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EXHIBIT 4.3
COUNTY OF LEXINGTON
LENDER
AND
AIR SOUTH, INC.
BORROWER
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LOAN AGREEMENT
DATED AS OF JULY 15, 1994
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$12,000,000 MAXIMUM PRINCIPAL AMOUNT SECTION 108 LOAN
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TABLE OF CONTENTS
INTRODUCTION
ARTICLE I
DEFINITIONS
SECTION 1. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2. Term Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 3. Terms of Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 4. Payments by Borrower and Security for Obligations of Borrower. . . . . . . . . . 5
SECTION 5. Establishment of Funds and Accounts and Reservation of Lending Capacity for
Registered Creditors . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 6. Obligations Absolute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 7. Conditions Precedent to Disbursement of Loan . . . . . . . . . . . . . . . . . . 11
SECTION 8. Representation and Warranties of Borrower . . . . . . . . . . . . . . . . . . . 14
SECTION 9. Regulatory Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 10. Maintenance of Corporate Existence; Continuation of Air South Operations
in Midlands Area . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 11. Managerial Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 12. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 13. Damage, Destruction and Condemnation . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 14. Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 15. Unencumbered Title and First Priority Lien . . . . . . . . . . . . . . . . . . . 23
SECTION 16. Additional Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 17. Record Keeping and Reporting Requirements . . . . . . . . . . . . . . . . . . . 33
SECTION 18. Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 19. Reliance upon Advisors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 20. Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 21. Remedies of the County . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 22. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 23. Release and Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 24. Continuing Obligation; No Assignment by
Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 25. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 26. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
EXHIBIT A DEFINITIONS
EXHIBIT B FORM OF NOTE
EXHIBIT C OPINION - COUNSEL FOR BORROWER
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EXHIBIT D REQUISITION
EXHIBIT E INDEBTEDNESS OF THE BORROWER
EXHIBIT F PERMITTED ENCUMBRANCES
EXHIBIT G LOCATIONS OF BORROWER'S ASSETS
EXHIBIT H INDEBTEDNESS AND LIENS PERMITTED OF BORROWER
EXHIBIT I GUARANTEES BY THE BORROWER
EXHIBIT J CONTROLLING OWNERS OF BORROWER
EXHIBIT K EXECUTIVE COMPENSATION PLAN
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THIS LOAN AGREEMENT dated as of July 15, 1994, (the "Agreement") by
and between the County of Lexington, a body corporate and politic and a
political subdivision of the State of South Carolina, (the "County") and Air
South, Inc., a corporation organized and existing under the laws of the State
of Illinois (the "Borrower").
W I T N E S S E T H:
WHEREAS, the State of South Carolina (the "State") and the Borrower
entered into that certain Memorandum of Understanding dated March 25, 1994 (the
"State Memorandum") and the County, the Borrower, the City of Columbia, South
Carolina (the "City") and Richland County, South Carolina ("Richland County")
entered into that certain Memorandum of Understanding dated March 15, 1994 (the
"Local Memorandum"), pursuant to which memoranda the Borrower agreed, inter
alia, to establish a low fare, high frequency, jet aircraft airline with its
principal operational base (including all pilots and flight attendants) at the
Columbia Metropolitan Airport and its corporate headquarters and primary
reservation center in the City (the "Air South Operations") in exchange for
certain grants to be made by the County, the City and Richland County and a
certain loan to be made by Lexington County, all as described more particularly
therein, and
WHEREAS, in accordance with the provisions of the State Memorandum,
the County has agreed that, upon receipt by the County of funding under the
County's application to the Department of Housing and Urban Development ("HUD")
for a loan guarantee under Section 108 of the Housing and Community Development
Act of 1974, as amended, (the "Federal Act"), as administered by HUD pursuant
to the Federal Act and by the County pursuant to Section 6-1-30, Code of Laws
of South Carolina, 1976, as amended, (the "State Act") (the loan guarantee
program so authorized and administered hereinafter referred to as the "Section
108 Program") and subject to the terms and conditions set forth herein, the
County shall provide financing assistance to the Borrower under the terms and
subject to the conditions of this Agreement, applicable laws, regulations and
all other federal and State requirements now or hereafter in effect, including
without limitation the Federal Act and the regulations promulgated thereunder
(the "Federal Regulations") and that certain Ordinance enacted by the County
Council of the County on July 11, 1994; and
WHEREAS, the State, acting through the South Carolina Jobs-Economic
Development Authority ("JEDA"), the County and the Secretary of Housing and
Urban Development (the "Secretary") intend to enter into that certain CONTRACT
FOR LOAN GUARANTEE ASSISTANCE UNDER SECTION 108 OF THE HOUSING AND COMMUNITY
DEVELOPMENT ACT OF 1974, AS AMENDED, 42 U.S.C. SECTION 5308 (the "HUD
Contract"), pursuant to which the County will obtain funds for the purpose of
providing assistance to the Borrower under the Section 108 Program; and
WHEREAS, under the Section 108 Program, HUD provides a guarantee (the
"HUD Guarantee") with respect to non-recourse notes issued by units of local
government such as the County, enabling them to sell their HUD-Guaranteed Notes
to lending institutions or to the
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public through underwritten public offerings, and the units of local government
may then loan or grant the proceeds obtained from the sale of the
HUD-Guaranteed Notes to business enterprises that meet job creation and other
requirements under the Section 108 Program; and
WHEREAS, in certain cases states may participate in the Section 108
Program, in order to: (1) assist the units of local government with their
applications to the Secretary for the HUD Guarantees; (2) help them carry out
certain of their responsibilities with respect to compliance with the Section
108 Program regulations; and (3) disburse, service and collect the payments
from the business enterprises, and under the Section 108 Program as
administered by the State, each loan from a unit of local government to a
business enterprise is to be evidenced by a promissory note or notes from such
business in favor of the unit of local government and secured by such liens or
encumbrances on property of the business enterprise as may be required by the
State, and the proceeds of said note and of any collateral securing same are to
be used to service the HUD-Guaranteed Notes, with such proceeds being paid over
to a fiscal agent (the "Fiscal Agent") acting for the holders of the
HUD-Guaranteed Notes under and pursuant to the terms of a certain Fiscal Agency
Agreement to be entered into by the County and the Fiscal Agent or to reimburse
the County or the State, as the case may be, for such payments; and
WHEREAS, as security for any HUD-Guaranteed Notes issued by the
County, federal law requires that the County and the State pledge to the
Secretary their respective entitlements to certain Community Development Block
Grant ("CDBG") monies (the "CDBG Pledge") to provide funds with which to
reimburse the Secretary if the HUD Guarantee is paid on account of a default by
the County under any HUD-Guaranteed Note; and
WHEREAS, under the terms of the HUD Contract, HUD will agree to
provide a HUD-Guarantee of one or more HUD-Guaranteed Notes issued by the
County (individually, a HUD-Guaranteed Note and, collectively, if more than
one, the "Air South HUD-Guaranteed Note") with the proceeds of which the County
will fund pursuant hereto a $12,000,000.00 maximum principal amount loan to the
Borrower for purposes of paying the costs of certain capital expenditures,
providing working capital and paying certain other costs in connection with the
establishment and operation of the Air South Operations, all as specified more
fully herein (the "Loan"), and in consideration for such HUD Guarantee the
County and the State must give their respective CDBG Pledges in respect to the
Air South HUD-Guaranteed Note (collectively, the "Air South CDBG Pledge"); and
WHEREAS, as a condition to and as consideration for its assistance in
obtaining the HUD Guarantee of the Air South HUD-Guaranteed Note, for the Air
South CDBG Pledge and for making the Loan to the Borrower, the County requires
the Borrower to make certain representations and warranties and to enter into
certain covenants with respect to job creation and other federal requirements
under the Section 108 Program and with respect to the other terms and
conditions upon which the Loan will be made, all as set forth herein,
NOT THEREFORE, in consideration of the premises and other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the parties aforesaid
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agree to the following terms and conditions:
Section 1. Defined Terms. Capitalized terms used herein, not
otherwise defined herein, shall have the meanings ascribed to them in EXHIBIT A
hereto.
Section 2. Term Loan. The loan shall be in the maximum principal
amount of TWELVE MILLION DOLLARS ($12,000,000) and, subject to the terms and
conditions hereof, including without limitation the conditions specified in
Section 5 and 7 hereof, the Servicing Agent shall advance funds under the Loan
on behalf of the County, and shall disburse such funds to the Borrower, from
time to time for the purposes specified in this Section 2; provided, however,
that the County's obligation to advance and disburse funds hereunder shall
expire at close of business on the Cutoff Date. The proceeds of the Loan shall
be used by the Borrower (i) to pay interest on the Note during the period
commencing September 1, 1994 and ending February 1, 1996; (ii) in an amount not
to exceed $1,500,000, unless otherwise approved in writing by JEDA in its
capacity as Assignee, to pay the cost of constructing and acquiring certain
land, a building or buildings and other improvements thereon for use as its
Principal Operational Base at the Columbia Metropolitan Airport; (iii) in an
amount not to exceed $1,000,000 unless otherwise approved in writing by JEDA in
its capacity as Assignee, to pay for the cost of acquiring certain ground
equipment; (iv) to pay the cost of certain other capital expenditures of the
Borrower as approved from time to time by JEDA in its capacity as Assignee; (v)
in an amount not to exceed $1,000,000, unless otherwise approved in writing by
JEDA in its capacity as Assignee, to fund the Emergency Cash Reserve Account
established pursuant to Section 5(b) hereof, which account shall be drawn upon
to pay the cost of certain unanticipated costs as set forth in Section 5(b)
hereof; (vi) to fund anticipated Cash Flow Shortfalls, including without
limitation payments not to exceed $2,000,000, unless otherwise approved in
writing by JEDA in its capacity as Assignee, to or for the benefit of
Registered Creditors as provided in Section 5(c) hereof; (vii) to pay certain
expenses under the HUD Documents and the Loan Documents; and (viii) for such
other purposes as may be approved in writing by JEDA in its capacity as
Assignee; provided, however that no Loan proceeds shall be used for the items
permitted to be paid from the grant provided by the City under that certain
Grant Agreement dated as of July 15, 1994 and provided further that, except for
amounts disbursed as provided in Section 5(c) hereof to or for the benefit of
Registered Creditors or out of the Emergency Cash Reserve Account, the
aggregate amounts disbursed from time to time hereunder shall be limited as to
dates and amounts to Scheduled Draws as provided in Section 7(d) hereof, unless
otherwise approved in writing by JEDA in its capacity as Assignee.
The Borrower shall not be entitled to disbursements hereunder of more
than $10,000,000 in the aggregate (amounts reserved for Registered Creditors
pursuant to Section 5(c) hereof being considered to be disbursed hereunder for
such purpose) until the Borrower has provided evidence satisfactory to the
Servicing Agent that it has used its best efforts to obtain total Equity
Contributions aggregating not less $4,000,000 in a manner which allows the
Controlling Owners to maintain at least fifty-one percent (51%) of the voting
stock in the Borrower, which shall be deemed to include stock which is then
issued and outstanding and registered in the names of such Controlling Owners
or which is beneficially owned by such Controlling Owners through stock
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option agreements or otherwise. The good faith effort of the Borrower shall be
evidenced in such manner as may be approved by the Assignee, which approval
shall not be unreasonably withheld. The Borrower hereby represents that its
current capital structure does not preclude raising such additional Equity
Contributions as described in this paragraph. Any excess of Equity
Contributions over $2,000,000 shall reduce, dollar for dollar, the maximum
principal amount of the Loan to as low as $10,000,000.
Pursuant to the Assignment and Servicing Agreement, the County will
contemporaneously herewith assign its rights with respect to the Loan to JEDA
in its capacity as Assignee in consideration for the Air South CDBG Pledge by
the JEDA acting on behalf of the State. The County also hereby appoints JEDA
as Servicing Agent with respect to the Loan, with responsibility for, inter
alia, making advances under the Loan and disbursements of the proceeds of the
Loan to the Borrower in accordance with the terms hereof and of the Assignment
and Servicing Agreement. The Servicing Agent will disburse amounts to the
Borrower at its offices by check or such other method of payment as may be
acceptable to the Servicing Agent and the Borrower.
Section 3. Terms of Note. The Loan shall be evidenced by a
promissory note substantially in the form attached as EXHIBIT B (the "note),
the terms of which are herein incorporated by reference as if fully set forth
in this Agreement. The Note shall bear interest at the rates described
hereinbelow on the principal amount outstanding thereunder from time to time
from the date of the initial advance thereunder until payment in full.
Advances shall be deemed to have been made under the Note on the dates and in
amounts corresponding to advances under the Air South HUD-Guaranteed Note
regardless of whether disbursed to the Borrower on such date.
Interest shall be payable on the first day of each month commencing
February 1, 1996 through the date of maturity on August 1, 2014 or earlier
prepayment. The Note shall initially bear interest at the rate per annum equal
to four percent (4%) through July 31, 1997. Effective August 1, 1997 and as of
any Public Offering Date after August 1, 1997, the interest rate on the Note
shall be adjusted to the rate or rates per annum sufficient to enable JEDA and
the County to recoup interest and other reasonable costs associated with the
Air South HUD-Guaranteed Note. Principal on the Note shall be payable on the
first day of each month commencing September 1, 1997, in equal installments
sufficient to pay the then outstanding principal balance of the Note over the
remaining term of the Note. There shall be due and owing by the Borrower a
late charge of five percent (5%) of any monthly payment on any such payment
which is fifteen (15) days or more past due. Upon an Event of Default
hereunder followed by a declaration of acceleration of amounts due with respect
to the Note, the interest rate on the Note shall be increased to the Default
Rate. The note shall be subject to the other terms and conditions as provided
in the Note.
The Borrower may prepay the Note in whole or in part at a price equal
to the principal amount thereof to be prepaid together with interest thereon to
the date of prepayment at any time. The Note shall be subject to mandatory
prepayment of one-half of the then outstanding
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principal balance thereof to the extent that funds are available from the net
proceeds of any public offering of stock by the Borrower within ten (10) days
following receipt of such proceeds. The Note is also subject to mandatory
prepayment on the Cutoff Date from amounts then remaining on deposit in the
Emergency Cash Reserve Account or any remaining other funds escrowed herewith,
including without limitation funds escrowed for the benefit of any Registered
Creditor. To the extent not reflected in the interest rate applicable to the
Note at the time of any prepayment, any such prepayment shall be accompanied by
payment of amounts sufficient to enable the county and JEDA to recoup interest
and other reasonable costs associated with the Air South HUD-Guaranteed Note.
The interest rate payable with respect to the Note shall also be
subject to modification at the end of five years from the Start-up Date to the
extend that JEDA, in its capacity as Assignee, in its sole discretion
determines that the Borrower's net operating income has progressed to a level
which no longer justifies below-market financing or continuation of public
subsidy. The Servicing Agent shall, in its sole discretion, determine the new
interest rate, if any, applicable to the Note, which shall be that rate per
annum determined by the Servicing Agent as appropriate based upon the
creditworthiness of the Borrower at that time, which rate shall not exceed the
then prevailing commercial loan rates for similar credits. JEDA shall instruct
the Servicing Agent to calculate, and notify the Borrower of, such rate
modification within one year following the fifth anniversary of the Start-up
Date, and such modified rate shall be effective for the next monthly
installment which falls due not less than fifteen (15) days following the date
of Servicing Agent sends notice thereof to the Borrower.
All calculations of interest hereunder shall be made by the Servicing
Agent based upon the amount of principal outstanding under the Note from time
to time on a daily basis and on the basis of a 360-day year and actual days
elapsed. The Servicing Agent shall calculate any interest rate adjustment
within fifteen (15) days following the later of the effective date thereof or
receipt by the Servicing Agent of information from the Fiscal Agent upon which
to base such calculation, and the Servicing Agent shall also calculate or
recalculate the schedule of principal installments within fifteen (15) days
following any of the Cutoff Date or any prepayment. Absent patent error, the
Servicing Agent's calculations shall be conclusive for all purposes of the
Note, this Agreement and any other Loan Document, and the Borrower shall,
within ten (10) days following written request by the Servicing Agent executive
and deliver to the County a new note or notes reflecting such modification,
calculation or recalculation.
Section 4. Payments by Borrower and Security for Obligations of
Borrower. (a) the Borrower hereby agrees to pay to the Servicing Agent for
the account of the County:
(i) on each date on which a principal payment is due
under the Note, the amount of principal then due and owing, together with any
interest payable under the Note and any fees and expenses then due and owing to
the County or the Servicing Agent hereunder or under any other Loan Document;
(ii) on each date on which interest is due under the Note,
the amount
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of interest then due and owing, together with any fees and expenses then due
and owing to the County or the Servicing Agent hereunder or under any other
Loan Document;
(iii) on the date disbursement under the Loan, a sum equal
to such amount as shall be necessary to cover the costs of transferring funds,
including without limitation any charges of the Fiscal Agent in connection with
such disbursement, and such amounts as are then required to be paid by the
County under the HUD Documents, including without limitation the cost of
establishing accounts thereunder and marketing the Air South HUD-Guaranteed
Note on any Public Offering Date;
(iv) on demand, any amount that is paid by or on behalf of
the County under or in connection with this Agreement including without
limitation amounts payable pursuant to Sections 21 and 22 of this Agreement;
(v) on the first Business Day of each month, the
servicing fee due to the Servicing Agent pursuant to the Assignment and
Servicing Agreement;
(vi) on demand, any and all reasonable charges and
expenses incurred by or on behalf of the County or the Servicing Agent in
enforcing any rights under this Agreement following the Occurrence of a
Default; and
(vii) on demand, interest on any and all amounts remaining
unpaid by the Borrower under paragraphs (iii) through (vi) of this Section 4 at
any time from the date such amounts become due and payable (regardless of any
grace period permitted under Section 20 hereof) until payment in full, at a
rate per annum equal to the interest rate then applicable to the Note; and
(b) All payments made by the Borrower under this Agreement shall
be made free and clear of, and without reduction for or on account of, any
present or future taxes, levies, imposts, duties, charges, fees, deductions,
withholdings, restrictions or conditions of any nature whatsoever now or
hereafter imposed, levied, collected, withheld or assessed by any country (or by
any political subdivision or taxing authority thereof or therein). All payments
by the Borrower to the County pursuant to any provision of this Agreement shall
be made in lawful currency of the United States and in immediately available
funds to the Servicing Agent for the benefit of the County at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Executive Director, or
at such other place as the Servicing Agent may designate by written notice to
the Borrower.
All amounts received upon payment of the Note, whether upon the due
date thereof, prepayment or acceleration, shall be applied by the Servicing
Agent first, to pay any reasonable outstanding fees and expenses of the County,
JEDA or the Servicing Agent; second, to the interest on the Note; and the
balance to the principal of the Note.
(c) Upon any payment by or on behalf of the County pursuant to
subparagraph
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(b)(iv) of this Section 4, the County shall be subrogated to, and otherwise
acquire and retain the rights of, the persons to and on behalf-of whom such
payment is made, and the Borrower will take such action as the County may
request to assure and confirm to the County such subrogation and such rights,
including the rights, if any, of the Persons to and on behalf of whom such
payment is made in any properties or assets of any person under or in respect
of this Agreement, the Air South HUD-Guaranteed Notes, or any other present or
future agreement or instrument which relates to any of the foregoing, each as
in effect immediately prior to such payment.
(d) As security for its obligations under the Note and
this Agreement, and for any other loans, advances, credits, indebtedness,
obligations and liabilities of any kind of Borrower to the County, now or
hereafter existing, whether absolute or contingent, due or to become due,
direct or indirect, liquidated or unliquidated and however incurred or arising,
the Borrower shall contemporaneously herewith pursuant to the terms and
conditions of the Security Agreement grant to the County a security interest in
all assets of the Borrower, as more particularly described in the Security
Agreement (hereinafter the "Collateral"), including but not limited to the
assets defined in paragraph 2 of said Security Agreement.
(e) The Borrower shall deliver to the Servicing Agent for
the benefit of the County from time to time such additional mortgages, fee or
leasehold; assignments of leases and rents; security agreements; financing
statements; certificates of title and other insurance; and other documents,
instruments and other Security Documents as may be necessary to effect and/or
perfect the pledge of all assets of the Borrower to the County, which
instruments and agreements shall be satisfactory to the Servicing Agent and its
counsel as to form and content and which shall be accompanied by an Opinion of
Counsel for the Borrower from an attorney or firm of attorneys reasonably
acceptable to the Servicing Agent regarding such matters of due authorization,
execution and delivery, validity and enforceability, creation, priority and
perfection of security interests and such other matters as the Servicing Agent
shall reasonably require. Such requirements for delivery of additional
instruments shall include without limitation, delivery prior to entering into
any construction contract with respect to facilities housing the Borrower's
Principal Operational Base, of a mortgage, assignment of construction contract
and, if applicable, an assignment of ground lease respecting such facilities.
The Borrower shall provide the Servicing Agent with copies of all proposed
aircraft leases, ground leases, any purchase contracts or leases of real
property not less than fifteen (15) days prior to execution and delivery
thereof by the Borrower and shall provide the Servicing Agent with a title
search respecting each aircraft prior to purchasing such aircraft or entering
into a lease with respect thereto.
(f) The security interest granted pursuant to the Security
Agreement or any other Loan Document shall constitute a first lien on the
Collateral, subject only to liens and other encumbrances permitted under
Section 16(h) of this Agreement.
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Section 5. Establishment of Funds and Accounts and Reservation of
Lending Capacity for Registered Creditors.
(a) There is hereby authorized and directed to be established
an account to be designated "Air South, Inc./Lexington County, South Carolina
Project Account" (the "Project Account"), which shall be established in the
joint names of the Borrower and the Servicing Agent, as agent for the County.
Except as set forth in paragraphs (b) and (c) of this Section 5, all
disbursements to the Borrower under the Note, net of the costs associated
therewith as provided in Section 4(a)(iii) hereof, shall be deposited in the
Project Account and held until needed by the Borrower for the purposes for
which drawn. All funds held in the Project Account shall be subject to
withdrawal by the Borrower as long as no Event of Default exists hereunder, in
which case, the Servicing Agent shall have the right to withdraw all funds from
the Project Account for application as provided in Section 4(b) hereof.
(b) There is hereby authorized and directed to be established
an account to be designated "Air South, Inc./Lexington County, South Carolina
Emergency Cash Reserve Account" (the "Emergency Cash Reserve Account"), which
shall be established in the name of the Servicing Agent, as agent for the
County. An amount equal to $1,000,000 from the initial advance under the Note
shall be deposited by the Servicing Agent into the Emergency Cash Reserve
Account automatically without requisition, notice or any further instruction.
As long as no event of Default exists hereunder, the Servicing
Agent may disburse the moneys therein to or to the order of the Borrower upon
written request of the Borrower, which request shall (i) state that such funds
are required on an emergency basis to pay significant and unforeseeable costs;
(ii) specify the nature of such costs, the reasons why such costs were
unforeseeable and the reasons funds are immediately required; (ii) certify that
there are not available to the Borrower in timely fashion sufficient
unrestricted operating revenues, equity funds, commercial loan funds, grant
funds or any other available funds with which to pay such costs without
reducing the Ending Cash Balance below the Operating Reserve Amount; and (iii)
there does not exist any Event of Default hereunder, nor any event which, with
notice or lapse of time or both would constitute an Event of Default hereunder.
Upon an Event of Default hereunder, the Servicing Agent shall have the right to
withdraw all funds from the Emergency Cash Reserve Account for application as
provided in Section 4(b) hereof.
Insurance proceeds received in respect of any emergency which
occasioned a disbursement from the Emergency Cash Reserve Account, up to an
amount sufficient to bring the balance in such account up to $500,000 plus any
lost earnings on amounts withdrawn for the period between the date of
disbursement and prior to reimbursement as calculated by the Servicing Agent
based upon an assumed yield equal to the yield in effect for such account on
the date of disbursement, shall be deposited by the Borrower to such Account
immediately upon receipt thereof. The Borrower may requisition additional
funds under the Note sufficient to replenish such account upon provision to the
Servicing Agent of evidence satisfactory to the Servicing Agent that insurance
proceeds are not anticipated to be sufficient for such purposes and that there
are not available to the Borrower in timely fashion sufficient unrestricted
operating revenues, equity funds, commercial loan funds, grant funds or any
other available funds with which to effect such replenishment without reducing
the Ending Cash Balance below the Operating Reserve Amount.
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The Borrower may requisition amounts on deposit in the
Emergency Cash Reserve Account as a Scheduled Draw pursuant to Section 7(d)
hereof upon a showing that, and to the extent that, there are not sufficient
Loan funds remaining unadvanced to fund fully a Scheduled Draw. Any funds
remaining in the Emergency Cash Reserve Account on the Cutoff Date shall be
applied by the Servicing Agent to prepayment of the Note.
(c) The Servicing Agent is hereby authorized, in its sole
discretion, to enter into agreements with one or more Registered Creditors upon
reasonable notice from the Borrower to the Servicing Agent, delivery to the
Servicing Agent of agreements and instruments sufficient, in the sole
discretion of the Servicing Agent, to delineate the respective rights of the
Servicing Agent, the County, the Borrower and any Registered Creditor and
provision of indemnity and rights of subrogation adequate, in the sole
discretion of the Servicing Agent, to protect the interests of the County and
the Servicing Agent. The Servicing Agent and the Borrower may agree with such
Registered Creditors to reserve up to $2,000,000 in the aggregate under the
Note for payment solely to or for the benefit of such Registered Creditors. In
lieu of agreements directly with any such Registered Creditor, the Servicing
Agent and the Borrower may enter into an agreement with one or more financial
institutions (who shall also be deemed to be a Registered Creditor), which in
turn guarantee payment to another Registered Creditor for the account of the
Borrower through insurance of a letter of credit, a line of credit or similar
arrangement acceptable to the servicing Agent.
As long as any Registered Creditor Agreement remains in
effect, but in no event beyond the Cutoff Date, the Servicing Agent may
disburse up to $2,000,000 under the Note for payment directly to a Registered
Creditor for the purposes, and in accordance with the terms and conditions of,
the agreement with such Registered Creditor, regardless of whether there shall
then exist an Event of Default hereunder. Upon any disbursement of funds under
the Note pursuant to this Section 5(c), there shall be no further disbursements
by the Servicing Agent of any kind under the Note or any account established
hereunder, except for disbursements to other Registered Creditors from amounts
remaining reserved therefor, until there is delivered to the Servicing Agent
evidence satisfactory to the Servicing Agent that the Borrower has brought
current its accounts with such Registered Creditor and that it is not in
default in respect of any other Indebtedness. Upon an Event of Default
hereunder, the Servicing Agent shall have the right to terminate any agreement
with any Registered Creditor upon ten (10) days prior written notice to such
Registered Creditor and to decline to fund any supplies or services provided to
Borrower more than 24 hours after delivering to such Registered Creditor notice
of termination.
The Borrower may requisition amounts reserved for Registered
Creditors in accordance with the provisions of Section 7(c) to the extent that
termination of any Registered Creditor Agreement has removed all restrictions
on such funds or to the extend agreed to by the Servicing Agent for deposit
into an escrow account established for the benefit of one or more Registered
Creditors. Any such escrow arrangement shall be subject to an escrow agreement
acceptable to the Servicing Agent as to form and substance. Any funds
remaining in such escrow account on the Cutoff Date shall be applied by the
Servicing Agent to the prepayment of the Note.
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(d) All accounts established hereunder shall be separate,
interest-bearing custodial accounts with a financial institution whose deposits
or accounts are federally insured and who shall be acceptable to the Servicing
Agent in its sole discretion. The balance of deposited funds exceeding such
insurance coverage shall be fully (100%) and continuously collateralized by
Government Obligations. Such collateral shall be pledged under a written
security agreement, in a form acceptable to the Servicing Agent, and shall be
held in a separate custodial account on behalf of the account parties for the
full term of deposit. Funds in the Project Account may be invested at the
written direction of the Borrower (as long as no Event of Default exists
hereunder, in which case the Servicing Agent shall direct such investments) in
Investments permitted under subparagraphs (i) through (vi) of Section 16(i)
hereof. Funds in the Emergency Cash Reserve Account may be invested at the
written direction of the Servicing Agent in overnight Investments of the type
permitted under subparagraphs (i) through (vi) of Section 16(i) hereof, and all
earnings credited to such account shall be the property of the County. Funds
in any escrow account established for the benefit of the Registered Creditors
may be invested at the written direction of the Servicing Agent in overnight
Investments of the type permitted under subparagraphs (i) through (vi) of
Section 16(i) hereof, and all earnings credited to such account shall be the
property of the County.
The Servicing Agent shall have no liability for any losses on
Investments held in any account established hereunder or for any failure to
invest the monies contained herein.
(e) The Borrower shall promptly deliver to the Servicing
Agent an assignment to the County, in form acceptable to the Servicing Agent,
of its interest in each account established hereunder, duly acknowledged by the
depositary institution. Upon any Event of Default hereunder, all right, title
and interest of the Borrower in and to the monies in any account established
hereunder shall immediately vest in the County.
Section 6. Obligations Absolute. Except to the extent prohibited by
applicable law which cannot be waived, the obligations of the Borrower under
this Agreement shall be absolute, unconditional and irrevocable and shall be
paid strictly in accordance with the terms of this Agreement under all
circumstances whatsoever, including without limitation the following
circumstances:
(a) any waiver of or any consent to departure from all or
any of the Loan Documents;
(b) the existence of any claim, set-off, defense or other
rights which the Borrower or any guarantor of any obligations of the Borrower
to the County may have at any time against the County, JEDA, the state, the
Servicing Agent, any holder of any Air South HUD-Guaranteed Note or any other
person or entity, whether in connection with this Agreement, any other Loan
Document or any unrelated transaction or matter;
(c) any statement or any other document pertaining to the
Air South HUD-Guaranteed Note, the CDBG Pledge of the County or the State, the
HUD Contract, any
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document or agreement or the transactions contemplated hereby and thereby
proving to be invalid or insufficient in any respect or any statement herein or
therein being untrue or inaccurate in any respect whatsoever; or
(d) any disbursement by the Servicing Agent to or for the
account of the Borrower under the terms hereof not complying with the terms
hereof.
(e) any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing.
Section 7. Conditions Precedent to Disbursement of Loan. (a) Prior
to the initial disbursement under the Loan, the Servicing Agent shall have
received the following in form and substance satisfactory to the Servicing
Agent and its counsel:
(i) copies of the resolutions adopted by the
board of directors of the borrower authorizing the execution, delivery and
performance of each of the Loan Documents certified by the secretary or any
assistant secretary of the Borrower (which certificate shall state that such
votes re in full force and effect);
(ii) a copy of the articles of incorporation of
the Borrower, as amended, certified by the Secretary of State of the State of
Illinois;
(iii) a copy of the by-laws of the Borrower, as
amended, certified by the secretary or any assistant secretary of the Borrower;
(iv) a good standing certificate with respect to
the Borrower issued as of a recent date by the Secretary of State of the State
of Illinois;
(v) a certificate of existence with respect to
the borrower's authorization to do business as a foreign corporation in the
State issued as of a recent date by the Secretary of State of the State
together with a certificate as to the payment of all fees and taxes issued as
of a recent date by the South Carolina Department of Revenue;
(vi) a certificate of the secretary or any
assistant secretary of the Borrower certifying the names and true signatures of
the officers of the Borrower authorized to sign the Loan Documents and the
requisitions for disbursement of the Loan and the other documents to be
delivered by the Borrower hereunder;
(vii) true and correct copies of all governmental
approvals, if any, necessary for the Borrower to enter into the Loan Documents
and carry out the transactions contemplated thereby, including without
limitation the Borrower's Section 401 Certificate from DOT, the FAA Part 121
Operating Certificate and such other permits, consents and authorizations as
may be required to initiate and maintain the Air South Operations as
contemplated by the Business Plan and by this Agreement;
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(viii) evidence satisfactory to the Servicing
Agent that the insurance required by Section 12 of this Agreement is in effect;
(ix) evidence satisfactory to the Servicing
Agent that the Borrower has Equity Contributions of not less than $2,000,000;
(x) evidence satisfactory to the Servicing Agent
that the Borrower has expended all available grant moneys provided or to be
provided by the County or Richland County to the extend not restricted under
the terms of the Local Memorandum;
(xi) the original Note and a fully executed
copy of each of the Loan Agreement; the Security Agreement; the Assignment and
Servicing Agreement; the Business Plan, which shall be satisfactory to the
Servicing Agent as to form and substance; the Aircraft Lease Agreement between
the Borrower and Polaris Aircraft Leasing K.B. ("Polaris") (together with, if
requested by the county a letter agreement between the County and Polaris
regarding the release of Polaris' security interest in removed parts), which
shall be satisfactory to the Servicing Agent as to form and substance; the HUD
Contract; the Fiscal Agency Agreement; and such other documents and agreements
as the county may reasonably require;
(xii) a favorable opinion of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
Esquire, counsel for the Borrower, in the form attached hereto as EXHIBIT C;
(xiii) evidence of due authorization by the
Governor of the state to JEDA to undertake the transactions contemplated by the
HUD Contract and this Agreement;
(xiv) copies of the resolutions adopted by JEDA's
board of directors authorizing execution and delivery of the HUD Contract and
the Assignment and Servicing Agreement of even date herewith among the County,
JEDA and the Borrower and the transactions contemplated thereunder;
(xv) Opinions of Counsel in the form required by
HUD; and
(xvi) such other documents, instruments, approvals
or opinions as the Servicing Agent or its counsel may reasonably request.
If the Servicing Agent does not receive the items listed in this paragraph (a)
on or before August 31, 1994, this Agreement shall be null and void.
(b) The Servicing Agent shall automatically without
requisition, notice or any further instruction, charge as an advance under the
Note amounts sufficient to pay when due interest on the Air South
HUD-Guaranteed Note prior to the Public Offering Date with respect thereto.
(c) Except as specified in Section 7(b) hereof and
subject to the other
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provisions of this Section, all disbursements of the Loan to or to the order of
the Borrower, including the initial disbursement, shall be made not more
frequently than bi-monthly by the Servicing Agent on behalf of the County for
the purposes specified in Section 2 of this Agreement and upon the occurrence
of the following:
(i) receipt by the Servicing Agent not less than
20 days prior to the date when the funds are requested to be paid of a
requisition in the form attached as EXHIBIT D signed by the President or Chief
Financial Officer of the Borrower certifying, inter alia, that Loan proceeds
are required (A) to purchase property, real or personal, authorized pursuant to
Section 2: (B) to remedy a Cash Flow Shortfall as of the end of the immediately
preceding calendar month, specifying the amount of such Cash Flow Shortfall,
which amount shall be the amount the Borrower is entitled to draw for such
purpose; or (C) to cover an emergency cash requirement as described in Section
5(b) hereof, accompanied by documentation acceptable to the Servicing Agent
verifying such matters; provided, however, that requisitions from the Emergency
Cash Reserve account may be paid by the Servicing Agent promptly upon receipt
thereof with back-up documentation to be provided by the borrower within five
(5) Business Days after the date of such requisition;
(ii) there shall not be available to the Borrower
in a timely fashion sufficient unrestricted operating revenues, equity funds,
commercial loan funds, grant funds or any other funds with which to pay such
purchase price, remedy such Cash Flow Shortfall or meet such emergency cash
requirements under the terms and conditions specified in Section 5(b) hereof,
as the case may be;
(iii) determination by the Servicing Agent that the
use intended by the Borrower of the proceeds of the Loan is eligible for
financing under the Section 108 Program and this Agreement;
(iv) there shall exist no Event of Default
hereunder, nor any circumstance which, with notice or lapse of time or both,
would constitute such an Event of Default;
(v) the Servicing Agent shall have received on
behalf of the County such additional Loan Documents and Opinions of County as
the Servicing Agent shall reasonably require; and
(vi) the County shall have received adequate
funding under the Air South HUD-Guaranteed Note.
(d) Notwithstanding anything herein to the contrary, the
Borrower shall not, during any draw period set forth below, be entitled to
aggregate disbursements ("Scheduled Draws") in excess of an amount equal to
125% of the aggregate Cash Flow Shortfall projected for such period and all
preceding periods, amounts deposited to the Emergency Cash Account as
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provided in Section 5(b) and amounts reserved under the Note for Registered
Creditors as provided in Section 5(c) hereof being considered to have been
disbursed to the Borrower under the Loan for this purpose, to wit:
Draw Period Amount Disburseable
----------- -------------------
August 15, 1994-October 14, 1994 $4,000,000
October 15, 1994-December 31, 1994 2,000,000
January 15, 1995-July 14, 1995 2,000,000
July 15, 1995-October 14, 1995 2,000,000
October 15, 1995-March 31, 1996 1,000,000
April 1, 1996 1,000,000
(e) Notwithstanding anything herein or in any other
instrument or agreement to the contrary, neither the County nor the Servicing
Agent shall have any obligation to advance any moneys to the Borrower under the
Loan except from the proceeds of the Air South HUD-Guaranteed Note, and the
provisions of the Federal Act, the Federal Regulations and, to the extent not
inconsistent therewith, the provision of all other applicable federal, State or
County laws, regulations or requirements shall govern the award and
administration of the Loan. The County makes no warranty that funds will be
made available from time to time under the HUD contract or that funds will be
received at the times anticipated by the Borrower.
(f) Upon any disbursement of funds under the Note in
accordance with this Section 7, the Servicing Agent shall record the date and
amount of such disbursement on the Record of Advances attached to the Note,
and, absent patent error, such record shall be conclusive as to such matters
for all purposes of this agreement.
Section 8. Representations and Warranties of Borrower. In addition
to the Covenants, Warranties and Representations made by the Debtor in the
Security Agreement, the terms of which are incorporated by reference, the
Borrower represents and warrants as follows:
(a) The Borrower is a corporation duly organized, validly
existing and in good standing under the laws of the State of Illinois, with
corporate powers adequate for the carrying on of the business now conducted and
proposed in the Business Plan to be conducted by it, and is duly qualified as a
foreign corporation in, and is in good standing in, the state and in each other
jurisdiction in which its conduct of business or ownership of property makes
such qualification necessary. The Borrower's corporate Headquarters are
located at ▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇;
its Principal Operational Base is located at the Columbia Metropolitan Airport,
and none of the Borrower's books or records are maintained at any other
location. The Borrower shall give the County and the Servicing Agent not less
than thirty (30) days prior written notice of any change in the location of the
Borrower's books and records.
(b) The execution, delivery and performance of this
Agreement, the Note and each of the other Loan Documents are within the
Borrower's power and authority, and the
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Borrower has duly authorized the execution and delivery hereon and thereof and
the taking of all action necessary to carry out and give effect to the
transaction contemplated hereby and thereby.
(c) No consent of any person and no authorization or
approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body is required for the due execution, delivery and
performance by the Borrower of this Agreement, the Note or any other Loan
Document, except such as have been obtained, including without limitation,
approval of the shareholders or the trustees or holders of any indebtedness of
Borrower;
(d) Each of this Agreement, the Note and each other Loan
Document is a legally valid and binding obligation of the Borrower, enforceable
against the Borrower in accordance with its terms.
(e) There is no pending action or proceeding before any
court, governmental agency or arbitrator against or directly involving the
Borrower, and there is no threatened action or proceeding affecting the
Borrower before any court, governmental agency or arbitrator which, in any
case, may materially and adversely affect the financial condition, operations
or business prospects of the Borrower or which questions the validity of any
Loan Document or any action taken or to be taken pursuant thereto.
(f) Neither the execution and delivery of this Loan, the
Note or any of the other Loan Documents, the consummation of the transactions
contemplated hereby and thereby, nor the fulfillment of or compliance with the
terms and conditions of this Agreement, the Note or any other Loan Document,
contravene any material provision of law, judgment, decree, order, franchise or
permit applicable to Borrower or its properties or by which the borrower or any
of its property is bound or conflict with or result in a material breach in the
terms, conditions or provision thereof or constitute a violation of the by-laws
or articles of Borrower, or constitute a default, or result in the creation of
a lien, under any agreement or instrument to which the Borrower is a party or
by which any of its property is bound.
(g) All tax returns and reports of the Borrower require
by law to be filed have been duly filed and all taxes, assessments, fees and
other governmental charges upon the Borrower or upon any of its respective
properties, assets, income or franchises which are due and payable pursuant to
such returns and reports, or pursuant to any assessment received by the
Borrower have been paid, other than those which may be presently payable
without penalty or interest (except to the extent that any such tax or
assessment is being contested in good faith and as to which adequate reserves
have been set aside in conformity with Generally Accepted Accounting
Principles).
(h) The Borrower is not in default under its corporate
organizational documents or under any statute, license, rule or regulation,
under any order, writ, injunction, award or decree of which it has notice of
any court, arbitrator, administrative agency or other governmental authority
binding upon or affecting it or by which any of its properties is bound
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or under any indenture, mortgage, contract, agreement or other undertaking or
instrument to which it is a party or by which it or its property is bound, and
the borrower has no knowledge of any event which, with notice or lapse of time
or both, would constitute such a default; nothing has occurred which would
materially adversely affect the ability of the Borrower to carry on its
business as now conducted or proposed to be conducted or perform its
obligations under any of the foregoing.
(i) The Borrower has no Subsidiaries.
(j) The Borrower possesses, or will possess prior to the
date of initial disbursement hereunder, all types certificates, documentation
and supplements thereto, franchises, patents, patent applications, patent
licenses, certificates, copyrights, trademarks, service marks, tradenames,
tradename rights, licenses and permits, and rights in respect of the foregoing,
necessary for the conduct of its business substantially as now conducted and
presently planned to be conducted without any known conflict with any rights of
others, including without limitation a Section 401 Certificate from DOT and
such other permits, landing rights and other authorizations as may be required
to initiate and maintain the Air South Operations as contemplated by the
Business Plan and by this Agreement.
(k) The Borrower is not subject to any corporate or other
legal restriction, or any judgment, decree, order, rule or regulation which in
the judgment of the Borrower has or is expected in the future to have a
materially adverse effect on the business, assets, financial condition or
business prospects of the Borrower as a whole the Borrower is not a party to
any contract or agreement which in the judgment of the Borrower has or is
expected to have any materially adverse effect on the business of the Borrower
as a whole, except as otherwise reflected in adequate reserves.
(l) The Borrower does not maintain any Guaranteed Pension
Plan.
(m) All outstanding capital stock of the Borrower is
owned of record; the Borrower currently has Equity Contributions of not less
than $2,000,000; and the Controlling owners currently own seventy-two and
sixty-seven one-hundredths percent (72.67%) of the voting stock of the
Borrower.
(n) EXHIBIT E contains a complete and correct listing, as
of the date of this Agreement, of (i) all Indebtedness of the Borrower for
money borrowed (excluding purchase money Indebtedness of less than $50,000 in
respect of individual items, provided that the aggregate amount of such
Indebtedness does not exceed $250,000) and (ii) all Guarantees of the Borrower.
(o) The Borrower has, or will have, title to all the
Collateral whenever acquired or arising free and clear of all liens and claims,
encumbrances, set-offs, defenses and counterclaims, except those stated in
EXHIBIT F attached hereto, and has not made and will not make any assignment,
pledge, mortgage, hypothecation or transfer (other than sales or leases
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in the ordinary course of business) of any such Collateral or the proceeds
thereof.
(p) EXHIBIT G hereto contains an accurate and complete
description of the tangible assets currently owned by the Borrower and all real
property leased by the Borrower together with the location thereon.
(q) There has been no material adverse change in the
aggregate assets or aggregate liabilities or in the condition or business,
financial or otherwise, of the Borrower from that set forth in the financial
statements delivered to the County by the Borrower in connection with the Loan.
(r) All statements, representations and warranties made
by the Borrower and any materials furnished in support of the request for the
Loan are true, accurate and complete; it is specifically understood by the
Borrower that all such statements, representations and warranties shall be
deemed to have been relied upon by the County and JEDA as an inducement to make
the Loan and to provide the CDBG Pledge.
(s) The Borrower represents to the county that it has at
all times pertinent to this Agreement been represented by advisors of its own
selection, including but not limited to attorneys-at-law and/or certified
public accountants that it has not relied upon any statement, representation,
warranty, agreement or information provided by the County, its employees,
agents or attorneys; that it acknowledges that it is informed by its advisors
of its respective rights, duties, and obligation with respect to the Loan under
all applicable laws, that it has no set-offs, defenses or counterclaims against
the County with respect to the Loan, and that it is indebted to the County for
the amounts stated in this Agreement and the Note.
(t) The borrower further acknowledges and agrees that
neither the County, JEDA nor the State has made any statements,
representations, warranties, agreements or provided information to it regarding
the Section 108 Program in order to induce the execution and delivery of this
Agreement; the Borrower further acknowledges and agrees that all agreements of
the parties regarding the Loan are set forth in this Agreement and in the other
Loan Documents executed by Borrower prior to or on even date hereof.
If during any time the Loan remains outstanding, the Borrower
becomes aware of any facts, occurrences, information, statements, or events
that render any of the foregoing representations or warranties herein made
untrue or materially misleading or incomplete, Borrower shall immediately
notify the Servicing Agent in writing of such facts, occurrences, information,
statements or events.
Section 9. Regulatory Compliance.
(a) General. The Borrower shall comply with all
applicable laws, regulations, ordinances, executive orders, air worthiness
directives, notices to airmen, manuals and government instructions from
governmental authorities of competent federal, state and local
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jurisdictions. The Borrower shall obtain and maintain all approvals,
certificates, licenses, and permits for operations of the Air South Operations
as proposed in the Business Plan, including without limitation all those
approvals necessary by state, local and federal governments, including the FAA
and DOT, necessary for, and shall comply with all the laws and regulations
applicable to, the certification, registration, operation, maintenance of the
aircraft and air carrier operating certificate, repair station certificate and
other permits and licenses issued to Borrower and any of its affiliates or
subsidiary companies, and the Borrower shall take no action nor suffer any
action to be taken which impairs, suspends, cancels, restricts, revokes, or
materially adversely modifies such certificates, license, permits or
registrations without the prior written consent of the JEDA in its capacity as
Assignee.
(b) Low-to-Moderate Income Hiring. The Borrower agrees
to comply with all HUD requirements regarding hiring for the Air South
Operations. In this connection, the Borrower agrees to create not less than
200 jobs at its corporate headquarters and central reservation center in the
City (the "Corporate Headquarters") and 420 jobs at the Columbia Metropolitan
Airport within two years following the Start-up Date. Of the total number of
jobs created at each of the Corporate Headquarters and the Columbia
Metropolitan Airport (even if in excess of 200 and 420, respectively), not less
than 51% shall be taken by persons from low and moderate income families, all
as determined in accordance with the Federal Regulations (calculated separately
for the Corporate Headquarters and Columbia Metropolitan Airport). The
Borrower agrees to maintain records adequate to document compliance with this
Section 9(b) and, until such time as the Borrower has fulfilled the
requirements of the proceeding provisions of this Section 9(b), to provide to
the Servicing Agent within 30 days following the end of each calendar quarter
with written evidence satisfactory to the Servicing Agent as to the number of
jobs created at each of the Corporate Headquarters and the Columbia
Metropolitan Airport and the number of such jobs which has been taken by
persons of low or moderate income.
In the case of a violation of hiring level low-to-moderate-income
hiring requirements specified in this Section 9(b), the Servicing Agent may, in
its sole discretion, require repayment of all of the Loan, together with
interest thereon at the rate per annum equal to the higher of (i) the interest
then or most recently applicable to the note or (ii) the highest rate
applicable to any of the Air South HUD-Guaranteed notes plus five percent (5%)
computed on the basis of a 360 day year and the actual number of days elapsed
from the date of each advance of Loan moneys to the Borrower. The obligation
to pay such modified interest rate shall survive prepayment of the Note, unless
the Servicing Agent received evidence satisfactory to it that the Borrower has
met its employment level and low-to-moderate income hiring requirements, in
which case such obligation terminates.
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(c) Other Section 108 Program Requirements.
Notwithstanding any other provision hereof or of any other instrument or
agreement to the contrary, the provision of the Federal Act, the Federal
Regulations and, to the extent not inconsistent therewith, the Provisions of
all other applicable federal, State or County laws, regulations or requirements
shall govern the award and administration of the Loan, and the Borrower agrees
to comply with, any and requirements and to cooperate fully with the County
with respect thereto. Such agreement on the part of the Borrower shall
include, but shall not be limited to the following federal laws to the extent
applicable to the Borrower's operations at its Principal Operational Base, and
such laws are incorporated here by reference:
(i) Equal Employment Opportunity: In accordance
with the applicable Federal and State laws, Executive Orders and regulations,
the Borrower cannot discriminate on the basis of race, color, religion, sex,
national origin, familial status, or disability in its employment practices.
(ii) Non-Discrimination Under Title VI of the
Civil Rights Act of 1964: T this Agreement is subject to the requirements of
Title VI of the Civil Rights Act of 1964 (P.L. 88-352) and HUD regulations with
respect thereto including the regulations under 24 CFR Part I.
(iii) MBE Obligation: The Borrower agrees to
ensure that minority business enterprises (MBE), as defined in 49 CFR Part 23,
have the maximum opportunity to participate in the performance of contracts and
subcontracts financed in whole or in part with Federal funds provided under
this Agreement.
(d) Additional FAA Matters. The Borrower at all times
will be a "Citizen of the United States" as defined in Section 101(16) of the
Federal Aviation Act. Any aircraft to be operated by Borrower shall be duly
registered in the name of the Borrower in accordance with the Federal Aviation
Act, pursuant to an FAA AC Form 8050-1 Aircraft Registration Application, which
shall be in due form and duly filed with the FAA Aircraft Registry; such
aircraft at no time will be registered under the laws of any other country. An
FAA Standard Airworthiness Certificate shall be duly issued under the Federal
Aviation Act for each such aircraft and shall be duly issued under the Federal
Aviation Act for each such aircraft and shall be in full force and effect while
listed on the operating certificate of the Borrower by the FAA.
(e) Equal Opportunity Hiring. At all times prior to the
repayment in full of the Loan, the Borrower shall comply with the Equal
Employment Opportunity Requirement of 42 U.S.C., Section 200(e) et seq. and the
specific requirements set forth in Section 301 of executive Order No. 1246, as
amended, relating to discrimination provisions in federally assisted contracts.
In addition, the Borrower shall utilize its best efforts to insure that the
Borrower and any contractors or subcontractors employed by it maximize the
employment and the utilization of minorities and other persons residing within
the State, shall, upon demand by the Servicing Agent, deliver any documentation
required by the Servicing Agent to demonstrate compliance with all statutes,
rules or regulations of the State and/or the United States
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Department of Housing & Urban Development pertaining to equal employment
opportunities and/or minority business enterprises.
Section 10. Maintenance of Corporate Existence; Continuation of Air
South Operations in Midlands Area. The Borrower shall maintain its existence
and continue as a corporation either organized under the laws of, or duly
qualified to business as a corporation in, the State, shall preserve and
maintain its rights and privileges to conduct business in each jurisdiction
material to the Air South Operations and shall operate and maintain the Air
South Operations substantially as proposed in the Business Plan. The Borrower
shall not, as long as the Loan remains outstanding, without the prior written
consent of the County:
(a) assign or transfer the whole or any part of its
interest in this Agreement;
(b) sell, lease, convey, assign, transfer or otherwise
dispose of all or substantially all of its assets or consolidate with or merge
into another entity or permit one or more other entities to consolidate with or
merge into it;
(c) sell, lease, convey, assign, transfer or otherwise
dispose of any interest in its assets or operating rights (including without
limitation operating or landing rights, type certificates, operating
certificate, licenses, regulatory approvals, leasehold or contact rights,
tradenames or trademarks or other right in tangible or intangible property)
material to the Air South Operations as proposed in the Business Plan or
otherwise act to disrupt the continued viability of the Air South Operations as
then conducted; provided, however, that a sale or other disposition shall be
permitted hereunder to the extent that the Borrower retains its interest in and
operating control over not less than fifty-one percent (51%) of the ten
existing assets of the Borrower, tangible and intangible, including without
limitation, operating rights, routes, gate leases, equipment leases, good will,
trademarks, tradenames and every other asset of the Borrower, (based on market
value rather than book value) and provided further that the proceeds form any
such sale shall be used to obtain assets or operations of similar value and
utility to the Air South Operations or to prepay the Note;
(d) permit the sale, assignment, transfer or other
disposition of the stock of the Borrower to a third person or group of persons
with the result that the Controlling Owners relinquish control over more than
forth-nine percent (49%) of the voting stock of the Borrower which is then
issued and outstanding;
(e) relocate its Principal Operational Base to a location
other than the Columbia Metropolitan Airport or its Corporate Headquarters from
within the city limits of the City.
The Borrower shall give the County and the Servicing Agent not less
than thirty (30) days' prior written notice of any change in its name, the
location of its books and records or of any substantial change in the nature of
the operations conducted at such locations or of any
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substantial reduction in the level of employment at such locations.
To the extent economically feasible, the Borrower shall provide air
service to and from the City, and each of the Cities of Charleston,
Greenville/Spartanburg and Myrtle Beach within the State.
Section 11. Managerial Control. The Borrower shall not, without the
express prior written consent of JEDA in its capacity as Assignee, make
material or substantial changes in the present management or operating control
of the Borrower, including without limitation those positions mandated to be
filled with qualified personnel under Part 121 of the Federal Aviation
Regulations, nor shall the Borrower permit the bulk transfer of assets,
acquisition, merger, reorganization, consolidation, dissolution or liquidation
of the air South Operations other than as permitted herein or the suspension,
revocation or cancellation of its operating certificate of authority.
Section 12. Insurance. In addition to any insurance requirement
contained in any mortgage or security agreement constituting a Loan Document,
the Borrower agrees to maintain insurance with responsible and reputable
insurance companies or associations acceptable to the Servicing Agent, naming
the County and the Servicing Agent as mortgagees or loss payees and additional
insureds as their respective interests may appear on such policies as the
Servicing Agent may specify, in such amounts and covering substantially such
hazards and risks as are usually carried by companies engaged in similar
businesses and owning or operating properties similar to those operated by the
Borrower. Such policies shall include (a) public liability; (b) full extended
coverage fire, theft and hazard insurance on all assets owned by it or used in
connection with its business; (c) worker;s compensation insurance or similar
insurance that may be required under laws applicable to Borrower; (d) business
interruption insurance, to the extent required by the Servicing Agent; (e)
title insurance with respect to any real property owned by the Borrower; and
(f) decreasing term life insurance policies on the lives of ▇▇▇▇▇▇▇ ▇'▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇ or any other person currently filling a position with the Borrower
which is required to be filled with qualified personnel under Part 121 of the
Federal Aviation Regulations, in the amount of $1,000,000 for ▇▇▇▇▇▇▇ ▇'▇▇▇▇
and $500,000 on each of the other insureds.
In furtherance and not in limitation of the foregoing insurance
requirements, the Borrower agrees that it will at all times carry and maintain
on each of the aircraft, engines and propellers used in the Air South
Operations, at its own cost and expense, public liability, property damage and,
as required for the carriage of passengers, passenger legal liability
insurance, and aircraft ground and flight all-risk hull insurance (which shall
include a standard 90-day mysterious disappearance clause and, to the extent
available, coverage against loss by reason of strikes, riots, civil commotion
or labor disturbance, malicious act or act of sabotage, unlawful seizure or
wrongful exercise of control of the aircraft in flight by any person on board
the aircraft acting without the consent of the insured, and governmental
confiscation and expropriation), war risk insurance, as well as fire and
extended coverage insurance on engines, propellers, rotables, consummables and
other equipment while removed from the aircraft or if maintained by the
Borrower on other aircraft utilized in commercial scheduled operations
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operated by the Borrower in the same areas.
Such policies shall contain a provision that such policy may not be
canceled or materially altered except upon at least fifteen (15) days written
notice to the Servicing Agent and shall not contain a provision for deductible
amounts greater than $500,000. In the event of loss or damage to any portion
of the Collateral constituting tangible property, the proceeds of any insurance
shall be deposited with the Servicing Agent and applied as set forth in Section
13 of this Agreement. Payments under any key man life insurance policy shall
be applied to prepay the Note unless JEDA in its capacity as Assignee shall
agree otherwise on behalf of the County. At least ten (10) days prior to the
expiration of any such policy the Borrower shall furnish evidence satisfactory
to the Servicing Agent that such policy has been renewed or replaced or is no
longer required by this Agreement.
At all times during the term of this Agreement, the Borrower shall
comply with the laws of south Carolina relating to worker's compensation
insurance.
Section 13. Damage, Destruction and Condemnation.
(a) If that portion of the Collateral consisting of tangible
property shall be damaged or either partially or totally destroyed or if title
to or temporary use of the whole or any part of such tangible property shall be
taken or condemned by a competent authority for any public use or purpose,
there shall be no abatement or reduction in the amounts payable by the Borrower
under this Agreement or under the Note.
(b) In the event of any damage, destruction, taking, or
condemnation, the proceeds from any insurance or condemnation award shall be
deposited with the Servicing Agent and applied to the payment of any amounts
due on the Loan, unless the Borrower and JEDA shall agree to apply the proceeds
to the repair, reconstruction, replacement or relocation of such Collateral.
Section 14. Maintenance of Properties.
(a) The Borrower shall cause all of its properties used or
useful in the conduct of its business to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment,
will cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of the Borrower
may be necessary so that the business carried on in connection therewith maybe
properly and advantageously conducted at all times and will comply at all times
in all material respects with the provisions of all material leases and other
material agreements to which it is a party so as to prevent any loss or
forfeiture thereof or thereunder unless compliance therewith is being at the
time contested in good faith by appropriate proceedings.
(b) In furtherance and not in limitation of the above
requirement of this Section 14, the Borrower will maintain all tangible
property used in the Air South Operations,
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including without limitation all aircraft, engines, propellers, auxiliary power
units, ground support equipment, shop machinery and tools, supplies, buildings
and other realty and personalty, in good condition and repair (normal wear and
tear accepted) and in accordance with applicable contracts, leases, federal and
state, and local laws, regulations and ordinances, will pay or discharge or
cause to be paid or discharged when due the cost of repairs or maintenance of
the same and will pay or caused to be paid all rental, lease or mortgage
payments due with respect to the same. The Borrower, at its own cost and
expense, shall service and maintain such property, repairing or overhauling
same as may be required by the FAA, including without limitation its aircraft,
engines, propellers, appliances, accessories, appurtenances, parts (defined as
"rotables, components, instruments and consummables") inventory other than
parts, shop equipment, ground support equipment and machinery; shall, at its
own cost and expense, according to FAA regulations, promptly install
replacement or substitute parts, engine, propellers, equipment, appurtenances,
accessories, appliances, inventory other than parts with all such replacements
and substitutions to be free and clear of all liens, encumbrances and rights of
others and which shall be in as good operating condition as, and shall have a
value and utility at least equal to, the items replaced or for which
substitution is made and meeting the standards of the FAA or other governmental
authority having jurisdiction over such activity so as to keep such property in
such operating condition as may be required by law, regulation or contract to
permit the property to be utilized by a licensed air carrier operating in
scheduled commercial operations in the United States; and shall maintain all
records, logs and other materials which may be required for such property to be
so utilized.
Section 15. Unencumbered Title and First Priority Lien. The Borrower
at all times shall have and maintain good and marketable title to the
Collateral, whether now owned or hereafter acquired, free and clear of all
claims, interests, mortgages, deeds of trust, liens, security interests and
other charges or encumbrances, except as specified in Section 16(h), any any
such mortgage shall, except as otherwise provided in Section 16(h) hereof,
constitute a first priority mortgage on and security interest in any such
Collateral duly securing the obligations of the Borrower under the Note, this
Agreement and any other Loan Document constituting collateral security
instruments executed and delivered to County herewith.
The Borrower agrees that it will at all times keep accurate and
complete records with respect to the Collateral and shall provide the Servicing
Agent with copies of all such records as the Servicing Agent shall request.
The Borrower will, not less than quarterly, provide the Servicing Agent with a
report as to any changes and additions to the information specified in EXHIBIT
G hereto and will not remove its assets from the locations listed in EXHIBIT G,
except in the normal course of business without the express prior consent of
the Servicing Agent, and the Borrower will join the County or the Servicing
Agent in executing, filing and doing whatever may be necessary under applicable
law, to perfect and continue the County's security interest in the Collateral
at Borrower's expense.
Section 16. Additional Covenants. The Borrower shall comply with the
following covenants for as long as the Loan is outstanding.
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(a) Payment of Debts, Taxes and Charges. The Borrower
shall pay, or cause to be paid, all of its debts and perform, or cause to be
performed, all of its obligations promptly and in accordance with the
respective terms thereof, and shall promptly pay and discharge, or cause to be
paid and discharged, all taxes, assessments and governmental charges or levies
imposed upon it, upon its income or receipts or upon any of its assets or
properties before the same shall become in default, as well as pay all lawful
claims for labor, materials and supplies or otherwise that, if not so paid,
could or would result in the imposition of a Lien upon such assets or
properties or any part thereof; provided, however, that it shall not constitute
an Event of Default under this paragraph (a) if (i) the Borrower fails to
perform any such obligation or to pay any such debt (except for any
Indebtedness owing under or in respect of any Loan Document), tax, assessment,
or governmental or other charge, levy or claim if the validity or amount
thereof is at the time being contested by the Borrower in good faith by
appropriate proceedings diligently pursued, and if the Borrower has obtained
therefor an adequate bond or adequate insurance or established therefor a
reserve of an adequate amount on its books, or (ii) any Lien described in
Section 16(h)(vi) on the Borrower's assets or properties is discharged within
30 days of the attachment thereof; provided further, that the Borrower will pay
all such taxes, assessments, charges,levies, or claims forthwith upon the
commencement of proceedings to foreclose any Lien which may have attached as
security therefor.
(b) Conduct of Business. The Borrower shall continue to
engage primarily in the air South Operations substantially as proposed in the
Business Plan and in related businesses. Except as shown in the Business Plan
or otherwise approved by JEDA as Assignee, the Borrower shall not, prior to the
Cutoff Date, (i) incur capital expenditures in excess of $100,000 for any
single item of property or $00,000 in the aggregate during any fiscal year or
(ii) undertake any discretionary expenditures substantially in excess of
expenditures budgeted in the Business Plan.
(c) Certain Financial Covenants.
(i) Throughout the term of the Loan, Borrower
shall maintain a debt to tangible net worth ratio (defined to mean the ratio of
debt to tangible net worth as determined in accordance with generally accepted
accounting principles consistently applied) of not greater than 4.0 to 1.0 for
each fiscal quarter of 1995, 2.0 to 1.0 for each fiscal quarter of 1996, and
1.5 to 1.0 for each fiscal quarter of 1997 and thereafter.
(ii) Throughout the term of the Loan, Borrower
shall maintain a current ratio as defined below of not less than 4.0 to 1.0 for
each fiscal quarter of 1995, 3.5 to 1.0 for each fiscal quarter of 1996, and
3.0 to 1.0 for each fiscal quarter of 1997 and thereafter. Current ratio is
defined as:
current assets/current liabilities
(iii) Throughout the term of the Loan, Borrower
shall maintain a minimum interest coverage ratio as defined below of not less
than 6.2 to 1.0 for each fiscal
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quarter of 1996, and 9.2 to 1.0 for each fiscal quarter of 1997 and thereafter.
Interest coverage ratio is defined as:
net income (before taxes and interest) interest
(iv) Throughout the term of the Loan, Borrower
shall maintain an operating ratio as defined below of not less than .27 to 1.0
for each fiscal quarter of 1995, .36 to 1.0 for each fiscal quarter of 1996,
and .45 to 1.0 for each fiscal quarter of 1997 and thereafter. Operating ratio
is defined as:
profits before taxes/tangible net worth
(v) Throughout the term of the Loan, Borrower
shall maintain a sales to receivables ratio of not less than 15.0 to 1.0 for
each fiscal quarter of 1995, 17.0 to 1.0 for each fiscal quarter of 1996, and
19.0 to 1.0 for each fiscal quarter of 1997 and thereafter.
(vi) Throughout the term of the Loan, Borrower
shall maintain a net sales to total assets ratio of not less than 2.8 to 1.0
for each fiscal quarter of 1995, 1996, 1997 and thereafter.
(d) Cash Flow. The Borrower shall not permit its
Adjusted Pre-Tax Income; determined as at the end of each fiscal quarter,
commencing with the fiscal quarter ending September 30, 1994, for the quarter
then ended, to be less than Debt Service for such quarter; nor shall the
Borrower permit its Ending Cash Balance to fall below seventy-five percent
(75%) of the Operating Reserve Amount.
(e) Distributions. The Borrower shall not, directly or
indirectly, declare or make or incur any liability to make any Distribution
until the principal balance of the Loan as of the Cutoff Date has been paid
down by one-half, nor thereafter unless and only as long as (i) at the time of
the declaration and payment thereof and immediately after giving effect
thereto, no Event of Default or Default shall exist, (ii) the total
Indebtedness of the Borrower outstanding at the time of such declaration and
payment and immediately after giving effect thereto will not exceed 125% of the
Borrower's Tangible Net Worth as at the end of the fiscal quarter most recently
ended, and (iii) the Borrower's Adjusted Pre-Tax Income for the period of the
four consecutive fiscal quarters most recently ended preceding such declaration
and payment was not less than 200% of the Borrower's Debt Service for such
period and, at the time of such declaration or payment and immediately after
giving effect thereto, such Adjusted Pre-Tax Income will not be less than 200%
of the Borrower's Pro Forma Debt Service for the one year period immediately
following the end of the fiscal quarter most recently ended.
(f) Tangible Net Worth. The Borrower shall at all times
during the periods set forth below maintain Tangible Net Worth in the
respective amounts set forth below:
(i) during the period commencing 90 days after
the inauguration of air
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service with the third aircraft and for as long as the Borrower's service is
limited to less than six (6) aircraft, the sum of <2,000,000>;
(ii) during the period commencing 90 days after
the inauguration of air service with the sixth aircraft and for as long as the
Borrower's service is limited to less than nine (9) aircraft, the sum of
<2,400,000>;
(iii) during the period commencing 90 days after the
inauguration of air service with the ninth aircraft and for as long as the
Borrower's service is limited to less than twelve (12) aircraft, the sum of
<1,300,000>;
(iv) during the period commencing 90 days after
the inauguration of air service with the twelfth aircraft and for as long as
the Borrower's service is limited to less than fifteen (15) aircraft, the sum
of $1,600,000;
(v) during the period commencing 90 days after
the inauguration of air service with the fifteenth aircraft and for as long as
the Borrower's service is limited to less than eighteen (18) aircraft, the sum
of $4,900,000;
(vi) during the period commencing 90 days after
the inauguration of air service with the eighteenth aircraft and for as long as
the Borrower's service is limited to less twenty-one (21) aircraft, the sum of
$10,000,000;
(g) Restrictions on Indebtedness. The Borrower shall not
create, incur, assume, guarantee or be or remain liable, contingently or
otherwise, with respect to any Indebtedness other than:
(i) Indebtedness hereunder or under the Loan
Documents;
(ii) Current Liabilities, other than for money
borrowed or for the deferred purchase price of property (other than the
deferred purchase price of fixed assets, the payment of which must be made
within 90 days after the purchase thereof), incurred in the ordinary course of
business;
(iii) Indebtedness in respect of taxes, assessments,
governmental charges or levies and claims for labor, materials and supplies to
the extent that payment thereof shall not at the time be required to be made in
accordance with the provisions of Section 16(a) hereof and Indebtedness secured
by liens of carriers, warehousemen, mechanics and materialmen permitted by
Section 16(h)(vi) hereof;
(iv) Indebtedness not in excess of $100,000, in
the aggregate at any one time outstanding in respect of judgments or awards not
covered by insurance (A) which have been in force for less than the applicable
appeal period so long as execution is not levied thereunder or (B) in respect
of which the Borrower shall at the time in good faith be prosecuting
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an appeal or proceedings for review and in respect of which a stay of execution
shall have been obtained pending such appeal or review;
(v) Indebtedness of the Borrower in respect of
the aircraft leases and pooling of parts as authorized in the Security
Agreement and listed in Exhibit H hereto;
(vi) Indebtedness of the Borrower (a) in respect
of Capitalized Lease Obligations and (b) secured by purchase money Liens, in
each case to the extent permitted by Section 16(h)(iii) hereof; provided,
however, that the aggregate principal amount of all such Indebtedness permitted
by this subparagraph (vi) (and excluding indebtedness permitted under
subparagraph (v)) shall not exceed an aggregate of $500,000 in the case of
Capitalized Lease Obligations, and an aggregate of $500,000 in the case of
Indebtedness secured by purchase money Liens;
(vii) Indebtedness of the Borrower outstanding on
the date hereof and listed in EXHIBIT E hereto.; and
(viii) After the date when the principal balance of
the Loan as of the Cutoff Date has been paid down by one-half, any other
Indebtedness if and only so long as (A) at the time of the creation or
incurrence of such Indebtedness and immediately after giving effect thereto, no
Event o Default or Default shall exist, (B) the total Indebtedness of the
borrower outstanding at the time of the creation or incurrence of such
Indebtedness and immediately after giving effect thereto (less any amounts of
such Indebtedness to be applied to the contemporaneous prepayment of existing
Indebtedness) will not exceed 125% of the Borrower's Tangible Net Worth as at
the end of the fiscal quarter most recently ended, and (C) the Borrower's
Adjusted Pre-Tax Income for the period of the four consecutive fiscal quarters
most recently ended preceding the creation or incurrence of such Indebtedness
was not less than 200% of the Borrower's Debt Service for such period and, at
the time of the creation or incurrence of such Indebtedness and immediately
after giving effect thereto, such Adjusted Pre-Tax Income will not be less than
200% of the Borrower's Pro Forma Debt Service for the one year period
immediately following the end of the fiscal quarter most recently ended.
(h) Restrictions on Liens. The Borrower shall not
create or incur or suffer to be created or incurred or to resist any
encumbrance, mortgage, pledge, lien, charge, restriction or other security
interest of any kind upon any of its property or assets of any character
whether now owned or hereafter acquire,d or upon the income or profits
therefrom; or transfer any of such property or assets or the income or profits
therefrom for the purpose of subjecting the same to the payment of Indebtedness
or performance of any other obligation in priority to payment of its general
creditors; or acquire, or agree to have an option to acquire, any property or
assets upon conditional sale or other title retention or purchase money
security agreement, device or arrangement; or suffer to exist for a period of
more than 30 days after the same shall have been incurred any Indebtedness or
claim or demand against it which if unpaid might by law or upon bankruptcy or
insolvency, or otherwise, be given any priority whatsoever over its general
creditors; or sell, assign, pledge or otherwise transfer any accounts, contract
rights, general
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intangibles or chattel paper, with or without recourse (all of the foregoing
items and actions being sometimes herein referred to as "Liens"); provided,
however, that the Borrower may create or incur or suffer to be created or
incurred or to exist:
(i) Liens to secure taxes, assessments and other
governmental charges to the extent that payment thereof shall not at the time
be required to be made in accordance with Section 16(a) hereof;
(ii) The Lien of this Agreement or any other Loan
Document;
(iii) Purchase money Liens (including mortgages,
conditional sales, Capitalized Lease Obligations and any other title retention
or deferred purchase devices) in real or tangible personal property of the
Borrower existing or created at the time of acquisition thereof, and the
renewal, extension and refunding of any such Lien in an amount not exceeding
the amount thereof remaining unpaid immediately prior to such renewal,
extension or refunding; provided, however, that the principal amount of
Indebtedness (including Indebtedness in respect of Capitalized Lease
Obligations) secured by each such Lien in each item of property shall not
exceed 100% of the cost to the Borrower (including all such Indebtedness
secured thereby, whether or not assumed) of the item subject thereto and such
Lien shall have attached solely to the particular item of property so acquired;
and provided, further, that the aggregate principal amount of all such
Indebtedness shall not exceed the amounts specified in Section 16(g)(vi)
hereof;
(iv) Deposits or pledges made in connection with,
or to secure payment of, worker's compensation, unemployment insurance, old age
pensions or other social security obligations (but only to the extent that such
Lien does not attach to any of the Collateral;
(v) Liens in respect of judgments or awards, the
payment of which has been stayed pending appeal, but only to the extend that
such judgments or awards are permitted as Indebtedness by Section 16(g)(iv);
(vi) Liens of carriers, warehousemen, mechanics,
materialmen, and other like liens to the extent that payment of the
Indebtedness secured thereby shall not at the time be required to be made in
accordance with the provisions of Section 16(a) hereof;
(vii) Encumbrances consisting of easements, rights
of way, zoning restrictions, restrictions on the use of real property and
defects and irregularities in the title thereto, security deposits and
landlord's or lessor's liens under leases to which the Borrower is a party, and
other similar encumbrances, none of which materially detract from the value of
such property or impair the use thereof in the business of the Borrower;
(viii) Liens securing Indebtedness permitted by
Section 16(g)(v);
(ix) Liens and mortgages upon property or assets
of the borrower listed
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on EXHIBIT F hereto; and
(x) after the date when the principal balance of
the Loan as of the Cutoff Date has been paid down by one-half, any other Lien
on property of the Borrower not subject to, or intended to be subject to, the
Security Interest if and only so long as (A) at the time of the creation or
incurrence of such Lien and immediately after giving effect thereto, no Event
of Default or Default shall exist, (B) the total Indebtedness of the borrower
outstanding at the time of the creation or incurrence of such Lien and
immediately after giving effect thereto will not exceed 125% of the Borrower's
Tangible Net Worth as at the end of the fiscal quarter most recently ended, and
(C) the Borrower's Adjusted Pre-Tax Income for the period of the four
consecutive fiscal quarters most recently ended preceding the creation or
incurrence of such Lien was not less than 200% of the Borrower's Debt Service
for such period an, at the time of the creation or incurrence of such Lien and
immediately after giving effect thereto, such Adjusted Pre-Tax Income will not
be less than 200% of the Borrower's Pro Forma Debt Service for the one year
period immediately following the end of the fiscal quarter most recently ended.
(i) Investments. The Borrower shall not make or
permit to exist any Investments other than:
(i) Investments in direct obligations of the
United States Government and obligations guaranteed by the United States
Government, which obligations mature in not more than one year;
(ii) Investments in certificates of deposit,
banker's acceptances or similar obligations issued by a bank or a bank holding
company having capital and surplus of not less than Five Hundred Million
dollars ($500,000,000) and long-term debt ratings of AA or better, which
obligations mature in not more than one year;
(iii) Investments in commercial or finance company
paper which at the time of purchase has been rated not less than "A-1" if rated
by Standard & Poor's Corporation or "P-1" if rated by ▇▇▇▇▇'▇ Investors
Service, Inc., or tax-exempt commercial paper or bonds with a rating of "Mig-1"
or "A-1+," which obligations mature in not more than one year;
(iv) Any direct obligation of the Unites Dates of
American or any agency, political subdivision or instrumentality thereof, which
has a remaining maturity at the time of purchase of not more than two years,
and which are rated in one of the two highest categories (without regard to
pluses or minuses) for securities by Moody's or S&P;
(v) Shares of any open-end diversified investment
company registered under the Investment Company Act of 1940, as amended, or any
other so-called "money market fund" which, in either case, maintains a constant
net assets value per share in accordance with the regulations of the Securities
and Exchange Commission; has aggregated net assets of not less than $50 million
on the date of purchase; and to the extent practicable and in accordance with
its investment guidelines invests 85% of its assets in investments of the types
described either
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in clauses (i), (ii) and (iii) above or in investments of the types described
in clause (iv) above;
(vi) Obligations of any other entity substantially
all of the assets of which consist of Investments described in clauses (i),
(ii), (iii) and (iv) above;
(vii) Guarantees permitted by Section 16(j) hereof;
(viii) Any other Investment if and only so long as
(i) at the time of the making of such Investment and immediately after giving
effect thereto, no Event of Default or Default shall exist, (ii) the total
Indebtedness of the Borrower outstanding at the time of the making of such
Investment and immediately after giving effect thereto will not exceed 125% of
the Borrower's Tangible Net worth as at the end of the fiscal quarter most
recently ended, and (iii) the Borrower's Adjusted Pre-Tax Income for the period
of the four consecutive fiscal quarters most recently ended preceding the
making of such Investment was not less than 200% of the Borrower's Debt Service
for such period and, at the time of the making of such Investment and
immediately after giving effect thereto, such Adjusted Pre-Tax Income will not
be less than 200% of the Borrower's Pro Forma Debt Service for the one year
period immediately following the end of the fiscal quarter most recently ended;
provided, however, that notwithstanding the foregoing, the Borrower shall not
make an Investment in any Subsidiary without the prior written consent of the
Servicing Agent.
(j) Restrictions on Guarantees. The Borrower shall
not become or remain liable with respect to any Guarantee of any obligation of
any other Person except the following:
(i) Guarantees by the Borrower outstanding on the
date of this Agreement and listed in EXHIBIT I hereto;
(ii) Endorsements for collection or deposit in the
ordinary course of business;
(iii) Guarantees which individually do not exceed
$10,000 and collectively do not exceed $100,000; and
(iv) After the date when the principal balance of
the Loan as of the Cutoff Date has been paid down by one-half, any other
Guarantee if and only so long as (A) at the time of the creation or incurrence
of such Guarantee and immediately after giving effect thereto, no Event of
Default or Default shall exist, (B) the Total Indebtedness of the Borrower
outstanding at the time of the creation or incurrence of such Guarantee and
immediately after giving effect thereto will not exceed 125% of the Borrower's
Tangible Net worth as at the end of the fiscal quarter most recently ended, and
(C) the Borrower's Adjusted Pre-Tax Income for the period of the four
consecutive fiscal quarters most recently ended preceding the creation or
incurrence of such Guarantee was not less than 200% of the Borrower's Debt
Service for such period and, at the time of the creation or incurrence of such
Guarantee and immediately after giving effect thereto, such Adjusted Pre-Tax
Income will not be less than 200% of the
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Borrower's Pro Forma Debt Service for the one year period immediately following
the end of the fiscal quarter most recently ended.
(k) No Leasebacks. The Borrower shall not directly or
indirectly become liable, as lessee or guarantor or other surety, with respect
to any lease of real or personal property, whether now owned or hereafter
acquired which is to be sold or transferred by the Borrower to any Person or
which the Borrower intends to use for substantially the same purpose as any
other property which has been or is to be sold or transferred by the Borrower
to any Person in connection with such lease; provided, however, that the
prohibition contained in this paragraph shall not apply to any sale and
leaseback by the Borrower of any asset not subject to, or intended to be
subject to, the Security Interest after the date when the principal balance of
the Loan as of the cutoff date has been paid down by one-half, if and only so
long as (A) at the time of such transaction and immediately after giving effect
thereto, no Event of Default or Default shall exist, (B) the total Indebtedness
of the Borrower outstanding at the time of such transaction and immediately
after giving effect thereto will not exceed 125% of the Borrower's Tangible Net
Worth as at the end of the fiscal quarter most recently ended, and (C) the
Borrower's Adjusted Pre-Tax Income for the period of the four consecutive
fiscal quarters most recently ended preceding such transaction was not less
than 200% of the Borrower's Debt Service for such period and, at the time of
transaction and immediately after giving effect thereto, such Adjusted Pre-Tax
Income will not be less than 200% of the Borrower's Pro Forma Debt Service for
the one year period immediately following the end of the fiscal quarter most
recently ended.
(l) Pension Plans. The Borrower shall give the County
and the Servicing Agent ten (10) days written notice prior to the institution
by it of a Guaranteed Pension Plan subsequent to the date hereof. The Borrower
covenants as follows with respect to any Guaranteed Pension Plan hereafter
created:
(i) Funding of Pension Plans. The Borrower will
fund any Guaranteed Pension Plan as required by the provisions of Section 302
of ERISA and Section 412 of the Internal Revenue Code of 1986, as amended. The
Borrower will deliver to the Servicing Agent copies of any request for waiver
from the funding standards or extension of the amortization periods required by
Sections 303 and 304 of ERISA or Section 412 of the Internal Revenue Code of
1954, as amended, promptly following the date on which the request is submitted
to the Department of Labor or the Internal Revenue Service.
(ii) Copies of Pension Plan Reports. The Borrower
will send to the Servicing Agent copies of all Forms 5500 and/or Forms 5500C
relating to a Guaranteed Pension Plan together with all attachments thereto,
including any actuarial statement required to be made under Section 103(d) of
ERISA, promptly following the date on which any such form is filed with the
Department of Labor, except, in the case of any multi-employer plans, the
Borrower will cause such Forms and all such attachments thereto to be sent to
the Servicing Agent within a reasonable time after such Forms are filed with
the Department of Labor.
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(iii) Notice of Termination. The Borrower will
furnish to the Servicing Agent forthwith copies of (A) any notice sent by the
Borrower of a Guaranteed Pension Plan termination to the Pension Benefit
Guaranty Corporation under Section 404a(a) of ERISA, or (B) any notice, report,
or demand sent or received by the Borrower under Sections 4041, 4041, 4043,
4063, 4065, 4066 or 4068 of ERISA.
(iv) Payment of Pension Benefits. the Borrower
shall cause any Guaranteed Pension Plan to pay all benefits guaranteed by the
Pension Benefit Guaranty Corporation when due, except where the obligation to
pay such benefits is being contested in good faith by the Borrower.
(v) Terminate Pension Plan. The Borrower will
not terminate, withdraw from, or permit termination of any Guaranteed Pension
Plan if the aggregate asset value of all such Plans is more than $250,000 less
than the value of the benefits guaranteed by the Pension Benefit Guaranty
Corporation.
(vi) Pension Plan Distribution. The Borrower will
not permit any distribution described in Section 4043(b)(7) of ERISA to be made
from any Guaranteed Pension Plan of the Borrower.
(m) Maintenance of Capital. The Borrower will not make
any loan or transfer of assets to any parent, subsidiary or affiliate nor to
any officer, shareholder, director, or employee of the Borrower or to any other
Person, except for temporary advances in the ordinary course of business and
except upon such terms and conditions as may be approved in writing by the
JEDA, and the Borrower shall not purchase its own stock for value.
The Borrower shall not, without the prior written consent of the
Assignee, increase the aggregate compensation of those managers who are a part
of the Borrower's executive compensation plan (Exhibit K) from the current
amount of $1,165,000 to an amount which exceeds the lesser of (i) 10% of the
previous year's aggregate or (ii) an amount which will result in ratios of
aggregate executive salaries (Exhibit K) to sales which are no greater than
.014:1 in 1995; .016:1 in 1996 and .018:1 in 1997 and in each year thereafter;
provided however, that in no event shall overall compensation to management,
including without limitation salaries, bonuses, stock options and other
employee benefits and incentives, exceed industry average for similarly
situation regional air carriers. The compensation shall be set by the
compensation committee of the board of directors, whose membership shall have
two outside board members and one board member from management.
Except to the extent required to prepay the Note, all proceeds from
any public offering of stock of the Borrower within five years following the
Start-up Date shall be paid in as a capital contribution to the Borrower.
(n) Further Assurances. The Borrower shall execute and
deliver to the County or the Servicing Agent such further instruments, provide
it with such further data and information and take such further action as the
Servicing Agent may reasonably request or as
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may be necessary further to effect the purposes of the Loan Documents.
Section 17. Record Keeping and Reporting Requirements.
(a) The Borrower agrees to keep true records and books of
account in which entries will be made in accordance with Generally Accepted
Accounting Principles for the airlines industry as set forth in applicable
guidelines of the Financial Standards Board ("FASB") consistently applied and
will maintain accounts and reserves adequate in the opinion of the management
of the Borrower, for all taxes (including income taxes), all depreciation,
depletion, obsolescence and amortization of its properties, all other
contingencies, and all other proper reserves.
(b) The Borrower shall furnish to the Servicing Agent:
(i) within 120 days of the end of each fiscal
year (commencing with the fiscal year ended August 31, 1995) the balance sheet
of the Borrower, as at the end of such fiscal year and the related statements
of income, stockholders' equity and changes in financial position of each of
the Borrower as at the end of such fiscal year, accompanied in each case by the
report or audit of Deloitte & Touche or, if they cease to be the auditors of
the Borrower, other independent certified public accountants of recognized
national standing, together with a certification of such accountants to the
effect that such financial statements have been prepared in accordance with
Generally Accepted Accounting Principles and FASB guidelines applied on a basis
consistent with prior years (except as to changes described therein with which
such accountants concur) and fairly present the respective financial conditions
of the Borrower at the dates thereof and the results of its operations and
changes in financial position for the periods covered thereby. In addition,
such financial statements of the Borrower shall be accompanied by (A) the
statement of such accountants that they have caused the provisions of this
Agreement and the other Loan Documents to be reviewed and that in the course of
their audit of the Borrower nothing has come to their attention to lead them to
believe that any Default hereunder exists and in particular that they have no
knowledge of any Default under the provisions of Sections 16(c), (d) or (f)
hereof, or, if such is not the case, specifying such Default or possible
Default and the nature thereof, it being understood that the examination of
such accountants cannot be relied upon to give them knowledge of any such
Default except as it relates to accounting or auditing matters, (B)
computations by the Borrower demonstrating, as of the close of such fiscal
year, compliance with Sections 16(c), (d) or (f) hereof, and (C) the
certificate of the President, Chief Financial Officer or other officer approved
in advance by the Servicing Agent of the Borrower,that such officer has caused
the provisions of this Agreement to be reviewed and has no knowledge of any
Default, or if any such officer has such knowledge, specifying such Default,
and the nature thereof, and what action the Borrower has taken, is taking or
proposes to take with respect thereto;
(ii) within 45 days after the end of the first
three fiscal quarters of each fiscal year of the Borrower, the balance sheet of
the Borrower as of the end of such quarter and the related statements of Net
Income, stockholders' equity and changes in financial position for
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the portion of the fiscal year of the Borrower then ended, certified by the
President or Chief Financial Officer or other officer approved in advance by
the Servicing Agent of the Borrower as having been properly prepared in
accordance with Generally Accepted Accounting Principles and FASB guidelines
consistently applied and as fairly presenting the financial position of the
Borrower at the dates thereof and the results of its operations and changes in
financial position for the periods covered thereby, subject only to normal
year-end audit adjustments, together with (A) computations by the Borrower
demonstrating, as of the close of such fiscal quarter, compliance with Sections
16(c), (d) and (f), and if applicable, compliance with Sections 16(e),
16(g)(viii), 16(h)(x), 16(i)(viii), 16(j)(iv), and 16(k), as the case may be,
and (B) a written certificate of such officer that no Default exists as of the
balance sheet date or the date of such certificate or, if any such Default
exists, specifying the same and the actions being taken by the Borrower with
respect thereto;
(iii) by noon on Wednesday of each week, an
operational report for the preceding Monday through Sunday, which shall include
the Borrower's management report, which shall include without limitation the
information specified in Section 4(n) and such other information reflecting the
operations and maintenance performance of the Borrower as the Servicing Agent
shall request from time to time;
(iv) within seven days of becoming aware of the
existence of (A) any condition or event which constitutes an Event of Default
or a default under any other agreement in respect of Indebtedness for borrowed
money or any event which, with notice or lapse of time or both, would
constitute such an Event of Default or default or (B) any threatened or pending
litigation or administrative proceedings which, if adversely determined, could
have a material adverse effect on the business or financial condition of the
Borrower, written notice to the Servicing Agent specifying the nature thereof
and, with respect to (A), the duration thereof and the action proposed to be
taken with respect thereto;
(v) within thirty (30) days of its occurrence,
information with respect to any action, claim or other event involving the
Borrower that could be reasonably expected to result in a loss that would have
a material adverse effect on the business or financial condition of the
Borrower; and
(vi) from time to time such other financial data
and information concerning the Borrower or any Affiliate thereof as the County
or the Servicing Agent may request.
(c) All financial statements delivered and to be
delivered to the Servicing Agent or the County by or on behalf of the Borrower
in connection with this Agreement shall fairly and accurately show the present
and projected financial condition and the income of the Borrower, prepared in
accordance with Generally Accepted Accounting Principles.
Section 18. Inspection. The Borrower, at its own expense, will
permit any authorized agents and representatives of the County or the Servicing
Agent, at any reasonable time and
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from time to time upon reasonable notice to examine and make copies of and
abstracts from the records and books of account of, and visit the properties
of, the Borrower and discuss the general business affairs, assets, liabilities,
financial condition, results of operations and business prospects of the
Borrower with its officers and independent accountants.
Section 19. Reliance upon Advisors. The County and the Servicing
Agent shall have the right from time to time and at any time to request advice
from such attorneys, accountants, appraiser,s engineers, consultants and other
advisors of its choosing and shall have the right to obtain an independent
appraisal of the market value of any Machinery and Equipment and/or Real
Property included in the Financial Covenants, which shall be determined by
appraisers selected by or acceptable to the Servicing Agent. The Borrower
shall be responsible for all reasonable fees and expenses associated therewith.
Section 20. Events of Default. Any one or more of the following
events shall constitute an event of default of the Borrower hereunder (an
"Event of Default"):
(a) if any representation or warranty made herein or in
any report, certificate, financial statement or other instrument furnished in
connection with this Agreement shall prove to be false or misleading in any
material respect;
(b) default in the payment of any installment of the
principal of or interest on the Note and such default shall continue unremedied
for two (2) business days;
(c) the Borrower relocates contrary to the covenants
contained herein, or the Borrower shall cease to be a commercial airline, or
the franchises, concessions, permits, rights or privileges required for the
conduct of the business and operations f the Borrower shall be revoked,
canceled or otherwise terminated or the free and continued use and exercise
thereof curtailed or prevented, and as a result thereof the preponderant
business activity of the Borrower shall cease to be that of a commercial
airline;
(d) failure of the Borrower to observe and perform any
covenant, condition or agreement hereunder on its part to be performed (except
obligations referred to in (b) (c) above) and continuance of such failure for a
period of thirty (30) days after receipt by the Borrower of written notice from
the Servicing Agent or the County, specifying the nature of such failure and
requesting that it be remedied; provided, however, that if, by reason of the
nature of such failure, the same cannot be remedied within the said 30 days and
the Borrower proceeds with reasonable diligence after receipt of said notice to
cure same, such period may be extended upon the prior written consent of the
Servicing Agent;
(e) any document or instrument required to be filed or
recorded on a public registry or record shall not be duly filed, recorded on
such date and time and in such place or places as shall be required to perfect
or continue the perfection of the security interest of the County in and to the
Collateral or of the lien and security interest of any aircraft chattel
mortgage or security agreement constituting a Loan Document;
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(f) any default occurs under the provisions of any other
Loan Document;
(g) any obligation of the Borrower for the payment of
borrowed money (with respect to either principal or interest), shall not be
paid when the same becomes due whether by acceleration or otherwise after the
expiration of any applicable grace period, or shall be declared due and payable
prior to the maturity thereof; or the Borrower shall default in the performance
of any other term, agreement or condition contained in any agreement or
instrument under or by which any such obligation created, evidence or secured,
if the effect of such default is to cause, or permit the holder or holders of
such obligation (or a trustee on behalf of such holder or holders) to cause,
such obligation to become due prior to its stated maturity;
(h) the Borrower shall consent to the appointment of a
receiver, trustee or liquidator of itself for of a substantial part of its
property, or shall admit in writing its inability to pay its debts generally as
they come due, or shall make a general assignment for the benefit of creditors;
(i) the Borrower shall file a voluntary petition in
bankruptcy or a voluntary petition or an answer seeking reorganization in a
proceeding under any bankruptcy laws (as now or hereafter in effect) or an
answer admitting the material allegations or a petition filed against it in any
such proceeding, or it shall, by voluntary petition, answer or consent, seek
relief under the provision of any other now existing or future bankruptcy or
other similar law providing for the reorganization or winding-up of
corporations, or providing for an agreement, composition. extension or
adjustment with its creditors;
(j) an order, judgment or decree shall be entered in any
proceeding by any court of competent jurisdiction appointing, without the
consent of the Borrower, a receiver, trustee or liquidator of the Borrower or
of any substantial part of its property, or sequestering any substantial part
of its property, and any such order, judgment or decree of appointment or
sequestration shall remain in force undismissed, unstayed or unvacated for a
period of 90 days after the date of entry thereof;
(k) a petition against the Borrower in a proceeding under
applicable bankruptcy laws or other insolvency laws as now or hereafter in
effect, shall be filed and shall not be withdrawn or dismissed within 30 days
thereafter, or if, under the provisions of any law providing for reorganization
or winding-up of corporations which may apply to the Borrower, any court of
competent jurisdiction shall assume jurisdiction, custody or control of it or
of any substantial part of its property and such jurisdiction, custody or
control shall remain in force unrelinquished, unstayed or unterminated for a
period of 30 days; or
(l) final judgment for the payment of money in excess of
$100,000 shall be rendered against the Borrower and shall remain undischarged
for a period of 30 days during which execution of such judgment shall not be
effectively stayed.
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Section 21. Remedies of the County.
(a) If any Event of Default shall occur and be
continuing, then the County, through the Servicing Agent or in its own right,
may, forthwith and,to the extent permitted by law, without notice of any kind
to the Borrower exercise any of the following remedies:
(i) declare the entire principal amount of the
Note to be due and payable forthwith, whereupon the Note shall become
forthwith, due and payable, both as to principal and interest, without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived, anything contained herein or in the Note to the
contrary notwithstanding;
(ii) take any action at law or in equity to
collect the payments than due and thereafter to become due under the Note or to
enforce performance and observance of any obligation, agreement or covenant of
the Borrower under this Agreement or any other Loan Document;
(iii) exercise all the rights and remedies upon
default, in foreclosure and otherwise, available under any of the Loan
Documents or available to mortgagees or secured parties under the provision of
applicable law, including without limitation all the rights and remedies under
Article 9 of the Uniform Commercial Code of the State;
(iv) institute legal proceedings to foreclose upon
and against the lien and security interest granted by any Loan Document to
recover judgment for all amounts then due and owing as obligations secured
hereby, and to collect the same out of any or all of the Collateral or the
proceeds of any sale thereof;
(v) sell, or to the extent required by applicable
law, institute legal proceedings for the sale, under the judgment or decree of
any court of competent jurisdiction, or any or all of the Collateral;
(vi) without regard to the adequacy of the value
of the Collateral used as security for the obligations of the Borrower
hereunder the other Loan Documents or to the solvency of the borrower,
institute legal proceedings for the appointment of a receiver or receivers;
(vii) personally or by agents or attorneys, and with
or, to the extent permitted by applicable law, without further notice or legal
process, enter upon any premises part thereof, including all records relating
to the Collateral, without being responsible for loss or damage to any
Collateral as to which the county or the Servicing Agent has taken possession,
hold, remove, store, and keep idle, or lease, operate, or otherwise use or
permit the use of, the Collateral or any part thereof, for such time and upon
such terms as the County or the Servicing Agent, as the case may be, may in its
sole and complete discretion deem to be in the County's own best interest, and
demand, collect, and retain all rents, earnings, and other sums due and to
become due in respect of the same from any party whomsoever, accounting only
for net
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earnings, if any, arising from such use and charging against all receipts from
the use of the same or from the sale thereof, by court subsection (b) below,
all other costs, expenses, charges, damages, and other losses resulting from
such use.
(b) If the County or the Servicing Agent should elect to
foreclose upon and against the lien and security interest created in and by any
Loan Document or take possession of the Collateral thereunder,the Borrower
shall, upon demand of the county or the servicing Agent, deliver to the County
or the servicing Agent, all or any part of the Collateral at such time or times
and place or places as the County or the Servicing Agent may specify.
(c) At any sale pursuant to this section, whether under
the power of sale or by virtue of judicial proceedings, it shall not be
necessary for the County, the Servicing Agent or a public officer under order
of a court to have present physical or constructive possession of the
Collateral to be sold. the recitals contained in any conveyances and receipts
made and given by the County or such public officer to any purchaser at any
sale pursuant to any Loan Document shall, to the extent permitted by applicable
law, conclusively establish the truth and accuracy of the matters therein
stated (including, without limiting the generality of the forgoing, the
obligations of the Borrower hereunder, under the Loan Documents and the accrual
and nonpayment thereof and advertisement and conduct of such sale in the manner
provided herein and by applicable law); and all prerequisites to such sale
shall be presumed to have been satisfied and performed. Upon any sale
hereunder or under any Loan Document of any or all of the Collateral of any
interest therein, the receipt of the officer making such sale upon judicial
proceedings or of the county or the servicing Agent shall be sufficient
discharge to the application thereof. Any sale hereunder of any or all of the
Collateral or any interest therein shall forever by a perpetual bar against the
Borrower with respect to such Collateral or interest therein, as the case may
be.
Upon any such sale or other disposition, the Borrower
shall then be liable for the difference between the loan payments and other
amounts due under this Agreement and the Note and amounts received pursuant to
such assignment or contract of sale or lease or other disposition of the
Borrower's interest in the Collateral, and the amount of such difference shall
then be immediately due and payable. The Borrower also agrees that in the
event the County or the Servicing Agent does take possession of the Collateral
as provided herein, the obligation of the Borrower to pay such loan payments
due or to become due under this Agreement and Note shall survive such
repossession.
The County, acting in its own or through the
Servicing Agent, may sell, lease and dispose of, or cause to be sold, leased
and disposed of all or any part of the Collateral at one or more public or
private sales, leasing or other dispositions, at such places and times, and on
such terms and conditions as the County or the Servicing Agent, as the case may
be, may deem fit, with or without any previous demand or notice to the Borrower
or advertisement of any such sale, lease or other disposal to the fullest
extent permitted by law; and for the aforesaid purpose all notices of sale,
lease or other disposition, and advertisement, and other notice or
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demand, any right or equity of redemption, and any obligation of a prospective
purchaser or lessee to inquire as to the power and authority of the County to
sell, lease or otherwise dispose of the Collateral or as to the application by
the County or the Servicing Agent, as the case may be, of the proceeds of sale,
lease or otherwise, which would otherwise be required by, or available to the
borrower under, applicable law are hereby expressly waived by the Borrower to
the fullest extent permitted by such Law. In the event that any mandatory
requirement of applicable law shall obligate the County or the Servicing Agent,
as the case may be, to give prior notice to the Borrower of any of the
foregoing acts, the Borrower hereby agrees that a written notice sent to it so
as reasonably to be expected to be delivered to the Borrower at least five (5)
business days before the date of any such act as its address specified for the
Borrower in any Loan Document, shall be deemed to be reasonable notice of such
act and, specifically, reasonable notification of the time after which any
private sale, lease or other disposition intended to be made hereunder is to be
made.
(d) If the County or the Servicing Agent shall have
proceeded to enforce the rights of the County under this Agreement and such
proceedings shall have been discontinued or abandoned for any reason or shall
have been determined adversely to the county, then the Borrower and the County
shall be restored respectively to their several positions and rights hereunder,
and all rights, remedies and powers of the Borrower and the County shall
continue as though no such proceedings had taken place.
(e) No remedy herein conferred or reserved to the County
is intended to be exclusive of any other available remedy or remedies, but each
and every such remedy shall be cumulative and shall be in addition to every
other remedy given under this Agreement or now or hereafter existing at law or
in equity or by statute. No delay or omission to exercise any right or power
accruing upon any default shall impair any such right or power or shall be
construed to be a waiver thereof; nor shall any single or partial exercise of
any right hereunder preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and
not exclusive of any remedies provided by law, and any such right and power may
be exercised from time to time and as often as may be deemed expedient. In
order to entitle the County to exercise any remedy reserved to it in this
Section, it shall not be necessary to give notice other than such notice as may
be required in this Section.
(f) In addition to the above remedies, if the Borrower
commits a breach, or threatens to commit a breach of this Agreement, the
County, in its own right or acting through the Servicing Agent, shall have the
right and remedy, without posting bond or other security, to have the
provisions of this Agreement specifically enforced by any court having equity
jurisdiction, it being acknowledged and agreed that any such breach or
threatened breach will cause irreparable injury to the County and that money
damages will not provide an adequate remedy therefor.
(g) In the event the Borrower shall default under any of
the provisions of this Agreement and the County or the Servicing Agent shall
require and employ attorneys or incur other expenses for the collection of
payments due or to become due for the enforcement
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or performance or observance of any obligation or agreement on the part of the
Borrower herein contained, the Borrower shall on demand therefor pay to the
County and the Servicing Agent, the reasonable fees of such attorneys and other
expenses so incurred by the County and/or the Servicing agent.
(h) Neither the County nor the Servicing Agent shall be
required to do any act whatsoever or exercise any diligence whatsoever to
mitigate the damages to the Borrower if an Event of Default shall occur
hereunder.
Section 22. Expenses. The Borrower agrees to pay on demand all
reasonable costs and expenses in connection with the review, preparation,
execution, delivery, and administration of this Agreement, the other Loan
Documents, the HUD Contract, the Fiscal Agency Agreement, the Air South
HUD-Guaranteed Note and any other documents which may be delivered in
connection herewith and therewith, including without limitation the reasonable
fees and out-of-pocket expenses of counsel for the County, JEDA and the
Servicing Agent with respect thereto and with respect to advising the County,
JEDA and the Servicing Agent as to their respective rights and responsibilities
under this Agreement and any such other document, and all costs and expenses,
if any, in connection with the enforcement of this Agreement, the other Loan
Documents and such other documents which may be delivered in connection
herewith and therewith. In addition, the Borrower shall pay any and all stamp
and other taxes and fees payable or determined to be payable in connection with
the execution, delivery, filing and recording of this Agreement, the other Loan
Documents and such other documents and agrees to save the County, JEDA and the
Servicing Agent harmless from and against any and all liabilities with respect
to or resulting from any delay in paying or omission to pay such taxes and
fees.
Upon the failure of the Borrower to pay any such fees,expenses
or costs to be paid by the Borrower, the Servicing Agent may, in its sole
discretion and without notice to any person, disburse moneys under the Loan on
behalf of the County to pay the same.
Section 23. Release and Indemnification. The Borrower hereby
releases the County, JEDA, the State and the Servicing Agent from, and agrees
that the County, JEDA, the State and the Servicing Agent, and their respective
officers, directors, members, employees, attorneys and agents shall not be
liable for, and agrees to indemnify and hold harmless the County, JEDA, the
State and the Servicing Agent and their respective officers, directors,
members, employees, attorneys and agents against:
(a) any liability, cost or expense in the
administration of the HUD Contract, the Air South HUD-Guaranteed Note,the Loan,
this Agreement and the other Loan Documents (hereinafter collectively referred
to as the "HUD Documents") and the obligations imposed on the County, JEDA, the
State and the Servicing Agent hereby and thereby;
(b) any or all liability or loss, cost or
expense, including reasonable attorneys' fees, resulting from or arising out of
any loss or damage to property or any injury to
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or death or any person occurring in connection with or on or about the
Corporate Headquarters or the Sir South Operations or resulting from any defect
in the fixtures, machinery, equipment or other property used in connection with
the Corporate Headquarters or the Air South Operations or arising out of,
pertaining to, or having any connection with, the Corporate Headquarters or the
Air South Operations or the financing thereof (whether or not arising out of
acts, omissions or negligence of the Borrower or any of its agents,
contractors, servants, employees, licensees, lessees or assignees);
(c) any or all liabilities or loss, cost or
expense including attorneys' fees, arising out of or in connection with or
pertaining to the issuance, sale or delivery of the Air South HUD-Guaranteed
Note including, but not limited to, liabilities arising under the Securities
Act of 1933, the Securities Exchange Act of 1934 or any applicable state
securities laws, but such indemnity for securities liabilities shall be subject
to the limitation that the Borrower shall not be liable for any representations
made with respect to the county, JEDA, the State or the Servicing Agent; and
(d) any or all liability or loss, cost or
expense, including attorneys' fees, arising out of or in connection with or
pertaining to the transactions contemplated under this Agreement, the other
Loan Documents or the HUD Documents, including without limitation any
liability, loss, cost or expense arising under the environmental laws of any
jurisdiction.
Notwithstanding the fact that it is in the intention of the parties
hereto that neither the County, JEDA, the State, the Servicing Agent nor their
respective officers, directors, members, employees, attorneys and agent shall
incur any pecuniary liability by reason of the terms of this Agreement or other
Section 108 Documents, or the undertakings required of the County, JEDA, the
State and the Servicing Agent hereunder and thereunder, by reason of the
issuance and sale of the Air South HUD-Guaranteed Note, the execution of the
Section 108 Documents or the performance of any act requested of the County,
JEDA, the State or the Servicing Agent by the Borrower, including all claims,
liabilities or losses arising in connection with the violation of any statues
or regulations pertaining to the foregoing, nevertheless, if the County, JEDA,
the State or the Servicing Agent, or any of their respective officers,
directors, members, employees, attorneys or agents should incur any such
pecuniary liability, then in such event, the Borrower shall indemnify and hold
the County, JEDA, the State and the Servicing Agent, and their respective
officers, directors, members, employees, attorneys and agents harmless against
all claims by or on behalf of any person, firm or corporation or other legal
entity arising out of the same and all costs and expenses incurred in
connection with any such claim or in connection with any action or proceeding
brought thereon. Upon notice from the County, JEDA, the State or the Servicing
Agent, the Borrower shall defend the County, JEDA, the State, the Servicing
Agent and their respective officer, directors, members, employees, attorneys
and agents in any such action or proceeding. If called upon to provide
indemnity under this Section 23, the Borrower shall be subrogated to the rights
of the indemnified party.
Section 24. Continuing Obligation: No Assignment by Borrower. All
covenants, agreements, representations and warranties made or incorporated
herein and in certificates delivered pursuant hereto shall be deemed to have
been material and relied on by the County,
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notwithstanding any investigation made by the County or on its behalf, and
shall survive the execution and delivery hereof and thereof. This Agreement is
a continuing obligation and shall (a) be binding upon the parties and their
respective successors and assigns and (b) inure to the benefit of and be
enforceable by the parties and their respective successors, transferees and
assigns; provided, that the Borrower may not assign all or any part of this
Agreement without the prior written consent of JEDA as Assignee.
Section 25. Notices. Any notices required to be sent under this
Agreement shall be sent to the following addresses, unless any party shall have
provided the other parties with written notice to the contrary:
(1) The County at: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(2) JEDA at: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(3) The Borrower at: ▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Section 26. Miscellaneous.
(a) This Agreement and the Loan Documents constitute the
entire agreement as to the Loan, and supersede all prior agreements and
understandings, both written and oral among the parties with respect to the
subject matter hereof and may be executed simultaneously in several
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
(b) Modifications or waivers of any provisions of this
Agreement or the Note must be in writing.
(c) The execution, delivery and performance of this
Agreement shall not be deemed a waiver of any deferral of sovereign immunity
which may otherwise be available to a governmental body or entity of South
Carolina.
(d) In the event any provision of this Agreement shall be
held invalid or unenforceable by any court of competent jurisdiction, such
holding shall not invalidate or render unenforceable any other provision
thereof.
(e) This Agreement shall become effective upon its
execution and delivery by the parties hereto, shall remain in full force from
the date hereof and, subject to the provisions hereof, shall expire on such
date as the Note and the interest thereon and all other expenses or sums to
which the County and the Servicing Agent are entitled, have been fully paid and
retired; provided, however, that the obligation of the Borrower to pay
additional interest with respect
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to the Note in the event it fails to comply with the low to moderate income
hiring requirement, shall survive payment of the Note, and this Agreement shall
not expire until such obligation is satisfied.
(f) This Agreement shall inure to the benefit of and be
binding upon the successors and assigns of the County and the Borrower.
(g) This Agreement shall be construed and enforced under
the laws of the State of South Carolina. Be executing this Loan, the Borrower
agrees to submit to the jurisdiction in the courts of the State of south
Carolina or the appropriate federal courts for all matters arising or to arise
hereunder.
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IN WITNESS WHEREOF, the County and the Borrower have caused
this Agreement to be executed in their respective names by their manual
signatures as of the date first above written.
COUNTY OF LEXINGTON
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Council Chairman
(SEAL)
ATTEST:
By: /s/ Dot Black
------------------------
Dot Black
Clerk to Council
AIR SOUTH, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇'▇▇▇▇
-------------------
▇▇▇▇▇▇▇ ▇'▇▇▇▇
President
(SEAL)
ATTEST:
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
------------------------
▇▇▇▇▇▇ ▇▇▇▇▇, Secretary
48
EXHIBIT A
Definitions
The following terms as used in the Agreement and any certificate or document
executed in connection therewith shall have the following meanings (or are
defined elsewhere in this Agreement as indicated below) unless the context
otherwise indicates:
"Account Debtor" means a person who is obligated on a Receivable.
"Adjusted Pre-Tax Income", for any period, means the sum of (a) Net
Income for such period plus (b) all amounts in respect of federal and state
income taxes deducted in determining such Net Income, plus (c) all amounts
deducted in calculating such Net Income in respect of depreciation,
amortization, interest expense (including payments in the nature of interest
under Capitalized Leases).
"Affiliate" means any Person directly or indirectly controlling,
controlled by or under direct or indirect common control with the Borrower and
shall include without limitation (i) each Person who is an officer or director
of the Borrower or members of their immediate families (whether or not living
under the same roof), or any direct or indirect beneficial holder of at least
5% of the outstanding equity securities of the Borrower having the general
power to vote and (ii) any Person of which the Borrower or an Affiliate (as
defined in clause (i) above) of the Borrower shall, directly or indirectly,
either beneficially own at least 5% of the outstanding equity securities having
the general power to vote or constitute at least a 5% participant.
"Agreement" means this Loan Agreement dated as of July 15, 1994,
between the County and the Borrower, as amended from time to time pursuant to
the terms hereof.
"Air South HUD-Guaranteed Note" - see recitals.
"Air South Operations" means the air carrier services and related
business of the Borrower, which shall be conducted substantially in accordance
with the Business Plan.
"Assignee" means JEDA, as assignee of the County's right, title and
interest in and to the Note, the Collateral and under this Agreement and the
other Loan Documents, all in accordance with the Assignment and Servicing
Agreement, and its successors and assigns.
"Assignment and Servicing Agreement" means the Assignment and
Servicing Agreement of even date with the Agreement among the County, JEDA and
the Borrower, as amended from time to time pursuant to the terms thereof.
"Borrower" means Air South, Inc., a corporation organized and existing
under the laws of the State of Illinois, and its permitted successors and
assigns.
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"Business Day" means any Monday through Friday except a day on which
federal or state offices are authorized to be closed or banks operating in the
state are authorized to be closed.
"Business Plan" means the Business Plan of the Borrower dated February
17, 1994, as the same may be amended from time to time by the Borrower with the
prior written consent of JEDA in its capacity as Assignee.
"Capitalized Lease" means any lease which is or should be capitalized
on the balance sheet of the lessee in accordance with generally accepted
accounting principles and Statement No. 13 of the Financial Accounting
Standards Board.
"Capitalized Lease Obligations" means the amount of the liability
reflecting the aggregate discounted amount of future payments under all
Capitalized Leases calculated in accordance with generally accepted accounting
principles and Statement No. 13 of the Financial Accounting Standards Board.
"Cash Flow Shortfall" means, as of the date of any calculation, the
excess of the Operating Reserve Amount over the Ending Cash Balance.
"Charter" shall include the articles or certificate of incorporation,
statue, constitution, joint venture or partnership agreement or articles or
other charter of any Person other than an individual, each as from time to time
amended or modified.
"City" means the City of Columbia, South Carolina.
"Collateral" means all assets of the Borrower (see Section 4(d)).
"Controlling Owners" means those shareholders of the Borrower shown on
EXHIBIT J attached hereto and their respective successors and assigns.
"Corporate Headquarters" means Borrower's corporate headquarters and
central reservation center in the City.
"CDBG Pledge" means the pledge of the County and State's entitlements
to Community Development Block Grant monies to the Secretary with respect to
the Air South HUD-Guaranteed Note.
"County" means the County of Lexington, a body corporate and politic,
and a political subdivision of the State, and its successors and assigns.
"Current Liabilities" means all liabilities of the indicated Person
maturing on demand or within one year from the date as of which current
liabilities are to be determined and such other liabilities (including taxes
accrued or estimated and amounts owed which have accelerated) as may properly
be classified as current liabilities on a balance sheet in accordance with
Generally
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Accepted Accounting Principles.
"Cutoff Date" means the earlier of april 1, 1996 or the date of an
initial public offering of stock in the Borrower.
"Debt Service" means, for any period for which the amount thereof
shall be determined, the aggregate amount of all interest and of all mandatory
payments, prepayments and sinking fund payments of principal (including
payments in the nature of principal and interest under Capitalized Leases)
required to be accrued or paid by the Borrower on all Indebtedness of the
Borrower for borrowed money or in respect of Capitalized Leases or secured by
purchase money Liens, including, without limitation, all Indebtedness of the
Borrower under this Agreement and any other Loan Document, all as determined in
accordance with Generally Accepted Accounting Principles.
"Default" means any Event of Default or any event, circumstance or
condition which, with the giving of notice or the passage of time or both,
would constitute an Event of Default.
"Default Rate" means, upon the time of any determination thereof, the
rate of interest per annum then applicable to the Note plus two percent (2%).
"Distribution" means the declaration or payment of any dividend on or
in respect of any shares of any class of capital stock of the Borrower, other
than dividends payable solely in shares of capital stock of the Borrower; the
purchase of other retirement of any shares of any class of capital stock of the
Borrower, directly or indirectly; or any other distribution on or in respect of
any shares of any class of capital stock of the Borrower.
"Emergency Cash Reserve Account" means the account of such name
established jointly by the Servicing Agent and the Borrower pursuant to the
provisions of Section 5(b) of this Agreement.
"Ending Cash Balance" shall mean the actual ending cash balance of the
Borrower as of the end of any reporting period, calculated in accordance with
generally accepted accounting practices applied consistently.
"Equity Contributions" means paid in contributions to capital and
shall include an amount representing in-kind contributions of not more than
$250,000, but shall exclude any contributions made with funds borrowed from the
Borrower and amount equal to any grants from the State or from the City, the
County, Richland County or any other governmental or quasi-governmental entity.
"ERISA" means the Employees Retirement Income Security Act of 1974, as
amended from time to time.
"Event of Default" - See Section 20.
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"FAA" means the Federal Aviation Administration.
"Federal Act" means Section 108 of the Housing and Community
Development Act of 1974, as amended.
"Federal Regulations" means the regulations promulgated under the
Federal Act and other federal regulations applicable to the transactions
contemplated hereby.
"Financing statements" means any financing statements required to be
filed under the uniform commercial code as in effect in any state where such a
financing statement is required to be filed with respect to the Security
Interest.
"Fiscal Agency Agreement" means the fiscal Agency Agreement to be
entered into between the Fiscal Agent and the County pursuant to the HUD
Contract, as from time to time in effect.
"Fiscal Agent" means Chemical Bank or such other fiscal agent as may
be appointed from time to time pursuant to the fiscal Agency Agreement.
"Generally Accepted Accounting Principles" means generally accepted
accounting principles as defined by the financial Accounting Standards Board as
from time to time in effect that are consistently applied.
"Government Obligations" means direct obligations of, or any
obligation for which the full and timely payment of principal and interest is
guaranteed by, the United States of America, including but not limited to,
United States Treasury Certificates of Indebtedness, Notes and Bonds - State
and Local Government Series, or certificates of ownership of the principal of
or interest on direct obligations of, or obligations unconditionally guaranteed
by, the United States of America, which obligations are held in trust by a
commercial bank which is a member of the Federal Reserve System and has capital
and surplus (exclusive of undivided profits) in excess of $100,000,000.
"Guarantee" means (a) any guarantee of the payment or performance of
any Indebtedness or other obligation of any obligor, and (b) any other
arrangement whereby credit is extended to one obligor on the basis of any
promise or undertaking of another Person, whether that promise or undertaking
is expressed in terms of any obligation to pay the Indebtedness of such
obligor, or to purchase or lease assets under circumstances that would enable
such obligor to discharge one or more of its obligations or to maintain the
capital, working capital, solvency or general financial condition of such
obligor, whether or not such arrangement is disclosed in the balance sheet of
such other person or is a footnote thereto.
"Guaranteed Pension Plan" means any pension plan maintained by the
Borrower or to which it contributes, the benefits under which are guaranteed in
whole or in part by the Pension Benefit Guaranty Corporation, or any profit
sharing plan maintained by the Borrower pursuant
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to the business Plan.
"HUD" means the United States Department of Housing and Urban
Development.
"HUD Contract" means that certain Contract for Loan Guarantee
Assistance under Section 108 of the Housing and Urban Development Act of 1974,
as amended, 42 U.S.C. Section 5308 to be entered into by the County, JEDA and
HUD.
"HUD Documents" means the HUD Contract, the HUD Guarantee, the Fiscal
Agency Agreement and the Air South HUD-Guaranteed Note.
"HUD Guarantee" means the guarantee provided by HUD under Section 108
of the Federal Act.
"HUD-Guaranteed Notes" means those notes guaranteed by HUD under the
Federal Act.
"Indebtedness" means all obligations, contingent and otherwise, which
in accordance with Generally Accepted Accounting Principles should be
classified upon the balance sheet of the obligor as liabilities, but in any
event including liabilities secured by any mortgage, pledge, security interest,
lien, charge or other encumbrance existing on property owned or secured of the
obligor, whether or not the liability secured thereby shall have been assumed,
obligations under leases which are capitalized on the balance sheet of the
obligor in accordance with Generally Accepted Accounting Principles
consistently followed, and all obligations on account of Guarantees in respect
to the Indebtedness of others and obligations to reimburse the issuer of a
letter of credit, whether or not reflected on such balance sheet or in a
footnote thereto.
"Investments" means the aggregate of all expenditures made and all
liabilities incurred (contingently or otherwise) for the acquisition of stock
or Indebtedness of, or for loans, advances, capital contributions or transfer
of property to, or in respect of any guarantees (or other commitments as
described under Indebtedness) or obligations of any Person, except transfer of
property to, or in respect of any guarantees (or other commitments as described
under Indebtedness) or obligations of any Person, except transfers or
deliveries made against receipt of full value in cash or made in the ordinary
course of business. In determining the aggregate amount of Investments
outstanding at any particular time (a) the amount of any Investment represented
by a guarantee shall be taken at not less than the principal amount of the
obligations guaranteed and still outstanding: (b) there shall be included as an
Investment all interest accrued with respect to Indebtedness constituting an
Investment unless and until such interest is paid; (c) there shall be deducted
in respect of each such Investment any amount received as a return of capital
(but only by repurchase, redemption, retirement, repayment, liquidating
dividend or liquidating distribution); (d) there shall not be deducted in
respect of any Investment any amount received as earnings on such Investment,
the foregoing clause (b) may be deducted when paid; and (e) there shall not be
deducted from the aggregate amount of Investments any decrease in the value
thereof.
"JEDA" means the South Carolina Jobs-Economic Development Authority,
and its
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successors and assigns.
"Lien" - See Section 16(h).
"Loan" - See Section 2(a).
"Loan Documents" means the Agreement, the Note, the Security
Agreement, the Assignment and Servicing Agreement, any Security Document, any
Financing Statements and any other document, instrument or agreement
hereinafter entered into in connection with the transactions contemplated by
the Agreement.
"Local Memorandum" means the Memorandum of Understanding among the
County, Richland County, the City and the Borrower dated March 15, 1994.
"Machinery and Equipment", with respect to any Person, includes, in
each case whether now or hereafter existing or now owned or hereafter acquired
by such Person and wherever located, all goods, as defined in Article 9 of the
Uniform Commercial Code, and all replacements and substitutions therefor and
all accessions thereto and proceeds thereof, which good shall include but not
limited to all machinery, equipment and fixtures but shall exclude any goods
that constitute inventory.
"Net Income," for any period, means the net after-tax income of the
indicated Person for such period determined in accordance with Generally
Accepted Accounting Principles after eliminating all intercompany items and
after deducting portions of net income properly attributable to minority
interest, if any, in Subsidiaries, provided, however that there shall be
excluded for net income: (i) the income (or deficit) of any Person accrued
prior to the date it becomes a Subsidiary or is merged into or consolidated
with the Borrower or a Subsidiary, (ii) the income (or deficit) of any Person
(other than a Subsidiary) in which the Borrower or any Subsidiary except to
the extent that any such income has actually been received by the Borrower or
such Subsidiary in the form of cash dividends or similar distribution, all
computed net of taxes attributable to such excluded or included income, (iii)
any income resulting from any write-up of any asset, (iv) any restoration of
any contingency reserve, except to the extent that provision for such reserve
was made out of income during such period, (v) any net gain arising from the
collection of the proceeds of any insurance policy, and (vi) any net gains or
losses during such period arising from extraordinary or nonrecurring
transaction (net of any tax effect).
"Note" means the note from Borrower to the County executed in the form
attached as Exhibit B.
"Operating Reserve Amount" means, as of the end of any reporting
period, the amount specified as the ending cash balance in the Borrower's pro
forma cash flow statement as set forth in the Business Plan.
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"Opinion of Counsel" means an opinion of an attorney or firm of
attorneys, reasonably acceptable to the Servicing Agent, and acceptable to the
Servicing Agent as to form and substance.
"Pension Benefit Guaranty Corporation" means the Pension Benefit
Guaranty Corporation created by Section 4002 of ERISA and any successor entity
having similar responsibilities.
"Person" means a corporation, association, partnership, joint venture,
trust, organization, business, individual or government of any governmental
agency or political subdivision thereof.
"Principal Operating Base" means the principal operating base of the
Borrower at Columbia Metropolitan Airport at which shall be headquartered all
pilots and flight attendants.
"Pro Forma Debt Service" shall mean, at any time, the aggregate amount
of (i) all interest and all amortization of debt discount and expense
(including the imputed interest portions of rentals under Capitalized Leases)
and (ii) all mandatory payments, prepayments and sinking fund payments of
principal (including the imputed principal portion of rentals under any
Capitalized Leases) which will be accrued on a pro forma basis by the Borrower
on all Indebtedness of the Borrower for borrowed money or in respect of
Capitalized Leases or secured by purchase money Liens, in each case for the
period of one year next following the date as of which such determination is
made assuming that all such Indebtedness remains outstanding for the entire
period (subject to scheduled reductions), all as reflected in the Business
Plan. When the interest on any such Indebtedness varies with or depends on a
floating rate of interest, the rate in effect on the date of determination will
be assumed to remain constant during the entire period for which Pro Forma Debt
Service is being computed.
"Project Account" means the account established pursuant to Section
5(a) hereof.
"Public Offering Date" means the public offering date as described in
the Air South HUD-Guaranteed Note.
"Real Property" means the real property and improvements and fixtures
located thereon that are subject to the Security Interest and all other such
property now owned or hereafter acquired by the Borrower or in which the
Borrower now has or hereafter acquires an interest, wherever located.
"Registered Creditors" means those suppliers or service providers
identified by the Borrower as critical to its operations and as to which the
Servicing Agent has entered into an agreement on behalf of the County as
provided in Section 5(c) hereof.
"Scheduled Draw" means the anticipated disbursements described in
Section (7d) hereof.
"Secretary" means the Secretary of HUD.
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"Security Agreement" means that certain Security Agreement and Chattel
Mortgage of even date with the Agreement between the County and the Borrower,
as amended from time to time pursuant to the terms thereof.
"Security Document" means any mortgage, security agreement, assignment
or other agreement or instrument creating or affecting a conveyance, fee, lien
or other security interest in favor of or for the benefit of the County as
security for the obligations of the Borrower under this Agreement, as from time
to time in effect.
"Security Interest" means the mortgages, pledges and assignments to
the County of, the continuing interest of the County in, and the continuing
lien of the County upon, the Collateral provided or contemplated by the terms
of the Agreement and the other Loan Documents.
"Servicing Agent" means JEDA, acting in such capacity pursuant hereto
and to the Assignment and Service Agreement, and its successors and assigns.
"Start-up Date" means the date the Borrower initiates regularly
scheduled passenger service from the Columbia Metropolitan Airport.
"State" means the State of South Carolina.
"State Act" means Section 6-1-30 of the Code of Laws of South
Carolina, 1976, as amended.
"State Memorandum" means the Memorandum of Understanding between the
Borrower and the State dated March 25, 1994.
"Subsidiary" means any Person of which the Borrower or other specified
Person shall at the time own, directly or indirectly through a Subsidiary,
sufficient voting stock or voting rights to entitle it to elect at least a
majority of board of directors or similar managing body.
"Tangible Net Worth" means the aggregate of the capital stock (but
excluding treasury stock and capital stock subscribed and unissued) and surplus
(including earned surplus, capital surplus and the balance of the current
profit and loss account not transferred to surplus) of the Borrower as the same
properly appears on a consolidated balance sheet of the Borrower prepared in
accordance with Generally Accepted Accounting Principles, less the sum of
(a) the total book value of all assets of the Borrower which
would be treated as intangibles under Generally Accepted Accounting Principles
including, without limitation, such items as good will, trademarks, trade
names, service marks, brand names, copyrights, patents and licenses, and rights
with respect to the foregoing, and
(b) all amounts representing any write-up in the book value of
any assets of the
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Borrower resulting from a revaluation thereof subsequent to March 31, 1994.
"Total Indebtedness" means all Indebtedness (a) for money borrowed,
(b) in respect of Capitalized Lease Obligations, and (c) secured by purchase
money Liens, and all Guarantees of any Indebtedness of the types described in
clauses (a), (b) and (c).
"Uniform Commercial Code" means the Uniform Commercial Code as in
effect from time to time in the State of South Carolina.
Any reference in the Agreement to Borrower, JEDA, the Assignee, the
Servicing Agent or the County shall include those which succeed to heir
functions, duties or responsibilities pursuant to or by operation of law or who
are lawfully performing their functions. Any reference in this Agreement to
any statute or law or chapter or section thereof shall include all amendments,
supplements or successor provisions thereto.
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EXHIBIT B
[FORM OF NOTE]
PROMISSORY NOTE
Dated: August ___, 1994 $12,000,000
AIR SOUTH, INC. (the "Borrower"), a corporation organized and
existing under the laws of the State of Illinois, acknowledges itself indebted
and for value received hereby promises to pay to the order of LEXINGTON COUNTY,
SOUTH CAROLINA (the "County") and its successors and assigns, the principal sum
of TWELVE MILLION DOLLARS ($12,000,000), or so much thereof as has been
advanced hereunder from time to time as shown on the Schedule of Advances
attached hereto until the close of business on April 1, 1996 (the "Cutoff
Date"), together with interest at the rate or rates hereinafter provided on the
unpaid principal balance hereof from the date of the initial advance to the
Borrower hereunder until the Borrower's obligations with respect to the payment
of such sums shall be discharged. Interest charges shall be computed hereunder
on the basis of a 360 day year, counting the actual number of days elapsed.
This Note is issued to evidence the obligation of the Borrower
under and pursuant to, and shall be governed by and construed in accordance
with the terms and conditions of the Loan Agreement (the "Agreement") between
the County and the Borrower dated as of July 15, 1994 for the repayment of the
loan made by the County to the Borrower thereunder and payment of interest
hereon. Capitalized terms used herein not otherwise defined herein have the
meanings specified in the Agreement. This Note is secured, inter alia, by a
Security Agreement and Chattel Mortgage dated as of July 15, 1994 executed by
the Borrower as Debtor and delivered to the County as Secured Party on all
assets of the Borrower except certain assets expressly excluded thereunder.
This Note will be serviced by the Servicing Agent designated in the Assignment
and Servicing Agreement by and among the County, the Borrower and JEDA (the
"Servicing Agreement").
The initial interest rate on this Note shall be a rate per
annum equal to four percent (4%) through July 31, 1997. Effective August 1,
1997 and as of any public offering date as described in the Air South
HUD-Guaranteed Note after August 1, 1997, the interest rate shall be adjusted
to the rate per annum sufficient to enable the County and JEDA to recoup
interest and other reasonable costs associated with the Air South
HUD-Guaranteed Note. The interest rate payable with respect to the Note also
shall be subject to modification at the end of five years from the Start-up
Date to the extent that JEDA, in its capacity as Assignee, in its sole
discretion determines that the Borrower's net operating income has progressed
to a level which no longer justifies below-market financing or continuation of
public subsidy. The Servicing Agent shall, in its sole discretion, determine
the new interest rate, if any, applicable to this Note, which shall be that
rate per annum determined by the Servicing Agent as appropriate based
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upon the creditworthiness of the Borrower at that time, which rate shall not
exceed the then prevailing commercial loan rates for similar credits. JEDA
shall instruct the Servicing Agent to calculate, and notify the Borrower of,
such rate modification within one year following the fifth anniversary of the
Start-up Date, and such modified rate shall be effective for the next monthly
installment which falls due not less than fifteen (15) days following the date
the Servicing Agent sends notice thereof to the Borrower.
Interest charges shall be computed hereunder on the basis of a
360 day year, counting the actual number of days elapsed. The Servicing Agent
shall calculate any interest rate adjustment within fifteen (15) days following
the effective date thereof or receipt by the Servicing Agent of information
from the Fiscal Agent upon which to base such calculation, and the Servicing
Agent shall also calculate or recalculate the principal amortization schedule
within fifteen (15) days following the Cutoff Date or any prepayment.
For purposes of calculating accrued interest hereon, the
amount of principal advanced hereunder and for all other purposes of this Note,
the date and amount of any advance to the County under that certain Air South
HUD-Guaranteed Note shall result in a corresponding advance hereunder.
Interest only on this Note at the rates as provided herein
shall be payable on the first day of each month commencing February 1, 1996
through and including August 1, 1997. Thereafter, commencing September 1,
1997, equal consecutive monthly installments of principal in an amount to fully
repay this Note over seventeen (17) years plus interest at the rates as
provided herein are payable in Two-Hundred Four (204) consecutive monthly
installments on the first day of each month and terminating, if not sooner
paid, as herein provided on September 1, 2014. Such installments shall be
applied, first, to pay any reasonable outstanding fees and expenses of the
County, JEDA or the Servicing Agent; second, to payment of interest then due on
the unpaid principal amount and the remaining balance of each such installment
to be applied to the payment and reduction of the unpaid principal amount of
this Note. The amount payable as the final installment may be such greater or
lesser amount as shall be equal to the actual principal amount of this Note
remaining unpaid, together with interest thereon then due and unpaid.
Payments hereon are to be made in lawful money of the United
States of America to the South Carolina Jobs-Economic Development Authority,
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Senior
Loan Officer, or such other place as the County or the Servicing Agreement may
designate, on each due date provided above, in an amount which will equal the
amount payable on this Note.
The Borrower agrees to make the payments on this Note on the
dates and in the amounts specified herein and in the Agreement and in addition
agrees to make such other payments as are required pursuant to the Agreement
and the Servicing Agreement. A late charge of five percent (5%) of the monthly
payment shall be due and payable on any monthly payment past due fifteen (15)
days or more.
B-2
59
The Borrower may prepay this Note in whole or in part at a
price equal to the principal amount thereof to be prepaid together with
interest thereon to the date of prepayment at any time. This Note shall be
subject to mandatory prepayment of one-half of the then outstanding principal
balance thereof to the extent that funds are available from the net proceeds of
any public offering of stock by the Borrower within ten (10) days following
receipt of such proceeds. This Note is also subject to mandatory prepayment on
the Cutoff Date from amounts remaining on deposit in the Emergency Cash Reserve
Account or any other funds escrowed under the Loan Agreement as provided
therein. To the extent not reflected in the interest rate applicable to this
Note at the time of any prepayment, any such prepayment shall be accompanied by
payment of amounts sufficient to enable the County and JEDA to recoup interest
and other reasonable costs associated with the Air South HUD-Guaranteed Note.
A default under this Note shall occur upon the failure by the
Borrower to pay when due principal or interest on this Note or upon any other
default described in the Agreement. In the event of default in the Agreement,
the principal of and interest on this Note may be declared immediately due and
payable as provided in the Agreement. Upon a default followed by a declaration
of acceleration of the payments due hereunder, the rate of interest payable
hereunder shall be the rate per annum equal to the rate per annum applicable to
the Note immediately prior thereto plus two percent (2%). This Note may be
canceled, amended or supplemented as provided in the Agreement.
The final payment on this Note shall be a sum sufficient,
together with other funds deposited with the County and available for such
purpose, to redeem all of this Note then outstanding at the principal amount
thereof plus accrued interest to the date of payment and to pay all reasonable
and necessary fees and expenses of the County, JEDA and the Servicing Agent
accrued and to accrue through final payment for this Note. At the
acceleration, termination or expiration of the term of this Note and following
full payment of this Note and all other fees and charges in accordance with the
provisions of the Agreement, the County shall deliver to the Borrower any
documents and take such actions as may be necessary to effectuate the
cancellation of this Note and evidence the termination of the Agreement.
IN WITNESS WHEREOF, AIR SOUTH, INC. has caused this Note to be
executed in its name and on its behalf by its authorized officers by their
manual signatures as of this ____ day of August, 1994.
[SEAL] AIR SOUTH, INC.
ATTEST:
By: __________________________________ By: _______________________
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇'▇▇▇▇
Secretary President
B-3
60
RECORDS OF ADVANCES
Date Amount
---- ------
_____________________________ __________________________________________
_____________________________ __________________________________________
_____________________________ __________________________________________
_____________________________ __________________________________________
_____________________________ __________________________________________
_____________________________ __________________________________________
_____________________________ __________________________________________
_____________________________ __________________________________________
_____________________________ __________________________________________
_____________________________ __________________________________________
_____________________________ __________________________________________
_____________________________ __________________________________________
_____________________________ __________________________________________
_____________________________ __________________________________________
_____________________________ __________________________________________
_____________________________ __________________________________________
_____________________________ __________________________________________
_____________________________ __________________________________________
_____________________________ __________________________________________
_____________________________ __________________________________________
_____________________________ __________________________________________
_____________________________ __________________________________________
B-4
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EXHIBIT C
[FORM OF BORROWER'S COUNSEL OPINION]
August ___, 1994
Lexington County, South Carolina
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
South Carolina Jobs-Economic Development Authority
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
RE: $12,000,000 Loan from Lexington County,
South Carolina to Air South Inc.
Ladies and Gentlemen:
I am special counsel to Air South, Inc., an Illinois corporation, (the
"Borrower") and have acted as such in connection with the execution and
delivery of this opinion letter pursuant to Section 7.(xiii) of that certain
Loan Agreement, dated as of July 15, 1994 (the "Loan Agreement") between the
County of Lexington, South Carolina (the "County") and the Borrower, pursuant
to which the County will make available funds to the Borrower from time-to-time
in amounts aggregating up to $12,000,000 (the "Loan").
I refer to the following:
a. the Note, dated August 8, 1994 from the Borrower to
the County (the "Note") evidencing the Loan;
b. the Security Agreement and Chattel Mortgage, dated
July 15, 1994 between the county and the Borrower (the "Security Agreement")
securing among other things the repayment of the Loan; and,
c. the Assignment and Servicing Agreement, dated July
15, 1994 by and among the South Carolina Jobs - Economic Development Authority
("JEDA"), the County and the Borrower (the "Assignment");
The Loan Agreement, the Security Agreement, the Note, and the Assignment are
hereinafter
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62
collectively referred to as the "Loan Documents."
"Collateral" shall mean the assets of the Borrower, including but not limited
to (a) the assets (the "U.C.C. Assets") which are of a type which are subject
to Article 9 of the Uniform Commercial Codes of Florida, Georgia and South
Carolina (collectively the "U.C.C.s") and which are described in section 2. of
the Security Agreement which will be an exhibit to the Financing Statements (as
defined below) to be filed under the U.C.C.s in effect in the States of
Florida, Georgia, and South Carolina in connection with the transactions
contemplated by the Loan Documents and (b) the assets which are described in
section 2. of the Security Agreement.
Capitalized terms used in this opinion letter which are not otherwise defined
herein shall have the meanings ascribed to them in the Loan Agreement.
I have examined the Loan Documents, and such other documents relating to the
Loan and the Loan Documents as I have deemed appropriate in the circumstances.
I have reviewed, to the extent I have deemed appropriate, the corporate
proceedings and records of the Borrower. I have examined, also to the extent I
have deemed appropriate, proceedings of various governmental entities and
agencies involved in the Loan, I have also examined, or caused to be examined
and reported upon, various public registries including, but not limited to,
certain public records of the States of Georgia, Florida, Illinois and South
Carolina, ▇▇▇▇▇▇ County, Georgia, Dade and Pinellas Counties, Florida, ▇▇▇▇
County, Illinois, and Lexington and Richland Counties, South Carolina.
I have also examined: (a) those certain reports of CT System, as to (i) U.C.C.
financing statements covering the U.C.C. Assets naming the Borrower as debtor
(ii) federal tax and state tax liens against the Borrower and (iii) judgment
liens against the Borrower, in each case on file in various state and county
filing offices in the States of Florida, Georgia, Illinois, and South Carolina.
Those reports were searched through the respective dates (collectively, the
"Ending Dates") given below: Dade County, Florida - _______ ___, 1994; ▇▇▇▇▇▇
County, Georgia - _______ ___, 1994; Florida Secretary of State - _______ ___,
1994; Dade County, Florida - _______ ___, 1994; Pinellas County, Florida -
______ ___, 1994; Illinois Secretary of State - _______ ___, 1994; ▇▇▇▇ County,
Illinois - _______ ___, 1994 (as to U.C.C. filing statements); ▇▇▇▇ County,
Illinois - _______ ___, 1994 (with respect to federal and state tax liens, and
judgment liens); South Carolina Secretary of State - _______ ___, 1994;
Lexington County, South Carolina - _______ ___, 1994; and Richland County,
South Carolina - _______ ___, 1994 (such reports being collectively, the
"U.C.C. Search Reports"); and (b) the originals or copies of Form U.C.C. 1
Financing Statements which will be filed with the appropriate state and county
filing offices in each of Florida, Georgia and South Carolina (the "Financing
Statements").
I have also examined Reports on Title Search of ▇▇▇▇▇▇ Aircraft Title Services,
Inc. (The "Aircraft Registry Search Reports"), each dated _______ ___, ____
3:15 p.m. (CDT) (collectively, the "Aircraft Ending Dates"), which report the
results of searches of the records of the Aircraft Registry of the Federal
Aviation Administration of the United States in Oklahoma City,
C-2
63
Oklahoma (the "Aircraft Registry") covering the following aircraft: Boeing
737-2P6, serial number 21612 and Boeing 737-2P6, serial number 21356 (the
"Aircraft").
In rendering this opinion, as to certain matters of fact, I have relied upon
representations, warranties and covenants made by the various parties to the
Loan Documents, certificates of officers of the Borrower, certificates of
public officials and oral interviews of various officers, agents and attorneys
of the Borrower.
I have assumed the genuineness of all signatures (except those of persons
signing on behalf of the Borrower) to, and the authenticity of, all documents
submitted to me as originals and the conformity with originals of all documents
submitted to me as copies.
I am also assuming that all parties to the Loan Documents, other than the
Borrower, have all requisite power and authority and have taken all necessary
actions to enter into any Loan Document to which they are a party and to effect
any transactions contemplated thereby. Finally, I have made such other
investigations of law and fact as in my judgment permits me to render an
informed opinion on the matters set forth below.
Based upon the foregoing, it is my opinion that:
1. The Borrower is a corporation duly organized, validly existing
and in good standing under the laws of the State of Illinois, with corporate
powers adequate to own its property, to carry on its business as now conducted
and as proposed in the Business Plan to be conducted and to perform its
obligations under the Loan Documents. The Borrower is duly qualified as a
foreign corporation and is in good standing in the States of Georgia and South
Carolina; in no other jurisdiction except Florida does its conduct of business
or ownership of property make such qualification necessary.
2. The execution, delivery and performance by the Borrower of
each of the Loan Documents are within the Borrower's power and authority. The
Borrower has duly authorized the execution and delivery of the Loan Documents
and the taking of all action necessary to carry out and give effect to the
transactions contemplated thereby.
3. Neither the execution and delivery of any of the Loan
Documents, nor the consummation by the Borrower of the transactions therein
contemplated, nor fulfillment of or compliance with the provisions thereof,
will: (i) violate or contravene any of the provisions of the Articles of
Incorporation, as amended, or the Bylaws of the Borrower; (ii) violate or
contravene any of the provisions of any law, governmental rule, regulation,
judgment, decree, writ, injunction, demand, order, franchise or permit binding
on the Borrower or its properties; (iii) conflict with or result in a breach
of, or constitute a default under (nor is there any waiver in effect which, if
not in effect, would result in any of the foregoing), any of the provisions of
any indenture, mortgage, contract or other instrument to which the Borrower is
a party of by which it or its property is bound; (iv) result in the creation or
imposition of any lien, charge or encumbrance upon any property of the Borrower
pursuant to the terms of any such indenture,
C-3
64
mortgage, contract or other instrument, except for any liens created by or
pursuant to the Loan Documents; or (v) result in an occurrence of an event for
which any holder or holders of indebtedness may declare the same due and
payable.
4. Each of the Loan Documents has been duly executed and
delivered by the Borrower. Assuming the due execution and delivery thereof by
the other parties thereto, each Loan Document constitutes a legal, valid and
binding instrument enforceable against the Borrower in accordance with its
terms, except as enforceability may be limited by general equitable principles
and applicable bankruptcy, reorganization, insolvency, moratorium or similar
laws affecting the enforceability of creditors' rights generally.
5. To the best of my knowledge, after due inquiry, there is no
pending or threatened action or proceeding before any court, governmental
agency or arbitrator against or directly involving the Borrower which if
decided adversely to the Borrower might (a) materially and adversely affect the
financial condition, operations, or business prospects of the Borrower or (b)
affect the validity of any Loan Document or any actions taken or to be taken
pursuant thereto.
6. No consent of any person and no authorization or approval or
other action by, and no notice to or filing with, any governmental authority or
regulatory body or other person is required with regard to the Borrower for the
due execution, delivery and performance by the Borrower of the Loan Documents,
except such as have been obtained; no approval of the shareholders, or the
trustee or any holder of any indebtedness of the Borrower is required.
7. It is not necessary under the circumstances contemplated in
the Loan Documents to register any Loan Document under the securities laws of
any jurisdiction.
8. No taxes, fees or other charges are payable by the Borrower to
any government or governmental authority in connection with the execution and
delivery by the Borrower of the Loan Documents or the consummation by the
Borrower of the transactions therein contemplated, except: (a) recording and
filing taxes or fees payable in connection with the recording of (i) the
Financing Statements; (ii) any filings upon the Aircraft Registry; (iii) any
transfers of personal or real property to, or by, the Borrower, and (iv)
perfecting security interests of the Borrower in real estate or fixtures; and
(b) any local, state or federal income or other taxes arising out of the
operations of the Borrower; (c) any property taxes on the assets of the
Borrower; and (d) any sales or compensating use taxes on assets or services
hereafter purchased or sold by the Borrower.
9. There is no fact known to me which materially and adversely
affects, or which in the future may (so far as can now reasonably be foreseen)
materially and adversely affect, the business, properties operations or
condition, financial or otherwise, of the Borrower.
10. The Security Agreement creates valid security in favor of the
County in the Collateral, including, but not limited to, the U.C.C. Assets,
subject to no prior lien or encumbrance, except as identified on Exhibit F to
the Loan Agreement, which is perfected by
C-4
65
filing or recording and provided that as to the U.C.C. Assets such opinion is
as of the Ending Dates. The Financing Statements have been filed with the
County and Richland County, South Carolina, the Secretary of State of South
Carolina, and the appropriate state and county filing offices in the States of
Florida and Georgia to perfect the security interest of the County in the
U.C.C. Assets in each of such states. To the best of my knowledge, after due
inquiry, the Borrower does not own assets located in other than the States of
South Carolina, Georgia and Florida. Copies of the Security Agreement and the
Assignment have been filed upon the Aircraft Registry to perfect the Security
interest in favor of the County, and JEDA as assignee thereof, in those assets
of the Borrower covered by the Security Agreement which are of a type as to
which a security interest may be perfected by such filing upon the Aircraft
Registry. As of the Aircraft Ending Dates, there were no liens on the Aircraft
recorded on the Aircraft Registry. To the best of my knowledge, after due
inquiry, the Borrower has no assets, other than assets covered by Article 9 of
the U.C.C. or as to which a filing on the Aircraft Registry may be made, in
which a security interest must be perfected by filing in any public registry.
No opinion is expressed herein as to whether a security interest is created in
any property which is the subject of any leasehold or other rights to assets in
the possession of but not owned by the Borrower, provided, however, that this
exception to my opinion does not extend to such leasehold or other rights. No
filing, registration or recordation other than those referred to above are
required to perfect, protect and preserve the liens created by the Security
Agreement and the Assignment.
11. No usury laws in effect in the State of South Carolina,
adversely affect the enforceability of the Loan Documents.
The portion of my security interest opinion in paragraph 10 relating to the
U.C.C. Assets is limited (other than as provided therein) to Article 9 of the
Uniform Commercial Codes of Florida, Georgia and South Carolina and does not
address: (i) laws of jurisdictions other than those states, and of those states
except for Article 9 of their respective U.C.C.s; (ii) security interests in
assets included in the Collateral which are of a type not subject to Article 9
of the U.C.C.s of those states; and (iii) under section 9-103(3) of each such
U.C.C., what law among Florida, Georgia and South Carolina governs perfection
of the security interests granted in the U.C.C. Assets. I express no opinion
as to perfection of the security interests about any portion of the Collateral
as to which the perfection of a security interest therein is obtained only by
possession. As to the States of Georgia and Florida, my examination of law for
purposes of giving this opinion has been limited to the U.C.C. of each of those
states as it appears in a recognized reporting service; this opinion is
accordingly limited as to its scope. To the extent that the opinion in
paragraph 10 above, addresses the transactions between the County and JEDA
contemplated by the Assignment, I call your attention to the fact that among
the Borrower, the County and JEDA, I am counsel only to the Borrower.
I express no opinion as to whether the Borrower may waive the pleading of the
statute of limitations to any demand for performance of any obligations under
any of the Loan Documents.
This opinion letter is not intended to address whether the Borrower has good
and marketable title
C-5
66
to any of the Collateral, but after due inquiry of the president, general
counsel and chief financial officer of the Borrower, I have no reason to
believe that the Borrower does not own the assets it purports to own. To the
extent that the Borrower does not have good and marketable title to any assets
included in the definition of Collateral, the opinions herein as to the
creation, perfection and priority of security interests in such assets is
appropriately qualified. Except as disclosed in the U.C.C. Search Reports or
the Aircraft Registry Search Reports this opinion does not address whether any
mechanics', artisans' or materialmens' liens may have attached by means other
than filing or recordation to any of the U.C.C. Assets, the Aircraft, or any
engines, components thereof and Parts which are used by the Borrower in its
business.
Although I am representing the Borrower as special counsel for purposes of this
opinion letter, I have not previously represented the Borrower on other
matters. In particular, I have not participated in any material way in
structuring the Loan and related transactions or the negotiation and drafting
of the Loan Documents.
I am an attorney at law admitted to practice in the State of South Carolina.
As such I express no opinion on other than the internal laws of the State of
South Carolina and the federal laws of the United States of America, except:
(1) my opinions contained in the first sentences of paragraphs 1 and 2 of this
opinion letter are given in reliance on an opinion letter of even date herewith
of ▇▇▇▇▇▇ ▇▇▇▇▇, Esquire of the Bar of the State of Illinois, an executed
counterpart of which is being delivered with this opinion letter and upon which
you may rely; and (2) as to the law of the states of Florida and Georgia
contained in paragraph 10 of this opinion letter, as qualified in the paragraph
immediately following paragraph 11.
This opinion is solely for the benefit of the addressees hereof and may not be
relied upon in any manner by any other person or entity.
Very truly yours,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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67
EXHIBIT D
REQUISITION FORM
No. __________
To: South Carolina Jobs-Economic Development Authority
Columbia, South Carolina
THIS IS TO CERTIFY:
1. With regard to the Loan Agreement dated as of July 15, 1994
(the "Loan Agreement"), between Lexington County, South Carolina, and Air
South, Inc. (the "Borrower") authorizing a $12,000,000 maximum principal amount
Section 108 HUD Loan (the "Loan") to the Borrower, the Loan proceeds are
required [Check appropriate box]:
_____ a. to purchase real property and/or construct
improvements thereon, to purchase personal property,
to fund other capital expenditures or for such other
purposes not specifically set forth in (b) or (c)
below, all as authorized pursuant to Section 2 of the
Loan Agreement;
_____ b. to remedy or prevent a Cash Flow Shortfall (as
defined in the Loan Agreement) as of the end of the
immediately preceding calendar month in the amount of
$________ (which amount shall be the amount the
Borrower is entitled to draw for such purpose); or
_____ c. to cover an emergency cash requirement as described
in Section 5(b) of the Loan Agreement.
2. Documentation verifying the amount eligible to be drawn under
the Loan Agreement is attached hereto.
3. The nature and purpose of the obligation for which such payment
is requested: _____________________
4. The name and address of the person, firm or corporation to
whom payment is due (if other than the Project Account (as defined in the Loan
Agreement)): ____
5. Amount to be disbursed: $______________________
D-1
68
6. The disbursement herein requested is for obligations properly
incurred, constitutes an authorized charge under the Note (as defined in the
Loan Agreement) and has not been the basis of any previous withdrawal.
7. No written notice of any lien, right to lien or attachment
upon, or claim affecting the right to receive payment of, any of the moneys
payable under this requisition to any of the persons, firms or corporations
named herein has been received which would result in a breach of the Loan
Agreement. If any notice of any such lien, attachment or claim has been
received, such lien, attachment or claim has been or will be released or
discharged of record simultaneously with disbursement by payment, deposit,
bond, order of a court of competent jurisdiction or otherwise.
8. No Event of Default (as defined in the Loan Agreement) nor any
event which with the passage of time, the giving of notice or both would
constitute such an Event of Default has occurred and is continuing; all
representations of the Borrower in the Loan Agreement are true and correct as
of the date of this requisition.
9. As to any disbursement for the purchase and/or construction of
improvements on real property, the Borrower has delivered to the Servicing
Agent (as defined in the Loan Agreement) all mortgages, assignments, security
agreements, consents, copies of leases and/or deeds, opinions of counsel and
other such documents required by the Servicing Agent, including those specified
in the Loan Agreement, the Security Agreement (as defined in the Loan
Agreement) or other Loan Documents (as defined in this Loan Agreement) and a
title insurance policy insuring the County's lien on the Borrower's interests
in such property, in form and substance and with only such exceptions
acceptable to the Servicing Agent. As to each disbursement after the issuance
of the policy, Borrower shall deliver to the Servicing Agent an endorsement to
the title policy acceptable to the Servicing Agent, indicating that since the
last preceding disbursement, there has been no change in the state of title and
no survey or other exceptions not theretofore approved by the Servicing Agent,
including exceptions for mechanics and materialmen's liens and which
endorsement increases the coverage of such title policy by an amount equal to
the disbursement requested hereby, so that the total amount insured equals the
total amount of all disbursements made by the Servicing Agent therefor and
changing the effective date of such title policy to the date of the
disbursement requested hereby.
10. In conjunction with a disbursement for the construction of
improvements on real property, Borrower also has provided the Servicing Agent
with such other documents typically required by construction lenders, all as
may be required and approved by the Servicing Agent, such as a survey, deeds
and/or leases, as applicable, a flood zone certification, flood insurance, if
applicable, copies of the plans and specifications for the construction
project, all construction and architect contracts and assignments of the same,
payment and performance bonds, subordinations, building permits, environmental
reports, soil reports, evidences of utility availability and access, insurance
policies, evidence of zoning compliance and the like.
▇-▇
▇▇
▇▇. For any draws for construction, renovation or supplies,
attached hereto are the mechanics' and materialmen's lien waivers, affidavits
or releases for all work done or all material supplied as required by the
Servicing Agent, together with such other documents required by the Servicing
Agent and/or the title company insurance issuing the title policy referred to
above, all as approved by the Servicing Agent, including invoices, tax
receipts, updated surveys and reports, evidence of governmental compliance,
including compliance with legal requirements regarding access for handicapped
or disabled persons, and such certificates and/or affidavits from contractors,
architects or others as required by Servicing Agent.
12. As to any disbursements pertaining to the acquisition of
aircraft through purchase or lease, all evidence of title and all opinions of
counsel and other documents required by the Loan Agreement or the Security
Agreement have been delivered to the Servicing Agent.
AIR SOUTH, INC.
By_________________________________
President or Chief Financial Officer
Dated: _______ ___, 199___
D-3
70
EXHIBIT E
INDEBTEDNESS OF THE BORROWER
CDC DUE SEPTEMBER 1994 $500,000
JEDA DUE DECEMBER 1994 $500,000
E-1
71
EXHIBIT F
PERMITTED ENCUMBRANCES
None
F-1
72
EXHIBIT G
LOCATIONS OF BORROWER'S ASSETS
ADMINISTRATIVE AND RESERVATIONS OFFICES
▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
[furniture, fixtures, computer equipment, computer
software and other office facilities and furnishings]
COLUMBIA AIRPORT
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇
▇. ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
[ground equipment, maintenance equipment and spare parts]
ATLANTA AIRPORT
Atlanta ▇▇▇▇▇▇▇▇▇▇ International Airport
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
[ground equipment]
ST. PETERSBURG/CLEARWATER INTERNATIONAL AIRPORT
▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
[ground equipment]
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
[ground equipment]
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73
EXHIBIT H
INDEBTEDNESS OF BORROWER UNDER AIRCRAFT LEASES
1. Aircraft Lease Agreement dated as of July 22, 1994, between Polaris
Aircraft Leasing K.B. ("Polaris") and Air South, Inc. ("Air South"),
regarding aircraft number one, Boeing 737-2P6 Advanced Aircraft,
Serial Number 21612, Registration No A40-BH, place of registration
Ireland (Irish Aviation Authorities);
2. Aircraft Lease Agreement between Polaris and Air South to be dated
date of delivery of aircraft number two, Boeing 737-2P6 Advanced
Aircraft, Serial Number 21356, Registration No. A40-BD, place of
registration Ireland (Irish Aviation Authorities); and
H-1
74
EXHIBIT I
[GUARANTEES BY THE BORROWER]
None
H-2
75
EXHIBIT J
CONTROLLING OWNERS OF BORROWER
Controlling Owners Shares
▇▇▇▇▇▇▇ ▇'▇▇▇▇ 680,000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 260,000
▇▇▇▇▇▇ ▇▇▇▇▇ 160,000
▇▇▇▇ ▇▇▇▇▇ 140,000
▇▇▇ ▇▇▇▇▇▇ 152,000
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 152,000
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 120,000
▇▇▇▇▇▇▇ ▇▇▇▇▇ 100,000
▇▇▇ ▇▇▇▇ 120,550
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 80,000
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 80,000
▇▇▇▇▇▇ ▇▇▇▇ 80,000
▇▇▇ ▇▇▇▇▇▇▇▇ 60,000
▇▇▇▇▇▇▇▇ ▇▇▇▇ 60,000
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 70,450
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 100,000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 43,334
▇▇▇▇ ▇▇▇▇▇▇▇▇ 12,000
▇▇▇▇▇▇ ▇▇▇▇▇▇ 30,000
▇▇▇ ▇▇▇▇▇▇▇▇ 30,000
▇▇▇▇▇ ▇▇▇▇▇▇▇ 30,000
▇▇▇▇ ▇▇▇▇▇ 30,000
▇▇▇▇ ▇▇▇▇▇▇ 30,000
▇▇▇▇ ▇▇▇▇▇ 30,000
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 30,000
▇▇▇▇ ▇▇▇▇▇ 30,000
▇▇▇▇ Brujes 10,000
▇▇▇▇▇ ▇▇▇▇▇▇ 10,000
TOTAL 2,730,334
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76
EXHIBIT K
Executive Compensation Plan
The executive compensation plan constitutes all Officers and Directors of Air
South, Inc. The following is a current list of Managers and Directors who are
included in Air South, Inc.'s compensation plan.
▇▇▇▇▇▇▇ ▇'▇▇▇▇, CEO & President
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, CFO & VP of Finance
▇▇▇▇▇▇ ▇▇▇▇, VP of Operations
▇▇▇ ▇▇▇▇, VP of Marketing
▇▇▇ ▇▇▇▇▇, General Counsel
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Director of Sales
▇▇▇▇ ▇▇▇▇▇, Director of Marketing
▇▇▇ ▇▇▇▇▇▇, Director of Flight Operations
▇▇▇▇▇ ▇▇▇▇▇▇▇, Director of Quality Assurance
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Director of Maintenance
▇▇▇▇ ▇▇▇▇▇▇, Chief Pilot
▇▇▇▇ ▇▇▇▇▇▇▇▇, Director of Information Systems
▇▇▇▇ ▇▇▇▇▇, Manager of Ground Operations
▇▇▇▇ ▇▇▇▇▇, Controller
K-1