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EXHIBIT 4.5
SENIOR TERM LOAN AGREEMENT
THIS SENIOR TERM LOAN AGREEMENT, dated as of May 17, 1996, is entered
into between IAI ALASKA I CORPORATION, a Nevada Corporation ("Borrower"), and
CITY NATIONAL BANK, A NATIONAL BANKING ASSOCIATION ("Lender"), in light of the
following facts:
WHEREAS, Borrower and International Lease Finance Corporation, a
California corporation ("ILFC"), have previously entered into that certain
Aircraft Purchase and Sale Agreement, dated as of December 21, 1995 (the
"Aircraft Sale Agreement"), pursuant to which Borrower purchased from ILFC one
(1) XxXxxxxxx Xxxxxxx MD-82 aircraft bearing manufacturer's serial number 49925
and United States Federal Aviation Administration ("FAA") registration number
N941AS with two (2) Xxxxx & Whitney JT8D-219 engines bearing manufacturer's
serial numbers P725407DCN and P725430DCN (or any replacement engines for either
of the foregoing engines) (the "Aircraft") which is currently being leased to
ALASKA AIRLINES, INC., an Alaskan corporation ("Lessee");
WHEREAS, Borrower has requested that Lender provide Borrower with a
senior loan of Fourteen Million Six Hundred Fifty Thousand U.S. Dollars (US$
14,650,000) to refinance a portion of the purchase price in connection with
Borrower's purchase of the Aircraft from ILFC; and
WHEREAS, on the terms and conditions contained herein, Lender has
agreed to provide Borrower with a senior loan of Fourteen Million Six Hundred
Fifty Thousand U.S. Dollars (US$ 14,650,000) to refinance a portion of the
purchase price of the Aircraft.
NOW THEREFORE, in consideration of the foregoing, mutual covenants and
conditions contained herein and other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the parties hereto agree
as follows:
1. DEFINITIONS; CONSTRUCTION
1.1 Definitions. For purposes of this Agreement, the
following capitalized terms shall have the following
meanings:
"Agreement" shall mean this Senior Term Loan Agreement between
Borrower and Lender, together with all of the exhibits and schedules hereto.
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"Aircraft" shall have the meaning ascribed to such term in the
recitals to this Agreement.
"Aircraft Sale Agreement" shall have the meaning ascribed to
such term in the recitals to this Agreement.
"Aircraft Loan Date" means the date of the Borrowing of the
Loan for the purchase of the Aircraft.
"Aircraft Original Sale Price" shall mean Twenty-One Million
Seven Hundred Fifty Thousand U.S. Dollars (US$ 21,750,000).
"Aircraft Sale Agreement" shall have the meaning ascribed to
such term in the recitals to this Agreement.
"Aircraft Secured Promissory Note" shall have the meaning
ascribed to such term in Section 2.3 hereof.
"Asset" shall mean any interest of a Person in any kind of
property or asset, whether real, personal, or mixed real and personal, or
whether tangible or intangible.
"Borrower" shall have the meaning set forth in the
introduction to this Agreement.
"Borrowing" shall mean the borrowing under the Loan made by
Lender to Borrower for the purchase of the Aircraft.
"Business Day" shall mean a day (other than a Saturday or
Sunday) upon which banks are open for the transaction of business of the kind
contemplated by this Agreement in Los Angeles, California.
"Contractual Obligation" shall mean, as applied to any Person,
any provision of any security agreement entered into by that Person or of any
material indenture, mortgage, deed of trust, contract, undertaking, agreement,
or other material instrument to which that Person is a party or by which it or
any of its owned Assets is bound or to which it or any of its owned Assets is
subject.
"Debt" shall mean, with respect to any Person, the aggregate
amount of, without duplication: (a) all obligations of such Person for borrowed
money; (b) all obligations of such Person evidenced by bonds, debentures,
letters of credit,
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notes, or other similar instruments and all reimbursement or other obligations
of such Person in respect of letters of credit, bankers acceptances, interest
rate swaps, or other financial products; (c) all capitalized lease obligations
of such Person; (d) all obligations or liabilities of others secured by a Lien
on any Asset owned by such Person whether or not such obligation or liability
is assumed; (e) all obligations guarantied by such Person or in respect of
which such Person acts as surety; and (f) all obligations of such Person to pay
the deferred purchase price of Assets or services, exclusive of trade payables
which are incurred in the ordinary course of such Person's business consistent
with past practices.
"Event of Default" shall have the meaning ascribed to such
term in Section 11.1 hereof.
"FAA" shall mean the Federal Aviation Administration of the
Department of Transportation or any successor thereto under the Laws of the
U.S.
"First Quarterly Payment Date" shall have the meaning ascribed
to such term in Section 4.1 hereof.
"Highest Lawful Rate" shall mean, the maximum non-usurious
interest rate, as in effect from time to time, which may be charged, contracted
for, reserved, received, or collected by Lender in connection with this
Agreement, the Aircraft Secured Promissory Note, or any other document executed
in connection herewith or therewith.
"Indemnified Liabilities" shall have the meaning ascribed to
such term in Section 12.2 hereof.
"Indemnitee" shall have the meaning ascribed to such term in
Section 12.2 hereof.
"Interest Rate" shall have the meaning ascribed to such term
in Section 3.1 hereof.
"Investment" shall mean, as applied to any Person, any direct
or indirect purchase or other acquisition by that Person of, or beneficial
interest in, stock, instruments, bonds, debentures or other securities of any
other Person, or any direct or indirect loan, advance (other than advances to
employees for expenditures in the ordinary course of such Person's business),
or capital contribution by such Person to any other Person, including all
indebtedness and accounts receivable from that other Person which did not arise
from sales or the
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rendition of services to that other Person in the ordinary and usual course of
such Person's business, and deposit accounts (including certificates of
deposit).
"Junior Lender" shall mean INTERNATIONAL LEASE FINANCE
CORPORATION, a California corporation.
"Junior Loan Agreement" shall mean that certain Junior Loan
Agreement, dated as of December 21, 1995, entered into between Borrower and
Junior Lender.
"Junior Loan" shall mean the junior loan of Four Million three
Hundred fifty Thousand U.S. Dollars (US$ 4,350,000) provided by Junior Lender
to Borrower pursuant to the Junior Loan Agreement.
"Lien" shall mean any lien, mortgage, assignment (including
any assignment of rights to receive payments of money), pledge security
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof, and any
agreement to give any security interest).
"Loan" shall have the meaning ascribed to such term in Section
2.1(a) hereof.
"Loan Date" shall mean the date on which the Borrowing of the
Loan is advanced by Lender to Borrower.
"Material Adverse Effect" shall mean a material and adverse
effect on the business, operations, Assets, or condition (financial or
otherwise) of a Person.
"Maturity Date" shall mean May 17, 2001.
"Mortgage" means that certain Senior Mortgage, Security
Agreement and Assignment of Rents of even date herewith entered into between
Lender and Borrower, pursuant to which Borrower granted Lender a first priority
security interest in the Aircraft.
"Overdue Rate" shall have the meaning ascribed to such term in
Section 3.2 hereof.
"Parent" means International Aircraft Investors, a California
corporation.
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"Parts" means all appliances, parts, components, modules,
instruments, appurtenances, accessories, furnishings and other equipment of
whatever nature (other than complete engines) whether now owned or hereafter
acquired which may from time to time be incorporated in the Aircraft or any
engine on any Aircraft (and "Part" means any of the foregoing) and, after
removal therefrom, so long as such Part is considered a Part associated with
the Aircraft or an engine on such Aircraft.
"Permitted Liens" shall mean any of the following Liens:
(a) Liens in favor of Lender arising by reason of
this Agreement;
(b) Liens in favor of Junior Lender arising by
reason of the Junior Loan Agreement;
(c) Liens for taxes, assessments or other
governmental charges or levies not at the time delinquent or
thereafter payable without penalty or being contested in good faith;
(d) Liens of carriers, warehousemen, mechanics,
materialmen and landlords incurred in the ordinary course of business
for sums not overdue or being contested in good faith;
(e) Liens incurred in the ordinary course of
business in connection with workmen's compensation, unemployment
insurance or other forms of governmental insurance or benefits, or to
secure performance of tenders and statutory obligations entered into
in the ordinary course of business or to secure obligations on surety
or appeal bonds;
(f) judgment Liens in existence less than thirty
(30) days after the entry thereof or with respect to which execution
has been stayed or the payment of which is covered in full by
insurance;
(g) liens on the Aircraft in favor of the lessee
of such Aircraft which result from the leases on such Aircraft; and
(h) Liens on the Aircraft which are "Permitted
Liens" under the existing lease and any other leases for the Aircraft;
provided, however, that such other leases are approved by Lender.
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"Person" shall mean natural persons, corporations, limited
partnerships, general partnerships, joint stock companies, joint ventures,
associations, companies, trusts, banks, trust companies, land trusts, vehicle
trusts, business trusts or other organizations irrespective of whether they are
legal entities, and governments and agencies and political subdivisions
thereof.
"Quarterly Payment Date" shall have the meaning ascribed to
such term in Section 4.1 hereof.
"Related Documents" shall mean the Aircraft Sale Agreement,
the Pledge Agreement, the Mortgage, and all other agreements, documents, or
instruments other than this Agreement and the Aircraft Secured Promissory Note,
delivered from time to time in connection with the transactions contemplated by
this Agreement.
"Subsidiary" shall mean any company or corporation a majority
of whose securities having ordinary voting power for the election of directors
(other than securities having such power only by reason of the happening of a
contingency) is, as of the date any determination thereof is to be made, owned
by a Person or one or more of such Person's Subsidiaries.
"Taxes" shall mean any taxes, charges, fees, levies or other
assessments based upon or measured by net or gross income, gross receipts,
sales, use, ad valorem, transfer, franchise, withholding, payroll, employment,
excise, occupation, premium, property or conduct of business, together with any
interest and penalties, additions to tax and additional amounts imposed by any
federal, state, local or foreign taxing authority.
"Transaction Documents" shall mean this Agreement, the
Aircraft Secured Promissory Note, the Related Documents, and all other
agreements or instruments executed and delivered or to be executed and
delivered pursuant hereto or thereto or in connection herewith or therewith, or
in connection with any of the transactions contemplated hereby or thereby.
"Unmatured Event of Default" shall mean an event, act, or
occurrence which, with the giving of notice or the lapse of time (or both),
would become an Event of Default.
1.2 Construction. Unless the context of this Agreement
clearly requires otherwise, references to the plural include the singular and
to the singular include the plural, the part includes the whole, the terms
"include" and "including"
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are not limiting, and the term "or" has, except where otherwise indicated, the
inclusive meaning represented by the phrase "and/or". The words "hereof,"
"herein," "hereby," "hereunder" and similar terms in this Agreement refer to
this Agreement as a whole and not to any particular provision of this
Agreement. Article, section, subsection, clause, exhibit and schedule
references are to this Agreement unless otherwise specified. Any reference
herein to this Agreement, the Aircraft Secured Promissory Note, or any of the
Related Documents includes any and all alterations, amendments, changes,
extensions, modifications, renewals, or supplements thereto or thereof, as
applicable.
1.3 Exhibits. All of the exhibits or schedules attached
hereto shall be deemed incorporated herein by reference.
2. AMOUNT OF LOAN
2.1 Loan
(a) Loan. Subject to the terms and conditions
contained herein, Lender agrees to make a loan to Borrower in one Borrowing and
in the principal amount equal to Fourteen Million Six Hundred Fifty Thousand
U.S. Dollars (US$ 14,650,000) (the "Loan"). The Loan Amount will be advanced
to Borrower on a date agreed upon by Borrower and Lender. Any amount repaid on
the Loan may not be reborrowed by Borrower.
(b) Advancement of Loan. Unless agreed to
otherwise, Borrower will provide Lender with notice of the date on which
Borrower wants the Loan extended to it on the Business Day prior to the date
set forth in such notice. The Loan will be extended to Borrower on the date
set forth in such notice,
2.2 Purpose of Loan. The proceeds of the Loan will be
used by Borrower solely to refinance debt presently owed to AIG Capital Corp.
with respect to the purchase the Aircraft from ILFC.
2.3 Aircraft Secured Promissory Note. The Loan will be
evidenced by a secured promissory note (the "Aircraft Secured Promissory
Note"). The form of such Aircraft Secured Promissory Note is attached hereto
as Exhibit A. The Aircraft Secured Promissory Note shall evidence the
aggregate outstanding principal balance of the Loan together with any and all
accrued and unpaid interest thereon.
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3. INTEREST AND FEES
3.1 Interest Rate. The Loan shall accrue interest at a
rate equal to 7 and 3/4 percent (7.75%) per annum, (the "Interest Rate").
Interest on any overdue portion of the balance due hereunder will accrue
interest according to the provisions for late payment hereunder.
3.2 Overdue Rate. Any payments of principal, interest
(to the extent permitted by law both before and after judgment) with respect to
the Loan, fees, expenses, or other amounts payable to Borrower which are not
paid when due hereunder or declared due, whether at maturity, by acceleration,
by lapse of time or otherwise, shall bear interest thereafter, at a per annum
interest rate (the "Overdue Rate") which is equal to the Interest Rate plus
three percent (3.0%).
3.3 Computation of Interest. All computations of
interest with respect to the Loan and all computations of interest due under
Section 3.2 hereof for any period shall be calculated on the basis of a year of
three hundred sixty (360) days with ninety (90) day quarter. Interest shall
accrue from the Loan Date (or the date on which interest or other payments are
due, if applicable), to the date of repayment of the Loan (or the date of the
payment of interest or fees or other payments, if applicable) in accordance
with the provisions hereof.
4. TERMS OF LOAN
4.1 Payment of Principal and Interest on the Loan.
Principal and interest due with respect to the Loan shall be due and payable
quarterly in arrears, commencing on August 17, 1996, (the "First Quarterly
Payment Date") and continuing on the same day of each third month thereafter
(each a "Quarterly Payment Date") until and including the Maturity Date on
which date the entire outstanding principal balance and all accrued and unpaid
interest shall be due and payable. The amount of the payments of principal and
interest on the loan shall be Five Hundred Ten Thousand U.S. Dollars (US$
510,000).
4.2 Voluntary Prepayments. At any time, Borrower may,
upon at least one (1) Business Day prior written notice, prepay the Loan in
whole or in part without penalty or premium.
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5. MANDATORY PREPAYMENTS FROM THE PROCEEDS FROM THE SALE OR TOTAL
LOSS OF AN AIRCRAFT
5.1 Payment of Proceeds of Sale or Total Loss. Upon the
sale or total loss (as defined in the Lease) of the Aircraft, Borrower will
repay in full the outstanding principal balance of the Loan and any and all
accrued and unpaid interest thereon.
6. PLACE AND MANNER OF BORROWING AND PAYMENT
6.1 Manner and Time of Payment. All payments of
principal and interest in respect of the Loan payable to Lender shall be made
without condition or reservation of right in United States Dollars and in
immediately available funds to Lender at:
City National Bank,
Westside Commercial Banking Center
000 Xx. Xxxxxxx Xxxxx, Xxxxx 000
Beverly Hills, CA 90210
Until the loan is paid in full, Borrower shall instruct any Lessee of
the Aircraft to make lease payments directly to CNB. Upon receipt of such
lease payments, CNB shall apply the payment first to accrued but unpaid
interest and then to any principal payment then due. Any lease amounts prepaid
over one month in advance shall be applied to principal payments due in their
order of maturity.
6.2 Payments on Non-Business Days. Whenever any payment
to be made by Borrower hereunder shall be stated to be due on a day which is
not a Business Day, then such payment shall be due and payable on the
immediately preceding Business Day.
6.3 No Deductions or Withholdings. All payments by
Borrower hereunder or under the Aircraft Secured Promissory Note, including,
without limitation, principal and interest, will be made in full without any
deduction or withholding whether in respect of set-off, counterclaim, duties,
or taxes imposed in the United States of America or any jurisdiction from which
such payments are made unless Borrower is prohibited by law from doing so, in
which event Borrower will gross up the payment amount such that the net payment
received by Lender after any deduction or withholding equals the amounts called
for hereunder or under the Aircraft Secured Promissory Note. Borrower will
also do all of the following:
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(a) Ensure that the deduction or withholding does
not exceed the minimum amount legally required.
(b) Pay to the relevant government entities
within the period for payment permitted by applicable law the full
amount of the deduction or withholding (including the full amount of
any deduction or withholding from any additional amount paid pursuant
hereto).
(c) Furnish to Lender within thirty (30) days
after each payment an official receipt of the relevant government
entities involved for all amounts so deducted or withheld.
6.4 Value Added Taxes. The principal, interest and fees
payable by Borrower hereunder or under the Aircraft Secured Promissory Note are
exclusive of any value added tax, turnover tax or similar tax or duty. If a
value added tax or any similar tax or duty is payable in any jurisdiction in
respect of any principal, interest, fee or other amounts as aforesaid, Borrower
will pay all such tax or duty and indemnify Lender against any claims for the
same and any related claims, losses or liabilities.
7. CONDITIONS TO THE LOAN
7.1 Conditions Precedent to the Loan. The obligation of
Lender to make the Loan specified in Section 2.1 hereof is subject to the
fulfillment and satisfaction of the each of the following conditions precedent
on or before the Loan Date:
(a) The Loan Date shall occur on or before May
31, 1996;
(b) Lender shall have received the Aircraft
Secured Promissory Note duly executed by Borrower to the order of
Lender;
(c) Borrower shall have executed, delivered, and
caused to be recorded, the Mortgage;
(d) Lender shall have received the Articles of
Incorporation (and any amendments thereto) of the Borrower;
(e) Lender shall have received a certificate from
the Secretary of the Borrower attesting to the resolutions of the
Borrower's board of directors, authorizing the execution, delivery,
and performance of this
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Agreement, the Related Documents, and the other documents contemplated
herein or therein, and the issuance of the Secured Promissory Note,
and authorizing specific officers of the Borrower to execute same;
(f) Lender shall have received a signature and
incumbency certificate for the officers of the Borrower who will
execute this Agreement, the Aircraft Secured Promissory Note, the
Related Documents, and the other documents contemplated herein or
therein to which Borrower is a party, which certificate has been
certified by the secretary of the Borrower;
(g) Lender shall have received the written
opinion of the Legal Counsel for Borrower, in form and substance
satisfactory to Lender and its counsel, covering the matters set forth
in the form of opinion contained in Exhibit B attached hereto;
(h) No Event of Default or Unmatured Event of
Default shall have occurred and be continuing on the date of the
Borrowing of the Loan nor shall either result from the making of the
Borrowing of the Loan;
(i) There is no litigation or proceeding pending
or threatened against or affecting Borrower, the result of which might
materially affect the financial condition, business or operations of
Borrower, and there has been no materially adverse change in the
financial condition of Borrower since the date of execution of this
Agreement; and
(j) The representations and warranties contained
in Section 8 of this Agreement are true and correct as of the date of
the Borrowing of the Loan; provided, however, that the representations
and warranties contained herein with respect to the accuracy of
financial statements shall be deemed to be made with respect to the
financial statements most recently delivered to the Lender.
8. REPRESENTATIONS AND WARRANTIES OF BORROWER
In order to induce Lender to enter into this Agreement,
Borrower makes the following representations and warranties which shall be true
and correct in all material respects as of the Loan Date and such
representations and warranties shall survive the execution and delivery of this
Agreement and the Aircraft Secured Promissory Note and the making of the Loan:
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8.1 Organization. Borrower (1) is a Corporation duly
organized, validly existing and in good standing under the laws of Nevada and
(2) has all requisite power and authority to own, operate, and encumber its
Assets and to conduct its business as presently conducted and as proposed to be
conducted in connection with the consummation of the transactions contemplated
by this Agreement and the Related Documents.
8.2 Authority.
(a) Borrower has the requisite power and
authority to execute, deliver, and perform each of the Transaction
Documents executed by it, or to be executed by it.
(b) The execution, delivery, and performance of
each of the Transaction Documents to which Borrower is a party and the
consummation of the transactions contemplated thereby, has been duly
approved by the board of directors of Borrower and no other
proceedings on the part of Borrower is necessary to consummate such
transactions.
(c) Each of the Transaction Documents to which
Borrower is a party has been duly executed and delivered by Borrower
constitutes its legal, valid and binding obligation, enforceable
against it in accordance with its terms, and is in full force and
effect except as the enforceability hereof or thereof may be affected
by: (a) bankruptcy, insolvency, moratorium, or other similar laws
affecting the enforcement of creditors' rights generally; (b) the
limitation of certain remedies by certain equitable principles of
general applicability; and (c) the fact that the rights to
indemnification thereunder or hereunder may be limited by securities
laws.
8.3 No Conflict. The execution, delivery, and
performance of each of the Transaction Documents to which Borrower is a party
and each of the transactions contemplated thereby do not and will not (a)
conflict with or violate Borrower's Articles of Incorporation, or (b) conflict
with, result in a breach of, constitute (with or without notice or lapse of
time) a default under, or require termination of, any of the Transaction
Documents, any material indenture, mortgage or other agreement or instrument to
which Borrower is a party or by which any of its properties may be bound, or
(c) result in or require the creation or imposition of any lien upon any of the
Assets of Borrower (other than liens in favor of Lender or Junior Lender
arising pursuant to the Transaction Documents), or (d) require any approval of
stockholders, or any approval or consent of any Person under any other
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Contractual Obligations to which Borrower is a party which approval or consent,
as the case may be has not already been obtained prior to the date hereof.
8.4 Government Consent. The execution, delivery, and
performance of each Transaction Document to which Borrower is a party and the
transactions contemplated thereby do not and will not require any registration
with, consent or approval of, or notice to, or other action to, with or by any
regulatory body or authority in the United States of America, Nevada or
California.
8.5 Payment of Taxes. All tax returns and reports of
Borrower required to be filed, have been timely filed (inclusive of any
permitted extensions), and all taxes, assessments, fees, and other governmental
charges thereupon and upon its assets, income, and franchises which are shown
on such returns or reports as being due and payable, have been paid when due
and payable, except such taxes, if any, that are reserved against in accordance
with generally accepted accounting principals in the United States of America
and are being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted. Borrower has no knowledge of any proposed
tax assessment against it which is not either going to be paid prior to it
becoming delinquent or being contested in good faith by appropriate proceedings
promptly instituted and diligently conducted by such Person with appropriate
reserves made for such assessment in accordance with generally accepted
accounting principals.
8.6 Litigation; Adverse Facts. Except as previously
disclosed to Lender in writing: (a) there is no action, suit, proceeding, or
arbitration (whether purportedly on behalf of Borrower) at law or in equity or
before or by any federal, state, municipal, or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
pending or, to the knowledge of Borrower, threatened against or directly
affecting Borrower which is reasonably likely to result in a Material Adverse
Effect on Borrower or may reasonably be expected to materially adversely affect
Borrower's ability to perform its obligations hereunder or under the Aircraft
Secured Promissory Note; or (b) Borrower is not subject to or in default with
respect to any final judgment, writ, injunction, decree, rule, or regulation of
any court or federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, in a
manner which would have a Material Adverse Effect on Borrower; and (c) (i) as
of the date hereof or on the Loan Date, there is no action, suit, proceeding
or, to the best of Borrower's knowledge or belief, investigation pending or, to
the best of Borrower's knowledge or belief, threatened against or directly
affecting Borrower, which questions the validity or the enforceability of this
Agreement, the Related Documents, or the Aircraft Secured Promissory Note; and
(ii) after the
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Loan Date, there is no action, suit or proceeding pending against or affecting
Borrower, pursuant to which, on the date of the making of any Loan hereunder,
there is in effect a binding injunction materially and adversely affecting the
validity or the enforceability of the sale of the Aircraft, this Agreement, the
Related Documents, or the Aircraft Secured Promissory Note.
8.7 Consents. Other than such as may have previously
been obtained, no consent, license, permit, approval or authorization of,
exemption by, notice to, report to, or registration, filing or declaration
with, any governmental authority or agency is required in connection with the
execution, delivery, and performance by Borrower of this Agreement, the Related
Documents, or the Aircraft Secured Promissory Note.
8.8 Title to Properties; Liens. Except for Permitted
Liens, all of the Assets of Borrower are free from all Liens of any nature
whatsoever. Borrower has good and sufficient title to all of the material
Assets reflected in its books and records as being owned by it.
8.9 Licenses, Patents, Trademarks, and Intellectual
Property. Borrower has all necessary patents, patent rights, license
agreements, trademarks, trademark rights, trade names, trade name rights,
copyrights, and franchise agreements in order for it to conduct its businesses
and to operate its Assets substantially as now operated, as the case may be,
without known conflict, other than as previously disclosed in writing, with the
rights of third Persons, except where the failure to obtain same could not
reasonably be expected to have a Material Adverse Effect on Borrower and all of
same are valid and subsisting, except where such lack of validity or
subsistence could not reasonably be expected to have a Material Adverse Effect
on Borrower. The consummation of the transactions contemplated by this
Agreement will not alter or impair any of such rights of Borrower. Except as
previously disclosed in writing, Borrower has not been charged or, to
Borrower's knowledge, is threatened to be charged with any infringement of, nor
has it infringed on any unexpired registered domestic trademark, trademark
registration, trade name, patent, copyright, copyright registration, or other
proprietary right of any Person, which charge or threat could reasonably be
expected to have a Material Adverse Effect on Borrower.
8.10 Burdensome Agreements. Except as previously
disclosed in writing, Borrower is not a party to any unusual or unduly
burdensome agreement or undertaking which could reasonably be expected to have
a Material Adverse Effect on Borrower. Borrower is not subject to any unusual
or unduly burdensome court order, writ, injunction, or decree of any court or
government instrumentality,
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domestic or foreign, which could reasonably be expected to have a Material
Adverse Effect on Borrower.
8.11 Existing Defaults. Except as previously disclosed in
writing, Borrower is not in default under any Contractual Obligation, the
effect of which would be a Material Adverse Effect on Borrower. Except as
previously disclosed in writing, Borrower is not in violation of any law,
ordinance, rule or regulation to which it or any of its Assets is subject, the
failure to comply with which would have a Material Adverse Effect on Borrower.
8.12 Foreign National. Borrower is not a "national" of a
"designated foreign country" (or a person defined as a "designated national" or
a "specially designated national") within the definitions in the Foreign or the
Cuban Assets Control Regulations of the United States Treasury Department, 31
CFR, Subtitle B, Chapter V, as amended, or any regulation or ruling issued
thereunder.
9. AFFIRMATIVE COVENANTS
Borrower and Lender covenant and agree, so long as the Loan
hereunder shall be outstanding and until the full and final payment of the Loan
and the performance of all obligations of Borrower, as follows:
9.1 Payment of Principal and Interest. Borrower will
duly and punctually pay all principal and interest due hereunder at the time
and place and in the manner specified herein.
9.2 Accounting Records and Inspection. Borrower shall
maintain adequate financial and accounting books and records in accordance with
sound business practices and generally accepted accounting principles
consistently applied, and permit any representative of Lender, upon reasonable
written notice to Borrower, at any time during usual business hours, to
inspect, audit, and examine such books and records and to make copies and take
extracts therefrom, and discuss its affairs, financing, and accounts with its
officers and independent public accountants. Borrower shall furnish Lender
with any information reasonably requested regarding Borrower's business or
finances promptly upon such entity's request. Borrower shall permit those
Persons designated by Lender to visit and inspect, during Borrower's normal
business hours, any of the Assets of Borrower upon reasonable notice and as
often as may be reasonably requested.
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9.3 Financial Statements. Borrower shall furnish Lender:
(a) as soon as practicable after the end of each
fiscal year, but in no event later than one hundred and twenty (120)
days after the end of such fiscal year, balance sheets of Borrower as
of the end of such year, profit and loss statements and statements of
cash flow (which cash flow statement need not be certified) of
Borrower for such year, setting forth in each case in comparative
form, figures for the previous fiscal year, all in reasonable detail
and certified by the Chief Financial Officer of Borrower.
(b) as soon as possible and, in any event, within
five (5) days after Borrower has knowledge, notice of: (1) the
occurrence of any Event of Default or event which with the giving of
notice or lapse of time, or both, would result in an Event of Default;
or (2) any default or event of default as defined in any evidence of
Debt of Borrower or under any agreement, indenture, or other
instrument under which such Debt has been issued, irrespective of
whether such Debt is accelerated or such default is waived.
(c) with prompt written notice of: (1) a material
adverse effect on Borrower's consolidated condition (financial or
otherwise) or operations; (2) a material breach of or noncompliance
with any term, condition or covenant contained in this Agreement, the
Aircraft Secured Promissory Note, or the other Transaction Documents;
or (3) a material breach of or noncompliance with any material term,
condition, or covenant of any material contract to which Borrower is a
party or by which any of its Assets may be bound;
(d) with prompt written notice of any claims,
proceedings, or disputes against, or to the knowledge or belief of
Borrower, threatened or directly affecting Borrower, which involve
monetary amounts of Five Hundred Thousand U.S. Dollars (US$ 500,000)
or more or which are reasonably likely to have a Material Adverse
Effect on Borrower or any material labor controversy resulting in or
threatening to result in a strike against Borrower which could have a
Material Adverse Effect on Borrower or any proposal by any public
authority of which Borrower has knowledge to acquire any of the
material Assets or businesses of Borrower.
(e) promptly upon becoming aware of the filing
against Borrower of an involuntary case under any applicable
bankruptcy, insolvency, or other similar law now or hereafter in
effect, a written notice
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thereof specifying what action Borrower is taking or proposes to take
with respect thereto;
(f) prompt notice of: (1) all legal or arbitral
proceedings, and all proceedings by or before any governmental
regulatory authority or agency, directly affecting Borrower which
involve monetary amounts of Five Hundred Thousand U.S. Dollars (US$
500,000) or more, or which are reasonably likely to have a Material
Adverse Effect on Borrower, or on the timely payment of the principal
of or interest on the Loan, or the enforceability of this Agreement,
the Related Documents, or the Aircraft Secured Promissory Note, or the
rights and remedies of Lender hereunder or thereunder, as applicable;
(2) any information coming to the attention of Borrower relating to
any action taken or proposed to be taken by any Person which is
reasonably likely to have a material adverse effect on the ability of
Borrower to perform its obligations under this Agreement, the Related
Documents, or the Aircraft Secured Promissory Note, as applicable; and
(g) upon demand, furnish Lender with such
information as it may reasonably request with respect to the financial
condition and affairs of Borrower.
9.4 Other Debt. Borrower will promptly pay and discharge
any and all indebtedness whether for borrowed money or otherwise, liens,
charges or obligations when due, including all taxes and assessments, except
such as may in good faith be contested or disputed or for which arrangements
for deferred payment have been made, provided provision is made to the
satisfaction of Lender for the eventual payment thereof in the event it is
found that such indebtedness, obligation or tax is an indebtedness, obligation
or tax payable by Borrower and when such dispute or contest is settled and
determined, will promptly pay the full amount then due; provided, however, that
Borrower shall not be in breach of this covenant unless: (a) Borrower fails to
pay when due or declared due installments on debt which installments in the
aggregate are equal to or greater than One Hundred Thousand U.S. Dollars (US
$100,000); or (b) Borrower fails to pay when due two (2) or more payments to
more than one (1) lender on Debt.
9.5 Conduct of Business. Borrower will maintain and
preserve its existence, conduct its business in an orderly, efficient manner,
without voluntary interruption; keep its properties useful or necessary in its
business in good working order and condition, and from time to time make all
needed repairs, renewals and replacements thereto, so that the efficiency of
its properties shall be fully preserved; will comply with all applicable laws
and regulations of governmental agencies; and
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will duly qualify to do business and maintain such qualification in each
jurisdiction where its ownership of property or conduct of business requires
such qualification.
9.6 Insurance. Borrower shall, at no cost to Lender,
maintain or cause to be maintained with insurers and through recognized
brokers, in full force and effect during the term of the loan until two (2)
years after the date of full repayment, full liability insurance in respect of
the Aircraft with Lender as an additional insured, and otherwise subject to all
the terms and conditions set out below.
If the Aircraft is sold, transferred, leased or operated by a third party
during such two (2) year period, Borrower and/or the lessee of the Aircraft
(the "Insured") will cause such subsequent owner, lessee or operator to obtain
the insurance referred to below so that Lender is fully protected by such
insurance for the entire two (2) year period. Such insurance shall include the
following provisions:
(a) The Insurers agree that the Lender shall not be liable for,
nor have any obligation to pay, any premium due hereunder, and
the Insurers further agree that they shall not offset or
counter-claim any unpaid premium against the interest of the
Lender.
(b) The Insurers agree to waive all of their rights of subrogation
against the Lender.
(c) The policy shall contain a cross liability clause to the
effect that this insurance, except for the limits of
liability, shall operate to give the Lender and Insureds the
same protection as if there was a separate policy issued to
each of them.
(d) The Insurers agree that this insurance shall be primary
insurance without any right of contribution from any other
insurance which is carried by the Lender or by the Insured and
the Insurer's liability shall not be affected by any other
insurance of which any of Lender or Insured have the benefit
so as to reduce the amount payable to the Lender under the
policy.
(e) The Insurers agree that as respects the interest of the Lender
this insurance shall in accordance with Lloyds Aviation 28
Breach of Warranty Endorsement not be invalidated by any
action or inaction of the Insured and shall insure the Lender
and its directors, officers, agents, and employees regardless
of any breach or violation of any
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warranty, declaration or condition contained in the policy by
the Insured or by the omission or neglect, or by the
performance of any act in violation or any terms or conditions
of the policy or because of the subjection of the property to
any conditions, uses or operations not permitted by the policy
or because of a use or operation of the property which is, by
the terms of the policy, specifically excluded from coverage
or because of any false statement concerning this policy or
the subject thereof, by the Insured or the Insured's
employees, agents or representatives, whether occurring before
or after attachment of this Agreement, or whether before or
after the loss.
(f) The Insurers shall promptly notify the Lender in the event of
cancellation or of any change whatsoever of a restrictive
nature affecting the insurance certified hereunder or in the
event that any premium or installment of premium shall not be
paid when due. The Insurance shall continue unaltered for the
benefit of the Lender and its officers, agents, and employees
for at least thirty (30) days after written notice by
registered mail of such cancellation change or non-payment of
premium or installment thereof shall have been received by
Lender except in the case of war risk for which seven (7) days
notice will be given.
(g) Irrespective of any war, Hi-Jacking, Confiscation and other
related perils exclusion clause(s) (e.g. London endorsement
form AVN 48B or wording of similar intent) the Insurers agree
that coverage afforded shall apply for the benefit of the
Lender to the same extent as would have applied had such
exclusion clause(s) not been made a part of any such policy.
9.7 Compliance with Laws. Borrower shall exercise all
due diligence in order to comply with the requirements of all applicable laws,
rules, regulations and orders of any governmental authority, noncompliance with
which would have a Material Adverse Effect on Borrower.
9.8 Subsequent Leases. Borrower will obtain Lender's
prior written approval, not to be unreasonably withheld, with respect to the
lease of the Aircraft to any new lessee. Borrower will provide a copy of the
proposed lease agreement with such new lessee. Lender will have the right to
approve the form and substance thereof with respect to those terms and
provisions relevant to Lender's interest such as amount of rent payable,
insurance, registration, maintenance and return condition. With respect to
other terms and provisions of the lease, Borrower will
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use its best efforts to negotiate with the new lessee such terms and conditions
as Lender reasonably may request. In order to secure, among other things, its
obligations hereunder, Borrower will assign all of its rights under such lease
to Lender pursuant to a written assignment agreement acceptable to Lender, and
obtain such Lessee's acknowledgment that Lease payments are to be paid directly
to CNB.
9.9 Preservation of Existence. Borrower will maintain
its existence and all of its material rights, privileges, and franchises in
every jurisdiction in which the character of the property owned or the nature
of the business transacted by its or its obligations and duties arising under
or pursuant to any of the Transaction Documents requires such qualification.
9.10 Further Assurances. At any time or from time to time
upon the reasonable request of Lender, Borrower shall and shall cause the
appropriate person to execute, acknowledge, deliver, and cause to be recorded
or registered (if so requested) all such additional instruments, and documents
and further assurances of title and shall do or cause to be done all such
further acts and things as may reasonably be necessary to effectuate fully the
intent and purposes of this Agreement, the Aircraft Secured Promissory Note,
the Related Documents, and any other agreement entered into in connection with
Lender's extension of the Loan to Borrower and to provide for payment of the
Loan made hereunder with interest thereon in accordance with the terms of this
Agreement and the Aircraft Secured Promissory Note.
10. NEGATIVE COVENANTS
Borrower covenants and agrees that from the date
hereof, and so long as the Loan hereunder shall be outstanding and until the
full and final payment of the Loan and the performance of all obligations of
Borrower hereunder, without the prior written consent of Lender first having
been obtained, to perform each and all of the covenants applicable to it:
10.1 Debt. Borrower shall not create, incur, assume,
permit, guarantee, or otherwise become, or remain, directly or indirectly,
liable with respect to any Debt, except:
(a) Borrower may become and remain liable with
respect to the Debt evidenced by the Aircraft Secured Promissory Note
and this Agreement;
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(b) Borrower may become and remain liable with
respect to the Debt evidenced by the Junior Loan Agreement;
(c) Borrower may remain liable with respect to
Debt disclosed to Lender in writing prior to the date of execution of
this Agreement, and any refundings, refinancings, or extensions
thereof;
(d) Borrower may become and remain liable with
respect to Debt secured by Permitted Liens;
(e) Borrower may become and remain liable with
respect to Debt which is used at the time of its incurrence to repay
in full the outstanding principal balance on all of the Loan or the
Junior Loan and any and all accrued and unpaid interest thereon;
(f) Borrower may become and remain liable with
respect to Debt incurred in connection with any liability under the
lease for the Aircraft which liability was the responsibility of the
"lessor" of the Aircraft pursuant to an agreement between Lender and
such lessee prior to the date of the Borrowing of the Loan for the
Aircraft;
(g) Borrower may become liable with respect to
Debt incurred in the ordinary and usual course of business in an
amount outstanding not to exceed, in the aggregate, Two Hundred
Thousand U.S. Dollars (US$ 200,000).
10.2 Restriction on Fundamental Changes. Borrower shall
not change its name, materially change the nature of its business, enter into
any merger, consolidation, reorganization or recapitalization or reclassify its
interests or liquidate, wind up or dissolve itself (or suffer any liquidation
or dissolution), or convey, sell, assign, lease, transfer, or otherwise dispose
of, in one transaction or a series of transactions, all or substantially all of
its businesses or Assets, whether now owned or hereafter acquired, or acquire
by purchase or otherwise all or substantially all the businesses or Assets of,
or stock or other evidence of beneficial ownership of, any Person, except:
(a) Borrower may sell, assign, transfer, convey,
or otherwise dispose of businesses or Assets in accordance with the
provisions of Section 10.3 hereof; and
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(b) Upon thirty (30) calendar days prior written
notice to Lender, Borrower may change its name.
10.3 Sale of Assets. Borrower shall not sell, assign,
transfer, convey, or otherwise dispose of its Assets, whether now owned or
hereafter acquired, except for the sale of the Aircraft by Borrower to any
Person; provided, however, that the proceeds from such sale are at least equal
to the outstanding principal balance of the Loan, the Junior Loan and any and
all accrued and unpaid interest on the Loan and the Junior Loan. The proceeds
of any sale of the Aircraft will be applied to the Loan and the Junior Loan and
otherwise as set forth in Article 5 hereof.
10.4 Liens. Borrower will not create, incur, assume or
suffer to exist any Lien (including any encumbrance or security interest) of
any kind upon any of its Assets, whether now owned or hereafter acquired,
except for Permitted Liens.
10.5 Investments. Borrower shall not make or own any
Investment, directly or indirectly, in any Person, except (a) cash equivalents,
(b) Borrower may maintain any Investment existing on the date hereof or in any
Person previously disclosed to Lender in writing, and (c) Borrower may maintain
any Investment which Lender has approved of in writing prior to Borrower making
or committing to make such Investment.
10.6 Restrictions on Distributions and Dividends.
Borrower shall not directly or indirectly, make or declare, any dividend (in
cash, return of capital, or any other form of Assets) on, or make any other
payment or distribution on account of, or set aside Assets for a sinking or
other similar fund for the purchase, redemption, retirement of, or redeem,
purchase, retire, or otherwise acquire any shares or interests of any of
Borrower's partnership interests, whether now or hereafter outstanding directly
or indirectly, whether in cash or property or in obligations, except:
(a) Borrower may pay dividends or make payment
distributions, so long as no Event of Default or Unmatured Event of Default has
occurred and is continuing; and
(b) Borrower may pay dividends or make payment
distributions with the amounts received by Borrower pursuant to the terms and
conditions of Section 5.1, so long as no Event of Default or Unmatured Event of
Default has occurred and is continuing.
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10.7 Preservation of Lender's Security Interest and Title
to the Aircraft. Borrower shall not, without the prior written consent of
Lender, knowingly do or take or omit to take any acts or things which might
prejudice the rights and remedies of Lender's valid security interest or title
in the Aircraft, or in the Lease, irrespective of whether such is in effect
from time to time.
10.8 Capital Expenditures. Other than the acquisition of
the Aircraft or the acquisition of any parts, components, accessories, or
equipment necessary for the operation or lease of the Aircraft, Borrower shall
not make any capital expenditure during any fiscal year during the term of this
Agreement, if, any after giving effect thereto, the aggregate amount of all
capital expenditures incurred by Borrower during such fiscal year would exceed
Two Hundred Thousand U.S. Dollars (US$ 200,000); provided, however, that (a)
the acquisition of the Aircraft and the acquisition of any Parts, necessary for
the operation or lease of the Aircraft is not considered a capital expenditure
for purposes of this Section 10.8, and (b) the acquisition of any Parts in
order to comply with an airworthiness directive of the FAA or the aviation
authority where the Aircraft is registered is not considered a capital
expenditure for purposes of this Section 10.8.
10.9 Conduct of Business. Except as may be permitted by
the other provisions of this Section 10, Borrower shall not engage in any
business other than the businesses which Borrower is engaged in as of the date
hereof, or any business activities related thereto (such business activities
include the leasing of the Aircraft to various Persons).
11. EVENTS OF DEFAULT
11.1 Events of Default. The occurrence of any one or more
of the following described events (each, an "Event of Default") shall
constitute a default hereunder:
(a) Failure to Make Payments When due. Borrower
shall fail to pay when due, any amount owing hereunder or under the
Aircraft Secured Promissory Note with respect to the principal and
interest on the Loan when such amount is due, whether at stated
maturity, as a result of a mandatory repayment requirement, by
acceleration, by notice of prepayment, or otherwise and such failure
is not cured within three (3) Business Days after written notice from
Lender of the occurrence thereof; or
(b) Default in Other Agreements. (i) Borrower
shall default (as principal or guarantor or other surety) in the
payment when due (subject
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to any applicable notice or grace period), whether at stated maturity
or otherwise, of any monetary obligation with respect to (howsoever
designated) any Debt, (including the Junior Loan) whether such Debt
now exists or shall hereafter be created; or (ii) An event of default,
as defined in any mortgage, indenture, interest rate swap agreement,
or instrument under which there may be issued, or by which there may
be secured or evidenced, any Debt of, or Debt guaranteed by, Borrower
whether such Debt now exists or shall hereafter be created, shall
occur and Borrower shall permit such Debt to become due and payable
prior to its stated maturity or due date;
(c) Breach of Certain Covenants. (i) Borrower
shall fail to perform or comply fully with any covenant, term, or
condition contained in Article 10 hereof; or (ii) Borrower shall
default in the performance of or compliance with any term contained in
this Agreement other than those referred to in Sections 11.1(a),
11.1(c)(i), and 11.1 (d) and such default shall not have been remedied
or waived within ten (10) calendar days after receipt of notice from
Lender of such default (if Borrower is using diligent and best efforts
to cure such default, then Borrower will have the reasonable number of
days necessary to cure such default (not to exceed thirty (30) days));
(d) Breach of Representation or Warranty. Any
financial statement, representation, warranty, or certification made
or furnished by Borrower under this Agreement shall, at any time,
prove to have been materially false, incorrect, or incomplete when
made, effective, or reaffirmed, as the case may be; or
(e) Bankruptcy; Assignment for the benefit of
Creditors. Borrower makes an assignment for the benefit of
creditors, or admits in writing its inability to pay its debts as they
become due, or files a voluntary petition in bankruptcy, or is
adjudicated a bankrupt or insolvent, or files any petition or answer
seeking for itself any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any
present or future statute, law or regulation, or files any answer
admitting or not contesting the material allegations of a petition
filed against Borrower in any such proceeding, or seeks or consents to
or acquiesces in the appointment of any trustee, receiver or
liquidator of Borrower or of all or any substantial part of the Assets
of Borrower or if Borrower or its limited partners, as applicable,
takes any action looking to the dissolution or liquidation of
Borrower; or
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(f) Appointment of Receiver. Within sixty (60)
days after the commencement of an action against Borrower seeking any
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future statute, law
or regulation, such action is not dismissed or all orders or
proceedings thereunder affecting the operations or the business of
Borrower stayed, or if stayed such stay order is thereafter set aside,
or if, within sixty (60) days after the appointment without the
consent of Borrower as applicable, the receiver, or the liquidator of
Borrower or all or any substantial part of the Assets of Borrower or,
such appointment is not vacated; or
(g) Judgments and Attachments.
(i) A final judgment for money, the
uninsured portion of which is in excess of Five Hundred
Thousand U.S. Dollars (US $500,000) is rendered against
Borrower and within thirty (30) days after the entry thereof,
such judgment is not discharged or execution thereof stayed
pending appeal, or within thirty (30) days after the
expiration of any such stay, such judgment is not discharged;
or
(ii) a judgment creditor shall obtain
possession of any material portion of the Assets of Borrower
by any means, including without limitation, levy, distraint,
replevin, or self-help; or
(h) Default Under Related Documents, etc. Borrower shall
fail to observe or perform any term, covenant, condition, agreement, or
obligation to be observed or performed by it under the Related Documents, and:
(i) such failure arises out of the granting by Borrower of a Lien upon any of
the Assets of Borrower in favor of any Person, except for Permitted Liens; or
(ii) such failure arises out of any other act or failure to act of Borrower
which act adversely affects the Liens granted in favor of Lender by Borrower;
or (iii) such failure arises other than under the circumstances set forth in
clauses (i) and (ii) above and continues for Fifteen (15) calendar days after
notice of such failure from Lender (if Borrower is using diligent and best
efforts to cure such default, then Borrower will have the reasonable number of
days necessary to cure such default (not to exceed thirty (30) days)); or (iv)
such failure arises other than under the circumstances set forth in clauses (i)
and (ii) above and continues for thirty (30) calendar days after Lender is
notified of such failure by Borrower.
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(i) Insurance. Borrower fails or has failed to
cause Lessee or any subsequent lessee to obtain or maintain the insurance
required by this Agreement.
11.2 Remedies. Upon the occurrence of an Event of
Default:
(a) If such Event of Default arises under Sections
11.1(e) or 11.1(f), then the unpaid principal amount of and any
accrued interest on the Loan and any other amounts owing hereunder,
under the Aircraft Secured Promissory Note or under the other
Transaction Documents shall automatically become immediately due and
payable, without presentment, demand, protest, notice, or other
requirements of any kind, all of which are hereby expressly waived by
Borrower; and
(b) In the case of any other Event of Default,
Lender, by written notice to Borrower, shall declare all of the Loan
to be, and the same shall forthwith become, due and payable, together
with any and all accrued interest thereon, and any other amounts owing
hereunder, under the Aircraft Secured Promissory Note or under the
other Transaction Documents.
Upon acceleration, Lender, without notice to or demand upon Borrower, which are
expressly waived by Borrower, to the fullest extent permitted by law, may
proceed to protect, exercise, and enforce its rights and remedies hereunder and
under the Aircraft Secured Promissory Note, the Mortgage and the Related
Documents, and any other rights and remedies as are provided by law or equity.
Lender may determine, in its sole discretion, the order and manner in which
Lender's rights and remedies are to be exercised, and all payments received by
Lender, or any one or more of them, shall be applied as follows (regardless of
how Lender may treat the payments for the purpose of its own accounting):
first, to all out-of-pocket expenses (including reasonable attorneys' fees)
incurred by Lender in enforcing any Debt of Borrower hereunder, or in
collecting any payments due hereunder or under the Aircraft Secured Promissory
Note; second, to accrued and unpaid interest on the Loan; third, to the
outstanding principal balance of the Loan, fourth, to any other Debt of
Borrower owing to Lender; and fifth, any remainder to Borrower.
12. EXPENSES AND INDEMNITIES
12.1 Expenses. Irrespective of whether the
transactions contemplated hereby shall be consummated, Borrower hereby agrees
to pay on demand: (a) filing, recording, publication, search and title fees
paid or incurred by or on behalf of Lender in connection with the transactions
contemplated by, and the
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administration of this Agreement, the Aircraft Secured Promissory Note, and the
Related Documents; (b) the reasonable out-of-pocket costs and expenses
(including reasonable attorneys' fees and expenses) incurred by Lender to
correct any default or to enforce any provision of this Agreement, the Aircraft
Secured Promissory Note, any of the Related Documents, or any other document or
instrument contemplated hereby or thereby against Borrower; and (c) the
reasonable out-of-pocket costs and expenses (including reasonable attorneys'
fees and expenses) incurred by Lender in connection with any bankruptcy or
other insolvency proceeding, reorganization, workout, composition, or other
credit arrangement of Borrower.
12.2 Indemnity. In addition to the payment of
expenses pursuant to Section 12.1 hereof, and irrespective of whether the
transactions contemplated hereby shall be consummated, Borrower hereby agrees
to indemnify, exonerate, pay, and hold harmless Lender, and the officers,
directors, employees, and agents of and counsel to Lender (collectively, the
"Indemnitees" and individually, an "Indemnitee") from and against any and all
liabilities, obligations, losses, damages, penalties, actions, causes of
action, judgments, suits, claims, costs, expenses, of any kind or nature
whatsoever, including the reasonable fees and expenses of counsel to
Indemnitees, in connection with any investigative, administrative, or judicial
proceeding, irrespective of whether such Indemnitee shall be designated a party
thereto, which may be imposed on, incurred by, or asserted against such
Indemnitee, in any manner relating to or arising out of this Agreement, any
Loan hereunder, the use or intended use of the proceeds of the Loan, or the
consummation of the transactions contemplated by this Agreement (the
"Indemnified Liabilities"); provided, however, that Borrower's obligations to
indemnify shall not extend to any losses, damages, liabilities, actions, or
claims against any Indemnitee arising as a result of the gross negligence or
willful misconduct of such Indemnitee. Each Indemnitee shall promptly notify
Borrower of each event of which it has knowledge which may give rise to a claim
under the indemnification provisions of this Section 12.2. If any
investigative, judicial, or administrative proceeding arising from any of the
foregoing is brought against any Indemnitee, Borrower, to the extent directed
by such Indemnitee, will resist and defend such action, suit, or proceeding or
cause the same to be resisted and defended by counsel designated by Borrower
(which counsel shall be reasonably satisfactory to such Indemnitee); provided,
however, that Borrower's obligation to so resist or defend any such action,
suit, or proceeding shall exist if and only if Borrower is directed to do so by
the Indemnitee. Such Indemnitee will use its best efforts to cooperate in the
defense of any such action, suit, or proceeding. In the event that the
Indemnitee does not direct Borrower to resist or defend any action, suit,
proceeding or cause and Borrower desires to resist or defend such action, suit,
proceeding or cause, then
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Borrower and such Indemnitee will discuss and establish the terms and
conditions on which Borrower may defend such action, suit, proceeding or cause.
To the extent that the undertaking to indemnify, exonerate, pay, and hold
harmless set forth in this Section 12.2 may be unenforceable because it is
violative of any law or public policy as determined by a final judgment of a
court of competent jurisdiction, Borrower shall make the maximum contribution
to the payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law. The obligations of Borrower under this
Section 12.2 shall survive the termination of this Agreement and the discharge
of Borrower's other obligations hereunder.
12.3 Currency Indemnity. If under any applicable law,
whether as a result of judgment against Borrower or the liquidation of Borrower
or for any other reason, any payment hereunder is made or recovered in a
currency other than United States Dollars then, to the extent that the payment
(when converted into United States Dollars at the "rate of exchange" on the
date of payment or, in the case of a liquidation, the latest date for the
determination of liabilities permitted by the applicable law) falls short of
the amount unpaid under this Agreement, Borrower will as a separate and
independent obligation, fully indemnify Lender against the amount of the
shortfall. If the payment exceeds the amount unpaid under this Agreement,
Lender will remit such excess to Borrower. For the purposes of this paragraph
"rate of exchange" means the rate at which Lender is able on the relevant date
to purchase United States Dollars in New York or London (at Lender's option)
with such other currency.
13. MISCELLANEOUS
13.1 Setoffs. Nothing in this Agreement shall be deemed
to constitute a waiver or prohibition of the Lender's right of setoff and
Borrower hereby expressly acknowledges that the Lender has such rights.
13.2 Entire Agreement. This Agreement and the documents
and agreements referred to and incorporated herein embody the entire agreement
and understanding between the parties hereto and supersede all prior agreements
and understandings relating to the subject matter hereof and the transactions
contemplated hereby.
13.3 Successors and Assigns. This Agreement shall be
binding upon, and inure to the benefit of, the parties hereto and their
respective successors and assigns; provided, however, that Borrower and Lender
may not assign or transfer any interest or rights hereunder without the prior
written consent of the other party
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(which consent will not be unreasonably withheld) and any such prohibited
assignment shall be absolutely void.
13.4 No Waiver. No failure to exercise, and no delay in
exercising any right, power or remedy hereunder or under any document delivered
pursuant hereto shall impair any right, power or remedy which Lender may have,
nor shall any such delay be construed to be a waiver of any such rights, powers
or remedies, or an acquiescence in any breach or default under this Agreement
or any document delivered pursuant hereto nor shall any waiver of any breach or
default of Borrower hereunder be deemed a waiver of any subsequent default or
breach. The rights and remedies of Lender specified herein are cumulative and
not exclusive of any rights or remedies which Lender would otherwise have
either at law or in equity.
13.5 Survival. All representations, warranties and
agreements contained herein on the part of Borrower shall survive the making of
the Loan hereunder and all such representations, warranties and agreements
shall be effective so long as any portion of the principal of the Loan or any
interest thereon is unpaid.
13.6 Notices. Any notice, request or information required
or permissible under this Agreement will be in writing and in English. Notices
will be delivered in person or sent by fax, letter (mailed airmail, certified
and return receipt requested), or by expedited delivery addressed to the
parties as set forth below in this Section. In the case of a fax, notice will
be deemed received upon actual receipt (in the case of a fax notice, the date
of actual receipt will be deemed to be the date set forth on the confirmation
of receipt produced by the sender's fax machine immediately after the fax is
sent). In the case of a mailed letter, notice will be deemed received on the
tenth (10th) day after mailing. In the case of a notice sent by expedited
delivery, notice will be deemed received on the date of delivery set forth in
the records of the Person which accomplished the delivery. If any notice is
sent by more than one of the above listed methods, notice will be deemed
received on the earliest possible date in accordance with the above provisions.
Notices will be addressed as follows:
Lender:
CITY NATIONAL BANK
Westside Commercial Banking Center
400 No. Roxbury Drive, 3rd Floor
Xxxxxxx Xxxxx, XX 00000
Telecopier: 000-000-0000
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Telephone: 000-000-0000
ATTENTION: Xxxxxx Xxxx, V.P.
With a copy to:
CITY NATIONAL BANK
Legal Department
400 No. Roxbury Drive, 5th Floor
Xxxxxxx Xxxxx, XX 00000
Telecopier: 310-888-6232
Telephone: 000-000-0000
ATTENTION: Xxxxxx X. Xxxxxx, Associate General Counsel
Borrower:
IAI ALASKA I CORPORATION
0000 X. Xxxxxx Xxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxx 00000
Telecopier: 702/880-3440
Telephone: 702/000-0000
ATTENTION: President
With a copy to:
INTERNATIONAL AIRCRAFT INVESTORS
0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Telecopier: 310/316-8145
Telephone: 310/000-0000
ATTENTION: President
13.7 Termination. This Agreement shall terminate when all
obligations of Borrower incurred hereunder, under the Aircraft Secured
Promissory
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Note, any Transaction Document, or under any other agreement executed and
delivered in connection herewith have been discharged in full.
13.8 Waivers and Amendments. No amendment, modification,
restatement, supplement, termination, or waiver of or to, or consent to any
departure from, any provision of this Agreement, the Aircraft Secured
Promissory Note, or the Related Documents, shall be effective unless the same
shall be in writing and signed by Lender and Borrower.
13.9 Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties on separate
counterparts, each of which counterparts, when so executed and delivered, shall
be deemed to be an original and all of which counterparts, taken together,
shall constitute but one and the same Agreement. This Agreement shall become
effective upon the execution of a counterpart hereof by each of the parties
hereto.
13.10 Severability of Provisions. Any provision of this
Agreement, the Aircraft Secured Promissory Note, or the Related Documents which
is illegal, invalid, prohibited, or unenforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of such illegality,
invalidity, prohibition, or unenforceability without invalidating or impairing
the remaining provisions hereof or affecting the validity or enforceability of
such provision in any other jurisdiction.
13.11 GOVERNING LAW. EXCEPT AS SPECIFICALLY SET FORTH IN
ANY OTHER TRANSACTION DOCUMENT: (A) THIS AGREEMENT, THE AIRCRAFT SECURED
PROMISSORY NOTE, AND THE OTHER TRANSACTION DOCUMENTS SHALL BE DEEMED TO HAVE
BEEN MADE IN THE STATE OF CALIFORNIA; AND (B) THE VALIDITY OF THIS AGREEMENT,
THE AIRCRAFT SECURED PROMISSORY NOTE, AND THE OTHER TRANSACTION DOCUMENTS, AND
THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE
RIGHTS OF THE PARTIES THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.
13.12 JURISDICTION AND VENUE. TO THE EXTENT PERMITTED BY
LAW, THE PARTIES HERETO AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT, THE AIRCRAFT SECURED PROMISSORY NOTE, OR THE
OTHER TRANSACTION DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND
FEDERAL COURTS LOCATED IN THE
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XXXXXX XX XXX XXXXXXX, XXXXX XX XXXXXXXXXX OR, AT THE SOLE OPTION OF LENDER, IN
ANY OTHER COURT IN WHICH LENDER SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS
AND WHICH HAS SUBJECT MATTER OR JURISDICTION OVER THE MATTER IN CONTROVERSY.
LENDER AND BORROWER, TO THE EXTENT THEY MAY LEGALLY DO SO, HEREBY WAIVE ANY
RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT
TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS
SECTION 13.12 AND STIPULATE THAT THE STATE AND FEDERAL COURTS LOCATED IN THE
COUNTY OF LOS ANGELES, STATE OF CALIFORNIA SHALL HAVE IN PERSONAM JURISDICTION
AND VENUE OVER SUCH PARTY FOR THE PURPOSE OF LITIGATING ANY SUCH DISPUTE,
CONTROVERSY, OR PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE
AIRCRAFT SECURED PROMISSORY NOTE, OR THE OTHER TRANSACTION DOCUMENTS. TO THE
EXTENT PERMITTED BY LAW, SERVICE OF PROCESS SUFFICIENT FOR PERSONAL
JURISDICTION IN ANY ACTION AGAINST BORROWER OR LENDER MAY BE MADE BY REGISTERED
OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO ITS ADDRESS INDICATED IN
SECTION 13.6 ATTACHED HERETO. BORROWER AGREES THAT ANY FINAL JUDGMENT RENDERED
AGAINST IT IN ANY ACTION OR PROCEEDING SHALL BE CONCLUSIVE AS TO THE SUBJECT OF
SUCH FINAL JUDGMENT AND MAY BE ENFORCED IN OTHER JURISDICTIONS IN ANY MANNER
PROVIDED BY LAW.
13.13 WAIVER OF TRIAL BY JURY. BORROWER AND LENDER, TO THE
EXTENT THEY MAY LEGALLY DO SO, HEREBY EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY
JURY OF ANY CLAIM, DEMAND, ACTION, CAUSE OF ACTION, OR PROCEEDING ARISING UNDER
OR WITH RESPECT TO THIS AGREEMENT, THE AIRCRAFT SECURED PROMISSORY NOTE, OR THE
OTHER TRANSACTION DOCUMENTS, OR IN ANY WAY CONNECTED WITH, OR RELATED TO, OR
INCIDENTAL TO, THE DEALINGS OF THE PARTIES HERETO WITH RESPECT TO THIS
AGREEMENT, THE AIRCRAFT SECURED PROMISSORY NOTE, OR THE OTHER TRANSACTION
DOCUMENTS, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER
NOW EXISTING OR HEREAFTER ARISING, AND IRRESPECTIVE OF WHETHER SOUNDING IN
CONTRACT, TORT, OR OTHERWISE. TO THE EXTENT THEY MAY LEGALLY DO SO, BORROWER
AND LENDER HEREBY AGREE THAT ANY SUCH CLAIM, DEMAND, ACTION, CAUSE OF ACTION,
OR PROCEEDING SHALL BE
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DECIDED BY A COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY HERETO MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 13.13 WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE OTHER PARTY OR PARTIES HERETO TO WAIVER OF ITS
OR THEIR RIGHT TO TRIAL BY JURY.
13.14 Headings. Article and Section headings used in this
Agreement and the table of contents preceding this Agreement are for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose or affect the construction of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed the day and year first above written.
CITY NATIONAL BANK, a National IAI ALASKA I CORPORATION,
a Banking Association a Nevada Corporation
By: /s/ Xxxxxx Xxxx By: /s/ Xxxxxxx X. Xxxxxx
-------------------------- ---------------------------
Its: Vice-President Its: President
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