CREDIT AGREEMENT
AMONG
PLM EQUIPMENT GROWTH FUND VI
AND
THE LENDERS LISTED HEREIN,
AND
COMERICA BANK-CALIFORNIA,
as Agent
December 21, 2001
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is entered into as of December 21, 2001, by and among
PLM EQUIPMENT GROWTH FUND VI, a California limited partnership ("Borrower") and
the banks, financial institutions and institutional lenders from time to time
party hereto and defined as Lenders herein, and COMERICA BANK-CALIFORNIA
("Comerica Bank") not in its individual capacity, but solely as agent (in such
capacity, "Agent").
RECITALS
Lenders have agreed to make advances of credit available to Borrower, but
only upon the terms and subject to the conditions hereinafter set forth and in
reliance on the representations and warranties set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants hereinafter set forth, and intending to be legally bound, the parties
hereto agree as follows:
SECTION 1. DEFINITIONS.
1.1 Defined Terms. As used herein, the following terms have the following
meanings:
"Acquisub" means Acquisub, LLC, a Delaware limited liability company.
"Advance" means any Advance made or to be made by any Lender to Borrower as
set forth in Section 2.1.1.
"Adjusted LIBOR" means, for each Interest Period in respect of LIBOR Loans,
an interest rate per annum (rounded upward to the nearest 1/16th of one percent
(0.0625%)) determined pursuant to the following formula:
LIBOR
Adjusted LIBOR = ---------------------------------------
1.00 - Eurodollar Reserve Percentage
The Adjusted LIBOR shall be adjusted automatically as of the effective date
of any change in the Eurodollar Reserve Percentage.
"Affiliate" means, with respect to any Person, (a) each Person that,
directly or indirectly, through one or more intermediaries, owns or controls,
whether beneficially or as a trustee, guardian or other fiduciary, five percent
(5.0%) or more of the stock having ordinary voting power in the election of
directors of such Person or of the ownership interests in any partnership,
limited liability company or joint venture, (b) each Person that controls, is
controlled by or is under common control with such Person or any Affiliate of
such Person, or (c) each of such Person's officers, directors, joint venturers,
members, managers, and partners; provided, however, that in no case shall any
Lender or Agent be deemed to be an Affiliate of Borrower for purposes of this
Agreement. For the purpose of this definition, "control" of a Person shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of its management or policies, whether through the ownership of voting
securities, by contract or otherwise.
"Agent" means Comerica Bank solely when acting in its capacity as the Agent
under this Agreement or any of the other Loan Documents, and any successor
Agent.
"Agreement" means this Credit Agreement dated as of December 21, 2001,
including all amendments, modifications and supplements hereto, renewals,
extensions or restatements hereof, and all appendices, exhibits and schedules to
any of the foregoing, and shall refer to the Agreement as the same may be in
effect from time to time.
"Aircraft" means any corporate, commuter, or commercial aircraft or
helicopters, with modifications (as applicable) and replacement or spare parts
used in connection therewith, including, without limitation, engines, rotables
and propellers, and any engines, rotables or propellers used on a stand-alone
basis.
"Aircraft Lease Agreement" means that certain Amended and Restated Lease
Agreement (2001 N907TW), dated as of November 13, 2001, between TEC, as Owner
Trustee (lessor) ("Aircraft Owner Trustee") and TWA Airlines, LLC, a Delaware
limited liability company (lessee) ("Aircraft Lessee") for the lease from
Aircraft Owner Trustee to Aircraft Lessee of the one ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MD-82
Series Aircraft U.S. Reg. No. N907TW and the Engines (as defined therein)
(collectively, the "Aircraft Collateral"), as the same may be modified, amended
or supplemented from time to time.
"Aircraft Owner Trust" means the owner trust created by the Aircraft Owner
Trust Agreement.
"Aircraft Owner Trust Agreement" means the Amended and Restated Trust
Agreement dated as of December 24, 1997 between Borrower, as beneficiary, and
the Aircraft Owner Trustee, as owner trustee, including all annexes, schedules,
supplements and exhibits thereto, all as amended, modified or supplemented from
time to time.
"American" means American Airlines, Inc., a Delaware corporation.
"Applicable Margin" means:
(a) with respect to Base Rate Loans, one-half of one percent (0.5%);
(b) with respect to LIBOR Loans, two and one-half percent (2.5%); and
(c) with respect to Cost of Funds Rate Loans, two and one-half percent
(2.5%).
"Approved Appraiser" means ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ or any other appraiser of
Equipment proposed by Borrower and acceptable to Agent in its sole and absolute
discretion.
"Asset Coverage Ratio" means, as at any date of determination, the ratio of
(a) the sum of (i) Borrower's investments in assets properly classified as
"cash" or "cash equivalents" under GAAP, and which conform to the investment
policies adopted by FSI, as the sole general partner of Borrower, and (ii) Fair
Market Value of Eligible Inventory (but only to the extent of Borrower's
proportional share of ownership in such Eligible Inventory) as determined by FSI
in good faith, as sole general partner of Borrower, as of the end of the fiscal
quarter of Borrower immediately preceding such date of determination (subject to
re-determination by an Approved Appraiser pursuant to Section 5.2 whose
determination shall be final), to (b) Total Funded Debt.
"Asset Coverage Ratio Compliance Certificate" means a certificate with
appropriate insertions setting forth evidence of Borrower's compliance with the
Asset Coverage Ratio, as of the last day of the month for which such certificate
is submitted or as of a requested Funding Date, which certificate shall be
substantially in the form set forth in Exhibit C, and certified by a Responsible
Officer of Borrower.
"Assignment and Acceptance" has the meaning set forth in Section 11.10.2.
"Bankruptcy Code" means the Bankruptcy Code of 1978, as amended, as
codified under Title 11 of the United States Code, and the Bankruptcy Rules
promulgated thereunder, as the same may be in effect from time to time.
"Base Rate" means the greater of (i) the Prime Rate and (ii) the Federal
Funds Rate plus 0.50% per annum.
"Base Rate Loan" means any borrowing which bears interest at a rate
determined with reference to the Base Rate.
"Borrower" has the meaning set forth in the Preamble.
"Business Day" means any day which is not a Saturday, Sunday or a legal
holiday under the laws of the State of California or is not a day on which
banking institutions located in the State of California are authorized or
permitted by law or other governmental action to close and, with respect to
LIBOR Loans, means any day on which dealings in foreign currencies and exchanges
may be carried on by Agent and Lenders in the London interbank market.
"Casualty Loss" means any of the following events with respect to any item
of Eligible Inventory: (a) the actual total loss or constructive total loss of
such item of Eligible Inventory; (b) such item of Eligible Inventory shall
become lost, stolen, destroyed, damaged beyond repair or permanently rendered
unfit for use for any reason whatsoever; (c) the seizure of such item of
Eligible Inventory for a period exceeding sixty (60) days or the condemnation or
confiscation of such item of Eligible Inventory; or (d) such item of Eligible
Inventory shall be deemed under its lease to have suffered a casualty loss as to
the entire item of Eligible Inventory.
"Change of Control" means (i) the failure after the date of this Agreement
of ▇▇▇▇ ▇▇▇▇▇ or ▇▇▇ ▇▇▇▇▇, directly or indirectly, through one or more
intermediaries, to own, whether beneficially or as a trustee, guardian or other
fiduciary, fifty-one percent (51%) or more of (x) the stock having ordinary
voting power in the election of directors or (y) the ownership interests of
either FSI, the Equipment Manager, or any Owner Trustee, or (ii) the failure
after the date of this Agreement of ▇▇▇▇ ▇▇▇▇▇ or ▇▇▇ ▇▇▇▇▇, directly or
indirectly, through one or more intermediaries, to control FSI, the Equipment
Manager, or any Owner Trustee. For purposes of this definition, "control" of
FSI, the Equipment Manager, or any Owner Trustee shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of its
management or policies, whether through the ownership of voting securities, by
contract or otherwise.
"Charges" means all federal, state, county, city, municipal, local, foreign
or other governmental taxes, levies, assessments, charges or claims, in each
case then due and payable, upon or relating to (a) the Loans made to Borrower
hereunder, (b) Borrower's employees, payroll, income or gross receipts, (c)
Borrower's ownership or use of any of its Properties or assets or (d) any other
aspect of Borrower's business.
"Closing Date" means the date of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended, the Treasury
Regulations adopted thereunder and the Treasury Regulations proposed thereunder
(to the extent Requisite Lenders, in their sole discretion, reasonably determine
that such proposed regulations set forth the regulations that apply in the
circumstances), as the same may be in effect from time to time.
"Collateral" means the Collateral described in one or more of the Security
Agreements.
"Comerica Bank" has the meaning set forth in the Preamble.
"Commitment" means with respect to each Lender the amounts set forth on
Schedule A and "Commitments" means all such amounts collectively, as each may be
amended from time to time upon the execution and delivery of an instrument of
assignment pursuant to Section 11.10, which amendments shall be evidenced on
Schedule 1.1.
"Commitment Termination Date" means June 30, 2003.
"Compliance Certificate" means a certificate signed by a Responsible
Officer of Borrower, substantially in the form of Exhibit F, with such changes
as Agent may from time to time reasonably request for the purpose of having such
certificate disclose the matters certified therein and the method of computation
thereof.
"Consent and Agreement" means the Consent and Agreement executed by each of
Aircraft Owner Trustee, Borrower, Aircraft Lessee and American, in favor of
Agent on behalf of Lenders, in form and substance acceptable to Agent.
"Consolidated EBIDA" means as measured as at any date of determination for
any period on a consolidated basis, the sum of (a) the Consolidated Net Income
of Borrower, plus (b) all amounts treated as expenses for depreciation and the
amortization of intangibles of any kind, plus (c) Consolidated Interest Expense,
plus (d) non-liquidating cash distributions received from Special Purpose
Entities, and in the cases of clauses (b) and (c) above, each to the extent
included in the determination of Consolidated Net Income.
"Consolidated Funded Debt" means, as measured at any date of determination
on a consolidated basis, the total amount of all interest bearing obligations
(including Indebtedness for borrowed money) of Borrower, including, without
limitation, Obligations under this Agreement, all capital lease obligations of
Borrower as a lessee, and the stated amount of all outstanding undrawn letters
of credit issued on behalf of Borrower or for which Borrower is liable.
"Consolidated Interest Expense" means, as measured at any date of
determination for any period on a consolidated basis, the gross interest expense
of Borrower for the period (including all commissions, discounts, fees and other
charges in connection with standby letters of credit and similar instruments),
less interest income for that period.
"Consolidated Net Income" means, as measured at any date of determination
for any period on a consolidated basis, the net income (or loss) of Borrower for
such period taken as a single accounting period.
"Consolidated Net Worth" means, for any Person, as measured at any date of
determination, the difference between Consolidated Total Assets and Consolidated
Total Liabilities.
"Consolidated Total Assets" means, for any Person, as measured at any date
of determination on a consolidated basis, all assets of such Person.
"Consolidated Total Liabilities" means, for any Person, as measured at any
date of determination on a consolidated basis, all liabilities of such Person.
"Contingent Obligation" means, as to any Person, (a) any Guaranty
Obligation of that Person and (b) any direct or indirect obligation or
liability, contingent or otherwise, of that Person, (i) in respect of any letter
of credit or similar instrument issued for the account of that Person or as to
which that Person is otherwise liable for reimbursement of drawings, (ii) with
respect to the Indebtedness of any partnership or joint venture of which such
Person is a partner or a joint venturer, (iii) to purchase any materials,
supplies or other property from, or to obtain the services of, another Person if
the relevant contract or other related document or obligation requires that
payment for such materials, supplies or other property, or for such services,
shall be made regardless of whether delivery of such materials, supplies or
other property is ever made or tendered, or such services are ever performed or
tendered, or (iv) in respect of any interest rate protection contract that is
not entered into in connection with a bona fide hedging operation that provides
offsetting benefits to such Person. The amount of any Contingent Obligation
shall (subject, in the case of Guaranty Obligations, to the last sentence of the
definition of "Guaranty Obligation") be deemed equal to the maximum reasonably
anticipated liability in respect thereof, and shall, with respect to clause
(b)(iv) of this definition, be marked to market on a current basis.
"Cost of Funds Rate" means, as applicable to any Loan, and as of any
particular date, Comerica Bank's funding cost on such date with respect to such
Loan as determined by Comerica Bank in its sole and absolute discretion. The
Cost of Funds Rate will be fixed on the date a Loan is converted into a Cost of
Funds Rate Loan until such Loan shall have been fully repaid.
"Cost of Funds Rate Loan" means any borrowing which bears interest at a
rate determined with reference to the Cost of Funds Rate.
"Default Rate" has the meaning set forth in Section 2.3.
"Designated Deposit Account" means a demand deposit account maintained by
Borrower with Comerica Bank designated by written notice from Borrower to Agent.
"Dollars" and the sign "$" means lawful money of the United States.
"Effective Amount" means with respect to any Loans on any date, the
aggregate outstanding principal amount thereof after giving effect to any
borrowing and prepayments or repayments thereof occurring on such date.
"Eligible Assignee" means (a) a commercial bank organized under the laws of
the United States, or any state thereof; (b) a commercial bank organized under
the laws of any other country which is a member of the Organization for Economic
Cooperation and Development ("OECD"), or a political subdivision of any such
country, provided, however, that such bank is acting through a branch or agency
located in the country in which it is organized or another country which is also
a member of the OECD or the Cayman Islands; (c) the central bank of any country
which is a member of the OECD; (d) an insurance company organized under the laws
of the United States; (e) a commercial finance company, mutual or other
investment fund, lease financing company or other institutional investor
(whether a corporation, partnership, trust or other entity) that is engaged in
making, purchasing or otherwise investing in commercial loans in the ordinary
course of its business, provided that such Person is an "accredited investor"
(as defined in Regulation D under the Securities Act of 1933, as amended); (f)
any Lender party to this Agreement; (g) any Lender Affiliate and (h) any other
Person approved by Agent and Borrower, such approval not to be unreasonably
withheld; provided, however, that (i) Borrower's approval shall not be required
so long as an Event of Default has occurred and is continuing and (ii) an
Affiliate of Borrower shall not qualify as an Eligible Assignee.
"Eligible Inventory" means all Trailers, Aircraft and Aircraft engines
complying with Stage III noise reduction requirements, Railcars, marine
containers, the marine vessel, LION, and, if approved by the Requisite Lenders,
other related Equipment, in each case that (a) is owned of record by Borrower or
a Special Purpose Entity (or jointly by Borrower and Acquisub or one or more
Equipment Growth Funds) or, subject to the approval of Agent, any Owner Trustee
of which Borrower or a Special Purpose Entity is the sole beneficiary or owner
(or is the beneficiary or owner jointly with Acquisub or one or more Equipment
Growth Funds), as applicable, (b) has a value and marketability reasonably
satisfactory to the Agent; and (c) is free and clear of all Liens, except (i)
any interest of a lessee thereof pursuant to a Lease entered into with Borrower
or a Special Purpose Entity or Borrower's or such Special Purpose Entity's
predecessor in interest or such Owner Trustee or nominee entity, as lessor, or
(ii) as otherwise permitted by Section 6.1, provided that any Liens of the type
permitted under clause (ii) encumbering any item of Equipment shall not secure
obligations in amounts which materially impair the equity value in such item of
Equipment. Notwithstanding anything to the contrary in the foregoing, there
shall be excluded from the definition of Eligible Inventory the following: (a)
items which are off-lease for more than ninety-two (92) days, (b) containers and
Trailers subject to Utilization Leases whereby the utilization rates of such
items of Equipment fall below fifty percent (50%), (c) any marine vessel, other
than the marine vessel, LION, and (d) the Aircraft Collateral, so long as all of
the conditions set forth in Section 3.3 below have not been satisfied or waived.
Equipment which is Eligible Inventory will cease to be Eligible Inventory at any
time, but only for so long as, it either (1) fails to meet all of the
requirements of clauses (a) through (c) set forth in the first sentence of this
definition or (2) falls in the category of items listed in any of the clauses
(a) through (d) set forth in the immediately preceding sentence. Requisite
Lenders in their sole discretion, on a case by case basis, may approve in
writing any other items or types of Equipment for credit under "Eligible
Inventory" from time to time.
"Employee Benefit Plan" means any Pension Plan and any employee welfare
benefit plan, as defined in Section 3(1) of ERISA, that is maintained for the
employees of Borrower, FSI or any of FSI's Subsidiaries or any ERISA Affiliate
of Borrower.
"Environmental Claims" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law or for release or injury
to the environment or threat to public health, personal injury (including
sickness, disease or death), property damage, natural resources damage, or
otherwise alleging liability or responsibility for damages (punitive or
otherwise), cleanup, removal, remedial or response costs, restitution, civil or
criminal penalties, injunctive relief, or other type of relief, resulting from
or based upon (a) the presence, placement, discharge, emission or release
(including intentional and unintentional, negligent and non-negligent, sudden or
non-sudden, accidental or non-accidental placement, spills, leaks, discharges,
emissions or releases) of any Hazardous Material at, in, or from Property,
whether or not owned by Borrower, FSI, or any Subsidiary of FSI, or (b) any
other circumstances forming the basis of any violation, or alleged violation, of
any Environmental Law.
"Environmental Laws" means all foreign, federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes, together
with all administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental
Authorities, in each case relating to environmental, health, safety and land use
matters, including the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Clean Air Act, the Federal Water Pollution Control
Act of 1972, the Solid Waste Disposal Act, the Federal Resource Conservation and
Recovery Act, the Toxic Substances Control Act and the Emergency Planning and
Community Right-to-Know Act.
"Environmental Permit" has the meaning set forth in Section 4.15.
"Equipment" means all items of equipment permitted to be owned directly or
beneficially by Borrower pursuant to the terms and conditions of the Limited
Partnership Agreement, as such terms and conditions are in effect on the Closing
Date, and owned directly or beneficially by Borrower or by any Special Purpose
Entity (or jointly by Borrower or any Special Purpose Entity and Acquisub or one
or more Equipment Growth Funds) and held for lease or rental, and shall include
items of equipment legal or record title to which is held by any Owner Trustee
or nominee entity in which Borrower or any Special Purpose Entity holds the sole
beneficial interest (or jointly by Borrower or any Special Purpose Entity and
Acquisub or one or more Equipment Growth Funds).
"Equipment Schedule" means a certificate with appropriate insertions
setting forth (a) a list of each item of Equipment forming part of Eligible
Inventory, including a description of each Lease and the lessee thereunder, and
(b) the Fair Market Value of Eligible Inventory determined by FSI in its good
faith on a quarterly basis, each as of the last day of the month for which such
certificate is submitted or as of a requested Funding Date, as the case may be,
which certificate shall be substantially in the form set forth in Exhibit B, and
certified by a Responsible Officer of Borrower.
"Equipment Growth Funds" means any and all of PLM Equipment Growth Fund I,
Equipment Growth Fund II, PLM Equipment Growth Fund III, PLM Equipment Growth
Fund IV, PLM Equipment Growth Fund V, PLM Equipment Growth Fund VII and
Professional Lease Management Income Fund I, L.L.C.
"Equipment Manager" means IMI or an Affiliate of IMI, in its capacity as
equipment manager under the Management Agreements.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, as the same may be in effect from time to time, and any successor
statute.
"ERISA Affiliate" means, as applied to any Person, any trade or business
(whether or not incorporated) which is a member of a group of which that Person
is a member and which is under common control within the meaning of the
regulations promulgated under Section 414 of the Code.
"Eurodollar Reserve Percentage" means the maximum reserve percentage
(expressed as a decimal, rounded upward to the nearest 1/100th of one percent
(0.01%)) in effect from time to time (whether or not applicable to any Lender)
under regulations issued by the Federal Reserve Board for determining the
maximum reserve requirement (including any emergency, supplemental or other
marginal reserve requirement) with respect to Eurocurrency liabilities having a
term comparable to such Interest Period.
"Event of Default" means any of the events set forth in Section 8.1.
"Existing Note Agreement" means that certain Note Agreement dated as of
August 1, 1993 among Borrower, as company, and Allstate Insurance Company and
Allstate Life Insurance Company, as purchasers.
"Existing Notes" means the notes issued by Borrower pursuant to the
Existing Note Agreement.
"FAA" or "Federal Aviation Administration" means the United States Federal
Aviation Administration or any successor thereto administering the functions
thereof.
"Facility" means the total Commitments described in Schedule A, as such
Schedule A may be amended from time to time as set forth on Schedule 1.1, for
the credit facility described in Section 2.1.1 to be provided by Lenders to
Borrower, according to each Lender's Pro Rata Share.
"Fair Market Value of Eligible Inventory" means the fair market value of
the Eligible Inventory as determined by an Approved Appraiser, or, for purposes
of the Equipment Schedule, by FSI, as sole general partner of Borrower,
reasonably satisfactory to Agent.
"Federal Funds Rate" means, for any day, the rate set forth in the weekly
statistical release designated as H.15(519), or any successor publication,
published by the Federal Reserve Board (including any such successor,
"H.15(519)") for such day opposite the caption "Federal Funds (Effective)". If
on any relevant day such rate is not yet published in H.15(519), the rate for
such day will be the rate set forth in the daily statistical release designated
as the Composite 3:30 p.m. Quotations for U.S. Government Securities, or any
successor publication, published by the Federal Reserve Bank of New York
(including any such successor, the "Composite 3:30 p.m. Quotation") for such day
under the caption "Federal Funds Effective Rate". If on any relevant day the
appropriate rate for such previous day is not yet published in either H.15(519)
or the Composite 3:30 p.m. Quotation, the rate for such day will be the
arithmetic mean of the rates for the last transaction in overnight Federal funds
arranged prior to 9:00 a.m. (New York time) on that day by each of three leading
brokers of Federal funds transactions in New York City selected by Agent.
"Federal Reserve Board" means the Board of Governors of the Federal Reserve
System and any successor thereto.
"Fee Letter" means that certain letter dated as of the Closing Date
executed by Borrower in favor of Agent with respect to the agency fee and
certain other matters, as the same may from time to time be amended or
supplemented.
"First Amendment to Warehousing Credit Agreement" means that certain First
Amendment to Warehousing Credit Agreement, of even date herewith, providing for
(a) the reduction in Comerica Bank's commitment, as successor by merger to
Imperial Bank, under the Warehousing Credit Agreement from $10,000,000 to
$5,000,000, and the reduction of the total commitment of lenders pursuant to the
Warehousing Credit Agreement from $15,000,000 to $10,000,000, (b) the amendment
to certain covenants applicable to Borrower under the Warehousing Credit
Agreement, and (c) other amendments and modifications as required by the lenders
thereunder, in form and substance similar to Exhibit K.
"Form W-8BEN" has the meaning set forth in Section 2.14.6.
"Form W-8ECI" has the meaning set forth in Section 2.14.6.
"FSI" means PLM Financial Services, Inc., a Delaware corporation and the
sole general partner of Borrower.
"Funding Date" means with respect to any proposed borrowing hereunder, the
date funds are advanced to Borrower for any Loan requested by Borrower.
"GAAP" means generally accepted accounting principles set forth from time
to time in the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar function of comparable stature and authority within the accounting
profession), or in such other statements by such other entity as may be in
general use by significant segments of the U.S. accounting profession, which are
applicable to the circumstances as of the date of determination.
"Governmental Authority" means (a) any federal, state, county, municipal or
foreign government, or political subdivision thereof, (b) any governmental or
quasi-governmental agency, authority, board, bureau, commission, department,
instrumentality or public body, (c) any court or administrative tribunal or (d)
with respect to any Person, any arbitration tribunal or other non-governmental
authority to whose jurisdiction that Person has consented.
"Guaranty Obligation" means, as applied to any Person, any direct or
indirect liability of that Person with respect to any Indebtedness, lease for
capital equipment other than Eligible Inventory, dividend, letter of credit or
other obligation (the "primary obligations") of another Person (the "primary
obligor"), including any obligation of that Person, whether or not contingent,
(a) to purchase, repurchase or otherwise acquire such primary obligations or any
property constituting direct or indirect security therefor, or (b) to advance or
provide funds (i) for the payment or discharge of any such primary obligation,
or (ii) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency or any balance sheet item, level
of income or financial condition of the primary obligor, or (c) to purchase
property, securities or services primarily for the purpose of assuring the owner
of any such primary obligation of the ability of the primary obligor to make
payment of such primary obligation, or (d) otherwise to assure or hold harmless
the holder of any such primary obligation against loss in respect thereof. The
amount of any Guaranty Obligation shall be deemed equal to the stated or
determinable amount of the primary obligation in respect of which such Guaranty
Obligation is made or, if not stated or if indeterminable, the maximum
reasonably anticipated liability in respect thereof.
"Hazardous Materials" means all those substances which are regulated by, or
which may form the basis of liability under, any Environmental Law, including
all substances identified under any Environmental Law as a pollutant,
contaminant, hazardous waste, hazardous constituent, special waste, hazardous
substance, hazardous material, or toxic substance, or petroleum or petroleum
derived substance or waste.
"IMI" means PLM Investment Management, Inc., a California corporation, and
a wholly owned Subsidiary of FSI.
"Indebtedness" means, as to any Person, (a) all indebtedness of such Person
for borrowed money, (b) all capital leases of such Person as lessee, (c) any
obligation of such Person for the deferred purchase price of Property or
services (other than trade or other accounts payable in the ordinary course of
business and not more than ninety (90) days past due), (d) any obligation of
such Person that is secured by a Lien on assets of such Person, whether or not
that Person has assumed such obligation or whether or not such obligation is
non-recourse to the credit of such Person, (e) obligations of such Person
arising under acceptance facilities or under facilities for the discount of
accounts receivable of such Person and (f) any obligation of such Person to
reimburse the issuer of any letter of credit issued for the account of such
Person upon which a draw has been made.
"Indemnified Liability" has the meaning set forth in Section 10.2.
"Indemnified Person" has the meaning set forth in Section 10.2.
"Interest Differential" means, with respect to any prepayment of a LIBOR
Loan on a day other than an LIBOR Interest Payment Date on which such LIBOR Loan
matures, the difference between (a) the per annum interest rate payable with
respect to such LIBOR Loan as of the date of the prepayment and (b) the Adjusted
LIBOR on, or as near as practicable to, the date of the prepayment for a LIBOR
Loan commencing on such date and ending on the last day of the applicable
Interest Period. The determination of the Interest Differential by Agent shall
be conclusive in the absence of manifest error.
"Interest Payment Date" means, (a) with respect to any Base Rate Loan, (x)
the last Business Day of each fiscal quarter of Borrower commencing with the
last Business Day of the fiscal quarter of Borrower in which the Funding Date of
such Loan occurs, or (y) if any Base Rate Loan is converted into a LIBOR Loan or
a Cost of Funds Rate Loan pursuant to Section 2.8, the date of such conversion,
and (b) with respect to any Cost of Funds Rate Loan, (x) the last Business Day
of each fiscal quarter of Borrower commencing with the last Business Day of the
fiscal quarter of Borrower in which the Funding Date of such Loan occurs, or (y)
if any LIBOR Loan or Base Rate Loan is converted into a Cost of Funds Rate Loan,
the last Business Day of each fiscal quarter of Borrower commencing with the
last Business Day of the fiscal quarter of Borrower in which such conversion
date occurs.
"Interest Period" means, with respect to any LIBOR Loan, the three-month,
six-month, nine-month or twelve-month period selected by Borrower pursuant to
Section 2, in each instance commencing on the applicable Funding Date of such
LIBOR Loan; provided, however, that any Interest Period which would otherwise
end on a day that is not a Business Day shall end on the next succeeding
Business Day except that in the instance of any LIBOR Loan, if such next
succeeding Business Day falls in the next calendar month, the Interest Period
shall end on the next preceding Business Day.
"Investment" means, when used in connection with any Person, any investment
by or of that Person, whether by means of purchase or other acquisition of stock
or other securities of any other Person or by means of loan or advance (other
than advances to employees for moving or travel expenses, drawing accounts and
similar expenditures in the ordinary course of business), capital contribution,
guaranty or other debt or equity participation or interest, or otherwise, in any
other Person, including any partnership and joint venture interests of that
Person in any other Person or in any item of transportation-related equipment
owned by a Person unaffiliated with that Person and on lease to another third
party, in which that Person acquires a right to share, directly or indirectly.
"Investment Company Act" means the Investment Company Act of 1940, as
amended (15 ▇.▇.▇.▇▇. 80a-1 et seq.), as the same may be in effect from time to
time, or any successor statute thereto.
"IRS" means the Internal Revenue Service and any successor thereto.
"Lease" means each and every item of chattel paper, installment sales
agreement, equipment lease or rental agreement (including progress payment
authorizations) relating to an item of Equipment of which Borrower or any
Special Purpose Entity is the sole record or beneficial lessor (or a record or
beneficial lessor jointly with Acquisub or one or more Equipment Growth Funds)
or of which an Owner Trustee is the sole record or beneficial lessor and in
respect of which the lessee and lease terms (including, without limitation, as
to rental rate, maturity and insurance coverage) are acceptable to Agent, in its
sole discretion. The term "Lease" includes (a) all payments to be made
thereunder, (b) all rights of Borrower or any Special Purpose Entity therein,
and (c) any and all amendments, renewals, extensions or guaranties thereof.
"Lender Affiliate" means a Person engaged primarily in the business of
commercial banking and that is an Affiliate of a Lender or of a Person of which
a Lender is an Affiliate.
"Lenders" means the banks, financial institutions or other institutional
lenders which have executed signature pages to this Agreement and such other
Assignees, banks, financial institutions or other institutional lenders as shall
hereafter execute and deliver an Assignment and Acceptance with respect to all
or any portion of the Commitments and the Loans advanced and maintained pursuant
to the Commitments, in each case pursuant to and in accordance with Section
11.10.
"Lending Office" means, with respect to any Lender, the office or offices
of the Lender specified as its lending office opposite its name on the
applicable signature page hereto, or such other office or offices of the Lender
as it may from time to time notify Borrower and Agent.
"Leverage Ratio" means, as at any date of determination, the ratio of (a)
Consolidated Total Liabilities of Borrower to (b) the Consolidated Net Worth of
Borrower.
"LIBOR" means, with respect to any Loan to be made, continued as or
converted into a LIBOR Loan, the London Inter-Bank Offered Rate (determined
solely by Agent), rounded upward to the nearest 1/16th of one percent (0.0625%),
at which Dollar deposits are offered to Agent by major banks in the London
interbank market at or about 11:00 a.m., London time, on the second Business Day
prior to the first day of the related Interest Period with respect to such Loan
in an aggregate amount approximately equal to the amount of such Loan and for a
period of time comparable to the number of days in the applicable Interest
Period. The determination of LIBOR by Agent shall be conclusive in the absence
of manifest error.
"LIBOR Interest Payment Date" means, with respect to any LIBOR Loan, the
last day of each Interest Period applicable to such LIBOR Loan; provided,
however, that if any Interest Period for a LIBOR Loan exceeds three (3) months,
interest shall also be paid on the date which falls three (3) months after the
beginning of such Interest Period, and every three months thereafter until the
end of the applicable Interest Period.
"LIBOR Loan" means a Loan that bears interest based on Adjusted LIBOR.
"Lien" means any mortgage, pledge, hypothecation, assignment for security,
security interest, encumbrance, ▇▇▇▇, ▇▇▇▇ or charge of any kind, whether
voluntarily incurred or arising by operation of law or otherwise, affecting any
Property, including any agreement to grant any of the foregoing, any conditional
sale or other title retention agreement, any lease in the nature of a security
interest, and the filing of or agreement to file or deliver any financing
statement (other than a precautionary financing statement with respect to a
lease that is not in the nature of a security interest) under the UCC or
comparable law of any jurisdiction.
"Limited Partnership Agreement" means the Amended and Restated Limited
Partnership Agreement of Borrower dated as of December 20, 1991, as amended by
that certain First Amendment to Amended and Restated Limited Partnership
Agreement, dated as of November 21, 1996, as further amended by that Second
Amendment to Amended and Restated Limited Partnership Agreement, dated as of
August 24, 2001 ("Second Amendment to Limited Partnership Agreement").
"Loan" has the meaning set forth in Section 2.1.1.
"Loan Document" when used in the singular and "Loan Documents" when used in
the plural means any and all of this Agreement, the Notes, the Security
Documents, the Subordination Agreement, the Consent and Agreement, the Fee
Letter and any and all other agreements, documents and instruments executed and
delivered by or on behalf or support of Borrower to Agent or any Lender or any
of their respective authorized designees evidencing or otherwise relating to the
Advances and the Liens granted to Agent, on behalf of Lenders, with respect to
the Advances, as the same may from time to time be amended, modified,
supplemented or renewed.
"Loan Parties" means Borrower, Aircraft Owner Trustee, the Subordinated
Lenders, any other Owner Trustee, and any Special Purpose Entity, and a "Loan
Party" means any one of the Loan Parties.
"Management Agreements" means, collectively (a) that certain Equipment
Management Agreement, dated as of December 23, 1991, entered into on behalf of
Borrower by FSI with its Affiliate, IMI, pursuant to Section 2.05(f) of the
Limited Partnership Agreement, (b) that certain Data Processing Servicing
Agreement, dated as of June 21, 1996, entered into on behalf of Borrower by FSI
with its Affiliate, IMI, and (c) that certain Equipment Services Agreement,
dated as of June 21, 1996, entered into on behalf of Borrower by FSI with its
Affiliate, IMI.
"Material Adverse Effect" means, with respect to any Loan Party, any set of
circumstances or events which (a) has or could reasonably be expected to have
any material adverse effect whatsoever upon the validity or enforceability of
any Loan Document, (b) is or could reasonably be expected to be material and
adverse to the condition (financial or otherwise) or business operations of such
Loan Party, (c) materially impairs or could reasonably be expected to materially
impair the ability of any Loan Party to perform its Obligations, or (d)
materially impairs or could reasonably be expected to materially impair the
ability of Agent or any Lender to enforce any of its or their legal remedies
pursuant to the Loan Documents.
"Maturity Date" means, with respect to each Loan advanced by Lenders
hereunder, the following date: (a) if the Funding Date of such Loan occurs on or
before the last Business Day of the second month of any fiscal quarter of
Borrower, then the last Business Day of the twentieth (20th) fiscal quarter of
Borrower after the fiscal quarter of Borrower in which such Funding Date occurs,
and (b) if the Funding Date of any Loan occurs during the third month of any
fiscal quarter of Borrower, then the last Business Day of the twentieth (20th)
fiscal quarter of Borrower after the fiscal quarter of Borrower immediately
following the Funding Date of such Loan, or such earlier or later date as
requested by Borrower and approved by Requisite Lenders, in their sole and
absolute discretion.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA, and to which Borrower, FSI or any of FSI's Subsidiaries or
any ERISA Affiliate of Borrower, FSI or any of FSI's Subsidiaries is making, or
is obligated to make, contributions or has made, or been obligated to make,
contributions within the preceding five (5) years.
"Net Cash Proceeds From the Disposition of Equipment" means, for any period
of determination, the sum of (a) Borrower's cash balance at the beginning of
such period and (b) cash received by Borrower from disposition of Equipment plus
without duplication liquidating distributions from Special Purpose Entities
during such period less payments made by Borrower for the purchase of such
Equipment and associated expenses including but not limited to, acquisition and
negotiation fees.
"Note" has the meaning set forth in Section 2.1.1(a)(i), and any and all
replacements, extensions, substitutions and renewals thereof.
"Notice of Borrowing" means a notice given by Borrower to Agent in
accordance with Section 2.7, substantially in the form of Exhibit G, with
appropriate insertions.
"Notice of Conversion/Continuation" means a notice given by Borrower to
Agent in accordance with Section 2.8, substantially in the form of Exhibit H,
with appropriate insertions.
"Obligations" means all loans, advances, liabilities and obligations for
monetary amounts owing by Borrower to any Lender or Agent, whether due or to
become due, matured or unmatured, liquidated or unliquidated, contingent or
non-contingent, and all covenants and duties of any Loan Party, of any kind or
nature, arising under any of the Loan Documents. This term includes, without
limitation, all principal, interest (including interest that accrues after the
commencement of a case or proceeding against Borrower under the Bankruptcy
Code), fees, including, without limitation, any and all prepayment fees,
facility fees, commitment fees, arrangement fees, agent fees and attorneys' fees
and any and all other fees, expenses, costs or other sums chargeable to Borrower
under any of the Loan Documents.
"Operating Cash Flow Coverage Ratio" means, as at any date of
determination, the ratio of (a) Consolidated EBIDA of Borrower adjusted for
gains or losses on the sale of Equipment in the ordinary course of business to
the extent not already taken into account in the determination of Consolidated
EBIDA to (b) the sum of (i) the aggregate amount of principal payments due on
Consolidated Funded Debt (excluding the Revolver Loans) during the four
consecutive fiscal quarters immediately succeeding such date plus (ii)
Consolidated Interest Expense of Borrower plus (iii) twenty-five percent (25%)
of the aggregate principal amount of the Revolver Loans outstanding on such date
(excluding principal amounts of Revolver Loans outstanding for ninety (90) days
or less). Consolidated EBIDA and Consolidated Interest Expense to be measured
for the four consecutive fiscal quarters then ended on such date.
"Opinion of Company Counsel" means the favorable written legal opinion of
Borrower's counsel, substantially in the form of Exhibit D.
"Opinion of FAA Counsel" means the favorable written legal opinion of
counsel acceptable to Agent in its sole and absolute discretion regarding
perfection of the security interest in the Collateral created by the Aircraft
Security Agreement filed with the FAA on the Funding Date of the second Advance.
"Other Taxes" has the meaning set forth in Section 2.14.2.
"Overadvance" has the meaning set forth in Sections 2.1.1(a)(iii) and (iv).
"Owner Trustee" means any Person acting in the capacity of (a) a trustee
for any owner trust or (b) a nominee entity, in each case holding record title
to any Eligible Inventory for the beneficial interest of Borrower or any Special
Purpose Entity (or for the joint beneficial interest of Borrower or any Special
Purpose Entity and Acquisub or one or more Equipment Growth Funds) pursuant to a
trust or similar agreement with Borrower. For the avoidance of any doubt, the
term "Owner Trustee" includes the Aircraft Owner Trustee.
"PBGC" means the Pension Benefit Guaranty Corporation and any successor
thereto.
"Pension Plan" means any employee pension benefit plan, as defined in
Section 3(2) of ERISA, that is maintained for the employees of Borrower, FSI or
any of FSI's Subsidiaries or any ERISA Affiliate of Borrower, FSI or any of
FSI's Subsidiaries, other than a Multiemployer Plan.
"Permitted Liens" has the meaning set forth in Section 6.1.
"Permitted Rights of Others" means, as to any Property in which a Person
has an interest, (a) an option or right to acquire a Lien that would be a
Permitted Lien, (b) the reversionary interest of a lessor under a lease of such
Property and (c) an option or right of the lessee under a lease of such Property
to purchase such property at fair market value.
"Person" means any individual, sole proprietorship, partnership, joint
venture, limited liability company, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or Governmental Authority.
"PFF" means PFF Bank & Trust.
"PLMI" means PLM International, Inc., a Delaware corporation, or any
successor in interest thereof.
"Potential Event of Default" means a condition or event which, after notice
or lapse of time or both, will constitute an Event of Default.
"Prepayment Date" has the meaning set forth in Section 2.2.2.
"Prepayment Premium" means, on any prepayment date and with respect to any
Cost of Funds Rate Loan being prepaid, the sum of (i) Five Hundred Dollars
($500), and (ii) the present value, discounted at the Reinvestment Rate of the
positive amount by which the interest the Lenders would have earned had the
prepaid principal amount been paid according to the Cost of Fund Rate Loan's
amortization schedule at the Cost of Funds Rate Loan interest rate exceeds the
interest the Lenders would earn by reinvesting the prepaid principal amount at
the Reinvestment Rate.
"Prime Rate" means, at any time, the rate of interest per annum publicly
announced from time to time by Comerica Bank as its prime rate. Each change in
the Prime Rate shall be effective as of the opening of business on the day such
change in the Prime Rate occurs. The parties hereto acknowledge that the rate
announced publicly by Comerica Bank as its Prime Rate is an index or base rate
and shall not necessarily be its lowest rate charged to Comerica Bank's
customers or other banks.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, whether tangible or intangible.
"Pro Rata Share" means, as to any Lender at any time, the percentage
equivalent (expressed as a decimal, rounded to the ninth decimal place) at such
time of the Effective Amount of such Lender's Loans divided by the Effective
Amount of all Loans, or if no Loans are outstanding, the percentage equivalent
(expressed as a decimal, rounded to the ninth decimal place) at such time of
such Lender's aggregate Commitments divided by the aggregate Commitments or, if
the Commitments have expired or been terminated and all Loans repaid in full,
the percentage equivalent (expressed as a decimal, rounded to the ninth decimal
place) of the Effective Amount of such Lender's Loans divided by the aggregate
Effective Amount of all Loans immediately before such repayment in full.
"Public Utility Holding Company Act" means the Public Utility Holding
Company Act of 1935, as amended (15 ▇.▇.▇.▇▇. 79 et seq.) as the same shall be
in effect from time to time, and any successor statute thereto.
"Railcar" means all railroad rolling stock, including, without limitation,
all coal, timber, plastic pellet, tank, ▇▇▇▇▇▇, flat and box cars and
locomotives.
"Regulations T, U and X" means, collectively, Regulations T, U and X
adopted by the Federal Reserve Board (12 C.F.R. Parts 220, 221 and 224,
respectively) and any other regulation in substance substituted therefor.
"Reinvestment Rate" means, on any prepayment date and with respect to any
Cost of Funds Rate Loan being prepaid, the interest rate equal to the rate of
interest reasonably determined by Agent (based on quotations from established
dealers) to be in effect in the secondary market of U.S. Treasury Obligations of
a comparable amount as the outstanding principal amount of such Loan being
prepaid or deemed to have been prepaid and with a comparable term to maturity,
not more than seven (7) days prior to such prepayment date plus one-half percent
(0.5%) per annum.
"Revolver Loans" means Loans made to Borrower pursuant to the Warehousing
Credit Agreement.
"Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule, regulation, guideline or determination of an arbitrator
or of a Governmental Authority, in each case applicable to or binding upon the
Person or any of its property or to which the Person or any of its property is
subject.
"Requisite Lenders" means any combination of Lenders whose combined Pro
Rata Share (and voting interest with respect thereto) of all amounts outstanding
under this Agreement, or, in the event there are no amounts outstanding, the
Commitments, is greater than sixty-six and two-thirds percent (66 2/3%) of all
such amounts outstanding or the total Commitments, as the case may be; provided,
however, that in the event there are only two (2) Lenders, Requisite Lenders
means both Lenders.
"Responsible Officer" means for (i) Borrower, any of the President, Chief
Executive Officer, Executive Vice President, Chief Financial Officer, Secretary
or Corporate Controller of FSI, or another officer authorized by FSI, as the
sole general partner of Borrower, having authority to request Advances or
perform other duties required hereunder, and (ii) any other Loan Party, any of
the President, Chief Executive Officer, Executive Vice President, Chief
Financial Officer, Secretary or Corporate Controller or another officer
authorized thereof.
"SEC" means the Securities and Exchange Commission and any successor
thereto.
"Security Agreements" means, collectively, (1) the Security Agreement of
even date herewith (the "Security Agreement") between Borrower and Agent, on
behalf and for the benefit of the Lenders, providing for the grant of a security
interest in all of the assets of Borrower, subject to no other Liens other than
Permitted Liens, substantially in the form of Exhibit J, including all
amendments, modifications and supplements thereto and all appendices, exhibits
and schedules to any of the foregoing, as the same may be in effect from time to
time, (2) the Aircraft Security and Assignment Agreement in form and substance
acceptable to Agent (the "Aircraft Security Agreement"), executed by Aircraft
Owner Trustee in favor of Agent on behalf of Lenders, granting to Agent, on
behalf of Lenders, a security interest in the Aircraft Collateral and assigning
to Agent on behalf of Lenders, the Aircraft Lease Agreement and any related
documents and agreements, as security for the payment and performance in full of
the Obligations, subject to no other Liens other than Permitted Liens, including
all amendments, modifications and supplements thereto and all appendices,
exhibits and schedules to any of the foregoing, as the same may be in effect
from time to time, and (3) the Beneficial Interest Pledge and Security Agreement
in form and substance acceptable to Agent (the "Pledge and Security Agreement"),
executed by the Borrower in favor of Agent on behalf of Lenders, assigning the
Borrower's beneficiary rights in the Aircraft Owner Trust as security for the
payment and performance in full of the Obligations, subject to no other Liens
other than Permitted Liens, including all amendments, modifications and
supplements thereto and all appendices, exhibits and schedules to any of the
foregoing, as the same may be in effect from time to time.
"Security Documents" means the Security Agreements, each chattel mortgage,
ship mortgage or similar security agreement, mortgage or other agreement or
document entered into with respect to this Agreement, each UCC-1 financing
statement delivered pursuant thereto and any and all other related documents.
"Settlement Order" means, collectively, (a) that certain Order, dated as of
July 24, 2001 ("Order"), issued by the Honorable Senior United States District
Judge in the matter of ▇▇▇▇ V. PLM INTERNATIONAL, INC., ET. AL., adopting the
Report and Recommendation, dated as of April 25, 2001, issued by the Honorable
United States Magistrate Judge for the Southern District of Alabama, Southern
Division, for the settlement of the litigation involving Borrower entitled ▇▇▇▇
V. PLM INTERNATIONAL, INC., ET. AL., and (b) that certain Judgment, dated as of
July 24, 2001, issued by the Honorable Senior United States District Judge in
the matter of ▇▇▇▇ V. PLM INTERNATIONAL, INC., ET. AL., approving the Order.
"Solvent" means, as to any Person at any time, that (a) the fair value of
the Property of such Person is greater than the amount of such Person's
liabilities (including disputed, contingent and unliquidated liabilities) as
such value is established and liabilities evaluated for purposes of Section
101(31) of the Bankruptcy Code; (b) the present fair saleable value of the
Property in an orderly liquidation of such Person is not less than the amount
that will be required to pay the probable liability of such Person on its debts
as they become absolute and matured; (c) such Person is able to realize upon its
Property and pay its debts and other liabilities (including disputed, contingent
and unliquidated liabilities) as they mature in the normal course of business;
(d) such Person does not intend to, and does not believe that it will, incur
debts or liabilities beyond such Person's ability to pay as such debts and
liabilities mature; and (e) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for which
such Person's property would constitute unreasonably small capital.
"Special Purpose Entity" means any Person in which the ownership interest
is held by Borrower, either wholly or jointly with one or more Equipment Growth
Funds, and organized for the purpose of owning equipment permitted to be owned
by Borrower pursuant to the terms and conditions of the Limited Partnership
Agreement, as such terms and conditions are in effect on the Closing Date.
"Subordination Agreement" means the Intercompany Subordination Agreement of
even date herewith among FSI, PLMI, TEC, and IMI ("Subordinated Lenders"),
Borrower, and Agent, substantially in the form of Exhibit E, including all
amendments, modifications and supplements thereto and all appendices, exhibits
and schedules to any of the foregoing, as the same may be in effect from time to
time.
"Subsidiary" means, with respect to any Person, any corporation,
association, partnership, limited liability company or other business entity of
which an aggregate of fifty percent (50.0%) or more of the beneficial interest
(in the case of a partnership) or fifty percent (50%) or more of the outstanding
stock, units or other voting interest having ordinary voting power to elect a
majority of the directors, managers or trustees of such Person (irrespective of
whether, at the time, the stock, units or other voting interest of any other
class or classes of such Person shall have or might have voting power by reason
of the happening of any contingency) is at the time, directly or indirectly,
owned legally or beneficially by such Person and/or one or more Subsidiaries of
such Person.
"Taxes" has the meaning set forth in Section 2.14.1.
"TEC" means PLM Transportation Equipment Corporation, a California
corporation, and a wholly-owned Subsidiary of FSI.
"Termination Date" means the date which is the later of (a) the Commitment
Termination Date and (b) the date of full, complete and indefeasible payment and
performance of the Obligations.
"Termination Event" means, with respect to Borrower, (a) a "reportable
event" described in Section 4043 of ERISA and the regulations issued thereunder
(other than a reportable event not subject to the provision for 30-day notice to
the PBGC under such regulations), or (b) the withdrawal of Borrower, FSI or any
of FSI's Subsidiaries or any of their ERISA Affiliates from a Pension Plan
during a plan year in which any of them was a "substantial employer" as defined
in Section 4001(a)(2) of ERISA, or (c) the filing of a notice of intent to
terminate a Pension Plan or the treatment of a Pension Plan amendment as a
termination under Section 4041 of ERISA, or (d) the institution of proceedings
to terminate a Pension Plan by the PBGC, or (e) any other event or condition
which might constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Pension Plan.
"Total Cash Flow Coverage Ratio" means, with respect to Borrower, as at any
date of determination, the ratio of (a) Consolidated EBIDA of Borrower adjusted
for gains or losses on the sale of Equipment in the ordinary course of business
to the extent not already taken into account in the determination of
Consolidated EBIDA plus (i) the Net Cash Proceeds From the Disposition of
Equipment in the ordinary course of business received during the four
consecutive fiscal quarters ending on such date less (ii) aggregate amounts of
cash distributions to its partners made during the four consecutive fiscal
quarters ending on such date, to (b) the sum of (i) the aggregate amount of
principal payments on Consolidated Funded Debt (excluding the Revolver Loans)
made during the four consecutive fiscal quarters ending on such date plus (ii)
Consolidated Interest Expense of Borrower plus (iii) twenty-five percent (25%)
of the aggregate principal amount of the Revolver Loans outstanding on such date
(excluding principal amounts of Revolver Loans outstanding for ninety (90) days
or less). (Consolidated EBIDA and Consolidated Interest Expense to be measured
for the four consecutive fiscal quarters then ended on such date).
"Total Funded Debt" means Consolidated Funded Debt less the aggregate
principal amount of the Revolver Loans outstanding for ninety (90) days or less.
"Trailer" means (a) vehicles having a minimum length of twenty (20) feet
used in trailer or freight car service and constructed for the transport of
commodities or containers from point to point and (b) associated equipment.
"UCC" means the Uniform Commercial Code as the same may, from time to time,
be in effect in the State of California; provided, however, in the event that,
by reason of mandatory provisions of law, any and all of the attachment,
perfection or priority of the Lien of Agent, on behalf of Lenders, in and to the
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of California, the term "UCC" shall mean the
Uniform Commercial Code as in effect in such other jurisdiction for purposes of
the provisions hereof relating to such attachment, perfection or priority and
for purposes of definitions related to such provisions.
"United States" means the United States of America.
"Utilization Leases" means Leases for Equipment held for lease in pooling
or similar arrangements where the actual rental payments under such Lease are
based on and for the actual period of utilization of such item of Equipment
rather than the Lease term.
"Warehousing Credit Agreement" means that certain Warehousing Credit
Agreement, dated as of April 13, 2001, by and among FSI, Borrower, Acquisub, PLM
Equipment Growth Fund VII and Professional Lease Management Income Fund I,
L.L.C, on the one hand and Imperial Bank, as Agent, and other lenders listed as
"Lenders" therein, on the other hand, as amended by the First Amendment to
Warehousing Credit Agreement, and as the same may be further amended, restated,
modified or supplemented from time to time.
1.2 Accounting Terms. Any accounting term used in this Agreement or any
other Loan Document shall have, unless otherwise specifically provided herein or
therein, the meaning customarily given such term in accordance with GAAP, and
all financial data required to be submitted by this Agreement or any other Loan
Document shall be prepared and computed, unless otherwise specifically provided
herein or therein, in accordance with GAAP. That certain terms or computations
are explicitly modified by the phrase "in accordance with GAAP" shall in no way
be construed to limit the foregoing. In the event that GAAP changes during the
term of this Agreement such that the covenants contained in Section 7 would then
be calculated in a different manner or with different components, (a) the
parties hereto agree to amend this Agreement in such respects as are necessary
to conform those covenants as criteria for evaluating Borrower's financial
condition to substantially the same criteria as were effective prior to such
change in GAAP and (b) Borrower shall be deemed to be in compliance with the
covenants contained in the aforesaid subsections during the sixty (60) day
period following any such change in GAAP if and to the extent that Borrower
would have been in compliance therewith under GAAP as in effect immediately
prior to such change.
1.3 Other Terms. All other undefined terms contained in this Agreement
shall, unless the context indicates otherwise, have the meanings provided for by
the UCC to the extent the same are used or defined therein. The words "herein,"
"hereof" and "hereunder" and other words of similar import refer to this
Agreement as a whole, including the Exhibits and Schedules hereto, all of which
are by this reference incorporated into this Agreement, as the same may from
time to time be amended, modified or supplemented, and not to any particular
section, subsection or clause contained in this Agreement. The term "including"
shall not be limiting or exclusive, unless specifically indicated to the
contrary. The term "or" is disjunctive; the term "and" is conjunctive. The term
"shall" is mandatory; the term "may" is permissive. Wherever from the context it
appears appropriate, each term stated in either the singular or plural shall
include the singular and plural, and pronouns stated in the masculine, feminine
or neuter gender shall include the masculine, feminine and the neuter.
1.4 Schedules And Exhibits. Any reference to a "Section," "Subsection,"
"Exhibit," or "Schedule" shall refer to the relevant Section or Subsection of or
Exhibit or Schedule to this Agreement, unless specifically indicated to the
contrary.
SECTION 2. AMOUNT AND TERMS OF CREDIT.
2.1 Commitment To Lend.
2.1.1 Term Facility. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of Borrower
set forth herein, Lenders hereby agree to make Advances (as defined below) of
immediately available funds to Borrower from the Closing Date until the Business
Day immediately preceding the Commitment Termination Date, in the aggregate
principal amount outstanding at any time not to exceed the total Commitments for
the Facility, as more fully set forth in this Section 2.1.1.
(a) Facility Commitments.
(i) On the Funding Date requested by Borrower, after
Borrower shall have satisfied all applicable conditions precedent set forth in
Section 3, each Lender shall advance immediately available funds to Agent (each
such advance being an "Advance") evidencing such Lender's Pro Rata Share of a
loan ("Loan"). Agent shall immediately advance such immediately available funds
to Borrower at the Designated Deposit Account (or such other deposit account at
Comerica Bank or such other financial institution as to which Borrower and Agent
shall agree at least three (3) Business Days prior to the requested Funding
Date) on the Funding Date with respect to such Loan. The Borrower shall pay
interest accrued on the Loan at the rates and in the manner set forth in Section
2.1.1(b). Each Loan advanced hereunder by each Lender shall be evidenced by the
Borrower's promissory note in favor of such Lender substantially in the form of
Exhibit A (each a "Note").
(ii) Nothing contained in this Agreement shall under any
circumstance be deemed to require any Lender to make any Advance under the
Facility which, in the aggregate principal amount, taking into account such
Lender's portion of the principal amounts outstanding under this Agreement and
the making of such Advance, exceeds such Lender's Commitment for the Facility.
(iii) Amounts borrowed by Borrower under this Facility that
are repaid or prepaid may not be reborrowed. No LIBOR Loan shall have an
Interest Period ending more than thirty (30) days after the Maturity Date
thereof. Notwithstanding anything to the contrary in the foregoing, Borrower
shall repay the outstanding principal of all LIBOR Loans and all accrued
interest thereon on the respective Maturity Dates of such LIBOR Loans and
nothing in the foregoing shall be deemed to be an extension of such Maturity
Date or waiver of Borrower's obligation to pay any breakage costs payable on
account of the Interest Period of any LIBOR Loan ending after the Maturity Date
thereof.
(iv) Each request for a Loan hereunder shall constitute a
reaffirmation by Borrower and the Responsible Officer requesting the same that
the representations and warranties contained in this Agreement are true, correct
and complete in all material respects to the same extent as though made on and
as of the date of the request, except to the extent such representations and
warranties specifically relate to an earlier date, in which event they shall be
true, correct and complete in all material respects as of such earlier date.
(b) Each Loan. Each Loan made by Lenders hereunder shall, at
Borrower's option in accordance with the terms of this Agreement, be either in
the form of a Base Rate Loan, a LIBOR Loan or a Cost of Funds Rate Loan. Subject
to the terms and conditions of this Agreement, each Loan shall bear interest on
the sum of the unpaid principal balance thereof outstanding on each day from the
date when made, continued or converted until such Loan shall have been fully
repaid at a rate per annum equal to the Base Rate, as the same may fluctuate on
a daily basis, the Adjusted LIBOR, or the Cost of Funds Rate, as the case may
be, plus the Applicable Margin. Interest on each LIBOR Loan funded hereunder
shall be due and payable by Borrower in arrears on the applicable LIBOR Interest
Payment Date, and interest on each Base Rate Loan or each Cost of Funds Rate
Loan funded hereunder shall be due and payable by Borrower in arrears on the
applicable Interest Payment Date. All accrued but unpaid interest on each Loan
will be due and payable on the date such Loan is repaid, whether by prepayment
or at maturity, and with all accrued but unpaid interest being due and payable
by the Borrower on the Maturity Date for such Loan.
Each Advance made by a Lender as part of a Loan hereunder and all
repayments of principal with respect to such Advance shall be evidenced by
notations made by such Lender on the books and records of such Lender; provided,
however, that the failure by such Lender to make such notations shall not limit
or otherwise affect the obligations of Borrower with respect to the repayments
of principal or payments of interest on any Advance or Loan. The aggregate
unpaid amount of each Advance set forth on the books and records of a Lender
shall be presumptive evidence of such Lender's Pro Rata Share of the principal
amount owing and unpaid by Borrower under its Note.
(c) Fees.
(i) In connection with the extension of the Loans, Borrower
shall pay to the Agent for the account of each Lender, on the date of execution
and delivery of this Agreement, a fully earned and non-refundable commitment fee
equal to one-half of one percent (0.50%) of such Lender's Commitment
("Commitment Fee"). Any good faith deposit deposited by Borrower with Agent,
after deducting therefrom Agent's expenses and costs (including reasonable
attorneys' fees) incurred by or on behalf of Agent or any Lender in connection
with the preparation and negotiation of the Loan Documents, shall be applied
toward the Commitment Fee due from Borrower hereunder.
(ii) Borrower shall pay to Agent for the account of each
Lender a commitment fee on the average daily unused portion of such Lender's
Commitment, computed on a quarterly basis based upon the daily utilization for
that quarter as calculated by the Agent, equal to one-half of one percent
(0.50%) per annum. Such commitment fee shall accrue from the date hereof to the
Commitment Termination Date and shall be due and payable quarterly in arrears on
the last Business Day of each March, June, September, and December, commencing
on March 31, 2002 with the final payment to be made on the Commitment
Termination Date. The commitment fees provided in this subsection shall accrue
at all times after the date hereof, including at any time during which one or
more conditions in Section 3 are not met.
(iii) Borrower agrees to pay to the Agent for its own
account, an agency fee in accordance with the Fee Letter.
2.1.2 Funding. Promptly following the receipt of such documents
required pursuant to Section 3.2.1 and approval of a Loan by Agent, Agent shall
notify by telephone, telecopier, facsimile or telex each Lender of the (a) the
principal amount (including Lender's Pro Rata Share thereof) and (b) Funding
Date of the Loan requested by Borrower. Not later than 1:00 p.m., California
time, on the Funding Date for any Loan, each Lender shall make an Advance to
Agent for the account of Borrower in the amount of its Pro Rata Share of the
Loan being requested. Upon satisfaction of the applicable conditions precedent
set forth in Section 3, all Advances shall be credited in immediately available
funds to the Designated Deposit Account.
2.1.3 Utilization Of The Loans. The Loans made under the Facility
shall be used solely for the purpose of first repaying the Existing Notes under
the Existing Note Agreement and then for Borrower's acquisition of Equipment.
Notwithstanding the foregoing, any excess proceeds of the Loans may remain as
Borrower's cash balances until applied to the acquisition of Equipment.
2.2 Repayment And Prepayment; Reduction or Termination of Commitments.
2.2.1 Repayment. Unless prepaid pursuant to Section 2.2.2 or 2.2.3,
the principal amount of each Loan made to Borrower hereunder shall be repaid by
Borrower as follows: (a) if the Funding Date of such Loan occurs on or before
the last Business Day of the second month of any fiscal quarter of Borrower,
then on the last Business Day of such fiscal quarter of Borrower and on the last
Business Day of each fiscal quarter of Borrower thereafter, and (b) if the
Funding Date of any Loan occurs during the third month of any fiscal quarter of
Borrower, then on the last Business Day of the fiscal quarter of Borrower
immediately following the Funding Date of such Loan and on the last Business Day
of each fiscal quarter of Borrower thereafter, in each case through the Maturity
Date of such Loan in twenty (20) equal quarterly installments of principal.
Subject to the terms and conditions of this Agreement, the unpaid principal
amount of each Loan and all unpaid interest accrued thereon, together with all
other fees, expenses, costs and other sums chargeable to Borrower incurred in
connection therewith shall be due and payable no later than the Maturity Date of
such Loan.
2.2.2 Voluntary Prepayment. Subject to Section 2.18, Borrower may in
the ordinary course of Borrower's business, upon at least three (3) Business
Days' written notice, or telephonic notice promptly confirmed in writing to
Agent, which notice shall be irrevocable, prepay any Loan in whole or in part.
Such notice of prepayment shall specify the date and amount of such prepayment
and whether such prepayment is of Base Rate Loans, LIBOR Loans or Cost of Funds
Rate Loans, or any combination thereof; provided that if an Event of Default
shall have occurred and be continuing, Lenders shall have the exclusive right to
apply any and all such prepayments against the then due and owing Obligations as
Lenders may deem advisable. Such prepayment of Loans, together with any amounts
required pursuant to Section 2.18, shall be in immediately available funds and
delivered to Agent not later than 1:00 p.m., California time, on the date for
prepayment stated in such notice (the "Prepayment Date"). With respect to any
prepayment under this Section 2.2.2, all interest on the amount prepaid accrued
up to but excluding the date of such prepayment shall be due and payable on the
Prepayment Date, and the amount prepaid shall be applied to the remaining
principal installments in inverse order of maturity or, at Borrower's election,
ratably based on the amount of such prepayment; provided that if an Event of
Default shall have occurred and be continuing, Lenders shall have the exclusive
right to apply any and all such prepayments against the then due and owing
Obligations as Lenders may deem advisable.
2.2.3 Mandatory Prepayments.
(a) In the event of a reduction in the Fair Market Value of
Eligible Inventory (other than due to a Casualty Loss) resulting in Borrower's
falling out of compliance with the Asset Coverage Ratio required to be
maintained on any date, then Borrower shall prepay the Loans in an amount
sufficient to return Borrower to being in compliance with the Asset Coverage
Ratio on such date, together with any amounts required by Section 2.18, within
thirty (30) calendar days after Borrower shall become aware of such
non-compliance, whether by written notice from Agent or any Lender or otherwise.
In the event that any item of Eligible Inventory shall be sold or
assigned by Borrower or any Special Purpose Entity, or the ownership interests
(whether by stock or otherwise) of Borrower in any Special Purpose Entity owning
record or beneficial title to any item of Eligible Inventory shall be sold or
transferred, resulting in Borrower's falling out of compliance with the Asset
Coverage Ratio required to be maintained on any date, then Borrower shall
immediately prepay the Loans in an amount sufficient to return Borrower to being
in compliance with the Asset Coverage Ratio on such date together with any
amounts required by Section 2.18. The sale or assignment of Eligible Inventory
by an Owner Trustee, or the sale or assignment of Borrower's or any Special
Purpose Entity's beneficial interest in any owner trust (or nominee entity)
holding title to Eligible Inventory, shall be considered a sale or assignment,
as the case may be, of such Eligible Inventory by Borrower or such Special
Purpose Entity, as the case may be. At Borrower's expense, Agent will, upon
receipt of the prepayment, release its security interest in the Property or
assets so sold, assigned or transferred so long as no Potential Event of Default
or Event of Default has occurred and is continuing.
In the event of a Casualty Loss resulting in Borrower's falling
out of compliance with the Asset Coverage Ratio required to be maintained on any
date, then Borrower shall (1) promptly provide notice of such Casualty Loss to
Agent, and (2) prepay the Loans in an amount sufficient to return Borrower to
being in compliance with the Asset Coverage Ratio, together with any amounts
required to be paid pursuant to Section 2.18, immediately upon receipt of
insurance or other proceeds with respect to such Casualty Loss but in no event
later than ninety (90) days after the date of such Casualty Loss.
(b) If at any time and for any reason the aggregate principal
amount of the Loan(s) then outstanding to Borrower shall exceed the total
Commitment (the amount of such excess, if any, being an "Overadvance"), Borrower
shall immediately repay the full amount of such Overadvance, together with all
interest accrued thereon and any amounts required to be paid pursuant to Section
2.18.
(c) In the event that Borrower conveys, sells, leases, assigns,
transfers or otherwise disposes of, in one transaction or a series of
transactions, all or substantially all of its business, Property or assets,
whether now owned or hereafter acquired ("Asset Disposition"), Borrower shall
immediately pay to Agent, together with any amounts required to be paid pursuant
to Section 2.18, one hundred percent (100%) of the net proceeds received by
Borrower from such Asset Disposition, to be applied by Agent pursuant to Section
2.6, except to the extent any such proceeds are invested by Borrower in the
purchase of Equipment within sixty (60) days of such Asset Disposition (unless a
Potential Event of Default or an Event of Default exists on the date of such
Asset Disposition or would result from such Asset Disposition, in which case the
proceeds of the Asset Disposition shall be immediately paid by Borrower to
Agent, together with any amounts required to be paid pursuant to Section 2.18,
to be applied by Agent pursuant to Section 2.6). Agent will, upon receipt of the
prepayment or confirmation of the purchase of Equipment, as the case may be,
release its security interest in the Property or assets so sold or otherwise
disposed of at Borrower's expense so long as no Potential Event of Default or
Event of Default has occurred and is continuing.
With respect to any prepayment under this Section 2.2.3, Borrower
shall provide Agent a written notice of prepayment that shall specify whether
such prepayment is of Base Rate Loans, LIBOR Loans or Cost of Funds Rate Loans,
or any combination thereof; provided that if an Event of Default shall have
occurred and be continuing, Lenders shall have the exclusive right to apply any
and all such prepayments against the then due and owing Obligations as Lenders
may deem advisable. Additionally, with respect to any prepayment under this
Section 2.2.3, all interest on the amount prepaid accrued up to but excluding
the date of such prepayment shall be due and payable on the date of the
prepayment, and the amount prepaid shall be applied to the remaining principal
installments in inverse order of maturity.
2.3 Calculation Of Fees and Interest; Post-Maturity Interest. All
computations of fees shall be made on the basis of a 360-day year and actual
days elapsed. Fees shall accrue during each period during which such fees are
computed from the first day thereof to the last day thereof. Interest on the
Loans shall be computed on the basis of a 365/366-day year for all Base Rate
Loans and a 360-day year for all LIBOR Loans and Cost of Funds Rate Loans and
the actual number of days elapsed in the period during which such interest
accrues. In computing interest on any Loan, the date of the making of such Loan
shall be included and the date of payment shall be excluded. Each change in the
interest rate of Base Rate Loans based on changes in the Prime Rate or the
Federal Funds Rate (as the case may be), and each change in the Adjusted LIBOR
based on changes in the Eurodollar Reserve Percentage shall be effective on the
effective date of such change and to the extent of such change. Agent shall give
Borrower notice of any such change in the Prime Rate or the Federal Funds Rate;
provided, however, that any failure by Agent to provide Borrower with notice
hereunder shall not affect Agent's right to make changes in the interest rate of
any Loan based on changes in the Prime Rate or the Federal Funds Rate. Upon the
occurrence and during the continuation of any Event of Default under this
Agreement, Advances under this Agreement will, at the option of Requisite
Lenders, bear interest at a rate per annum which is determined by adding two
percent (2.00%) to the rate of interest otherwise chargeable for such Advance
("Default Rate"). The imposition of a Default Rate will not constitute a waiver
of any Event of Default.
2.4 Manner Of Payments. All repayments or prepayments of principal and
all payments of interest, fees, costs, expenses and other sums chargeable to
Borrower under this Agreement, the Notes or any of the other Loan Documents
shall be in lawful money of the United States of America in immediately
available funds and delivered to Agent, for the account of Lenders, not later
than 1:00 p.m., California time, on the date due at Comerica Bank-California,
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇▇▇▇,
Vice President, or such other place as shall have been designated in writing by
Agent.
2.5 Payment On Non-Business Days. Whenever any payment to be made
under this Agreement, the Note or any of the other Loan Documents shall be
stated to be due on a day which is not a Business Day, such payment shall be
made on the next succeeding Business Day and such extension of time shall in
such case be included in the computation of the payment of interest thereon;
provided, however, that no Loan shall have remained outstanding after the
Maturity Date of such Loan.
2.6 Application Of Payments. All payments to or for the benefit of
Lenders hereunder shall be applied to the Obligations in the following order:
(a) then due and payable fees as set forth in Section 2.1.1(c) and, at the
direction of Borrower or upon prior notice given to Borrower by Agent, other
then due and payable fees, expenses and costs; (b) then due and payable interest
payments and mandatory prepayments; and (c) then due and payable principal
payments and optional prepayments; provided that if an Event of Default shall
have occurred and be continuing, Lenders shall have the exclusive right to apply
any and all such payments against the then due and owing Obligations as Lenders
may deem advisable. To the extent Borrower fails to make payment required
hereunder or under any of the other Loan Documents, each Lender is authorized
to, and at its sole option may, make such payments on behalf of Borrower. To the
extent permitted by law, all amounts advanced by any Lender hereunder or under
other provisions of the Loan Documents shall accrue interest at the same rate as
Base Rate Loans hereunder.
2.7 Procedure For The Borrowing Of Loans.
2.7.1 Notice Of Borrowing. Each borrowing of Loans shall be made
upon Borrower's irrevocable written notice delivered to Agent in the form of a
Notice of Borrowing, executed by a Responsible Officer of Borrower, with
appropriate insertions (which Notice of Borrowing must be received by Agent
prior to 12:00 noon, San Francisco, California time, five (5) Business Days
prior to the requested Funding Date) specifying:
(a) the amount of the requested borrowing, which, with
respect to any LIBOR Loan or Base Rate Loan, shall be in an aggregate minimum
amount of $5,000,000, and with respect to any Cost of Funds Rate Loan, shall be
in an aggregate minimum amount of $10,000,000 (unless the available amount
remaining to be borrowed under the Facility is less than $5,000,000 or
$10,000,000, as applicable, in which case the aggregate minimum amount of
borrowing shall be such lower amount);
(b) the requested Funding Date, which shall be a Business
Day;
(c) whether the borrowing is to be comprised of one or more
LIBOR Loans, Base Rate Loans or Cost of Funds Rate Loans; if the Notice of
Borrowing shall fail to specify whether the borrowing is to be comprised of
LIBOR Loans, Base Rate Loans or Cost of Funds Rate Loans, the borrowing shall be
comprised entirely of Base Rate Loans; and
(d) the duration of the Interest Period applicable to any
such LIBOR Loans included in such Notice of Borrowing. If the Notice of
Borrowing shall fail to specify the duration of the Interest Period for any
borrowing comprised of LIBOR Loans, such Interest Period shall be three (3)
months.
2.7.2 Unavailability Of LIBOR Loans. Unless the Requisite Lenders
shall otherwise consent, Borrower may not elect to have any Loan made as a LIBOR
Loan during the existence of an Event of Default or Potential Event of Default.
2.8 Conversion And Continuation Elections.
2.8.1 Election. Borrower may, upon irrevocable written notice to
Agent:
(a) elect to convert on any Business Day, any Base Rate Loan
(or any portion thereof in an amount equal to at least $5,000,000) into a LIBOR
Loan; or
(b) elect to convert on any LIBOR Interest Payment Date any
LIBOR Loan maturing on such LIBOR Interest Payment Date (or any portion thereof)
into a Base Rate Loan;
(c) elect to continue on any LIBOR Interest Payment Date any
LIBOR Loan maturing on such LIBOR Interest Payment Date; or
(d) elect to convert on any Business Day, any Base Rate Loan
or any LIBOR Loan or any combination thereof, in each case, in an amount equal
to at least $10,000,000 into a Cost of Funds Rate Loan; provided that a LIBOR
Loan may be converted into a Cost of Funds Rate Loan only on the last day of the
applicable Interest Period.
provided, that if the aggregate amount of LIBOR Loans outstanding at any date
shall have been reduced, by payment, prepayment, or conversion of portion
thereof, to be less than $2,000,000, such LIBOR Loans shall automatically
convert into Base Rate Loans, and on and after such date the right of Borrower
to continue such Loans as, and convert such Loans into, LIBOR Loans shall
terminate.
2.8.2 Notice Of Conversion. Each conversion or continuation of
Loans shall be made upon Borrower's irrevocable written notice delivered to
Agent in the form of a Notice of Conversion/Continuation, executed by a
Responsible Person of Borrower, with appropriate insertions (which Notice of
Conversion/Continuation must be received by Lender prior to 12:00 noon, San
Francisco, California time, at least three (3) Business Days in advance of the
proposed conversion date or continuation date) specifying:
(a) the proposed conversion date or continuation date;
(b) the aggregate amount of Loans to be converted or
continued;
(c) the nature of the proposed conversion or continuation;
and
(d) the duration of the requested Interest Period in the
case of LIBOR Loans.
2.8.3 Interest Period. If upon the expiration of any Interest
Period applicable to any LIBOR Loan, Borrower has failed to select a new
Interest Period to be applicable to such LIBOR Loan, Borrower shall be deemed to
have elected to convert such LIBOR Loan into a Base Rate Loan effective as of
the last day of such current Interest Period.
2.8.4 Unavailability Of LIBOR Loans. Unless the Requisite Lenders
shall otherwise consent, during the existence of an Event of Default or
Potential Event of Default, Borrower may not elect to have a Loan converted into
or continued as a LIBOR Loan.
2.9 Discretion Of Lenders As To Manner Of Funding. Notwithstanding any
provision of this Agreement to the contrary, each Lender shall be entitled to
fund and maintain its funding of all or any part of its LIBOR Loans in any
manner it elects, it being understood, however, that for the purposes of this
Agreement all determinations hereunder shall be made as if such Lender actually
funded and maintained each LIBOR Loan through the purchase of deposits having a
maturity corresponding to the maturity of the LIBOR Loan and bearing an interest
rate equal to the LIBOR rate (whether or not, in any instance, Lender shall have
granted any participations in such Loan). Each Lender may, if it so elects,
fulfill any commitment to make LIBOR Loans by causing a foreign branch or
affiliate to make or continue such LIBOR Loans; provided, however, that in such
event such Loans shall be deemed for the purposes of this Agreement to have been
made by such Lender, and the obligation of Borrower to repay such Loans shall
nevertheless be to such Lender and shall be deemed held by such Lender, to the
extent of such Loans, for the account of such branch or affiliate.
2.10 Distribution Of Payments. Agent shall immediately distribute to
each Lender, at such address as each Lender shall designate, its respective
interest in all repayments and prepayments of principal and all payments of
interest and all fees, expenses and costs received by Agent on the same day and
in the same type of funds as payment was received. In the event Agent does not
distribute such payments on the same day received, if such payments are received
by Agent by 1:00 p.m., California time, or if received after such time, on the
next succeeding Business Day, such payment shall accrue interest at the Federal
Funds Rate.
2.11 Agent's Right To Assume Funds Available For Advances. Unless
Agent shall have been notified by any Lender no later than the Business Day
prior to the respective Funding Date of a Loan that such Lender does not intend
to make available to Agent an Advance in immediately available funds equal to
such Lender's Pro Rata Share of the total principal amount of such Loan, Agent
may assume that such Lender has made such Advance to Agent on the date of the
Loan and Agent may, in reliance upon such assumption, make available to Borrower
a corresponding Advance. If Agent has made funds available to Borrower based on
such assumption and such Advance is not in fact made to Agent by such Lender,
Agent shall be entitled to recover the corresponding amount of such Advance on
demand from such Lender. If such Lender does not promptly pay such corresponding
amount upon Agent's demand, Agent shall notify Borrower and Borrower shall repay
such Advance to Agent. Agent also shall be entitled to recover from such Lender
interest on such Advance in respect of each day from the date such Advance was
made by Agent to Borrower to the date such corresponding amount is recovered by
Agent at the Federal Funds Rate. Nothing in this Section 2.11 shall be deemed to
relieve any Lender from its obligation to fulfill its Commitment or to prejudice
any rights which Agent or Borrower may have against such Lender as a result of
any default by such Lender under this Agreement.
2.12 Agent's Right To Assume Payments Will Be Made By Borrower. Unless
Agent shall have been notified by Borrower prior to the date on which any
payment to be made by Borrower hereunder is due that Borrower does not intend to
remit such payment, Agent may, in its sole discretion, assume that Borrower has
remitted such payment when so due and Agent may, in its sole discretion and in
reliance upon such assumption, make available to each Lender on such payment
date an amount equal to such Lender's Pro Rata Share of such assumed payment. If
Borrower has not in fact remitted such payment to Agent, each Lender shall
forthwith on demand repay to Agent the amount of such assumed payment made
available to such Lender, together with interest thereon in respect of each date
from and including the date such amount was made available by Agent to such
Lender to the date such amount is repaid to Agent at the Federal Funds Rate.
2.13 Capital Requirements. If any Lender determines that compliance
with any law or regulation or with any guideline or request from any central
bank or other Governmental Authority (whether or not having the force of law)
adopted after the date of this Agreement has or would have the effect of
reducing the rate of return on the capital of such Lender or any corporation
controlling such Lender as a consequence of, or with reference to, such Lender's
Commitment or its making or maintaining its Pro Rata Share of the Loans below
the rate which such Lender or such other corporation could have achieved but for
such compliance (taking into account the policies of such Lender or corporation
with regard to capital), then Borrower shall, from time to time, upon written
demand by such Lender (with a copy of such demand to Agent), immediately pay to
such Lender (a) such additional amounts as shall be sufficient to compensate
such Lender or other corporation for such reduction resulting from Loans or (b)
in the case where such reduction results from compliance with any such law,
regulation, guideline or request affecting only the Commitments and not the
Loans, such additional amounts as shall be sufficient to compensate such Lender
or other corporation for such reduction based on Borrower's usage of the
Commitments. A certificate submitted by such Lender to Borrower, stating that
the amounts set forth as payable to such Lender are true and correct, shall be
conclusive and binding for all purposes, absent manifest error. Each Lender
agrees promptly to notify Borrower and Agent of any circumstances that would
cause Borrower to pay additional amounts pursuant to this section, provided that
the failure to give such notice shall not affect Borrower's obligation to pay
any such additional amounts.
2.14 Taxes.
2.14.1 No Deductions. Subject to Section 2.14.7, any and all
payments by Borrower to each Lender or Agent under this Agreement shall be made
free and clear of, and without deduction or withholding for, any and all present
or future taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding, in the case of each Lender and
Agent, such taxes (including income taxes or franchise taxes) as are imposed on
or measured by each Lender's net income (all such non-excluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities being hereinafter
referred to as "Taxes").
2.14.2 Miscellaneous Taxes. In addition, Borrower shall pay any
present or future stamp or documentary taxes or any other excise or property
taxes, charges or similar levies which arise from any payment made hereunder or
from the execution, delivery or registration of, or otherwise with respect to,
this Agreement or any other Loan Documents (hereinafter referred to as "Other
Taxes").
2.14.3 Indemnity. Subject to Section 2.14.7, Borrower shall
indemnify and hold harmless each Lender and Agent for the full amount of Taxes
or Other Taxes (including any Taxes or Other Taxes imposed by any jurisdiction
on amounts payable under this Section 2.14) paid by such Lender or Agent in
relation to any payments made by or Obligations of Borrower and any liability
(including penalties, interest, additions to tax and expenses) arising therefrom
or with respect thereto, whether or not such Taxes or Other Taxes were correctly
or legally asserted. Payment under this indemnification shall be made within
thirty (30) days from the date any Lender or Agent makes written demand
therefor.
2.14.4 Required Deductions. If Borrower shall be required by law
to deduct or withhold any Taxes or Other Taxes from or in respect of any sum
payable hereunder to any Lender or Agent, then, subject to Section 2.14.7:
(a) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section 2.14) such Lender or Agent, as the
case may be, receives an amount equal to the sum it would have received had no
such deductions been made;
(b) Borrower shall make such deductions; and
(c) Borrower shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable
law.
2.14.5 Evidence of Payment. Within thirty (30) days after the
date of any payment by Borrower of Taxes or Other Taxes, Borrower shall furnish
to Agent the original or a certified copy of a receipt evidencing payment
thereof, or other evidence of payment satisfactory to Agent.
2.14.6 Foreign Persons. Each Lender which is a foreign person
(i.e., a person other than a United States person for United States Federal
income tax purposes) shall:
(a) No later than the date upon which such Lender becomes a
party hereto deliver to Borrower through Agent two (2) accurate and complete
signed originals of IRS Form W-8ECI or any successor thereto ("Form W-8ECI"), or
two accurate and complete signed originals of IRS Form W-8BEN or any successor
thereto ("Form W-8BEN"), as appropriate, in each case indicating that such
Lender is on the date of delivery thereof entitled to receive payments of
principal, interest and fees under this Agreement free from withholding of
United States Federal income tax;
(b) If at any time such Lender makes any changes
necessitating a new Form W-8ECI or Form W-8BEN, with reasonable promptness
deliver to Borrower through Agent in replacement for, or in addition to, the
forms previously delivered by it hereunder, two accurate and complete signed
originals of Form W-8ECI; or two accurate and complete signed originals of Form
W-8BEN, as appropriate, in each case indicating that the Lender is on the date
of delivery thereof entitled to receive payments of principal, interest and fees
under this Agreement free from withholding of United States Federal income tax;
(c) Before or promptly after the occurrence of any event
(including the passing of time but excluding any event mentioned in (b) above)
requiring a change in or renewal of the most recent Form W-8ECI or Form W-8BEN
previously delivered by such Lender, deliver to Borrower through Agent two
accurate and complete original signed copies of Form W-8ECI or Form W-8BEN in
replacement for the forms previously delivered by the Lender; and
(d) Promptly upon Borrower's or Agent's reasonable request
to that effect, deliver to Borrower or Agent (as the case may be) such other
forms or similar documentation as may be required from time to time by any
applicable law, treaty, rule or regulation in order to establish such Lender's
tax status for withholding purposes.
2.14.7 Income Taxes. Borrower will not be required to pay any
additional amounts in respect of United States Federal income tax pursuant to
Section 2.14.4 to Lender for the account of any Lending Office of such Lender:
(a) If the obligation to pay such additional amounts would
not have arisen but for a failure by such Lender to comply with its obligations
under Section 2.14.6 in respect of such Lending Office;
(b) If such Lender shall have delivered to Borrower a Form
W-8ECI in respect of such Lending Office pursuant to Section 2.14.6 and such
Lender shall not at any time be entitled to exemption from deduction or
withholding of United States Federal income tax in respect of payments by
Borrower hereunder for the account of such Lending Office for any reason other
than a change in United States law or regulations or in the official
interpretation of such law or regulations by any Governmental Authority charged
with the interpretation or administration thereof (whether or not having the
force of law) after the date of delivery of such Form W-8ECI; or
(c) If such Lender shall have delivered to Borrower a Form
W-8BEN in respect of such Lending Office pursuant to Section 2.14.6, and such
Lender shall not at any time be entitled to exemption from deduction or
withholding of United States Federal income tax in respect of payments by
Borrower hereunder for the account of such Lending Office for any reason other
than a change in United States law or regulations or any applicable tax treaty
or regulations or in the official interpretation of any such law, treaty or
regulations by any Governmental Authority charged with the interpretation or
administration thereof (whether or not having the force of law) after the date
of delivery of such Form W-8BEN.
2.14.8 Reimbursement Of Costs. If, at any time, Borrower requests
any Lender to deliver any forms or other documentation pursuant to Section
2.14.6(d), then Borrower shall, on demand of such Lender through Agent,
reimburse such Lender for any costs and expenses (including reasonable attorney
fees) reasonably incurred by such Lender in the preparation or delivery of such
forms or other documentation.
2.14.9 Jurisdiction. If Borrower is required to pay additional
amounts to any Lender or Agent pursuant to Section 2.14.4, then such Lender
shall use its reasonable good faith efforts (consistent with legal and
regulatory restrictions) to change the jurisdiction of its Lending Office so as
to eliminate any such additional payment by Borrower which may thereafter accrue
if such change, in the judgment of such Lender, is not otherwise disadvantageous
to such Lender.
2.15 Illegality.
2.15.1 LIBOR Loans. If any Lender shall determine that the
introduction of any Requirement of Law, or any change in any Requirement of Law
or in the interpretation or administration thereof, has made it unlawful, or
that any central bank or other Governmental Authority has asserted that it is
unlawful, for such Lender or its Lending Office to make LIBOR Loans, then, on
notice thereof by Lender to Borrower, the obligation of such Lender to make
LIBOR Loans shall be suspended until such Lender shall have notified Borrower
that the circumstances giving rise to such determination no longer exists.
2.15.2 Prepayment. If a Lender shall determine that it is
unlawful to maintain any LIBOR Loan, Borrower shall prepay in full all LIBOR
Loans of such Lender then outstanding, together with interest accrued thereon,
either on the last day of the Interest Period thereof if such Lender may
lawfully continue to maintain such LIBOR Loans to such day, or immediately, if
such Lender may not lawfully continue to maintain such LIBOR Loans, together
with any amounts required to be paid in connection therewith pursuant to Section
2.18.
2.15.3 Base Rate Borrowing. If Borrower is required to prepay any
LIBOR Loan immediately as provided in Section 2.15.2, then concurrently with
such prepayment, Borrower may borrow, in the amount of such prepayment, a Base
Rate Loan.
2.16 Increased Costs. If any Lender shall determine that, due to
either (a) the introduction of or any change (other than any change by way of
imposition of or increase in reserve requirements included in the calculation of
the LIBOR) in or in the interpretation of any Requirement of Law or (b) the
compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), there shall be
any increase in the cost to such Lender of agreeing to make or making, funding
or maintaining any LIBOR Loans, then Borrower shall be liable for, and shall
from time to time, upon demand therefor by such Lender, pay to such Lender such
additional amounts as are sufficient to compensate such Lender for such
increased costs.
2.17 Inability To Determine Rates. If any Lender shall have determined
that for any reason adequate and reasonable means do not exist for ascertaining
the LIBOR for any requested Interest Period with respect to a proposed LIBOR
Loan or that the LIBOR applicable for any requested Interest Period with respect
to a proposed LIBOR Loan does not adequately and fairly reflect the cost to
Lenders of funding such Loan, Agent will forthwith give notice of such
determination to Borrower and each Lender. Thereafter, the obligation of Lenders
to make or maintain LIBOR Loans, as the case may be, hereunder shall be
suspended until Agent, upon instruction from Requisite Lenders, revokes such
notice in writing. Upon receipt of such notice, Borrower may revoke any Notice
of Borrowing or Notice of Conversion/Continuation then submitted. If Borrower
does not revoke such notice, Lenders shall make, convert or continue the Loans,
as proposed by Borrower, in the amount specified in the applicable notice
submitted by Borrower, but such Loans shall be made, converted or continued as
Base Rate Loans instead of LIBOR Loans, as the case may be.
2.18 Prepayment Penalties.
2.18.1 Prepayment of LIBOR Loans. Borrower agrees that in the
event that Borrower prepays or is required to prepay any LIBOR Loan by
acceleration or otherwise or fails to draw down or convert to a LIBOR Loan after
giving notice thereof, it shall reimburse each Lender for its funding losses due
to such prepayment or failure to draw. Borrower and Lenders hereby agree that
such funding losses shall consist of the sum of the discounted monthly
differences for each month during the applicable or requested Interest Period,
calculated as follows for each such month:
(a) Principal amount of such LIBOR Loan times (number of
days between the date of prepayment or failure to draw and the last day in the
applicable Interest Period divided by 360), times the applicable Interest
Differential, plus
(b) All actual out-of-pocket expenses (other than those
taken into account in the calculation of the Interest Differential) incurred by
Lenders and Agent (excluding allocation of any expense internal to Lenders and
Agent) and reasonably attributable to such payment, prepayment or failure to
draw down or convert as described above; provided that no prepayment fee shall
be payable (and no credit or rebate shall be required) if the product of the
foregoing formula is not a positive number.
2.18.2 Prepayment of Cost of Funds Rate Loans. Borrower agrees
that in the event that Borrower prepays or is required to prepay in whole or in
part any Cost of Funds Rate Loans, by acceleration or otherwise, it shall
reimburse each Lender in an amount equal to the Prepayment Premium applicable to
such Loans, according to such Lender's Pro Rata Share of the Cost of Funds Rate
Loans being prepaid, excluding any portion attributable to profit.
SECTION 3. CONDITIONS PRECEDENT TO THE MAKING OF LOANS.
3.1 Conditions to First Advance. Unless waived in writing by Requisite
Lenders, the obligation of any Lender to make the first Advance is subject to
the satisfaction of the following conditions precedent:
3.1.1 Partnership, Company And Corporate Documents. Agent shall have
received, in form and substance satisfactory to Lenders and their respective
counsel, the following:
(a) A certified copy of the records of all actions taken by each
Loan Party, including all resolutions of Borrower and resolutions of FSI and
each other corporate Loan Party, authorizing or relating to the execution,
delivery and performance of this Agreement and the other Loan Documents and the
consummation of the transactions contemplated hereby and thereby;
(b) A certificate of a Responsible Officer of each Loan Party,
stating that (A) the articles or certificate of incorporation, as the case may
be, bylaws and any other formation documents of each Loan Party attached to such
certificate are true and accurate, remain in full force and effect and have not
been amended since the date thereof and (B) each Loan Party is in good standing
under the laws of the state of its formation and each other jurisdiction where
its ownership of Property and assets or conduct of business require such
qualification;
(c) Certificates of incumbency and signature with respect to the
authorized representatives of each Loan Party executing this Agreement and the
other Loan Documents and requesting Loans; and
(d) Such other documents relating to each Loan Party as Lenders
may reasonably request.
3.1.2 Notes. Agent shall have received Notes, in form and substance
satisfactory to Lenders, and duly executed and delivered by Borrower.
3.1.3 Termination of Existing Note Agreement; Repayment of Existing
Notes. Borrower shall, concurrently with the initial Advance, terminate the
Existing Note Agreement and repay the Existing Notes and all other obligations
outstanding thereunder, and Agent shall have received from Borrower evidence of
such termination and repayment, satisfactory to Agent in its sole and absolute
discretion.
3.1.4 Opinion Of Company Counsel. Agent shall have received an
originally executed Opinion of Counsel, in form and substance satisfactory to
Agent and Lenders, dated as of the initial Funding Date and addressed to Agent
and Lenders, together with copies of any officer's certificate or legal opinion
of other counsel or law firm specifically identified and expressly relied upon
by such counsel.
3.1.5 Subordination Agreement. Agent shall have received the
Subordination Agreement in form and substance satisfactory to Lenders, duly
executed and delivered by each Subordinated Lender and Borrower.
3.1.6 Bringdown Certificate. A certificate, dated as of the initial
Funding Date, of (a) a Responsible Officer of FSI, in its capacity as the sole
general partner of Borrower, and (b) a Responsible Officer of FSI in its
individual capacity and of each of the other Loan Parties, each to the effect
that (i) the representations and warranties of Borrower contained in Section 4
of this Agreement and of each Loan Party in each of the other Loan Documents are
true, accurate and complete in all material respects as of the initial Funding
Date as though made on such date and (ii) no Event of Default or Potential Event
of Default under this Agreement has occurred.
3.1.7 Material Adverse Effect. No event that has resulted or could
result in a Material Adverse Effect shall have occurred since September 30,
2001, as determined by Agent in its sole discretion.
3.1.8 Security Documents. Agent shall have received the Security
Agreement in form and substance satisfactory to Agent and duly executed and
delivered by Borrower; there shall have been filed in all applicable
jurisdictions Uniform Commercial Code financing statements naming Borrower as
"debtor" and the Agent as "secured party" (which financing statements shall be
in form and substance acceptable to Agent) to perfect the security interest of
Agent in the Collateral; Borrower shall have assigned to Agent any UCC filings
made by Borrower, any Special Purpose Entity, or any Owner Trustee against any
lessee with respect to any item of Collateral described in the Security
Agreement; there shall have been delivered to Agent or executed, filed and/or
recorded in all applicable jurisdictions such other instruments or documents as
Agent deems necessary or advisable to perfect its security interest in any
Collateral other than Trailers, Aircraft, Aircraft engines, Railcars, and marine
vessels; and Agent shall have received such Lien and judgment searches,
opinions, releases, termination statements, and other documents and instruments
as Agent shall reasonably request to confirm that Agent shall have a first
priority perfected security interest in any Collateral other than Trailers,
Aircraft, Aircraft engines, Railcars, and marine vessels, subject to no other
Liens other than Permitted Liens.
3.1.9 Payment of Fees. Agent shall have received evidence of payment
by Borrower of all accrued and unpaid fees, costs and expenses to the extent
then due and payable on the initial Funding Date, together with all reasonable
attorney's fees.
3.1.10 First Amendment to Warehousing Credit Agreement. Agent shall
have received the First Amendment to Warehousing Credit Agreement, duly executed
and delivered by each party thereto and the same shall have become effective.
3.1.11 Second Amendment to Limited Partnership Agreement. Agent shall
have received the Second Amendment to Limited Partnership Agreement in form and
substance reasonably satisfactory to Agent, duly executed and delivered and the
same shall have become effective.
3.1.12 Due Diligence. Agent shall have completed, at Borrower's
expense, an audit of Borrower's Equipment, Leases, accounts receivables,
accounts payables, assets, records, financial condition and corporate and
financial documents, with results satisfactory to Agent in its sole and absolute
discretion.
3.1.13 Other Documents. Agent shall have received such other
documents, information and items from Borrower as reasonably requested by Agent.
3.2 Conditions to Each Advance. Unless waived in writing by Requisite
Lenders, the obligation of any Lender to make any Advance (including the initial
Advance) is subject to the satisfaction of the following further conditions
precedent:
3.2.1 Notice Of Borrowing; Certificates. At least five (5) Business
Days before each Loan hereunder, Agent shall have received (a) a Notice of
Borrowing, (b) an Asset Coverage Ratio Compliance Certificate and, (c) an
Equipment Schedule, each with appropriate insertions satisfactory to Agent in
its sole and absolute discretion and certified and executed by a Responsible
Officer of Borrower.
3.2.2 No Event Of Default. No event shall have occurred and be
continuing or would result from the making of any Loan on such Funding Date
which constitutes an Event of Default or Potential Event of Default under this
Agreement.
3.2.3 Officer's Certificate. Agent shall have received a certificate,
dated as of the Funding Date, of a Responsible Officer of FSI, in its capacity
as the sole general partner of Borrower and in its individual capacity and of
each other Loan Party, certifying to the effect that (i) all representations and
warranties of each Loan Party contained in the Loan Documents are true, accurate
and complete in all material respects with the same effect as though such
representations and warranties had been made on and as of such Funding Date
(except to the extent such representations and warranties specifically relate to
an earlier date, in which case they shall be true, accurate and complete in all
material respects as of such earlier date) and (ii) no Event of Default or
Potential Event of Default under this Agreement has occurred.
3.2.4 Insurance. The insurance required to be maintained by Borrower
pursuant to the Loan Documents shall be in full force and effect.
3.2.5 Other Instruments. Agent shall have received such other
instruments and documents as it may have reasonably requested from Borrower in
connection with the Loans to be made on such date.
3.3 Conditions to Second Advance. Unless waived in writing by Requisite
Lenders, the obligation of any Lender to make the second Advance is subject to
the satisfaction of the following further conditions precedent:
3.3.1 Partnership, Company And Corporate Documents. Agent shall have
received, in form and substance satisfactory to Lenders and their respective
counsel, the following:
(a) A certified copy of the records of all actions taken by
Borrower and Aircraft Owner Trustee, including all resolutions of Borrower and
resolutions of Aircraft Owner Trustee, authorizing or relating to the execution,
delivery and performance of the Loan Documents being delivered on the Funding
Date of the second Advance and the consummation of the transactions contemplated
thereby;
(b) A certificate of a Responsible Officer of Borrower and
Aircraft Owner Trustee, stating that (A) the articles or certificate of
incorporation, as the case may be, bylaws and any other formation documents of
each such Loan Party have not been amended since the date thereof and (B) each
such Loan Party is in good standing under the laws of the state of its formation
and each other jurisdiction where its ownership of Property and assets or
conduct of business require such qualification;
(c) Certificates of incumbency and signature with respect to the
authorized representatives of each such Loan Party executing such Loan
Documents; and
(d) Such other documents relating to each such Loan Party as
Lenders may reasonably request.
3.3.2 Opinion Of Company Counsel. Agent shall have received an
originally executed legal opinion of Borrower's counsel, in form and substance
satisfactory to Agent and Lenders, regarding the execution, delivery and
performance of the Loan Documents being delivered on the Funding Date of the
second Advance and the consummation of the transactions contemplated thereby,
dated as of the Funding Date of the second Advance and addressed to Agent and
Lenders, together with copies of any officer's certificate or legal opinion of
other counsel or law firm specifically identified and expressly relied upon by
such counsel.
3.3.3 Opinion Of FAA Counsel. Agent shall have received an originally
executed Opinion of FAA Counsel, in form and substance satisfactory to Agent and
Lenders, dated as of the Funding Date of the second Advance and addressed to
Agent and Lenders, together with copies of any officer's certificate or legal
opinion of other counsel or law firm specifically identified and expressly
relied upon by such counsel.
3.3.4 Security Documents. Agent shall have received the Pledge and
Security Agreement and the Aircraft Security Agreement, each in form and
substance satisfactory to Agent and duly executed and delivered by Borrower and
the Aircraft Owner Trustee, as applicable; there shall have been filed in all
applicable jurisdictions (a) Uniform Commercial Code financing statements naming
Borrower and the Aircraft Owner Trustee as "debtor" and the Agent as "secured
party" (which financing statements shall be in form and substance acceptable to
Agent) to perfect the security interest of Agent in the Aircraft Collateral and
in Borrower's beneficial interest in the Aircraft Owner Trust, and (b) all
documents and supplements required to be filed by the terms of the Aircraft
Security Agreement; Borrower shall have assigned, and caused Aircraft Owner
Trustee to assign, to Agent, any UCC or FAA filings made by Borrower or Aircraft
Owner Trustee against Aircraft Lessee with respect to the Aircraft Collateral or
Borrower's beneficial interest in the Aircraft Owner Trust; there shall have
been delivered to Agent or executed, filed and/or recorded in all applicable
jurisdictions such other instruments or documents as Agent deems necessary or
advisable to perfect its security interest in the Aircraft Collateral and in
Borrower's beneficial interest in the Aircraft Owner Trust; and Agent shall have
received such Lien and judgment searches, opinions, releases, termination
statements, and other documents and instruments as Agent shall reasonably
request to confirm that Agent shall have a first priority perfected security
interest in the Aircraft Collateral and in Borrower's beneficial interest in the
Aircraft Owner Trust, subject to no other Liens other than Permitted Liens.
3.3.5 Consent and Agreement. Agent shall have received the Consent and
Agreement, in form and substance satisfactory to Agent and duly executed by each
of Borrower, Aircraft Owner Trustee, Aircraft Lessee and American, in favor of
Agent on behalf of Lenders.
3.3.6 Collateral Documents. Agent shall have received (i) an executed
copy of the Aircraft Owner Trust Agreement, (ii) the chattel paper original of
the Aircraft Lease Agreement, and (iii) an executed copy of each of the
following: (a) American Guaranty, dated April 9, 2001, executed by American in
favor of the Aircraft Owner Trustee and Borrower, (b) Assignment, Assumption and
Amendment Agreement, dated as of April 9, 2001, between Aircraft Lessee,
American, Aircraft Owner Trustee, Borrower, and Trans World Airlines, Inc., (c)
the Assumption and Lease Agreement, dated as of February 27, 2001, between the
Aircraft Owner Trustee, Borrower, and American, (d) Lessee Assignment and
Assumption Agreement, dated as of April 9, 2001, between American and Aircraft
Lessee, (e) Amendment to Lease Agreement, dated as of April 9, 2001, between
Trans World Airlines, Inc. and the Aircraft Owner Trustee, and (f) Amendment to
Assumption and Lease Agreement, dated as of November 13, 2001 among Aircraft
Lessee, American, Aircraft Owner Trustee and Borrower (collectively, the
"Aircraft Lease Documents"), and any other related document or agreement,
together with any and all amendments thereto, in each case certified by a
Responsible Officer of Borrower and the Aircraft Owner Trustee to be true and
complete copy thereof.
3.4 Further Conditions To All Loans. Notwithstanding anything to the
contrary contained in this Agreement, unless waived in writing by Requisite
Lenders, no Lender shall have any obligation hereunder to make any Advance if
any of the following events shall occur:
3.4.1 General Partner; Manager. (a) FSI shall have ceased to be the
sole general partner of Borrower, whether due to the voluntary or involuntary
withdrawal, substitution, removal or transfer of FSI from or of all or any
portion of FSI's general partnership interest or capital contribution in
Borrower or shall have ceased to maintain at least a five percent (5%) ownership
interest in the net distributions of Borrower or (b) IMI or an Affiliate of IMI
shall have ceased to be the Equipment Manager of Borrower.
3.4.2 Removal Of General Partner . Twenty five percent (25.0%) or more
of the limited partners (measured by such partners' percentage interest) of
Borrower shall at any time vote to remove FSI as the general partner of
Borrower, regardless of whether FSI is actually removed.
3.5 Satisfaction of Closing Conditions. Anything contained herein to the
contrary notwithstanding, the obligation of the Lenders to make Loans hereunder
shall not become effective unless each of the conditions set forth in Sections
3.1, 3.2 and 3.4 is satisfied (or waived pursuant to Section 11.6) at or prior
to 5:00 p.m., San Francisco time, on January 31, 2002 (and in the event such
conditions are not so satisfied or waived, the Commitments shall terminate at
such time).
SECTION 4. BORROWER'S REPRESENTATIONS AND WARRANTIES. Borrower hereby warrants
and represents to Agent and each Lender as follows, and agrees that each of said
warranties and representations shall be true and correct as of the Closing Date
and each Funding Date:
4.1 Existence And Power. Borrower is a limited partnership, duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization and is duly qualified and licensed as a partnership, and authorized
to do business in each jurisdiction within the United States where its ownership
of Property and assets or conduct of business requires such qualification. Each
of Borrower, FSI and each other Loan Party has the power and authority, rights
and franchises to own its Property and assets and to carry on its businesses as
now conducted. Each of Borrower, FSI and each other Loan Party has the power and
authority to execute and deliver the Loan Documents (to the extent each is a
party thereto) and all other instruments and documents contemplated hereby or
thereby.
4.2 Loan Documents And Notes Authorized; Binding Obligations. The
execution, delivery and performance of this Agreement and each of the other Loan
Documents and delivery and payment of the Notes have been duly authorized by all
necessary and proper action on the part of Borrower. The execution, delivery and
performance of this Agreement and each of the other Loan Documents to which any
other Loan Party is a party have been duly authorized by all necessary and
proper corporate action on the part of such other Loan Party. The Loan Documents
constitute legally valid and binding obligations of Borrower and the other Loan
Parties as the case may be, enforceable against Borrower and each other Loan
Party to the extent it is a party thereto, in accordance with their respective
terms, except as enforcement thereof may be limited by bankruptcy, insolvency or
other laws affecting the enforcement of creditors' rights generally.
4.3 No Conflict; Legal Compliance. The execution, delivery and performance
of this Agreement and each of the other Loan Documents, the execution, delivery
and payment of the Notes, the incurrence of Indebtedness hereunder, and the
granting of the Liens in the Collateral by Borrower or any other Loan Party will
not: (a) (i) contravene any provision of Borrower's Limited Partnership
Agreement, or other formation or organization document; or (ii) contravene any
provision of any other Loan Party's certificate of incorporation or bylaws or
other formation or organization document, as applicable; (b) contravene,
conflict with or violate any applicable law or regulation, or any order, writ,
judgment, injunction, decree, determination or award of any Governmental
Authority, which contravention, conflict or violation, in the aggregate, may
have a Material Adverse Effect; or (c) violate or result in the breach of, or
constitute a default under any indenture or other loan or credit agreement, or
other agreement or instrument which are, in the aggregate, material and to which
Borrower or any other Loan Party is a party or by which Borrower or any other
Loan Party's Property and assets may be bound or affected. Neither Borrower nor
any other Loan Party is in violation or breach of or default under any law,
rule, regulation, order, writ, judgment, injunction, decree, determination or
award or any contract, agreement, lease, license, indenture or other instrument
to which any one of them is a party, the non-compliance with, the violation or
breach of or the default under which would, with reasonable likelihood, have a
Material Adverse Effect.
4.4 Financial Condition. Borrower's audited consolidated financial
statements as of June 30, 2001 and unaudited consolidated financial statements
as of September 30, 2001, copies of which heretofore have been delivered to
Agent by Borrower, and all other financial statements and other data submitted
in writing by Borrower to Agent or any Lender in connection with the request for
credit granted by this Agreement, are true, accurate and complete in all
material respects, and said financial statements and other data fairly present
the consolidated financial condition of Borrower, as of the date thereof, and
have been prepared in accordance with GAAP, subject to fiscal year-end audit
adjustments. There has been no material adverse change in the business,
properties or assets, operations, prospects, profitability or financial or other
condition of Borrower since September 30, 2001.
4.5 Executive Offices. The current location of Borrower's and FSI's chief
executive offices and principal places of business is set forth on Schedule 4.5.
4.6 Litigation. Except as disclosed on Schedule 4.6, there are no claims,
actions, suits, proceedings or other litigation pending or, to the best of
Borrower's knowledge, after due inquiry, threatened against Borrower, FSI or any
of FSI's Subsidiaries, at law or in equity before any Governmental Authority or,
to the best of Borrower's knowledge, after due inquiry, any investigation by any
Governmental Authority of Borrower's or FSI's or any of FSI's Subsidiaries'
affairs, Properties or assets which would, with reasonable likelihood, if
adversely determined, have a Material Adverse Effect. Other than any liability
incident to the litigation or proceedings disclosed on Schedule 4.6, Borrower
does not have any Contingent Obligations which are not provided for or disclosed
in the financial statements delivered to Agent pursuant to Sections 4.4 and 5.1.
There are no appeals to the Settlement Order currently filed or pending with any
Governmental Authority.
4.7 Material Contracts. Schedule 4.7 lists all currently effective loan
agreements and other contracts and agreements (whether written or oral) to which
Borrower is a party (other than Leases) and which (i) could involve the payment
by Borrower after the date of this Agreement of more than $250,000 in the
aggregate or (ii) otherwise materially affect the business, operations or
financial condition of Borrower (the "Material Contracts"). Except as disclosed
on Schedule 4.7, there are no material defaults under any such Material Contract
by Borrower, to the best of Borrower's knowledge, by any other party to any such
Material Contract. Borrower has delivered to Agent true and correct copies of
all such contracts or agreements (or, with respect to oral contracts or
agreements, written descriptions of the material terms thereof).
4.8 Consents And Approvals. No approval, authorization or consent of any
trustee or holder of any indebtedness or obligation of Borrower or of any other
Person under any such material agreement, contract, lease or license or similar
document or instrument to which Borrower is a party or by which Borrower is
bound, is required to be obtained by Borrower in order to make or consummate the
transactions contemplated under the Loan Documents. Except as set forth in
Schedule 4.8, all consents and approvals of, filings and registrations with, and
other actions in respect of, all Governmental Authorities required to be
obtained by Borrower or any other Loan Party in order to make or consummate the
transactions contemplated under the Loan Documents have been, or prior to the
time when required will have been, obtained, given, filed or taken and are or
will be in full force and effect.
4.9 Other Agreements. Neither Borrower nor any other Loan Party is a party
to or is bound by any agreement, contract, lease, license or instrument, or is
subject to any restriction under its respective charter or formation documents,
which has, or is likely in the foreseeable future to have, a Material Adverse
Effect. Neither Borrower nor FSI has entered into, and does not contemplate
entering into, any material agreement or contract with any Affiliate of Borrower
or FSI on terms that are less favorable to Borrower or FSI than those that might
be obtained at the time from Persons who are not such Affiliates.
4.10 Employment And Labor Agreements. There are no collective bargaining
agreements or other labor agreements covering any employees of Borrower, FSI or
any of FSI's Subsidiaries.
4.11 ERISA. Borrower does not have any Employee Benefit Plan subject to
ERISA. All Pension Plans of FSI and any of FSI's Subsidiaries that are intended
to be qualified under Section 401(a) of the Code have been determined by the IRS
to be qualified or FSI or any of FSI's Subsidiaries will obtain such
determination prior to instituting such a Pension Plan. All Pension Plans
existing as of the date hereof continue to be so qualified. No "reportable
event" (as defined in Section 4043 of ERISA) has occurred and is continuing with
respect to any Pension Plan for which the thirty-day notice requirement may not
be waived other than those of which the appropriate Governmental Authority has
been notified. All Employee Benefit Plans of FSI or any of FSI's Subsidiaries
have been operated in all material respects in accordance with their terms and
applicable law, including ERISA, and no "prohibited transaction" (as defined in
ERISA and the Code) that would result in any material liability to FSI or any of
FSI's Subsidiaries has occurred with respect to any such Employee Benefit Plan.
4.12 Labor Matters. There are no strikes or other labor disputes against
Borrower, FSI or any of FSI's Subsidiaries, or to the best of Borrower's
knowledge, after due inquiry, threatened against Borrower, FSI or any of FSI's
Subsidiaries, which would, with reasonable likelihood, have a Material Adverse
Effect. All payments due from Borrower or FSI, on account of employee health and
welfare insurance which would, with reasonable likelihood, have a Material
Adverse Effect if not paid have been paid or, if not due, accrued as a liability
on the books of Borrower or FSI.
4.13 Margin Regulations. Borrower does not own any "margin security", as
that term is defined in Regulation U of the Federal Reserve Board, and the
proceeds of the Loans under this Agreement will be used only for the purposes
set forth in Section 2.1.3. None of the Loans will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin security, for
the purpose of reducing or retiring any indebtedness which was originally
incurred to purchase or carry any margin security or for any other purpose which
might cause any of the Loans under this Agreement to be considered a "purpose
credit" within the meaning of Regulations T, U and X. Borrower will not take or
permit FSI or any agent acting on its behalf to take any action which might
cause this Agreement or any document or instrument delivered pursuant hereto to
violate any regulation of the Federal Reserve Board.
4.14 Taxes. All federal, state, local and foreign tax returns, reports and
statements required to be filed by Borrower and FSI have been filed with the
appropriate Governmental Authorities where failure to file would, with
reasonable likelihood, have a Material Adverse Effect, and all material Charges
and other impositions shown thereon to be due and payable by Borrower, FSI or
such Subsidiary, have been paid prior to the date on which any fine, penalty,
interest or late charge may be added thereto for nonpayment thereof, or any such
fine, penalty, interest, late charge or loss has been paid, or Borrower, FSI or
such Subsidiary is contesting its liability therefor in good faith and has fully
reserved all such amounts according to GAAP in the financial statements provided
to Agent pursuant to Section 5.1. Borrower, FSI and, to the best of Borrower's
knowledge, after due inquiry, each of FSI's Subsidiaries has paid when due and
payable all material Charges upon the books of Borrower, FSI or such Subsidiary
and no Government Authority has asserted any Lien against Borrower, FSI or any
of FSI's Subsidiaries with respect to unpaid Charges. Proper and accurate
amounts have been withheld by Borrower, FSI and, to the best of Borrower's
knowledge, after due inquiry, by each of FSI's Subsidiaries from their
respective employees for all periods in full and complete compliance with the
tax, social security and unemployment withholding provisions of applicable
federal, state, local and foreign law and such withholdings have been timely
paid to the respective Governmental Authorities.
4.15 Environmental Quality.
(a) Except as specifically disclosed in Schedule 4.15, the on-going
operations of Borrower, FSI and each of FSI's Subsidiaries, comply in all
material respects with all Environmental Laws, except such non-compliance which
would not (if enforced in accordance with applicable law) result in liability in
excess of $250,000 in the aggregate.
(b) Except as specifically disclosed in Schedule 4.15, Borrower, FSI
and each of FSI's Subsidiaries has obtained all licenses, permits,
authorizations and registrations required under any Environmental Law
("Environmental Permits") and necessary for its ordinary course operations, all
such Environmental Permits are in good standing, and Borrower, FSI and each of
FSI's Subsidiaries is in compliance with all material terms and conditions of
such Environmental Permits.
(c) Except as specifically disclosed in Schedule 4.15, neither
Borrower nor FSI nor any of FSI's Subsidiaries or any of their respective
present Property or operations is subject to any outstanding written order from
or agreement with any Governmental Authority nor subject to any judicial or
docketed administrative proceeding, respecting any Environmental Law,
Environmental Claim or Hazardous Material.
(d) Except as specifically disclosed in Schedule 4.15, there are no
Hazardous Materials or other conditions or circumstances existing with respect
to any Property, or arising from operations prior to the Closing Date, of
Borrower, FSI or any of FSI's Subsidiaries that would reasonably be expected to
give rise to Environmental Claims with a potential liability of Borrower, FSI or
any of FSI's Subsidiaries in excess of $250,000 in the aggregate for any such
condition, circumstance or Property.
4.16 Trademarks, Patents, Copyrights, Franchises And Licenses. Borrower and
FSI, and to the best of Borrower's knowledge, after due inquiry, each of FSI's
Subsidiaries possess and owns all necessary trademarks, trade names, copyrights,
patents, patent rights, franchises and licenses which are material to the
conduct of their business as now operated.
4.17 Full Disclosure. As of the Closing Date, no information contained in
this Agreement, the other Loan Documents or any other documents or written
materials furnished by or on behalf of Borrower or FSI to Agent or any Lender
pursuant to the terms of this Agreement or any of the other Loan Documents
contains any untrue or inaccurate statement of a material fact or omits to state
a material fact necessary to make the statement contained herein or therein not
misleading in light of the circumstances under which made.
4.18 Other Regulations. Neither Borrower nor FSI is: (a) a "public utility
company" or a "holding company," or an "affiliate" or a "subsidiary company" of
a "holding company," or an "affiliate" of such a "subsidiary company," as such
terms are defined in the Public Utility Holding Company Act or (b) an
"investment company," or an "affiliated person" of, or a "promoter" or
"principal underwriter" for, an "investment company," as such terms are defined
in the Investment Company Act. The making of the Loans hereunder and the
application of the proceeds and repayment thereof by Borrower and the
performance of the transactions contemplated by this Agreement and the other
Loan Documents will not violate any provision of the Investment Company Act or
the Public Utility Holding Company Act, or any rule, regulation or order issued
by the SEC thereunder.
4.19 Solvency. Each of Borrower and FSI is Solvent.
4.20 Survival Of Representations And Warranties. So long as any of the
Commitments shall be available and until payment and performance in full of the
Obligations, the representations and warranties contained herein shall have a
continuing effect as having been true when made.
SECTION 5. BORROWER'S AFFIRMATIVE COVENANTS.
Borrower covenants and agrees that, so long as any of the Commitments shall
be available and until full, complete and indefeasible payment and performance
of the Obligations, unless Requisite Lenders shall otherwise consent in writing,
Borrower shall do or cause to have done all of the following:
5.1 Records And Reports. Maintain, and cause FSI and each of FSI's
Subsidiaries to maintain, a system of accounting administered in accordance with
sound business practices to permit preparation of financial statements in
conformity with GAAP, and deliver to Agent or cause to be delivered to Agent:
5.1.1 Quarterly Statements. Within forty-five (45) days after the end
of each quarterly accounting period of Borrower and PLMI, except with respect to
the final fiscal quarter of each fiscal year, consolidated balance sheets of
PLMI and Borrower as at the end of such period and the related consolidated
statements of income, stockholders' or partners' equity and cash flows of
Borrower and PLMI for such quarterly accounting period, setting forth in each
case in comparative form the consolidated figures for the corresponding periods
of the previous year, all in reasonable detail and certified by a Responsible
Officer of Borrower and PLMI that they (i) are complete and fairly present the
financial condition of Borrower and PLMI as at the dates indicated and the
results of their operations and changes in their cash flow for the periods
indicated, (ii) disclose all liabilities of Borrower and PLMI that are required
to be reflected or reserved against under GAAP, whether liquidated or
unliquidated, fixed or contingent and (iii) have been prepared in accordance
with GAAP, subject to changes resulting from audit and normal year-end
adjustment;
5.1.2 Annual Statements. Within ninety (90) days after the end of each
fiscal year of each of Borrower and PLMI, consolidated balance sheets of PLMI
and a consolidated balance sheet of Borrower as at the end of such year and the
related consolidated statements of income, stockholders' or partners' equity and
cash flows of Borrower, if applicable, and PLMI for such fiscal year, setting
forth in each case, in comparative form the consolidated figures for the
previous year, all in reasonable detail and (i) in the case of such consolidated
financial statements, accompanied by a report thereon of an independent public
accountant of recognized national standing selected by Borrower and PLMI and
satisfactory to Agent, which report shall contain an opinion which is not
qualified in any manner or which otherwise is satisfactory to Requisite Lenders,
in their sole discretion, and (ii) in the case of such consolidating financial
statements, certified by a Responsible Officer of PLMI;
5.1.3 Equipment Schedule. Within twenty (20) days after the end of
each calendar month, an Equipment Schedule dated as of the last day of such
month, duly executed by FSI as the sole general partner of Borrower;
5.1.4 Asset Coverage Ratio Compliance Certificate. Within twenty (20)
days after the end of each calendar month, an Asset Coverage Ratio Compliance
Certificate dated as of the last day of such month, duly executed by FSI as the
sole general partner of Borrower;
5.1.5 Compliance Certificate. Within forty-five (45) days after the
end of each fiscal quarter of Borrower, except with respect to the final fiscal
quarter of each fiscal year, in which case within ninety (90) days after the end
of such fiscal quarter, a Compliance Certificate dated as of the last day of
such fiscal quarter, and executed by a Responsible Officer of Borrower, with
appropriate insertions;
5.1.6 Reports. At Agent's request, promptly upon receipt thereof,
copies of all reports submitted to Borrower, FSI or PLMI by independent public
accountants in connection with each annual, interim or special audit of the
financial statements of Borrower, FSI or PLMI made by such accountants;
5.1.7 Insurance Reports. (i) On the date six months after the Closing
Date and thereafter upon Agent's reasonable request, which request will not be
made more than once during any calendar year (unless an Event of Default shall
have occurred and be continuing, in which event such limitation shall not
apply), a report from Borrower's or Aircraft Owner Trustee's insurance broker,
in such detail as Agent may reasonably request, as to the insurance maintained
or caused to be maintained by Borrower or the Aircraft Owner Trustee pursuant to
this Agreement or any other Loan Document, demonstrating compliance with the
requirements hereof and thereof, and (ii) as soon as possible and in no event
later than fifteen (15) days prior to the expiration date of any insurance
policy of Borrower or the Aircraft Owner Trustee, a written confirmation that
such policy is in process of renewal and is not terminated or subject to a
notice of non-renewal from Borrower's or the Aircraft Owner Trustee's insurance
broker; provided, however, that Borrower shall give or cause the Aircraft Owner
Trustee to give Agent prompt written notice if changes affecting risk coverage
will be made to such policy or if the policy will be canceled;
5.1.8 Certificate Of Responsible Officer. Promptly upon any officer of
Borrower obtaining knowledge (a) of any condition or event which constitutes an
Event of Default or Potential Event of Default under this Agreement, (b) that
any Person has given any notice to any Loan Party or taken any other action with
respect to a claimed default or event or condition of the type referred to in
Section 8.1.2, (c) of the institution of any litigation or of the receipt of
written notice from any Governmental Authority as to the commencement of any
formal investigation involving an alleged or asserted liability of any Loan
Party of any amount equal to or greater than $500,000 or any adverse judgment in
any litigation involving a potential liability of any Loan Party equal to or
greater than $500,000, or (d) of a material adverse change in the business,
operations, properties, assets or condition (financial or otherwise) of any Loan
Party a certificate of a Responsible Officer of Borrower, specifying the notice
given or action taken by such Loan Party and the nature of such claimed default,
Event of Default, Potential Event of Default, event or condition and what action
such Loan Party has taken, is taking and proposes to take with respect thereto;
5.1.9 Employee Benefit Plans. Promptly upon becoming aware of the
occurrence of any (a) Termination Event in connection with any Pension Plan or
(b) "prohibited transaction" (as such term is defined in ERISA and the Code) in
connection with any Employee Benefit Plan or any trust created thereunder, a
written notice specifying the nature thereof, what action Borrower or any of its
ERISA Affiliates has taken, is taking or proposes to take with respect thereto,
and, when known, any action taken or threatened by the IRS or the PBGC with
respect thereto;
5.1.10 ERISA Notices. With reasonable promptness, copies of (a) all
notices received by Borrower or any of its ERISA Affiliates of the PBGC's intent
to terminate any Pension Plan or to have a trustee appointed to administer any
Pension Plan, (b) each Schedule B (Actuarial Information) to the annual report
(Form 5500 Series) filed by Borrower or any of its ERISA Affiliates with the IRS
with respect to each Pension Plan covering employees of Borrower and its ERISA
Affiliates, and (c) all notices received by Borrower or any of its ERISA
Affiliates from a Multiemployer Plan sponsor concerning the imposition or amount
of withdrawal liability pursuant to Section 4202 of ERISA;
5.1.11 Pension Plans. Promptly upon receipt by Borrower or any of its
ERISA Affiliates, any challenge by the IRS to the qualification under Section
401 or 501 of the Code of any Pension Plan;
5.1.12 SEC Reports. As soon as available and in no event later than
five (5) days after the same shall have been filed with the SEC, a copy of each
Form 8-K Current Report, Form 10-K Annual Report, Form 10-Q Quarterly Report,
Annual Report to Shareholders, Proxy Statement and Registration Statement of
Borrower and PLMI;
5.1.13 Tax Returns. Upon the request of Agent, copies of all federal,
state, local and foreign tax returns and reports in respect of income, franchise
or other taxes on or measured by income (excluding sales, use or like taxes)
filed by or on behalf of Borrower, FSI, and PLMI; and
5.1.14 Additional Information. Such other information respecting the
condition or operations, financial or otherwise, of Borrower, FSI or PLMI and
their respective Subsidiaries as Agent or any Lender may from time to time
reasonably request, and such information regarding the lessees under Leases as
Borrower from time to time receives or Agent or any Lender reasonably requests.
All financial statements of Borrower, FSI and PLMI to be delivered by
Borrower to Agent pursuant to this Section 5.1 will be complete and correct and
present fairly the financial condition of Borrower, FSI and PLMI as of the date
thereof; will disclose all liabilities of Borrower, FSI and PLMI that are
required to be reflected or reserved against under GAAP, whether liquidated or
unliquidated, fixed or contingent; and will have been prepared in accordance
with GAAP. All tax returns submitted to Agent by Borrower will, to the best of
Borrower's knowledge, after due inquiry, be true and correct. Borrower hereby
agrees that each time it submits a financial statement or tax return to Agent,
it shall be deemed to represent and warrant to Lenders that such financial
statement or tax return complies with all of the preceding requirements set
forth in this paragraph.
5.2 Appraisals. Agent shall have the right on an annual basis (and upon a
more frequent basis upon reasonable request) to require that, at the expense of
Borrower, an appraisal be made by an Approved Appraiser of the Fair Market Value
of the Eligible Inventory; provided, however, that Borrower shall not be liable
for the costs of more than one such appraisal in any calendar year, unless an
Event of Default has occurred and is continuing. Borrower shall make available
to any Approved Appraiser who so requests all information regarding the Eligible
Inventory reasonably requested by such Approved Appraiser and shall otherwise
cooperate fully with Agent and such Approved Appraiser in connection with any
such appraisal.
5.3 Existence; Compliance With Law. Borrower shall preserve and maintain,
and shall cause FSI and each of FSI's Subsidiaries to preserve and maintain,
their existence and all of their respective licenses, permits, governmental
approvals, rights, privileges and franchises necessary or desirable in the
normal conduct of their businesses as now conducted or presently proposed to be
conducted (including, without limitation, their qualification to do business in
each jurisdiction in which such qualification is necessary or desirable in view
of its business); conduct, and cause FSI and each of FSI's Subsidiaries and any
Owner Trustee to conduct, its business in an orderly and regular manner; and
comply, and cause FSI and each of FSI's Subsidiaries, and any Owner Trustee, to
comply, with (a) as to Borrower, its Limited Partnership Agreement, and other
organizational documents, and as to FSI and each of its Subsidiaries, the
provisions of its respective certificate or articles of incorporation, as
applicable, and bylaws and (b) the requirements of all applicable laws, rules,
regulations or orders of any Governmental Authority and requirements for the
maintenance of Borrower's, FSI's or such Subsidiary's insurance, licenses,
permits, governmental approvals, rights, privileges and franchises, except, in
either case, to the extent that the failure to comply therewith would not, in
the aggregate, with reasonable likelihood, have a Material Adverse Effect.
5.4 Insurance. Borrower shall maintain and keep in force, and cause FSI and
each of FSI's Subsidiaries to maintain and keep in force, insurance of the types
and in amounts then customarily carried in lines of business similar to that of
Borrower, FSI or any of FSI's Subsidiaries as the case may be, including, but
not limited to, fire, extended coverage, public liability, property damage,
environmental hazard and workers' compensation, in each case carried with
financially sound Persons and in amounts satisfactory to Requisite Lenders
(subject to commercial reasonableness as to each type of insurance); provided,
however, that the types and amounts of insurance shall not provide any less
coverage for Borrower than provided as of the Closing Date by the existing
blanket policies of insurance for PLMI and its Subsidiaries. All policies of
property insurance shall carry endorsements naming Agent as principal loss payee
as to any property owned by Borrower and financed by Lenders and all policies of
liability insurance shall carry endorsements naming Agent and each Lender as an
additional insured, and in each case indicating that (a) any loss thereunder
shall be payable to Agent or Lenders, as the case may be, notwithstanding any
action, inaction or breach of representation or warranty by Borrower or FSI; (b)
there shall be no recourse against any Lender for payment of premiums or other
amounts with respect thereto, and (c) at least fifteen (15) days' prior written
notice of cancellation, lapse or material change in coverage shall be given to
Agent by the insurer.
5.5 Taxes And Other Liabilities. Promptly pay and discharge, and cause FSI
and each of FSI's Subsidiaries to promptly pay and discharge, all material
Charges when due and payable, except (a) such as may be paid thereafter without
penalty or (b) such as may be contested in good faith by appropriate proceedings
and for which an adequate reserve has been established and is maintained in
accordance with GAAP. Borrower shall promptly notify Agent of any material
challenge, contest or proceeding pending by or against Borrower, FSI or against
PLMI or any of its other Subsidiaries before any taxing authority.
5.6 Inspection Rights; Assistance. At any reasonable time and from time to
time during normal business hours, permit Agent or any Lender or any agent,
representative or employee thereof, to examine and make copies of and abstracts
from the financial records and books of account of Borrower, FSI or any of FSI's
Subsidiaries, and other documents in the possession or under the control of
Borrower, FSI or any of FSI's Subsidiaries, including relating to any obligation
of Borrower arising under or contemplated by this Agreement and to visit the
offices of Borrower to discuss the affairs, finances and accounts of Borrower
with any of the officers of Borrower, and, upon reasonable notice and during
normal business hours (unless an Event of Default or Potential Event of Default
shall have occurred and be continuing, in which event no notice is required), to
conduct audits of and appraise the Equipment. Such audits and appraisals shall
be subject to the lessee's right to quiet enjoyment as set forth in the
respective Lease.
5.7 Maintenance Of Facilities; Modifications; Performance of Leases.
5.7.1 Maintenance Of Facilities. Borrower shall keep, and cause FSI
and each of FSI's Subsidiaries to keep, all of their respective Properties which
are useful or necessary to Borrower's, FSI's or such Subsidiary's business, in
good repair and condition, normal wear and tear excepted, and from time to time
make, and cause each such Subsidiary to make necessary repairs thereto, and
renewals and replacements thereof so that Borrower's, FSI's or such Subsidiary's
Properties shall be fully and efficiently preserved and maintained.
5.7.2 Certain Modifications To The Equipment. Subject to Section
5.7.1, Borrower shall promptly make, or cause to be made, all modifications,
additions and adjustments to the Eligible Inventory as may from time to time be
required by any Governmental Authority having jurisdiction over the operation,
safety or use thereof.
5.7.3 Performance of Leases. Borrower shall timely perform in all
material respects each of its covenants and obligations under the Leases to
which it is a party.
5.8 Special Provisions for Aircraft. Without limiting the foregoing
provisions of Section 5.4 and 5.7, Borrower shall cause any Aircraft owned by it
or in which it has an ownership interest to be maintained and insured as
provided in this Section 5.8.
5.8.1 Maintenance and Servicing of Aircraft. Borrower will at all
times cause:
(a) any Aircraft that is on lease and included as part of
Eligible Inventory to be serviced, repaired, maintained, tested and overhauled
so as to keep such Aircraft in such operating condition as may be necessary to
enable the airworthiness certification of the Aircraft to be maintained in good
standing at all times under the Federal Aviation Act or the governmental
authority having jurisdiction over such Aircraft;
(b) all records, logs and other materials required to be
maintained by the FAA, or the governmental authority having jurisdiction over
any Aircraft, to be maintained in respect of each Aircraft (including any item
of Equipment included therein); and
(c) any Aircraft to comply with all airworthiness directives
issued by any governmental authority having jurisdiction over any Aircraft.
5.8.2 Public Liability and Property Damage Liability Insurance for
Aircraft. Borrower will at all times cause third party aircraft liability
insurance, passenger legal liability insurance, if applicable, and property
damage liability insurance to be carried with respect to any Aircraft.
5.8.3 Insurance Against Loss or Damage to the Aircraft. Borrower shall
at all times cause the following to be maintained with respect to any Aircraft:
(i) all-risk ground and flight aircraft hull insurance covering the airframe and
engines of any such Aircraft; (ii) fire, transit and extended coverage with
respect to any engines or parts while removed from such Aircraft; and (iii) war
risk, hijacking (air piracy) and governmental confiscation and expropriation
insurance.
5.9 Supplemental Disclosure. From time to time as may be necessary (in the
event that such information is not otherwise delivered by Borrower to Agent or
Lenders pursuant to this Agreement), so long as there are Obligations
outstanding hereunder, disclose to Agent in writing any material matter
hereafter arising which, if existing or occurring at the date of this Agreement,
would have been required to be set forth or described by Borrower in this
Agreement or any of the other Loan Documents (including all Schedules and
Exhibits hereto or thereto) or which is necessary to correct any information set
forth or described by Borrower hereunder or thereunder or in connection herewith
which has been rendered inaccurate thereby.
5.10 Further Assurances.
5.10.1 In addition to the obligations and documents which this
Agreement expressly requires Borrower to execute, deliver and perform, Borrower
shall execute, deliver and perform, and shall cause FSI and FSI's Subsidiaries
to execute, deliver and perform, any and all further acts or documents which
Agent or Lenders may reasonably require to effectuate the purposes of this
Agreement or any of the other Loan Documents.
5.10.2 Upon any assignment by IMI of its rights and obligations under
the Management Agreements to any Affiliate of IMI, Borrower shall cause such
Affiliate to become a party to the Subordination Agreement as a Subordinated
Lender.
5.10.3 Without limiting Section 5.10.1, promptly upon request by the
Agent or the Requisite Lenders, Borrower shall, and cause FSI and each Owner
Trustee and each Special Purpose Entity to, execute, acknowledge, deliver,
record, re-record, file, re-file, register and re-register, any and all such
further acts, deeds, conveyances, security agreements, mortgages, assignments,
estoppel certificates, financing statements and continuations thereof,
termination statements, notices of assignment, transfers, certificates,
assurances and other instruments the Agent or such Requisite Lenders, as the
case may be, may reasonably require from time to time in order (i) to carry out
more effectively, the purposes of this Agreement or any other Loan Document,
(ii) to subject to the Liens created by any of the Security Documents any of the
properties, rights or interests covered by any of the Security Documents, (iii)
to perfect and maintain the validity, effectiveness and priority of any of the
Security Documents and the Liens intended to be created thereby, and (iv) to
better assure, convey, grant, assign, transfer, preserve, protect and confirm to
the Agent and the Lenders the rights granted or now or hereafter intended to be
granted to the Lenders under any Loan Document or under any other document
executed in connection therewith. Upon a Potential Event of Default or an Event
of Default, Borrower hereby authorizes Agent, in such jurisdictions where such
action is authorized by law, to effect any such recordations, filings or
registrations of financing statements and other instruments and documents
without the signature of Borrower thereto.
5.11 Environmental Laws. Borrower shall, and shall cause FSI and each of
FSI's Subsidiaries to, conduct its operations and keep and maintain its Property
in material compliance with all Environmental Laws.
5.12 Operating Relationship. Borrower shall maintain all of its primary
depositary and operating accounts with Comerica Bank or Comerica Securities,
Inc. except for its payroll account. In addition, Borrower (either individually
or together with Acquisub and the Equipment Growth Funds) will maintain on
deposit with PFF non-interest bearing demand deposit balances of not less than
(i) $650,000 for the period commencing no later than December 31, 2001 through
and including December 31, 2002; (ii) 3.25% of the sum of: (x) the total
"Commitment" of PFF under the Warehousing Credit Agreement on January 1, 2003
and (y) the total Commitment of PFF under this Facility on January 1, 2003 less
the aggregate amount of principal repayments or prepayments made by Borrower
during calendar year 2002 on the Loans made by PFF hereunder, for the six-month
period commencing on January 1, 2003 through and including June 30, 2003; (iii)
3.25% of the sum of: (x) the total "Commitment" of PFF under the Warehousing
Credit Agreement on July 1, 2003 and (y) the unpaid principal balance on July 1,
2003 of the Loans made by PFF hereunder, for the six-month period commencing on
July 1, 2003 through and including December 31, 2003; and (iv) 3.25% of the sum
of: (x) the total "Commitment" of PFF under the Warehousing Credit Agreement on
each January 1 (commencing on January 1, 2004) and (y) the unpaid principal
balance on each January 1 (commencing on January 1, 2004) of the Loans made by
PFF hereunder, for each calendar year thereafter (commencing on January 1, 2004)
through the Termination Date.
5.13 Lockbox Agreement. Borrower shall continue to deposit all remittances
made by any obligor under any Lease to the Lockbox (as defined in the
Warehousing Credit Agreement) pursuant to the Lockbox Agreement (as defined in
the Warehousing Credit Agreement). In the event of the termination of the
Warehousing Credit Agreement prior to the Termination Date, Borrower shall enter
into an agreement with Agent on behalf of the Lenders in form and substance
similar to the Lockbox Agreement.
SECTION 6. BORROWER'S NEGATIVE COVENANTS.
So long as any of the Commitments shall be available and until full,
complete and indefeasible payment and performance of the Obligations, unless
Requisite Lenders shall otherwise consent in writing, Borrower covenants and
agrees as follows:
6.1 Liens; Negative Pledges; And Encumbrances. Borrower shall not
create, incur, assume or suffer to exist, nor permit any Special Purpose Entity
or Owner Trustee to create, incur, assume or suffer to exist, any Lien of any
nature upon or with respect to any of their respective Property, whether now or
hereafter owned, leased or acquired, except (collectively, the "Permitted
Liens"):
6.1.1 Liens in favor of Comerica Bank, successor by merger to
Imperial Bank, as Agent on behalf of the lenders pursuant to the Warehousing
Credit Agreement;
6.1.2 Liens for Charges if payment shall not at the time be
required to be made in accordance with Section 5.5;
6.1.3 Liens in respect of pledges, obligations or deposits (a)
under workers' compensation laws, unemployment insurance and other types of
social security or similar legislation, (b) in connection with surety, appeal
and similar bonds incidental to the conduct of litigation, (c) in connection
with bid, performance or similar bonds and mechanics', laborers' and
materialmen's and similar statutory Liens not then delinquent, or (d) incidental
to the conduct of the business of Borrower, any Special Purpose Entity, any
Owner Trustee, FSI or any of FSI's Subsidiaries and which were not incurred in
connection with the borrowing of money or the obtaining of advances or credit;
provided that the Liens permitted by this Section 6.1.3 do not in the aggregate
materially detract from the value of any assets or property of or materially
impair the use thereof in the operation of the business of Borrower, any Owner
Trustee, FSI or any of FSI's Subsidiaries; and provided further that the adverse
determination of any claim or liability, contingent or otherwise, secured by any
of such Liens would not either individually or in the aggregate, with reasonable
likelihood, have a Material Adverse Effect;
6.1.4 Permitted Rights of Others;
6.1.5 Liens granted in favor of Agent on behalf of Lenders
pursuant to the Security Documents;
6.1.6 Liens incurred by a Special Purpose Entity to secure debt
allowed to be incurred by such Special Purpose Entity pursuant to Section 6.3.2;
6.1.7 In the case of the Aircraft Collateral, Liens permitted by
the terms of Sections 6(i), (ii), (iv), (v), (vi), (vii), (viii) and (x) of the
Aircraft Lease Agreement as such terms are in effect on the Closing Date;
6.1.8 In the case of any item of Equipment other than Aircraft
Collateral: (a) any Liens for current taxes, assessments and other governmental
charges not yet due and payable or being contested in good faith by Borrower,
any Special Purpose Entity or any Owner Trustee (or by a lessee) by appropriate
proceedings and for which adequate reserves have been established by Borrower as
reflected in Borrower's financial statements (or by the lessee as reflected in
such lessee's financial statements); (b) any mechanic's, materialman's
carrier's, warehousemen's or similar Liens for sums not yet due or being
contested in good faith by Borrower, any Special Purpose Entity or any Owner
Trustee (or by a lessee) by appropriate proceedings and for which adequate
reserves have been established by Borrower as reflected in Borrower's financial
statements (or by the lessee as reflected in such lessee's financial
statements); (c) the rights of a lessee or sublessee to utilize the Equipment
pursuant to the terms of a Lease; and (d) Liens arising from the following types
of liabilities of a lessee or any other operator of any Aircraft or Aircraft
engine, so long as such liabilities are either not yet due or are being
contested in good faith through appropriate proceedings that do not give rise to
any reasonable likelihood of the sale, forfeiture or other loss of such Aircraft
or Aircraft engines, title thereto or Agent's security interest therein or of
criminal or unindemnified civil liability on the part of Borrower, any Special
Purpose Entity, any Owner Trustee, or Agent and with respect to which the lessee
maintains adequate reserves (in the reasonable judgment of Borrower): (1) fees
or charges of any airport or navigation authority, (2) judgments, or (3) salvage
or other rights of insurers;
6.1.9 Liens not exceeding $100,000 consisting of judgment or
judicial attachment liens, provided that no Event of Default exists in respect
thereof pursuant to Section 8.1.9.
6.2 Intentionally omitted.
6.3 Limitations On Indebtedness. Borrower shall neither create, incur,
assume or suffer to exist, nor permit any Special Purpose Entity or Owner
Trustee to create, incur, assume or suffer to exist, any Indebtedness or
Contingent Obligation; provided, however, that this Section 6.3 shall not be
deemed to prohibit:
6.3.1 The Obligations to Lenders and Agent arising hereunder and
under the other Loan Documents;
6.3.2 Indebtedness incurred by a Special Purpose Entity to finance equipment not
constituting Eligible Inventory, provided that such Indebtedness is non-recourse
to Borrower and not guaranteed by Borrower;
6.3.3 Indebtedness incurred by the Borrower pursuant to the
Warehousing Credit Agreement;
6.3.4 The acquisition of goods, supplies or merchandise on normal
trade credit;
6.3.5 The endorsement of negotiable instruments received in the
ordinary course of Borrower's business;
6.3.6 With the prior written consent of Agent, Indebtedness
incurred in respect of the deferred purchase price for an item of Eligible
Inventory to be financed with the proceeds of a loan under the Warehousing
Credit Agreement, but only to the extent that the incurrence of such
Indebtedness is customary in the industry with respect to the purchase of this
type of equipment (provided that such Indebtedness shall only be permitted under
this Section 6.3.6 if, taking into account the incurrence of such Indebtedness,
Borrower's incurring such Indebtedness shall not be in violation of any of the
financial covenants set forth in Section 7 if measured as of the date of
incurrence as determined by GAAP); and
6.3.7 Any Guaranty Obligations of Borrower in the form of
performance guaranties undertaken on behalf of a Special Purpose Entity of
Borrower in favor of the charter party in connection with the leasing of a
marine vessel on a time charter.
6.4 Use Of Proceeds. Borrower shall not, nor permit any Special
Purpose Entity or any Owner Trustee to, use the proceeds of any Loan except for
the purpose set forth in Section 2.1.3.
6.5 Sale and Leaseback. Borrower shall not, nor permit any Special
Purpose Entity or any Owner Trustee to, enter into any sale and leaseback
agreement covering any of its or their respective fixed or capital assets.
6.6 Restriction On Fundamental Changes. Borrower shall not, nor permit
any Special Purpose Entity or any Owner Trustee to, (1) enter into any
transaction of merger, consolidation or recapitalization, directly or
indirectly, whether by operation of law or otherwise, or liquidate, wind up or
dissolve itself (or suffer any liquidation or dissolution), or convey, sell,
lease, assign, transfer or otherwise dispose of, in one transaction or a series
of transactions, all or any part of its respective business, Property or assets,
whether now owned or hereafter acquired, or (2) acquire by purchase or otherwise
all or substantially all the business, Property or assets of, or stock or other
evidence of beneficial ownership of, any Person, except (a) for the formation of
Special Purpose Entities and the sale and transfer of all of its ownership
interest (whether stock or otherwise) in any Special Purpose Entity to any
Equipment Growth Fund, and (b) the acquisition or resale of Equipment in the
ordinary course of business (for the purposes of this Section 6.6, with respect
to Borrower and any Special Purpose Entity, ordinary course of business shall
refer to the business of Borrower and all Special Purpose Entities,
collectively).
6.7 Transactions With Affiliates. Borrower shall not, nor permit any
Special Purpose Entity or any Owner Trustee to, directly or indirectly, enter
into or permit to exist any transaction (including, without limitation, the
purchase, sale, lease or exchange of any property or the rendering of any
service) with any of its Affiliates on terms that are less favorable to Borrower
or such Special Purpose Entity or such Owner Trustee than those that might be
obtained at the time from Persons who are not such Affiliates.
6.8 Intentionally omitted.
6.9 No Investment. Borrower shall not make or suffer to exist, or
permit or suffer any of its Special Purpose Entities or any Owner Trustee to
make or suffer to exist any Investment, except for (1) the sharing arrangements
with respect to Equipment which is shared with Equipment Growth Funds and
equipment owned jointly with Special Purpose Entities, and (2) equity
investments in Special Purpose Entities in an aggregate amount not to exceed
$6,000,000.
6.10 Maintenance Of Business. Borrower shall not engage in any
business inconsistent with the purpose of Borrower and the investment objectives
described in Section 1.05 of the Limited Partnership Agreement, as in effect on
the Closing Date.
6.11 Modification to Aircraft Lease Documents. Borrower shall not
modify or agree to modify and shall not permit the Aircraft Owner Trustee to
modify or agree to modify , any material term of any Aircraft Lease Document
without the written consent of Agent, which consent shall not be unreasonably
withheld, delayed or conditioned. For purposes of this Section 6.11, material
terms shall include , without limitation, terms relating to lease payments,
maturity and the amount and scope of Aircraft Lessee's insurance coverage.
6.12 No Subsidiaries. Borrower shall not create any Subsidiaries
except Special Purpose Entities.
6.13 No Distributions; Management Fees. Borrower shall not on any
date, directly or indirectly, make, pay or set apart any funds for the payment
or distribution to FSI, the Equipment Manager, or any of the Borrower's limited
partners, and shall not redeem any limited partnership units if a Potential
Event of Default or an Event of Default exists on such date or would result from
such payment, distribution or redemption, as applicable. Without limiting the
generality of the foregoing, Borrower shall not directly or indirectly pay any
Subordinated Incentive Fee (as defined in the Limited Partnership Agreement)
unless and until the payment and performance in full of all the Obligations.
Notwithstanding anything to the contrary in the foregoing, Borrower may (1) pay
to FSI or the Equipment Manager management fees pursuant to the Limited
Partnership Agreement or equipment management fees or servicing fees pursuant to
the Management Agreements, in each case not in excess of the amounts provided
for in, and subject to the terms and conditions of, the Limited Partnership
Agreement and the Management Agreements, as the case may be, in effect on the
Closing Date, (2) reimburse FSI and its Affiliates for Borrower expenses paid by
them, to the extent allowed by the Limited Partnership Agreement in effect on
the Closing Date, and (3) redeem any limited partnership units pursuant to the
terms and conditions set forth in the Settlement Order.
6.14 Events Of Default. Borrower shall not take or omit to take any
action, which act or omission would, with the lapse of time, or otherwise
constitute (a) a default, event of default or Event of Default under any of the
Loan Documents or (b) a default or an event of default under any other material
agreement, contract, lease, license, mortgage, deed of trust or instrument to
which it is a party or by which it or any of its Properties or assets is bound,
which default or event of default would, with reasonable likelihood, have a
Material Adverse Effect.
6.15 ERISA. If Borrower, FSI or any of their ERISA Affiliates incurs
any obligation to contribute to any Pension Plan, then Borrower shall not, nor
permit FSI to, either (a) terminate, or permit such ERISA Affiliate to
terminate, any Pension Plan so as to result in any liability that would, with
reasonable likelihood, have a Material Adverse Effect or (b) make or permit such
ERISA Affiliate to make a complete or partial withdrawal (within the meaning of
Section 4201 of ERISA) from any Multiemployer Plan so as to result in any
liability that would, with reasonable likelihood, have a Material Adverse
Effect.
6.16 No Use Of Any Lender's Name. Borrower shall not use or authorize
others to use any Lender's name or marks in any publication or medium,
including, without limitation, any prospectus, without such Lender's advance
written authorization except as required by law.
6.17 Certain Accounting Changes. Borrower shall not change its fiscal
year end from December 31 or make any change in its accounting treatment and
reporting practices except as permitted by GAAP; provided, however, that should
Borrower change its accounting treatment or reporting practices in a way that
would cause a change in the calculation, or in the results of a calculation, of
any of the financial covenants set forth in Section 7, below, then Borrower
shall continue to calculate such covenants as if such accounting treatment or
reporting practice had not been changed unless otherwise agreed to by Requisite
Lenders.
6.18 Amendment Of Limited Partnership Agreement. Borrower shall
neither permit nor cause to occur, any amendment, modification or supplement of
or to any of the terms or provisions of Borrower's Limited Partnership
Agreement, which amendment, modification or supplement would affect, limit or
otherwise impair Borrower's ability to pay the Obligations or perform its
obligations under this Agreement or any of the other Loan Documents.
SECTION 7. FINANCIAL COVENANTS OF BORROWER.
Borrower covenants and agrees that, so long as the Commitments hereunder
shall be available, and until full, complete and indefeasible payment and
performance of the Obligations, including, without limitation, all Loans
evidenced by the Notes, unless Requisite Lenders shall otherwise consent in
writing, Borrower shall perform the following financial covenants. Borrower
agrees and understands that (i) the covenants under Sections 7.1, 7.2 and 7.3
shall be subject to quarterly compliance (as measured on the last day of each
fiscal quarter of Borrower), and in each case review by Lenders of the
respective fiscal quarter's consolidated financial statements delivered to Agent
by Borrower pursuant to Section 5.1, and (ii) the covenant under Section 7.4
shall be subject to monthly compliance (as measured on the last day of each
fiscal month of Borrower) and as of the date of any request for a Loan pursuant
to Section 3.2.1 (after giving effect to the making of such Loan on such date).
7.1 Minimum Operating Cash Flow Coverage Ratio. Borrower shall maintain an
Operating Cash Flow Coverage Ratio of not less than 1.25:1.00.
7.2 Minimum Total Cash Flow Coverage Ratio. Borrower shall maintain a Total
Cash Flow Coverage Ratio of not less than 1.00:1.00.
7.3 Maximum Leverage Ratio. Borrower shall maintain a Leverage Ratio of not
more than 1.50:1.0.
7.4 Minimum Asset Coverage Ratio. Borrower shall maintain the following
Asset Coverage Ratios:
for the period commencing on the Closing Date until December 31, 2002,
of not less than 2.50:1.00;
for the period commencing on January 1, 2003 until December 31, 2003,
of not less than 2.75:1.00; and
for the period commencing on January 1, 2004 until the Termination
Date, of not less than 3.00:1.00.
SECTION 8. EVENTS OF DEFAULT AND REMEDIES.
8.1 Events Of Default. The occurrence of any one or more of the following
shall constitute an Event of Default:
8.1.1 Failure To Make Payments. Borrower, any Special Purpose Entity
or any Owner Trustee fails to pay any sum due to Lenders or Agent arising under
this Agreement, any Note or any of the other Loan Documents when and as the same
shall become due and payable, whether by acceleration or otherwise and such
failure shall not have been cured to Lenders' satisfaction within five (5)
calendar days; or
8.1.2 Other Agreements. Borrower, any Special Purpose Entity, or any
Owner Trustee defaults in the repayment of any principal of or the payment of
any interest on any Indebtedness of Borrower, any such Special Purpose Entity
(other than Indebtedness of any such Special Purpose Entity without recourse to
and not guaranteed by Borrower) or any such Owner Trustee, respectively, or
defaults in any payment in respect of any Contingent Obligation (other than a
Contingent Obligation without recourse to and not guaranteed by Borrower), in
each case exceeding, in the aggregate outstanding principal amount, $2,000,000,
or Borrower, any Special Purpose Entity or any Owner Trustee breaches or
violates any term or provision of any evidence of such Indebtedness or
Contingent Obligation or of any such loan agreement, mortgage, indenture,
guaranty or other agreement relating thereto if the effect of such breach is to
permit acceleration under the applicable instrument, loan agreement, mortgage,
indenture, guaranty or other agreement and such failure shall not have been
cured within the applicable cure period, or there is an acceleration under the
applicable instrument, loan agreement, mortgage, indenture, guaranty or other
agreement; or
8.1.3 Breach Of Covenants. Borrower fails or neglects to perform, keep
or observe any of the covenants contained in Sections 2.1.3, 5.3, 5.4, 5.10,
5.13, 6.1, 6.3, 6.4, 6.5, 6.6, 6.7, 6.9, 6.10, 6.11, 6.12, 6.13, 6.17 or 6.18,
or any of the financial covenants contained in Section 7 of this Agreement; or
8.1.4 Breach Of Representations Or Warranties. Any representation or
warranty made by or on behalf of Borrower or any other Loan Party in this
Agreement or any other Loan Document or any statement or certificate at any time
given in writing pursuant hereto or in connection herewith shall be false,
misleading or incomplete in any material respect when made; or
8.1.5 Failure To Cure. Except as provided in Sections 8.1.1 and 8.1.3,
Borrower, any Special Purpose Entity or any Owner Trustee fails or neglects to
perform, keep or observe any covenant or provision of this Agreement or of any
of the other Loan Documents or any other document or agreement executed by
Borrower, any such Special Purpose Entity or any such Owner Trustee in
connection therewith, and the same has not been cured to Requisite Lenders'
satisfaction within thirty (30) calendar days from the earlier of the date: (x)
a Responsible Officer of Borrower, such Special Purpose Entity or such Owner
Trustee first becomes aware thereof or (y) Agent or any Lender gives notice
thereof to Borrower, such Special Purpose Entity or such Owner Trustee; or
8.1.6 Insolvency. Borrower, any Special Purpose Entity that has
incurred any Indebtedness with recourse to, or guaranteed by, Borrower, or any
Owner Trustee shall (a) cease to be Solvent, (b) admit in writing its inability
to pay its debts as they mature, (c) make an assignment for the benefit of
creditors, or (d) apply for or consent to the appointment of a receiver,
liquidator, custodian or trustee for it or for a substantial part of its
Properties or business, or such a receiver, liquidator, custodian or trustee
otherwise shall be appointed and shall not be discharged within sixty (60) days
after such appointment; or
8.1.7 Bankruptcy Proceedings. Bankruptcy, insolvency, reorganization
or liquidation proceedings or other proceedings for relief under any bankruptcy
law or any law for the relief of debtors shall be instituted by or against
Borrower, any Special Purpose Entity that has incurred any Indebtedness with
recourse to, or guaranteed by, Borrower, or any Owner Trustee, or any order,
judgment or decree shall be entered against Borrower, any such Special Purpose
Entity or any Owner Trustee decreeing its dissolution or division; provided,
however, with respect to an involuntary petition in bankruptcy, such petition
shall not have been dismissed within sixty (60) days after the filing of such
petition; or
8.1.8 Material Adverse Effect. There shall have been a change in the
assets, liabilities, financial condition, operations, affairs or prospects of
Borrower, any Special Purpose Entity that has incurred Indebtedness with
recourse to, or guaranteed by, Borrower, or any Owner Trustee which, in the
reasonable determination of Requisite Lenders has, either individually or in the
aggregate, had a Material Adverse Effect; or
8.1.9 Judgments, Writs And Attachments. There shall be a money
judgment, writ or warrant of attachment or similar process entered or filed
against Borrower, any Special Purpose Entity that has incurred Indebtedness with
recourse to, or guaranteed by, Borrower, or any Owner Trustee which (net of
insurance coverage) remains unvacated, unbonded, unstayed or unpaid or
undischarged for more than sixty (60) days (whether or not consecutive) or in
any event later than five (5) calendar days prior to the date of any proposed
sale thereunder, which, together with all such other unvacated, unbonded,
unstayed, unpaid and undischarged judgments or attachments against Borrower, any
such Special Purpose Entity or any Owner Trustee exceeds in the aggregate
$1,000,000; or
8.1.10 Legal Obligations. Any of the Loan Documents shall for any
reason other than the full, complete and indefeasible satisfaction of the
Obligations thereunder cease to be, or be asserted by Borrower, any Special
Purpose Entity or Owner Trustee, or any other Loan Party not to be, a legal,
valid and binding obligation of Borrower, such Special Purpose Entity or Owner
Trustee, or such other Loan Party, respectively, enforceable against such Person
in accordance with its terms; or
8.1.11 Change Of General Partner; Equipment Manager. Either (a) FSI
shall cease to be the sole general partner of Borrower, whether due to the
voluntary or involuntary withdrawal, substitution, removal or transfer of FSI
from or of all or any portion of FSI's general partnership interest or capital
contribution in Borrower or shall cease to maintain at least a five percent (5%)
ownership interest in the net distributions of Borrower; or (b) IMI or any
Affiliate of IMI shall cease to be the Equipment Manager of Borrower; or
8.1.12 Change of Control. There occurs any Change of Control; or
8.1.13 Criminal Proceedings. A criminal proceeding shall have been
filed in any court naming Borrower, any Special Purpose Entity that has incurred
any Indebtedness with recourse to, or guaranteed by Borrower, or Owner Trustee
as a defendant for which forfeiture is a potential penalty under applicable
federal or state law which, in the reasonable determination of Requisite
Lenders, may have a Material Adverse Effect; or
8.1.14 Action By Governmental Authority. Any Governmental Authority
enters a decree, order or ruling ("Government Action") which will materially and
adversely affect Borrower's financial condition, operations or ability to
perform or pay Borrower's obligations arising under this Agreement or any
instrument or agreement executed pursuant to the terms of this Agreement or
which will similarly affect any Special Purpose Entity that has incurred any
Indebtedness with recourse to, or guaranteed by, Borrower, or any Owner Trustee.
Borrower shall have thirty (30) days from the earlier of the date (a) Borrower
first discovers that it or any such Special Purpose Entity or any Owner Trustee
is the subject of Government Action or (b) Agent or any Lender gives notice of
Government Action to take such steps as are necessary to obtain relief from the
Government Action. For the purpose of this paragraph, "relief from Government
Action" means to discharge or to obtain a dismissal of or release or relief from
(i) any Government Action so that the affected party or parties do not incur (A)
monetary liability of more than $1,000,000 in the aggregate, or (ii) any
disqualification of or other limitation on the operation of Borrower, any Owner
Trustee or any such Special Purpose Entity, or any of them, which in the
reasonable determination of Requisite Lenders may have a Material Adverse
Effect; or
8.1.15 Governmental Decrees. Any Governmental Authority, including,
without limitation, the SEC, shall enter a decree, order or ruling prohibiting
Borrower from releasing or paying to FSI any funds in the form of management
fees, profits or otherwise which, in the reasonable determination of Requisite
Lenders, may have a Material Adverse Effect; or
8.1.16 Collateral.
(i) (a) Any material provision of any Security Document shall for
any reason cease to be valid and binding on or enforceable in any material
respect against Borrower FSI or the Aircraft Owner Trustee or (b) Borrower, FSI
or the Aircraft Owner Trustee shall state that any material provision of any
Security Document to which it is party shall for any reason cease to be valid
and binding on or enforceable against it in writing or bring an action to limit
its respective obligations or liabilities thereunder; or
(ii) (a) any Security Document shall for any reason (other than
pursuant to the terms thereof) cease to create a valid security interest in any
portion of the Collateral purported to be covered thereby or (b) such security
interest shall for any reason (other than the failure of Agent to take any
action available to it to maintain perfection of the Liens granted in favor of
Agent pursuant to the Security Documents) cease to be a perfected and first
priority security interest with respect to any item of Collateral other than any
Trailers, Aircraft (except Aircraft Collateral), Aircraft engines, Railcars and
marine vessels, in each case subject only to Permitted Liens; or
8.1.17 Subordination Agreement. Any Subordinated Lender shall fail to
perform or observe any term, covenant or agreement contained in the
Subordination Agreement.
8.2 Waiver Of Default. An Event of Default may be waived only with the
written consent of Requisite Lenders, or if expressly provided, of all Lenders.
Any Event of Default so waived shall be deemed to have been cured and not to be
continuing; but no such waiver shall be deemed a continuing waiver or shall
extend to or affect any subsequent like default or impair any rights arising
therefrom.
8.3 Remedies. Upon the occurrence and during the continuance of any Event
of Default or Potential Event of Default, Lenders shall have no further
obligation to advance money or extend credit to or for the benefit of Borrower.
In addition, upon the occurrence and during the continuance of an Event of
Default, Lenders or Agent, on behalf of Lenders, may, at the option of Requisite
Lenders, do any one or more of the following, all of which are hereby authorized
by Borrower:
8.3.1 Declare all or any of the Obligations of Borrower under this
Agreement, the Notes, the other Loan Documents and any other instrument executed
by Borrower pursuant to the Loan Documents to be immediately due and payable,
and upon such declaration such obligations so declared due and payable shall
immediately become due and payable; provided that if such Event of Default is
under part 8.1.6 or 8.1.7 of Section 8.1, then all of the Obligations of
Borrower shall become immediately due and payable forthwith without the
requirement of any notice or other action by Lenders or Agent;
8.3.2 Terminate this Agreement as to any future liability or
obligation of Agent or Lenders; and
8.3.3 Exercise in addition to all other rights and remedies granted
hereunder, any and all rights and remedies granted under the Loan Documents or
otherwise available at law or in equity.
8.4 Set-Off.
8.4.1 During the continuance of an Event of Default, any deposits or
other sums credited by or due from any Lender to Borrower (exclusive of deposits
in accounts expressly held in the name of third parties or held in trust for
benefit of third parties) may be set-off against the Obligations and any and all
other liabilities, direct or indirect, absolute or contingent, due or to become
due, now existing or hereafter arising of Borrower to Lenders. Each Lender
agrees to notify promptly Borrower and Agent of any such set-off; provided, that
the failure to give such notice shall not affect the validity of any such
set-off.
8.4.2 Each Lender agrees that if it shall, whether by right of
set-off, banker's lien or similar remedy pursuant to Section 8.4.1, obtain any
payment as a result of which the outstanding and unpaid principal portion of the
Loans of such Lender shall be less than such Lender's Pro Rata Share of the
outstanding and unpaid principal portion of the aggregate of all Loans, such
Lender receiving such payment shall simultaneously purchase from each other
Lender a participation in the Loans held by such Lenders so that the outstanding
and unpaid principal amount of the Loans and participations in Loans of such
Lender shall be in the same proportion to the unpaid principal amount of the
aggregate of all Loans then outstanding as the unpaid principal amount under the
Loans of such Lender outstanding immediately prior to receipt of such payment
was to the unpaid principal amount of the aggregate of all Loans outstanding
immediately prior to such Lender's receipt of such payment; provided, however,
that if any such purchase shall be made pursuant to this Section 8.4.2 and the
payment giving rise thereto shall thereafter be recovered, such purchase shall
be rescinded to the extent of such recovery and the purchase price restored
without interest. Borrower expressly consents to the foregoing arrangements and
agrees that any Lender holding a participation in a Loan deemed to have been so
purchased may exercise any and all rights of set-off, banker's lien or similar
remedy with respect to any and all moneys owing by Borrower to such Lender as
fully as if such Lender held a Loan in the amount of such participation.
8.5 Rights And Remedies Cumulative. The enumeration of the rights and
remedies of Agent and Lenders set forth in this Agreement is not intended to be
exhaustive and the exercise by Agent and Lenders of any right or remedy shall
not preclude the exercise of any other rights or remedies, all of which shall be
cumulative, and shall be in addition to any other right or remedy given
hereunder or under the Loan Documents or that may now or hereafter exist in law
or in equity or by suit or otherwise. No delay or failure to take action on the
part of Agent and Lenders in exercising any right, power or privilege shall
operate as a waiver hereof, nor shall any single or partial exercise of any such
right, power or privilege preclude other or further exercise thereof or the
exercise of any other right, power or privilege or shall be construed to be a
waiver of any Event of Default or Potential Event of Default. No course of
dealing between Borrower, FSI, Agent, or any Lender or their respective agents
or employees shall be effective to change, modify or discharge any provision of
this Agreement or any of the Loan Documents or to constitute a waiver of any
Event of Default or Potential Event of Default.
SECTION 9. AGENT.
9.1 Appointment. Each of the Lenders hereby irrevocably designates and
appoints Comerica Bank as the Agent of such Lender under this Agreement and the
other Loan Documents, and each such Lender irrevocably authorizes Comerica Bank
as the Agent for such Lender to take such action on its behalf under the
provisions of this Agreement and the other Loan Documents and to exercise such
powers and perform such duties as are expressly delegated to the Agent by the
terms of this Agreement and such other Loan Documents, together with such other
powers as are reasonably incidental thereto. Notwithstanding any provision to
the contrary elsewhere in this Agreement or such other Loan Documents, the Agent
shall not have any duties or responsibilities, except those expressly set forth
herein and therein, or any fiduciary relationship with any Lender, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or the other Loan Documents or
otherwise exist against Agent. To the extent any provision of this Agreement
permits action by Agent, Agent shall, subject to the provisions of this Section
9, take such action if directed in writing to do so by Requisite Lenders.
9.2 Delegation Of Duties. Agent may execute any of its duties under this
Agreement and the other Loan Documents by or through agents or attorneys-in-fact
and shall be entitled to advice of counsel concerning all matters pertaining to
such duties. Agent shall not be responsible for the negligence or misconduct of
any agents or attorneys-in-fact selected by it with reasonable care.
9.3 Exculpatory Provisions. Neither Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates shall be (a)
liable for any action lawfully taken or omitted to be taken by it or such Person
under or in connection with this Agreement or the other Loan Documents (except
for its or such Person's own gross negligence or willful misconduct), or (b)
responsible in any manner to any Lender for any recitals, statements,
representations or warranties made by Borrower or any officer thereof contained
in this Agreement or the other Loan Documents or in any certificate, report,
statement or other document referred to or provided for in, or received by Agent
under or in connection with, this Agreement or the other Loan Documents or for
the value, validity, effectiveness, genuineness, enforceability or sufficiency
of this Agreement or the other Loan Documents or for any failure of Borrower to
perform its obligations hereunder or thereunder. Agent shall not be under any
obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement, or to inspect the Properties, books or records of Borrower.
9.4 Reliance By Agent. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any note, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype
message, statement, order or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to Borrower), independent accountants and other experts
selected by Agent. Agent may deem and treat the payee of any promissory note
issued pursuant to this Agreement as the owner thereof for all purposes unless
such promissory note shall have been transferred in accordance with Section
11.10 hereof. Agent shall be fully justified in failing or refusing to take any
action under this Agreement and the other Loan Documents unless it shall first
receive such advice or concurrence of Requisite Lenders as it deems appropriate
or it shall first be indemnified to its satisfaction by Lenders against any and
all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action except for its own gross negligence or
willful misconduct. Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement in accordance with a request of
Requisite Lenders, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all Lenders.
9.5 Notice Of Default. Agent shall not be deemed to have knowledge or
notice of the occurrence of any Event of Default or Potential Event of Default
hereunder unless Agent has received written notice from a Lender or Borrower
referring to this Agreement, describing such Event of Default or Potential Event
of Default and stating that such notice is a "notice of default". In the event
that Agent receives such a notice, Agent shall promptly give notice thereof to
Lenders. The Agent shall take such action with respect to such Event of Default
or Potential Event of Default as shall be reasonably directed by Requisite
Lenders; provided that unless and until Agent shall have received such
directions, Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Event of Default or
Potential Event of Default as it shall deem advisable in the best interests of
Lenders.
9.6 Non-Reliance On Agent And Other Lenders. Each Lender expressly
acknowledges that neither Agent nor any of its officers, directors, employees,
agents, attorneys-in-fact or Affiliates has made any representations or
warranties to it and that no act by Agent hereinafter taken, including any
review of the affairs of Borrower, shall be deemed to constitute any
representation or warranty by Agent to any Lender. Each Lender represents to
Agent that it has, independently and without reliance upon Agent or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness of
Borrower and made its own decision to make its Loans hereunder and enter into
this Agreement. Each Lender also represents that it will, independently and
without reliance upon Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigation as
it deems necessary to inform itself as to the business, operations, property,
financial and other condition and creditworthiness of Borrower. Except for
notices, reports and other documents expressly required to be furnished to the
Lenders by Agent hereunder or by the other Loan Documents, Agent shall not have
any duty or responsibility to provide any Lender with any credit or other
information concerning the business, operations, property, financial and other
condition or creditworthiness of Borrower which may come into the possession of
Agent or any of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates. Notwithstanding anything contained in the preceding sentence to the
contrary, Agent agrees to promptly provide Lenders with (i) copies of all
financial statements, reports and certificates delivered by Borrower to Agent
hereunder, (ii) copies of all notices and other communications deemed by Agent
to be material, relating to the transactions contemplated by this Agreement,
that are sent or received by Agent, and (iii) any other information, financial
or otherwise, deemed by Agent to be material, relating to Borrower's financial
condition or ability to perform its obligations hereunder, furnished to, or
obtained by, Agent hereunder.
9.7 Indemnification. Each Lender agrees to indemnify Agent in its capacity
as such (to the extent not reimbursed by Borrower and without limiting the
obligation of Borrower to do so), ratably according to the respective amounts of
their Pro Rata Share of the Commitments, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the Loans)
be imposed on, incurred by or asserted against Agent in any way relating to or
arising out of this Agreement or the other Loan Documents, or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by Agent under or
in connection with any of the foregoing; provided that no Lender shall be liable
for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting solely from Agent's bad faith, gross negligence or willful misconduct.
The agreements in this Section 9.7 shall survive the repayment of the Loans and
all other amounts payable hereunder.
9.8 Agent In Its Individual Capacity. Agent and its Affiliates may make
loans to, accept deposits from and generally engage in any kind of business with
Borrower as though Agent were not Agent hereunder. With respect to Advances made
or renewed by it, Agent shall have the same rights and powers under this
Agreement and the other Loan Documents as any Lender and may exercise the same
as though it were not Agent, and the terms "Lender" and "Lenders" shall include
Agent in its individual capacity.
9.9 Resignation And Appointment Of Successor Agent. Agent may resign at any
time by giving thirty (30) days' prior written notice thereof to Lenders and
Borrower; provided, however, that the retiring Agent shall continue to serve
until a successor Agent shall have been selected and approved pursuant to this
Section 9.9. Upon any such notice, Agent shall have the right to appoint a
successor Agent; provided, however, that if such successor shall not be a
signatory to this Agreement, such appointment shall be subject to the consent of
Requisite Lenders. Agent may be replaced by Requisite Lenders, with or without
cause; provided, however, that any successor agent shall be subject to
Borrower's consent, which consent shall not be unreasonably withheld. Upon the
acceptance of any appointment as an Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations under this Agreement.
After any retiring Agent's resignation hereunder as Agent, the provisions of
this Section 9 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent under this Agreement.
SECTION 10. EXPENSES AND INDEMNITIES.
10.1 Expenses. Borrower agrees that, as the following costs, expenses,
charges and other disbursements benefit Borrower, Borrower, unless otherwise
specified in this Section 10.1, shall pay, as its Obligation, promptly on
demand, and in any event within thirty (30) days of the invoice date therefor,
(a) all costs, expenses, charges and other disbursements (including, without
limitation, all reasonable attorneys' fees) incurred by or on behalf of Agent or
any Lender in connection with the preparation of the Loan Documents and all
amendments and modifications thereof, extensions thereto or substitutions
therefor, and all costs, expenses, charges or other disbursements incurred by or
on behalf of Agent or any Lender (including, without limitation all reasonable
attorney's fees) in connection with the furnishing of opinions of counsel
(including, without limitation, any opinions requested by Lenders as to any
legal matters arising hereunder) and of Borrower's performance of and compliance
with all agreements and conditions contained herein or in any of the other Loan
Documents on its part to be performed or complied with; (b) all other costs,
expenses, charges and other disbursements incurred by or on behalf of Agent or
any Lender in connection with the negotiation, preparation, execution,
administration, continuation and enforcement of the Loan Documents, and the
making of the Loans hereunder, including without limitation the cost of UCC
searches and filing fees; and (c) upon and during the existence of an Event of
Default or Potential Event of Default, all legal expenses (including all
reasonable attorneys' fees), appraisal, audit, accounting, consulting or other
fees, costs, expenses, charges or other disbursements incurred by or on behalf
of Agent or any Lender in connection with any litigation, contest, dispute,
suit, proceeding or action (whether instituted by Lenders, Agent, Borrower or
any other Person) seeking to enforce any Obligations of, or collecting any
payments due from, Borrower under this Agreement and the Notes, all of which
amounts shall be deemed to be part of the Obligations; provided, however, that
Lenders shall be entitled to collect the full amount of such costs, expenses,
charges and other disbursements only once.
10.2 Indemnification. Whether or not the transactions contemplated hereby
shall be consummated:
10.2.1 General Indemnity. Borrower shall pay, indemnify, and hold each
Lender, Agent and each of their respective officers, directors, employees,
counsel, agents and attorneys-in-fact (each, an "Indemnified Person") harmless
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, charges, expenses or disbursements
(including reasonable attorney's fees and the allocated cost of in-house
counsel) of any kind or nature whatsoever with respect to the execution,
delivery, enforcement, performance and administration of this Agreement and any
other Loan Documents, or the transactions contemplated hereby and thereby, and
with respect to any investigation, litigation or proceeding (including any case,
action or proceeding before any court or other Governmental Authority relating
to bankruptcy, reorganization, insolvency, liquidation, dissolution or relief of
debtors or any appellate proceeding) related to this Agreement or the Loans or
the use of the proceeds thereof, whether or not any Indemnified Person is a
party thereto (all the foregoing, collectively, the "Indemnified Liabilities");
provided, that Borrower shall not have any obligation hereunder to any
Indemnified Person with respect to Indemnified Liabilities arising from the
gross negligence or willful misconduct of such Indemnified Person.
10.2.2 Environmental Indemnity.
(a) Borrower agrees to indemnify, defend and hold harmless each
Indemnified Person, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, charges, expenses
or disbursements (including reasonable attorneys' fees and the allocated cost of
in-house counsel and of internal environmental audit or review services), which
may be incurred by or asserted against such Indemnified Person in connection
with or arising out of any pending or threatened investigation, litigation or
proceeding, or any action taken by any Person, with respect to any Environmental
Claim arising out of or related to any Property owned, leased or operated by
Borrower. No action taken by legal counsel chosen by Agent or any Lender in
defending against any such investigation, litigation or proceeding or requested
remedial, removal or response action shall (except for actions which constitute
fraud, willful misconduct, gross negligence or material violations of law)
vitiate or in any way impair Borrower's obligation and duty hereunder to
indemnify and hold harmless Agent and each Lender. Agent and all Lenders agree
to use reasonable efforts to cooperate with Borrower respecting the defense of
any matter indemnified hereunder, except insofar as and to the extent that their
respective interests may be adverse to Borrower's interests, in Agent's or such
Lender's sole discretion.
(b) In no event shall any site visit, observation, or testing by
Agent or any Lender be deemed a representation or warranty that Hazardous
Materials are or are not present in, on, or under the site, or that there has
been or shall be compliance with any Environmental Law. Neither Borrower nor any
other Person is entitled to rely on any site visit, observation, or testing by
Agent or any Lender. Except as otherwise provided by law, neither Agent nor any
Lender owes any duty of care to protect Borrower, or any one of them, or any
other Person against, or to inform Borrower or any other party of, any Hazardous
Materials or any other adverse condition affecting any site or Property. Neither
Agent nor any Lender shall be obligated to disclose to Borrower or any other
Person any report or findings made as a result of, or in connection with, any
site visit, observation, or testing by Agent or any Lender.
10.2.3 Survival; Defense. The obligations in this Section 10.2 shall
survive payment of all other Obligations. At the election of any Indemnified
Person, Borrower shall defend such Indemnified Person using legal counsel
satisfactory to such Indemnified Person in such Person's sole discretion, at the
sole cost and expense of Borrower. All amounts owing under this Section 10.2
shall be paid within thirty (30) days after written demand.
SECTION 11. MISCELLANEOUS.
11.1 Survival. All covenants, agreements, representations and warranties
made herein shall survive the execution and delivery of the Loan Documents and
the making of the Loans hereunder.
11.2 No Waiver By Agent Or Lenders. No failure or delay on the part of
Agent or any Lender in the exercise of any power, right or privilege under this
Agreement, the Notes or any of the other Loan Documents shall impair such power,
right or privilege or be construed to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other right,
power or privilege.
11.3 Notices. Except as otherwise provided in this Agreement, any notice or
other communication herein required or permitted to be given shall be in writing
and may be delivered in person, with receipt acknowledged, or sent by telex,
facsimile, telecopy, computer transmission or by United States mail, registered
or certified, return receipt requested, or by Federal Express or other
nationally recognized overnight courier service, postage prepaid and
confirmation of receipt requested, and addressed as set forth on the signature
pages to this Agreement or at such other address as may be substituted by notice
given as herein provided. The giving of any notice required hereunder may be
waived in writing by the party entitled to receive such notice. Every notice,
demand, request, consent, approval, declaration or other communication hereunder
shall be deemed to have been duly given or served on the date on which the same
shall have been personally delivered, with receipt acknowledged, or sent by
telex, facsimile, telecopy or computer transmission (with appropriate
answerback), three (3) Business Days after the same shall have been deposited in
the United States mail or on the next succeeding Business Day if the same has
been sent by Federal Express or other nationally recognized overnight courier
service. Failure or delay in delivering copies of any notice, demand, request,
consent, approval, declaration or other communication to the persons designated
above to receive copies shall in no way adversely affect the effectiveness of
such notice, demand, request, consent, approval, declaration or other
communication.
11.4 Headings. Section and subsection headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive effect.
11.5 Severability. Whenever possible, each provision of this Agreement,
each Note and each of the other Loan Documents shall be interpreted in such a
manner as to be valid, legal and enforceable under the applicable law of any
jurisdiction. Without limiting the generality of the foregoing sentence, in case
any provision of this Agreement, any Note or any of the other Loan Documents
shall be invalid, illegal or unenforceable under the applicable law of any
jurisdiction, the validity, legality and enforceability of the remaining
provisions, or of such provision in any other jurisdiction, shall not in any way
be affected or impaired thereby.
11.6 Entire Agreement; Construction; Amendments And Waivers.
11.6.1 This Agreement, the Notes and each of the other Loan Documents
dated as of the date hereof, taken together, constitute and contain the entire
agreement among Borrower, Lenders and Agent and supersede any and all prior
agreements, negotiations, correspondence, understandings and communications
between the parties, whether written or oral, respecting the subject matter
hereof.
11.6.2 This Agreement is the result of negotiations between and has
been reviewed by each of Borrower, Agent and each Lender executing this
Agreement as of the Closing Date and their respective counsel; accordingly, this
Agreement shall be deemed to be the product of the parties hereto, and no
ambiguity shall be construed in favor of or against Borrower, Lenders or Agent.
Borrower, Lenders and Agent agree that they intend the literal words of this
Agreement and the other Loan Documents and that no parol evidence shall be
necessary or appropriate to establish Borrower's, any Lender's or Agent's actual
intentions.
11.6.3 No amendment, modification, discharge or waiver of or consent
to any departure by Borrower from, any provision in this Agreement or any of the
other Loan Documents relating to (a) the definition of "Requisite Lenders," (b)
any increase of the amount of any Commitment, (c) any reduction of principal,
interest or fees payable hereunder, (d) any postponement of any date fixed for
any payment or prepayment of principal or interest hereunder or (e) this Section
11.6.3 shall be effective without the written consent of all Lenders. Any and
all other amendments, modifications, discharges or waivers of, or consents to
any departures from any provision of this Agreement or of any of the other Loan
Documents shall not be effective without the written consent of Requisite
Lenders. Any waiver or consent with respect to any provision of the Loan
Documents shall be effective only in the specific instance and for the specific
purpose for which it was given. No notice to or demand on Borrower in any case
shall entitle Borrower to any other or further notice or demand in similar or
other circumstances. Any amendment, modification, waiver or consent effected in
accordance with this Section 11.6 shall be binding upon Borrower and each Lender
then party hereto and each subsequent Lender.
11.7 Reliance By Lenders. All covenants, agreements, representations and
warranties made herein by Borrower shall, notwithstanding any investigation by
Lenders or Agent, be deemed to be material to and to have been relied upon by
Lenders.
11.8 Marshaling; Payments Set Aside. Lenders shall be under no obligation
to marshal any assets in favor of Borrower or any other person or against or in
payment of any or all of the Obligations. To the extent that Borrower makes a
payment or payments to Lenders or Agent, or Lenders or Agent, on behalf of
Lenders, enforce their or its Liens or exercises their or its rights of set-off,
and such payment or payments or the proceeds of such enforcement or set-off or
any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, receiver or any
other party under Title 11 of the United States Code or under any other similar
federal or state law, common law or equitable cause, then to the extent of such
recovery the obligation or part thereof originally intended to be satisfied
shall be revived and continued in full force and effect as if such payment had
not been made or such enforcement or set-off had not occurred.
11.9 No Set-Offs By Borrower. All sums payable by Borrower pursuant to this
Agreement, any Note or any of the other Loan Documents shall be payable without
notice or demand and shall be payable in United States Dollars without set-off
or reduction of any manner whatsoever. 11.10 Binding Effect, Assignment.
11.10.1 This Agreement, the Notes and the other Loan Documents shall
be binding upon and shall inure to the benefit of the parties hereto and thereto
and their respective successors and assigns, except that Borrower shall not
assign its rights hereunder or thereunder or any interest herein or therein
without the prior written consent of each Lender.
11.10.2 Subject to the limitations of this Section 11.10.2, each
Lender may sell and assign, from time to time, all or any portion of its Pro
Rata Share of the Commitments to any Eligible Assignee, subject to the
assumption by such assignee of the share of the Commitments so assigned
(provided that any such partial assignment shall not be for a principal amount
of less than Five Million Dollars ($5,000,000)). The assignment to such Eligible
Assignee shall be evidenced by an Assignment and Acceptance in the form of
Exhibit H ("Assignment and Acceptance") executed by the assignor Lender
(hereinafter from time to time referred to as the "Assignor Lender") and such
Eligible Assignee or other financial institution (which, upon such assignment
shall become a Lender hereunder (hereinafter from time to time referred to as
the "Assignee Lender")). The Assignment and Acceptance need not include any of
the economic or financial terms upon which such Assignee Lender receives the
assignment from the Assignor Lender, and such terms need not be disclosed to or
approved by Borrower; provided only that such terms do not diminish the
obligations undertaken by such Assignee Lender in the Assignment and Acceptance
or increase the obligations of Borrower under this Agreement. Upon execution of
such Assignment and Acceptance, (a) the definition of "Commitments" in Section 1
hereof and the Pro Rata Shares set forth therein shall be deemed to be amended
to reflect each Lender's share of the Commitments, after giving effect to the
assignment and (b) the Assignee Lender shall, from the effective date of the
Assignment and Acceptance, be subject to all of the obligations, and entitled to
all of the rights, of a Lender hereunder, except as may be expressly provided to
the contrary in the Assignment and Acceptance. To the extent the obligations
hereunder of the Assignor Lender are assumed by the Assignee Lender, the
Assignor Lender shall be relieved of such obligations. Upon the assignment of
any interest by any Assignor Lender pursuant to this Section 11.10.2, such
Assignor Lender agrees to supplement Schedule 1.1 to show the date of such
assignment, the Assignor Lender, the Assignee Lender, the Assignee Lender's
address for notice purposes and the amount of the Commitments so assigned. In
connection and as a condition to each assignment hereunder, the Assignor Lender
agrees to pay or to cause the Assignee Lender to pay to Agent a processing fee
of $3,500; provided that no processing fee shall be charged for any assignment
to a Lender or a Lender Affiliate.
11.10.3 Subject to the limitations of this Section 11.10.3, any Lender
may also grant, from time to time, participation interests in the interests of
such Lender under this Agreement, the Notes and the other Loan Documents to any
other financial institution without notice to, or approval of, Borrower. The
grant of such a participation interest shall be on such terms as the granting
Lender determines are appropriate, provided only that (a) the holder of such
participation interest shall not have any of the rights of a Lender under this
Agreement except, if the participation agreement expressly provides, rights
under Sections 2.9, 2.10, 5.1 and 10.2, and (b) the consent of the holder of
such a participation interest shall not be required for amendments or waivers of
provisions of the Loan Documents other than, if the participation agreement
expressly provides, those which (i) increase the monetary amount of any
Commitment, (ii) decrease any fee or any other monetary amount payable to
Lenders, or (iii) extend the date upon which any monetary amount is payable to
Lenders.
11.10.4 Notwithstanding the foregoing Sections 11.10.2 and 11.10.3, no
such sale, assignment or participation grant shall result in requiring
registration under the Securities Act of 1933, as amended, or qualification
under any state securities law.
11.11 Counterparts. This Agreement and any amendments, waivers, consents or
supplements hereto may be executed in any number of counterparts, and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument. Each such agreement
shall become effective upon the execution of a counterpart hereof or thereof by
each of the parties hereto or thereto, delivery of each such counterpart to
Agent.
11.12 Equitable Relief. Borrower recognizes that, in the event Borrower
fails to perform, observe or discharge any of its obligations or liabilities
under this Agreement, any Note or any of the other Loan Documents, any remedy at
law may prove to be inadequate relief to Lenders or Agent; therefore, Borrower
agrees that Lenders or Agent, if Lenders or Agents so request, shall be entitled
to temporary and permanent injunctive relief in any such case without the
necessity of proving actual damages.
11.13 Written Notice Of Claims; Claims Bar. BORROWER HEREBY AGREES THAT IT
SHALL GIVE PROMPT WRITTEN NOTICE OF ANY CLAIM OR CAUSE OF ACTION IT BELIEVES IT
HAS, OR MAY SEEK TO ASSERT OR ALLEGE AGAINST ANY LENDER OR AGENT, WHETHER SUCH
CLAIM IS BASED IN LAW OR EQUITY, ARISING UNDER OR RELATED TO THIS AGREEMENT, ANY
NOTE OR ANY OF THE OTHER LOAN DOCUMENTS OR TO THE LOANS CONTEMPLATED HEREBY OR
THEREBY OR ANY ACT OR OMISSION TO ACT BY ANY LENDER OR AGENT WITH RESPECT HERETO
OR THERETO, AND THAT IF IT SHALL FAIL TO GIVE SUCH PROMPT NOTICE TO AGENT WITH
REGARD TO ANY SUCH CLAIM OR CAUSE OF ACTION, IT SHALL BE DEEMED TO HAVE WAIVED,
AND SHALL BE FOREVER BARRED FROM BRINGING OR ASSERTING SUCH CLAIM OR CAUSE OF
ACTION IN ANY SUIT, ACTION OR PROCEEDING IN ANY COURT OR BEFORE ANY GOVERNMENTAL
AUTHORITY.
11.14 Waiver Of Punitive Damages. NOTWITHSTANDING ANYTHING TO THE CONTRARY
CONTAINED IN THIS AGREEMENT, BORROWER HEREBY AGREES THAT IT SHALL NOT SEEK FROM
LENDERS OR AGENT, UNDER ANY THEORY OF LIABILITY, INCLUDING, WITHOUT LIMITATION,
ANY THEORY IN TORTS, ANY PUNITIVE DAMAGES.
11.15 Relationship Of Parties. The relationship between Borrower, on the
one hand, and Lenders and Agent, on the other, is, and at all time shall remain
solely that of borrower and lender. Neither Lenders nor Agent shall under any
circumstances be construed to be partners or joint venturers of Borrower or any
of its Affiliates; nor shall Lenders nor Agent under any circumstances be deemed
to be in a relationship of confidence or trust or a fiduciary relationship with
Borrower or any of its Affiliates, or to owe any fiduciary duty to Borrower or
any of its Affiliates. Lenders and Agent do not undertake or assume any
responsibility or duty to Borrower or any of its Affiliates to select, review,
inspect, supervise, pass judgment upon or otherwise inform Borrower or any of
its Affiliates of any matter in connection with its or their Property, any
collateral held by Agent or any Lender or the operations of Borrower or any of
its Affiliates. Borrower and each of its Affiliates shall rely entirely on their
own judgment with respect to such matters, and any review, inspection,
supervision, exercise of judgment or supply of information undertaken or assumed
by any Lender or Agent in connection with such matters is solely for the
protection of Lenders and Agent and neither Borrower nor any of its Affiliate is
entitled to rely thereon.
11.16 Obligations Of Borrower. Borrower agrees that its liability hereunder
shall be the immediate, direct, and primary obligation of Borrower, and shall
not be contingent upon the Agent's or any Lender's exercise or enforcement of
any remedy it may have against Borrower or any other person, or against any
collateral or any security for the Obligations. Without limiting the generality
of the foregoing, the Obligations shall remain in full force and effect without
regard to and shall not be impaired or affected by, nor shall Borrower be
exonerated or discharged by, any of the following events:
11.16.1 Insolvency, bankruptcy, reorganization, arrangement,
adjustment, composition, assignment for the benefit of creditors, death,
liquidation, winding up or dissolution of Borrower or any guarantor of the
Obligations;
11.16.2 Any limitation, discharge, or cessation of the liability of
any guarantor for the Obligations due to any statute, regulation or rule of law,
or any invalidity or unenforceability in whole or in part of the documents
evidencing the Obligations or any guaranty of the Obligations;
11.16.3 Any merger, acquisition, consolidation or change in structure
of Borrower or any guarantor of the Obligations or any sale, lease, transfer or
other disposition of any or all of the assets, shares or interests in or of
Borrower or any guarantor of the Obligations;
11.16.4 Any assignment or other transfer, in whole or in part, of any
Lender's interests in and rights under this Agreement or any of the other Loan
Documents, including, without limitation, any assignment or other transfer, in
whole or in part, of Lenders' interests in and to any collateral;
11.16.5 Any claim, defense, counterclaim or setoff, other than that of
prior performance, that Borrower or any guarantor of the Obligations may have or
assert, including, but not limited to, any defense of incapacity or lack of
corporate or other authority to execute any documents relating to the
Obligations or any collateral;
11.16.6 Agent's or any Lender's amendment, modification, renewal,
extension, cancellation or surrender of any agreement, document or instrument
relating to this Agreement, the Obligations or any collateral, or any exchange,
release, or waiver of any collateral;
11.16.7 Agent's or any Lender's exercise or nonexercise of any power,
right or remedy with respect to the Obligations or any collateral, including,
but not limited to, the compromise, release, settlement or waiver with or of
Borrower or any other person;
11.16.8 Agent's or any Lender's vote, claim, distribution, election,
acceptance, action or inaction in any bankruptcy case related to the Obligations
or any collateral; and
11.16.9 Any impairment or invalidity of any collateral or any failure
to perfect any of Agent's liens thereon.
11.17 Waivers. Borrower hereby expressly waives (a) diligence, presentment,
demand for payment and protest affecting Borrower's liability under the Loan
Documents; (b) discharge due to any disability of Borrower; (c) any defenses of
any other Person to obligations under the Loan Documents not arising under the
express terms of the Loan Documents or from a material breach thereof by Agent
or any Lender which under applicable law has the effect of discharging Borrower
from the Obligations; (d) the benefit of any act or omission by Agent or any
Lender which directly or indirectly results in or aids the discharge of Borrower
from any of the Obligations by operation of law or otherwise; (e) all notices
whatsoever, including, without limitation, notice of acceptance of the incurring
of the Obligations; (f) any requirement that Agent and Lenders exhaust any
right, power or remedy or proceed against any other Person or any other security
for, or any guarantor of, or any other party liable for, any of the Obligations,
or any portion thereof; and (g) without limiting the foregoing, the benefit of
California Civil Code Sections 2809, 2810, 2819, 2839, 2845, 2848, 2849, 2850,
2899 and 1432. Borrower specifically agrees that it shall not be necessary or
required, and Borrower shall not be entitled to require, that Agent or any
Lender (i) file suit or proceed to assert or obtain a claim for personal
judgment against any other Person for all or any part of the Obligations; (ii)
make any effort at collection or enforcement of all or any part of the
Obligations from any other Person; (iii) foreclose against or seek to realize
upon any collateral or any other security now or hereafter existing for all or
any part of the Obligations; (iv) file suit or proceed to obtain or assert a
claim for personal judgment against Borrower or any guarantor or other party
liable for all or any part of the Obligations; (v) exercise or assert any other
right or remedy to which Agent or any Lender is or may be entitled in connection
with the Obligations or any security or guaranty relating thereto to assert; or
(vi) file any claim against assets of any other Person before or as a condition
of enforcing the liability of Borrower under this Agreement or the Notes.
11.18 Governing Law. Except as otherwise expressly provided in any of the
Loan Documents, in all respects, including all matters of construction, validity
and performance, this Agreement and the Obligations arising hereunder shall be
governed by, and construed and enforced in accordance with, the laws of the
State of California applicable to contracts made and performed in such state,
without regard to the principles thereof regarding conflict of laws, and any
applicable laws of the United States of America.
11.19 Judicial Reference.
(a) Other than (a) nonjudicial foreclosure and all matters in
connection therewith regarding security interests in real or personal property;
or (b) the appointment of a receiver, or the exercise of other provisional
remedies (any and all of which may be initiated pursuant to applicable law),
each controversy, dispute or claim between the parties arising out of or
relating to this Agreement or the other Loan Documents, which controversy,
dispute or claim is not settled in writing within thirty (30) days after the
"Claim Date" (defined as the date on which a party subject to this Agreement
gives written notice to all other parties that a controversy, dispute or claim
exists), will be settled by a reference proceeding in California in accordance
with the provisions of Section 638 et seq. of the California Code of Civil
Procedure, or their successor sections ("CCP"), which shall constitute the
exclusive remedy for the settlement of any controversy, dispute or claim
concerning this Agreement and the other Loan Documents, including whether such
controversy, dispute or claim is subject to the reference proceeding and except
as set forth above, the parties waive their rights to initiate any legal
proceedings against each other in any court or jurisdiction other than the
Superior Court in the County where the real property, if any, is located or San
Francisco County, if none (the "Court"). The referee shall be a retired Judge of
the Court selected by mutual agreement of the parties, and if they cannot so
agree within forty-five (45) days after the Claim Date, the referee shall be
promptly selected by the Presiding Judge of the Court (or his/her
representative). The referee shall be appointed to sit as a temporary judge,
with all of the powers for a temporary judge, as authorized by law, and upon
selection shall take and subscribe to the oath of office as provided for in Rule
244 of the California Rules of Court (or any subsequently enacted Rule). Each
party shall have one peremptory challenge pursuant to CCP ss. 170.6. The referee
shall (x) be requested to set the matter for hearing within sixty (60) days
after the date of selection of the referee and (y) try any and all issues of law
or fact and report a statement of decision upon them, if possible, within ninety
(90) days of the Claim Date. Any decision rendered by the referee will be final,
binding and conclusive and judgment shall be entered pursuant to CCP ss. 644 in
any court in the State of California having jurisdiction. Any party may apply
for a reference proceeding at any time after thirty (30) days following notice
to any other party of the nature of the controversy, dispute or claim, by filing
a petition for a hearing and/or trial. All discovery permitted by this Agreement
or any other Loan Document shall be completed no later than fifteen (15) days
before the first hearing date established by the referee. The referee may extend
such period in the event of a party's refusal to provide requested discovery for
any reason whatsoever, including, without limitation, legal objections raised to
such discovery or unavailability of a witness due to absence or illness. No
party shall be entitled to "priority" in conducting discovery. Depositions may
be taken by either party upon seven (7) days written notice, and request for
production or inspection of documents shall be responded to within ten (10) days
after service. All disputes relating to discovery which cannot be resolved by
the parties shall be submitted to the referee whose decision shall be final and
binding upon the parties. Pending appointment of the referee as provided herein,
the Court is empowered to issue temporary and/or provisional remedies, as
appropriate.
(b) Except as expressly set forth in this Agreement, the referee
shall determine the manner in which the reference proceeding is conducted
including the time and place of all hearings, the order of presentation of
evidence, and all other questions that arise with respect to the course of the
reference proceeding. All proceedings and hearings conducted before the referee,
except for trial, shall be conducted without a court reporter except that when
any party so requests, a court reporter will be used at any hearing conducted
before the referee. The party making such a request shall have the obligation to
arrange for and pay for the court reporter. The costs of the court reporter at
the trial shall be borne equally by the parties.
(c) The referee shall be required to determine all issues in
accordance with existing case law and the statutory laws of the State of
California. The rules of evidence applicable to proceedings at law in the State
of California will be applicable to the reference proceeding. The referee shall
be empowered to enter equitable as well as legal relief, to provide all
temporary and/or provisional remedies and to enter equitable orders that will be
binding upon the parties. The referee shall issue a single judgment at the close
of the reference proceeding that shall dispose of all of the claims of the
parties that are the subject of the reference. The parties hereto expressly
reserve the right to contest or appeal from the final judgment or any appealable
order or appealable judgment entered by the referee. The parties hereto
expressly reserve the right to findings of fact, conclusions of laws, a written
statement of decision, and the right to move for a new trial or a different
judgment, which new trial, if granted, is also to be a reference proceeding
under this provision.
(d) In the event that the enabling legislation which provides for
appointment of a referee is repealed (and no successor statute is enacted), any
dispute between the parties that would otherwise be determined by the reference
procedure herein described will be resolved and determined by arbitration. The
arbitration will be conducted by a retired judge of the Court, in accordance
with the California Arbitration Act, ss. 1280 through ss. 1294.2 of the CCP, as
amended from time to time. The limitations with respect to discovery as set
forth hereinabove shall apply to any such arbitration proceeding.
11.20 Waiver Of Jury Trial. WITHOUT LIMITING THE INTENTION OF THE PARTIES
THAT THE PROCEDURES SET FORTH IN SECTION 11.19 APPLY TO THE MAXIMUM EXTENT
CONTEMPLATED THEREIN, TO THE EXTENT PERMITTED BY APPLICABLE LAW, BORROWER, BY
EXECUTION HEREOF, AND THE AGENT AND EACH LENDER, BY ACCEPTANCE HEREOF,
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT THEY MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON THIS AGREEMENT, OR ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY AGREEMENT CONTEMPLATED
TO BE EXECUTED IN CONNECTION WITH THIS AGREEMENT, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY
PARTY WITH RESPECT HERETO. THIS PROVISION IS A MATERIAL INDUCEMENT TO THE AGENT
AND EACH LENDER TO ACCEPT THIS AGREEMENT AND THE NOTES EXECUTED AND DELIVERED BY
BORROWER PURSUANT TO THIS AGREEMENT.
CREDIT AGREEMENT SIGNATURE PAGE
WITNESS the due execution hereof by the respective duly authorized officers
of the undersigned as of the date first written above.
BORROWER: PLM EQUIPMENT GROWTH FUND VI
BY PLM FINANCIAL SERVICES, INC.,
ITS GENERAL PARTNER
By /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
President and Chief Executive Officer
Notice to be sent to:
▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Telephone: 415/▇▇▇-▇▇▇▇
Telecopy: 415/882-0860
With a copy to:
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telephone:
Telecopy:
AGENT: COMERICA BANK-CALIFORNIA
By /s/▇▇▇▇▇▇ ▇▇▇▇
----------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇
Vice President
Notice to be sent to:
Comerica Bank-California
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇, Vice President
Telephone: 415/▇▇▇-▇▇▇▇
Facsimile: 415/954-5020
LENDERS: COMERICA BANK-CALIFORNIA
By /s/▇▇▇▇▇▇ ▇▇▇▇
-----------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇
Vice President
Notice to be sent to:
Comerica Bank-California
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇, Vice President
Telephone: 415/▇▇▇-▇▇▇▇
Facsimile: 415/954-5020
PFF BANK & TRUST
By /s/▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------------------------
Printed Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President
Notice to be sent to:
PFF Bank & Trust
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇.
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇, Vice President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
SCHEDULE A
(COMMITMENTS)
Pro Rata
Lender Commitment Share
Comerica Bank-California $15,000,000 50%
PFF Bank & Trust $ 15,000,000 50%
SCHEDULE 4.5
EXECUTIVE OFFICES AND PRINCIPAL PLACES OF BUSINESS
For Borrower: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
SCHEDULE 4.6
LITIGATION
None.
SCHEDULE 4.7
MATERIAL CONTRACTS
The Limited Partnership Agreement
The Management Agreements
Existing Note Agreement
Warehousing Credit Agreement
SCHEDULE 4.8
CONSENT AND APPROVALS
None.
SCHEDULE 4.15
ENVIRONMENTAL DISCLOSURES
None.
CREDIT AGREEMENT
TABLE OF CONTENTS
Page
SECTION 1.DEFINITIONS.............................................................................................1
1.1 Defined Terms...................................................................................1
1.2 Accounting Terms...............................................................................20
1.3 Other Terms....................................................................................20
1.4 Schedules And Exhibits.........................................................................21
SECTION 2.AMOUNT AND TERMS OF CREDIT.............................................................................21
2.1 Commitment To Lend.............................................................................21
2.1.1 Term Facility.........................................................................21
(a) Facility Commitments.........................................................21
(b) Each Loan....................................................................22
(c) Fees.........................................................................22
2.1.2 Funding...............................................................................23
2.1.3 Utilization Of The Loans..............................................................23
2.2 Repayment And Prepayment; Reduction or Termination of Commitments..............................23
2.2.1 Repayment.............................................................................23
2.2.2 Voluntary Prepayment..................................................................23
2.2.3 Mandatory Prepayments.................................................................24
2.3 CALCULATION OF FEES AND INTEREST; POST-MATURITY INTEREST................................................25
2.4 MANNER OF PAYMENTS......................................................................................26
2.5 Payment On Non-Business Days...................................................................26
2.6 Application Of Payments........................................................................26
2.7 Procedure For The Borrowing Of Loans...........................................................26
2.7.1 Notice Of Borrowing...................................................................26
2.7.2 Unavailability Of LIBOR Loans.........................................................27
2.8 Conversion And Continuation Elections..........................................................27
2.8.1 Election..............................................................................27
2.8.2 Notice Of Conversion..................................................................27
2.8.3 Interest Period.......................................................................28
2.8.4 Unavailability Of LIBOR Loans.........................................................28
2.9 Discretion Of Lenders As To Manner Of Funding..................................................28
2.10 Distribution Of Payments.......................................................................28
2.11 Agent's Right To Assume Funds Available For Advances...........................................28
2.12 Agent's Right To Assume Payments Will Be Made By Borrower......................................29
2.13 Capital Requirements...........................................................................29
2.14 Taxes..........................................................................................29
2.14.1 No Deductions.........................................................................29
2.14.2 Miscellaneous Taxes...................................................................30
2.14.3 Indemnity.............................................................................30
2.14.4 Required Deductions...................................................................30
2.14.5 Evidence of Payment...................................................................30
2.14.6 Foreign Persons.......................................................................30
2.14.7 Income Taxes..........................................................................31
2.14.8 Reimbursement Of Costs................................................................32
2.14.9 Jurisdiction..........................................................................32
2.15 Illegality.....................................................................................32
2.15.1 LIBOR Loans...........................................................................32
2.15.2 Prepayment............................................................................32
2.15.3 Base Rate Borrowing...................................................................32
2.16 Increased Costs................................................................................32
2.17 Inability To Determine Rates...................................................................32
2.18 Prepayment Penalties...........................................................................33
2.18.1 Prepayment of LIBOR Loans.............................................................33
2.18.2 Prepayment of Cost of Funds Rate Loans................................................33
SECTION 3.CONDITIONS PRECEDENT TO THE MAKING OF LOANS............................................................33
3.1 Conditions to First Advance....................................................................33
3.1.1 Partnership, Company And Corporate Documents..........................................33
3.1.2 Notes.................................................................................34
3.1.3 Termination of Existing Note Agreement; Repayment of Existing Notes...................34
3.1.4 Opinion Of Company Counsel............................................................34
3.1.5 Subordination Agreement...............................................................34
3.1.6 Bringdown Certificate.................................................................34
3.1.7 Material Adverse Effect...............................................................35
3.1.8 Security Documents....................................................................35
3.1.9 Payment of Fees.......................................................................35
3.1.10 First Amendment to Warehousing Credit Agreement.......................................35
3.1.11 Second Amendment to Limited Partnership Agreement.....................................35
3.1.12 Due Diligence.........................................................................35
3.1.13 Other Documents.......................................................................35
3.2 Conditions to Each Advance.....................................................................35
3.2.1 Notice Of Borrowing; Certificates.....................................................35
3.2.2 No Event Of Default...................................................................36
3.2.3 Officer's Certificate.................................................................36
3.2.4 Insurance.............................................................................36
3.2.5 Other Instruments.....................................................................36
3.3 Conditions to Second Advance...................................................................36
3.3.1 Partnership, Company And Corporate Documents..........................................36
3.3.2 Opinion Of Company Counsel............................................................37
3.3.3 Opinion Of FAA Counsel................................................................37
3.3.4 Security Documents....................................................................37
3.3.5 Consent and Agreement.................................................................37
3.4 Further Conditions To All Loans................................................................38
3.4.1 General Partner; Manager..............................................................38
3.4.2 Removal Of General Partner............................................................38
3.5 Satisfaction of Closing Conditions.............................................................38
SECTION 4.BORROWER'S REPRESENTATIONS AND WARRANTIES..............................................................38
4.1 Existence And Power............................................................................38
4.2 Loan Documents And Notes Authorized; Binding Obligations.......................................39
4.3 No Conflict; Legal Compliance..................................................................39
4.4 Financial Condition............................................................................39
4.5 Executive Offices..............................................................................39
4.6 Litigation.....................................................................................39
4.7 Material Contracts.............................................................................40
4.8 Consents And Approvals.........................................................................40
4.9 Other Agreements...............................................................................40
4.10 Employment And Labor Agreements................................................................40
4.11 ERISA..........................................................................................40
4.12 Labor Matters..................................................................................41
4.13 Margin Regulations.............................................................................41
4.14 Taxes..........................................................................................41
4.15 ENVIRONMENTAL QUALITY...................................................................................42
4.16 TRADEMARKS, PATENTS, COPYRIGHTS, FRANCHISES AND LICENSES................................................42
4.17 Full Disclosure................................................................................42
4.18 Other Regulations..............................................................................42
4.19 Solvency.......................................................................................43
4.20 Survival Of Representations And Warranties.....................................................43
SECTION 5.BORROWER'S AFFIRMATIVE COVENANTS.......................................................................43
5.1 Records And Reports............................................................................43
5.1.1 Quarterly Statements..................................................................43
5.1.2 Annual Statements.....................................................................43
5.1.3 Equipment Schedule....................................................................44
5.1.4 Asset Coverage Ratio Compliance Certificate...........................................44
5.1.5 Compliance Certificate................................................................44
5.1.6 Reports...............................................................................44
5.1.7 Insurance Reports.....................................................................44
5.1.8 Certificate Of Responsible Officer....................................................44
5.1.9 Employee Benefit Plans................................................................45
5.1.10 ERISA Notices.........................................................................45
5.1.11 Pension Plans.........................................................................45
5.1.12 SEC Reports...........................................................................45
5.1.13 Tax Returns...........................................................................45
5.1.14 Additional Information................................................................45
5.2 Appraisals.....................................................................................46
5.3 Existence; Compliance With Law.................................................................46
5.4 Insurance......................................................................................46
5.5 Taxes And Other Liabilities....................................................................47
5.6 Inspection Rights; Assistance..................................................................47
5.7 Maintenance Of Facilities; Modifications; Performance of Leases................................47
5.7.1 Maintenance Of Facilities.............................................................47
5.7.2 Certain Modifications To The Equipment................................................47
5.7.3 Performance of Leases.................................................................47
5.8 Special Provisions for Aircraft................................................................47
5.8.1 Maintenance and Servicing of Aircraft.................................................47
5.8.2 Public Liability and Property Damage Liability Insurance for Aircraft.................48
5.8.3 Insurance Against Loss or Damage to the Aircraft......................................48
5.9 Supplemental Disclosure........................................................................48
5.10 Further Assurances.............................................................................48
5.11 Environmental Laws.............................................................................49
5.12 Operating Relationship.........................................................................49
5.13 Lockbox Agreement..............................................................................49
SECTION 6.BORROWER'S NEGATIVE COVENANTS..........................................................................50
6.1 Liens; Negative Pledges; And Encumbrances......................................................50
6.3 Limitations On Indebtedness....................................................................51
6.4 Use Of Proceeds................................................................................52
6.6 Restriction On Fundamental Changes.............................................................52
6.7 Transactions With Affiliates...................................................................52
6.9 No Investment..................................................................................52
6.10 Maintenance Of Business........................................................................53
6.12 No Subsidiaries................................................................................53
6.13 No Distributions; Management Fees..............................................................53
6.14 Events Of Default..............................................................................53
6.15 ERISA..........................................................................................53
6.16 No Use Of Any Lender's Name....................................................................54
6.17 Certain Accounting Changes.....................................................................54
6.18 Amendment Of Limited Partnership Agreement.....................................................54
SECTION ▇.▇▇▇▇▇▇▇▇▇ COVENANTS OF BORROWER........................................................................54
7.1 Minimum Operating Cash Flow Coverage Ratio.....................................................54
7.2 Minimum Total Cash Flow Coverage Ratio.........................................................54
7.3 Maximum Leverage Ratio.........................................................................54
7.4 Minimum Asset Coverage Ratio...................................................................54
SECTION ▇.▇▇▇▇▇▇ OF DEFAULT AND REMEDIES.........................................................................55
8.1 Events Of Default..............................................................................55
8.1.1 Failure To Make Payments..............................................................55
8.1.2 Other Agreements......................................................................55
8.1.3 Breach Of Covenants...................................................................55
8.1.4 Breach Of Representations Or Warranties...............................................55
8.1.5 Failure To Cure.......................................................................55
8.1.6 Insolvency............................................................................56
8.1.7 Bankruptcy Proceedings................................................................56
8.1.8 Material Adverse Effect...............................................................56
8.1.9 Judgments, Writs And Attachments......................................................56
8.1.10 Legal Obligations.....................................................................56
8.1.11 Change Of General Partner; Equipment Manager..........................................56
8.1.12 Change of Control.....................................................................57
8.1.13 Criminal Proceedings..................................................................57
8.1.14 Action By Governmental Authority......................................................57
8.1.15 Governmental Decrees..................................................................57
8.1.16 Collateral............................................................................57
8.1.17 Subordination Agreement...............................................................58
8.2 Waiver Of Default..............................................................................58
8.3 Remedies.......................................................................................58
8.4 Set-Off........................................................................................58
8.5 Rights And Remedies Cumulative.................................................................59
SECTION 9.AGENT..................................................................................................59
9.1 Appointment....................................................................................59
9.2 Delegation Of Duties...........................................................................60
9.3 Exculpatory Provisions.........................................................................60
9.4 Reliance By Agent..............................................................................60
9.5 Notice Of Default..............................................................................60
9.6 Non-Reliance On Agent And Other Lenders........................................................61
9.7 Indemnification................................................................................61
9.8 Agent In Its Individual Capacity...............................................................62
9.9 Resignation And Appointment Of Successor Agent.................................................62
SECTION 10.EXPENSES AND INDEMNITIES..............................................................................62
10.1 Expenses.......................................................................................62
10.2 Indemnification................................................................................63
10.2.1 General Indemnity.....................................................................63
10.2.2 Environmental Indemnity...............................................................63
10.2.3 Survival; Defense.....................................................................64
SECTION 11.MISCELLANEOUS.........................................................................................64
11.1 Survival.......................................................................................64
11.2 No Waiver By Agent Or Lenders..................................................................64
11.3 Notices........................................................................................64
11.4 Headings.......................................................................................65
11.5 Severability...................................................................................65
11.6 Entire Agreement; Construction; Amendments And Waivers.........................................65
11.7 Reliance By Lenders............................................................................65
11.8 Marshaling; Payments Set Aside.................................................................66
11.9 No Set-Offs By Borrower........................................................................66
11.10 Binding Effect, Assignment.....................................................................66
11.11 Counterparts...................................................................................67
11.12 Equitable Relief...............................................................................67
11.13 Written Notice Of Claims; Claims Bar...........................................................67
11.14 Waiver Of Punitive Damages.....................................................................68
11.15 Relationship Of Parties........................................................................68
11.16 Obligations Of Borrower........................................................................68
11.17 Waivers........................................................................................69
11.18 Governing Law..................................................................................70
11.19 Judicial Reference.............................................................................70
11.20 Waiver Of Jury Trial...........................................................................71
Index of Exhibits
Exhibit A.........Form of Note
Exhibit B.........Form of Equipment Schedule
Exhibit C.........Form of Asset Coverage Ratio Compliance Certificate
Exhibit D.........Form of Opinion of Company Counsel
Exhibit E.........Form of Subordination Agreement
Exhibit F.........Form of Compliance Certificate
Exhibit G.........Form of Notice of Borrowing
Exhibit H.........Form of Notice of Conversion/Continuation
Exhibit I.........Form of Assignment and Acceptance
Exhibit J.........Form of Security Agreement
Exhibit K.........Form of First Amendment to Warehousing Credit Agreement
INDEX OF SCHEDULES
Schedule A Commitments
Schedule 1.1 Amendments to Schedule A
Schedule 4.5 Executive Offices and Principal Places of Business
Schedule 4.6 Litigation
Schedule 4.7 Material Contracts
Schedule 4.8 Consent and Approvals
Schedule 4.15 Environmental Disclosures