.
"Record" means information that is inscribed on a tangible
medium or which is stored in an electronic or other medium and is retrievable in
perceivable form.
"Remedial Action" means all actions taken to (a) clean up,
remove, remediate, contain, treat, monitor, assess, evaluate, or in any way
address Hazardous Materials in the indoor or outdoor environment, (b) prevent or
minimize a release or threatened release of Hazardous Materials so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment, (c) perform any pre-remedial studies,
investigations, or post-remedial operation and maintenance activities, or (d)
conduct any other actions authorized by 42 USC Section 9601.
"Report" has the meaning set forth in Section 16.17.
"Required Availability" means Excess Availability and, to the
extent located in an account in the name of Agent or otherwise under the
immediate control of Agent, unrestricted cash and Cash Equivalents.
"Required Lenders" means, at any time, (a) Agent, and (b) the
Lenders whose Pro Rata Shares aggregate 50.1% of the Revolver Commitments, or if
the Revolver Commitments have been terminated irrevocably, 50.1% of the
Obligations (other than Bank Product Obligations) then outstanding.
"Revolver Commitment" means, with respect to each Lender, its
Revolver Commitment, and, with respect to all Lenders, their Revolver
Commitments, in each case as such Dollar amounts are set forth beside such
Lender's name under the applicable heading on Schedule C-1 or on the signature
page of the Assignment and Acceptance pursuant to which such Lender became a
Lender hereunder in accordance with the provisions of Section 14.1.
"Revolver Usage" means, as of any date of determination, the sum
of (a) the then extant amount of outstanding Advances, plus (b) the then extant
amount of the Letter of Credit Usage.
21
"Risk Participation Liability" means, as to each Letter of
Credit, all reimbursement obligations of Borrowers to the Issuing Lender with
respect to an L/C Undertaking, consisting of (a) the amount available to be
drawn or which may become available to be drawn, (b) all amounts that have been
paid by the Issuing Lender to the Underlying Issuer to the extent not reimbursed
by Borrowers, whether by the making of an Advance or otherwise, and (c) all
accrued and unpaid interest, fees, and expenses payable with respect thereto.
"Rotable Parts" means those parts constituting Inventory of any
Borrower that can be refurbished and returned to service consistent with
aerospace standards.
"S&P" means Standard & Poor's Rating Service, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., a New York corporation, and its successors.
"SEC" means the United States Securities and Exchange Commission
and any successor thereto.
"Securities Account" means a "securities account" as that term
is defined in the Code.
"Senior Subordinated Note Indenture" means that certain
Indenture, dated as of August 1, 1997, between Parent and First Union National
Bank, as trustee.
"Settlement" has the meaning set forth in Section 2.3(f)(i).
"Settlement Date" has the meaning set forth in Section
2.3(f)(i).
"Solvent" means, with respect to any Person on a particular
date, that such Person is not insolvent (as such term is defined in the Uniform
Fraudulent Transfer Act).
"Stock" means all shares, options, warrants, interests,
participations, or other equivalents (regardless of how designated) of or in a
Person, whether voting or nonvoting, including common stock, preferred stock,
member or partner interests, or any other "equity security" (as such term is
defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the
SEC under the Exchange Act).
"Stock Pledge Agreement" means a stock pledge agreement, in form
and substance satisfactory to Agent, executed and delivered by each Borrower
that owns Stock of a Subsidiary of Parent.
"Subordinated Debt" means those certain 8% Convertible Senior
Subordinated Debentures due 2004 issued by Parent pursuant to the Senior
Subordinated Note Indenture.
"Subsidiary" of a Person means a corporation, partnership,
limited liability company, or other entity in which that Person directly or
indirectly owns or controls the shares of Stock having ordinary voting power to
elect a majority of the board of directors (or appoint other comparable
managers) of such corporation, partnership, limited liability company, or other
entity.
22
"Swing Lender" means Foothill or any other Lender that, at the
request of Administrative Borrower and with the consent of Agent agrees, in such
Lender's sole discretion, to become the Swing Lender hereunder.
"Swing Loan" has the meaning set forth in Section 2.3(d)(i).
"Taxes" has the meaning set forth in Section 2.2.
"Trademark Security Agreement" means a security agreement for
Collateral consisting of one or more trademarks executed and delivered by each
Borrower and Agent, the form and substance of which is satisfactory to Agent.
"Underlying Issuer" means a third Person which is the
beneficiary of an L/C Undertaking and which has issued a letter of credit at the
request of the Issuing Lender for the benefit of Borrowers.
"Underlying Letter of Credit" means a letter of credit that has
been issued by an Underlying Issuer.
"Unused Line Fee Adjustment Date" has the meaning as set forth
in Section 2.11.
"Unused Line Fee Percentage Date" has the meaning as set forth
in Section 2.11.
"Voidable Transfer" has the meaning set forth in Section 17.7.
"▇▇▇▇▇ Fargo" means ▇▇▇▇▇ Fargo Bank, National Association, a
national banking association.
"World Parts" has the meaning set forth in the preamble to this
Agreement.
1.2 ACCOUNTING TERMS. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP. "Inventory" and "Equipment"
shall have the meanings set forth herein notwithstanding treatment under GAAP.
When used herein, the term "financial statements" shall include the notes and
schedules thereto, if any. Whenever the term "Borrowers" or the term "Parent" is
used in respect of a financial covenant or a related definition, it shall be
understood to mean Parent and its Subsidiaries on a consolidated basis unless
the context clearly requires otherwise.
1.3 CODE. Any terms used in this Agreement that are defined in the
Code shall be construed and defined as set forth in the Code unless otherwise
defined herein.
1.4 CONSTRUCTION. Unless the context of this Agreement or any other
Loan Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the term "including" is
not limiting, and the term "or" has, except where otherwise indicated, the
inclusive meaning represented by the phrase "and/or." The words "hereof,"
"herein," "hereby," "hereunder," and similar terms in this Agreement or any
other Loan Document refer to this Agreement or such other Loan Document, as the
case may be, as a whole and not to any particular provision of this Agreement or
such other Loan Document, as the
23
case may be. Section, subsection, clause, schedule, and exhibit references
herein are to this Agreement unless otherwise specified. Any reference in this
Agreement or in the other Loan Documents to any agreement, instrument, or
document shall include all alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements,
thereto and thereof, as applicable (subject to any restrictions on such
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements set forth herein). Any
reference herein to any Person shall be construed to include such Person's
successors and assigns. Any requirement of a writing contained herein or in the
other Loan Documents shall be satisfied by the transmission of a Record and any
Record transmitted shall constitute a representation and warranty as to the
accuracy and completeness of the information contained therein.
1.5 SCHEDULES AND EXHIBITS. All of the schedules and exhibits
attached to this Agreement shall be deemed incorporated herein by reference.
2. LOAN AND TERMS OF PAYMENT.
2.1 REVOLVER ADVANCES.
(a) Subject to the terms and conditions of this Agreement,
and during the term of this Agreement, each Lender agrees (severally, not
jointly or jointly and severally) to make advances ("Advances") to Borrowers in
an amount at any one time outstanding not to exceed such Lender's Pro Rata Share
of an amount equal to the lesser of (i) the Maximum Revolver Amount less the
Letter of Credit Usage, or (ii) the Borrowing Base less the Letter of Credit
Usage. For purposes of this Agreement, "Borrowing Base," as of any date of
determination, shall mean the result of:
(x) the lesser of
(i) 85% of the amount of Eligible
Accounts, less the amount, if any, of the
Dilution Reserve, and
(ii) an amount equal to Borrowers'
Collections with respect to Accounts for the
immediately preceding 45 day period, plus
(y) the lesser of
(i) $12,500,000, and
(ii) the sum of
(A) 70% times the then
extant Net Orderly
Liquidation Value of
Eligible Inventory
constituting Rotable
Parts as calculated by
Agent, plus
(B) the lesser of
24
(1) 50% times
the then
extant Net
Orderly
Liquidation
Value of
Eligible
Inventory
constituting
Non-Rotable
Parts as
calculated
by Agent,
or
(2) $3,000,000,
minus
(z) the sum of (i) the Bank Product Reserve, (ii)
the Permanent Availability Block and (iii) the aggregate
amount of reserves, if any, established by Agent under
Section 2.1(b).
(b) Anything to the contrary in this Section 2.1
notwithstanding, Agent shall have the right to establish reserves in such
amounts, and with respect to such matters, as Agent in its Permitted Discretion
shall deem necessary or appropriate, against the Borrowing Base, including
reserves with respect to (i) sums that Borrowers are required to pay (such as
taxes, assessments, insurance premiums, or, in the case of leased assets, rents
or other amounts payable under such leases) and has failed to pay under any
Section of this Agreement or any other Loan Document, and (ii) amounts owing by
Borrowers to any Person to the extent secured by a Lien on, or trust over, any
of the Collateral (other than any existing Permitted Lien set forth on Schedule
P-1 which is specifically identified thereon as entitled to have priority over
the Agent's Liens), which Lien or trust, in the Permitted Discretion of Agent
likely would have a priority superior to the Agent's Liens (such as Liens or
trusts in favor of landlords, warehousemen, carriers, mechanics, materialmen,
laborers, or suppliers, or Liens or trusts for ad valorem, excise, sales, or
other taxes where given priority under applicable law) in and to such item of
the Collateral. In addition to the foregoing, Agent shall have the right to have
the Inventory reappraised by a qualified appraisal company selected by Agent at
any time and from time to time after the Closing Date for the purpose of
redetermining the Net Orderly Liquidation Value of the Eligible Inventory
portion of the Collateral and, as a result, redetermining the Borrowing Base and
resetting the advance rates thereunder.
(c) The Lenders shall have no obligation to make additional
Advances hereunder to the extent such additional Advances would cause the
Revolver Usage to exceed the Maximum Revolver Amount.
(d) Amounts borrowed pursuant to this Section may be repaid
and, subject to the terms and conditions of this Agreement, reborrowed at any
time during the term of this Agreement.
2.2 [INTENTIONALLY OMITTED]
2.3 BORROWING PROCEDURES AND SETTLEMENTS.
(a) PROCEDURE FOR BORROWING. Each Borrowing shall be made by
an irrevocable written request by an Authorized Person delivered to Agent (which
notice must be received by Agent no later than (x) 1:00 p.m. (Atlanta, Georgia
time) on the Business Day prior to the date that is the requested Funding Date
in the case of a request for an Advance or a Swing
25
Loan in an amount in excess of $5,000,000 and (y) 1:00 p.m. (Atlanta, Georgia
time) on the Business Day that is the requested Funding Date in all other cases)
specifying (i) the amount of such Borrowing, and (ii) the requested Funding
Date, which shall be a Business Day. At Agent's election, in lieu of delivering
the above-described written request, any Authorized Person may give Agent
telephonic notice of such request by the required time, with such telephonic
notice to be confirmed electronically or in writing within 24 hours of the
giving of such notice.
(b) AGENT'S ELECTION. Promptly after receipt of a request
for a Borrowing pursuant to Section 2.3(a), Agent shall elect, in its
discretion, (i) to have the terms of Section 2.3(c) apply to such requested
Borrowing, or (ii) if the Borrowing is for an Advance, to request Swing Lender
to make a Swing Loan pursuant to the terms of Section 2.3(d) in the amount of
the requested Borrowing; provided, however, that if Swing Lender declines in its
sole discretion to make a Swing Loan pursuant to Section 2.3(d), Agent shall
elect to have the terms of Section 2.3(c) apply to such requested Borrowing.
(C) MAKING OF ADVANCES.
(i) In the event that Agent shall elect to have the
terms of this Section 2.3(c) apply to a requested Borrowing as
described in Section 2.3(b), then promptly after receipt of a
request for a Borrowing pursuant to Section 2.3(a), Agent shall
notify the Lenders, not later than 4:00 p.m. (Atlanta, Georgia
time) on the Business Day immediately preceding the Funding Date
applicable thereto, by telecopy, telephone, or other similar
form of transmission, of the requested Borrowing. Each Lender
shall make the amount of such Lender's Pro Rata Share of the
requested Borrowing available to Agent in immediately available
funds, to Agent's Account, not later than 1:00 p.m. (Atlanta,
Georgia time) on the Funding Date applicable thereto. After
Agent's receipt of the proceeds of such Advances upon
satisfaction of the applicable conditions precedent set forth in
Section 3 hereof, Agent shall make the proceeds thereof
available to Administrative Borrower on the applicable Funding
Date by transferring immediately available funds equal to such
proceeds received by Agent to Administrative Borrower's
Designated Account; provided, however, that, subject to the
provisions of Section 2.3(i), Agent shall not request any Lender
to make, and no Lender shall have the obligation to make, any
Advance if Agent shall have actual knowledge that (1) one or
more of the applicable conditions precedent set forth in Section
3 will not be satisfied on the requested Funding Date for the
applicable Borrowing unless such condition has been waived, or
(2) the requested Borrowing would exceed the Availability on
such Funding Date.
(ii) Unless Agent receives notice from a Lender on or
prior to the Closing Date or, with respect to any Borrowing
after the Closing Date, at least 1 Business Day prior to the
date of such Borrowing, that such Lender will not make available
as and when required hereunder to Agent for the account of
Borrowers the amount of that Lender's Pro Rata Share of the
Borrowing, Agent may assume that each Lender has made or will
make such amount available to Agent in immediately available
funds on the Funding Date and Agent may (but shall not be so
required), in reliance upon such assumption, make available to
Borrowers on
26
such date a corresponding amount. If and to the extent any
Lender shall not have made its full amount available to Agent in
immediately available funds and Agent in such circumstances has
made available to Borrowers such amount, that Lender shall on
the Business Day following such Funding Date make such amount
available to Agent, together with interest at the Defaulting
Lender Rate for each day during such period. A notice submitted
by Agent to any Lender with respect to amounts owing under this
subsection shall be conclusive, absent manifest error. If such
amount is so made available, such payment to Agent shall
constitute such Lender's Advance on the date of Borrowing for
all purposes of this Agreement. If such amount is not made
available to Agent on the Business Day following the Funding
Date, Agent will notify Administrative Borrower of such failure
to fund and, upon demand by Agent, Borrowers shall pay such
amount to Agent for Agent's account, together with interest
thereon for each day elapsed since the date of such Borrowing,
at a rate per annum equal to the interest rate applicable at the
time to the Advances composing such Borrowing. The failure of
any Lender to make any Advance on any Funding Date shall not
relieve any other Lender of any obligation hereunder to make an
Advance on such Funding Date, but no Lender shall be responsible
for the failure of any other Lender to make the Advance to be
made by such other Lender on any Funding Date.
(iii) Agent shall not be obligated to transfer to a
Defaulting Lender any payments made by Borrowers to Agent for
the Defaulting Lender's benefit, and, in the absence of such
transfer to the Defaulting Lender, Agent shall transfer any such
payments to each other non-Defaulting Lender member of the
Lender Group ratably in accordance with their Revolver
Commitments (but only to the extent that such Defaulting
Lender's Advance was funded by the other members of the Lender
Group) or, if so directed by Administrative Borrower and if no
Default or Event of Default had occurred and is continuing (and
to the extent such Defaulting Lender's Advance was not funded by
the Lender Group), retain same to be re-advanced to Borrowers as
if such Defaulting Lender had made Advances to Borrowers.
Subject to the foregoing, Agent may hold and, in its Permitted
Discretion, re-lend to Borrowers for the account of such
Defaulting Lender the amount of all such payments received and
retained by it for the account of such Defaulting Lender. Solely
for the purposes of voting or consenting to matters with respect
to the Loan Documents, such Defaulting Lender shall be deemed
not to be a "Lender" and such Lender's Revolver Commitment shall
be deemed to be zero. This Section shall remain effective with
respect to such Lender until (x) the Obligations under this
Agreement shall have been declared or shall have become
immediately due and payable, (y) the non-Defaulting Lenders,
Agent, and Administrative Borrower shall have waived such
Defaulting Lender's default in writing, or (z) the Defaulting
Lender makes its Pro Rata Share of the applicable Advance and
pays to Agent all amounts owing by Defaulting Lender in respect
thereof. The operation of this Section shall not be construed to
increase or otherwise affect the Revolver Commitment of any
Lender, to relieve or excuse the performance by such Defaulting
Lender or any other Lender of its duties and obligations
hereunder, or to relieve or excuse the performance by Borrowers
of their duties and obligations hereunder to Agent or to the
Lenders other than such
27
Defaulting Lender. Any such failure to fund by any Defaulting
Lender shall constitute a material breach by such Defaulting
Lender of this Agreement and shall entitle Administrative
Borrower at its option, upon written notice to Agent, to arrange
for a substitute Lender to assume the Revolver Commitment of
such Defaulting Lender, such substitute Lender to be reasonably
acceptable to Agent. In connection with the arrangement of such
a substitute Lender, the Defaulting Lender shall have no right
to refuse to be replaced hereunder, and agrees to execute and
deliver a completed form of Assignment and Acceptance Agreement
in favor of the substitute Lender (and agrees that it shall be
deemed to have executed and delivered such document if it fails
to do so) subject only to being repaid its share of the
outstanding Obligations (other than Bank Product Obligations)
(including an assumption of its Pro Rata Share of the Risk
Participation Liability) without any premium or penalty of any
kind whatsoever; provided further, however, that any such
assumption of the Revolver Commitment of such Defaulting Lender
shall not be deemed to constitute a waiver of any of the Lender
Groups' or Borrowers' rights or remedies against any such
Defaulting Lender arising out of or in relation to such failure
to fund.
(D) MAKING OF SWING LOANS.
(i) In the event more than one Lender shall be party
to this Agreement and Agent shall elect, with the consent of
Swing Lender, as a Lender, to have the terms of this Section
2.3(d) apply to a requested Borrowing as described in Section
2.3(b), Swing Lender as a Lender shall make such Advance in the
amount of such Borrowing (any such Advance made solely by Swing
Lender as a Lender pursuant to this Section 2.3(d) being
referred to as a "Swing Loan" and such Advances being referred
to collectively as "Swing Loans") available to Borrowers on the
Funding Date applicable thereto by transferring immediately
available funds to Administrative Borrower's Designated Account.
Each Swing Loan is an Advance hereunder and shall be subject to
all the terms and conditions applicable to other Advances,
except that all payments on any Swing Loan shall be payable to
Swing Lender as a Lender solely for its own account (and for the
account of the holder of any participation interest with respect
to such Swing Loan). Subject to the provisions of Section
2.3(i), Agent shall not request Swing Lender as a Lender to
make, and Swing Lender as a Lender shall not make, any Swing
Loan if Agent has actual knowledge that (i) one or more of the
applicable conditions precedent set forth in Section 3 will not
be satisfied on the requested Funding Date for the applicable
Borrowing unless such condition has been waived, or (ii) the
requested Borrowing would exceed the Availability on such
Funding Date. Swing Lender as a Lender shall not otherwise be
required to determine whether the applicable conditions
precedent set forth in Section 3 have been satisfied on the
Funding Date applicable thereto prior to making, in its sole
discretion, any Swing Loan.
(ii) The Swing Loans shall be secured by the Agent's
Liens, shall constitute Advances and Obligations hereunder, and
shall bear interest at the rate applicable from time to time to
Advances.
28
(E) AGENT ADVANCES.
(i) Agent hereby is authorized by Borrowers and the
Lenders, from time to time in Agent's sole discretion, (1) after
the occurrence and during the continuance of a Default or an
Event of Default, or (2) at any time that any of the other
applicable conditions precedent set forth in Section 3 have not
been satisfied, to make Advances to Borrowers on behalf of the
Lenders that Agent, in its Permitted Discretion deems necessary
or desirable (A) to preserve or protect the Collateral, or any
portion thereof, (B) to enhance the likelihood of repayment of
the Obligations (other than the Bank Product Obligations), or
(C) to pay any other amount chargeable to Borrowers pursuant to
the terms of this Agreement, including Lender Group Expenses and
the costs, fees, and expenses described in Section 10 (any of
the Advances described in this Section 2.3(e) shall be referred
to as "Agent Advances"). Each Agent Advance is an Advance
hereunder and shall be subject to all the terms and conditions
applicable to other Advances, except that all payments thereon
shall be payable to Agent solely for its own account (and for
the account of the holder of any participation interest with
respect to such Agent Advance).
(ii) The Agent Advances shall be repayable on demand
and secured by the Agent's Liens granted to Agent under the Loan
Documents, shall constitute Advances and Obligations hereunder,
and shall bear interest at the rate applicable from time to time
to Advances.
(f) Settlement. It is agreed that each Lender's funded
portion of the Advances is intended by the Lenders to equal, at all times, such
Lender's Pro Rata Share of the outstanding Advances. Such agreement
notwithstanding, Agent, Swing Lender, and the other Lenders agree (which
agreement shall not be for the benefit of or enforceable by Borrowers) that in
order to facilitate the administration of this Agreement and the other Loan
Documents, settlement among them as to the Advances, the Swing Loans, and the
Agent Advances shall take place on a periodic basis in accordance with the
following provisions:
(i) Agent shall request settlement ("Settlement")
with the Lenders on a weekly basis, or on a more frequent basis
if so determined by Agent, (1) on behalf of Swing Lender, with
respect to each outstanding Swing Loan, (2) for itself, with
respect to each Agent Advance, and (3) with respect to
Collections received, as to each by notifying the Lenders by
telecopy, telephone, or other similar form of transmission, of
such requested Settlement, no later than 2:00 p.m. (Atlanta,
Georgia time) on the Business Day immediately prior to the date
of such requested Settlement (the date of such requested
Settlement being the "Settlement Date"). Such notice of a
Settlement Date shall include a summary statement of the amount
of outstanding Advances, Swing Loans, and Agent Advances for the
period since the prior Settlement Date. Subject to the terms and
conditions contained herein (including Section 2.3(c)(iii)): (y)
if a Lender's balance of the Advances, Swing Loans, and Agent
Advances exceeds such Lender's Pro Rata Share of the Advances,
Swing Loans, and Agent Advances as of a Settlement Date, then
Agent shall, by no later than 3:00 p.m. (Atlanta, Georgia time)
on the
29
Settlement Date, transfer in immediately available funds to the
account of such Lender as such Lender may designate, an amount
such that each such Lender shall, upon receipt of such amount,
have as of the Settlement Date, its Pro Rata Share of the
Advances, Swing Loans, and Agent Advances, and (z) if a Lender's
balance of the Advances, Swing Loans, and Agent Advances is less
than such Lender's Pro Rata Share of the Advances, Swing Loans,
and Agent Advances as of a Settlement Date, such Lender shall no
later than 12:00 p.m. (Atlanta, Georgia time) on the Settlement
Date transfer in immediately available funds to the Agent's
Account, an amount such that each such Lender shall, upon
transfer of such amount, have as of the Settlement Date, its Pro
Rata Share of the Advances, Swing Loans, and Agent Advances.
Such amounts made available to Agent under clause (z) of the
immediately preceding sentence shall be applied against the
amounts of the applicable Swing Loan or Agent Advance and,
together with the portion of such Swing Loan or Agent Advance
representing Swing Lender's Pro Rata Share thereof, shall
constitute Advances of such Lenders. If any such amount is not
made available to Agent by any Lender on the Settlement Date
applicable thereto to the extent required by the terms hereof,
Agent shall be entitled to recover for its account such amount
on demand from such Lender together with interest thereon at the
Defaulting Lender Rate.
(ii) In determining whether a Lender's balance of the
Advances, Swing Loans, and Agent Advances is less than, equal
to, or greater than such Lender's Pro Rata Share of the
Advances, Swing Loans, and Agent Advances as of a Settlement
Date, Agent shall, as part of the relevant Settlement, apply to
such balance the portion of payments actually received in good
funds by Agent with respect to principal, interest, fees payable
by Borrowers and allocable to the Lenders hereunder, and
proceeds of Collateral. To the extent that a net amount is owed
to any such Lender after such application, such net amount shall
be distributed by Agent to that Lender as part of such next
Settlement.
(iii) Between Settlement Dates, Agent, to the extent
no Agent Advances or Swing Loans are outstanding, may pay over
to Swing Lender any payments received by Agent, that in
accordance with the terms of this Agreement would be applied to
the reduction of the Advances, for application to Swing Lender's
Pro Rata Share of the Advances. If, as of any Settlement Date,
Collections received since the then immediately preceding
Settlement Date have been applied to Swing Lender's Pro Rata
Share of the Advances other than to Swing Loans, as provided for
in the previous sentence, Swing Lender shall pay to Agent for
the accounts of the Lenders, and Agent shall pay to the Lenders,
to be applied to the outstanding Advances of such Lenders, an
amount such that each Lender shall, upon receipt of such amount,
have, as of such Settlement Date, its Pro Rata Share of the
Advances. During the period between Settlement Dates, Swing
Lender with respect to Swing Loans, Agent with respect to Agent
Advances, and each Lender (subject to the effect of letter
agreements between Agent and individual Lenders) with respect to
the Advances other than Swing Loans and Agent Advances, shall be
entitled to interest at the applicable rate or
30
rates payable under this Agreement on the daily amount of funds
employed by Swing Lender, Agent, or the Lenders, as applicable.
(g) Notation. Agent shall record on its books the principal
amount of the Advances owing to each Lender, including the Swing Loans owing to
Swing Lender, and Agent Advances owing to Agent, and the interests therein of
each Lender, from time to time. In addition, each Lender is authorized, at such
Lender's option, to note the date and amount of each payment or prepayment of
principal of such Lender's Advances in its books and records, including computer
records, such books and records constituting conclusive evidence, absent
manifest error, of the accuracy of the information contained therein.
(h) Lenders' Failure to Perform. All Advances (other than
Swing Loans and Agent Advances) shall be made by the Lenders contemporaneously
and in accordance with their Pro Rata Shares. It is understood that (i) no
Lender shall be responsible for any failure by any other Lender to perform its
obligation to make any Advance (or other extension of credit) hereunder, nor
shall any Revolver Commitment of any Lender be increased or decreased as a
result of any failure by any other Lender to perform its obligations hereunder,
and (ii) no failure by any Lender to perform its obligations hereunder shall
excuse any other Lender from its obligations hereunder.
(i) Optional Overadvances. Any contrary provision of this
Agreement notwithstanding, the Lenders hereby authorize Agent or Swing Lender,
as applicable, and Agent or Swing Lender, as applicable, may, but is not
obligated to, knowingly and intentionally, continue to make Advances (including
Swing Loans) to Borrowers notwithstanding that an Overadvance exists or thereby
would be created, so long as (i) after giving effect to such Advances (including
a Swing Loan), the Adjusted Revolver Usage does not exceed the Borrowing Base by
more than $3,000,000, (ii) after giving effect to such Advances (including a
Swing Loan) the outstanding Revolver Usage (except for and excluding amounts
charged to the Loan Account for interest, fees, or Lender Group Expenses) does
not exceed the Maximum Revolver Amount, and (iii) at the time of the making of
any such Advance (including a Swing Loan), Agent does not believe, in good
faith, that the Overadvance created by such Advance will be outstanding for more
than 90 days. The foregoing provisions are for the exclusive benefit of Agent,
Swing Lender, and the Lenders and are not intended to benefit Borrowers in any
way. The Advances and Swing Loans, as applicable, that are made pursuant to this
Section 2.3(i) shall be subject to the same terms and conditions as any other
Advance or Swing Loan, as applicable, except that the rate of interest
applicable thereto shall be the rate applicable to Advances under Section 2.6(c)
hereof without regard to the presence or absence of a Default or Event of
Default.
(A) In the event Agent obtains actual
knowledge that the Revolver Usage exceeds the amounts
permitted by the preceding paragraph, regardless of the
amount of, or reason for, such excess, Agent shall
notify the Lenders as soon as practicable (and prior to
making any (or any additional) intentional Overadvances
(except for and excluding amounts charged to the Loan
Account for interest, fees, or Lender Group Expenses)
unless Agent determines that prior notice would result
in imminent harm to the Collateral or its value), and
the Lenders shall, together with Agent, jointly
determine the terms of arrangements that shall
31
be implemented with Borrowers and intended to reduce,
within a reasonable time, the outstanding principal
amount of the Advances to Borrowers to an amount
permitted by the preceding paragraph. In the event Agent
or any Lender disagrees over the terms of reduction or
repayment of any Overadvance, the terms of reduction or
repayment thereof shall be implemented according to the
determination of the Required Lenders.
(B) Each Lender shall be obligated to
settle with Agent as provided in Section 2.3(f) for the
amount of such Lender's Pro Rata Share of any
unintentional Overadvances by Agent reported to such
Lender, any intentional Overadvances made as permitted
under this Section 2.3(i), and any Overadvances
resulting from the charging to the Loan Account of
interest, fees, or Lender Group Expenses.
2.4 PAYMENTS.
(a) PAYMENTS BY BORROWERS.
(i) Except as otherwise expressly provided herein,
all payments by Borrowers shall be made to Agent's Account for
the account of the Lender Group and shall be made in immediately
available funds, no later than 2:00 p.m. (Atlanta, Georgia time)
on the date specified herein. Any payment received by Agent
later than 2:00 p.m. (Atlanta, Georgia time), shall be deemed to
have been received on the following Business Day and any
applicable interest or fee shall continue to accrue until such
following Business Day.
(ii) Unless Agent receives notice from Administrative
Borrower prior to the date on which any payment is due to the
Lenders that Borrowers will not make such payment in full as and
when required, Agent may assume that Borrowers have made (or
will make) such payment in full to Agent on such date in
immediately available funds and Agent may (but shall not be so
required), in reliance upon such assumption, distribute to each
Lender on such due date an amount equal to the amount then due
such Lender. If and to the extent Borrowers do not make such
payment in full to Agent on the date when due, each Lender
severally shall repay to Agent on demand such amount distributed
to such Lender, together with interest thereon at the Defaulting
Lender Rate for each day from the date such amount is
distributed to such Lender until the date repaid.
(b) APPORTIONMENT AND APPLICATION OF PAYMENTS.
(i) Except as otherwise provided with respect to
Defaulting Lenders and except as otherwise provided in the Loan
Documents (including letter agreements between Agent and
individual Lenders), aggregate principal and interest payments
shall be apportioned ratably among the Lenders (according to the
unpaid principal balance of the Obligations to which such
payments relate held by each Lender) and payments of fees and
expenses (other than fees or
32
expenses that are for Agent's separate account, after giving
effect to any letter agreements between Agent and individual
Lenders) shall be apportioned ratably among the Lenders having a
Pro Rata Share of the type of Obligation to which a particular
fee relates. All payments shall be remitted to Agent and all
such payments (other than payments received while no Default or
Event of Default has occurred and is continuing and which relate
to the payment of principal or interest of specific Obligations
or which relate to the payment of specific fees), and all
proceeds of Accounts or other Collateral received by Agent,
shall be applied as follows:
(A) first, to pay any Lender Group Expenses
then due to Agent under the Loan Documents, until paid
in full,
(B) second, to pay any Lender Group Expenses
then due to the Lenders under the Loan Documents, on a
ratable basis, until paid in full,
(C) third, to pay any fees then due to Agent
(for its separate accounts, after giving effect to any
letter agreements between Agent and the individual
Lenders) under the Loan Documents until paid in full,
(D) fourth, to pay any fees then due to any
or all of the Lenders (after giving effect to any letter
agreements between Agent and individual Lenders) under
the Loan Documents, on a ratable basis, until paid in
full,
(E) fifth, to pay interest due in respect of
all Agent Advances, until paid in full,
(F) sixth, ratably to pay interest due in
respect of the Advances (other than Agent Advances) and
the Swing Loans until paid in full,
(G) seventh, to pay the principal of all
Agent Advances until paid in full,
(H) eighth, to pay the principal of all
Swing Loans until paid in full,
(I) ninth, so long as no Event of Default
has occurred and is continuing, and at Agent's election
(which election Agent agrees will not be made if an
Overadvance would be created thereby), to pay amounts
then due and owing by Administrative Borrower or its
Subsidiaries in respect of Bank Products, until paid in
full,
(J) tenth, so long as no Event of Default
has occurred and is continuing, to pay the principal of
all Advances (other than Agent Advances) until paid in
full,
(K) eleventh, if an Event of Default has
occurred and is continuing, ratably (i) to pay the
principal of all Advances until paid in
33
full, and (ii) to Agent, to be held by Agent, for the
benefit of ▇▇▇▇▇ Fargo or its Affiliates, as applicable,
as cash collateral in an amount up to the amount of the
Bank Product Reserve established prior to the occurrence
of, and not in contemplation of, the subject Event of
Default until Administrative Borrower's and its
Subsidiaries' obligations in respect of the then extant
Bank Products have been paid in full or the cash
collateral amount has been exhausted,
(L) twelfth, if an Event of Default has
occurred and is continuing, to Agent, to be held by
Agent, for the ratable benefit of Issuing Lender and the
Lenders, as cash collateral in an amount up to 105% of
the then extant Letter of Credit Usage until paid in
full,
(M) thirteenth, to pay any other Obligations
(including Bank Product Obligations) until paid in full,
and
(N) fourteenth, to Borrowers (to be wired to
the Designated Account) or such other Person entitled
thereto under applicable law.
(ii) Agent promptly shall distribute to each Lender,
pursuant to the applicable wire instructions received from each
Lender in writing, such funds as it may be entitled to receive,
subject to a Settlement delay as provided in Section 2.3(h).
(iii) In each instance, so long as no Event of Default
has occurred and is continuing, Section 2.4(b)(i) shall not be
deemed to apply to any payment by Borrowers specified by
Borrowers to be for the payment of specific Obligations then due
and payable (or prepayable) under any provision of this
Agreement.
(iv) For purposes of the foregoing, "paid in full"
means payment of all amounts owing under the Loan Documents
according to the terms thereof, including loan fees, service
fees, professional fees, interest (and specifically including
interest accrued after the commencement of any Insolvency
Proceeding), default interest, interest on interest (to the
extent permitted by law), and expense reimbursements, whether or
not the same would be or is allowed or disallowed in whole or in
part in any Insolvency Proceeding.
(v) In the event of a direct conflict between the
priority provisions of this Section 2.4 and other provisions
contained in any other Loan Document, it is the intention of the
parties hereto that such priority provisions in such documents
shall be read together and construed, to the fullest extent
possible, to be in concert with each other. In the event of any
actual, irreconcilable conflict that cannot be resolved as
aforesaid, the terms and provisions of this Section 2.4 shall
control and govern.
2.5 OVERADVANCES. If, at any time or for any reason, the amount of
Obligations (other than Bank Product Obligations) owed by Borrowers to the
Lender Group pursuant to Sections 2.1 and 2.12 is greater than either the Dollar
or percentage limitations set forth in
34
Sections 2.1 or 2.12, (an "Overadvance"), Borrowers immediately shall pay to
Agent, in cash, the amount of such excess, which amount shall be used by Agent
to reduce the Obligations in accordance with the priorities set forth in Section
2.4(b). In addition, Borrowers hereby promise to pay the Obligations (including
principal, interest, fees, costs, and expenses) in Dollars in full to the Lender
Group as and when due and payable under the terms of this Agreement and the
other Loan Documents.
2.6 INTEREST RATES AND LETTER OF CREDIT FEE: RATES, PAYMENTS, AND
CALCULATIONS.
(a) Interest Rates. Except as provided in clause (c) below,
all Obligations (except for undrawn Letters of Credit and except for Bank
Product Obligations) that have been charged to the Loan Account pursuant to the
terms hereof shall bear interest on the Daily Balance at a per annum rate equal
to the Base Rate plus the Base Rate Margin; provided, however, that commencing
on the ninetieth (90th) day following the making of the initial Advance
hereunder and on the first Business Day of each calendar month thereafter (each,
an "Adjustment Date"), the Base Rate Margin shall be reduced or increased to be
lower or higher than the Base Rate Margin in effect prior to such Adjustment
Date if the Average Unused Line Percentage, calculated for the most recently
ended calendar month, as calculated by Agent, is greater than or equal to the
amounts set forth below:
Average Unused Line Percentage Base Rate Margin
------------------------------ ----------------
>= 85% 2.00%
>= 75% but < 85% 1.75%
>= 65% but < 75% 1.50%
>= 55% but < 65% 1.25%
>= 45% but < 55% 1.00%
>= 35% but < 45% 0.75%
< 35% 0.50%
(b) Letter of Credit Fee. Borrowers shall pay Agent (for the
ratable benefit of the Lenders, subject to any letter agreement between Agent
and individual Lenders), a Letter of Credit fee (in addition to the charges,
commissions, fees, and costs set forth in Section 2.12(e)) which shall accrue at
a rate equal to 2.75% per annum times the Daily Balance of the undrawn amount of
all outstanding Letters of Credit.
(c) Default Rate. Upon the occurrence and during the
continuation of an Event of Default (and at the election of Agent or the
Required Lenders),
(i) all Obligations (except for undrawn Letters of
Credit and except for Bank Product Obligations) that have been
charged to the Loan Account pursuant to the terms hereof shall
bear interest on the Daily Balance thereof at a per annum rate
equal to 2 percentage points above the per annum rate otherwise
applicable hereunder, and
35
(ii) the Letter of Credit fee provided for above
shall be increased to 2 percentage points above the per annum
rate otherwise applicable hereunder.
(d) Payment. Interest, Letter of Credit fees, and all other
fees payable hereunder shall be due and payable, in arrears, on the first day of
each month at any time that Obligations or Revolver Commitments are outstanding.
Borrowers hereby authorize Agent, from time to time, without prior notice to
Borrowers, to charge such interest and fees, all Lender Group Expenses (as and
when incurred), the charges, commissions, fees, and costs provided for in
Section 2.12(e) (as and when accrued or incurred), the fees and costs provided
for in Section 2.11 (as and when accrued or incurred), and all other payments as
and when due and payable under any Loan Document (including any amounts due and
payable to ▇▇▇▇▇ Fargo or its Affiliates in respect of Bank Products up to the
amount of the then extant Bank Product Reserve) to Borrowers' Loan Account,
which amounts thereafter shall constitute Advances hereunder and shall accrue
interest at the rate then applicable to Advances hereunder. Any interest not
paid when due shall be charged to Borrowers' Loan Account and shall thereafter
constitute Advances hereunder and shall accrue interest at the rate then
applicable to Advances.
(e) Computation. All interest and fees chargeable under the
Loan Documents shall be computed on the basis of a 365 day year for the actual
number of days elapsed. In the event the Base Rate is changed from time to time
hereafter, the rates of interest hereunder based upon the Base Rate
automatically and immediately shall be increased or decreased by an amount equal
to such change in the Base Rate.
(f) Intent to Limit Charges to Maximum Lawful Rate. In no
event shall the interest rate or rates payable under this Agreement, plus any
other amounts paid in connection herewith, exceed the highest rate permissible
under any law that a court of competent jurisdiction shall, in a final
determination, deem applicable. Borrowers and the Lender Group, in executing and
delivering this Agreement, intend legally to agree upon the rate or rates of
interest and manner of payment stated within it; provided, however, that,
anything contained herein to the contrary notwithstanding, if said rate or rates
of interest or manner of payment exceeds the maximum allowable under applicable
law, then, ipso facto, as of the date of this Agreement, Borrowers are and shall
be liable only for the payment of such maximum as allowed by law, and payment
received from Borrowers in excess of such legal maximum, whenever received,
shall be applied to reduce the principal balance of the Obligations to the
extent of such excess. Notwithstanding the foregoing, Borrowers and Lender Group
further agree and stipulate that to the fullest extent permitted by law, all
agency fees, syndication fees, facility fees, underwriting fees, default
charges, late charges, funding or "breakage" charges, increased cost charges,
the Applicable Prepayment Premium, "float" or "clearance" charges, attorneys'
fees and reimbursement for costs and expenses paid by Lender Group to third
parties or for damages incurred by Lender Group are charges to compensate Lender
Group for underwriting and administrative services and costs or losses performed
or incurred, and to be performed and incurred, by Lender Group in connection
with this Agreement and the other Loan Documents and shall under no
circumstances be deemed to be charges for the use of money pursuant to Official
Code of Georgia Annotated Sections 7-4-2 and 7-4-18.
36
2.7 CASH MANAGEMENT.
(a) Borrowers shall (i) establish and maintain cash
management services of a type and on terms satisfactory to Agent at one or more
of the banks set forth on Schedule 2.7(a) (each, a "Cash Management Bank"), and
shall request in writing and otherwise take such reasonable steps to ensure that
all of its Account Debtors forward payment of the amounts owed by them directly
to such Cash Management Bank, or with respect to Accounts for which the Account
Debtor is Air Mobility Command, Borrower may request in writing and otherwise
take such reasonable steps to ensure that such Account Debtor forward payment of
the amounts owed by it directly to the Agent's Account, and (ii) deposit or
cause to be deposited promptly, and in any event no later than the first
Business Day after the date of receipt thereof, all Collections (including those
sent directly by Account Debtors to a Cash Management Bank) into a bank account
in Agent's name (a "Cash Management Account") at one of the Cash Management
Banks.
(b) Each Cash Management Bank shall establish and maintain
Cash Management Agreements with Agent and Borrowers, in form and substance
acceptable to Agent. Each such Cash Management Agreement shall provide, among
other things, that (i) all items of payment deposited in such Cash Management
Account and proceeds thereof are held by such Cash Management Bank as agent or
bailee-in-possession for Agent, (ii) the Cash Management Bank has no rights of
setoff or recoupment or any other claim against the applicable Cash Management
Account, other than for payment of its service fees and other charges directly
related to the administration of such Cash Management Account and for returned
checks or other items of payment, and (iii) upon notice by Agent that a Default
or Event of Default has occurred hereunder, it immediately will forward by daily
sweep all amounts in the applicable Cash Management Account to the Agent's
Account. Borrowers specifically acknowledge and agree that in the event the Cash
Management Bank debits the Cash Management Account to void an ACH deposit
transaction or to reimburse the Cash Management Bank with respect to an ACH
deposit transaction, Agent may, in its sole discretion, deliver notice to the
Cash Management Bank to immediately forward by daily sweep all amounts in the
applicable Cash Management Account to the Agent's Account.
(c) So long as no Default or Event of Default has occurred
and is continuing, Administrative Borrower may amend Schedule 2.7(a) to add or
replace a Cash Management Account Bank or Cash Management Account; provided,
however, that (i) such prospective Cash Management Bank shall be reasonably
satisfactory to Agent and Agent shall have consented in writing in advance to
the opening of such Cash Management Account with the prospective Cash Management
Bank, and (ii) prior to the time of the opening of such Cash Management Account,
Borrowers and such prospective Cash Management Bank shall have executed and
delivered to Agent a Cash Management Agreement. Borrowers shall close any of
their Cash Management Accounts (and establish replacement cash management
accounts in accordance with the foregoing sentence) promptly and in any event
within 30 days of notice from Agent that the creditworthiness of any Cash
Management Bank is no longer acceptable in Agent's reasonable judgment, or as
promptly as practicable and in any event within 60 days of notice from Agent
that the operating performance, funds transfer, or availability procedures or
performance of the Cash Management Bank with respect to Cash Management Accounts
or Agent's liability under
37
any Cash Management Agreement with such Cash Management Bank is no longer
acceptable in Agent's reasonable judgment.
(d) The Cash Management Accounts shall be cash collateral
accounts, with all cash, checks and similar items of payment in such accounts
securing payment of the Obligations, and in which Borrowers are hereby deemed to
have granted a Lien to Agent.
2.8 CREDITING PAYMENTS; FLOAT CHARGE. The receipt of any payment
item by Agent (whether from transfers to Agent by the Cash Management Banks
pursuant to the Cash Management Agreements or otherwise) shall not be considered
a payment on account unless such payment item is a wire transfer of immediately
available federal funds made to the Agent's Account (provided that in connection
with payments on Accounts with respect to which the Account Debtor is Air
Mobility Command, such payment may be made by ACH transfer), or unless and until
such payment item is honored when presented for payment. Should any payment item
not be honored when presented for payment, then Borrowers shall be deemed not to
have made such payment and interest shall be calculated accordingly. Anything to
the contrary contained herein notwithstanding, any payment item shall be deemed
received by Agent only if it is received into the Agent's Account on a Business
Day on or before 2:00 p.m. (Atlanta, Georgia time). If any payment item is
received into the Agent's Account on a non-Business Day or after 2:00 p.m.
(Atlanta, Georgia time) on a Business Day, it shall be deemed to have been
received by Agent as of the opening of business on the immediately following
Business Day. From and after the Closing Date, Agent shall be entitled to charge
Borrowers for 2 Business Days of 'clearance' or 'float' at the rate applicable
to Base Rate Loans under Section 2.6 on all Collections that are received by
Borrowers (regardless of whether forwarded by the Cash Management Banks to
Agent). This across-the-board 2 Business Day clearance or float charge on all
Collections is acknowledged by the parties to constitute an integral aspect of
the pricing of the financing of Borrowers and shall apply irrespective of
whether or not there are any outstanding monetary Obligations; the effect of
such clearance or float charge being the equivalent of charging 2 Business Days
of interest on such Collections. The parties acknowledge and agree that the
economic benefit of the foregoing provisions of this Section 2.8 shall be for
the exclusive benefit of Agent.
2.9 DESIGNATED ACCOUNT. Agent is authorized to make the Advances,
and Issuing Lender is authorized to issue the Letters of Credit, under this
Agreement based upon telephonic or other instructions received from anyone
purporting to be an Authorized Person, or without instructions if pursuant to
Section 2.6(d). Administrative Borrower agrees to establish and maintain the
Designated Account with the Designated Account Bank for the purpose of receiving
the proceeds of the Advances requested by Borrowers and made by Agent or the
Lenders hereunder. Unless otherwise agreed by Agent and Administrative Borrower,
any Advance, Agent Advance, or Swing Loan requested by Borrowers and made by
Agent or the Lenders hereunder shall be made to the Designated Account.
2.10 MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF OBLIGATIONS. Lender
shall maintain an account on its books in the name of Borrowers (the "Loan
Account") on which Borrowers will be charged with all Advances (including Agent
Advances and Swing Loans) made by Agent, Swing Lender, or the Lenders to
Borrowers or for Borrowers' account, the Letters of Credit issued by Issuing
Lender for Borrowers' account, and with all other payment
38
Obligations hereunder or under the other Loan Documents (except for Bank Product
Obligations), including, accrued interest, fees and expenses, and Lender Group
Expenses. In accordance with Section 2.8, the Loan Account will be credited with
all payments received by Agent from Borrowers or for Borrowers' account,
including all amounts received in the Agent's Account from any Cash Management
Bank. Agent shall render statements regarding the Loan Account to Administrative
Borrower, including principal, interest, fees, and including an itemization of
all charges and expenses constituting Lender Group Expenses owing, and such
statements shall be conclusively presumed to be correct and accurate and
constitute an account stated between Borrowers and the Lender Group unless,
within 30 days after receipt thereof by Administrative Borrower, Administrative
Borrower shall deliver to Agent written objection thereto describing the error
or errors contained in any such statements.
2.11 FEES. Borrowers shall pay to Agent the following fees and
charges, which fees and charges shall be non-refundable when paid (irrespective
of whether this Agreement is terminated thereafter) and shall be apportioned
among the Lenders in accordance with the terms of letter agreements between
Agent and individual Lenders:
(a) Unused Line Fee. On the first day of each month during
the term of this Agreement, an unused line fee in the amount equal to 0.50% per
annum (the "Unused Line Fee Percentage") times the Average Unused Line Amount;
provided, however, that commencing on the ninetieth (90th) day following the
making of the initial Advance hereunder and on the first Business Day of each
calendar month thereafter (each, an "Unused Line Fee Adjustment Date"), the
Unused Line Fee Percentage shall be reduced or increased to be lower or higher
than the Unused Line Fee Percentage in effect prior to such Unused Line Fee
Adjustment Date if the Average Unused Line Percentage, calculated for the most
recently ended calendar month, as calculated by Agent, is greater than or equal
to the amounts set forth below:
Average Unused Line Percentage Unused Line Fee Percentage
------------------------------ --------------------------
>= 85% 0.500%
>= 75% but < 85% 0.500%
>= 65% but < 75% 0.375%
>= 55% but < 65% 0.375%
>= 45% but < 55% 0.375%
>= 35% but < 45% 0.250%
< 35% 0.250%
(b) Fee Letter Fees. As and when due and payable under the
terms of the Fee Letter, Borrowers shall pay to Agent the fees set forth in the
Fee Letter, and
(c) Audit, Appraisal, and Valuation Charges. For the
separate account of Agent, audit, appraisal, and valuation fees and charges as
follows, (i) a fee of $850 per day, per auditor, plus out-of-pocket expenses for
each financial audit of a Borrower performed by personnel employed by Agent,
(ii) if implemented, a one time charge of $5,000 plus out-of-pocket expenses for
expenses for the establishment of electronic collateral reporting systems,
39
(iii) a fee of $1,500 per day per appraiser, plus out-of-pocket expenses, for
each appraisal of the Collateral performed by personnel employed by Agent, and
(iv) the actual charges paid or incurred by Agent if it elects to employ the
services of one or more third Persons to perform financial audits of Borrowers,
to appraise the Collateral, or any portion thereof, or to assess a Borrower's
business valuation. Valuations of Inventory may be conducted at any time (and in
any event not less frequently than monthly) by an appraiser satisfactory to
Agent. Complete appraisals of Inventory (including a review of all aircraft
maintenance records and maintenance reserves) and audits may be performed by
Agent or its agents, at any time and from time to time after the Closing Date;
provided, however that in the absence of a Default or Event of Default, the
obligation of Borrowers to reimburse Agent under this Section 2.11(c)(i),
2.11(c)(iii) and 2.11(c)(iv) shall be limited to not more than one monthly
Inventory valuation and one quarterly audit.
2.12 LETTERS OF CREDIT.
(a) Subject to the terms and conditions of this Agreement,
the Issuing Lender agrees to issue letters of credit for the account of
Borrowers (each, an "L/C") or to purchase participations or execute indemnities
or reimbursement obligations (each such undertaking, an "L/C Undertaking") with
respect to letters of credit issued by an Underlying Issuer (as of the Closing
Date, the prospective Underlying Issuer is to be ▇▇▇▇▇ Fargo) for the account of
Borrowers. To request the issuance of an L/C or an L/C Undertaking (or the
amendment, renewal, or extension of an outstanding L/C or L/C Undertaking),
Administrative Borrower shall hand deliver or telecopy (or transmit by
electronic communication, if arrangements for doing so have been approved by the
Issuing Lender) to the Issuing Lender and Agent (reasonably in advance of the
requested date of issuance, amendment, renewal, or extension) a notice
requesting the issuance of an L/C or L/C Undertaking, or identifying the L/C or
L/C Undertaking to be amended, renewed, or extended, the date of issuance,
amendment, renewal, or extension, the date on which such L/C or L/C Undertaking
is to expire, the amount of such L/C or L/C Undertaking, the name and address of
the beneficiary thereof (or of the Underlying Letter of Credit, as applicable),
and such other information as shall be necessary to prepare, amend, renew, or
extend such L/C or L/C Undertaking. If requested by the Issuing Lender,
Borrowers also shall be an applicant under the application with respect to any
Underlying Letter of Credit that is to be the subject of an L/C Undertaking. The
Issuing Lender shall have no obligation to issue a Letter of Credit if any of
the following would result after giving effect to the requested Letter of
Credit:
(i) the Letter of Credit Usage would exceed the
Borrowing Base less the amount of outstanding Advances, or
(ii) the Letter of Credit Usage would exceed
$10,000,000, or
(iii) the Letter of Credit Usage would exceed the
Maximum Revolver Amount less the then extant amount of
outstanding Advances.
(b) Borrowers and the Lender Group acknowledge and agree
that certain Underlying Letters of Credit may be issued to support letters of
credit that already are outstanding as of the Closing Date. Each Letter of
Credit (and corresponding Underlying Letter of Credit) shall be in form and
substance acceptable to the Issuing Lender (in the exercise of its
40
Permitted Discretion), including the requirement that the amounts payable
thereunder must be payable in Dollars. If Issuing Lender is obligated to advance
funds under a Letter of Credit, Borrowers immediately shall reimburse such L/C
Disbursement to Issuing Lender by paying to Agent an amount equal to such L/C
Disbursement not later than 2:00 p.m., Atlanta, Georgia time, on the date that
such L/C Disbursement is made, if Administrative Borrower shall have received
written or telephonic notice of such L/C Disbursement prior to 1:00 p.m.,
Atlanta, Georgia time, on such date, or, if such notice has not been received by
Administrative Borrower prior to such time on such date, then not later than
2:00 p.m., Atlanta, Georgia time, on (i) the Business Day that Administrative
Borrower receives such notice, if such notice is received prior to 1:00 p.m.,
Atlanta, Georgia time, on the date of receipt, and, in the absence of such
reimbursement, the L/C Disbursement immediately and automatically shall be
deemed to be an Advance hereunder and, thereafter, shall bear interest at the
rate then applicable to Advances under Section 2.6. To the extent an L/C
Disbursement is deemed to be an Advance hereunder, Borrowers' obligation to
reimburse such L/C Disbursement shall be discharged and replaced by the
resulting Advance. Promptly following receipt by Agent of any payment from
Borrowers pursuant to this paragraph, Agent shall distribute such payment to the
Issuing Lender or, to the extent that the Lenders have made payments pursuant to
Section 2.12(c) to reimburse the Issuing Lender, then to such Lenders and the
Issuing Lender as their interest may appear.
(c) Promptly following receipt of a notice of L/C
Disbursement pursuant to Section 2.12(a), each Lender agrees to fund its Pro
Rata Share of any Advance deemed made pursuant to the foregoing subsection on
the same terms and conditions as if Borrowers had requested such Advance and
Agent shall promptly pay to Issuing Lender the amounts so received by it from
the Lenders. By the issuance of a Letter of Credit (or an amendment to a Letter
of Credit increasing the amount thereof) and without any further action on the
part of the Issuing Lender or the Lenders, the Issuing Lender shall be deemed to
have granted to each Lender with a Revolver Commitment, and each Lender shall be
deemed to have purchased, a participation in each Letter of Credit, in an amount
equal to its Pro Rata Share of the Risk Participation Liability of such Letter
of Credit, and each such Lender agrees to pay to Agent, for the account of the
Issuing Lender, such Lender's Pro Rata Share of any payments made by the Issuing
Lender under such Letter of Credit. In consideration and in furtherance of the
foregoing, each Lender hereby absolutely and unconditionally agrees to pay to
Agent, for the account of the Issuing Lender, such Lender's Pro Rata Share of
each L/C Disbursement made by the Issuing Lender and not reimbursed by Borrowers
on the date due as provided in clause (a) of this Section, or of any
reimbursement payment required to be refunded to Borrowers for any reason. Each
Lender acknowledges and agrees that its obligation to deliver to Agent, for the
account of the Issuing Lender, an amount equal to its respective Pro Rata Share
pursuant to this Section 2.12(b) shall be absolute and unconditional and such
remittance shall be made notwithstanding the occurrence or continuation of an
Event of Default or Default or the failure to satisfy any condition set forth in
Section 3 hereof. If any such Lender fails to make available to Agent the amount
of such Lender's Pro Rata Share of any payments made by the Issuing Lender in
respect of such Letter of Credit as provided in this Section, Agent (for the
account of the Issuing Lender) shall be entitled to recover such amount on
demand from such Lender together with interest thereon at the Defaulting Lender
Rate until paid in full.
(d) Each Borrower hereby agrees to indemnify, save, defend,
and hold the Lender Group harmless from any loss, cost, expense, or liability,
and reasonable attorneys fees
41
actually incurred by the Lender Group arising out of or in connection with any
Letter of Credit; provided, however, that no Borrower shall be obligated
hereunder to indemnify for any loss, cost, expense, or liability that is caused
by the gross negligence or willful misconduct of the Issuing Lender or any other
member of the Lender Group. Each Borrower agrees to be bound by the Underlying
Issuer's regulations and reasonable interpretations of any Underlying Letter of
Credit or by Issuing Lender's reasonable interpretations of any L/C issued by
Issuing Lender to or for such Borrower's account, even though this
interpretation may be different from such Borrower's own, and each Borrower
understands and agrees that the Lender Group shall not be liable for any error,
negligence, or mistake, whether of omission or commission, in following
Borrowers' instructions or those contained in the Letter of Credit or any
modifications, amendments, or supplements thereto. Each Borrower understands
that the L/C Undertakings may require Issuing Lender to indemnify the Underlying
Issuer for certain costs or liabilities arising out of claims by Borrowers
against such Underlying Issuer. Each Borrower hereby agrees to indemnify, save,
defend, and hold the Lender Group harmless with respect to any loss, cost,
expense (including reasonable and actual attorneys fees), or liability incurred
by the Lender Group under any L/C Undertaking as a result of the Lender Group's
indemnification of any Underlying Issuer; provided, however, that no Borrower
shall be obligated hereunder to indemnify for any loss, cost, expense, or
liability that is caused by the gross negligence or willful misconduct of the
Issuing Lender or any other member of the Lender Group.
(e) Each Borrower hereby authorizes and directs any
Underlying Issuer to deliver to the Issuing Lender all instruments, documents,
and other writings and property received by such Underlying Issuer pursuant to
such Underlying Letter of Credit and to accept and rely upon the Issuing
Lender's instructions with respect to all matters arising in connection with
such Underlying Letter of Credit and the related application.
(f) Any and all charges, commissions, fees, and costs
incurred by the Issuing Lender relating to Underlying Letters of Credit shall be
Lender Group Expenses for purposes of this Agreement and immediately shall be
reimbursable by Borrowers to Agent for the account of the Issuing Lender; it
being acknowledged and agreed by each Borrower that, as of the Closing Date, the
issuance charge imposed by the prospective Underlying Issuer is .825% per annum
times the face amount of each Underlying Letter of Credit, that such issuance
charge may be changed from time to time, and that the Underlying Issuer also
imposes a schedule of charges for amendments, extensions, drawings, and
renewals, in each case, consistent with generally-applicable charges imposed by
the Underlying Issuer.
(g) If by reason of (i) any change in any applicable law,
treaty, rule, or regulation or any change in the interpretation or application
thereof by any Governmental Authority, or (ii) compliance by the Underlying
Issuer or the Lender Group with any direction, request, or requirement
(irrespective of whether having the force of law) of any Governmental Authority
or monetary authority including, Regulation D of the Federal Reserve Board as
from time to time in effect (and any successor thereto):
(i) any reserve, deposit, or similar requirement is
or shall be imposed or modified in respect of any Letter of
Credit issued hereunder, or
42
(ii) there shall be imposed on the Underlying Issuer
or the Lender Group any other condition regarding any Underlying
Letter of Credit or any Letter of Credit issued pursuant hereto;
and the result of the foregoing is to increase, directly or indirectly, the cost
to the Lender Group of issuing, making, guaranteeing, or maintaining any Letter
of Credit or to reduce the amount receivable in respect thereof by the Lender
Group, then, and in any such case, Agent may, at any time within a reasonable
period after the additional cost is incurred or the amount received is reduced,
notify Administrative Borrower, and Borrowers shall pay on demand such amounts
as Agent may specify to be necessary to compensate the Lender Group for such
additional cost or reduced receipt, together with interest on such amount from
the date of such demand until payment in full thereof at the rate then
applicable to Base Rate Loans hereunder. The good faith determination by Agent
of any amount due pursuant to this Section, as set forth in a certificate
setting forth the calculation thereof in reasonable detail, shall, in the
absence of manifest or demonstrable error, be final and conclusive and binding
on all of the parties hereto.
(h) Each Letter of Credit (as defined in that certain letter
agreement by and between Foothill and Parent, dated as of November 25, 2002)
shall be deemed to be a Letter of Credit hereunder.
2.13 [INTENTIONALLY OMITTED]
2.14 CAPITAL REQUIREMENTS. If, after the date hereof, any Lender
determines that (i) the adoption of or change in any law, rule, regulation or
guideline regarding capital requirements for banks or bank holding companies, or
any change in the interpretation or application thereof by any Governmental
Authority charged with the administration thereof, or (ii) compliance by such
Lender or its parent bank holding company with any guideline, request or
directive of any such entity regarding capital adequacy (whether or not having
the force of law), will have the effect of reducing the return on such Lender's
or such holding company's capital as a consequence of such Lender's Revolver
Commitments hereunder to a level below that which such Lender or such holding
company could have achieved but for such adoption, change, or compliance (taking
into consideration such Lender's or such holding company's then existing
policies with respect to capital adequacy and assuming the full utilization of
such entity's capital) by any amount deemed by such Lender to be material, then
such Lender may notify Administrative Borrower and Agent thereof. Following
receipt of such notice, Borrowers agree to pay such Lender on demand the amount
of such reduction of return of capital as and when such reduction is determined,
payable within 90 days after presentation by such Lender of a statement in the
amount and setting forth in reasonable detail such Lender's calculation thereof
and the assumptions upon which such calculation was based (which statement shall
be deemed true and correct absent manifest error). In determining such amount,
such Lender may use any reasonable averaging and attribution methods.
2.15 JOINT AND SEVERAL LIABILITY OF BORROWERS.
(a) Each of Borrowers is accepting joint and several
liability hereunder and under the other Loan Documents in consideration of the
financial accommodations to be provided by the Agent and the Lenders under this
Agreement, for the mutual benefit, directly and
43
indirectly, of each of Borrowers and in consideration of the undertakings of the
other Borrowers to accept joint and several liability for the Obligations.
(b) Each of Borrowers, jointly and severally, hereby
irrevocably and unconditionally accepts, not merely as a surety but also as a
co-debtor, joint and several liability with the other Borrowers, with respect to
the payment and performance of all of the Obligations (including, without
limitation, any Obligations arising under this Section 2.15), it being the
intention of the parties hereto that all the Obligations shall be the joint and
several obligations of each Person composing Borrowers without preferences or
distinction among them.
(c) If and to the extent that any of Borrowers shall fail to
make any payment with respect to any of the Obligations as and when due or to
perform any of the Obligations in accordance with the terms thereof, then in
each such event the other Persons composing Borrowers will make such payment
with respect to, or perform, such Obligation.
(d) The Obligations of each Person composing Borrowers under
the provisions of this Section 2.15 constitute the absolute and unconditional,
full recourse Obligations of each Person composing Borrowers enforceable against
each such Borrower to the full extent of its properties and assets, irrespective
of the validity, regularity or enforceability of this Agreement or any other
circumstances whatsoever.
(e) Except as otherwise expressly provided in this
Agreement, each Person composing Borrowers hereby waives notice of acceptance of
its joint and several liability, notice of any Advances or Letters of Credit
issued under or pursuant to this Agreement, notice of the occurrence of any
Default, Event of Default, or of any demand for any payment under this
Agreement, notice of any action at any time taken or omitted by Agent or the
Lenders under or in respect of any of the Obligations, any requirement of
diligence or to mitigate damages and, generally, to the extent permitted by
applicable law, all demands, notices and other formalities of every kind in
connection with this Agreement (except as otherwise provided in this Agreement).
Each Person composing Borrowers hereby assents to, and waives notice of, any
extension or postponement of the time for the payment of any of the Obligations,
the acceptance of any payment of any of the Obligations, the acceptance of any
partial payment thereon, any waiver, consent or other action or acquiescence by
Agent or the Lenders at any time or times in respect of any default by any
Person composing Borrowers in the performance or satisfaction of any term,
covenant, condition or provision of this Agreement, any and all other
indulgences whatsoever by Agent or the Lenders in respect of any of the
Obligations, and the taking, addition, substitution or release, in whole or in
part, at any time or times, of any security for any of the Obligations or the
addition, substitution or release, in whole or in part, of any Person composing
Borrowers. Without limiting the generality of the foregoing, each of Borrowers
assents to any other action or delay in acting or failure to act on the part of
any Agent or Lender with respect to the failure by any Person composing
Borrowers to comply with any of its respective Obligations, including, without
limitation, any failure strictly or diligently to assert any right or to pursue
any remedy or to comply fully with applicable laws or regulations thereunder,
which might, but for the provisions of this Section 2.15 afford grounds for
terminating, discharging or relieving any Person composing Borrowers, in whole
or in part, from any of its Obligations under this Section 2.15, it being the
intention of each Person composing Borrowers that, so long as any of the
Obligations hereunder remain unsatisfied, the Obligations
44
of such Person composing Borrowers under this Section 2.15 shall not be
discharged except by performance and then only to the extent of such
performance. The Obligations of each Person composing Borrowers under this
Section 2.15 shall not be diminished or rendered unenforceable by any winding
up, reorganization, arrangement, liquidation, reconstruction or similar
proceeding with respect to any Person composing Borrowers or any Agent or
Lender. The joint and several liability of the Persons composing Borrowers
hereunder shall continue in full force and effect notwithstanding any
absorption, merger, amalgamation or any other change whatsoever in the name,
constitution or place of formation of any of the Persons composing Borrowers or
any Agent or Lender.
(f) Each Person composing Borrowers represents and warrants
to Agent and the Lenders that such Borrower is currently informed of the
financial condition of Borrowers and of all other circumstances which a diligent
inquiry would reveal and which bear upon the risk of nonpayment of the
Obligations. Each Person composing Borrowers further represents and warrants to
Agent and the Lenders that such Borrower has read and understands the terms and
conditions of the Loan Documents. Each Person composing Borrowers hereby
covenants that such Borrower will continue to keep informed of Borrowers'
financial condition, the financial condition of any guarantors, and of all other
circumstances which bear upon the risk of nonpayment or nonperformance of the
Obligations.
(g) The provisions of this Section 2.15 are made for the
benefit of the Agent, the Lenders and their respective successors and assigns,
and may be enforced by it or them from time to time against any or all of the
Persons composing Borrowers as often as occasion therefor may arise and without
requirement on the part of any such Agent, Lender, successor or assign first to
marshal any of its or their claims or to exercise any of its or their rights
against any of the other Persons composing Borrowers or to exhaust any remedies
available to it or them against any of the other Persons composing Borrowers or
to resort to any other source or means of obtaining payment of any of the
Obligations hereunder or to elect any other remedy. The provisions of this
Section 2.15 shall remain in effect until all of the Obligations shall have been
paid in full or otherwise fully satisfied. If at any time, any payment, or any
part thereof, made in respect of any of the Obligations, is rescinded or must
otherwise be restored or returned by any Agent or Lender upon the insolvency,
bankruptcy or reorganization of any of the Persons composing Borrowers, or
otherwise, the provisions of this Section 2.15 will forthwith be reinstated in
effect, as though such payment had not been made.
(h) Each of the Persons composing Borrowers hereby agrees
that it will not enforce any of its rights of contribution or subrogation
against the other Persons composing Borrowers with respect to any liability
incurred by it hereunder or under any of the other Loan Documents, any payments
made by it to the Agent or the Lenders with respect to any of the Obligations or
any collateral security therefor until such time as all of the Obligations have
been paid in full in cash. Any claim which any Borrower may have against any
other Borrower with respect to any payments to any Agent or Lender hereunder or
under any other Loan Documents are hereby expressly made subordinate and junior
in right of payment, without limitation as to any increases in the Obligations
arising hereunder or thereunder, to the prior payment in full in cash of the
Obligations and, in the event of any insolvency, bankruptcy, receivership,
liquidation, reorganization or other similar proceeding under the laws of any
jurisdiction relating to any Borrower, its debts or its assets, whether
voluntary or involuntary, all such Obligations shall be
45
paid in full in cash before any payment or distribution of any character,
whether in cash, securities or other property, shall be made to any other
Borrower therefor.
(i) Each of the Persons composing Borrowers hereby agrees
that, after the occurrence and during the continuance of any Default or Event of
Default, the payment of any amounts due with respect to the indebtedness owing
by any Borrower to any other Borrower is hereby subordinated to the prior
payment in full in cash of the Obligations. Each Borrower hereby agrees that
after the occurrence and during the continuance of any Default or Event of
Default, such Borrower will not demand, ▇▇▇ for or otherwise attempt to collect
any indebtedness of any other Borrower owing to such Borrower until the
Obligations shall have been paid in full in cash. If, notwithstanding the
foregoing sentence, such Borrower shall collect, enforce or receive any amounts
in respect of such indebtedness, such amounts shall be collected, enforced and
received by such Borrower as trustee for the Agent, and the Agent shall deliver
any such amounts to Agent for application to the Obligations in accordance with
Section 2.4(b).
3. CONDITIONS; TERM OF AGREEMENT.
3.1 CONDITIONS PRECEDENT TO THE INITIAL EXTENSION OF CREDIT. The
obligation of the Lender Group (or any member thereof) to make the initial
Advance (or otherwise to initially extend on the Closing Date any credit
provided for hereunder), is subject to the fulfillment, to the satisfaction of
Agent, of each of the conditions precedent set forth below:
(a) the Closing Date shall occur on or before December 15,
2002;
(b) Agent shall have received all financing statements
required by Agent, and Agent shall have received searches reflecting the filing
of all such financing statements;
(c) Agent shall have received each of the following
documents, in form and substance satisfactory to Agent, duly executed, and each
such document shall be in full force and effect:
(i) the Cash Management Agreements,
(ii) the Disbursement Letter,
(iii) the Due Diligence Letter,
(iv) the Fee Letter,
(v) the Officers' Certificate,
(vi) the Pay-Off Letter, together with UCC
termination statements and other documentation evidencing the
termination by Existing Lender of its Liens in and to the
properties and assets of Borrower,
(vii) the Stock Pledge Agreement, together with all
certificates representing the shares of Stock pledged
thereunder, as well as transfer powers with respect thereto
endorsed in blank, and
46
(viii) the Trademark Security Agreement;
(d) Agent shall have received a certificate from the
Secretary of each Borrower attesting to the resolutions of such Borrower's Board
of Directors authorizing its execution, delivery, and performance of this
Agreement and the other Loan Documents to which such Borrower is a party and
authorizing specific officers of such Borrower to execute the same;
(e) Agent shall have received copies of each Borrower's
Governing Documents, as amended, modified, or supplemented to the Closing Date,
certified by the Secretary of such Borrower;
(f) Agent shall have received a certificate of status with
respect to each Borrower, dated within 20 days of the Closing Date, such
certificate to be issued by the appropriate officer of the jurisdiction of
organization of such Borrower, which certificate shall indicate that such
Borrower exists and address such other matters as is customary in such
jurisdiction;
(g) Agent shall have received certificates of status with
respect to each Borrower, each dated within 30 days of the Closing Date, such
certificates to be issued by the appropriate officer of the jurisdictions (other
than the jurisdiction of organization of such Borrower) in which its failure to
be duly qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that such Borrower exists and address such other
matters as is customary in such jurisdictions;
(h) Agent shall have received, in each case, in form and
substance satisfactory to Agent (i) a certificate of insurance as required by
Section 6.8 and (ii) a undertaking by Borrowers' insurance agent to deliver not
later than December 16, 2002 an endorsement to Borrowers' insurance policies
naming Agent as loss payee as required by Section 6.8.
(i) Agent shall have received Collateral Access Agreements
with respect to each location listed on Schedule E-1.
(j) Agent shall have received opinions of Borrowers' counsel
in form and substance satisfactory to Agent;
(k) Agent shall have received satisfactory evidence
(including a certificate of the chief financial officer of Parent) that all tax
returns required to be filed by Borrowers have been timely filed and all taxes
upon Borrowers or their properties, assets, income, and franchises (including
Real Property taxes and payroll taxes) have been paid prior to delinquency,
except such taxes that are the subject of Permitted Protest;
(l) Borrowers shall have Required Availability of not less
than $10,000,000 after giving effect to the initial extensions of credit
hereunder;
(m) Agent shall have completed its business, legal, and
collateral due diligence, including (i) a collateral audit and review of
Borrowers' books and records and verification of Borrowers' representations and
warranties to the Lender Group, the results of which shall be satisfactory to
Agent, (ii) an inspection of each of the locations where Inventory is
47
located, the results of which shall be satisfactory to Agent, (iii) a review of
all Air Mobility Command Agreements, executed deferred payment plan agreements,
and the Senior Subordinated Note Indenture, and (iv) satisfactory review of
outstanding litigation;
(n) Agent shall have received completed reference checks
with respect to Borrowers' senior management, the results of which are
satisfactory to Agent in its sole discretion;
(o) Agent shall have received an appraisal of the Net
Orderly Liquidation Value applicable to Borrowers' Inventory (including a
timeline liquidation curve), the results of which shall be satisfactory to
Agent;
(p) Agent shall have received Borrowers' Closing Date
Business Plan;
(q) Borrowers shall pay all Lender Group Expenses incurred
in connection with the transactions evidenced by this Agreement;
(r) Agent shall have received copies of each of the Air
Mobility Command Agreement, the Master Assignment Agreement and Senior
Subordinated Notes Indenture, together with a certificate of the Secretary of
the applicable Borrower certifying each such document as being a true, correct,
and complete copy thereof;
(s) Borrowers shall have received all licenses, approvals or
evidence of other actions required by any Governmental Authority in connection
with the execution and delivery by Borrowers of this Agreement or any other Loan
Document or with the consummation of the transactions contemplated hereby and
thereby;
(t) Agent shall have received satisfactory evidence that
Borrowers have deposited all cash on hand in the Cash Management Account;
(u) Agent shall have received satisfactory evidence that the
Air Mobility Command has approved congressional funding;
(v) Agent shall have received an assignment of claims on all
Accounts included in the calculation of the Borrowing Base;
(w) Agent shall have received a duly executed consignee
waiver, in form and substance satisfactory to Agent, with respect to any
consigned Eligible Inventory included in the calculation of the Borrowing Base;
(x) Agent shall have received satisfactory evidence of the
capital and organizational structure of Parent and its Subsidiaries, in form and
substance satisfactory to Agent;
(y) Agent shall have received a list or lists itemizing and
valuing all Inventory of Borrowers and including the location of such Inventory
thereon;
48
(z) Agent shall have received confirmation that Borrowers
own all Inventory constituting spare parts;
(aa) Agent shall have received satisfactory evidence that all
Accounts owed by Parent to International Lease Finance Corporation and Boeing
are current; and
(bb) all other documents and legal matters in connection with
the transactions contemplated by this Agreement shall have been delivered,
executed, or recorded and shall be in form and substance satisfactory to Agent.
3.2 CONDITIONS SUBSEQUENT TO THE INITIAL EXTENSION OF CREDIT. The
obligation of the Lender Group (or any member thereof) to continue to make
Advances (or otherwise extend credit hereunder) is subject to the fulfillment,
on or before the date applicable thereto, of each of the conditions subsequent
set forth below (the failure by Borrowers to so perform or cause to be performed
constituting an Event of Default):
(a) not later than December 16, 2002, Agent shall have
received, in form and substance satisfactory to Agent, the endorsement to
Borrowers' insurance policies naming Agent as loss payee as required by Section
6.8,
(b) within 5 Business Days of the Closing Date, deliver to
Agent evidence satisfactory to Agent, that Borrowers have obtained "breach of
warranty" insurance coverage on terms and conditions satisfactory to Agent,
(c) within 45 days of the Closing Date, deliver to Agent
duly executed Aircraft Lessor Intercreditor Agreements, each in form and
substance satisfactory to Agent, and
(d) within 60 days of the Closing Date, deliver to Agent
true and valid copies of the policies of insurance, together with the
endorsements thereto, as are required by Section 6.8, the form and substance of
which shall be satisfactory to Agent and its counsel.
3.3 CONDITIONS PRECEDENT TO ALL EXTENSIONS OF CREDIT. The obligation
of the Lender Group (or any member thereof) to make all Advances (or to extend
any other credit hereunder) shall be subject to the following conditions
precedent:
(a) the representations and warranties contained in this
Agreement and the other Loan Documents shall be true and correct in all material
respects on and as of the date of such extension of credit, as though made on
and as of such date (except to the extent that such representations and
warranties relate solely to an earlier date);
(b) no Default or Event of Default shall have occurred and
be continuing on the date of such extension of credit, nor shall either result
from the making thereof;
(c) no injunction, writ, restraining order, or other order
of any nature prohibiting, directly or indirectly, the extending of such credit
shall have been issued and remain in force by any Governmental Authority against
any Borrower, Agent, any Lender, or any of their Affiliates; and
49
(d) no Material Adverse Change shall have occurred.
3.4 TERM. This Agreement shall become effective upon the execution
and delivery hereof by Borrowers, Agent, and the Lenders and shall continue in
full force and effect for a term ending on December 12, 2007 (the "Maturity
Date"). The foregoing notwithstanding, the Lender Group, upon the election of
the Required Lenders, shall have the right to terminate its obligations under
this Agreement immediately and without notice upon the occurrence and during the
continuation of an Event of Default.
3.5 EFFECT OF TERMINATION. On the date of termination of this
Agreement, all Obligations (including contingent reimbursement obligations of
Borrowers with respect to any outstanding Letters of Credit and including all
Bank Product Obligations) immediately shall become due and payable without
notice or demand (including (a) either (i) providing cash collateral to be held
by Agent for the benefit of the Lenders in an amount equal to 105% of the then
extant Letter of Credit Usage, or (ii) causing the original Letters of Credit to
be returned to the Issuing Lender, and (b) providing cash collateral to be held
by Agent for the benefit of ▇▇▇▇▇ Fargo or its Affiliates with respect to the
then extant Bank Product Obligations). No termination of this Agreement,
however, shall relieve or discharge Borrowers of their duties, Obligations, or
covenants hereunder and the Agent's Liens in the Collateral shall remain in
effect until all Obligations have been fully and finally discharged and the
Lender Group's obligations to provide additional credit hereunder have been
terminated. When this Agreement has been terminated and all of the Obligations
have been fully and finally discharged and the Lender Group's obligations to
provide additional credit under the Loan Documents have been terminated
irrevocably, Agent will, at Borrowers' sole expense, execute (if applicable) and
deliver any UCC termination statements, lien releases, mortgage releases,
re-assignments of trademarks, discharges of security interests, and other
similar discharge or release documents (and, if applicable, in recordable form)
as are reasonably necessary to release, as of record, the Agent's Liens and all
notices of security interests and liens previously filed by Agent with respect
to the Obligations.
3.6 EARLY TERMINATION BY BORROWERS. Borrowers have the option, at
any time upon 90 days prior written notice by Administrative Borrower to Agent,
to terminate this Agreement by paying to Agent, for the benefit of the Lender
Group, in cash, the Obligations (including (a) either (i) providing cash
collateral to be held by Agent for the benefit of the Lenders in an amount equal
to 105% of the then extant Letter of Credit Usage, or (ii) causing the original
Letters of Credit to be returned to the Issuing Lender, and (b) providing cash
collateral to be held by Agent for the benefit of ▇▇▇▇▇ Fargo or its Affiliates
with respect to the then extant Bank Product Obligations), in full, together
with the Applicable Prepayment Premium to be allocated based upon letter
agreements between Agent and individual Lenders. If Administrative Borrower has
sent a notice of termination pursuant to the provisions of this Section, then on
the date set forth as the date of termination of this Agreement in such notice,
the Revolver Commitments shall terminate and Borrowers shall be obligated to
repay the Obligations (including (a) either (i) providing cash collateral to be
held by Agent for the benefit of the Lenders in an amount equal to 105% of the
then extant Letter of Credit Usage, or (ii) causing the original Letters of
Credit to be returned to the Issuing Lender, and (b) providing cash collateral
to be held by Agent for the benefit of ▇▇▇▇▇ Fargo or its Affiliates with
respect to the then extant Bank Product Obligations), in full, together with the
Applicable Prepayment Premium. In the
50
event of the termination of this Agreement and repayment of the Obligations at
any time prior to the Maturity Date, for any other reason, including (a)
termination upon the election of the Required Lenders to terminate after the
occurrence of an Event of Default, (b) foreclosure and sale of Collateral, (c)
sale of the Collateral in any Insolvency Proceeding, or (iv) restructure,
reorganization or compromise of the Obligations by the confirmation of a plan of
reorganization, or any other plan of compromise, restructure, or arrangement in
any Insolvency Proceeding, then, in view of the impracticability and extreme
difficulty of ascertaining the actual amount of damages to the Lender Group or
profits lost by the Lender Group as a result of such early termination, and by
mutual agreement of the parties as to a reasonable estimation and calculation of
the lost profits or damages of the Lender Group, Borrowers shall pay the
Applicable Prepayment Premium to Agent to be allocated based upon letter
agreements between Agent and individual Lenders, measured as of the date of such
termination.
4. CREATION OF SECURITY INTEREST.
4.1 GRANT OF SECURITY INTEREST. Each Borrower hereby grants to
Agent, for the benefit of the Lender Group, a continuing security interest in
all of its right, title, and interest in all currently existing and hereafter
acquired or arising Personal Property Collateral in order to secure prompt
repayment of any and all of the Obligations in accordance with the terms and
conditions of the Loan Documents and in order to secure prompt performance by
Borrowers of each of their covenants and duties under the Loan Documents. The
Agent's Liens in and to the Personal Property Collateral shall attach to all
Personal Property Collateral without further act on the part of Agent or
Borrowers. Anything contained in this Agreement or any other Loan Document to
the contrary notwithstanding, except for Permitted Dispositions, Borrowers have
no authority, express or implied, to dispose of any item or portion of the
Collateral.
4.2 NEGOTIABLE COLLATERAL. In the event that any Collateral,
including proceeds, is evidenced by or consists of Negotiable Collateral, and if
and to the extent that perfection of priority of Agent's security interest is
dependent on or enhanced by possession, the applicable Borrower, immediately
upon the request of Agent, shall endorse and deliver physical possession of such
Negotiable Collateral to Agent.
4.3 COLLECTION OF ACCOUNTS, GENERAL INTANGIBLES, AND NEGOTIABLE
COLLATERAL. At any time after the occurrence and during the continuation of an
Event of Default, Agent or Agent's designee may (a) notify Account Debtors of
Borrowers that the Accounts, chattel paper, or General Intangibles have been
assigned to Agent or that Agent has a security interest therein, or (b) collect
the Accounts, chattel paper, or General Intangibles directly and charge the
collection costs and expenses to the Loan Account. Each Borrower agrees that it
will hold in trust for the Lender Group, as the Lender Group's trustee, any
Collections that it receives and immediately will deliver said Collections to
Agent or a Cash Management Bank in their original form as received by the
applicable Borrower.
4.4 DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED. At any time upon
the request of Agent, Borrowers shall execute and deliver to Agent, any and all
financing statements, original financing statements in lieu of continuation
statements, fixture filings, security agreements, pledges, assignments,
endorsements of certificates of title, and all other documents (the "Additional
Documents") that Agent may request in its Permitted Discretion, in form and
51
substance satisfactory to Agent, to perfect and continue perfected or better
perfect the Agent's Liens in the Collateral (whether now owned or hereafter
arising or acquired), to create and perfect Liens in favor of Agent in any Real
Property acquired after the Closing Date, and in order to fully consummate all
of the transactions contemplated hereby and under the other Loan Documents. To
the maximum extent permitted by applicable law, each Borrower authorizes Agent
to execute any such Additional Documents in the applicable Borrower's name and
authorize Agent to file such executed Additional Documents in any appropriate
filing office. In addition, on such periodic basis as Agent shall require,
Borrowers shall (a) provide Agent with a report of all new patentable,
copyrightable, or trademarkable materials acquired or generated by Borrowers
during the prior period, (b) cause all patents, material copyrights, and
trademarks acquired or generated by Borrowers that are not already the subject
of a registration with the appropriate filing office (or an application therefor
diligently prosecuted) to be registered with such appropriate filing office in a
manner sufficient to impart constructive notice of Borrowers' ownership thereof,
and (c) cause to be prepared, executed, and delivered to Agent supplemental
schedules to the applicable Loan Documents to identify such patents, copyrights,
and trademarks as being subject to the security interests created thereunder.
4.5 POWER OF ATTORNEY. Each Borrower hereby irrevocably makes,
constitutes, and appoints Agent (and any of Agent's officers, employees, or
agents designated by Agent) as such Borrower's true and lawful attorney, with
power to (a) if such Borrower refuses to, or fails timely to execute and deliver
any of the documents described in Section 4.4, sign the name of such Borrower on
any of the documents described in Section 4.4, (b) at any time that an Event of
Default has occurred and is continuing, sign such Borrower's name on any invoice
or ▇▇▇▇ of lading relating to the Collateral, drafts against Account Debtors, or
notices to Account Debtors, (c) send requests for verification of Accounts, (d)
endorse such Borrower's name on any Collection item that may come into the
Lender Group's possession, (e) at any time that an Event of Default has occurred
and is continuing, make, settle, and adjust all claims under such Borrower's
policies of insurance and make all determinations and decisions with respect to
such policies of insurance, and (f) at any time that an Event of Default has
occurred and is continuing, settle and adjust disputes and claims respecting the
Accounts, chattel paper, or General Intangibles directly with Account Debtors,
for amounts and upon terms that Agent determines to be reasonable, and Agent may
cause to be executed and delivered any documents and releases that Agent
determines to be necessary. The appointment of Agent as each Borrower's
attorney, and each and every one of its rights and powers, being coupled with an
interest, is irrevocable until all of the Obligations have been fully and
finally repaid and performed and the Lender Group's obligations to extend credit
hereunder are terminated.
4.6 RIGHT TO INSPECT; VERIFICATION. Agent (through any of its
officers, employees, or agents) shall have the right, from time to time
hereafter to inspect the Books and to check, test, and appraise the Collateral
in order to verify Borrowers' financial condition or the amount, quality, value,
condition of, or any other matter relating to, the Collateral. Agent, or its
officers, employees or agents, shall have the right to appraise the Collateral,
verify Borrowers' Inventory and review all aircraft maintenance records at any
time; provided that, so long as no Default or Event of Default exists, Agent
shall exercise its right to review all aircraft maintenance records no more
frequently than quarterly. Borrowers also acknowledge and agree that Agent shall
have the right to verify the status of Parent's relationship with the lessors of
its aircraft at any time; provided that, so long as no Default or Event of
Default exists, Agent shall exercise its right to
52
verify the status of Parent's relationship with the lessors of its aircraft no
more frequently than quarterly.
4.7 CONTROL AGREEMENTS. Each Borrower agrees that it will not
transfer assets out of any Securities Accounts other than as permitted under
Section 7.19 and, if to another securities intermediary, unless each of the
applicable Borrower, Agent, and the substitute securities intermediary have
entered into a Control Agreement. No arrangement contemplated hereby or by any
Control Agreement in respect of any Securities Accounts or other Investment
Property shall be modified by Borrowers without the prior written consent of
Agent. Upon the occurrence and during the continuance of a Default or Event of
Default, Agent may notify any securities intermediary to liquidate the
applicable Securities Account or any related Investment Property maintained or
held thereby and remit the proceeds thereof to the Agent's Account.
5. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender Group to enter into this
Agreement, each Borrower makes the following representations and warranties to
the Lender Group which shall be true, correct, and complete, in all material
respects, as of the date hereof, and shall be true, correct, and complete, in
all material respects, as of the Closing Date, and at and as of the date of the
making of each Advance (or other extension of credit) made thereafter, as though
made on and as of the date of such Advance (or other extension of credit)
(except to the extent that such representations and warranties relate solely to
an earlier date) and such representations and warranties shall survive the
execution and delivery of this Agreement:
5.1 NO ENCUMBRANCES. Each Borrower has good and indefeasible title
to its Collateral and its Real Property, free and clear of Liens except for
Permitted Liens.
5.2 ELIGIBLE ACCOUNTS. The Eligible Accounts are bona fide existing
payment obligations of Account Debtors created by the sale and delivery of
Inventory or the rendition of services to such Account Debtors in the ordinary
course of Borrowers' business, owed to Borrowers without defenses, disputes,
offsets, counterclaims, or rights of return or cancellation. As to each Account
that is identified by Administrative Borrower as an Eligible Account in a
borrowing base report submitted to Agent, such Account is not excluded as
ineligible by virtue of one or more of the excluding criteria set forth in the
definition of eligible Accounts.
5.3 ELIGIBLE INVENTORY. All Eligible Inventory is of good and
merchantable quality, free from defects. As to each item of Inventory that is
identified by Administrative Borrower as Eligible Inventory in a borrowing base
report submitted to Agent, such Inventory is not excluded as ineligible by
virtue of one or more of the excluding criteria set forth in the definition of
Eligible Inventory.
5.4 EQUIPMENT. All of the Equipment is used or held for use in
Borrowers' business and is fit for such purposes.
5.5 LOCATION OF INVENTORY AND EQUIPMENT. Except as identified on
Schedule 5.5, the Inventory and Equipment are not stored with a bailee,
warehouseman, or similar party and are located only at the locations identified
on Schedule 5.5.
53
5.6 INVENTORY RECORDS. Each Borrower keeps correct and accurate
records itemizing and describing the type, quality, and quantity of its
Inventory and the book value thereof.
5.7 LOCATION OF CHIEF EXECUTIVE OFFICE; FEIN. The chief executive
office of each Borrower is located at the address indicated in Schedule 5.7 and
each Borrower's FEIN is identified in Schedule 5.7.
5.8 DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) Each Borrower is duly organized and existing and in good
standing under the laws of the jurisdiction of its organization and qualified to
do business in any state where the failure to be so qualified reasonably could
be expected to have a Material Adverse Change.
(b) Set forth on Schedule 5.8(b), is a complete and accurate
description of the authorized capital Stock of each Borrower, by class, and, as
of the Closing Date, a description of the number of shares of each such class
that are issued and outstanding. Other than as described on Schedule 5.8(b),
there are no subscriptions, options, warrants, or calls relating to any shares
of each Borrower's capital Stock, including any right of conversion or exchange
under any outstanding security or other instrument. No Borrower is subject to
any obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its capital Stock or any security convertible into or
exchangeable for any of its capital Stock.
(c) Set forth on Schedule 5.8(c), is a complete and accurate
list of each Borrower's direct and indirect Subsidiaries, showing: (i) the
jurisdiction of their organization; (ii) the number of shares of each class of
common and preferred Stock authorized for each of such Subsidiaries; and (iii)
the number and the percentage of the outstanding shares of each such class owned
directly or indirectly by the applicable Borrower. All of the outstanding
capital Stock of each such Subsidiary has been validly issued and is fully paid
and non-assessable.
(d) Except as set forth on Schedule 5.8(c), there are no
subscriptions, options, warrants, or calls relating to any shares of any
Borrower's Subsidiaries' capital Stock, including any right of conversion or
exchange under any outstanding security or other instrument. No Borrower or any
of its respective Subsidiaries is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of any
Borrower's Subsidiaries' capital Stock or any security convertible into or
exchangeable for any such capital Stock.
(e) Set forth on Schedule 5.8(e) is a complete and accurate
list of each Affiliate of Borrowers.
5.9 DUE AUTHORIZATION; NO CONFLICT.
(a) As to each Borrower, the execution, delivery, and
performance by such Borrower of this Agreement and the Loan Documents to which
it is a party have been duly authorized by all necessary action on the part of
such Borrower.
(b) As to each Borrower, the execution, delivery, and
performance by such Borrower of this Agreement and the Loan Documents to which
it is a party do not and will not
54
(i) violate any provision of federal, state, or local law or regulation
applicable to any Borrower, the Governing Documents of any Borrower, or any
order, judgment, or decree of any court or other Governmental Authority binding
on any Borrower, (ii) conflict with, result in a breach of, or constitute (with
due notice or lapse of time or both) a default under any material contractual
obligation of any Borrower, (iii) result in or require the creation or
imposition of any Lien of any nature whatsoever upon any properties or assets of
any Borrower, other than Permitted Liens, or (iv) require any approval of any
Borrower's shareholders or any approval or consent of any Person under any
material contractual obligation of any Borrower.
(c) Other than the filing of financing statements, fixture
filings, and Mortgages, and as applicable, the delivery of any notice required
under the Assignment of Claims Act, 31 USC Section 3727, the execution,
delivery, and performance by each Borrower of this Agreement and the Loan
Documents to which such Borrower is a party do not and will not require any
registration with, consent, or approval of, or notice to, or other action with
or by, any Governmental Authority or other Person.
(d) As to each Borrower, this Agreement and the other Loan
Documents to which such Borrower is a party, and all other documents
contemplated hereby and thereby, when executed and delivered by such Borrower
will be the legally valid and binding obligations of such Borrower, enforceable
against such Borrower in accordance with their respective terms, except as
enforcement may be limited by equitable principles or by bankruptcy, insolvency,
reorganization, moratorium, or similar laws relating to or limiting creditors'
rights generally.
(e) The Agent's Liens are validly created, perfected, and
first priority Liens, subject only to Permitted Liens.
5.10 LITIGATION. Other than those matters disclosed on Schedule 5.10,
there are no actions, suits, or proceedings pending or, to the best knowledge of
Borrowers, threatened against Borrowers, or any of their Subsidiaries, as
applicable, except for (a) matters that are fully covered by insurance (subject
to customary deductibles), and (b) matters arising after the Closing Date that,
if decided adversely to Borrowers, or any of their Subsidiaries, as applicable,
reasonably could not be expected to result in a Material Adverse Change.
5.11 NO MATERIAL ADVERSE CHANGE. All financial statements relating to
Borrowers that have been delivered by Borrowers to the Lender Group have been
prepared in accordance with GAAP (except, in the case of unaudited financial
statements, for the lack of footnotes and being subject to year-end audit
adjustments) and present fairly in all material respects, Borrowers' financial
condition as of the date thereof and results of operations for the period then
ended. There has not been a Material Adverse Change with respect to Borrowers
since the date of the latest financial statements submitted to the Lender Group
on or before the Closing Date.
5.12 FRAUDULENT TRANSFER.
(a) Each Borrower is Solvent.
(b) No transfer of property is being made by any Borrower
and no obligation is being incurred by any Borrower in connection with the
transactions contemplated by this
55
Agreement or the other Loan Documents with the intent to hinder, delay, or
defraud either present or future creditors of Borrowers.
5.13 EMPLOYEE BENEFITS; LABOR MATTERS. None of Borrowers, any of
their Subsidiaries, or any of their ERISA Affiliates maintains or contributes to
any Benefit Plan. The terms and conditions governing the employment of
Borrowers' unionized employees prohibit any of Borrowers' unionized employees
from striking or taking other labor-related action with respect to services
provided by Parent pursuant to the Air Mobility Command Agreement.
5.14 ENVIRONMENTAL CONDITION. Except as set forth on Schedule 5.14,
(a) to Borrowers' knowledge, none of Borrowers' properties or assets has ever
been used by Borrowers or by previous owners or operators in the disposal of, or
to produce, store, handle, treat, release, or transport, any Hazardous
Materials, where such production, storage, handling, treatment, release or
transport was in violation, in any material respect, of applicable Environmental
Law, (b) to Borrowers' knowledge, none of Borrowers' properties or assets has
ever been designated or identified in any manner pursuant to any environmental
protection statute as a Hazardous Materials disposal site, (c) none of Borrowers
have received notice that a Lien arising under any Environmental Law has
attached to any revenues or to any Real Property owned or operated by Borrowers,
and (d) none of Borrowers have received a summons, citation, notice, or
directive from the Environmental Protection Agency or any other federal or state
governmental agency concerning any action or omission by any Borrower resulting
in the releasing or disposing of Hazardous Materials into the environment.
5.15 BROKERAGE FEES. Borrowers have not utilized the services of any
broker or finder in connection with Borrowers' obtaining financing from the
Lender Group under this Agreement and no brokerage commission or finders fee is
payable by Borrowers in connection herewith.
5.16 INTELLECTUAL PROPERTY. Each Borrower owns, or holds licenses in,
all trademarks, trade names, copyrights, patents, patent rights, and licenses
that are necessary to the conduct of its business as currently conducted.
Attached hereto as Schedule 5.16 is a true, correct, and complete listing of all
material patents, patent applications, trademarks, trademark applications and
copyright registrations as to which each Borrower is the owner or is an
exclusive licensee.
5.17 LEASES. Borrowers enjoy peaceful and undisturbed possession
under all leases material to the business of Borrowers and to which Borrowers
are a party or under which Borrowers are operating. All of such leases are valid
and subsisting and no material default by Borrowers exists under any of them.
5.18 DDAs. Set forth on Schedule 5.18 are all of the DDAs of each
Borrower, including, with respect to each depository (i) the name and address of
that depository, and (ii) the account numbers of the accounts maintained with
such depository.
5.19 COMPLETE DISCLOSURE. All factual information (taken as a whole
with all previously furnished information) furnished by or on behalf of
Borrowers in writing to Agent or any Lender (including all information contained
in the Schedules hereto or in the other Loan Documents) for purposes of or in
connection with this Agreement, the other Loan Documents, or any transaction
contemplated herein or therein is, and all other such factual information (taken
as
56
a whole with all previously furnished information), hereafter furnished by or on
behalf of Borrowers in writing to the Agent or any Lender will be, true and
accurate, in all material respects, on the date as of which such information is
dated or certified and not incomplete by omitting to state any fact necessary to
make such information (taken as a whole with all previously furnished
information), not misleading in any material respect at such time in light of
the circumstances under which such information was provided. On the Closing
Date, the Closing Date Projections represent, and as of the date on which any
other Projections are delivered to Agent, such additional Projections represent
Borrowers' good faith best estimate of its future performance for the periods
covered thereby.
5.20 INDEBTEDNESS. Set forth on Schedule 5.20 is a true and complete
list of all Indebtedness of each Borrower outstanding immediately prior to the
Closing Date that is to remain outstanding after the Closing Date and such
Schedule accurately reflects the aggregate principal amount of such Indebtedness
and the principal terms thereof.
6. AFFIRMATIVE COVENANTS.
Each Borrower covenants and agrees that, so long as any credit
hereunder shall be available and until full and final payment of the
Obligations, Borrowers shall and shall cause each of their respective
Subsidiaries to do all of the following:
6.1 ACCOUNTING SYSTEM. Maintain a system of accounting that enables
Borrowers to produce financial statements in accordance with GAAP and maintain
records pertaining to the Collateral that contain information as from time to
time reasonably may be requested by Agent. Borrowers also shall keep an
inventory reporting system that shows all additions, sales, claims, returns, and
allowances with respect to the Inventory.
6.2 COLLATERAL REPORTING. Provide Agent or its designee with the
following documents at the following times in form satisfactory to Agent:
--------------------------------------------------------------------------------
Daily (a) with respect to all Eligible
Accounts, a sales journal, collection
journal, and credit register since the
last such schedule and a calculation of
the Borrowing Base as of such date;
provided that Agent agrees to deliver to
Administrative Borrower on each day on
which Agent receives notice of daily
collections from the Air Mobility
Command, notice of such collections and
the invoice numbers for which such
proceeds are to be applied; provided,
further, however, that the failure of
Agent to so deliver such notice at any
time or from time to time shall not
constitute a breach of this Agreement by
Agent, and
(b) with respect to all Eligible
Accounts, notice of all returns,
disputes, or claims.
--------------------------------------------------------------------------------
57
Monthly (not later than the first day (c) To the Designated Appraiser,
of each month) Inventory reports specifying each
Borrower's Inventory, by serial number,
by part and by location.
--------------------------------------------------------------------------------
Monthly (not later than the 3rd day (d) a detailed calculation of the
followingdelivery by the Designated Borrowing Base (including detail
Appraiser of the monthly appraisal) regarding those Accounts that are not
Eligible Accounts).
--------------------------------------------------------------------------------
Monthly (not later than the 10th day (e) a detailed aging, by total, of the
of each month) Accounts, together with a reconciliation
to the detailed calculation of the
Borrowing Base previously provided to
Agent,
(f) a summary aging, by vendor
(including any vendors that are
Governmental Authorities or fuel
suppliers), of Borrowers' accounts
payable and any book overdraft, and
(g) a calculation of Dilution for the
prior month.
--------------------------------------------------------------------------------
Quarterly (h) a report regarding each Borrower's
accrued, but unpaid, ad valorem taxes.
--------------------------------------------------------------------------------
Upon request by Agent (i) a report detailing the length of
time that Borrowers' Inventory is under
repair,
(j) a detailed list of each Borrower's
customers,
(k) copies of invoices in connection
with the Accounts, credit memos,
remittance advices, deposit slips,
shipping and delivery documents in
connection with the Accounts and, for
Inventory and Equipment acquired by
Borrowers, purchase orders and invoices,
and
(l) such other reports as to the
Collateral, or the financial condition
of Borrowers, as Agent may request.
--------------------------------------------------------------------------------
6.3 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. Deliver to Agent:
(a) as soon as available, but in any event within 35 days
(60 days in the case of a month that is the end of one of the first 3 fiscal
quarters in a fiscal year) after the end of each month during each of Parent's
fiscal years,
58
(i) a company prepared consolidated balance sheet,
income statement, and statement of cash flow covering Parent's
and its Subsidiaries' operations during such period,
(ii) a certificate signed by the chief financial
officer or President of Parent to the effect that:
(A) the financial statements delivered
hereunder have been prepared in accordance with GAAP
(except for the lack of footnotes and being subject to
year-end audit adjustments) and fairly present in all
material respects the financial condition of Parent and
its Subsidiaries,
(B) the representations and warranties of
Borrowers contained in this Agreement and the other Loan
Documents are true and correct in all material respects
on and as of the date of such certificate, as though
made on and as of such date (except to the extent that
such representations and warranties relate solely to an
earlier date),
(C) there does not exist any condition or
event that constitutes a Default or Event of Default
(or, to the extent of any non-compliance, describing
such non-compliance as to which he or she may have
knowledge and what action Borrowers have taken, are
taking, or propose to take with respect thereto),
(D) there does not exist any event of
default under any aircraft lease agreement for any
reason,
(E) Borrowers are in compliance with
insurance coverage requirements set forth Section 6.8,
and
(F) World Parts is the owner of all the
Borrowers' Inventory constituting spare parts (except as
may be otherwise disclosed to Agent on a schedule
attached thereto which details the owner and serial
number of each item of Inventory constituting spare
parts not owned by World Parts), and
(iii) for each month that is the date on which a
financial covenant in Section 7.20 is to be tested, a Compliance
Certificate demonstrating, in reasonable detail, compliance at
the end of such period with the applicable financial covenants
contained in Section 7.20,
(b) as soon as available, but in any event within 100 days
after the end of each of Parent's fiscal years,
(i) financial statements of Parent and its
Subsidiaries for each such fiscal year, audited by independent
certified public accountants reasonably acceptable to Agent and
certified, without any qualifications, by such accountants to
have been prepared in accordance with GAAP (such audited
financial
59
statements to include a balance sheet, income statement, and
statement of cash flow and, if prepared, such accountants'
letter to management),
(ii) a certificate of such accountants addressed to
Agent and the Lenders stating that such accountants do not have
knowledge of the existence of any Default or Event of Default
under Section 7.20,
(c) as soon as available, but in any event within 30 days
prior to the start of each of Parent's fiscal years,
(i) copies of Borrowers' Projections, in form and
substance (including as to scope and underlying assumptions)
satisfactory to Agent, in its sole discretion, for the remaining
months of the then current fiscal year and for the next
succeeding year, month by month, certified by the chief
financial officer of Parent as being such officer's good faith
best estimate of the financial performance of Parent and its
Subsidiaries during the period covered thereby,
(d) if and when filed by any Borrower,
(i) 10-Q quarterly reports, Form 10-K annual
reports, and Form 8-K current reports,
(ii) any other filings made by any Borrower with the
SEC,
(iii) copies of Borrowers' federal income tax returns,
and any amendments thereto, filed with the Internal Revenue
Service, and
(iv) any other information that is provided by Parent
to its shareholders generally,
(e) if and when filed by any Borrower and as requested by
Agent, satisfactory evidence of payment of applicable excise taxes in each
jurisdictions in which (i) any Borrower conducts business or is required to pay
any such excise tax, (ii) where any Borrower's failure to pay any such
applicable excise tax would result in a Lien on the properties or assets of any
Borrower, or (iii) where any Borrower's failure to pay any such applicable
excise tax reasonably could be expected to result in a Material Adverse Change,
(f) as soon as a Borrower has knowledge of any event or
condition that constitutes a Default or an Event of Default, notice thereof and
a statement of the curative action that Borrowers propose to take with respect
thereto,
(g) as soon as a Borrower has knowledge thereof, notice that
(i) aggregate revenues from sales to Air Mobility
Command for the succeeding twelve month period may decrease by
an amount equal to or greater than twenty percent (20%) with
respect to Accounts owed by Air Mobility Command during the
immediately preceding twelve month period,
60
(ii) an event of default exists under any aircraft
lease agreement,
(iii) an aircraft crash has occurred,
(iv) a claim of $1,000,000 or greater has been filed
in any court or proceeding, or is anticipated to be filed,
against Borrowers, or either of them, for whatever reason, or
(v) the terms and conditions governing the
employment of Borrowers' unionized employees no longer prohibit
any of Borrowers' unionized employees from striking or taking
other labor-related action with respect to services provided by
Parent pursuant to the Air Mobility Command Agreement, and
(h) in the event of any disposition of Inventory by any
consignee of such Inventory, notice of such disposition, including the serial
number, part number and location of all Inventory disposed of by such consignee;
and
(i) upon the request of Agent, any other report reasonably
requested relating to the financial condition of Borrowers.
In addition to the financial statements referred to above,
Borrowers agree to deliver financial statements prepared on both a consolidated
and consolidating basis and that no Borrower, or any Subsidiary of a Borrower,
will have a fiscal year different from that of Parent. Borrowers agree that
their independent certified public accountants are authorized to communicate
with Agent and to release to Agent whatever financial information concerning
Borrowers that Agent reasonably may request. Each Borrower waives the right to
assert a confidential relationship, if any, it may have with any accounting firm
or service bureau in connection with any information requested by Agent pursuant
to or in accordance with this Agreement, and agree that Agent may contact
directly any such accounting firm or service bureau in order to obtain such
information.
6.4 CONSULTANT. In the event of a liquidation by Agent of some or
all of the Collateral, or upon the occurrence and during the continuation of an
Event of Default for a period in excess of one hundred (120) days, Borrowers
agree to retain, at Borrowers' expense, a consultant or inventory management
agent acceptable to Agent.
6.5 RETURN. Cause returns and allowances, as between Borrowers and
their Account Debtors, to be on the same basis and in accordance with the usual
customary practices of the applicable Borrower, as they exist at the time of the
execution and delivery of this Agreement. If, at a time when no Event of Default
has occurred and is continuing, any Account Debtor returns any Inventory to any
Borrower, the applicable Borrower promptly shall determine the reason for such
return and, if the applicable Borrower accepts such return, issue a credit
memorandum (with a copy to be sent to Agent) in the appropriate amount to such
Account Debtor. If, at a time when an Event of Default has occurred and is
continuing, any Account Debtor returns any Inventory to any Borrower, the
applicable Borrower promptly shall determine the reason for such return and, if
Agent consents (which consent shall not be unreasonably withheld), issue a
credit memorandum (with a copy to be sent to Agent) in the appropriate amount to
such Account Debtor.
61
6.6 MAINTENANCE OF PROPERTIES. Maintain and preserve all of its
material properties which are necessary or useful in the proper conduct to its
business in good working order and condition, ordinary wear and tear excepted
(including the maintenance of all aircraft in accordance with the requirements
of the FAA and the lessors of such aircraft), and comply at all times with the
provisions of all leases to which it is a party as lessee, so as to prevent any
loss or forfeiture thereof or thereunder. Each Borrower agrees to maintain all
of its spare parts Inventory, if any, as "certified parts" (as certified by the
relevant Governmental Authority).
6.7 TAXES. Cause all assessments and taxes, whether real, personal,
or otherwise, due or payable by, or imposed, levied, or assessed against
Borrowers or any of their assets to be paid in full, before delinquency or
before the expiration of any extension period, except to the extent that the
validity of such assessment or tax shall be the subject of a Permitted Protest.
Borrowers will make timely payment or deposit of all tax payments and
withholding taxes required of it by applicable laws, including those laws
concerning F.I.C.A., F.U.T.A., state disability, and local, state, and federal
income taxes, and will, upon request, furnish Agent with proof satisfactory to
Agent indicating that the applicable Borrower has made such payments or
deposits. Borrowers shall deliver satisfactory evidence of payment of applicable
excise taxes in each jurisdictions in which any Borrower is required to pay any
such excise tax.
6.8 INSURANCE.
(a) At Borrowers' expense, maintain insurance respecting its
property and assets wherever located, covering loss or damage by fire, theft,
explosion, and all other hazards and risks as ordinarily are insured against by
other similarly situated Persons engaged in the same or similar businesses.
Borrowers also shall maintain business interruption (with respect to business
interruptions arising from loss or damage to property and not exclusively as a
result of the inability to schedule or conduct flights), public liability, and
product liability insurance, as well as insurance against larceny, embezzlement,
and criminal misappropriation. All such policies of insurance shall be in such
amounts and with such insurance companies as are reasonably satisfactory to
Agent. Borrowers shall deliver copies of all such policies to Agent with a
satisfactory lender's loss payable endorsement naming Agent as sole loss payee
(except with respect to aircraft owned or leased by Parent) or additional
insured, as appropriate. Each policy of insurance or endorsement shall contain a
clause requiring the insurer to give not less than (i) 7 days (or such shorter
period as required by Borrowers' insurers) prior written notice to Agent in the
event of cancellation of the policy for "War Risks and Allied Perils" and (ii)
30 days prior written notice to Agent in the event of cancellation of the policy
for any other reason whatsoever.
(b) Administrative Borrower shall give Agent prompt notice
(i) of any loss covered by such insurance with respect to Inventory, (ii) of any
other loss covered by such insurance reasonably believed by Borrowers to be in
excess of $100,000. Upon an Event of Default, Agent shall have the exclusive
right to adjust any losses payable under any such insurance policies in excess
of $500,000, without any liability to Borrowers whatsoever in respect of such
adjustments. Any monies received as payment for any loss under any insurance
policy mentioned above (other than liability insurance policies) or as payment
of any award or compensation for condemnation or taking by eminent domain, shall
be paid over to Agent to be applied at the option of the Required Lenders either
to the prepayment of the Obligations or shall
62
be disbursed to Administrative Borrower under staged payment terms reasonably
satisfactory to the Required Lenders for application to the cost of repairs,
replacements, or restorations. Any such repairs, replacements or restorations
shall be effected with reasonable promptness and the economic value, utility and
useful life of any such repaired, replaced or restored property shall not have
been materially diminished from that which existed immediately prior to such
damage or destruction. Such determination shall be made by Borrowers in the
exercise of Borrowers' reasonable business judgment and no independent appraisal
shall be required to be performed to ascertain the value of any repaired,
replaced or restored property so long as the repaired, restored or replacement
item performs substantially the same function as the item that it replaced; and
the repairs or replacement is undertaken in an arms-length transaction such that
the price of the repair, restoration or replacement equals or exceeds the amount
of insurance proceeds made available for the repair, replacement or restoration.
(c) Borrowers shall not take out separate insurance
concurrent in form or contributing in the event of loss with that required to be
maintained under this Section 6.8, unless Agent is included thereon as
additional insured with the loss payable to Agent under a lender's loss payable
endorsement or its equivalent. Administrative Borrower immediately shall notify
Agent whenever such separate insurance is taken out, specifying the insurer
thereunder and full particulars as to the policies evidencing the same, and
copies of such policies promptly shall be provided to Agent.
6.9 LOCATION OF INVENTORY AND EQUIPMENT. Keep the Inventory and
Equipment only at the locations identified on Schedule 5.5 or in-transit between
such locations; provided, however, that Administrative Borrower may amend
Schedule 5.5 so long as such amendment occurs by written notice to Agent not
less than 30 days prior to the date on which the Inventory or Equipment is moved
to such new location, so long as such new location is within the continental
United States, and so long as, at the time of such written notification, the
applicable Borrower provides any financing statements or fixture filings
necessary to perfect and continue perfected the Agent's Liens on such assets and
also provides to Agent a Collateral Access Agreement.
6.10 COMPLIANCE WITH LAWS. Comply with the requirements of all
applicable laws, rules, regulations, and orders of any Governmental Authority,
including the Fair Labor Standards Act and the Americans With Disabilities Act,
other than laws, rules, regulations, and orders the non-compliance with which,
individually or in the aggregate, would not result in and reasonably could not
be expected to result in a Material Adverse Change.
6.11 LEASES. Pay when due all rents and other amounts payable under
any leases to which any Borrower is a party or by which any Borrower's
properties and assets are bound, unless such payments are the subject of a
Permitted Protest.
6.12 BROKERAGE COMMISSIONS. Pay any and all brokerage commission or
finders fees incurred in connection with or as a result of Borrowers' obtaining
financing from the Lender Group under this Agreement. Borrowers agree and
acknowledge that payment of all such brokerage commissions or finders fees shall
be the sole responsibility of Borrowers, and each Borrower agrees to indemnify,
defend, and hold Agent and the Lender Group harmless from and
63
against any claim of any broker or finder arising out of Borrowers' obtaining
financing from the Lender Group under this Agreement.
6.13 EXISTENCE. At all times preserve and keep in full force and
effect each Borrower's valid existence and good standing and any rights and
franchises material to Borrowers' businesses.
6.14 ENVIRONMENTAL.
(a) Keep any property either owned or operated by any
Borrower free of any Environmental Liens or post bonds or other financial
assurances sufficient to satisfy the obligations or liability evidenced by such
Environmental Liens, (b) comply, in all material respects, with Environmental
Laws and provide to Agent documentation of such compliance which Agent
reasonably requests, (c) promptly notify Agent of any release of a Hazardous
Material of any reportable quantity from or onto property owned or operated by
any Borrower and take any Remedial Actions required to ▇▇▇▇▇ said release or
otherwise to come into compliance with applicable Environmental Law, and (d)
promptly provide Agent with written notice within 10 days of the receipt of any
of the following: (i) notice that an Environmental Lien has been filed against
any of the real or personal property of any Borrower, (ii) commencement of any
Environmental Action or notice that an Environmental Action will be filed
against any Borrower, and (iii) notice of a violation, citation, or other
administrative order which reasonably could be expected to result in a Material
Adverse Change.
6.15 DISCLOSURE UPDATES. Promptly and in no event later than 5
Business Days after obtaining knowledge thereof, (a) notify Agent if any written
information, exhibit, or report furnished to the Lender Group contained any
untrue statement of a material fact or omitted to state any material fact
necessary to make the statements contained therein not misleading in light of
the circumstances in which made, and (b) correct any defect or error that may be
discovered therein or in any Loan Document or in the execution, acknowledgement,
filing, or recordation thereof
6.16 EXTENSION OF SUBORDINATED DEBT. Not later than one hundred
twenty (120) days prior to the maturity of the Subordinated Debt, Borrowers
shall deliver to Agent an amendment to, extension of, refinancing of or other
modification to the Subordinated Debt, in form and upon terms and conditions
satisfactory to Agent in all respects.
6.17 MASTER ASSIGNMENT AGREEMENT. Borrowers will comply at all times
with the provisions of the Master Assignment Agreement. Parent will contribute
or otherwise transfer all spare parts Inventory to World Parts promptly after
the acquisition thereof, in accordance with the Master Assignment Agreement.
6.18 CREDIT MEMO. From and after the date ninety (90) days following
the Closing Date, Parent shall issue each Credit Memo within sixty (60) days
following the end of the month to which such Credit Memo relates.
64
7. NEGATIVE COVENANTS.
Each Borrower covenants and agrees that, so long as any credit
hereunder shall be available and until full and final payment of the
Obligations, Borrowers will not and will not permit any of their respective
Subsidiaries to do any of the following:
7.1 INDEBTEDNESS. Create, incur, assume, permit, guarantee, or
otherwise become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:
(a) Indebtedness evidenced by this Agreement and the other
Loan Documents, together with Indebtedness owed to Underlying Issuers with
respect to Underlying Letters of Credit;
(b) Indebtedness of Parent set forth on Schedule 5.20;
(c) Purchase Money Indebtedness of Parent so long as (i) the
proceeds of such Indebtedness are used to purchase aircrafts (including engines
and parts to support such aircrafts, provided that a list of serial numbers of
these parts is provided to Agent and excluded from the calculation of the
Borrowing Base) to be used in the ordinary course of Borrower's business, (ii)
the principal amount of such Indebtedness shall not exceed the fair market value
of the airplanes so purchased, (iii) the terms and conditions of such
Indebtedness do not, in Agent's reasonable judgment, materially impair the
prospects of repayment of the Obligations by Borrowers or materially impair
Borrowers' creditworthiness, (iv) Administrative Borrower has delivered to Agent
projections evidencing, to the satisfaction of Agent, that no Default or Event
of Default shall occur after the incurrence of such Indebtedness and during the
repayment thereof by Parent, (v) if requested by Agent, Borrowers shall have
delivered to Agent an intercreditor agreement duly executed by such lender, in
form and substance acceptable to Agent, and (vi) such Indebtedness is otherwise
on terms and conditions reasonably acceptable to Agent;
(d) Indebtedness of Parent pursuant to one or more loans
extended to Parent under Section 101(a)(1) of the Air Transportation Safety and
System Stabilization Act, P.L. 107-42, so long as (i) the proceeds of such
Indebtedness are used for Parent's ordinary working capital purposes, (ii) the
terms and conditions of such Indebtedness do not, in Agent's judgment,
materially impair the prospects of repayment of the Obligations by Parent or
materially impair Parent's creditworthiness, (iii) the interest rate and
amortization schedule for such Indebtedness are each acceptable to Agent, (iv)
Parent shall have delivered to Agent projections evidencing, to the satisfaction
of Agent, that no Default or Event of Default shall occur after the incurrence
of such Indebtedness and during the repayment thereof by Parent, (v) such
Indebtedness is subordinated in right of payment to the Obligations, and
includes subordination terms and conditions that are acceptable to Agent, and
(vi) such Indebtedness is otherwise on terms and conditions acceptable to Agent;
(e) Subordinated Debt pursuant to the Subordinated Note
Indenture and at all times unsecured and subordinated to the Obligations, and
any refinancing thereof in accordance with Section 6.16 hereof; and;
(f) refinancings, renewals, or extensions of Indebtedness
permitted under clauses (b), (c) and (d) of this Section 7.1 (and continuance or
renewal of any Permitted Liens
65
associated therewith) so long as: (i) the terms and conditions of such
refinancings, renewals, or extensions do not, in Agent's judgment, materially
impair the prospects of repayment of the Obligations by Borrowers or materially
impair Borrowers' creditworthiness, (ii) such refinancings, renewals, or
extensions do not result in an increase in the principal amount of, or interest
rate with respect to, the Indebtedness so refinanced, renewed, or extended,
(iii) such refinancings, renewals, or extensions do not result in a shortening
of the average weighted maturity of the Indebtedness so refinanced, renewed, or
extended, nor are they on terms or conditions, that, taken as a whole, are
materially more burdensome or restrictive to the applicable Borrower, and (iv)
if the Indebtedness that is refinanced, renewed, or extended was subordinated in
right of payment to the Obligations, then the terms and conditions of the
refinancing, renewal, or extension Indebtedness must include subordination terms
and conditions that are at least as favorable to the Lender Group as those that
were applicable to the refinanced, renewed, or extended Indebtedness.
7.2 LIENS. Create, incur, assume, or permit to exist, directly or
indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens (including Liens that are replacements of Permitted
Liens to the extent that the original Indebtedness is refinanced, renewed, or
extended under Section 7.1(f) and so long as the replacement Liens only encumber
those assets that secured the refinanced, renewed, or extended Indebtedness on
assets of Parent.
7.3 RESTRICTIONS ON FUNDAMENTAL CHANGES.
(a) Enter into any merger, consolidation, reorganization, or
recapitalization, or reclassify its Stock.
(b) Liquidate, wind up, or dissolve itself (or suffer any
liquidation or dissolution).
(c) Convey, sell, lease, license, assign, transfer, or
otherwise dispose of, in one transaction or a series of transactions, all or any
substantial part of its assets.
7.4 DISPOSAL OF ASSETS.
(a) Other than Permitted Dispositions, convey, sell, lease,
license, assign, transfer, or otherwise dispose of any of the assets of any
Borrower.
(b) In the event that the net proceeds of any disposition of
Inventory by any consignee of such Inventory exceed, with respect to (i) any
individual disposition, $2,500, Borrowers shall, or shall cause the consignee of
such Inventory to, forward the full amount of such net proceeds by wire transfer
in immediately available funds to the Agent's Account, and (ii) a series of
dispositions, related or unrelated, during any calendar year, $5,000 in the
aggregate, Borrowers shall, or shall cause the consignee of such Inventory to,
forward the amount of such net proceeds in excess of $5,000 by wire transfer in
immediately available funds to the Agent's Account.
7.5 CHANGE NAME. Change any Borrower's name, FEIN, corporate
structure, or identity, or add any new fictitious name; provided, however, that
a Borrower may change its
66
name upon at least 30 days prior written notice by Administrative Borrower to
Agent of such change and so long as, at the time of such written notification,
such Borrower provides any financing statements or fixture filings necessary to
perfect and continue perfected Agent's Liens.
7.6 GUARANTEE. Guarantee or otherwise become in any way liable with
respect to the obligations of any third Person except by endorsement of
instruments or items of payment for deposit to the account of Borrowers or which
are transmitted or turned over to Agent.
7.7 NATURE OF BUSINESS.
(a) Make any change in the principal nature of Borrowers'
business.
(b) Permit World Parts to engage in or conduct any business
or own any assets or incur or assume any debts or other liabilities, except for
the ownership of Inventory constituting spare parts and the contribution and
transfer of such Inventory to and from Parent pursuant to the Master Assignment
Agreement.
7.8 PREPAYMENTS AND AMENDMENTS.
(a) Except in connection with a refinancing permitted by
Section 7.1(f) or required by Section 6.16, prepay, redeem, defease, purchase,
or otherwise acquire any Indebtedness of any Borrower, other than the
Obligations in accordance with this Agreement,
(b) Except in connection with a refinancing permitted by
Section 7.1(f) or modification or refinancing of the Subordinated Debt required
pursuant to Section 6.16, directly or indirectly, amend, modify, alter,
increase, or change any of the terms or conditions of any agreement, instrument,
document, indenture, or other writing evidencing or concerning Indebtedness
permitted under Sections 7.1(b), (c), (d) or (e), and
(c) Amend or modify any term or provision of the Master
Assignment Agreement or Governing Documents of World Parts, or terminate the
Master Assignment Agreement.
7.9 CHANGE OF CONTROL. Cause, permit, or suffer, directly or
indirectly, any Change of Control.
7.10 CONSIGNMENTS. Consign any Inventory (except to the extent such
consigned Inventory is subject to a waiver agreement, in form and substance
satisfactory to Agent, duly executed by the consignee of such Inventory) or sell
any Inventory on ▇▇▇▇ and hold, sale or return, sale on approval, or other
conditional terms of sale.
7.11 DISTRIBUTIONS. Other than distributions or declaration and
payment of dividends by a Borrower to another Borrower, make any distribution or
declare or pay any dividends (in cash or other property, other than common
Stock) on, or purchase, acquire, redeem, or retire any of any Borrower's Stock,
of any class, whether now or hereafter outstanding.
7.12 ACCOUNTING METHODS. Modify or change its method of accounting
(other than as may be required to conform to GAAP) or enter into, modify, or
terminate any agreement
67
currently existing, or at any time hereafter entered into with any third party
accounting firm or service bureau for the preparation or storage of Borrowers'
accounting records without said accounting firm or service bureau agreeing to
provide Agent information regarding the Collateral or Borrowers' financial
condition.
7.13 INVESTMENTS. Except for Permitted Investments, directly or
indirectly, make or acquire any Investment, or incur any liabilities (including
contingent obligations) for or in connection with any Investment; provided,
however, that Administrative Borrower and its Subsidiaries shall not have
Permitted Investments (other than in the Cash Management Accounts) in deposit
accounts or Securities Accounts in excess of $5,000 outstanding at any one time
unless Administrative Borrower or any of its Subsidiaries, as applicable, and
the applicable securities intermediary or bank have entered into Control
Agreements or similar arrangements governing such Permitted Investments, as
Agent shall determine in its Permitted Discretion, to perfect (and further
establish) the Agent's Liens in such Permitted Investments; provided however,
that Agent acknowledges and agrees that no Control Agreement or Cash Management
Agreement shall be required with respect to any Securities Account or deposit
accounts located outside the United States so long as such amount invested or
deposited with respect thereto does not exceed $300,000 with respect to any
single Securities Account or deposit account, or $1,000,000 in the aggregate.
7.14 TRANSACTIONS WITH AFFILIATES. Directly or indirectly enter into
or permit to exist any transaction with any Affiliate of any Borrower except for
transactions that are in the ordinary course of Borrowers' business, upon fair
and reasonable terms, that are fully disclosed to Agent, and that are no less
favorable to Borrowers than would be obtained in an arm's length transaction
with a non-Affiliate.
7.15 SUSPENSION. Suspend or go out of a substantial portion of its
business.
7.16 [INTENTIONALLY OMITTED]
7.17 USE OF PROCEEDS. Use the proceeds of the Advances for any
purpose other than (a) on the Closing Date, (i) to repay in full the outstanding
principal, accrued interest, and accrued fees and expenses owing to Existing
Lender, and (ii) to pay transactional fees, costs, and expenses incurred in
connection with this Agreement, the other Loan Documents, and the transactions
contemplated hereby and thereby, and (b) from and after the Closing Date,
consistent with the terms and conditions hereof, for its lawful and permitted
purposes.
7.18 CHANGE IN LOCATION OF CHIEF EXECUTIVE OFFICE; INVENTORY AND
EQUIPMENT WITH BAILEES. Relocate its chief executive office to a new location
without Administrative Borrower providing 30 days prior written notification
thereof to Agent and so long as, at the time of such written notification, the
applicable Borrower provides any financing statements or fixture filings
necessary to perfect and continue perfected the Agent's Liens and also provides
to Agent a Collateral Access Agreement with respect to such new location. The
Inventory and Equipment shall not at any time now or hereafter be stored with a
bailee, warehouseman, or similar party without Agent's prior written consent.
68
7.19 SECURITIES ACCOUNTS. Establish or maintain any Securities
Account unless Agent shall have received a Control Agreement in respect of such
Securities Account (unless a Control Agreement is expressly not required by
Section 7.13). Borrowers agree to not transfer assets out of any Securities
Account; provided, however, that, so long as no Event of Default has occurred
and is continuing or would result therefrom, Borrowers may use such assets (and
the proceeds thereof) to the extent not prohibited by this Agreement.
7.20 FINANCIAL COVENANTS.
(a) Fail to maintain:
(i) Minimum EBITDA. EBITDA, measured on a monthly
basis, of not less than the required amount set forth in the
following table for the applicable period set forth opposite
thereto;
--------------------------------------------------------------------------------
Applicable Amount Applicable Period
--------------------------------------------------------------------------------
$ 10,634,000 For the 12 month period
ending December 31, 2002
--------------------------------------------------------------------------------
$ 9,158,000 For the 12 month period
ending January 31, 2003
--------------------------------------------------------------------------------
$ 6,145,000 For the 12 month period
ending February 28, 2003
--------------------------------------------------------------------------------
$ 2,313,000 For the 12 month period
ending March 31, 2003
--------------------------------------------------------------------------------
$ 5,452,000 For the 12 month period
ending April 30, 2003
--------------------------------------------------------------------------------
$ 1,542,000 For the 12 month period
ending May 31, 2003
--------------------------------------------------------------------------------
$ (1,070,000) For the 12 month period
ending June 30, 2003
--------------------------------------------------------------------------------
$ 1,819,000 For the 12 month period
ending July 31, 2003
--------------------------------------------------------------------------------
$ 1,476,000 For the 12 month period
ending August 31, 2003
--------------------------------------------------------------------------------
$ 325,000 For the 12 month period
ending September 30, 2003
--------------------------------------------------------------------------------
$ 3,669,000 For the 12 month period
ending October 31, 2003
--------------------------------------------------------------------------------
69
--------------------------------------------------------------------------------
Applicable Amount Applicable Period
--------------------------------------------------------------------------------
$ 7,692,000 For the 12 month period
ending November 30, 2003
--------------------------------------------------------------------------------
$ 9,789,000 For the 12 month period
ending December 31, 2003
--------------------------------------------------------------------------------
to be set at 85% of Borrowers' Projections (or For the 12 month period
115% of Borrowers' Projections to the extent such most recently ending as of
projected amount is a negative number) based upon the last day of each month
Projections satisfactory to Agent thereafter
--------------------------------------------------------------------------------
(ii) Minimum Net Worth. Net Worth of at least the
required amount set forth in the following table as of the
applicable date set forth opposite thereto:
--------------------------------------------------------------------------------
Applicable Amount Applicable Date
--------------------------------------------------------------------------------
$ (31,657,000) December 31, 2002
--------------------------------------------------------------------------------
$ (34,555,000) January 31, 2003
--------------------------------------------------------------------------------
$ (37,670,000) February 28, 2003
--------------------------------------------------------------------------------
$ (36,906,000) March 31, 2003
--------------------------------------------------------------------------------
$ (37,820,000) April 30, 2003
--------------------------------------------------------------------------------
$ (39,663,000) May 31, 2003
--------------------------------------------------------------------------------
$ (38,767,000) June 30, 2003
--------------------------------------------------------------------------------
$ (38,836,000) July 31, 2003
--------------------------------------------------------------------------------
$ (37,688,000) August 31, 2003
--------------------------------------------------------------------------------
$ (35,333,000) September 30, 2003
--------------------------------------------------------------------------------
$ (32,178,000) October 31, 2003
--------------------------------------------------------------------------------
$ (29,731,000) November 30, 2003
--------------------------------------------------------------------------------
$ (28,682,000) December 31, 2003
--------------------------------------------------------------------------------
to be set at 85% of Borrowers' Projections (or the last day of each month
115% of Borrowers' Projections to the extent such thereafter
projected amount is a negative number) based upon
Projections satisfactory to Agent
--------------------------------------------------------------------------------
70
(iii) Required Availability. Required Availability (A)
at all times from and after the first day of each calendar month
through and including the seventh day of each calendar month, of
not less than $8,000,000, and (B) at all times after the seventh
day of each calendar month through and including the last day of
each calendar month of not less than $10,000,000.
(b) Make:
(i) Capital Expenditures. Capital expenditures in
any fiscal year in excess of the amount set forth in the
following table for the applicable period:
--------------------------------------------------------
Fiscal Year 2002 Fiscal Year 2003 for each Fiscal
Year thereafter
--------------------------------------------------------
$3,328,000 $3,450,000 to be set at 115%
of Borrowers'
Projections based
upon Projections
satisfactory to
Agent
--------------------------------------------------------
provided, however, that, without giving effect to the limit set forth above, not
later than the date which is one hundred and eighty (180) days from the Closing
Date, Parent may make one or more capital expenditures in an aggregate amount
not to exceed $2,850,000 to purchase that certain aircraft bearing serial number
46836 and FAA identification number N107WA.
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an
event of default (each, an "Event of Default") under this Agreement:
8.1 If Borrowers fail to pay when due and payable, or when declared
due and payable, all or any portion of the Obligations (whether of principal,
interest (including any interest which, but for the provisions of the Bankruptcy
Code, would have accrued on such amounts), fees and charges due the Lender
Group, reimbursement of Lender Group Expenses, or other amounts constituting
Obligations);
8.2 If Borrowers fail to perform, keep, or observe any term,
provision, condition, covenant, or agreement (a) contained in Section 6.2 hereof
(Collateral Reporting) within 5 days of the date due, (b) contained in Section
6.3 hereof (Financial Statements, Reports, Certificates), Section 6.5 hereof
(Return), or Section 6.9 hereof (Location of Inventory and Equipment), within 15
days of the date when due or when such Default occurs, or (c) contained in any
other provision of this Agreement or in any of the other Loan Documents;
8.3 If any material portion of any Borrower's or any of its
Subsidiaries' assets is attached, seized, subjected to a writ or distress
warrant, levied upon, or comes into the possession of any third Person;
71
8.4 If an Insolvency Proceeding is commenced by any Borrower or any
of its Subsidiaries;
8.5 If an Insolvency Proceeding is commenced against any Borrower,
or any of its Subsidiaries, and any of the following events occur: (a) the
applicable Borrower or the Subsidiary consents to the institution of the
Insolvency Proceeding against it, (b) the petition commencing the Insolvency
Proceeding is not timely controverted, (c) the petition commencing the
Insolvency Proceeding is not dismissed within 60 calendar days of the date of
the filing thereof; provided, however, that, during the pendency of such period,
Agent (including any successor agent) and each other member of the Lender Group
shall be relieved of their obligation to extend credit hereunder, (d) an interim
trustee is appointed to take possession of all or any substantial portion of the
properties or assets of, or to operate all or any substantial portion of the
business of, any Borrower or any of its Subsidiaries, or (e) an order for relief
shall have been entered therein;
8.6 If any Borrower or any of its Subsidiaries is enjoined,
restrained, or in any way prevented by court order from continuing to conduct
all or any material part of its business affairs;
8.7 If a notice of Lien, levy, or assessment involving an amount in
controversy in excess of $150,000, individually or in the aggregate, is filed of
record with respect to any Borrower's or any of its Subsidiaries' assets by the
United States, or any department, agency, or instrumentality thereof, or by any
state, county, municipal, or governmental agency, or if any taxes or debts owing
at any time hereafter in excess of $150,000, individually or in the aggregate,
to any one or more of such entities becomes a Lien, whether ▇▇▇▇▇▇ or otherwise,
upon any Borrower's or any of its Subsidiaries' assets and the same is not paid
on the payment date thereof;
8.8 If a judgment or other claim in an amount in excess of $500,000,
individually or $1,000,000 in the aggregate, becomes a Lien or encumbrance upon
any material portion of any Borrower's or any of its Subsidiaries' properties or
assets;
8.9 If there is a default in any material agreement to which any
Borrower or any of its Subsidiaries is a party and such default (a) occurs at
the final maturity of the obligations thereunder, or (b) results in a right by
the other party thereto, irrespective of whether exercised, to accelerate the
maturity of the applicable Borrower's or its Subsidiaries' obligations
thereunder, to terminate such agreement, or to refuse to renew such agreement
pursuant to an automatic renewal right therein;
8.10 If any Borrower or any of its Subsidiaries makes any payment on
account of Indebtedness that has been contractually subordinated in right of
payment to the payment of the Obligations, except to the extent such payment is
permitted by the terms of the subordination provisions applicable to such
Indebtedness;
8.11 If any misstatement or misrepresentation exists now or hereafter
in any warranty, representation, statement, or Record made to the Lender Group
by any Borrower, its
72
Subsidiaries, or any officer, employee, agent, or director of any Borrower or
any of its Subsidiaries;
8.12 If there is a default under, or non-renewal of, the Air Force
Mobility Agreement for any reason or if there is an event of default under any
aircraft lease agreement for any reason;
8.13 If this Agreement or any other Loan Document that purports to
create a Lien, shall, for any reason other than conduct by Agent or Lenders,
fail or cease to create a valid and perfected and, except to the extent
permitted by the terms hereof or thereof, first priority Lien on or security
interest in the Collateral covered hereby or thereby;
8.14 Any provision of any Loan Document shall at any time for any
reason be declared to be null and void, or the validity or enforceability
thereof shall be contested by any Borrower, or a proceeding shall be commenced
by any Borrower, or by any Governmental Authority having jurisdiction over any
Borrower, seeking to establish the invalidity or unenforceability thereof, or
any Borrower shall deny that any Borrower has any liability or obligation
purported to be created under any Loan Document;
8.15 If, within thirty (30) days following the date that the terms
and conditions governing the employment of Borrowers' unionized employees that
prohibit any of Borrowers' unionized employees from striking or taking other
labor-related action with respect to services provided by Parent pursuant to the
Air Mobility Command Agreement are no longer enforceable or in effect, Borrowers
shall fail to deliver to Agent copies of renewed labor contracts prohibiting
such unionized employees from striking or taking other labor-related action with
respect to services provided by Parent pursuant to the Air Mobility Command
Agreement; or
8.16 If there shall occur a default or breach under the Master
Assignment Agreement.
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.
9.1 RIGHTS AND REMEDIES. Upon the occurrence, and during the
continuation, of an Event of Default, the Required Lenders (at their election
but without notice of their election and without demand) may authorize and
instruct Agent to do any one or more of the following on behalf of the Lender
Group (and Agent, acting upon the instructions of the Required Lenders, shall do
the same on behalf of the Lender Group), all of which are authorized by
Borrowers:
(a) Declare all Obligations, whether evidenced by this
Agreement, by any of the other Loan Documents, or otherwise, immediately due and
payable;
(b) Cease advancing money or extending credit to or for the
benefit of Borrowers under this Agreement, under any of the Loan Documents, or
under any other agreement between Borrowers and the Lender Group;
(c) Terminate this Agreement and any of the other Loan
Documents as to any future liability or obligation of the Lender Group, but
without affecting any of the Agent's Liens in the Collateral and without
affecting the Obligations;
73
(d) Settle or adjust disputes and claims directly with
Account Debtors for amounts and upon terms which Agent considers advisable, and
in such cases, Agent will credit the Loan Account with only the net amounts
received by Agent in payment of such disputed Accounts after deducting all
Lender Group Expenses incurred or expended in connection therewith;
(e) Cause Borrowers to hold all returned Inventory in trust
for the Lender Group, segregate all returned Inventory from all other assets of
Borrowers or in Borrowers' possession and conspicuously label said returned
Inventory as the property of the Lender Group;
(f) Without notice to or demand upon any Borrower, make such
payments and do such acts as Agent considers necessary or reasonable to protect
its security interests in the Collateral. Each Borrower agrees to assemble the
Personal Property Collateral if Agent so requires, and to make the Personal
Property Collateral available to Agent at a place that Agent may designate which
is reasonably convenient to both parties. Each Borrower authorizes Agent to
enter the premises where the Personal Property Collateral is located, to take
and maintain possession of the Personal Property Collateral, or any part of it,
and to pay, purchase, contest, or compromise any Lien that in Agent's
determination appears to conflict with the Agent's Liens and to pay all expenses
incurred in connection therewith and to charge Borrowers' Loan Account therefor.
With respect to any of Borrowers' owned or leased premises, each Borrower hereby
grants Agent a license to enter into possession of such premises and to occupy
the same, without charge, in order to exercise any of the Lender Group's rights
or remedies provided herein, at law, in equity, or otherwise;
(g) Without notice to any Borrower (such notice being
expressly waived), and without constituting a retention of any collateral in
satisfaction of an obligation (within the meaning of the Code), set off and
apply to the Obligations any and all (i) balances and deposits of any Borrower
held by the Lender Group (including any amounts received in the Cash Management
Accounts), or (ii) Indebtedness at any time owing to or for the credit or the
account of any Borrower held by the Lender Group;
(h) Hold, as cash collateral, any and all balances and
deposits of any Borrower held by the Lender Group, and any amounts received in
the Cash Management Accounts, to secure the full and final repayment of all of
the Obligations;
(i) Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell (in the manner provided for
herein) the Personal Property Collateral. Each Borrower hereby grants to Agent a
non-exclusive license or other right to use, without charge, such Borrower's
labels, patents, copyrights, trade secrets, trade names, trademarks, service
marks, and advertising matter, or any property of a similar nature, as it
pertains to the Personal Property Collateral, in completing production of,
advertising for sale, and selling any Personal Property Collateral and such
Borrower's rights under all licenses and all franchise agreements shall inure to
the Lender Group's benefit;
(j) Sell the Personal Property Collateral at either a public
or private sale, or both, by way of one or more contracts or transactions, for
cash or on terms, in such manner and
74
at such places (including Borrowers' premises) as Agent determines is
commercially reasonable. It is not necessary that the Personal Property
Collateral be present at any such sale;
(k) Agent shall give notice of the disposition of the
Personal Property Collateral as follows:
(i) Agent shall give Administrative Borrower (for
the benefit of the applicable Borrower) a notice in writing of
the time and place of public sale, or, if the sale is a private
sale or some other disposition other than a public sale is to be
made of the Personal Property Collateral, the time on or after
which the private sale or other disposition is to be made; and
(ii) The notice shall be personally delivered or
mailed, postage prepaid, to Administrative Borrower as provided
in Section 12, at least 10 days before the earliest time of
disposition set forth in the notice; no notice needs to be given
prior to the disposition of any portion of the Personal Property
Collateral that is perishable or threatens to decline speedily
in value or that is of a type customarily sold on a recognized
market;
(l) Agent, on behalf of the Lender Group, may credit
bid and purchase at any public sale;
(m) Agent may seek the appointment of a receiver or keeper
to take possession of all or any portion of the Collateral or to operate same
and, to the maximum extent permitted by law, may seek the appointment of such a
receiver without the requirement of prior notice or a hearing;
(n) The Lender Group shall have all other rights and
remedies available to it at law or in equity pursuant to any other Loan
Documents; and
(o) Any deficiency that exists after disposition of the
Personal Property Collateral as provided above will be paid immediately by
Borrowers. Any excess will be returned, without interest and subject to the
rights of third Persons, by Agent to Administrative Borrower (for the benefit of
the applicable Borrower).
9.2 REMEDIES CUMULATIVE. The rights and remedies of the Lender Group
under this Agreement, the other Loan Documents, and all other agreements shall
be cumulative. The Lender Group shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by the Lender Group of one right or remedy shall be deemed an election,
and no waiver by the Lender Group of any Event of Default shall be deemed a
continuing waiver. No delay by the Lender Group shall constitute a waiver,
election, or acquiescence by it.
10. TAXES AND EXPENSES.
If any Borrower fails to pay any monies (whether taxes,
assessments, insurance premiums, or, in the case of leased properties or assets,
rents or other amounts payable under such leases) due to third Persons, or fails
to make any deposits or furnish any required proof of
75
payment or deposit, all as required under the terms of this Agreement, then,
Agent, in its sole discretion and without prior notice to any Borrower, may do
any or all of the following: (a) make payment of the same or any part thereof,
(b) set up such reserves in Borrowers' Loan Account as Agent deems necessary to
protect the Lender Group from the exposure created by such failure, or (c) in
the case of the failure to comply with Section 6.8 hereof, obtain and maintain
insurance policies of the type described in Section 6.8 and take any action with
respect to such policies as Agent deems prudent. Any such amounts paid by Lender
shall constitute Lender Group Expenses and any such payments shall not
constitute an agreement by the Lender Group to make similar payments in the
future or a waiver by the Lender Group of any Event of Default under this
Agreement. Agent need not inquire as to, or contest the validity of, any such
expense, tax, or Lien and the receipt of the usual official notice for the
payment thereof shall be conclusive evidence that the same was validly due and
owing.
11. WAIVERS; INDEMNIFICATION.
11.1 DEMAND; PROTEST; ETC. Except for notices expressly provided for
herein or in the Loan Documents, each Borrower waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment,
nonpayment at maturity, release, compromise, settlement, extension, or renewal
of documents, instruments, chattel paper, and guarantees at any time held by the
Lender Group on which any such Borrower may in any way be liable.
11.2 THE LENDER GROUP'S LIABILITY FOR COLLATERAL. Except with respect
to the gross negligence or intentional misconduct of the Lender Group, each
Borrower hereby agrees that: (a) so long as the Lender Group complies with its
obligations, if any, under the Code, Agent shall not in any way or manner be
liable or responsible for: (i) the safekeeping of the Collateral, (ii) any loss
or damage thereto occurring or arising in any manner or fashion from any cause,
(iii) any diminution in the value thereof, or (iv) any act or default of any
carrier, warehouseman, bailee, forwarding agency, or other Person, and (b) all
risk of loss, damage, or destruction of the Collateral shall be borne by
Borrowers.
11.3 INDEMNIFICATION. Each Borrower shall pay, indemnify, defend, and
hold the Agent-Related Persons, the Lender Related Persons with respect to each
Lender, each Participant, and each of their respective officers, directors,
employees, agents, and attorneys-in-fact (each, an "Indemnified Person")
harmless (to the fullest extent permitted by law) from and against any and all
claims, demands, suits, actions, investigations, proceedings, and damages, and
all reasonable attorneys fees and disbursements and other costs and expenses
actually incurred in connection therewith (as and when they are incurred and
irrespective of whether suit is brought), at any time asserted against, imposed
upon, or incurred by any of them (a) in connection with or as a result of or
related to the execution, delivery, enforcement, performance, or administration
of this Agreement, any of the other Loan Documents, or the transactions
contemplated hereby or thereby, and (b) with respect to any investigation,
litigation, or proceeding related to this Agreement, any other Loan Document, or
the use of the proceeds of the credit provided hereunder (irrespective of
whether any Indemnified Person is a party thereto), or any act, omission, event,
or circumstance in any manner related thereto (all the foregoing, collectively,
the "Indemnified Liabilities"). The foregoing to the contrary notwithstanding,
Borrowers shall have no obligation to any Indemnified Person under this Section
11.3 with respect to any Indemnified Liability that a court of competent
jurisdiction finally determines to
76
have resulted from the gross negligence or willful misconduct of such
Indemnified Person. This provision shall survive the termination of this
Agreement and the repayment of the Obligations. If any Indemnified Person makes
any payment to any other Indemnified Person with respect to an Indemnified
Liability as to which Borrowers were required to indemnify the Indemnified
Person receiving such payment, the Indemnified Person making such payment is
entitled to be indemnified and reimbursed by Borrowers with respect thereto.
WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED
PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART CAUSED
BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR
OF ANY OTHER PERSON.
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or
demands by Borrowers or Agent to the other relating to this Agreement or any
other Loan Document shall be in writing and (except for financial statements and
other informational documents which may be sent by first-class mail, postage
prepaid) shall be personally delivered or sent by registered or certified mail
(postage prepaid, return receipt requested), overnight courier, electronic mail
(at such email addresses as Administrative Borrower or Agent, as applicable, may
designate to each other in accordance herewith), or telefacsimile to Borrowers
in care of Administrative Borrower or to Agent, as the case may be, at its
address set forth below:
If to Administrative Borrower: WORLD AIRWAYS, INC.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Financial
Officer
Fax No. ▇▇▇.▇▇▇.▇▇▇▇
with copies to: WORLD AIRWAYS, INC.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
Fax No. ▇▇▇.▇▇▇.▇▇▇▇
POWELL, GOLDSTEIN, ▇▇▇▇▇▇ &
▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇,
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Fax No. ▇▇▇.▇▇▇.▇▇▇▇
If to Agent: FOOTHILL CAPITAL CORPORATION
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
Attn: Business Finance
Division Manager
Fax No. ▇▇▇.▇▇▇.▇▇▇▇
77
FOOTHILL CAPITAL CORPORATION
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇.▇.,
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Business Finance
Division
Fax No. ▇▇▇.▇▇▇.▇▇▇▇
with copies to: PAUL, HASTINGS, ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇,
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇. ▇▇▇▇▇, Esq.
Fax No. ▇▇▇.▇▇▇.▇▇▇▇
Agent and Borrowers may change the address at which they are to
receive notices hereunder, by notice in writing in the foregoing manner given to
the other party. All notices or demands sent in accordance with this Section 12,
other than notices by Agent in connection with enforcement rights against the
Collateral under the provisions of the Code, shall be deemed received on the
earlier of the date of actual receipt or 3 Business Days after the deposit
thereof in the mail. Each Borrower acknowledges and agrees that notices sent by
the Lender Group in connection with the exercise of enforcement rights against
Collateral under the provisions of the Code shall be deemed sent when deposited
in the mail or personally delivered, or, where permitted by law, transmitted by
telefacsimile or any other method set forth above.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN
RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND
ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO
WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR
THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF GEORGIA.
(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS
ARISING IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE
TRIED AND LITIGATED ONLY IN A GEORGIA STATE COURT OR A SUPERIOR COURT LOCATED IN
▇▇▇▇▇▇ COUNTY, GEORGIA AND THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF GEORGIA, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT
AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT'S OPTION, IN
THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE
SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. BORROWERS AND THE LENDER GROUP
WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO
ASSERT THE DOCTRINE
78
OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS
BROUGHT IN ACCORDANCE WITH THIS SECTION 13(b).
(c) TO THE EXTENT PERMITTED BY LAW, BORROWERS AND THE LENDER
GROUP HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE
TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. BORROWERS
AND THE LENDER GROUP REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE
FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
14.1 ASSIGNMENTS AND PARTICIPATIONS.
(a) Any Lender may, with the written consent of Agent
(provided that no written consent of Agent shall be required in connection with
any assignment and delegation by a Lender to an Eligible Transferee), assign and
delegate to one or more assignees (each an "Assignee") all, or any ratable part
of all, of the Obligations, the Revolver Commitments and the other rights and
obligations of such Lender hereunder and under the other Loan Documents, in a
minimum amount of $5,000,000; provided, however, that Borrowers and Agent may
continue to deal solely and directly with such Lender in connection with the
interest so assigned to an Assignee until (i) written notice of such assignment,
together with payment instructions, addresses, and related information with
respect to the Assignee, have been given to Administrative Borrower and Agent by
such Lender and the Assignee, (ii) such Lender and its Assignee have delivered
to Administrative Borrower and Agent an Assignment and Acceptance in form and
substance satisfactory to Agent, and (iii) the assignor Lender or Assignee has
paid to Agent for Agent's separate account a processing fee in the amount of
$5,000; provided, further, however, that prior to an Event of Default, no Lender
shall, without the consent of Administrative Borrower, assign all, or any
ratable part of all, of the Obligations, the Revolver Commitments and the other
rights and obligations of such Lender hereunder and under the other Loan
Documents to any Person reasonably determined by Agent to be engaged principally
in the same business as Parent. Anything contained herein to the contrary
notwithstanding, the consent of Agent shall not be required (and payment of any
fees shall not be required) if such assignment is in connection with any merger,
consolidation, sale, transfer, or other disposition of all or any substantial
portion of the business or loan portfolio of such Lender.
(b) From and after the date that Agent notifies the assignor
Lender (with a copy to Administrative Borrower) that it has received an executed
Assignment and Acceptance and payment of the above-referenced processing fee,
(i) the Assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, shall have the rights and obligations of a Lender
under the Loan Documents, and (ii) the assignor Lender shall, to the extent that
rights and obligations
79
hereunder and under the other Loan Documents have been assigned by it pursuant
to such Assignment and Acceptance, relinquish its rights (except with respect to
Section 11.3 hereof) and be released from its obligations under this Agreement
(and in the case of an Assignment and Acceptance covering all or the remaining
portion of an assigning Lender's rights and obligations under this Agreement and
the other Loan Documents, such Lender shall cease to be a party hereto and
thereto), and such assignment shall affect a novation between Borrowers and the
Assignee.
(c) By executing and delivering an Assignment and
Acceptance, the assigning Lender thereunder and the Assignee thereunder confirm
to and agree with each other and the other parties hereto as follows: (1) other
than as provided in such Assignment and Acceptance, such assigning Lender makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto, (2) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of
Borrowers or the performance or observance by Borrowers of any of their
obligations under this Agreement or any other Loan Document furnished pursuant
hereto, (3) such Assignee confirms that it has received a copy of this
Agreement, together with such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance, (4) such Assignee will, independently and without
reliance upon Agent, such assigning Lender or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement, (5) such Assignee appoints and authorizes Agent to take such
actions and to exercise such powers under this Agreement as are delegated to
Agent, by the terms hereof, together with such powers as are reasonably
incidental thereto, and (6) such Assignee agrees that it will perform all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Lender.
(d) Immediately upon each Assignee's making its processing
fee payment under the Assignment and Acceptance and receipt and acknowledgment
by Agent of such fully executed Assignment and Acceptance, this Agreement shall
be deemed to be amended to the extent, but only to the extent, necessary to
reflect the addition of the Assignee and the resulting adjustment of the
Revolver Commitments arising therefrom. The Revolver Commitment allocated to
each Assignee shall reduce such Revolver Commitments of the assigning Lender pro
tanto.
(e) Any Lender may at any time, with the written consent of
Agent, sell to one or more commercial banks, financial institutions, or other
Persons not Affiliates of such Lender (a "Participant") participating interests
in its Obligations, the Revolver Commitment, and the other rights and interests
of that Lender (the "Originating Lender") hereunder and under the other Loan
Documents (provided that no written consent of Agent shall be required in
connection with any sale of any such participating interests by a Lender to an
Eligible Transferee); provided, however, that (i) the Originating Lender shall
remain a "Lender" for all purposes of this Agreement and the other Loan
Documents and the Participant receiving the participating interest in the
Obligations, the Revolver Commitments, and the other rights and interests of the
Originating Lender hereunder shall not constitute a "Lender" hereunder or under
the other Loan
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Documents and the Originating Lender's obligations under this Agreement shall
remain unchanged, (ii) the Originating Lender shall remain solely responsible
for the performance of such obligations, (iii) Borrowers, Agent, and the Lenders
shall continue to deal solely and directly with the Originating Lender in
connection with the Originating Lender's rights and obligations under this
Agreement and the other Loan Documents, (iv) no Lender shall transfer or grant
any participating interest under which the Participant has the right to approve
any amendment to, or any consent or waiver with respect to, this Agreement or
any other Loan Document, except to the extent such amendment to, or consent or
waiver with respect to this Agreement or of any other Loan Document would (A)
extend the final maturity date of the Obligations hereunder in which such
Participant is participating, (B) reduce the interest rate applicable to the
Obligations hereunder in which such Participant is participating, (C) release
all or a material portion of the Collateral or guaranties (except to the extent
expressly provided herein or in any of the Loan Documents) supporting the
Obligations hereunder in which such Participant is participating, (D) postpone
the payment of, or reduce the amount of, the interest or fees payable to such
Participant through such Lender, or (E) change the amount or due dates of
scheduled principal repayments or prepayments or premiums; and (v) all amounts
payable by Borrowers hereunder shall be determined as if such Lender had not
sold such participation; except that, if amounts outstanding under this
Agreement are due and unpaid, or shall have been declared or shall have become
due and payable upon the occurrence of an Event of Default, each Participant
shall be deemed to have the right of set-off in respect of its participating
interest in amounts owing under this Agreement to the same extent as if the
amount of its participating interest were owing directly to it as a Lender under
this Agreement. The rights of any Participant only shall be derivative through
the Originating Lender with whom such Participant participates and no
Participant shall have any rights under this Agreement or the other Loan
Documents or any direct rights as to the other Lenders, Agent, Borrowers, the
Collections, the Collateral, or otherwise in respect of the Obligations. No
Participant shall have the right to participate directly in the making of
decisions by the Lenders among themselves.
(f) In connection with any such assignment or participation
or proposed assignment or participation, a Lender may disclose all documents and
information which it now or hereafter may have relating to Borrowers or
Borrowers' business.
(g) Any other provision in this Agreement notwithstanding,
any Lender may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement in favor of any
Federal Reserve Bank in accordance with Regulation A of the Federal Reserve Bank
or U.S. Treasury Regulation 31 CFR Section203.14, and such Federal Reserve Bank
may enforce such pledge or security interest in any manner permitted under
applicable law.
14.2 SUCCESSORS. This Agreement shall bind and inure to the benefit
of the respective successors and assigns of each of the parties; provided,
however, that Borrowers may not assign this Agreement or any rights or duties
hereunder without the Lenders' prior written consent and any prohibited
assignment shall be absolutely void ab initio. No consent to assignment by the
Lenders shall release any Borrower from its Obligations. A Lender may assign
this Agreement and the other Loan Documents and its rights and duties hereunder
and thereunder pursuant to Section 14.1 hereof and, except as expressly required
pursuant to Section 14.1 hereof, no consent or approval by any Borrower is
required in connection with any such assignment.
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15. AMENDMENTS; WAIVERS.
15.1 AMENDMENTS AND WAIVERS. No amendment or waiver of any provision
of this Agreement or any other Loan Document, and no consent with respect to any
departure by Borrowers therefrom, shall be effective unless the same shall be in
writing and signed by the Required Lenders (or by Agent at the written request
of the Required Lenders) and Administrative Borrower (on behalf of all
Borrowers) and then any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided,
however, that no such waiver, amendment, or consent shall, unless in writing and
signed by all of the Lenders affected thereby and Administrative Borrower (on
behalf of all Borrowers) and acknowledged by Agent, do any of the following:
(a) increase or extend any Revolver Commitment of any
Lender,
(b) postpone or delay any date fixed by this Agreement or
any other Loan Document for any payment of principal, interest, fees, or other
amounts due hereunder or under any other Loan Document,
(c) reduce the principal of, or the rate of interest on, any
loan or other extension of credit hereunder, or reduce any fees or other amounts
payable hereunder or under any other Loan Document,
(d) change the percentage of the Revolver Commitments that
is required to take any action hereunder,
(e) amend this Section or any provision of the Agreement
providing for consent or other action by all Lenders,
(f) release Collateral other than as permitted by Section
16.12,
(g) change the definition of "Required Lenders",
(h) contractually subordinate any of the Agent's Liens,
(i) release any Borrower from any obligation for the payment
of money, or
(j) change the definition of Borrowing Base or the
definitions of Eligible Accounts, Eligible Inventory, Maximum Revolver Amount or
change Section 2.1(b); or
(k) amend any of the provisions of Section 16.
and, provided further, however, that no amendment, waiver or consent shall,
unless in writing and signed by Agent, Issuing Lender, or Swing Lender, affect
the rights or duties of Agent, Issuing Lender, or Swing Lender, as applicable,
under this Agreement or any other Loan Document. The foregoing notwithstanding,
any amendment, modification, waiver, consent, termination, or release of, or
with respect to, any provision of this Agreement or any other Loan Document that
relates only to the relationship of the Lender Group among themselves, and that
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does not affect the rights or obligations of Borrowers, shall not require
consent by or the agreement of Borrowers.
15.2 REPLACEMENT OF HOLDOUT LENDER.
If any action to be taken by the Lender Group or Agent hereunder
requires the unanimous consent, authorization, or agreement of all Lenders, and
a Lender ("Holdout Lender") fails to give its consent, authorization, or
agreement, then Agent, upon at least 5 Business Days prior irrevocable notice to
the Holdout Lender, may permanently replace the Holdout Lender with one or more
substitute Lenders (each, a "Replacement Lender"), and the Holdout Lender shall
have not right to refuse to be replaced hereunder. Such notice to replace the
Holdout Lender shall specify an effective date for such replacement, which date
shall not be later than 15 Business Days after the date such notice is given.
Prior to the effective date of such replacement, the Holdout
Lender and each Replacement Lender shall execute and deliver an Assignment and
Acceptance Agreement, subject only to the Holdout Lender being repaid its share
of the outstanding Obligations (including an assumption of its Pro Rata Share of
the Risk Participation Liability) without any premium or penalty of any kind
whatsoever. If the Holdout Lender shall refuse or fail to execute and deliver
any such Assignment and Acceptance Agreement prior to the effective date of such
replacement, the Holdout Lender shall be deemed to have executed and delivered
such Assignment and Acceptance Agreement. The replacement of any Holdout Lender
shall be made in accordance with the terms of Section 14.1. Until such time as
the Replacement Lenders shall have acquired all of the Obligations, the Revolver
Commitments, and the other rights and obligations of the Holdout Lender
hereunder and under the other Loan Documents, the Holdout Lender shall remain
obligated to make the Holdout Lender's Pro Rata Share of Advances and to
purchase a participation in each Letter of Credit, in an amount equal to its Pro
Rata Share of the Risk Participation Liability of such Letter of Credit.
15.3 NO WAIVERS; CUMULATIVE REMEDIES. No failure by Agent or any
Lender to exercise any right, remedy, or option under this Agreement or any
other Loan Document, or delay by Agent or any Lender in exercising the same,
will operate as a waiver thereof. No waiver by Agent or any Lender will be
effective unless it is in writing, and then only to the extent specifically
stated. No waiver by Agent or any Lender on any occasion shall affect or
diminish Agent's and each Lender's rights thereafter to require strict
performance by Borrowers of any provision of this Agreement. Agent's and each
Lender's rights under this Agreement and the other Loan Documents will be
cumulative and not exclusive of any other right or remedy that Agent or any
Lender may have.
16. AGENT; THE LENDER GROUP.
16.1 APPOINTMENT AND AUTHORIZATION OF AGENT. Each Lender hereby
designates and appoints Foothill as its representative under this Agreement and
the other Loan Documents and each Lender hereby irrevocably authorizes Agent to
take such action on its behalf under the provisions of this Agreement and each
other Loan Document and to exercise such powers and perform such duties as are
expressly delegated to Agent by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto. Agent
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agrees to act as such on the express conditions contained in this Section 16.
The provisions of this Section 16 are solely for the benefit of Agent, and the
Lenders, and Borrowers shall have no rights as a third party beneficiary of any
of the provisions contained herein. Any provision to the contrary contained
elsewhere in this Agreement or in any other Loan Document notwithstanding, Agent
shall not have any duties or responsibilities, except those expressly set forth
herein, nor shall Agent have or be deemed to have any fiduciary relationship
with any Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against Agent; it being expressly understood and
agreed that the use of the word "Agent" is for convenience only, that Foothill
is merely the representative of the Lenders, and only has the contractual duties
set forth herein. Except as expressly otherwise provided in this Agreement,
Agent shall have and may use its sole discretion with respect to exercising or
refraining from exercising any discretionary rights or taking or refraining from
taking any actions that Agent expressly is entitled to take or assert under or
pursuant to this Agreement and the other Loan Documents. Without limiting the
generality of the foregoing, or of any other provision of the Loan Documents
that provides rights or powers to Agent, the Lenders agree that Agent shall have
the right to exercise the following powers as long as this Agreement remains in
effect: (a) maintain, in accordance with its customary business practices,
ledgers and records reflecting the status of the Obligations, the Collateral,
the Collections, and related matters, (b) execute or file any and all financing
or similar statements or notices, amendments, renewals, supplements, documents,
instruments, proofs of claim, notices and other written agreements with respect
to the Loan Documents, (c) make Advances, for itself or on behalf of the Lenders
as provided in the Loan Documents, (d) exclusively receive, apply, and
distribute the Collections as provided in the Loan Documents, (e) open and
maintain such bank accounts and cash management accounts as Agent deems
necessary and appropriate in accordance with the Loan Documents for the
foregoing purposes with respect to the Collateral and the Collections, (f)
perform, exercise, and enforce any and all other rights and remedies of the
Lender Group with respect to Borrowers, the Obligations, the Collateral, the
Collections, or otherwise related to any of same as provided in the Loan
Documents, and (g) incur and pay such Lender Group Expenses as Agent may deem
necessary or appropriate for the performance and fulfillment of its functions
and powers pursuant to the Loan Documents.
16.2 DELEGATION OF DUTIES. Agent may execute any of its duties under
this Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects as
long as such selection was made without gross negligence or willful misconduct.
16.3 LIABILITY OF AGENT. None of the Agent-Related Persons shall (i)
be liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by any Borrower or any Subsidiary or
Affiliate of any Borrower, or any officer or director thereof, contained in this
Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by Agent
under or in connection with, this Agreement or any other Loan Document, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of any Borrower or any
other
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party to any Loan Document to perform its obligations hereunder or thereunder.
No Agent-Related Person shall be under any obligation to any Lender to ascertain
or to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Loan Document, or to
inspect the Books or properties of Borrowers or the books or records or
properties of any of Borrowers' Subsidiaries or Affiliates.
16.4 RELIANCE BY AGENT. Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent, or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to Borrowers
or counsel to any Lender), independent accountants and other experts selected by
Agent. Agent shall be fully justified in failing or refusing to take any action
under this Agreement or any other Loan Document unless Agent shall first receive
such advice or concurrence of the Lenders as it deems appropriate and until such
instructions are received, Agent shall act, or refrain from acting, as it deems
advisable. If Agent so requests, it shall first be indemnified to its reasonable
satisfaction by the Lenders against any and all liability and expense that may
be incurred by it by reason of taking or continuing to take any such action.
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement or any other Loan Document in accordance with a
request or consent of the Lenders and such request and any action taken or
failure to act pursuant thereto shall be binding upon all of the Lenders.
16.5 NOTICE OF DEFAULT OR EVENT OF DEFAULT. Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of
Default, except with respect to defaults in the payment of principal, interest,
fees, and expenses required to be paid to Agent for the account of the Lenders,
except with respect to Events of Default of which Agent has actual knowledge,
unless Agent shall have received written notice from a Lender or Administrative
Borrower referring to this Agreement, describing such Default or Event of
Default, and stating that such notice is a "notice of default." Agent promptly
will notify the Lenders of its receipt of any such notice or of any Event of
Default of which Agent has actual knowledge. If any Lender obtains actual
knowledge of any Event of Default, such Lender promptly shall notify the other
Lenders and Agent of such Event of Default. Each Lender shall be solely
responsible for giving any notices to its Participants, if any. Subject to
Section 16.4, Agent shall take such action with respect to such Default or Event
of Default as may be requested by the Required Lenders in accordance with
Section 9; provided, however, that unless and until Agent has received any such
request, Agent may (but shall not be obligated to) take such action, or refrain
from taking such action, with respect to such Default or Event of Default as it
shall deem advisable.
16.6 CREDIT DECISION. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by Agent hereinafter taken, including any review of the affairs of Borrowers
and their Subsidiaries or Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrowers and any other Person (other than the Lender Group)
party to a Loan Document, and all applicable bank regulatory laws relating to
85
the transactions contemplated hereby, and made its own decision to enter into
this Agreement and to extend credit to Borrowers. Each Lender also represents
that it will, independently and without reliance upon any Agent-Related Person
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrowers and any other Person (other than the Lender Group)
party to a Loan Document. Except for notices, reports, and other documents
expressly herein required to be furnished to the Lenders by Agent, Agent shall
not have any duty or responsibility to provide any Lender with any credit or
other information concerning the business, prospects, operations, property,
financial and other condition or creditworthiness of Borrowers and any other
Person party to a Loan Document that may come into the possession of any of the
Agent-Related Persons.
16.7 COSTS AND EXPENSES; INDEMNIFICATION. Agent may incur and pay
Lender Group Expenses to the extent Agent reasonably deems necessary or
appropriate for the performance and fulfillment of its functions, powers, and
obligations pursuant to the Loan Documents, including court costs, reasonable
attorneys fees and expenses, costs of collection by outside collection agencies
and auctioneer fees and costs of security guards or insurance premiums paid to
maintain the Collateral, whether or not Borrowers are obligated to reimburse
Agent or the Lenders for such expenses pursuant to the Loan Agreement or
otherwise. Agent is authorized and directed to deduct and retain sufficient
amounts from Collections received by Agent to reimburse Agent for such
out-of-pocket costs and expenses prior to the distribution of any amounts to the
Lenders. In the event Agent is not reimbursed for such costs and expenses from
Collections received by Agent, each Lender hereby agrees that it is and shall be
obligated to pay to or reimburse Agent for the amount of such Lender's Pro Rata
Share thereof. Whether or not the transactions contemplated hereby are
consummated, the Lenders shall indemnify upon demand the Agent-Related Persons
(to the extent not reimbursed by or on behalf of Borrowers and without limiting
the obligation of Borrowers to do so), according to their Pro Rata Shares, from
and against any and all Indemnified Liabilities; provided, however, that no
Lender shall be liable for the payment to any Agent-Related Person of any
portion of such Indemnified Liabilities resulting solely from such Person's
gross negligence or willful misconduct nor shall any Lender be liable for the
obligations of any Defaulting Lender in failing to make an Advance or other
extension of credit hereunder. Without limitation of the foregoing, each Lender
shall reimburse Agent upon demand for such Lender's ratable share of any costs
or out-of-pocket expenses (including attorneys fees and expenses) incurred by
Agent in connection with the preparation, execution, delivery, administration,
modification, amendment, or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that Agent is not
reimbursed for such expenses by or on behalf of Borrowers. The undertaking in
this Section shall survive the payment of all Obligations hereunder and the
resignation or replacement of Agent.
16.8 AGENT IN INDIVIDUAL CAPACITY. Foothill and its Affiliates may
make loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in, and generally engage in any kind of banking, trust,
financial advisory, underwriting, or other business with Borrowers and their
Subsidiaries and Affiliates and any other Person (other than
86
the Lender Group) party to any Loan Documents as though Foothill were not Agent
hereunder, and, in each case, without notice to or consent of the other members
of the Lender Group. The other members of the Lender Group acknowledge that,
pursuant to such activities, Foothill or its Affiliates may receive information
regarding Borrowers or their Affiliates and any other Person (other than the
Lender Group) party to any Loan Documents that is subject to confidentiality
obligations in favor of Borrowers or such other Person and that prohibit the
disclosure of such information to the Lenders, and the Lenders acknowledge that,
in such circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver Agent will use its reasonable best efforts to obtain),
Agent shall not be under any obligation to provide such information to them. The
terms "Lender" and "Lenders" include Foothill in its individual capacity.
16.9 SUCCESSOR AGENT. Agent may resign as Agent upon 45 days notice
to the Lenders. If Agent resigns under this Agreement, the Required Lenders
shall appoint a successor Agent for the Lenders. If no successor Agent is
appointed prior to the effective date of the resignation of Agent, Agent may
appoint, after consulting with the Lenders, a successor Agent. If Agent has
materially breached or failed to perform any material provision of this
Agreement or of applicable law, the Required Lenders may agree in writing to
remove and replace Agent with a successor Agent from among the Lenders. In any
such event, upon the acceptance of its appointment as successor Agent hereunder,
such successor Agent shall succeed to all the rights, powers, and duties of the
retiring Agent and the term "Agent" shall mean such successor Agent and the
retiring Agent's appointment, powers, and duties as Agent shall be terminated.
After any retiring Agent's resignation hereunder as Agent, the provisions of
this Section 16 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent under this Agreement. If no successor Agent
has accepted appointment as Agent by the date which is 45 days following a
retiring Agent's notice of resignation, the retiring Agent's resignation shall
nevertheless thereupon become effective and the Lenders shall perform all of the
duties of Agent hereunder until such time, if any, as the Lenders appoint a
successor Agent as provided for above.
16.10 LENDER IN INDIVIDUAL CAPACITY. Any Lender and its respective
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with
Borrowers and their Subsidiaries and Affiliates and any other Person (other than
the Lender Group) party to any Loan Documents as though such Lender were not a
Lender hereunder without notice to or consent of the other members of the Lender
Group. The other members of the Lender Group acknowledge that, pursuant to such
activities, such Lender and its respective Affiliates may receive information
regarding Borrowers or their Affiliates and any other Person (other than the
Lender Group) party to any Loan Documents that is subject to confidentiality
obligations in favor of Borrowers or such other Person and that prohibit the
disclosure of such information to the Lenders, and the Lenders acknowledge that,
in such circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver such Lender will use its reasonable best efforts to
obtain), such Lender not shall be under any obligation to provide such
information to them. With respect to the Swing Loans and Agent Advances, Swing
Lender shall have the same rights and powers under this Agreement as any other
Lender and may exercise the same as though it were not the sub-agent of the
Agent.
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16.11 WITHHOLDING TAXES.
(a) If any Lender is a "foreign corporation, partnership or
trust" within the meaning of the IRC and such Lender claims exemption from, or a
reduction of, U.S. withholding tax under Sections 1441 or 1442 of the IRC, such
Lender agrees with and in favor of Agent and Borrowers, to deliver to Agent and
Administrative Borrower:
(i) if such Lender claims an exemption from
withholding tax pursuant to its portfolio interest exception,
(a) a statement of the Lender, signed under penalty of perjury,
that it is not a (I) a "bank" as described in Section
881(c)(3)(A) of the IRC, (II) a 10% shareholder (within the
meaning of Section 881(c)(3)(B) of the IRC), or (III) a
controlled foreign corporation described in Section 881(c)(3)(C)
of the IRC, and (B) a properly completed IRS Form W-8BEN, before
the first payment of any interest under this Agreement and at
any other time reasonably requested by Agent or Administrative
Borrower;
(ii) if such Lender claims an exemption from, or a
reduction of, withholding tax under a United States tax treaty,
properly completed IRS Form W-8BEN before the first payment of
any interest under this Agreement and at any other time
reasonably requested by Agent or Administrative Borrower;
(iii) if such Lender claims that interest paid under
this Agreement is exempt from United States withholding tax
because it is effectively connected with a United States trade
or business of such Lender, two properly completed and executed
copies of IRS Form W-8ECI before the first payment of any
interest is due under this Agreement and at any other time
reasonably requested by Agent or Administrative Borrower;
(iv) such other form or forms as may be required
under the IRC or other laws of the United States as a condition
to exemption from, or reduction of, United States withholding
tax.
Such Lender agrees promptly to notify Agent and Administrative Borrower of any
change in circumstances which would modify or render invalid any claimed
exemption or reduction.
(b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form W-8BEN
and such Lender sells, assigns, grants a participation in, or otherwise
transfers all or part of the Obligations of Borrowers to such Lender, such
Lender agrees to notify Agent of the percentage amount in which it is no longer
the beneficial owner of Obligations of Borrowers to such Lender. To the extent
of such percentage amount, Agent will treat such Lender's IRS Form W-8BEN as no
longer valid.
(c) If any Lender is entitled to a reduction in the
applicable withholding tax, Agent may withhold from any interest payment to such
Lender an amount equivalent to the applicable withholding tax after taking into
account such reduction. If the forms or other documentation required by
subsection (a) of this Section are not delivered to Agent, then Agent may
withhold from any interest payment to such Lender not providing such forms or
other documentation an amount equivalent to the applicable withholding tax.
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(d) If the IRS or any other Governmental Authority of the
United States or other jurisdiction asserts a claim that Agent did not properly
withhold tax from amounts paid to or for the account of any Lender (because the
appropriate form was not delivered, was not properly executed, or because such
Lender failed to notify Agent of a change in circumstances which rendered the
exemption from, or reduction of, withholding tax ineffective, or for any other
reason) such Lender shall indemnify and hold Agent harmless for all amounts
paid, directly or indirectly, by Agent as tax or otherwise, including penalties
and interest, and including any taxes imposed by any jurisdiction on the amounts
payable to Agent under this Section, together with all costs and expenses
(including attorneys fees and expenses). The obligation of the Lenders under
this subsection shall survive the payment of all Obligations and the resignation
or replacement of Agent.
(e) All payments made by Borrowers hereunder or under any
note or other Loan Document will be made without setoff, counterclaim, or other
defense, except as required by applicable law other than for Taxes (as defined
below). All such payments will be made free and clear of, and without deduction
or withholding for, any present or future taxes, levies, imposts, duties, fees,
assessments or other charges of whatever nature now or hereafter imposed by any
jurisdiction (other than the United States) or by any political subdivision or
taxing authority thereof or therein (other than of the United States) with
respect to such payments (but excluding, any tax imposed by any jurisdiction or
by any political subdivision or taxing authority thereof or therein (i) measured
by or based on the net income or net profits of a Lender, or (ii) to the extent
that such tax results from a change in the circumstances of the Lender,
including a change in the residence, place of organization, or principal place
of business of the Lender, or a change in the branch or lending office of the
Lender participating in the transactions set forth herein) and all interest,
penalties or similar liabilities with respect thereto (all such non-excluded
taxes, levies, imposts, duties, fees, assessments or other charges being
referred to collectively as "Taxes"). If any Taxes are so levied or imposed,
each Borrower agrees to pay the full amount of such Taxes, and such additional
amounts as may be necessary so that every payment of all amounts due under this
Agreement or under any note, including any amount paid pursuant to this Section
16.11(e) after withholding or deduction for or on account of any Taxes, will not
be less than the amount provided for herein; provided, however, that Borrowers
shall not be required to increase any such amounts payable to Agent or any
Lender (i) that is not organized under the laws of the United States, if such
Person fails to comply with the other requirements of this Section 16.11, or
(ii) if the increase in such amount payable results from Agent's or such
Lender's own willful misconduct or gross negligence. Borrowers will furnish to
Agent as promptly as possible after the date the payment of any Taxes is due
pursuant to applicable law certified copies of tax receipts evidencing such
payment by Borrowers.
16.12 COLLATERAL MATTERS.
(a) The Lenders hereby irrevocably authorize Agent, at its
option and in its sole discretion, to release any Lien on any Collateral (i)
upon the termination of the Revolver Commitments and payment and satisfaction in
full by Borrowers of all Obligations, (ii) constituting property being sold or
disposed of if a release is required or desirable in connection therewith and if
Administrative Borrower certifies to Agent that the sale or disposition is
permitted under Section 7.4 of this Agreement or the other Loan Documents (and
Agent may rely conclusively on any such certificate, without further inquiry),
(iii) constituting property in
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which no Borrower owned any interest at the time the security interest was
granted or at any time thereafter, or (iv) constituting property leased to a
Borrower under a lease that has expired or is terminated in a transaction
permitted under this Agreement. Except as provided above, Agent will not execute
and deliver a release of any Lien on any Collateral without the prior written
authorization of (y) if the release is of all or substantially all of the
Collateral, all of the Lenders, or (z) otherwise, the Required Lenders. Upon
request by Agent or Administrative Borrower at any time, the Lenders will
confirm in writing Agent's authority to release any such Liens on particular
types or items of Collateral pursuant to this Section 16.12; provided, however,
that (1) Agent shall not be required to execute any document necessary to
evidence such release on terms that, in Agent's opinion, would expose Agent to
liability or create any obligation or entail any consequence other than the
release of such Lien without recourse, representation, or warranty, and (2) such
release shall not in any manner discharge, affect, or impair the Obligations or
any Liens (other than those expressly being released) upon (or obligations of
Borrowers in respect of) all interests retained by Borrowers, including, the
proceeds of any sale, all of which shall continue to constitute part of the
Collateral.
(b) Agent shall have no obligation whatsoever to any of the
Lenders to assure that the Collateral exists or is owned by Borrowers or is
cared for, protected, or insured or has been encumbered, or that the Agent's
Liens have been properly or sufficiently or lawfully created, perfected,
protected, or enforced or are entitled to any particular priority, or to
exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to Agent pursuant to any of the Loan
Documents, it being understood and agreed that in respect of the Collateral, or
any act, omission, or event related thereto, subject to the terms and conditions
contained herein, Agent may act in any manner it may deem appropriate, in its
sole discretion given Agent's own interest in the Collateral in its capacity as
one of the Lenders and that Agent shall have no other duty or liability
whatsoever to any Lender as to any of the foregoing, except as otherwise
provided herein.
16.13 RESTRICTIONS ON ACTIONS BY THE LENDERS; SHARING OF PAYMENTS.
(a) Each of the Lenders agrees that it shall not, without
the express consent of Agent, and that it shall, to the extent it is lawfully
entitled to do so, upon the request of Agent, set off against the Obligations,
any amounts owing by such Lender to Borrowers or any deposit accounts of
Borrowers now or hereafter maintained with such Lender. Each of the Lenders
further agrees that it shall not, unless specifically requested to do so by
Agent, take or cause to be taken any action, including, the commencement of any
legal or equitable proceedings, to foreclose any Lien on, or otherwise enforce
any security interest in, any of the Collateral the purpose of which is, or
could be, to give such Lender any preference or priority against the other
Lenders with respect to the Collateral.
(b) If, at any time or times any Lender shall receive (i) by
payment, foreclosure, setoff, or otherwise, any proceeds of Collateral or any
payments with respect to the Obligations arising under, or relating to, this
Agreement or the other Loan Documents, except for any such proceeds or payments
received by such Lender from Agent pursuant to the terms of this Agreement, or
(ii) payments from Agent in excess of such Lender's ratable portion of all such
distributions by Agent, such Lender promptly shall (1) turn the same over to
Agent, in kind, and
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with such endorsements as may be required to negotiate the same to Agent, or in
immediately available funds, as applicable, for the account of all of the
Lenders and for application to the Obligations in accordance with the applicable
provisions of this Agreement, or (2) purchase, without recourse or warranty, an
undivided interest and participation in the Obligations owed to the other
Lenders so that such excess payment received shall be applied ratably as among
the Lenders in accordance with their Pro Rata Shares; provided, however, that if
all or part of such excess payment received by the purchasing party is
thereafter recovered from it, those purchases of participations shall be
rescinded in whole or in part, as applicable, and the applicable portion of the
purchase price paid therefor shall be returned to such purchasing party, but
without interest except to the extent that such purchasing party is required to
pay interest in connection with the recovery of the excess payment.
16.14 AGENCY FOR PERFECTION. Agent hereby appoints each other Lender
as its agent (and each Lender hereby accepts such appointment) for the purpose
of perfecting the Agent's Liens in assets which, in accordance with Article 9 of
the UCC can be perfected only by possession. Should any Lender obtain possession
of any such Collateral, such Lender shall notify Agent thereof, and, promptly
upon Agent's request therefor shall deliver such Collateral to Agent or in
accordance with Agent's instructions.
16.15 PAYMENTS BY AGENT TO THE LENDERS. All payments to be made by
Agent to the Lenders shall be made by bank wire transfer or internal transfer of
immediately available funds pursuant to such wire transfer instructions as each
party may designate for itself by written notice to Agent. Concurrently with
each such payment, Agent shall identify whether such payment (or any portion
thereof) represents principal, premium, or interest of the Obligations.
16.16 CONCERNING THE COLLATERAL AND RELATED LOAN DOCUMENTS. Each
member of the Lender Group authorizes and directs Agent to enter into this
Agreement and the other Loan Documents relating to the Collateral, for the
benefit of the Lender Group. Each member of the Lender Group agrees that any
action taken by Agent in accordance with the terms of this Agreement or the
other Loan Documents relating to the Collateral and the exercise by Agent of its
powers set forth therein or herein, together with such other powers that are
reasonably incidental thereto, shall be binding upon all of the Lenders.
16.17 FIELD AUDITS AND EXAMINATION REPORTS; CONFIDENTIALITY;
DISCLAIMERS BY THE LENDERS; OTHER REPORTS AND INFORMATION. By becoming a party
to this Agreement, each Lender:
(a) is deemed to have requested that Agent furnish such
Lender, promptly after it becomes available, a copy of each field audit or
examination report (each a "Report" and collectively, "Reports") prepared by
Agent, and Agent shall so furnish each Lender with such Reports,
(b) expressly agrees and acknowledges that Agent does not
(i) make any representation or warranty as to the accuracy of any Report, and
(ii) shall not be liable for any information contained in any Report,
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(c) expressly agrees and acknowledges that the Reports are
not comprehensive audits or examinations, that Agent or other party performing
any audit or examination will inspect only specific information regarding
Borrowers and will rely significantly upon the Books, as well as on
representations of Borrowers' personnel,
(d) agrees to keep all Reports and other material,
non-public information regarding Borrowers and their Subsidiaries and their
operations, assets, and existing and contemplated business plans in a
confidential manner; it being understood and agreed by Borrowers that in any
event such Lender may make disclosures (a) to counsel for and other advisors,
accountants, and auditors to such Lender, (b) reasonably required by any bona
fide potential or actual Assignee or Participant in connection with any
contemplated or actual assignment or transfer by such Lender of an interest
herein or any participation interest in such Lender's rights hereunder that has
agreed to comply with the covenant contained in this Section 16.17(d) as if it
were a Lender hereunder (and any such bona fide assignee or participant or
potential assignee or participant may disclose such information to Persons
employed or engaged by them as described in clause (a) above), (c) of
information that has become public by disclosures made by Persons other than
such Lender, its Affiliates, assignees, transferees, or Participants, or (d) as
required or requested by any court, governmental or administrative agency,
pursuant to any subpoena or other legal process, or by any law, statute,
regulation, or court order; provided, however, that, unless prohibited by
applicable law, statute, regulation, or court order, such Lender shall notify
Administrative Borrower of any request by any court, governmental or
administrative agency, or pursuant to any subpoena or other legal process for
disclosure of any such non-public material information concurrent with, or where
practicable, prior to the disclosure thereof, and
(e) without limiting the generality of any other
indemnification provision contained in this Agreement, agrees: (i) to hold Agent
and any such other Lender preparing a Report harmless from any action the
indemnifying Lender may take or conclusion the indemnifying Lender may reach or
draw from any Report in connection with any loans or other credit accommodations
that the indemnifying Lender has made or may make to Borrowers, or the
indemnifying Lender's participation in, or the indemnifying Lender's purchase
of, a loan or loans of Borrowers; and (ii) to pay and protect, and indemnify,
defend and hold Agent, and any such other Lender preparing a Report harmless
from and against, the claims, actions, proceedings, damages, costs, expenses,
and other amounts (including, attorneys fees and costs) incurred by Agent and
any such other Lender preparing a Report as the direct or indirect result of any
third parties who might obtain all or part of any Report through the
indemnifying Lender.
In addition to the foregoing: (x) any Lender may from time to time request of
Agent in writing that Agent provide to such Lender a copy of any report or
document provided by Borrowers to Agent that has not been contemporaneously
provided by Borrowers to such Lender, and, upon receipt of such request, Agent
shall provide a copy of same to such Lender, (y) to the extent that Agent is
entitled, under any provision of the Loan Documents, to request additional
reports or information from Borrowers, any Lender may, from time to time,
reasonably request Agent to exercise such right as specified in such Lender's
notice to Agent, whereupon Agent promptly shall request of Administrative
Borrower the additional reports or information reasonably specified by such
Lender, and, upon receipt thereof from Administrative Borrower, Agent promptly
shall provide a copy of same to such Lender, and (z) any time that Agent renders
to
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Administrative Borrower a statement regarding the Loan Account, Agent shall send
a copy of such statement to each Lender.
16.18 SEVERAL OBLIGATIONS; NO LIABILITY. Notwithstanding that certain
of the Loan Documents now or hereafter may have been or will be executed only by
or in favor of Agent in its capacity as such, and not by or in favor of the
Lenders, any and all obligations on the part of Agent (if any) to make any
credit available hereunder shall constitute the several (and not joint)
obligations of the respective Lenders on a ratable basis, according to their
respective Revolver Commitments, to make an amount of such credit not to exceed,
in principal amount, at any one time outstanding, the amount of their respective
Revolver Commitments. Nothing contained herein shall confer upon any Lender any
interest in, or subject any Lender to any liability for, or in respect of, the
business, assets, profits, losses, or liabilities of any other Lender. Each
Lender shall be solely responsible for notifying its Participants of any matters
relating to the Loan Documents to the extent any such notice may be required,
and no Lender shall have any obligation, duty, or liability to any Participant
of any other Lender. Except as provided in Section 16.7, no member of the Lender
Group shall have any liability for the acts or any other member of the Lender
Group. No Lender shall be responsible to any Borrower or any other Person for
any failure by any other Lender to fulfill its obligations to make credit
available hereunder, nor to advance for it or on its behalf in connection with
its Revolver Commitment, nor to take any other action on its behalf hereunder or
in connection with the financing contemplated herein.
16.19 LEGAL REPRESENTATION OF AGENT. In connection with the
negotiation, drafting, and execution of this Agreement and the other Loan
Documents, or in connection with future legal representation relating to loan
administration, amendments, modifications, waivers, or enforcement of remedies,
Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP ("PHJW") only has represented and only
shall represent Foothill in its capacity as Agent and as a Lender. Each other
Lender hereby acknowledges that PHJW does not represent it in connection with
any such matters.
17. GENERAL PROVISIONS.
17.1 EFFECTIVENESS. This Agreement shall be binding and deemed
effective when executed by Borrowers, Agent, and each Lender whose signature is
provided for on the signature pages hereof.
17.2 SECTION HEADINGS. Headings and numbers have been set forth
herein for convenience only. Unless the contrary is compelled by the context,
everything contained in each Section applies equally to this entire Agreement.
17.3 INTERPRETATION. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against the Lender Group or
Borrowers, whether under any rule of construction or otherwise. On the contrary,
this Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to
accomplish fairly the purposes and intentions of all parties hereto.
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17.4 SEVERABILITY OF PROVISIONS. Each provision of this Agreement
shall be severable from every other provision of this Agreement for the purpose
of determining the legal enforceability of any specific provision.
17.5 AMENDMENTS IN WRITING. This Agreement only can be amended by a
writing in accordance with Section 15.1.
17.6 COUNTERPARTS; TELEFACSIMILE EXECUTION. This Agreement may be
executed in any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, shall be deemed to be
an original, and all of which, when taken together, shall constitute but one and
the same Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by telefacsimile also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis.
17.7 REVIVAL AND REINSTATEMENT OF OBLIGATIONS. If the incurrence or
payment of the Obligations by any Borrower or the transfer to the Lender Group
of any property should for any reason subsequently be declared to be void or
voidable under any state or federal law relating to creditors' rights, including
provisions of the Bankruptcy Code relating to fraudulent conveyances,
preferences, or other voidable or recoverable payments of money or transfers of
property (collectively, a "Voidable Transfer"), and if the Lender Group is
required to repay or restore, in whole or in part, any such Voidable Transfer,
or elects to do so upon the reasonable advice of its counsel, then, as to any
such Voidable Transfer, or the amount thereof that the Lender Group is required
or elects to repay or restore, and as to all reasonable costs, expenses, and
attorneys fees of the Lender Group related thereto, the liability of Borrowers
automatically shall be revived, reinstated, and restored and shall exist as
though such Voidable Transfer had never been made.
17.8 INTEGRATION. This Agreement, together with the other Loan
Documents, reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
17.9 PARENT AS AGENT FOR BORROWERS.
Each Borrower hereby irrevocably appoints Parent as the
borrowing agent and attorney-in-fact for all Borrowers (the "Administrative
Borrower") which appointment shall remain in full force and effect unless and
until Agent shall have received prior written notice signed by each Borrower
that such appointment has been revoked and that another Borrower has been
appointed Administrative Borrower. Each Borrower hereby irrevocably appoints and
authorizes the Administrative Borrower (i) to provide Agent with all notices
with respect to Advances and Letters of Credit obtained for the benefit of any
Borrower and all other notices and instructions under this Agreement and (ii) to
take such action as the Administrative Borrower deems appropriate on its behalf
to obtain Advances and Letters of Credit and to exercise such
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other powers as are reasonably incidental thereto to carry out the purposes of
this Agreement. It is understood that the handling of the Loan Account and
Collateral of Borrowers in a combined fashion, as more fully set forth herein,
is done solely as an accommodation to Borrowers in order to utilize the
collective borrowing powers of Borrowers in the most efficient and economical
manner and at their request, and that Lender Group shall not incur liability to
any Borrower as a result hereof. Each Borrower expects to derive benefit,
directly or indirectly, from the handling of the Loan Account and the Collateral
in a combined fashion since the successful operation of each Borrower is
dependent on the continued successful performance of the integrated group. To
induce the Lender Group to do so, and in consideration thereof, each Borrower
hereby jointly and severally agrees to indemnify each member of the Lender Group
and hold each member of the Lender Group harmless against any and all liability,
expense, loss or claim of damage or injury, made against the Lender Group by any
Borrower or by any third party whosoever, arising from or incurred by reason of
(a) the handling of the Loan Account and Collateral of Borrowers as herein
provided, (b) the Lender Group's relying on any instructions of the
Administrative Borrower, or (c) any other action taken by the Lender Group
hereunder or under the other Loan Documents, except that Borrowers will have no
liability to the relevant Agent-Related Person or Lender-Related Person under
this Section 17.9 with respect to any liability that has been finally determined
by a court of competent jurisdiction to have resulted solely from the gross
negligence or willful misconduct of such Agent-Related Person or Lender-Related
Person, as the case may be.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered as of the date first above written.
WORLD AIRWAYS, INC.,
a Delaware corporation, as a Borrower
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
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Title: Chief Financial Officer
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WORLD AIRWAYS PARTS COMPANY, LLC
a Delaware limited liability company, as a Borrower
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Title: Manager
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FOOTHILL CAPITAL CORPORATION,
a California corporation, as Agent and as Lender
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
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Title: Vice President
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LOAN AND SECURITY AGREEMENT