Exhibit 10(11)
AIRCRAFT LOAN AND SECURITY AGREEMENT
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THIS AIRCRAFT LOAN AND SECURITY AGREEMENT (the "Loan Agreement") made and
entered into this 26th day of January, 1996 by and between FINOVA CAPITAL
CORPORATION (formerly GREYHOUND FINANCIAL CORPORATION) (the "Lender"), a
corporation organized and existing under the laws of the State of Delaware, with
its chief executive office and principal place of business at 0000 Xxxxx Xxxxxxx
Xxxxxx, Xxxxxxx, Xxxxxxx 00000 and TOWER AIR, INC. (the "Borrower"), a
corporation organized and existing under the laws of the State of Delaware, with
its chief executive office and principal place of business at Xxxxxx Xx. 00,
Xxxx X. Xxxxxxx Xxxxxxxxxxxxx Xxxxxxx, Xxxxxxx, Xxx Xxxx 00000.
W I T N E S S E T H:
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1. DEFINITIONS.
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1.1 Each of the following terms shall have the respective meaning
ascribed to it in this Paragraph 1.1 (where the context so permits, the
definition of each term used herein shall be equally applicable to the singular
and plural forms thereof):
Act: defined in Paragraph 6.12 hereof.
Agreed Value: shall mean, in the case of a Total Loss of either of the
Aircraft, the fair market value of the aircraft subject to such Total Loss, with
such fair market value determined by an appraiser selected by Lender and
Borrower.
Aircraft: Aircraft I and Aircraft II
Aircraft I: that certain Boeing cargo Aircraft Model 747-100, bearing
FAA Registration No. N613FF and Manufacturer's Serial Number 19647, together
with four Xxxxx & Whitney Engines Model JT9D-7, bearing Manufacturer's Serial
Nos: 662417, 662598, 685945 and 662574, together with any and all attachments,
accessories, improvements and betterments thereto and replacements thereof and
all general intangibles and contract rights, including, but not limited to, all
rents, issues, proceeds, insurance proceeds, properties, revenues and other
income in respect of Aircraft I.
Aircraft II: that certain Boeing cargo Aircraft Model 747-100, bearing FAA
Registration No. N617FF and Manufacturer's Serial Number 19650, together with
four Xxxxx & Xxxxxxx Engines Model JT9D-7, bearing Manufacturer's Serial Nos:
685714, 662362, 663029 and 662867, together with any and all attachments,
accessories, improvements and betterments thereto and replacements thereof and
all general intangibles and contract rights, including, but not limited to, all
rents, issues, proceeds, insurance proceeds, properties, revenues and other
income in respect of Aircraft II.
Acquisition Aircraft I: that certain Boeing passenger Aircraft Model
747-200, bearing FAA Registration No. N511P (to be changed to N620FF) and
Manufacturer's Serial Number _____, together with four Xxxxx & Whitney Engines
Model JT9D-___, bearing Manufacturer's Serial Nos. _____, _____, _____, and
_____ together with any and all attachments, accessories, improvements and
betterments thereto and replacements thereof and all general intangibles and
contract rights, including, but not limited to, all rents, issues, proceeds,
insurance proceeds, properties, revenues and other income in respect of
Acquisition Aircraft I.
Acquisition Aircraft II: that certain Boeing passenger Aircraft Model
747-200, bearing FAA Registration No. N504DC (to be changed to N619FF) and
Manufacturer's Serial Number _____, together with four Xxxxx & Xxxxxxx Engines
Model JT9D-___, bearing Manufacturer's Serial Nos. _____, _____, _____, and
_____ together with any and all attachments, accessories, improvements and
betterments thereto and replacements thereof and all general intangibles and
contract rights, including, but not limited to, all rents, issues, proceeds,
insurance proceeds, properties, revenues and other income in respect of
Acquisition Aircraft II.
Arizona Courts: defined in Paragraph 9.14(a) hereof.
Borrower: above defined.
Business Day: any day other than Saturday, Sunday or other day on which
commercial lenders in Phoenix, Arizona or New York, New York are required or
permitted to close under the laws of the States of Arizona and New York,
respectively.
Certificate of Resolutions: that certain certificate of resolutions of the
board of directors of the Borrower to be delivered by the Borrower to the Lender
in form and substance satisfactory to the Lender.
Documents: collectively, the Loan Agreement, the Mortgage, the Note, the
First Loan Documents, the Third Loan Documents, the Fourth Loan Documents, the
Third Amendment to Third Loan Agreement, the Seventh Amendment to First Loan
Agreement, the First Amendment to Fourth Loan Agreement, the Mortgage Amendments
and the documents, instruments and agreements referred to herein and therein and
to be executed and delivered in connection herewith and therewith.
Due Date(s): defined in the Note.
Engine: each of the engines referred to in the definition of either
Aircraft.
Event of Default: defined in Paragraph 7.1 hereof.
FAA: the Federal Aviation Administration as provided for in the Department
of Transportation Act of 1966, as in effect on the date of this Loan Agreement
and as modified or amended hereafter, or any successor or substituted
governmental authority at the time having jurisdiction over the use, operation,
maintenance and perfection of security interests in the Engines and the
Aircraft.
Fifth Amendment to First Loan Agreement: that certain Fifth Amendment to
Aircraft Loan and Security Agreement dated as of May 28, 1993 by and between
Borrower and Lender.
First Aircraft: that certain Boeing Model Aircraft 747-121, bearing FAA
Registration No. N604FF (formerly N755PA) and Manufacturer's Serial No. 19659,
together with three (3) installed Xxxxx & Whitney Engines Model JT9D-7A, bearing
Manufacturer's Serial Nos. P662561, P685674 and 662387, and one (1) Xxxxx &
Xxxxxxx Engine Model JT9D-7F bearing Manufacturer's Serial No. P662443, together
with any and all attachments, accessories, improvements and betterments thereto
and replacements thereof and all general intangibles and contract rights,
including, but not limited to, all rents, issues, proceeds, insurance proceeds,
properties, revenues and other income in respect of such Aircraft.
First Amendment to Third Priority Aircraft Engine Mortgage (First): that
certain First Amendment to Third Priority Aircraft Engine Mortgage to be entered
into by the Borrower and the Lender.
First Amendment to Fourth Priority Aircraft Mortgage (First): that certain
First Amendment to Fourth Priority Aircraft Mortgage to be entered into by
Borrower and Lender.
First Amendment to Second Priority Aircraft Engine Mortgage (Second): that
certain First Amendment to Second Priority Aircraft Engine Mortgage to be
entered into by Borrower and Lender.
First Amendment to Third Priority Aircraft Engine Mortgage (Second): that
certain First Amendment to Third Priority Aircraft Engine Mortgage to be entered
into by Borrower and Lender.
First Amendment to Second Priority Aircraft Mortgage (Second): that
certain First Amendment to Second Priority Aircraft Mortgage to be entered into
by the Borrower and the Lender.
First Amendment to Third Priority Aircraft Mortgage (Second): that certain
First Amendment to Third Priority Aircraft Mortgage to be entered into by the
Borrower and the Lender.
First Amendment to Third Priority Aircraft Mortgage (First): that certain
First Amendment to Third Priority Aircraft Mortgage to be entered into by the
Borrower and the Lender.
First Amendment to Aircraft Mortgage (Third): that certain First Amendment
to Aircraft Mortgage to be entered into between Borrower and Lender.
First Amendment to First Priority Aircraft Engine Mortgage (Second): that
certain First Amendment to Purchase Money Aircraft Engine Mortgage to be entered
into between Borrower and Lender.
First Amendment to First Priority Aircraft Mortgage (Second): that certain
First Amendment to the Aircraft Mortgage to be entered into between Borrower and
Lender.
First Amendment to Second Priority Aircraft Engine Mortgage (First): that
certain First Amendment to Second Priority Aircraft Engine Mortgage to be
entered into between Borrower and Lender.
Second Amendment to Second Priority Aircraft Mortgage (First): that certain
Second Amendment to Second Priority Aircraft Mortgage to be entered into between
Borrower and Lender.
Second Amendment to First Priority Aircraft Engine Mortgage (First): that
certain Second Amendment to Aircraft Engine Mortgage to be entered into between
Borrower and Lender.
Second Amendment to First Priority Aircraft Engine Mortgage (October 1990):
that certain Second Amendment to Aircraft Engine Mortgage to be entered into
between Lender and Borrower, which amends that certain Aircraft Engine Mortgage
dated October 1, 1990 between Lender and Borrower, as amended by the First
Amendment to Aircraft Engine Mortgage dated July 31, 1991, between Lender and
Borrower.
Second Amendment to First Priority Aircraft Mortgage (First): that certain
Second Amendment to Aircraft Mortgage to be entered into between Borrower and
Lender.
First Amendment to Fourth Priority Aircraft Engine Mortgage (First): that
certain First Amendment to Fourth Priority Aircraft Engine Mortgage to be
entered into by the Borrower and the Lender, in form and substance satisfactory
to the Lender.
First Amendment to First Loan Agreement: that certain First Amendment to
Aircraft Loan and Security Agreement dated as of August 28, 1990 by and between
the Borrower and the Lender.
First Amendment to Fourth Loan Agreement: that certain First Amendment to
Aircraft Loan and Security Agreement to be entered into by and between Borrower
and Lender, in form and substance satisfactory to Lender, which amends the Loan
Agreement referred to in the definition of Fourth Loan Documents.
First Amendment to Third Loan Agreement: that certain First Amendment to
Aircraft and Engine Loan and Security Agreement dated as of May 28, 1993 by and
between Borrower and Lender.
First Engines: one (1) Xxxxx & Whitney Model JT9D-7A engine bearing
Manufacturer's Serial No.P662962CN.
First Loan Documents: collectively, that certain Aircraft Loan and
Security Agreement dated as of August 30, 1988 by and between the Borrower and
the Lender, as amended by the First Amendment to First Loan Agreement, by the
Second Amendment to First Loan Agreement, by the Third Amendment to First Loan
Agreement, by the Fourth Amendment to First Loan Agreement, by the Fifth
Amendment to First Loan Agreement and by the Sixth Amendment to First Loan
Agreement, that certain Aircraft Mortgage dated August 30, 1988, executed and
delivered in connection therewith, that certain USD 12,000,000 promissory note
of the Borrower dated August 30, 1988 payable to the order of the Lender
executed and delivered in connection therewith, that certain Aircraft Engine
Mortgage dated October 1, 1990, as amended by the First Amendment to Aircraft
Engine Mortgage dated as of July 31, 1991, executed and delivered in connection
therewith, and that certain USD 1,750,000 Supplemental Promissory Note of the
Borrower dated October 1, 1990 payable to the order of the Lender executed and
delivered in connection therewith, the Second Priority Aircraft Engine Mortgage
(Second), the Third Priority Aircraft Engine Mortgage (First) and the
Second Priority Aircraft Mortgage (Second).
Fourth Amendment to First Loan Agreement: that certain Fourth Amendment to
Aircraft Loan and Security Agreement dated as of November 5, 1991 by and between
Borrower and Lender.
Fourth Loan Documents: collectively, that certain Aircraft Loan and
Security Agreement dated as of February 15, 1995 by and between Borrower and
Lender, that certain USD12,000,000.00 Promissory Note of the Borrower payable to
the order of the Lender executed and delivered in connection therewith, that
certain Aircraft Mortgage dated February 15, 1995 executed and delivered in
connection therewith, the Fourth Priority Aircraft Mortgage, the Fourth Priority
Aircraft Engine Mortgage, the Third Priority Aircraft Mortgage (Second) and the
Third Priority Aircraft Engine Mortgage (Second).
Fourth Priority Aircraft Mortgage: that certain Fourth Priority Aircraft
Mortgage dated February 15, 1995 made by Borrower on the First Aircraft to and
for the benefit of the Lender.
Fourth Priority Aircraft Engine Mortgage: that certain Fourth Priority
Aircraft Engine Mortgage dated February 15, 1995 made by the Borrower on the
First Engines to and for the benefit of the Lender.
Funding Day: the date to be agreed upon by the Borrower and the Lender and
which shall occur subsequent to the fulfillment of all applicable conditions
precedent set forth in Section 8 hereof, upon which date the Loan shall be
advanced provided that such date shall not be later than January 31, 1996.
GAAP: means generally accepted accounting principles in the United States
of America (as such principles may change from time to time) applied on a
consistent basis (except for changes in application in which Borrower's
independent certified public accountants concur), applied both to classification
of items and amounts.
Impositions: sales, use, excise, gross receipts, value added, personal
property, stamp, documentary taxes, ad valorem taxes, license fees, registration
fees, assessments, fines, penalties and similar charges imposed on the Engines
and all other taxes of whatsoever kind (except federal or state income taxes)
imposed upon the Lender with respect to either Aircraft, the Documents, the
transactions contemplated by the Documents, the Installments and any other
payments of whatsoever kind made under the Documents.
Indemnitees: defined in Paragraph 5.12 hereof.
Installments: defined in the Note.
Lender: above defined.
Loan: USD 20,000,000.00
Loan Agreement: above defined.
Mortgage: that certain Aircraft Mortgage to be made by the Borrower on the
Aircraft to and for the benefit of the Lender in form and substance satisfactory
to the Lender.
Mortgage Amendments:
(i) Second Amendment to First Priority Aircraft Mortgage (First);
(ii) Second Amendment to First Priority Aircraft Engine Mortgage (First);
(iii) First Amendment to First Priority Aircraft Mortgage (Second);
(iv) First Amendment to First Priority Aircraft Engine Mortgage (Second);
(v) First Amendment to Aircraft Mortgage (Third);
(vi) First Amendment to Second Priority Aircraft Engine Mortgage
(Second);
(vii) First Amendment to Third Priority Aircraft Engine Mortgage (First);
(viii) First Amendment to Second Priority Aircraft Mortgage (Second);
(ix) First Amendment to Fourth Priority Aircraft Mortgage (First);
(x) First Amendment to Fourth Priority Aircraft Engine Mortgage (First);
(xi) First Amendment to Third Priority Aircraft Mortgage (Second);
(xii) First Amendment to Third Priority Aircraft Engine Mortgage (Second);
(xiii) Second Amendment to Second Priority Aircraft Engine Mortgage
(First);
(xiv) First Amendment to Third Priority Aircraft Mortgage (First);
(xv) Second Amendment to Second Priority Aircraft Mortgage (First); and
(xvi) Second Amendment to First Priority Aircraft Engine Mortgage (October
1990).
Note: that certain negotiable promissory note to be made and delivered by
the Borrower to the Lender on the Funding Day in the principal amount of the
Loan in form and substance satisfactory to the Lender.
Obligations: each and every obligation, duty, covenant, undertaking and
promise of the Borrower now existing or hereafter arising under the Documents.
Officer's Certificate: that certain certificate to be signed on the
Funding Day by (i) the President or Vice President and (ii) the Treasurer or
Secretary of the Borrower, in form and substance satisfactory to the Lender.
Opinion(s) of Counsel: those opinion(s) to be made and delivered on the
Funding Day by legal counsel (including, without limitation, legal counsel to
the Borrower and special FAA counsel), in form and substance satisfactory to the
Lender.
Overdue Rate: a rate of interest per annum equal to the Interest Rate plus
2%.
Second Aircraft: that certain Boeing Aircraft Model 747-130, bearing FAA
Registration No. N603FF and Manufacturer's Serial No. 19746, together with four
(4) installed Xxxxx & Xxxxxxx Engines Model JT9D-7A, bearing Manufacturer's
Serial Nos. P662756, 662711, 662934 and 662616, together with any and all
attachments, accessories, improvements and betterments thereto and replacements
thereof and all general intangibles and contract rights, including, but not
limited to, all rents, issues,
proceeds, insurance proceeds, properties, revenues and other income in respect
of the Aircraft.
Second Amendment to First Loan Agreement: that certain Second Amendment to
Aircraft Loan and Security Agreement dated as of October 1, 1990 by and between
Borrower and Lender.
Second Amendment to Third Loan Agreement: that certain Second Amendment to
Aircraft and Engine Loan and Security Agreement dated February 15, 1995 by and
between Borrower and Lender, in form and substance satisfactory to Lender.
Second Engines: Three (3) Xxxxx & Whitney Model JT9D-3A engines bearing
Manufacturer's Serial Nos. P662804, P662787, P662821 and one ( 1) Xxxxx and
Xxxxxxx Model JT9D-7A engine bearing Manufacturer's Serial No. P663034.
Second Priority Aircraft Engine Mortgage (First): that certain Second
Priority Aircraft Engine Mortgage dated as of November 7, 1991 on the First
Engines made by Borrower to and for the benefit of Lender.
Second Priority Aircraft Engine Mortgage (Second): that certain Second
Priority Aircraft Engine Mortgage dated May 28, 1993 on the Second Engines made
by the Borrower to and for the benefit of Lender.
Second Priority Aircraft Mortgage (Second): that certain Second Priority
Aircraft Mortgage dated May 28, 1993 by the Borrower on the Second Aircraft to
and for the benefit of the Lender.
Security Interest: an interest, charge, lien, encumbrance, security
interest and claim in and to the Aircraft, securing the payment and performance
of the Obligations.
Sixth Amendment to First Loan Agreement: that certain Sixth Amendment to
Aircraft Loan and Security Agreement dated February 15, 1995 by and between
Borrower and Lender, in form and substance satisfactory to Lender.
Seventh Amendment to First Loan Agreement: that certain Seventh Amendment
to Aircraft Loan and Security Agreement to be entered into by and between
Borrower and Lender, in form and substance satisfactory to Lender.
Tangible Net Worth: shall mean the Net Worth, according to generally
accepted accounting principles, of Borrower less any intangible assets or
deferred loan
costs.
Term: that period of time commencing on the Funding Date to and including
the date 60 months thereafter or, if earlier, the date on which the Obligations
are fully and completely paid and performed, as the case may be.
Third Aircraft: that certain Boeing Aircraft Model 747-124, bearing FAA
Registration No. N602FF and Manufacturer's Serial No. 19734, together with two
(2) Xxxxx & Whitney Engines Model JT9D-7A, bearing Manufacturer's Serial Nos.
P662280CN and P662923CN and two (2) Xxxxx & Xxxxxxx Engines Model JT9D-7,
bearing Manufacturer's Serial Nos. P662890 and P662938, together with any and
all attachments, accessories, improvements and betterments thereto and
replacements thereof and all general intangibles and contract rights, including,
but not limited to, all rents, issues, proceeds, insurance proceeds, properties,
revenues and other income in respect of the Aircraft.
Third Amendment to First Loan Agreement: that certain Third Amendment to
Loan and Security Agreement dated as of July 31, 1991 by and between the
Borrower and the Lender.
Third Amendment to Third Loan Agreement: that certain Third Amendment to
Aircraft and Engine Loan and Security Agreement to be entered into by and
between Borrower and Lender.
Third Loan Documents: collectively, that certain Aircraft and Engine Loan
and Security Agreement dated as of November 5, 1991 by and between Borrower and
Lender, as amended by the First Amendment to Third Loan Agreement and by the
Second Amendment to Third Loan Agreement that certain Aircraft Mortgage dated as
of November 7, 1991 executed and delivered in connection therewith, that certain
USD 12,000,000 Promissory Note [Aircraft] of the Borrower executed and delivered
in connection therewith, that certain Purchase Money Aircraft Engine Mortgage
dated as of March 20, 1992 executed and delivered in connection therewith, that
certain USD 4,000,000 Promissory Note [Engines] of the Borrower executed and
delivered in connection therewith, that certain USD 2,000,000 Promissory Note
[General] of the Borrower executed and delivered in connection therewith, the
Second Priority Aircraft Engine Mortgage (First) and the Third Priority Aircraft
Mortgage (First).
Third Priority Aircraft Engine Mortgage (First): that certain Third
Priority Aircraft Engine Mortgage dated May 28, 1993 made by the Borrower on the
First Engines to and for the benefit of the Lender.
Third Priority Aircraft Engine Mortgage (Second): that certain Third
Priority Aircraft Engine Mortgage dated February 15, 1995 made by the Borrower
on the Second Engines to and for the benefit of the Lender, in form and
substance satisfactory to the Lender.
Third Priority Aircraft Mortgage (First): that certain Third Priority
Aircraft Mortgage dated as of November 7, 1991 by the Borrower on the First
Aircraft to and for the benefit of the Lender.
Third Priority Aircraft Mortgage (Second): that certain Third Priority
Aircraft Mortgage dated February 15, 1995 made by the Borrower on the Second
Aircraft to and for the benefit of the Lender, in form and substance
satisfactory to the Lender.
Total Loss: (i) extensive damage to or destruction of an Aircraft or any
Engine if repair cannot be made or if permanently rendered unfit for normal use
for any reason whatsoever; or (ii) condemnation, requisition of title or use,
confiscation, appropriation, nationalization or deprivation, de facto or de
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jure, by exercise of the power of eminent domain or by any governmental body, or
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otherwise, which continues uninterrupted for a period in excess of 60 days;
provided, however, that at all times during said 60 day period, no other Event
of Default has occurred hereunder and the insurance required to be provided by
the Borrower pursuant to the terms hereof shall not be adversely affected by the
occurrence of any of the events set forth in this clause (ii); or (iii) theft
and such property is unrecovered for an uninterrupted period in excess of 60
days; or (iv) prohibition of use in the ordinary course of the business of
passenger air transportation or grounding as a result of a rule, regulation,
order, directive or other action by the governmental authority (including,
without limitation, legislative, executive, administrative or judicial bodies)
having jurisdiction, which prohibition of use or grounding continues
uninterrupted for a period in excess of 90 days, provided, however, that in the
event the Borrower has undertaken and is pursuing in a diligent manner those
actions necessary to remove such prohibition of use or grounding, then in such
event, same will not constitute a Total Loss (assuming no Event of Default has
occurred) unless such prohibition of use or grounding continues uninterrupted
for a period in excess of 180 days. Notwithstanding anything set forth in this
clause (iv) to the contrary, if a prohibition of use or grounding of the
Aircraft occurs due to a prohibition of use or grounding of all aircraft of the
same make and model as the Aircraft then, in such event, a Total Loss shall not
be deemed to have occurred provided, however, that no Event of Default has
occurred or with notice or passage of time would occur, that the insurance
required to be provided pursuant hereto shall not be adversely affected and, in
all events, such prohibition of use or grounding does not continue uninterrupted
for a period in excess of 120 days from the commencement of the prohibition or
grounding, unless the Borrower has undertaken and is pursuing, in a diligent
manner, those actions necessary to remove such prohibition of use or grounding
provided, that in all events, such prohibition of use or grounding does not
continue uninterrupted for a period in excess of 270 days
from the commencement date of the prohibition or grounding. With respect to any
period of time set forth in this clause (iv) as to when a Total Loss shall be
deemed to have occurred, the Borrower agrees that in the event the Borrower has
entered into any loan or leasing agreement with respect to any other aircraft or
engines, as the case may be, owned or leased by the Borrower and which provides
with respect to the events mentioned in this clause (iv) for a shorter period of
time to have passed before a Total Loss will be deemed to have occurred, then,
in such event, the Borrower agrees that such shorter period of time shall apply
with respect to this Loan Agreement as to when a Total Loss shall be deemed to
have occurred. A Total Loss with respect to an Airframe shall be deemed a Total
Loss with respect to the related Aircraft.
Unpaid Amount: a stipulated sum of money equal to the aggregate of: (i)
the outstanding principal balance of the Loan as of the day the "Unpaid Amount"
is declared due and payable; plus (ii) all accrued and unpaid interest as of the
day the "Unpaid Amount" is declared due and payable; plus (iii) all other sums
of whatever nature due and unpaid as of the day the "Unpaid Amount" is declared
due and payable; plus (iv) interest at the Overdue Rate on those amounts set
forth in clauses (i), (ii) and (iii), commencing on the day the "Unpaid Amount"
is declared due and payable to and including the day(s) of payment thereof in
full.
USD: lawful currency of the United States of America.
1.2 It is the intention of the parties hereto to use herein such
definitions, descriptions and terms for and specifications of the Aircraft as
are necessary and/or desirable in accordance with the practice and procedure of
any governmental entity having jurisdiction to record and/or file mortgages on
the Aircraft and in order to accomplish such goal the parties hereto agree that
should redefinition and/or redescription of the terms for and specifications of
the Aircraft from time to time be necessary and/or desirable to facilitate such
recordation and/or filing, the parties hereto shall make such redefinition
and/or redescription of the terms for and specifications of the Aircraft as
shall be necessary and/or desirable together with such re-filings, re-
recordations and/or new or additional filings as shall be necessary and/or
desirable to protect and preserve the interest of the Lender hereunder;
provided, however, that such redefinition and/or redescription of the terms for
and specifications of the Aircraft and/or such re-filings, re-recordations
and/or new or additional filings shall not in any manner whatsoever change or
alter the respective and substantive powers, privileges, remedies and rights of
the parties hereto.
2. LOAN AND NOTES.
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2.1 (i) The Lender hereby agrees to lend to the Borrower and the Borrower
hereby agrees to borrow from the Lender the Loan in accordance with the terms
and conditions of this Loan Agreement.
(ii) The Loan shall be used to finance the acquisition of the Acquisition
Aircraft I and Acquisition Aircraft II.
2.2 On the Funding Date the Lender shall apply a portion of the Loan in
the amount of the fee referred to in Paragraph 9.18 hereof to the payment of
such fee and disburse the remainder of the Loan directly to Borrower, and the
disbursement thereof shall be evidenced and secured by the execution and
delivery by the Borrower on or prior to the Funding Date to the Lender of the
Documents as set forth in this Loan Agreement. The Loan shall be disbursed in
such a manner as to ensure the fulfillment of the conditions precedent as set
forth in Section 8 hereof and elsewhere in this Loan Agreement and the other
Documents and the disbursement thereof shall be directed in writing by Borrower
and approved by Lender.
2.3 The Borrower agrees to duly and punctually pay, or cause to be duly
and punctually paid, all amounts due and owing by the Borrower under the
Documents at the times and places and in the manner specified herein and therein
according to the terms hereof and thereof. If any Installment or any other
payment of whatsoever kind due under the Documents is not paid when due, an
additional fee for late payment shall be payable thereon at a rate of interest
equal to the Overdue Rate from the Due Date(s) and due date(s), respectively,
thereof to and including the earlier to occur of (i) the date(s) of payment in
full of such overdue Installment or other payment or (ii) the day the Unpaid
Amount is declared due and payable, in which event, interest shall be due
thereon at the Overdue Rate as is more particularly set forth in the Note. This
provision, or reliance thereon by the Lender, shall not be deemed a waiver of
any Event of Default.
2.4 (a) Interest shall accrue on the unpaid principal amount of the Loan
at a fixed rate per annum ("Interest Rate") of 4.07% above the yield to maturity
of that issue of U.S. Treasury notes maturing in February, 2001 with the highest
yield, as published in The Wall Street Journal three Banking Days preceding the
Funding Day, or, if such publication shall be suspended or terminated or such
yield shall otherwise not be so published for such Banking Day, on the basis of
such yield reported by dealers of U.S. Treasury notes to and published by the
Federal Reserve Bank of New York or, if such publication shall be suspended or
terminated, on the basis of quotations of such yield received by the Lender from
three New York dealers of U.S. Treasury notes of recognized standing selected by
the Lender, calculated on a 360 day year based on the actual number of days
elapsed. Interest shall be payable monthly on each Due Date, and whenever else
principal is due and payable hereunder.
(b) The unpaid principal amount of the Loan together with any unpaid
accrued interest thereon and all other amounts owing hereunder shall be repaid
by
the Borrower in full on January 26, 2001.
2.5 The Borrower's obligation to pay all interest, the principal and
all other payments of whatsoever kind under the Documents shall be absolute and
unconditional under any and all circumstances of whatever kind and shall not be
affected by any circumstance of any character, including, but not limited to,
(a) any set-off, counterclaim, recoupment, abatement, demand, deduction, defense
or any other circumstance of whatsoever kind which the Borrower may have against
the Lender, its successors and assigns, or anyone else for any reason
whatsoever, (b) any defect in the title, airworthiness, merchantability,
condition, design, operation or fitness for use of the Aircraft, (c) any damage
to or loss or destruction of the Aircraft, (d) any interruption or cessation in
the use or possession of the Aircraft, by the Borrower or by anyone entitled to
use or possess the same for any reason whatsoever and (e) any insolvency,
bankruptcy, reorganization or similar proceedings by or against the Borrower or
any third party whomsoever.
2.6 All Installments and any and all other payments of whatsoever kind
due under the Documents shall be paid without notice (except as otherwise
expressly provided herein). Each payment shall be final and the Borrower will
not seek to recover all or any part of such payment from the Lender or from
whosoever may be entitled thereto, for any reason whatsoever.
2.7 The Lender shall open and maintain on its books a loan account in
the Borrower's name showing the repayment of the Loan and other amounts due and
paid under the Documents. Such loan account shall be conclusive and binding on
the Borrower and any third party whosoever claiming through or by way of the
Borrower as to the amount at any time due to the Lender in respect of the
Obligations, except in the case of error in computation or willful
misrepresentation by the Lender.
2.8 Except where due to the negligence or willful misconduct of the
Lender, all Installments and other payments of whatever kind to be made by the
Borrower shall be free of expense to the Lender with respect to the amount of
any Impositions (all of which Impositions the Borrower assumes and agrees to pay
on demand in addition to the other payments to be made by the Borrower as
provided for in the Documents).
3. PREPAYMENT.
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3.1 There shall be no prepayment of the Notes or the Loan either in
whole or in part except as set fborth in Paragraphs 3.2, and 3.3 hereof.
3.2 Provided no Event of Default shall have occurred and be
continuing, the Borrower shall be entitled to prepay all, but not less than all,
of the Loan at any time
by providing Lender with not less than thirty (30) days' prior written notice of
Borrower's intention to prepay, which notice will specify the date of
prepayment. Any prepayment, whether voluntary or involuntary (including,
without limitation, as a result of a Total Loss of Aircraft II) shall, subject
to Paragraph 3.3 hereof, be made together with: (i) accrued interest on the
amount of such prepayment through the date of such prepayment, (ii) a prepayment
fee equal to the following percentage of the principal amount of the Loan: (A)
if such prepayment is made on or prior to the first year anniversary of the
Funding Day, 4% of such principal amount; (B) if such prepayment is made after
the first year anniversary and on or prior to the second year anniversary of the
Funding Day, 3% of such principal amount; (C) if such prepayment is made after
the second year anniversary and on or prior to the third year anniversary of the
Funding Day, 2% of such principal amount; and (D) if such prepayment is made
after the third year anniversary and on or prior to the fourth year anniversary
of the Funding Day, 1% of such principal amount ; and (iii) all other sums due
and owing hereunder. No prepayment fee with respect to the Loan shall be
payable if any prepayment is made after the fourth year anniversary of the
Funding Day. No prepayment fee shall be payable if any prepayment is made as a
result of Borrower's refinancing this Loan with Lender.
3.3 Notwithstanding anything to the contrary in Paragraph 3.2, above,
in the event of a Total Loss with respect to either Aircraft, the Borrower shall
pay to Lender the amount of insurance proceeds paid with respect to such Total
Loss upon its receipt of such proceeds or, if no such proceeds have been
received within 120 days after the occurrence of such Total Loss, the Agreed
Value no later than 120 days after such occurrence. If Borrower receives such
proceeds later than 120 days after such occurrence, Borrower shall, promptly
upon its receipt of such proceeds, pay to Lender the amount of such proceeds,
less the amount of Agreed Value previously paid. Lender shall apply the amount
of the Agreed Value, or, subject to Borrower's right to replace an engine or
aircraft pursuant to the provisions of paragraph 5.4 hereof, the proceeds of
such insurance, as a prepayment of the Unpaid Amount under this Loan Agreement.
4. SECURITY.
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4.1 To secure payment of the Note and the full and complete
performance of the Obligations, the Borrower hereby grants and conveys to the
Lender a Security Interest in and to the Aircraft, all original books, records,
logs and other material pertaining to the use, operation and maintenance of the
Aircraft, and all the estate, right, title and interest of every nature
whatsoever of the Borrower at law or in equity in and to the Aircraft, and every
part and parcel thereof. Title to or a lien upon all property in which a
Security Interest is granted hereby, or is intended to be, and which is
hereafter acquired by the Borrower or to which the Borrower may at any time
hereafter be, in any manner, entitled at law or in equity, and required to be
subjected hereto or intended so to be, shall vest in the Lender, under the terms
and conditions of this Loan
Agreement, forthwith upon acquisition thereof by the Borrower, and such property
shall be as fully embraced within the Security Interest granted by and pursuant
to this Loan Agreement and subject to the lien hereof as if such property were
now owned by the Borrower and were specifically described herein and a Security
Interest granted hereby.
4.2 The Documents and any or all agreements, documents and instruments
pertaining to the Aircraft, or counterparts or copies or other evidence hereof
or thereof may be filed or recorded in any public office of any jurisdiction as
may be necessary or appropriate to protect the perfection and/or existence of
the Lender's Security Interest in and to the Aircraft. Borrower hereby agrees
and covenants to execute and file such agreements, documents and instruments,
including, without limitation, Uniform Commercial Code financing statements,
with respect to agreements, documents and instruments previously executed and/or
filed relating to the Security Interest and interests created under the
Documents as shall from time to time be specified by the Lender.
4.3 The Borrower will not nor will the Borrower attempt to, nor will
the Borrower authorize, suffer or permit a third party to either assign, pledge,
mortgage, lease, hypothecate, encumber, sell or otherwise dispose of either
Aircraft. Notwithstanding the foregoing, nothing herein contained shall be
deemed to prohibit the Borrower from "wet leasing" either Aircraft. The Borrower
shall not "dry lease" either Aircraft, without the Lender's prior written
consent, which consent shall not be unreasonably withheld; except, that the
Borrower shall not dry lease either Aircraft, without the Lender's prior written
consent, which consent may be withheld in the Lender's sole and absolute
discretion, if said dry lease is for a term of more than six months or is to a
non-FAR Part 121 U.S. air carrier.
4.4 (a) The Borrower will not suffer or permit to be incurred any
liens, security interests, charges, claims or encumbrances of whatsoever nature
or kind on or in and to the Aircraft, or permit the Aircraft, to be subjected to
any unpaid charges whatsoever. The Borrower will defend the Aircraft, and its
interests therein against the claims and demands of all parties other than the
Lender. The Borrower shall notify the Lender in writing within 5 days of its
acquisition of knowledge thereof that a lien, security interest, charge, claim
or encumbrance of whatsoever kind has attached to or been asserted against the
Aircraft.
(b) (i) The Borrower shall have the right to contest by
appropriate proceedings duly instituted and diligently prosecuted or defended,
as applicable, without cost or expense to the Lender, the validity of any lien,
security interest, charge, claim or encumbrance of whatsoever nature referred to
in Paragraph 4.4(a) hereof or any law, ordinances or regulation the nature of
which it deems harmful to either Aircraft. However, for claims in excess of
USD 150,000 the Borrower shall upon commencing
such contest furnish to the Lender a bond, guarantee or other document
satisfactory to the Lender, in the Lender's reasonable discretion, guaranteeing
that the Lender's interest in and to such Aircraft, shall be held harmless from
any penalty, damage, charge, claim or adverse judgment of whatsoever kind
resulting from such contest; and provided that the Borrower shall diligently
prosecute such contest, and maintain in force any required bond, guarantee or
other document, no Event of Default as set forth in Paragraph 7.1(g) or
otherwise shall be deemed to occur with respect to any such lien, security
interest, charge, claim or encumbrance.
(ii) The Borrower hereby irrevocably assigns, transfers and sets
over to the Lender all of its rights to any award or payment on account of any
confiscation of either Aircraft, and irrevocably authorizes and empowers the
Lender, in the name of the Borrower or otherwise, to file and prosecute what
would otherwise be the Borrower's claim for any such award or payment and to
collect, receipt for and retain the same. The Borrower will pay all costs, fees
and expenses incurred by the Lender in connection with any expropriation or
confiscation and seeking and obtaining any award or payment on account thereof.
Any monies received by the Lender under this Paragraph 4.4(b)(ii) shall be
applied by the Lender in the following order: (A) to the payment of all
reasonable out-of-pocket costs and expenses incurred in the collection of said
balance; then (B) to the payment of the Unpaid Amount; then (C) to the payment
of any other of the Borrower's Obligations due; then (D) any remainder shall be
paid to the Borrower.
(c) Nothing contained in this Paragraph 4.4 or elsewhere in the
Documents is intended to prohibit either Aircraft, from being subject to liens,
security interests, charges, claims or encumbrances of whatever nature that
arise in the normal course of the Borrower's business nor provide for the
posting by the Borrower of a bond, guarantee or other document, provided,
however, that such liens and encumbrances are cleared up in a reasonable period
of time and do not involve any material danger of the sale, forfeiture or loss
of such Aircraft, and do not adversely affect the Lender's rights in and to such
Aircraft, or any of the Lender's remedies with respect thereto and further
provided that the Borrower shall have set aside on its books reserves to the
extent required by generally accepted accounting principles, and adequate with
respect thereto.
4.5 The Borrower at its expense shall comply with and satisfy all the
provisions of all applicable laws as amended from time to time, and shall
establish and maintain the Mortgage as a first priority and perfected senior
lien and Security Interest on the Aircraft, under the laws of the United States
of America and the State of Arizona, including, without limitation, the Act.
The Borrower shall perform all acts and execute all instruments necessary or
required by the Lender in order to permit the immediate registration and
recordation of the Mortgage, and the Mortgage Amendments at the FAA and the
filing of Uniform Commercial Code financing statements in Queens County, New
York and with the Secretary of State of the State of New York. The Borrower
shall
furnish to the Lender from time to time such proof as the Lender may reasonably
request with respect to the Borrower's compliance with the foregoing. Without
limiting the foregoing, the Borrower shall do or cause to be done, at its own
cost and expense, any and all acts and things which may be required under the
terms of the Convention for the International Recognition of Rights in Aircraft,
signed (ad referendum) at Geneva, Switzerland, on June 19, 1948, to perfect and
preserve title to the Aircraft, within the jurisdiction of any signatory state
which has ratified said Convention and the territory of which the Borrower may
operate the Aircraft. The Borrower shall also do or cause to be done, at its
own cost and expense, everything which may be required under the terms of any
other agreement, treaty, convention, pact or by a practice, custom, or
understanding involving any state in which the Borrower may operate the
Aircraft, or any and all acts and things which the Lender may reasonably
request, to perfect and preserve the rights of the Lender under the Mortgage in
and to the Aircraft, within the jurisdiction of any such state.
5. COVENANTS.
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5.1 Except as otherwise provided in the Documents, the Borrower shall
until the occurrence of an Event of Default remain in possession of the
Aircraft, and the Lender shall not interfere with the (a) possession, enjoyment,
use and control of the Aircraft, nor (b) rents, earnings, surplus, profits,
revenues and income therefrom, except as otherwise set forth herein.
5.2 [Intentionally Omitted]
5.3 The Borrower will maintain and deliver evidence to the Lender of
such insurance on the Aircraft, required by, written by insurers and in amounts
and forms satisfactory to, the Lender.
5.4 (a) In the event of any payment made to the Borrower by an insurer
in connection with either Aircraft pursuant to a claim by the Borrower, the
Borrower shall submit to the Lender for approval a proposal for the use of such
insurance proceeds. Notwithstanding the foregoing, subject to subparagraph
5.4(b) below, the Lender may in its sole discretion, apply such sum to the
satisfaction of the Obligations and to the extent not so applied shall be paid
over to the Borrower.
(b) Upon the occurrence of a Total Loss with respect to either of
the Aircraft, Borrower shall give Lender prompt (and in any event within 15 days
after such occurrence) written notice thereof. If as a result of the Total Loss,
the Borrower or Lender shall be entitled to receive insurance proceeds under the
insurance policies required to be maintained by the Borrower pursuant to the
terms hereof, Borrower, at its option, may acquire, within 120 days after the
occurrence of such Total Loss a
replacement aircraft or engine with all or part of such insurance proceeds and
Lender shall apply proceeds held by it to such acquisition, provided, however,
that such replacement aircraft or engine shall have a value and utility at least
equal to, and being in as good operating condition as, the engine or aircraft
with respect to which such Total Loss occurred (assuming such engine or aircraft
was of the value and utility and in the condition and repair required by the
terms of this Loan Agreement immediately prior to the occurrence of such Total
Loss). In the event Borrower elects to acquire a replacement aircraft or engine
Borrower shall deliver to Lender: (i) at least 60 days prior to the acquisition
of a replacement engine or aircraft, notice stating the type of replacement
engine or aircraft; (ii) at least twenty days prior to the acquisition of such
replacement aircraft or engine, a written appraisal rendered by an independent
appraiser reasonably acceptable to Lender; (iii) a duly executed supplement
hereto and a supplement to each of the Documents pursuant to which the Lender
was granted a security interest in such engine or aircraft that was the subject
of the Total Loss; (iv) an opinion of the Borrower's counsel, satisfactory to
Lender, in form and substance satisfactory to Lender, to the effect that such
replacement engine or aircraft is free and clear of all liens, encumbrances and
rights of others and that the Lender has a perfected security interest therein,
(v) an officers' certificate certifying to the continued truth of all
representatives and warranties and that no Event of Default then exists and (vi)
Uniform Commercial Code financing statements covering such replacement engine or
aircraft. Borrower shall also take such other action and furnish such other
documents as Lender may reasonably request.
5.5 Except as expressly permitted in Paragraph 5.7(g) hereof, Borrower
shall not permit either Aircraft during the term hereof to be operated in any
manner contrary to any international treaties, conventions or statutes, rules or
regulations of the FAA or of any other country with jurisdiction or any
department or agency thereof, and Borrower covenants that the Aircraft will at
all times comply with the foregoing and the Aircraft shall have on board as and
when required thereby valid certificates showing compliance therewith.
5.6 (a) At all times during the term hereof, except as may be required
for normal maintenance, service, repair and overhaul, and except as otherwise
provided in this Loan Agreement, the Borrower will cause each Aircraft to be in
as good operating condition as at the time of funding, ordinary wear and tear
excepted, and will meet the standards of the FAA and any other governmental
authority having jurisdiction thereof, regardless of on whom such requirements
are, by their terms, nominally imposed, will meet the manufacturers' standards
and will be able to engage in scheduled operations. An Event of Default shall
not be deemed to occur by virtue of maintaining, servicing, repairing or
overhauling the Aircraft while the Borrower is diligently performing the same.
(b) The Borrower shall (i) comply with all applicable mandatory
service, maintenance, repair and overhaul regulations, directives and
instructions, manuals and service bulletins of the FAA and of the manufacturers
of the Aircraft and all parts thereof including, without limitation, regulations
requiring the Aircraft to comply with, or be operated in accordance with, Stage
3 requirements; (ii) accurately maintain in the English language all records,
logs and other materials required by the FAA to be maintained in respect of the
Aircraft regardless of on whom such requirements are, by their terms, nominally
imposed; (iii) take all steps necessary which are within its power to assure
that the Aircraft remains certified by the FAA with appropriate airworthiness
certificates; (iv) comply with all laws, rules, regulations and orders of
applicable jurisdictions (domestic or foreign) and with all rules of the FAA
(including, but not limited to, the regulations set forth in FAR Part 121) and
any other legislative, executive, administrative or judicial body exercising any
power or jurisdiction over the Aircraft and in the event that such laws or rules
require the alteration of the Aircraft, the Borrower shall conform or obtain
conformance therewith at no expense to the Lender and will maintain the Aircraft
and each part thereof in proper condition for operation under such laws and
rules provided that no technical or nonsubstantial noncompliance with the
provisions of this Paragraph shall be deemed a breach thereof if the Borrower
shall have obtained in writing from the appropriate authorities permissions,
extensions or continuances to perform any and all requirements or conditions set
forth therein. In operating the Aircraft for hire or otherwise, the Borrower
shall at all times comply with all laws, rules, regulations and orders of
applicable jurisdictions (domestic or foreign) and with all rules, regulations
and orders of the FAA and any other legislative, executive, administrative or
judicial body, exercising any power or jurisdiction over the Aircraft.
(c) In addition to and not in limitation of the foregoing
requirements regarding the maintenance, use and operation of the Aircraft by the
Borrower, the Borrower shall service, repair, maintain and overhaul the Aircraft
in accordance with an FAA approved maintenance program acceptable to the Lender.
The Borrower shall submit to the Lender for the Lender's approval, details of
the maintenance program for the Aircraft.
(d) The Borrower shall furnish to Lender a copy of the Form 337
and the current life-limited parts summary relating to the four engines
undergoing maintenance on the Funding Day under the maintenance schedule
referred to in Section 8.1(t) hereof, within 30 days after the completion of the
maintenance on such engines.
5.7 (a) The Borrower shall promptly replace all appliances, parts,
instruments, accessories and other equipment, of whatever nature, which may from
time to time be incorporated or installed in or attached to the Aircraft
(including, without limitation, any engine constituting part of the Aircraft)
and which may from time to time become worn out, lost, stolen, destroyed,
seized, confiscated, damaged beyond repair, in any way rendered unfit for use or
unserviceable. The Borrower shall also replace any
item of equipment installed on the Aircraft where necessary in the normal course
of the Borrower's maintenance program. All such replacement parts or items of
equipment shall be of at least equal utility, value and condition as the part or
item of equipment so replaced and in the same or better serviceable condition by
standards of the FAA as the unit so retired or rendered unfit for use assuming
such replaced property was maintained in accordance with the provisions hereof,
and shall be free and clear of all liens, charges, claims, encumbrances and
rights of others, except for the Security Interest to be granted by the Borrower
to the Lender in such replacement parts or items of equipment. In the case of
the replacement of an engine constituting part of the Aircraft, the replacement
engine shall be of the same type and model as such engine or shall be an
improved or advanced version thereof then operated on other aircraft of the same
make and same model and Borrower will, with respect to replacement engines,
execute and deliver to the Lender a Supplemental Chattel Mortgage and Form UCC-3
and such other documents as may be necessary to accord the Lender a first
priority lien under the security agreement with respect thereto. The Borrower
may remove accessories, equipment or parts from the Aircraft provided, however,
that such equipment or parts are promptly replaced by the Borrower with
equipment or parts in as good condition and value as the equipment or parts so
removed and, further provided, that (i) an Event of Default has not occurred nor
an event has occurred that with the giving of notice or passage of time, or
both, would become an Event of Default, (ii) the equipment to be removed is not
required by the FAA or any other governmental authority exercising jurisdiction
in respect of the Aircraft and (iii) the removal of the accessories, equipment
or parts will not interfere with or reduce the usefulness of the Aircraft in
regard to its intended use as of the date hereof. Any accessories, equipment or
parts added to the Aircraft by the Borrower may be removed by the Borrower,
provided, however, that: (x) such accessories, equipment or parts have not
replaced other accessories, equipment or parts on the Aircraft or (y) such
accessories, equipment or parts are not required by the FAA or any other
legislative, executive, administrative or judicial body exercising any power or
jurisdiction over the Aircraft or (z) such accessories, equipment or parts are
not otherwise required by the Loan Agreement.
(b) Any accessories, equipment or parts so installed on, incorporated in,
or attached to the Aircraft in replacement of any item of equipment or existing
parts and accessories, and any accessories, equipment or parts so installed,
incorporated or attached which are in addition to existing accessories,
equipment or parts and which are essential or required by the FAA or any other
governmental authority having jurisdiction thereof to the Aircraft will be
considered accessions to the Aircraft and/or the engines installed thereon,
provided, however, that any such engine or any item of equipment which shall
have been replaced by other engines, accessories, equipment or parts of at least
equal value installed on, incorporated in or attached to the Aircraft shall be
released from the lien of the Mortgage at such time as replacement has been
completed.
(c) The Borrower shall promptly report to the Lender all replacements made
having a cost in excess of USD 250,000 and made pursuant hereto and submit
satisfactory evidence of compliance with the terms of this Loan Agreement with
respect thereto, and if it is necessary or advisable that this Loan Agreement be
amended or supplemented from time to time to protect the interest of the Lender
with respect thereto, the Lender and the Borrower shall do so.
(d) The Borrower shall not make any alterations in and to the Aircraft or
any part thereof which adversely affects the value or utility of the Aircraft
except as necessary for compliance with the provisions hereof.
(e) The Lender shall bear no liability whatsoever for the cost of
modifications to the Aircraft or any part thereof, whether in the event of
grounding, suspension of certifications or for any other cause.
(f) Borrower will not operate the Aircraft or suffer the Aircraft to be
operated except by pilots who are, at the time of operation, certified by the
FAA for the operation of the Aircraft and meeting the requirements of any
insurance policy in effect with respect to such Aircraft.
(g) The Aircraft shall not be used for any military operation or maneuver.
Notwithstanding the foregoing or any other provision of this Agreement to the
contrary (including, without limitation, the provisions of Paragraph 5.5
hereof), Borrower shall be permitted to operate the Aircraft in connection with
its present and future Air Mobility Command ("AMC") charter contracts with the
United States Department of Defense ("Department of Defense") and to place the
Aircraft in the Civil Reserve Air Fleet program ("CRAF"). If the Aircraft is
placed by Borrower in the CRAF and the CRAF is activated by the Department of
Defense during the Term ("CRAF Activation Period"), Borrower shall nevertheless
be obligated to retain control of the Aircraft. Lender agrees to accept
indemnification by the United States Government in lieu of the insurance
required pursuant to Paragraph 5.3 hereof during the Term if Borrower is unable
to provide such insurance required pursuant to Paragraph 5.3 provided, however,
that such indemnification shall provide substantially similar coverage as the
insurance required pursuant to Paragraph 5.3 and Lender shall have received
evidence of such indemnification reasonably satisfactory to Lender. Lender
agrees that the failure of Borrower to provide the insurance required pursuant
to Paragraph 5.3 during the Term shall not be an Event of Default hereunder so
long as such indemnification is in effect. Borrower may transfer possession of
the Aircraft to the Department of Defense during the CRAF Activation Period if
required to do so by the terms of the CRAF program, provided, however, that
Borrower will not volunteer the Aircraft for any CRAF activation without the
express prior written consent of Lender. In addition, Lender agrees to notify
the Commander, Air Mobility Command, Xxxxx Air Force Base, Illinois 62225-5001
in
the event that default of this Agreement is contemplated by Lender. All other
terms and provisions of this Agreement shall continue in full force and effect
during any CRAF Activation Period and until such time as Borrower has discharged
all its obligations under this Agreement.
5.8 The Borrower will plainly, distinctly and conspicuously place and
leave in the cockpit of each Aircraft and upon such other place as may
reasonably be designated by the Lender from time to time, a plate, insignia or
other identification bearing the name of the Borrower and the Lender and
identifying them as "Owner" and "Mortgagee", as applicable, in letters of a size
reasonable under the circumstances and acceptable to the Lender.
5.9 (a) Until the Borrower has fully and completely performed and paid
all of the Obligations, the Borrower shall furnish or cause to be furnished to
the Lender, as soon as the same are available, and in any event within 120 days
after the end of each fiscal year, a copy of the Borrower's current annual
audited financial statements. Such financial statements shall contain a balance
sheet as of the end of such fiscal year and statements of income and of changes
in cash flows for such fiscal year (together, in each case, with the comparable
figures for the same period during the immediately preceding fiscal year), all
in reasonable detail, prepared in accordance with generally accepted accounting
principles applied on a basis consistently maintained throughout the period
involved and with prior periods and certified to by a recognized firm of
independent certified public accountants satisfactory to Lender. Together with
such annual financial statements, the Borrower will deliver to the Lender (i) a
certificate from the accountants who audited such statements stating that in
making the examination necessary for the audit of such financial statements they
obtained no knowledge of any default by the Borrower in the full and complete
payment and performance of the Obligations, or if they shall have obtained
knowledge of any such default, specifying the same; and (ii) an officer's
certificate stating that there exists no Event of Default and no condition,
event or act which, with notice or lapse of time or both would become an Event
of Default or, if any such Event of Default or any such condition, event or act
exists, specifying the nature and period of existence thereof and what action
the Borrower proposes to take with respect thereto. The Borrower shall also
furnish from time to time, such additional financial and other information as
the Lender may reasonably request.
(b) Until the Borrower has fully and completely performed and paid all of
the Obligations, the Borrower shall furnish or cause to be furnished to the
Lender, as soon as the same are available, and in any event within 45 days after
the end of each quarter during each fiscal year, a copy of the Borrower's
current quarterly financial statements. Such financial statements shall contain
a balance sheet as of the end of such quarter and statements of income and of
changes in cash flows for such quarter
(together, in each case, with the comparable figures for the same quarter during
the immediately preceding fiscal year), all in reasonable detail. Together with
such quarterly financial statements, the Borrower will deliver to the Lender a
certificate of the chief financial officer of the Borrower stating that there
exists no Event of Default and no condition, event or act which, with notice or
lapse of time or both would become an Event of Default or, if any such Event of
Default or any such condition, event or act exists, specifying the nature and
period of existence thereof and what action the Borrower proposes to take with
respect thereto.
(c) The Borrower shall promptly give notice to the Lender of (i) any
substantial dispute with respect to taxes or any other matter in connection with
the Aircraft or which might in any way interfere with the normal use and
operation thereof, or (ii) any substantial labor dispute threatening the
continued normal operations of the Borrower.
(d) The Borrower will at any and all times, on reasonable notice and
request of the Lender, permit the Lender or its representatives to inspect the
Aircraft and the records, reports, books of accounts, logs and other papers of
the Borrower relating to the Aircraft and the business operations of the
Borrower and to make copies and take extracts therefrom and will afford and
procure a reasonable opportunity to make any such inspections and will furnish
the Lender with any and all other information as the Lender may reasonably
request with respect to the Aircraft including information concerning the
location, condition, use and operation of the Aircraft. Such inspections shall
take place on dates, times and places mutually convenient to the Borrower and
the Lender and so as not to unreasonably interfere with the normal business
operations of the Borrower. The annual inspection of the Aircraft and any other
inspection made by the Lender in addition to the annual inspection (other than
in connection with the exercise of its rights after the occurrence of an Event
of Default) shall be at the Lender's sole cost and expense. Nothing contained
in the immediately preceding sentence shall be construed in any way to limit the
number of inspections the Lender may make of the Aircraft. Borrower shall also
provide Lender with not less than 60 days' prior written notice as to the time
and location of all "C" and "D" checks to be performed on the Aircraft. The
Lender shall have no duty to make any such inspections and shall not incur any
liability or obligation or be deemed to have waived any rights by reason of not
making any such inspection.
(e) The Borrower shall provide the Lender with the following information
within 30 days after the end of each year and at the following times upon
Lender's request: (i) at any time after the occurrence of an Event of Default,
or (ii) otherwise, no more frequently than once every quarter:
(i) the current location of each Engine (in the event that an
Engine is attached to another aircraft, Borrower shall provide Lender with
information identifying such aircraft and if such aircraft is subject to a
lease, Borrower shall inform Lender of the name and address of the lessee
thereunder and the term of such lease and such other information as is
reasonably requested by Lender regarding the location of such Engine);
(ii) the total number of hours and cycles with respect to the
Aircraft and each Engine;
(iii) the number of hours remaining on the airframe of the Aircraft,
until the next required or scheduled "C" Check; and
(iv) the number of engine cycles remaining with respect to each
Engine prior to the next scheduled removal for maintenance of such Engine from
any aircraft;
5.10 If the Borrower shall fail to perform any of its covenants in the
Documents, including, without limitation, its covenant set forth in Paragraph
5.3 hereof to maintain insurance, the Lender may, in its sole and exclusive
discretion, at any time and from time to time, make advances to effect
performance of such covenant on behalf of the Borrower, including, with respect
to such insurance, to purchase such insurance, and all moneys so advanced by the
Lender, together with interest thereon at the Overdue Rate, shall be repaid by
the Borrower on demand, but no such advance shall constitute a waiver by the
Lender of or relieve the Borrower from any Event of Default.
5.11 Nothing contained in the Documents shall constitute any consent or
request by the Lender, express or implied, for the performance of any labor or
services or the furnishing of any materials or other property in respect of the
Aircraft or any part thereof, nor as giving the Borrower any right, power or
authority to contract for or permit the performance of any labor or services or
the furnishing of any materials or other property in such a fashion as would
permit the making of any claim against the Lender in respect thereof or any
claim that any lien based on the performance of such labor or services or the
furnishing of any such materials or other property is superior to the Security
Interest herein granted in and to the Aircraft in favor of the Lender.
5.12 The Borrower hereby agrees to (a) indemnify, reimburse and save
harmless the Lender, its successors, assigns, shareholders (including corporate
shareholders) directors, officers, employees, agents and servants of the
foregoing (collectively, the "Indemnitees") from and against any and all
liability, loss, damages, costs and expenses which the Lender or the Indemnitees
may hereafter incur, suffer or be required to pay by reason of all manner of
action and actions, cause and causes of action, suits, debts, sums of money,
reckonings, controversies, suits, judgments, claims and
demands howsoever arising and resulting from or growing out of the management,
control, condition, use, operation, destruction, damage, repossession, storage,
surrender, sale or other disposition of the Aircraft (whether or not the
Borrower is in possession of the Aircraft), or otherwise from this transaction
and (b) waive and release the Indemnitees from any and all action and actions,
cause and causes of action, reckonings, controversies, claims and demands
howsoever arising and resulting from or growing out of the management, control,
condition, use, operation, destruction, damage, repossession, storage,
surrender, sale or other disposition of the Aircraft (whether or not the
Borrower is in possession of the Aircraft or the Engines) or otherwise from this
transaction. This indemnification shall not cover liability, loss, damage, cost
or expense which is proximately caused solely by the negligence or willful
misconduct of an Indemnitee.
5.13 The Borrower's Obligations will rank at least pari passu in priority
---- -----
of payment and in all other respects with all other indebtedness or obligations
of the Borrower.
5.14 The Borrower shall provide the Lender with written notice of the
relocation of its chief executive office and/or principal place of business not
less than 30 days prior to the effective date thereof.
5.15 The Borrower shall maintain a Tangible Net Worth of not less than $14
million.
6. REPRESENTATIONS AND WARRANTIES OF THE BORROWER.
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The Borrower represents and warrants to the Lender as follows:
6.1 The Borrower is a corporation duly organized and validly existing and
in good standing under the laws of the State of Delaware and is duly qualified
to do business and in good standing in every jurisdiction in which the nature of
its business or properties requires such qualification, except where failure to
qualify will not have a material adverse affect upon the transaction embodied
herein. The Borrower maintains its chief executive office and principal place
of business at the address set forth in the preamble to this Loan Agreement.
6.2 The Borrower has taken all action which may be required by its
articles or certificate of incorporation and its by-laws, and by the laws of the
State of Delaware and all other applicable laws to (a) grant and convey to the
Lender the Security Interest in and to the Aircraft, and (b) authorize the
execution, delivery and performance of the Documents.
6.3 The execution and delivery of the Documents and the performance by the
Borrower of the Obligations under the Documents and the creation of the Security
Interest in and to the Aircraft, will not conflict with or violate any
provisions of its articles or certificate of incorporation or its by-laws, or
any provisions thereof or result in a default or acceleration of any obligation
under any agreement or instrument of any kind or any undertaking, order, decree
or judgment to which the Borrower is a party or by which it is bound.
6.4 Except as set forth on Attachment A, hereto, and as further described
in the opinion of Borrower's counsel delivered pursuant to Paragraph 8.1(n)
hereof, there is no litigation currently pending or expected against the
Borrower before any court or administrative agency which may have a materially
adverse effect on the assets, business, financial condition or operations of the
Borrower or which would or do prevent or hinder the performance by the Borrower
of its obligations under the Documents.
6.5 The Documents are valid obligations of the Borrower, binding and
enforceable against it in accordance with the terms and conditions thereof.
6.6 The Borrower has read and is fully familiar with all the covenants,
terms and conditions of the Documents and has not relied on any representations
or warranties of the Lender, express or implied, except those representations
and warranties of the Lender, if any, expressly set forth in the Documents.
6.7 Simultaneously with the disbursement of the Loan, the Lender's
Security Interest in and to the Aircraft, will be duly and properly preserved
and perfected and will constitute a first priority security interest in and to
the Aircraft, in accordance with all applicable laws and regulations.
6.8 As of the Funding Day, the Borrower (i) owns and holds good and
marketable title to the First Engines, the First Aircraft, the Second Engines,
the Second Aircraft and the Third Aircraft, free and clear of all liens,
security interests, charges, claims and encumbrances of whatsoever nature (other
than the Security Interests granted and conveyed to the Lender by the First Loan
Documents, the Second Loan Documents and the Third Loan Documents and herein)
and (ii) will defend title to the First Engines, the First Aircraft, the Second
Engines, the Second Aircraft and the Third Aircraft against the claims and
demands of all parties.
6.9 As of the Funding Day, the Borrower (i) owns and holds good and
marketable title to each Aircraft, free and clear of all liens, security
interests, charges, claims and encumbrances of whatsoever nature (other than the
Security Interests granted and conveyed to the Lender by the Mortgage and
herein) and (ii) will defend title to each Aircraft against the claims and
demands of all parties.
6.10 On the Funding Day, no further registration, recording or filing with
respect to the Aircraft, the First Engines, the First Aircraft, the Second
Aircraft, the Second Engines or the Third Aircraft will be necessary or
advisable in order to establish and perfect the Borrower's title thereto nor to
establish and perfect the Security Interest in favor of the Lender in and to the
Aircraft, other than the filing of the Mortgage, the Mortgage Amendments, and
Uniform Commercial Code financing statements.
6.11 All documents, instruments, certificates and agreements delivered to
the Lender in connection with the transaction contemplated herein, including,
but not limited to, the Note and the Mortgage, are complete and there are no
addenda thereto nor modifications thereof (whether written or verbal) which have
not been disclosed in writing to the Lender prior to the date hereof.
6.12 The Borrower is, and at all times will be, a "Citizen of the United
States" as defined in Title 49 United States Code, as in effect on the date
hereof, and as modified or amended hereafter, or any successor or substituted
legislation at the time in effect and applicable (the "Act").
6.13 The Borrower is, and at all times will be, an FAR Part 121 air
carrier.
6.14 Borrower has heretofore furnished to Lender audited annual financial
statements and related financial information as of [December 31, 1993], and
interim financial statements and related financial information for the 11-month
period ending [November 30, 1994] (together, "Financial Statements"). Such
Financial Statements (including the notes thereto) fully and fairly present the
financial condition of Borrower as of the dates of the balance sheets contained
therein, and the results of its operations for the periods then ended, all in
conformity with GAAP on a basis consistent with that of financial statements for
corresponding prior periods. Except as disclosed therein, Borrower has no
material contingent liabilities (including liabilities for taxes). Since
[November 30, 1994] there has been no material, adverse change in the business,
operations or financial condition of Borrower;
6.15 Neither the Documents nor any filing required or permitted thereunder
is subject to any registration tax, stamp duty or similar tax and to the extent
the same is due then the same shall be paid by the Borrower when due or
reimbursed to the Lender upon demand.
6.16 The Borrower will use the Loan for the purposes set forth in
Paragraph 2.1 hereof, and for no other purpose without the prior written consent
of the Lender.
6.17 The reports as to the status and condition of the Engines heretofore
delivered to Lender under the First Loan Agreement and the Third Loan Agreement
have
been true and accurate in all material reports.
6.18 No information given by the Borrower in relation to this Loan
Agreement or the other Documents and the transaction contemplated herein and
therein and furnished pursuant hereto or thereto contains any misstatement of
fact or omits to state a fact which would be adverse to the interest of the
Lender or which would be necessary to make any statement or representation or
warranty contained herein or therein not misleading.
7. DEFAULT, ACCELERATION AND REMEDIES.
----------------------------------
7.1 Each of the following events and occurrences shall, at the Lender's
option, constitute a default (each, an "Event of Default") under the Documents:
(a) The Borrower fails to pay any payment of interest or principal
hereunder when and as the same is due and such failure continues for 5 days
subsequent to the receipt by the Borrower of written notice thereof;
(b) The Borrower fails to pay any payment due under the Documents when
and as the same is due, other than the payments referred to in Paragraph 7.1(a)
hereof, and such failure continues for 10 days subsequent to the receipt by the
Borrower of written notice thereof;
(c) A default or event of default occurs under the First Loan
Documents;
(d) A default or event of default occurs under the Third Loan
Documents or the Fourth Loan Documents;
(e) The Borrower fails to procure and/or maintain any insurance
coverage or knowingly violates or suffers or permits the violation of any of the
warranties or conditions of the policies of insurance required hereunder;
(f) The Borrower fails to perform or observe any material duty,
obligation or covenant contained in the Documents, other than that referred to
in Paragraphs 7.1(a) (b) or (e) hereof, and such failure continues for 15 days
subsequent to the receipt by the Borrower of written notice thereof;
(g) A default occurs under the Mortgage;
(h) The Borrower becomes insolvent or unable to pay its debts when due
or commits or permits any act of bankruptcy, including, but not limited to: (i)
the filing by the Borrower of a petition in any bankruptcy, reorganization,
winding-up or liquidation proceeding or other proceeding analogous in purpose or
effect relating to itself; (ii) the filing by another of a petition instituting
any bankruptcy, reorganization, winding-up or liquidation proceeding or other
proceeding analogous in purpose or effect relating to the Borrower, which
petition is not dismissed or discharged within 60 days of its filing; (iii) its
application for or consent to the appointment of a receiver, custodian, or
trustee for the bankruptcy, reorganization, winding-up or liquidation of itself;
(iv) it makes an assignment for the benefit of creditors; or (v) any court order
for judgment is entered confirming the bankruptcy or insolvency of itself or
approving any reorganization, winding-up or liquidation of itself or a
substantial portion of its assets or providing other relief;
(i) A final non-appealable judgment or decree for money damages or for a
fine or penalty in excess of USD 1,000,000.00 is entered against the Borrower
and such judgment or decree is not paid or discharged within 45 days thereof;
(j) The Borrower has made a materially untrue, incorrect or misleading
representation or warranty herein or in any other Document;
(k) Borrower shall fail to pay any indebtedness in an amount, solely or in
the aggregate, of not less than $1,000,000.00 when and as payable (or within any
applicable grace period) or shall default with respect to any evidence of such
indebtedness or any obligation for borrowed money in such amount, or in the
performance of any other obligation incurred in connection with any such
indebtedness, if the effect of such default is to accelerate the maturity of
such evidence of indebtedness or obligation or to require the prepayment thereof
or to permit the holder or obligee thereof (or a trustee on behalf of such
holder or obligee) to cause any such indebtedness to become payable prior to its
stated maturity;
(l) Either Aircraft shall no longer be registered in the United States of
America;
(m) The Airworthiness Certificate for either Aircraft has been suspended or
revoked or the Borrower's Part 121 certificate is suspended or revoked and same
is not reinstated or reacquired within 30 days of the date of such suspension or
revocation (if the Borrower has undertaken and has diligently commenced such
action as is necessary to have the Airworthiness Certificate for such Aircraft
or the Borrower's Part 121 certificate reinstated or reacquired, then, in such
event, the 30 day cure period provided for in this subsection (n) shall be
extended to 60 days from the date of the suspension or revocation of same).
Notwithstanding the foregoing, in the event the Airworthiness Certificate for
such Aircraft have been suspended or revoked due to a suspension or revocation
of airworthiness certificates for all aircraft of the same type as
such Aircraft then, in such event, provided no other Event of Default has
occurred hereunder or by the giving of notice or passage of time would be
constituted, and the insurance required to be provided pursuant hereto is not
adversely affected, then, in such instance, an Event of Default shall not be
deemed to have occurred unless the Airworthiness Certificate is not reinstated
or reacquired or the required certifications are not reinstated or reacquired,
respectively, within 120 days of the date of such suspension or revocation.
However, if the Borrower has undertaken and has diligently commenced such action
necessary in such event to remove such prohibition of use or grounding of all
aircraft of the same type as such Aircraft same shall not constitute an Event of
Default unless such prohibition of use or grounding of all aircraft of the same
type as the Aircraft continues uninterrupted for a period in excess of 270 days
from the commencement date of the prohibition or grounding; or
(n) The Lender has not received, within 14 days after the Funding Date, an
Opinion of Counsel referred to in Paragraph 8.1(j) and a Certificate of
Resolutions, certified by the corporate secretary of the Borrower and setting
forth a true, complete and accurate copy of the resolutions approved by the
Borrower's Board of Directors authorizing the entering into, execution and
delivery of the Documents (other than the First Loan Documents, the Second Loan
Documents, the Third Loan Documents and the Fourth Loan Documents, the entering
into, execution, delivery and performance of which has been previously
authorized) and performance by the Borrower thereunder and the incurring of the
Obligations by the Borrower.
7.2 (a) Upon the occurrence of an Event of Default, the Lender may, at
its option, declare the Unpaid Amount to be immediately due and payable,
whereupon the Unpaid Amount shall immediately be due and payable and the
Borrower shall immediately pay same to the Lender.
(b) In addition to exercising all rights, powers, privileges and
remedies available to the Lender under the Uniform Commercial Code or other
applicable law or as provided for elsewhere in the Documents, upon the
occurrence of an Event of Default, the Lender may, in each and every case: (i)
declare the Unpaid Amount immediately due and payable; (ii) enter into and take
possession of the Aircraft, (iii) sell, to the extent permitted by law, the
Aircraft, at such place or places and otherwise in such manner and on such
notice as may be required by law in order to collect the indebtedness of the
Borrower under the Documents and execute proper conveyances to the purchaser or
purchasers thereof; and/or (iv) proceed by a suit or suits in equity or at law
to protect and enforce the Lender's rights under the Documents, whether for the
specific performance of any covenant, condition, agreement or undertaking
therein contained, or in aid of the execution of any power therein granted, or
for the foreclosure of the Security Interests and sale of the Aircraft or any
part thereof under the judgment or decree of any court of competent
jurisdiction, or for the appointment of a receiver or receivers, or for
the enforcement of such other appropriate legal or equitable remedy as may in
the opinion of the Lender's counsel be most effectual to protect and enforce the
rights aforesaid.
7.3 If an Event of Default shall have occurred and the Lender shall elect
to take possession of the Aircraft, as set forth in Paragraph 7.2(b) hereof, the
Lender, by its attorneys or agents, may enter into and take possession of the
Aircraft, and each and every part thereof and exclude the Borrower and its
agents, servants and employees wholly therefrom, and have, hold, use, operate,
manage and control the same and each and every part thereof and in the name of
the Borrower, or otherwise as the Lender shall deem best, use the Aircraft, and
at the expense of the Borrower, maintain, restore, insure and keep insured the
Aircraft, and likewise from time to time, at the expense of the Borrower, make
all such expenditures for maintenance, insurance, repairs, replacements,
alterations and, to the extent Lender considers reasonably necessary or
desirable in its sole discretion in order to effect a sale, additions and
improvements to and of such property. Lender shall be entitled to collect and
receive all earnings, income, rents, issues, profits, proceeds and revenues of
the same and of every part thereof, and after deducting therefrom the expenses
of operation and all expenses incurred hereunder and all other proper outlays
herein authorized, and all payments which may be made as just and reasonable
compensation for its own services, and for the services of its attorneys, agents
and assistants, the Lender shall apply the rest and residue of the monies
received by it in the following order: (i) to the payment of all reasonable
costs and expenses incurred in the collection of the Unpaid Amount, including,
but not limited to, reasonable attorney's fees; then (ii) to the payment of all
reasonable costs and expenses incurred by the Lender in taking any of the
actions specified above in this Paragraph 7.3; then (iii) to the payment of the
remaining Unpaid Amount; then (iv) to the payment of any other of the Borrower's
Obligations then due; then (v) any remainder shall be paid to the Borrower.
7.4 If an Event of Default shall have occurred and the Lender shall elect
to sell either or both Aircraft, or any part thereof, then the Lender shall
proceed to do so in a commercially reasonable manner in accordance with
applicable law and the proceeds of any such sale shall be applied in accordance
with Paragraph 7.3 hereof. In any such sale the Lender may bid for and purchase
either or both Aircraft, and on compliance with the terms of sale may hold,
retain, possess and dispose of such property in its own absolute right, without
further accountability.
7.5 On any sale, whether made under the power of sale hereby given or by
virtue of judicial proceedings, the receipt of the Lender or of the officer
making a sale under judicial proceedings shall be a sufficient discharge to the
purchaser(s) and his or their assigns or personal representatives, who shall,
after paying such purchase money and receiving such receipt of the Lender or of
such officer therefor, not be obliged to see to the application of such purchase
price or be in any way answerable for any loss,
misapplication or non-application thereof.
7.6 (a) No failure or delay by the Lender to insist on the strict
performance of any term or condition of the Documents or to exercise any right,
remedy, power or privilege consequent on an Event of Default and no acceptance
of any payment of the principal of or interest on the Note or other payment of
whatsoever kind payable to the Lender during the continuance of any such Event
of Default shall constitute a waiver of any such term or condition or default or
of any such right, remedy, power or privilege, nor shall any single or partial
exercise of any such right, remedy, power or privilege preclude any other or
further exercise thereof or of the exercise of any other right, remedy, power or
privilege. No waiver of any Event of Default hereunder shall affect or alter
the Documents, which shall continue in full force and effect, or the rights of
the Lender with respect to any other then existing or subsequent Event of
Default.
(b) Each right, remedy, power or privilege of the Lender provided for
in the Documents or now or hereafter existing at law or in equity, by statute or
otherwise, shall be cumulative and concurrent and shall be in addition to every
other right, remedy, power or privilege by statute or otherwise, and the
exercise or beginning of the exercise by the Lender of any one or more of such
rights, remedies, powers or privileges shall not preclude the simultaneous or
later exercise of any or all other rights, remedies, powers or privileges.
7.7 The Borrower, for itself and for all who may claim through or under
it, hereby expressly waives and releases all right to have either or both
Aircraft, or any part thereof or any other of its property marshalled on any
foreclosure, sale or other enforcement hereof, and the Lender, or any court in
which the foreclosure of the Security Interests in either or both Aircraft is
sought, shall have the right to sell the Aircraft, as an entirety in a single
parcel or otherwise. The Borrower, if called upon to do so, shall provide the
Lender with a specific written waiver to evidence the intent of this Paragraph
7.7.
7.8 If any legal action or any other proceeding is brought for the
enforcement of this Loan Agreement or of any of the Documents or because of an
alleged dispute, breach, default or misrepresentation in connection with any of
the provisions of this Loan Agreement or of any of the Documents, the successful
or prevailing party shall be entitled to recover reasonable attorneys' fees and
other costs incurred in connection with such action or proceeding and any appeal
thereof, in addition to any other remedies available.
8. CLOSING CONDITIONS.
------------------
8.1 Notwithstanding anything contained in this Loan Agreement or the
other Documents to the contrary, the obligation of the Lender to advance the
Loan or any part thereof is expressly contingent on the fulfillment and/or
satisfaction in the sole discretion of the Lender of the following conditions
precedent and the receipt by the Lender (in form and substance satisfactory to
the Lender) of such documents and instruments, if any, therein required or
deemed necessary by the Lender to evidence the fulfillment and/or satisfaction
of said conditions precedent:
(a) The Borrower and the Lender have executed and delivered this Loan
Agreement or have caused the same to be done;
(b) The Borrower has executed and delivered to the Lender the Note in the
amount of the Loan and dated as of the Funding Day or has caused the same to be
done;
(c) The Borrower has executed and delivered the Mortgage or has caused the
same to be done;
(d) The Borrower has executed and delivered each of the Mortgage Amendments
or has caused the same to be done;
(e) The Borrower and the Lender have executed and delivered the Third
Amendment to Third Loan Agreement or have caused the same to be done;
(f) The Borrower and the Lender have executed and delivered the Seventh
Amendment to First Loan Agreement or have caused the same to be done;
(g) The Borrower and the Lender have executed and delivered the First
Amendment to Fourth Loan Agreement;
(h) The Lender has received certificates of insurance or other written
evidence that insurance required under this Loan Agreement and under the
Mortgage in respect of the Aircraft has been obtained;
(i) The Lender has received a Certificate of Resolutions, certified by the
corporate secretary of the Borrower and setting forth a true, complete and
accurate copy of the resolutions approved by the Board of Directors, of the
Borrower authorizing the entering into, execution and delivery of the Documents
and performance by the Borrower thereunder and the incurring of the Obligations
by the Borrower;
(j) The Lender has received an Opinion of Counsel from the Borrower's
counsel to the effect that the representations and warranties of the Borrower
set forth in Paragraphs 6.1, 6.2, 6.3, 6.4, 6.5, 6.7, 6.8(i), 6.9(i), 6.10,
6.12, 6.13 and 6.15,
hereof are true and correct as of the Funding Day;
(k) The Lender has received evidence that the Borrower has good and
marketable title to the Aircraft free and clear of all liens, security
interests, claims, charges and other encumbrances of whatsoever kind, except the
Mortgage, in favor of and for the benefit of the Lender;
(l) The Lender has acquired a perfected first and senior Security Interest
and mortgage in and to the Aircraft;
(m) The Lender has received an Officer's Certificate setting forth the
following: (i) the name of each of the duly elected and acting officers of the
Borrower together with the title of each office each holds; (ii) the name and
title of each officer of the Borrower who is authorized by the Board of
Directors of the Borrower to enter into, execute and deliver the Documents on
behalf of the Borrower and a specimen signature of each of said officers and
(iii) a certified copy of a current Certificate of Good Standing of the Borrower
certified by the Secretary of State of the State of Delaware;
(n) The Lender has received a copy of the Borrower's articles of
incorporation;
(o) The Lender has received a copy of the by-laws, as amended, of the
Borrower;
(p) The Borrower has executed and delivered to the Lender such Uniform
Commercial Code financing statements as the Lender shall require;
(q) The Lender has completed a satisfactory inspection of both Airframes
and such Engines as Lender may select together with books and records relating
to both Aircraft and Lender shall have received an appraisal, in form and
substance reasonably satisfactory to it, of both Aircraft;
(r) The Lender has received an Opinion of Counsel from Xxxxxxxxx, Xxxxxx
and Xxxxxxxx, special FAA counsel;
(s) The Lender has received copies of all other licenses, consents and
approvals, if any, necessary to the operation of the Borrower's business; and
(t) The Lender has received a copy of the maintenance schedule with respect
to the maintenance being performed on Aircraft I; and
(u) Such other agreements, certificates instruments or legal
opinions in writing as shall be deemed by the Lender or its counsel necessary or
desirable in order to more fully and completely service, protect, perfect or
preserve the Lender's Security Interests and other interests in and to the, the
Aircraft, and otherwise under the Documents and the Mortgage.
9. MISCELLANEOUS.
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9.1 The Documents and the documents, instruments and agreements herein
referred to constitute the entire agreement between the parties hereto with
respect to the transaction embodied herein and shall supersede all other prior
agreements, written or oral, with respect thereto.
9.2 This Loan Agreement shall be binding on and inure to the benefit
of the parties hereto and their respective successors and assigns, provided,
however, that the Borrower shall not have the right to assign or transfer its
rights or obligations under the Documents except with the prior written consent
thereto of the Lender. The Lender, at any time, may sell, assign, grant or
otherwise transfer its rights, interest and obligations under the Documents or
part thereof.
9.3 This Loan Agreement may be amended, modified, renewed or extended
but only by a written instrument, executed by both of the parties hereto, in the
manner of the execution of this Loan Agreement.
9.4 The validity, construction and interpretation of this Loan
Agreement and the other Documents, and all rights, obligations and liabilities
arising hereunder or thereunder, shall be governed by the laws of the State of
Arizona, United States of America, and for the purpose of legal proceedings this
Loan Agreement and the other Documents shall be deemed to have been made and to
be wholly performed in such jurisdiction.
9.5 Each of the parties hereto shall, from time to time, perform such
other and further acts and execute and deliver any and all such other and
further instruments as may be required or reasonably requested by the other
party to establish, maintain and protect the respective rights and remedies of
such other party and to carry out and effect the intents and purposes of this
Loan Agreement.
9.6 All documents, agreements, certificates and instruments herein
required shall be in form and substance satisfactory in all respects to the
Lender in its sole discretion and shall be provided at the sole cost and expense
of the Borrower.
9.7 The representations and warranties hereunder shall survive the
Funding Date and the Lender may enforce such representations and warranties at
any
time. The Borrower's covenants shall survive the Funding Date and shall be
performed fully and faithfully by the Borrower at all times. The indemnities of
the Borrower in each case shall survive repayment of the Loan.
9.8 Any provision hereof prohibited by, or unlawful or unenforceable
under, any applicable law of any jurisdiction shall as to such jurisdiction be
ineffective without affecting the remaining provisions of this Loan Agreement
which shall remain in full force and effect. Where, however, the provisions of
any such applicable law may be waived they are hereby waived to the fullest
extent permitted by law so that this Loan Agreement shall be a valid and binding
agreement enforceable in accordance with its terms. In the event that any
provision of this Loan Agreement or the documents, instruments and agreements
pertaining hereto shall be deemed to be invalid or become invalid, the Borrower
agrees to substitute for such invalid provision a new provision which serves the
purpose of the invalid provision to the furthest possible extent permitted by
law.
9.9 The Borrower shall pay, on the Funding Date and thereafter, to the
extent required, on demand, all expenses incident to this transaction,
including, but not limited to, appraisal fees, the costs payable upon the filing
and recording of any of the Documents, recordation taxes, travel expenses,
transfer taxes and reasonable fees and disbursements of outside counsel.
9.10 This Loan Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same instrument.
9.11 The headings of the Sections and Paragraphs of this Loan Agreement
have been inserted for convenience of reference only and shall in no way
restrict or otherwise modify any of the terms or provisions hereof.
9.12 The Documents have been reviewed and negotiated by counsel for
each party and no ambiguity in this Loan Agreement or the other Documents shall
be construed against either party based upon its having prepared any of the
Documents or part thereof.
9.13 It is the intention of the parties hereto to comply with
applicable state usury laws. Accordingly, it is agreed that notwithstanding any
provisions to the contrary in the Documents, the Documents shall not require the
payment or permit the collection of interest in excess of the maximum legal
amount permitted by law. If any such excess of interest otherwise is contracted
for, charged or received pursuant to the Documents or if the Obligations are
accelerated in whole or in part, so that under any of such circumstances the
amount contracted for, charged or received pursuant to the Documents
would exceed the maximum legal amount of interest permitted by law, then, upon
such happenstance, (i) the provisions of this Paragraph 9.13 shall govern and
control, (ii) neither the Borrower nor any other person or entity now or
hereafter liable for payments under the Documents would be obligated to pay the
same to the extent that it is in excess of the maximum legal amount of interest
permitted by law, (iii) any such excess which may have been collected shall, at
the Lender's option, be either applied as a credit against the Unpaid Amount(s)
or refunded to the Borrower or the person or entity thereunto entitled and (iv)
the effective rate of interest shall be automatically reduced to the maximum
lawful rate allowed under law as now or hereafter construed by any court having
jurisdiction hereof.
9.14 (a) The Borrower (i) hereby irrevocably submits to the
jurisdiction of the Superior Court of Maricopa County, State of Arizona, or any
successor to said court, and to the jurisdiction of the United States District
Court for the District of Arizona, or any successor to said court (hereinafter
referred to collectively as the "Arizona Courts"), for purposes of any suit,
action or other proceeding which relates to the transactions contemplated in
this Loan Agreement, (ii) to the extent permitted by applicable law, hereby
irrevocably waives and agrees not to assert by way of motion as a defense or
otherwise in any such suit, action or proceeding any claim that it is not
personally subject to the jurisdiction of the Arizona Courts, that the suit,
action or proceeding is brought in an inconvenient forum, that the venue of the
suit, action or proceeding is improper or that this Loan Agreement or any
transaction provided for or contemplated herein may not be enforced in or by the
Arizona Courts, (iii) hereby agrees not to seek, and hereby waives, any
collateral review by any other court, which may be called upon to enforce the
judgment of any of the Arizona Courts, of the merits of any such suit, action or
proceeding or the jurisdiction of said Arizona Courts, and (iv) hereby
irrevocably waives, to the fullest extent permitted under applicable law, the
right to trial by jury in any action, suit or proceeding brought to enforce the
provisions of this Loan Agreement or any of the Documents. Nothing herein shall
limit the Lender's right to bring any suit, action or other proceeding against
the Borrower or any of the Borrower's assets or to serve process on the Borrower
by any means authorized by law.
(b) The Borrower hereby irrevocably designates and appoints C T
Corporation System, with offices on the date hereof at 0000 X. Xxxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxx 00000, Xxxxxx Xxxxxx of America, as its agent for service of
process in the State of Arizona, United States of America. The foregoing,
however, shall not limit the right of the Lender to serve legal proceedings in
any other manner permitted by law or to bring any legal action or proceedings or
to obtain execution or judgment in any courts of competent jurisdiction.
9.15 Interest calculations under the Documents shall be made on a 360
day year based on the actual number of days elapsed.
9.16 All demands, declaration, notices, consents, requests and other
communications hereunder shall be in writing and shall be deemed to have been
duly given five (5) days subsequent to its being deposited in the mail,
registered or certified, postage prepaid, addressed as follows to the party to
be given notice:
(i) To the Lender:
FINOVA Capital Corporation
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Operations Management -
Transportation
(ii) To the Borrower:
Tower Air, Inc.
Hangar No. 00
Xxxx X. Xxxxxxx Xxxxxxxxxxxxx Xxxxxxx
Xxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxxx
Chairman-President & CEO
9.17 The Borrower hereby represents and warrants to the Lender that no
broker brought about the transaction contemplated hereby and the Borrower hereby
agrees to indemnify and hold the Lender harmless from any and all liabilities
and costs (including, without limitation, costs of counsel) to any person or
entity claiming brokerage commissions or finder's fees on account of this Loan
Agreement or the other Documents.
9.18 The Borrower has paid to the Lender the amount of USD 200,000 as
a non-interest bearing deposit (the "Deposit"). On the Funding Day, the Borrower
shall pay to the Lender a loan fee in the amount of $200,000.00 and Lender shall
apply the Deposit to the payment of such fee.
9.19 Both parties agree that they shall keep all proprietary
information and data provided with respect to the transaction embodied herein
confidential except as required by law.
9.20 Time is of the essence with respect to the terms and conditions
of this Loan Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Loan Agreement as
of the day and year first above written.
TOWER AIR, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------
Title: Chairman/CEO
Tax ID No.: 00-000-0000
FINOVA CAPITAL CORPORATION
By: /s/ Xxxxx X. Xxxxx
-----------------------
Title: Vice President
