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EXHIBIT 4.10
SENIOR TERM LOAN AGREEMENT
THIS SENIOR TERM LOAN AGREEMENT, dated as of June 23, 1997, is entered into
between IAI III, Inc., a Nevada Corporation ("Borrower") and CITY NATIONAL BANK,
A NATIONAL BANKING ASSOCIATION, ("Lender"), in light of the following facts:
WHEREAS, Borrower and International Lease Finance Corporation, a California
Corporation ("ILFC"), have entered into that certain Aircraft Purchase and Sale
Agreement (the "Aircraft Sale Agreement"), pursuant to which Borrower purchased
from ILFC one (1) Boeing 737-4Q8 aircraft bearing manufacturers serial number
25168 and Civil Aviation Authority of the United Kingdom ("CAA") registration
number G-BSNV with (2) CFM56-3C-1 engines bearing manufacturer's serial numbers
726404 and 726406 (or any replacement engines for either of the foregoing
engines) (the "Aircraft") which is currently being leased to British Airways
Plc, an English Company ("Lessee");
WHEREAS, Borrower has requested that Lender provide Borrower with a senior
loan of Twenty-Two Million Five Hundred Thousand U.S. Dollars (US$ 22,500,000)
to finance a portion of the purchase price in connection with Borrower's
purchase of the Aircraft from ILFC; and
WHEREAS, on the terms and conditions contained herein, Lender has agreed to
provide Borrower with a senior loan of Twenty-Two Million Five Hundred Thousand
U.S. Dollars (US$ 22,500,000) to finance a portion of the purchase price of the
aircraft.
NOW THEREFORE, in consideration of the foregoing, mutual covenants and
conditions contained herein and other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the parties hereto agree
as follows:
1. DEFINITIONS; CONSTRUCTION
1.1 Definitions. For purposes of this Agreement, the following
capitalized terms shall have the following meanings:
"Agreement" shall mean this Senior Term Loan Agreement between Borrower
and Lender, together with all of the exhibits and schedules hereto.
"Aircraft" shall have the meaning ascribed to such term in the
introduction of this Agreement.
"Aircraft Loan Date" means the date of the Borrowing of the Loan for the
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financing of the Aircraft.
"Aircraft Secured Promissory Note" shall have the meaning ascribed to
such term in Section 2.3 hereof.
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"Asset" shall mean any interest of a Person in any kind of property or
asset, whether real, personal, or mixed real and personal, or whether tangible
or intangible.
"Borrower" shall have the meaning set forth in the introduction to this
Agreement.
"Borrowing" shall mean the borrowing under the Loan made by Lender to
Borrower for the refinancing of the Aircraft.
"Business Day" shall mean a day (other than a Saturday or Sunday) upon
which banks are open for the transaction of business of the kind contemplated by
this Agreement in Los Angeles, California.
"CAA" shall mean the Civil Aviation Authority of the United Kingdom.
"Contractual Obligation" shall mean, as applied to any Person, any
provision of any security agreement entered into by that Person or of any
material indenture, mortgage, deed of trust, contract, undertaking, agreement,
or other material instrument to which that Person is a party or by which it or
any of its owned Assets is bound or to which it or any of its owned Assets is
subject.
"Debt" shall mean, with respect to any Person, the aggregate amount of,
without duplication: (a) all obligations of such Person for borrowed money; (b)
all obligations of such Person evidenced by bonds, debentures, letters of
credit, notes, or other similar instruments and all reimbursement or other
obligations of such Person in respect of letters of credit, bankers acceptances,
interest rate swaps, or other financial products; (c) all capitalized lease
obligations of such Person; (d) all obligations or liabilities of others secured
by a Lien on any Asset owned by such Person whether or not such obligation or
liability is assumed; (e) all obligations guarantied by such Person or in
respect of which such Person acts as surety; and (f) all obligations of such
Person to pay the deferred purchase price of Assets or services, exclusive of
trade payables which are incurred in the ordinary course of such Person's
business consistent with past practices.
"Event of Default" shall have the meaning ascribed to such term in
Section 11.1 hereof.
"Existing Lease" Aircraft Lease Agreement dated as of December 9, 1996
between ILFC and British Airways PLC.
"Existing Lessee" British Airways PLC.
"FAA" shall mean the Federal Aviation Administration of the Department
of Transportation or any successor thereto under the Laws of the U.S.
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"First Quarterly Payment Date" shall have the meaning ascribed to such
term in Section 4.1 hereof.
"Highest Lawful Rate" shall mean, the maximum non-usurious interest
rate, as in effect from time to time, which may be charged, contracted for,
reserved, received, or collected by Lender in connection with this Agreement,
the Aircraft Secured Promissory Note, or any other document executed in
connection herewith or therewith.
"Indemnified Liabilities" shall have the meaning ascribed to such term
in Section 12.2 hereof.
"Indemnitee" shall have the meaning ascribed to such term in Section
12.2 hereof.
"Interest Rate" shall have the meaning ascribed to such term in Section
3.1 hereof.
"Investment" shall mean, as applied to any Person, any direct or
indirect purchase or other acquisition by that Person of, or beneficial interest
in, stock, instruments, bonds, debentures or other securities of any other
Person, or any direct or indirect loan, advance (other than advances to
employees for expenditures in the ordinary course of such Person's business), or
capital contribution by such Person to any other Person, including all
indebtedness and accounts receivable from that other Person which did not arise
from sales or the rendition of services to that other Person in the ordinary and
usual course of such Person's business, and deposit accounts (including
certificates of deposit).
"Junior Lender" shall mean International Lease Finance Corporation, a
California corporation.
"Junior Loan" shall mean the junior loan of Four Million Four Hundred
Thirty-Three Thousand (US$4,433,000) provided by Junior Lender to Borrower.
"Lien" shall mean any lien, mortgage, assignment (including any
assignment of rights to receive payments of money), pledge security interest,
charge or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof, and any agreement to give
any security interest).
"Loan" shall have the meaning ascribed to such term in Section 2.1(a)
hereof.
"Loan Date" shall mean the date on which the Borrowing of the Loan is
advanced by Lender to Borrower.
"Material Adverse Effect" shall mean a material and adverse effect on
the business, operations, Assets, or condition (financial or otherwise) of a
Person.
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"Maturity Date" shall mean May 30, 2001.
"Mortgage" means that certain Mortgage, Security Agreement and
Assignment of Rents entered into between Lender and Borrower, pursuant to which
Borrower granted Lender a first priority security interest in the Aircraft.
"Overdue Rate" shall have the meaning ascribed to such term in Section
3.2 hereof.
"Parent" means International Aircraft Investors, a California
corporation.
"Parts" means all appliances, parts, components, modules, instruments,
appurtenances, accessories, furnishings and other equipment of whatever nature
(other than complete engines) whether now owned or hereafter acquired which may
from time to time be incorporated in the Aircraft or any engine on any Aircraft
(and "Part" means any of the foregoing) and, after removal therefrom, so long as
such Part is considered a Part associated with the Aircraft or an engine on such
Aircraft.
"Permitted Liens" shall mean any of the following Liens:
(a) Liens in favor of Lender arising by reason of this
Agreement;
(b) Liens in favor of Junior Lender arising by reason of the
Junior Loan Agreement;
(c) Liens for taxes, assessments or other governmental
charges or levies not at the time delinquent or thereafter payable
without penalty or being contested in good faith;
(d) Liens of carriers, warehousemen, mechanics, materialmen
and landlords incurred in the ordinary course of business for sums not
overdue or being contested in good faith;
(e) Liens incurred in the ordinary course of business in
connection with workmen's compensation, unemployment insurance or other
forms of governmental insurance or benefits, or to secure performance of
tenders and statutory obligations entered into in the ordinary course of
business or to secure obligations on surety or appeal bonds;
(f) Judgment Liens in existence less than thirty (30) days
after the entry thereof or with respect to which execution has been
stayed or the payment of which is covered in full by insurance;
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(g) Liens on the Aircraft in favor of the lessee of such
Aircraft which result from the leases on such Aircraft; and
(h) Liens on the Aircraft which are "Permitted Liens" under
the Existing Lease and any other leases for the Aircraft; provided,
however, that such other leases are approved by Lender.
"Person" shall mean natural persons, corporations, limited partnerships,
general partnerships, joint stock companies, joint ventures, associations,
companies, trusts, banks, trust companies, land trusts, vehicle trusts, business
trusts or other organizations irrespective of whether they are legal entities,
and governments and agencies and political subdivisions thereof.
"Quarterly Payment Date" shall have the meaning ascribed to such term in
Section 4.1 hereof.
"Related Documents" shall mean all other agreements, documents, or
instruments other than this Agreement and the Aircraft Secured Promissory Note,
delivered from time to time in connection with the transactions contemplated by
this Agreement.
"Subsidiary" shall mean any company or corporation a majority of whose
securities having ordinary voting power for the election of directors (other
than securities having such power only by reason of the happening of a
contingency) is, as of the date any determination thereof is to be made, owned
by a Person or one or more of such Person's Subsidiaries.
"Taxes" shall mean any taxes, charges, fees, levies or other assessments
based upon or measured by net or gross income, gross receipts, sales, use, ad
valorem, transfer, franchise, withholding, payroll, employment, excise,
occupation, premium, property or conduct of business, together with any interest
and penalties, additions to tax and additional amounts imposed by any federal,
state, local or foreign taxing authority.
"Transaction Documents" shall mean this Agreement, the Aircraft Secured
Promissory Note, the Related Documents, and all other agreements or instruments
executed and delivered or to be executed and delivered pursuant hereto or
thereto or in connection herewith or therewith, or in connection with any of the
transactions contemplated hereby or thereby.
"Unmatured Event of Default" shall mean an event, act, or occurrence
which, with the giving of notice or the lapse of time (or both), would become an
Event of Default.
1.2 Construction. Unless the context of this Agreement clearly
requires otherwise, references to the plural include the singular and to the
singular include the plural,
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the part includes the whole, the terms "include" and "including" are not
limiting, and the term "or" has, except where otherwise indicated, the inclusive
meaning represented by the phrase "and/or". The words "hereof," "herein,"
"hereby," "hereunder" and similar terms in this Agreement refer to this
Agreement as a whole and not to any particular provision of this Agreement.
Article, section, subsection, clause, exhibit and schedule references are to
this Agreement unless otherwise specified. Any reference herein to this
Agreement, the Aircraft Secured Promissory Note, or any of the Related Documents
includes any and all alterations, amendments, changes, extensions,
modifications, renewals, or supplements thereto or thereof, as applicable.
1.3 Exhibits. All of the exhibits or schedules attached hereto shall
be deemed incorporated herein by reference.
2. AMOUNT OF LOAN
2.1 Loan
(a) Loan. Subject to the terms and conditions contained
herein, Lender agrees to make a loan to Borrower in one Borrowing and in
the principal amount equal to Twenty-Two Million Five Hundred Thousand
U.S. Dollars (US$ 22,500,000) (the "Loan"). Any amount repaid on the
Loan may not be reborrowed by Borrower.
(b) Advancement of Loan. Unless agreed to otherwise,
Borrower will provide Lender with notice of the date on which Borrower
wants the Loan for the Aircraft extended to it on the Business Day prior
to the date set forth in such notice. The Loan will be extended to
Borrower on the date set forth in such notice.
2.2 Purpose of Loans. The proceeds of the Loan will be used to
finance a portion of the purchase price in connection with Borrower's purchase
of the Aircraft from ILFC.
2.3 Aircraft Secured Promissory Note. The Loan will be evidenced by
a secured promissory note (the "Aircraft Secured Promissory Note"). The form of
such Aircraft Secured Promissory Note is attached hereto as Exhibit A. The
Aircraft Secured Promissory Note shall evidence the aggregate outstanding
principal balance of the Loan together with any and all accrued and unpaid
interest thereon.
3. INTEREST AND FEES
3.1 Interest Rate. The Loan shall accrue interest at a rate equal to
Seven and 6/10 Percent (7.6%) per annum (the "Interest Rate"). Interest on any
overdue portion
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of the balance due hereunder will accrue interest according to the provisions
for late payment hereunder.
3.2 Overdue Rate. Any payments of principal, interest (to the extent
permitted by law both before and after judgment) with respect to the Loan, fees,
expenses, or other amounts payable to Borrower which are not paid when due
hereunder or declared due, whether at maturity, by acceleration, by lapse of
time or otherwise, shall bear interest thereafter, at a per annum interest rate
(the "Overdue Rate") which is equal to the Interest Rate plus five percent
(5.0%).
3.3 Computation of Interest. All computations of interest with
respect to the Loan and all computations of interest due under Section 3.2
hereof for any period shall be calculated on the basis of a year of three
hundred sixty (360) days with ninety (90) day quarter. Interest shall accrue
from the Loan Date (or the date on which interest or other payments are due, if
applicable), to the date of repayment of the Loan (or the date of the payment of
interest or fees or other payments, if applicable) in accordance with the
provisions hereof.
4. TERMS OF LOANS
4.1 Payment of Principal and Interest on the Loan. Principal and
interest due with respect to the Loan shall be due and payable quarterly in
arrears, commencing on October 2, 1997, (the "First Quarterly Payment Date") and
continuing on the same day of each third month thereafter (each a "Quarterly
Payment Date") (excluding only the quarterly payment due April 2, 2001) until
and including the Maturity Date on which date the entire outstanding principal
balance and all accrued and unpaid interest shall be due and payable. The amount
of the payments of principal and interest on the loan shall be in equal
quarterly payments of Five Hundred Ninety-Eight Thousand Dollars ($598,000)
Dollars with a final balloon payment at the Maturity Date in the sum of Twenty
Million Four Hundred Twenty-Five Thousand Five Hundred Sixty-Eight Dollars and
Eight Cents ($20,425,568.08). An amortization schedule is attached hereto as
Exhibit "B" and incorporated herein by this reference.
4.2 Voluntary Prepayments. At any time, Borrower may, upon at least
one (1) Business Day prior written notice, prepay the Loan in whole or in part
without penalty or premium.
5. MANDATORY PREPAYMENTS FROM THE PROCEEDS FROM THE SALE OR TOTAL LOSS OF
AN AIRCRAFT
5.1 Payment of Proceeds of Sale or Total Loss. Upon the sale or
total loss (as defined in the Lease) of the Aircraft, Borrower will repay in
full the outstanding
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principal balance of the Loan and any and all accrued and unpaid interest
thereon.
6. PLACE AND MANNER OF BORROWING AND PAYMENT
6.1 Manner and Time of Payment. All payments of principal and
interest in respect of the Loan payable to Lender shall be made without
condition or reservation of right in United States Dollars and in immediately
available funds to City National Bank located at 400 N. Roxbury Drive, Third
Floor, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (or at such other office as may be
designated by Lender), not later than 1:00 p.m. Los Angeles time, on the date of
payment.
Until the loan is paid in full, Borrower shall instruct any
Lessee of the Aircraft to make lease payments directly to CNB. Upon receipt of
such lease payments, CNB shall apply the payment first to interest accrued
unpaid and then to any principal payment then due or to become due before the
next lease payment is due. Any prepaid lease amounts shall be applied to
principal payments due in their order of maturity.
6.2 Payments on Non-Business Days. Whenever any payment to be made
by Borrower hereunder shall be stated to be due on a day which is not a Business
Day, then such payment shall be due and payable on the immediately preceding
Business Day.
6.3 No Deductions or Withholdings. All payments by Borrower
hereunder or under the Aircraft Secured Promissory Note, including, without
limitation, principal and interest, will be made in full without any deduction
or withholding whether in respect of set-off, counterclaim, duties, or taxes
imposed in the United States of America or any jurisdiction from which such
payments are made unless Borrower is prohibited by law from doing so, in which
event Borrower will gross up the payment amount such that the net payment
received by Lender after any deduction or withholding equals the amounts called
for hereunder or under the Aircraft Secured Promissory Note. Borrower will also
do all of the following:
(a) Ensure that the deduction or withholding does not exceed
the minimum amount legally required.
(b) Pay to the relevant government entities within the
period for payment permitted by applicable law the full amount of the
deduction or withholding (including the full amount of any deduction or
withholding from any additional amount paid pursuant hereto).
(c) Furnish to Lender within thirty (30) days after each
payment an official receipt of the relevant government entities involved
for all amounts so deducted or withheld.
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6.4 Value Added Taxes. The principal, interest and fees payable by
Borrower hereunder or under the Aircraft Secured Promissory Note are exclusive
of any value added tax, turnover tax or similar tax or duty. If a value added
tax or any similar tax or duty is payable in any jurisdiction in respect of any
principal, interest, fee or other amounts as aforesaid, Borrower will pay all
such tax or duty and indemnify Lender against any claims for the same and any
related claims, losses or liabilities.
7. CONDITIONS TO THE LOAN
7.1 Conditions Precedent to the Loan. The obligation of Lender to
make the Loan specified in Section hereof is subject, to the fulfillment and
satisfaction of the each of the following conditions precedent on or before the
Loan Date:
(a) The Loan Date shall occur on or before June 30, 1997;
(b) Lender shall have received the Aircraft Secured
Promissory Note duly executed by Borrower to the order of Lender;
(c) The Aircraft Secured Promissory Note shall be in full
force and effect;
(d) Borrower shall have executed, delivered and caused to be
recorded the Mortgage;
(e) Lender shall have received the Articles of Incorporation
(and any amendments thereto) of the Borrower;
(f) Lender shall have received a signature and incumbency
certificate for the officers of the Borrower who will execute this
Agreement, the Aircraft Secured Promissory Note, the Related Documents,
and the other documents contemplated herein or therein to which Borrower
is a party, which certificate has been certified by the secretary of the
Borrower;
(g) Lender shall have received the written opinion of the
Legal Counsel for Borrower, in form and substance satisfactory to Lender
and its counsel, Exhibit C attached hereto;
(h) No Event of Default or Unmatured Event of Default shall
have occurred and be continuing on the date of the Borrowing of the Loan
nor shall either result from the making of the Borrowing of the Loan;
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(i) Except as set forth in Exhibit D attached hereto and
incorporated herein by this reference, there is no litigation or
proceeding pending or threatened against or affecting Borrower, the
result of which might materially affect the financial condition,
business or operations of Borrower, and there has been no materially
adverse change in the financial condition of Borrower since the date of
execution of this Agreement; and
(j) The representations and warranties contained in Section
8 of this Agreement are true and correct as of the date of the Borrowing
of the Loan; provided, however, that the representations and warranties
contained herein with respect to the accuracy of financial statements
shall be deemed to be made with respect to the financial statements most
recently delivered to the Lender.
8. REPRESENTATIONS AND WARRANTIES OF BORROWER
In order to induce Lender to enter into this Agreement, Borrower makes
the following representations and warranties which shall be true and correct in
all material respects as of the Loan Date and such representations and
warranties shall survive the execution and delivery of this Agreement and the
Aircraft Secured Promissory Note and the making of the Loan :
8.1 Organization.
Borrower (1) is a Corporation duly organized, validly existing
and in good standing under the laws of Nevada and (2) has all requisite power
and authority to own, operate, and encumber its Assets and to conduct its
business as presently conducted and as proposed to be conducted in connection
with the consummation of the transactions contemplated by this Agreement and the
Related Documents.
8.2 Authority.
(a) Borrower has the requisite power and authority to
execute, deliver, and perform each of the Transaction Documents executed
by it, or to be executed by it.
(b) The execution, delivery, and performance of each of the
Transaction Documents to which Borrower is a party and the consummation
of the transactions contemplated thereby, has been duly approved by the
board of directors of Borrower and no other proceeding on the part of
Borrower is necessary to consummate such transactions.
(c) Each of the Transaction Documents to which Borrower is a
party has been duly executed and delivered by Borrower, constitutes its
legal, valid and binding obligation, enforceable against it in
accordance with its terms, and is in full force and
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effect except as the enforceability hereof or thereof may be affected
by: (a) bankruptcy, insolvency, moratorium, or other similar laws
affecting the enforcement of creditors' rights generally; (b) the
limitation of certain remedies by certain equitable principles of
general applicability; and (c) the fact that the rights to
indemnification thereunder or hereunder may be limited by securities
laws.
8.3 No Conflict. The execution, delivery, and performance of each of
the Transaction Documents to which Borrower is a party and each of the
transactions contemplated thereby do not and will not (a) conflict with or
violate Borrower's Articles of Incorporation, or (b) conflict with, result in a
breach of, constitute (with or without notice or lapse of time) a default under,
or require termination of, any of the Transaction Documents, any material
indenture, mortgage or other agreement or instrument to which Borrower is a
party or by which any of its properties may be bound, or (c) result in or
require the creation or imposition of any lien upon any of the Assets of
Borrower (other than liens in favor of Lender or Junior Lender arising pursuant
to the Transaction Documents), or (d) require any approval of stockholders, or
any approval or consent of any Person under any other Contractual Obligations to
which Borrower is a party which approval or consent, as the case may be has not
already been obtained prior to the date hereof.
8.4 Government Consent. The execution, delivery, and performance of
each Transaction Document to which Borrower is a party and the transactions
contemplated thereby do not and will not require any registration with, consent
or approval of, or notice to, or other action to, with or by any regulatory body
or authority in the United States of America, Nevada or California.
8.5 Payment of Taxes. All tax returns and reports of Borrower
required to be filed, have been timely filed (inclusive of any permitted
extensions), and all taxes, assessments, fees, and other governmental charges
thereupon and upon its assets, income, and franchises which are shown on such
returns or reports as being due and payable, have been paid when due and
payable, except such taxes, if any, that are reserved against in accordance with
generally accepted accounting principals in the United States of America and are
being contested in good faith by appropriate proceedings promptly instituted and
diligently conducted. Borrower has no knowledge of any proposed tax assessment
against it which is not either going to be paid prior to it becoming delinquent
or being contested in good faith by appropriate proceedings promptly instituted
and diligently conducted by such Person with appropriate reserves made for such
assessment in accordance with generally accepted accounting principals.
8.6 Litigation; Adverse Facts. Except as previously disclosed to
Lender in writing: (a) there is no action, suit, proceeding, or arbitration
(whether purportedly on behalf of Borrower) at law or in equity or before or by
any federal, state, municipal, or other governmental department, commission,
board, bureau, agency or instrumentality, domestic
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or foreign, pending or, to the knowledge of Borrower, threatened against or
directly affecting Borrower which is reasonably likely to result in a Material
Adverse Effect on Borrower or may reasonably be expected to materially adversely
affect Borrower's ability to perform its obligations hereunder or under the
Aircraft Secured Promissory Note; or (b) Borrower are not subject to or in
default with respect to any final judgment, writ, injunction, decree, rule, or
regulation of any court or federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, in a manner which would have a Material Adverse Effect on Borrower; and
(c) (i) as of the date hereof or on the Loan Date, there is no action, suit,
proceeding or, to the best of Borrower's knowledge or belief, investigation
pending or, to the best of Borrower's knowledge or belief, threatened against or
directly affecting Borrower, which questions the validity or the enforceability
of this Agreement, the Related Documents, or the Aircraft Secured Promissory
Note; and (ii) after the Loan Date, there is no action, suit or proceeding
pending against or affecting Borrower, pursuant to which, on the date of the
making of any Loan hereunder, there is in effect a binding injunction materially
and adversely affecting the validity or the enforceability of the sale of the
Aircraft, this Agreement, the Related Documents, or the Aircraft Secured
Promissory Note.
8.7 Consents. Other than such as may have previously been obtained,
no consent, license, permit, approval or authorization of, exemption by, notice
to, report to, or registration, filing or declaration with, any governmental
authority or agency is required in connection with the execution, delivery, and
performance by Borrower of this Agreement, the Related Documents, or the
Aircraft Secured Promissory Note.
8.8 Title to Properties; Liens. Except for Permitted Liens, all of
the Assets of Borrower are free from all Liens of any nature whatsoever.
Borrower has good and sufficient title to all of the material Assets reflected
in its books and records as being owned by it.
8.9 Licenses, Patents, Trademarks, and Intellectual Property.
Borrower has all necessary patents, patent rights, license agreements,
trademarks, trademark rights, trade names, trade name rights, copyrights, and
franchise agreements in order for it to conduct its businesses and to operate
its Assets substantially as now operated, as the case may be, without known
conflict, other than as previously disclosed in writing, with the rights of
third Persons, except where the failure to obtain same could not reasonably be
expected to have a Material Adverse Effect on Borrower and all of same are valid
and subsisting, except where such lack of validity or subsistence could not
reasonably be expected to have a Material Adverse Effect on Borrower. The
consummation of the transactions contemplated by this Agreement will not alter
or impair any of such rights of Borrower. Except as previously disclosed in
writing, Borrower has not been charged or, to Borrower's knowledge, is
threatened to be charged with any infringement of, nor has it infringed on any
unexpired registered domestic trademark, trademark registration, trade name,
patent, copyright, copyright
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registration, or other proprietary right of any Person, which charge or threat
could reasonably be expected to have a Material Adverse Effect on Borrower.
8.10 Burdensome Agreements. Except as previously disclosed in
writing, Borrower is not a party to any unusual or unduly burdensome agreement
or undertaking which could reasonably be expected to have a Material Adverse
Effect on Borrower. Borrower is not subject to any unusual or unduly burdensome
court order, writ, injunction, or decree of any court or government
instrumentality, domestic or foreign, which could reasonably be expected to have
a Material Adverse Effect on Borrower.
8.11 Existing Defaults. Except as previously disclosed in writing,
Borrower is not in default under any Contractual Obligation, the effect of which
would be a Material Adverse Effect on Borrower. Except as previously disclosed
in writing, Borrower is not in violation of any law, ordinance, rule or
regulation to which it or any of its Assets is subject, the failure to comply
with which would have a Material Adverse Effect on Borrower.
8.12 Foreign National. Borrower is not a "national" of a "designated
foreign country" (or a person defined as a "designated national" or a "specially
designated national") within the definitions in the Foreign or the Cuban Assets
Control Regulations of the United States Treasury Department, 31 CFR, Subtitle
B, Chapter V, as amended, or any regulation or ruling issued thereunder.
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9. AFFIRMATIVE COVENANTS
Borrower and Lender covenant and agree, so long as the Loan hereunder
shall be outstanding and until the full and final payment of the Loan and the
performance of all obligations of Borrower, as follows:
9.1 Payment of Principal and Interest. Borrower will duly and
punctually pay all principal and interest due hereunder at the time and place
and in the manner specified herein.
9.2 Accounting Records and Inspection. Borrower shall maintain
adequate financial and accounting books and records in accordance with sound
business practices and generally accepted accounting principles consistently
applied, and permit any representative of Lender, upon reasonable written notice
to Borrower, at any time during usual business hours, to inspect, audit, and
examine such books and records and to make copies and take extracts therefrom,
and discuss its affairs, financing, and accounts with its officers and
independent public accountants. Borrower shall furnish Lender with any
information reasonably requested regarding Borrower's business or finances
promptly upon such entity's request. Borrower shall permit those Persons
designated by Lender to visit and inspect, during Borrower's normal business
hours, any of the Assets of Borrower upon reasonable notice and as often as may
be reasonably requested.
9.3 Financial Statements. Borrower shall furnish Lender:
(a) Quarterly, as soon as they are available, after the end
of each quarterly accounting period of each fiscal year, excluding the fourth
quarter, a financial statement for Borrower consisting of a balance sheet, and
income statement which financial statement may be internally prepared.
(b) Yearly, as soon as they are available, a copy of the
annual financial statements for such year for Borrower including therein a
balance sheet, income statement.
(c) Yearly, as soon as they are available, a copy of the
annual financial statements for such year for the Lessee, British Airways PLC,
or any Subsequent Lessee, including therein a balance sheet, income statement,
reconciliation of net worth and statement of cash flows with notes thereto.
(d) Promptly upon becoming aware of the filing against
Borrower of an involuntary case under any applicable bankruptcy, insolvency, or
other similar law now or hereafter in effect, a written notice thereof
specifying what action Borrower is taking or proposes to take with respect
thereto;
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(e) Prompt notice of: (1) all legal or arbitral proceedings,
and all proceedings by or before any governmental regulatory authority or
agency, directly affecting Borrower and/or Parent which involve monetary amounts
of Five Hundred Thousand U.S. Dollars (US$ 500,000) or more, or which are
reasonably likely to have a Material Adverse Effect on Borrower and/or Parent,
or on the timely payment of the principal of or interest on the Loan, or the
enforceability of this Agreement, the Related Documents, or the Aircraft Secured
Promissory Note, or the rights and remedies of Lender hereunder or thereunder,
as applicable; (2) any information coming to the attention of Borrower relating
to any action taken or proposed to be taken by any Person which is reasonably
likely to have a material adverse effect on the ability of Borrower to perform
its obligations under this Agreement, the Related Documents, or the Aircraft
Secured Promissory Note, as applicable; and
(f) Upon demand, furnish Lender with such information as it
may reasonably request with respect to the financial condition and affairs of
Borrower and/or Parent.
9.4 Other Debt. Borrower will promptly pay and discharge any and all
indebtedness whether for borrowed money or otherwise, liens, charges or
obligations when due, including all taxes and assessments, except such as may in
good faith be contested or disputed or for which arrangements for deferred
payment have been made, provided provision is made to the satisfaction of Lender
for the eventual payment thereof in the event it is found that such
indebtedness, obligation or tax is an indebtedness, obligation or tax payable by
Borrower and when such dispute or contest is settled and determined, will
promptly pay the full amount then due; provided, however, that Borrower shall
not be in breach of this covenant unless: (a) Borrower fails to pay when due or
declared due installments on debt which installments in the aggregate are equal
to or greater than Two Hundred Thousand U.S. Dollars (US $200,000); or (b)
Borrower fails to pay when due two (2) or more payments to more than one (1)
lender on Debt.
9.5 Conduct of Business. Borrower will maintain and preserve its
existence, conduct its business in an orderly, efficient manner, without
voluntary interruption; keep its properties useful or necessary in its business
in good working order and condition, and from time to time make all needed
repairs, renewals and replacements thereto, so that the efficiency of its
properties shall be fully preserved; will comply with all applicable laws and
regulations of governmental agencies; and will duly qualify to do business and
maintain such qualification in each jurisdiction where its ownership of property
or conduct of business requires such qualification.
9.6 Insurance. Borrower shall, at no cost to Lender, maintain or
cause to be maintained with insurers and through recognized brokers, in full
force and effect during the term of the loan until two (2) years after the date
of full repayment, full liability insurance in respect of the Aircraft with
Lender as an additional insured, and otherwise subject to all
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the terms and conditions set out below. If the Aircraft is sold, transferred,
leased or operated by a third party during such two (2) year period, Borrower
and/or the lessee of the Aircraft (the "Insured") will cause such subsequent
owner, lessee or operator to obtain the insurance referred to below so that
Lender is fully protected by such insurance for the entire two (2) year period.
Such insurance shall include the following provisions:
(a) The Insurers agree that the Lender shall not be liable
for, nor have any obligation to pay, any premium due hereunder, and the
Insurers further agree that they shall not offset or counter-claim any
unpaid premium against the interest of the Lender.
(b) The Insurers agree to waive all of their rights of
subrogation against the Lender.
(c) The policy shall contain a cross liability clause to the
effect that this insurance, except for the limits of liability, shall
operate to give the Lender and Insureds the same protection as if there
was a separate policy issued to each of them.
(d) The Insurers agree that this insurance shall be primary
insurance without any right of contribution from any other insurance
which is carried by the Lender or by the Insured and the Insurer's
liability shall not be affected by any other insurance of which any of
Lender or Insured have the benefit so as to reduce the amount payable to
the Lender under the policy.
(e) The Insurers agree that as respects the interest of the
Lender this insurance shall in accordance with Lloyds Aviation 28 Breach
of Warranty Endorsement not be invalidated by any action or inaction of
the Insured and shall insure the Lender and its directors, officers,
agents, and employees regardless of any breach or violation of any
warranty, declaration or condition contained in the policy by the
Insured or by the omission or neglect, or by the performance of any act
in violation or any terms or conditions of the policy or because of the
subjection of the property to any conditions, uses or operations not
permitted by the policy or because of a use or operation of the property
which is, by the terms of the policy, specifically excluded from
coverage or because of any false statement concerning this policy or the
subject thereof, by the Insured or the Insured's employees, agents or
representatives, whether occurring before or after attachment of this
Agreement, or whether before or after the loss.
(f) The Insurers shall promptly notify the Lender in the
event of cancellation or of any change whatsoever of a restrictive
nature affecting the insurance certified hereunder or in the event that
any premium or installment of premium shall not be paid when due. The
Insurance shall continue unaltered for the benefit of the Lender and its
officers, agents, and employees for at least thirty (30) days after
written notice by registered mail of such cancellation, change or
non-payment of
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premium or installment thereof shall have been received by Lender except
in the case of war risk for which seven (7) days notice will be given.
(g) Irrespective of any war, Hi-Jacking, Confiscation and
other related perils exclusion clause(s) (e.g. London endorsement form
AVN 48B or wording of similar intent) the Insurers agree that coverage
afforded shall apply for the benefit of the Lender to the same extent as
would have applied had such exclusion clause(s) not been made a part of
any such policy.
9.7 Compliance with Laws. Borrower shall exercise all due diligence
in order to comply with the requirements of all applicable laws, rules,
regulations and orders of any governmental authority, noncompliance with which
would have a Material Adverse Effect on Borrower.
9.8 Subsequent Leases. Borrower will obtain Lender's prior written
approval, which approval will be in the sole discretion of Lender, with respect
to the lease of the Aircraft to any new lessee. Borrower will provide a copy of
the proposed lease agreement with such new lessee. Lender will have the right to
approve the form and substance thereof with respect to those terms and
provisions of the Lease, including but not limited to, Lender's interest in such
amount of rent payable as insurance, registration, maintenance and return
condition. Lease payments are to be paid directly to CNB. In order to secure,
among other things, its obligations hereunder, Borrower will assign all of its
rights under such lease to Lender pursuant to a written assignment agreement
acceptable to Lender.
9.9 Preservation of Existence. Borrower will maintain its existence
and all of its material rights, privileges, and franchises in every jurisdiction
in which the character of the property owned or the nature of the business
transacted or its obligations and duties arising under or pursuant to any of the
Transaction Documents requires such qualification.
9.10 Further Assurances. At any time or from time to time upon the
reasonable request of Lender, Borrower shall and shall cause the appropriate
person to execute, acknowledge, deliver, and cause to be recorded or registered
(if so requested) all such additional instruments, and documents and further
assurances of title and shall do or cause to be done all such further acts and
things as may reasonably be necessary to effectuate fully the intent and
purposes of this Agreement, the Aircraft Secured Promissory Note, the Related
Documents, and any other agreement entered into in connection with Lender's
extension of the Loans to Borrower and to provide for payment of the Loans made
hereunder with interest thereon in accordance with the terms of this Agreement
and the Aircraft Secured Promissory Note.
10. NEGATIVE COVENANTS
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Borrower covenants and agrees that from the date hereof, and so long as
the Loans hereunder shall be outstanding and until the full and final payment of
the Loans and the performance of all obligations of Borrower hereunder, without
the prior written consent of Lender first having been obtained, to perform each
and all of the covenants applicable to it:
10.1 Debt. Borrower shall not create, incur, assume, permit,
guarantee, or otherwise become, or remain, directly or indirectly, liable with
respect to any Debt, except:
(a) Borrower may become and remain liable with respect to
the Debt evidenced by the Aircraft Secured Promissory Note and this
Agreement;
(b) Borrower may become and remain liable with respect to
the Debt evidenced by the Junior Loan;
(c) Borrower may remain liable with respect to Debt
disclosed to Lender in writing prior to the date of execution of this
Agreement, and any refundings, refinancings, or extensions thereof;
(d) Borrower may become and remain liable with respect to
Debt secured by Permitted Liens;
(e) Borrower may become and remain liable with respect to
Debt which is used at the time of its incurrence to repay in full the
outstanding principal balance on all of the Loan or the Junior Loan and
any and all accrued and unpaid interest thereon;
(f) Borrower may become and remain liable with respect to
Debt incurred in connection with any liability under the lease for the
Aircraft which liability was the responsibility of the "lessor" of the
Aircraft pursuant to an agreement between Borrower and such lessee prior
to the date of the Borrowing of the Loan for the Aircraft;
(g) Borrower may become liable with respect to Debt incurred
in the ordinary and usual course of business in an amount outstanding
not to exceed, in the aggregate, Two Hundred Thousand U.S. Dollars (US$
200,000).
10.2 Restriction on Fundamental Changes. Borrower shall not change
its name, materially change the nature of its business, enter into any merger,
consolidation, reorganization or recapitalization or reclassify its interests or
liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, assign, lease, transfer, or otherwise dispose of,
in one transaction or a series of transactions, all or substantially all of its
businesses or Assets, whether now owned or hereafter acquired, or acquire by
purchase or
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otherwise all or substantially all the businesses or Assets of, or stock or
other evidence of beneficial ownership of, any Person, except:
(a) Borrower may sell, assign, transfer, convey, or
otherwise dispose of businesses or Assets in accordance with the
provisions of Section 10.3 hereof; and
(b) Upon thirty (30) calendar days prior written notice to
Lender, Borrower may change its name.
10.3 Sale of Assets. Borrower shall not sell, assign, transfer,
convey, or otherwise dispose of its Assets, whether now owned or hereafter
acquired, except for the sale of the Aircraft by Borrower to any Person;
provided, however, that the proceeds from such sale are at least equal to the
outstanding principal balance of the Loan, the Junior Loan and any and all
accrued and unpaid interest on the Loan and the Junior Loan. The proceeds of any
sale of the Aircraft will be applied to the Loan and the Junior Loan and
otherwise as set forth in Article 5 hereof.
10.4 Liens. Borrower will not create, incur, assume or suffer to
exist any Lien (including any encumbrance or security interest) of any kind upon
any of its Assets, whether now owned or hereafter acquired, except for Permitted
Liens.
10.5 Investments. Borrower shall not make or own any Investment,
directly or indirectly, in any Person, except (a) cash equivalents, (b) Borrower
may maintain any Investment existing on the date hereof or in any Person
previously disclosed to Lender in writing, and (c) Borrower may maintain any
Investment which Lender has approved of in writing prior to Borrower making or
committing to make such Investment.
10.6 Restrictions on Distributions and Dividends. Borrower shall not
directly or indirectly, make or declare, any dividend (in cash, return of
capital, or any other form of Assets) on, or make any other payment or
distribution on account of, or set aside Assets for a sinking or other similar
fund for the purchase, redemption, retirement of, or redeem, purchase, retire,
or otherwise acquire any shares or interests of any of Borrower's partnership
interests, whether now or hereafter outstanding directly or indirectly, whether
in cash or property or in obligations, except:
(a) Borrower may pay dividends or make payment
distributions, so long as no Event of Default or Unmatured Event of
Default has occurred and is continuing; and
(b) Borrower may pay dividends or make payment distributions
with the amounts received by Borrower pursuant to the terms and
conditions of Section 5.1, so long as no Event of Default or Unmatured
Event of Default has occurred and is continuing.
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10.7 Preservation of Lender's Security Interest and Title to the
Aircraft. Borrower shall not, without the prior written consent of Lender,
knowingly do or take or omit to take any acts or things which might prejudice
the rights and remedies of Lender's valid security interest or title in the
Aircraft, or in the Lease, irrespective of whether such is in effect from time
to time.
10.8 Capital Expenditures. Other than the acquisition of the Aircraft
or the acquisition of any parts, components, accessories, or equipment necessary
for the operation or lease of the Aircraft, Borrower shall not make any capital
expenditure during any fiscal year during the term of this Agreement, if, any
after giving effect thereto, the aggregate amount of all capital expenditures
incurred by Borrower during such fiscal year would exceed Two Hundred Thousand
U.S. Dollars (US$ 200,000); provided, however, that (a) the acquisition of the
Aircraft and the acquisition of any Parts, necessary for the operation or lease
of the Aircraft is not considered a capital expenditure for purposes of this
Section , and (b) the acquisition of any Parts in order to comply with an
airworthiness directive of the FAA or the aviation authority where the Aircraft
is registered is not considered a capital expenditure for purposes of this
Section 10.8.
10.9 Conduct of Business. Except as may be permitted by the other
provisions of this Section 10, Borrower shall not engage in any business other
than the businesses which Borrower is engaged in as of the date hereof, or any
business activities related thereto (such business activities include the
leasing of the Aircraft to various Persons).
11. EVENTS OF DEFAULT
11.1 Events of Default. The occurrence of any one or more of the
following described events (each, an "Event of Default") shall constitute a
default hereunder:
(a) Failure to Make Payments When Due. Borrower shall fail
to pay when due, any amount owing hereunder or under the Aircraft
Secured Promissory Note with respect to the principal and interest on
the Loan when such amount is due, whether at stated maturity, as a
result of a mandatory repayment requirement, by acceleration, by notice
of prepayment, or otherwise and such failure is not cured within three
(3) Business Days after written notice from Lender of the occurrence
thereof; or
(b) Default in Other Agreements. (i) Borrower shall default
(as principal or guarantor or other surety) in the payment when due
(subject to any applicable notice or grace period), and such default is
not cured within three (3) Business Days after written notice from
Lender of the occurrence thereof, whether at stated maturity or
otherwise, of any monetary obligation with respect to (howsoever
designated) any Debt, (including the Junior Loan) whether such Debt now
exists or shall hereafter be created; or (ii) An event of default, as
defined in any mortgage, indenture, interest rate swap agreement, or
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instrument under which there may be issued, or by which there may be
secured or evidenced, any Debt of, or Debt guaranteed by, Borrower
whether such Debt now exists or shall hereafter be created, shall occur
and Borrower shall permit such Debt to become due and payable prior to
its stated maturity or due date;
(c) Breach of Certain Covenants. (i) Borrower shall fail to
perform or comply fully with any covenant, term, or condition contained
in Article 10 hereof; or (ii) Borrower shall default in the performance
of or compliance with any term contained in this Agreement other than
those referred to in Sections 11.1(a), 11.1(c)(i), and 11.1(d) such
default shall not have been remedied or waived within ten (10) calendar
days after receipt of notice from Lender of such default (if Borrower is
using diligent and best efforts to cure such default, then Borrower will
have the reasonable number of days necessary to cure such default (not
to exceed thirty (30) days));
(d) Breach of Representation or Warranty. Any financial
statement, representation, warranty, or certification made or furnished
by Borrower under this Agreement shall, at any time, prove to have been
materially false, incorrect, or incomplete when made, effective, or
reaffirmed, as the case may be; or
(e) Bankruptcy; Assignment for the Benefit of Creditors.
Borrower makes an assignment for the benefit of creditors, or admits in
writing its inability to pay its debts as they become due, or files a
voluntary petition in bankruptcy, or is adjudicated a bankrupt or
insolvent, or files any petition or answer seeking for itself any
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future statute, law
or regulation, or files any answer admitting or not contesting the
material allegations of a petition filed against Borrower in any such
proceeding, or seeks or consents to or acquiesces in the appointment of
any trustee, receiver or liquidator of Borrower or of all or any
substantial part of the Assets of Borrower or if Borrower takes any
action looking to the dissolution or liquidation of Borrower; or
(f) Appointment of Receiver. Within sixty (60) days after
the commencement of an action against Borrower seeking any
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future statute, law
or regulation, such action is not dismissed or all orders or proceedings
thereunder affecting the operations or the business of Borrower stayed,
or if stayed such stay order is thereafter set aside, or if, within
sixty (60) days after the appointment without the consent of Borrower as
applicable, the receiver, or the liquidator of Borrower or all or any
substantial part of the Assets of Borrower or, such appointment is not
vacated; or
(g) Judgments and Attachments.
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(i) A final judgment for money, the uninsured
portion of which is in excess of Five Hundred Thousand U.S.
Dollars (US $500,000) is rendered against Borrower and within
thirty (30) days after the entry thereof, such judgment is not
discharged or execution thereof stayed pending appeal, or within
thirty (30) days after the expiration of any such stay, such
judgment is not discharged; or
(ii) a judgment creditor shall obtain possession of
any material portion of the Assets of Borrower by any means,
including without limitation, levy, distraint, replevin, or
self-help; or
(h) Default Under Related Documents, etc. Borrower shall
fail to observe or perform any term, covenant, condition, agreement, or
obligation to be observed or performed by it under the Related
Documents, and: (i) such failure arises out of the granting by Borrower
of a Lien upon any of the Assets of Borrower in favor of any Person,
except for Permitted Liens; or (ii) such failure arises out of any other
act or failure to act of Borrower which act adversely affects the Liens
granted in favor of Lender by Borrower; or (iii) such failure arises
other than under the circumstances set forth in clauses (i) and (ii)
above and continues for Fifteen (15) calendar days after notice of such
failure from Lender (if Borrower is using diligent and best efforts to
cure such default, then Borrower will have the reasonable number of days
necessary to cure such default (not to exceed thirty (30) days)); or
(iv) such failure arises other than under the circumstances set forth in
clauses (i) and (ii) above and continues for thirty (30) calendar days
after Lender is notified of such failure by Borrower.
(i) Insurance. Borrower fails or has failed to cause Lessee
or any subsequent lessee to obtain or maintain the insurance required by
this Agreement.
11.2 Remedies. Upon the occurrence of an Event of Default:
(a) If such Event of Default arises under Sections 11.1(e)
or 11.1(f), then the unpaid principal amount of and any accrued
interest on the Loans and any other amounts owing hereunder, under the
Aircraft Secured Promissory Note or under the other Transaction
Documents shall automatically become immediately due and payable,
without presentment, demand, protest, notice, or other requirements of
any kind, all of which are hereby expressly waived by Borrower; and
(b) In the case of any other Event of Default, Lender, by
written notice to Borrower, shall declare all of the Loans to be, and
the same shall forthwith become, due and payable, together with any and
all accrued interest thereon, and any other amounts owing hereunder,
under the Aircraft Secured Promissory Note or under the other
Transaction Documents.
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Upon acceleration, Lender, without notice to or demand upon Borrower,
which are expressly waived by Borrower, to the fullest extent permitted by law,
may proceed to protect, exercise, and enforce its rights and remedies hereunder
and under the Aircraft Secured Promissory Note, the Mortgage and the Related
Documents, and any other rights and remedies as are provided by law or equity.
Lender may determine, in its sole discretion, the order and manner in which
Lender's rights and remedies are to be exercised, and all payments received by
Lender, or any one or more of them, shall be applied as follows (regardless of
how Lender may treat the payments for the purpose of its own accounting): first,
to all out-of-pocket expenses (including reasonable attorneys' fees) incurred by
Lender in enforcing any Debt of Borrower hereunder, or in collecting any
payments due hereunder or under the Aircraft Secured Promissory Note; second, to
accrued and unpaid interest on the Loans; third, to the outstanding principal
balance of the Loans, fourth, to any other Debt of Borrower owing to Lender;
fifth, to junior lender; and sixth, any remainder to Borrower.
12. EXPENSES AND INDEMNITIES
12.1 Expenses. Irrespective of whether the transactions contemplated
hereby shall be consummated, Borrower hereby agrees to pay on demand: (a)
filing, recording, publication, search and title fees paid or incurred by or on
behalf of Lender in connection with the transactions contemplated by, and the
administration of this Agreement, the Aircraft Secured Promissory Note, and the
Related Documents; (b) the reasonable out-of-pocket costs and expenses
(including reasonable attorneys' fees and expenses) incurred by Lender to
correct any default or to enforce any provision of this Agreement, the Aircraft
Secured Promissory Note, any of the Related Documents, or any other document or
instrument contemplated hereby or thereby against Borrower; and (c) the
reasonable out-of-pocket costs and expenses (including reasonable attorneys'
fees and expenses) incurred by Lender in connection with any bankruptcy or other
insolvency proceeding, reorganization, workout, composition, or other credit
arrangement of Borrower.
12.2 Indemnity. In addition to the payment of expenses pursuant to
Section 12.1 hereof, and irrespective of whether the transactions contemplated
hereby shall be consummated, Borrower hereby agrees to indemnify, exonerate,
pay, and hold harmless Lender, and the officers, directors, employees, and
agents of and counsel to Lender (collectively, the "Indemnitees" and
individually, an "Indemnitee") from and against any and all liabilities,
obligations, losses, damages, penalties, actions, causes of action, judgments,
suits, claims, costs, expenses, of any kind or nature whatsoever, including the
reasonable fees and expenses of counsel to Indemnitees, in connection with any
investigative, administrative, or judicial proceeding, which may be imposed on,
incurred by, or asserted against such Indemnitee, in any manner relating to or
arising out of this Agreement, any Loan hereunder, the use or intended use of
the proceeds of the Loan, or the consummation of the transactions contemplated
by this Agreement (the "Indemnified Liabilities"); provided, however, that
Borrower's obligations to indemnify shall not extend to any losses, damages,
liabilities,
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actions, or claims against any Indemnitee arising as a result of the gross
negligence or willful misconduct of such Indemnitee. Each Indemnitee shall
promptly notify Borrower of each event of which it has knowledge which may give
rise to a claim under the indemnification provisions of this Section 12.2. If
any investigative, judicial, or administrative proceeding arising from any of
the foregoing is brought against any Indemnitee, Borrower, to the extent
directed by such Indemnitee, will resist and defend such action, suit, or
proceeding or cause the same to be resisted and defended by counsel designated
by Borrower (which counsel shall be reasonably satisfactory to such Indemnitee);
provided, however, that Borrower's obligation to so resist or defend any such
action, suit, or proceeding shall exist if and only if Borrower is directed to
do so by the Indemnitee. Such Indemnitee will use its best efforts to cooperate
in the defense of any such action, suit, or proceeding. In the event that the
Indemnitee does not direct Borrower to resist or defend any action, suit,
proceeding or cause and Borrower desires to resist or defend such action, suit,
proceeding or cause, then Borrower and such Indemnitee will discuss and
establish the terms and conditions on which Borrower may defend such action,
suit, proceeding or cause. To the extent that the undertaking to indemnify,
exonerate, pay, and hold harmless set forth in this Section 12.2 may be
unenforceable because it is violative of any law or public policy as determined
by a final judgment of a court of competent jurisdiction, Borrower shall make
the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law. The
obligations of Borrower under this Section 12.2 shall survive the termination of
this Agreement and the discharge of Borrower's other obligations hereunder.
12.3 Currency Indemnity. If under any applicable law, whether as a
result of judgment against Borrower or the liquidation of Borrower or for any
other reason, any payment hereunder is made or recovered in a currency other
than United States Dollars then, to the extent that the payment (when converted
into United States Dollars at the "rate of exchange" on the date of payment or,
in the case of a liquidation, the latest date for the determination of
liabilities permitted by the applicable law) falls short of the amount unpaid
under this Agreement, Borrower will as a separate and independent obligation,
fully indemnify Lender against the amount of the shortfall. If the payment
exceeds the amount unpaid under this Agreement, Lender will remit such excess to
Borrower. For the purposes of this paragraph "rate of exchange" means the rate
at which Lender is able on the relevant date to purchase United States Dollars
in New York or London (at Lender's option) with such other currency.
13. MISCELLANEOUS
13.1 Setoffs. Nothing in this Agreement shall be deemed to constitute
a waiver or prohibition of the Lender's right of setoff and Borrower hereby
expressly acknowledges that the Lender has such rights.
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13.2 Entire Agreement. This Agreement and the documents and
agreements referred to and incorporated herein embody the entire agreement and
understanding between the parties hereto and supersede all prior agreements and
understandings relating to the subject matter hereof and the transactions
contemplated hereby.
13.3 Successors and Assigns. This Agreement shall be binding upon,
and inure to the benefit of, the parties hereto and their respective successors
and assigns; provided, however, that Borrower and Lender may not assign or
transfer any interest or rights hereunder without the prior written consent of
the other party (which consent will not be unreasonably withheld) and any such
prohibited assignment shall be absolutely void.
13.4 No Waiver. No failure to exercise, and no delay in exercising
any right, power or remedy hereunder or under any document delivered pursuant
hereto shall impair any right, power or remedy which Lender may have, nor shall
any such delay be construed to be a waiver of any such rights, powers or
remedies, or an acquiescence in any breach or default under this Agreement or
any document delivered pursuant hereto nor shall any waiver of any breach or
default of Borrower hereunder be deemed a waiver of any subsequent default or
breach. The rights and remedies of Lender specified herein are cumulative and
not exclusive of any rights or remedies which Lender would otherwise have either
at law or in equity.
13.5 Survival. All representations, warranties and agreements
contained herein on the part of Borrower shall survive the making of the Loan
hereunder and all such representations, warranties and agreements shall be
effective so long as any portion of the principal of the Loan or any interest
thereon is unpaid.
13.6 Notices. Any notice, request or information required or
permissible under this Agreement will be in writing and in English. Notices will
be delivered in person or sent by fax, letter (mailed airmail, certified and
return receipt requested), or by expedited delivery addressed to the parties as
set forth below in this Section. In the case of a fax, notice will be deemed
received upon actual receipt (in the case of a fax notice, the date of actual
receipt will be deemed to be the date set forth on the confirmation of receipt
produced by the sender's fax machine immediately after the fax is sent). In the
case of a mailed letter, notice will be deemed received on the tenth (10th) day
after mailing. In the case of a notice sent by expedited delivery, notice will
be deemed received on the date of delivery set forth in the records of the
Person which accomplished the delivery. If any notice is sent by more than one
of the above listed methods, notice will be deemed received on the earliest
possible date in accordance with the above provisions. Notices will be addressed
as follows:
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Lender:
CITY NATIONAL BANK
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ATTENTION: ▇▇▇▇▇▇ ▇. ▇▇▇▇, V.P.
With a copy to:
CITY NATIONAL BANK
Legal Department
400 North Roxbury Drive, 5th Floor
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ATTENTION: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
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Borrower:
IAI III, Inc.
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ATTENTION: President
With a copy to:
INTERNATIONAL AIRCRAFT INVESTORS
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ATTENTION: President
13.7 Termination. This Agreement shall terminate when all obligations
of Borrower incurred hereunder, under the Aircraft Secured Promissory Note, any
Transaction Document, or under any other agreement executed and delivered in
connection herewith have been discharged in full.
13.8 Waivers and Amendments. No amendment, modification, restatement,
supplement, termination, or waiver of or to, or consent to any departure from,
any provision of this Agreement, the Aircraft Secured Promissory Note, or the
Related Documents, shall be effective unless the same shall be in writing and
signed by Lender and Borrower.
13.9 Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties on separate counterparts, each
of which counterparts, when so executed and delivered, shall be deemed to be an
original and all of which counterparts, taken together, shall constitute but one
and the same Agreement. This Agreement shall become effective upon the execution
of a counterpart hereof by each of the parties hereto.
13.10 Severability of Provisions. Any provision of this Agreement, the
Aircraft Secured Promissory Note, or the Related Documents which is illegal,
invalid, prohibited, or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective
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to the extent of such illegality, invalidity, prohibition, or unenforceability
without invalidating or impairing the remaining provisions hereof or affecting
the validity or enforceability of such provision in any other jurisdiction.
13.11 GOVERNING LAW. EXCEPT AS SPECIFICALLY SET FORTH IN ANY OTHER
TRANSACTION DOCUMENT: (A) THIS AGREEMENT, THE AIRCRAFT SECURED PROMISSORY NOTE,
AND THE OTHER TRANSACTION DOCUMENTS SHALL BE DEEMED TO HAVE BEEN MADE IN THE
STATE OF CALIFORNIA; AND (B) THE VALIDITY OF THIS AGREEMENT, THE AIRCRAFT
SECURED PROMISSORY NOTE, AND THE OTHER TRANSACTION DOCUMENTS, AND THE
CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS
OF THE PARTIES THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.
13.12 JURISDICTION AND VENUE. TO THE EXTENT PERMITTED BY LAW, THE
PARTIES HERETO AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH
THIS AGREEMENT, THE AIRCRAFT SECURED PROMISSORY NOTE, OR THE OTHER TRANSACTION
DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS
LOCATED IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA OR, AT THE SOLE OPTION
OF LENDER, IN ANY OTHER COURT IN WHICH LENDER SHALL INITIATE LEGAL OR EQUITABLE
PROCEEDINGS AND WHICH HAS SUBJECT MATTER JURISDICTION OVER THE MATTER IN
CONTROVERSY. LENDER AND BORROWER, TO THE EXTENT THEY MAY LEGALLY DO SO, HEREBY
WAIVE ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR
TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH
THIS SECTION 13.12 AND STIPULATE THAT THE STATE AND FEDERAL COURTS LOCATED IN
THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA SHALL HAVE IN PERSONAM
JURISDICTION AND VENUE OVER SUCH PARTY FOR THE PURPOSE OF LITIGATING ANY SUCH
DISPUTE, CONTROVERSY, OR PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT,
THE AIRCRAFT SECURED PROMISSORY NOTE, OR THE OTHER TRANSACTION DOCUMENTS. TO THE
EXTENT PERMITTED BY LAW, SERVICE OF PROCESS SUFFICIENT FOR PERSONAL JURISDICTION
IN ANY ACTION AGAINST BORROWER OR LENDER MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL, RETURN RECEIPT REQUESTED, TO ITS ADDRESS INDICATED IN SECTION 13.6
ATTACHED HERETO. BORROWER AGREES THAT ANY FINAL JUDGMENT RENDERED AGAINST IT IN
ANY ACTION OR PROCEEDING SHALL BE CONCLUSIVE AS TO THE SUBJECT OF SUCH FINAL
JUDGMENT AND MAY BE ENFORCED IN OTHER JURISDICTIONS IN ANY MANNER PROVIDED BY
LAW.
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13.13 WAIVER OF TRIAL BY JURY. BORROWER AND LENDER, TO THE EXTENT THEY
MAY LEGALLY DO SO, HEREBY EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY
CLAIM, DEMAND, ACTION, CAUSE OF ACTION, OR PROCEEDING ARISING UNDER OR WITH
RESPECT TO THIS AGREEMENT, THE AIRCRAFT SECURED PROMISSORY NOTE, OR THE OTHER
TRANSACTION DOCUMENTS, OR IN ANY WAY CONNECTED WITH, OR RELATED TO, OR
INCIDENTAL TO, THE DEALINGS OF THE PARTIES HERETO WITH RESPECT TO THIS
AGREEMENT, THE AIRCRAFT SECURED PROMISSORY NOTE, OR THE OTHER TRANSACTION
DOCUMENTS, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER
NOW EXISTING OR HEREAFTER ARISING, AND IRRESPECTIVE OF WHETHER SOUNDING IN
CONTRACT, TORT, OR OTHERWISE. TO THE EXTENT THEY MAY LEGALLY DO SO, BORROWER AND
LENDER HEREBY AGREE THAT ANY SUCH CLAIM, DEMAND, ACTION, CAUSE OF ACTION, OR
PROCEEDING SHALL BE DECIDED BY A COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY
HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 13.13 WITH ANY
COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE OTHER PARTY OR PARTIES HERETO TO
WAIVER OF ITS OR THEIR RIGHT TO TRIAL BY JURY.
13.14 Headings. Article and Section headings used in this Agreement
and the table of contents preceding this Agreement are for convenience of
reference only and shall not constitute a part of this Agreement for any other
purpose or affect the construction of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed the day and year first above written.
CITY NATIONAL BANK, a IAI III, Inc., a Nevada
national banking association Corporation
By:________________________________ By:__________________________________
Its:_______________________________ Its:_________________________________
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EXHIBIT A
Aircraft Secured Promissory Note
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EXHIBIT B
AMORTIZATION SCHEDULE
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EXHIBIT C
OPINION OF COUNSEL FOR BORROWER
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EXHIBIT D
LITIGATION AND PROCEEDINGS
None.
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