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AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
DATED AS OF SEPTEMBER 1, 1997
between
TOWER AIR, INC.,
as Borrower,
and
▇▇▇▇▇▇ FINANCIAL, INC.,
as Agent and as Lender
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TABLE OF CONTENTS
Page
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SECTION 1. DEFINITIONS....................................................... 1
1.1 Certain Defined Terms............................................. 1
1.2 Accounting Terms................................................. 12
1.3 Other Definitional Provisions.................................... 13
SECTION 2. LOANS AND COLLATERAL............................................. 13
2.1 Loans............................................................ 13
(A) Revolving Loan.............................................. 13
(1) Maximum Revolving Loan Amount........................... 14
(2) Borrowing Base.......................................... 14
(B) Eligible Collateral......................................... 14
(C) Borrowing Mechanics......................................... 16
(D) Revolving Note[s]........................................... 16
(E) Evidence of Revolving Loan Obligations...................... 17
(F) Letters of Credit........................................... 17
(1) Maximum Amount.......................................... 17
(2) Reimbursement........................................... 17
(3) Conditions of Issuance.................................. 18
(4) Request for Letters of Credit........................... 18
(G) Other Letter of Credit Provisions........................... 18
(1) Obligations Absolute.................................... 18
(2) Nature of Lender's Duties............................... 19
(3) Liability............................................... 19
2.2 Interest......................................................... 20
(A) Rate of Interest............................................ 20
(B) Interest Periods............................................ 20
(C) Computation and Payment of Interest......................... 21
(D) Interest Laws............................................... 21
(E) Conversion or Continuation.................................. 22
(F) Interest Adjustment......................................... 22
2.3 Fees............................................................. 23
(A) Closing Fee................................................. 23
(B) Unused Line Fee............................................. 23
(C) Letter of Credit Fees....................................... 24
(D) Audit Fees.................................................. 24
(E) Other Fees and Expenses..................................... 24
2.4 Payments and Prepayments......................................... 24
(A) Manner and Time of Payment.................................. 24
(B) Mandatory Prepayments....................................... 24
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(1) Overadvance............................................. 24
(2) Proceeds of Asset Dispositions.......................... 24
(3) Events of Loss with Respect to Eligible
Aircraft Collateral............................. 25
(C) Voluntary Prepayments and Repayments........................ 25
(D) Payments on Business Days................................... 26
2.5 Term of this Agreement........................................... 26
2.6 Statements....................................................... 26
2.7 Grant of Security Interest....................................... 26
2.8 Capital Adequacy and Other Adjustments........................... 27
2.9 Taxes............................................................ 27
(A) No Deductions............................................... 27
(B) Changes in Tax Laws......................................... 27
(C) Foreign Lenders............................................. 28
2.10 Optional Prepayment/Replacement of Agent or Lenders
in Respect of Increased Costs............................... 29
2.11 Required Termination and Prepayment.............................. 29
2.12 Compensation..................................................... 30
2.13 Booking of LIBOR Loans........................................... 30
2.14 Assumptions Concerning Funding of LIBOR Loans.................... 30
SECTION 3. CONDITIONS TO LOANS.............................................. 30
3.1 Conditions to Loans.............................................. 30
(A) Closing Deliveries.......................................... 30
(B) Security Interests.......................................... 30
(C) Representations and Warranties.............................. 31
(D) Closing Fee................................................. 31
(E) No Default.................................................. 31
(F) Performance of Agreements................................... 31
(G) No Prohibition.............................................. 31
(H) No Litigation............................................... 31
(I) Insurance................................................... 31
(J) Appraisals.................................................. 31
SECTION 4. BORROWER'S REPRESENTATIONS AND WARRANTIES........................ 32
4.1 Organization, Powers, Capitalization............................. 32
(A) Organization and Powers..................................... 32
(B) Capitalization.............................................. 32
4.2 Authorization of Borrowing, No Conflict.......................... 32
4.3 Financial Condition.............................................. 32
4.4 Indebtedness and Liabilities..................................... 33
4.5 Account Warranties............................................... 33
4.6 Names............................................................ 33
4.7 Locations; FEIN.................................................. 33
4.8 Title to Properties; Liens....................................... 33
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4.9 Litigation; Adverse Facts........................................ 34
4.10 Payment of Taxes................................................. 34
4.11 Performance of Agreements........................................ 34
4.12 Employee Benefit Plans........................................... 34
4.13 Intellectual Property............................................ 34
4.14 Broker's Fees.................................................... 34
4.15 Environmental Compliance......................................... 34
4.16 Solvency......................................................... 35
4.17 Disclosure....................................................... 35
4.18 Insurance........................................................ 35
4.19 Compliance with Laws............................................. 35
4.20 Bank Accounts.................................................... 36
4.21 Subsidiaries..................................................... 36
4.22 Employee Matters................................................. 36
4.23 Governmental Regulation.......................................... 36
SECTION 5. AFFIRMATIVE COVENANTS............................................ 36
5.1 Financial Statements and Other Reports........................... 36
(A) Monthly Financials.......................................... 37
(B) Quarterly Financials........................................ 37
(C) Year-End Financials......................................... 37
(D) Accountants' Certification and Reports...................... 38
(E) Compliance Certificate...................................... 38
(F) Borrowing Base Certificates, Registers and Journals......... 38
(G) Reconciliation Reports, Inventory Reports and
Listings and Agings..................................... 38
(H) Management Report........................................... 39
(I) Appraisals.................................................. 39
(J) Government Notices.......................................... 39
(K) Events of Default, etc...................................... 39
(L) Trade Names................................................. 39
(M) Locations................................................... 40
(N) Bank Accounts............................................... 40
(O) Litigation.................................................. 40
(P) Projections................................................. 40
(Q) Subordinated Debt and Other Indebtedness
Notices................................................. 40
(R) Other Information........................................... 40
5.2 Access to Accountants and Management............................. 40
5.3 Inspection....................................................... 40
5.4 Collateral Records............................................... 41
5.5 Account Covenants; Verification.................................. 41
5.6 Collection of Accounts and Payments.............................. 41
5.7 Endorsement...................................................... 42
5.8 Corporate Existence.............................................. 42
5.9 Payment of Taxes................................................. 42
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5.10 Maintenance of Properties; Insurance............................. 42
5.11 Compliance with Laws............................................. 43
5.12 Further Assurances............................................... 43
5.13 Collateral Locations............................................. 43
5.14 Bailees.......................................................... 43
5.15 Use of Proceeds and Margin Security.............................. 43
SECTION 6. FINANCIAL COVENANTS.............................................. 43
6.1 Tangible Net Worth............................................... 44
6.2 EBITDA........................................................... 44
SECTION 7. NEGATIVE COVENANTS............................................... 44
7.1 Indebtedness and Liabilities..................................... 44
7.2 Guaranties....................................................... 44
7.3 Transfers, Liens and Related Matters............................. 45
(A) Transfers................................................... 45
(B) Liens....................................................... 45
(C) No Negative Pledges......................................... 45
7.4 Investments and Loans............................................ 45
7.5 Restricted Payments.............................................. 45
7.6 Restriction on Fundamental Changes............................... 45
7.7 Transactions with Affiliates..................................... 46
7.8 Environmental Liabilities........................................ 46
7.9 Conduct of Business.............................................. 46
7.10 Compliance with ERISA............................................ 46
7.11 Tax Consolidations............................................... 46
7.12 Subsidiaries..................................................... 46
7.13 Fiscal Year...................................................... 46
7.14 Press Release; Public Offering Materials......................... 46
7.15 Bank Accounts.................................................... 46
SECTION 8. DEFAULT, RIGHTS AND REMEDIES..................................... 47
8.1 Event of Default................................................. 47
(A) Payment..................................................... 47
(B) Default in Other Agreements................................. 47
(C) Breach of Certain Provisions................................ 47
(D) Breach of Warranty.......................................... 47
(E) Other Defaults Under Loan Documents......................... 47
(F) Change in Control........................................... 47
(G) Involuntary Bankruptcy; Appointment of Receiver, etc........ 47
(H) Voluntary Bankruptcy; Appointment of Receiver, etc.......... 48
(I) Liens....................................................... 48
(J) Judgment and Attachments.................................... 48
(K) Dissolution................................................. 48
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(L) Solvency.................................................... 48
(M) Injunction.................................................. 49
(N) Invalidity of Loan Documents................................ 49
(O) Failure of Security......................................... 49
(P) Damage, Strike, Casualty.................................... 49
(Q) Licenses and Permits........................................ 49
(R) Forfeiture.................................................. 49
8.2 Suspension of Commitments........................................ 49
8.3 Acceleration..................................................... 49
8.4 Remedies......................................................... 50
8.5 Appointment of Attorney-in-Fact.................................. 50
8.6 Limitation on Duty of Agent with Respect to Collateral........... 51
8.7 Application of Proceeds.......................................... 51
8.8 License of Intellectual Property................................. 51
8.9 Waivers, Non-Exclusive Remedies.................................. 52
SECTION 9. ASSIGNMENT AND PARTICIPATION..................................... 52
9.1 Assignments and Participations in Loans.......................... 52
9.2 Agent............................................................ 53
(A) Appointment................................................. 53
(B) Nature of Duties............................................ 54
(C) Rights, Exculpation, Etc.................................... 54
(D) Reliance.................................................... 55
(E) Indemnification............................................. 55
(F) ▇▇▇▇▇▇ Individually......................................... 55
(G) Successor Agent............................................. 55
(1) Resignation............................................. 55
(2) Appointment of Successor................................ 56
(3) Successor Agent......................................... 56
(H) Collateral Matters.......................................... 56
(1) Release of Collateral................................... 56
(2) Confirmation of Authority; Execution of Releases........ 56
(3) Absence of Duty......................................... 57
(I) Agency for Perfection....................................... 57
(J) Exercise of Remedies........................................ 57
9.3 Consents......................................................... 57
9.4 Set Off and Sharing of Payments.................................. 58
9.5 Disbursement of Funds............................................ 58
9.6 Settlements, Payments and Information............................ 59
(A) Revolving Advances and Payments; Fee Payments............... 59
(B) Availability of Lender's Pro Rata Share..................... 59
(C) Return of Payments.......................................... 60
9.7 Dissemination of Information..................................... 60
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SECTION 10. MISCELLANEOUS................................................... 60
10.1 Expenses and Attorneys' Fees.................................... 60
10.2 Indemnity....................................................... 61
10.3 Amendments and Waivers.......................................... 62
10.4 Notices......................................................... 62
10.5 Survival of Warranties and Certain Agreements................... 63
10.6 Indulgence Not Waiver........................................... 64
10.7 Marshaling; Payments Set Aside.................................. 64
10.8 Entire Agreement................................................ 64
10.9 Independence of Covenants....................................... 64
10.10 Severability.................................................... 64
10.11 Lenders' Obligations Several; Independent
Nature of Lenders' Rights............................... 64
10.12 Headings........................................................ 65
10.13 Applicable Law.................................................. 65
10.14 Successors and Assigns.......................................... 65
10.15 No Fiduciary Relationship; Limitation of Liabilities............ 65
10.16 Consent to Jurisdiction......................................... 65
10.17 Waiver of Jury Trial............................................ 66
10.18 Construction.................................................... 66
10.19 Counterparts; Effectiveness..................................... 66
10.20 No Duty......................................................... 66
10.21 Confidentiality................................................. 67
10.22 Agent's Consent................................................. 67
EXHIBITS
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EXHIBIT A Borrowing Base Certificate
EXHIBIT B Compliance Certificate
EXHIBIT C Lender Addition Agreement
EXHIBIT D Reconciliation Report
SCHEDULES
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1.1(A) Location(s) of Inventory
3.1(A) List of Closing Documents
4.1(B) Capitalization of Loan Parties
4.6 Trade Names (Present and Past Five Years)
4.7 Location of Principal Place of Business, Books and Records and
Collateral
4.9 Litigation
4.13 Intellectual Property
4.20 Bank Accounts
4.21 Subsidiaries
4.22 Employee Matters
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AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
This AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this "Agreement") is
dated as of September 1, 1997 and entered into among TOWER AIR, INC., a Delaware
corporation ("Borrower"), with its principal place of business at Hanger ▇▇, ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, the financial institution(s)
listed on the signature pages hereof and their respective successors and assigns
(each individually a "Lender" and collectively "Lenders") and ▇▇▇▇▇▇ FINANCIAL,
INC., a Delaware corporation (in its individual capacity, "▇▇▇▇▇▇"), with
offices at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, for itself as a
Lender and as Agent. All capitalized terms used herein are defined in Section 1
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of this Agreement.
WHEREAS, Borrower, ▇▇▇▇▇▇ and Lenders previously entered into that certain
Loan and Security Agreement dated as of December 1, 1996, as amended by that
certain First Amendment to Loan and Security Agreement dated as of January 31,
1997, that certain Second Amendment to Loan and Security Agreement dated as of
March 13, 1997, that certain Third Amendment to Loan and Security Agreement
dated as of June 16, 1997, and that certain Fourth Amendment to Loan and
Security Agreement dated as of September 1, 1997 (collectively, the "Original
Loan Agreement") pursuant to which Lenders authorized and approved a credit
facility to provide working capital financing and to provide funds for other
general corporate purposes (the "Credit Facility"); and
WHEREAS, Borrower, ▇▇▇▇▇▇ and the Lenders desire, among other things, to
extend the maturity date of the Credit Facility, to increase the amount of funds
available thereunder and to otherwise amend the terms of the Credit Facility in
certain respects;
WHEREAS, Borrower's obligations under the Loan Documents (as defined
herein) shall continue to be secured by a security interest in and lien upon
certain of Borrower's property serving as collateral under the Original Loan
Agreement and the principal and interest outstanding under each Loan advanced
pursuant to the Original Loan Agreement shall become a Loan under this Credit
Facility subject to the terms and conditions hereunder;
WHEREAS, Borrower, ▇▇▇▇▇▇ and the Lenders desire to amend and restate the
Original Loan Agreement upon the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Borrower, Agent and Lenders agree as
follows:
SECTION 1. DEFINITIONS
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1.1 Certain Defined Terms. The following terms used in this Agreement
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shall have the following meanings:
"Accounts" means all "accounts" (as defined in the UCC), accounts
receivable, contract rights and general intangibles relating thereto, notes,
drafts and other forms of obligations owed to or owned by Borrower arising or
resulting from the sale of goods or the rendering of services.
"Affiliate" means, with respect to any Loan Party, any Person (other than
Agent or any Lender): (a) directly or indirectly controlling, controlled by, or
under common control with, such Loan Party; (b) directly or indirectly owning or
holding five percent (5%) or more of any equity interest in Borrower; (c) five
percent (5%) or more of whose stock or other equity interest having ordinary
voting power for the election of directors or the power to direct or cause the
direction of management, is directly or indirectly owned or held by Borrower;
or (d) which has a senior executive officer who is also a senior executive
officer of Borrower. For purposes of this definition, "control" (including with
correlative meanings, the terms "controlling", "con trolled by" and "under
common control with") means the possession directly or indirectly of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities or other equity interest, or
by contract or otherwise.
"Agent" means ▇▇▇▇▇▇ in its capacity as agent for the Lenders under the
Loan Documents and any successor in such capacity appointed pursuant to
subsection 9.1.
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"Agent's Account" means ABA No. 0710 0001 3, Account No. 52 98695 at First
National Bank of Chicago, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
Reference: ▇▇▇▇▇▇ Business Credit for the benefit of Tower Air, Inc.
"Agreement" means this Loan and Security Agreement as it may be amended,
restated, supplemented or otherwise modified from time to time.
"Airframe" means the Boeing model 747 airframe (excluding the engines from
time to time attached thereto) as more particularly described in the Security
Agreement (Aircraft) which, pursuant to an understanding between Borrower and
Lender, Lender hereby consents to the grounding of such Airframe and conversion
of the parts of such Airframe to Inventory as long as such grounding of the
Airframe occurs within twelve (12) months of the date hereof.
"Applicable Interest Margin" means that increase or decrease in the
original Interest Rate as determined in accordance with Section 2.2(F) hereof.
"Appraisal" means the appraisal delivered by the Appraiser with respect to
the Eligible Inventory pursuant to Section 3.1(J) hereof.
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"Appraiser" means ▇▇▇▇-▇▇▇▇▇▇▇▇, Inc.
"Asset Disposition" means the disposition, whether by sale, lease,
transfer, loss, damage, destruction, condemnation or otherwise, of any or all of
the Collateral of Borrower or any of its Subsidiaries other than sales of
Eligible Inventory in the ordinary course of business.
2
"Bank Letter of Credit" means each letter of credit issued by a bank
acceptable to and approved by Agent for the account of Borrower and supported by
a Risk Participation Agreement.
"Base Rate" means a variable rate of interest per annum equal to the higher
of (a) the rate of interest from time to time published by the Board of
Governors of the Federal Reserve System as the "Bank Prime Loan" rate in Federal
Reserve Statistical Release H.15(519) entitled "Selected Interest Rates" or any
successor publication of the Federal Reserve System reporting the Bank Prime
Loan rate or its equivalent, or (b) the Federal Funds Effective Rate. The
statistical release generally sets forth a Bank Prime Loan rate for each
Business Day. In the event the Board of Governors of the Federal Reserve System
ceases to publish a Bank Prime Loan rate or its equivalent, the term "Base Rate"
shall mean a variable rate of interest per annum equal to the highest of the
"prime rate", "reference rate", "base rate", or other similar rate announced
from time to time by any of Bankers Trust Company, The Chase Manhattan Bank,
N.A., or their successors (with the understanding that any such rate may merely
be a reference rate and may not necessarily represent the lowest or best rate
actually charged to any customer by any such bank).
"Base Rate Loans" means Loans bearing interest at rates determined by
reference to the Base Rate.
"Blocked Accounts" has the meaning assigned to that term in subsection 5.6.
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"Borrower" has the meaning assigned to that term in the preamble to this
Agreement.
"Borrowing Base" has the meaning assigned to that term in subsection
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2.1(A).
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"Borrowing Base Certificate" means a certificate and assignment schedule
duly executed by an officer of Borrower appropriately completed and in
substantially the form of Exhibit A.
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"Business Day" means any day excluding Saturday, Sunday and any day which
is a legal holiday under the laws of the States of Illinois, Pennsylvania or New
York or is a day on which banking institutions located in any such state are
closed, and for the purposes of LIBOR Loans only, a day on which commercial
banks are open for dealings in Dollar deposits in the London, England (UK)
market.
"Capital Expenditures" means all expenditures (including deposits) for, or
contracts for expenditures (excluding contracts for expenditures under or with
respect to Capital Leases, but including cash down payments for assets acquired
under Capital Leases) with respect to any fixed assets or improvements, or for
replacements, substitutions or additions thereto, which have a useful life of
more than one year, including the direct or indirect acquisition of such assets
by way of increased product or service charges, offset items or otherwise.
3
"Capital Lease" means any lease of any property (whether real, personal or
mixed) that, in conformity with GAAP, should be accounted for as a capital
lease.
"Cash Equivalents" means: (a) marketable direct obligations issued or
unconditionally guaranteed by the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within six (6) months from the date of acquisition thereof;
(b) commercial paper maturing no more than six (6) months from the date issued
and, at the time of acquisition, having a rating of at least A-1 from Standard &
Poor's Corporation or at least P-1 from ▇▇▇▇▇'▇ Investors Service, Inc.; and (c)
certificates of deposit or bankers' acceptances maturing within six (6) months
from the date of issuance thereof issued by, or overnight reverse repurchase
agreements from, any commercial bank organized under the laws of the United
States of America or any state thereof or the District of Columbia having
combined capital and surplus of not less than $250,000,000 and not subject to
setoff rights in favor of such bank.
"Closing Date" means September 25, 1997.
"Collateral" has the meaning assigned to that term in subsection 2.7.
--------------
"Collecting Banks" has the meaning assigned to that term in subsection 5.6.
--------------
"Commitment" or "Commitments" means the commitment or commitments of
Lenders to make Loans as set forth in subsection 2.1(A).
-----------------
"Compliance Certificate" means a certificate duly executed by the chief
executive officer or chief financial officer of Borrower appropriately completed
and in substantially the form of Exhibit B.
---------
"Default" means a condition, act or event that, after notice or lapse of
time or both, would constitute an Event of Default if that condition or event
were not cured or removed within any applicable grace or cure period.
"Default Rate" has the meaning assigned to that term in subsection 2.2(A).
"EBITDA" means, for any period, without duplication, the total of the
following for Borrower and its Subsidiaries on a consolidated basis, each
calculated for such period: (1) net income determined in accordance with GAAP;
plus, to the extent included in the calculation of net income, (2) the sum of
----
(a) income and franchise taxes paid or accrued; (b) Interest Expenses, net of
interest income, paid or accrued; (c) interest paid in kind; (d) amortization
and depreciation and (e) other non-cash charges (excluding accruals for cash
expenses made in the ordinary course of business); less, to the extent included
----
in the calculation of net income, (3) the sum of (a) the income of any Person
(other than wholly-owned Subsidiaries of Borrower) in which Borrower or a wholly
owned Subsidiary of Borrower has an ownership interest except to the extent such
income is received by Borrower or such wholly-owned Subsidiary in a cash
4
distribution during such period; (b) gains or losses from sales or other
dispositions of assets (other than Inventory in the normal course of business);
and (c) extraordinary or non-recurring gains, but not net of extraordinary or
non-recurring "cash" losses.
"Eligible Accounts" has the meaning assigned to that term in subsection
----------
2.1(B).
------
"Eligible Aircraft Collateral" means the Airframe.
"Eligible Consumable Inventory" shall mean all aircraft parts now or
hereafter owned by the Borrower for which Borrower can report orderly
liquidation values by part numbers, which cannot be refurbished upon expiration
of such parts' useful lives, and which are (a) not subject to any liens or
encumbrances other than in favor of Lenders, (b) not obsolete or unserviceable,
and (c) located at the locations listed in attached Schedule 1.1(A).
---------------
"Eligible Inventory" means, collectively, the Eligible Consumable Inventory
and the Eligible Rotable Inventory.
"Eligible Rotable Inventory" shall mean all aircraft parts now or hereafter
owned by Borrower for which Borrower can report orderly liquidation values by
part numbers, and, pursuant to FAA regulations, are refurbished from time to
time, and which are (a) not subject to any liens or encumbrances, other than in
favor of Lenders, (b) not obsolete or unserviceable, and (c) located at the
locations listed in attached Schedule 1.1(A).
---------------
"Employee Benefit Plan" means any employee benefit plan within the meaning
of Section 3(3) of ERISA which (a) is maintained for employees of any Loan Party
------------
or any ERISA Affiliate or (b) has at any time within the preceding six (6) years
been maintained for the employees of any Loan Party or any current or former
ERISA Affiliate.
"Environmental Claims" means claims, liabilities, investigations,
litigation, administrative proceedings, judgments or orders relating to
Hazardous Materials.
"Environmental Laws" means any present or future federal, state or local
law, rule, regulation or order relating to pollution, waste, disposal or the
protection of human health or safety, plant life or animal life, natural
resources or the environment.
"Equipment" means all machinery, apparatus, equipment, fittings, furniture,
fixtures, motor vehicles and other tangible personal property of every kind and
description used in Borrower's operations or owned by Borrower or in which
Borrower has an interest, whether now owned or hereafter acquired by Borrower
and wherever located, and all parts, accessories and special tools and all
increases and accessions thereto and substitutions and replacements therefor.
5
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute and all rules and
regulations promulgated thereunder.
"ERISA Affiliate", as applied to any Loan Party, means any Person who is a
member of a group which is under common control with any Loan Party, who
together with any Loan Party is treated as a single employer within the meaning
of Section 414(b) and (c) of the IRC.
----------------------
"Event of Default" means each of the events set forth in subsection 8.1.
--------------
"Federal Funds Effective Rate" means, for any day, the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the
immediately following Business Day by the Federal Reserve Bank of New York or,
if such rate is not published for any Business Day, the average of the
quotations for the day of the requested Loan received by Agent from three
Federal funds brokers of recognized standing selected by Agent.
"Fiscal Year" means each twelve month period ending on the last day of
December in each year.
"Fixed Charge Coverage" means, for any period, Operating Cash Flow divided
by Fixed Charges.
"Fixed Charges" means, for any period, and each calculated for such period
(without duplication), (a) Interest Expenses paid or accrued by Borrower and its
Subsidiaries; plus (b) scheduled payments of principal with respect to all
----
Indebtedness of Borrower and its Subsidiaries; plus (c) any provision for (to
----
the extent it is greater than zero) income or franchise taxes included in the
determination of net income, excluding any provision for deferred taxes; plus
----
(d) payment of deferred taxes accrued in any prior period.
"Funding Date" means the date of each funding of a Loan.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board that are applicable to the
circumstances as of the date of determination.
"Hazardous Material" means all or any of the following: (a) substances that
are defined or listed in, or otherwise classified pursuant to, any Environmental
Laws or regulations as "hazardous substances", "hazardous materials", "hazardous
wastes", "toxic substances" or any other formulation intended to define, list or
classify substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, or toxicity; (b) oil, petroleum or
petroleum derived substances, natural gas, natural gas liquids or synthetic gas
and drilling fluids, produced waters and other wastes associated with the
exploration, development
6
or production of crude oil, natural gas or geothermal resources; (c) any
flammable substances or explosives or any radioactive materials; and (d)
asbestos in any form or electrical equipment which contains any oil or
dielectric fluid containing polychlorinated biphenyls.
"Indebtedness", as applied to any Person, means without duplication: (a)
all indebtedness for borrowed money; (b) obligations under leases which in
accordance with GAAP constitute Capital Leases; (c) notes payable and drafts
accepted representing extensions of credit whether or not representing
obligations for borrowed money; (d) any obligation owed for all or any part of
the deferred purchase price of property or services if the purchase price is due
more than six months from the date the obligation is incurred or is evidenced by
a note or similar written instrument; (e) all indebtedness secured by any Lien
on any property or asset owned or held by that Person regardless of whether the
indebtedness secured thereby shall have been assumed by that Person or is non
recourse to the credit of that Person; and (f) obligations in respect of letters
of credit.
"Intangible Assets" means all intangible assets (determined in conformity
with GAAP) including, without limitation, goodwill, Intellectual Property,
licenses, organizational costs, deferred amounts, covenants not to compete,
unearned income and restricted funds.
"Intellectual Property" means all present and future designs, patents,
patent rights and applications therefor, trademarks and registrations or
applications therefor, trade names, inventions, copyrights and all applications
and registrations therefor, software or computer programs, license rights, trade
secrets, methods, processes, know-how, drawings, specifications, descriptions,
and all memoranda, notes and records with respect to any research and
development, whether now owned or hereafter acquired, all goodwill associated
with any of the foregoing, and proceeds of all of the foregoing, including,
without limitation, proceeds of insurance policies thereon.
"Interest Expenses" means, without duplication, for any period, the
following, for Borrower and its Subsidiaries each calculated for such period:
interest expenses deducted in the determination of net income (excluding (i) the
amortization of fees and costs with respect to the transactions contemplated by
this Agreement which have been capitalized as transaction costs in accordance
----
with the provisions of subsection 1.2; and (ii) interest paid in kind).
--------------
"Interest Period" has the meaning assigned to that term in subsection
2.2(B).
"Interest Rate" has the meaning assigned to that term in subsection 2.2(A).
-----------------
"Inventory" means all "inventory" (as defined in the UCC), including,
without limitation, Equipment, finished goods, raw materials, work in process
and other materials and supplies used or consumed in a Person's business, and
goods which are returned or repossessed.
"Inventory Report" means a report duly executed by an officer of Borrower
in form and substance satisfactory to ▇▇▇▇▇▇.
7
"IRC" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute and all rules and regulations promulgated
thereunder.
"Lender" or "Lenders" has the meaning assigned to that term in the preamble
to this Agreement.
"Lender Addition Agreement" means an agreement among Agent, a Lender and
such Lender's assignee regarding their respective rights and obligations with
respect to assignments of the Loans, the Commitments and other interests under
this Agreement and the other Loan Documents substantially in the form of Exhibit
-------
C.
-
"Lender Letter of Credit" has the meaning assigned to that term in
subsection 2.1(F).
-----------------
"Letter of Credit Liability" means, all reimbursement and other liabilities
of Borrower or any of its Subsidiaries with respect to each Lender Letter of
Credit, whether contingent or otherwise, including: (a) the amount available to
be drawn or which may become available to be drawn; (b) all amounts which have
been paid or made available by any Lender issuing a Lender Letter of Credit or
any bank issuing a Bank Letter of Credit to the extent not reimbursed; and (c)
all unpaid interest, fees and expenses related thereto.
"Letter of Credit Reserve" means, at any time, an amount equal to (a) the
aggregate amount of Letter of Credit Liability with respect to all Lender
Letters of Credit outstanding at such time plus, without duplication, (b) the
aggregate amount theretofore paid by Agent or any Lender under Lender Letters of
Credit and not debited to the Loan Account pursuant to subsection 2.1 or
--------------
otherwise reimbursed by Borrower.
"Liabilities" shall have the meaning given that term in accordance with
GAAP and shall include Indebtedness.
"LIBOR" means, for each Interest Period, a rate of interest equal to:
(a) the rate of interest determined by Agent at which deposits in
dollars for the relevant Interest Period are offered based on information
presented on the Reuters Screen LIBOR Page as of 11:00 A.M. (London time)
on the day which is two (2) Business Days prior to the first day of such
Interest Period; provided that if at least two such offered rates appear on
the Reuters Screen LIBOR Page in respect of such Interest Period, the
arithmetic mean (rounded upward to the nearest 1/16 of 1%) of all such
rates (as determined by the applicable Lender) will be the rate used;
provided further that if Reuters ceases to provide LIBOR quotations, such
rate shall be the average rate of interest (rounded upward to the nearest
1/16 of 1%) determined by Agent at which deposits in dollars are offered
for the relevant Interest Period by Bankers Trust Company and The Chase
Manhattan Bank, N.A., or their successors, to prime banks in the London
interbank market as of 11:00 A.M. (London time) on the applicable interest
rate determination date, divided by
8
(b) a number equal to 1.0 minus the aggregate (but without
duplication) of the rates (expressed as a decimal fraction) of reserve
requirements in effect on the day which is two (2) Business Days prior to
the beginning of such Interest Period (including, without limitation,
basic, supplemental, marginal and emergency reserves under any regulations
of the Board of Governors of the Federal Reserve System or other
governmental authority having jurisdiction with respect thereto, as now and
from time to time in effect) for Eurocurrency funding (currently referred
to as "Eurocurrency Liabilities" in Regulation D of such Board) which are
required to be maintained by a member bank of the Federal Reserve System.
"LIBOR Loans" means, at any time, each of the Loans bearing interest at
rates determined by reference to LIBOR.
"Lien" means any lien, mortgage, pledge, security interest, charge or
encumbrance of any kind, whether voluntary or involuntary, (including any
conditional sale or other title retention agreement, any lease in the nature
thereof, and any agreement to give any security interest).
"Loan" or "Loans" means an advance or advances under the Revolving Loan
Commitment.
"Loan Documents" means this Agreement, the Revolving Notes, the Security
Agreement (Aircraft), the Security Agreement (Spare Parts), and all other
instruments, documents and agreements executed by or on behalf of Borrower and
delivered concurrently herewith or at any time hereafter to or for Agent or any
Lender in connection with the Loans, any Lender Letter of Credit and other
transactions contemplated by this Agreement, all as amended, restated,
supplemented or modified from time to time.
"Loan Party" means each of Borrower, Borrower's Subsidiaries and any other
Person (other than Agent or any Lender) which is or becomes a party to any Loan
Document.
"Loan Year" means each period of twelve (12) consecutive months commencing
on the Closing Date and on each anniversary thereof.
"Material Adverse Effect" means a material adverse effect upon (a) the
business, operations, prospects, properties, assets or condition (financial or
otherwise) of any Loan Party on an individual basis or taken as a whole or (b)
the ability of any Loan Party to perform its obligations under any Loan Document
to which it is a party or of Agent or any Lender to enforce or collect any of
the Obligations.
"Maximum Revolving Loan Amount" has the meaning assigned to that term in
subsection 2.1(A).
-----------------
9
"Net Worth" means, as of any date, the sum of the capital stock and
additional paid-in capital plus retained earnings (or minus accumulated deficit)
calculated in conformity with GAAP.
"Notice of Borrowing" has the meaning assigned to that term in subsection
2.1(C).
"Obligations" means all obligations, liabilities and indebtedness of every
nature of each Loan Party from time to time owed to Agent or to any Lender under
the Loan Documents including the principal amount of all debts, claims and
indebtedness (whether incurred before or after the Termination Date), accrued
and unpaid interest and all fees, costs and expenses, whether primary,
secondary, direct, contingent, fixed or otherwise, heretofore, now and/or from
time to time hereafter owing, due or payable including, without limitation, all
interest, fees, cost and expenses accrued or incurred after the filing of any
petition under any bankruptcy or insolvency law.
"Operating Cash Flow" means, for any period, (a) EBITDA; less (b)
----
unfinanced Capital Expenditures.
"Permitted Encumbrances" means the following types of Liens: (a) Liens
(other than Liens relating to Environmental Claims or ERISA) for taxes,
assessments or other governmental charges not yet due and payable; (b) statutory
Liens of landlords, carriers, warehousemen, mechanics, materialmen and other
similar liens imposed by law, which are incurred in the ordinary course of
business for sums not more than thirty (30) days delinquent; (c) Liens (other
than any Lien imposed by ERISA) incurred or deposits made in the ordinary course
of business in connection with workers' compensation, unemployment insurance and
other types of social security, statutory obligations, surety and appeal bonds,
bids, leases, government contracts, trade contracts, performance and return-of-
money bonds and other similar obligations (exclusive of obligations for the
payment of borrowed money); (d) easements, rights-of-way, restrictions, and
other similar charges or encumbrances not interfering in any material respect
with the ordinary conduct of the business of any Loan Party or any of its
Subsidiaries; (e) Liens for purchase money obligations, provided that (i) the
--------
Indebtedness secured by any such Lien is permitted under subsection 7.1, and
--------------
(ii) such Lien encumbers only the asset so purchased; and (f) Liens in favor of
Agent, on behalf of Lenders.
"Person" means and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, joint stock
companies, joint ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts or other organizations, whether or not
legal entities, and governments and agencies and political subdivisions thereof.
"Pro Rata Share" means (a) with respect to matters relating to a particular
Commitment of a Lender, the percentage obtained by dividing (i) such Commitment
of that Lender by (ii) all such Commitments of all Lenders and (b) with respect
to all other matters, the percentage obtained by dividing (i) the Total Loan
Commitment of a Lender by (ii) the Total Loan Commitments of all Lenders, in
either case as such percentage may be adjusted by assignments
10
permitted pursuant to subsection 9.1; provided, however, if any Commitment is
--------------
terminated pursuant to the terms hereof, then "Pro Rata Share" means the
percentage obtained by dividing (x) the aggregate amount of such Lender's
outstanding Loans related to such Commitment by (y) the aggregate amount of all
outstanding Loans related to such Commitment.
"Projections" means Borrower's forecasted consolidated and consolidating:
(a) balance sheets; (b) profit and loss statements; (c) cash flow statements;
and (d) capitalization statements, all prepared on a division by division and
Subsidiary by Subsidiary basis and otherwise consistent with Borrower's
historical financial statements, together with appropriate supporting details
and a statement of underlying assumptions.
"Reconciliation Report" means a report duly executed by the chief executive
officer or chief financial officer of Borrower appropriately completed and in
substantially the form of Exhibit D.
---------
"Requisite Lenders" means Lenders holding or being responsible for sixty-
six and two-thirds percent (66.66%) or more of the sum of (a) outstanding Loans,
(b) outstanding Letter of Credit Liability, and (c) unutilized Commitments.
"Restricted Payment" means: (a) any dividend or other distribution, direct
or indirect, on account of any shares of any class of stock of Borrower or any
of its Subsidiaries now or hereafter outstanding, except a dividend payable
solely with shares of the class of stock on which such dividend is declared; or
(b) any payment made to retire, or to obtain the surrender of, any outstanding
warrants, options or other rights to acquire shares of any class of stock of
Borrower or any of its Subsidiaries now or hereafter outstanding.
"Revolving Advance" means each Base Rate Loan and each LIBOR Loan made by
Lender(s) pursuant to Section 2.1.
-----------
"Revolving Loan" means the outstanding balance of all Revolving Advances
and any amounts added to the principal balance of the Revolving Loan pursuant to
this Agreement.
"Revolving Loan Commitment" means (a) as to any Lender, the commitment of
such Lender to make Revolving Advances pursuant to Section 2.1, in the aggregate
-----------
amount set forth on the signature page of this Agreement opposite such Lender's
signature or in the most recent Lender Addition Agreement, if any, executed by
such Lender and (b) as to all Lenders, the aggregate commitment of all Lenders
to make Revolving Advances.
"Revolving Note" means each promissory note of Borrower in a form
reasonably acceptable to Agent, issued pursuant to subsection 2.1(A).
-----------------
"Risk Participation Agreement" has the meaning assigned to that term in
subsection 2.1(F).
----------------
11
"Security Agreement (Aircraft)" means that certain Aircraft Mortgage and
Security Agreement dated as of December 1, 1996 between Borrower and Agent.
"Security Agreement (Spare Parts)" means that certain Security Agreement
(Spare Parts) dated as of December 1, 1996 between Borrower and Agent.
"Security Agreements" means, collectively, the Security Agreement
(Aircraft) and the Security Agreement (Spare Parts).
"Settlement Date" has the meanings assigned to that term in subsection
----------
9.6(A)(2).
---------
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than fifty percent (50%) of
the total voting power of shares of stock (or equivalent ownership or
controlling interest) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by that Person or
one or more of the other subsidiaries of that Person or a combination thereof.
"Tangible Net Worth" of any Person means an amount equal to: (a) Net Worth
of such Person; less (b) Intangible Assets of such Person; less (c) prepaid
---- ----
expenses of any Person; less (d) all obligations owed to such Person by any
----
Affiliate of such Person or any of its Subsidiaries; and less (e) all loans by
----
such Person to its officers, stockholders, Subsidiaries or employees.
"Termination Date" means the date this Agreement is terminated as set forth
in subsection 2.5.
--------------
"Total Loan Commitment" means as to any Lender the aggregate commitments of
such Lender with respect to its Revolving Loan Commitment.
"UCC" means the Uniform Commercial Code as in effect on the date hereof in
the State of Illinois, as amended from time to time, and any successor statute.
"Working Capital" means as to any Person: (a) current assets; less (b)
current liabilities; and less (c) the amount of any obligations owed to such
Person or any of its Subsidiaries by any Affiliate of such Person or any of its
Subsidiaries.
1.2 Accounting Terms. For purposes of this Agreement, all accounting
----------------
terms not otherwise defined herein shall have the meanings assigned to such
terms in conformity with GAAP. Financial statements and other information
furnished to Agent or any Lender pursuant to subsection 5.1 shall be prepared in
--------------
accordance with GAAP (as in effect at the time of such preparation) on a
consistent basis. In the event any "Accounting Changes" (as defined below)
shall occur and such changes affect financial covenants, standards or terms in
this Agreement, then Borrower and Lenders agree to enter into negotiations in
order to amend such provisions
12
of this Agreement so as to equitably reflect such Accounting Changes with the
desired result that the criteria for evaluating the financial condition of
Borrower shall be the same after such Accounting Changes as if such Accounting
Changes had not been made, and until such time as such an amendment shall have
been executed and delivered by Borrower and Requisite Lenders, (A) all financial
covenants, standards and terms in this Agreement shall be calculated and/or
construed as if such Accounting Changes had not been made, and (B) Borrower
shall prepare footnotes to each Compliance Certificate and the financial
statements required to be delivered hereunder that show the differences between
the financial statements delivered (which reflect such Accounting Changes) and
the basis for calculating financial covenant compliance (without reflecting such
Accounting Changes). "Accounting Changes" means: (a) changes in accounting
principles required by GAAP and implemented by Borrower; and (b) changes in
accounting principles recommended by Borrower's certified public accountants.
1.3 Other Definitional Provisions. References to "Sections",
-----------------------------
"subsections", "Exhibits" and "Schedules" shall be to Sections, subsections,
Exhibits and Schedules, respectively, of this Agreement unless otherwise
specifically provided. Any of the terms defined in subsection 1.1 may, unless
--------------
the context otherwise requires, be used in the singular or the plural depending
on the reference. In this Agreement, words importing any gender include the
other genders; the words "including," "includes" and "include" shall be deemed
to be followed by the words "without limitation"; references to agreements and
other contractual instruments shall be deemed to include subsequent amendments,
assignments, and other modifications thereto, but only to the extent such
amendments, assignments and other modifications are not prohibited by the terms
of this Agreement or any other Loan Document; references to Persons include
their respective permitted successors and assigns or, in the case of
governmental Persons, Persons succeeding to the relevant functions of such
Persons; and all references to statutes and related regulations shall include
any amendments of same and any successor statutes and regulations.
SECTION 2. LOANS AND COLLATERAL
--------------------
2.1 Loans.
-----
(A) Revolving Loan. Subject to the terms and conditions of this
--------------
Agreement and in reliance upon the representations and warranties of Borrower
and the other Loan Parties set forth herein and in the other Loan Documents,
each Lender, severally, agrees to lend to Borrower from time to time its Pro
Rata Share of each Revolving Advance. From and after the Closing Date through
the Termination Date, the aggregate amount of all Revolving Loan Commitments
shall not exceed the following amounts during the following periods: (i) from
and after the Closing Date (and thereafter on each successive September 1) to
and including the following September 30, Twenty Million Dollars ($20,000,000),
(ii) on and after each successive October 1 to and including the following
February 28, Twenty-Five Million Dollars ($25,000,000), (iii) on and after each
successive March 1, to and including the following May 31, Twenty Million
Dollars ($20,000,000), (iv) on and after each successive June 1 to and
13
including the following August 31, Fifteen Million Dollars ($15,000,000), as
reduced by subsection 2.4(B); provided, however, that in the final month prior
-----------------
to the Termination Date, the amount of all Revolving Loan Commitments shall not
exceed Fifteen Million Dollars ($15,000,000). Amounts borrowed under this
subsection 2.1(A) may be repaid and reborrowed at any time prior to the earlier
-----------------
of (i) the termination of the Revolving Loan Commitment pursuant to subsection
----------
8.3 or (ii) the Termination Date. Except as otherwise provided herein, no
-----------
Lender shall have any obligation to make an advance under this subsection 2.1(A)
-----------------
to the extent such advance would cause the Revolving Loan (after giving effect
to any immediate application of the proceeds thereof) to exceed the Maximum
Revolving Loan Amount.
(1) "Maximum Revolving Loan Amount" means, as of any date of
determination, the lesser of (a) the Revolving Loan Commitment(s) of all Lenders
minus the Letter of Credit Reserve or (b) the Borrowing Base minus the Letter of
Credit Reserve.
(2) "Borrowing Base" means, as of any date of determination, an amount
equal to the sum of (a) eighty-five percent (85%) of the value of the Eligible
Accounts plus (b) sixty percent (60%) of the orderly liquidation value of the
----
Eligible Rotable Inventory (as determined by the Appraiser and set forth in the
Appraisal or any subsequent appraisal) (c) fifty percent (50%) of the orderly
liquidation value of Eligible Consumable Inventory (as determined by the
Appraiser and set forth in the Appraisal or any subsequent appraisal) plus (d)
eighty percent (80%) of the orderly liquidation value of the Eligible Aircraft
Collateral (as determined by the Appraiser and set forth in the Appraisal and
any subsequent appraisals) in each case subject to such reserves as the Agent in
its reasonable discretion may elect to establish; provided, however, that,
notwithstanding anything to the contrary contained herein, in no event shall the
amount of the Borrowing Base attributable to Eligible Inventory exceed Twenty
Million Dollars ($20,000,000).
(B) Eligible Collateral. "Eligible Accounts" means, as at any date of
-------------------
determination, the aggregate of all Accounts that Agent, in its reasonable
judgment, deems to be eligible for borrowing purposes. Without limiting the
generality of the foregoing, unless otherwise agreed by Agent, the following
Accounts are not Eligible Accounts:
(a) Accounts which, at the date of issuance of the respective
invoice therefor, were payable more than sixty (60) days after the date of
issuance of such invoice;
(b) Accounts which remain unpaid for more than ninety (90) days
after the due date specified in the original invoice or for more than one
hundred twenty (120) days after invoice date if no due date was specified;
(c) Accounts which are otherwise eligible with respect to which
the account debtor is owed a credit by Borrower, but only to the extent of such
credit;
(d) Accounts due from a customer whose principal place of business
is located outside the United States of America except to the extent Borrower
has taken all steps
14
deemed necessary or advisable to perfect Agent's first priority security
interest in such Accounts; Accounts due from a customer which Agent has notified
Borrower does not have a satisfactory credit standing;
(e) Accounts with respect to which the customer is the United
States of America, any state or any municipality, or any department, agency or
instrumentality thereof unless Borrower has, with respect to such Accounts,
complied with the Federal Assignment of Claims Act (31 U.S.C. Section 3727) or
any applicable statute or municipal ordinance of similar purpose and effect;
(f) Accounts with respect to which the customer is an Affiliate of
Borrower or a director, officer, agent, stockholder or employee of Borrower or
any of its Affiliates;
(g) Accounts due from a customer if more than twenty-five percent
(25%) of the aggregate amount of Accounts of such customer have at the time
remained unpaid for more than ninety (90) days after due date or one hundred
twenty (120) days after the invoice date if no due date was specified;
(h) Accounts with respect to which there is any unresolved dispute
with the respective customer (but only to the extent of such dispute);
(i) Accounts evidenced by an "instrument" or "chattel paper" (as
defined in the UCC) not in the possession of Agent, on behalf of Lenders;
(j) Accounts with respect to which Agent, on behalf of Lenders,
does not have a valid, first priority and fully perfected security interest;
(k) Accounts subject to any Lien except those in favor of Agent,
on behalf of Lenders;
(l) Accounts with respect to which the customer is the subject of
any bankruptcy or other insolvency proceeding;
(m) Accounts due from a customer to the extent that such Accounts
exceed in the aggregate an amount equal to twenty percent (20%) of the aggregate
of all Accounts at said date;
(n) Accounts with respect to which the customer's obligation to
pay is conditional or subject to a repurchase obligation or right to return or
with respect to which the goods or services giving rise to such Account have not
been delivered (or performed, as applicable) and accepted by such account
debtor, including progress ▇▇▇▇▇▇▇▇, ▇▇▇▇ and hold sales, guarantied sales, sale
or return transactions, sales on approval or consignment sales;
15
(o) Accounts with respect to which the customer is located in
Indiana, New Jersey, Minnesota, or any other state denying creditors access to
its courts in the absence of a Notice of Business Activities Report or other
similar filing, unless Borrower has either qualified as a foreign corporation
authorized to transact business in such state or has filed a Notice of Business
Activities Report or similar filing with the applicable state agency for the
then current year;
(p) Accounts with respect to which the customer is a creditor of
Borrower, provided, however, that any such Account shall only be ineligible as
-------- -------
to that portion of such Account which is less than or equal to the amount owed
by Borrower to such Person.
(C) Borrowing Mechanics. (1) LIBOR Loans made on any Funding Date
-------------------
shall be in an aggregate minimum amount of $1,000,000 and integral multiples of
$100,000 in excess of such amount. (2) On any day Borrower desires to borrow
under this subsection 2.1, Borrower shall give Agent telephonic notice of the
--------------
proposed borrowing by 11:00 a.m. Central time on the Funding Date of a Base Rate
Loan and two (2) Business Days in advance of the Funding Date of a LIBOR Loan,
which notice (a "Notice of Borrowing") shall also specify the proposed Funding
Date (which shall be a Business Day), whether such Loan shall be a Base Rate
Loan or a LIBOR Loan, and, for a LIBOR Loan, the Interest Period applicable
thereto. Any such telephonic notice shall be confirmed in writing on the same
day. Neither Agent nor Lender shall incur any liability to Borrower for acting
upon any telephonic notice Agent believes in good faith to have been given by a
duly authorized officer or other person authorized to borrow on behalf of
Borrower or for otherwise acting in good faith under this subsection 2.1(C).
--------------
Neither Agent nor Lender will make any advance pursuant to any telephonic notice
unless Agent has also received the Borrowing Base Certificate for such day and
all other documents required under subsection 5.1(F) by 12:00 noon (New York
--------------
time). The making of an advance pursuant to telephonic notice shall constitute
a Loan under this Agreement. Each such advance to a Borrower under the
Revolving Loan Commitment shall be deposited by wire transfer in immediately
available funds in such account as Borrower may from time to time designate to
Agent in writing. If the Borrower fails to repay a LIBOR Loan on the due date
thereof, such LIBOR Loan shall, subject to Section 2.2 hereof, be deemed
converted into a Base Rate Loan on such due date. The becoming due of any
amount required to be paid under this Agreement or any of the other Loan
Documents as principal, accrued interest and fees shall be deemed irrevocably to
be a request by Borrower for a Base Rate Loan in the amount required to pay,
such principal, accrued interest and fees, and the proceeds of each such Base
Rate Loan if made by Agent or any Lender shall be disbursed by Agent or such
Lender by way of direct payment of the relevant obligation.
(D) Revolving Note[s]. Borrower shall execute and deliver to each
-----------------
Lender with appropriate insertions a Revolving Note to evidence such Lender's
Revolving Loan Commitment. In the event of an assignment under subsection 9.1,
--------------
Borrower shall, upon surrender of the assigning Lender's Revolving Note[s],
issue [a] new Revolving Note[s] to reflect the interest held by the assigning
Lender and its assignee.
16
(E) Evidence of Revolving Loan Obligations. Each Revolving Advance
--------------------------------------
shall be evidenced by this Agreement, the Revolving Note with respect thereto,
and notations made from time to time by Agent in its books and records,
including computer records. Agent shall record in its books and records,
including computer records, the principal amount of the Revolving Loan owing to
each Lender from time to time. Agent's books and records shall constitute
presumptive evidence, absent manifest error, of the accuracy of the information
contained therein. Failure by Agent to make any such notation or record shall
not affect the obligations of Borrower[s] to Lenders with respect to the
Revolving Loans.
(F) Letters of Credit. Subject to the terms and conditions of this
-----------------
Agreement and in reliance upon the representations and warranties of Borrower
herein set forth, the Revolving Loan Commitments may, in addition to Revolving
Advances be utilized, upon the request of Borrower, for (i) the issuance of
letters of credit by Agent; or with Agent's consent any Lender, or (ii) the
issuance by Agent of risk participations (a Risk Participation Agreement) to
banks to induce such banks to issue letters of credit for the account of
Borrower (each of (i) and (ii) above a "Lender Letter of Credit"). Each Lender
shall be deemed to have purchased a participation in each Lender Letter of
Credit issued on behalf of Borrower in an amount equal to its Pro Rata Share
thereof. In no event shall any Lender Letter of Credit be issued to the extent
that the issuance of such Lender Letter of Credit would cause the sum of the
Letter of Credit Reserve (after giving effect to such issuance) plus the
Revolving Loan to exceed the lesser of (x) the Borrowing Base and (y) the
Revolving Loan Commitment.
(1) Maximum Amount. The aggregate amount of Letter of Credit
--------------
Liability with respect to all Lender Letters of Credit outstanding at any time
shall not exceed $5,000,000.
(2) Reimbursement. Borrower shall be irrevocably and
-------------
unconditionally obligated forthwith without presentment, demand, protest or
other formalities of any kind, to reimburse Agent or Lender for any amounts paid
by Lender with respect to a Lender Letter of Credit including all fees, costs
and expenses paid by Lender to any bank that issues letters of credit. Borrower
hereby authorizes and directs Agent, at Agent's option, to debit Borrower's
account (by increasing the principal balance of the Revolving Loan) in the
amount of any payment made by Lender with respect to any Lender Letter of
Credit. All amounts paid with respect to any Lender Letter of Credit or Lender
Guaranty that are not immediately repaid by Borrower with the proceeds of a
Revolving Loan or otherwise shall bear interest at the Default Rate applicable
to Base Rate Revolving Loans. In the event that Borrower shall fail to reimburse
Agent on the date of any payment under a Lender Letter of Credit in an amount
equal to the amount of such payment, Agent shall promptly notify each Lender of
the unreimbursed amount of such payment together with accrued interest thereon
and each Lender, on the next Business Day, shall deliver to Agent an amount
equal to its respective participation in same day funds. The obligation of each
Lender to deliver to Agent an amount equal to its respective participation
pursuant to the foregoing sentence shall be absolute and unconditional and such
remittance shall be made notwithstanding the occurrence or continuation of an
Event of Default or Default or the failure to satisfy any condition set forth in
Section 3. In the event any
---------
17
Lender fails to make available to Agent the amount of such Lender's
participation in such Lender Letter of Credit, Agent shall be entitled to
recover such amount on demand from such Lender together with interest at the
Base Rate.
(3) Conditions of Issuance. In addition to all other terms and
----------------------
conditions set forth in this Agreement, the issuance of any Lender Letter of
Credit shall be subject to the satisfaction of all conditions applicable to
Revolving Advances, and the conditions that the letter of credit which Borrower
requests be in such form, be for such amount, contain such terms and support
such transactions as are reasonably satisfactory to Agent. The expiration date
of each Lender Letter of Credit shall be on a date which is at least thirty (30)
days prior to the Termination Date.
(4) Request for Letters of Credit. Borrower shall give Agent at
-----------------------------
least ten (10) Business Days prior notice specifying the date a Lender Letter of
Credit is to be issued, identifying the beneficiary and describing the nature of
the transactions proposed to be supported thereby. The notice shall be
accompanied by the form of the letter of credit being requested.
(G) Other Letter of Credit Provisions.
---------------------------------
(1) Obligations Absolute. The obligation of Borrower to reimburse
--------------------
Agent or any Lender for payments made under, and other amounts payable in
connection with, any Lender Letter of Credit shall be unconditional and
irrevocable and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances including the following circumstances:
(a) any lack of validity or enforceability of any Lender Letter
of Credit, Bank Letter of Credit or any other agreement;
(b) the existence of any claim, set-off, defense or other right
which Borrower, any of its Affiliates, Agent or any Lender, on the one
hand, may at any time have against any beneficiary or transferee of any
Lender Letter of Credit or Bank Letter of Credit (or any Persons for whom
any such transferee may be acting), Agent, any Lender or any other Person,
on the other hand, whether in connection with this Agreement, the
transactions contemplated herein or any unrelated transaction (including
any underlying transaction between Borrower or any of its Affiliates and
the beneficiary of the letter of credit);
(c) any draft, demand, certificate or any other document
presented under any Lender Letter of Credit or Bank Letter of Credit is
alleged to be forged, fraudulent, invalid or insufficient in any respect or
any statement therein being untrue or inaccurate in any respect;
(d) payment under any Lender Letter of Credit or Bank Letter of
Credit against presentation of a demand, draft or certificate or other
document which
18
does not comply with the terms of such letter of credit;
provided that, in the case of any payment by Agent or a Lender under any
Lender Letter of Credit, Agent or such Lender has not acted with gross
negligence or willful misconduct (as determined by a court of competent
jurisdiction) in determining that the demand for payment under such Lender
Letter of Credit complies on its face with any applicable requirements for
a demand for payment under such Lender Letter of Credit;
(e) any other circumstance or happening whatsoever, which is similar
to any of the foregoing; or
(f) the fact that a Default or an Event of Default shall have occurred
and be continuing.
(2) Nature of Lender's Duties. As between Agent and Lenders, on the
-------------------------
one hand, and Borrower, on the other hand, Borrower assumes all risks of the
acts and omissions of, or misuse of any Lender Letter of Credit by the
beneficiary thereof. In furtherance and not in limitation of the foregoing,
neither Agent nor any Lender shall be responsible: (a) for the form, validity,
sufficiency, accuracy, genuineness or legal effect of any document by any party
in connection with the application for and issuance of any Lender Letter of
Credit, even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (b) for the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any Lender Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (c) for failure of the beneficiary of any
Lender Letter of Credit to comply fully with conditions required in order to
demand payment thereunder; provided that, in the case of any payment by Agent or
any Lender under any Lender Letter of Credit, Agent or Lender has not acted with
gross negligence or willful misconduct (as determined by a court of competent
jurisdiction) in determining that the demand for payment under such Lender
Letter of Credit complies on its face with any applicable requirements for a
demand for payment thereunder; (d) for errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they be in cipher; (e) for errors in
interpretation of technical terms; (f) for any loss or delay in the transmission
or otherwise of any document required in order to make a payment under any
Lender Letter of Credit; (g) for the credit of the proceeds of any drawing under
any Lender Letter of Credit; and (h) for any consequences arising from causes
beyond the control of Agent or any Lender as the case may be. None of the above
shall affect, impair, or prevent the vesting of any of Agent's or any Lender's
rights or powers hereunder.
(3) Liability. In furtherance and extension of and not in limitation
---------
of, the specific provisions herein above set forth, any action taken or omitted
by Agent or any Lender under or in connection with any Lender Letter of Credit,
if taken or omitted in good faith, shall not put Agent or any Lender under any
resulting liability to Borrower.
19
2.2 Interest.
--------
(A) Rate of Interest. The Loans and all other Obligations shall bear
----------------
interest from the date such Loans are made or such other Obligations become due
to the date paid at a rate per annum equal to (i) in the case of Base Rate Loans
and other Obligations for which no other interest rate is specified, the Base
Rate plus three quarters of one percent (0.75%) and (ii) in the case of LIBOR
Loans, LIBOR plus three and one-half percent (3.50%), in each case subject to
adjustment as provided in Section 2.2(F) herein (the "Interest Rate"). The
applicable basis for determining the rate of interest shall be selected by
Borrower initially at the time a Notice of Borrowing is given pursuant to
subsection 2.1(C). The basis for determining the interest rate with respect to
--------------
any Loan or a portion of any Loan may be changed from time to time pursuant to
subsection 2.2(E). If on any day a Loan or a portion of any Loan is outstanding
-----------------
with respect to which notice has not been delivered to Lender in accordance with
the terms of this Agreement specifying the basis for determining the rate of
interest, then for that day that Loan or portion thereof shall bear interest
determined by reference to the Base Rate.
After the occurrence and during the continuance of an Event of Default (i)
the Loans and all other Obligations shall, at the option of the Requisite
Lenders, bear interest at a rate per annum equal to two percent (2.0%) plus the
applicable Interest Rate (the "Default Rate"), (ii) each LIBOR Loan shall
automatically convert to a Base Rate Loan at the end of any applicable Interest
Period and (iii) no Loans may be converted to LIBOR Loans.
(B) Interest Periods. In connection with each LIBOR Loan, Borrower
----------------
shall elect an interest period (each an "Interest Period") to be applicable to
such Loan, which Interest Period shall be either a one, two, three or six month
period; provided that:
(1) the initial Interest Period for any LIBOR Loan shall commence
on the Funding Date of such Loan;
(2) in the case of successive Interest Periods, each successive
Interest Period shall commence on the day on which the immediately
preceding Interest Period expires;
(3) if an Interest Period expiration date is not a Business Day,
such Interest Period shall expire on the next succeeding Business Day;
provided that if any Interest Period expiration date is not a Business Day
but is a day of the month after which no further Business Day occurs in
such month, such Interest Period shall expire on the immediately preceding
Business Day and, in either case, no adjustment shall be made to the
interest otherwise payable;
(4) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall,
subject to part (5), below, end on the last Business Day of a calendar
month;
20
(5) no Interest Period shall extend beyond the Termination Date;
(6) no Interest Period may extend beyond a scheduled principal
payment date unless the sum of (a) the aggregate principal amount of Loans
that are Base Rate Loans or that have Interest Periods expiring on or
before such date and (b) the lesser of the available, unused (i) Revolving
Loan Commitment or (ii) Borrowing Base equals or exceeds the principal
amount required to be paid on the Loans on such date; and
(7) there shall be no more than three (3) LIBOR Loans outstanding
at any time.
(C) Computation and Payment of Interest. Interest on the Loans and
-----------------------------------
all other Obligations shall be computed on the daily principal balance on the
basis of a 360 day year for the actual number of days elapsed in the period
during which it accrues. In computing interest on any Loan, the date of funding
of the Loan or the first day of an Interest Period applicable to such Loan or,
with respect to a Base Rate Loan being converted from a LIBOR Loan, the date of
conversion of such LIBOR Loan to such Base Rate Loan, shall be included; and
the date of payment of such Loan or the expiration date of an Interest Period
applicable to such Loan, or with respect to a Base Rate Loan being converted to
a LIBOR Loan, the date of conversion of such Base Rate Loan to such LIBOR Loan,
shall be excluded; provided that if a Loan is repaid on the same day on which it
is made, one day's interest shall be paid on that Loan. Interest on Base Rate
Loans and all other Obligations other than LIBOR Loans shall be payable to
Lender monthly in arrears on the first day of each month, on the date of any
prepayment of Loans, and at maturity, whether by acceleration or otherwise.
Interest on LIBOR Loans shall be payable to Lender on the last day of the
applicable Interest Period for such Loan, on the date of any prepayment of the
Loans, and at maturity, whether by acceleration or otherwise. In addition, for
each LIBOR Loan having an Interest Period longer than three (3) months, interest
accrued on such Loan shall also be payable on the last day of each three (3)
month interval during such Interest Period.
(D) Interest Laws. Notwithstanding any provision to the contrary
-------------
contained in this Agreement or any other Loan Document, Borrower shall not be
required to pay, and neither Agent nor any Lender shall be permitted to collect,
any amount of interest in excess of the maximum amount of interest permitted by
applicable law ("Excess Interest"). If any Excess Interest is provided for or
determined by a court of competent jurisdiction to have been provided for in
this Agreement or in any other Loan Document, then in such event: (1) the
provisions of this subsection shall govern and control; (2) neither Borrower nor
any other Loan Party shall be obligated to pay any Excess Interest; (3) any
Excess Interest that Lender may have received hereunder shall be, at such
Lender's option, (a) applied as a credit against the outstanding principal
balance of the Obligations or accrued and unpaid interest (not to exceed the
maximum amount permitted by law), (b) refunded to the payor thereof, or (c) any
combination of the foregoing; (4) the interest rate(s) provided for herein shall
be automatically reduced to the maximum lawful rate allowed from time to time
under applicable law (the "Maximum Rate"), and this Agreement and the other Loan
Documents shall be deemed to have been and shall be, reformed and modified to
reflect such
21
reduction; and (5) neither Borrower nor any Loan Party shall have any action
against Agent or any Lender for any damages arising out of the payment or
collection of any Excess Interest. Notwithstanding the foregoing, if for any
period of time interest on any Obligations is calculated at the Maximum Rate
rather than the applicable rate under this Agreement, and thereafter such
applicable rate becomes less than the Maximum Rate, the rate of interest payable
on such Obligations shall remain at the Maximum Rate until such Lender shall
have received the amount of interest which Lender would have received during
such period on such Obligations had the rate of interest not been limited to the
Maximum Rate during such period.
(E) Conversion or Continuation. Subject to the applicable provisions
--------------------------
of Section 2, Borrower shall have the option to (1) convert at any time all or
---------
any part of an outstanding Loan equal to $1,000,000 and integral multiples of
$100,000 in excess of that amount from a Base Rate Loan to a LIBOR Loan or (2)
upon the expiration of any Interest Period applicable to a LIBOR Loan, to (a)
continue all or any portion of such LIBOR Loan equal to $1,000,000 and integral
multiplies of $100,000 in excess of that amount as a LIBOR Loan or (b) convert
all or any portion of such LIBOR Loan to a Base Rate Loan. The succeeding
Interest Period(s) of such continued or converted Loan commence on the last day
of the Interest Period of the Loan to be continued or converted; provided that
no outstanding Loan may be continued as, or be converted into, a LIBOR Loan,
when any Event of Default or Default has occurred and is continuing.
Borrower shall deliver a notice of conversion or continuation to
Lender no later than 12:00 noon (New York time) at least two (2) Business Days
in advance of the proposed conversion/continuation date ("Notice of
Conversion/Continuation"). A Notice of Conversion/Continuation shall certify:
(1) the proposed conversion/continuation date (which shall be a Business Day);
(2) the amount of the Loan to be converted/continued; (3) the nature of the
proposed conversion/continuation; (4) in the case of conversion to, or a
continuation of, a LIBOR Loan, the requested Interest Period; and (5) that no
Default or Event of Default has occurred and is continuing or would result from
the proposed conversion/continuation.
In lieu of delivering the Notice of Conversion/Continuation, Borrower
may give Lender telephonic notice by the required time of any proposed
conversion/continuation under this subsection 2.2(E); provided that such notice
-----------------
shall be promptly confirmed in writing by delivery of a Notice of
Conversion/Continuation to Lender on or before the proposed conversion or
continuation date.
Lender shall not incur any liability to Borrower in acting upon any
telephonic notice referred to above that Lender believes in good faith to have
been given by a duly authorized officer or other person authorized to act on
behalf of Borrower or for otherwise acting in good faith under this subsection
----------
2.2(E) and upon conversion/continuation by Lender in accordance with this
------
Agreement pursuant to any telephonic notice, Borrower shall have effected such
conversion or continuation, as the case may be, hereunder.
22
(F) Interest Adjustment.
-------------------
Beginning with the quarter ended March 31, 1998, the Interest Rate
shall be subject to quarterly adjustments based upon the Fixed Charge Coverage
of Borrower determined in accordance with the quarterly consolidated financial
statements of Borrower delivered pursuant to subsection 5.1(B) hereof and a
certificate of the Chief Financial Officer of Borrower delivered pursuant to
this subsection calculating the Fixed Charge Coverage for the applicable
trailing twelve month calendar period (the "Fixed Charge Certificate"). The
Interest Rate shall adjust by the Applicable Interest Margin based upon the
Fixed Charge Coverage ratio for the trailing twelve month calendar period as
follows:
---------------------------------------------------
Fixed Charge Coverage Applicable Interest Margin
----------------------- --------------------------
---------------------------------------------------
0.70x or less add 0.25%
---------------------------------------------------
1.05x to 1.14x subtract 0.25%
---------------------------------------------------
1.15x to 1.24x subtract 0.50%
---------------------------------------------------
1.25x or more subtract 0.75%
---------------------------------------------------
Any adjustment to the Interest Rate shall be effective on the first
day of the month next following Agent's receipt of the applicable financial
statements and the Fixed Charge Certificate. For the avoidance of doubt,
with respect to each Interest Period, each Loan shall bear interest at the
original Interest Rate as adjusted by the Applicable Interest Margin as
provided above for such Interest Period. In the event that Borrower fails
to deliver either the financial statements or the Fixed Charge Certificate
within the time period provided for in Section 5.1(B), all Loans and all
Obligations hereunder shall immediately bear interest at the original
Interest Rate.
2.3 Fees.
----
(A) Closing Fee. On the Closing Date, Borrower shall pay to Agent,
-----------
for the benefit of Lenders, a fee in an amount equal to $100,000 (the "Closing
Fee").
(B) Unused Line Fee. Borrower shall pay to Agent, for the benefit of
---------------
Lenders, a fee in an amount equal to the Revolving Loan Commitment less the sum
of the average daily balance of the Revolving Loan plus the average daily face
amount of the Lender Letter of Credit Reserve during the preceding month
multiplied by three-eighths of one percent (.375%)] per annum, such fee to be
calculated on the basis of a 360 day year for the actual number of days elapsed
and to be payable monthly in arrears on the first day of the first month
following the Closing Date and the first day of each month thereafter.
23
(C) Letter of Credit Fees. Borrower shall pay to Agent for the
---------------------
account of Lenders, a fee for the account of Lenders with respect to the Lender
Letters of Credit in the amount of the average daily amount of Letter of Credit
Liability outstanding during such month multiplied by one and three-quarters
percent (1.75%) per annum. Such fees will be calculated on the basis of a 360
day year for the actual number of days elapsed and will be payable monthly in
arrears on the first day of each month. Borrower shall also reimburse Agent for
any and all fees and expenses, if any, paid by Agent or any Lender to the issuer
of any Bank Letter of Credit.
(D) Audit Fees. Borrower agrees to pay to Agent for its own account
----------
an audit fee for each inspection equal to $650 per auditor per day or any
portion thereof, excluding all full days spent by Agent traveling to or from
Borrower's locations together with out of pocket expenses.
(E) Other Fees and Expenses. Borrower shall pay to Agent, for its own
-----------------------
account, all charges for returned items and all other bank charges incurred by
Agent, as well as Agent's standard wire transfer charges for each wire transfer
made under this Agreement.
2.4 Payments and Prepayments.
------------------------
(A) Manner and Time of Payment. In its sole discretion, Agent may
--------------------------
charge interest and other amounts payable hereunder to the Revolving Loan, all
as set forth on Agent's books and records. If Agent elects to ▇▇▇▇ Borrower for
any amount due hereunder, such amount shall be immediately due and payable with
interest thereon as provided herein. All payments made by Borrower with respect
to the Obligations shall be made without deduction, defense, setoff, withholding
or counterclaim. All payments to Agent hereunder shall, unless otherwise
directed by Agent, be made to Agent's Account or in accordance with subsection
----------
5.6. Proceeds remitted to the Agent's Accounts shall be credited to the
---
Obligations on the first Business Day following the day such proceeds were
received; provided, however, for the purpose of calculating interest on the
Obligations, such funds shall be deemed received on the first Business Day
thereafter. Proceeds remitted to Agent's Account by wire transfer shall be
credited to the Obligations on the Business Day received; provided, however, for
the purpose of calculating interest on the Obligations such funds shall be
deemed received the first Business Day thereafter.
(B) Mandatory Prepayments.
---------------------
(1) Overadvance. At any time that the Revolving Loan exceeds the
-----------
Maximum Revolving Loan Amount, Borrower shall, immediately repay the
Revolving Loan to the extent necessary to reduce the principal balance to
an amount equal to or less than the Maximum Revolving Loan Amount.
(2) Proceeds of Asset Dispositions. Immediately upon receipt by
------------------------------
Borrower or any of its Subsidiaries of proceeds of any Asset Disposition
(in one or a series of related transactions), which proceeds exceed $10,000
(it being understood that
24
if the proceeds exceed $10,000, the entire amount and not just the portion
above $10,000 shall be subject to this subsection 2.4(B)(2)), Borrower
---------------------
shall repay the Obligations in an amount equal to such proceeds.
(3) Events of Loss with Respect to Eligible Aircraft Collateral.
-----------------------------------------------------------
If an Event of Loss (as defined in the Security Agreement (Aircraft))
occurs with respect to the Airframe, then:
(a) the Borrowing Base shall automatically and without action
by the Agent be reduced by eighty percent (80%) of the orderly liquidation
value of such Airframe as set forth in the Appraisal; and
(b) as more particularly set forth in the Security Agreement
(Aircraft), the Agent shall be paid directly by the applicable insurance
carrier the proceeds of the hull insurance with respect to such Aircraft
carried by the Borrower, as required by the terms of the Security Agreement
(Aircraft). The proceeds of such insurance shall be applied by the Agent
as follows:
first, to the extent that (x) the reduced Borrowing Base is
greater than (y) the principal amount of the Revolving Loan then
outstanding hereunder, then so much of such proceeds as shall be required
to reduce the outstanding principal amount of the Revolving Loan then
outstanding hereunder sufficiently such that the sum of the amounts set
forth in clause (y) above shall be equal to or less than the reduced
Borrowing Base shall be applied by the Agent in payment of such principal
amount by paying such amount to the holders of the then outstanding
Revolving Notes on a pro rata basis; and
second, any proceeds then remaining shall be distributed to
the Borrower;
provided, however, that no amounts shall be disbursed by the
Agent pursuant to clause second above if at the time of such disbursement a
Default or Event of Default shall have occurred and be continuing, and such
amounts shall be held by the Agent as security for the Indebtedness owed
hereunder, to be applied against such Indebtedness as and when due. At
such time as there shall not be continuing any Default or Event of Default,
such amounts shall be paid over to the Borrower, to the extent not
previously applied hereunder. Furthermore, to the extent there are
insufficient insurance proceeds to satisfy all amounts payable under clause
first above, the Borrower shall pay to the Agent the amount by which such
insurance proceeds are insufficient, to be distributed by the Agent
pursuant to this subsection 2.4(B)(3).
--------------------
(C) Voluntary Prepayments and Repayments. Except as provided in
------------------------------------
subsection 2.4(B), Borrower's Obligations may be prepaid or repaid in full or in
-----------------
part; it being understood that a prepayment shall involve a permanent reduction
of the Revolving Loan Commitment hereunder (a "Prepayment"). Upon any
Prepayment by Borrower, Borrower shall
25
pay Lenders a prepayment fee of two percent (2%) of the Maximum Revolving Loan
Commitment if the Loans are prepaid at any time during the first year such Loans
are outstanding and one percent (1%) of the Maximum Revolving Loan Commitment if
the Loans are prepaid at any time thereafter. Borrower may, at any time upon not
less than three Business Days' prior notice to Agent, terminate the Revolving
Loan Commitment. Upon termination of the Revolving Loan Commitment, Borrower
shall cause Agent and each Lender to be released from all liability under any
Lender Letters of Credit or, at Agent's option, Borrower will deposit cash
collateral with Agent in an amount equal to 105% of the Letter of Credit
Liability that will remain outstanding after prepayment or repayment.
(D) Payments on Business Days. Whenever any payment to be made
-------------------------
hereunder shall be stated to be due on a day that is not a Business Day, the
payment may be made on the next succeeding Business Day and such extension of
time shall be included in the computation of the amount of interest or fees due
hereunder.
2.5 Term of this Agreement. This Agreement shall be effective until
----------------------
September 30, 1999 (the "Termination Date") unless earlier terminated pursuant
to Section 8.3 hereof. The Commitments shall (unless earlier terminated)
-----------
terminate upon the earlier of (i) the occurrence of an event specified in
subsection 8.3 or (ii) the Termination Date. Upon termination in accordance
--------------
with subsection 8.3 or on the Termination Date, all Obligations shall become
--------------
immediately due and payable without notice or demand. Notwithstanding any
termination, until all Obligations have been fully paid and satisfied, Agent, on
behalf of Lenders, shall be entitled to retain security interests in and liens
upon all Collateral, and even after payment of all Obligations hereunder,
Borrower's obligation to indemnify Agent and each Lender in accordance with the
terms hereof shall continue.
2.6 Statements. Agent shall render a monthly statement of account to
----------
Borrower within twenty (20) days after the end of each month. Such statement of
account shall constitute an account stated unless Borrower makes written
objection thereto within thirty (30) days from the date such statement is mailed
to Borrower. Borrower promises to pay all of its Obligations as such amounts
become due or are declared due pursuant to the terms of this Agreement.
2.7 Grant of Security Interest. To secure the payment and performance of
--------------------------
the Obligations, including all renewals, extensions, restructurings and
refinancings of any or all of the Obligations, Borrower hereby grants to Agent,
on behalf of Lenders, a continuing security interest, lien and mortgage in and
to all right, title and interest of Borrower in the following property of
Borrower, whether now owned or existing or hereafter acquired or arising and
regardless of where located (all being collectively referred to as the
"Collateral"): (A) Accounts, and all guaranties and security therefor, and all
goods and rights represented thereby or arising therefrom including the rights
of stoppage in transit, replevin and reclamation; (B) Inventory; (C) general
intangibles (as defined in the UCC); (D) Intellectual Property; (E) all cash and
other monies and property of Borrower in the possession or under the control of
Agent, any Lender or any participant; (F) all books, records, ledger cards,
files, correspondence, computer programs, tapes, disks and related data
processing software that at any time evidence or contain
26
information relating to any of the property described above or are otherwise
necessary or helpful in the collection thereof or realization thereon; (G) the
Eligible Inventory and the Eligible Aircraft Collateral; (H) all landing and
gate rights and any agreements, contracts and licenses with respect thereto; and
(I) proceeds of all or any of the property described above, including, without
limitation, the proceeds of any insurance policies covering any of the above
described property.
2.8 Capital Adequacy and Other Adjustments. In the event Agent or any
--------------------------------------
Lender shall have determined that the adoption after the date hereof of any law,
treaty, governmental (or quasi-governmental) rule, regulation, guideline or
order regarding capital adequacy, reserve requirements or similar requirements
or compliance by Agent or such Lender or any corporation controlling Agent or
such Lender with any request or directive regarding capital adequacy, reserve
requirements or similar requirements (whether or not having the force of law and
whether or not failure to comply therewith would be unlawful) from any central
bank or governmental agency or body having jurisdiction does or shall have the
effect of increasing the amount of capital, reserves or other funds required to
be maintained by Agent or such Lender or any corporation controlling Agent or
such Lender and thereby reducing the rate of return on Agent's or such Lender's
or such corporation's capital as a consequence of its obligations hereunder,
then Borrower shall from time to time within fifteen (15) days after notice and
demand from such Lender (with a copy to Agent) or Agent (together with the
certificate referred to in the next sentence) pay to Agent or such Lender
additional amounts sufficient to compensate Agent or such Lender for such
reduction. A certificate as to the amount of such cost and showing the basis of
the computation of such cost submitted by Agent or any Lender to Borrower shall,
absent manifest error, be final, conclusive and binding for all purposes.
2.9 Taxes.
-----
(A) No Deductions. Any and all payments or reimbursements made
-------------
hereunder or under the Revolving Notes shall be made free and clear of and
without deduction for any and all taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto; excluding, however, the
following: federal or state taxes imposed on the net income of any Lender or
Agent by the jurisdiction under the laws of which Agent or such Lender is
organized or doing business or any political subdivision thereof and taxes
imposed on its net income by the jurisdiction of Agent's or such Lender's
applicable lending office or any political subdivision thereof (all such taxes,
levies, imposts, deductions, charges or withholdings and all liabilities with
respect thereto excluding such taxes imposed on net income, herein "Tax
Liabilities"). If Borrower shall be required by law to deduct any such Tax
Liabilities from or in respect of any sum payable hereunder to Agent or any
Lender, then the sum payable hereunder shall be increased as may be necessary so
that, after making all required deductions, Agent or such Lender receives an
amount equal to the sum it would have received had no such deductions been made.
(B) Changes in Tax Laws. In the event that, subsequent to the Closing
-------------------
Date, (i) any changes in any existing law, regulation, treaty or directive or in
the interpretation or
27
application thereof, (ii) any new law, regulation, treaty or directive enacted
or any interpretation or application thereof, or (iii) compliance by Lender with
any request or directive (whether or not having the force of law) from any
governmental authority, agency or instrumentality:
(1) does or shall subject Agent or any Lender to any tax of any
kind whatsoever with respect to this Agreement, the other Loan Documents or any
Loans made or Lender Letters of Credit issued hereunder, or change the basis of
taxation of payments to Agent or such Lender of principal, fees, interest or any
other amount payable hereunder (except for net income taxes, or franchise taxes
imposed in lieu of net income taxes, imposed generally by federal, state or
local taxing authorities with respect to interest or commitment or other fees
payable hereunder or changes in the rate of tax on the overall net income of
Agent or such Lender); or
(2) does or shall impose on Agent or any Lender any other
condition or increased cost in connection with the transactions contemplated
hereby or participations herein; and the result of any of the foregoing is to
increase the cost to Agent or such Lender of issuing any Lender Letter of Credit
or making or continuing any Loan hereunder, as the case may be, or to reduce any
amount receivable hereunder, then, in any such case, Borrower shall promptly pay
to Agent or such Lender, upon its demand, any additional amounts necessary to
compensate Agent or such Lender, on an after-tax basis, for such additional cost
or reduced amount receivable, as determined by Agent or such Lender with respect
to this Agreement or the other Loan Documents. If Agent or any Lender becomes
entitled to claim any additional amounts pursuant to this subsection, it shall
promptly notify Borrower of the event by reason of which Agent or such Lender
has become so entitled. A certificate as to any additional amounts payable
pursuant to the foregoing sentence submitted by Agent or any Lender to Borrower
shall, absent manifest error, be final, conclusive and binding for all purposes.
(C) Foreign Lenders. Each Lender organized under the laws of a
---------------
jurisdiction outside the United States (a "Foreign Lender") as to which payments
to be made under this Agreement or under the Revolving Note[s] are exempt from
United States withholding tax or are subject to United States withholding tax at
a reduced rate under an applicable statute or tax treaty shall provide to
Borrower and Agent (i) a properly completed and executed Internal Revenue
Service Form 4224 or Form 1001 or other applicable form, certificate or document
prescribed by the Internal Revenue Service of the United States certifying as to
such Foreign Lender's entitlement to such exemption or reduced rate of
withholding with respect to payments to be made to such Foreign Lender under
this Agreement or under the Revolving Notes, (a "Certificate of Exemption"), or
(ii) a letter from any such Foreign Lender stating that it is not entitled to
any such exemption or reduced rate of withholding (a "Letter of Non-Exemption").
Prior to becoming a Lender under this Agreement and within fifteen (15) days
after a reasonable written request of Borrower or Agent from time to time
thereafter, each Foreign Lender that becomes a Lender under this Agreement shall
provide a Certificate of Exemption or a Letter of Non-Exemption to Borrower and
Agent.
28
If a Foreign Lender is entitled to an exemption with respect to
payments to be made to such Foreign Lender under this Agreement (or to a reduced
rate of withholding) and does not provide a Certificate of Exemption to Borrower
and Agent within the time periods set forth in the preceding paragraph, Borrower
shall withhold taxes from payments to such Foreign Lender at the applicable
statutory rates and Borrower shall not be required to pay any additional amounts
as a result of such withholding; provided, however, that all such withholding
--------
shall cease upon delivery by such Foreign Lender of a Certificate of Exemption
to Borrower and Agent.
2.10 Optional Prepayment/Replacement of Agent or Lenders in Respect of
-----------------------------------------------------------------
Increased Costs. Within fifteen (15) days after receipt by Borrower of written
---------------
notice and demand from Agent or any Lender (an "Affected Lender") for payment of
additional costs as provided in subsection 2.8, Borrower may, at its option,
--------------
notify Agent and such Affected Lender of its intention to do one of the
following:
(A) Borrower may obtain, at Borrower's expense, a replacement Lender
("Replacement Lender") for such Affected Lender, which Replacement Lender shall
be reasonably satisfactory to Agent. In the event Borrower obtains a
Replacement Lender within ninety (90) days following notice of its intention to
do so, the Affected Lender shall sell and assign its Loans and Commitments to
such Replacement Lender provided, that Borrower has reimbursed such Affected
--------
Lender for its increased costs for which it is entitled to reimbursement under
this Agreement through the date of such sale and assignment.
(B) Borrower may prepay in full all outstanding Obligations owed to
such Affected Lender and terminate such Affected Lender's Commitments. Borrower
shall, within ninety (90) days following notice of its intention to do so,
prepay in full all outstanding Obligations owed to such Affected Lender
(including such Affected Lender's increased costs for which it is entitled to
reimbursement under this Agreement through the date of such prepayment and
terminate such Affected Lender's Commitments.
2.11 Required Termination and Prepayment. If on any date any Lender shall
-----------------------------------
have reasonably determined (which determination shall be final and conclusive
and binding upon all parties) that the making or continuation of its LIBOR Loans
has become unlawful or impossible by compliance by any Lender in good faith with
any law, governmental rule, regulation or order (whether or not having the force
of law and whether or not failure to comply therewith would be unlawful), then,
and in any such event, that Lender shall promptly give notice (by telephone
confirmed in writing) to Borrower of that determination. Subject to prior
withdrawal of a Notice of Borrowing or a Notice of Conversion/Continuation or
prepayment of LIBOR Loans as contemplated by the subsection 2.12, the obligation
---------------
of Lender to make or maintain its LIBOR Loans during any such period shall be
terminated at the earlier of the termination of the Interest Period then in
effect or when required by law and Borrower shall no later than the termination
of the Interest Period in effect at the time any such determination pursuant to
this subsection 2.11 is made or, earlier when required by law, at Borrower'
---------------
option, repay such Lender's LIBOR Loans together with all interest accrued
thereon or convert such LIBOR Loans to Base Rate Loans.
29
2.12 Compensation. Borrower shall compensate each Lender, upon written
------------
request by such Lender (which request shall set forth in reasonable detail the
basis for requesting such amounts and which shall, absent manifest error, be
conclusive and binding upon all parties hereto), for all reasonable losses,
expenses and liabilities (including, without limitation, any loss sustained by
Lender in connection with the re-employment of such funds), (i) if for any
reason (other than a default by Lender) a borrowing of any LIBOR Loan does not
occur on a date specified therefor in a Notice of Borrowing, a Notice of
Conversion/Continuation or a telephonic request for borrowing or
Conversion/Continuation; (ii) if any prepayment of any of its LIBOR Loans occurs
on a date that is not the last day of an Interest Period applicable to that
Loan; (iii) if any prepayment of any of its LIBOR Loans is not made on any date
specified in a notice of prepayment given by Borrower; or (iv) as a consequence
of any other default by Borrower in repaying its LIBOR Loans when required by
the terms of this Agreement; provided that during the period while any such
amounts have not been paid, such Lender shall reserve an equal amount from
amounts otherwise available to be borrowed under the Revolving Loan.
2.13 Booking of LIBOR Loans. Each Lender may make, carry or transfer LIBOR
----------------------
Loans at, to, or for the account of, any of its branch offices or the office of
an affiliate of such Lender.
2.14 Assumptions Concerning Funding of LIBOR Loans. Calculation of all
---------------------------------------------
amounts payable to any Lender under subsection 2.12 shall be made as though such
---------------
Lender had actually funded its relevant LIBOR Loan through the purchase of a
LIBOR deposit bearing interest at LIBOR in an amount equal to the amount of that
LIBOR Loan and having maturity comparable to the relevant Interest Period and
through the transfer of such LIBOR deposit from an offshore office to a domestic
office in the United States of America; provided, however, that such Lender may
fund each of its LIBOR Loans in any manner it sees fit and the foregoing
assumption shall be utilized only for the calculation of amounts payable under
subsection 2.12.
---------------
SECTION 3. CONDITIONS TO LOANS
-------------------
3.1 Conditions to Loans. The obligations of Agent and each Lender to make
-------------------
Loans and the obligation of Agent or any Lender to issue Lender Letters of
Credit on the Closing Date and on each Funding Date are subject to satisfaction
of all of the conditions set forth below.
(A) Closing Deliveries. Agent shall have received, in form and
------------------
substance satisfactory to Agent and Lenders, all documents, instruments and
information identified on Schedule 3.1(A) and all other agreements, notes,
---------------
certificates, orders, authorizations, financing statements, mortgages and other
documents which Agent may at any time reasonably request.
(B) Security Interests. Agent and Lenders shall have received
------------------
satisfactory evidence that all security interests and liens granted to Agent for
the benefit of Lenders pursuant to this Agreement, the Security Agreements or
the other Loan Documents have been duly perfected and constitute first priority
liens on the Collateral, subject only to Permitted Encumbrances.
30
(C) Representations and Warranties. The representations and
------------------------------
warranties contained herein and in the Loan Documents shall be true, correct and
complete in all material respects on and as of that Funding Date to the same
extent as though made on and as of that date, except for any representation or
warranty limited by its terms to a specific date and taking into account any
amendments to the Schedules or Exhibits as a result of any disclosures made by
Borrower to Agent after the Closing Date and approved by Agent.
(D) Closing Fee. Borrower shall have paid the Closing Fee.
-----------
(E) No Default. No event shall have occurred and be continuing or
----------
would result from the consummation of the requested borrowing or notice
requesting issuance of a Lender Letter of Credit that would constitute an Event
of Default or a Default.
(F) Performance of Agreements. Each Loan Party shall have performed
-------------------------
in all material respects all agreements and satisfied all conditions which any
Loan Document provides shall be performed by it on or before that Funding Date.
(G) No Prohibition. No order, judgment or decree of any court,
--------------
arbitrator or governmental authority shall purport to enjoin or restrain Agent
or any Lender from making any Loans or issuing any Lender Letters of Credit.
(H) No Litigation. There shall not be pending or, to the knowledge of
-------------
Borrower, threatened, any action, charge, claim, demand, suit, proceeding,
petition, governmental investigation or arbitration by, against or affecting any
Loan Party or any of its Subsidiaries or any property of any Loan Party or any
of its Subsidiaries that has not been disclosed to Agent by Borrower in writing,
and there shall have occurred no development in any such action, charge, claim,
demand, suit, proceeding, petition, governmental investigation or arbitration
that, in the opinion of Agent, would reasonably be expected to have a Material
Adverse Effect.
(I) Insurance. Agent shall have received, in form and substance
---------
satisfactory to Agent and Lenders, (i) insurance policies or binders of Borrower
with appropriate endorsements naming Agent as Loss Payee and, (ii) with respect
to the Eligible Inventory and the Eligible Aircraft Collateral, such evidence of
insurance and insurance certificates as are required under the Security
Agreements.
(J) Appraisals. Agent shall have received the Appraisal with respect
----------
to the orderly liquidation value and condition of the Eligible Inventory and the
Airframe prepared by the Appraiser.
31
SECTION 4. BORROWER'S REPRESENTATIONS AND WARRANTIES
-----------------------------------------
To induce Agent and each Lender to enter into this Agreement, to make Loans
and to issue Lender Letters of Credit, Borrower represents and warrants to Agent
and each Lender that the following statements are and will be true, correct and
complete:
4.1 Organization, Powers, Capitalization.
------------------------------------
(A) Organization and Powers. Each of the Loan Parties is a
-----------------------
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation and qualified to do business in all states
where such qualification is required except where failure to be so qualified
could not be reasonably expected to have a Material Adverse Effect. Each of the
Loan Parties has all requisite corporate power and authority to own and operate
its properties, to carry on its business as now conducted and proposed to be
conducted and to enter into each Loan Document.
(B) Capitalization. The authorized capital stock of each of the Loan
--------------
Parties is as set forth on Schedule 4.1(B). All issued and outstanding shares
---------------
of capital stock of each of the Loan Parties are duly authorized and validly
issued, fully paid, nonassessable, free and clear of all Liens and such shares
were issued in compliance with all applicable state and federal laws concerning
the issuance of securities. The capital stock of each of the Loan Parties is
owned by the stockholders and in the amounts set forth on Schedule 4.1(B). No
---------------
shares of the capital stock of any Loan Party, other than those described above,
are issued and outstanding. There are no preemptive or other outstanding rights,
options, warrants, conversion rights or similar agreements or understandings for
the purchase or acquisition from any Loan Party, of any shares of capital stock
or other securities of any such entity except as set forth on Schedule 4.1(B).
---------------
4.2 Authorization of Borrowing, No Conflict. Borrower has the corporate
---------------------------------------
power and authority to incur the Obligations and to grant security interests in
the Collateral. On the Closing Date, the execution, delivery and performance of
the Loan Documents by each Loan Party signatory thereto will have been duly
authorized by all necessary corporate and shareholder action. The execution,
delivery and performance by each Loan Party of each Loan Document to which it is
a party and the consummation of the transactions contemplated by this Agreement
and the other Loan Documents by each Loan Party do not contravene and will not
be in contravention of any applicable law, the corporate charter or bylaws of
any Loan Party or any agreement or order by which any Loan Party or any Loan
Party's property is bound. This Agreement is, and the other Loan Documents,
including the Revolving Note[s] when executed and delivered will be, the legally
valid and binding obligations of the applicable Loan Parties respectively, each
enforceable against the Loan Parties, as applicable, in accordance with their
respective terms.
4.3 Financial Condition. All financial statements concerning Borrower and
-------------------
its Subsidiaries which have been or will hereafter be furnished by Borrower and
its Subsidiaries to Agent or any Lender pursuant to this Agreement have been or
will be prepared in accordance
32
with GAAP consistently applied throughout the periods involved (except as
disclosed therein) and do or will present fairly the financial condition of the
Borrower covered thereby as at the dates thereof and the results of their
operations for the periods then ended. The Projections delivered and to be
delivered have been and will be prepared by Borrower in light of the past
operations of the business of Borrower and its Subsidiaries, and such
Projections represent and will represent the good faith estimate of Borrower and
its senior management concerning the most probable course of its business as of
the date such Projections are prepared and delivered.
4.4 Indebtedness and Liabilities. As of the Closing Date, neither
----------------------------
Borrower nor any of its Subsidiaries has (a) any Indebtedness except as
reflected on the most recent financial statements delivered to Agent and
Lenders; or (b) any Liabilities other than as reflected on the most recent
financial statements delivered to Agent and Lenders or as incurred in the
ordinary course of business following the date of the most recent financial
statements delivered to Agent and Lenders.
4.5 Account Warranties. Borrower represents, warrants and covenants as to
------------------
each Account that, at the time of its creation, the Account is a valid, bona
fide account, representing an undisputed indebtedness incurred by the named
account debtor for goods actually sold and delivered or for services completely
rendered; there are no setoffs, offsets or counterclaims, genuine or otherwise,
against the Account; the Account does not represent a sale to an Affiliate or a
consignment, sale or return or a ▇▇▇▇ and hold transaction; no agreement exists
permitting any deduction or discount (other than the discount stated on the
invoice); Borrower is the lawful owner of the Account and has the right to
assign the same to Agent, for the benefit of Lenders; the Account is free of all
security interests, liens and encumbrances other than those in favor of Agent,
on behalf of Lenders, and the Account is due and payable in accordance with its
terms.
4.6 Names. Schedule 4.6 sets forth all names, trade names, fictitious
----- ------------
names and business names under which Borrower currently conducts business or has
at any time during the past five years conducted business.
4.7 Locations; FEIN. Schedule 4.7 sets forth the location of Borrower's
--------------- ------------
principal place of business, the location of Borrower's books and records, the
location of all other offices of Borrower and all Collateral locations, and such
locations are Borrower's sole locations for its business and the Collateral.
Borrower's federal employer identification number is set forth on the signature
page hereof.
4.8 Title to Properties; Liens. Borrower and each of its Subsidiaries has
--------------------------
good, sufficient and legal title, subject to Permitted Encumbrances, to all its
respective material properties and assets. Except for Permitted Encumbrances,
all such properties and assets are free and clear of Liens. To the best
knowledge of Borrower after due inquiry, there are no actual, threatened or
alleged defaults with respect to any leases of real property under which
Borrower or any of its Subsidiaries is lessee or lessor which would have a
Material Adverse Effect.
33
4.9 Litigation; Adverse Facts. There are no judgments outstanding against
-------------------------
any Loan Party or affecting any property of any Loan Party nor is there any
action, charge, claim, demand, suit, proceeding, petition, governmental
investigation or arbitration now pending or, to the best knowledge of Borrower
after due inquiry, threatened against or affecting any Loan Party or any
property of any Loan Party which could reasonably be expected to result in any
Material Adverse Effect other than as set forth on Schedule 4.9 hereof. No Loan
------------
Party has received any opinion or memorandum or legal advice from legal counsel
to the effect that it is exposed to any liability which could reasonably be
expected to result in any Material Adverse Effect.
4.10 Payment of Taxes. All material tax returns and reports of Borrower
----------------
and each of its Subsidiaries required to be filed by any of them have been
timely filed, and all taxes, assessments, fees and other governmental charges
upon such Persons and upon their respective properties, assets, income and
franchises which are shown on such returns as due and payable have been paid
when due and payable. As of the Closing Date, none of the United States income
tax returns of Borrower or any of its Subsidiaries are under audit. No tax liens
have been filed and no claims (except as otherwise permitted by subsection 5.9)
--------------
are being asserted with respect to any such taxes. The charges, accruals and
reserves on the books of Borrower and each of its Subsidiaries in respect of any
taxes or other governmental charges are in accordance with GAAP.
4.11 Performance of Agreements. None of the Loan Parties and none of their
-------------------------
respective Subsidiaries is in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any
contractual obligation of any such Person, and no condition exists that, with
the giving of notice or the lapse of time or both, would constitute such a
default.
4.12 Employee Benefit Plans. Borrower, each of its Subsidiaries and each
----------------------
ERISA Affiliate is in compliance in all material respects with all applicable
provisions of ERISA, the IRC and all other applicable laws and the regulations
and interpretations thereof with respect to all Employee Benefit Plans. No
material liability has been incurred by Borrower, any Subsidiaries or any ERISA
Affiliate which remains unsatisfied for any funding obligation, taxes or
penalties with respect to any Employee Benefit Plan.
4.13 Intellectual Property. Borrower and each of its Subsidiaries owns, is
---------------------
licensed to use or otherwise has the right to use, all Intellectual Property
used in or necessary for the conduct of its business as currently conducted, and
all such Intellectual Property is identified on Schedule 4.13.
-------------
4.14 Broker's Fees. No broker's or finder's fee or commission will be
-------------
payable with respect to any of the transactions contemplated hereby.
4.15 Environmental Compliance. Each Loan Party has been and is currently
------------------------
in compliance with all applicable Environmental Laws, including obtaining and
maintaining in
34
effect all permits, licenses or other authorizations required by applicable
Environmental Laws. There are no claims, liabilities, investigations,
litigation, administrative proceedings, whether pending or threatened, or
judgments or orders relating to any Hazardous Materials asserted or threatened
against any Loan Party or relating to any real property currently or formerly
owned, leased or operated by any Loan Party.
4.16 Solvency. After giving effect to the transactions contemplated by the
--------
Loan Documents, and from and after the date of this Agreement, Borrower: (a)
owns and will own assets the fair salable value of which are (i) greater than
the total amount of its liabilities (including contingent liabilities) and (ii)
greater than the amount that will be required to pay the probable liabilities of
Borrower as they mature; (b) has capital that is not unreasonably small in
relation to its business as presently conducted or any contemplated or
undertaken transaction; and (c) does not intend to incur and does not believe
that it will incur debts beyond its ability to pay such debts as they become
due. There is no material fact known to Borrower that has or could have a
Material Adverse Effect and that has not been fully disclosed herein or in such
other documents, certificates and statements furnished to Agent or Lenders for
use in connection with the transactions contemplated hereby.
4.17 Disclosure. No representation or warranty of Borrower, any of its
----------
Subsidiaries or any other Loan Party contained in this Agreement, the financial
statements, the other Loan Documents, or any other document, certificate or
written statement furnished to Agent or any Lender by or on behalf of any such
Person for use in connection with the Loan Documents contains any untrue
statement of a material fact or omitted, omits or will omit to state a material
fact necessary in order to make the statements contained herein or therein not
misleading in light of the circumstances in which the same were made. The
Projections and pro forma financial information contained in such materials are
based upon good faith estimates and assumptions believed by such Persons to be
reasonable at the time made, it being recognized by Agent and Lenders that such
projections as to future events are not to be viewed as facts and that actual
results during the period or periods covered by any such projections may differ
from the projected results. There is no material fact known to Borrower that has
had or will have a Material Adverse Effect and that has not been disclosed
herein or in such other documents, certificates and statements furnished to
Agent or any Lender for use in connection with the transactions contemplated
hereby.
4.18 Insurance. Borrower and each of its Subsidiaries maintains adequate
---------
insurance policies for public liability, property damage for its business and
properties, product liability, and business interruption, no notice of
cancellation has been received with respect to such policies and Borrower and
each of its Subsidiaries is in compliance with all conditions contained in such
policies.
4.19 Compliance with Laws. Neither Borrower nor any of its Subsidiaries is
--------------------
in violation of any law, ordinance, rule, regulation, order, policy, guideline
or other requirement of any domestic or foreign government or any
instrumentality or agency thereof, having jurisdiction over the conduct of its
business or the ownership of its properties, including, without
35
limitation, any violation relating to any use, release, storage, transport or
disposal of any Hazardous Material, which violation would subject Borrower or
any of its Subsidiaries, or any of their respective officers to criminal
liability or have a Material Adverse Effect and no such violation has been
alleged.
4.20 Bank Accounts. Schedule 4.20 sets forth the account numbers and
------------- -------------
locations of all bank accounts of Borrower and its Subsidiaries.
4.21 Subsidiaries. Borrower has no Subsidiaries other than as set forth on
------------
Schedule 4.21.
-------------
4.22 Employee Matters. Except as set forth on Schedule 4.22, (a) no Loan
---------------- -------------
Party nor any of such Loan Party's employees is subject to any collective
bargaining agreement, (b) no petition for certification or union election is
pending with respect to the employees of any Loan Party and no union or
collective bargaining unit has sought such certification or recognition with
respect to the employees of any Loan Party and (c) there are no strikes,
slowdowns, work stoppages or controversies pending or, to the best knowledge of
Borrower after due inquiry, threatened between any Loan Party and its respective
employees, other than employee grievances arising in the ordinary course of
business which could reasonably be expected to have, either individually or in
the aggregate, a Material Adverse Effect. Except as set forth on Schedule 4.22,
-------------
neither Borrower nor any of its Subsidiaries is subject to an employment
contract.
4.23 Governmental Regulation. None of the Loan Parties is, or after giving
-----------------------
effect to any loan will be, subject to regulation under the Public Utility
Holding Company Act of 1935, the Federal Power Act or the Investment Company Act
of 1940 or to any federal or state statute or regulation limiting its ability to
incur indebtedness for borrowed money.
Borrower may, at any time and from time to time and subject to subsection
----------
5.13, amend any one or more of the Schedules referred in this Section 4 and any
---- ---------
representation or warranty contained herein which refers to any such Schedule
shall from and after the date of any such amendment refer to such Schedule as so
amended, provided, however, that in no event may the Borrower amend any such
Schedule if such amendment would reflect or evidence a Default or Event of
Default.
SECTION 5. AFFIRMATIVE COVENANTS
---------------------
Borrower covenants and agrees that, so long as any of the Commitments
hereunder shall be in effect and until payment in full of all Obligations,
unless Requisite Lenders shall otherwise give their prior written consent,
Borrower shall perform, and shall cause each of its Subsidiaries to perform, all
covenants in this Section 5 applicable to such Person.
---------
5.1 Financial Statements and Other Reports. Borrower will maintain, and
--------------------------------------
cause each of its Subsidiaries to maintain, a system of accounting established
and administered in
36
accordance with sound business practices to permit preparation of financial
statements in conformity with GAAP. Borrower will deliver to Agent and each
Lender (unless specified to be delivered solely to Agent) the financial
statements and other reports described below.
(A) Monthly Financials. As soon as available and in any event within
------------------
twenty (20) days after the end of each month, Borrower will deliver (1) the
consolidated and consolidating balance sheet of Borrower and its Subsidiaries as
at the end of such month and the related consolidated and consolidating
statements of income, stockholders' equity and cash flow for such month and for
the period from the beginning of the then current Fiscal Year to the end of such
month, and (2) a schedule of the outstanding Indebtedness for borrowed money of
Borrower and its Subsidiaries describing in reasonable detail each such debt
issue or loan outstanding and the principal amount and amount of accrued and
unpaid interest with respect to each such debt issue or loan.
(B) Quarterly Financials. As soon as available and in any event
--------------------
within forty-five (45) days after the end of each quarter of a Fiscal Year,
Borrower will deliver the consolidated and consolidating balance sheet of
Borrower and its Subsidiaries as at the end of such period and the related
consolidated and consolidating statements of income, stockholders' equity and
cash flow for such quarter of a Fiscal Year and for the period from the
beginning of the then current Fiscal Year to the end of such quarter of a Fiscal
Year and such financial statements shall have been reviewed by a firm of
independent certified public accountants selected by Borrower.
(C) Year-End Financials. As soon as available and in any event within
-------------------
ninety (90) days after the end of each Fiscal Year, Borrower will deliver: (1)
the consolidated balance sheet of Borrower and its Subsidiaries as at the end of
such year and the related consolidated statements of income, stockholders'
equity and cash flow for such Fiscal Year; (2) a schedule of the outstanding
Indebtedness of Borrower and its Subsidiaries describing in reasonable detail
each such debt issue or loan outstanding and the principal amount and amount of
accrued and unpaid interest with respect to each such debt issue or loan; and
(3) a report with respect to the financial statements from a firm of independent
certified public accountants selected by Borrower and acceptable to Agent, which
report shall be unqualified as to going concern and scope of audit of Borrower
and its Subsidiaries and shall state that (a) such consolidated financial
statements present fairly the consolidated financial position of Borrower and
its Subsidiaries as at the dates indicated and the results of their operations
and cash flow for the periods indicated in conformity with GAAP applied on a
basis consistent with prior years and (b) that the examination by such
accountants in connection with such consolidated financial statements has been
made in accordance with generally accepted auditing standards; and (4) copies of
the consolidating financial statements of Borrower and its Subsidiaries,
including (a) consolidating balance sheets of Borrower and its Subsidiaries as
at the end of such Fiscal Year showing intercompany eliminations and (b) related
consolidating statements of earnings of Borrower and its Subsidiaries showing
intercompany eliminations.
37
(D) Accountants' Certification and Reports. Together with each
--------------------------------------
delivery of consolidated financial statements of Borrower and its Subsidiaries
pursuant to subsection 5.1(C), Borrower will deliver (1) a written statement by
-----------------
its independent certified public accountants (a) stating that the examination
has included a review of the terms of this Agreement as same relate to
accounting matters and (b) stating whether, in connection with the examination,
any condition or event that constitutes a Default or an Event of Default has
come to their attention and, if such a condition or event has come to their
attention, specifying the nature and period of existence thereof and (2) a
letter addressed to Agent and Lenders from such accountants stating that such
accountants have been informed that a primary intent of Borrower was to have the
professional services such accountants provided to Borrower in preparing their
audit report and the letter referred to in this subsection 5.1(D) benefit or
-----------------
influence Agent and Lenders, and identifying Agent and Lenders as parties that
Borrower has indicated intend to rely on such professional services provided to
Borrower by such accountants. Promptly upon receipt thereof, Borrower will
deliver copies of all significant reports submitted to Borrower by independent
public accountants in connection with each annual, interim or special audit of
the financial statements of Borrower made by such accountants, including the
comment letter submitted by such accountants to management in connection with
their annual audit.
(E) Compliance Certificate. Together with the delivery of each set of
----------------------
financial statements referenced in subparts (A), (B) and (C) of this subsection
----------
5.1, Borrower will deliver a Compliance Certificate, together with copies of the
---
calculations and work-up employed to determine Borrower's compliance or
noncompliance with the financial covenants set forth in Section 6.
---------
(F) Borrowing Base Certificates, Registers and Journals. On the first
---------------------------------------------------
Business Day of each week, Borrower shall deliver to Agent: (1) a Borrowing Base
Certificate updated to reflect the most recent sales and collections of Borrower
and an assignment schedule of all Accounts created by Borrower during the
preceding week together with an inventory report in form and substance
satisfactory to agent; (2) an invoice register or sales journal describing all
sales of Borrower for the preceding week, in form and substance satisfactory to
Agent, and, if Agent so requests, copies of invoices evidencing such sales and
proofs of delivery relating thereto; and (3) a cash receipts journal; provided,
however, that Borrower shall include in its Borrowing Base Certificate a report
with respect to ARC, IATA, the Tel Aviv Account and its credit card receivables
only in the first Borrowing Base Certificate delivered each calendar month,
which Borrowing Base Certificate shall contain the relevant information for the
immediately preceding calendar month.
(G) Reconciliation Reports, Inventory Reports and Listings and Agings.
-----------------------------------------------------------------
On the Closing Date and within five (5) Business Days after the last day of each
month and from time to time upon the request of Agent, Borrower will deliver to
Agent: (1) an aged trial balance of all then existing Accounts; and (2) an
Inventory Report as of the last day of such period. As soon as available and in
any event within five (5) Business Days after the last day of each month, and
from time to time upon the request of Agent, Borrower will deliver to Agent: (1)
a Reconciliation Report as at the last day of such period; (2) an aged trial
balance of all then
38
existing accounts payable; and (3) a detailed inventory listing and cover
summary report. All such reports shall be in form and substance satisfactory to
Agent.
(H) Management Report. Together with each delivery of financial
-----------------
statements of Borrower and its Subsidiaries pursuant to subdivisions (A), (B)
and (C) of this subsection 5.1, Borrower will deliver a management report: (1)
--------------
describing the operations and financial condition of Borrower and its
Subsidiaries for the month then ended and the portion of the current Fiscal Year
then elapsed (or for the Fiscal Year then ended in the case of year-end
financials); (2) setting forth in comparative form the corresponding figures for
the corresponding periods of the previous Fiscal Year and the corresponding
figures from the most recent Projections for the current Fiscal Year delivered
to Lenders pursuant to 5.1(P); and (3) discussing the reasons for any
significant variations. The information above shall be presented in reasonable
detail and shall be certified by the chief financial officer of Borrower to the
effect that such information fairly presents the results of operations and
financial condition of Borrower and its Subsidiaries as at the dates and for the
periods indicated.
(I) Appraisals. Every six (6) months, and from time to time upon the
----------
request of Agent, Borrower will obtain and deliver to Agent, at Borrower's
expense, appraisal reports from the Appraiser in form and substance and from
appraisers satisfactory to Agent, stating the then current fair market and
orderly liquidation values of all or any portion of the Collateral; provided,
however, so long as no Event of Default is continuing, Agent shall not request
an appraisal as to any particular category of Collateral to be performed more
than twice every Loan Year at Borrower's expense.
(J) Government Notices. Borrower will deliver to Agent promptly after
------------------
receipt copies of all notices, requests, subpoenas, inquiries or other writings
received from any governmental agency concerning any Employee Benefit Plan, the
violation or alleged violation of any Environmental Laws, the storage, use or
disposal of any Hazardous Material, the violation or alleged violation of the
Fair Labor Standards Act or Borrower's payment or non-payment of any taxes
including any tax audit.
(K) Events of Default, etc. Promptly upon any officer of Borrower
-----------------------
obtaining knowledge of any of the following events or conditions, Borrower shall
deliver a certificate of Borrower's chief executive officer specifying the
nature and period of existence of such condition or event and what action
Borrower has taken, is taking and proposes to take with respect thereto: (1) any
condition or event that constitutes an Event of Default or Default; (2) any
notice of default that any Person has given to Borrower or any of its
Subsidiaries or any other action taken with respect to a claimed default; or (3)
any Material Adverse Effect.
(L) Trade Names. Borrower and each of its Subsidiaries will give
-----------
Agent at least thirty (30) days advance written notice of any change of name or
of any new trade name or fictitious business name. Borrower's use of any trade
name or fictitious business name will be in compliance with all laws regarding
the use of such names.
39
(M) Locations. Borrower will give Agent at least thirty (30) days
---------
advance written notice of any change in Borrower's principal place of business
or any change in the location of its books and records or the Collateral or of
any new location for its books and records or the Collateral.
(N) Bank Accounts. Borrower will give Agent prompt notice of any new
-------------
bank accounts Borrower or any of its Subsidiaries intends to establish prior to
its opening same.
(O) Litigation. Promptly upon any officer of Borrower or its
----------
subsidiaries obtaining knowledge of (1) the institution of any action, suit,
proceeding, governmental investigation or arbitration against or affecting any
Loan Party or any property of any Loan Party not previously disclosed by
Borrower to Agent or (2) any material development in any action, suit,
proceeding, governmental investigation or arbitration at any time pending
against or affecting any Loan Party or any property of any Loan Party which
could reasonably be expected to have a Material Adverse Effect, Borrower will
promptly give notice thereof to Agent and provide such other information as may
be reasonably available to them to enable Agent and its counsel to evaluate such
matter.
(P) Projections. As soon as available and in any event no later than
-----------
thirty (30) days prior to the end of each Fiscal Year of Borrower, Borrower will
deliver consolidated and consolidating Projections of Borrower and its
Subsidiaries for the forthcoming three Fiscal Years, year by year, and for the
forthcoming Fiscal Year, month by month.
(Q) Subordinated Debt and Other Indebtedness Notices. Borrower shall
------------------------------------------------
promptly deliver copies of all notices given or received by Borrower and any of
its Subsidiaries with respect to noncompliance with any term or condition
related to any Subordinated Debt and other Indebtedness, and shall promptly
notify Lenders and Agent of any potential or actual event of default with
respect to any Subordinated Debt or other Indebtedness.
(R) Other Information. With reasonable promptness, Borrower will
-----------------
deliver such other information and data with respect to any Loan Party, any
Subsidiary of any Loan Party or the Collateral as Agent or any Lender may
reasonably request from time to time.
5.2 Access to Accountants and Management. Borrower authorizes Agent and
------------------------------------
Lenders to discuss the financial condition and financial statements of Borrower
and its Subsidiaries with Borrower's independent public accountants upon
reasonable notice to Borrower of its intention to do so, and authorizes such
accountants to respond to all of Agent's and Lenders' inquiries. Each Lender may
with the consent of Agent, which will not be unreasonably denied, confer with
Borrower's management directly regarding Borrower's business, operations and
financial condition.
5.3 Inspection. Borrower shall permit Agent and any authorized
----------
representatives designated by Agent to visit and inspect any of the properties
of Borrower or any of its Subsidiaries, including its and their financial and
accounting records, and in conjunction with
40
such inspection, to make copies and take extracts therefrom, and to discuss its
and their affairs, finances and business with its and their officers and
independent public accountants, at such reasonable times during normal business
hours and as often as may be reasonably requested. Borrower acknowledges that
Agent intends to make such inspections on at least a quarterly basis. Each
Lender may with the consent of Agent, which will not be unreasonably denied,
accompany Agent on any such visit or inspection.
5.4 Collateral Records. Borrower shall keep full and accurate books and
------------------
records relating to the Collateral and shall ▇▇▇▇ such books and records to
indicate Agent's security interests in the Collateral, for the benefit of
Lenders.
5.5 Account Covenants; Verification. Borrower shall, at its own expense:
-------------------------------
(a) cause all invoices evidencing Accounts and all copies thereof to bear a
notice that such invoices are payable to the lockboxes established in accordance
with subsection 5.6 and (b) use its best efforts to assure prompt payment of all
--------------
amounts due or to become due under the Accounts. No discounts, credits or
allowances will be issued, granted or allowed by Borrower to customers and no
returns will be accepted without Agent's prior written consent; provided, that
--------
until Agent notifies Borrower to the contrary, Borrower may presume consent.
Borrower will immediately notify Agent in the event that a customer alleges any
dispute or claim with respect to an Account or of any other circumstances known
to Borrower that may impair the validity or collectibility of an Account. Agent
shall have the right, at any time or times hereafter, to verify the validity,
amount or any other matter relating to an Account, by mail, telephone or in
person. After the occurrence of a Default or an Event of Default, Borrower
shall not, without the prior consent of Agent, adjust, settle or compromise the
amount or payment of any Account, or release wholly or partly any customer or
obligor thereof, or allow any credit or discount thereon.
5.6 Collection of Accounts and Payments. Borrower shall establish
-----------------------------------
lockboxes and blocked accounts (collectively, "Blocked Accounts") in Borrower's
name with such banks ("Collecting Banks") as are acceptable to Agent (subject to
irrevocable instructions acceptable to Agent as hereinafter set forth) to which
all account debtors shall directly remit all payments on Accounts and in which
Borrower will immediately deposit all payments made for Inventory or other
payments constituting proceeds of Collateral in the identical form in which such
payment was made, whether by cash or check. The Collecting Banks shall
acknowledge and agree, in a manner satisfactory to Agent, that all payments made
to the Blocked Accounts are the sole and exclusive property of Agent, for the
benefit of Lenders, and that the Collecting Banks have no right of setoff
against the Blocked Accounts and that all such payments received will be
promptly transferred to Agent's Account. Borrower hereby agrees that all
payments received by Agent, whether by cash, check, wire transfer or any other
instrument, made to such Blocked Accounts or otherwise received by Agent and
whether on the Accounts or as proceeds of other Collateral or otherwise will be
the sole and exclusive property of Agent, for the benefit of Lenders. Borrower
shall irrevocably instruct each Collecting Bank to promptly transfer all
payments or deposits to the Blocked Accounts into Agent's Account. Borrower, and
any of its Affiliates, employees, agents or other Persons acting for or in
concert with Borrower, shall, acting as trustee for Agent, receive, as the sole
and exclusive property of Agent, any monies,
41
checks, notes, drafts or any other payments relating to and/or proceeds of
Accounts or other Collateral which come into the possession or under the control
of Borrower or any of Borrower's Affiliates, employees, agents or other Persons
acting for or in concert with Borrower, and immediately upon receipt thereof,
Borrower or such Persons shall remit the same or cause the same to be remitted,
in kind, to the Blocked Accounts or to Agent at its address set forth in
subsection 10.4 below.
---------------
5.7 Endorsement. Borrower hereby constitutes and appoints Agent and all
-----------
Persons designated by Agent for that purpose as Borrower's true and lawful
attorney-in-fact, with power to endorse Borrower's name to any of the items of
payment or proceeds described in subsection 5.6 above and all proceeds of
--------------
Collateral that come into Agent's possession or under Agent's control. Both the
appointment of Agent as Borrower's attorney and Agent's rights and powers are
coupled with an interest and are irrevocable until payment in full and complete
performance of all of the Obligations.
5.8 Corporate Existence. Borrower will, and will cause each of its
-------------------
Subsidiaries to, at all times preserve and keep in full force and effect its
corporate existence and all rights and franchises material to its business.
Borrower will promptly notify Agent of any change in its or its Subsidiaries'
ownership or corporate structure.
5.9 Payment of Taxes. Borrower will, and will cause each of its
----------------
Subsidiaries to, pay all taxes, assessments and other governmental charges
imposed upon it or any of its properties or assets or with respect to any of its
franchises, business, income or property before any penalty accrues thereon
provided that no such tax need be paid if Borrower or one of its Subsidiaries is
--------
contesting same in good faith by appropriate proceedings promptly instituted and
diligently conducted and if Borrower or such Subsidiary has established
appropriate reserves as shall be required in conformity with GAAP.
5.10 Maintenance of Properties; Insurance. Borrower will maintain or cause
------------------------------------
to be maintained in good repair, working order and condition all material
properties used in the business of Borrower and its Subsidiaries and will make
or cause to be made all appropriate repairs, renewals and replacements thereof.
Borrower will maintain or cause to be maintained, with financially sound and
reputable insurers, public liability and property damage insurance with respect
to its business and properties and the business and properties of its
Subsidiaries against loss or damage of the kinds customarily carried or
maintained by corporations of established reputation engaged in similar
businesses and in amounts acceptable to Agent. Borrower shall cause Agent, for
the benefit of Lenders, to be named as loss payee on all insurance policies
relating to any Collateral and as additional insured under all liability
policies, in each case pursuant to appropriate endorsements in form and
substance satisfactory to Agent and shall collaterally assign to Agent, for the
benefit of Lenders, as security for the payment of the Obligations all business
interruption insurance of Borrower. Borrower shall apply any proceeds received
from any policies of insurance relating to any Collateral to the Obligations as
set forth in subsection 2.4(B).
-----------------
42
5.11 Compliance with Laws. Borrower will, and will cause each of its
--------------------
Subsidiaries to, comply with the requirements of all applicable laws, rules,
regulations and orders of any governmental authority as now in effect and which
may be imposed in the future in all jurisdictions in which Borrower or any of
its Subsidiaries is now doing business or may hereafter be doing business, other
than those laws the noncompliance with which would not have a Material Adverse
Effect.
5.12 Further Assurances. Borrower shall, and shall cause each of its
------------------
Subsidiaries to, from time to time, execute such guaranties, financing or
continuation statements, documents, security agreements, reports and other
documents or deliver to Agent such instruments, certificates of title or other
documents as Agent at any time may reasonably request to evidence, perfect or
otherwise implement the guaranties and security for repayment of the Obligations
provided for in the Loan Documents. At Agent's request, Borrower shall cause
any Subsidiaries of Borrower promptly to guaranty the Obligations and to grant
to Agent, on behalf of Lenders, security interests in the real, personal and
mixed property of such Subsidiary to secure the Obligations.
5.13 Collateral Locations. Borrower will keep the Collateral at the
--------------------
locations specified on Schedule 4.7. With respect to any new location (which in
-------------
any event shall be within the continental United States), Borrower will execute
such documents and take such actions as Agent deems necessary to perfect and
protect the security interests of the Agent, on behalf of Lenders, in the
Collateral prior to the transfer or removal of any Collateral to such new
location.
5.14 Bailees. If any Collateral is at any time in the possession or control
-------
of any warehouseman, bailee or any of Borrower's agents or processors, Borrower
shall, upon the request of Lenders, notify such warehouseman, bailee, agent or
processor of the security interests in favor of Agent, for the benefit of
Lenders, created hereby and shall instruct such Person to hold all such
Collateral for Agent's account subject to Agent's instructions.
5.15 Use of Proceeds and Margin Security. Borrower shall use the proceeds
-----------------------------------
of all Loans for proper business purposes (as described in the recitals to this
Agreement) consistent with all applicable laws, statutes, rules and regulations.
No portion of the proceeds of any Loan shall be used by Borrower or any of its
Subsidiaries for the purpose of purchasing or carrying margin stock within the
meaning of Regulation G or Regulation U, or in any manner that might cause the
borrowing or the application of such proceeds to violate Regulation T or
Regulation X or any other regulation of the Board of Governors of the Federal
Reserve System or to violate the Exchange Act.
SECTION 6. FINANCIAL COVENANTS
-------------------
Borrower covenants and agrees that so long as any of the Commitments remain
in effect and until payment in full of all Obligations and termination of all
Lender Letters of Credit, unless Borrower has received the prior written consent
of Requisite Lenders, Borrower
43
shall comply with and shall cause each of its Subsidiaries to comply with all
covenants in this Section 6 applicable to such Person.
---------
6.1 Tangible Net Worth. Borrower shall at all times prior to August 31,
------------------
1998, maintain Tangible Net Worth of at least $47,500,000 and maintain Tangible
Net Worth of $55,000,000 at all times thereafter.
6.2 EBITDA. Borrower shall maintain EBITDA of at least the following
------
amounts during the following periods:
Period Amount
------ ------
The nine months ended September 30, 1997 $55,000,000
The twelve months ended December 31, 1997 $55,000,000
The twelve months ended March 31, 1998 $58,000,000
The twelve months ended June 30, 1998 $60,000,000
The twelve months ended September 30, 1998 $62,000,000
The twelve months ended December 31, 1998 $65,000,000
and for each trailing twelve month calendar
quarter thereafter
SECTION 7. NEGATIVE COVENANTS
------------------
Borrower covenants and agrees that so long as any of the Commitments remain
in effect and until payment in full of all Obligations and termination of all
Lender Letters of Credit, unless Borrower has received the prior written consent
of Requisite Lenders, Borrower shall not and will not permit any of its
subsidiaries to:
7.1 Indebtedness and Liabilities. Directly or indirectly create, incur,
----------------------------
assume, guaranty, or otherwise become or remain directly or indirectly liable,
on a fixed or contingent basis, with respect to any Indebtedness except: (a)
the Obligations; (b) Indebtedness (excluding Capital Leases) not to exceed
$5,000,000 in the aggregate at any time outstanding secured by purchase money
Liens; (c) Indebtedness under Capital Leases not to exceed $10,000,000
outstanding at any time in the aggregate; and (d) Indebtedness existing on the
Closing Date and identified on Schedule 1.1(C). Except for Indebtedness
---------------
described permitted in the preceding sentence, Borrower will not, and will not
permit any of its Subsidiaries to, incur any Liabilities except for trade
payables and normal accruals in the ordinary course of business not yet due and
payable or with respect to which Borrower or any of its Subsidiaries is
contesting in good faith the amount or validity thereof by appropriate
proceedings and then only to the extent that Borrower or any of its Subsidiaries
has established adequate reserves therefor, if appropriate under GAAP.
7.2 Guaranties. Except for endorsements of instruments or items of
----------
payment for collection in the ordinary course of business, guaranty, endorse, or
otherwise in any way become
44
or be responsible for any obligations of any other Person, whether directly or
indirectly by agreement to purchase the indebtedness of any other Person or
through the purchase of goods, supplies or services, or maintenance of working
capital or other balance sheet covenants or conditions, or by way of stock
purchase, capital contribution, advance or loan for the purpose of paying or
discharging any indebtedness or obligation of such other Person or otherwise.
7.3 Transfers, Liens and Related Matters.
------------------------------------
(A) Transfers. Sell, assign (by operation of law or otherwise) or
---------
otherwise dispose of, or grant any option with respect to any of the Collateral,
except that Borrower and its Subsidiaries may (i) sell Inventory in the ordinary
course of business; and (ii) make Asset Dispositions if all of the following
conditions are met: (1) the market value of assets sold or otherwise disposed
of in any single transaction or series of related transactions does not exceed
$2,000,000 and the aggregate market value of assets sold or otherwise disposed
of in any Fiscal Year does not exceed $5,000,000; (2) the consideration received
is at least equal to the fair market value of such assets; (3) the sole
consideration received is cash; (4) the net proceeds of such Asset Disposition
are applied as required by subsection 2.4(B); (5) after giving effect to the
-----------------
sale or other disposition of the assets included within the Asset Disposition
and the repayment of the Obligations with the proceeds thereof, Borrower is in
compliance on a pro forma basis with the covenants set forth in Section 6
---------
recomputed for the most recently ended month for which information is available
and is in compliance with all other terms and conditions contained in this
Agreement; and (6) no Default or Event of Default shall then exist or result
from such sale or other disposition.
(B) Liens. Except for Permitted Encumbrances, directly or indirectly
-----
create, incur, assume or permit to exist any Lien on or with respect to any of
the Collateral or any proceeds, income or profits therefrom.
(C) No Negative Pledges. Enter into or assume any agreement (other
-------------------
than the Loan Documents) prohibiting the creation or assumption of any Lien upon
its properties or assets, whether now owned or hereafter acquired.
7.4 Investments and Loans. Make or permit to exist investments in or
---------------------
loans to any other Person, except: (a) Cash Equivalents; and (b) loans and
advances to employees for moving, entertainment, travel and other similar
expenses in the ordinary course of business in an aggregate outstanding amount
not in excess of $1,000,000 at any time.
7.5 Restricted Payments. Directly or indirectly declare, order, pay, make
-------------------
or set apart any sum for any Restricted Payment.
7.6 Restriction on Fundamental Changes. (a) Enter into any transaction of
----------------------------------
merger or consolidation; (b) liquidate, wind-up or dissolve itself (or suffer
any liquidation or dissolution); (c) convey, sell, lease, sublease, transfer or
otherwise dispose of, in one transaction or a series of transactions, all or any
substantial part of its business or assets, or the capital stock
45
of any of its Subsidiaries, whether now owned or hereafter acquired; or (d)
acquire by purchase or otherwise all or any substantial part of the business or
assets of, or stock or other evidence of beneficial ownership of, any Person.
7.7 Transactions with Affiliates. Directly or indirectly, enter into or
----------------------------
permit to exist any transaction (including the purchase, sale or exchange of
property or the rendering of any service) with any Affiliate or with any
officer, director or employee of any Loan Party, except for transactions in the
ordinary course of and pursuant to the reasonable requirements of Borrower's
business and upon fair and reasonable terms which are fully disclosed to Agent
and Lenders and which are no less favorable to Borrower than it would obtain in
a comparable arm's length transaction with an unaffiliated Person.
7.8 Environmental Liabilities. (a) Violate any applicable Environmental
-------------------------
Law; (b) dispose of any Hazardous Materials (except in accordance with
applicable law) into or onto or from, any real property owned, leased or
operated by any Loan Party; or (c) permit any Lien imposed pursuant to any
Environmental Law to be imposed or to remain on any real property owned, leased
or operated by any Loan Party.
7.9 Conduct of Business. From and after the Closing Date, engage in any
-------------------
business other than businesses of the type engaged in by Borrower or any
Subsidiary on the Closing Date.
7.10 Compliance with ERISA. Establish any new Employee Benefit Plan or
---------------------
amend any existing Employee Benefit Plan if the liability or increased liability
resulting from such establishment or amendment is material. Neither Borrower
nor any Subsidiary shall fail to establish, maintain and operate each Employee
Benefit Plan in compliance in all material respects with the provisions of
ERISA, the IRC and all other applicable laws and the regulations and
interpretations thereof.
7.11 Tax Consolidations. File or consent to the filing of any consolidated
------------------
income tax return with any Person other than Borrower or any of its
Subsidiaries.
7.12 Subsidiaries. Establish, create or acquire any new Subsidiaries.
------------
7.13 Fiscal Year. Change its Fiscal Year.
-----------
7.14 Press Release; Public Offering Materials. Disclose the name of Agent
----------------------------------------
or any Lender in any press release or in any prospectus, proxy statement or
other materials filed with any governmental entity relating to a public offering
of the capital stock of any Loan Party except as may be required by law.
7.15 Bank Accounts. Establish any new bank accounts, or amend or terminate
-------------
any Blocked Account or lockbox agreement without Agent's prior written consent.
46
SECTION 8. DEFAULT, RIGHTS AND REMEDIES
----------------------------
8.1 Event of Default. "Event of Default" shall mean the occurrence or
----------------
existence of any one or more of the following:
(A) Payment. Failure to make payment of any of the Obligations when
-------
due and, in the case of interest, such failure shall not be cured within five
(5) days of the applicable due date; or
(B) Default in Other Agreements. (1) Failure of Borrower or any of
---------------------------
its Subsidiaries to pay when due any principal or interest on any Indebtedness
(other than the Obligations) or (2) breach or default of Borrower or any of its
Subsidiaries with respect to any Indebtedness (other than the Obligations); if
such failure to pay, breach or default entitles the holder to cause such
Indebtedness having an individual principal amount in excess of $100,000 or
having an aggregate principal amount in excess of $250,000 to become or be
declared due prior to its stated maturity; or
(C) Breach of Certain Provisions. Failure of Borrower to perform or
----------------------------
comply with any term or condition contained in subsections 5.1 (A), (B), (C),
------------------------------
(I) and (P), 5.3, 5.5 or 5.6 or contained in Section 6 or Section 7; or
----------------------------- --------- ---------
(D) Breach of Warranty. Any representation, warranty, certification
------------------
or other statement made by any Loan Party in any Loan Document or in any
statement or certificate at any time given by such Person in writing pursuant or
in connection with any Loan Document is false in any material respect on the
date made; or
(E) Other Defaults Under Loan Documents. Borrower or any other Loan
-----------------------------------
Party defaults in the performance of or compliance with any term contained in
this Agreement or the other Loan Documents and such default is not remedied or
waived within ten (10) days after receipt by Borrower of notice from Agent, or
Requisite Lenders of such default (other than occurrences described in other
provisions of this subsection 8.1 for which a different grace or cure period is
--------------
specified or which constitute immediate Events of Default); or
(F) Change in Control. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Family Limited Partnership
-----------------
ceases to beneficially own and control, directly or indirectly, at least fifty-
one percent (51%) of the issued and outstanding shares of each class of capital
stock of Borrower entitled (without regard to the occurrence of any contingency)
to vote for the election of a majority of the members of the board of directors
of Borrower; or
(G) Involuntary Bankruptcy; Appointment of Receiver, etc. (1) A court
-----------------------------------------------------
enters a decree or order for relief with respect to Borrower or any of its
Subsidiaries in an involuntary case under any applicable bankruptcy, insolvency
or other similar law now or hereafter in effect, which decree or order is not
stayed or other similar relief is not granted under any applicable federal or
state law; or (2) the continuance of any of the following events for sixty (60)
days
47
unless dismissed, bonded or discharged: (a) an involuntary case is commenced
against Borrower or any of its Subsidiaries, under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect; or (b) a decree or
order of a court for the appointment of a receiver, liquidator, sequestrator,
trustee, custodian or other officer having similar powers over Borrower or any
of its Subsidiaries, or over all or a substantial part of their respective
property, is entered; or (c) an interim receiver, trustee or other custodian is
appointed without the consent of Borrower or any of its Subsidiaries, for all or
a substantial part of the property of Borrower or any such Subsidiary; or
(H) Voluntary Bankruptcy; Appointment of Receiver, etc. (1) An order
---------------------------------------------------
for relief is entered with respect to Borrower or any of its Subsidiaries or
Borrower or any of its Subsidiaries commences a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or consents to the entry of an order for relief in an involuntary case
or to the conversion of an involuntary case to a voluntary case under any such
law or consents to the appointment of or taking possession by a receiver,
trustee or other custodian for all or a substantial part of its property; or (2)
Borrower or any of its Subsidiaries makes any assignment for the benefit of
creditors; or (3) the board of directors of Borrower or any of its Subsidiaries
adopts any resolution or otherwise authorizes action to approve any of the
actions referred to in this subsection 8.1(H); or
-----------------
(I) Liens. Any lien, levy or assessment is filed or recorded with
-----
respect to or otherwise imposed upon all or any part of the Collateral or the
assets of Borrower or any of its Subsidiaries by the United States or any
department or instrumentality thereof or by any state, county, municipality or
other governmental agency (other than Permitted Encumbrances) and such lien,
levy or assessment is not stayed, vacated, paid or discharged within ten (10)
days after written notice thereof is given to Borrower or Borrower otherwise
becomes aware of such lien, levy or assessment; or
(J) Judgment and Attachments. Any money judgment, writ or warrant of
------------------------
attachment, or similar process involving (1) an amount in any individual case in
excess of $100,000 or (2) an amount in the aggregate at any time in excess of
$250,000 (in either case not adequately covered by insurance as to which the
insurance company has acknowledged coverage) is entered or filed against
Borrower or any of its Subsidiaries or any of their respective assets and
remains undischarged, unvacated, unbonded or unstayed for a period of thirty
(30) days or in any event later than five (5) days prior to the date of any
proposed sale thereunder; or
(K) Dissolution. Any order, judgment or decree is entered against
-----------
Borrower or any of its Subsidiaries decreeing the dissolution or split up of
Borrower or that Subsidiary and such order remains undischarged or unstayed for
a period in excess of twenty (20) days; or
(L) Solvency. Borrower ceases to be solvent (as represented by
--------
Borrower in subsection 4.16) or admits in writing its present or prospective
---------------
inability to pay its debts as they become due; or
48
(M) Injunction. Borrower or any of its Subsidiaries is enjoined,
----------
restrained or in any way prevented by the order of any court or any
administrative or regulatory agency from conducting all or any material part of
its business and such order continues for more than thirty (30) days; or
(N) Invalidity of Loan Documents. Any of the Loan Documents for any
----------------------------
reason, other than a partial or full release in accordance with the terms
thereof, ceases to be in full force and effect or is declared to be null and
void, or any Loan Party denies that it has any further liability under any Loan
Documents to which it is party, or gives notice to such effect; or
(O) Failure of Security. Agent, on behalf of Lenders, does not have
-------------------
or ceases to have a valid and perfected first priority security interest in the
Collateral (subject to Permitted Encumbrances), in each case, for any reason
other than the failure of Agent or any Lender to take any action within its
control; or
(P) Damage, Strike, Casualty. Any material damage to, or loss, theft
------------------------
or destruction of, any Collateral, whether or not insured, or any strike,
lockout, labor dispute, embargo, condemnation, act of God or public enemy, or
other casualty which causes, for more than forty-five (45) consecutive days, the
cessation or substantial curtailment of revenue producing activities at any
facility of Borrower or any of its Subsidiaries if any such event or
circumstance could reasonably be expected to have a Material Adverse Effect.
(Q) Licenses and Permits. The loss, suspension or revocation of, or
--------------------
failure to renew, any license or permit now held or hereafter acquired by
Borrower or any of its Subsidiaries, if such loss, suspension, revocation or
failure to renew could reasonably be expected to have a Material Adverse Effect.
(R) Forfeiture. There is filed against Borrower or any Guarantor any
----------
civil or criminal action, suit or proceeding under any federal or state
racketeering statute (including, without limitation, the Racketeer Influenced
and Corrupt Organization Act of 1970), which action, suit or proceeding (1) is
not dismissed within one hundred twenty (120) days; and (2) could result in the
confiscation or forfeiture of any material portion of the Collateral.
8.2 Suspension of Commitments. Upon the occurrence of any Default or
-------------------------
Event of Default, notwithstanding any grace period or right to cure, Agent may
or upon demand by Requisite Lenders shall, without notice or demand, immediately
cease making additional Loans and the Commitments shall be suspended; provided
--------
that, in the case of a Default, if the subject condition or event is waived or
cured within any applicable grace or cure period, the Commitments shall be
reinstated.
8.3 Acceleration. Upon the occurrence of any Event of Default described
------------
in the foregoing subsections 8.1(G) or 8.1(H), all Obligations shall
----------------------------
automatically become immediately due and payable, without presentment, demand,
protest or other requirements of any kind, all
49
of which are hereby expressly waived by Borrower, and the Commitments shall
thereupon terminate. Upon the occurrence and during the continuance of any other
Event of Default, Agent may, and upon demand by Requisite Lenders shall, by
written notice to Borrower, (a) declare all or any portion of the Obligations to
be, and the same shall forthwith become, immediately due and payable and the
Commitments shall thereupon terminate and (b) demand that Borrower immediately
deposit with Agent an amount equal to one hundred five percent (105%) of the
Letter of Credit Reserve to enable Lender to make payments under the Lender
Letters of Credit when required and such amount shall become immediately due and
payable.
8.4 Remedies. If any Event of Default shall have occurred and be
--------
continuing, in addition to and not in limitation of any other rights or remedies
available to Agent and Lenders at law or in equity, Agent may and shall upon the
request of Requisite Lenders exercise in respect of the Collateral, in addition
to all other rights and remedies provided for herein or otherwise available to
it, all the rights and remedies of a secured party on default under the UCC
(whether or not the UCC applies to the affected Collateral) and may also (a)
notify any or all obligors on the Accounts to make all payments directly to
Agent; (b) require Borrower to, and Borrower hereby agrees that it will, at its
expense and upon request of Agent forthwith, assemble all or part of the
Collateral as directed by Agent and make it available to Agent at a place to be
designated by Agent which is reasonably convenient to both parties; (c) withdraw
all cash in the Blocked Accounts and apply such monies in payment of the
Obligations in the manner provided in subsection 8.7; (d) without notice or
--------------
demand or legal process, enter upon any premises of Borrower and take possession
of the Collateral; and (e) without notice except as specified below, sell the
Collateral or any part thereof in one or more parcels at public or private sale,
at any of the Agent's offices or elsewhere, at such time or times, for cash, on
credit or for future delivery, and at such price or prices and upon such other
terms as Agent may deem commercially reasonable. Borrower agrees that, to the
extent notice of sale shall be required by law, at least ten (10) days notice to
Borrower of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification. At any
sale of the Collateral, if permitted by law, Agent or any Lender may bid (which
bid may be, in whole or in part, in the form of cancellation of indebtedness)
for the purchase of the Collateral or any portion thereof for the account of
Agent or such Lender. Agent shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. Borrower shall
remain liable for any deficiency. Agent may adjourn any public or private sale
from time to time by announcement at the time and place fixed therefor, and such
sale may, without further notice, be made at the time and place to which it was
so adjourned. To the extent permitted by law, Borrower hereby specifically
waives all rights of redemption, stay or appraisal which it has or may have
under any law now existing or hereafter enacted. Agent shall not be required to
proceed against any Collateral but may proceed against Borrower directly.
8.5 Appointment of Attorney-in-Fact. Borrower hereby constitutes and
-------------------------------
appoints Agent as Borrower's attorney-in-fact with full authority in the place
and stead of Borrower and in the name of Borrower, Agent or otherwise, from time
to time in Agent's discretion while an Event of Default is continuing to take
any action and to execute any instrument that Agent may deem necessary or
advisable to accomplish the purposes of this Agreement, including: (a) to ask,
50
demand, collect, ▇▇▇ for, recover, compound, receive and give acquittance and
receipts for moneys due and to become due under or in respect of any of the
Collateral; (b) to adjust, settle or compromise the amount or payment of any
Account, or release wholly or partly any customer or obligor thereunder or allow
any credit or discount thereon; (c) to receive, endorse, and collect any drafts
or other instruments, documents and chattel paper, in connection with clause (a)
above; (d) to file any claims or take any action or institute any proceedings
that Agent may deem necessary or desirable for the collection of any of the
Collateral or otherwise to enforce the rights of Agent and Lenders with respect
to any of the Collateral; and (e) to sign and endorse any invoices, freight or
express bills, bills of lading, storage or warehouse receipts, assignments,
verifications and notices in connection with Accounts and other documents
relating to the Collateral. The appointment of Agent as Borrower's attorney and
Agent's rights and powers are coupled with an interest and are irrevocable until
payment in full and complete performance of all of the Obligations.
8.6 Limitation on Duty of Agent with Respect to Collateral. Beyond the
------------------------------------------------------
safe custody thereof, Agent and each Lender shall have no duty with respect to
any Collateral in its possession or control (or in the possession or control of
any agent or bailee) or with respect to any income thereon or the preservation
of rights against prior parties or any other rights pertaining thereto. Agent
shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which Agent accords its own property.
Neither Agent nor any Lender shall be liable or responsible for any loss or
damage to any of the Collateral, or for any diminution in the value thereof, by
reason of the act or omission of any warehouseman, carrier, forwarding agency,
consignee or other agent or bailee selected by Agent in good faith.
8.7 Application of Proceeds. Upon the occurrence and during the
-----------------------
continuance of an Event of Default, (a) Borrower irrevocably waives the right to
direct the application of any and all payments at any time or times thereafter
received by Agent from or on behalf of Borrower, and Borrower hereby irrevocably
agrees that Agent shall have the continuing exclusive right to apply and to
reapply any and all payments received at any time or times after the occurrence
and during the continuance of an Event of Default against the Obligations in
such manner as Agent may deem advisable notwithstanding any previous entry by
Agent upon any books and records and (b) the proceeds of any sale of, or other
realization upon, all or any part of the Collateral shall be applied: first, to
-----
all fees, costs and expenses incurred by Agent or any Lender with respect to
this Agreement, the other Loan Documents or the Collateral; second, to all fees
------
due and owing to Agent and Lenders; third, to accrued and unpaid interest on the
-----
Obligations; fourth, to the principal amounts of the Obligations outstanding;
------
and fifth, to any other indebtedness or obligations of Borrower owing to Agent
-----
or any Lender.
8.8 License of Intellectual Property. Borrower hereby assigns, transfers
--------------------------------
and conveys to Agent, for the benefit Lenders, effective upon the occurrence of
any Event of Default hereunder, the non-exclusive right and license to use all
Intellectual Property owned or used by Borrower together with any goodwill
associated therewith, all to the extent necessary to enable Agent to realize on
the Collateral and any successor or assign to enjoy the benefits of the Col-
51
lateral. This right and license shall inure to the benefit of all successors,
assigns and transferees of Agent and its successors, assigns and transferees,
whether by voluntary conveyance, operation of law, assignment, transfer,
foreclosure, deed in lieu of foreclosure or otherwise. Such right and license
is granted free of charge, without requirement that any monetary payment
whatsoever be made to Borrower by Agent; provided, however, that the Borrower
shall be entitled to continue to use the name "Tower Air" following the
occurrence and during the continuance of any Event of Default so long as (i) the
FAA has not revoked the Borrower's air carrier operating certificate, (ii) the
Borrower has not ceased to operate its regularly scheduled passenger services,
(iii) proceedings for dissolution of the Borrower have not commenced, or (iv)
the Agent has not accelerated the obligations pursuant to subsection 8.3 hereof.
--------------
8.9 Waivers, Non-Exclusive Remedies. No failure on the part of Agent or
-------------------------------
any Lender to exercise, and no delay in exercising and no course of dealing with
respect to, any right under this Agreement or the other Loan Documents shall
operate as a waiver thereof; nor shall any single or partial exercise by Agent
or any Lender of any right under this Agreement or any other Loan Document
preclude any other or further exercise thereof or the exercise of any other
right. The rights in this Agreement and the other Loan Documents are cumulative
and are not exclusive of any other remedies provided by law.
SECTION 9. ASSIGNMENT AND PARTICIPATION
----------------------------
9.1 Assignments and Participations in Loans.
---------------------------------------
(A) Each Lender may assign its rights and delegate its obligations
under this Agreement to another Person; provided, that (a) such Lender shall
--------
first obtain the written consent of Agent, which shall not be unreasonably
withheld, (b) the amount of Commitments and Loans of the assigning Lender being
assigned shall in no event be less than the lesser of (i) $5,000,000 or (ii) the
entire amount of the Commitments and Loans of such assigning Lender and (c)(i)
each such assignment shall be of a pro rata portion of all such assigning
Lender's Loans and Commitments hereunder, and (ii) the parties to such
assignment shall execute and deliver to Agent for acceptance and recording a
Lender Addition Agreement together with (x) a processing and recording fee of
$2,500 payable to Agent and (y) the Revolving Note[s] originally delivered to
the assigning Lender. Upon receipt of all of the foregoing, Agent shall notify
Borrower of such assignment and Borrower shall comply with its obligations under
the last sentence of subsection 2.1(D). In the case of an assignment authorized
-----------------
under this subsection 9.1, the assignee shall have, to the extent of such
--------------
assignment, the same rights, benefits and obligations as it would if it were a
Lender hereunder. The assigning Lender shall be relieved of its obligations
hereunder with respect to its Commitment or assigned portion thereof. Borrower
hereby acknowledges and agrees that any assignment will give rise to a direct
obligation of Borrower to the assignee and that the assignee shall be considered
to be a "Lender".
52
(B) Each Lender may sell participations in all or any part of any
Loans made by it to another Person; provided, that all amounts payable by
--------
Borrower hereunder shall be determined as if that Lender had not sold such
participation and the holder of any such participation shall not be entitled to
require such Lender to take or omit to take any action hereunder except action
directly effecting (a) any reduction in the principal amount, interest rate or
fees payable with respect to any Loan in which such holder participates; (b) any
extension of the Termination Date or the date fixed for any payment of
principal, interest or fees payable with respect to any Loan in which such
holder participates; and (c) any release of substantially all of the Collateral
(other than in accordance with the terms of this Agreement or the Loan
Documents). Borrower hereby acknowledges and agrees that the participant under
each participation shall for purposes of subsections 2.8, 2.9, 2.10, 9.4 and
-------------------------------
10.2 of this Agreement be considered to be a "Lender".
----
(C) Except as otherwise provided in this subsection 9.1 no Lender
--------------
shall, as between Borrower and that Lender, be relieved of any of its
obligations hereunder as a result of any sale, assignment, transfer or
negotiation of, or granting of participation in, all or any part of the Loans or
other Obligations owed to such Lender. Each Lender may furnish any information
concerning Borrower and its Subsidiaries in the possession of that Lender from
time to time to assignees and participants (including prospective assignees and
participants) provided that the Persons obtaining such information agrees to
maintain the confidentiality of such information to the extent required by
subsection 10.21.
----------------
(D) Notwithstanding any other provision set forth in this Agreement,
any Lender may at any time create a security interest in all or any portion of
its rights under this Agreement (including, without limitation, the Loans owing
to it and the Revolving Note[s] held by it in favor of any Federal Reserve Bank
in accordance with Regulation A of the Board of Governors of the Federal Reserve
System).
9.2 Agent.
-----
(A) Appointment. Each Lender hereby designates and appoints ▇▇▇▇▇▇ as
-----------
its agent under this Agreement and the Loan Documents, and each Lender hereby
irrevocably authorizes Agent to take such action or to refrain from taking such
action on its behalf under the provisions of this Agreement and the Loan
Documents and to exercise such powers as are set forth herein or therein,
together with such other powers as are reasonably incidental thereto. Agent is
authorized and empowered to amend, modify, or waive any provisions of this
Agreement or the other Loan Documents on behalf of Lenders subject to the
requirement that certain of Lenders' consent be obtained in certain instances as
provided in subsection 9.3. Agent agrees to act as such on the express
--------------
conditions contained in this subsection 9.2. The provisions of this subsection
-------------- ----------
9.2 are solely for the benefit of Agent and Lenders and neither Borrower nor any
---
Loan Party shall have any rights as a third party beneficiary of any of the
provisions hereof. In performing its functions and duties under this Agreement,
Agent shall act solely as an administrative representative of Lenders and does
not assume and shall not be deemed to have assumed any obligation toward or
relationship of agency or trust with or for Lenders, Borrower
53
or any Loan Party. Agent may perform any of its duties hereunder, or under the
Loan Documents, by or through its agents or employees.
(B) Nature of Duties. Agent shall have no duties, obligations or
----------------
responsibilities except those expressly set forth in this Agreement or in the
Loan Documents. The duties of Agent shall be mechanical and administrative in
nature. Agent shall not have by reason of this Agreement a fiduciary
relationship in respect of any Lender. Each Lender shall make its own
independent investigation of the financial condition and affairs of Borrower in
connection with the extension of credit hereunder and shall make its own
appraisal of the credit worthiness of Borrower, and Agent shall have no duty or
responsibility, either initially or on a continuing basis, to provide any Lender
with any credit or other information with respect thereto, whether coming into
its possession before the Closing Date or at any time or times thereafter. If
Agent seeks the consent or approval of any Lenders to the taking or refraining
from taking any action hereunder, then Agent shall send notice thereof to each
Lender. Agent shall promptly notify each Lender any time that the applicable
percentage of Lenders have instructed Agent to act or refrain from acting
pursuant hereto.
(C) Rights, Exculpation, Etc. Neither Agent nor any of its officers,
-------------------------
directors, employees or agents shall be liable to any Lender for any action
taken or omitted by them hereunder or under any of the Loan Documents, or in
connection herewith or therewith, except that Agent shall be obligated on the
terms set forth herein for performance of its express obligations hereunder, and
except that Agent shall be liable with respect to its own gross negligence or
willful misconduct. Agent shall not be liable for any apportionment or
distribution of payments made by it in good faith and if any such apportionment
or distribution is subsequently determined to have been made in error the sole
recourse of any Lender to whom payment was due but not made, shall be to recover
from other Lenders any payment in excess of the amount to which they are
determined to be entitled (and such other Lenders hereby agree to return to such
Lender any such erroneous payments received by them). In performing its
functions and duties hereunder, Agent shall exercise the same care which it
would in dealing with loans for its own account, but Agent shall not be
responsible to any Lender for any recitals, statements, representations or
warranties herein or for the execution, effectiveness, genuineness, validity,
enforceability, collectability, or sufficiency of this Agreement or any of the
Loan Documents or the transactions contemplated thereby, or for the financial
condition of any Loan Party. Agent shall not be required to make any inquiry
concerning either the performance or observance of any of the terms, provisions
or conditions of this Agreement or any of the Loan Documents or the financial
condition of any Loan Party, or the existence or possible existence of any
Default or Event of Default. Agent may at any time request instructions from
Lenders with respect to any actions or approvals which by the terms of this
Agreement or of any of the Loan Documents Agent is permitted or required to take
or to grant, and Agent shall be absolutely entitled to refrain from taking any
action or to withhold any approval and shall not be under any liability
whatsoever to any Person for refraining from any action or withholding any
approval under any of the Loan Documents until it shall have received such
instructions from the applicable percentage of the Lenders. Without limiting
the foregoing, no Lender shall have any right of action whatsoever against Agent
as a result of Agent acting or refraining from
54
acting under this Agreement or any of the other Loan Documents in accordance
with the instructions of the applicable percentage of the Lenders and
notwithstanding the instructions of Lenders, Agent shall have no obligation to
take any action if it, in good faith believes that such action exposes Agent to
any liability.
(D) Reliance. Agent shall be entitled to rely upon any written
--------
notices, statements, certificates, orders or other documents or any telephone
message or other communication (including any writing, telex, telecopy or
telegram) believed by it in good faith to be genuine and correct and to have
been signed, sent or made by the proper Person, and with respect to all matters
pertaining to this Agreement or any of the Loan Documents and its duties
hereunder or thereunder, upon advice of counsel selected by it. Agent shall be
entitled to rely upon the advice of legal counsel, independent accountants, and
other experts selected by Agent in its sole discretion.
(E) Indemnification. Each Lender, severally, agrees to reimburse and
---------------
indemnify Agent for and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses, advances or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by, or asserted against Agent in any way relating to or arising out of this
Agreement or any of the Loan Documents or any action taken or omitted by Agent
under this Agreement for any of the Loan Documents, in proportion to each
Lender's Pro Rata Share; provided, however, that no Lender shall be liable for
-------- -------
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses, advances or disbursements resulting
from Agent's gross negligence or willful misconduct. The obligations of Lenders
under this subsection 9.2(E) shall survive the payment in full of the
-----------------
Obligations and the termination of this Agreement.
(F) ▇▇▇▇▇▇ Individually. With respect to its Commitments and the
-------------------
Loans made by it, and the Revolving Note[s] issued to it, ▇▇▇▇▇▇ shall have and
may exercise the same rights and powers hereunder and is subject to the same
obligations and liabilities as and to the extent set forth herein for any other
Lender. The terms "Lenders" or "Requisite Lenders" or any similar terms shall,
unless the context clearly otherwise indicates, include ▇▇▇▇▇▇ in its individual
capacity as a Lender or one of the Requisite Lenders. ▇▇▇▇▇▇ may lend money to,
and generally engage in any kind of banking, trust or other business with any
Loan Party as if it were not acting as Agent pursuant hereto.
(G) Successor Agent.
---------------
(1) Resignation. Agent may resign from the performance of all its
-----------
functions and duties hereunder at any time by giving at least thirty (30)
Business Days' prior written notice to Borrower and the Lenders. Such
resignation shall take effect upon the acceptance by a successor Agent of
appointment pursuant to clause (2) below or as otherwise provided below.
55
(2) Appointment of Successor. Upon any such notice of resignation
------------------------
pursuant to clause (G)(1) above, Requisite Lenders shall, upon receipt of
Borrower's prior consent which shall not unreasonably be withheld, appoint a
successor Agent. If a successor Agent shall not have been so appointed within
said thirty (30) Business Day period, the retiring Agent, upon notice to
Borrower, shall then appoint a successor Agent who shall serve as Agent until
such time, as Requisite Lenders, upon receipt of Borrower's prior written
consent which shall not be unreasonably withheld, appoint a successor Agent as
provided above.
(3) Successor Agent. Upon the acceptance of any appointment as Agent
---------------
under the Loan Documents by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations under the Loan Documents. After any retiring
Agent's resignation as Agent under the Loan Documents, the provisions of this
subsection 9.2 shall inure to its benefit as to any actions taken or omitted to
--------------
be taken by it while it was Agent under the Loan Documents.
(H) Collateral Matters.
------------------
(1) Release of Collateral. Lenders hereby irrevocably authorize
---------------------
Agent, at its option and in its discretion, to release any Lien granted to or
held by Agent upon any property covered by this Agreement or the Loan Documents
(i) upon termination of the Commitments and payment and satisfaction of all
Obligations; (ii) constituting property being sold or disposed of if Borrower
certifies to Agent that the sale or disposition is made in compliance with the
provisions of this Agreement (and Agent may rely in good faith conclusively on
any such certificate, without further inquiry); or (iii) constituting property
leased to Borrower under a lease which has expired or been terminated in a
transaction permitted under this Agreement or is about to expire and which has
not been, and is not intended by Borrower to be, renewed or extended. In
addition during any Fiscal Year (x) Agent may release Collateral having a book
value of not more than 10% of the book value of all Collateral, (y) Agent, with
the consent of Requisite Lenders, may release Collateral having a book value of
not more than 25% of the book value of all Collateral and (z) Agent, with the
consent of Lenders having 90% of (i) the Total Loan Commitments and (ii) Loans,
may release all the Collateral.
(2) Confirmation of Authority; Execution of Releases. Without in any
------------------------------------------------
manner limiting Agent's authority to act without any specific or further
authorization or consent by Lenders (as set forth in subsection 9.2(H)(1)), each
---------------------
Lender agrees to confirm in writing, upon request by Borrower, the authority to
release any property covered by this Agreement or the Loan Documents conferred
upon Agent under subsection 9.2(H)(1). So long as no Event of Default is then
--------------------
continuing, upon receipt by Agent of confirmation from the requisite percentage
of Lenders, of its authority to release any particular item or types of property
covered by this Agreement or the Loan Documents, and upon at least five (5)
Business Days prior written request by Borrower, Agent shall (and is hereby
irrevocably authorized by Lenders to) execute such documents as may be necessary
to evidence the release of the Liens granted to Agent for the benefit of Lenders
herein or pursuant hereto upon such Collateral; provided,
--------
56
however, that (i) Agent shall not be required to execute any such document on
-------
terms which, in Agent's opinion, would expose Agent to liability or create any
obligation or entail any consequence other than the release of such Liens
without recourse or warranty, and (ii) such release shall not in any manner
discharge, affect or impair the Obligations or any Liens upon (or obligations of
any Loan Party, in respect of), all interests retained by any Loan Party,
including, without limitation, the proceeds of any sale, all of which shall
continue to constitute part of the property covered by this Agreement or the
Loan Documents.
(3) Absence of Duty. Agent shall have no obligation whatsoever to any
---------------
Lender or any other Person to assure that the property covered by this Agreement
or the Loan Documents exists or is owned by Borrower or is cared for, protected
or insured or has been encumbered or that the Liens granted to Agent on behalf
of Lenders herein or pursuant hereto have been properly or sufficiently or
lawfully created, perfected, protected or enforced or are entitled to any
particular priority, or to exercise at all or in any particular manner or under
any duty of care, disclosure or fidelity, or to continue exercising, any of the
rights, authorities and powers granted or available to Agent in this subsection
----------
9.2(H) or in any of the Loan Documents, it being understood and agreed that in
------
respect of the property covered by this Agreement or the Loan Documents or any
act, omission or event related thereto, Agent may act in any manner it may deem
appropriate, in its discretion, given Agent's own interest in property covered
by this Agreement or the Loan Documents as one of the Lenders and that Agent
shall have no duty or liability whatsoever to any of the other Lenders;
provided, that Agent shall exercise the same care which it would in dealing with
--------
loans for its own account.
(I) Agency for Perfection. Each Lender hereby appoints each other
---------------------
Lender as agent for the purpose of perfecting Lenders' security interest in
Collateral which, in accordance with Article 9 of the Uniform Commercial Code in
---------
any applicable jurisdiction, can be perfected only by possession. Should any
Lender (other than Agent) obtain possession of any such Collateral, such Lender
shall notify Agent thereof, and, promptly upon Agent's request therefor, shall
deliver such Collateral to Agent or in accordance with Agent's instructions.
(J) Exercise of Remedies. Each Lender agrees that it will not have
--------------------
any right individually to enforce or seek to enforce this Agreement or any Loan
Document or to realize upon any collateral security for the Loans, it being
understood and agreed that such rights and remedies may be exercised only by
Agent.
9.3 Consents.
--------
(A) In the event Agent requests the consent of a Lender and does not
receive a written denial thereof within five (5) Business Days after such
Lender's receipt of such request, then such Lender will be deemed to have given
such consent.
(B) In the event Agent requests the consent of a Lender and such
consent is denied, then ▇▇▇▇▇▇ may, at its option, require such Lender to assign
its interest in the Loans to ▇▇▇▇▇▇ for a price equal to the then outstanding
principal amount thereof plus accrued and unpaid
----
57
interest and fees due such Lender, which interest and fees will be paid when
collected from Borrower. In the event that ▇▇▇▇▇▇ elects to require any Lender
to assign its interest to ▇▇▇▇▇▇, ▇▇▇▇▇▇ will so notify such Lender in writing
within forty-five (45) days following such Lender's denial, and such Lender will
assign its interest to ▇▇▇▇▇▇ no later than five (5) days following receipt of
such notice.
9.4 Set Off and Sharing of Payments. In addition to any rights now or
-------------------------------
hereafter granted under applicable law and not by way of limitation of any such
rights, upon the occurrence and during the continuance of any Event of Default,
each Lender is hereby authorized by Borrower at any time or from time to time,
with reasonably prompt subsequent notice to Borrower or to any other Person (any
prior or contemporaneous notice being hereby expressly waived) to set off and to
appropriate and to apply any and all (A) balances held by such Lender or such
holder at any of its offices for the account of Borrower or any of its
Subsidiaries (regardless of whether such balances are then due to Borrower or
its Subsidiaries), and (B) other property at any time held or owing by such
Lender or such holder to or for the credit or for the account of Borrower or
any of its Subsidiaries, against and on account of any of the Obligations which
are not paid when due; except that no Lender or any such holder shall exercise
any such right without the prior written consent of Agent. Any Lender which has
exercised its right to set off shall, to the extent the amount of any such set
off exceeds its Pro Rata Share of the Obligations, purchase for cash (and the
other Lenders or holders shall sell) participations in each such other Lender's
or holder's Pro Rata Share of the Obligations as would be necessary to cause
such Lender to share such excess with each other Lender or holder in accordance
with their respective Pro Rata Shares. Borrower agrees, to the fullest extent
permitted by law, that (a) any Lender or holder may exercise its right to set
off with respect to amounts in excess of its Pro Rata Share of the Obligations
and may sell participations in such excess to other Lenders and holders, and (b)
any Lender or holder so purchasing a participation in the Loans made or other
Obligations held by other Lenders or holders may exercise all rights of set-off,
bankers' lien, counterclaim or similar rights with respect to such participation
as fully as if such Lender or holder were a direct holder of Loans and other
Obligations in the amount of such participation.
9.5 Disbursement of Funds. Agent may, on behalf of Lenders, disburse
---------------------
funds to Borrower for Loans requested. Each Lender shall reimburse Agent on
demand for all funds disbursed on its behalf by Agent, or if Agent so requests,
each Lender will remit to Agent its Pro Rata Share of any Loan before Agent
disburses same to Borrower. If Agent elects to require that funds be made
available prior to disbursement to Borrower, Agent shall advise each Lender by
telephone, telex or telecopy of the amount of such Lender's Pro Rata Share of
such requested Loan no later than by 1:00 p.m. Central time on the Funding Date
for Base Rate Loans, and each such Lender shall pay Agent such Lender's Pro Rata
Share of such requested Loan, in same day funds, by wire transfer to Agent's
account not later than 3:00 p.m. Central time for Base Rate Loans. If any
Lender fails to pay the amount of its Pro Rata Share forthwith upon Agent's
demand, Agent shall promptly notify Borrower, and Borrower shall immediately
repay such amount to Agent. Any repayment required pursuant to this subsection
----------
9.5 shall be without premium or penalty. Nothing in this subsection 9.5 or
--- --------------
elsewhere in this Agreement or
58
the other Loan Documents, including without limitation the provisions of
subsection 9.6, shall be deemed to require Agent to advance funds on behalf of
--------------
any Lender or to relieve any Lender from its obligation to fulfill its
Commitments hereunder or to prejudice any rights that Agent or Borrower may have
against any Lender as a result of any default by such Lender hereunder.
9.6 Settlements, Payments and Information.
-------------------------------------
(A) Revolving Advances and Payments; Fee Payments.
---------------------------------------------
(1) The Revolving Loan may fluctuate from day to day through Agent's
disbursement of funds to, and receipt of funds from, Borrower. In order to
minimize the frequency of transfers of funds between Agent and each Lender
notwithstanding terms to the contrary set forth in Section 2 and subsection 9.5,
--------- --------------
Revolving Advances and repayments may be settled according to the procedures
described in subsection 9.6(A)(2) and 9.6(A)(3) of this Agreement.
----------------------------------
Notwithstanding these procedures, each Lender's obligation to fund its Pro Rata
Share of any advances made by Agent to Borrower will commence on the date such
advances are made by Agent. Such payments will be made by such Lender without
set-off, counterclaim or reduction of any kind.
(2) Once each week, or more frequently (including daily), if Agent so
elects (each such day being a "Settlement Date"), Agent will advise each Lender
by 1 p.m. Central time by telephone, telex, or telecopy of the amount of each
such Lender's Pro Rata Share of the Revolving Loan. In the event payments are
necessary to adjust the amount of such Lender's share of the Revolving Loan to
such Lender's Pro Rata Share of the Revolving Loan, the party from which such
payment is due will pay the other, in same day funds, by wire transfer to the
other's account not later than 3:00 p.m. Central time on the Settlement Date.
(3) On the first Business Day of each month ("Interest Settlement
Date"), Agent will advise each Lender by telephone, telefax or telecopy of the
amount of interest and fees charged to and collected from Borrower for the
proceeding month. Provided that such Lender has made all payments required to
be made by it under this Agreement, Agent will pay to such Lender, by wire
transfer to such Lender's account (as specified by such Lender on the signature
page of this Agreement as amended by such Lender from time to time after the
date hereof pursuant to the notice provisions contained herein or in the
applicable Lender Addition Agreement) not later than 3 p.m. Central time on the
Interest Settlement Date such Lender's share of such interest and fees.
(B) Availability of Lender's Pro Rata Share.
---------------------------------------
(1) Unless Agent has been notified by a Lender prior to a Funding Date
of such Lender's intention not to fund its Pro Rata Share of the Loan amount
requested by Borrower, Agent may assume that such Lender will make such amount
available to Agent on the Funding Date or the next Settlement Date, as
applicable. If such amount is not, in fact,
59
made available to Agent by such Lender when due, Agent will be entitled to
recover such amount on demand from such Lender without set-off, counterclaim or
deduction of any kind.
(2) Nothing contained in this subsection 9.6(B) will be deemed to
-----------------
relieve a Lender of its obligation to fulfill its Commitments or to prejudice
any rights Agent or Borrower may have against such Lender as a result of any
default by such Lender under this Agreement.
(3) Without limiting the generality of the foregoing, each Lender
shall be obligated to fund its Pro Rata Share of any Revolving Advance made with
respect to any draw on a Lender Letter of Credit.
(C) Return of Payments.
------------------
(1) If Agent pays an amount to a Lender under this Agreement in the
belief or expectation that a related payment has been or will be received by
Agent from Borrower and such related payment is not received by Agent, then
Agent will be entitled to recover such amount from such Lender without set-off,
counterclaim or deduction of any kind.
(2) If Agent determines at any time that any amount received by Agent
under this Agreement must be returned to Borrower or paid to any other person
pursuant to any solvency law or otherwise, then, notwithstanding any other term
or condition of this Agreement, Agent will not be required to distribute any
portion thereof to any Lender. In addition, each Lender will repay to Agent on
demand any portion of such amount that Agent has distributed to such Lender,
together with interest at such rate, if any, as Agent is required to pay to
Borrower or such other Person, without set-off, counterclaim or deduction of any
kind.
9.7 Dissemination of Information. Agent will provide Lenders with any
----------------------------
information received by Agent from Borrower which is required to be provided to
a Lender hereunder; provided, however, that Agent shall not be liable to Lenders
-------- -------
for any failure to do so, except to the extent that such failure is attributable
to Agent's gross negligence or willful misconduct.
SECTION 10. MISCELLANEOUS
-------------
10.1 Expenses and Attorneys' Fees. Whether or not the transactions
----------------------------
contemplated hereby shall be consummated, Borrower agrees to promptly pay all
reasonable fees, costs and expenses incurred by Agent and each of the Lenders in
connection with any matters contemplated by or arising out of this Agreement or
the other Loan Documents including the following, and all such fees, costs and
expenses shall be part of the Obligations, payable on demand and secured by the
Collateral: (a) fees, costs and expenses (including attorneys' fees, allocated
costs of internal counsel and fees of the Appraiser (or any successor
appraiser), environmental consultants, accountants and other professionals
retained by Agent) incurred in connection with the examination, review, due
diligence investigation, documentation and closing
60
of the financing arrangements evidenced by the Loan Documents; (b) fees, costs
and expenses (including attorneys' fees, allocated costs of internal counsel and
fees of environmental consultants, accountants and other professionals retained
by Agent) incurred in connection with the review, negotiation, preparation,
documentation, execution, syndication, and administration of the Loan Documents,
the Loans and any amendments, waivers, consents, forbearances and other
modifications relating thereto or any subordination or intercreditor agreements;
(c) fees, costs and expenses incurred by Agent in creating, perfecting and
maintaining perfection of Liens in favor of Agent, on behalf of Lenders; (d)
fees, costs and expenses incurred by Agent in connection with forwarding to
Borrower the proceeds of Loans including Agent's or any Lenders' standard wire
transfer fee; (e) fees, costs, expenses and bank charges, including bank charges
for returned checks, incurred by Agent or any Lender in establishing,
maintaining and handling lock box accounts, blocked accounts or other accounts
for collection of the Collateral; (f) fees, costs, expenses (including
attorneys' fees and allocated costs of internal counsel) of Agent or any Lender
and costs of settlement incurred in collecting upon or enforcing rights against
the Collateral or incurred in any action to enforce this Agreement or the other
Loan Documents or to collect any payments due from Borrower or any other Loan
Party under this Agreement or any other Loan Document or incurred in connection
with any refinancing or restructuring of the credit arrangements provided under
this Agreement, whether in the nature of a "workout" or in connection with any
insolvency or bankruptcy proceedings or otherwise.
10.2 Indemnity. In addition to the payment of expenses pursuant to
---------
subsection 10.1, whether or not the transactions contemplated hereby shall be
---------------
consummated, Borrower agrees to indemnify, pay and hold Agent and each Lender
and any holder of the Notes and the officers, directors, employees, agents,
consultants, auditors, persons engaged by Agent or any Lender and any holder of
the Revolving Note[s] to evaluate or monitor the Collateral, affiliates and
attorneys of Agent, Lender and such holders (collectively called the
"Indemnitees") harmless from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, costs, expenses
and disbursements of any kind or nature whatsoever (including the fees and
disbursements of counsel for such Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not such Indemnitee shall be designated a party thereto) that may be
imposed on, incurred by, or asserted against that Indemnitee, in any manner
relating to or arising out of this Agreement or the other Loan Documents, the
consummation of the transactions contemplated by this Agreement, the statements
contained in the commitment letters, if any, delivered by Agent or any Lender,
Agent's and each Lender's agreement to make the Loans hereunder, the use or
intended use of the proceeds of any of the Loans or the exercise of any right or
remedy hereunder or under the other Loan Documents (the "Indemnified
Liabilities"); provided that Borrower shall have no obligation to an Indemnitee
--------
hereunder with respect to Indemnified Liabilities arising from the gross
negligence or willful misconduct of that Indemnitee as determined by a court of
competent jurisdiction.
61
10.3 Amendments and Waivers.
----------------------
(A) Except as otherwise provided herein, no amendment, modification,
termination or waiver of any provision of this Agreement or any Loan Document,
or consent to any departure by any Loan Party therefrom, shall in any event be
effective unless the same shall be in writing and signed by Requisite Lenders or
Agent, as applicable; provided, that no amendment, modification, termination or
--------
waiver shall, unless in writing and signed by all Lenders, do any of the
following: (i) increase the Commitment of any Lender; (ii) reduce the principal
of, rate of interest on or fees payable with respect to any Loan; (iii) extend
the scheduled due date of any installment of principal of the Loans; (iv) change
the percentage of the Commitments or of the aggregate unpaid principal amount of
the Loans, or the percentage of Lenders which shall be required for Lenders or
any of them to take any action hereunder; (v) amend or waive this subsection
----------
10.3 or the definitions of the terms used in this subsection 10.3 insofar as the
---- ---------------
definitions affect the substance of this subsection 10.3; (vi) consent to the
---------------
assignment or other transfer by any Loan Party of any of its rights and
obligations under any Loan Document; and (vii) increase the percentages
contained in the definition of Borrowing Base and provided, further, that no
-------- -------
amendment, modification, termination or waiver affecting the rights or duties of
Agent under any Loan Document shall in any event be effective, unless in writing
and signed by Agent, in addition to the Lenders required herein above to take
such action.
(B) Each amendment, modification, termination or waiver shall be
effective only in the specific instance and for the specific purpose for which
it was given. No amendment, modification, termination or waiver shall be
required for Agent to take additional Collateral pursuant to any Loan Document.
(C) No amendment, modification or waiver of any provision of any
Lender Letter of Credit shall be applicable without the written concurrence of
the issuer of such Lender Letter of Credit. No notice to or demand on Borrower
or any other Loan Party in any case shall entitle Borrower or any other Loan
Party to any other or further notice or demand in similar or other
circumstances. Any amendment, modification, termination, waiver or consent
effected in accordance with this subsection 10.3 shall be binding upon each
---------------
Lender, and, if signed by a Loan Party, on such Loan Party.
(D) In the event Agent waives (1) any Default arising under
subsection 8.1(E) as a result of the breach of any of the provisions of Section
----------------- -------
5 of this Agreement (other than any such breach which constitutes an Event of
-
Default) or (2) any Default constituting a condition to the funding of any
Revolving Advance or issuance of any Lender Letter of Credit, such waiver shall
expire on the date upon which the Default which was the subject of such waiver
matures into an Event of Default pursuant to the terms of this Agreement.
10.4 Notices. Unless otherwise specifically provided herein, all notices
-------
shall be in writing addressed to the respective party as set forth below and may
be personally served, telecopied or sent by overnight courier service or United
States mail and shall be deemed to have
62
been given: (a) if delivered in person, when delivered; (b) if delivered by
telecopy, on the date of transmission if transmitted on a Business Day before
4:00 p.m. Central time or, if not, on the next succeeding Business Day; (c) if
delivered by overnight courier, two (2) days after delivery to such courier
properly addressed; or (d) if by U.S. Mail, four (4) Business Days after
depositing in the United States mail, with postage prepaid and properly
addressed.
If to Borrower: Tower Air, Incorporated
Hanger ▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: Chief Financial Officer/Treasurer
If to Agent or to ▇▇▇▇▇▇: ▇▇▇▇▇▇ FINANCIAL, INC.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇
Attn: HBC Portfolio Manager
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇ FINANCIAL, INC.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Legal Department/HBC
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
VEDDER, PRICE, ▇▇▇▇▇▇▇ & KAMMHOLZ
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to any Lender: Its address indicated on the signature page hereto, in a
Lender Addition Agreement or in a notice to Agent and Borrower or to such other
address as the party addressed shall have previously designated by written
notice to the serving party, given in accordance with this subsection 10.4.
---------------
10.5 Survival of Warranties and Certain Agreements. All agreements,
---------------------------------------------
representations and warranties made herein shall survive the execution and
delivery of this Agreement and the making of the Loans hereunder.
Notwithstanding anything in this Agreement or implied by law to the contrary,
the agreements of Borrower set forth in subsections 10.1 and 10.2 shall survive
-------------------------
the payment of the Loans and the termination of this Agreement.
63
10.6 Indulgence Not Waiver. No failure or delay on the part of Agent, any
---------------------
Lender or any holder of the Revolving Note[s] in the exercise of any power,
right or privilege hereunder or under the Revolving Note[s] shall impair such
power, right or privilege or be construed to be a waiver of any default or
acquiescence therein, nor shall any single or partial exercise of any such
power, right or privilege preclude other or further exercise thereof or of any
other right, power or privilege.
10.7 Marshaling; Payments Set Aside. Neither Agent nor any Lender shall be
------------------------------
under any obligation to marshal any assets in favor of any Loan Party or any
other party or against or in payment of any or all of the Obligations. To the
extent that any Loan Party makes a payment or payments to Agent and/or any
Lender or Agent and/or any Lender enforces its security interests or exercise
its rights of setoff, and such payment or payments or the proceeds of such
enforcement or setoff or any part thereof are subsequently invalidated, declared
to be fraudulent or preferential, set aside and/or required to be repaid to a
trustee, receiver or any other party under any bankruptcy law, state or federal
law, common law or equitable cause, then to the extent of such recovery, the
Obligations or part thereof originally intended to be satisfied, and all Liens,
rights and remedies therefor, shall be revived and continued in full force and
effect as if such payment had not been made or such enforcement or setoff had
not occurred.
10.8 Entire Agreement. This Agreement, the Revolving Note[s] and the other
----------------
Loan Documents referred to herein embody the final, entire agreement among the
parties hereto and supersede any and all prior commitments, agreements,
representations, and understandings, whether written or oral, relating to the
subject matter hereof and may not be contradicted or varied by evidence of
prior, contemporaneous, or subsequent oral agreements or discussions of the
parties hereto. There are no oral agreements among the parties hereto.
10.9 Independence of Covenants. All covenants hereunder shall be given
-------------------------
independent effect so that if a particular action or condition is not permitted
by any of such covenants, the fact that it would be permitted by an exception
to, or be otherwise within the limitations of, another covenant shall not avoid
the occurrence of a Default or an Event of Default if such action is taken or
condition exists.
10.10 Severability. The invalidity, illegality or unenforceability in any
------------
jurisdiction of any provision in or obligation under this Agreement or the other
Loan Documents shall not affect or impair the validity, legality or
enforceability of the remaining provisions or obligations under this Agreement,
or the other Loan Documents or of such provision or obligation in any other
jurisdiction.
10.11 Lenders' Obligations Several; Independent Nature of Lenders' Rights.
-------------------------------------------------------------------
The obligation of each Lender hereunder is several and not joint and neither
Agent nor any Lender shall be responsible for the obligation or commitment of
any other Lender hereunder. In the event that any Lender at any time should
fail to make a Loan as herein provided, the Lenders, or any of them, at their
sole option, may make the Loan that was to have been made by the Lender so
failing to make such Loan. Nothing contained in any Loan Document and no action
64
taken by Agent or any Lender pursuant hereto or thereto shall be deemed to
constitute Lenders to be a partnership, an association, a joint venture or any
other kind of entity. The amounts payable at any time hereunder to each Lender
shall be a separate and independent debt, and, provided Agent fails or refuses
to exercise any remedies against Borrower after receiving the direction of the
Requisite Lenders, each Lender shall be entitled to protect and enforce its
rights arising out of this Agreement and it shall not be necessary for any other
Lender to be joined as an additional party in any proceeding for such purpose.
10.12 Headings. Section and subsection headings in this Agreement are
--------
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive effect.
10.13 APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE
--------------
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
ILLINOIS, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
10.14 Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the parties hereto and their respective successors and
assigns except that Borrower may not assign its rights or obligations hereunder
without the written consent of Lenders.
10.15 No Fiduciary Relationship; Limitation of Liabilities.
----------------------------------------------------
(A) No provision in this Agreement or in any of the other Loan
Documents and no course of dealing between the parties shall be deemed to create
any fiduciary duty by Agent or any Lender to Borrower.
(B) Neither Agent nor any Lender, nor any affiliate, officer,
director, shareholder, employee, attorney, or agent of Agent or any Lender shall
have any liability with respect to, and Borrower hereby waives, releases, and
agrees not to ▇▇▇ any of them upon, any claim for any special, indirect,
incidental, or consequential damages suffered or incurred by Borrower in
connection with, arising out of, or in any way related to, this Agreement or any
of the other Loan Documents, or any of the transactions contemplated by this
Agreement or any of the other Loan Documents. Borrower hereby waives, releases,
and agrees not to ▇▇▇ Agent or any Lender or any of Agent's or any Lender's
affiliates, officers, directors, employees, attorneys, or agents for punitive
damages in respect of any claim in connection with, arising out of, or in any
way related to, this Agreement or any of the other Loan Documents, or any of the
transactions contemplated by this Agreement or any of the transactions
contemplated hereby.
10.16 CONSENT TO JURISDICTION. BORROWER HEREBY CONSENTS TO THE JURISDICTION
-----------------------
OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF ▇▇▇▇ STATE OF
ILLINOIS AND IRREVOCABLY AGREES THAT, SUBJECT TO AGENT'S ELECTION, ALL ACTIONS
OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT, REVOLVING NOTE[S]
OR THE OTHER
65
LOAN DOCUMENTS SHALL BE LITIGATED IN SUCH COURTS. BORROWER ACCEPTS FOR ITSELF
AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NON-
EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM
NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED
THEREBY IN CONNECTION WITH THIS AGREEMENT, THE REVOLVING NOTE[S], THE OTHER LOAN
DOCUMENTS OR THE OBLIGATIONS.
10.17 WAIVER OF JURY TRIAL. BORROWER, AGENT AND EACH LENDER HEREBY WAIVE
--------------------
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF THIS AGREEMENT, THE NOTE[S] OR THE OTHER LOAN DOCUMENTS.
BORROWER, AGENT AND EACH LENDER ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL
INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED
ON THE WAIVER IN ENTERING INTO THIS AGREEMENT, THE REVOLVING NOTE[S] AND THE
OTHER LOAN DOCUMENTS AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR
RELATED FUTURE DEALINGS. BORROWER, AGENT AND EACH LENDER FURTHER WARRANT AND
REPRESENT THAT EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT
EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL.
10.18 Construction. Borrower, Agent and each Lender each acknowledge that it
------------
has had the benefit of legal counsel of its own choice and has been afforded an
opportunity to review this Agreement and the other Loan Documents with its legal
counsel and that this Agreement and the other Loan Documents shall be construed
as if jointly drafted by Borrower, Agent and each Lender.
10.19 Counterparts; Effectiveness. This Agreement and any amendments,
---------------------------
waivers, consents, or supplements may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all of which
counterparts together shall constitute but one and the same instrument. This
Agreement shall become effective upon the execution of a counterpart hereof by
each of the parties hereto. Delivery of an executed counterpart of a signature
page to this Agreement, any amendments, waivers, consents or supplements, or to
any other Loan Document by telecopier shall be as effective as delivery of a
manually executed counterpart thereof.
10.20 No Duty. All attorneys, accountants, appraisers, and other
-------
professional Persons and consultants retained by Agent or any Lender shall have
the right to act exclusively in the interest of Agent or such Lender and shall
have no duty of disclosure, duty of loyalty, duty of care, or other duty or
obligation of any type or nature whatsoever to Borrower or any of Borrower's
shareholders or any other Person.
66
10.21 Confidentiality. Agent and Lenders shall hold all nonpublic
---------------
information obtained pursuant to the requirements hereof and identified as such
by Borrower in accordance with such Person's customary procedures for handling
confidential information of this nature and in accordance with safe and sound
business practices and in any event may make disclosure to such of its
respective Affiliates, officers, directors, employees, agents and
representatives as need to know such information in connection with the Loans.
If any Lender is otherwise a creditor of a Borrower, such Lender may use the
information in connection with its other credits. Agent and Lenders may also
make disclosure reasonably required by a bona fide offeree or assignee (or
participation), or as required or requested by any Governmental Authority or
representative thereof, or pursuant to legal process, or to its accountants,
lawyers and other advisors, and shall require any such offeree or assignee (or
participant) to agree (and require any of its offerees, assignees or
participants to agree) to comply with this Section 10.21. In no event shall
-------------
Agent or any Lender be obligated or required to return any materials furnished
by Borrower; provided, however, each Offeree shall be required to agree that if
it does not become a assignee (or participant) it shall return all materials
furnished to it by Borrower in connection herewith.
10.22 Agent's Consent. To the extent the Agent's consent is required
---------------
under any provision hereof, unless such provision explicitly contains a
different standard, the Agent shall not unreasonably withhold its consent under
such provision.
* * *
67
Witness the due execution of this Amended and Restated Loan and
Security Agreement by the respective duly authorized officers of the undersigned
as of the date first written above.
TOWER AIR, INC.
By: [SIGNATURE APPEARS HERE]
---------------------------------
Title: VP FINANCE
------------------------------
FEIN:
-------------------------------
Revolving Loan Commitments: ▇▇▇▇▇▇ FINANCIAL, INC.
$25,000,000 By: [SIGNATURE APPEARS HERE]
---------------------------------
Title: Vice President
------------------------------