AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT, dated as of July 16,
2002, among the financial institutions listed on the signature pages hereof
(such financial institutions, together with their respective successors and
assigns, are referred to hereinafter each individually as a "Lender" and
collectively as the "Lenders"), Bank of America, N.A. (in its capacity as agent,
the "Agent" and/or security trustee, the "Security Trustee", as the case may
be), Bank of America, N.A. (in its capacity as lead arranger and syndication
manager, the "Syndication Agent"), and KAV Inventory, LLC, a Delaware limited
liability company (the "Borrower").
W I T N E S S E T H:
WHEREAS, the Borrower, the Agent, the Syndication Agent and the Lenders
entered into that certain Loan and Security Agreement, dated at December 1, 2000
(as amended, restated, supplemented or otherwise modified from time to time,
(the "Loan Agreement") pursuant to which the Lenders made a loan facility
available to the Borrower;
WHEREAS, Xxxxxxxxx defaulted under the terms of that certain
Consignment Agreement dated December 1, 2000 between Borrower and Xxxxxxxxx and
on or about October 15, 2001, Agent notified Borrower of the default and
accelerated the Loan Agreement;
WHEREAS, Xxxxxxxxx filed a voluntary petition for relief under Chapter
11 of the United States Bankruptcy Code (the "Bankruptcy Code") on February 20,
2002 and Xxxxxxxxx'x bankruptcy case is currently pending in the United States
Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"), Case No.
02-10536 (the "Bankruptcy Case");
WHEREAS, Xxxxxxxxx obtained authorization and approval from the
Bankruptcy Court to enter into an Asset Sale Agreement, as amended, restated or
supplemented, (the "Asset Sale Agreement") by and among Xxxxxxxxx and KIAC (as
defined herein) and to consummate the transactions provided for therein,
including the Borrower and KIAC entering into the Consignment Agreement; and
WHEREAS, the outstanding obligations under the Loan Agreement are to be
capitalized and converted into a term loan upon the terms and conditions set
forth in this Agreement, and the Agent, the Syndication Agent and the Lenders
have agreed to restructure the loan facility upon the terms and conditions set
forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth in this Agreement, and for good and valuable consideration,
the receipt of which is hereby acknowledged, the parties hereto agree as
follows.
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ARTICLE 1
INTERPRETATION OF THIS AGREEMENT
1.1 Definitions. As used herein:
"Accounts" means all of the Borrower's now owned or hereafter
acquired or arising accounts, as defined in the UCC, including any rights to
payment for the sale, lease or exchange of goods or rendition of services,
whether or not they have been earned by performance, including, but not limited
to all amounts payable by KIAC to the Borrower pursuant to the Consignment
Agreement.
"Account Debtor" means each Person obligated in any way on or in
connection with an Account.
"Acquisition" means the acquisition by Xxxxxxxxx of the aircraft
and aircraft engine spare parts redistribution business of TIMCO Distribution.
"Acquisition Documents" means, collectively, the Inventory Purchase
Agreement, the Asset Purchase Agreement (including any novations necessary to
effect the assignments contemplated thereunder), the Consignment Agreement, the
Cooperation Agreement, the Operating Agreement, the Transition Services
Agreement, the Non-Competition Agreement and the License Agreement (including
any schedules, exhibits and annexes thereto).
"Affiliate" means, (a) as to the Borrower, Xxxxxxxxx and XXXXX and
(b) as to any Person other than the Borrower, any other Person which, directly,
is in control of, is controlled by, or is under common control with, such Person
or which owns, directly, five percent (5%) or more of the outstanding equity
interest of such Person. A Person shall be deemed to control another Person if
the controlling Person possesses, directly, the power to direct or cause the
direction of the management and policies of the other Person, whether through
the ownership of voting securities, by contract, or otherwise.
"Agent" means the Bank, solely in its capacity as agent for the
Lenders, and any successor agent.
"Agent Advances" has the meaning specified in Section 2.2(b).
"Agent's Liens" means the Liens on the Collateral granted to the
Agent, for the benefit of the Lenders, Bank, and Agent pursuant to this
Agreement and the other Loan Documents.
"Agent-Related Persons" means the Agent and the Security Trustee,
together with their Affiliates, and the officers, directors, employees, agents
and attorneys-in-fact of the Agent and the Security Trustee and such Affiliates.
"Agreement" means this Amended and Restated Loan and Security
Agreement.
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"Anniversary Date" means each one-year anniversary of the Original
Closing Date.
"Applicable Margin" means two percent (2.0%).
"Appraisal" means an appraisal setting forth the Orderly
Liquidation Value of all of the Borrower's Inventory, which appraisal shall be
prepared in accordance with Section 6.5.
"Asset Purchase Agreement" means the Asset Purchase Agreement,
dated as of September 20, 2000, among TIMCO, TIMCO Distribution and Xxxxxxxxx,
together with four (4) letter agreements, dated September 20, 2000, as amended
by three (3) letter agreements, dated November 14, 2000, November 17, 2000, and
November 28, 2000, in each case, among TIMCO, TIMCO Distribution and Xxxxxxxxx
as further amended by the PCRA.
"Assignee" has the meaning specified in Section 13.2(a).
"Assignment and Acceptance" has the meaning specified in Section
13.2(a).
"Attorney Costs" means and includes all reasonable fees, expenses
and disbursements of any law firm or other counsel engaged by the Agent.
"Bank" means Bank of America, N.A., a national banking association,
or any successor entity thereto.
"Bank Products" means any Hedge Agreements extended to the Borrower
by the Bank or any affiliate of the Bank in reliance on the Bank's agreement to
indemnify such affiliate.
"Bank Product Reserves" means all reserves which the Agent from
time to time establishes in its good faith judgment for the Bank Products then
provided or outstanding.
"Bankruptcy Code" means Title 11 of the United States Code (11
U.S.C.(S) 101 et seq.).
"Based" means, with respect to any Account Debtor, that such
Account Debtor's principal place of business, chief executive office, or
principal operations are located in such geographic location.
"Base Rate" means, for any day, the rate of interest in effect for
such day as publicly announced from time to time by the Bank in Charlotte, North
Carolina as its "prime rate" (the "prime rate" being a rate set by the Bank
based upon various factors including the Bank's costs and desired return,
general economic conditions and other factors, and is used as a prime point for
pricing some loans, which may be priced at, above, or below such announced
rate). Any change in the prime rate announced by the Bank shall take effect at
the opening of business on the day specified in the public announcement of such
change. Each Interest Rate based upon the Base Rate shall be adjusted
simultaneously with any change in the Base Rate.
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"Blocked Account Agreement" means an agreement among the Borrower,
the Agent and the Bank, in form and substance satisfactory to the Agent,
concerning the collection of payments which represent the proceeds of Accounts
or of any other Collateral.
"Business Day" means any day that is not a Saturday, Sunday, or a
day on which banks in Atlanta, Georgia or Charlotte, North Carolina are required
or permitted to be closed.
"Capital Adequacy Regulation" means any guideline, request or
directive of any central bank or other Governmental Authority, or any other law,
rule or regulation, whether or not having the force of law, in each case,
regarding capital adequacy of any bank or of any corporation controlling a bank.
"Capital Expenditures" means all payments due (whether or not paid)
in respect of the cost of any fixed asset or improvement, or replacement,
substitution, or addition thereto, which has a useful life of more than one
year, including, without limitation, those costs arising in connection with the
direct or indirect acquisition of such asset by way of increased product or
service charges or in connection with a Capital Lease.
"Capital Lease" means any lease of property by the Borrower which,
in accordance with GAAP, should be reflected as a capital lease on the balance
sheet of Borrower.
"Capitalized Lease Obligation" means Debt represented by
obligations under a Capital Lease, and the amount of such Debt shall be the
capitalized amount of such obligations determined in accordance with GAAP.
"Change of Control" means Xxxxxxxxx or TIMCO's sale or liquidation
of their respective membership interests of the Borrower, but specifically
excludes TIMCO's acquisition of Xxxxxxxxx'x membership interest.
"Chattel Paper" means all chattel paper as such term is defined in
the Uniform Commercial Code, including, without limitation, the original of each
Lease Agreement.
"Closing Date" means the date of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from
time to time, and any successor statute, and regulations promulgated thereunder.
"Collateral" has the meaning specified in Section 6.1.
"Collateral Assignment of Consignment Agreement" means the
Collateral Assignment of Consignment Agreement executed by the Borrower in favor
of the Agent for the benefit of the Lenders.
"Collateral Assignment of Inventory Purchase Agreement" means the
Collateral Assignment of Inventory Purchase Agreement executed by the Borrower
in favor of the Agent for the benefit of the Lenders.
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"Commitment" means, at any time with respect to a Lender, the
principal amount set forth beside such Lender's name under the heading
"Commitment" on the signature pages of this Agreement or on the signature page
of the Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 13.2, as such Commitment
may be adjusted from time to time in accordance with the provisions of Section
13.2, and "Commitments" means, collectively, the aggregate amount of the
commitments of all of the Lenders.
"Consignment Agreement" means the Consignment Agreement, dated as
of even date herewith, by and among the Borrower, the Agent and KIAC.
"Contaminant" means any waste, pollutant, hazardous substance,
toxic substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, asbestos in any form or condition, polychlorinated biphenyls
("PCBs"), or any constituent of any such substance or waste.
"Cooperation Agreement" means the Cooperation Agreement, dated as
of December 1, 2000, by and among TIMCO, TIMCO Distribution and Xxxxxxxxx as
amended by the PCRA.
"Debt" means, without duplication all liabilities, obligations and
indebtedness of the Borrower to any Person, of any kind or nature, now or
hereafter owing, arising, due or payable, howsoever evidenced, created,
incurred, acquired or owing, whether primary, secondary, direct, contingent,
fixed or otherwise, and including, without in any way limiting the generality of
the foregoing: (a) the Borrower's liabilities and obligations to trade
creditors, if any; (b) all Obligations; (c) all obligations and liabilities of
any Person secured by any Lien on the Borrower's property, even though the
Borrower shall not have assumed or become liable for the payment thereof,
provided, however; that all such obligations and liabilities which are limited
in recourse to such property shall be included in Debt only to the extent of the
book value of such property as would be shown on a balance sheet of the Borrower
prepared in accordance with GAAP; (d) all obligations or liabilities created or
arising under any Capital Lease or conditional sale or other title retention
agreement with respect to property used or acquired by the Borrower, even if the
rights, and remedies of the lessor, seller or lender thereunder are limited to
repossession of such property; provided, however, that all such obligations and
liabilities which are limited in recourse to such property shall be included in
Debt only to the extent of the book value of such property as would be shown on
a balance sheet of the Borrower prepared in accordance with GAAP; and (e) all
obligations and liabilities under Guaranties.
"Debt For Borrowed Money" means, as to any Person, Debt for
borrowed money or as evidenced by notes, bonds, debentures or similar evidences
of any such Debt of such Person, the deferred and unpaid purchase price of any
property or business (other than trade accounts payable incurred in the ordinary
course of business and constituting current liabilities) and all Capitalized
Lease Obligations.
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"Default" means any event or circumstance which, with the
giving of notice, the lapse of time, or both, would (if not cured, waived, or
otherwise remedied during such time) constitute an Event of Default.
"Defaulting Lender" has the meaning specified in Section
2.2(g)(ii).
"Default Rate" means a fluctuating per annum interest rate at
all times equal to the sum of (a) the otherwise applicable Interest Rate plus
(b) two percent (2%). Each Default Rate shall be adjusted simultaneously with
any change in the applicable Interest Rate.
"Distribution" means, in respect of any corporation or limited
liability company: (a) the payment or making of any dividend or other
distribution of property in respect of capital stock (or any options or warrants
for such stock) of such corporation or in respect of membership interests of
such limited liability company, as applicable, other than distributions in
capital stock (or any options or warrants for such stock) of the same class; or
(b) the redemption or other acquisition by such corporation of any capital stock
(or any options or warrants for such stock) of such corporation or acquisition
by such limited liability company of any membership interest in such limited
liability company, as applicable.
"DOL" means the United States Department of Labor or any
successor department or agency.
"Dollar" and "$" mean dollars in the lawful currency of the
United States.
"Eligible Assignee" means (a) a commercial bank, commercial
finance company or other asset based lender, having total assets in excess of
$1,000,000,000; (b) any Lender listed on the signature page of this Agreement;
(c) any Affiliate of any Lender, and (d) if an Event of Default exists, any
Person reasonably acceptable to the Agent.
"Engine Mortgage" means the Engine Mortgage and Security
Agreement pursuant to which the Borrower grants a Lien in all of its Engines to
the Agent for the benefit of the Lenders.
"Engines" means Inventory owned by a Borrower consisting of
whole aircraft engines which have not been broken down into their component
parts.
"English Charge" means the Deed of Fixed and Floating Charge,
dated as December 1, 2000, by and between the Borrower and the Security Trustee,
relating to Inventory located in the United Kingdom and/or India or leased to
Persons Based in the United Kingdom and/or India.
"Environmental Claims" means all claims, however asserted, by
any Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for a Release or
injury to the environment.
"Environmental Laws" means all federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes, together
with all administrative orders,
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directed duties, licenses, authorizations and permits of, and agreements with,
any Governmental Authority, in each case relating to environmental, health,
safety and land use matters.
"Environmental Lien" means a Lien in favor of any Governmental
Authority for (a) any liability under Environmental Laws, or (b) damages arising
from, or costs incurred by such Governmental Authority in response to, a Release
or threatened Release of a Contaminant into the environment.
"Equipment" means all of the Borrower's now owned and
hereafter acquired machinery, equipment, furniture, furnishings, fixtures, and
other tangible personal property (except Inventory), including motor vehicles
with respect to which a certificate of title has been issued, aircraft (other
than Inventory), dies, tools, jigs, and office equipment, as well as all of such
types of property leased by the Borrower and all of the Borrower's rights and
interests with respect thereto under such leases (including, without limitation,
options to purchase); together with all present and future additions and
accessions thereto, replacements therefor, component and auxiliary parts and
supplies used or to be used in connection therewith, and all substitutes for any
of the foregoing, and all manuals, drawings, instructions, warranties and rights
with respect thereto; wherever any of the foregoing is located.
"ERISA" means the Employee Retirement Income Security Act of
1974, and regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Borrower within the meaning of
Section 414(b) or (c) of the Code (and- Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event with respect to a
Pension Plan, (b) a withdrawal by the Borrower or any ERISA Affiliate from a
Pension Plan subject to Section 4063 of ERISA during a plan year in which it was
a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a
cessation of operations which is treated as such a withdrawal under Section
4062(e) of ERISA, (c) a complete or partial withdrawal by the Borrower or any
ERISA Affiliate from a Multi-employer Plan or notification that a Multi-employer
Plan is in reorganization, (d) the filing of a notice of intent to terminate,
the treatment of a Plan amendment as a termination under Section 4041 or 4041A
of ERISA, or the commencement of proceedings by the PBGC to terminate a pension
plan or multi-employer plan, (e) the occurrence of an event or condition which
might reasonably be expected to constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any
pension plan or multi-employer plan, or (f) the imposition of any liability
under Title N of ERISA, other than for PBGC premiums due but not delinquent
under Section 4007 of ERISA, upon the Borrower or any ERISA Affiliate.
"Event of Default" has the meaning specified in Section 11.1.
"Exchange Act" means the Securities Exchange Act of 1934, and
regulations promulgated thereunder.
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"FAA" means the United States Federal Aviation Administration,
and any instrumentality of the United States succeeding to this function.
"Facility" means the Loans and Obligations arising under the
terms of this Loan Agreement.
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of I%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day; provided that (a) if such day is not a Business Day,
the Federal Funds Rate for such day shall be such rate on such transactions on
the next preceding Business Day as so published on the next succeeding Business
Day, and (b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate charged to
the Bank on such day on such transactions as determined by the Agent.
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System or any successor thereto.
"Financial Statements" means any financial statements required
to be given to the Agent and/or the Lenders pursuant to this Agreement.
"Fiscal Year" means the Borrower's fiscal year for financial
accounting purposes. The current Fiscal Year of the Borrower will end on
December 31, 2002.
"Foreign Security Documents" means, collectively, the English
Charge and any other documents required by the Agent to create, and/or perfect
the Agent's Liens in Inventory located outside of the United States or leased to
Persons Based outside of the United States.
"GAAP" means generally accepted accounting principles and
practices set forth from time to time in the opinions and pronouncements of the
Accounting Principles Board and the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board (or agencies with similar functions of comparable stature and
authority within the U.S. accounting profession), which are applicable to the
circumstances as of the Closing Date.
"General Intangibles" means all of the Borrower's now owned or
hereafter acquired general intangibles, choses in action and causes of action
and all other intangible personal property of the Borrower of every kind and
nature (other than Accounts), including, without limitation, all contract
rights, Proprietary Rights, corporate or other business records, inventions,
designs, blueprints, plans, specifications, patents, patent applications,
trademarks, service marks, trade names, trade secrets, goodwill, copyrights,
computer software, customer lists, registrations, licenses, franchises, tax
refund claims, any funds which may become due to the Borrower in connection with
the termination of any Plan or other employee benefit plan or any rights thereto
and any other amounts payable to the Borrower from any Plan or other
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employee benefit plan, rights and claims against carriers and shippers, rights
to indemnification, business interruption insurance and proceeds thereof,
property, casualty or any similar type of insurance and any proceeds thereof,
proceeds of insurance covering the lives of key employees on which the Borrower
is beneficiary, and any letter of credit, guarantee, claim, security interest or
other security held by or granted to the Borrower.
"Good Condition" means, with respect to any item of Inventory,
the condition and merchantability of such item of Inventory on the Closing Date;
provided, however, that, to the extent any item of Inventory is repaired,
overhauled or otherwise improved, such item of Inventory shall at least remain
in such repaired, overhauled or improved condition to be deemed to be in "Good
Condition" hereunder.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"Guaranty" means, with respect to any Person, all obligations
of such Person which in any manner directly or indirectly guarantee or assure
(other than by endorsement of negotiable instruments for collection in the
ordinary course of business), or in effect guarantee or assure, the payment or
performance of any indebtedness, dividend or other obligations of any other
Person (the "guaranteed obligations"), or assure or in effect assure the holder
of the guaranteed obligations against loss in respect thereof, including any
such obligations incurred through an agreement, contingent or otherwise: (a) to
purchase the guaranteed obligations or any property constituting security
therefor; (b) to advance or supply funds for the purchase or payment of the
guaranteed obligations or to maintain a working capital or other balance sheet
condition; or (c) to lease property or to purchase any debt or equity securities
or other property or services.
"Hedge Agreement" means any and all transactions, agreements
or documents now existing or hereafter entered into, which provides for an
interest rate, credit, commodity or equity swap, cap, floor, collar, forward
foreign exchange transaction, currency swap, cross currency rate swap, currency
option, or any combination of, or option with respect to, these or similar
transactions, for the purpose of hedging the Borrower's exposure to fluctuations
in interest or exchange rates, loan, credit exchange, security or currency
valuations or commodity prices.
"Intercompany Accounts" means all assets and liabilities,
however arising, which are due to the Borrower from, which are due from the
Borrower to, or which otherwise arise from any transaction by the Borrower with
any Affiliate.
"Interest Rate" means each or any of the interest rates,
including the Default Rate, set forth in Section 3.1.
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"Inventory" means all of the Borrower's now owned and
hereafter acquired inventory, goods and merchandise, wherever located, to be
furnished under any contract of service or held for sale, lease or exchange, all
returned goods, raw materials, other materials and supplies of any kind, nature
or description which are used or consumed in the Borrower's business or used in
connection with the packing, shipping, advertising, selling or finishing of such
goods, merchandise and such other personal property, and all documents of title
or other documents representing them.
"Inventory Acquisition" means the acquisition by the Borrower
of all of the aircraft and aircraft engine spare parts inventory of TIMCO
Distribution pursuant to the Inventory Purchase Agreement as amended.
"Inventory Purchase Agreement" means the Inventory Purchase
Agreement, dated as of September 20, 2000, by and among the Borrower, TIMCO and
TIMCO Distribution, as amended by three (3) letter agreements, dated November
14, 2000; November 17, 2000, and November 28, 2000, in each case, among the
Borrower, TIMCO and TIMCO Distribution as amended by the PCRA.
"Investment Property" means all of the Borrower's right title
and interest in and to any and all: (a) securities whether certificated or,
uncertificated; (b) securities entitlements; (c) securities accounts; (d)
commodity contracts; and (e) commodity accounts.
"IRS" means the Internal Revenue Service and any Governmental
Authority succeeding to any of its principal functions under the Code.
"KAV Payables" means any amounts paid by the Borrower other
than (a) amounts paid or payable by the Borrower under the Loan Documents which
are charged to the Loan Account; (b) any Consignee Commission (as defined in the
Consignment Agreement), (c) any Reimbursable Expenses (as defined in the
Consignment Agreement), (d) any amounts payable for purchases of parts by
Borrower under the Consignment Agreement and (e) any amounts payable to KIAC, as
consignee, from insurance proceeds received under the Consignment Agreement.
"Xxxxxxxxx" means Xxxxxxxxx Industries, Inc., a Delaware
corporation as Debtor-in-Possession in the Bankruptcy Case.
"KIAC" means Xxxxxxxxx Commercial Aerospace, Inc., a Delaware
corporation.
"Lease Agreement" means a lease agreement between KIAC, as
consignee under the Consignment Agreement and lessor of one or more Engines, and
the lessee of any such Engines.
"Lender" and "Lenders" have the meanings specified in the
introductory paragraph hereof and shall include the Agent to the extent of any
Agent Advance outstanding; provided that no such Agent Advance shall be taken
into account in determining any Lender's Pro Rata Share.
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"Letter Agreements" means, collectively, the letter agreement
among TIMCO, Xxxxxxxxx and the Agent, on behalf of the Lenders, in which TIMCO
and Xxxxxxxxx agree to contribute equally to the Borrower, as the members of the
Borrower, any KAV Payables in excess of the applicable KAV cap (as defined in
the Letter Agreements) in order to allow the Borrower to pay such expenses or
any other expenses, such contributions to be treated as loans made by each of
Xxxxxxxxx and TIMCO to Borrower which loans shall be junior in right of payment
and in all other respects completely subordinated to the Obligations hereunder
in accordance with the terms of the related Subordination Agreement. On the
Closing Date, TIMCO and Xxxxxxxxx shall have no further obligation to contribute
to the Borrower for any KAV Payables; provided however, that all other terms,
conditions and subordination agreements contained in the Letter Agreements shall
remain in full force and effect.
"License Agreement" means the License Agreement dated as of
December 1, 2000, by and among the Borrower, TIMCO, and Xxxxxxxxx.
"Lien" means: (a) any interest in property securing an
obligation owed to, or a claim by, a Person other than the owner of the
property, whether such interest is based on the common law, statute, or
contract, and including a security interest, charge, claim, or lien arising from
a mortgage, deed of trust, encumbrance, pledge, hypothecation, assignment,
deposit arrangement, agreement, security agreement, conditional sale or trust
receipt or a lease, consignment or bailment for security purposes; (b) to the
extent not included under clause (a), any reservation, exception, encroachment,
easement, right-of-way, covenant, condition, restriction, lease or other title
exception or encumbrance affecting property; and (c) any contingent or other
agreement to provide any of the foregoing.
"Loan Account" means the loan account of the Borrower, which
account shall be maintained by the Agent.
"Loan Documents" means this Agreement, the Engine Mortgage and
any Mortgage Supplements related thereto, the Consignment Agreement, the
Collateral Assignment of Consignment Agreement, the Collateral Assignment of
Inventory Purchase Agreement, the Subordination Agreement, the Letter
Agreements, the Foreign Security Documents and any other agreements,
instruments, and documents heretofore, now or hereafter evidencing, securing,
guaranteeing or otherwise relating to the Obligations, the Collateral, or any
other aspect of the transactions contemplated by this Agreement.
"Loans" has the meaning specified in Section 2.2 and includes
the Term Loan and each Agent Advance.
"Manager" means any manager of the Borrower, as designated by
TIMCO and Xxxxxxxxx pursuant to the Operating Agreement.
"Margin Stock" means "margin stock" as such term is defined in
Regulation T, U or X of the Federal Reserve Board.
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"Material Adverse Effect" means, as determined by the Agent in
its good faith judgment, (a) a material adverse change in, or a material adverse
effect upon, the operations, business, properties, condition (financial or
otherwise) or prospects of the Borrower; (b) a material adverse change in, or a
material adverse effect upon the Collateral or the value thereof (including, but
not limited to, a default and termination under any lease respecting a location
where a substantial portion of the Collateral is situated, which default and
termination has or causes a material adverse effect upon the Collateral or the
value thereof); (c) a material impairment of the ability of the Borrower to
perform under any Loan Document to which it is a party and to avoid any Event of
Default; or (d) a material adverse effect upon the legality, validity, binding
effect or enforceability against the Borrower of any Loan Document to which it
is a party except to the extent arising from the action of the Agent or any
Lender.
"Mortgage Supplement" means a supplement to the Engine
Mortgage pursuant to which the Borrower grants the Lien in Engines and Lease
Agreements acquired by the Borrower or entered into by the Borrower on the
Closing Date and from time to time after the Closing Date.
"Multi-employer Plan" means a "multi-employer plan" as defined
in Section 4001(a)(3) of ERISA which is or was at any time during the current
year or the immediately preceding five (5) years contributed to by the Borrower
or any ERISA Affiliate.
"Non-Competition Agreement" means the Non-Competition
Agreement, dated as of December 1, 2000, by and among the Borrower, Xxxxxxxxx,
TIMCO and TIMCO Distribution as amended by that certain First Amendment to the
Non-Competition Agreement dated as of even date herewith.
"Notice of Security Interest" means a notice of security
interest and estoppel certificate in form and substance satisfactory to the
Agent in its absolute discretion pursuant to which, among other things, the
Borrower, Xxxxxxxxx and the Agent provide notice to and seek acknowledgment from
the lessee under a Lease Agreement that the Inventory subject to such Lease
Agreement has been collaterally assigned to the Agent for the benefit of the
Lenders.
"Obligations" means all present and future loans, advances,
liabilities, obligations, covenants, duties, and debts owing by the Borrower to
the Agent and/or any Lender, arising under or pursuant to this Agreement or any
of the other Loan Documents, whether or not evidenced by any note, or other
instrument or document, whether arising from an extension of credit, whether
direct or indirect, absolute or contingent, due or to become due, primary or
secondary, as principal or guarantor, and including all principal, interest,
charges, expenses, fees, attorneys' fees, filing fees and any other sums
chargeable to the Borrower hereunder or under any of the other Loan Documents.
"Obligations" includes, without limitation, all debts, liabilities and
obligations of the Borrower now or hereafter arising from or in connection with
Bank Products.
"Obligor" means the Borrower and any Person liable with
respect to the Obligations, whether as maker, endorser, guarantor, pledgor or
otherwise, and whether such liability is direct, indirect, primary or secondary,
and "Obligors" means all of such Persons collectively.
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"Operating Agreement" means the Operating Agreement, dated as
of September 20, 2000, by and between TIMCO and Xxxxxxxxx, as sole members of
the Borrower.
"Orderly Liquidation Value" means the orderly liquidation
value of the Inventory, as reflected in the most recent Appraisal received by
the Agent in accordance with Section 6.5.
"Original Closing Date" means December 1, 2000.
"Other Taxes" means any present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies which
arise from any payment made hereunder or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or any other Loan
Documents.
"Participant" has the meaning specified in Section 13.2(6).
"Payment Account" means the bank account established pursuant
to Section 6.9, to which the proceeds of Accounts and other Collateral are
deposited or credited, and which is maintained in the name of the Agent or the
Borrower, as the Agent may determine, on terms acceptable to the Agent.
"PBGC" means the Pension Benefit Guaranty Corporation or any
Governmental Authority succeeding to the functions thereof.
"PCRA" means that certain Post-Closing Resolution Agreement
dated as of June 10, 2002 by and among Xxxxxxxxx, TIMCO and TIMCO Distribution.
By its execution hereof, Agent approves and consents to the PCRA and the
ancillary documents thereto, including without limitation, that certain
Acknowledgment, consent and Release executed by Borrower.
"Pension Plan" means a pension plan (as defined in Section
3(2) of ERISA) subject to Title IV of ERISA which the Borrower sponsors,
maintains, or to which it makes, is making, or is obligated to make
contributions, or in the case of a Multiple-employer Plan has made contributions
at any time during the immediately preceding five (5) plan years.
"Permitted Liens" means:
(a) Liens for taxes, assessments and other governmental
charges and levies not delinquent or statutory Liens for taxes in an amount not
to exceed $100,000, provided that the payment of such taxes which are due and
payable is being contested in good faith and by appropriate proceedings
diligently pursued and as to which adequate financial reserves have been
established on Borrower's books and records and a stay of enforcement of any
such Lien is in effect;
(b) the Agent's Liens;
(c) Liens securing the claims or demands of materialmen,
mechanics, carriers, warehousemen, landlords and other like Persons, provided
that if any such Lien arises from the
13
nonpayment of such claims or demand, when due, such claims or demands do not
exceed $200,000 in the aggregate;
(d) Liens consisting of deposits or pledges made in the
ordinary course of business in connection with or to secure payment of
obligations under worker's compensation, unemployment insurance or similar
legislation; and
(e) the Lien of KIAC created pursuant to the Consignment
Agreement, but only to the extent such Lien is subordinated to the Agent's Liens
in accordance with the related Subordination Agreement.
"Person" means any individual, sole proprietorship,
partnership, limited liability company, joint venture, trust, unincorporated
organization, association, corporation, Governmental Authority, or any other
entity.
"Plan" means an employee benefit plan (as defined in Section
3(3) of ERISA) which the Borrower sponsors or maintains or to which the Borrower
makes, is making, or is obligated to make contributions and includes any Pension
Plan.
"Pro Rata Share" means, with respect to a Lender, a fraction
(expressed as a percentage), the numerator of which is the amount of such
Lender's Commitment and the denominator of which is the sum of the amounts of
all of the Lenders' Commitments, or if no Commitments are outstanding, a
fraction (expressed as a percentage), the numerator of which is the amount of
Obligations owed to such Lender and the denominator of which is the aggregate
amount of the Obligations owed to the Lenders, in each case giving effect to a
Lender's participation in Agent Advances.
"Proprietary Rights" means all of the Borrower's now owned and
hereafter arising or acquired: licenses, franchises, permits, patents, patent
rights, copyrights, works which are the subject matter of copyrights,
trademarks, service marks, trade names, trade styles, patent, trademark and
service xxxx applications, and all licenses and rights related to any of the
foregoing, including those patents, trademarks, service marks, trade names and
copyrights set forth on Schedule 8.13 hereto, and all other rights under any of
the foregoing, all extensions, renewals, reissues, divisions, continuations, and
continuations-in-part of any of the foregoing, and all rights to xxx for past,
present and future infringement of any of the foregoing.
"Real Estate" means all of the Borrower's now or hereafter
owned or leased estates in real property, including, without limitation, all
fees, leaseholds and future interests, together with all of the Borrower's now
or hereafter owned or leased interests in the improvements and emblements
thereon, the fixtures attached thereto and the easements appurtenant thereto.
"Release" means a release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration of a
Contaminant into the indoor or outdoor environment or into or out of any Real
Estate or other property, including the movement of
14
Contaminants through or in the air, soil, surface water, groundwater or Real
Estate or other property.
"Reportable Event" means, any of the events set forth in
Section 4043(b) of ERISA or the regulations thereunder, other than any such
event for which the 30-day notice requirement under ERISA has been waived in
regulations issued by the PBGC.
"Required Lenders" means at any date of determination, (a) in
the event that there is only one (1) Lender, such Lender, (b) in the event that
there are only two (2) Lenders, both Lenders, and (c) in the event that there
are more than two (2) Lenders, at least two (2) Lenders whose Pro Rata Shares
aggregate more than 50% as such percentage is determined under the definition of
Pro Rata Share set forth herein.
"Requirement of Law" means, as to any Person, any law
(statutory or common), treaty, rule or regulation or determination of an
arbitrator or of a Governmental Authority, in each case applicable to or binding
upon the Person or any of its property or to which the Person or any of its
property is subject.
"Reserve Amount" means the amount established by Agent for the
benefit of Borrower from the proceeds of Agent's Collateral as the reserve to
pay all approved KAV Payables.
"Responsible Officer" means any Manager of the Borrower, or
any other officer having substantially the same authority and responsibility
with respect to the preparation and delivery of the financial statements and
projections.
"Restricted Investment" means, as to the Borrower, any
acquisition of property by the Borrower in exchange for cash or other property,
whether in the form of an acquisition of stock, debt, or other indebtedness or
obligation, or the purchase or acquisition of any other property, or a loan,
advance, capital contribution, or subscription, except the following: (a)
acquisitions of exchanged Inventory and returns of Inventory sold, in each case,
in accordance with the Consignment Agreement and (b) Hedge Agreements.
"Security Trustee" means the Bank, solely in its capacity as
security trustee for the Lenders, and any successor security trustee.
"Settlement" and "Settlement Date" have the meanings specified
in Section 2.2(c)(i):
"Stated Termination Date" means July 16, 2005
"Subordinated Notes" means any KAV Senior Subordinated
Adjustment Notes, KAV Senior Subordinated Note-A, KAV Senior Subordinated Note-B
and KAV Subordinated Note (as such terms are defined in the Inventory Purchase
Agreement) issued by the Borrower.
"Subordination Agreement" means, in form and substance
acceptable to the Agent, in its sole discretion, the subordination agreement
among the Agent, for the benefit of the
15
Lenders, Xxxxxxxxx and XXXXX providing that any loans made, or deemed made, by
either of Xxxxxxxxx or TIMCO, or any affiliates thereof, pursuant to the
Operating Agreement or otherwise (other than pursuant to the Subordinated
Notes), shall be junior in right of payment and in all other respects completely
subordinated to the rights of the Agent and the Lenders under this Agreement.
"Subsidiary" of a Person means any corporation, association,
partnership, joint venture or other business entity of which more than fifty
percent (50%) of the voting stock or other equity interests (in the case of
Persons other than corporations), is owned or controlled directly or indirectly
by the Person, or one or more of the Subsidiaries of the Person, or a
combination thereof.
"Taxes" means any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding, in the case of each Lender and the Agent, such taxes
(including income taxes or franchise taxes) as are imposed on or measured by the
Agent's or each Lender's net income in any jurisdiction (whether federal, state
or local and including any political subdivision thereof) under the laws of
which such Lender or the Agent, as the case may be, is organized or maintains a
lending office.
"Termination Date" means the earliest to occur of the (a)
Stated Termination Date, (b) the date the Facility is terminated either by the
Borrower pursuant to Section 4.2 or by the Required Lenders pursuant to Section
11.2, and (c) the date this Agreement is otherwise terminated for any reason
whatsoever pursuant to the terms of this Agreement.
"Term Loan" has the meaning specified in Section 2.2.
"TIMCO" means TIMCO Aviation Services, Inc. (f/k/a Aviation
Sales Company), a Delaware corporation.
"TIMCO Distribution" means Aviation Sales Distribution
Services Company, a Delaware corporation and wholly-owned subsidiary of TIMCO.
"Transaction" means, collectively, the Acquisition, the
Inventory Acquisition, the Facility evidenced by this Agreement, the consignment
arrangement established and maintained pursuant to the Consignment Agreement,
and the issuance of the Subordinated Notes, each as described herein, and all
other transactions related to the Acquisition.
"Transition Services Agreement" means the Transition Services
Agreement, dated as of December 1, 2000, by and among TIMCO, TIMCO Distribution
and Xxxxxxxxx.
"Trust Property" means all or any of the assets, rights,
powers, authorities and discretions at any time subject to or expressed to be
subject to the security from time to time constituted by or arising pursuant to
the Foreign Security Documents or vested in the Security Trustee or given under
or pursuant to the Foreign Security Documents including all income and other
sums at any time received or receivable by the Security Trustee in respect
thereof.
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"UCC" means the Uniform Commercial Code (or any successor
statute), as in effect from time to time, of the State of Georgia or of any
other state the laws of which are required as a result thereof to be applied in
connection with the issue of perfection of security interests.
"Unfunded Pension Liability" means the excess of a Plan's
benefit liabilities under Section 4001(a)(16) of ERISA, over the current value
of that Plan's assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the applicable
plan year.
1.2 Accounting Terms. Any accounting term used in this Agreement
shall have, unless otherwise specifically provided herein, the meaning
customarily given in accordance with GAAP, and all financial computations
hereunder shall be computed, unless otherwise specifically provided herein, in
accordance with GAAP as consistently applied and using the same method for
inventory valuation as used in the preparation of the Financial Statements.
1.3 Interpretive Provisions. (a) The meanings of defined terms are
equally applicable to the singular and plural foams of the defined terms.
(b) The words "hereof," "herein," "hereunder" and similar
words refer to this Agreement as a whole and not to any particular provision of
this Agreement; and Subsection, Section, Schedule and Exhibit references are to
this Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other writings,
however evidenced.
(ii) The term "including" is not limiting and means
"including without limitation."
(iii) In the computation of periods of time from a
specified date to a later specified date, the word "from" means "from and
including," the words "to" and "until" each mean "to but excluding" and the word
"through" means "to and including."
(d) Unless otherwise expressly provided herein, (i)
references, to agreements (including this Agreement) and other contractual
instruments shall be deemed to include all subsequent amendments and other
modifications thereto, but only to the extent such amendments and other
modifications are not prohibited by the terms of any Loan Document, and (ii)
references to any statute or regulation are to be construed as including all
statutory and regulatory provisions consolidating, amending, replacing,
supplementing or interpreting the statute or regulation.
(e) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement.
(f) Different provisions of this Agreement and other Loan
Documents may use several different limitations, tests or measurements to
regulate the same or similar matters.
17
All such limitations, tests and measurements in such different provisions are
cumulative and shall each be performed in accordance with their respective
terms.
(g) This Agreement and the other Loan Documents are the result
of negotiations among and have been reviewed by counsel to the Agent, the
Borrower and the other parties, and are the products of all parties.
Accordingly, they shall not be construed against the Lenders or the Agent merely
because of the Agent's or Lenders' involvement in their preparation.
(h) All references in- this Agreement and the other Loan
Documents to a particular time of day shall be deemed to refer to Atlanta,
Georgia time unless otherwise indicated.
ARTICLE 2
LOANS
2.1 Intentionally Omitted.
2.2 Loans.
(a) Term Loan. The Lenders agree, severally in accordance with
their respective Commitments and not jointly, upon the terms and subject to the
conditions of this Agreement, to lend to the Borrower on the Closing Date the
amount of $56,511,044.02 to repay the Borrower's outstanding obligations in
favor of the Lenders prior to the date hereof. The Borrower hereby promises to
pay to each Lender the principal amount of the Loans made by such Lender, and
accrued and unpaid interest and fees thereon, as the same become due and payable
in accordance with this Agreement.
(b) Agent Advances. (i) Subject to the limitations set forth
in the proviso contained in this Section 2.2(b) and the proviso contained in
Section 13.1, the Agent is hereby authorized by the Borrower and the Lenders,
from time to time in the Agent's sole discretion, (A) after the occurrence of a
Default or an Event of Default, to make Loans to the Borrower on behalf of the
Lenders which the Agent, in its reasonable business judgment, deems necessary or
desirable (1) to preserve or protect the Collateral, or any portion thereof, (2)
to enhance the likelihood of, or maximize the amount of, repayment of the Loans
and other Obligations, or (3) to pay any other amount chargeable to the Borrower
pursuant to the terms of this Agreement, including costs, fees and expenses as
described in Section 15.7 (any of the advances described in this Section 2.2(a)
being hereinafter referred to as "Agent Advances"); provided, that the Required
Lenders may at any time revoke the Agent's authorization contained in this
Section 2.2(b) to make Agent Advances, any such revocation to be in writing and
to become effective prospectively upon the Agent's receipt thereof;
(ii) The Agent Advances shall be repayable on demand and
secured by the Agent's Liens in and to the Collateral, shall constitute Loans
and Obligations hereunder, and
18
shall bear interest at the rate applicable to Loans from time to time. The Agent
shall notify each Lender in writing of each such Agent Advance.
(c) Settlement. It is agreed that each Lender's funded portion of
the Loans is intended by the Lenders to be equal at all times to such Lender's
Pro Rata Share of the outstanding Loans. Notwithstanding such agreement, the
Agent, the Bank, and the other Lenders agree (which agreement shall not be for
the benefit of or enforceable by the Borrower) that in order to facilitate the
administration of this Agreement and the other Loan Documents, settlement among
them as to the Loans and the Agent Advances shall take place on a periodic basis
in accordance with the following provisions:
(i) The Agent shall request settlement ("Settlement") with
the Lenders on at least a weekly basis, or on a more frequent basis if so
determined by the Agent, (A) for itself, with respect to each Agent Advance, and
(B) with respect to collections received, in each case, by notifying the Lenders
of such requested Settlement by telecopy, telephone or other similar form of
transmission, of such requested Settlement, no later than 12:00 noon on the date
of such requested Settlement (the "Settlement Date"). Each Lender (other than
the Agent in the case of Agent Advances) shall make the amount of such Lender's
Pro Rata Share of the outstanding principal amount of the Agent Advances with
respect to which Settlement is requested available to the Agent, to such account
of the Agent as the Agent may designate, not later than 1:30 p.m., on the
Settlement Date applicable thereto, which may occur before or after the
occurrence or during the continuation of a Default or an Event of Default and
whether or not the applicable conditions precedent set forth in Article 10 have
then been satisfied. Such amounts made available to the Agent shall be applied
against the amounts of the applicable Agent Advance and, together with the
portion of such Agent Advance representing the Bank's Pro Rata Share thereof,
shall constitute Loans of such Lenders. If any such amount is not made available
to the Agent by any Lender on the Settlement Date applicable thereto, the Agent
shall for itself, with respect to each Agent Advance, be entitled to recover
such amount on demand from such Lender together with interest thereon at the
Federal Funds Rate for the first three days from and after the Settlement Date
and thereafter at the Interest Rate then applicable to the Loans.
(ii) Notwithstanding the foregoing, not more than one Business
Day after demand is made by the Agent (whether before or after the occurrence of
a Default or an Event of Default), each other Lender (A) shall irrevocably and
unconditionally purchase and receive from the Bank or the Agent, as applicable,
without recourse or warranty, an undivided interest and participation in such
Agent Advance equal to such Lender's Pro Rata Share of such Agent Advance and
(B) if Settlement has not previously occurred with respect to such Agent
Advances, upon demand by Bank or Agent, as applicable, shall pay to Bank or
Agent, as applicable, as the purchase price of such participation an amount
equal to one-hundred percent (100%) of such Lender's Pro Rata Share of such
Agent Advances. If such amount is not in fact made available to the Agent by any
Lender, the Agent shall be entitled to recover such amount on demand from such
Lender together with interest thereon at the Federal Funds Rate for the first
three (3) days from and after such demand and thereafter at the Interest Rate
then applicable to Loans.
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(iii) From and after the date, if any, on which any Lender
purchases an undivided interest and participation in any Agent Advance pursuant
to clause (ii) preceding, the Agent shall promptly distribute to such Lender,
such Lender's Pro Rata Share of all payments of principal and interest and all
proceeds of Collateral received by the Agent in respect of such Agent Advance.
(d) Notation. The Agent shall record on its books the
principal amount of the Loans owing to each Lender, including the Agent Advances
owing to the Agent, from time to time. In addition, each Lender is authorized,
at such Lender's option, to note the date and amount of each payment or
prepayment of principal of such Lender's Loans in its books and records,
including computer records, such books and records constituting presumptive
evidence, absent manifest error, of the accuracy of the information contained
therein.
(e) Lenders' Failure to Perform. It is understood that (i) no
Lender shall be responsible for any failure by any other Lender to perform its
obligation to make any Loans hereunder, nor shall any Commitment of any Lender
be increased or decreased as a result of any failure by any other Lender to
perform its obligation to make any Loans hereunder, (ii) no failure by any
Lender to perform its obligation to make any Loans hereunder shall excuse any
other Lender from its obligation to make any Loans hereunder, and (iii) the
obligations of each Lender hereunder shall be several, not joint and several.
2.3 Bank Products. The Borrower may request and the Bank may, in
its sole and absolute discretion, arrange for the Borrower to obtain from the
Bank or the Bank's Affiliates Bank Products although the Borrower is not
required to do so. The Borrower agrees to indemnify and hold the Bank and the
Lenders harmless from any and all costs and obligations now or hereafter
incurred by or owing to any other Person by the Bank or any of the Lenders or
the Bank's Affiliates arising from or related to such Bank Products; provided,
however, nothing contained herein is intended to limit the Borrower's rights, if
any, which arise as a result of the execution of documents by and between the
Borrower and the Bank which relate to Bank Products. The agreement contained in
this Section shall survive termination of the Agreement. The Borrower
acknowledges and agrees that the obtaining of Bank Products from the Bank or the
Bank's Affiliates (a) is in the sole and absolute discretion of the Bank or the
Bank's Affiliates, and (b) is subject to all rules and regulations of the Bank
or the Bank's Affiliates.
ARTICLE 3
INTEREST AND FEES
3.1 Interest.
(a) Interest Rates. All outstanding Obligations shall bear
interest on the unpaid principal amount thereof (including, to the extent
permitted by law, on interest thereon not paid when due) from the date made
until paid in full in cash at a rate determined by reference to the Base Rate
and the following sentence, but not to exceed the Maximum Rate described in
Section 3.2. Except as otherwise provided herein, the outstanding Obligations
shall bear interest at a fluctuating per annum rate equal to the Base Rate plus
the Applicable Margin. Each change
20
in the Base Rate shall be reflected in the interest rate described above as of
the effective date of such change. All interest charges shall be computed on the
basis of a year of 360 days and actual days elapsed (which results in more
interest being paid than if computed on the basis of a 365-day year). Interest
accrued on all Loans will be payable in arrears on the 15th day of each month
hereafter and on the Termination Date.
(b) Default Rate. If any Event of Default occurs and is
continuing and the Agent or the Required Lenders in their discretion so elect,
then, while any such Event of Default is continuing, all of the Obligations
shall bear interest at the Default Rate applicable thereto.
3.2 Maximum Interest Rate. In no event shall any interest rate
provided for hereunder exceed the maximum rate legally chargeable by any Lender
under applicable law for such Lender with respect to loans of the type provided
for hereunder (the "Maximum Rate"). If, in any month, any interest rate, absent
such limitation, would have exceeded the Maximum Rate, then the interest rate
for that month shall be the Maximum Rate, and, if in future months, that
interest rate would otherwise be less than the Maximum Rate, then that interest
rate shall remain at the Maximum Rate until such time as the amount of interest
paid hereunder equals the amount of interest which would have been paid if the
same had not been limited by the Maximum Rate. In the event that, upon payment
in full of the Obligations, the total amount of interest paid or accrued under
the terms of this Agreement is less than the total amount of interest which
would, but for this Section 3.2 have been paid or accrued if the interest rate
otherwise set forth in this Agreement had at all times been in effect, then the
Borrower shall, to the extent permitted by applicable law, pay the Agent, for
the account of the Lenders, an amount equal to the excess of (a) the lesser of
(i) the amount of interest which would have been charged if the Maximum Rate
had, at all times, been in effect or (ii) the amount of interest which would
have accrued had the interest rate otherwise set forth in this Agreement, at all
times, been in effect over (b) the amount of interest actually paid or accrued
under this Agreement. In the event that a court of competent jurisdiction
determines that the Agent and/or any Lender has received interest and other
charges hereunder in excess of the Maximum Rate, such excess shall be deemed
received on account of, and shall automatically be applied to reduce, the
Obligations other than interest, in the inverse order of maturity, and if there
are no Obligations outstanding, the Agent and/or such Lender shall refund to the
Borrower such excess.
ARTICLE 4
PAYMENTS AND PREPAYMENTS
4.1 Repayment of Loans. The Borrower shall repay the outstanding
principal balance of the Loans, plus all accrued but unpaid interest thereon, on
the Termination Date. The Borrower may prepay the Loans at any time subject to
the terms of this Agreement.
4.2 Termination of Facility. The Borrower may terminate this
Agreement upon at least five (5) Business Days' notice to the Agent and the
Lenders, upon (a) the payment in full of all outstanding Loans, together with
accrued interest thereon, and (b) the payment in full in cash of all other
Obligations together with accrued and unpaid interest thereon.
21
4.3 Mandatory Prepayments. On the 15th day of each month
hereafter, commencing on August 15, 2002 the Borrower shall deposit with the
Agent for application pursuant to Section 4.6 hereof the aggregate amount of any
Net Sales Proceeds (as defined in the Consignment Agreement) received by the
Borrower pursuant to the Consignment Agreement since the date of the most recent
such deposit by the Borrower with the Agent.
4.4 Payments by the Borrower. (a) All payments to be made by the
Borrower shall be made without set-off, recoupment or counterclaim. Except as
otherwise expressly provided herein, all payments by the Borrower shall be made
to the Agent for the account of the Lenders, at the account designated by the
Agent and shall be made in Dollars and in immediately available funds, no later
than 12:00 noon on the date specified herein. Any payment received by the Agent
later than 12:00 noon shall be deemed to have been received on the following
Business Day and any applicable interest or fee shall continue to accrue.
(b) Whenever any payment is due on a day other than a Business
Day, such payment shall be due on the following Business Day, and such extension
of time shall in such case be included in the computation of interest or fees,
as the case may be.
(c) Unless the Agent receives notice from the Borrower prior
to the date on which any payment is due to the Lenders that the Borrower will
not make such payment in full as and when required, the Agent may assume that
the Borrower has made such payment in full to the Agent on such date in
immediately available funds and the Agent may (but shall not be so required), in
reliance upon such assumption, distribute to each Lender on such due date an
amount equal to the amount then due such Lender. If and to the extent the
Borrower has not made such payment in full to the Agent, each Lender shall repay
to the Agent on demand such amount distributed to such Lender, together with
interest thereon at the Federal Funds Rate for each day from the date such
amount is distributed to such Lender until the date repaid.
4.5 Payments as Loans. All payments of principal, interest, fees,
premiums and other sums payable hereunder, including all reimbursement for
expenses pursuant to Section 15.7, may, at the option of the Agent, in its sole
discretion, subject only to the terms of this Section 4.5, be paid from the
proceeds of Loans made hereunder, whether made following a request by the
Borrower pursuant to Section 2.2 or a deemed request as provided in this Section
4.5. The Borrower hereby irrevocably authorizes the Agent to charge the Loan
Account for the purpose of paying principal, interest, reimbursement obligations
in connection with fees, premiums and other sums payable hereunder, including
reimbursing expenses pursuant to Section 15.7, and agrees that all such amounts
charged shall constitute Loans (including Agent Advances) and that all such
Loans so made shall be deemed to have been requested by Borrower pursuant to
Section 2.2.
4.6 Apportionment, Application and Reversal of Payments. Principal
and interest payments shall be apportioned ratably among the Lenders (according
to the unpaid principal balance of the Loans to which such payments relate held
by each Lender) and payments of any fees subject to apportionment under this
Agreement, as applicable, shall be apportioned ratably among the Lenders. All
payments shall be remitted to the Agent and all such payments not relating to
principal or interest of specific Loans, or not constituting payment of specific
fees,
22
and all proceeds of Accounts or other Collateral received by the Agent, shall be
applied, ratably, subject to the provisions of this Agreement, first, to pay any
fees, indemnities or expense reimbursements (including any amounts relating to
Bank Products) then due to the Agent or the Syndication Agent from the Borrower;
second, to pay any fees or expense reimbursements then due to the Lenders from
the Borrower; third, to pay interest due in respect of all Loans, including
Agent Advances; fourth, to pay or prepay principal of the Agent Advances; fifth,
to pay or prepay principal of the Loans (other than Agent Advances); and sixth,
to the payment of any other Obligation due to the Agent, the Syndication Agent
or any Lender by the Borrower. The Agent shall promptly distribute to each
Lender, pursuant to the applicable wire transfer instructions received from each
Lender in writing, such funds as it may be entitled to receive, subject to a
Settlement delay as provided for in Section 2.2(i). The Agent and the Lenders
shall have the continuing and exclusive right to apply and reverse and reapply
any and all such proceeds and payments to any portion of the Obligations.
4.7 Indemnity for Returned Payments. If after receipt of any
payment which is applied to the payment of all or any part of the Obligations,
the Agent, the Syndication Agent or any Lender is for any reason compelled to
surrender such payment or proceeds to any Person because such payment or
application of proceeds is invalidated, declared fraudulent, set aside,
determined to be void or voidable as a preference, impermissible setoff, or a
diversion of trust funds, or for any other reason, then the Obligations or part
thereof intended to be satisfied shall be revived and continued and this
Agreement shall continue in full force as if such payment or proceeds had not
been received by the Agent, the Syndication Agent or such Lender and the
Borrower shall be liable to pay to the Agent, the Syndication Agent and the
Lenders, and hereby does indemnify the Agent, the Syndication Agent and the
Lenders and hold the Agent, the Syndication Agent and the Lenders harmless for
the amount of such payment or proceeds surrendered. The provisions of this
Section 4.7 shall be and remain effective notwithstanding any contrary action
which may have been taken by the Agent, the Syndication Agent or any Lender in
reliance upon such payment or application of proceeds, and any such contrary
action so taken shall be without prejudice to the Agent's, the Syndication
Agent's and the Lenders' rights under this Agreement and shall be deemed to have
been conditioned upon such payment or application of proceeds having become
final and irrevocable. The provisions of this Section 4.7 shall survive the
termination of this Agreement.
4.8 Agent's and Lenders' Books and Records Monthly Statements. The
Borrower agrees that the Agent's and each Lender's books and records showing the
Obligations and the transactions pursuant to this Agreement and the other Loan
Documents shall be admissible in any action or proceeding arising therefrom, and
shall constitute rebuttably presumptive proof thereof in the absence of manifest
error, irrespective of whether any Obligation is also evidenced by a promissory
note or other instrument. The Agent will provide to the Borrower a monthly
statement of Loans, payments, and other transactions pursuant to this Agreement.
Such statement shall be deemed correct, accurate, and binding on the Borrower
and an account stated (except for reversals and reapplications of payments made
as provided in Section 4.6 and corrections of errors discovered by the Agent),
unless the Borrower notifies the Agent in writing to the contrary within thirty
(30) days, after such statement is rendered. In the event a timely written
notice of objections is given by the Borrower, only the items to which exception
is expressly made will be considered to be disputed by the Borrower.
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ARTICLE 5
TAXES, YIELD PROTECTION AND ILLEGALITY
5.1 Taxes. (a) Any and all payments by the Borrower to each Lender
or the Agent under this Agreement and any other Loan Document shall be made free
and clear of, and without deduction or withholding for any Taxes. In addition,
the Borrower shall pay all Other Taxes to the extent funds are available.
(b) The Borrower agrees to indemnify and hold harmless each
Lender and the Agent for the full amount of Taxes or Other Taxes (including any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this
Section) paid by the Lender or the Agent and any liability (including penalties,
interest, additions to tax and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted. Payment under this indemnification shall be made within thirty (30)
days after the date the Lender or the Agent makes written demand therefor in
accordance with Section 5.3; provided, however, that so long as the Borrower has
notified the Agent in writing, the Borrower need not pay any amount under this
Section 5.1. (i) that the Borrower is contesting in good faith by appropriate
proceedings diligently pursued, (ii) for which the Borrower has established
proper reserves as provided in GAAP, and (iii) as long as no Lien results from
such non-payment.
(c) If the Borrower shall be required by law to deduct or
withhold any Taxes or Other Taxes from or in respect of any sum payable
hereunder to any Lender or the Agent, then:
(i) the sum payable shall be increased as necessary so
that after making all required deductions and withholdings (including deductions
and withholdings applicable to additional sums payable under this Section) such
Lender or the Agent, as the case may be, receives an amount equal to the sum it
would have received had no such deductions or withholdings been made;
(ii) the Borrower shall make such deductions and
withholdings;
(iii) the Borrower shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority in accordance with
applicable law; and
(iv) the Borrower shall also pay to each Lender or the
Agent for the account of such Lender, at the time interest is paid, all
additional amounts which the respective Lender specifies as necessary to
preserve the after-tax yield the Lender would have received if such Taxes or
Other Taxes had not been imposed.
(d) Within thirty (30) days after the date of any payment by
the Borrower of Taxes or Other Taxes, the Borrower shall furnish the Agent the
original or a certified copy of a receipt evidencing payment thereof, or other
evidence of payment satisfactory to the Agent.
(e) If the Borrower is required to pay additional amounts to
any Lender or the Agent pursuant to subsection (c) of this Section, then such
Lender shall use reasonable efforts
24
(consistent with legal and regulatory restrictions) to change the jurisdiction
of its lending office so as to eliminate any such additional payment by the
Borrower which may thereafter accrue, if such change in the judgment of such
Lender is not otherwise disadvantageous to such Lender.
5.2 Increased Costs and Reduction of Return. If any Lender shall
have determined that (a) the introduction of any Capital Adequacy Regulation,
(b) any change in any Capital Adequacy Regulation, (c) any change in the
interpretation or administration of any Capital Adequacy Regulation by any
central bank or other Governmental Authority charged with the interpretation or
administration thereof, or (d) compliance by the Lender or any corporation or
other entity controlling the Lender with any Capital Adequacy Regulation,
affects or would affect the amount of capital required or expected to be
maintained by the Lender or any corporation or other entity controlling the
Lender and (taking into consideration such Lender's or such corporation's or
other entity's policies with respect to capital adequacy and such Lender's
desired return on capital) determines that the amount of such capital is
increased as a consequence of its Commitments, loans, credits or obligations
under this Agreement, then, upon demand of such Lender to the Borrower through
the Agent in accordance with Section 5.3, the Borrower shall pay to the Lender,
from time to time as specified by the Lender, additional amounts sufficient to
compensate the Lender for such increase.
5.3 Certificates of Lenders. Any Lender claiming reimbursement or
compensation under this Article 5 shall deliver to the Borrower (with a copy to
the Agent) within 180 days of the event or events giving rise to such claim a
certificate setting forth in reasonable detail (including, with respect to
Section 5.2, the nature of the occurrence giving rise to such compensation, the
additional amount or amounts to be paid to such Lender thereunder, and the
method by which such amounts were determined) the amount payable to the Lender
hereunder and such certificate shall be conclusive and binding on the Borrower
in the absence of manifest error, with such certificate to constitute a written
demand for payment pursuant to Sections 5.1 and 5.2.
5.4 Survival. The agreements and obligations of the Borrower in
this Article 5 shall survive the payment of all other Obligations.
ARTICLE 6
COLLATERAL
6.1 Grant of Security Interest. (a) As security for all
Obligations, the Borrower hereby grants to the Agent, for the benefit of the
Agent and the Lenders, a continuing security interest in, lien on, assignment of
and right of set-off against, all of the following property and assets of the
Borrower, whether now owned or existing or hereafter acquired or arising,
regardless of where located:
(i) all Accounts (including any credit enhancement
therefor);
(ii) all Inventory;
25
(iii) all contract rights (including rights to payment
under the Consignment Agreement), letters of credit, Chattel Paper, instruments,
notes, documents, and documents of title;
(iv) all General Intangibles;
(v) all Equipment;
(vi) all Investment Property;
(vii) all money, cash, cash equivalents, securities and
other property of any kind of the Borrower held directly or indirectly by the
Agent or any Lender;
(viii) all of the Borrower's deposit accounts, credits,
and balances with and other claims against the Agent or any Lender or any of
their Affiliates or any other financial institution with which the Borrower
maintains deposits, including the Payment Account;
(ix) all books, records and other property related to or
referring to any of the foregoing, including books, records, account ledgers,
data processing records, computer software and other property and General
Intangibles at any time evidencing or relating to any of the foregoing; and
(x) all accessions to, substitutions for and
replacements, products and proceeds of any of the foregoing, including, but not
limited to, proceeds of any insurance policies, claims against third parties,
and condemnation or requisition payments with respect to all or any of the
foregoing.
All of the foregoing, together with all other property of the Borrower in which
the Agent or any Lender may at any time be granted a Lien, is herein
collectively referred to as the "Collateral."
(b) As security for all Obligations, the Borrower has executed
and delivered to the Agent the Engine Mortgage and any Mortgage Supplements
necessary to perfect the Agent's Lien in the Engines.
(c) All of the Obligations shall be secured by all of the
Collateral.
6.2 Perfection and Protection of Security Interest. (a) The
Borrower shall, at its expense, perform all steps requested by the Agent in good
faith at any time to perfect, maintain, protect, and enforce the Agent's Liens,
including: (i) executing, delivering and/or filing and recording of the Engine
Mortgage and any Mortgage Supplements necessary to perfect the Agent's Lien in
the Engines, and executing and filing financing or continuation statements, and
amendments thereof, in form and substance reasonably satisfactory to the Agent;
(ii) delivering to the Agent the originals of all instruments, documents, and
Chattel Paper, and all other Collateral of which the Agent determines it should
have physical possession in order to perfect and protect the Agent's security
interest therein, duly pledged, endorsed or assigned to the Agent without
restriction;. (iii) delivering to the Agent warehouse receipts covering any
portion of the Collateral located in warehouses and for which warehouse receipts
are issued and certificates of
26
title covering any portion of the collateral for which certificates of title
have been issued; (iv) when an Event of Default exists, transferring Inventory
to warehouses or other locations designated by the Agent; (v) placing notations
on the Borrower's books of account to disclose the Agent's Liens; (vi)
delivering to the Agent all letters of credit on which the Borrower is named
beneficiary; and (vii) taking such other steps as are deemed necessary or
reasonably desirable by the Agent to maintain and protect the Agent's Liens. To
the extent permitted by applicable law, the Agent may file, without the
Borrower's signature, one or more financing statements disclosing the Agent's
Liens. The Agent will give the Borrower notice of the filing of any such
statements, which notice shall specify the location(s) where such statements
were filed. The Borrower agrees that a carbon, photographic, photostatic, or
other reproduction of this Agreement or of a financing statement is sufficient
as a financing statement.
(b) If any Collateral is at any time in the possession or
control of any warehouseman, bailee, consignee or any of the Borrower's agents
or processors, then the Borrower shall notify the Agent thereof and shall, at
the request of Agent, notify such Person of the Agent's security interest in
such Collateral and, at the request of the Agent upon any Event of Default,
instruct such Person to hold all such Collateral for the Agent's account subject
to the Agent's instructions. If at any time any Collateral is located in any
operating facility of the Borrower or Xxxxxxxxx not owned by the Borrower or
Xxxxxxxxx, then the Borrower shall, at the request of the Agent, use
commercially reasonable efforts to obtain written landlord lien waivers or
subordinations, in form and substance reasonably satisfactory to the Agent, of
all present and future Liens to which the owner or lessor of such premises may
be entitled to assert against the Collateral; provided, however, that the Agent
shall not request or require any such waivers or subordinations to the extent
that the Agent on the Closing Date has expressly waived, in writing, such
requirement as to specified Inventory at specified locations; provided, further,
however, that any such waiver by the Agent shall not be effective to waive any
requirement of this paragraph (b) above (i) during the continuance of an Event
of Default or (ii) with respect to any Inventory (including any Inventory
received in exchange for Inventory) relocated to a different location
(regardless of whether any other Inventory may be located at such different
location) subsequent to the Closing Date.
(c) From time to time, the Borrower shall, upon the Agent's
request, execute and deliver confirmatory written instruments pledging to the
Agent, for the ratable benefit of the Agent and the Lenders, the Collateral with
respect to the Borrower, but the Borrower's failure to do so shall not affect or
limit the Agent's Liens or any other rights of the Agent or any Lender in and to
the Collateral with respect to the Borrower. So long as this Agreement is in
effect and until all Obligations have been fully satisfied, the Agent's Liens
shall continue in full force and effect in all Collateral (whether or not deemed
eligible for the purpose of calculating the Availability or as the basis for any
advance, loan, extension of credit, or other -financial accommodation).
6.3 Location of Collateral. The Borrower represents and warrants
to the Agent and the Lenders that, as of the date hereof: (a) Schedule 6.3 is a
correct and complete list of the Borrower's chief executive office, the location
of its books and records, the locations of the Collateral, and the locations of
all of its other places of business; and (b) Schedule 6.3 correctly identifies
any of such facilities and locations that are not owned by the Borrower and sets
forth
27
the names of the owners and lessors or sublessors, or bailees or consignees, as
applicable, of such facilities and locations. The Borrower covenants and agrees
that it will not (i) maintain any Collateral at any location other than those
locations listed for the Borrower on Schedule 6.3, except for Inventory subject
to a Lease Agreement, Inventory at a FAA-approved repair facility, and Inventory
in transit to any such location, or (ii) change the location of its chief
executive office or the locations of the Collateral from the locations
identified in Schedule 6.3, unless, in either case, it gives the Agent at least
thirty (30) days' prior written notice thereof and executes any and all
financing statements and other documents that the Agent reasonably requests in
connection therewith. Without limiting the foregoing, the Borrower represents
that all of its Inventory (other than Inventory subject to a Lease Agreement,
Inventory at a FAA-approved repair facility and Inventory in transit) is, and
covenants that all of its Inventory will be, located either (A) on premises
owned by the Borrower, (B) on premises leased by the Borrower, provided that the
Agent has, if requested by the Agent, received an executed landlord waiver from
the landlord of such premises in form and substance satisfactory to the Agent,
or (C) in a warehouse or with a bailee or consignee, provided that the Agent
has, if requested by the Agent, received from the applicable Person in form and
substance satisfactory to the Agent, (1) an executed bailee or consignee letter,
(2) an executed UCC financing statement and (3) any other items that the Agent
requests in its good faith judgment; provided; however, that the Agent shall not
request or require any such waivers, bailee or consignee letters, UCC financing
statements or other similar such documents to the extent that the Agent on the
Closing Date has expressly waived, in writing, such requirement as to specified
Inventory at specified locations; provided, further, however, that any such
waiver by the Agent shall not be effective to waive any requirement of clauses
(B) and (C) above (x) during the continuance of an Event of Default or (y) with
respect to any Inventory (including any Inventory received in exchange for
Inventory) relocated to a different location (regardless of whether any other
Inventory may be located at such different location) subsequent to the Closing
Date.
6.4 Title to, Liens on, and Sale and Use of Collateral. The
Borrower represents and warrants to the Agent and the Lenders and agrees with
the Agent and the Lenders that: (a) all of the Collateral is and will continue
to be owned by the Borrower free and clear of all Liens whatsoever, except for
Permitted Liens; (b) the Agent's Liens in the Collateral will not be subject to
any prior Lien except (i) those Liens described in clause (a) of the definition
of Permitted Liens to the extent that the underlying amounts are not delinquent
and (ii) those Liens described in clause (c) of the definition of Permitted
Liens provided that with respect to such Permitted Liens of warehousemen and
landlords, the warehouseman or landlord, as applicable has delivered to the
Agent such waivers and consents as are required by Section 6.3 above; and (c)
the Borrower will use, store, and maintain the Collateral with all reasonable
care and will use such Collateral for lawful purposes only.
6.5 Appraisals. At any time if requested by the Agent, the
Borrower shall deliver to the Agent Appraisals of all Inventory owned by the
Borrower, which Appraisals shall set forth the Orderly Liquidation Value of all
Inventory. Each Appraisal shall (a) be conducted by an appraiser satisfactory to
the Agent in its reasonable discretion, (b) be in form reasonably acceptable to
the Agent, and (c) such costs shall be deemed KAV Payables and payable from the
Reserve Amount.
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6.6 Access and Examination: Confidentiality; Consent to
Advertising. (a) The Borrower shall permit the Agent, accompanied by any Lender
which so elects, to have access to, examine, audit, make extracts from or copies
of and inspect any or all of the Borrower's records, files, books of account and
the Collateral, and discuss the Borrower's officers and management at all
reasonable times during regular business hours (and at any time when a Default
or Event of Default exists and is continuing). The Borrower shall deliver to the
Agent any instrument necessary for the Agent to obtain records from any service
bureau maintaining records for the Borrower. The Borrower shall permit the
Agent, in its discretion or at the direction of the Required Lenders to make
copies of all of the Borrower's books and records, or require the Borrower to
deliver such copies to the Agent, at any time when a Default or Event of Default
exists, and at the Borrower's expense. The Borrower shall permit the Agent to
use such of the Borrower's respective personnel, supplies, and Real Estate, if
any, as may be reasonably necessary for maintaining or enforcing the Agent's
Liens, without expense to the Agent. The Agent shall have the right, at any
time, in the Agent's name or in the name of a nominee of the Agent, to verify
the validity, amount or any other matter relating to the Accounts, Inventory, or
other Collateral, by mail, telephone, or otherwise.
(b) The Borrower hereby consents that the Agent and each
Lender may issue and disseminate to the public general information describing
the credit accommodation entered into pursuant to this Agreement, including the
name and address of the Borrower and a general description of the Borrower's
business and may use the Borrower's name in advertising and other promotional
material.
(c) Each Lender severally agrees to take normal and reasonable
precautions and exercise due care to maintain the confidentiality of all
materials, documents and information related to the Borrower, Xxxxxxxxx and
Xxxxxxxxx'x Subsidiaries, TIMCO and TIMCO' Subsidiaries, including TIMCO
Distribution (collectively, the "Companies"), the business of the Companies, the
Acquisition, and the Inventory Acquisition (collectively, the "Information")
provided to the Agent or such Lender by or on behalf of the Borrower, under this
Agreement, any other Loan Document or otherwise, except that such Information
may be disclosed to the extent that such Information (i) was or becomes
generally available to the public other than as a result of disclosure by the
Agent or such Lender, or (ii) was or becomes available on a non-confidential
basis from a source other than the Companies, provided that such source is not
bound by a confidentiality agreement with the Companies known to the Agent or
such Lender; provided, however, that the Agent and any Lender may disclose such
information (A) at the request or pursuant to any requirement of any
Governmental Authority to which the Agent or such Lender is subject or in
connection with an examination of the Agent or such Lender by any such
Governmental Authority; (B) pursuant to subpoena or other court process; (C)
when required to do- so in accordance with the provisions of any applicable
Requirement of Law; (D) to the extent reasonably required in connection with any
litigation or proceeding (including, but not limited to, any bankruptcy
proceeding) to which the Agent, any Lender or their respective Affiliates may be
party; (E) to the extent reasonably required in connection with the exercise of
any remedy hereunder or under any other Loan Document; (F) to the Agent's or
such Lender's independent auditors, accountants, attorneys and other
professional advisors; (G) to any prospective Participant or Assignee under any
Assignment and Acceptance, actual or potential, provided that such prospective
Participant or Assignee agrees in writing to keep such
29
information confidential to the same extent required of the Agent and the
Lenders hereunder and agrees that the Borrower, Xxxxxxxxx, its subsidiaries,
TIMCO, and its subsidiaries, including TIMCO Distribution, are third party
beneficiaries thereof; (H) as expressly permitted under the terms of any other
document or agreement regarding confidentiality to which the Borrower is party
or is deemed party with the Agent or such Lender, and (I) to its Affiliates;
provided, however, that in the event of any disclosure pursuant to clauses (A),
(B), (C) and (D) above, the Agent or such Lender shall notify, to the extent
practicable and not prohibited under the circumstances, Xxxxxxxxx, XXXXX and the
Bank on a timely basis prior to such disclosure so that a protective order or
other appropriate remedy may be sought or a waiver of compliance with the
provisions of this Section 6.6(c) may be granted.
6.7 Intentionally Omitted.
6.8 Lease Agreements. (a) All Lease Agreements used by the
Borrower and KIAC with respect to the Engines shall be in form and substance
satisfactory to the Agent, in its reasonable discretion.
(b) Prior to the execution of any Lease Agreement, there shall
be marked in a plain, distinct, permanent and conspicuous manner that one single
original Lease Agreement is the chattel paper original, and the Borrower shall
cause all executed counterparts of such Lease Agreement to be marked as
duplicate originals.
(c) No Lease Agreement (other than because of a default by the
lessee under such Lease Agreement) shall terminate nor shall any amendment,
modification, or consent be entered into with respect to a Lease Agreement that
materially affects any of the Agent's rights under such Lease Agreement, unless
the Agent consents to such amendment, modification or consent.
6.9 Collection of Payments. (a) Until the Agent notifies the
Borrower to the contrary, the Borrower shall make collection of all Accounts and
other Collateral for the Agent, shall receive all payments as the Agent's
trustee, and shall immediately deliver all payments in their original form duly
endorsed in blank into the Payment Account established for the account of the
Borrower at the Bank, subject to a Blocked Account Agreement. All collections
received in the Payment Account or directly by the Borrower or the Agent, and
all funds in the Payment Account shall be subject to the Agent's sole control
and withdrawals by the Borrower shall not be permitted. The Agent or the Agent's
designee may, at any time after the occurrence of an Event of Default, notify
Account Debtors that the Accounts have been assigned to the Agent and of the
Agent's security interest therein, and may collect them directly and charge the
collection costs and expenses to the Loan Account as a Loan. From time to time,
the Agent, in its sole discretion, may establish a Reserve Amount in the account
for the payment of KAV Payables, provided however that such Reserve Amount shall
remain subject to the Agent's security interest and upon an Event of Default the
Reserve Amount shall immediately be paid to Agent to be applied to reduce the
Obligations.
(b) If sales, leases or exchanges of Inventory are made or
services are rendered for cash, the Borrower shall immediately deliver to the
Agent or deposit into a Payment
30
Account the cash which the Borrower receives, including, but not limited to any
sales proceeds, lease payments or exchange fees received by the Borrower
pursuant to the Consignment Agreement.
(c) All payments received by the Agent in the Payment Account will be
the Agent's sole property for its benefit and the benefit of the Lenders. All
such payments received by the Agent by 12:00 noon on a Business Day will be
credited to the Loan Account on such Business Day. All such payments received by
the Agent after 12:00 noon on a Business Day will be credited to the Loan
Account on the next succeeding Business Day; provided, however, that all such
payments shall be deemed to be credited to the Loan Account immediately upon
receipt for purposes of calculating the amount of interest accrued thereon
solely for purposes of determining the amount of interest to be distributed by
the Agent to the Lenders (but not the amount of interest payable by the
Borrower).
6.10 Inventory, Perpetual Inventory. The Borrower represents and warrants
to the Agent and the Lenders and agrees with the Agent and the Lenders that to
the best of Zivi Nedivi's (the President and CEO of Xxxxxxxxx) knowledge, all of
the Inventory owned by the Borrower is and will be held for sale, lease or
exchange by it or by KIAC pursuant to the Consignment Agreement, or to be
furnished in connection with the rendition of services, in the ordinary course
of the Borrower's business, and such Inventory is and will be fit for such
purposes to the extent such Inventory is fit for such purposes on the Closing
Date or is repaired, overhauled or otherwise improved after the Closing Date to
render such Inventory fit for such purposes. The Borrower will keep its
Inventory in Good Condition, except for damaged or defective goods arising in
the ordinary course of the Borrower's business. Borrower will not, without the
prior written consent of the Agent, acquire or accept any Inventory on
consignment or approval. The Borrower agrees that all Inventory produced by the
Borrower in the United States of America will be produced in accordance with the
Federal Fair Labor Standards Act of 1938, as amended, and all rules,
regulations, and orders thereunder. The Borrower will maintain a perpetual
inventory reporting system at all times. The Borrower will not, without the
Agent's written consent, sell any Inventory on a sale and return or other
repurchase or return basis.
6.11 Documents, Instruments, and Chattel Paper. The Borrower represents and
warrants to the Agent and the Lenders that (a) to the best of Zivi Nedivi's (the
President and CEO of Xxxxxxxxx) knowledge, all documents, instruments, and
Chattel Paper describing, evidencing, or constituting Collateral, and all
signatures and endorsements thereon, are and will be complete, valid, and
genuine, and (b) all goods evidenced by such documents, instruments, and Chattel
Paper are and will be owned by the Borrower, free and clear of all Liens other
than Permitted Liens.
6.12 Right to Cure. The Agent may, in its discretion, and shall, at the
direction of the Required Lenders, pay any amount or do any act required of the
Borrower hereunder or under any other Loan Document in order to preserve,
protect, maintain or enforce the Obligations, the Collateral or the Agent's
Liens therein, and which the Borrower fails to pay or do, including payment of
any judgment against the Borrower, any insurance premium, any warehouse charge,
any finishing, repair, overhaul or processing charge, any landlord's or bailee's
claim, and any other Lien upon or with respect to the Collateral. All payments
that the Agent makes under this
31
Section 6.12 and all reasonable out-of-pocket costs and expenses that the Agent
pays or incurs in connection with any action taken by it hereunder shall be
charged to the Borrower's Loan Account as a Loan. Any payment made or other
action taken by the Agent under this Section 6.12 shall be without prejudice to
any right to assert an Event of Default hereunder and to proceed thereafter as
herein provided.
6.13 Power of Attorney. The Borrower hereby appoints the Agent and the
Agent's designee as the Borrower's attorney, with power: (a) to endorse the
Borrower's name on any checks, notes, acceptances, money orders, or other forms
of payment or security that come into the Agent's or any Lender's possession;
(b) to sign the Borrower's name on any invoice, xxxx of lading, warehouse
receipt or other document of title relating to any Collateral, on drafts against
customers, on assignments of Accounts, on notices of assignment, financing
statements and other public records and to file any such financing statements by
electronic means with or without a signature as authorized or required by
applicable law or filing procedure; and (c) to do all things necessary to carry
out this Agreement. The Borrower ratifies and approves all such acts of such
attorney. None of the Lenders or the Agent nor their attorneys will be liable
for any acts or omissions or for any error of judgment or mistake of fact or law
except for their willful misconduct or gross negligence. This power, being
coupled with an interest, is irrevocable until this Agreement has been
terminated and the Obligations have been fully satisfied.
6.14 The Agent's and Lenders' Rights Duties and Liabilities. The Borrower
assumes all responsibility and liability arising from or relating to its use,
sale, lease, exchange or other disposition of the Collateral. The Obligations
shall not be affected by any failure of the Agent or any Lender to take any
steps to perfect the Agent's Liens or to collect or realize upon the Collateral,
nor shall loss of or damage to the Collateral release the Borrower from any of
the Obligations. The Agent may (but shall not be required to), and at the
direction of the Required Lenders shall, without notice to or consent from the
Borrower, xxx upon or otherwise collect, extend the time for payment of, modify
or amend the terms of, compromise or settle for cash, credit, or otherwise upon
any terms, grant other indulgences, extensions, renewals, compositions, or
releases, and take or omit to take any other action with respect to the
Collateral, any security therefor, any agreement relating thereto, any insurance
applicable thereto, or any Person liable directly or indirectly in connection
with any of the foregoing, without discharging or otherwise affecting the
liability of the Borrower for the Obligations or under this Agreement or any
other agreement now or hereafter existing between the Agent and/or any Lender
and the Borrower.
6.15 Site Visits, Observations and Testing. The Agent and its
representatives will have the right at any reasonable time during normal
business hours to enter and visit the Real Estate and any other place where any
property of the Borrower is located for the purposes of observing the Real
Estate, taking and removing soil or groundwater samples, and conducting tests on
any part of the Real Estate; provided, however, that with respect to property
other than the Real Estate, the Borrower shall not be deemed to be under any
obligation to provide sufficient access to such property to allow for the
exercise of such right. The Agent is under no duty, however, to visit or observe
the Real Estate or to conduct tests, and any such acts by the Agent will be
solely for the purposes of protecting the Agent's Liens and preserving the Agent
and the Lenders' rights under this Agreement. No site visit, observation or
testing by the Agent and the Lenders will result in a waiver of any default of
the Borrower or impose any liability on the Agent or the
32
Lenders. In no event will any site visit, observation or testing by the Agent be
a representation that hazardous substances are or are not present in, on or
under the Real Estate, or that there has been or will be compliance with any
Environmental Law. Neither the Borrower nor any other party is entitled to rely
on any site visit, observation or testing by the Agent. The Agent and the
Lenders owe no duty of care to protect the Borrower or any other party against,
or to inform the Borrower or any other party of, any hazardous substances or any
other adverse condition affecting the Real Estate. The Agent shall disclose to
the Borrower, or to any other party if so required by law, any report or
findings made as a result of, or in connection with, any site visit, observation
or testing by the Agent. The Borrower understands and agrees that the Agent
makes no warranty or representation to the Borrower or any other party regarding
the truth, accuracy or completeness of any such report or findings that may be
disclosed. The Borrower also understands that depending on the results of any
site visit, observation or testing by the Agent and disclosed to the Borrower,
the Borrower may have a legal obligation to notify one or more environmental
agencies of the results, that such reporting requirements are site-specific, and
are to be evaluated by the Borrower without advice or assistance from the Agent.
In each instance, the Agent will give the Borrower reasonable notice before
entering the Real Estate or any other place the Agent is permitted to enter
under this Section 6.15. The Agent will make reasonable efforts to avoid
interfering with the Borrower's use of the Real Estate or any other property in
exercising any rights provided hereunder.
ARTICLE 7
BOOKS AND RECORDS: FINANCIAL INFORMATION: NOTICES
7.1 Books and Records. The Borrower shall maintain, at all times, correct
and complete books, records and accounts in which complete, correct and timely
entries are made of its transactions in accordance with GAAP applied
consistently with the audited Financial Statements required to be delivered
pursuant to Section 7.2(a). The Borrower shall, by means of appropriate entries,
reflect in such accounts and in all Financial Statements proper liabilities and
reserves for all taxes and proper provision for depreciation and amortization of
property and bad debts, all in accordance with GAAP. The Borrower shall maintain
at all times books and records pertaining to the Collateral in such detail, form
and scope as the Agent or any Lender shall reasonably require, including, but
not limited to, records of (a) all payments received with respect to the
Accounts, including but not limited to any payments received from KIAC pursuant
to the Consignment Agreement; (b) the return, rejection, repossession, stoppage
in transit, loss, damage, or destruction of any Inventory; and (c) all other
dealings affecting the Collateral.
7.2 Financial Information. The Borrower shall promptly furnish, or cause to
be furnished, to the Agent and each Lender, all such financial information as
the Borrower receives pursuant to the Consignment Agreement and all reports or
other financial information generated by Borrower related to the Consignment
Agreement and Inventory, if any including, but not limited to the following:
(a) Promptly after filing with the PBGC and the IRS, a copy of each
annual report or other filing filed with respect to each Plan of the Borrower,
if any.
33
(b) Promptly upon the filing thereof, copies of all reports, if any, to
or other documents filed by the Borrower with the Securities and Exchange
Commission under the Exchange Act, and all reports, notices or statements sent
or received by the Borrower to or from the holders of any equity interests of
the Borrower (other than routine non-material correspondence sent by members of
the Borrower to the Borrower).
(c) As soon as available, but in any event not later than fifteen (15)
days after the Borrower's receipt thereof, respectively, a copy of all
management reports and management letters prepared for the Borrower,
respectively, by any independent certified public accountants of the Borrower.
(d) Promptly after their preparation, copies of any and all proxy
statements, financial statements, and reports which the Borrower makes available
to its members.
(e) Promptly after filing with the IRS, a copy of each tax return filed
by the Borrower.
(f) Such additional information available to the Borrower, or any
Affiliate of the Borrower, as the Agent and/or any Lender may from time to time
reasonably request regarding the financial and business affairs of the Borrower
or any Affiliate.
7.3 Notices to the Lenders. The Borrower shall notify the Agent, the
Security Trustee and the Lenders in writing of the following matters at the
following times:
(a) Immediately after becoming aware of any Default or Event of
Default;
(b) Immediately after becoming aware of the assertion by the holder of
any membership unit of the Borrower or of any Debt in a face amount in excess of
$100,000 that a default exists with respect thereto or that the Borrower is not
in compliance with the terms thereof, or the threat or commencement by such
holder of any enforcement action because of such asserted default or
non-compliance;
(c) Immediately after becoming aware of any Material Adverse Effect;
(d) Immediately after becoming aware of any pending or threatened
action, suit, or proceeding, by any Person, or any pending or threatened
investigation by a Governmental Authority, which could reasonably be expected to
have a Material Adverse Effect;
(e) Immediately after becoming aware of any pending or threatened
strike, work stoppage, unfair labor practice claim, or other labor dispute
affecting the Borrower in a manner which could reasonably be expected to have a
Material Adverse Effect;
(f) Immediately after becoming aware of any violation of any law,
statute, regulation, or ordinance of a Governmental Authority affecting the
Borrower which could reasonably be expected to have a Material Adverse Effect;
34
(g) Immediately after receipt of any notice of any violation by the
Borrower of any Environmental Law which could reasonably be expected to have a
Material Adverse Effect or that any Governmental Authority has asserted in
writing that the Borrower is not in compliance with any Environmental Law or is
investigating the Borrower's compliance therewith:
(h) Immediately after receipt of any written notice that the Borrower
is or may be liable to any Person as a result of the Release or threatened
Release of any Contaminant or that the Borrower is subject to investigation by
any Governmental Authority evaluating whether any remedial action is needed to
respond to the Release or threatened Release of any Contaminant;
(i) Immediately after receipt of any written notice of the imposition
of any Environmental Lien against any property of the Borrower;
(j) Any change in the Borrower's name, state of organization, or form
of organization, trade names under which the Borrower will sell, lease and
exchange Inventory or create Accounts, or to which instruments in payment of
Accounts may be made payable, in each case at least thirty (30) days prior
thereto;
(k) Within ten (10) Business Days after the Borrower or any ERISA
Affiliate knows or has reason to know, that an ERISA Event or a prohibited
transaction (as defined in Sections 406 of ERISA and 4975 of the Code) has
occurred, and, when known, any action taken or threatened by the IRS, the DOL or
the PBGC with respect thereto;
(l) Upon request, or, in the event that such filing reflects a
significant change with respect to the matters covered thereby, within three (3)
Business Days after the filing thereof with the PBGC, the DOL or the IRS, as
applicable, copies of the following: (i) each annual report (form 5500 series),
including Schedule B thereto, filed with the PBGC, the DOL or the IRS with
respect to each Plan, if any, (ii) a copy of each funding waiver request filed
with the PBGC, the DOL or the IRS with respect to any Plan and all
communications received by the Borrower or any ERISA Affiliate from the PBGC,
the DOL or the IRS with respect to such request, if any, and (iii) a copy of
each other filing or notice filed with the PBGC, the DOL or the IRS, with
respect to each Plan of either the Borrower or any ERISA Affiliate, if any;
(m) Upon request, copies of each actuarial report for any Plan or
Multi-employer Plan and annual report for any Multi-employer Plan; and within
three (3) Business Days after receipt thereof by the Borrower or any ERISA
Affiliate, copies of the following: (i) any notices of the PBGC's intention to
terminate a Plan or to have a trustee appointed to administer such Plan; (ii)
any favorable or unfavorable determination letter from the IRS regarding the
qualification of a Plan under Section 401 (a) of the Code; or (iii) any notice
from a Multi-employer Plan regarding the imposition of withdrawal liability;
(n) Within three (3) Business Days after the occurrence thereof: (i)
any changes in the benefits of any existing Plan which increase the Borrower's
annual costs with respect thereto by an amount in excess of $200,000, or the
establishment of any new Plan or the
35
commencement of contributions to any Plan to which the Borrower or any ERISA
Affiliate was not previously contributing; or (ii) any failure by the Borrower
or any ERISA Affiliate to make a required installment or any other required
payment under Section 412 of the Code on or before the due date for such
installment or payment;
(o) Within three (3) Business Days after the Borrower or any ERISA
Affiliate knows or has reason to know that any of the following events has or
will occur: (i) a Multiemployer Plan has been or will be terminated; (ii) the
administrator or plan sponsor of a Multiemployer Plan intends to terminate a
Multi-employer Plan; or (iii) the PBGC has instituted or will institute
proceedings under Section 4042 of ERISA to terminate a Multi-employer Plan; or
(p) Upon receipt, any material notices received by the Borrower, or
when delivered, any notices to be delivered by the Borrower, pursuant to the
Cooperation Agreement, the Inventory Purchase Agreement (including any claims
for indemnification thereunder), the PCRA and the Consignment Agreement.
For the purposes of this Section 7.3, the phrase "becoming aware" means that any
Responsible Officer of the Borrower receives personal knowledge of the relevant
fact. Each notice given under this Section shall describe the subject matter
thereof in reasonable detail, and shall set forth the action that the Borrower,
or any ERISA Affiliate, as applicable, has taken or proposes to take with
respect thereto.
ARTICLE 8
GENERAL WARRANTIES AND REPRESENTATIONS
The Borrower warrants and represents to the Agent and the Lenders that
except as hereafter disclosed to and accepted by the Agent and the Required
Lenders in writing:
8.1 Authorization, Validity, and Enforceability of this Agreement and the
Loan Documents. The Borrower has the power and authority to execute, deliver and
perform this Agreement and the other Loan Documents to which it is a party, to
incur the Obligations, and to grant to the Agent Liens upon and security
interests in the Collateral. The Borrower has taken all necessary action
(including obtaining approval of its members if necessary) to authorize its
execution, delivery, and performance of this Agreement and the other Loan
Documents to which it is a party. This Agreement and the other Loan Documents to
which it is a party have been duly executed and delivered by the Borrower, and
constitute the legal, valid and binding obligations of the Borrower, enforceable
against it in accordance with their respective terms without defense, setoff or
counterclaim except as the enforceability of the foregoing may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws or
equitable principles affecting enforcement of creditors' rights generally. The
Borrower's execution, delivery, and performance of this Agreement and the other
Loan Documents to which it is a party do not and will not conflict with, or
constitute a violation or breach of, or constitute a default under, or result
in, or require the creation or imposition of any Lien upon the property of the
Borrower or any of its Affiliates by reason of the terms of (a) any contract,
mortgage, Xxxx,
00
lease, agreement, indenture, or instrument to which the Borrower is a party or
which is binding upon it the breach of which could reasonably be expected to
have a Material Adverse Effect; (b) any Requirement of Law applicable to the
Borrower, or (c) the certificate of formation or Operating Agreement of the
Borrower.
8.2 Validity and Priority of Security Interest. The provisions of this
Agreement, the Engine Mortgage and any related Mortgage Supplements and the
other Loan Documents create legal and valid Liens on all the Collateral in favor
of the Agent, for the ratable benefit of the Agent and the Lenders, and such
Liens constitute perfected and continuing Liens on all the Collateral, having
priority over all other Liens on the Collateral, except for those Liens
identified in clause (c) of the definition of Permitted Liens securing all the
Obligations, and enforceable against the Borrower and all third parties.
8.3 Organization and Qualification. The Borrower (a) is duly organized and
validly existing in good standing under the laws of the state of its
organization, (b) is qualified to do business as a foreign organization and is
in good standing in the jurisdictions set forth on Schedule 8.3 which are the
only jurisdictions in which qualification is necessary in order for it to own or
lease its property and conduct its business, except for jurisdictions in which
the failure to do so could not reasonably be expected to have a Material Adverse
Effect and (c) has all requisite power and authority to conduct its business and
to own its property.
8.4 Corporate Name, Prior Transactions. Except as set forth on Schedule
8.4, the Borrower has not, during the past five (5) years, been known by or used
any other organizational or fictitious name, or been a party to any merger or
consolidation, or acquired all or substantially all of the assets of any Person,
or acquired any of its property outside of the ordinary course of business.
8.5 Subsidiaries and Affiliates. The Borrower has no Subsidiaries.
8.6 Intentionally Omitted.
8.7 Capitalization. The Borrower's authorized membership interests consist
of 1000 membership units owned beneficially and of record in equal amounts by
TIMCO and Xxxxxxxxx.
8.8 Intentionally Omitted.
8.9 Debt. After giving effect to the making of the Loans to be made on the
Closing Date, the Borrower has no Debt, except (a) the Obligations, (b) the
Subordinated Notes, and (c) the Debt expressly made subordinate to the
Obligations pursuant to the Subordination Agreement.
8.10 Distributions. No Distribution has been declared, paid, or made upon
or in respect of any membership unit of the Borrower.
8.11 Title to Property. The Borrower has good, indefeasible, and
merchantable title to all of its personal property, free of all Liens except
Permitted Liens.
37
8.12 Real Estate, Leases. Schedule 8.12 sets forth, as of the Closing Date,
a correct and complete list of all Real Estate owned by the Borrower, all leases
and subleases of real or personal property held by the Borrower as lessee or
sublessee and all leases and subleases of real or personal property held by the
Borrower as lessor, or sublessor. Each of such leases and subleases is valid and
enforceable in accordance with its terms and is in full force and effect, and no
default by any party to any such lease or sublease exists.
8.13 Proprietary Rights. Schedule 8.13 sets forth a correct and complete
list of all of the Borrower's Proprietary Rights. None of the Proprietary Rights
is subject to any licensing agreement or similar arrangement except as set forth
on Schedule 8.13. To the best of the Borrower's knowledge, none of the
Proprietary Rights infringes on or conflicts with any other Person's property,
and no other Person's property infringes on or conflicts with the Proprietary
Rights. The Proprietary Rights described on Schedule 8.13 constitute all of the
property of such type necessary to the current and anticipated future conduct of
the Borrower's business.
8.14 Trade Names. All trade names or styles under which the Borrower will
sell Inventory or create Accounts, or to which instruments in payment of
Accounts may be made payable, are listed on Schedule 8.14.
8.15 Litigation. Except as set forth on Schedule 8.15, there is no pending,
or to the best of the Borrower's knowledge threatened, action, suit, proceeding,
or counterclaim by any Person, or to the best of the Borrower's knowledge
investigation by any Governmental Authority, or any basis for any of the
foregoing, which seeks to enjoin, restrain, prohibit or obtain damages in
respect of the Transaction, or that, in the Agent's judgment, could reasonably
be expected to have a Material Adverse Effect.
8.16 Restrictive Agreements. Neither the Borrower nor any of its Affiliates
is a party to any contract or agreement, or subject to any charter or other
corporate restriction, which affects such Person's ability to execute, deliver,
and perform the Loan Documents and repay the Obligations or which could
reasonably be expected to cause a Material Adverse Effect.
8.17 Labor Disputes. Except as set forth on Schedule 8.17, as of the
Closing Date (a) there is no collective bargaining agreement or other labor
contract covering employees of the Borrower, (b) no such collective bargaining
agreement or other labor contract is scheduled to expire during the term of this
Agreement, (c) no union or other labor organization is seeking to organize, or
to be recognized as, a collective bargaining unit of employees of the Borrower
or for any similar purpose, and (d) there is no pending or (to the best of the
Borrower's knowledge) threatened, strike, work stoppage, material unfair labor
practice claim, or other material labor dispute against or affecting the
Borrower or their employees.
8.18 Environmental Laws. Except as otherwise disclosed on Schedule 8.18:
(a) The Borrower has complied in all material respects with all
Environmental Laws and neither the Borrower nor any of its presently owned real
property or presently conducted operations, nor its previously owned real
property or prior operations, is subject to any enforcement order from or
liability agreement with any Governmental Authority or private
38
Person respecting (i) compliance with any Environmental Law or (ii) any
potential liabilities and costs or remedial action arising from the Release or
threatened Release of a Contaminant.
(b) The Borrower has obtained all material permits necessary for its
current operations under Environmental Laws, and all such permits are in good
standing and the Borrower is in compliance with all material terms and
conditions of such permits.
(c) The Borrower has not, nor, to the best of the Borrower's
knowledge, any of its predecessors in interest, has in violation of applicable
law stored, treated or disposed of any hazardous waste.
(d) The Borrower has not received any summons, complaint, order or
similar written notice indicating that it is not currently in compliance with,
or that any Governmental Authority is investigating its compliance with, any
Environmental Laws or that it is or may be liable to any other Person as a
result of a Release or threatened Release of a Contaminant.
(e) To the best of the Borrower's knowledge, none of the present or
past operations of the Borrower is the subject of any investigation by any
Governmental Authority evaluating whether any remedial action is needed to
respond to a Release or threatened Release of a Contaminant.
(f) There is not now, nor to the best of the Borrower's knowledge has
there ever been on or in the Real Estate:
(i) any underground storage tanks or surface impoundments,
(ii) any asbestos-containing material, or
(iii) any polychlorinated biphenyls (PCBs) used in hydraulic oils,
electrical transformers or other equipment.
(g) The Borrower has not filed any notice under any requirement of
Environmental Law reporting a spill or accidental and unpermitted Release or
discharge of a Contaminant into the environment.
(h) The Borrower has not entered into any negotiations or settlement
agreements with any Person (including the prior owner of its property) imposing
material obligations or liabilities on the Borrower with respect to any remedial
action in response to the Release of a Contaminant or environmentally related
claim.
(i) None of the products manufactured, distributed or sold by the
Borrower contain asbestos containing material.
(j) No Environmental Lien has attached to the Real Estate.
39
8.19 No Violation of Law. Neither the Borrower nor any of its Affiliates is
in violation of any law, statute, regulation, ordinance, judgment, order, or
decree applicable to it which violation could reasonably be expected to have a
Material Adverse Effect.
8.20 Intentionally Omitted.
8.21 ERISA Compliance. Except as specifically disclosed in Schedule 8.21:
(a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other federal or state law. Each
Plan which is intended to qualify under Section 401(a) of the Code has received,
or will apply for, when permitted by the IRS, a favorable determination letter
from the IRS and to the best knowledge of the Borrower, nothing has occurred
which would cause the loss of such qualification. The Borrower and each ERISA
Affiliate has made all required contributions to any Plan subject to Section 412
of the Code, and no application for a funding waiver or an extension of any
amortization period pursuant to Section 412 of the Code has been made with
respect to any Plan,
(b) There are no pending or, to the best knowledge of the Borrower,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan which has resulted or could reasonably be expected to
result in a Material Adverse Effect. There has been no prohibited transaction or
violation of the fiduciary responsibility rules with respect to any Plan which
has resulted or could reasonably be expected to result in a Material Adverse
Effect.
(c) (i) No ERISA Event has occurred or is reasonably expected to
occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither
the Borrower nor any ERISA Affiliate has incurred, or reasonably expects to
incur, any liability under Title IV of ERISA with respect to any Pension Plan
(other than premiums due and not delinquent under Section 4007 of ERISA); (iv)
neither the Borrower nor any ERISA Affiliate has incurred, or reasonably expects
to incur, any liability (and no event has occurred which, with the giving of
notice under Section 4219 of ERISA, would result in such liability) under
Section 4201 or 4243 of ERISA with respect to a Multi-employer Plan; and (v)
neither the Borrower nor any ERISA Affiliate has engaged in a transaction that
could be subject to Section 4069 or 4212(c) of ERISA.
8.22 Taxes. The Borrower has filed all federal and other tax returns and
reports required to be filed, and has paid all federal and other taxes,
assessments, fees and other governmental charges levied or imposed upon it or
its properties, income or assets otherwise due and payable unless such unpaid
taxes and assessments would constitute a Permitted Lien.
8.23 Regulated Entities. Neither the Borrower nor any Person controlling
the Borrower, is an "Investment Company" within the meaning of the Investment
Company Act of 1940. The Borrower is not subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, the Interstate
Commerce Act, any state public utilities code or law, or any other federal or
state statute or regulation limiting its ability to incur indebtedness.
40
8.24 Use of Proceeds, Margin Regulations. The Borrower is not engaged
in the business of purchasing or selling Margin Stock or extending credit for
the purpose of purchasing or carrying Margin Stock.
8.25 Copyrights, Patents, Trademarks and Licenses, etc. The Borrower
owns or is licensed or otherwise has the right to use all Proprietary Rights
that are reasonably necessary for the operation of its businesses, without
conflict with the rights of any other Person. To the best knowledge of the
Borrower, no slogan or other advertising device, product, process, method,
substance, part or other material now employed, or now contemplated to be
employed, by the Borrower infringes upon any rights held by any other Person. No
claim or litigation regarding any of the foregoing is pending or threatened, and
no patent, invention, device, application, principle or any statute, law, rule,
regulation, standard or code is pending or, to the knowledge of the Borrower,
proposed, which, in either case, could reasonably be expected to have a Material
Adverse Effect.
8.26 Intentionally Omitted.
8.27 Full Disclosure. None of the representations or warranties made by
the Borrower in the Loan Documents (or to the best knowledge of the Borrower,
made by TIMCO Distribution or TIMCO in the Inventory Purchase Agreement) as of
the date such representations and warranties are made or deemed made, and none
of the statements contained in any exhibit, report, statement or certificate
furnished by or on behalf of the Borrower or any Affiliate in connection with
the Loan Documents (including the offering and disclosure materials delivered by
or on behalf of the Borrower to the Lenders prior to the Closing Date), contains
any untrue statement of a material fact or omits any material fact required to
be stated therein or necessary to make the statements made therein, in light of
the circumstances under which they are made, not misleading as of the time when
made or delivered.
8.28 Material Agreements. Schedule 8.28 hereto sets forth as of the
Closing Date all material agreements and contracts to which the Borrower is a
party or is bound as of the date hereof.
8.29 Bank Accounts. Schedule 8.29 contains as of the Closing Date a
complete and accurate list of all bank accounts maintained by the Borrower with
any bank or other financial institution.
8.30 Governmental Authorization. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority or other Person is necessary or required in connection
with the execution, delivery or performance by, or enforcement against, the
Borrower of this Agreement or any other Loan Document.
8.31 Federal Tax Identification Number. The Borrower's federal tax
identification number is set forth on Schedule 8.31 hereto.
41
ARTICLE 9
AFFIRMATIVE AND NEGATIVE COVENANTS
The Borrower covenants to the Agent and each Lender that so long as
any of the Obligations remain outstanding or this Agreement is in effect:
9.1 Taxes and Other Obligations. The Borrower shall (a) file when due
all tax returns and other reports which it is required to file; (b) pay, or
provide for the payment, when due, of all taxes, fees, assessments and other
governmental charges against it or upon its property, income and franchises,
make all required withholding and other tax deposits, and establish adequate
reserves for the payment of all such items, and provide to the Agent and the
Lenders, upon request, satisfactory evidence of its timely compliance with the
foregoing; and (c) pay when due all Debt owed by it and all claims of
materialmen, mechanics, carriers, warehousemen, landlords, processors and other
like Persons, and all other indebtedness owed by it and perform and discharge in
a timely manner all other obligations undertaken by it; provided, however, so
long as the Borrower has notified the Agent in writing, the Borrower shall not
need to pay any tax, fee, assessment, governmental charge or other claim, that
(i) it is contesting in good faith by appropriate proceedings diligently
pursued, (ii) for which the Borrower has established proper reserves as provided
in GAAP, and (iii) no Lien (other than a Permitted Lien) results from such
non-payment.
9.2 Existence and Good Standing. The Borrower shall maintain its
existence and its qualification and good standing in all jurisdictions in which
the failure to maintain such existence and qualification or good standing could
reasonably be expected to have a Material Adverse Effect.
9.3 Compliance with Law and Agreements Maintenance of Licenses. The
Borrower shall comply, in all material respects with all Requirements of Law of
any Governmental Authority having jurisdiction over it or its business
(including the Federal Fair Labor Standards Act and all Environmental Laws
except to the extent that failure to do so could not reasonably be expected to
have a Material Adverse Effect). The Borrower shall obtain and maintain all
licenses, permits, franchises, and governmental authorizations necessary to own
its property and to conduct its business as conducted on the Closing Date except
to the extent that failure to do so could not reasonably be expected to have a
Material Adverse Effect. The Borrower shall not modify, amend or alter its
articles of organization other than in a manner which does not adversely affect
the rights of the Lenders or the Agent with respect to the Loans.
9.4 Maintenance of Property. The Borrower shall maintain all of its
property necessary and useful in the conduct of its business, in Good Condition,
ordinary wear and tear excepted.
9.5 Insurance.
(a) The Borrower shall at all times maintain, or cause to be
maintained, insurance (or cause insurance to be maintained) on the Inventory and
Equipment against loss or
42
damage by fire, theft (excluding theft by employees, if any), burglary,
pilferage, loss in transit and such other hazards as are specified in the Engine
Mortgage or as the Agent shall reasonably specify, in amounts not to exceed
those obtainable at commercially reasonable rates and under policies issued by
insurers acceptable to the Agent in the exercise of its reasonable judgment. All
premiums on such insurance shall be paid as provided in the Consignment
Agreement and the Engine Mortgage and copies of the policies shall be delivered
to the Agent. The Borrower will not use or permit the Inventory or Equipment to
be used in any manner which might render inapplicable any insurance coverage.
(b) All insurance policies required under Section 9.5(a) shall name the
Agent, for the benefit of the Lenders, as an additional insured and shall
contain loss payable clauses in the form submitted to the Borrower by the Agent,
or otherwise in form and substance satisfactory to the Agent, naming the Agent,
for the benefit of the Lenders, as loss payee, as its interests may appear, and
providing that
(i) the Inventory shall be insured pursuant to the terms of the
Consignment Agreement.
(ii) all proceeds thereunder shall be payable to the Agent, for
the benefit of the Lenders less any commissions due under the Consignment
Agreement,
(iii) no such insurance shall be affected by any act or neglect of
the insurer or owner of the property described in such policy, and
(iv) such policy and loss payable clauses may be canceled,
amended or terminated only upon at least 30 days prior written notice given to
the Agent.
(c) Any proceeds of insurance referred to in this Section 9.5 which are
paid to the Agent, for the account of the Lenders, shall be applied to the
payment or prepayment of the Obligations.
The Borrower shall maintain, or cause to be maintained, in addition to the
coverage required above and in the Engine Mortgage, insurance with responsible
insurance companies against such risks and in such amounts as is customarily
maintained by similar businesses or as may be required by any Requirement of
Law, and from time to time deliver to the Agent or any Lender upon its request a
detailed list of the insurance then in effect, stating the names of the
insurance companies, the amounts and rates of the insurance, the dates of the
expiration thereof and the properties and risks covered thereby
9.6 Condemnation. (a) The Borrower shall, immediately upon learning of the
institution of any proceeding for the condemnation or other taking of any of its
property, notify the Agent of the pendency of such proceeding, and agrees that
the Agent may participate in any such proceeding, and the Borrower from time to
time will deliver to the Agent all instruments reasonably requested by the Agent
to permit such participation.
(b) The Agent is hereby authorized to collect the proceeds of any
condemnation claim or award directly, and to apply such proceeds to the payment
or prepayment
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of the Obligations, subject to any reimbursement obligations to KIAC pursuant to
the Consignment Agreement.
9.7 Environmental Laws. (a) The Borrower shall conduct its business in
compliance with all material Environmental Laws applicable to it, including
those relating to the generation, handling, use, storage, and disposal of any
Contaminant. The Borrower shall take prompt and appropriate action to respond to
any non-compliance with Environmental Laws and shall regularly report to the
Agent on such response.
(b) Without limiting the generality of the foregoing, the Borrower
shall submit to the Agent and the Lenders annually, an update of the status of
each environmental compliance or liability issue. The Agent or any Lender may
request copies of technical reports prepared by the Borrower and its
communications with any Governmental Authority to determine whether the Borrower
is proceeding reasonably to correct, cure or contest in good faith any alleged
noncompliance or environmental liability. The Borrower shall, at the Agent's or
the Required Lenders' request and at the Borrower's expense, (i) retain an
independent environmental engineer acceptable to the Agent to evaluate the site,
including tests if appropriate, where the non-compliance or alleged
non-compliance with Environmental Laws has occurred and prepare and deliver to
the Agent, in sufficient quantity for distribution by the Agent to the Lenders,
a report setting forth the results of such evaluation, a proposed plan for
responding to any environmental problems described therein, and an estimate of
the costs thereof, and (ii) provide to the Agent and the Lenders a supplemental
report of such engineer whenever the scope of the environmental problems, or the
response thereto or the estimated costs thereof, shall change in any material
respect.
9.8 Compliance with ERISA. The Borrower shall, and shall cause each of
its ERISA Affiliates to: (a) maintain each Plan in compliance in all material
respects with the applicable provisions of ERISA, the Code and other federal or
state law; (b) cause each Plan which is qualified under Section 401(a) of the
Code to maintain such qualification; (c) make all required contributions to any
Plan subject to Section 412 of the Code; (d) not engage in a prohibited
transaction or violation of the fiduciary responsibility rules with respect to
any Plan; and (e) not engage in a transaction that could be subject to Section
4069 or 4212(c) of ERISA.
9.9 Mergers, Consolidations or Sales. The Borrower shall not enter
into any transaction of merger, reorganization, or consolidation, or transfer,
sell, assign, lease, or otherwise dispose of all or any part of its property, or
wind up, liquidate or dissolve, or agree to do any of the foregoing, except for
sales, leases or exchanges of Inventory in the ordinary course of its business
in accordance with the terms hereof and the Consignment Agreement. The inclusion
of proceeds in the definition of Collateral shall not be deemed to constitute
the Agent's or any Lender's consent to any sale or other disposition of the
Collateral except as expressly permitted herein.
9.10 Distributions; Capital Change; Restricted Investments. The
Borrower shall not (a) directly or indirectly declare or make, or incur any
liability to make, any Distribution, (b) make any change in its capital
structure or (c) make any Restricted Investment. The Borrower shall not effect
any purchase of any membership units from either of TIMCO or Xxxxxxxxx.
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9.11 Transactions Affecting Collateral or Obligations. The Borrower
shall not enter into any transaction which would be reasonably expected to have
a Material Adverse Effect.
9.12 Guaranties. The Borrower shall not make, issue, or become liable
on any Guaranty.
9.13 Debt. The Borrower shall not incur or maintain any Debt, other
than: (a) the Obligations, (b) the Subordinated Notes, and (c) the Debt
expressly made subordinate to the Obligations pursuant to the Subordination
Agreement.
9.14 Prepayment. The Borrower shall not voluntarily prepay any Debt,
except the Obligations in accordance with the terms of this Agreement.
9.15 Transactions with Affiliates. Except as set forth below and except
as expressly set forth in the Consignment Agreement, the Borrower shall not,
sell, transfer, distribute, or pay any money or property, including, but not
limited to, any fees or expenses of any nature (including, but not limited to,
any fees or expenses for management services), to any Affiliate, or lend or
advance money or property to any Affiliate, or invest in (by capital
contribution or otherwise) or purchase or repurchase any stock or indebtedness,
or any property, of any Affiliate, or become liable on any Guaranty of the
indebtedness, dividends, or other obligations of any Affiliate. Notwithstanding
the foregoing, while no Event of Default has occurred and is continuing, the
Borrower may engage in transactions with Affiliates in the ordinary course of
business, in amounts and upon terms fully disclosed to the Agent and the
Lenders, and no less favorable to the Borrower than would be obtained in a
comparable arm's-length transaction with a third party who is not an Affiliate.
9.16 Investment Banking and Finder's Fees. The Borrower shall not pay
or agree to pay, or reimburse any other party with respect to, any investment
banking or similar or related fee, underwriter's fee, finder's fee, or broker's
fee to any Person in connection with this Agreement, except as disclosed to the
Agent in writing prior to the Closing Date. The Borrower shall defend and
indemnify the Agent and the Lenders against and hold them harmless from all
claims of any Person that the Borrower is obligated to pay for any such fees,
and all costs and expenses (including attorneys' fees) incurred by the Agent
and/or any Lender in connection therewith.
9.17 Use of Proceeds. The Borrower shall not use any portion of the
Loan proceeds, directly or indirectly, (a) to purchase or carry Margin Stock,
(b) to repay or otherwise refinance indebtedness of the Borrower or others
incurred to purchase or carry Margin Stock, (c) to extend credit for the purpose
of purchasing or carrying any Margin Stock, or (d) to acquire any security in
any transaction that is subject to Section 13 or 14 of the Exchange Act.
9.18 Business Conducted. The Borrower shall not engage directly or
indirectly, in any line of business other than the businesses in which the
Borrower is engaged on the Closing Date.
9.19 Liens. The Borrower shall not create, incur, assume, or permit to
exist any Lien on any property now owned or hereafter acquired by it, except
Permitted Liens.
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9.20 Sale and Leaseback Transactions. The Borrower shall not, directly or
indirectly, enter into any arrangement with any Person providing for the
Borrower to lease or rent property that the Borrower has sold or will sell or
otherwise transfer to such Person.
9.21 Subsidiaries. The Borrower shall not, directly or indirectly,
organize, create, acquire or permit to exist any Subsidiary.
9.22 Fiscal Year. The Borrower shall not change its Fiscal Year.
9.23 Capital Expenditures and Operating Leases, Purchase of Real Estate and
Equipment. The Borrower shall not (a) make or incur any Capital Expenditures,
(b) enter into, or suffer to exist, any lease of real or personal property as
lessee or sublessee or (c) purchase any Real Estate or Equipment.
9.24 Further Assurances. The Borrower shall execute and deliver, or cause
to be executed and delivered, to the Agent and/or the Lenders such documents and
agreements, and shall take or cause to be taken such actions, as the Agent or
any Lender may, from time to time, in good faith request to carry out the terns
and conditions of this Agreement and the other Loan Documents.
9.25 Intentionally Omitted.
9.26 Intentionally Omitted.
9.27 Payment of KAV Payables. The Borrower shall submit to Agent
documentation of the KAV Payables with a letter authorizing and requesting the
payment of the KAV Payables. All payment of the KAV Payables shall be subject to
the Agent's sole discretion and paid from the Reserve Amount.
9.28 Amendment, Termination or Waiver of the Acquisition Documents. Except
as otherwise expressly provided for herein, the Borrower shall not permit, or
cause to be permitted, any amendment or termination of, or material waiver with
respect to the Acquisition Documents without the Required Lenders' prior written
consent thereto.
9.29 Syndication. The Borrower shall cooperate fully with the Agent and the
Syndication Agent through meetings with and providing requested information to
prospective assignees of the Commitments, and in such other matters as the Agent
and the Syndication Agent may reasonably request, in connection with the
syndication of the Commitments.
ARTICLE 10
CONDITIONS OF LENDING
10.1 Conditions Precedent. The effectiveness of this Agreement on the
Closing Date is subject to the following conditions precedent having been
satisfied in a manner satisfactory to the Agent and each Lender:
46
(a) This Agreement and the other Loan Documents shall have been executed
by each party thereto and the Borrower shall have performed and complied with
all covenants, agreements and conditions contained herein and in the other Loan
Documents which are required to be performed or complied with by the Borrower
before or on the Closing Date.
(b) All representations and warranties made hereunder and in the other
Loan Documents shall be true and correct as if made on such date.
(c) No Default or Event of Default shall exist on the Closing Date, or
would exist after giving effect to the Loans to be made on such date.
(d) The Agent and the Lenders shall have received such opinions of
counsel for the Borrower as the Agent or any Lender shall request, each such
opinion to be in a form, scope, and substance reasonably satisfactory to the
Agent, the Lenders, and their respective counsel.
(e) The Agent shall have received a duly executed acknowledgment of KIAC,
as consignee, and of any other bailees or consignees with respect to the
Inventory, of the Agent's Lien in the Inventory, in form and substance
reasonably satisfactory to the Agent.
(f) The Agent shall have received:
(i) in the Agent's discretion, either acknowledgment copies of
proper financing statements, duly filed on or before the Closing Date, or
executed copies of financing statements in a form proper for filing, in either
case under the Uniform Commercial Code, of all jurisdictions that the Agent may
deem necessary or desirable in order to perfect the Agent's Lien, including, but
not limited to any such filings relating to the Agent's Lien in the Inventory
held by KIAC as consignee under the Consignment Agreement or any other bailees
or consignees with respect to the Inventory, and all such filings deemed
necessary or advisable to protect and preserve the Borrower's right, title and
interest in and to the Inventory under the Consignment Agreement; and
(ii) such other agreements, certificates, instruments and other
documents as the Agent or any Lender may reasonably request, in form and
substance reasonably satisfactory to the Agent and the Lenders.
(g) All fees and expenses of the Agent and the Attorney Costs incurred in
connection with any of the Loan Documents and the transactions contemplated
thereby shall be treated as KAV Payables.
(h) The Agent shall have received evidence, in form, scope, and
substance, reasonably satisfactory to the Agent, of all insurance coverage as
required by this Agreement, the Engine Mortgages and the Consignment Agreement.
(i) The Agent shall have received from KIAC, as consignee under the
Consignment Agreement, valid executed documents exempting the Borrower from the
47
application of any sales tax or similar taxes in the State of Florida, in form
and substance reasonably satisfactory to the Agent.
(j) All proceedings taken in connection with the execution of this
Agreement, all other Loan Documents and all documents and papers relating
thereto shall be satisfactory in form, scope, and substance to the Agent and the
Lenders.
(k) Intentionally Omitted.
(l) Intentionally Omitted.
(m) There shall exist no action, suit, investigation, litigation, or
proceeding pending or threatened in any court or before any arbitrator or
governmental instrumentality seeking to enjoin, restrain, prohibit or to obtain
damages in respect of the Transaction, or that in the Agent's good faith
judgment (i) could reasonably be expected to have a Material Adverse Effect,
(ii) could reasonably be expected to result in a material adverse change in, or
a material adverse effect upon, the operations, business, properties, condition
(financial or otherwise) or prospects of Xxxxxxxxx, or (iii) could reasonably be
expected to materially and adversely affect the Transaction.
(n) Intentionally Omitted.
(o) All governmental and third party consents and approvals necessary or
appropriate, in the Agent's reasonable discretion, in connection with the
Transaction shall have been obtained by Borrower, Xxxxxxxxx, TIMCO and TIMCO
Distribution.
(p) Intentionally Omitted.
(q) On the Closing Date, Xxxxxxxxx and XXXXX shall each own fifty percent
(50%) of the membership interests in the Borrower, subject to the relative
rights set forth in the Operating Agreement.
(r) Intentionally Omitted.
(s) Intentionally Omitted.
Execution and delivery to the Agent by a Lender of a counterpart of this
Agreement shall be deemed confirmation by such Lender that (i) all conditions
precedent in this Section 10.1 have been fulfilled to the satisfaction of such
Lender, (ii) the decision of such Lender to execute and deliver to the Agent an
executed counterpart of this Agreement was made by such Lender independently and
without reliance on the Agent or any other Lender as to the satisfaction of any
condition precedent set forth in this Section 10.1, and (iii) all documents sent
to such Lender for approval consent, or satisfaction were acceptable to such
Lender.
(t) Intentionally Omitted.
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ARTICLE 11
DEFAULT; REMEDIES
11.1 Events of Default. It shall constitute an event of default ("Event of
Default") if any one or more of the following shall occur for any reason:
(a) any failure by the Borrower to pay the principal of or interest
on any Loan when due, whether upon demand, at maturity or otherwise;
(b) any failure by the Borrower to pay any other Obligations or any
fee or other amount owing hereunder when due, whether upon demand or otherwise
and such failure shall continue for more than three (3) Business Days after
written notice has been given to the Borrower by the Agent;
(c) any material representation or warranty made or deemed made by
the Borrower in this Agreement or by the Borrower in any of the other Loan
Documents, any Financial Statement, or any certificate furnished by the Borrower
at any time to the Agent or any Lender shall prove to be untrue in any material
respect as of the date on which made, deemed made, or furnished;
(d) any default shall occur in the observance or performance of any
of the covenants and agreements contained in:
(i) Articles 6 and 7 and Sections 9.1, 9.2, 9.3, 9.9, 9.10,
9.11, 9.12, 9.13, 9.14, 9.15, 9.16, 9.17, 9.18, 9.19, 9.20, 9.21, 9.23, 9.27 and
9.28 of this Agreement;
(ii) Article 9 (other than the sections thereof referenced in
clause (i) above) and such default shall continue for a period of ten (10) days
after the earlier of (A) the date on which a Manager becomes aware of such
default or (B) written notice thereof has been given to the Borrower by the
Agent; or
(iii) any other provision of this Agreement and such default
shall continue for a period of thirty (30) days after the earlier of (A) the
date on which a Manager becomes aware of such default or (B) written notice
thereof has been given to the Borrower by the Agent;
(e) Any material provision of any of the Subordination Agreement
shall not be enforceable, except as the enforceability of the foregoing may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws or equitable principles affecting enforcement of creditors' rights
generally or Xxxxxxxxx or TIMCO shall challenge the validity and binding effect
of any material provision of the Subordination Agreement after delivery thereof
or shall state its intention to make such a challenge in writing, or either
Xxxxxxxxx or XXXXX seek to exercise any rights under or with respect to the Debt
or Lien subordinated to the Obligations and the Agent's Liens pursuant to the
Subordination Agreement;
49
(f) either Borrower or KIAC or any of KIAC's Subsidiaries to which its
rights under the Consignment Agreement have been assigned shall (i) file a
voluntary petition in bankruptcy or file a voluntary petition or an answer or
otherwise commence any action or proceeding seeking reorganization, arrangement
or readjustment of its debts or for any other relief under the federal
Bankruptcy Code, as amended, or under any other bankruptcy or insolvency act or
law, state or federal, now or hereafter existing, or consent to, approve of, or
acquiesce in, any such petition, action or proceeding; (ii) apply for or
acquiesce in the appointment of a receiver, assignee, liquidator, sequestrator,
custodian, monitor, trustee or similar officer for it or for all or any part of
its property; (iii) make an assignment for the benefit of creditors; or (iv) be
unable generally to pay its debts as they become due;
(g) an involuntary petition or proposal shall be filed or an action or
proceeding otherwise commenced seeking reorganization, arrangement,
consolidation or readjustment of the debts of the Borrower or KIAC or any of
KIAC's Subsidiaries to which its rights under the Consignment Agreement have
been assigned or for any other relief under the federal Bankruptcy Code, as
amended, or under any other bankruptcy or insolvency act or law, state or
federal, now or hereafter existing and not dismissed within sixty (60) days;
(h) a receiver, assignee, liquidator, sequestrator, custodian,
monitor, trustee or similar officer for the Borrower or KIAC or any of KIAC's
Subsidiaries to which its rights under the Consignment Agreement have been
assigned or for all or any part of its property shall be appointed or a warrant
of attachment, execution or similar process shall be issued against any part of
the property of the Borrower or KIAC or any of KIAC's Subsidiaries to which its
rights under the Consignment Agreement have been assigned and not dismissed
within sixty (60) days;
(i) the Borrower shall file a certificate of dissolution under
applicable state law or shall be liquidated, dissolved or wound-up or shall
commence or have commenced against it any action or proceeding for dissolution,
winding-up or liquidation, or shall take any corporate action in furtherance
thereof,
(j) all or any material part of the property of the Borrower shall be
nationalized, expropriated or condemned, seized or otherwise appropriated, or
custody or control of such property or of the Borrower shall be assumed by any
Governmental Authority or any court of competent jurisdiction at the instance of
any Governmental Authority, except where contested in good faith by proper
proceedings diligently pursued where a stay of enforcement is in effect;
(k) any guaranty of the Obligations shall be terminated, revoked or
declared void or invalid;
(l) one or more judgments, orders, decrees or arbitration awards is
entered against the Borrower involv ing in the aggregate liability as to any
single or related or unrelated series of transactions, incidents or conditions,
of $200,000 or more, and the same shall remain unsatisfied, unvacated and
unstayed pending appeal for a period of thirty (30) days after the entry
thereof;
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(m) any loss, theft, damage or destruction of any item or items of
Collateral or other property of the Borrower occurs which could reasonably be
expected to cause a Material Adverse Effect and is not adequately covered by
insurance;
(n) there occurs a Material Adverse Effect;
(o) there is filed against the Borrower any action, suit or
proceeding under any federal or state racketeering statute (including the
Racketeer Influenced and Corrupt Organization Act of 1970), which action, suit
or proceeding (i) is not dismissed within one hundred twenty (120) days, and
(ii) could reasonably be expected to result in (A) the confiscation or
forfeiture of any material portion of the Collateral or (B) a Material Adverse
Effect;
(p) for any reason other than the failure of the Agent to take any
action available to it to maintain perfection of the Agent's Liens, pursuant to
the Loan Documents, any Loan Document ceases to be in full force and effect or
any Lien with respect to any material portion of the Collateral intended to be
secured thereby ceases to be, or is not, valid, perfected and prior to all other
Liens (other than Permitted Liens) or is terminated, revoked or declared void;
(q) (i) an ERISA Event shall occur with respect to a pension plan or
multiemployer plan which has resulted or could reasonably be expected to result
in liability of the Borrower under Title IV of ERISA to the pension plan,
multi-employer plan or the PBGC in an aggregate amount in excess of $200,000;
(ii) the aggregate amount of Unfunded Pension Liability among all Pension Plans
at any time exceeds $200,000; or (iii) the Borrower or any ERISA Affiliate shall
fail to pay when due, after the expiration of any applicable grace period, any
installment payment with respect to its withdrawal liability under Section 4201
of ERISA under a Multi-employer Plan in an aggregate amount in excess of
$200,000;
(r) there occurs a Change of Control which is not consented to by
Agent;
(s) any Event of Default or Termination Event shall occur under the
Consignment Agreement; or
(t) any event of default under any Loan Document (other than this
Agreement) shall occur or any party thereto (other than the Agent or the
Lenders) shall default in the performance or observance of any term, covenant,
condition or agreement contained in, or the payment of any other sum covenanted
to be paid by any party thereto (other than the Agent or the Lenders) under, any
Loan Document (other than this Agreement); provided, however, that no event of
default under any Loan Document (other than this Agreement) shall be deemed to
have occurred until any notice required under such Loan Document has been given
any grace period granted under such Loan Document has expired.
11.2 Remedies. (a) If an Event of Default exists, the Agent may, in its
discretion, and shall, at the direction of the Required Lenders, do one or more
of the following at any time or times and in any order, without notice to or
demand on the Borrower, appoint an independent third party to oversee the
consignment arrangement provided for in the Consignment Agreement,
51
which third party shall have all rights of inspection granted to the Agent
hereunder and any other inspection rights necessary and appropriate to enable
such third party to effectively oversee such consignment arrangement. The
Borrower shall cooperate fully with any third party appointed pursuant to the
foregoing clause. If an Event of Default exists, the Agent shall, at the
direction of the Required Lenders, do one or more of the following, in addition
to the actions described in the preceding sentence, at any time or times and in
any order, without notice to or demand on the Borrower: (A) terminate the
Commitments and this Agreement; (B) declare any or all Obligations to be
immediately due and payable; provided, however, that upon the occurrence of any
Event of Default described in Sections 11.1(f), 11.1(g), 11.1(h), or 11.1(i),
the Commitments shall automatically and immediately expire and all Obligations
shall automatically become immediately due and payable without notice or demand
of any kind; and (C) pursue its other rights and remedies under the Loan
Documents (including, without limitation, the Consignment Agreement) and
applicable law.
(b) In addition to any other rights and remedies available to the Agent
hereunder: (i) the Agent shall have for the benefit of the Lenders, in addition
to all other rights of the Agent and the Lenders, the rights and remedies of a
secured party under the UCC; (ii) the Agent may, at any time, take possession of
the Collateral and keep it on the Borrower's premises, at no cost to the Agent
or any Lender, or remove any part of it to such other place or places as the
Agent may desire, or the Borrower shall, upon the Agent's demand, at the
Borrower's cost, assemble the Collateral and make it available to the Agent at a
place reasonably convenient to the Agent; (iii) the Agent may sell and deliver
any Collateral at public or private sales, for cash, upon credit or otherwise,
at such prices and upon such terms as the Agent deems advisable, in its sole
discretion, and may, if the Agent deems it reasonable, postpone or adjourn any
sale of the Collateral by an announcement at the time and place of sale or of
such postponed or adjourned sale without giving a new notice of sale; (iv) the
Agent may settle or adjust disputes and claims directly with Account Debtors for
amounts and upon terms which the Agent or the Required Lenders, as applicable;
shall consider advisable; (v) the Agent may instruct the Security Trustee to
exercise its rights, powers and authorities relating to enforcement (including
the appointment of a receiver) under the Foreign Security Documents; and (vi)
the Agent may exercise any rights of the Borrower under the Consignment
Agreement and any other Acquisition Document to which the Borrower is a party.
Without in any way requiring notice to be given in the following manner, the
Borrower agrees that any notice by the Agent of sale, disposition or other
intended action hereunder or in connection herewith; whether required by the UCC
or otherwise, shall constitute reasonable notice to the Borrower if such notice
is mailed by registered or certified mail, return receipt requested, postage
prepaid, or is delivered personally against receipt, at least five (5) Business
Days prior to such action to the Borrower's address specified in or pursuant to
Section 15.8. If any Collateral is sold on terms other than payment in full at
the time of sale, no credit shall be given against the Obligations until the
Agent or the Lenders receive payment. In the event the Agent seeks to take
possession of all or any portion of the Collateral by judicial process, the
Borrower irrevocably waives: (A) the posting of any bond, surety or security
with respect thereto which might otherwise be required; (B) any demand for
possession prior to the commencement of any suit or action to recover the
Collateral; and (C) any requirement that the Agent retain possession and not
dispose of any Collateral until after trial or final judgment. The Borrower
agrees that the Agent has no obligation to preserve rights to the Collateral or
marshal any Collateral for the benefit of any Person. The Agent is hereby
granted a
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license or other right to use, without charge, the Borrower's labels, patents,
copyrights, name, trade secrets, trade names, trademarks, and advertising
matter, and all other Proprietary Rights, or any similar property, in completing
production of, advertising or selling any Collateral, and the Borrower's rights
under all licenses and all franchise agreements shall inure to the Agent's
benefit for such purpose. The proceeds of sale shall be applied first to all
expenses of sale, including attorneys' fees, and then to the Obligations. The
Agent will return any excess to the Borrower and the Borrower shall remain
liable for any deficiency.
(c) The Borrower hereby waives all rights to notice and hearing
prior to the exercise by the Agent of the Agent's rights to repossess the
Collateral without judicial process or to reply, attach or levy upon the
Collateral without notice or hearing.
ARTICLE 12
TERM AND TERMINATION
12.1 Term and Termination. The term of this Agreement shall end on
the Stated Termination Date. The Agent upon direction from the Required Lenders
may terminate this Agreement without notice upon the occurrence and during the
continuation of an Event of Default. Upon the effective date of termination of
this Agreement for any reason whatsoever, all Obligations (including all unpaid
principal, accrued and unpaid interest) shall become immediately due and
payable. Notwithstanding the termination of this Agreement; until all
Obligations are indefeasibly paid and performed in full in cash, the Borrower
shall remain bound by the terms of this Agreement and shall not be relieved of
any of its Obligations hereunder, and the Agent and the Lenders shall retain all
their rights and remedies hereunder (including the Agent's Liens in and all
rights and remedies with respect to all then existing and after-arising
Collateral).
ARTICLE 13
AMENDMENTS; WAIVER; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS
13.1 Amendments and Waivers. No amendment or waiver of any provision
of this Agreement, any other Loan Document, and no consent with respect to any
departure by the Borrower therefrom, shall be effective unless the same shall be
in writing and signed by the Required Lenders (or by the Agent at the written
request of the Required Lenders) and the Borrower and then any such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no such waiver, amendment, or
consent shall, unless in writing and signed by all the Lenders and the Borrower
and acknowledged by the Agent, do any of the following:
(a) increase or extend the Commitment of any Lender;
(b) postpone or delay any date fixed by this Agreement or any other
Loan Document for any payment of principal, interest, fees or other amounts due
to the Lenders (or any of them) hereunder or under any other Loan Document;
53
(c) reduce the principal of, or the rate of interest specified
herein on any Loan, or any fees or other amounts payable hereunder or under any
other Loan Document;
(d) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans which is required for the Lenders or any of
them to take any action hereunder;
(e) amend this Section or any provision of the Agreement providing
for consent or other action by all Lenders;
(f) release Collateral other than as permitted by Section 14.12; or
(g) change the definition of "Required Lenders";
provided further that no amendment, waiver or consent shall, unless in writing
and signed by the Agent, affect the rights or duties of the Agent under this
Agreement or any other Loan Document.
13.2 Assignments; Participations. (a) Any Lender may, with the written
consent of the Agent (which consent shall not be unreasonably withheld or
delayed), and, as long as no Default or Event of Default has occurred and is
continuing, with the written consent of the Borrower (which consent shall not be
unreasonably withheld or delayed), assign and delegate to one or more Eligible
Assignees (provided that no consent of the Agent shall be required in connection
with any assignment and delegation by a Lender to an Affiliate of such Lender)
(each an "Assignee") all, or any ratable part of all, of the Loans, the
Commitments and the other rights and obligations of such Lender hereunder, in a
minimum amount of $5,000,000 (provided that, unless an assignor Lender has
assigned and delegated all of its Loans and Commitments, no such assignment
and/or delegation shall be permitted unless, after giving effect thereto, such
assignor Lender retains a Commitment in a minimum amount of $5,000,000);
provided, however, that the Borrower and the Agent may continue to deal solely
and directly with such Lender in connection with the interest so assigned to an
Assignee until (i) written notice of such assignment, together with payment
instructions, addresses and related information with respect to the Assignee,
shall have been given to the Borrower and the Agent by such Lender and the
Assignee; (ii) such Lender and its Assignee shall have delivered to the Borrower
and the Agent an Assignment and Acceptance in the form of Exhibit D ("Assignment
and Acceptance"), and (iii) the assignor Lender or Assignee has paid to the
Agent a processing fee in the amount of $3,000.
(b) From and after the date that the Agent notifies the assignor
Lender that it has received an executed Assignment and Acceptance and payment of
the above-referenced processing fee, (i) the Assignee thereunder shall be a
party hereto and, to the extent that rights and obligations have been assigned
to it pursuant to such Assignment and Acceptance, shall have the rights and
obligations of a Lender under the Loan Documents, and (ii) the assignor Lender
shall, to the extent that rights and obligations hereunder and under the other
Loan Documents have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations under
this Agreement (and in the case of an Assignment and Acceptance covering all or
the remaining portion of an assigning Lender's rights and obligations
54
under this Agreement, such Lender shall cease to be a party hereto); provided,
however, that the assignor Lender shall not relinquish its rights under Sections
5.2 and 15.11 of this Agreement or its obligations under Section 14.7 of this
Agreement, in either case, to the extent such rights and obligations related to
the time prior to the effective date of such Assignment and Acceptance.
(c) By executing and delivering an Assignment and Acceptance, the assigning
Lender thereunder and the Assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than as provided in
such Assignment and Acceptance, such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability; genuineness, sufficiency or
value of this Agreement or any other Loan Document furnished pursuant hereto or
the attachment, perfection, or priority of any Lien granted by the Borrower to
the Agent or any Lender in the Collateral; (ii) such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower or Xxxxxxxxx or the performance or
observance by the Borrower of any of its obligations under this Agreement or any
other Loan Document furnished pursuant hereto; (iii) such Assignee confirms that
it has received a copy of this Agreement, together with such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such Assignee will,
independently and without reliance upon the Agent, such assigning Lender or any
other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement; (v) such Assignee appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Agent by the, terms
hereof, together with such powers, including the discretionary rights and
incidental power, as are reasonably incidental thereto; and (vi) such Assignee
agrees that it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Lender.
(d) Immediately upon satisfaction of the requirements of Section 13.2(04),
this Agreement shall be deemed to be amended to the extent, but only to the
extent, necessary to reflect the addition of the Assignee and the resulting
adjustment of the Commitments arising therefrom. The Commitment allocated to
each Assignee shall reduce such Commitments of the assigning Lender pro tanto.
(e) Any Lender may at any time sell to one or more commercial banks,
financial institutions, or other Persons not Affiliates of the Borrower (a
"Participant") participating interests in any Loans, the Commitment of that
Lender and the other interests of that Lender (the "Originating Lender")
hereunder and under the other Loan Documents; provided, however, that (i) the
originating Lender's obligations under this Agreement shall remain unchanged,
(ii) the originating Lender shall remain solely responsible for the performance
of such obligations, (iii) the Borrower and the Agent shall continue to deal
solely and directly with the originating Lender in connection with the
originating Lender's rights and obligations under this Agreement and the other
Loan Documents, and (iv) no Lender shall transfer or grant any participating
interest under which the Participant has rights to approve any amendment to, or
any consent or waiver with respect to, this Agreement or any other Loan
55
Document, and all amounts payable by the Borrower hereunder shall be determined
as if such Lender had not sold such participation; except that, if amounts
outstanding under this Agreement are due and unpaid, or shall have been declared
or shall have become due and payable upon the occurrence of an Event of Default,
each Participant shall be deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement to the same extent
and subject to the same limitation as if the amount of its participating
interest were owing directly to it as a Lender under this Agreement.
(f) Notwithstanding any other provision in this Agreement, any Lender
may at any time create a security interest in, or pledge, all or any portion of
its rights under and interest in this Agreement in favor of any Federal Reserve
Bank in accordance with Regulation A of the FRB or U.S. Treasury Regulation 31
CFR (S)203.14, and such Federal Reserve Bank may enforce such pledge or security
interest in any manner permitted under applicable law.
ARTICLE 14
THE AGENT AND THE SECURITY TRUSTEE
14.1 Appointment and Authorization. Each Lender hereby designates and
appoints Bank as its Agent under this Agreement and the other Loan Documents and
each Lender hereby irrevocably authorizes the Agent to take such action on its
behalf under the provisions of this Agreement and each other Loan Document and
to exercise such powers and perform such duties as are expressly delegated to it
by the terms of this Agreement or any other Loan Document, together with such
powers as are reasonably incidental thereto. The Agent agrees to act as such on
the express conditions contained in this Article 14. The provisions of this
Article 14 are solely for the benefit of the Agent and the Lenders, and the
Borrower shall have no rights as a third party beneficiary of any of the
provisions contained herein. Notwithstanding any provision to the contrary
contained elsewhere in this Agreement or in any other Loan Document, the Agent
shall not have any duties or responsibilities, except those expressly set forth
herein, nor shall the Agent have or be deemed to have any fiduciary relationship
with any Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against the Agent. Without limiting the generality
of the foregoing sentence, the use of the term "agent" in this Agreement with
reference to the Agent is not intended to connote any fiduciary or other implied
(or express) obligations arising under agency doctrine of any applicable law.
Instead, such term is used merely as a matter of market custom, and is intended
to create or reflect only an administrative relationship between independent
contracting parties. Except as expressly otherwise provided in this Agreement,
the Agent shall have and may use its sole discretion with respect to exercising
or refraining from exercising any discretionary rights or taking or refraining
from taking any actions which the Agent is expressly entitled to take or assert
under this Agreement and the other Loan. Documents, including (a) the making of
Agent Advances pursuant to Section 2.2(i), and (b) the exercise of remedies
pursuant to Section 11.2, and any action so taken or not taken shall be deemed
consented to by the Lenders.
14.2 Delegation of Duties. The Agent may execute any of its duties under
this Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact
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and shall be entitled to advice of counsel concerning all matters pertaining to
such duties. The Agent shall not be responsible for the negligence or misconduct
of any agent or attorney-in-fact that it selects as long as such selection was
made without gross negligence or willful misconduct.
14.3 Liability of Agent. None of the Agent-Related Persons shall (i) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by the Borrower or any Affiliate of
the Borrower, or any officer thereof, contained in this Agreement or in any
other Loan Document, or in any certificate, report, statement or other document
referred to or provided for in, or received by the Agent under or in connection
with, this Agreement or any other Loan Document, or the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document, or for any failure of the Borrower or any other party to any Loan
Document to perform its obligations hereunder or thereunder. No Agent-Related
Person shall be under any obligation to any Lender to ascertain or to inquire as
to the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to inspect the
properties, books or records of the Borrower or any of the Borrower's
Affiliates.
14.4 Reliance by Agent. The Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to the
Borrower), independent accountants and other experts selected by the Agent. The
Agent shall be fully justified in failing or refusing to take any action under
this Agreement or any other Loan Document unless it shall first receive such
advice or concurrence of the Required Lenders as it deems appropriate and, if it
so requests, it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this Agreement or
any other Loan Document in accordance with a request or consent of the Required
Lenders (or all Lenders if so required by Section 13.1) and such request and any
action taken or failure to act pursuant thereto shall be binding upon all of the
Lenders.
14.5 Notice of Default. The Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default, unless the Agent
shall have received written notice from a Lender or the Borrower referring to
this Agreement, describing such Default or Event of Default and stating that
such notice is a "notice of default." The Agent will notify the Lenders of its
receipt of any such notice. The Agent shall take such action with respect to
such Default or Event of Default as may be requested by the Required Lenders in
accordance with Section 11; provided, however, that unless and until the Agent
has received any such request, the Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable.
57
14.6 Credit Decision. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by the Agent hereinafter taken, including any review of the affairs of the
Borrower and its Affiliates, shall be deemed to constitute any representation or
warranty by any Agent-Related Person to any Lender. Each Lender represents to
the Agent that it has, independently and without reliance upon any Agent-Related
Person and based on such documents and information as it has deemed appropriate,
made its own appraisal of and investigation into the business, prospects,
operations, property, financial and other condition and creditworthiness of the
Borrower and its Affiliates, and all applicable bank regulatory laws relating to
the transactions contemplated hereby, and made its own decision to enter into
this Agreement and to extend credit to the Borrower. Each Lender also represents
that it will, independently and without reliance upon any Agent-Related Person
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Borrower and its Affiliates. Except for notices, reports
and other documents expressly herein required to be furnished to the Lenders by
the Agent, the Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, prospects,
operations, property, financial and other condition or creditworthiness of the
Borrower or its Affiliates which may come into the possession of any of the
Agent-Related Persons.
14.7 Indemnification. Whether or not the transactions contemplated hereby
are consummated, the Lenders shall indemnify upon demand the Agent-Related
Persons (to the extent not reimbursed by or on behalf of the Borrower and
without limiting the obligation of the Borrower to do so), pro rata, from and
against any and all Indemnified Liabilities as such term is defined in Section
15.11; provided, however, that no Lender shall be liable for the payment to the
Agent-Related Persons of any portion of such Indemnified Liabilities resulting
solely from such Person's gross negligence or willful misconduct. Without
limitation of the foregoing, each Lender shall reimburse the Agent upon demand
for its ratable share of any costs or out-of-pocket expenses (including Attorney
Costs) incurred by the Agent in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement, any other Loan
Document, or any document contemplated by or referred to herein, to the extent
that the Agent is not reimbursed for such expenses by or on behalf of the
Borrower. The undertaking in this Section shall survive the payment of all
Obligations hereunder and the resignation or replacement of the Agent.
14.8 Agent in Individual Capacity. The Bank and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with the Borrower and its
Affiliates as though the Bank were not the Agent hereunder and without notice to
or consent of the Lenders. The Lenders acknowledge that, pursuant to such
activities, the Bank or its Affiliates may receive information regarding the
Borrower or its Affiliates (including information that may be subject to
confidentiality obligations in favor of the Borrower or such Affiliate) and
acknowledge that the Agent and the Bank shall be under no
58
obligation to provide such information to them. With respect to its Loans, the
Bank shall have the same rights and powers under this Agreement as any other
Lender and may exercise the same as though it were not the Agent, and the terms
"Lender" and "Lenders" include the Bank in its individual capacity.
14.9 Successor Agent. The Agent may resign as Agent upon five (5) days
notice to the Lenders and the Borrower, such resignation to be effective upon
the acceptance of a successor agent to its appointment as Agent. In the event
the Bank sells all of its Commitment and Loans as part of a sale, transfer or
other disposition by the Bank of substantially all of its loan portfolio, the
Bank shall resign as Agent and such purchaser or transferee shall become the
successor Agent hereunder. If the Agent resigns under this Agreement, the
Required Lenders shall appoint from among the Lenders a successor agent for the
Lenders. If no successor agent is appointed prior to the effective date of the
resignation of the Agent, the Agent may appoint, after consulting with the
Lenders and the Borrower, a successor agent from among the Lenders. Upon the
acceptance of its appointment as successor agent hereunder, such successor agent
shall succeed to all the rights, powers and duties of the retiring Agent and the
term "Agent" shall mean such successor agent and the retiring Agent's
appointment, powers and duties as Agent shall be terminated. After any retiring
Agent's resignation hereunder as Agent, the provisions of this Article 14 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement.
14.10 Withholding Tax. (a) If any Lender is a "foreign corporation,
partnership or trust" within the meaning of the Code and such Lender claims
exemption from, or a reduction of, U.S. withholding tax under Sections 1441 or
1442 of the Code, such Lender agrees with and in favor of the Agent, to deliver
to the Agent:
(i) if such Lender claims an exemption from, or a reduction of,
withholding tax under a United States of America tax treaty, properly completed
IRS Forms 1001 and W-8 before the payment of any interest in the first calendar
year and before the payment of any interest in each third succeeding calendar
year during which interest may be paid under this Agreement;
(ii) if such Lender claims that interest paid under this Agreement
is exempt from United States of America withholding tax because it is
effectively connected with a United States of America trade or business of such
Lender, two properly completed and executed copies of IRS Form 4224 before the
payment of any interest is due in the first taxable year of such Lender and in
each succeeding taxable year of such Lender during which interest may be paid
under this Agreement, and IRS Form W-9; and
(iii) such other form or forms as may be required, under the Code
or other laws of the United States of America as a condition to exemption from,
or reduction of, United States of America withholding tax.
Such Lender agrees to promptly notify the Agent of any change
in circumstances which would modify or render invalid any claimed exemption or
reduction.
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(b) If any Lender claims exemption from, or reduction of, withholding
tax under a United States of America tax treaty by providing IRS Form 1001 and
such Lender sells, assigns, grants a participation in, or otherwise transfers
all or part of the Obligations owing to such Lender, such Lender agrees to
notify the Agent of the percentage amount in which it is no longer the
beneficial owner of Obligations of the Borrower to such Lender. To the extent of
such percentage amount, the Agent will treat such Lender's IRS Form 1001 as no
longer valid.
(c) If any Lender claiming exemption from United States of America
withholding tax by filing IRS Form 4224 with the Agent sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations owing to
such Lender, such Lender agrees to undertake sole responsibility for complying
with the withholding tax requirements imposed by Sections 1441 and 1442 of the
Code.
(d) If any Lender is entitled to a reduction in the applicable
withholding tax, the Agent may withhold from any interest payment to such Lender
an amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation required by subsection (a)
of this Section are not delivered to the Agent, then the Agent may withhold from
any interest payment to such Lender not providing such forms or other
documentation an amount equivalent to the applicable withholding tax.
(e) If the IRS or any other Governmental Authority of the United
States of America or other jurisdiction asserts a claim that the Agent did not
properly withhold tax from amounts paid to or for the account of any Lender
(because the appropriate form was not delivered, was not properly executed, or
because such Lender failed to notify the Agent of a change in circumstances
which rendered the exemption from, or reduction of, withholding tax ineffective,
or for any other reason) such Lender shall indemnify the Agent fully for all
amounts paid, directly or indirectly, by the Agent as tax or otherwise,
including penalties and interest, and including any taxes imposed by any
jurisdiction on the amounts payable to the Agent under this Section, together
with all costs and expenses (including Attorney Costs). The obligation of the
Lenders under this subsection shall survive the payment of all Obligations and
the resignation or replacement of the Agent.
14.11 Lender Acknowledgment. Each Lender acknowledges that the Bank is
agent and lender under Xxxxxxxxx'x senior credit facility, and, as a result of
the relationship between Xxxxxxxxx and the Borrower, the Bank, in its as agent
and a lender under Xxxxxxxxx'x senior credit facility, may have interests and
obligations that may be adverse to those of the Lenders.
14.12 Collateral Matters. (a) The Lenders hereby irrevocably authorize the
Agent, at its option and in its sole discretion, to release any Agent's Lien
upon any Collateral (i) upon the termination of the Commitments and payment and
satisfaction in full by Borrower of all Loans (whether or not any of such
obligations are due) and all other Obligations; (ii) constituting property being
sold or disposed of by the Borrower pursuant to Section 9.9; (iii) constituting
property in which the Borrower owned no interest at the time the Lien was
granted or at any time thereafter; or (iv) constituting property leased to the
Borrower under a lease which has expired or been terminated in a transaction
permitted under this Agreement. Except as provided above, the Agent will not
release any of the Agent's Liens without the prior written authorization of the
60
Lenders; provided that the Agent may, in its discretion, release the Agent's
Liens on Collateral valued in the aggregate not in excess of $500,000 during any
one year period without the prior written authorization of the Lenders. Upon
request by the Agent or the Borrower at any time, the Lenders will confirm in
writing the Agent's authority to release any Agent's Liens upon particular types
or items of Collateral pursuant to this Section 14.12.
(b) Upon receipt by the Agent of any authorization required pursuant
to Section 14.12(a) from the Lenders of the Agent's authority to release any
Agent's Liens upon particular types or items of Collateral, and upon at least
five (5) Business Days prior written request by the Borrower, the Agent shall
(and is hereby irrevocably authorized by the Lenders to) execute such documents
as may be necessary to evidence the release of the Agent's Liens upon such
Collateral; provided, however, that (i) the Agent shall not be required to
execute any such document on terms which, in the Agent's opinion, would expose
the Agent to liability or create any obligation or entail any consequence other
than the release of such Liens without recourse or warranty, and (ii) such
release shall not in any manner discharge, affect or impair the Obligations or
any Liens (other than those expressly being released) upon (or obligations of
the Borrower in respect of) all interests retained by the Borrower, including
the proceeds of any sale, all of which shall continue to constitute part of the
Collateral.
(c) The Agent shall have no obligation whatsoever to any of the
Lenders to assure that the Collateral exists or is owned by the Borrower or is
cared for, protected or insured or has been encumbered, or that the Agent's
Liens have been properly or sufficiently or lawfully created, perfected,
protected or enforced or are entitled to any particular priority, or to exercise
at all or in any particular manner or under any duty of care, disclosure or
fidelity, or to continue exercising, any of the rights, authorities and powers
granted or available to the Agent pursuant to any of the Loan Documents, it
being understood and agreed that in respect of the Collateral, or any act,
omission or event related thereto, the Agent may act in any manner it may deem
appropriate, in its sole discretion given the Agent's own interest in the
Collateral in its capacity as one of the Lenders and that the Agent shall have
no other duty or liability whatsoever to any Lender as to any of the foregoing.
14.13 Restrictions on Actions by Lenders, Sharing of Payments. (a) Each of
the Lenders agrees that it shall not, without the express consent of all
Lenders, and that it shall to the extent it is lawfully entitled to do so, upon
the request of all Lenders, set off against the Obligations, any amounts owing
by such Lender to the Borrower or any accounts of the Borrower now or hereafter
maintained with such Lender. Each of the Lenders further agrees that it shall
not, unless specifically requested to do so by the Agent, take or cause to be
taken any action to enforce its rights under this Agreement or against the
Borrower, including the commencement of any legal or equitable proceedings, to
foreclose any Lien on, or otherwise enforce any security interest in, any of the
Collateral.
(b) If at any time or times any Lender shall receive (i) by payment,
foreclosure, setoff or otherwise, any proceeds of Collateral or any payments
with respect to the Obligations of the Borrower to such Lender arising under, or
relating to, this Agreement or the other Loan Documents, except for any such
proceeds or payments received by such Lender from the Agent pursuant to the
terms of this Agreement, or (ii) payments from the Agent in excess of
61
such Lender's ratable portion of all such distributions by the Agent, such
Lender shall promptly (A) turn the same over to the Agent, in kind, and with
such endorsements as may be required to negotiate the same to the Agent, or in
same day funds, as applicable, for the account of all of the Lenders and for
application to the Obligations in accordance with the applicable provisions of
this Agreement, or (B) purchase, without recourse or warranty, an undivided
interest and participation in the Obligations owed to the other Lenders so that
such excess payment received shall be applied ratably as among the Lenders in
accordance with their Pro Rata Shares; provided, however, that if all or part of
such excess payment received by the purchasing party is thereafter recovered
from it, those purchases of participations shall be rescinded in whole or in
part, as applicable, and the applicable portion of the purchase price paid
therefor shall be returned to such purchasing party, but without interest except
to the extent that such purchasing party is required to pay interest in
connection with the recovery of the excess payment.
14.14 Agency for Perfection. Each Lender hereby appoints each other Lender
as agent for the purpose of perfecting the Lenders' security interest in assets
which, in accordance with Article 9 of the UCC can be perfected only by
possession. Should any Lender (other than the Agent) obtain possession of any
such Collateral, such Lender shall notify the Agent thereof, and, promptly upon
the Agent's request therefor shall deliver such Collateral to the Agent or in
accordance with the Agent's instructions.
14.15 Payments by Agent to Lenders. All payments to be made by the Agent to
the Lenders shall be made by bank wire transfer or internal transfer of
immediately available funds to each Lender pursuant to wire transfer
instructions delivered in writing to the Agent on or prior to the Closing Date
(or if such Lender is an Assignee, on the applicable Assignment and Acceptance),
or pursuant to such other wire transfer instructions as each party may designate
for itself by written notice to the Agent. Concurrently with each such payment,
the Agent shall identify whether such payment (or any portion thereof)
represents principal, premium or interest on the Loans or otherwise.
14.16 Concerning the Collateral and the Related Loan Documents. Each Lender
authorizes and directs the Agent to enter into this Agreement and the other Loan
Documents, for the ratable benefit and obligation of the Agent and the Lenders.
Each Lender agrees that any action taken by the Agent or the Required Lenders,
as applicable, in accordance with the terms of this Agreement or the other Loan
Documents, and the exercise by the Agent or the Required Lenders, as applicable,
of their respective powers set forth therein or herein, together with such other
powers that are reasonably incidental thereto, shall be binding upon all of the
Lenders.
14.17 Field Audit and Examination Reports; Disclaimer by Lenders. By
signing this Agreement, each Lender:
(a) is deemed to have requested that the Agent furnish such Lender,
promptly after it becomes available, a copy of each field audit or examination
report (each a "Report" and collectively, "Reports") prepared by the Agent;
62
(b) expressly agrees and acknowledges that neither the Bank nor the
Agent (i) makes any representation or warranty as to the accuracy of any Report,
or (ii) shall be liable for any information contained in any Report;
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that the Agent or the Bank or other party
performing any audit or examination will inspect only specific information
regarding the Borrower and will rely significantly upon the Borrower's books and
records, as well as on representations of the Borrower's personnel;
(d) agrees to keep all Reports confidential and strictly for its
internal use, and not to distribute except to its Participants, or use any
Report in any other manner; and
(e) without limiting the generality of any other indemnification
provision contained in this Agreement, agrees: (i) to hold the Agent and any
such other Lender preparing a Report harmless from any action the indemnifying
Lender may take or conclusion the indemnifying Lender may reach or draw from any
Report in connection with any loans or other credit accommodations that the
indemnifying Lender has made or may make to the Borrower, or the indemnifying
Lender's participation in, or the indemnifying Lender's purchase of, a loan or
loans of the Borrower; and (ii) to pay and protect, and indemnify, defend and
hold the Agent and any such other Lender preparing a Report harmless from and
against, the claims, actions, proceedings, damages, costs, expenses and other
amounts (including Attorney Costs) incurred by the Agent and any such other
Lender preparing a Report as the direct or indirect result of any third parties
who might obtain all or part of any Report through the indemnifying Lender.
14.18 Relation Among Lenders. The Lenders are not partners or co-venturers,
and no Lender shall be liable for the acts or omissions of, or (except as
otherwise set forth herein in case of the Agent) authorized to act for, any
other Lender.
14.19 Appraisals; Disclaimer by Lenders. By signing this Agreement, each
Lender:
(a) expressly agrees and acknowledges that neither the Bank nor the
Agent (i) makes any representation or warranty as to the accuracy of any
Appraisal, or (ii) shall be liable for any information contained in any
Appraisal;
(b) agrees to keep all Appraisals confidential and strictly for its
internal use, and not to distribute except to its Participants, or use any
Appraisal in any other manner; and
(c) without limiting the generality of any other indemnification
provision contained in this Agreement,' agrees: (i) to hold the Agent and any
such other Lender preparing, or assisting in the preparation of, an Appraisal
harmless from any action the indemnifying Lender may take or conclusion the
indemnifying Lender may reach or draw from any Appraisal in connection with any
loans or other credit accommodations that the indemnifying Lender has made or
may make to the Borrower, or the indemnifying Lender's participation in, or the
indemnifying Lender's purchase of, a loan or loans of the Borrower; and (ii) to
pay and protect, and indemnify, defend and hold the Agent and any such other
Lender preparing, or assisting in
63
the preparation of, an Appraisal harmless from and against, the claims, actions,
proceedings, damages, costs, expenses and other amounts (including Attorney
Costs) incurred by the Agent and any such other Lender preparing, or assisting
in the preparation of, an Appraisal as the direct or indirect result of any
third parties who might obtain all or part of any Appraisal through the
indemnifying Lender.
14.20 Syndication Agent. Each of the parties to this Agreement acknowledges
that, other than any rights and duties explicitly assigned to the Syndication
Agent under this Agreement, the Syndication Agent has no obligations hereunder
and shall not be responsible or accountable to any other party hereto for any
action or failure to act hereunder.
14.21 Security Trustee. Each Lender hereby appoints the Security Trustee to
act as its trustee under and in relation to the Foreign Security Documents
pursuant to this Agreement and to hold the Trust Property as trustee for the
Lenders on the trusts and other terms contained in the Foreign Security
Documents and each Lender hereby irrevocably authorizes the Security Trustee to
exercise such rights, powers and discretions as are specifically delegated to
the Security Trustee by the terms of the Foreign Security Documents together
with all such rights, powers and discretions as are reasonably incidental
thereto.
14.22 Successor Security Trustee. The Security Trustee may resign its
appointment under any of this Agreement or the Foreign Security Documents upon
five (5) days notice to the Lenders and the Borrower, such resignation to be
effective upon the acceptance of a successor security trustee to its appointment
as Security Trustee and upon all necessary documents having been entered into to
ensure that the benefit of the Foreign Security Documents is held by such
successor. In the event the Bank sells all of its Commitment and Loans as part
of a sale, transfer or other disposition by the Bank of substantially all of its
loan portfolio, the Bank shall resign as Security Trustee and such purchaser or
transferee shall become the successor Security Trustee hereunder. If the
Security Trustee resigns under this Agreement, the Required Lenders shall
appoint from among the Lenders a successor security trustee for the Lenders. If
no successor security trustee is appointed prior to the effective date of the
resignation of the Security Trustee, the Security Trustee may appoint, after
consulting with the Lenders and the Borrower, a successor security trustee from
among the Lenders. Upon the acceptance of its appointment as successor security
trustee hereunder, such successor security trustee shall succeed to all the
rights, powers and duties of the retiring Security Trustee and the term
"Security Trustee" shall mean such successor security trustee and the retiring
Security Trustee's appointment, powers and duties as Security Trustee shall be
terminated. After any retiring Security Trustee's resignation "hereunder as
Security Trustee, the provisions of this Article 14 shall inure to its benefit
as to any actions taken or omitted to be taken by it while it was Security
Trustee under this Agreement. The retiring Security Trustee shall make available
to its successor such documents and records and provide such assistance as the
successor may reasonably request for the purpose of performing its functions
under this Agreement and the Foreign Security Documents. Notwithstanding any
provision to the contrary, the Security Trustee shall not be obligated to
disclose to any person any confidential or other information if the disclosure
would or might in its reasonable opinion constitute a breach of any law or
fiduciary duty.
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14.23 Protection of Security Trustee. The benefits conferred on the Agent
pursuant to this Article 14 regarding rights to indemnification and the exercise
of its rights, powers, authorizations, discretions, duties and responsibilities
pursuant to this Agreement and any other Loan Document shall also be conferred,
where appropriate, on the Security Trustee in relation to this Agreement and the
Foreign Security Documents and references to the Agent in this Article 14 shall
be read and construed as references to the Agent and/or the Security Trustee
accordingly.
ARTICLE 15
MISCELLANEOUS
15.1 No Waivers; Cumulative Remedies. No failure by the Agent or any
Lender to exercise any right, remedy, or option under this Agreement or any
present or future supplement thereto, or in any other agreement between or among
the Borrower and the Agent and/or any Lender, or delay by the Agent or any
Lender in exercising the same, will operate as a waiver thereof. No waiver by
the Agent or any Lender will be effective unless it is in writing, and then only
to the extent specifically stated. No waiver by the Agent or the Lenders on any
occasion shall affect or diminish the Agent's and each Lender's rights
thereafter to require strict performance by the Borrower of any provision of
this Agreement, except to the extent specified in such waiver. The Agent and the
Lenders may proceed directly to collect the Obligations without any prior
recourse to the Collateral. The Agent's and each Lender's rights under this
Agreement will be cumulative and not exclusive of any other right or remedy
which the Agent or any Lender may have.
15.2 Severability. The illegality or unenforceability of any provision of
this Agreement or any Loan Document or any instrument or agreement required
hereunder shall not in any way affect or impair the legality or enforceability
of the remaining provisions of this Agreement or any instrument or agreement
required hereunder.
15.3 Governing Law; Choice of Forum; Service of Process; Jury Trial
Waiver. (a) THIS AGREEMENT SHALL BE INTERPRETED AND THE' RIGHTS AND LIABILITIES
OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE INTERNAL LAWS (AS
OPPOSED TO THE CONFLICT OF LAWS PROVISIONS PROVIDED, THAT PERFECTION ISSUES WITH
RESPECT TO ARTICLE 9 OF THE UCC MAY GIVE EFFECT TO APPLICABLE CHOICE OR CONFLICT
OF LAW RULES SET FORTH IN ARTICLE 9 OF THE UCC) OF THE STATE OF GEORGIA;
PROVIDED THAT THE AGENT, THE SYNDICATION AGENT AND THE LENDERS SHALL RETAIN ALL
RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACT10N OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF GEORGIA OR
OF THE UNITED STATES OF AMERICA FOR THE NORTHERN DISTRICT OF GEORGIA, AND BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE BORROWER, THE AGENT, THE
SYNDICATION AGENT AND THE LENDERS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS
65
PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE
BORROWER, THE AGENT, THE SYNDICATION AGENT AND THE LENDERS IRREVOCABLY WAIVES
ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS
AGREEMENT OR ANY DOCUMENT RELATED HERETO. NOTWITHSTANDING THE FOREGOING: (i) THE
AGENT AND THE LENDERS SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING
AGAINST THE BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION THE
AGENT OR THE LENDERS DEEM NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE
COLLATERAL OR OTHER SECURITY FOR THE OBLIGATIONS AND (ii) EACH OF THE PARTIES
HERETO ACKNOWLEDGES THAT ANY APPEALS FROM THE COURTS DESCRIBED IN THE
IMMEDIATELY PRECEDING SENTENCE MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE
THOSE JURISDICTIONS.
(c) THE BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS
UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY REGISTERED
MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO THE BORROWER AT ITS ADDRESS SET
FORTH IN SECTION 15.8 AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE
(5) DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE U.S. MAILS POSTAGE
PREPAID. NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF AGENT OR THE LENDERS
TO SERVE LEGAL PROCESS BY ANY OTHER MANNER PERMITTED BY LAW.
(d) THE BORROWER HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY WAIVES
ALL RIGHTS WHICH IT HAS UNDER CHAPTER 14 OF TITLE 44 OF THE OFFICIAL CODE OF
GEORGIA OR UNDER ANY SIMILAR PROVISION OF APPLICABLE LAW TO NOTICE AND TO A
JUDICIAL HEARING PRIOR TO THE ISSUANCE OF A WRIT OF POSSESSION ENTITLING THE
AGENT OR ANY LENDER, OR THE SUCCESSORS AND ASSIGNS OF THE AGENT OR SUCH LENDER,
TO POSSESSION OF THE COLLATERAL UPON AN EVENT OF DEFAULT. WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING AND WITHOUT LIMITING ANY OTHER RIGHT WHICH THE AGENT
OR THE LENDERS MAY HAVE, THE BORROWER CONSENTS THAT IF THE AGENT OR ANY LENDER
FILES A PETITION FOR AN IMMEDIATE WRIT OF POSSESSION IN COMPLIANCE WITH SECTIONS
00-00-000 AND 00-00-000 OF THE OFFICIAL CODE OF GEORGIA OR UNDER ANY SIMILAR
PROVISION OF APPLICABLE LAW, AND THIS WAIVER OR A COPY HEREOF IS ALLEGED IN SUCH
PETITION AND ATTACHED THERETO, THE COURT BEFORE WHICH SUCH PETITION IS FILED MAY
DISPENSE WITH ALL RIGHTS AND PROCEDURES HEREIN WAIVED AND MAY ISSUE FORTHWITH AN
IMMEDIATE WRIT OF POSSESSION IN ACCORDANCE WITH CHAPTER 14 OF TITLE 44 OF THE
OFFICIAL CODE OF GEORGIA OR IN ACCORDANCE WITH ANY SIMILAR PROVISION OF
APPLICABLE LAW, WITHOUT THE NECESSITY OF AN ACCOMPANYING BOND AS OTHERWISE
REQUIRED BY SECTION 00-00-000 OF THE
66
OFFICIAL CODE OF GEORGIA OR BY ANY SIMILAR PROVISION UNDER APPLICABLE LAW. THE
BORROWER HEREBY ACKNOWLEDGES THAT IT HAS READ AND FULLY UNDERSTANDS THE TERMS OF
THIS WAIVER AND THE EFFECT HEREOF.
15.3.2 Waiver of Jury Trial. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, THE BORROWER, THE LENDERS, THE AGENT, AND THE SYNDICATION AGENT, EACH
IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE
OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY
ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES
AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE,
WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE
BORROWER, THE LENDERS, THE SYNDICATION AGENT AND THE AGENT EACH AGREE THAT ANY
SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY.
WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE
RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY
ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO
CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS.
15.4 Survival of Representations and Warranties. All of the Borrower's
representations and warranties contained in this Agreement shall survive the
execution, delivery, and acceptance thereof by the parties, notwithstanding any
investigation by the Agent or the Lenders or their respective agents.
15.5 Other Security and Guaranties. The Agent may, without notice or demand
and without affecting the Borrower's obligations hereunder, from time to time:
(a) take from any Person and hold collateral (other than the Collateral) for the
payment of all or any part of the Obligations and exchange, enforce or release
such collateral or any part thereof; and (b) accept and hold any endorsement or
guaranty of payment of all or any part of the Obligations and release or
substitute any such endorser or guarantor, or any Person who has given any Lien
in any other collateral as security for the payment of all or any part of the
Obligations, or any other Person in any way obligated to pay all or any part of
the Obligations.
15.6 Fees and Expenses. The Borrower agrees to pay, or cause to be paid, to
the Agent, the Security Trustee and the Syndication Agent, for their benefit, on
demand, all reasonable out-of-pocket costs and expenses that the Agent, the
Security Trustee and the Syndication Agent pay or incur in connection with the
negotiation, preparation, syndication, consummation, administration,
enforcement, and termination of this Agreement or any of the other Loan
Documents, including: (a) Attorney Costs; (b) costs and expenses (including
67
attorneys' and paralegals' fees and disbursements) for any amendment,
supplement, waiver, consent, or subsequent closing in connection with the Loan
Documents and the transactions contemplated thereby; (c) costs and expenses of
lien and title searches and title insurance; (d) taxes, fees and other charges
for recording the Engine Mortgage and any related Mortgage Supplements, filing
financing. statements and continuations, and other actions to perfect, protect,
and continue the Agent's Liens (including costs and expenses paid or incurred by
the Agent, the Security Trustee and the Syndication Agent in connection with the
consummation of Agreement); (e) sums paid or incurred to pay any amount or take
any action required of the Borrower under the Loan Documents that the Borrower
fails to pay or take; (f) costs of appraisals, inspections, and verifications of
the Collateral, including travel, lodging, and meals for inspections of the
Collateral and the Borrower's operations by the Agent plus the Agent's then
customary charge for field examinations and audits and the preparation of
reports thereof (such charge is currently $750 per day (or portion thereof) for
each agent or employee of the Agent with respect to each field examination or
audit); (g) costs and expenses of forwarding loan proceeds, collecting checks
and other items of payment, and establishing and maintaining the Payment
Account; (h) costs and expenses of preserving and protecting the Collateral; and
(i) costs and expenses (including Attorney Costs) paid or incurred to obtain
payment of the Obligations, enforce the Agent's Liens, sell or otherwise realize
upon the Collateral, and otherwise enforce the provisions of the Loan Documents,
or to defend any claims made or threatened against the Agent, the Security
Trustee, the Syndication Agent or any Lender arising out of the transactions
contemplated hereby (including preparations for and consultations concerning any
such matters). The foregoing shall not be construed to limit any other
provisions of the Loan Documents regarding costs and expenses to be paid by the
Borrower. All of the foregoing costs and expenses may be charged to the
Borrower's Loan Account as Loans as described in Section 4.5.
The Borrower further agrees to pay or reimburse, or cause to be paid
or reimbursed, upon written demand all out-of-pocket costs and expenses incurred
by the Agent, the Security Trustee, the Syndication Agent and the Lenders,
including, without limitation, the reasonable fees and disbursements of counsel,
experts and other consultants to the Agent, the Security Trustee, the
Syndication Agent and any Lender, in connection with (a) any Default or Event of
Default or any modification, amendment, waiver, restructuring or forbearance
with respect to any of the Loan Documents in connection with such Default or
Event of Default, and (b) any actions taken to obtain payment of the
Obligations, enforce the security interests created hereunder, sell or otherwise
realize upon the Collateral, and otherwise enforce the provisions of the Loan
Documents, or to prosecute or defend any claim in any way arising out of,
related to or connected with, this Agreement or any of the Loan Documents.
15.7 Notices. Except as otherwise provided herein, all notices, demands and
requests that any party is required or elects to give to any other shall be in
writing, or by a telecommunications device capable of creating a written record,
and any such notice shall become effective (a) upon personal delivery thereof,
including, but not limited to, delivery by overnight mail and courier service,
(b) four (4) days after it shall have been mailed by United States mail, first
class, certified or registered, with postage prepaid, or (c) in the case of
notice by such a telecommunications device, when properly transmitted, in each
case addressed to the party to be notified as follows:
68
If to the Agent or to the Bank:
Bank of America, N.A.
000 Xxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx
Telecopy No.: (000) 000-0000
with copies to:
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
Bank of America Plaza
Suite 2400
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, III, Esq.
Telecopy No. (000) 000-0000
If to the Borrower:
KAV Inventory, LLC
C/O Kellstrom Industries, Inc.
0000 Xxxxxxxx Xxxx
Xxxxxxx, XX 00000
Attention: Manager
Facsimile: (000) 000-0000
and
KAV Inventory, LLC
C/O Timco Aviation Services, Inc.
000 Xxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: Xxx X. Xxxxxx, Xx.
Facsimile: (000) 000-0000
with copies to:
Akerman, Senterfitt & Xxxxxx, P.A.
000 Xxxx Xxx Xxxx Xxxx.
Xxxxx 0000
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxx March, Esq.
Telecopy No. (000) 000-0000
69
and
Xxxxx & Xxxxxx, P.C.
0000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: J. Xxxxxxx Xxxxx
Telecopy No.: (000) 000-0000
or to such other address as each party may designate for itself by like notice.
Failure or delay in delivering copies of any notice, demand, request, consent,
approval, declaration or other communication to the persons designated above to
receive copies shall not adversely affect the effectiveness of such notice,
demand, request, consent, approval, declaration or other communication.
15.8 Waiver of Notices. Unless otherwise expressly provided herein, the
Borrower waives presentment, and notice of demand or dishonor and protest as to
any instrument, notice of intent to accelerate the Obligations and notice of
acceleration of the Obligations, as well as any and all other notices to which
it might otherwise be entitled. No notice to or demand on the Borrower which the
Agent or any Lender may elect to give shall entitle the Borrower to any or
further notice or demand in the same, similar or other circumstances.
15.9 Binding Effect. The provisions of this Agreement shall be binding
upon and inure to the benefit of the respective representatives, successors, and
permitted assigns of the parties hereto; provided, however, that no interest
herein may be assigned by the Borrower without prior written consent of the
Agent and each Lender. The rights and benefits of the Agent and the Lenders
hereunder shall, if such Persons so agree, inure to any party acquiring any
interest in the Obligations or any part thereof.
15.10 Indemnity of the Agent, the Syndication Agent, the Security Trustee
and the Lenders by the Borrower. (a) The Borrower agrees to defend, indemnify
and hold the Agent-Related Persons, the Security Trustee, the Syndication Agent
and each Lender and each of its respective officers, directors, employees,
counsel, agents and attorneys-in-fact (each, an "Indemnified Person") harmless
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, charges, expenses and disbursements
(including Attorney Costs) of any kind or nature whatsoever which may at any
time (including at any time following repayment of the Loans and the
termination, resignation or replacement of the Agent or the Security Trustee or
replacement of any Lender) be imposed on, incurred by or asserted against any
such Person in any way relating to or arising out of this Agreement or any
document contemplated by or referred to herein, or the transactions contemplated
hereby, or any action taken or omitted by any such Person under or in connection
with any of the foregoing, including with respect to any investigation,
litigation or proceeding (including any Insolvency Proceeding or appellate
proceeding) related to or arising out of this Agreement, any other Loan
Document, or the Loans or the use of the proceeds thereof, whether or not any
Indemnified Person is a party thereto (all the foregoing, collectively, the
"Indemnified Liabilities"); provided, however, that the Borrower shall have no
obligation hereunder to any Indemnified Person with respect to Indemnified
Liabilities to the extent resulting from the gross negligence or willful
70
misconduct of such Indemnified Person. The agreements in this Section shall
survive payment of all other Obligations.
(b) The Borrower agrees to indemnify, defend and hold harmless the
Agent, the Security Trustee, the Syndication Agent and the Lenders from any loss
or liability directly or indirectly arising out of the use, generation,
manufacture, production, storage, release, threatened release, discharge,
disposal or presence of a hazardous substance relating to the Borrower's
operations, business or property. This indemnity will apply whether the
hazardous substance is on, under or about the Borrower's property or operations
or property leased to the Borrower. The indemnity includes but is not limited to
Attorney Costs. The indemnity extends to the Agent, the Security Trustee, the
Syndication Agent and the Lenders, their parents, Affiliates, Subsidiaries and
all of their directors, officers, employees, agents, successors, attorneys and
assigns. "Hazardous substances" means any substance, material or waste that is
or becomes designated or regulated as "toxic," "hazardous," "pollutant," or
"contaminant" or a similar designation or regulation under any federal, state or
local law (whether under common law, statute, regulation or otherwise) or
judicial or administrative interpretation of such, including petroleum or
natural gas. This indemnity will survive repayment of all other Obligations.
15.10.2 Limitation of Liability. NO CLAIM MAY BE MADE BY THE BORROWER, ANY
LENDER OR OTHER PERSON AGAINST THE AGENT, THE SYNDICATION AGENT, ANY LENDER, OR
THE AFFILIATES, DIRECTORS, OFFICERS, OFFICERS, EMPLOYEES, OR AGENTS OF ANY OF
THEM FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES IN RESPECT OF
ANY CLAIM FOR BREACH OF CONTRACT OR ANY OTHER THEORY OF LIABILITY ARISING OUT OF
OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH, AND
THE BORROWER AND EACH LENDER HEREBY WAIVE, RELEASE AND AGREE NOT TO XXX UPON ANY
CLAIM FOR SUCH DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER OR NOT KNOWN OR
SUSPECTED TO EXIST IN ITS FAVOR.
15.11 Final Agreement. This Agreement and the other Loan Documents are
intended by the Borrower, the Agent, the Syndication Agent and the Lenders to be
the final, complete, and exclusive expression of the agreement between them.
This Agreement supersedes any and all prior oral or written agreements relating
to the subject matter hereof. No modification, rescission, waiver, release, or
amendment of any provision of this Agreement or any other Loan Document shall be
made, except by a written agreement signed by the Borrower and a duly authorized
officer of each of the Agent, the Syndication Agent and the requisite Lenders.
15.12 Counterparts. This Agreement may be executed in any number of
counterparts, and by the Agent, the Syndication Agent, each Lender and the
Borrower in separate counterparts, each of which shall be an original, but all
of which shall together constitute one and the same agreement; signature pages
may be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.
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15.13 Captions. The captions contained in this Agreement are for
convenience of reference only, are without substantive meaning and should not be
construed to modify, enlarge, or restrict any provision.
15.14 Right of Setoff. In addition to any rights and remedies of the
Lenders provided by law, if an Event of Default exists, each Lender is
authorized at any time and from time to time, without prior notice to the
Borrower, any such notice being waived by the Borrower to the fullest extent
permitted by law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held by, and other
indebtedness at any time owing by, such Lender to or for the credit or the
account of the Borrower against any and all Obligations owing to such Lender,
now or hereafter existing, irrespective of whether or not the Agent or such
Lender shall have made demand under this Agreement or any Loan Document and
although such Obligations may be contingent or unmatured. Each Lender agrees
promptly to notify the Borrower and the Agent after any such set-off and
application made by such Lender; provided, however, that the failure to give
such notice shall not affect the validity of such set-off and application.
NOTWITHSTANDING THE FOREGOING, NO LENDER SHALL EXERCISE ANY RIGHT OF SET-OFF,
BANKER'S LIEN, OR THE LIKE AGAINST ANY DEPOSIT ACCOUNT OR PROPERTY OF THE
BORROWER HELD OR MAINTAINED BY SUCH LENDER WITHOUT THE PRIOR WRITTEN UNANIMOUS
CONSENT OF THE LENDERS.
[Remainder of page intentionally left blank.]
72
IN WITNESS WHEREOF, the parties have entered into this Agreement on the
date first above written.
"BORROWER"
KAV Inventory, LLC, a limited liability company
organized under the laws of the State of
Delaware
By: /s/ Xxx X. Xxxxxx, Xx.
---------------------------------------------
Name: Xxx X. Xxxxxx, Xx.
Title: Manager
By: /s/ Xxx Xxxx
---------------------------------------------
Name: Xxx Xxxx
Title: Manager
By: /s/ Zivi Nedivi
---------------------------------------------
Name: Zivi Nedivi
Title: Manager
By: /s/ Xxxxx Xxxxxx
---------------------------------------------
Name: Xxxxx Xxxxxx
Title: Manager
"AGENT" and "SECURITY TRUSTEE"
Bank of America, N.A., as the Agent and Security
Trustee
By: /s/
---------------------------------------------
Name:___________________________________________
Title:__________________________________________
"SYNDICATION AGENT"
Bank of America, N.A, as the Syndication Agent
By: /s/
---------------------------------------------
Name:___________________________________________
Title:__________________________________________
"LENDERS"
Bank of America, N.A., as a Lender
By: /s/
---------------------------------------------
Name:___________________________________________
Title:__________________________________________
Commitment: $56,511,044.02
Pro Rata Share: 100%
---------
73
EXHIBITS AND SCHEDULES
EXHIBIT D - FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
SCHEDULE 6.3 - LOCATION OF COLLATERAL
SCHEDULE 8.3 - ORGANIZATION AND QUALIFICATIONS
SCHEDULE 8.4 - CORPORATE NAMES; PRIOR TRANSACTIONS
SCHEDULE-8.12 - REAL ESTATE; LEASES
SCHEDULE 8.13 - PROPRIETARY RIGHTS
SCHEDULE 8.14 - TRADE NAMES
SCHEDULE 8.15 - LITIGATION
SCHEDULE 8.17 - LABOR DISPUTES
SCHEDULE 8.18 - ENVIRONMENTAL LAWS
SCHEDULE 8.21 - ERISA COMPLIANCE
SCHEDULE 8.28 - MATERIAL AGREEMENTS
SCHEDULE 8.29 - BANK ACCOUNTS
SCHEDULE 8.31 - TAXPAYER IDENTIFICATION NUMBER
i
