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EXHIBIT 4.7
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SECURED CREDIT AGREEMENT
between
IAI II, INC.,
as the Borrower,
and
CONTINENTAL BANK N.A.,
as the Lender
Dated as of December 21, 1993
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TABLE OF CONTENTS
PAGE
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SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2 Cross References: Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2. COMMITMENT OF THE LENDER; BORROWING PROCEDURES AND CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.1 Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.2 Borrowing Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.3 Conditions to the Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.4 Extension of Termination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 3. NOTE EVIDENCING LOAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 3.1 Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 4. INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 4.1 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 4.2 Interest Payment Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 4.3 Basis of Computation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 4.4 Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 4.5 Deposits Unavailable or Interest Rate Unascertainable or
Inadequate; Impracticability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 4.6 Changes in Law Rendering Loans made at Interbank Rate
Unlawful . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 4.7 Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 4.8 Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 4.9 Conclusiveness of Statements Survival of Provisions . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5. PREPAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5.1 Voluntary Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5.2 Mandatory Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5.3 Interest on Principal Prepaid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 6. MAKING OF PAYMENTS; OFFSET; FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 6.1 Place of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 6.2 Offset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 7. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 7.1 Organization, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 7.2 Authorization; No Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 7.3 Validity and Binding Nature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 7.4 Litigation and Contingent Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
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SECTION 7.5 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 7.6 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 7.7 Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 7.8 Public Utility Holding Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 7.9 Regulations G, T, U and X . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 7.10 Citizenship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 7.11 Certain Related Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 7.12 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 7.13 Absence of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 7.14 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 7.15 Material Disruptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 7.16 Accuracy of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 7.17 Securities Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 7.18 Intentionally deleted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 7.19 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 7.20 Title to Aircraft . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 7.21 Lessee Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 8. BORROWER'S COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 8.1 Reports, Certificates and Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 8.1.1 Reports of Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 8.1.2 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 8.1.3 British Midland Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 8.1.4 Reports to SEC and to Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 8.1.5 Notice of Default and Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 8.1.6 Withdrawal Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 8.1.7 Related Documents; Aircraft . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 8.1.8 Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 8.2 Books, Records and Inspections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 8.3 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 8.4 Taxes and Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 8.5 Purchase or Redemption of Borrower's Securities;
Dividend Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 8.6 Mergers, Consolidations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 8.7 Unconditional Purchase Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 8.8 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 8.9 Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 8.10 Citizenship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 8.11 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 8.12 Collateral Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 8.13 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 8.14 Maintenance of Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 8.15 Transaction with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 8.16 Changes to Related Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 8.17 Performance of Obligations Under ILFC Purchase Contract
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and Aircraft Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 8.18 Limitation on Activities of Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 8.19 Payments Under Aircraft Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 8.20 Notification of Status of Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 8.21 Lessee Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 8.22 Estoppel Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 9. CONDITIONS OF LENDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 9.1 Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 9.1.1 Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 9.1.2 Remarketing Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 9.1.3 Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 9.1.4 Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 9.1.5 Resolutions; Corporation Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 9.1.6 Good Standing Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 9.1.7 Opinion of Counsel for the Borrower and ILFC and Letter from ▇▇▇▇▇ & ▇▇▇▇▇ . . . . . . . 21
SECTION 9.1.8 Consents, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 9.2 Mortgage and CAA Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 9.3 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 9.4 Airworthiness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 9.5 Financing Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 9.6 Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 9.7 The Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 9.8 Legal Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 9.9 Collateral Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 9.10 ▇▇▇▇ of Sale from Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 9.11 Intentionally deleted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 9.12 Intentionally deleted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 9.13 Lender's Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 9.14 Other Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 9.14.1 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 9.14.2 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 9.14.3 Confirmatory Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 10. EVENT OF DEFAULT AND THEIR EFFECT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 10.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 10.1.1 Non-Payment of Loan, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 10.1.2 Default of Other Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 10.1.3 Other Material Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 10.1.4 Aircraft Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 10.1.5 Bankruptcy, Insolvency, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 10.1.6 Insurance; Citizenship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 10.1.7 Non-Compliance with this Agreement and the Related Documents . . . . . . . . . . . . . . 24
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SECTION 10.1.8 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 10.1.9 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 10.1.10 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 10.1.11 Certain Related Documents Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 10.1.12 Ownership of Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 10.2 Effect of Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 10.3 Borrower's Right to Cure Aircraft Lease Default . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 11. Intentionally deleted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 12. GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 12.1 Waiver; Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 12.2 Confirmations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 12.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 12.4 Computations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 12.5 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 12.6 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 12.7 Intentionally deleted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 12.8 Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 12.9 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 12.10 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 12.11 Submission to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 12.12 JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
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EXHIBITS
Exhibit A Note
Exhibit B Consent
Exhibit C Remarketing Agreement and Note Purchase Agreement
Exhibit D Mortgage and Security Agreement
Exhibit E Form of Opinion of Counsel to Borrower
Exhibit F Form of Opinion of Counsel to ILFC
Exhibit G Letter From ▇▇▇▇▇ & ▇▇▇▇▇
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EXHIBIT 4.7
SECURED CREDIT AGREEMENT
Dated as of December 21, 1993
IAI II, INC., a Nevada corporation, as borrower (the "Borrower"), and
CONTINENTAL BANK N.A., a national banking association, as lender (the "Lender")
agree as follows:
SECTION 1. DEFINITIONS.
SECTION 1.1 Defined Terms. The following terms (whether or not
underscored) when used in this Agreement, including its preamble, except where
the context otherwise requires, shall have the following meanings (such
meanings, except where the context otherwise requires, to be equally applicable
to the singular and plural forms thereof):
"Affiliate" of any Person means (i) any director (or Person
holding the equivalent position) or officer (or Person holding the equivalent
position) of such Person or of any Affiliate of such Person, and (ii) any other
Person which, directly or indirectly, controls or is controlled by or under
common control with such Person (excluding any trustee under, or any committee
with responsibility for administering, a Plan). A Person shall be deemed to be
1. "controlled by" any other Person if such other Person
possesses, directly or indirectly, power (i) to vote 10% or more of the
securities having at the time of any determination voting power for the
election of directors of such Person or (ii) to direct or cause the direction
of the management and policies of such Person whether by contract or otherwise;
or
2. "controlled by" or "under common control with" such
other Person if such other Person is a member of the immediate family of such
Person or is the executor, administrator or other personal representative of
such Person.
"Agreement" means this Secured Credit Agreement, as the same
may be amended, supplemented or otherwise modified from time to time in
accordance with the provisions hereof.
"Aircraft" means the Airframe, together with the Engines (or
any Replacement Engine substituted for any of such Engines under the Mortgage),
whether or not any such Engines or Replacement Engines may from time to time be
installed on such Airframe or may be installed on any other airframe or on any
other aircraft, and all Parts, including avionics and related equipment,
manuals and logs.
"Aircraft Lease" shall mean that certain Aircraft Lease
Agreement dated as November 8, 1991 between British Midland, as lessee, and the
Borrower as assignee of ILFC, as lessor, concerning the Aircraft, as amended by
Amendment No. 1 thereto dated February 3, 1992, Amendment No. 2 thereto dated
May 5, 1992, and as such lease may be
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amended, supplemented or otherwise modified from time to time in accordance
with Section 8.l8 hereof.
"Airframe" means (i) the Boeing 737-300 aircraft (excluding
the Engines or engines from time to time installed thereon) bearing United
Kingdom Registration ▇▇▇▇ GOBML and manufacturer's serial number 24300, (ii)
any and all Parts so long as the same shall be incorporated in such aircraft
and (iii) any and all Parts removed from such aircraft so long as such Parts
shall remain subject to the Mortgage and the Lien thereof in accordance with
the terms of Section 3.7, 3.8 or 3.9 thereof.
"Alternative Reference Rate" means, for any day, a fluctuating
rate per annum equal to the greater of (i) the Reference Rate in effect on such
day plus .25% per annum or (ii) a rate per annum (rounded upward to the next
highest 1/8 of 1% if not already an integral multiple of 1/8 of 1%) equal to
the Federal Funds Effective Rate in effect on such day plus 1.5% per annum. If
for any reason the Lender shall have determined (which determination shall be
conclusive in the absence of manifest error) that it is unable to ascertain the
Federal Funds Effective Rate for any reason (including, without limitation, the
inability or failure of the Lender to obtain sufficient bids or publications in
accordance with the terms hereof), the Alternative Reference Rate shall be a
fluctuating rate per annum equal to the Reference Rate in effect from time to
time plus .25% per annum until the circumstances giving rise to such inability
no longer exist.
"Banking Day" means (i) any day other than a Saturday, Sunday
or legal holiday on which banks are authorized or required to be closed in
Chicago, Illinois and (ii) a day on which dealings in dollars may be carried on
by the Lender in the interbank eurodollar market.
"British Midland" means British Midland Airways Limited, a
corporation incorporated under the laws of the England.
"CAA" means the Civil Aviation Authority of the United Kingdom
or any governmental Person, agency or other authority succeeding to the
functions of the Civil Aviation Authority.
"Closing Date" means the date upon which the Loan is made.
"Collateral" shall mean all property and/or rights on or in
which a Lien or security interest is granted to the Lender (or to any agent,
trustee or other party acting on behalf of the Lender) pursuant to this
Agreement or the Mortgage or any other instruments or documents provided for
herein or therein or delivered or to be delivered hereunder or thereunder or in
connection herewith or therewith.
"Collateral Account" shall mean the cash collateral account
established pursuant to the Mortgage.
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"Commitment" see Section 2.l.
"Consent" shall mean the consent in substantially the form of
Exhibit B attached hereto, to be executed and delivered to the Lender by
British Midland Airways Limited.
"Dollar" or "$" means lawful money of the United States.
"Engine" means (i) each of the two CFM56-3B1 engines, each of
which has 750 or more rated takeoff horsepower or the equivalent thereof,
bearing manufacturer's serial numbers 722372 and 722384, respectively, and
whether or not from time to time thereafter installed on the Airframe or
installed on any other airframe or on any other aircraft, and (ii) any
Replacement Engine, whether or not from time to time thereafter installed on
the Airframe or any other airframe or on any other aircraft, together in each
case with any and all Parts incorporated in such Engine or Replacement Engine
and any and all Parts removed from such Engine or Replacement Engine as long as
such Parts shall remain subject to the Lien of the Mortgage in accordance with
the terms of Section 3.7, 3.8 or 3.9 thereof. At such time as a Replacement
Engine shall be substituted under the Mortgage and the Engine for which the
substitution is made shall be released from the Mortgage and the Lien thereof,
such replaced Engine shall cease to be an Engine hereunder. The term "Engines"
shall mean as of any date of determination, all Engines then subject to the
Mortgage.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Eurocurrency Reserve Requirement" means, for any Interest
Period, a percentage equal to the daily average during such Interest Period of
the percentages in effect on each day of such Interest Period, as prescribed by
the Federal Reserve Board, for determining the aggregate maximum reserve
requirements (including all basic, supplemental, marginal and other reserves)
applicable to "Eurocurrency liabilities" pursuant to Regulation D or any other
then applicable regulation of the Federal Reserve Board which prescribes
reserve requirements applicable to "Eurocurrency liabilities" as presently
defined in Regulation D. Without limiting the effect of the foregoing, the
Eurocurrency Reserve Requirement shall reflect any other reserves required to
be maintained by any Lender against (i) any category of liabilities that
includes deposits by reference to which the Interbank Rate (Reserve Adjusted)
is to be determined, or (ii) any category of extensions of credit or other
assets that includes Eurocurrency liabilities. For purposes of this Agreement
(except if the Loan is bearing interest at the Alternative Reference Rate), the
Loan hereunder shall be deemed to be "Eurocurrency liabilities," as defined in
Regulation D, and, as such, shall be deemed to be subject to such reserve
requirements without the benefit of, or credit for, proration, exceptions or
offsets which may be available to any Lender from time to time under Regulation
D.
"Event of Default" - see Section 10.1.
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"Event of Loss" shall mean a Total Loss as such term is
defined under the Aircraft Lease.
"Federal Funds Effective Rate" means, for any day, an interest
rate per annum equal to the weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System arranged by
Federal funds brokers, as published for such day by the Federal Reserve Bank of
New York, or, if such rate is not so published for any day which is a Banking
Day, the average of the quotations for such day on such transactions received
by the Lender from three Federal funds brokers of recognized standing selected
by it. In the case of a day which is not a Banking Day, the Federal Funds
Effective Rate for such day shall be the Federal Funds Effective Rate for the
next preceding Banking Day. For purposes of this Agreement and the Note, each
change in the Alternative Reference Rate due to a change in the Federal Funds
Effective Rate shall take effect on the effective date of such change in the
Federal Funds Effective Rate.
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System or any successor thereto.
"IAI" means International Aircraft Investors, Inc., a
California corporation.
"ILFC" means International Lease Finance Corporation, a
California corporation.
"ILFC Purchase Contract" means the Aircraft Sale Agreement
dated December 21, 1993 between ILFC and the Borrower.
"Interbank Rate" means, with respect to each Interest Period,
the rate per annum at which Dollar deposits in immediately available funds are
offered to the Lender two Banking Days prior to the beginning of such Interest
Period by major banks in the interbank eurodollar market at or about 10:00
a.m., Chicago time, for delivery on the first day of such Interest Period, for
the number of days comprised therein and in an amount equal to the amount of
the Lender's Loan to be outstanding during such Interest Period.
"Interbank Rate (Reserve Adjusted)" means, with respect to
each Interest Period, a rate per annum (rounded upward, if necessary, to the
nearest 1/100 of 1%) determined pursuant to the following formula:
Interbank Rate Interbank Rate
(Reserve Adjusted) = 1-Eurocurrency Reserve Requirement
"Interest Period" means the period commencing on the initial
borrowing date of the Loan or the last day of the prior Interest Period for the
Loan, as the case may be, and ending on the numerically corresponding day one
month thereafter (or as otherwise agreed between the Borrower and the Lender),
except that the first Interest Period shall end on January 17, 1994, provided,
however, that:
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(a) any Interest Period which would otherwise end on a day
which is not a Banking Day shall end on the next succeeding Banking
Day unless such next succeeding Banking Day falls in another calendar
month, in which case such Interest Period shall end on the next
preceding Banking Day;
(b) any Interest Period which begins on the last Banking Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Banking Day of the calendar month at the
end of such Interest Period; and
(c) no Interest Period shall extend beyond the Termination
Date.
"Interest Rate Contracts" shall mean interest rate exchange,
collar, cap, or similar agreements providing for interest rate protection.
"Liabilities" shall have the meaning provided in the
Remarketing Agreement.
"Lien" means, when used with respect to any Person, any
interest in any real or personal property, asset or other right held, owned or
being purchased or acquired by such Person for its own use, consumption or
enjoyment in its business which secures payment or performance of any
obligation and shall include any mortgage, lien, pledge, encumbrance, charge,
retained security title of a conditional vendor or lessor, or other security
interest of any kind, whether arising under a security agreement, mortgage,
deed of trust, chattel mortgage, assignment, pledge, retention of security
title, financing or similar statement or notice or arising as a matter of law,
judicial process or otherwise.
"Loan" - see Section 2.1.
"Loan Documents" means this Agreement, the Note, the Mortgage,
the Remarketing Agreement, any Swap Agreement and each other agreement,
instrument or document executed and delivered pursuant to or in connection with
any thereof.
"Mortgage" means a mortgage and security agreement in the form
of Exhibit D attached hereto, to be executed and delivered to the Lender by the
Borrower, as the same may be amended, supplemented or otherwise modified from
time to time in accordance with the provisions hereof and thereof.
"Note" - means a promissory note of the Borrower payable to
the Lender, in the form of Exhibit A attached hereto (as such promissory note
may be amended, endorsed or otherwise modified from time to time), evidencing
the aggregate indebtedness of the Borrower to the Lender resulting from
outstanding Loan, and also means all other promissory notes accepted from time
to time in substitution therefor or renewal thereof.
"Parts" means all appliances, parts, components, instruments,
appurtenances, accessories, furnishings and other equipment of whatever nature
(other than complete
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Engines or engines) whether now owned or hereafter acquired which may from time
to time be incorporated in the Airframe or any Engine (and "Part" means any of
the foregoing) and, after removal therefrom, so long as such Parts remain
subject to the Lien of the Mortgage in accordance with Section 3.7, 3.8 or 3.9
thereof.
"Pension Plan" means any "employee pension benefit plan," as
such term is defined in ERISA, which is subject to Title IV of ERISA (other
than a "multiemployer plan," as defined in Section 4001 of ERISA) and to which
the Borrower or ILFC has or may have any liability, including any liability by
reason of having been a substantial employer within the meaning of section 4001
of ERISA for any time within the preceding five years or by reason of being
deemed to be a contributing sponsor under section 4069 of ERISA.
"Permitted Liens" shall have the meaning provided in the
Mortgage.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization
or government or any agency or political subdivision thereof.
"Plan" means any Welfare Plan, Pension Plan or similar plan to
which the Borrower may have any liability.
"Reference Rate" means, at any time, the rate of interest then
most recently announced by the Lender as its reference rate. For purposes of
this Agreement and the Note, each change in the Alternate Reference Rate due to
a change in the Reference Rate shall take effect on the effective date of the
change in the Reference Rate.
"Related Documents" means the Note, the Remarketing Agreement,
the Mortgage, the Consent, any Swap Agreement, the ILFC Purchase Contract, the
Aircraft Lease, and each other agreement, instrument or document executed and
delivered pursuant to or in connection with any thereof.
"Remarketing Agreement" means a remarketing and note purchase
agreement, in the form of Exhibit C attached hereto, to be executed and
delivered by the Borrower, ILFC and the Lender, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with the
provisions thereof.
"Replacement Engine" means a CFM56-3B1 engine (or, in each
case, an improved model engine manufactured by the same manufacturer, suitable
for installation and use on the Airframe and compatible with the other Engine)
and which shall have been substituted for an Engine and be subject to the Lien
of the Mortgage pursuant to Section 4.2 thereof.
"Stipulated Loss Value" shall have the meaning provided in the
Aircraft Lease.
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"Subsidiary" means a corporation of which the indicated Person
and/or its other subsidiaries, individually or in the aggregate, own, directly
or indirectly, such number of outstanding shares as have at the time of any
determination hereunder more than 50% of the ordinary voting power for the
election of directors (or their equivalent under the laws of the jurisdiction
of organization of such corporation).
"Swap Agreement" means an Interest Rate Contract entered into
between the Borrower and the Lender and consented to by ILFC (which consent
shall not be unreasonably withheld) with respect to the Loan.
"Termination Date" shall mean July 19, 1997 or any subsequent
date approved by the Lender in accordance with Section 2.4.
"Unmatured Event of Default" means any event which if it
continues uncured will, with lapse of time or giving of notice or lapse of time
and giving of notice, constitute an Event of Default.
"Welfare Plan" means any "employee welfare benefit plan," as
such term is defined in ERISA.
SECTION 1.2 Cross References: Headings. The words "hereof,"
"herein," and "hereunder" and words of a similar import when used in this
Agreement or in any of the Loan Documents shall refer to this Agreement or such
Loan Document as a whole and not to any particular provision of this Agreement
or such Loan Document. Section, Schedule and Exhibit references contained in
this Agreement are references to Sections, Schedules and Exhibits in or to this
Agreement unless otherwise specified. Any reference in any Section or
definition to any clause is, unless otherwise specified, to such clause of such
Section or definition. The various headings in this Agreement and the Loan
Documents are inserted for convenience only and shall not affect the meaning or
interpretation of this Agreement or such Loan Document or any provision hereof
or thereof.
SECTION 2. COMMITMENT OF THE LENDER; BORROWING PROCEDURES AND
CONDITIONS.
SECTION 2.1 Commitment. Subject to the terms and conditions of this
Agreement, the Lender agrees to make a loan (a "Loan") to the Borrower with
respect to the Aircraft equal to the amount requested by the Borrower to be
made on the Closing Date up to $21,976,677. The commitment of the Lender
described in this Section 2.1 is herein referred to as its "Commitments." The
Commitment shall expire upon the making of the initial Loan.
SECTION 2.2 Borrowing Procedures. The Lender shall receive at least
two Banking Days' (or such lesser time as agreed to by the Lender) prior
written notice from the Borrower of the proposed borrowing. The Lender shall
make such funds available to the Borrower by wire transfer to the accounts the
Borrower shall have specified in its borrowing request.
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SECTION 2.3 Conditions to the Loan. Notwithstanding any other
provision of this Agreement, no Loan shall be required to be made hereunder if
the conditions precedent to the making of the Loan specified in Section 9 have
not been satisfied.
SECTION 2.4 Extension of Termination Date. The Borrower may, upon at
least 90 days' written notice to the Lender prior to the then scheduled
Termination Date, request an extension of the Termination Date for a specified
period not to exceed two years. If the Lender agrees to such extension on or
before 30 days' prior to the then scheduled Termination Date, the Lender shall
promptly notify the Borrower and if no Event of Default or Unmatured Event of
Default has occurred and is continuing on the then scheduled Termination Date,
the Termination Date shall be extended to the date agreed upon. If the Borrower
and the Lender are unable to agree on such new Termination Date, the
Termination Date shall not be extended. Failure of the Lender to respond to any
request by the Borrower to extend the Termination Date shall not create any
claim against the Lender; and provided, further, the failure of the Lender to
respond to any such request shall have the effect of denying such request.
SECTION 3. NOTE EVIDENCING LOAN.
SECTION 3.1 Note. The Loan shall be evidenced by a Note, with
appropriate insertions, dated the date such Loan is made, in the original
principal amount of the Loan and payable in the principal installments as set
forth in such Note or on a Schedule attached thereto or made a part thereof.
Subject to the instruction set forth in the definition of "Interest Period," if
any payment of principal of the Note falls due on a day which is not a Banking
Day, then such due date shall be extended to the next following Banking Day.
SECTION 4. INTEREST.
SECTION 4.1 Interest. The unpaid principal amount of the Loan from
time to time outstanding shall bear interest at the following rates per annum:
(A) with respect to each Interest Period prior to and including maturity, at a
rate per annum equal to the sum of (x) the Interbank Rate (Reserve Adjusted) in
effect for such Interest Period, plus (y) 1.25%; and (B) after maturity of any
installment of principal or interest, whether by acceleration or otherwise,
until paid, at a rate per annum equal to the Interbank Rate (Reserve Adjusted)
plus 3.00%; provided, however, that such post-maturity interest rate shall not
be less than the Interbank Rate (Reserve Adjusted) in effect on the due date of
such installment of principal or interest plus 3.00%.
SECTION 4.2 Interest Payment Dates. Accrued interest on the Loan
(whether bearing interest at the Interbank Rate (Reserve Adjusted) or the
Alternative Reference Rate) shall be payable in arrears on the last day of each
Interest Period and at maturity date. After maturity of any installment of
principal or interest, whether by acceleration or otherwise, accrued interest
shall be payable upon demand.
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SECTION 4.3 Basis of Computation. Interest shall be computed for the
actual number of days elapsed on the basis of a year consisting of 360 days.
SECTION 4.4 Increased Costs. If, as a result of any law, rule,
regulation, treaty or directive, or any change therein or in the interpretation
or administration thereof, or compliance by the Lender with any request or
directive (whether or not having the force of law) from any court, central
bank, governmental authority, agency or instrumentality, or comparable agency:
a. any tax, duty or other charge with respect to the
Loan, the Note or the Lender's obligation to make its Loan is
imposed, modified or deemed applicable, or the basis of
taxation of payments to the Lender of the principal of, or
interest on, its Loan (other than taxes imposed on the overall
net income of the Lender by the jurisdiction in which the
Lender has its principal office) is changed;
b. any reserve, special deposit, special assessment
or similar requirement against assets of, deposits with or for
the account of, or credit extended by, the Lender is imposed,
modified or deemed applicable; or
c. any other condition affecting this Agreement or
the Loan is imposed on the Lender or the interbank eurodollar
market;
and the Lender determines that, by reason thereof, the cost to the Lender of
making or maintaining its Loan is increased, or the amount of any sum
receivable by the Lender hereunder or under its Note in respect of the Loan is
reduced; then, the Borrower shall pay to the Lender upon demand such additional
amount or amounts as will compensate the Lender for such additional cost or
reduction (provided that the Lender has not been compensated for such
additional cost or reduction in the calculation of the Eurocurrency Reserve
Requirement or otherwise).
SECTION 4.5 Deposits Unavailable or Interest Rate Unascertainable or
Inadequate; Impracticability. If prior to any Interest Period, the Lender
shall have determined (which determination shall be conclusive and binding on
the parties hereto) that:
a. deposits of the necessary amount for the relevant
Interest Period are not available to the Lender in the
interbank eurodollar market or that, by reason of
circumstances affecting the interbank eurodollar market,
adequate and reasonable means do not exist for ascertaining
the Interbank Rate for such Interest Period; or
b. the Interbank Rate (Reserve Adjusted) will not
adequately and fairly reflect the cost to the Lender of making
or funding the Loan for such Interest Period; or
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c. the making or funding of the Loan has become
impracticable as a result of any event occurring after the
date of this Agreement which, in the opinion of the Lender,
materially and adversely affects the Loan or the Lender's
obligation to make the Loan or the interbank eurodollar
market;
the Lender shall promptly give notice of such determination to the Borrower,
and the Borrower shall be obligated to either prepay in full the outstanding
principal balance of the Loan without any premium or penalty on the last day of
the then current Interest Period or convert the Loan to loans bearing interest
at the Alternative Reference Rate.
SECTION 4.6 Changes in Law Rendering Loans made at Interbank Rate
Unlawful. If at any time due to the adoption of any law, rule, regulation,
treaty or directive, or any change therein or in the interpretation or
administration thereof by any court, central bank, governmental authority,
agency or instrumentality, or comparable agency charged with the interpretation
or administration thereof, or for any other reason arising subsequent to the
date hereof, it shall become unlawful or impossible, or any central bank or
other governmental authority asserts that it is unlawful, for the Lender to
make or fund its Loan, the obligation of the Lender to provide the Loan shall,
upon the happening of such event, forthwith be suspended for the duration of
such illegality or impossibility. If any such event shall make it unlawful or
impossible for the Lender to continue its Loan (if already made) at the
Interbank Rate (Reserve Adjusted) the Lender shall, upon the happening of such
event, notify the Borrower thereof in writing, and the Borrower shall, on the
earlier of (i) the last day of the then current Interest Period with respect
thereto or (ii) if required by such law, rule, regulation, treaty, directive or
interpretation, on such date as shall be specified in such notice, either
convert the Loan to a loan bearing interest at the Alternative Reference Rate
or prepay in full the Loan, together with accrued interest thereon, without any
premium or penalty (except as provided in Section 4.8).
SECTION 4.7 Funding.
a. Discretion of the Lender as to Manner of Funding.
Notwithstanding any provision of this Agreement to the
contrary, the Lender shall be entitled to fund and maintain
its funding of all or any part of its Loan in any manner it
sees fit; it being understood, however, that for purposes of
this Agreement, all determinations hereunder shall be made as
if the Lender had actually funded and maintained its Loan
during the Interest Period for such Loan through the purchase
of deposits in the interbank eurodollar market having a term
corresponding to such Interest Period and bearing an interest
rate equal to the Interbank Rate for such Interest Period
(whether or not the Lender shall have granted any
participations in such Loan).
b. Funding Through the Sale of Participations.
Notwithstanding any provision of this Agreement to the
contrary, the Borrower acknowledges that the Lender may fund
all or any part of its Loan by sales of participations to
various participants, and agrees that such a Lender may, in
invoking its rights
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under this Section 4.7 demand and receive payment for costs
and other amounts incurred by or allocable to, any such
participant, or take other action arising from circumstances
applicable to any such participant, to the same extent that
such participant could demand and receive payments, or take
other action, under Section 4.4 or under Section 4.8 if such
participant were a Lender under this Agreement. It is
understood, however, that notwithstanding any such
participation, the Borrower's relationship shall be directly
with the Lender, and the Lender shall (as between any such
participant and the Lender) retain the exclusive right to deal
with the Borrower and the Borrower shall be entitled to rely
on the Lender on behalf of the participant.
SECTION 4.8 Funding Losses. The Borrower will indemnify the Lender
upon demand against any loss or expense which the Lender may sustain or incur
(including, without limitation, any loss or expense sustained or incurred in
obtaining, liquidating or employing deposits or other funds acquired to effect,
fund or maintain its Loan) as a consequence of (i) any failure of the Borrower
to make any payment when due of any amount due hereunder or under the Note,
(ii) any failure of the Borrower to borrow or convert the Loan on a date
specified therefor in a notice thereof, or (iii) any payment (including,
without limitation, any payment pursuant to Section 4.6 or Section 10.2) or
prepayment of the Loan on a date other than the last day of the Interest Period
for such Loan. The Lender, at the time of making demand for such costs, shall
deliver to the Borrower a certificate specifying, in reasonable detail, the
basis on which such loss or expense was calculated.
SECTION 4.9 Conclusiveness of Statements Survival of Provisions. In
making the determinations contemplated by Sections 4.4 and 4.8, the Lender may
make such reasonable estimates, assumptions, allocations and the like that the
Lender in good faith determines to be appropriate; and, subject to the
foregoing clause, determinations and statements of the Lender pursuant thereto
shall be conclusive absent demonstrable error. The provisions of Sections 4.4,
4.7, 4.8 and this Section 4.9 shall survive termination of this Agreement.
SECTION 5. PREPAYMENTS.
SECTION 5.1 Voluntary Prepayments. The Borrower may from time to
time, upon at least three Banking Days' prior written or telephonic notice
received by the Lender, prepay the principal of the Loan in whole or in part;
provided, however, that any partial prepayment of principal shall be in a
minimum amount of $100,000 and in an integral multiple of $100,000, and
provided further that any prepayment of principal shall be subject to the
indemnification provisions of Section 4.8, but shall otherwise be without any
premium or penalty. The Borrower shall promptly confirm any telephonic notice
of prepayment in writing.
SECTION 5.2 Mandatory Prepayments. If an Event of Loss occurs with
respect to the Aircraft, the entire outstanding amount of the Loan shall be
paid upon the earlier of (1) the date on which the Stipulated Loss Value of the
Aircraft or the Airframe is paid by British
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Midland's insurance underwriters or brokers, and (2) the date which falls sixty
(60) days after the Event of Loss.
SECTION 5.3 Interest on Principal Prepaid. Any prepayment of
principal of the Loan shall include accrued interest to the date of prepayment
on the principal amount being prepaid.
SECTION 6. MAKING OF PAYMENTS; OFFSET; FEES.
SECTION 6.1 Place of Payment. Unless otherwise expressly provided
(including, without limitation, as set forth in the next sentence), all
payments by the Borrower pursuant to this Agreement, the Note or any other Loan
Document shall be made by the Borrower to the Lender. To the extent that ILFC
has purchased any Liabilities pursuant to Article VII of the Remarketing
Agreement, all payments made by the Borrower shall be applied to the
Liabilities held by the Lender (other than ILFC) before being applied to the
Liabilities held by ILFC. All such payments shall be made without setoff or
counterclaim and shall be made to the Lender in immediately available funds
prior to 12:30 p.m., Chicago time, on the date due at its office at ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other place or for such
other account as may be designated by the Lender to the Borrower in writing.
Any payments received after such time shall be deemed received on the next
Banking Day.
SECTION 6.2 Offset. In addition to, and not in limitation of, all
rights of offset that the Lender or other holder of the Note may have under
applicable law, the Lender or other holder of the Note shall, upon the
occurrence of any Event of Default or any Unmatured Event of Default which
might mature into an Event of Default described in Section 10.1.5, have the
right to appropriate and apply to the payment of its Note any and all balances,
credits, deposits, accounts or moneys of the Borrower then or thereafter with
the Lender or other holder.
SECTION 7. REPRESENTATIONS AND WARRANTIES.
To induce the Lender to enter into this Agreement and to make the Loan
hereunder, the Borrower represents and warrants to the Lender that:
SECTION 7.1 Organization, etc. The Borrower is a corporation duly
existing and in good standing under the laws of the State of Nevada and the
Borrower is duly qualified and in good standing as a foreign corporation
authorized to do business in each jurisdiction where, because of the nature of
its activities or properties, failure to so qualify would materially and
adversely affect the financial condition, businesses, assets, operations or
properties of the Borrower or adversely affect the Collateral or the Lender's
Lien or interest thereon.
SECTION 7.2 Authorization; No Conflict. The execution and delivery
of this Agreement and the Loan Documents to which it is a party, the borrowing
hereunder, the execution and delivery of the Note, and the performance by the
Borrower of its obligations
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under this Agreement, the Note and other Related Documents are within the
Borrower's corporate powers, have been duly authorized by all necessary
corporate action (including approval by its shareholders), have received all
necessary governmental approval (if any shall be required), and do not and will
not contravene or conflict with any provision of law or of the charter or
by-laws of the Borrower or of any agreement binding upon the Borrower or any of
its properties or assets.
SECTION 7.3 Validity and Binding Nature. This Agreement is, and the
Note and the other Loan Documents to which it is a party when duly executed and
delivered will be, legal, valid and binding obligations of the Borrower
enforceable against the Borrower in accordance with their respective terms.
SECTION 7.4 Litigation and Contingent Liabilities. No litigation
(including, without limitation, derivative actions), arbitration proceedings or
governmental proceedings are pending or threatened against the Borrower which
would, if adversely determined, materially and adversely affect the financial
condition or continued operations of the Borrower or adversely affect the
Collateral or the Lender's Lien on or interest therein.
SECTION 7.5 Subsidiaries. The Borrower has no Subsidiaries.
SECTION 7.6 Employee Benefit Plans. (a) During the 12 consecutive
month period prior to the Closing Date, (i) no steps have been taken to
terminate any Pension Plan; and (ii) no contribution failure has occurred with
respect to any Pension Plan sufficient to give rise to a Lien under section
302(f)(1) of ERISA in connection with such Pension Plan; (b) no condition
exists or event or transaction has occurred with respect to any Pension Plan
which could result in the incurrence by the Borrower of liabilities, fines or
penalties in excess of $10,000 in the aggregate; and (c) the Borrower does not
have any contingent liability with respect to any post-retirement benefits
under a Welfare Plan, other than liability for continuation coverage described
in Part 6 of Title I of ERISA.
SECTION 7.7 Investment Company Act. The Borrower is not an
"investment company" or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended.
SECTION 7.8 Public Utility Holding Company Act. The Borrower is not
a "holding company," or a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company," within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
SECTION 7.9 Regulations G, T, U and X. The Borrower is not engaged
principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulations G, T, U or X of the Board of Governors of the
Federal Reserve System).
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SECTION 7.10 Citizenship. The Borrower is a "citizen of the United
States" within the meaning of Section 101 of the Federal Aviation Act of 1958,
as amended.
SECTION 7.11 Certain Related Documents. The ILFC Purchase Contract,
the Aircraft Lease and the Consent are all in full force and effect and neither
a default nor an event which, with the lapse of time or the giving of notice,
or both, would constitute a default, exists thereunder.
SECTION 7.12 Taxes. The Borrower has filed all tax returns that are
required to be filed by it under the laws of the United States of America or
any state or subdivision thereof and has paid all taxes which have become due.
There are no tax Liens filed against the Borrower or attaching to the
Collateral.
SECTION 7.13 Absence of Default. The Borrower is not in default
under any contract or contracts to which it is a party.
SECTION 7.14 Insurance. Without limiting the provisions of the
Mortgage, the Borrower and its businesses and properties are adequately insured
under policies issued by insurers of recognized responsibility. No notice of
any pending or threatened cancellation or premium increase has been received by
the Borrower with respect to any such policies. The Borrower is in compliance
with all conditions contained in such insurance policies.
SECTION 7.15 Material Disruptions. Neither the business nor the
properties of the Borrower is affected, or anticipated to be affected, by any
existing event of force majeure or other existing casualty which would have a
materially adverse effect on the financial condition, business, assets,
operations or prospects of the Borrower or the ability of the Borrower to
perform its obligations hereunder or under any Related Document or would have
an adverse affect on the Collateral or the Lender's Lien thereon or interest
therein.
SECTION 7.16 Accuracy of Information. All factual information
heretofore or contemporaneously herewith furnished by the Borrower to the
Lender for purposes of or in connection with this Agreement or any transaction
contemplated hereby is, and all other such factual information hereafter
furnished by or on behalf of the Borrower to the Lender will be, true and
accurate in every material respect on the date as of which such information is
dated or certified and not incomplete by omitting to state any material fact
necessary to make such information not misleading.
SECTION 7.17 Securities Laws. Neither the Borrower nor anyone acting
on behalf of the Borrower has directly or indirectly offered any interest in
the Note or any similar security for sale to, or solicited any offer to acquire
any such interest from, or has sold any such interest to any Person that would
subject the issuance or sale of the Note to registration under the Securities
Act of 1933, as amended, or under any applicable state securities or "blue sky"
law.
SECTION 7.18 Intentionally deleted.
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SECTION 7.19 Compliance with Laws. The Borrower is not in violation
of any law, ordinance, rule, regulation, order, policy, guideline or other
requirement of any governmental authority, which violation would subject it or
any of its respective officers to criminal liability or have a material adverse
effect on it or an adverse effect on the Collateral, and no such violation has
been alleged.
SECTION 7.20 Title to Aircraft. The Borrower has good and marketable
title to the Aircraft and the Aircraft Lease free and clear of all liens,
charges and encumbrances (except for Liens arising under the Mortgage and
Permitted Liens).
SECTION 7.21 Lessee Qualification. Based on information that the
Borrower has received in connection with its dealings with British Midland: (a)
British Midland is a duly certificated air carrier engaged in scheduled air
transportation of persons, property and mail and (b) British Midland is the
holder of a valid and effective Air Transport License and an Air Operator's
Certificate each issued by the CAA. Based on information that Borrower has
received in connection with its dealings with British Midland, there are no
actions, proceedings or investigations pending or threatened (or any basis
therefor known to Borrower) to amend, modify, suspend or revoke any such
certificate in whole or in part for additional route authorizations, which
would have any material adverse effect on any such certificate or any
operations of British Midland.
SECTION 8. BORROWER'S COVENANTS.
Until the expiration or termination of the Commitment and thereafter
until all obligations of the Borrower hereunder and under the Note and Loan
Documents are paid and performed in full, the Borrower agrees that, unless at
any time the Lender shall otherwise expressly consent in writing, the Borrower
will:
SECTION 8.1 Reports, Certificates and Other Information. Furnish to
the Lender.
SECTION 8.1.1 Reports of Borrower. Within 120 days after each fiscal
year of the Borrower and within 45 days after each quarter of each fiscal year
of the Borrower, a copy of the unaudited financial statements of the Borrower
for such period prepared in conformity with generally accepted accounting
principles consistently applied, certified by the chief financial officer of
the Borrower as presenting fairly the financial condition and results of
operations of the Borrower, and consisting of at least a balance sheet as at
the close of such period and statements of income and retained earnings for
such period and for the period of time from the beginning of such fiscal year
to the close of such quarter, in the case of quarterly statements.
SECTION 8.1.2 Certificates. Contemporaneously with the furnishing of
a copy of each annual statement and each set of quarterly statements provided
for in Section 8.1.1, a compliance certificate signed by the President or the
chief financial officer of the Borrower, and to the effect that as of such date
no Event of Default or Unmatured Event of Default has
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occurred and is continuing, or, if there is any such event, describing it and
the steps, if any, being taken to cure it.
SECTION 8.1.3 British Midland Reports. (i) Within 90 days after each
fiscal year of British Midland, a copy of the annual audited profit and loss
account and balance sheet of British Midland, and (ii) within 10 days after
receipt from British Midland, copies of each other report supplied to the
Borrower pursuant to the Aircraft Lease.
SECTION 8.1.4 Reports to SEC and to Shareholders. Promptly upon the
filing or making thereof, copies of each filing and report made by the Borrower
with or to any securities exchange or the Securities and Exchange Commission,
and of each communication from the Borrower to shareholders generally.
SECTION 8.1.5 Notice of Default and Litigation. Forthwith upon
learning of the occurrence of any of the following, written notice thereof,
describing the same and the steps being taken by the Borrower with respect
thereto: (i) the occurrence of an Event of Default or an Unmatured Event of
Default, or of a default under the ILFC Purchase Contract by ILFC, or the
Aircraft Lease by British Midland, (ii) the institution of, or any adverse
determination in, any litigation, arbitration proceeding or governmental
proceeding which could have a material adverse effect on the Borrower or an
adverse effect on the Collateral, (iii) the failure of the Borrower to make a
required contribution to any Pension Plan if such failure is sufficient to give
rise to a Lien under section 302(f)(1) of ERISA, (iv) the institution of any
steps by the Borrower to withdraw from or terminate any Pension Plan, or the
taking of any action with respect to a Pension Plan which could result in the
requirement that the Borrower furnish a bond or other security to the Pension
Benefit Guaranty Corporation or such Pension Plan, or the occurrence of any
event with respect to any Pension Plan which could result in the incurrence by
the Borrower of any liability, fine or penalty in excess of $10,000 in the
aggregate or any increase in excess of $10,000 in the aggregate in the
contingent liability of the Borrower with respect to any post-retirement
Welfare Plan benefit, (v) the commencement of any dispute which might lead to
the modification, transfer, revocation, suspension or termination of any Loan
Document, (vi) an Event of Loss, or (vii) any event which would have a material
adverse effect on the business, operations, assets, financial condition or
prospects of the Borrower or the ability of the Borrower to perform its
respective obligations under this Agreement or the Related Documents or would
have an adverse effect on the Collateral or the Lender's Lien thereon or
interest therein.
SECTION 8.1.6 Withdrawal Liability. With respect to each
"multiemployer plan," as defined in section 4001 of ERISA as to which the
Borrower may have any liability, (i) no less frequently than annually, a
written estimate (which shall be based on information received from each such
plan, it being expressly understood that the Borrower shall take all reasonable
steps to obtain such information) of the withdrawal liability that would be
incurred by the Borrower in the event that the Borrower were to completely
withdraw from that plan, and (ii) written notice thereof, as soon as it has
reason to believe (on the basis of the most recent information available to it)
that the sum of (a) the withdrawal liability that would be
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incurred by the Borrower if the Borrower completely withdrew from all
multiemployer plans as to which the Borrower has an obligation to contribute,
and (b) the aggregate amount of the outstanding withdrawal liability (without
unaccrued interest) incurred by the Borrower to multiemployer plans, would
exceed $10,000.
SECTION 8.1.7 Related Documents; Aircraft. Immediately upon receipt
or delivery by the Borrower, copies of any notices of default from or to any
other Person which is a party to, or any other correspondence with any such
Person with respect to, the ILFC Purchase Contract, the Aircraft Lease, or the
Aircraft.
SECTION 8.1.8 Other Information. From time to time, such other
information concerning the Borrower or British Midland as the Lender may
reasonably request.
SECTION 8.2 Books. Records and Inspections. Maintain complete and
accurate books and records and (a) if no Unmatured Event of Default or Event of
Default shall have occurred and be continuing, at reasonable times and upon
reasonable notice or (b) if an Event of Default has occurred and is continuing,
at any time without prior notice, permit access by the Lender to the books and
records of the Borrower; and permit the Lender to make copies of such books and
records; and permit the Lender to inspect the properties and operations of the
Borrower.
SECTION 8.3 Insurance. Maintain such insurance as may be required by
(i) law and such other insurance, to such extent and against such hazards and
liabilities, as is customarily maintained by companies similarly situated and
(ii) the Mortgage.
SECTION 8.4 Taxes and Liabilities. Pay when due all taxes,
assessments and other liabilities, except as contested in good faith by
appropriate proceedings and for which adequate reserves have been established
and are being maintained in accordance with generally accepted accounting
principles (but only so long as such proceedings do not involve any danger of
the attachment, sale, forfeiture or loss of any item of Collateral or any
interest therein, including the Lender's Lien therein).
SECTION 8.5 Purchase or Redemption of Borrower's Securities: Dividend
Restrictions. Not purchase or redeem any shares of the capital stock of the
Borrower, declare or pay any dividends thereon (other than dividends payable on
common stock which has no rights greater than common stock outstanding on the
date of execution and delivery hereof), make any distribution to stockholders
or set aside any funds for any such purpose.
SECTION 8.6 Mergers, Consolidations. Not be a party to any merger or
consolidation, or purchase or otherwise acquire all or substantially all of the
assets or stock of any class of, or any partnership or joint venture interest
in, any other Person, or sell, transfer, convey or lease all or any substantial
part of its assets.
SECTION 8.7 Unconditional Purchase Obligations. Not enter into or be a
party to any contract for the purchase of materials, supplies or other property
or services, if such
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contract requires that payment be made by it regardless of whether delivery is
ever made of such materials, supplies or other property or services.
SECTION 8.8 Use of Proceeds. Not use or permit any proceeds of the
Loan to be used, either directly or indirectly, for the purpose, whether
immediate, incidental or ultimate, of "purchasing or carrying any margin stock"
within the meaning of Regulations G, T, U or X of the Board of Governors of the
Federal Reserve System, as amended from time to time.
SECTION 8.9. Other Agreements. Not enter into any agreement containing
any provision which would be violated or breached by the performance of its
obligations hereunder or under any Related Document or any other instrument or
document delivered or to be delivered by it hereunder or thereunder or in
connection herewith or therewith.
SECTION 8.10 Citizenship. Continue to be a "citizen of the United
States" within the meaning of Section 101 of the Federal Aviation Act of 1958,
as amended.
SECTION 8.11 Employee Benefit Plans. Maintain each Plan as to which it
may have any liability, in compliance in all material respects with all
applicable requirements of law.
SECTION 8.12 Collateral Documents. Cause the Mortgage to be and remain
a first, valid, prior and perfected Lien on, and security interest in the
Collateral (free of all other Liens whatsoever other than Permitted Liens).
SECTION 8.13 Compliance with Laws. Comply with all Federal, State and
local laws, rules and regulations and with any foreign laws, rules and
regulations related to its businesses and properties (including, without
limitation, all such laws, rules and regulations relating to hazardous
materials or the disposal thereof) if the failure so to comply would have a
materially adverse effect on its financial condition, businesses, assets,
operations or properties or an adverse Effect on the Collateral.
SECTION 8.14 Maintenance of Permits. Maintain all permits, licenses
and consents as may be required for the conduct of its business by any Federal,
State or local government agency or instrumentality or by any foreign
government or governmental entity (including, without limitation, any such
license, consent or permit relating to hazardous materials or the disposal
thereof) if the failure to maintain such licenses, permits and consents would
have a materially adverse effect on its financial condition, businesses,
assets, operations or properties or would have an adverse effect on the
Collateral.
SECTION 8.15 Transaction with Affiliates. Not enter into, or cause,
suffer or permit to exist:
a. any arrangement or contract with any of its Affiliates requiring
any payments to be made by the Borrower to an Affiliate with respect
to services, where compensation is due whether or not such services
shall be received by the Borrower; and
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b. any other transaction, arrangement or contract (including, without
limitation, any employment contract or agreement as to payment of a director's
fees) with any of its Affiliates which would not be entered into by a prudent
Person in the position of the Borrower, or which is on terms which are less
favorable than those otherwise reasonably attainable on an arm's-length basis
from, any Person which is not one of its Affiliates.
SECTION 8.16 Changes to Related Documents. Not amend, supplement or
otherwise modify, or consent to the amendment, supplement or modification of,
the ILFC Purchase Contract, the Aircraft Lease, or the Consent, or waive
performance or observance by any Person of its obligations under the ILFC
Purchase Contract, Aircraft Lease, or Consent, without the prior written
consent of the Lender. If an Unmatured Event of Default or an Event of Default
has occurred and is continuing, promptly following a request from the Lender to
do so, at the Borrower's expense, the Borrower shall take all such lawful
action as the Lender may request to enforce or secure the performance by any
Person of its obligations under or in respect of the ILFC Purchase Contract,
Aircraft Lease or Consent in accordance with the respective terms thereof, and
exercise any right, power, remedy or privilege available to the Borrower
thereunder or in connection therewith to the extent and in the manner directed
by the Lender, including, without limitation, the institution of legal
proceedings to compel or enforce performance by such Person of its obligations
thereunder or otherwise, or to recover any payment due to the Borrower
thereunder or otherwise.
SECTION 8.17 Performance of Obligations Under ILFC Purchase Contract
and Aircraft Lease. Duly and punctually pay and perform each of its
obligations under the ILFC Purchase Contract, if any, and the Aircraft Lease.
SECTION 8.18 Limitation on Activities of Borrower. Not engage in any
business other than the business of acquiring and owning the Aircraft and the
Aircraft Lease. Without limiting the foregoing, the Borrower shall not (i)
create, incur, assume or suffer to exist any indebtedness other than
indebtedness in connection with this Agreement, the Mortgage or Interest Rate
Contracts entered into with respect to the Loan or (ii) be a party to any lease
other than the Aircraft Lease, (iii) assume, guarantee, or endorse, or
otherwise become directly or contingently liable in respect of, any obligation
of any Person, except by way of endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary course of
business, (iv) make any loan or advance or extend any credit to any Person, or
otherwise purchase or acquire the capital stock or obligations of, or any
investment in, any Person, (v) apply for or become liable in respect of any
letter of credit or acceptance financing, (vi) permit any Person other than IAI
to hold any beneficial interest in the Borrower during the term of this
Agreement, (vii) make any expenditures for fixed or capital assets of any kind
except as contemplated by the Related Documents, or (viii) increase the salary,
compensation or bonus of any officer, director or employee, or provide any such
Person with any pension, vacation or insurance benefit of any kind or adopt,
establish or maintain any program to provide any such benefit.
SECTION 8.19 Payments Under Aircraft Lease. Cause all other payments
required to be made by British Midland or any other obliger under or in respect
of the Aircraft Lease
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(including, without limitation, scheduled rent) and all payments to be made by
the counterparty in connection with any Interest Rate Contract entered into
with respect to the Loan to be made directly into the Collateral Account, or
such other account as the Lender shall specify in a written notice to the
Borrower.
SECTION 8.20 Notification of Status of Lease. Notify the Lender
monthly in writing of the status of reletting the Aircraft, commencing 90 days
prior to April 19, 1997.
SECTION 8.21 Lessee Approval. Upon the termination of the Aircraft
Lease, relet and deliver the Aircraft to a new lessee only upon the written
consent of the Lender.
SECTION 8.22 Estoppel Certificates. Request that British Midland
deliver an estoppel certificate pursuant to Article 22 of the Aircraft Lease no
less than once every six months and, if requested by the Lender, at up to one
additional time during any year.
SECTION 9. CONDITIONS OF LENDING.
The obligation of the Lender to make the Loan is subject to the
following conditions precedent:
SECTION 9.1 Documents. The Lender shall have received all of the
following, each duly executed and dated as of the date of the Loan (or such
other date prior thereto as shall be satisfactory to the Lender), in form and
substance satisfactory to the Lender:
SECTION 9.1.1 Note. The Note of the Borrower payable to the order of
the Lender.
SECTION 9.1.2 Remarketing Agreement. The Remarketing Agreement duly
executed by ILFC.
SECTION 9.1.3 Mortgage. The Mortgage, duly executed by the Borrower,
covering the Aircraft.
SECTION 9.1.4 Consent. The Consent duly executed by British Midland.
SECTION 9.1.5 Resolutions: Corporation Documents. Copies, duly
certified by the Secretary or Assistant Secretary of the Borrower or ILFC, as
the case may be, of: (I) the certificate of incorporation and by-laws of the
Borrower and ILFC; (ii) resolutions of the Board of Directors of the Borrower
and ILFC authorizing the execution, delivery and performance, respectively, of
this Agreement, the Note and the other Loan Documents to which it is a party;
and (iii) the names of the officer or officers of the Borrower and ILFC
authorized to sign this Agreement, the Note and other Loan Documents to which
the Borrower or ILFC is a party, together with a sample of the true signature
of each such officer. (The Lender may conclusively rely on such certificates
until formally advised by a like certificate of any changes therein.).
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SECTION 9.1.6 Good Standing Certificates. Certificates of good
standing for the Borrower and ILFC in each jurisdiction, where, because of the
nature of their respective activities or properties, such qualification is or
will be required and the failure so to qualify would materially and adversely
affect (i) such Person's business, assets, financial condition, operations or
prospects or (ii) the ability of such Person to perform its obligations in
connection with this Agreement or the Loan Documents to which it is a party or
would adversely affect the Collateral or the Lender's Lien thereon or interest
therein.
SECTION 9.1.7 Opinion of Counsel for the Borrower and ILFC and Letter
from ▇▇▇▇▇ & ▇▇▇▇▇. The opinion of (a) ▇▇▇▇▇▇ & ▇▇▇▇▇, counsel for the
Borrower, addressed to the Lender in the form attached hereto as Exhibit E, and
(b) ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, counsel for ILFC, addressed to the Lender in the form
attached hereto as Exhibit F, and a Letter from ▇▇▇▇▇ & ▇▇▇▇▇, special United
Kingdom counsel, addressed to the Lender and ILFC in the form attached hereto
as Exhibit G.
SECTION 9.1.8 Consents. etc. Certified copies of all documents
evidencing any necessary corporate action, consents and governmental approvals
(if any) with respect to this Agreement, the Note and the other Related
Documents.
SECTION 9.2 Mortgage and CAA Filings. The Lender shall have received
evidence that the Mortgage has been duly filed with the CAA and the English
Companies Registry.
SECTION 9.3 Insurance. The Lender shall have received evidence that
the requirements of Section 5.1 of the Mortgage covering the Aircraft shall
have been met.
SECTION 9.4 Airworthiness. The Lender shall have received evidence
that: (i) the Aircraft has been duly certified by the CAA as to type and
airworthiness; and (ii) an application for registration of the Aircraft shall
have been duly filed with the CAA.
SECTION 9.5 Financing Statements. The Lender shall have received
Uniform Commercial Code financing statements covering all of the security
interests created by or pursuant to the granting clause of the Mortgage which
shall have been executed and delivered by (i) the Borrower, as debtor, and, if
required by applicable law, the Lender, and (ii) for precautionary purposes
only and not as an admission that the Aircraft Lease is other than a true
lease, British Midland, as debtor, the Borrower, as secured party, and, if
required by applicable law, the Lender, as assignee of such secured party, as
are deemed necessary or desirable by the Lender to protect the interests in the
Aircraft, and all such financing or similar statements shall have been duly
filed in all such places as, in the opinion of counsel for the Lender are
necessary or desirable to perfect said security or other interests.
SECTION 9.6 Pose. The Lender shall have received all original copies
in Borrower's possession of the Aircraft Lease (including all amendments and
modifications thereto); provided, however, one original copy of the Aircraft
Lease marked "Lessor's Copy" may be retained in Borrower's possession but
Borrower shall, at any time, deliver such Aircraft Lease immediately to Lender
upon the request therefor, and one original copy of the Aircraft
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Lease marked "Lessee's Copy" may be retained in British Midland's possession
and, provided further that Borrower will use its reasonable best efforts to
cause each original copy of the Aircraft Lease to be marked to give notice of
the Lender's Lien therein with a legend to read as follows: "The Lessor's
right, title and interest in, under and to this Aircraft Lease Agreement is
subject to a security interest in favor of Continental Bank N.A. as Lender.
SECTION 9.7 The Purchase Agreement. The Lender shall have received (a)
executed copies of the ILFC Purchase Contract, (b) copies of a full warranty
▇▇▇▇ of sale and an Aircraft ▇▇▇▇ of Sale, each from ILFC to the Borrower,
transferring good title to the Aircraft, free and clear of all liens and
encumbrances other than Permitted Liens and in form and substance satisfactory
to the Lender, and (c) copies of the assignment transferring ILFC's interest in
the Aircraft Lease to the Borrower, free and clear of all liens and
encumbrances other than Permitted Liens and in form and substance satisfactory
to the Lender.
SECTION 9.8 Legal Fees. Borrower shall have paid the Lender the legal
fees and expenses of the Lender, incurred by the Lender in connection with the
preparation, negotiation and execution of this Agreement, the Note and the Loan
Documents
SECTION 9.9 Collateral Account. The Lender shall have received
evidence that the Collateral Account shall have been established in accordance
with the Mortgage.
SECTION 9.10 ▇▇▇▇ of Sale from Borrower. The Lender shall have
received a full warranty ▇▇▇▇ of sale, duly executed in blank by the Borrower,
together with such other documents as the Lender believes are necessary to
facilitate the transfer of the Aircraft after the occurrence of an Event of
Default.
SECTION 9.11 Intentionally deleted.
SECTION 9.12 Intentionally deleted.
SECTION 9.13 Lender's Fee. The Lender shall have received all agreed
upon fees and expenses.
SECTION 9.14 Other Requirements. The obligation of the Lender to make
the Loan is subject to the following further conditions precedent that:
SECTION 9.14.1 No Default. (a) No Event of Default, or Unmatured
Event of Default, has occurred and is continuing or will result from the making
of the Loan, (b) the representations and warranties of the Borrower contained
in Section 7 are true and correct, (c) the representations and warranties of
ILFC contained in the Remarketing Agreement are true and correct, (d) ILFC has
complied with all of its covenants contained in the Remarketing Agreement, and
(e) there has been no material adverse change in the business, financial
condition, operations or assets of either the Borrower or ILFC, or any material
change in the Collateral.
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SECTION 9.14.2 Litigation. No litigation (including, without
limitation, derivative actions), arbitration proceedings or governmental
proceedings not disclosed in writing by the Borrower or ILFC to the Lender
prior to the date of the requested Loan hereunder is pending or known to be
threatened against the Borrower or ILFC and no material development not so
disclosed has occurred in any litigation (including, without limitation,
derivative actions), arbitration proceedings or governmental proceedings so
disclosed, which in the opinion of the Lender is likely to materially adversely
affect the financial position or business of the Borrower or ILFC or impair the
ability of the Borrower or ILFC to perform its obligations under this Agreement
or the Related Documents to which it is a party.
SECTION 9.14.3 Confirmatory Certificates. The Lender shall have
received certificates dated the date of such requested Loan and signed by the
President, the chief financial officer or the Treasurer of the Borrower and
ILFC as to the matters set out in Section 9.14.1 with respect to each, and such
other documents as the Lender may request in support thereof.
SECTION 10. EVENTS OF DEFAULT AND THEIR EFFECT.
SECTION 10.1 Events of Default. Each of the following shall
constitute an Event of Default under this Agreement:
SECTION 10.1.1 Non-Payment of Loan. etc. Default, and continuance
thereof, in the payment when due of any principal of or interest on the Loan or
any other amount due hereunder or due under any Loan Document.
SECTION 10.1.2 Default of Other Indebtedness. Default in the payment
when due (subject to any applicable grace period), whether by acceleration or
otherwise, of any indebtedness (other than indebtedness hereunder or under the
Note) of, or guaranteed by, the Borrower or ILFC; or default in the performance
or observance of any other obligation or condition with respect to any such
other indebtedness if the effect of such default is to accelerate the maturity
of any such indebtedness or to permit the holder or holders thereof, or any
trustee or agent for such holders, to cause such indebtedness to become due and
payable prior to its expressed maturity; provided, in the case of ILFC, the
aggregate principal amount of all indebtedness subject to defaults described
above shall exceed $20,000,000.
SECTION 10.1.3 Other Material Obligations. Default in the payment when
due, or in the performance or observance of, (i) any obligation or agreement of
the Borrower or ILFC to or with the Lender (other than any obligation hereunder
or under the Note, the Mortgage or the Remarketing Agreement) or (ii) any
material obligation of, or material condition agreed to by the Borrower or ILFC
with respect to any material purchase or lease of goods or services or other
material obligation if the effect of such default is to permit the other party
to such transaction to accelerate the obligations of the Borrower or ILFC
thereunder or terminate or rescind such transaction (except only to the extent
that the existence of any such default is being contested by the Borrower or
ILFC in good faith and by appropriate
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proceedings and for which adequate reserves shall have been established and are
being maintained in accordance with generally accepted accounting principles
(but only so long as such proceedings do not involve any danger of the sale,
forfeiture or loss of any item of Collateral or any interest therein, including
the Lender's security interest therein)).
SECTION 10.1.4 Aircraft Lease. An Event of Default as set forth in
Article 27 of the Aircraft Lease shall have occurred and be continuing.
SECTION 10.1.5 Bankruptcy, Insolvency, etc. The Borrower or ILFC
becomes insolvent or generally fails to pay, or admits in writing its inability
to pay, debts as they become due; or the Borrower or ILFC applies for, consents
to, or acquiesces in the appointment of, a trustee, receiver or other custodian
for the Borrower or ILFC or any property of either thereof, or makes a general
assignment for the benefit of creditors; or, in the absence of such
application, consent or acquiescence, a trustee, receiver or other custodian is
appointed for the Borrower or ILFC or for a substantial part of the property of
either thereof unless (i) the Borrower or ILFC institutes appropriate
proceedings to contest or discharge such appointment within 10 days and
thereafter continuously and diligently prosecutes such proceedings, (ii) such
appointment is in fact discharged within 60 days and (iii) such proceedings do
not involve any danger of forfeiture or loss of any item of Collateral or any
interest therein, including the Lender's security interest, or of any of the
rights of the Lender in any of the Loan Documents; or any bankruptcy,
reorganization, debt arrangement, or other case or proceeding under any
bankruptcy or insolvency law, or any dissolution or liquidation proceeding is
commenced in respect of the Borrower or ILFC, unless (v) such case or
proceeding is not commenced by the Borrower or ILFC, (w) such case or
proceeding is not consented to or acquiesced in by the Borrower or ILFC, (x)
the Borrower or ILFC institutes appropriate proceedings to dismiss such case or
proceedings within 10 days and thereafter continuously and diligently
prosecutes such proceeding, (y) such case or proceeding is in fact dismissed
within 60 days after the commencement thereof and (z) such proceedings do not
involve any danger of forfeiture or loss of any item of Collateral or any
interest therein, including the Lender's security interest, or of any of the
rights of the Lender in any of the Loan Documents; or the Borrower or ILFC
takes any action to authorize, or in furtherance of, any of the foregoing.
SECTION 10.1.6 Insurance; Citizenship. The Borrower fails to comply
with the provisions of Section 5.1 of the Mortgage, or the insurance required
by such Section lapses or is terminated for any reason, or Borrower fails to
comply with the provisions of either Section 8.3 or 8. 10.
SECTION 10.1.7 Non-Compliance with this Agreement and the Related
Documents. Failure by the Borrower to comply with or to perform any provision
of this Agreement or any Loan Document or any Related Document (and not
constituting an Event of Default under any of the other provisions of this
Section 10) and continuance of such failure for 30 days after the Borrower
first learns of such failure.
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SECTION 10.1.8 Representations and Warranties. Any representation or
warranty made by or on behalf of the Borrower or ILFC herein or in the
Remarketing Agreement or any other Related Document is breached or is false or
misleading in any material respect, or any schedule, certificate, financial
statement, report, notice, or other writing at any time furnished by or on
behalf of the Borrower or ILFC to the Lender or any Lender is false or
misleading in any material respect on the date as of which the facts therein
set forth are stated or certified.
SECTION 10.1.9 Litigation. There shall be entered against the Borrower
or ILFC one or more judgments or decrees in excess of $10,000 in the aggregate
at any one time outstanding in the case of the Borrower, and in excess of
$25,000,000 in the aggregate at any one time outstanding in the case of ILFC,
excluding those judgments or decrees (i) that shall have been outstanding less
than the applicable time for filing an appeal so long as execution is not
levied thereunder (or in respect of which Borrower or ILFC, as applicable,
shall at the time in good faith be prosecuting an appeal or proceeding for
review and in respect of which a stay of execution or appropriate appeal bond
shall have been obtained pending such appeal or review) or (ii) for and to the
extent which the Borrower or ILFC, as the case may be, is insured and with
respect to which the insurer has assumed responsibility in writing or for and
to the extent which the Borrower or ILFC, as the case may be, is otherwise
indemnified if the terms of such indemnification and the Person providing such
indemnification are satisfactory to the Lender.
SECTION 10.1.10 Employee Benefit Plans. Institution of any steps by
Borrower, ILFC or any other Person to terminate a Pension Plan if as a result
of such termination the Borrower or ILFC could be required to make a
contribution to such Pension Plan, or could incur a liability or obligation to
such Pension Plan, in excess of $10,000 in the case of the Borrower or
$25,000,000 in the case of ILFC, or a contribution failure occurs with respect
to any Pension Plan sufficient to give rise to a Lien under section 302(f)(1)
of ERISA (as in effect on the Closing Date); or the Borrower or ILFC shall
withdraw from one or more "multiemployer plans," as defined in section 4001 of
ERISA, to which it has an obligation to contribute and the withdrawal liability
(without unaccrued interest) to multiemployer plans as a result of such
withdrawal or withdrawals (including any outstanding withdrawal liability on
the date of such withdrawal) equals or exceeds $10,000 in the case of the
Borrower or $25,000,000 in the case of ILFC.
SECTION 10.1.11 Certain Related Documents Defaults. Any of the Related
Documents shall fail to remain in full force and effect, except to the extent
such Related Document shall have expired or terminated as the result of the
passage of time or by its terms as the result of full compliance by British
Midland or ILFC of its obligations thereunder; failure by the Borrower to
maintain the Lien and priority of the Mortgage as against any Person; or
failure by ILFC to observe its covenants under the Remarketing Agreement, or
any action shall be taken to discontinue, or contest the validity, binding
nature or enforceability of, any Related Document.
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SECTION 10.1.12 Ownership of Borrower. ILFC shall cease to own
directly at least 300,000 of the issued and outstanding shares of the preferred
stock of IAI.
SECTION 10.2 Effect of Event of Default. If any Event of Default
described in Section 10.1.5 shall occur, the Commitment (if it has not
theretofore terminated) shall immediately terminate and the Note and all other
amounts owing hereunder shall become immediately due and payable, all without
notice of any kind; and, in the case of any other Event of Default, the Lender
may declare the Commitment (if it has not theretofore terminated) to be
terminated and the Note and all other amounts owing hereunder to be immediately
due and payable, whereupon the Commitment (if it has not theretofore
terminated) shall immediately terminate and the Note and all other amounts
owing hereunder shall become immediately due and payable, all without notice of
any kind. The Lender shall promptly advise the Borrower of any such
declaration, but failure to do so shall not impair the effect of such
declaration.
SECTION 10.3 Borrower's Right to Cure Aircraft Lease Default.
Notwithstanding Section 10.2, if British Midland fails to make any payment of
rent under the Aircraft Lease after it becomes due, or fails to perform or
observe any other covenant under the Aircraft Lease, and the failure can be
cured by the payment of money, and if no Event of Default or Unmatured Event of
Default which is not also an Event of Default under the Aircraft Lease exists,
then at any time within 3 Banking Days after the expiration of the applicable
period allowed under the Aircraft Lease for British Midland to cure the
failure, Borrower shall have the right to (but need not) pay to Lender (in the
case of the failure of British Midland to pay rent) an amount equal to any
principal of and interest on the Note then due and payable (including interest
on any overdue amounts), or make payments (in the case of any other covenant
default) sufficient to cause the performance of such covenant. The foregoing
cure right may not be so exercised with respect to more than three consecutive
rent defaults.
SECTION 11. Intentionally deleted.
SECTION 12. GENERAL.
SECTION 12.1 Waiver; Amendments. The provisions of this Agreement and
of each other Loan Document may from time to time be amended, modified or
waived, if such amendment, modification or waiver is in writing and consented
to by the Borrower and the Lender. No failure or delay on the part of the
Lender or the holder of the Note in exercising any power or right under this
Agreement or any other Loan Document shall operate as a waiver thereof, nor
shall any single or partial exercise of any such power or right preclude any
other or further exercise thereof or the exercise of any other power or right.
No notice to or demand on the Borrower in any case shall entitle it to any
notice or demand in similar or other circumstances. No waiver or approval by
the Lender or the holder of the Note under this Agreement or any other Loan
Document shall, except as may be otherwise stated in such waiver or approval,
be applicable to subsequent transactions. No waiver or approval hereunder shall
require any similar or dissimilar waiver or approval thereafter to be granted
hereunder.
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SECTION 12.2 Confirmations. The Borrower and the Lender agree from
time to time, upon written request received by it from the other, to confirm to
the other in writing the aggregate unpaid principal amount of the Loan then
outstanding.
SECTION 12.3 Notices. Any notice hereunder shall be in writing and,
(i) if by telegram or telex, shall be deemed to have been given when sent, (ii)
if mailed, shall be deemed to have been given three days after the date when
sent by registered or certified mail, postage prepaid, (iii) if sent by
overnight delivery service shall be deemed to have been given one Banking Day
after the date sent and (iv) if sent by facsimile transmission, shall be deemed
to have been given when sent and confirmed, and, in each case, addressed, as
appropriate, at its address shown below its signature hereto, or at such other
address as it may, by written notice pursuant to this Section, have designated
as its address for such purpose.
SECTION 12.4 Computations. Where the character or amount of any asset
or liability or item of income or expense is required to be determined, or any
consolidation or other accounting computation is required to be made, for the
purpose of this Agreement or any Related Document, such determination or
calculation shall, to the extent applicable and except as otherwise specified
in this Agreement, be made in accordance with generally accepted accounting
principles applied on a basis consistent with those at the time in effect.
SECTION 12.5 Expenses. The Borrower agrees, whether or not any Loan is
made hereunder, to pay the Lender upon demand for all reasonable expenses,
including reasonable fees of attorneys and paralegals for the Lender (who may
be employees of the Lender), incurred by the Lender in connection with (i) the
preparation, negotiation and execution of this Agreement, the Note, the Loan
Documents and any other instrument or document provided for herein or delivered
or to be delivered hereunder or in connection herewith, (ii) the preparation,
negotiation and execution of any and all amendments to this Agreement, and the
Note or any such other instrument or documents. The Borrower further agrees to
pay, and to save the Lender harmless from all liability for, any stamp or other
taxes which may be payable in connection with the execution or delivery of this
Agreement, the borrowings hereunder, or the issuance of the Note or any other
Loan Documents. The Borrower also agrees to reimburse the Lender upon demand
for all reasonable out-of-pocket expenses (including attorneys' fees and legal
expenses) incurred by the Lender in connection with (x) the negotiation of any
restructuring or "work-out," whether or not consummated, of any obligations to
the Lender hereunder and under the other Loan Documents and (y) the enforcement
of any such obligations, including, without limitation, any costs incurred in
remarketing the Aircraft. The Borrower also agrees to indemnify and hold the
Lender harmless from any loss or expense which may arise or be created by the
acceptance of telephonic or other instructions for making the Loan or
disbursing the proceeds thereof.
SECTION 12.6 Captions. Section captions used in this Agreement are for
convenience only, and shall not affect the construction of this Agreement.
SECTION 12.7 Intentionally deleted.
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SECTION 12.8 Participations. The Lender may at any time sell to one or
more commercial banks or other Persons (each of such commercial banks and other
Persons being herein called a "Participant") participating interests in the
Loan or other interests of the Lender hereunder; provided, however, that
(a) no participation contemplated in this Section 12.8 shall
relieve the Lender from its obligations hereunder or under any other
Loan Document;
(b) the Lender shall remain solely responsible for the performance
of its obligations hereunder and under the other Loan Documents;
(c) the Borrower and the Lender shall continue to deal solely and
directly with the Lender in connection with the Lender's rights and
obligations under this Agreement and each of the other Loan Documents;
(d) no Participant, unless such Participant is an Affiliate of the
Lender, shall be entitled to require the Lender to take or refrain
from taking any action hereunder or under any other Loan Document,
except that the Lender may agree with any Participant that the Lender
will not, without such Participant's consent, take any actions of the
type described in Section 12.1; and
(e) the Borrower shall not be required to pay any amount under
Section 4.4 that is greater than the amount which it would have been
required to pay had no participating interest been sold.
The Borrower acknowledges and agrees that each Participant, for purposes of
Sections 4.4, 4.8, and 12 5, shall be considered a Lender.
SECTION 12.9 Governing Law. THIS AGREEMENT, THE NOTE, AND EACH OTHER
LOAN DOCUMENT SHALL BE CONTRACTS MADE UNDER AND GOVERNED BY THE LAWS OF THE
STATE OF ILLINOIS WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES. ALL OBLIGATIONS
OF THE BORROWER AND RIGHTS OF THE LENDER AND ANY OTHER HOLDER OF ANY NOTE
EXPRESSED HEREIN OR IN ANY NOTE SHALL BE IN ADDITION TO AND NOT IN LIMITATION
OF THOSE PROVIDED BY APPLICABLE LAW.
SECTION 12.10 Successors and Assigns. This Agreement shall be binding
upon the Borrower and the Lender and their respective successors and assigns,
and shall inure to the benefit of the Borrower and the Lender, and their
successors and assigns; provided, however, that the Borrower may not assign its
obligations hereunder.
SECTION 12.11 Submission to Jurisdiction. THE LENDER MAY ENFORCE ANY
CLAIM ARISING OUT OF THIS AGREEMENT OR THE LOAN DOCUMENTS IN ANY STATE OR
FEDERAL COURT HAVING SUBJECT MATTER JURISDICTION AND
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LOCATED IN CHICAGO, ILLINOIS. FOR THE PURPOSES OF ANY ACTION OR PROCEEDING
INSTITUTED WITH RESPECT TO ANY SUCH CLAIM, THE BORROWER HEREBY IRREVOCABLY
SUBMITS TO THE JURISDICTION OF SUCH COURTS. THE BORROWER IRREVOCABLY CONSENTS
TO THE SERVICE OF PROCESS OUT OF SAID COURTS BY MAILING A COPY THEREOF, BY
REGISTERED MAIL, POSTAGE PREPAID, TO THE BORROWER, AND AGREES THAT SUCH
SERVICE, TO THE FULLEST EXTENT PERMITTED BY LAW (I) SHALL BE DEEMED IN EVERY
RESPECT EFFECTIVE SERVICE OF PROCESS UPON IT IN ANY SUCH SUIT, ACTION OR
PROCEEDING AND (II) SHALL BE TAKEN AND HELD TO BE VALID PERSONAL SERVICE UPON
AND PERSONAL DELIVERY TO IT. NOTHING HEREIN CONTAINED SHALL AFFECT THE RIGHT OF
THE LENDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR PRECLUDE
THE LENDER FROM BRINGING AN ACTION OR PROCEEDING IN RESPECT HEREOF IN ANY OTHER
COUNTRY, STATE OR PLACE HAVING JURISDICTION OVER SUCH ACTION. THE BORROWER
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY HAVE OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY COURT LOCATED IN CHICAGO,
ILLINOIS AND ANY CLAIM ThAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH
A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
SECTION 12.12 JURY TRIAL. THE BORROWER AND THE LENDER HEREBY EXPRESSLY
WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR
DEFEND ANY RIGHTS UNDER THIS AGREEMENT OR ANY LOAN DOCUMENT TO WHICH IT IS A
PARTY, OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR
WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR
ARISING FROM ANY RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT OR ANY
LOAN DOCUMENT, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED
BEFORE A COURT AND NOT BEFORE A JURY.
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Delivered at Chicago, Illinois, as of the day and year first above written.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name Printed: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: President
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Address:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
CONTINENTAL BANK N.A.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
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Name Printed: ▇▇▇▇▇▇▇ ▇▇▇▇▇
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Title: Vice President
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Address:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Vice President -
Leasing and Finance Company Division
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telex: 25-3412
(Answerback: CONTL BK CGO)
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
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