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EXHIBIT 10.40
REIMBURSEMENT AGREEMENT
BY AND AMONG
AIR SOUTH AIRLINES, INC.
AND
XXXXXXXXX & XXXXX CALIFORNIA
A WHOLLY OWNED SUBSIDIARY OF
XXXXXXXXX & XXXXX GROUP
DATED AS OF JANUARY 31, 1997
RELATING TO THE ISSUANCE OF A
$2,000,000
LETTER OF CREDIT
TO
To NATIONAL BANK OF SOUTH CAROLINA
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TABLE OF CONTENTS Page
ARTICLE I
DEFINITIONS ............................................................ 2.
Section 1.1 Definitions ....................................... 2.
Section 1.2 Construction ...................................... 4.
ARTICLE II
LETTER OF CREDIT ...................................................... 4.
Section 2.1 Amount and Terms of Letter of Credit............... 4.
Section 2.2 Drawings and Reinstatement ........................ 4.
Section 2.3 Fees and Other Payment ............................ 5.
Section 2.4 Reimbursement ..................................... 6.
Section 2.5 Place of Payment .................................. 6.
Section 2.6 Termination of Agreement .......................... 6.
Section 2.7 Reimbursement Loans ............................... 6.
ARTICLE III
CONDITIONS PRECEDENT To ISSUANCE
OF LETTER OF CREDIT ...................................................... 7.
Section 3.1 Documents TO Be Received .......................... 7.
Section 3.2 Other Conditions Precedent ........................ 8.
ARTICLE IV
OBLIGATIONS OF THE CORPORATION ......................................... 9.
Section 4.1 Obligations of the Corporation ..................... 9.
ARTICLE V
REPRESENTATIONS AND WARRANTIES .......................................... 10.
Section 5.1 Representations and Warranties of the Corporation.... 10.
ARTICLE VI
COVENANTS OF THE CORPORATION ............................................ 11.
Section 6.1 Affirmative Covenants............................... 11.
Section 6.2 Negative Covenants ................................. 13.
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TABLE OF CONTENTS
(CONTINUED)
Page
ARTICLE VII
EVENTS OF DEFAULT ......................................................... 13.
Section 7.1 Events of Default .................................. 13.
ARTICLE VIII
RIGHTS AND REMEDIES ..................................................... 14.
Section 8.1 Rights and Remedies ................................ 14.
ARTICLE IX
MISCELLANEOUS ............................................................ 14.
Section 9.1 Modification of Agreement .......................... 14.
Section 9.2 Waiver of Rights by Lender; Remedies................ 15.
Section 9.3 Notices............................................. 15.
Section 9.4 Indemnification..................................... 16.
Section 9.5 Liability of Lender................................. 16.
Section 9.6 Participations ..................................... 17.
Section 9.7 Satisfaction Requirement............................ 17.
Section 9.8 Governing Law ...................................... 17.
Section 9.9 Waiver of Jury Trial ............................... 17.
Section 9.10 Jurisdiction: Service of Process ................... 18.
Section 9.11 Survival of Agreement .............................. 18.
Section 9.12 Severability ....................................... 18.
Section 9.13 Headings ........................................... 18.
Section 9.14 Counterparts ....................................... 18.
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EXHIBITS
EXHIBIT A Form of Reimbursement Loan Note
EXHIBIT B Form of Letter of Credit
EXHIBIT C Form of Certificate Relating to Accuracy of Certain
Corporation Representations Contained in, and the
Authorization to Execute, Certain Documents
EXHIBIT D Form of Warrant
EXHIBIT E Loan Agreement between The National Bank of South Carolina
and Air South, Inc.
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REIMBURSEMENT AGREEMENT
(NBSC LETTER OF CREDIT)
This REIMBURSEMENT AGREEMENT dated as of January 31, 1997, is made by and
between AIR SOUTH AIRLINES, INC., a Delaware corporation having its principal
place of business at 0000 Xxxxxxx Xxxxxxxxx, Xxxx Xxxxxxxx, Xxxxx Xxxxxxxx,
00000 ("Corporation"), in favor of XXXXXXXXX & XXXXX CALIFORNIA, a wholly owned
subsidiary of Xxxxxxxxx & Xxxxx Group ("Lender").
RECITALS
A. Corporation and The National Bank of South Carolina ("Bank") entered
into that certain Loan Agreement dated April 16, 1996 (the "Loan Agreement")
whereby Bank has loaned to Corporation Two Million Dollars ($2,000,000) (the
"Loan").
B. Substantially concurrently with the execution of the Loan Agreement,
Lender and Bank entered into that certain Guaranty, dated April 26, 1996 (the
"Guaranty"). Such Guaranty was entered into as a condition to Bank entering into
the Loan Agreement and to induce Bank to make the Loan.
C. The Loan expired on December 1, 1996 and has been extended until
January 15, 1997. Pursuant to a letter dated December 13, 1996 Bank has offered
to extend the Loan for an additional eighteen (18) months, but only on the
condition that a letter of credit be issued by an acceptable source to serve as
collateral for the Loan.
D. Corporation has requested that Lender arrange for the issuance of such
Letter of Credit in favor of Bank in the aggregate amount of Two Million Dollars
($2,000,000).
E. Lender is willing to arrange for the issuance of said Letter of
Credit, but only upon the condition, among others, that the Guaranty be
terminated and Corporation shall have executed and delivered to Lender this
Reimbursement Agreement.
AGREEMENT
NOW, THEREFORE, in order to induce Lender to cause the issuance of the
Letter of Credit and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, and intending to be legally bound,
the parties hereto represent, warrant, covenant and agree as follows:
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ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. Unless otherwise defined herein the following
terms shall have the following meanings (such meanings being equally applicable
to both the singular and plural forms of the terms defined):
"ACT OF BANKRUPTCY" shall mean the Corporation shall commence a
voluntary case or other proceeding in seeking liquidation, reorganization,
arrangement, readjustment of its debts or for any other relief under the federal
bankruptcy laws, including the Federal Bankruptcy Code, as amended, or under any
other insolvency act or law, state or federal, now or hereafter existing, or
shall take any other action indicating its consent to, approval of, or
acquiescence in, any such petition or proceedings; the Corporation shall apply
for, or consent to or acquiesce in, the appointment of a receiver, liquidator,
custodian, sequestrator, or a trustee for all or a substantial part of its
property; the Corporation shall make an assignment for the benefit of its
creditors; the Corporation shall be unable, or shall admit in writing its
inability, to pay its debts when due; or a petition in bankruptcy shall be filed
against the Corporation, as a debtor, under any applicable bankruptcy,
insolvency or similar law as now or hereafter in effect which shall not be
discharged by a court of competent jurisdiction within sixty (60) days of the
date of such filing.
"AIR SOUTH, INC." means Air South Airlines, Inc.
"AGREEMENT" shall mean this Reimbursement Agreement together with all
duly authorized and executed amendments thereto.
"APPLICATION" shall mean that certain Application and Agreement for
Standby Letter of Credit dated January 28, 1997 by and between Issuing Bank and
Lender.
"BANK" shall mean National Bank of South Carolina, a national banking
association with its principal office located at 0000 Xxxx Xxxxxx, Xxxxxxxx,
Xxxxx Xxxxxxxx, or any surviving, resulting or transferee entity.
"BUSINESS DAY" shall mean any day other than (i) a Saturday or Sunday,
(ii) a day on which banking institutions in the States of California or South
Carolina are authorized or required by law or executive order not to be open for
the conduct of their commercial banking business, or (iii) a day on which the
federal reserve bank for the federal reserve district in which Bank is located
is closed.
"DATE OF DELIVERY" shall mean January 31, 1997 or any other date
agreed upon by the Corporation and Lender as the date upon which the initial
Letter of Credit shall be issued.
"DEFAULT RATE" shall mean a rate per annum equal to five (5)
percentage points above the interest rate applicable immediately prior to the
occurrence of the Event of Default.
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"DRAWING" shall mean a drawing under the Letter of Credit in
accordance with its terms.
"EVENT OF DEFAULT" shall have the meaning set forth in SECTION 7.1
hereof.
"GUARANTY" means that certain Guaranty by and between Lender and Bank,
dated April 26, 1996, as amended, supplemented or reaffirmed to the date of this
Agreement.
"INTEREST RATE" shall mean ten percent (10%) per annum.
"ISSUING BANK" shall mean Bank of America National Trust and Savings
Association acting through its Chicago branch, or any surviving, resulting or
transferee entity.
"LETTER OF CREDIT" shall mean the Letter of Credit arranged by Lender
and issued by Issuing Bank pursuant to the Application on the Date of Delivery,
as the same may from time to time be amended, modified, supplemented or
restated, and shall include any substitute Letter of Credit issued pursuant to
Lender's obligations hereunder.
"LOAN" shall mean the loan made by Bank to Borrower represented by
that certain promissory note dated April 26, 1996 in the principal amount of
$2,000,000 issued by Corporation to Bank pursuant to the Loan Agreement.
"LOAN AGREEMENT" shall mean that certain Loan Agreement dated April
26, 1996 by and between Corporation and Bank attached as EXHIBIT E hereto, as
the same may from time to time be amended, modified, supplemented or restated.
"MAXIMUM CREDIT" shall mean, as of any date of calculation, the
maximum amount available to be drawn under the Letter of Credit. Initially, the
Maximum Credit shall be $2,000,000.
"PERSON" shall mean any individual, sole proprietorship, partnership,
limited liability company, joint venture, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock corporation, estate, entity or governmental agency.
"REIMBURSEMENT LOAN NOTE" shall mean the note evidencing the
Reimbursement Loans, substantially in the form attached hereto as EXHIBIT A.
"Reimbursement Loans" shall mean a reimbursement loan described in SECTION 2.8
hereof.
"TERMINATION DATE" shall mean the date determined in the manner
provided in SECTION 2.6 hereof.
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"TRANSACTION DOCUMENTS" means, collectively, this Agreement, the
Reimbursement Loan Note, and any other agreement entered into between
Corporation and Lender, and any certificate or instrument executed by Lender, in
connection with said agreements and note, as the same may from time to time be
amended, modified, supplemented or restated.
SECTION 1.2 CONSTRUCTION. In this Agreement, unless the context otherwise
requires:
(A) Articles and Sections referred to by number shall mean the
corresponding Articles and Sections of this Agreement.
(B) The terms "hereby," "hereof," hereto," "herein," "hereunder," and
any similar terms, as used in this Agreement refer to this Agreement, and the
term "hereafter. shall mean after, and the term "heretofore" shall mean before
the date of execution of this Agreement.
(C) Words of the masculine gender shall be deemed and construed to
include correlative words of the feminine and neuter genders. Words importing
the singular number shall include the plural number and vice versa, and words
importing persons shall include corporations and associations, including public
bodies, as well as natural persons.
ARTICLE II
LETTER OF CREDIT
SECTION 2.1 AMOUNT AND TERMS OF LETTER OF CREDIT. At the request of
Corporation, Lender agrees, on the terms and subject to the conditions set forth
in this Agreement, including without limitation the conditions set forth in
ARTICLE III hereof, to on or before the Date of Delivery cause the issuance of
the Letter of Credit by Issuing Bank, in favor of Bank to secure, and to provide
a source of payment of, the Loan. The Letter of Credit will be issued in an
initial amount equal to the Maximum Credit. The Letter of Credit shall be issued
in favor of Bank substantially in the form of EXHIBIT B hereto.
SECTION 2.2 DRAWINGS AND REINSTATEMENT.
(A) Drawings under the Letter of Credit are intended to be made by
Bank and to be honored by Issuing Bank, all pursuant to the provisions, on the
terms and subject to the conditions set forth in the Letter of Credit. The
honoring of any Drawing shall automatically reduce by like amount the Maximum
Credit. No Drawing under the Letter of Credit shall behonored in an amount
exceeding the Maximum Credit.
(B) The Maximum Credit, or any lesser amount, may be reinstated by
Lender at its sole option, provided Lender has been reimbursed by Corporation
any such amounts to be reinstated.
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SECTION 2.3 FEES AND OTHER PAYMENT.
(A) The Corporation hereby agrees to pay to or reimburse Lender:
(I) On or before the Date of Delivery, the origination fee paid
to Issuing Bank in an amount equal to $200.
(II) On or before the Date of Delivery, an amount equal to all
costs and expenses (including attorneys' fees and expenses) incurred by Lender
in connection with the preparation and negotiation of this Agreement, the
Reimbursement Loan Note, the other Transaction Documents and the closing of the
transactions contemplated hereby.
(III) On demand from time to time from Lender, any fees or other
amounts (not otherwise reimbursed by Corporation to Lender pursuant to SECTION
2.4 hereof) required to be paid by Lender to the Issuing Bank in connection with
the Letter of Credit, including, without limitation, a one percent (1%) per
annum fee, payable quarterly by Lender to Issuing Bank;
(IV) On demand from time to time by Lender, an amount equal to
all costs and expenses (including attorneys' fees and expenses) (not otherwise
reimbursed by Corporation to Lender pursuant to SECTION 2.4 hereof) incurred by
Lender relative to a Drawing under the Letter of Credit.
(V) On demand from time to time by Lender, an amount equal to
all costs and expenses (including attorneys' fees and expenses) incurred by
Lender relative to the Letter of Credit (not otherwise reimbursed by Corporation
to Lender pursuant to this SECTION 2.3 or SECTION 2.4) or each Reimbursement
Loan or the enforcement or preservation of any rights of Lender under this
Agreement, the other Transaction Documents, each Reimbursement Loan or the
Reimbursement Loan Note, or in connection with the exercise or waiver of any of
Lender's discretionary rights under this Agreement, the Reimbursement Loan Note
or under the other Transaction Documents;
(VI) On demand from time to time by Lender, interest, at the
Default Rate, on any and all amounts unpaid by the Corporation when due under
this Agreement or the Reimbursement Loan Note, but in no event shall such rates
exceed the maximum rate of nonusurious interest allowed from time to time by
law, as is now or, to the extent allowable by law, as hereinafter may be in
effect, to be paid by the Corporation;
Each such payment or reimbursement shall be deemed to be earned in
full on the date on which such amount is due and payable by the Corporation.
(B) The Corporation agrees to pay, on demand from time to time by the
Lender, all reasonable costs and expenses incurred by the Lender, in connection
with (i) any transfer or amendment of the Letter of Credit or amendment of this
Agreement, (ii) any review by the Lender of the documents necessary for Lender
to honor a Drawing under the Letter of
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Credit, or relative to the Lender's curing of any event of default by Borrower
under any of the Transaction Documents, (iii) the exercise, enforcement or
preservation of any rights of Lender under this Agreement, (iv) any action or
proceeding relating to a court order, injunction, or other process or decree
restraining or seeking to restrain Lender from paying any amount under the
Letter of Credit, and (v) the waiver or amendment of any of the Lender's rights
under any of the Transaction Documents; provided, however, that no payment shall
be required under this SECTION 2.3(b) in respect of any cost or expense Lender
has incurred because of its gross negligence or willful misconduct if so
determined by a court of competent jurisdiction.
SECTION 2.4 REIMBURSEMENT. The Corporation agrees to pay to or reimburse
Lender in full for any and all Drawings made under the Letter of Credit on the
date any Drawing is made. Any amount drawn under the Letter of Credit shall be,
to the extent permitted by and in accordance with SECTION 2.7 hereof,
automatically converted into a Reimbursement Loan. A Reimbursement Loan, when
made, will satisfy the reimbursement obligation of the Corporation to Lender in
the principal amount of such Reimbursement Loan.
SECTION 2.5 PLACE OF PAYMENT. All payments to be made by the Corporation to
the Lender hereunder shall be made in lawful currency of the United States of
America and in immediately available funds by wire to the following account:
XXXXXXXXX AND XXXXX CALIFORNIA
c/o Citibank, F.S.B.
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
ABA: 000000000
Account #: 601022205
Account Name: H&Q Management Corporation
or at such other address as Lender may specify from time to time by notice to
the Corporation.
SECTION 2.6 TERMINATION OF AGREEMENT. This Agreement (except for the
obligations of the Corporation set forth in SECTIONS 2.3(B) and 9.4) shall
terminate at such time as the Letter of Credit shall have expired and when all
amounts due and payable to Lender hereunder shall be paid in full (the
"Termination Date").
SECTION 2.7 REIMBURSEMENT LOANS.
(A) Lender agrees, upon the terms, subject to the conditions and
relying upon the representations and warranties set forth in this Agreement and
the other Transaction Documents, that, unless an Event of Default shall have
occurred and be continuing Drawing under the Letter of Credit that is not repaid
in full by the Corporation on the date thereof shall automatically be converted
into a Reimbursement Loan. On and as of the date of the making of each
Reimbursement Loan: (i) the Corporation shall be deemed to have (A) remade,
ratified and confirmed all representations and warranties of the Corporation
contained in SECTION 5.1 of this Agreement, and (B) certified compliance with
all covenants contained in ARTICLE VI hereof;
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(B) The principal amount of the Reimbursement Loans shall not
exceed the Maximum Credit available under the Letter of Credit on such date. All
the Reimbursement Loans shall be evidenced by a single Reimbursement Loan Note
substantially in the form of EXHIBIT A hereto with appropriate insertions, duly
executed and delivered by the Corporation to Lender, dated by Lender on the
attached schedule the date of each Drawing under the Letter of Credit that gives
rise to a Reimbursement Loan, and payable to Lender or its assigns in an amount
equal to the amount drawn on the Letter of Credit that is not reimbursed as
provided in the first sentence of SECTION 2.4 of this Agreement. The principal
amount of each Reimbursement Loan, together with any unpaid and accrued interest
thereon, shall be due and payable on demand.
(C) The Reimbursement Loans shall bear interest at the Interest
Rate. Such interest shall be calculated on the basis of a 365 or 366 day year
and actual number of days elapsed and shall be payable monthly while any
Reimbursement Loan is outstanding. Lender shall, and is hereby authorized by the
Corporation to, date the schedule attached to the Reimbursement Loan- Note the
date of any Drawing under the Letter of Credit that is not reimbursed as
provided in the first sentence of SECTION 2.4 of this Agreement and insert the
amount (or the portion thereof not so reimbursed, as the case may be), and
endorse on such schedule an appropriate notation evidencing the date and amount
of each repayment and any other information provided for on such schedule;
provided, however, that the failure of Lender to insert any such date or amount
or set forth such repayments and other information on such schedule shall not in
any manner affect the obligation of the Corporation to repay the related
Reimbursement Loans in accordance with the terms of this Agreement.
(D) Lender agrees that the Corporation may prepay a Reimbursement
Loan in whole or in part without premium or penalty at any time.
ARTICLE III
CONDITIONS PRECEDENT TO ISSUANCE
OF LETTER OF CREDIT
SECTION 3.1 DOCUMENTS TO BE RECEIVED. Lender's obligations to cause the
issuance of the Letter of Credit as set forth in SECTION 2.1 hereof are subject
to the conditions precedent that, on or prior to the Date of Delivery, Lender
shall receive the following documents, all in form and substance satisfactory to
Lender:
(A) executed counterparts of the this Agreement and the Reimbursement
Loan Note, which shall be duly executed and dated by the Corporation (except for
the schedule attached thereto, which shall be undated and blank as to amount);
(B) a certificate of the appropriate officer(s) of the Corporation
certifying (i) that the statements contained in SECTIONS 3.2(A) and 5.1 are true
and correct, (ii) the name and true signatures of the officers of the
Corporation authorized to sign this Agreement and the other
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documents to be delivered by the Corporation hereunder and (iii) as to such
other matters as Lender shall determine, in substantially the form attached
hereto as EXHIBIT C;
(C) the Warrant duly executed and delivered by Corporation in the
form attached hereto as EXHIBIT D;
(D) proof of the termination of the Guaranty duly executed and
delivered by Bank;
(E) such other documents, certificates, instruments, approvals or
filings as Lender may reasonably deem necessary or appropriate.
SECTION 3.2 OTHER CONDITIONS PRECEDENT. The Lender's obligation to cause
the issuance of the Letter of Credit as set forth in SECTION 2.1 hereof shall be
subject to the additional conditions precedent that:
(A) the following statements shall be true and correct on the Date
of Delivery and Lender shall have received a certificate signed by a duly
authorized officer of the Corporation, dated the Date of Delivery to the
following effect and to such other effects as the Lender may request,
substantially in the form attached hereto as EXHIBIT C:
(I) the representations and warranties of the Corporation set
forth in SECTION 5.1 hereof and in the other Transaction Documents are true and
correct as of the Date of Delivery as though made on and as of such date;
(II) no event has occurred and is continuing, or would result
directly or indirectly from the issuance of the Letter of Credit, which
constitutes an Event of Default hereunder or which would constitute such an
Event of Default, but for the requirement that notice be given or time elapse,
or both; and
(III) no "event of default" (however defined or designated) has
occurred under any of the Transaction Documents, and no event has occurred and
is continuing which would constitute such an event of default, but for the
requirement that notice be given or time elapse, or both.
(B) On or before the Date of Delivery, the Corporation shall have
duly adopted a resolution authorizing the execution, delivery and performance by
the Corporation of the Transaction Documents to which it is a party, and on and
after the Date of Delivery such resolution shall continue to be in full force
and effect.
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ARTICLE IV
OBLIGATIONS OF THE CORPORATION
SECTION 4.1 OBLIGATIONS OF THE CORPORATION.
(A) The obligations of the Corporation under this Agreement
shall be absolute, unconditional and irrevocable, and shall be performed
strictly in accordance with the terms of this Agreement, under all circumstances
whatsoever, including without limitation the following circumstances:
(I) any lack of validity or enforceability of any of the
Transaction Documents (other than this Agreement) or any other agreement or
instrument contemplated thereby or related thereto;
(II) any amendment or waiver of or any consent to departure
from all or any of the documents contemplated hereby;
(III) the existence of any claim, setoff, defense or other
rights which the Corporation may have at any time against any beneficiary or any
transferee of the Letter of Credit (or any persons or entities for whom such
beneficiary may be acting), the Lender or any other Person, whether in
connection with the Loan Agreement or any unrelated transaction;
(IV) any breach of contract or other dispute between the
Corporation and any beneficiary of the Letter of Credit (or any persons or
entities for whom any such beneficiary may be acting), Lender, Issuing Bank,
Bank or any other Person;
(V) any statement or any other document presented under the
Transaction Documents proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect whatsoever;
(VI) payment by the Issuing Bank under the Letter of Credit
against presentation of a sight draft or certificate which does not comply with
the terms of the Letter of Credit, provided that such payment shall not have
constituted an act of gross negligence or willful misconduct by Lender as
determined by a court of competent jurisdiction; or
(VII) any delay, extension of time, renewal, compromise or
other indulgence or modification granted or agreed to by Lender, with or without
notice to or approval by the Corporation, as the case may be, in respect of any
of the Corporation's indebtedness to Lender under this Agreement.
(B) Lender shall not be deemed to have waived or released any of
its rights or remedies (whether specified in or arising under this Agreement or
otherwise available to it by law or agreement) unless it signs a written waiver
or release. Delay or failure to act on the Lender's part shall not constitute a
waiver of or otherwise preclude enforcement of any of its
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rights and remedies. All of Lender's rights and remedies shall be cumulative and
may be exercised singularly or concurrently. Lender need not resort to any
particular right or remedy before exercising or enforcing any other, and
Lender's resort to any right or remedy shall not preclude the exercise or
enforcement of each other right and remedy.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.1 REPRESENTATIONS AND WARRANTIES OF THE CORPORATION. The
Corporation represents and warrants as follows:
(A) ORGANIZATION AND POWERS. The Corporation is a corporation,
duly organized and validly existing under the laws of the State of Delaware and
is authorized to transact business and exercise its power under the applicable
laws of any state in which the conduct of its business or its ownership of
property requires that it be so qualified.
(B) AUTHORIZATION AND ABSENCE OF CONFLICTS. The execution,
delivery and performance of the Transaction Documents (i) have been duly
authorized by all necessary action on the part of the Corporation, (ii) do not
and will not conflict with, or result in a violation of, any provision of law,
or any order, writ, rule or regulation of any court or governmental agency or
instrumentality binding upon or applicable to the Corporation and (iii) do not
and will not conflict with, result in a violation of, or constitute a default
under, any resolution, material agreement or instrument to which the Corporation
is a party or by which the Corporation or any of its property is bound.
(C) BINDING OBLIGATION. Each of the Transaction Documents will
be a valid and binding obligation of the Corporation enforceable in accordance
with its terms.
(D) GOVERNMENTAL CONSENT OR APPROVAL. No consent, approval,
permit, authorization or order of, or registration or filing with, any court or
governmental agency, authority or other instrumentality not already obtained,
given or made is required on the part of the Corporation for the execution,
delivery and performance by the Corporation of any of the Transaction Documents.
(E) ABSENCE OF LITIGATION. There is no action, suit, proceeding,
inquiry or investigation, at law or in equity, before or by any court,
arbitrator, governmental or other board, body or official, pending or, to the
best knowledge of the Corporation, threatened against or affecting the
Corporation, questioning the validity of any proceeding taken or to be taken by
the Corporation in connection with the execution, delivery and performance by
the Corporation of the Transaction Documents or seeking to prohibit, restrain or
enjoin the execution, delivery or performance by the Corporation of any of the
foregoing, nor, to the best knowledge of the Corporation, is there any basis
therefor, wherein an unfavorable decision, ruling or finding would (i) adversely
affect the validity or enforceability of, or the authority or ability of the
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Corporation to perform its obligations under the Transaction Documents or (ii)
have a material adverse effect on the ability of the Corporation to conduct its
business as currently conducted or as proposed or contemplated to be conducted.
(F) NO DEFAULTS BY THE CORPORATION. Other than as set forth on
the Schedule of Exceptions attached hereto (the "Schedule"), the Corporation is
not in default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any agreement or instrument to
which the Corporation is a party or by which the Corporation or any of its
property is bound, except for such defaults as would not have a material adverse
effect on the ability of the Corporation to conduct its business as currently
conducted or as proposed or contemplated to be conducted.
(G) INCORPORATION OF REPRESENTATIONS. The Corporation hereby
makes to the Lender the same representations and warranties as are made by the
Corporation and set forth in any other Transaction Documents, which
representations and warranties, as well as the defined terms contained therein
(or in such defined terms), are hereby incorporated by reference with the same
effect as if each and every such representation and warranty and defined term
were set forth herein in its entirety. No amendment to such representations and
warranties or defined terms made pursuant thereto shall be effective to amend
such representations and warranties and defined terms as incorporated by
reference herein without the consent of Lender.
(H) COMPLIANCE WITH LAWS. The Corporation is in material
compliance with all provisions of applicable law.
ARTICLE VI
COVENANTS OF THE CORPORATION
SECTION 6.1 AFFIRMATIVE COVENANTS. So long as the Termination Date has not
occurred or so long as any amount is due and owing to Lender hereunder, the
Corporation will, unless Lender otherwise shall consent in writing:
(A) DELIVERY OF INFORMATION AND REPORTS. Furnish to Lender the
following: (i) as soon as possible and in any event within two (2) Business Days
after the occurrence of (A) each Event of Default or any event or condition
that, with the passage of time or the giving of notice or both, would constitute
an Event of Default, under this Agreement, and (B) each "event of default"
(however defined or designated) or any event or condition that, with the passage
of time or the giving of notice or both, would constitute an "event of default"
under any Transaction Document, a statement of an officer of the Corporation
setting forth details thereof and the action which the Corporation proposes to
take with respect thereto; (ii) audited financial statements, if any, of the
Corporation within ten (10) days after the Corporation's receipt of the same
from the respective accountants; (iii) a copy of the annual budget, if any, for
the Corporation within ten (10) days after the adoption of such budget; and (iv)
as promptly as practicable, written notice to the Lender of all proceedings
before any court or governmental
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authority which, if adversely determined, would materially and adversely affect
the ability of the Corporation to pay when due the principal of or any interest
on the Reimbursement Loan Note.
(B) PAYMENT OF INDEBTEDNESS. Other than as set forth on the
Schedule, duly and punctually pay or cause to be paid all principal and interest
on the indebtedness of the Corporation legally due and owing to third parties,
comply with and perform all conditions, terms and obligations of the notes or
bonds evidencing such indebtedness and the security agreements, deeds of trust
and mortgages securing such indebtedness, and upon being notified of a default
or having made a determination not to pay an indebtedness when due, promptly
inform Lender of any such default, or anticipated default, under any such note,
bond, security agreement, deed of trust or mortgage, and forward to the Lender a
copy of any notice of default or notice of an event that might result in default
under any such note, bond, security agreement, deed of trust or mortgage;
(C) ACCESS TO RECORDS AND AUDIT. Upon reasonable notice to
Corporation (unless an Event of Default has occurred and is continuing, in which
case no notice is necessary) Corporation shall permit Lender to at all times
have full and free access during normal business hours to all the books and
records and correspondence of Corporation, and Lender or any agents or
representatives of Lender may examine the same, take extracts therefrom and make
photocopies thereof, and Corporation agrees to render to Lender, at
Corporation's cost and expense, such clerical and other assistance as may be
reasonably requested with regard thereto.
(D) RELATED COVENANTS. Fully and faithfully perform each of the
covenants and agreements required of it pursuant to the provisions of the
Transaction Documents;
(E) FURTHER ACTION. At any and all times, insofar as it may be
authorized to do so by law, pass, make, do, execute, acknowledge and deliver all
and every such further resolutions, acts, deeds, conveyances, assignments,
recordings, filings, transfers and assurances as may be necessary or reasonably
desirable for the better assuring, conveying, granting, assigning and confirming
the amounts due hereunder and under the Reimbursement Loan Note, or intended so
to be, or which the Corporation may hereafter become bound to pledge or assign
thereto;
(F) COMPLIANCE WITH LAWS. Comply in all material respects with
all applicable (A) laws (including, rules, regulations, writs, decrees and
orders of all Federal, state, local or foreign courts or governmental agencies,
authorities, instrumentalities or regulatory bodies and (B) rules, regulations
and requirements necessary to maintain its operating and business licenses,
authorizations and permits; and
(G) INCORPORATION OF COVENANTS. The Corporation hereby makes to
Lender the same covenants as are made by the Corporation and set forth in any
other Transaction Document, which covenants, as well as the defined terms
contained therein (or in such defined terms), are hereby incorporated by
reference with the same effect as if each and every such covenant and defined
term were set forth herein in its entirety. No amendment to such
12.
17
covenants or defined terms made pursuant thereto shall be effective to amend
such covenants and defined terms as incorporated by reference herein without the
consent of the Lender.
SECTION 6.2 NEGATIVE COVENANTS. Corporation shall not amend nor modify any
term, condition or provision of the Loan Agreement or any promissory note issued
pursuant thereto without the written consent of Lender.
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.1 EVENTS OF DEFAULT. The occurrence of any of the following
events shall be an "Event of Default" hereunder unless waived by Lender pursuant
to SECTION 9.1 hereof:
(A) the Corporation shall fail to pay when due any amount
specified under the terms of this Agreement, including, without limitation,
amounts due under the Reimbursement Loan Note;
(B) any representation or warranty made by the Corporation pursuant
to SECTION 5.1 hereof or any certification made by the Corporation hereunder
shall prove to have been incorrect in any material respect when made;
(C) the Corporation and/or Bank shall amend or modify any term,
condition or provision of the Loan Agreement or any promissory note issued
pursuant thereto without the written consent of Lender.
(D) the Corporation shall fail to perform or observe any other
term, covenant or agreement contained in this Agreement (other than those
specifically referenced in SECTION 7.1(a), (b) and (c) above) and such failure
shall remain unremedied for thirty (30) days after written notice thereof shall
have been given to the Corporation, by Lender;
(E) an "event of default" (however defined or designated) under any
Transaction Document shall have occurred and be continuing;
(F) an event of default under any indebtedness of the Corporation
from time to time outstanding or under any agreement to which Borrower is a
party with a third party or parties resulting in a right by such third party or
parties, whether or not exercised, to accelerate the maturity of any
indebtedness in an amount in excess of Five Hundred Thousand Dollars ($500,000)
or that could materially and adversely affect the ability of the Corporation to
pay when due the principal of or any interest on the Reimbursement Loan Note.
(G) any material provision of this Agreement or the other
Transaction Documents shall at any time for any reason cease to be valid and
binding on the Corporation, or shall be declared to be null and void, or the
validity or enforceability thereof shall be
13.
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contested by the Corporation or any governmental agency or authority, and the
happening of the events heretofore set forth in this SUBSECTION (F) shall
materially and adversely affect Lender's rights under this Agreement or under
any other Transaction Document, or the Corporation shall deny that it has any or
further liability or obligation under this Agreement or any other Transaction
Document; or
(H) an Act of Bankruptcy.
ARTICLE VIII
RIGHTS AND REMEDIES
SECTION 8.1 RIGHTS AND REMEDIES.
(A) DEFAULTS UNDER THIS AGREEMENT. Upon the occurrence of an Event
of Default hereunder, or at any time thereafter while such default continues,
Lender, in its sole discretion, may do any one or more of the following:
(I) send notice of such Event of Default to the Corporation;
(II) declare the Reimbursement Loan Note, if outstanding, and
any and all amounts due and owing under this Agreement or under the other
Transaction Documents, to be immediately due and payable
(III) terminate the Letter of Credit; and
(IV) exercise any rights and remedies available to it by law
or under this Agreement, any other Transaction Document or any other agreement,
document or instrument contemplated hereby.
(B) DEFAULTS UNDER THE LOAN AGREEMENT. Lender may cure an event of
default under the Loan Agreement; provided, however, that nothing contained
herein shall obligate Lender to cure any such event of default.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 MODIFICATION OF AGREEMENT. No modification or waiver of any
provision of this Agreement, and no consent to any departure by the Corporation
therefrom, shall be effective unless the same shall be in writing and signed by
Lender and the Corporation and no modification or waiver of any provision of the
Letter of Credit, and no consent to any departure by the Corporation or Bank
therefrom, shall in any event be effective unless the same shall be
14.
19
in writing and signed by Lender. Any such waiver or consent shall be effective
only in the specific instance and for the purpose for which given. No notice to
or demand on the Corporation in any case shall entitle the Corporation to or any
other or further notice or demand in the same, similar or other circumstances.
SECTION 9.2 WAIVER OF RIGHTS BY LENDER; REMEDIES. No course of dealing or
failure or delay on the part of Lender in exercising any right, power or
privilege hereunder or under the Letter of Credit shall operate as a waiver
hereof or thereof, nor shall a single or partial exercise thereof preclude any
other or further exercise or the exercise of any other right, power or
privilege. The rights of Lender under this Agreement are cumulative and not
exclusive of any rights or remedies which Lender would otherwise have.
SECTION 9.3 NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed effectively
given: (i) upon personal delivery to the party to be notified; (ii) upon receipt
at the address specified below after having been sent by certified or registered
mail, return receipt requested, postage prepaid; or (iii) one (1) day after
deposit with a nationally recognized overnight courier, specifying next day
delivery, with written verification of receipt. All communications shall be sent
to the party to be notified at the address set forth below:
If to the Corporation:
Air South Airlines, Inc.
0000 Xxxxxxx Xxxxxxxxx
Xxxx Xxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxx X. Xxxxx, Chairman
Fax: (000)000-0000
with a copy to:
Xxxxx X. Xxxxxxxx, Esq.
Monteith Law Offices
0000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
(which shall not constitute notice)
If to Lender:
XXXXXXXXX & XXXXX CALIFORNIA
x/x Xxxxxxxxx & Xxxxx LLC
Xxx Xxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxx
Fax: (000)000-0000
15.
20
with a copy to:
Cooley Godward LLP
Five Palo Alto Square
0000 Xx Xxxxxx Xxxx
Xxxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxxx
Telephone: (000) 000-0000
Facsimile No.: (000) 000-0000
(which shall not constitute notice)
or, in any such case, at such other address or addresses as shall have been
furnished in writing by such party to the others.
SECTION 9.4 INDEMNIFICATION. In addition to other amounts payable by the
Corporation under this Agreement, the Corporation hereby agrees to the fullest
extent permitted by applicable law, to protect, defend, indemnify and hold
harmless Lender, its assignees, the Issuing Bank, and their respective
directors, officers, employees, agents, counsel, successors and assigns from and
against any and all claims, demands, judgments, damages, actions, injuries,
losses, liabilities, penalties, costs, charges and expenses whatsoever which
such Person may (or which may be claimed against such Person whatsoever),
including, without limitation, the fees and expenses of counsel for such Person
by reason of or in connection with: (a) the issuance of the Letter of Credit;
(b) any breach by Corporation of any representation, warranty, covenant, term or
condition in, or the occurrence of any default under this Agreement, the
Reimbursement Loan Note or the other Transaction Documents, including all
reasonable fees or expenses resulting from the settlement or defense of any
claims or liabilities arising as a result of any such breach or default;
provided, however, that the Corporation shall not be required to indemnify any
such Person for any claims, demands, damages, losses, liabilities, costs,
charges and expenses to the extent, but only to the extent, caused by (i) the
gross negligence of Lender, as determined by a court of competent jurisdiction,
in determining whether a sight draft or certificate presented under the Letter
of Credit complied with the terms of the Letter of Credit; (ii) Lender's willful
failure, as determined by a court of competent jurisdiction, to cause payment
under the Letter of Credit after the presentation to it by Lender of a sight
draft and all required certificates strictly complying with the terms and
conditions of the Letter of Credit. The indemnification obligations in this
SECTION 9.4 shall survive the expiration of this Agreement or the Letter of
Credit.
SECTION 9.5 LIABILITY OF LENDER. The Corporation assumes all risks of the
acts or omissions of Bank and any transferee of the Letter of Credit with
respect to its use of the Letter of Credit or the proceeds thereof; provided,
however, this assumption is not intended to, and shall not, preclude the
Corporation from pursuing such rights and remedies as it may have against Bank
at law or under the Loan Agreement or any other agreement. Neither the Lender
nor any Person participating in the Letter of Credit or the Reimbursement Loan
Note shall be liable or responsible for: (a) the use which may be made of the
Letter of Credit or the proceeds
16.
21
thereof or for any acts or omissions of Bank and any transferee of the Letter of
Credit in connection therewith; (b) the validity, sufficiency or genuineness of
documents presented under the Letter of Credit, or of any endorsement(s)
thereon, even if such documents should in fact prove to be in any or all
respects invalid, insufficient, fraudulent or forged; provided, however, (a) and
(b) to the contrary notwithstanding, the Corporation shall have a claim against
the Lender, and the Lender shall be liable to the Corporation, to the extent,
but only to the extent, of any direct, as opposed to consequential, damages
suffered by the Corporation which the Corporation proves, as determined by a
court of competent jurisdiction, were caused by (i) Lender's gross negligence or
(ii) Lender's willful act that prevents payment under the Letter of Credit after
the presentation to Issuing Bank by the Bank (or a successor under the Loan
Agreement to whom the Letter of Credit has been transferred in accordance with
its terms) of a sight draft and all required certificates strictly complying
with the terms and conditions of the Letter of Credit. In furtherance and not in
limitation of the foregoing, the Lender may accept documents that appear on
their face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary; provided, however, that
if Lender shall receive timely written notification from each of Bank or the
Corporation and that sufficiently identifies (in the reasonable opinion of
Lender) documents that thereafter may be presented to Issuing Bank or Lender
which are not to be honored, Lender agrees to use its best efforts to avoid
honoring such documents thereafter. Lender assumes no responsibility for any
failure or delay in the transmission to Bank of funds drawn under the Letter of
Credit through the federal funds wire system.
SECTION 9.6 PARTICIPATIONS. Lender may participate to other Persons and
institutions of the Lender's choosing all or any portion of its obligations
under the Letter of Credit and the obligations of the Corporation under the
Reimbursement Loan Note. No such participation shall relieve the Lender of its
obligations hereunder nor shall it cause an increase in Corporation's
obligations under this Agreement, including under SECTION 2.3(b) above.
SECTION 9.7 SATISFACTION REQUIREMENT. If any agreement, certificate or
other writing, or any action taken or to be taken, is by the terms of this
Agreement required to be satisfactory to the Lender, the determination of such
satisfaction shall be made by Lender in its sole and exclusive judgment
exercised in good faith.
SECTION 9.8 GOVERNING LAW. In all respects, including all matters of
construction, validity and performance, this Agreement, the Reimbursement Loan
Note and the other Transaction Documents, and any obligations arising hereunder
or thereunder, shall be governed by, and construed and enforced in accordance
with, the laws of the State of California applicable to contracts made and
performed in such state, without regard to the principles thereof regarding
conflict of laws.
SECTION 9.9 WAIVER OF JURY TRIAL. The Corporation hereby waives trial by
jury in any litigation in any court with respect to, in connection with, or
arising out of this Agreement, the Reimbursement Loan Note, the other
Transaction Documents or any instrument or document delivered pursuant to this
Agreement, the Reimbursement Loan Note or the other Transaction Documents, or
the validity, protection, interpretation, collection or enforcement thereof, or
any
17.
22
other claim or dispute howsoever arising, between the Corporation, on the one
hand, and Lender, on the other hand.
SECTION 9.10 JURISDICTION: SERVICE OF PROCESS. The Corporation hereby
irrevocably consents to the jurisdiction of the Courts of the State of
California, County of San Francisco and of any Federal Court located in the
county of San Francisco California, and agree that venue in each of such Courts
is proper in connection with any action or proceeding arising out of or relating
to this Agreement, the other Transaction Documents, or any document or
instrument delivered pursuant to this Agreement or the other Transaction
Documents. Nothing herein shall affect the right of Lender to serve process in
any other manner permitted by law or to commence legal proceedings or otherwise
proceed against the Corporation in any other jurisdiction.
SECTION 9.11 SURVIVAL OF AGREEMENT. All covenants, agreements,
representations and warranties made in this Agreement shall survive the issuance
of the Letter of Credit by Issuing Bank and shall continue in full force and
effect so long as the Letter of Credit shall be unexpired or any sums drawn or
due hereunder or under the Reimbursement Loan Note shall be outstanding and
unpaid, regardless of any investigation made by any Person and so long as any
amount payable hereunder remains unpaid. Whenever in this Agreement Lender is
referred to, such reference shall be deemed to include the successors and
assigns of Lender, and all covenants, promises and agreements by or on behalf of
the Corporation which are contained in this Agreement shall inure to the benefit
of the successors and assigns of Lender and such other Persons as are
indemnified herein, subject to such limitations as are set forth in SECTION 9.6
above regarding participations. The rights and duties of the Corporation,
however, may not be assigned or transferred, except as specifically provided in
this Agreement or with the prior written consent of the Lender, and all
obligations of the Corporation shall continue in full force and effect
notwithstanding any assignment by the Corporation of any of their respective
rights or obligations under any of the Transaction Documents or the
Reimbursement Loan Note or any entering into, or consent by the Corporation
supplement or amendment to any of the Transaction Documents.
SECTION 9.12 SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 9.13 HEADINGS. The various headings in this Agreement are inserted
for convenience only and shall not affect the meaning or interpretation of this
agreement or any provisions hereof.
SECTION 9.14 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so delivered shall be deemed an original, but
all such counterparts shall constitute but one and the same instrument. Each
such agreement shall become effective upon the execution of a counterpart hereof
or thereof by each of the parties hereto and telephonic notification thereof has
been received by Corporation and Lender.
18.
23
In WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed and delivered by its duly authorized officer on the date first set
forth above.
CORPORATION: AIR SOUTH AIRLINES, INC.
By:/s/Xxxx X. Xxxxx
----------------------------------------
Printed Name: Xxxx X. Xxxxx
------------------------------
Title: Chairman of the Board, President
-------------------------------------
and Chief Executive Officer
ATTEST:
/s/D Monteith
-----------------------------------
Name: Xxxxx Xxxxxxxx
Title: Secretary
XXXXXXXXX AND XXXXX CALIFORNIA, a wholly
owned subsidiary of Xxxxxxxxx & Xxxxx Group
By:/s/Xxxxxx Xxxxxxxxxxxx
----------------------------------------
Printed Name:/s/Xxxxxx Xxxxxxxxxxxx
------------------------------
Title: Attorney-in-Fact
-------------------------------------
19.
24
SCHEDULE OF EXCEPTIONS
Schedule 5.1(f)
The Company is currently in default under the following instruments or
Contracts:
(a) Air South, Inc. HUD Section 108 Loan; such defaults have been
waived until September 30, 1997.
(b) Revolving Credit Facility with NationsBank, N.A.
(c) Aircraft leases for five Boeing 737-200 Aircrafts entered into by
the lessors through GE Credit Aviation Services, Inc.; however, such
defaults have been waived pending amendment of such leases.
(d) From time-to-time on a continuing basis the Company is in arrears
of payments owed to all the airports to which it flies. Such arrearages
could give rise to events of default under the Company's agreement with
such airports if not timely cured.
Schedule 6.1(h)
It is understood that the Company is currently and generally in
arrears on accounts payable to numerous general creditors not exceeding
$7,500,000. Such accounts are not evidenced by notes, bonds, security
agreements, deeds of trust or mortgages; some however are the subject of
written agreements with creditors for extended payment terms; others, in
amounts not material to the Company (less than $100,000 in the aggregate),
have been included in confessions of judgments by the Company which may be
entered only if the Company defaults in an agreed upon payment schedule.
25
EXHIBIT A
FORM OF
REIMBURSEMENT LOAN NOTE
$2,OOO,OOO San Francisco, California
January___, 1997
FOR VALUE RECEIVED, AIR SOUTH AIRLINES, INC., a Delaware corporation (the
"Corporation") hereby unconditionally promises to pay to the order of XXXXXXXXX
& XXXXX CALIFORNIA, a wholly owned subsidiary of Xxxxxxxxx & Xxxxx Group
("Lender"), or their assigns, in lawful money of the United States of America
and in immediately available funds, on demand the sum of Two Million Dollars
($2,000,000) or so much thereof as from time to time may be advanced hereunder
pursuant to Section 2.7 of that certain Reimbursement Agreement, dated as of
January___, 1997, by and among the Corporation and Lender, as amended from time
to time (the "Agreement"), in connection with drawings under that certain Letter
of Credit No.___ dated January___, 1997, issued by the BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION in favor of THE NATIONAL BANK OF SOUTH CAROLINA
(including any amendment thereof or substitute therefor) (the "Letter of
Credit") in accordance with the terms and conditions set forth in the Agreement.
Borrower shall also pay interest (calculated on the basis of a 365 or 366 day
year and actual number of days elapsed) on such sum or the portion thereof from
time to time outstanding hereunder, monthly, at the rates and in accordance with
the terms and conditions set forth in the Agreement. All accrued and unpaid
interest shall be due and payable at such time as demand is made under this
Reimbursement Loan Note. This Reimbursement Loan Note is issued under and is
subject to the terms and conditions of the Agreement. All definitions, terms,
conditions, rights and provisions set forth in the Agreement, are hereby
incorporated herein in their entirety.
Annexed hereto and made a part hereof is a schedule (the "Loan and
Repayment Schedule") on which shall be shown all advances by Lender pursuant to
the Agreement (each such advance, a "Reimbursement Loan") and all repayments of
principal made to Lender hereunder. The Corporation hereby appoints Lender as
its agent to endorse the date and the amount of each such Reimbursement Loan or
principal repayment made hereunder. Such endorsement shall constitute prima
facie evidence of the accuracy of the information endorsed; provided, however,
that failure to make any such endorsement (or any errors in notation) shall not
affect in any manner the obligations of Corporation with respect to the amounts
payment hereunder.
This Reimbursement Loan Note is subject to acceleration upon the occurrence
of certain events as provided in the Agreement. The Corporation shall have the
right to prepay this Reimbursement Loan Note in whole or in part, without
penalty or premium, at any time.
1.
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All payments or prepayments of principal of and interest on this
Reimbursement Loan Note shall be payable to the Account of Lender as specified
in Section 2.6 of the Agreement.
All payments and prepayments hereon shall be applied first, to costs and
expenses and other amounts due and owing to Lender under the Agreement; second,
to accrued interest then payable; and third to principal of the Reimbursement
Loans in chronological order of funding of the Reimbursement Loans and within
each Reimbursement Loan in inverse chronological order of principal
amortization.
The Corporation hereby waives presentment, demand, protest, notice of
protest or other notice of dishonor of any kind or of non-payment of this
Reimbursement Loan Note, and promises to pay all reasonable costs of collection
when incurred, including, without limitation, reasonable attorneys' fees, costs
and other expenses.
The right to plead any and all statutes of limitations as a defense to any
demands hereunder is hereby waived to the full extent permitted by law.
No extension of the time for the payment of this Reimbursement Loan Note or
any installment hereof made by agreement with any Person now or hereafter liable
for the payment of this Reimbursement Loan Note shall operate to release or
discharge the original liability under this Reimbursement Loan Note, either in
whole or in part, of the Corporation.
This Reimbursement Loan Note is to be construed according to the laws of
the State of California, without regard to principles of conflict of laws.
The provisions of this Note shall inure to the benefit of and be binding on
any successor to Lender and shall extend to any holder hereof.
CORPORATION: AIR SOUTH AIRLINES, INC.
By:
----------------------------------------
Printed Name:
------------------------------
Title:
-------------------------------------
2.
27
EXHIBIT B
1.
28
IRREVOCABLE STANDBY LETTER OF CREDIT
#__________
December __, 1996
APPLICANT: Air South Airlines, Inc.
0000 Xx. Xxxxxx Xxxxx
Xxxxxxxx, Xxxxx Xxxxxxxx
BENEFICIARY: The National Bank of South Carolina
0000 Xxxx Xxxxxx
Xxxxxxxx, Xxxxx Xxxxxxxx
MAXIMUM AMOUNT: $2,000,000.00 EXPIRY: July 1, 1998
We hereby issue this Irrevocable Standby Letter of Credit #____ in your favor
for the maximum amount shown above available against your draft at sight drawn
on (issuer) when accompanied by this letter and a statement from you (the
Beneficiary) signed by an officer of the Beneficiary stating:
"The Applicant, Air South Airlines, Inc., has failed to pay The National
Bank of South Carolina in accordance to the terms of their loan (to
include, but not be 1imited to, the maintenance of this Irrevocable
Standby Letter of Credit) and the loan is in default."
This letter of Credit shall be deemed automatically extended without amendment
for one year fit expiry date hereof, unless not less than sixty(60) days prior
to any such expiry date we shall notify you in writing that we elect not to
consider the Letter of Credit renewed for any such additional period.
Drafts drawn under this Letter of Credit must bear the phrase "Drawn under
(issuer) Irrevocable Letter of Credit No.____ dated December____ , 1996."
We engage with you that all drafts drawn under in compliance with the terms of
this Letter of Credit will be duly honored on delivery of documents as specified
it presented at this office on or before December ____, 1997 any automatically
extended date as provided above.
Except as otherwise expressly stated herein, this Irrevocable Standby Letter of
Credit is subject to the Uniform customs and Practices for Documentary Credit
(1993 Revision), International Chamber of Commerce Brochure 500 (the "Uniform
Customs") As to matters not governed by Uniform Customs, this Irrevocable
Standby Letter of Credit shall be governed and construed in, accordance with the
laws of the State of South Carolina.
Upon strict compliance with the terms of this Letter of Credit, the drafts
hereinabove referred to will be duly mored upon presentation.
---------------------------------
Authorized Signature
