EXHIBIT 10.16
MASTER LOAN AND
SECURITY AGREEMENT [ * ]
1.0 PARTIES, COLLATERAL AND OBLIGATIONS
1.1 This Agreement is dated as of January 28, 1997. For valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Xxxxxx Lease Finance Corporation ("Xxxxxx") & Terandon Leasing Corporation
("Terandon"), as CoBorrowers (collectively referred to herein as "Debtor") with
offices at 000 Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxxxx 00000 intending to
be legally bound, hereby promises to pay to [ * ] (hereinafter called "Secured
Party"), any amounts set forth on any Schedule to Master Loan and Security
Agreement hereunder (the "Schedule(s)", all the terms of which are incorporated
herein) and Terandon hereby grants a security interest in and assigns, transfers
and sets over to Secured Party and to the successors and assigns thereof, the
property specified in the Exhibit "A" hereto regarding engines hereunder
wherever located, and any and all proceeds thereof, insurance recoveries, and
all replacements, additions, accessions, accessories and substitutions thereto
or therefor (hereinafter called the "Collateral"). The security interest granted
hereby is to secure payment of any and all liabilities or obligations of Debtor
to the Secured Party, matured or unmatured, direct or indirect, absolute or
contingent, under this Agreement (all hereinafter called the "obligations"
and/or the "liabilities").
1.2 Assignment and Security Interest. Terandon hereby collaterally
assigns, transfers and sets over to Secured Party, and Secured Party hereby
acknowledges and consents to and takes collateral assignment of, the aircraft
engine lease agreements as fully described on Exhibit "A" hereto, (collectively,
the "Leases") and all of Terandon's right, title and interest in and to the
property leased pursuant to the Leases (hereinafter called the "Engines") and
all rights, powers and remedies therein. Each lessee which is a party to each
such Lease (as described in more detail on Exhibit "A") shall be referred to
herein as a "Lessee." Should an Event of Default (as defined herein) occur and
continue, and after all applicable cure periods, Secured Party shall have the
right, either in its own name, or in Terandon's name, to notify each Lessee that
Secured Party should thereafter be regarded by such Lessee as Lessor under each
Lease and that Terandon shall no longer have any right title or interest in or
to such Lease, except with respect to Terandon's rights to recover from each
Lessee any payments arising from either the general or tax indemnity provisions
of the Leases or payments pursuant to liability insurance proceeds. Thereafter,
Secured Party may take any action under the provisions of the Leases as assignee
of Terandon's interest in such Leases in accordance with the terms thereof and
subject to the rights of each Lessee, and may release any rights against, grant
extensions of time to, and compromise claims with, each Lessee and may repossess
and resell or release the Engines which are the subject thereof. Terandon and/or
Xxxxxx will reimburse Secured Party for all expenses of collection and
repossession incurred by Secured Party in connection with enforcing its rights
hereunder, including but not limited to, reasonable attorney's fees, court
costs, expenses of repossession and sale and interest on overdue payments.
Terandon agrees that Secured Party may, upon reasonable prior notice and at a
reasonable time, audit Terandon's books and records relating to the Leases and
the Engines.
1.3 Joint and Several Liability; Payment Terms. All obligations to make
payments to Secured Party hereunder shall be considered as joint and several
obligations of both Xxxxxx and Terandon regardless of the source of Collateral.
The liability of Xxxxxx hereunder shall be limited to the obligation to make
such payments in the event that Terandon fails to do so. Except insofar as
Xxxxxx exercises control over Terandon, Xxxxxx shall have no obligations with
respect to the Collateral. Interest shall be calculated on the basis of a
360-day year. All payments on any Schedule hereunder shall be made in lawful
money of the United States at the post office address of the Secured Party or at
such other place as the Secured Party may designate to Debtor in writing from
time to time. In no event shall any Schedule hereunder be enforced in any way
which permits Secured Party to collect interest in excess of the maximum lawful
rate. Should interest collected exceed such rate, Secured Party shall refund
such excess interest to Debtor. In such event, Debtor agrees that Secured Party
shall not be subject to any penalties for contracting for or collecting interest
in excess of the maximum lawful rate.
1.4 Late Charge. If any of the obligations remains overdue for more
than ten (10) days, Debtor hereby agrees to pay on demand, as a late charge, an
amount equal to the lesser of (i) One percent (1.0%) of each such overdue
amount; or (ii) the maximum percentage of any such overdue amount permitted by
applicable law as a late charge. Debtor agrees that the amount of such late
charge represents a reasonable estimate of the cost to Secured Party of
processing a delinquent payment and that the acceptance of any late charge shall
not constitute a waiver of default with respect to the overdue amount or prevent
Secured Party from exercising any other available rights and remedies.
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2.0 WARRANTIES AND COVENANTS OF DEBTOR Debtor hereby represents,
warrants and covenants that:
2.1 Business Organization Status and Authority. (i) Debtor is duly
organized, validly existing and in good standing under the laws of the state of
its incorporation; (ii) Debtor has the lawful power and authority to own its
assets and to conduct the business in which it is engaged; and to execute and
comply with the provisions of this Agreement and any related documents; (iii)
the execution and delivery of this Agreement and any related documents have been
duly authorized by all necessary action; (iv) no authorization, consent,
approval, license or exemption of, or filing or registration with, any or all of
the owners of Debtor or any governmental entity in the United States of America
was, is or will be necessary to the valid execution, delivery, performance or
full enforceability of this Agreement and any related documents, except for
appropriate Federal Aviation Authority filings and Uniform Commercial Code
filings. Except as specifically disclosed to Secured Party, Debtor utilizes no
trade names in the conduct of its business and/or has not changed its name
within the past five years. Secured Party is advised that Xxxxxx Lease Finance
Corporation does business as The Xxxxxx Group and was formerly known as Xxxxxxx
X. Xxxxxx Company.
2.2 Merger; Transfer of Assets. Debtor will not consolidate or merge
with or into any other entity, liquidate or dissolve, distribute, sell, lease,
transfer or dispose of all of its properties or assets or any substantial
portion thereof other than in the ordinary course of its business, unless Debtor
shall advise Secured Party of such event, and the surviving, or successor entity
or the transferee of such assets, as the case may be, shall, at the time of such
event: 1) have a tangible net worth which is equal to or greater than that of
Debtor; and, 2) assume, by a written instrument which is legal, valid and
enforceable against such surviving or successor entity or transferee, all of the
obligations of Debtor under this Agreement to Secured Party or any affiliate of
Secured Party.
2.3 No Violation of Covenants or Laws. Except as previously disclosed,
Debtor is not party to any agreement or subject to any restriction which
materially and adversely affects its ability to perform its obligations under
this Agreement and any related documents. The execution of and compliance with
the terms of this Agreement and any related documents does not and will not (i)
violate any provision of law, or (ii) conflict with or result in a breach of any
order, injunction, or decree of any court or governmental authority or the
formation documents of Debtor, or (iii) constitute or result in a default under
any agreement, bond or indenture by which Debtor is bound or to which any of its
property is subject, or (iv) result in the imposition of any lien or encumbrance
upon any of Debtor's assets, except for any liens created hereunder or under any
related documents.
2.4 Accurate Information. To the best of Debtor's knowledge, all
financial information submitted to the Secured Party in regard to Debtor or any
shareholder, officer director, member, or partner thereof, or any guarantor of
any of the obligations thereof, was prepared in accordance with generally
accepted accounting principles, consistently applied, and fairly and accurately
depicts the financial position and results of operations of Debtor or such other
person, as of the respective dates or for the respective periods, to which such
information pertains. To the best of Debtor's knowledge, Debtor had good and
valid title to all the properties and assets reflected as being owned by it on
any balance sheets of Debtor submitted to Secured Party as of the dates thereof
subject to the liens of lenders which financed specific assets and further
subject to the Leases described in 1.2 above.
2.5 Judgments; Pending Legal Action. There are no judgments outstanding
against Debtor, and there are no actions or proceedings pending or, to the best
knowledge of Debtor, threatened against or affecting Debtor or any of its
properties in any court or before any governmental entity which, if determined
adversely to Debtor, would result in any material adverse change in the
business, properties or assets, or in the condition, financial or otherwise, of
Debtor or would materially and adversely affect the ability of Debtor to satisfy
its obligations under this Agreement and any related documents.
2.6 No Breach of Other Agreements; Compliance with Applicable Laws. To
the best of Debtor's knowledge: 1) Debtor is not in breach of or in default
under any loan agreement, indenture, bond, note or other evidence of
indebtedness, or any other material agreement or any court order, injunction or
decree or any lien, statute, rule or regulation; 2) the operations of Debtor
comply with all laws, ordinances and governmental rules and regulations
applicable to them; and, 3) Debtor has filed all Federal, state and municipal
income tax returns which are required to be filed and has paid all taxes as
shown on said returns and on all assessments billed to it to the extent that
such taxes or assessments have become due. Debtor does not know of any other
proposed tax assessment against it.
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2.7 Sale Prohibited. Except as to the interest in the Engines conveyed
to the Lessees by virtue of the Leases and, subject to the reasonable approval
of Secured Party any future leases, Debtor will not sell, dispose of or
otherwise transfer the Collateral or any interest therein unless Debtor shall
remit to Secured Party the pro rata share of the then principal balance
attributable to that item of Collateral. All such future leases (along with all
current Leases) shall be referred to herein as "Leases". All such future lessees
(along with all current Lessees) shall be referred to herein as "Lessees".
2.8 Operation of Collateral. Within Thirty (30) days after the end of
each calendar quarter, Debtor will provide to Secured Party the most recent
report received by Debtor from each Lessee as to the operation of each Engine.
2.9 Perfection of Security Interest. Except for (i) the security
interest granted hereby and (ii) the interest conveyed to Lessees by virtue of
the Leases and any documents relating thereto, Debtor is, to the best of its
knowledge, the owner of the Collateral free from any adverse lien, security
interest or encumbrance. Debtor will defend the Collateral against all claims
and demands of all persons at any time claiming any interest therein. At the
request of Secured Party, Debtor will execute, acknowledge and deliver to
Secured Party in recordable or fileable form, any document or instrument
reasonably required by Secured Party to further the purposes of this Agreement,
or to perfect its interest in the Collateral or to maintain such perfected
interest in full force and effect, including (without limitation) any financing
statements and any amendments and continuation statements thereto pursuant to
the Uniform Commercial Code, in form satisfactory to Secured Party, and will pay
the cost of filing the same or filing or recording this Agreement in all public
offices wherever filing or recording is deemed by Secured Party to be reasonably
necessary. Debtor hereby agrees that this Agreement shall be and constitute a
financing statement for purposes of the Uniform Commercial Code.
2.10 Insurance. At its expense, Debtor shall maintain or shall require
each Lessee to maintain, in force, at all times from delivery of the Engines to
Debtor and each Lessee until surrender thereof, insurance of types or amounts as
required under each Lease, protecting Secured Party, as an additional insured,
or loss payee, or both at the option of the Secured Party, and providing for
Thirty (30) days advance written notice to Secured Party of modification or
cancellation; provided however, that if any notice period specified above is not
commercially available, such policies shall provide for as long a period of
prior notice as is then commercially available. Debtor shall within Thirty (30)
days of the date hereof for Leases to domestic Lessees and within Sixty (60)
days of the date hereof for foreign Lessees (and, in each case, annually
thereafter) deliver to Secured Party satisfactory evidence of such insurance
coverage. In the event Debtor fails to provide satisfactory evidence of coverage
within ten (10) days of a written request thereof by Secured Party, then Secured
Party may, at Secured Party's option, in addition to any other rights available
to Secured Party, obtain coverage, and any sum paid therefor by Secured Party
shall be immediately due and payable to Secured Party by Debtor.
Without limitation of the insurance provisions set out in the preceding
paragraph, it is agreed that Debtor will carry or cause to be carried at its own
or at each Lessee's expense:
(a) Comprehensive Airline liability (including, without limitation,
passenger legal liability) insurance and property damage insurance
(exclusive of manufacturer's product liability insurance) with respect
to the Engines in an amount not less than $20,000,000 per occurrence;
and,
(b) Insurance against Loss or damage, consisting of all-risk hull insurance
covering the Engines, and all-risk coverage of the Engines and parts
while removed from any aircraft and not replaced by similar components.
Such insurance shall at times while the Engines are subject to this
Agreement be for not less than 41,500,000.00 in the aggregate for all
Engines or a lesser amount equal to the then remaining balance due
hereunder.
Any policies carried in accordance with this section shall name the Secured
Party as an additional insured, without imposing upon Secured Party any
liability to pay premiums with respect to such insurance. If any material change
shall be made in the insurance that adversely affects the interest of Secured
Party, any cancellation or change shall not be effective as to the Secured Party
for thirty (30) days after receipt by Secured Party of written notice by such
insurer; provided, however, that if any notice period specified above is not
commercially available, such policies shall provide for as long a period of
prior notice as is then commercially available. Such insurance shall be primary
without any right of contribution from any other insurance that is carried by
the Secured Party.
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Insurance payments for any property damage loss to the Engines will be
applied in payment for repairs or for replacement property. All such insurance
proceeds remaining after compliance with this section will be paid to the
Debtor. During any period that any Engine is in storage and reasonable
precautions have been taken to insure that the Engine will not be used or
operated without the insurance required hereunder, Debtor may carry or cause to
be carried, in lieu of the insurance otherwise required above, insurance
otherwise conforming to that carried by Debtor or each Lessee for aircraft
engines similar to the Engines in similar storage. Such insurance shall be in an
amount equal to the lesser of the Initial Principal Balance allocated to such
Engine as set forth on Exhibit "A" or the amount required pursuant to each
Lease.
2.11 Use, Location and Maintenance of the Collateral. Debtor may use
and operate, or permit the use and operation of, the Engines within and without
the continental limits of the United States of America. Debtor agrees not to
knowingly suffer the Engines to be maintained, used or operated in violation of
any law or any rule, regulation or order of any domestic or foreign governmental
authority having jurisdiction over the Engines or registration relating to the
Engines issued by any such authority. Debtor also agrees not to suffer the
Engines to be used or operated, in any area not fully covered by each insurance
policy in effect with respect to the Engines and required by the terms hereof.
At its own risk, Debtor shall use or permit the use of the Engines. Debtor shall
not use or permit the use of the Engines in any unintended, injurious or
unlawful manner and shall not change or alter or permit the change or alteration
of the Engines (except pursuant to the Leases or future leases) without Secured
Party's written consent which shall not be unreasonably withheld. Debtor, at its
own cost and expense, shall comply (or cause each Lessee to comply) with all
applicable service, maintenance, repair and overhaul regulations, directives and
instructions of applicable governmental authority, and all applicable
maintenance, service, repair and overhaul manuals and service bulletins
published by the manufacturers of the Engines or the accessories, equipment and
parts installed on the Engines. Debtor shall maintain (or cause each Lessee to
maintain) all records, logs and other materials required by the aeronautics
authority to be maintained in respect to the Engines after delivery, regardless
of upon whom such requirements are, by their terms, normally imposed. Debtor
shall comply (or cause each Lessee to comply) with all laws of the jurisdiction
in which the Engines may be operated and within all rules of the FAA and other
legislative, executive, administrative or judicial body exercising any power or
jurisdiction over the Engines, to the extent that such laws and rules affect the
operation, maintenance or use of the Engines. In the event that such laws or
rules require the alteration of the Engines, Debtor shall conform or obtain
conformance therewith at no expense of Secured Party, and shall maintain (or
cause each Lessee to maintain) the Engines in proper condition for operation
under such laws and rules; provided, however, that Debtor may in good faith
contest, or permit the Lessees to contest, the validity and application of any
such law or rule in any reasonable manner which does not adversely affect the
Engines or rights of Secured Party hereunder, or to the Engines. No technical or
non-substantial non-compliance with the provisions of this paragraph shall be
deemed a material breach if Debtor shall have obtained, or caused to be
obtained, from the appropriate authorities permissions, extensions or
continuances.
2.12 Taxes and Assessments. Debtor will pay (or cause to be paid)
promptly when due all taxes, assessments, levies, imposts, duties and charges,
of any kind or nature, imposed upon the Collateral or for its use or operation
or upon this Agreement or upon any instruments evidencing the obligations except
for (i) taxes on Secured Party's net income, or (ii) taxes being contested in
good faith.
2.13 Financial Statements. Debtor shall furnish to Secured Party,
within sixty (60) days of the end of each calendar quarter, the Form 10Q
submitted by Debtor to the Securities and Exchange Commission for that quarter.
Debtor shall furnish Secured Party within one hundred twenty (120) days after
the close of each fiscal year of Debtor, its financial statements (including,
without limitation, a balance sheet, a statement of income and surplus account
and a statement of changes in financial position) for the immediately preceding
fiscal year, setting forth the corresponding figures for the prior fiscal year
in comparative form, all in reasonable detail without any qualification or
exception deemed material by Secured Party. Such financial statements shall be
prepared at least as a review by Debtor's independent certified accountants and,
if prepared as an audit, shall be certified by such accountants. Debtor shall
also furnish Secured Party with any other financial information reasonably
deemed necessary by Secured Party. Each financial statement submitted by Debtor
to Secured Party shall be accompanied by a certificate signed by the chief
executive officer, the chief operating officer or the chief financial officer of
Debtor, certifying that (i) such financial statement was prepared in accordance
with generally accepted accounting principles consistently applied and fairly
and accurately presents the Debtor's financial condition and results of
operations for the period to which it pertains, and (ii) that no Event of
Default has occurred under this Agreement during the period to which such
financial statement pertains.
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3.0 EVENTS OF DEFAULT
3.1 The following shall be considered Events of Default: (i) failure on
the part of Debtor to promptly perform in complete accordance with its
representations, warranties and covenants made in this Agreement, including, but
not limited to, the payment of any liability, with interest, when due; (ii) the
dissolution of Debtor; (iii) the filing of any petition or complaint under the
Federal Bankruptcy Code or other federal or state acts of similar nature, by or
against Debtor; or an assignment for the benefit of creditors by Debtor; (iv) an
application for or the appointment of a Receiver, Trustee or Conservator,
voluntary or involuntary, by or against Debtor or for any substantial assets of
Debtor; (v) insolvency of Debtor under either the Federal Bankruptcy Code or
applicable principles of equity; (vi) entry of judgment, issuance of any
garnishment or attachment, or filing of any lien, claim (which can be reasonably
substantiated) or government attachment against the Collateral in excess of Five
Million Dollars ($5,000,000.00) in the aggregate which remains undischarged,
unvacated, unbonded, or unstayed for more than Thirty (30) days; (vii) a
material misrepresentation of fact has been made by Debtor in this Agreement or
in any writing supplementary or ancillary hereto; or (viii) bankruptcy,
insolvency, termination, dissolution or default of any guarantor for Debtor.
Upon an Event of Default resulting from a material misrepresentation by Debtor,
Secured Party shall be entitled to exercise its remedies immediately. Upon an
Event of Default resulting from the failure on the part of Debtor in regard to
the payment of any liability arising hereunder when due, Secured Party shall
give Debtor ten (10) days written notice and an opportunity to cure. Upon any
other Event of Default as set forth herein, Secured Party shall give Debtor
thirty (30) days written notice and an opportunity to cure.
4.0 REMEDIES
4.1 Upon the happening of any Event of Default which is not cured
within the applicable grace period and at any time thereafter and subject to the
Lessees' rights under the Leases: (i) all liabilities of Debtor shall, at the
option of Secured Party, become immediately due and payable; (ii) Secured Party
shall have and may exercise all of the rights and remedies granted to a secured
party under the Uniform Commercial Code; (iii) should such Event of Default
occur during the first year of this transaction Secured Party shall have the
right, immediately, and without notice or other action, to set-off against any
of Debtor's liabilities to Secured Party the Cash Collateral (as defined in the
Schedule), and Secured Party shall be deemed to have exercised such right of
set-off and to have made a charge against any such Cash Collateral immediately
upon the occurrence of such Event of Default and the expiration of any
applicable grace period, though actual book entries may be made at some time
subsequent thereto; (iv) Secured Party may proceed with or without judicial
process to take possession of all or any part of the Collateral; Debtor agrees
that upon receipt of notice of Secured Party's intention to take possession of
all or any part of said Collateral, Debtor will do everything necessary to make
same available to Secured Party (including, without limitation, assembling the
Collateral and making it available to Secured Party at a place designated by
Secured Party which is reasonably convenient to Debtor and Secured Party); and
so long as Secured Party acts in a commercially reasonable manner, Debtor agrees
to assign, transfer and deliver at any time the whole or any portion of the
Collateral or any rights or interest therein in accordance with the Uniform
Commercial Code and without limiting the scope of Secured Party's rights
thereunder; (v) Secured Party may sell the Collateral at public or private sale
or in any other commercially reasonable manner and, at the option of Secured
Party, in bulk or in parcels and with or without having the Collateral at the
sale or other disposition, and Debtor agrees that in case of sale or other
disposition of the Collateral, or any portion thereof, Secured Party shall apply
all proceeds first to all costs and expenses of disposition, including
reasonable attorneys' fees, and then to Debtors obligations to Secured Party;
(vi) Secured Party may elect to retain the Collateral or any part thereof in
satisfaction of all sums due from Debtor upon notice to Debtor and any other
party as may be required by the Uniform Commercial Code. All remedies provided
in this paragraph shall be cumulative. Secured Party may exercise any one or
more of such remedies in addition to any and all other remedies Secured Party
may have under any applicable law or in equity.
4.2 Expenses; Disposition. Upon the occurrence of an Event of Default
and until same is cured, all amounts due and to become due hereunder shall,
without notice, bear interest at the lesser of (i) twelve percent (12%) per
annum or (ii) the maximum rate per annum which Secured Party is permitted by law
to charge from the date such amounts are due until paid. Debtor shall pay all
reasonable expenses of realizing upon the Collateral hereunder upon the
occurrence of an Event of Default and the expiration of any applicable grace
period and collecting all liabilities of Debtor to Secured Party, which expenses
shall include reasonable attorneys' fees, whether or not litigation is commenced
and whether incurred at trial, on appeal, or in any other proceeding. Any
notification of a sale or other disposition of Collateral or of other action by
Secured Party required to be given by Secured Party, will be sufficient if given
personally, mailed, or delivered by facsimile machine or overnight carrier not
less than five (5) business days prior to the day on which such sale or other
disposition will be made or action taken, and such notification shall be deemed
reasonable notice.
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5.0 MISCELLANOUS
5.1 No Implied Waivers; Entire Agreement. The waiver by Secured Party
of any default hereunder or of any provisions hereof shall not discharge any
party hereto from liability hereunder and such waiver shall be limited to the
particular event of default and shall not operate as a waiver of any subsequent
default. This Agreement and any Schedule hereunder are non-cancelable. No
modification of this Agreement or waiver of any right of any party hereunder
shall be valid unless in writing and signed by an authorized officer of the
parties hereto. No failure on the part of Secured Party to exercise, or delay in
exercising, any right or remedy hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any right or remedy hereunder preclude
any other or further exercise thereof or the exercise of any other right or
remedy. This Agreement and any Schedule hereunder (a "Transaction") embody the
entire agreement between the parties and supersede all prior agreements and
understandings relating to the same subject matter.
5.2 Choice of Law. This Agreement and the rights of the parties hereto
shall be governed by applicable Federal law and the laws of the State of
California. Any action arising out of this Agreement may be litigated under the
laws of California and submitted to the non-exclusive jurisdiction of the courts
of such state, and that service of process by certified mail, return receipt
requested, will be sufficient to confer personal jurisdiction over the Debtor.
5.3 Protection of the Collateral. At its option, upon the occurrence of
an Event of Default and the expiration of any applicable grace period, Secured
Party may discharge taxes, liens or other encumbrances at any time levied or
placed on the Collateral, may pay for insurance on the Collateral and may pay
for the maintenance and preservation of the Collateral. Debtor agrees to
reimburse Secured Party on demand for any payment made or any expense incurred
by Secured Party pursuant to the foregoing authorization. Any such payments made
by Secured Party shall be immediately due and payable by Debtor and shall bear
interest at the rate of Twelve percent (12%) per annum. Until the occurrence of
an Event of Default and the expiration of any applicable grace period, Debtor
may retain possession of the Collateral and use it in any lawful manner not
inconsistent with the provisions of this Agreement and any other agreement
between Debtor and Secured Party, and not inconsistent with any policy of
insurance thereon.
5.4 Binding Agreement; Time of the Essence. This Agreement shall take
effect as a sealed instrument and shall be binding upon and shall inure to the
benefit of the parties hereto, their respective successors and assigns. Time is
of the essence with respect to the performance of Debtor's obligations under
this Agreement.
5.5 Enforceability. Any term, clause or provision of this Agreement or
of any evidence of indebtedness from Debtor to Secured Party which is
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
only to the extent of such prohibition or unenforceability without invalidating
the remaining terms or clauses of such provision or the remaining provisions
hereof, and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such term, clause or provision in any
other jurisdiction.
5.6 Notices. Any notices or demands required to be given herein shall
be given to the parties in writing by facsimile with an original sent via
Federal Express (or other recognized express carrier) or by United States first
class mail (express, certified or otherwise) at the addresses set forth on page
1 of this Agreement or to such other addresses as the parties may hereafter
substitute by written notice given in the manner prescribed in this paragraph
via facsimile.
5.7 Discharge of the Agreement. This Agreement and the related Schedule
and all agreements contained herein and therein shall cease and terminate when
all the obligations of Debtor to Secured Party under the Agreement and the
Schedule have been satisfied in full. Upon such termination and cessation of
this Agreement and the Schedule, the Secured Party shall execute and deliver
such instruments as shall be reasonably requested by Debtor (at Debtor's
expense) to satisfy, discharge, release and clear the public record of the
security interest granted to Secured Party in the Collateral under this
Agreement and the Schedule. In addition, if an Engine is sold pursuant to
Section 2.7 of the Agreement or if the loan is prepaid in part pursuant to
Section 6 of the Schedule and the Schedule is terminated with respect to that
Engine pursuant to Section 8 of the Schedule, then Secured Party shall execute
and deliver such instruments as shall be reasonably requested by Debtor (at
Debtor's expense) to satisfy, discharge, release and clear the public record of
the security interest granted to Secured Party in such Engine and any related
Lease.
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6.0 ASSIGNMENT
6.1 UPON THIRTY DAYS PRIOR NOTICE TO DEBTOR, SECURED PARTY MAY SELL OR
ASSIGN ANY AND ALL RIGHT, TITLE AND INTEREST IT HAS IN THE COLLATERAL AND/OR
ARISING UNDER THIS AGREEMENT, SUBJECT TO AND IN ACCORDANCE WITH THE TERMS OF THE
LEASES AND ANY RELATED DOCUMENTS. DEBTOR SHALL, UPON THE DIRECTION OF SECURED
PARTY: 1) EXECUTE ALL DOCUMENTS REASONABLY NECESSARY TO EFFECTUATE SUCH
ASSIGNMENT AND, 2) PAY DIRECTLY AND PROPERLY TO SECURED PARTY'S ASSIGNEE ALL
AMOUNTS WHICH HAVE BECOME DUE UNDER THE ASSIGNED AGREEMENTS. SECURED PARTY'S
ASSIGNEE SHALL HAVE ANY AND ALL RIGHTS, IMMUNITIES AND DISCRETION OF SECURED
PARTY HEREUNDER AND SHALL BE ENTITLED TO EXERCISE ANY REMEDIES OF SECURED PARTY
HEREUNDER. ALL REFERENCES HEREIN TO SECURED PARTY SHALL INCLUDE SECURED PARTY'S
ASSIGNEE (EXCEPT THAT SAID ASSIGNEE SHALL NOT BE CHARGEABLE WITH ANY OBLIGATIONS
OR LIABILITIES HEREUNDER OK IN RESPECT HEREOF).
6.2 NOTWITHSTANDING THE FOREGOING, SECURED PARTY SHALL NOT ASSIGN ITS
INTEREST HEREUNDER PRIOR TO JUNE 1, 1998 AND, THEREAFTER, SHALL NOT ASSIGN ITS
INTEREST HEREUNDER EXCEPT TO AN "INSTITUTIONAL" INVESTOR WHICH IS NOT A DIRECT
COMPETITOR OF DEBTOR. IN THE EVENT THAT SECURED PARTY ASSIGNS ITS INTEREST
HEREUNDER TO MORE THAN ONE SUCH INSTITUTIONAL INVESTOR, SECURED PARTY SHALL
REMAIN RESPONSIBLE FOR SERVICING THIS AGREEMENT.
6.3 EXCEPT AS OTHERWISE SET FORTH IN THIS AGREEMENT, DEBTOR SHALL NOT
ASSIGN OR IN ANY WAY DISPOSE OF ALL OR ANY OF ITS RIGHTS OR OBLIGATIONS UNDER
THIS AGREEMENT OR ENTER INTO ANY AGREEMENT REGARDING ALL OR ANY PART OF THE
COLLATERAL WITHOUT THE PRIOR WRITTEN CONSENT OF SECURED PARTY WHICH SHALL NOT BE
UNREASONABLY WITHHELD.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day set forth above.
[ * ] XXXXXX LEASE FINANCE CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------
An Authorized Officer Thereof
TERANDON LEASING CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------
An Authorized Officer Thereof
[ * ]
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[ * ] Confidential Treatment Requested
Exhibit A To Master Loan and Security Agreement
Dated as of January 28, 1997 Between
Terandon Leasing Corporation and Xxxxxx Lease Finance Corporation as Debtor
and
[ * ]
ENGINES
Manufacturer Model No. and Manufacturer's Allocation of Initial
------------ ---------------------------- ---------------------
Serial No. Principal Balance and
---------- ---------------------
Cash Collateral
---------------
General Electric Model No. CF6-50C2 4.82%
Serial No. 455423
Rolls Royce Model No. RB-211-535-E-4 8.01%
Serial No. 30771
General Electric Model No. CF6-50C2 4.77%
Serial No. 530114
Xxxxx & Xxxxxxx Model No. JT9D-7J 5.88%
Serial No. 685971
Xxxxx & Whitney Model No. JT9D-7J 5.96%
Serial No. P689462
General Electric Model No. CF6-80C2B6 10.16%
Serial Xx. 000000
Xxxxx & Xxxxxxx Xxxxx Xx. XX0X-0X0X 5.83%
Serial No. P709685
Xxxxx & Whitney Model No. JT8D-219 5.90%
Serial No. P718262
CFM International Model No. CFM 56-3B-2 6.14%
Serial No. 720190
CFM International Model No. CFM-56-3B2 3.65%
Serial No. 721397
CFM International Model No. CFM 56-3C-1 4.68%
Serial No. 725180
CFM International Model No. CFM-56-3B-2 3.14%
Serial No. 725192
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[ * ] Confidential Treatment Requested
Page 1 of 0
XXX Xxxxxxxxxxxxx Xxxxx Xx. XXX-00-0X0 3.23%
Serial No. 725557
CFM International Model No. CFM 56-5A3 10.09%
Serial No. 731570
CFM International Model No. CFM-56-3C1 4.53%
Serial No. 856173
(Previous Serial No. 620173)
CFM International Model No. CFM-56-3C1 4.45%
Serial No. 856256
General Electric Model No. CF6-50C2 4.84%
Serial No. 455788
Xxxxx & Whimey Model No. JT8D-219 3.91%
Serial No. P718210D
[THE BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK]
Page 2 of 5
(Pages 3, 4 and 5 of 5) [ * ]
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[ * ] Confidential Treatment Requested
SCHEDULE TO MASTER LOAN [ * ]
AND SECURITY AGREEMENT
Xxxxxx Lease Finance Corporation
& Terandon Leasing Corporation
000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxxx 00000
$41,500,000.00 Effective Date ______________ Loan Transaction Number
1. THIS SCHEDULE is made between Xxxxxx Lease Finance Corporation & Terandon
Leasing Corporation, as Co-Debtors, (referred to herein as "Debtor") and [ * ]
(which, together with its successor and permited assigns, will be called the
"Secured Party") pursuant to the Master Loan and Security Agreement dated as of
January 28, 1997 (the "Loan Agreement"), the terms of which (including the
definitions) are incorporated herein. If any terms hereof are inconsistent with
the terms of the Loan Agreement, the terms hereof shall prevail.
2. FOR VALUE RECEIVED, Debtor hereby promises to pay to the order of Secured
Party the principal amount of Forty-One Million, Five Hundred Thousand and
00/100 Dollars ($41,500,000.00) with interest on any outstanding principal
balance at the rate(s) specified herein from the Effective Date hereof until
this Schedule shall have been paid in full, in accordance with the following
payment schedule: Eleven (11) installments of $520,705.65 each, including the
entire amount of interest accrued on this Schedule at the time of payment of
each installment, followed by one installment of approximately $38,104,879.49
(the "Final Installment"), including the entire amount of interest accrued on
this Schedule at the time of payment of such Final Installment (this Twelve (12)
month period shall be referred to herein as the "Initial Term"). The first
payment shall be due on April 1, 1997 and a payment shall be due on the same day
of each succeeding month thereafter until the entire principal and interest have
been paid. The Final Installment shall be due on March 1, 1998. At the time of
the Final Installment hereon, all unpaid principal and interest shall be due and
owing. Each payment shall be applied first to accrued and unpaid interest, and
the balance to the outstanding principal hereof. Simultaneously with and in
addition to the first installment due hereunder, Debtor shall pay per diem
interest in the total amount of $65,372.63, based upon per diem interest of
$7,263.63 per day from February 20, 1997 through, and including, February 28,
1997.
3. EXTENDED TERM OPTION. Debtor may elect to pay the Final Installment over a 72
month term (the "Extended Term"). Debtor shall notify Secured Party in writing
of such election not less than Thirty (30) days prior to the date on which such
Final Installment is due. In connection with such notification, Debtor shall pay
to Secured Party a fee in the amount of .625% of the amount of the Final
Installment. The first payment due during the Extended Term shall be due on
March 1, 1998 and a payment shall be due on the same day of each succeeding
month thereafter until the entire principal and interest have been paid. The
final installment during the Extended Term shall be due on February 1, 2004.
4 [ * ]
5 FLOATING RATE ADJUSTMENTS. During the Extended Term, Secured Party may, from
time to time, increase or decrease the amount of unpaid installments to an
amount Secured Party deems necessary to amortize the outstanding principal
balance of this Schedule by the due date of the last installment. Secured Party
shall notify Debtor of each such change in writing. Whether or not the
installment amount is increased or decreased, Debtor understands that, as a
result of increases or decreases in the rate of interest in accordance herewith,
the Final Installment and/or the last installment due during the Extended Term
may be substantially more or substantially less than the amount originally
estimated.
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[ * ] Confidential Treatment Requested
6. PREPAYMENT. This Schedule may be prepaid in whole or in part at any time
without penalty. In connection with partial prepayments, Debtor shall remit to
Secured Party the pro rata share of the then principal balance attributable to
the item of Collateral with respect to which this Schedule is being prepaid.
Upon receipt of such partial prepayment, Secured Party shall remit to Debtor a
portion of the Cash Collateral (as defined in Paragraph 9) equal to the
percentage reduction in the then outstanding principal balance.
7. COLLATERAL DESCRIPTION. The following property is hereby made Collateral for
all purposes under the Loan Agreement:
Those certain Aircraft Engine Lease Agreements between Terandon Leasing
Corporation as Lessor and various Lessees (the "Lessees") all more
particularly described on Exhibit "A" attached to the Loan Agreement (the
"Leases"), and related schedules, documents, and proceeds thereof,
including but not limited to, all rents, engine reserve payments, security
deposits and all other sums whatsoever payable by Lessees to Lessor in
regard to the following Aircraft Engines and subject to the rights of the
Lessees under such Leases.
Eighteen (18) Aircraft Engines as more particularly described on Exhibit
"A" (the "Engines") complete as equipped including, but not limited to, all
accessories, improvements, components, furnishings, substitutions,
additions, replacements, parts, tools, equipment, and books and records now
or hereafter affixed to or used in connection with such Engines. As well as
all income, rents, lease payments, rates, fees, accounts receivable, and
proceeds (including any recoveries from physical damage insurance), whether
now existing or hereafter arising, plus any and all interest in such
Engines whether or not such Engines are or may be construed as inventory of
Terandon Leasing Corporation.
8. ALLOCATION OF INITIAL PRINCIPAL BALANCE. Debtor and Secured Party agree that,
for purposes of this Schedule and the Loan Agreement, each of the Engines shall
be valued at the amount set forth on Exhibit "A" and that, Debtor may terminate
this Schedule with respect to any Engine by paying to Secured Party an amount
equal to the proportionate share of that Engine to the total amount advanced
hereunder multiplied by the then outstanding principal balance of this Schedule.
9. CASH COLLATERAL. As additional collateral security for this transaction,
Debtor hereby pledges to Secured Party all of Debtor's right, title and interest
in and to the amounts deposited in an account titled Terandon Leasing
Corporation Maintenance Reserve Deposit Account, Account Number 000-00000-0,
located at Marine Midland Bank, Buffalo, New York, ABA Number 000-000-000 (the
"Account").
Immediately following funding by Secured Party in the amount of $41,500,000,
Debtor shall deposit with (or cause to be deposited with) Secured Party the sum
of Eight Million Dollars ($8,000,000) to be held by Secured Party as additional
collateral security for this transaction during the Initial Term (the "Cash
Collateral"). Upon receipt of the Cash Collateral by Secured Party, Secured
Party shall advise Marine Midland Bank that Secured Party has no further
interest in the Account and Debtor's pledge of such Account to Secured Party
shall terminate without any other or further action on the part of Debtor or
Secured Party.
The Cash Collateral is pledged by Debtor to Secured Party as security for all
Debtor's obligations during the Initial Term under the Loan Agreement and this
Schedule. In the event that, during the Initial Term, an Event of Default should
occur and continue beyond any applicable grace period, Secured Party may apply
the Cash Collateral to cure any such Event of Default, and upon such
application, Debtor shall immediately restore to Secured Party the full value of
such Cash Collateral. At the end of the Initial Term, Secured Party shall apply
the Cash Collateral against the Final Installment unless Debtor elects to extend
the term hereof. At the commencement of the Extended Term, Secured Party shall
have the option to either reduce the opening principal balance of the Extended
Term by the amount of the Cash Collateral or to transfer such amount to an
account in the name of Debtor, to be pledged by Debtor to Secured Party and held
by Secured Party as an Engine Reserve.
3
10. ENGINE RESERVES. During the Initial Term, Debtor shall collect and use
engine reserve payments from each Lessee in accordance with the terms and
conditions of each Lease and Debtor shall provide to Secured Party, on a
quarterly basis, an accounting of all receipts and disbursements in this regard.
As set forth above, at the commencement of the Extended Term, the Cash
Collateral may, at the option of Secured Party, be combined with such engine
reserve payments. The share of the Cash Collateral which has been remitted to
Debtor by each Lessee is set forth on Exhibit "A." The total of the Cash
Collateral and any engine reserve payments collected by Debtor during the
Initial Term but not used by Debtor shall be referred to herein as the "Engine
Reserve." The Engine Reserve shall be allocated among the Engines and the Leases
subject to the rights of the Lessees under the Leases. Such Engine Reserve shall
be held at [ * ] and shall be pledged in support of Debtor's obligations
hereunder. At least Thirty (30) days prior to the end of the Initial Term,
Debtor and Secured Party shall enter into an Engine Reserve Agreement which
shall specify the terms and conditions governing the use of such Engine Reserve.
11. ENGINE APPRAISAL. On of before each anniversary date of the Extended Term,
Debtor shall provide to Secured Party, at Debtor's sole expense, an appraisal of
the Engines conducted by a qualified appraiser reasonably acceptable to Secured
Party. In the event that such appraisal indicates that the total "Half Life
Liquidation Value" of the Engines is less than the then outstanding principal
balance hereunder, Debtor shall remit to Secured Party an amount necessary to
reduce the then outstanding principal balance to such appraisal value.
12. [ * ]
13. PAY PROCEEDS INSTRUCTIONS. Debtor hereby instructs and authorizes Secured
Party to disburse the proceeds to be funded hereunder as follows:
$41,500,000.00 to Marine Midland Bank, Buffalo, New York, ABA Number 000-000-000
IN WITNESS WHEREOF, Debtor has executed this Schedule as of the 28th day of
January, 1997.
[ * ] XXXXXX LEASE FINANCE CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------
An Authorized Officer Thereof
TERANDON LEASING CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------
An Authorized Officer Thereof
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[ * ] Confidential Treatment Requested
