LOAN AGREEMENT
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THIS LOAN AGREEMENT (this "Agreement") is made and entered into as of the
25th day of April, 2000, by and between ARCH AIR MEDICAL SERVICE, INC., a
Missouri corporation ("Borrower"), and FIRSTAR BANK, N.A., a national banking
association ("Lender").
WITNESSETH:
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WHEREAS, Borrower has applied for (a) a revolving credit loan from Lender
in an aggregate principal amount of up to $1,500,000.00 and (b) a term loan from
Lender in the original principal amount of $1,350,000.00; and
WHEREAS, Lender is willing to make said revolving credit loan and said term
loan to Borrower upon, and subject to, the terms, provisions and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Borrower and Lender hereby mutually covenant and agree as follows:
SECTION 1. DEFINITIONS.
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1.01 Definitions. In addition to the terms defined elsewhere in this
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Agreement or in any Exhibit or Schedule hereto, when used in this Agreement, the
following terms shall have the following meanings (such meanings shall be
equally applicable to the singular and plural forms of the terms used, as the
context requires):
Account Debtor shall mean any Person who is and/or may become obligated to
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Borrower under or on account of any of the Accounts.
Accounts shall mean all trade accounts receivable of Borrower which have
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been invoiced by Borrower.
Acquisition shall mean any transaction or series of related transactions,
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consummated on or after the date of this Agreement, by which Borrower or any
Subsidiary directly or indirectly (a) acquires all or substantially all of the
assets comprising one or more business units of any other Person, whether
through purchase of assets, merger or otherwise or (b) acquires (in one
transaction or as the most recent transaction in a series of transactions) at
least (i) a majority (in number of votes) of the stock and/or other securities
of a corporation having ordinary voting power for the election of directors
(other than stock and/or other securities having such power only by reason of
the happening of a contingency), (ii) a majority (by percentage of voting power)
of the outstanding partnership interests of a partnership, (iii) a majority (by
percentage of voting power) of the outstanding membership interests of a limited
liability company or (iv) a majority of the ownership interests in any
organization or entity other than a corporation or partnership.
Affiliate shall mean any Person (a) which directly or indirectly through
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one or more intermediaries controls, is controlled by or is under common control
with Borrower or any Subsidiary, (b) which directly or indirectly through one or
more intermediaries beneficially owns or holds or has the power to direct the
voting power of Five Percent (5%) or more of any class of capital stock or other
equity interests of Borrower or any Subsidiary, (c) which has Five Percent (5%)
or more of any class of its capital stock or other equity interests beneficially
owned or held, directly or indirectly, by Borrower or any Subsidiary or (d) who
is a director, officer or employee of Borrower or any Subsidiary. For purposes
of this definition, "control" shall mean the power to direct the management and
policies of a Person, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise.
Assignment of Leases and Rents shall mean that certain Assignment of Leases
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and Rents dated the date hereof and executed by Borrower in favor of Lender, as
the same may from time to time be amended, modified, extended, renewed or
restated.
Attorneys' Fees shall mean the reasonable value of the services (and costs,
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charges and expenses related thereto) of the attorneys (and all paralegals,
accountants and other staff employed by such attorneys) employed by Lender
(including, without limitation, attorneys and paralegals who are employees of
Lender or any affiliate of Lender) from time to time (a) in connection with the
negotiation, preparation, execution, delivery, amendment, modification,
extension, renewal, administration and/or enforcement of this Agreement and/or
any of the other Transaction Documents, (b) in connection with the preparation,
negotiation or execution of any waiver or consent with respect to this Agreement
or any of the other Transaction Documents, (c) in connection with any Default or
Event of Default under this Agreement, (d) to represent Lender in any
litigation, contest, dispute, suit or proceeding, or to commence, defend or
intervene in any litigation, contest, dispute, suit or proceeding, or to file
any petition, complaint, answer, motion or other pleading or to take any other
action in or with respect to any litigation, contest, dispute, suit or
proceeding (whether instituted by Lender, Borrower or any other Person and
whether in bankruptcy or otherwise) in any way or respect relating to this
Agreement or any of the other Transaction Documents, Borrower, any other
Obligor, any Subsidiary, any Collateral or any Third Party Collateral, (e) to
protect, collect, lease, sell, take possession of or liquidate any Collateral or
any Third Party Collateral, (f) to attempt to enforce any security interest in
or other Lien upon any Collateral or any Third Party Collateral or to give any
advice with respect to such enforcement and/or (g) to enforce any of the rights
or remedies of Lender to collect any of the Borrower's Obligations and/or any
Guarantee thereof.
Borrower's Obligations shall mean any and all present and future
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indebtedness (principal, interest, fees, collection costs and expenses, and
other amounts), liabilities and obligations (including, without limitation,
guaranty obligations, letter of credit reimbursement obligations and indemnity
obligations) of Borrower to Lender evidenced by or arising under this Agreement,
the Notes, any of the other Transaction Documents and/or any other agreement,
document or instrument heretofore, now or hereafter executed and delivered by
Borrower to Lender, in each case whether now existing or hereafter arising,
absolute or contingent, joint and/or several, secured or unsecured, direct or
indirect, expressed or implied in law, contractual or tortious, liquidated or
unliquidated, at law or in equity, or otherwise, and whether created directly or
acquired by Lender by assignment or otherwise, and any and all costs of
collection and/or Attorneys' Fees incurred or to be incurred in connection
therewith.
Borrowing Base shall have the meaning ascribed thereto in Section 2.01(b).
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Borrowing Base Certificate shall have the meaning ascribed thereto in
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Section 2.01(c).
Borrowing Notice shall have the meaning ascribed thereto in Section 2.02.
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Business Day shall mean any day except a Saturday, Sunday or legal holiday
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observed by Lender.
Capital Expenditure shall mean any expenditure which, in accordance with
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GAAP, is required to be capitalized on the balance sheet of the Person making
the same.
Capitalized Lease shall mean any lease of Property, whether real and/or
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personal, by a Person as lessee which in accordance with GAAP is required to be
capitalized on the balance sheet of such Person.
Capitalized Lease Obligations of any Person shall mean, as of the date of
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any determination thereof, the amount at which the aggregate rental obligations
due and to become due under all Capitalized Leases under which such Person is a
lessee would be reflected as a liability on a balance sheet of such Person in
accordance with GAAP.
CERCLA shall mean the Comprehensive Environmental Response, Compensation
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and Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, 42 U.S.C. 9601 et seq., and as the same may from
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time to time be further amended.
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Change of Control Event shall mean each and every issue, sale, transfer or
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other disposition, directly or indirectly, of shares of capital stock of
Borrower which, after giving effect thereto, results in the Principal
Shareholder legally or beneficially owning or controlling in the aggregate less
than Fifty-One Percent (51%) (by number of votes) of the Voting Stock of
Borrower.
Code shall mean the Internal Revenue Code of 1986, as amended, and any
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successor statute of similar import, together with the regulations thereunder,
in each case as in effect from time to time. References to sections of the Code
shall be construed to also refer to any successor sections.
Collateral shall mean any Property or assets of Borrower which now or at
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any time hereafter secure the payment or performance of any of the Borrower's
Obligations.
Consolidated Debt shall mean, as of the date of any determination thereof,
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all Debt of Borrower and its Subsidiaries as of such date, determined on a
consolidated basis and in accordance with GAAP.
Consolidated Debt to Consolidated EBITDAR Ratio shall mean, as of the last
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day of any fiscal quarter of Borrower, the ratio of (a) the sum of (i)
Consolidated Debt as of such day plus (ii) an amount equal to six (6) times
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Consolidated Operating Lease Expense for the four (4) consecutive fiscal quarter
period of Borrower ending on such day to (b) Consolidated EBITDAR for the four
(4) consecutive fiscal quarter period of Borrower ending on such day.
Consolidated EBITDA shall mean, for the period in question, the sum of (a)
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Consolidated Net Income during such period plus (b) to the extent deducted in
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determining Consolidated Net Income, the sum of (i) Consolidated Interest
Expense during such period, plus (ii) all provisions for any Federal, state,
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local and/or foreign income taxes made by Borrower and its Subsidiaries during
such period (whether paid or deferred), plus (iii) all depreciation and
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amortization expenses of Borrower and its Subsidiaries during such period, plus
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(iv) any extraordinary losses during such period plus (v) any losses from the
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sale or other disposition of Property other than in the ordinary course of
business during such period minus (c) to the extent added in determining such
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Consolidated Net Income, the sum of (i) any extraordinary gains during such
period plus (ii) any gains from the sale or other disposition of Property other
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than in the ordinary course of business during such period, all determined on a
consolidated basis and in accordance with GAAP.
Consolidated EBITDAR shall mean, for the period in question, the sum of (a)
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Consolidated EBITDA during such period plus (b) to the extent deducted in
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determining such Consolidated EBITDA, Consolidated Operating Lease Expense
during such period, all determined on a consolidated basis and in accordance
with GAAP.
Consolidated Fixed Charge Coverage Ratio shall mean, for the period in
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question, the ratio of (a) Consolidated EBITDAR during such period to (b)
Consolidated Fixed Charges during such period, all determined on a consolidated
basis and in accordance with GAAP.
Consolidated Fixed Charges shall mean, for the period in question, the sum
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of (a) the aggregate amount of all principal payments made or required to be
made by Borrower and its Subsidiaries on all Debt during such period (including
the principal portion of payments in respect of Capitalized Leases but excluding
principal payments on the Revolving Credit Loans), plus (b) Consolidated
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Interest Expense during such period, plus (c) Consolidated Operating Lease
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Expense during such period, plus (d) all Capital Expenditures made by Borrower
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and its Subsidiaries during such period (net of any Debt incurred by Borrower or
such Subsidiary (other than Revolving Credit Loans) to finance such Capital
Expenditure) plus (e) all provisions for any Federal, state, local and/or
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foreign income taxes made by Borrower and its Subsidiaries during such period
(whether paid or deferred), all determined on a consolidated basis and in
accordance with GAAP.
Consolidated Interest Expense shall mean, for the period in question,
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without duplication, all gross interest expense of Borrower and its Subsidiaries
(including, without limitation, all commissions, discounts and/or related
amortization and other fees and charges owed by Borrower and its Subsidiaries
with respect to letters of credit, the net costs associated with interest swap
obligations of Borrower and its Subsidiaries, capitalized interest expense, the
interest portion of Capitalized Lease Obligations and the interest portion of
any deferred payment obligation) during such period, all determined on a
consolidated basis and in accordance with GAAP.
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Consolidated Net Income shall mean the after-tax net income (or loss) of
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Borrower and its Subsidiaries for the period in question, determined on a
consolidated basis and in accordance with GAAP.
Consolidated Net Worth shall mean, as of the date of any determination
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thereof, the amount of the capital stock accounts (net of treasury stock, at
cost) of Borrower and its Subsidiaries as of such date plus (or minus in the
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case of a deficit) the surplus and retained earnings of Borrower and its
Subsidiaries as of such date, all determined on a consolidated basis and in
accordance with GAAP.
Consolidated Operating Lease Expense shall mean, for the period in
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question, the aggregate amount of all Operating Lease Expenses of Borrower and
its Subsidiaries during such period, all determined on a consolidated basis and
in accordance with GAAP.
Consolidated Total Liabilities shall mean, as of the date of any
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determination thereof, all liabilities of Borrower and its Subsidiaries as of
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such date, determined on a consolidated basis and in accordance with GAAP.
Default shall mean any event or condition the occurrence of which would,
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with the lapse of time or the giving of notice or both, become an Event of
Default as defined in Section 6 hereof.
Debt of any Person shall mean, as of the date of determination thereof, the
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sum of (a) all Indebtedness of such Person for borrowed money or which has been
incurred in connection with the purchase or other acquisition of Property or
assets (other than unsecured trade accounts payable incurred in the ordinary
course of business) plus (b) all Capitalized Lease Obligations of such Person
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plus (c) all Guarantees by such Person of Debt of others plus (d) the aggregate
undrawn face amount of all letters of credit issued for the account of and/or
upon the application of such Person together with all unreimbursed drawings with
respect thereto.
Distribution in respect of any corporation or other entity shall mean: (a)
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dividends or other distributions on or in respect of any of the capital stock or
other equity interests of such corporation or other entity; and (b) the
redemption, repurchase or other acquisition of any capital stock or other equity
interests of such corporation or other entity or of any warrants, rights or
other options to purchase any such capital stock or other equity interests.
Eligible Accounts shall mean all Accounts other than: (a) Accounts which
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remain unpaid for more than one hundred-twenty (120) days after their invoice
dates and Accounts which are not due and payable within one hundred-twenty (120)
days after their invoice dates; (b) Accounts owing by a single Account Debtor,
including a currently scheduled Account, if Ten Percent (10%) or more of the
balance owing by said Account Debtor upon said Accounts is ineligible pursuant
to clause (a) above; (c) Accounts with respect to which the Account Debtor is a
shareholder or partner of Borrower or an Affiliate; (d) Accounts with respect to
which payment by the Account Debtor is or may be conditional and Accounts
commonly known as xxxx and hold Accounts or Accounts of a similar or like
arrangement; (e) Accounts with respect to which the Account Debtor is not a
resident or citizen of or otherwise located in the continental United States of
America, unless such Accounts are backed in full by an irrevocable letter of
credit in form and substance satisfactory to Lender issued by a domestic
commercial bank acceptable to Lender; (f) Accounts with respect to which the
Account Debtor is the United States of America, any state of the United States
or any other governmental body or any department, agency or instrumentality of
any of the foregoing; (g) Accounts with respect to which Borrower is or may
become liable to the Account Debtor for goods sold or services rendered by such
Account Debtor to Borrower, but only to the extent of Borrower's then aggregate
liability to such Account Debtor (i.e. the excess of the aggregate face amount
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of Accounts of such Account Debtor over the aggregate liability of Borrower to
such Account Debtor shall constitute an Eligible Account unless otherwise
excepted under this definition of Eligible Accounts); (h) Accounts with respect
to which the goods giving rise thereto have not been shipped and delivered to
and accepted as satisfactory by the Account Debtor thereof or with respect to
which the services performed giving rise thereto have not been completed and
accepted as satisfactory by the Account Debtor thereof; (i) Accounts which are
not invoiced (and dated as of such date) and sent to the Account Debtor thereof
concurrently with or not later than five (5) days after the shipment and
delivery to said Account Debtor of the goods giving rise thereto or the
performance of the services giving rise thereto; (j) Accounts with respect to
which possession and/or control of the goods sold giving rise thereto is held,
maintained or retained by Borrower (or by any agent or custodian of Borrower)
for the account of or subject to further and/or future direction from the
Account Debtor thereof; (k) Accounts arising from a consignment sale, a "sale
on approval" or a "sale or return"; (l) Accounts as to which Lender, at any time
or times hereafter, determines, in good faith, that the prospects of payment or
performance by the Account Debtor is or will be impaired in any material
respect; (m) Accounts of an Account Debtor to the extent, but only to the
extent, that the same exceed a credit limit determined by Lender in its good
faith discretion, at any time or times hereafter; (n) Accounts which are subject
to any dispute, offset, counterclaim, discount (except for prompt payment
discounts that do not exceed Two Percent (2%) of the invoice amount) or other
claim or defense on the part of the Account Debtor or to any claim on the part
of the Account Debtor contesting or denying liability under such Account; (o)
Accounts with respect to which the Account Debtor is located in the State of New
Jersey, the State of Minnesota or the State of West Virginia; provided, however,
that such restriction shall not apply if Borrower (i) has filed and has
effective (A) in respect of Account Debtors located in the State of New Jersey,
a Notice of Business Activities Report with the State of New Jersey Division of
Taxation for the then current year, (B) in respect of Account Debtors located in
the State of Minnesota, a Minnesota Business Activity Report with the Minnesota
Department of Revenue for the then current year or (C) in respect of Account
Debtors located in the State of West Virginia, a West Virginia Business Activity
Report with the West Virginia Department of Tax and Revenue for the then current
year, as applicable, or (ii) is otherwise exempt from such reporting
requirements under the laws of such State(s); and (p) Accounts which are not
subject to a first priority perfected security interest in favor of Lender.
Environmental Claim shall mean any administrative, regulatory or judicial
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action, judgment, order, consent decree, suit, demand, demand letter, claim,
Lien, notice of non-compliance or violation, investigation or other proceeding
arising (a) pursuant to any Environmental Law or governmental or regulatory
approval issued under any such Environmental Law, (b) from the presence, use,
generation, storage, treatment, Release, threatened Release, disposal,
remediation or other existence of any Hazardous Substance, (c) from any removal,
remedial, corrective or other response action pursuant to an Environmental Law
or the order of any governmental or regulatory authority or agency, (d) from any
third party seeking damages, contribution, indemnification, cost recovery,
compensation, injunctive or other relief in connection with a Hazardous
Substance or arising from alleged injury or threat of injury to health, safety,
natural resources or the environment or (e) from any Lien against any Property
owned, leased or operated by Borrower or any Subsidiary in favor of any
governmental or regulatory authority or agency in connection with a Release,
threatened Release or disposal of a Hazardous Substance.
Environmental Law shall mean any Federal, state, local, foreign or other
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statute, law, rule, regulation, order, consent decree, judgment, permit,
license, code, covenant, deed restriction, common law, treaty, convention,
ordinance or other requirement relating to public health, safety or the
environment, including, without limitation, those relating to Releases,
discharges or emissions to air, water, land or groundwater, to the withdrawal or
use of groundwater, to the use and handling of polychlorinated biphenyls or
asbestos, to the disposal, treatment, storage or management of hazardous or
solid waste, Hazardous Substances or crude oil, or any fraction thereof, to
exposure to toxic or hazardous materials, to the handling, transportation,
discharge or release of gaseous or liquid Hazardous Substances and any rule,
regulation, order, notice or demand issued pursuant to such law, statute or
ordinance, in each case applicable to any of the Property owned, leased or
operated by Borrower or any Subsidiary or the operation, construction or
modification of any such Property, including, without limitation, the following:
CERCLA, the Solid Waste Disposal Act, as amended by the Resource Conservation
and Recovery Act of 1976 and the Hazardous and Solid Waste Amendments of 1984,
the Hazardous Materials Transportation Act, as amended, the Federal Water
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Pollution Control Act, as amended by the Clean Water Act of 1976, the Safe
Drinking Water Control Act, the Clean Air Act of 1966, as amended, the Toxic
Substances Control Act of 1976, the Occupational Safety and Health Act of 1970,
as amended, the Emergency Planning and Community Right-to-Know Act of 1986, the
National Environmental Policy Act of 1975, the Oil Pollution Act of 1990 and any
similar or implementing state or local law, and any state or local statute and
any further amendments to these laws providing for financial responsibility for
cleanup or other actions with respect to the Release or threatened Release of
Hazardous Substances or crude oil, or any fraction thereof and all rules,
regulations, guidance documents and publication promulgated thereunder.
ERISA shall mean the Employee Retirement Income Security Act of 1974, as
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amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA shall be construed to also refer to any successor sections.
ERISA Affiliate shall mean any corporation, trade or business that is,
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along with Borrower or any Subsidiary, a member of a controlled group of
corporations or a controlled group of trades or businesses, as described in
Sections 414(b) and 414(c), respectively, of the Code or Section 4001 of ERISA.
Event of Default shall have the meaning ascribed thereto in Section 6.
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GAAP shall mean, at any time, generally accepted accounting principles at
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such time in the United States.
Guarantee by any Person shall mean any obligation (other than endorsements
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of negotiable instruments for deposit or collection in the ordinary course of
business), contingent or otherwise, of such Person guaranteeing, or in effect
guaranteeing, any Indebtedness, liability, dividend or other obligation of any
other Person (the "primary obligor") in any manner, whether directly or
indirectly, including, without limitation, all obligations incurred through an
agreement, contingent or otherwise, by such Person: (a) to purchase such
Indebtedness or obligation or any Property constituting security therefor, (b)
to advance or supply funds (i) for the purchase or payment of such Indebtedness
or obligation, (ii) to maintain working capital or other balance sheet condition
or otherwise to advance or make available funds for the purchase or payment of
such Indebtedness or obligation, (iii) to lease property or to purchase
securities or other property or services primarily for the purpose of assuring
the owner of such Indebtedness or obligation of the ability of the primary
obligor to make payment of the Indebtedness or obligation or (iv) otherwise to
assure the owner of the Indebtedness or obligation of the primary obligor
against loss in respect thereof. For the purposes of all computations made
under this Agreement, a Guarantee in respect of any Indebtedness for borrowed
money shall be deemed to be Indebtedness equal to the then outstanding principal
amount of such Indebtedness for borrowed money which has been guaranteed or such
lesser amount to which the maximum exposure of the guarantor shall have been
specifically limited, and a Guarantee in respect of any other obligation or
liability or any dividend shall be deemed to be Indebtedness equal to the
maximum aggregate amount of such obligation, liability or dividend or such
lesser amount to which the maximum exposure of the guarantor shall have been
specifically limited. Guarantee when used as a verb shall have a correlative
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meaning.
Guarantors shall mean Air Methods Corporation and Mercy Air Services, Inc.
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and Guarantor shall mean any one of the foregoing.
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Guaranty shall mean that certain Unlimited Continuing Guaranty dated the
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date hereof and executed by the Guarantors in favor of Lender with respect to
the indebtedness of Borrower to Lender, as the same may from time to time be
amended, modified, extended or renewed.
Hazardous Substance shall mean any hazardous or toxic material, substance
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or waste, pollutant or contaminant which is regulated under any Environmental
Law or any other statute, law, ordinance, rule or regulation of any local,
state, regional, Federal or international body, instrumentality, authority,
agency or official having jurisdiction over any of the Property owned, leased or
operated by Borrower or any Subsidiary or its use, including, without
limitation, any material, substance or waste which is: (a) defined as a
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hazardous substance under Section 311 of the Federal Water Pollution Control Act
(33 U.S.C. 1317), as amended; (b) regulated as a hazardous waste under Section
1004 or Section 3001 of the Federal Solid Waste Disposal Act, as amended by the
Resource Conservation and Recovery Act (42 U.S.C. 6901 et seq.), as amended;
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(c) defined as a hazardous substance under Section 101 of the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. 9601 et
seq.), as amended; or (d) defined or regulated as a hazardous substance or
hazardous waste under any rules or regulations promulgated under any of the
foregoing statutes.
Illinois Mortgage shall mean that certain Leasehold Mortgage and Security
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Agreement dated the date hereof and executed by Borrower in favor of Lender, as
the same may from time to time be amended, modified, extended, renewed or
restated.
Indebtedness shall mean, with respect to any Person, without duplication,
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all indebtedness, liabilities and obligations of such Person which in accordance
with GAAP are required to be classified upon a balance sheet of such Person as
liabilities of such Person, and in any event shall include all (a) obligations
of such Person for borrowed money or which have been incurred in connection with
the purchase or other acquisition of Property or assets, (b) obligations secured
by any Lien on, or payable out of the proceeds of or production from, any
Property or assets owned by such Person, whether or not such Person has assumed
or become liable for the payment of such obligations, (c) indebtedness,
liabilities and obligations of third parties, including joint ventures and
partnerships of which such Person is a venturer or general partner, recourse to
which may be had against such Person, (d) obligations created or arising under
any conditional sale or other title retention agreement with respect to Property
acquired by such Person, notwithstanding the fact that the rights and remedies
of the seller, lender or lessor under such agreement in the event of default are
limited to repossession or sale of such Property, (e) Capitalized Lease
Obligations of such Person, (f) indebtedness, liabilities and obligations of
such Person under Guarantees and (g) the aggregate undrawn face amount of all
letters of credit issued for the account of and/or upon the application of such
Person together with all unreimbursed drawings with respect thereto.
Intangible Assets shall mean all patents, trademarks, service marks,
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copyrights, trade names, goodwill (including any amounts, however designated,
representing the cost of acquisition of business and investments in excess of
the book value thereof), unamortized debt discount and expense, unamortized
deferred charges, deferred research and development costs, any write-up of asset
value after the date of this Agreement, non-competition covenants, signing
bonuses, prepaid expenses and other forms of prepaid assets, deferred taxes,
officer or employee advances, intercompany accounts, investments in and
receivables due from affiliates, deposits for insurance, utilities and the like,
and any other assets treated as intangible assets under GAAP.
Inventory shall mean all inventory of Borrower.
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Investment shall mean any investment by Borrower or any Subsidiary in any
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Person, whether payment therefor is made in cash or capital stock of Borrower or
any Subsidiary, and whether such investment is by acquisition of stock or
Indebtedness, or by loan, advance, transfer of property out of the ordinary
course of business, capital contribution, equity or profit sharing interest,
extension of credit on terms other than those normal in the ordinary course of
business or otherwise.
Lender's Revolving Credit Commitment shall mean the sum of $
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1,500,000.00.
Lien shall mean any interest in any Property securing an obligation owed
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to, or a claim by, a Person other than the owner of the Property, whether such
interest is based on common law, statute or contract, including, without
limitation, any security interest, mortgage, deed of trust, pledge,
hypothecation, judgment lien or other lien or encumbrance of any kind or nature
whatsoever, any conditional sale or trust receipt, any lease, consignment or
bailment for security purposes and any Capitalized Lease. The term "Lien" shall
include reservations, exceptions, encroachments, easements, rights-of-way,
covenants, conditions, restrictions, leases and other title exceptions and
encumbrances affecting Property.
Loan shall mean each Revolving Credit Loan and the Term Loan and Loans
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shall mean any or all of the foregoing.
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Material Adverse Effect shall mean (a) a material adverse effect on the
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Properties, assets, liabilities, business, operations, prospects, income or
condition (financial or otherwise) of Borrower, any other Obligor and/or any
Subsidiary, (b) material impairment of the ability of Borrower and/or any other
Obligor to perform any of its obligations under this Agreement, the Notes or any
of the other Transaction Documents or (c) material impairment of the
enforceability of the rights of, or benefits available to, Lender under this
Agreement, the Notes or any of the other Transaction Documents.
Missouri Deed of Trust shall mean that certain Deed of Trust and Security
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Agreement dated the date hereof and executed by Borrower for the benefit of
Lender, as the same may from time to time be amended, modified, extended,
renewed or restated.
Moody's shall mean Xxxxx'x Investors Service, Inc.
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Multi-Employer Plan shall mean a "multi-employer plan" as defined in
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Section 4001(a)(3) of ERISA which is maintained for employees of Borrower, any
Subsidiary or any ERISA Affiliate or to which Borrower, any Subsidiary or any
ERISA Affiliate has contributed in the past or currently contributes.
Notes shall mean the Revolving Credit Note and the Term Loan Note.
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Obligor shall mean Borrower, each Guarantor and each other Person who is or
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shall at any time hereafter become primarily or secondarily liable on any of the
Borrower's Obligations or who grants Lender a Lien upon any of the Property or
assets of such Person as security for any of the Borrower's Obligations.
Occupational Safety and Health Laws shall mean the Occupational Safety and
------------------------------------
Health Act of 1970, as amended, and any other Federal, state or local statute,
law, ordinance, code, rule, regulation, order or decree regulating, relating to
or imposing liability or standards of conduct concerning employee health and/or
safety, as now or at any time hereafter in effect.
Operating Lease shall mean any lease of Property, whether real and/or
----------------
personal, by a Person as lessee which is not a Capitalized Lease.
Operating Lease Expenses shall mean with respect to any Person, for the
--------------------------
period in question, the aggregate amount of rental and other expenses incurred
by such Person in respect of Operating Leases during such period, all determined
in accordance with GAAP.
Parent shall mean Air Methods Corporation, a Delaware corporation.
------
PBGC shall mean the Pension Benefit Guaranty Corporation and any entity
----
succeeding to any or all of its functions under ERISA.
Pension Plan shall mean a "pension plan," as such term is defined in
-------------
Section 3(2) of ERISA, which is established or maintained by Borrower, any
Subsidiary or any ERISA Affiliate, other than a Multi-Employer Plan.
Permitted Liens shall mean any of the following:
----------------
(a) Liens in favor of Lender;
(b) Liens on Property or assets of a Subsidiary to secure
obligations of such Subsidiary to Borrower;
-8-
(c) Liens for property taxes and assessments or governmental
charges or levies and Liens securing claims or demands of mechanics and
materialmen, provided payment thereof is not at the time required by Section
5.01(d) and/or 5.01(e);
(d) Liens (other than any Liens imposed by ERISA) incidental to
the conduct of business or the ownership of Properties (including Liens in
connection with worker's compensation, unemployment insurance and other like
laws, warehousemen's and attorneys' liens and statutory landlords' liens) and
Liens to secure the performance of bids, tenders or trade contracts, or to
secure statutory obligations, surety or appeal bonds or other Liens of like
general nature incurred in the ordinary course of business and not in connection
with the borrowing of money or the purchase or other acquisition of Property;
provided in each case the obligation secured is not overdue or, if overdue, is
being contested in good faith by appropriate actions or proceedings being
diligently conducted and for which adequate reserves in accordance with GAAP
have been set aside;
(e) minor survey exceptions or minor encumbrances, easements or
reservations, or rights of others for rights-of-way, utilities and other similar
purposes, or zoning or other restrictions as to the use of real properties,
which are necessary or desirable for the conduct of the activities of Borrower
and its Subsidiaries or which customarily exist on properties of corporations
engaged in similar activities and similarly situated and which do not in any
event materially impair the use of such real properties in the operation of the
business of the Borrower and its Subsidiaries;
(f) Liens existing as of the date of this Agreement and listed on
Schedule 4.12 attached hereto; and
--------------
(g) purchase money Liens granted to a Person financing a Capital
Expenditure so long as (i) the Lien granted is limited to the specific fixed
assets acquired and the proceeds thereof, (ii) the aggregate principal amount of
Debt secured by the Lien is not more than the acquisition cost of the specific
fixed assets on which the Lien is granted and (iii) the transaction does not
violate any other provision of this Agreement.
Person shall mean any individual, sole proprietorship, partnership, joint
------
venture, limited liability company, trust, unincorporated organization,
association, corporation, institution, entity or government (whether national,
Federal, state, county, city, municipal or otherwise, including, without
limitation, any instrumentality, division, agency, body or department thereof).
Prime Rate shall mean the interest rate announced from time to time by
-----------
Lender as its "prime rate" (which rate shall fluctuate as and when said prime
rate shall change). Borrower acknowledges that such "prime rate" is a reference
rate and does not necessarily represent the lowest or best rate offered by
Lender to its customers.
Principal Shareholder shall mean Mercy Air Service, Inc.
----------------------
Property shall mean any interest in any kind of property or asset, whether
--------
real, personal or mixed, or tangible or intangible. Properties shall mean the
----------
plural of Property. For purposes of this Agreement, Borrower and each
Subsidiary shall be deemed to be the owner of any Property which it has acquired
or holds subject to a conditional sale agreement, financing lease or other
arrangement pursuant to which title to the Property has been retained by or
vested in some other Person for security purposes.
Rate of Dilution of Borrower's Accounts shall mean the value of all
------------------
non-cash credits to Borrower's Accounts (including, without limitation, bad debt
expense) during the twelve (12) month period immediately preceding the date of
calculation divided by Borrower's sales during said period. The Rate of
Dilution shall be calculated by Lender in connection with each of its collateral
examinations of the Borrower's Accounts (which calculation shall be conclusive
in the absence of manifest error), and the Rate of Dilution as so calculated by
Lender shall be and remain the applicable Rate of Dilution until the next
collateral examination is performed by Lender. If the Rate of Dilution at the
time of any calculation thereof has increased or decreased from the prior
calculation thereof, then Lender shall adjust the advance rate for Accounts used
in the Borrowing Base accordingly.
-9-
RCRA shall mean the Solid Waste Disposal Act, as amended by the Resource
----
Conservation and Recovery Act of 1976 and Hazardous and Solid Waste Amendments
of 1984, 42 U.S.C. 6901 et seq., and any future amendments.
-- ---
Release shall mean any spilling, leaking, pumping, pouring, emitting,
-------
emptying, discharging, injecting, escaping, leaching, dumping or disposing into
the environment, including, without limitation, the abandonment or discarding of
barrels, drums, containers, tanks and/or other receptacles containing (or
containing traces of) any Hazardous Substance.
Reportable Event shall have the meaning given to such term in ERISA.
-----------------
Restricted Investment shall mean any Investment, or any expenditure or any
----------------------
incurrence of any liability to make any expenditure for an Investment, other
than:
(a) loans and/or advances by any Subsidiary to Borrower which are
subordinated in writing to the payment of the Borrower's Obligations in form and
substance satisfactory to Lender;
(b) direct obligations of the United States of America or any
instrumentality or agency thereof, the payment of which is unconditionally
guaranteed by the United States of America or any instrumentality or agency
thereof (all of which Investments must mature within twelve (12) months from the
time of acquisition thereof);
(c) Investments in readily marketable commercial paper which, at
the time of acquisition thereof by Borrower or any Subsidiary, is rated A-1 or
better by S&P and P-1 or better by Moody's and which matures within 270 days
from the date of acquisition thereof, provided that the issuer of such
commercial paper shall, at the time of acquisition of such commercial paper,
have a senior long-term debt rating of at least A by S&P and Moody's;
(d) negotiable certificates of deposit or negotiable bankers
acceptances issued by Lender or any other bank or trust company organized under
the laws of the United States of America or any state thereof, which bank or
trust company (other than Lender to which such restrictions shall not apply) is
a member of both the Federal Deposit Insurance Corporation and the Federal
Reserve System and has a Thomson BankWatch Global Issuer Rating of "B" or better
(all of which Investments must mature within twelve (12) months from the time of
acquisition thereof);
(e) repurchase agreements, which shall be collateralized for at
least 102% of face value, issued by Lender or any other bank or trust company
organized under the laws of the United States or any state thereof, which bank
or trust company (other than Lender to which such restrictions shall not apply)
is a member of both the Federal Deposit Insurance Corporation and the Federal
Reserve System and has a Thomson BankWatch Global Issuer Rating of "B" or better
(all of which Investments must mature within twelve (12) months from the time of
acquisition thereof);
(f) Investments existing as of the date hereof as described in
Schedule 4.18 attached hereto, and any future retained earnings in respect
--------------
thereof; and
(g) loans or advances in the usual and ordinary course of business
to officers and/or employees of Borrower or a Subsidiary for business expenses
in the aggregate principal amount of up to $25,000 at any one time outstanding.
-10-
Revolving Credit Loan and Revolving Credit Loans shall have the respective
---------------------- ----------------------
meanings ascribed thereto in Section 2.01(a).
Revolving Credit Note shall have the meaning ascribed thereto in Section
-----------------------
2.02.
Revolving Credit Period shall mean the period commencing on the date of
-------------------------
this Agreement and ending April 25, 2001.
S&P shall mean Standard and Poor's Ratings Group.
---
Security Agreement shall mean that certain Security Agreement dated the
-------------------
date hereof and executed by Borrower in favor of Lender, as the same may from
time to time be amended, modified, extended, or restated.
Subordinated Indebtedness shall mean, as of the date of any determination
--------------------------
thereof, the aggregate principal amount of all Indebtedness of Borrower
outstanding as of such date which is subordinated in writing (either by its
terms or pursuant to a subordination agreement) to the payment and priority of
all of the Borrower's Obligations in form and substance satisfactory to Lender.
Subsidiary shall mean any corporation or other entity of which more than
----------
Fifty Percent (50%) of the issued and outstanding capital stock or other equity
interests entitled to vote for the election of directors or other persons
performing similar functions (other than by reason of default in the payment of
dividends) is at the time owned directly or indirectly by Borrower or any
Subsidiary.
Term Loan shall have the meaning ascribed thereto in Section 2.03.
----------
Term Loan Note shall have the meaning ascribed thereto in Section 2.03.
----------------
Third Party Collateral shall mean any Property or assets of any Obligor
------------------------
other than Borrower which now or at any time hereafter secure the payment or
performance of any of the Borrower's Obligations or any Guarantee thereof.
Total Revolving Credit Outstandings shall mean, as of any date, the
--------------------------------------
aggregate principal amount of all Revolving Credit Loans outstanding as of such
date.
Transaction Documents shall mean this Agreement, the Notes, the Security
----------------------
Agreement, the Guaranty, the Illinois Mortgage, the Missouri Deed of Trust, the
Assignment of Leases and Rents and all other agreements, documents and
instruments heretofore, now or hereafter delivered to Lender with respect to or
in connection with or pursuant to this Agreement, any Loans made hereunder or
any of the other Borrower's Obligations, and executed by or on behalf of
Borrower and/or any other Obligor, all as the same may from time to time be
amended, modified, extended, renewed or restated.
Unused Availability shall mean, as of any date, the sum of (a) the lesser
--------------------
of (i) the amount of Lender's Revolving Credit Commitment as of such date or
(ii) the Borrowing Base as of such date minus (b) the Total Revolving Credit
-----
Outstandings as of such date.
Voting Stock shall mean, with respect to any corporation, any shares of
-------------
stock of such corporation whose holders are entitled under ordinary
circumstances to vote for the election of directors of such corporation
(irrespective of whether at the time stock of any other class or classes shall
have or might have voting power by reason of the happening of any contingency).
Welfare Plan shall mean a "welfare plan" as such term is defined in Section
------------
3(1) of ERISA, which is established or maintained by Borrower, any Subsidiary or
any ERISA Affiliate, other than a Multi-Employer Plan.
-11-
1.02 Accounting Terms and Determinations. Except as otherwise specified in
-----------------------------------
this Agreement, all accounting terms used in this Agreement shall be
interpreted, all accounting determinations under this Agreement shall be made
and all financial statements required to be delivered under this Agreement shall
be prepared in accordance with GAAP as in effect from time to time, applied on a
basis consistent (except for changes approved by Lender and by Borrower's
independent certified public accountants) with the most recent audited financial
statements of Borrower delivered to Lender.
SECTION2. THE LOANS.
---------------------
2.01 Revolving Credit Loans.
------------------------
(a) Subject to the terms and conditions of this Agreement, during the
Revolving Credit Period of this Agreement, and so long as no Default or Event of
Default under this Agreement has occurred and is continuing, Lender hereby
agrees to make such loans (individually, a "Revolving Credit Loan" and
collectively, the "Revolving Credit Loans") to Borrower as Borrower may from
time to time request pursuant to Section 2.02. The aggregate principal amount
of Revolving Credit Loans which Lender shall be required to have outstanding
under this Agreement at any one time shall not exceed the lesser of (i) the
Lender's Revolving Credit Commitment or (ii) the Borrowing Base. Subject to the
terms and conditions of this Agreement, Borrower may borrow, repay and reborrow
such sums from Lender, provided, however, that in no event may the Total
Revolving Credit Outstandings on any given day exceed the lesser of (A) the
Lender's Revolving Credit Commitment as of such day or (B) the Borrowing Base as
of such day. All Revolving Credit Loans not paid prior to the last day of the
Revolving Credit Period, together with all accrued and unpaid interest thereon,
shall be due and payable on the last day of the Revolving Credit Period.
Notwithstanding anything herein to the contrary, for a period of thirty (30)
consecutive days during the Revolving Credit Period, Borrower agrees to pay the
principal balance of all outstanding Revolving Credit Loans, together with all
accrued and unpaid interest thereon, to $0 and maintain such $0 balance
throughout such thirty (30) day period.
(b) For purposes of this Agreement, the "Borrowing Base" shall mean an
amount equal to Eighty Percent (80%) of the face amount of all then existing
Eligible Accounts (less maximum discounts, credits and allowances which may be
taken by or granted to Account Debtors in connection therewith and/or
adjustments for reserves and allowances deemed appropriate by Lender in its good
faith discretion);
Notwithstanding any provision contained in this Section 2.01(b) to the
contrary, Lender may at any time and from time to time, in its sole and absolute
discretion, loan to Borrower more than the above stated percentage of Eligible
Accounts without notice to Borrower; provided, however, that no such
over-advance shall establish a custom or course of dealing or entitle Borrower
to any subsequent over-advance under the same or different circumstances.
Lender reserves the right at any time and from time to time in its good
faith discretion to increase or decrease the percentage advance rates on
Eligible Accounts specified in this Section 2.01(b) upon seven (7) days' prior
written notice to Borrower.
(c) Borrower shall deliver to Lender on the tenth (10) Business Day of
each month hereafter (calculated as of the close of business on the last day of
the preceding month) (or at such other intervals as Lender shall require from
time to time), a borrowing base certificate in the form of Exhibit A attached
---------
hereto and incorporated herein by reference (or in such other form as Lender
shall require from time to time) (each, a "Borrowing Base Certificate") setting
forth:
(i) the Borrowing Base and its components as of the end of the
immediately preceding Business Day;
(ii) the sum of the Total Revolving Credit Outstandings as of the end
of the immediately preceding Business Day; and
-12-
(iii) the difference, if any, between the Borrowing Base and the sum
of the Total Revolving Credit Outstandings as of the end of the immediately
preceding Business Day.
The Borrowing Base shown in such Borrowing Base Certificate (subject to
adjustment for collections of Accounts received by Lender since the date of such
Borrowing Base Certificate) shall be and remain the Borrowing Base hereunder
until the next Borrowing Base Certificate is delivered to Lender, at which time
the Borrowing Base shall be the amount shown in such subsequent Borrowing Base
Certificate. Each Borrowing Base Certificate shall be certified as to truth and
accuracy by the president, the chief financial officer or the chief accounting
officer of Borrower.
(d) If at any time the Total Revolving Credit Outstandings are greater
than the Borrowing Base as shown on the most recent Borrowing Base Certificate,
Borrower shall be automatically required (without demand or notice of any kind
by Lender, all of which are hereby expressly waived by Borrower) to immediately
repay the Revolving Credit Loans in an amount sufficient to reduce the amount of
the Total Revolving Credit Outstandings to the amount of the Borrowing Base.
2.02 Procedure for Borrowing. Subject to the terms and conditions of
-------------------------
this Agreement, Lender shall cause the Revolving Credit Loans to be made to
Borrower at any time and from time to time during the Revolving Credit Period of
this Agreement upon timely prior oral or written notice ("Borrowing Notice") to
Lender specifying (a) the desired amount of the Revolving Credit Loan and (b)
the date on which the Revolving Credit Loan proceeds are to be made available to
Borrower, which must be a Business Day. Each Borrowing Notice must be received
by Lender not later than 12:00 noon (St. Louis time) on the Business Day on
which a Revolving Credit Loan is to be made. Subject to the terms and
conditions of this Agreement, provided that Lender has received the Borrowing
Notice, Lender shall (unless Lender determines that any applicable condition
specified in Section 3 has not been satisfied) make such Revolving Credit Loan
to Borrower by crediting the amount of such Revolving Credit Loan to an account
of Borrower at Lender, not later than 2:30 p.m. (St. Louis time) on the Business
Day specified in said Borrowing Notice. Borrower hereby authorizes Lender to
rely on telephonic, telegraphic, telecopy, telex or written instructions of any
individual identifying himself or herself as one of the individuals listed on
Schedule 2.02 attached hereto (or any other individual from time to time
--------------
authorized to act on behalf of Borrower pursuant to a resolution adopted by the
Board of Directors of Borrower and certified by the Secretary of Borrower and
delivered to Lender) with respect to any request to make a Revolving Credit Loan
or a repayment hereunder, and on any signature which Lender believes to be
genuine, and Borrower shall be bound thereby in the same manner as if such
person were actually authorized or such signature were genuine. Borrower also
hereby agrees to indemnify Lender and hold Lender harmless from and against any
and all claims, demands, damages, liabilities, losses, costs and expenses
(including, without limitation, reasonable attorneys' fees and expenses)
relating to or arising out of or in connection with the acceptance of
instructions for making Revolving Credit Loans or repayments hereunder. The
Revolving Credit Loans shall be evidenced by a Revolving Credit Note of Borrower
dated the date hereof and payable to the order of Lender in the original
principal amount of $1,500,000.00 in the form attached hereto as Exhibit B and
---------
incorporated herein by reference (as the same may from time to time be amended,
modified, extended or renewed, the "Revolving Credit Note").
2.03 Term Loan. Lender hereby agrees to make Borrower a term loan on
----------
the date hereof in the original principal amount of $1,350,000.00 (the "Term
Loan"). The Term Loan shall be evidenced by a Term Loan Promissory Note of
Borrower dated the date hereof and payable to the order of Lender in the
original principal amount of $1,350,000.00 in the form attached hereto as
Exhibit C and incorporated herein by reference (as the same may from time to
----------
time be amended, modified, extended, renewed or restated, the "Term Loan Note").
The Term Loan Note shall mature on April 25, 2007 (on which date all unpaid
principal and all accrued and unpaid interest shall become due and payable).
Principal on the Term Loan Note shall be payable as provided in the Term Loan
Note.
-13-
Any provision of this Agreement or the Term Loan Note to the contrary
notwithstanding, the unpaid principal balance of the Term Loan plus accrued
interest thereon shall be immediately due and payable upon acceleration of
Borrower's Obligations as provided in Section 6 hereof or in the event of
termination of this Agreement.
2.04 Interest Rates. So long as no Event of Default under this
---------------
Agreement has been declared by Lender and is continuing, (a) each Revolving
Credit Loan shall bear interest prior to maturity at a rate per annum equal to
the Prime Rate (fluctuating as and when the Prime Rate shall change) and (b) the
Term Loan shall bear interest prior to maturity at a rate per annum equal to
Eight and 01/100 Percent (8.01%). So long as any Event of Default under this
Agreement has been declared by Lender and is continuing, (a) each Revolving
Credit Loan shall bear interest prior to maturity at a rate per annum equal to
Three Percent (3%) over and above the Prime Rate (fluctuating as and when the
Prime Rate shall change) and (b) the Term Loan shall bear interest prior to
maturity at a rate per annum equal to Eleven and 01/100 Percent (11.01%). From
and after the maturity of the Revolving Credit Note, whether by reason of
acceleration or otherwise, each Revolving Credit Loan shall bear interest
payable on demand until paid at a rate per annum equal to Three Percent (3%)
over and above the Prime Rate (fluctuating as and when the Prime Rate shall
change). From and after the maturity of the Term Loan Note, the Term Loan shall
bear interest payable on demand until paid at a rate per annum equal to Eleven
and 01/100 Percent (11.01%). Interest shall be computed with respect to all
Loans on an actual day, 360-day year basis.
2.05 Interest Payments. Borrower shall pay Lender on the first (1st)
------------------
day of each month, commencing with the first (1st) day of the first (1st) month
following the date each Revolving Credit Loan was made, all accrued and unpaid
interest on each Revolving Credit Loan. Notwithstanding any provision contained
in this Agreement to the contrary, all accrued and unpaid interest on the
Revolving Credit Loans shall also be paid at the maturity of the Revolving
Credit Note, whether by reason of acceleration or otherwise. Borrower shall pay
Lender interest on the Term Loan as provided in the Term Loan Note.
Notwithstanding any provision contained in this Agreement to the contrary, all
accrued and unpaid interest on the Term Loan shall also be paid at the maturity
of the Term Loan Note, whether by reason of acceleration or otherwise. In the
event any payment of interest shall become due on a day which is not a Business
Day, such interest payment shall be due and payable on the next succeeding
Business Day.
2.06 Prepayment. Subject to the provisions of Section 2.10 and 2.07 of
----------
this Agreement, (a) Borrower shall have the right to prepay all at any time or
any portion from time to time of the unpaid principal of any Revolving Credit
Loan prior to maturity, without penalty or premium, and (b) Borrower shall have
the right to prepay all at any time or any portion from time to time of the
unpaid principal balance of the Term Loan prior to maturity, provided that (i)
partial prepayments shall be applied to installments of principal of the Term
Loan in the inverse order of their stated maturities, (ii) on each prepayment
date, Borrower shall pay to the order of Lender all accrued and unpaid interest
on the principal portion of the Term Loan being prepaid to and including the
date of such prepayment, and (iii) Borrower shall pay the Prepayment Fee and
other amounts, if any, under Section 2.07.
2.07 Prepayment Fee. Borrower hereby agrees to pay Lender, upon
---------------
prepayment of all or part of the principal amount of the Term Loan before final
maturity, a prepayment fee ("Prepayment Fee") in an amount equal to the product
of (A) the amount of principal of each installment so prepaid, each respectively
multiplied by (B) the product of (1) a rate of interest equal to the difference
(not less than zero) between the rate of interest then applicable to the Term
Loan and the yield-to-maturity of U.S. Treasury securities selected by Bank, as
reported in the Wall Street Journal, Midwest Edition, or any similar publication
-------------------
or newspaper selected by Bank, on the Business Day before the date of such
prepayment, having an original maturity closest to, but not later than, the
respective due date of the applicable installment of principal being prepaid,
multiplied by (2) the number of days from and including the date of such
prepayment to but not including the respective due date of the applicable
installment of principal being prepaid divided by three hundred sixty (360).
All determinations, estimates, assumptions, allocations and the like required
for the determination of such Prepayment Fees shall be made by Bank in good
faith, and Bank's determination shall be final, binding and conclusive upon
Borrower. If Borrower fails to pay any Prepayment Fee when due, the amount of
such Prepayment Fee shall thereafter bear interest until paid at the default
rate applicable to the Term Loan specified in this Agreement (computed on the
basis of a 360-day year, actual days elapsed).
-14-
2.08 Method of Making Interest and Other Payments; Application of
------------------------------------------------------------------
Payments. Lender may, at its option, deem interest and other amounts payable
under this Agreement (including any principal portion of the Term Loan which is
then due and payable but excluding the principal balance of the Revolving Credit
Loans) to be paid by causing a Revolving Credit Loan to be made to Borrower in
such amount(s). Solely for the purpose of calculating interest earned by
Lender, payment by or for the account of Borrower shall be applied by the Lender
on account of the Borrower's Obligations on the second (2nd) Business Day after
a deposit of funds is made in the amount of that payment in Lender's operating
account at Lender. Deposits received after 12:00 noon. (St. Louis time) shall
be deemed to have been received or deposited on the following Business Day.
2.09 Late Fees. If Borrower fails to make any payment of any principal
---------
of or interest on any Loan within ten (10) days after the date the same shall
become due and payable, whether by reason of maturity, acceleration or
otherwise, in addition to all of the other rights and remedies of Lender under
this Agreement and at law or in equity, Borrower shall pay Lender on demand with
respect to each such late payment a late fee in an amount equal to the greater
of $100.00 or Five Percent (5%) of the amount of each such late payment.
2.10 Early Termination and Early Termination Fee. Borrower may elect
---------------------------------------------
to terminate this Agreement at any time. Borrower hereby agrees that in the
event that Lender or Borrower elects to terminate this Agreement (including,
without limitation, any termination by Lender as a result of the occurrence of
an Event of Default under this Agreement), Borrower will pay to Lender the total
of the following: (a) any amount of interest accrued through the date of
termination with respect to the outstanding Borrower's Obligations; and (b) the
outstanding Borrower's Obligations.
2.11 General Provisions as to Payments. Borrower shall make each
-------------------------------------
payment of principal of, and interest on, the Loans and of fees and all other
amounts payable under this Agreement not later than 12:00 noon (St. Louis time)
on the date when due, in Federal or other funds immediately available in St.
Louis, Missouri, to Lender at its address referred to in Section 7.07. Payments
received after 12:00 noon. (St. Louis time) shall be deemed to have been
received on the following Business Day. Whenever any payment of principal of,
or interest on, the Loans or of fees shall be due on a day which is not a
Business Day, the date for payment thereof shall be extended to the next
succeeding Business Day. If the date for any payment of principal is extended
by operation of law or otherwise, interest thereon, at the then applicable rate,
shall be payable for such extended time.
SECTION3. PRECONDITIONS TO LOANS.
-----------------------------------
3.01 Initial Loan. Notwithstanding any provision contained in this
-------------
Agreement to the contrary, Lender shall have no obligation to make the initial
Loan under this Agreement unless Lender shall have first received:
(a) this Agreement and the Notes, each executed by a duly authorized
officer of Borrower;
(b) the Security Agreement (which must be in form and substance
satisfactory to Lender) and such Uniform Commercial Code financing statements
and other documents as Lender may require in connection therewith, each executed
by a duly authorized officer of Borrower;
(c) the Missouri Deed of Trust (which must be in form and substance
satisfactory to Lender) and such Uniform Commercial Code financing statements
and other documents as Lender may require in connection therewith, each executed
by a duly authorized officer of Borrower;
(d) the Assignment of Leases and Rents (which must be in form and
substance satisfactory to Lender) and such Uniform Commercial Code financing
statements and other documents as Lender may require in connection therewith,
each executed by a duly authorized officer of Borrower;
(e) a title commitment for an ALTA Loan Policy (Form 1970) for the real
property covered by the Missouri Deed of Trust in an amount acceptable to the
Lender, with all standard exceptions deleted, no other exceptions unless
previously approved by the Lender and with such affirmative coverages as the
Lender shall require, including, without limitation, a zoning endorsement, a
comprehensive endorsement, a future advance endorsement, a survey endorsement,
an access endorsement, a separate tax parcel, and a last dollar endorsement;
-15-
(f) copies of all recorded plats and title exceptions affecting the
real property covered by the Missouri Deed of Trust;
(g) an appraisal of the real property covered by the Missouri Deed of
Trust in form and substance satisfactory to the Lender prepared by an appraiser
selected by the Lender;
(h) such environmental assessments of the real property covered by the
Missouri Deed of Trust as shall be required by the Lender, including, without
limitation, appropriate environmental inspections, tests and record searches,
and a report thereof by an environmental engineer or other Person satisfactory
to the Lender stating there is no evidence of hazardous or toxic materials on or
affecting any such real property together with a reliance letter acceptable to
the Lender;
(i) the Illinois Mortgage (which must be in form and substance
satisfactory to Lender) and such Uniform Commercial Code financing statements
and other documents as Lender may require in connection therewith, each executed
by a duly authorized officer of Borrower;
(j) a title commitment for an ALTA Loan Policy (Form 1970) for the real
property covered by the Illinois Mortgage in an amount acceptable to the Lender,
with all standard exceptions deleted, no other exceptions unless previously
approved by the Lender and with such affirmative coverages as the Lender shall
require, including, without limitation, a zoning endorsement, a comprehensive
endorsement, a future advance endorsement, a survey endorsement, an access
endorsement, a separate tax parcel, and a last dollar endorsement;
(k) copies of all recorded plats and title exceptions affecting the
real property covered by the Illinois Mortgage;
(l) an appraisal of the real property covered by the Illinois Mortgage
in form and substance satisfactory to the Lender prepared by an appraiser
selected by the Lender;
(m) such environmental assessments of the real property covered by the
Illinois Mortgage as shall be required by the Lender, including, without
limitation, appropriate environmental inspections, tests and record searches,
and a report thereof by an environmental engineer or other Person satisfactory
to the Lender stating there is no evidence of hazardous or toxic materials on or
affecting any such real property together with a reliance letter acceptable to
the Lender;
(n) a landlord estoppel letter (which must be in form and substance
satisfactory to the Lender), duly executed by the owner of the real property
covered by the Illinois Mortgage;
(o) the Guaranty (which must be in form and substance satisfactory to
Lender), duly executed by each of the Guarantors;
(p) a copy of resolutions of the Board of Directors of Borrower, duly
adopted, which authorize the execution, delivery and performance of this
Agreement, the Notes and the other Transaction Documents executed by Borrower,
certified by the Secretary of Borrower;
(q) a copy of the Articles of Incorporation of Borrower, including any
amendments thereto, certified by the Secretary of State of the State of
Missouri;
(r) a copy of the By-Laws of Borrower, including any amendments
thereto, certified by the Secretary of Borrower;
-16-
(s) an incumbency certificate, executed by the Secretary of Borrower,
which shall identify by name and title and bear the signatures of all of the
officers of Borrower executing any of the Transaction Documents;
(t) certificates of corporate good standing of Borrower issued by the
Secretaries of State of the States of Missouri and Illinois;
(u) a copy of the Certificate of Incorporation of Air Methods
Corporation, including any amendments thereto, certified by the Secretary of
State of the State of Delaware;
(v) a copy of the By-Laws of Air Methods Corporation, including any
amendments thereto, certified by the Secretary of Air Methods Corporation;
(w) an incumbency certificate, executed by the Secretary of Air Methods
Corporation, which shall identify by name and title and bear the signatures of
all of the officers of Air Methods Corporation executing any of the Transaction
Documents;
(x) certificates of corporate good standing of Air Methods Corporation
issued by the Secretaries of State of the States of Missouri and Delaware;
(y) a copy of the Articles of Incorporation of Mercy Air Service, Inc.,
including any amendments thereto, certified by the Secretary of State of the
State of California;
(z) a copy of the By-Laws of Mercy Air Service, Inc., including any
amendments thereto, certified by the Secretary of Mercy Air Service, Inc.;
(aa) an incumbency certificate, executed by the Secretary of Mercy Air
Service, Inc., which shall identify by name and title and bear the signatures of
all of the officers of Mercy Air Service, Inc. executing any of the Transaction
Documents;
(bb) certificates of corporate good standing of Mercy Air Service, Inc.
issued by the Secretaries of State of the States of Missouri and California;
(cc) an opinion of counsel of Xxxxx, Xxxxxx & Xxxxxx LLP, outside
counsel to Borrower and the Guarantors, in form and substance satisfactory to
Lender and Lender's counsel;
(dd) the initial Borrowing Base Certificate required by Section
2.01(c);
(ee) the Borrowing Notice required by Section 2.02;
(ff) evidence of the proper filing of UCC-1 Financing Statements
perfecting first priority security interests in favor of Lender in all of the
Collateral and all of the Third Party Collateral;
(gg) UCC-3 Termination Statements for all UCC-1 Financing Statements
filed of record against Borrower other than UCC-1 Financing Statements relating
to Permitted Liens;
(hh) evidence satisfactory to Lender of the insurance required by this
Agreement and the other Transaction Documents together with loss payable
endorsements in form and substance satisfactory to Lender, duly executed by the
insurance company;
(ii) copies of all financial statements and other Exhibits and
Schedules required by this Agreement and the other Transaction Documents;
-17-
(jj) a letter of direction from Borrower with respect to the
disbursement of the proceeds of the initial Loans under this Agreement;
(kk) such mortgagee, bailee, landlord or warehousemen's waivers as
Lender may deem necessary regarding locations at which Collateral is or will be
stored or otherwise located;
(ll) evidence satisfactory to the Lender that Borrower has consummated
the acquisition of the assets of Area Rescue Consortium of Hospitals pursuant to
that certain Asset Purchase Agreement dated March 23, 2000, by and among Area
Rescue Consortium of Hospitals, as seller, Air Methods Corporation and Mercy Air
Service, Inc., as buyers, and assigned by buyers to Borrower pursuant to that
certain Assignment Agreement dated April 18, 2000 by and among such seller and
buyers (the "ARCH Acquisition Agreement"), the terms and provisions (including
the purchase price) of which ARCH Acquisition Agreement must be acceptable to
the Lender, which evidence shall include (i) a certificate of all "buyer"
parties to the ARCH Acquisition Agreement that all of the conditions to such
parties' obligations thereunder which are required to be satisfied as of or
prior to closing have been satisfied or effectively waived and (ii) a
certificate of all "seller" parties to the ARCH Acquisition Agreement that all
of the conditions to such parties' obligations thereunder which are required to
be satisfied as of or prior to closing have been satisfied or effectively
waived; and
(mm) such other agreements, documents, instruments and certificates as
Lender may reasonably request.
Any one or more of the conditions set forth above which have not been
satisfied by Borrower on or prior to the date of disbursement of the initial
Loan hereunder shall not be deemed permanently waived by Lender unless Lender
shall waive the same in a writing which expressly states that the waiver is
permanent, and in all cases in which the waiver is not stated to be permanent
Lender may at any time subsequent thereto insist upon compliance and
satisfaction of any such condition as a condition to any subsequent Loan
hereunder and failure to Borrower to comply with any such condition within three
(3) Business Day's written notice from Lender to Borrower shall constitute an
Event of Default under this Agreement.
3.02 All Loans. Notwithstanding any provision contained in this
----------
Agreement to the contrary, Lender shall have no obligation to make any Loan
under this Agreement unless:
(a) Lender shall have received a current Borrowing Base Certificate as
required by Section 2.01(c);
(b) if such Loan is a Revolving Credit Loan, Lender shall have received
a Borrowing Notice for such Revolving Credit Loan as required by Section 2.02;
(c) both immediately before and immediately after giving effect to such
Loan, no Default or Event of Default under this Agreement shall have occurred
and be continuing;
(d) no material adverse change in the Properties, assets, liabilities,
business, operations, prospects, income or condition (financial or otherwise) of
Borrower, any other Obligor and/or any Subsidiary shall have occurred since the
date of this Agreement and be continuing; and
(e) all of the representations and warranties made by Borrower in this
Agreement and/or in any other Transaction Document shall be true and correct in
all material respects on and as of the date of such Loan as if made on and as of
the date of such Loan (and for purposes of this Section 3.02(e), the
representations and warranties made by Borrower in Section 4.04 shall be deemed
to refer to the most recent financial statements of Borrower delivered to Lender
pursuant to Section 5.01(a)).
Each request for a Loan by Borrower under this Agreement shall be deemed to
be a representation and warranty by Borrower on the date of such Loan as to the
facts specified in clauses (c), (d) and (e) of this Section 3.02.
-18-
SECTION 4. REPRESENTATIONS AND WARRANTIES.
-------------------------------------------
Borrower hereby represents and warrants to Lender that:
4.01 Corporate Existence and Power. Borrower and each Subsidiary: (a)
-----------------------------
is duly incorporated, validly existing and in good standing under the laws of
the jurisdiction of its incorporation; (b) has all requisite corporate powers
required to carry on its business as now conducted; (c) has all requisite
governmental and regulatory licenses, authorizations, consents and approvals
required to carry on its business as now conducted, except such licenses,
authorizations, consents and approvals the failure to have could not reasonably
be expected to have a Material Adverse Effect; and (d) is qualified to transact
business as a foreign corporation in, and is in good standing under the laws of,
all states in which it is required by applicable law to maintain such
qualification and good standing except for those states in which the failure to
qualify or maintain good standing could not reasonably be expected to have a
Material Adverse Effect.
4.02 Corporate Authorization. The execution, delivery and performance
------------------------
by Borrower of this Agreement, the Notes and the other Transaction Documents to
which Borrower is a party are within the corporate powers of Borrower and have
been duly authorized by all necessary corporate action.
4.03 Binding Effect. This Agreement, the Notes and the other
---------------
Transaction Documents to which Borrower is a party have been duly executed and
delivered by Borrower and constitute the legal, valid and binding obligations of
Borrower enforceable in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency or other similar laws
affecting creditors' rights generally and by general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
4.04 Financial Statements. Borrower has furnished Lender with such
---------------------
financial statements of Parent and Area Rescue Consortium of Hospitals as Lender
has requested. Borrower represents and warrants to Lender that (a) such
financial statements with respect to Parent fairly present the condition of
Parent and its Subsidiaries as of the dates thereof, (b) there has been no
material adverse change in the condition or operation, financial or otherwise,
of Parent or any of its Subsidiaries since the last date of any such financial
statements, (c) neither Parent nor any of its Subsidiaries had any direct or
contingent liabilities which were not disclosed on said financial statements or
the notes thereto (to the extent such disclosure is required by GAAP); and (d)
Borrower has no knowledge of any facts, circumstances or omissions that make or
may make the financial statements furnished with respect to Area Rescue
Consortium of Hospitals untrue, incorrect or misleading in any material respect.
4.05 Litigation. Except as disclosed on Schedule 4.05 attached hereto,
---------- -------------
there is no action or proceeding pending or, to the knowledge of Borrower,
threatened against or affecting Borrower or any Subsidiary before any court,
arbitrator or any governmental, regulatory or administrative body,
instrumentality, authority, agency or official which, if determined adversely
against Borrower or any Subsidiary, could reasonably be expected to have a
Material Adverse Effect. Neither Borrower nor any Subsidiary is in default with
respect to any order, writ, injunction, decision or decree of any court,
arbitrator or any governmental, regulatory or administrative body,
instrumentality, authority, agency or official, a default under which could
reasonably be expected to have a Material Adverse Effect. There are no
outstanding judgments against Borrower or any Subsidiary.
-19-
4.06 Pension and Welfare Plans. Each Pension Plan and Welfare Plan
----------------------------
complies in all material respects with ERISA and all other applicable statutes
and governmental and regulatory rules and regulations; no Reportable Event has
occurred and is continuing with respect to any Pension Plan; neither Borrower
nor any Subsidiary nor any ERISA Affiliate has withdrawn from any Multi-Employer
Plan in a "complete withdrawal" or a "partial withdrawal" as defined in Sections
4203 or 4205 of ERISA, respectively; neither Borrower nor any Subsidiary nor any
ERISA Affiliate has entered into an agreement pursuant to Section 4204 of ERISA;
neither Borrower nor any Subsidiary nor any ERISA Affiliate has in the past
contributed to or currently contributes to a Multi-Employer Plan; neither
Borrower nor any Subsidiary nor any ERISA Affiliate has any withdrawal liability
with respect to a Multi-Employer Plan; no steps have been instituted by Borrower
or any Subsidiary or any ERISA Affiliate to terminate any Pension Plan; no
condition exists or event or transaction has occurred in connection with any
Pension Plan, Multi-Employer Plan or Welfare Plan which could result in the
incurrence by Borrower or any Subsidiary or any ERISA Affiliate of any material
liability, fine or penalty; and neither Borrower nor any Subsidiary nor any
ERISA Affiliate is a "contributing sponsor" as defined in Section 4001(a)(13) of
ERISA of a "single-employer plan" as defined in Section 4001(a)(15) of ERISA
which has two or more contributing sponsors at least two of whom are not under
common control. Except as disclosed on the consolidated financial statements of
Borrower and its Subsidiaries delivered by Borrower to Lender, neither Borrower
nor any Subsidiary nor any ERISA Affiliate has any liability with respect to any
Welfare Plan.
4.07 Tax Returns and Payment. Borrower and each Subsidiary has filed
-------------------------
all Federal, state, local and other income and other tax returns which are
required to be filed and has paid all taxes which have become due pursuant to
such returns and all other taxes, assessments, fees and other governmental
charges upon Borrower or such Subsidiary, as the case may be, and/or upon their
respective Properties, assets, income and franchises which have become due and
payable by Borrower or such Subsidiary, as the case may be, except those wherein
the amount, applicability or validity are being contested by Borrower or such
Subsidiary, as the case may be, by appropriate proceedings being diligently
conducted in good faith and in respect of which adequate reserves in accordance
with GAAP have been established. There is no asserted or assessed (or to
Borrower's knowledge, proposed) tax deficiency against Borrower or any
Subsidiary which, if determined adversely against Borrower or any Subsidiary,
could reasonably be expected to have a Material Adverse Effect.
4.08 Subsidiaries. Borrower has no Subsidiaries other than as
------------
identified on Schedule 4.08 attached hereto, as the same may from time to time
-------------
be amended, modified or supplemented as provided herein. Schedule 4.08 attached
-------------
hereto correctly sets forth, for each Subsidiary, the number of shares of each
class of common and preferred stock authorized for such Subsidiary, the number
of outstanding and the percentage of the outstanding shares of each such class
owned, directly or indirectly, by Borrower or one or more of its Subsidiaries.
All of the issued and outstanding capital stock of each Subsidiary is duly
authorized, validly issued and fully paid and nonassessable. Except as
disclosed on Schedule 4.08 attached hereto, neither Borrower nor any Subsidiary,
-------------
individually or collectively, owns or holds, directly or indirectly, any capital
stock or equity security of, or any equity interest in, any corporation or
business other than Borrower's Subsidiaries. Borrower may at any time amend,
modify or supplement Schedule 4.08 by notifying Lender in writing of any changes
-------------
thereto, including any formation, acquisition, merger or liquidation of any
Subsidiary or any change in the capitalization of any Subsidiary, in each case,
in accordance with the terms of this Agreement, and thereby the representations
and warranties contained in this Section 4.08 shall be amended accordingly so
long as such amendment, modification or supplement is made within thirty (30)
days after the occurrence of any such changes in the facts stated therein and
that such changes reflect transactions that are permitted under this Agreement.
4.09 Compliance With Other Instruments; None Burdensome. Neither
-------------------------------------------------------
Borrower nor any Subsidiary is a party to any contract or agreement or subject
to any charter or other corporate restriction which could reasonably be expected
to have a Material Adverse Effect and which is not disclosed on Borrower's
financial statements heretofore submitted to Lender; none of the execution and
delivery by Borrower of the Transaction Documents, the consummation of the
transactions therein contemplated or the compliance with the provisions thereof
will violate any law, rule, regulation, order, writ, judgment, injunction,
decree or award binding on Borrower, or any of the provisions of the Certificate
or Articles of Incorporation or By-Laws of Borrower or any of the provisions of
any indenture, agreement, document, instrument or undertaking to which Borrower
is a party or subject, or by which Borrower or any Property of Borrower is
bound, or conflict with or constitute a default thereunder or result in the
creation or imposition of any Lien pursuant to the terms of any such indenture,
agreement, document, instrument or undertaking (other than in favor of Lender
pursuant to the Transaction Documents). No order, consent, approval, license,
authorization or validation of, or filing, recording or registration with, or
exemption by, any governmental, regulatory, administrative or public body or
authority, or any subdivision thereof, or any other Person is required to
authorize, or is required in connection with, the execution, delivery or
performance of, or the legality, validity, binding effect or enforceability of,
any of the Transaction Documents.
-20-
4.10 Other Debt, Guarantees and Capitalized Leases. Except as
--------------------------------------------------
disclosed on Schedule 4.10 attached hereto, neither Borrower nor any Subsidiary
-------------
is a borrower, guarantor or obligor with respect to, or a lessee under, any
Debt, Guarantees or Capitalized Leases. Borrower may at any time amend, modify
or supplement Schedule 4.10 by notifying Lender in writing of any changes
--------------
thereto, and thereby the representations and warranties contained in this
Section 4.10 shall be amended accordingly so long as such amendment,
modification or supplement is made within thirty (30) days after the occurrence
of any such changes in the facts stated therein and that such changes reflect
transactions that are permitted under this Agreement.
4.11 Labor Matters. Neither Borrower nor any Subsidiary is a party to
-------------
any labor dispute which could reasonably be expected to have a Material Adverse
Effect. There are no strikes or walkouts relating to any labor contract to
which Borrower or any Subsidiary is subject. Hours worked and payments made to
the employees of Borrower and its Subsidiaries have not been in violation of (a)
the Fair Labor Standards Act or (b) any other applicable law dealing with such
matters, the violation of which could reasonably be expected to have a Material
Adverse Effect. All payments due from Borrower or any Subsidiary, or for which
any claim may be made against any of them, in respect of wages, employee health
and welfare insurance and/or other benefits have been paid or accrued as a
liability on their respective books.
4.12 Title to Property. Borrower and each Subsidiary is the sole and
-------------------
absolute owner of, or has the legal right to use and occupy, all Property it
claims to own or which is necessary for Borrower or such Subsidiary to conduct
its business, and all of such Property is free and clear of all Liens other than
Permitted Liens. Borrower and each Subsidiary enjoys peaceful and undisturbed
possession in all material respects under all leases under which it is operating
as a lessee.
4.13 Regulation U. Borrower is not engaged principally, or as one of
-------------
its important activities, in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulation U of The
Board of Governors of the Federal Reserve System, as amended) and no part of the
proceeds of any Loan will be used, whether directly or indirectly, and whether
immediately, incidentally or ultimately (a) to purchase or carry margin stock or
to extend credit to others for the purpose of purchasing or carrying margin
stock, or to refund or repay indebtedness originally incurred for such purpose
or (b) for any purpose which entails a violation of, or which is inconsistent
with, the provisions of any of the Regulations of The Board of Governors of the
Federal Reserve System, including, without limitation, Regulations G, U, T or X
thereof, as amended. If requested by Lender, Borrower shall furnish to Lender a
statement in conformity with the requirements of Federal Reserve Form U-1
referred to in Regulation U.
4.14 Multi-Employer Pension Plan Amendments Act of 1980. Borrower and
---------------------------------------------------
each Subsidiary is in compliance with the Multi-Employer Pension Plan Amendments
Act of 1980, as amended ("MEPPAA"), and has no liability for pension
contributions pursuant to MEPPAA.
4.15 Investment Company Act of 1940; Public Utility Holding Company Act
------------------------------------------------------------------
of 1935. Borrower is not an "investment company" as that term is defined in,
--------
and is not otherwise subject to regulation under, the Investment Company Act of
1940, as amended. Borrower is not a "holding company" as that term is defined
in, and is not otherwise subject to regulation under, the Public Utility Holding
Company Act of 1935, as amended.
4.16 Patents, Trademarks, Copyrights, Licenses, Etc. Except as
--------------------------------------------------
disclosed on Schedule 4.16 attached hereto, neither Borrower nor any Subsidiary
-------------
has any patents, patent applications, patent rights, trademarks, trademark
applications, trademark rights, copyrights, licenses or other intellectual
property which are material to the business of Borrower or any Subsidiary.
Borrower may at any time amend, modify or supplement Schedule 4.16 by notifying
-------------
Lender in writing of any changes thereto, and thereby the representations and
warranties contained in the first sentence of this Section 4.16 shall be amended
accordingly so long as such amendment, modification or supplement is made within
thirty (30) days after the occurrence of any such changes in the facts stated
therein and that such changes reflect transactions that are permitted under this
Agreement. Borrower and each Subsidiary possesses all necessary patents, patent
rights, trademarks, trademark rights, trade names, trade name rights,
copyrights, licenses and other intellectual property to conduct its business
without conflict with any patent, patent right, trademark, trademark right,
trade name, copyright, license or other intellectual property of any other
Person.
-21-
4.17 Environmental and Safety and Health Matters. Except as disclosed
--------------------------------------------
on Schedule 4.17 attached hereto: (a) the operations of Borrower and each
--------------
Subsidiary comply with all applicable Environmental Laws and all applicable
Occupational Safety and Health Laws, the violation or noncompliance with which
could reasonably be expected to have a Material Adverse Effect; (b) none of the
operations of Borrower or any Subsidiary are subject to any Environmental Claim
or any judicial, governmental, regulatory or administrative proceeding alleging
the violation of any Occupational Safety and Health Law, which, if determined
adversely against Borrower or any Subsidiary, could reasonably be expected to
have a Material Adverse Effect; (c) none of the operations of Borrower or any
Subsidiary is the subject of any Federal or state investigation evaluating
whether any remedial action is needed to respond to any Release of Hazardous
Substances or any unsafe or unhealthful condition at any premises owned, leased
or operated by Borrower or such Subsidiary, which, if determined adversely to
Borrower or any Subsidiary, could reasonably be expected to have a Material
Adverse Effect; (d) neither Borrower nor any Subsidiary has filed any notice
under any Environmental Law or Occupational Safety and Health Law indicating or
reporting (i) any past or present spillage, leakage or Release into the
environment of, or treatment, storage or disposal of, any Hazardous Substance or
(ii) any unsafe or unhealthful condition at any premises owned, leased or
operated by Borrower or such Subsidiary; and (e) neither Borrower nor any
Subsidiary has any material contingent liability in connection with (i) any
spillage, disposal or Release into the environment of, or otherwise with respect
to, any Hazardous Substances or (ii) any unsafe or unhealthful condition at any
premises owned, leased or operated by Borrower or such Subsidiary.
4.18 Investments. Neither Borrower nor any Subsidiary has any
-----------
Restricted Investments.
4.19 No Default. No Default or Event of Default under this Agreement
-----------
has occurred and is continuing. There is no existing default or event of
default under or with respect to any indenture, contract, agreement, lease or
other instrument to which Borrower or any Subsidiary is a party or by which any
Property of Borrower or any Subsidiary is bound or affected, a default under
which could reasonably be expected to have a Material Adverse Effect. Borrower
and each Subsidiary has and is in full compliance with and in good standing with
respect to all governmental and regulatory permits, licenses, certificates,
consents and franchises necessary to continue to conduct its business as
previously conducted by it and to own or lease and operate its Properties as now
owned or leased by it, the failure to have or noncompliance with which could
reasonably be expected to have a Material Adverse Effect, and, to the best of
Borrower's knowledge, none of said permits, certificates, consents or franchises
contain any term, provision, condition or limitation more burdensome than such
as are generally applicable to Persons engaged in the same or similar business
as Borrower or such Subsidiary, as the case may be. Neither Borrower nor any
Subsidiary of Borrower is in violation of any applicable statute, law, rule,
regulation or ordinance of the United States of America, of any state, city,
town, municipality, county or of any other jurisdiction, or of any agency
thereof, a violation of which could reasonably be expected to have a Material
Adverse Effect.
4.20 Government Contracts. Neither Borrower nor any Subsidiary is a
---------------------
party to or bound by any supply or purchase agreements with the Federal
government or any state or local government or any agency thereof, the
termination or cancellation of which could reasonably be expected to have a
Material Adverse Effect.
4.21 Purchase and Other Commitments and Outstanding Bids. No material
-----------------------------------------------------
purchase or other commitment of Borrower or any Subsidiary is in excess of the
normal, ordinary and usual requirements of its business, or was made at any
price in excess of the then current market price, or, to the best of Borrower's
knowledge, contains terms and conditions more onerous than those usual and
customary in the applicable industry. There is no material outstanding bid,
sales proposal, contract or unfilled order of Borrower or any Subsidiary which
(a) will, or could if accepted, require Borrower or any Subsidiary to supply
goods or services at a cost to Borrower or any Subsidiary in excess of the
revenues to be received therefor or (b) quotes prices which do not include a
markup over reasonably estimated costs consistent with past markups on similar
business based on market conditions current at that time.
-22-
4.22 Disclosure. Neither this Agreement nor any of the Exhibits or
----------
Schedules hereto nor any certificate or other data furnished to Lender in
writing by or on behalf of Borrower or any Subsidiary in connection with the
transactions contemplated by this Agreement contains any untrue or incorrect
statement of a material fact or omits to state a material fact necessary to make
the statements contained herein or therein not misleading. To the best
knowledge of Borrower, there is no fact peculiar to Borrower or any Subsidiary
which presently has a Material Adverse Effect or in the future (so far as
Borrower can now foresee) could reasonably be expected to have a Material
Adverse Effect, which has not heretofore been disclosed in writing by Borrower
to Lender.
SECTION5. COVENANTS.
--------------------
5.01 Affirmative Covenants of Borrower. Borrower covenants and agrees
----------------------------------
that, so long as Lender has any obligation to make any Loan under this
Agreement, any Letter of Credit remains outstanding or any of the Borrower's
Obligations remain unpaid:
(a) Information. Borrower will deliver or cause to be delivered to
-----------
Lender:
(i) as soon as available and in any event within ninety (90) days
after the end of each fiscal year of Parent, consolidated and consolidating
balance sheets of Parent and its Subsidiaries as of the end of such fiscal year
and the related consolidated and consolidating statements of income, retained
earnings and cash flows for such fiscal year, setting forth in each case, in
comparative form, the figures for the previous fiscal year, all such financial
statements to be prepared in accordance with GAAP consistently applied and
reported on by and accompanied by the unqualified opinion of KPMG LLP or other
independent certified public accountants selected by Parent and reasonably
acceptable to Lender;
(ii) as soon as available and in any event within forty-five (45)
days after the end of each fiscal quarter of each fiscal year of Parent,
consolidated and consolidating balance sheets of Parent and its Subsidiaries as
of the end of such fiscal month and the related consolidated and consolidating
statements of income, retained earnings and cash flows for such fiscal quarter
and for the portion of Parent's fiscal year ended at the end of such fiscal
quarter, setting forth in each case in comparative form, the figures for the
corresponding fiscal quarter and the corresponding portion of Parent's previous
fiscal year, all in reasonable detail and satisfactory in form to Lender and
certified (subject to normal year-end adjustments and footnote disclosures) as
to fairness of presentation, GAAP and consistency by the President or the chief
financial officer of Parent;
(iii) as soon as available and in any event within forty-five (45)
days after the end of each fiscal quarter of each fiscal year of Borrower,
consolidated and consolidating balance sheets of Borrower and its Subsidiaries
as of the end of such fiscal month and the related consolidated and
consolidating statements of income, retained earnings and cash flows for such
fiscal quarter and for the portion of Borrower's fiscal year ended at the end of
such fiscal quarter, setting forth in each case in comparative form, the figures
for the corresponding fiscal quarter and the corresponding portion of Borrower's
previous fiscal year, all in reasonable detail and satisfactory in form to
Lender and certified (subject to normal year-end adjustments and footnote
disclosures) as to fairness of presentation, GAAP and consistency by the
President or the chief financial officer of Borrower;
(iv) simultaneously with the delivery of each set of financial
statements referred to in Sections 5.01(a)(i), (ii) and (iii) above, a
certificate of the chief financial officer of Parent and Borrower (or such other
officer of Parent and Borrower as shall be reasonably acceptable to Lender) in
-23-
the form attached hereto as Exhibit D and incorporated herein by reference,
---------
accompanied by supporting financial work sheets where appropriate, (A)
evidencing Parent's and Borrower's compliance with the financial covenants
contained in Section 5.01(o) of this Agreement and the financial covenants
contained in the Guaranty, (B) stating whether there exists on the date of such
certificate any Default or Event of Default and, if any Default or Event of
Default then exists, setting forth the details thereof and the action which
Parent or Borrower is taking or proposes to take with respect thereto and (C)
certifying that all of the representations and warranties made by Parent,
Borrower and/or any other Obligor in this Agreement and/or in any other
Transaction Document are true and correct in all material respects on and as of
the date of such certificate as if made on and as of the date of such
certificate;
(v) promptly upon receipt thereof, any reports (including, without
limitation, any management letters and/or reports) submitted to Parent, Borrower
or any Subsidiary (other than reports previously delivered pursuant to Sections
5.01(a)(i), (ii) and (iii) above) by independent accountants in connection with
any annual, interim or special audit made by them of the books of Parent,
Borrower or any Subsidiary;
(vi) within fifteen (15) days after the end of each fiscal month of
Borrower, (A) an Accounts Trial Balance of Borrower indicating which Accounts
are current, up to 30, 30 to 60, 60 to 90, 90 to 120 and 120 days or more past
the invoice date and including, if requested by Lender, a listing of the names
and addresses of all applicable Account Debtors and (B) upon request of Lender,
a summary of accounts payable of Borrower showing which accounts payable are
current, up to 30, 30 to 60, 60 to 90 and 90 days or more past due and
including, if requested by Lender, a listing of the names and addresses of
applicable creditors, all in form and detail reasonably satisfactory to Lender
and certified as being true, correct and complete in all material respects by
the President or the chief financial officer of Borrower;
(vii) at such intervals as Lender may request, such information and
reports regarding Borrower's Inventory as Lender may from time to time request,
all in form and detail reasonably satisfactory to Lender and certified as being
true, correct and complete by the President or the chief financial officer of
Borrower;
(viii) as soon as available and in any event within thirty (30) days
after the beginning of each fiscal year of Parent, consolidated and
consolidating balance sheet, income statement and cash flow projections for
Parent and its Subsidiaries for such fiscal year on a month-by-month basis, all
in form and detail reasonably acceptable to Lender; and
(ix) as soon as available and in any event within thirty (30) days
after the beginning of each fiscal year of Borrower, consolidated and
consolidating balance sheet, income statement and cash flow projections for
Borrower and its Subsidiaries for such fiscal year on a month-by-month basis,
all in form and detail reasonably acceptable to Lender; and
(x) with reasonable promptness, such further information regarding
the business, affairs and financial condition of Borrower or any Subsidiary as
Lender may from time to time reasonably request.
Lender is hereby authorized to deliver a copy of any financial statement or
other information made available by Parent, Borrower or any Subsidiary to any
regulatory authority having jurisdiction over Lender, pursuant to any request
therefor.
(b) Payment of Indebtedness. Borrower will, and it will cause each
-------------------------
Subsidiary to, (i) pay and discharge any and all Indebtedness payable or
Guaranteed by Borrower or such Subsidiary, as the case may be, and any interest
or premium thereon, when due (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise) in accordance with the agreement,
document or instrument relating to such Indebtedness or Guarantee and (ii)
faithfully perform, observe and discharge all covenants, conditions and
obligations which are imposed upon Borrower or such Subsidiary, as the case may
be, by any and all agreements, documents, instruments and indentures evidencing,
securing or otherwise relating to such Indebtedness or Guarantee.
-24-
(c) Maintenance of Books and Records; Consultations and Inspections.
------------------------------------------------------------------
Borrower will, and it will cause each Subsidiary to, maintain books and records
sufficient to permit the preparation of financial statements in accordance with
GAAP and in which true, correct and complete entries shall be made of all
dealings and transactions in relation to its business and activities. Borrower
will, and it will cause each Subsidiary to, permit Lender (and any Person
appointed by Lender to whom Borrower does not reasonably object) to discuss the
affairs, finances and accounts of Borrower and each Subsidiary with the officers
of Borrower and each Subsidiary and their independent public accountants, all at
such reasonable times and as often as Lender may from time to time reasonably
request. Borrower will also permit, and will cause each Subsidiary to permit,
inspection of its Properties, books and records by the Lender during normal
business hours and at other reasonable times. Borrower will reimburse Lender
upon demand for all reasonable costs and expenses incurred by Lender in
connection with any such inspection conducted by Lender while any Default or
Event of Default under this Agreement has occurred and is continuing. Borrower
irrevocably authorizes Lender to communicate directly with its independent
public accountants and irrevocably authorizes and directs such accountants to
disclose to Lender any and all information with respect to the business and
financial condition of Borrower and each Subsidiary as Lender may from time to
time reasonably request in writing.
(d) Payment of Taxes. Borrower will, and it will cause each Subsidiary
----------------
to, duly file all Federal, state and local income tax returns and all other tax
returns and reports of Borrower or such Subsidiary, as the case may be, which
are required to be filed and duly pay and discharge promptly all taxes,
assessments and other governmental charges imposed upon it or any of its
Property; provided, however, that neither Borrower nor any Subsidiary shall be
required to pay any such tax, assessment or other governmental charge the
payment of which is being contested in good faith and by appropriate proceedings
being diligently conducted and for which adequate reserves in accordance with
GAAP have been provided, except that Borrower or such Subsidiary, as the case
may be, shall pay or cause to be paid all such taxes, assessments and
governmental charges forthwith upon the commencement of proceedings to foreclose
any Lien which is attached as security therefor, unless such foreclosure is
stayed by the filing of an appropriate bond in a manner reasonably satisfactory
to Lender.
(e) Payment of Claims. Borrower will, and it will cause each
-------------------
Subsidiary to, promptly pay and discharge (i) all trade accounts payable in
accordance with its usual and customary business practices as in effect on the
date of this Agreement (but in no event later than thirty (30) days after the
due date thereof) and (ii) all claims for work, labor or materials which if
unpaid might become a Lien upon any of its Property or assets; provided,
however, that neither Borrower nor any Subsidiary shall be required to pay any
such account payable or claim the payment of which is being contested in good
faith and by appropriate proceedings being diligently conducted and for which
adequate reserves in accordance with GAAP have been provided, except that
Borrower or such Subsidiary, as the case may be, shall pay or cause to be paid
all such accounts payable and claims forthwith upon the commencement of
proceedings to foreclose any Lien which is attached as security therefor, unless
such foreclosure is stayed by the filing of an appropriate bond in a manner
reasonably satisfactory to Lender.
(f) Corporate Existence. Borrower will, and it will cause each
--------------------
Subsidiary to, do all things necessary to (i) preserve and keep in full force
and effect at all times its corporate existence and all permits, licenses,
franchises and other rights material to its business and (ii) be duly qualified
to do business and be in good standing in all jurisdictions where the nature of
its business or its ownership of Property requires such qualification except for
those jurisdictions in which the failure to qualify or be in good standing could
not reasonably be expected to have a Material Adverse Effect.
(g) Maintenance of Property. Borrower will, and it will cause each
-------------------------
Subsidiary to, at all times, preserve and maintain all of the Property used or
useful in the conduct of its business in good condition, working order and
repair, ordinary wear and tear excepted.
-25-
(h) Compliance with Laws, Regulations, Etc. Borrower will, and it will
---------------------------------------
cause each Subsidiary to, comply with any and all laws, ordinances and
governmental and regulatory rules and regulations to which Borrower or such
Subsidiary, as the case may be, is subject (including, without limitation, all
Occupational Safety and Health Laws and all Environmental Laws) and obtain any
and all licenses, permits, franchises and other governmental and regulatory
authorizations necessary to the ownership of its Properties or to the conduct of
its business, which violation or failure to obtain could reasonably be expected
to have a Material Adverse Effect.
(i) Environmental Matters. Borrower shall give Lender prompt written
----------------------
notice of (i) any Environmental Claim or any other action or investigation with
respect to the existence or potential existence of any Hazardous Substances
instituted or threatened with respect to Borrower or any Subsidiary or any of
the Properties or facilities owned, leased or operated by Borrower or any
Subsidiary which, if determined adversely to Borrower or any Subsidiary, could
reasonably be expected to have a Material Adverse Effect and (ii) any condition
or occurrence on any of the Properties or facilities owned, leased or operated
by Borrower or any Subsidiary which constitutes a violation of any Environmental
Laws or which gives rise to a reporting obligation or requires removal or
remediation under any Environmental Laws. Within thirty (30) days after the
giving of any such notice, Borrower shall deliver to Lender Borrower's plan
with respect to removal or remediation and Borrower agrees to take all action
which is reasonably necessary in connection with such action, investigation,
condition or occurrence in accordance with such plan with due diligence and to
complete such removal or remediation as promptly as possible and in all events
within the time required by any Environmental Laws or any other applicable law,
rule or regulation. Borrower shall promptly provide Lender with copies of all
documentation relating thereto, and such other information with respect to
environmental matters as Lender may request from time to time.
(j) ERISA Compliance. If Borrower, any Subsidiary or any ERISA
-----------------
Affiliate shall have any Pension Plan, Borrower, such Subsidiary or such ERISA
Affiliate, as the case may be, shall comply with all requirements of ERISA
relating to such Pension Plan. Without limiting the generality of the
foregoing, Borrower will not, and it will not cause or permit any Subsidiary or
any ERISA Affiliate to:
(i) permit any Pension Plan maintained by Borrower, any Subsidiary or
any ERISA Affiliate to engage in any nonexempt "prohibited transaction," as such
term is defined in Section 4975 of the Code;
(ii) permit any Pension Plan maintained by Borrower, any
Subsidiary or any ERISA Affiliate to incur any "accumulated funding deficiency",
as such term is defined in Section 302 of ERISA, 29 U.S.C. 1082, whether or
not waived;
(iii) terminate any Pension Plan in a manner which could result in
the imposition of a Lien on any Property of Borrower, any Subsidiary or any
ERISA Affiliate pursuant to Section 4068 of ERISA, 29 U.S.C. 1368; or
(iv) take any action which would constitute a complete or partial
withdrawal from a Multi-Employer Plan within the meaning of Sections 4203 or
4205 of Title IV of ERISA.
Notwithstanding any provision contained in this Section 5.01(j) to the
contrary, an act by Borrower or any Subsidiary shall not be deemed to constitute
a violation of this Section 5.01(j) unless the Lender determines in good faith
that said action, individually or cumulatively with other acts of Borrower and
its Subsidiaries, has or could reasonably be expected to have a Material Adverse
Effect.
-26-
(k) Notices. Borrower will notify Lender in writing of any of the
-------
following within three (3) Business Days after any officer of Borrower has
actual knowledge thereof, describing the same and, if applicable, the steps
being taken by the Person(s) affected with respect thereto:
(i) the occurrence of any Default or Event of Default under this
Agreement;
(ii) the occurrence of any default or event of default by
Borrower, any other Obligor or any Subsidiary under any note, indenture, loan
agreement, mortgage, deed of trust, security agreement, lease or other similar
agreement, document or instrument to which Borrower, any other Obligor or any
Subsidiary, as the case may be, is a party or by which it is bound or to which
it is subject;
(iii) the institution of any litigation, arbitration proceeding or
governmental or regulatory proceeding affecting Borrower, any other Obligor or
any Subsidiary, whether or not considered to be covered by insurance, in which
the prayer or claim for relief seeks recovery of an amount in excess of
$100,000.00 (or, if no dollar amount is specified in the prayer or claim for
relief, in which there is a reasonable likelihood of recovery of an amount in
excess of $100,000.00) or any form of equitable relief;
(iv) the entry of any judgment or decree against Borrower, any
other Obligor or any Subsidiary;
(v) the occurrence of a Reportable Event with respect to any
Pension Plan; the filing of a notice of intent to terminate a Pension Plan by
Borrower, any ERISA Affiliate or any Subsidiary; the institution of proceedings
to terminate a Pension Plan by the PBGC or any other Person; the withdrawal in a
"complete withdrawal" or a "partial withdrawal" as defined in Sections 4203 and
4205, respectively, of ERISA by Borrower, any ERISA Affiliate or any Subsidiary
from any Multi-Employer Plan; or the incurrence of any material increase in the
contingent liability of Borrower or any Subsidiary with respect to any "employee
welfare benefit plan" as defined in Section 3(1) of ERISA which covers retired
employees and their beneficiaries;
(vi) the occurrence of any material adverse change in the
Properties, assets, liabilities, business, operations, prospects, income or
condition (financial or otherwise) of Borrower, any other Obligor or any
Subsidiary;
(vii) any change in the name of Borrower, any other Obligor or any
Subsidiary;
(viii) any proposed opening, closing or other change of any place
of business of Borrower, any other Obligor or any Subsidiary;
(ix) any material change in Borrower's or any Subsidiary's line(s)
of business;
(x) the occurrence of any Change of Control Event; and
(xi) any notices required to be provided pursuant to other
provisions of this Agreement and notice of the occurrence of such other events
as Lender may from time to time reasonably specify.
(l) Insurance. Borrower will, and it will cause each Subsidiary to,
---------
insure all of its Property of the character usually insured by corporations
engaged in the same or similar businesses similarly situated, against loss or
damage of the kind customarily insured against by such corporations, unless
higher limits or coverage are reasonably required in writing by Lender, and
carry adequate liability insurance and other insurance of a kind and in an
amount generally carried by corporations engaged in the same or similar
businesses similarly situated, unless higher limits or coverage are reasonably
required in writing by Lender. All insurance required by this Section 5.01(l)
shall be with insurers rated A-XI or better by A.M Best Company (or accorded a
similar rating by another nationally or internationally recognized insurance
rating agency of similar standing if A.M. Best Company is not then in the
business of rating insurers or rating foreign insurers) or such other insurers
as may from time to time be reasonably acceptable to Lender. All such insurance
may be subject to reasonable deductible amounts. UNLESS BORROWER PROVIDES
EVIDENCE OF THE INSURANCE COVERAGE REQUIRED UNDER THIS AGREEMENT AND THE OTHER
TRANSACTION DOCUMENTS, LENDER MAY PURCHASE INSURANCE AT BORROWER'S EXPENSE TO
PROTECT LENDER'S INTEREST IN THE COLLATERAL. THIS INSURANCE MAY, BUT NEED NOT,
PROTECT BORROWER'S INTERESTS. THE COVERAGE THAT LENDER PURCHASES MAY NOT PAY
ANY CLAIM THAT BORROWER MAY MAKE OR ANY CLAIM THAT IS MADE AGAINST BORROWER IN
CONNECTION WITH THE COLLATERAL. BORROWER MAY LATER CANCEL ANY INSURANCE
PURCHASED BY LENDER, BUT ONLY AFTER PROVIDING EVIDENCE THAT BORROWER HAS
OBTAINED INSURANCE AS REQUIRED BY THIS AGREEMENT AND THE OTHER TRANSACTION
DOCUMENTS. IF LENDER PURCHASES INSURANCE FOR THE COLLATERAL, BORROWER WILL BE
RESPONSIBLE FOR THE COSTS OF THAT INSURANCE, INCLUDING THE INSURANCE PREMIUM,
INTEREST AND ANY OTHER CHARGES LENDER MAY IMPOSE IN CONNECTION WITH THE
PLACEMENT OF INSURANCE, UNTIL THE EFFECTIVE DATE OF THE CANCELLATION OR
EXPIRATION OF THE INSURANCE. THE COSTS OF THE INSURANCE MAY BE ADDED TO THE
BORROWER'S OBLIGATIONS. THE COSTS OF THE INSURANCE MAY BE MORE THAN THE COST OF
INSURANCE BORROWER MAY BE ABLE TO OBTAIN ON ITS OWN.
-27-
(m) Further Assurances. Borrower will execute and deliver to Lender,
-------------------
at any time and from time to time, any and all further agreements, documents and
instruments, and take any and all further actions which may be required under
applicable law, or which Lender may from time to time reasonably request, in
order to effectuate the transactions contemplated by this Agreement and the
other Transaction Documents.
(n) Accountant. Borrower will give Lender prompt notice of any change
----------
of Borrower's independent certified public accountants and a statement of the
reasons for such change. Borrower shall at all times utilize independent
certified public accountants reasonably acceptable to Lender.
(o) Financial Covenants.
--------------------
(i) Maximum Consolidated Debt to Consolidated EBITDAR Ratio.
-------------------------------------------------------------
Borrower will have a Consolidated Debt to Consolidated EBITDAR Ratio of (A) not
more than 5.0 to 1.0 as of December 31, 2000 with respect to the fiscal year (or
short period) of Borrower ending December 31, 2000 and (B) not more than the
ratio set forth below as of the last day of the fiscal quarter period of
Borrower ending on the applicable date set forth below:
Date Ratio
---- -----
March 31, 2001 4.0 to 1.0
June 30, 2001 4.0 to 1.0
September 30, 2001 4.0 to 1.0
December 31, 2001 4.0 to 1.0
March 31, 2002 3.0 to 1.0
June 30, 2002 3.0 to 1.0
September 30, 2002 3.0 to 1.0
December 30, 2002 3.0 to 1.0
Each March 31, June 30,
September 30 and December 31
thereafter 2.5 to 1.0
(ii) Minimum Consolidated Fixed Charges Coverage Ratio. Borrower
--------------------------------------------------
will have a Consolidated Fixed Charges Coverage Ratio of (A) at least 1.25 to
1.0 for the fiscal year (or short period) of Borrower ending December 31, 2000
and (B) at least 1.25 for each period of four (4) consecutive fiscal quarters of
Borrower commencing with the four (4) consecutive fiscal quarter period ending
March 31, 2001.
5.02 Negative Covenants of Borrower. Borrower covenants and agrees
---------------------------------
that, so long as Lender has any obligation to make any Revolving Credit under
this Agreement, any Letter of Credit remains outstanding or any of the
Borrower's Obligations remain unpaid, unless the prior written consent of Lender
is obtained:
-28-
(a) Limitation on Indebtedness. Borrower will not, and it will not
----------------------------
cause or permit any Subsidiary to, incur or be obligated on any Indebtedness,
either directly or indirectly, by way of Guarantee, suretyship or otherwise,
other than:
(i) the Borrower's Obligations;
(ii) unsecured trade accounts payable and other normal accruals
incurred in the ordinary course of business which are not more than thirty (30)
days past due (provided, however, that neither Borrower nor any Subsidiary shall
be required to pay any such account payable or other accrual the payment of
which is being contested in good faith and by appropriate proceedings being
diligently conducted and for which adequate reserves in accordance with GAAP
have been provided, except that Borrower or such Subsidiary, as the case may be,
shall pay or cause to be paid all such accounts payable and accruals forthwith
upon the commencement of proceedings to foreclose any Lien which is attached as
security therefor, unless such foreclosure is stayed by the filing of an
appropriate bond in a manner reasonably satisfactory to Lender);
(iii) Indebtedness existing as of the date of this Agreement and
listed on Schedule 4.10 attached hereto (without giving effect to any amendments
-------------
to Schedule 4.10 after the date of this Agreement);
(iv) Subordinated Indebtedness;
(v) purchase money Indebtedness incurred solely with respect to
and in the amount of a Permitted Lien under subsection (g) of the definition of
"Permitted Lien"; and
(vi) other Indebtedness not otherwise permitted by this Section
5.02(a) in an amount not to exceed $25,000.00 in the aggregate at any one time
outstanding for Borrower and all of its Subsidiaries on a combined basis.
(b) Limitation on Liens. Borrower will not, and will not cause or
---------------------
permit any Subsidiary to, create, incur or assume, or suffer to be incurred or
to exist, any Lien on any of its or their Property or assets, whether now owned
or hereafter acquired, or upon any income or profits therefrom, except for
Permitted Liens.
(c) Consolidation, Merger, Sale of Assets, Etc.
------------------------------------------------
(i) Borrower will not, and it will not cause or permit any Subsidiary
to, directly or indirectly merge or consolidate with or into any other Person or
permit any other Person to merge into or with or consolidate with it.
(ii) Borrower will not, and will not cause or permit any Subsidiary
to, (A) sell, assign, lease, transfer, abandon or otherwise dispose of any of
its Property (including, without limitation, any shares of capital stock of a
Subsidiary owned by Borrower or another Subsidiary) or (B) issue, sell or
otherwise dispose of any shares of capital stock of any Subsidiary, except for
(1) sales of Inventory in the ordinary course of business (which does not
include a transfer of Inventory in partial or total satisfaction of any
Indebtedness), (2) sales of fixed assets which are obsolete, worn-out or
otherwise not used or useable in the ordinary course of its business, so long as
the net proceeds thereof are used solely to purchase replacement fixed assets or
assets of comparable quality or to pay or prepay (y) in the case of assets sales
by Borrower, Debt secured by Permitted Liens encumbering the assets being sold
or the Borrower's Obligations and (z) in the case of asset sales by a
Subsidiary, Debt of such Subsidiary and (3) other sales of fixed assets which
are not used or useable in the ordinary course of its business, so long as the
gross sale proceeds from all such asset sales by Borrower and all of its
Subsidiaries on a combined basis does not exceed $100,000.00 in the aggregate in
any fiscal year.
-29-
(d) Sale and Leaseback Transactions. Borrower will not, and it will not
---------------------------------
cause or permit any Subsidiary to, enter into any arrangement, directly or
indirectly, whereby Borrower or such Subsidiary shall in one or more related
transactions sell, transfer or otherwise dispose of any Property owned by
Borrower or such Subsidiary to any Person and then rent or lease, as lessee,
such Property or any part thereof for a period or periods which in the aggregate
would exceed twelve (12) months from the date of commencement of the lease term.
(e) Sale or Discount of Accounts. Borrower will not, and it will not
-------------------------------
cause or permit any Subsidiary to, sell or discount (other than prompt payment
discounts granted in the ordinary course of business) any of its notes or
accounts receivable or chattel paper.
(f) Transactions with Affiliates. Borrower will not, and it will not
------------------------------
cause or permit any Subsidiary to, enter into or be a party to any transaction
or arrangement with any Affiliate (including, without limitation, the purchase
from, sale to or exchange of Property with, or the rendering of any service by
or for, any Affiliate), except in the ordinary course of business and pursuant
to the reasonable requirements of Borrower's or such Subsidiary's business and
upon fair and reasonable terms no less favorable to Borrower or such Subsidiary
than would be obtained in a comparable arm's-length transaction with a Person
not an Affiliate.
(g) Changes in Nature of Business. Borrower will not, and it will not
------------------------------
cause or permit any Subsidiary to, engage in any business if, as a result, the
general nature of the business which would then be engaged in by Borrower and
its Subsidiaries, considered as a whole, would be substantially changed from the
general nature of the business engaged in by Borrower and its Subsidiaries as of
the date of this Agreement, which is the business of emergency air medical
transportation services.
(h) Fiscal Year. Borrower will not, and it will not cause or permit
------------
any Subsidiary to, change its fiscal year.
(i) Stock Redemptions and Distributions. Borrower will not, and it
--------------------------------------
will not cause or permit any Subsidiary to, declare or incur any liability to
make any Distribution in respect of the capital stock of Borrower or the capital
stock of such Subsidiary, as the case may be, except that (i) each wholly-owned
Subsidiary shall be permitted to declare and pay cash dividends on their
respective capital stock and (ii) so long as no Default or Event of Default
under this Agreement has occurred and is continuing or is created by or would
result from the payment of such dividends, during each fiscal year, Borrower
shall be permitted to declare and pay cash dividends on its capital stock in an
aggregate amount not to exceed Borrower's after-tax net income for the
immediately preceding fiscal year of Borrower.
(j) Pension Plans. Borrower will not, and it will not cause or permit
--------------
any Subsidiary to, (a) permit any condition to exist in connection with any
Pension Plan which might constitute grounds for the PBGC to institute
proceedings to have such Pension Plan terminated or a trustee appointed to
administer such Pension Plan or (b) engage in, or permit to exist or occur, any
other condition, event or transaction with respect to any Pension Plan which
could result in the incurrence by Borrower, any Subsidiary or any ERISA
Affiliate of any material liability, fine or penalty.
(k) Subordinated Indebtedness. Borrower will not make any payment of
--------------------------
principal, interest or other amount on or with respect to any of its
Subordinated Indebtedness to the extent prohibited by the subordination
provisions governing the same.
(l) Restricted Investments; Acquisitions. Borrower will not, and it
--------------------------------------
will not cause or permit any Subsidiary to, directly or indirectly, make any
Restricted Investments. Borrower will not, and it will not cause or permit any
Subsidiary to, directly or indirectly, make any Acquisitions.
(m) Subsidiaries. Borrower will not, and it will not cause or permit
------------
any Subsidiary to, create, form or acquire any Subsidiary. If Borrower or any
Subsidiary creates, forms or acquires any Subsidiary on or after the date of
this Agreement, Borrower or such Subsidiary, as the case may be, will,
contemporaneously with the creation, formation or acquisition of such
Subsidiary, (i) grant Lender a first priority perfected security interest in and
lien on all of the issued and outstanding shares of capital stock of such
Subsidiary and (ii) cause such Subsidiary to (A) guaranty the payment and
performance of all of the Borrower's Obligations and (B) secure said guaranty
with a first priority perfected security interest in and lien on all of the
accounts, inventory, documents, instruments, chattel paper, general intangibles,
goods, machinery, equipment, investment property, other tangible and intangible
personal property and books and records of such Subsidiary and the proceeds
thereof, all pursuant to documentation (including, without limitation, an
amendment to this Agreement if requested by Lender) in form and substance
reasonably satisfactory to Lender.
-30-
(n) Limitations on Restrictive Agreements. Borrower will not, and it
----------------------------------------
will not cause or permit any Subsidiary to, enter into, or permit to exist, any
agreement with any Person which prohibits or limits the ability of Borrower or
such Subsidiary, as the case may be, to (i) pay dividends or make other
distributions or prepay any Indebtedness owed to Borrower and/or any Subsidiary,
(ii) make loans or advances to Borrower and/or any Subsidiary, (iii) transfer
any of its Properties to Borrower and/or any Subsidiary (other than with respect
to Property subject to Liens permitted by clauses (g) or (h) of the definition
of Permitted Liens) or (iv) create, incur, assume or suffer to exist any Lien
upon any of its Property or revenues, whether now owned or hereafter acquired
(other than with respect to Property subject to Liens permitted by clauses (g)
or (h) of the definition of Permitted Liens); provided that the foregoing shall
not apply to restrictions in effect on the date of this Agreement contained in
agreements governing Debt outstanding on the date of this Agreement and listed
on Schedule 5.02(q) attached hereto and, if such Debt is renewed, extended or
-----------------
refinanced, restrictions in the agreements governing the renewed, extended or
refinanced Debt (and successive renewals, extensions and refinancings thereof)
if such restrictions are no more restrictive in any material respect than those
contained in the agreements governing the Debt being renewed, extended or
refinanced.
5.03 Use of Proceeds. Borrower covenants and agrees that (a) the
-----------------
proceeds of the Loans will be used solely for the working capital and general
corporate purposes of Borrower, (b) no part of the proceeds of any Loan will be
used in violation of any applicable law, rule or regulation and (c) no part of
the proceeds of any Loan will be used, whether directly or indirectly, and
whether immediately, incidentally or ultimately (i) to purchase or carry margin
stock or to extend credit to others for the purpose of purchasing or carrying
margin stock, or to refund or repay indebtedness originally incurred for such
purpose or (ii) for any purpose which entails a violation of, or which is
inconsistent with, the provisions of any of the Regulations of The Board of
Governors of the Federal Reserve System, including, without limitation,
Regulations U, T or X thereof, as amended.
SECTION6. EVENTS OF DEFAULT.
------------------------------
If any of the following (each of the following herein sometimes called an
"Event of Default") shall occur and be continuing:
6.01 Borrower shall fail to pay any of the Borrower's Obligations
constituting principal as and when the same shall become due and payable,
whether by reason of demand, maturity, acceleration or otherwise;
6.02 Borrower shall fail to pay any of the Borrower's Obligations
constituting interest, fees or other amounts (other than principal) within five
(5) Business Days after the date the same shall first become due and payable,
whether by reason of demand, maturity, acceleration or otherwise; or
6.03 Any representation or warranty of Borrower made in this Agreement,
in any other Transaction Document to which Borrower is a party or in any
certificate, agreement, instrument or statement furnished or made or delivered
pursuant hereto or thereto or in connection herewith or therewith, shall prove
to have been untrue or incorrect in any material respect when made or effected;
6.04 Borrower shall fail to perform or observe any term, covenant or
provision contained in Section 2.01(d), Section 5.01(c), Section 5.01(f),
Section 5.01(k), Section 5.01(l), Section 5.01(m), Section 5.01(o), Section 5.02
or Section 5.03;
-31-
6.05 Borrower shall fail to perform or observe any other term, covenant
or provision contained in this Agreement (other than those specified in Sections
6.01, 6.02 or 6.03 above) and any such failure shall remain unremedied for
fifteen (15) days after the earlier of (a) written notice of default is given to
Borrower by Lender or (b) any officer of Borrower obtaining knowledge of such
default;
6.06 This Agreement or any of the other Transaction Documents shall at
any time for any reason (other than the termination of this Agreement or such
other Transaction Document, as the case may be, in accordance with its terms)
cease to be in full force and effect or shall be declared to be null and void by
a court of competent jurisdiction, or if the validity or enforceability thereof
shall be contested or denied by Borrower and/or any other Obligor, or if the
transactions completed hereunder or thereunder shall be contested by Borrower
and/or any other Obligor or if Borrower and/or any other Obligor shall deny that
it has any further liability or obligation hereunder or thereunder;
6.07 Borrower, any other Obligor or any Subsidiary shall (a)
voluntarily commence any proceeding or file any petition seeking relief under
Title 11 of the United States Code or any other Federal, state or foreign
bankruptcy, insolvency, receivership, liquidation or similar law, (b) consent to
the institution of, or fail to contravene in a timely and appropriate manner,
any such proceeding or the filing of any such petition, (c) apply for or consent
to the appointment of a receiver, trustee, custodian, sequestrator or similar
official of itself or of a substantial part of its Property or assets, (d) file
an answer admitting the material allegations of a petition filed against itself
in any such proceeding, (e) make a general assignment for the benefit of
creditors, (f) become unable, admit in writing its inability or fail generally
to pay its debts as they become due or (g) take any corporate or other action
for the purpose of effecting any of the foregoing;
6.08 An involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (a) relief
in respect of Borrower, any other Obligor or any Subsidiary, or of a substantial
part of the Property or assets of Borrower, any other Obligor or any Subsidiary,
under Title 11 of the United States Code or any other Federal, state or foreign
bankruptcy, insolvency, receivership, liquidation or similar law, (b) the
appointment of a receiver, trustee, custodian, sequestrator or similar official
of Borrower, any other Obligor or any Subsidiary or of a substantial part of the
Property or assets of Borrower, any other Obligor or any Subsidiary or (c) the
winding-up or liquidation of Borrower, any other Obligor or any Subsidiary; and
such proceeding or petition shall continue undismissed for thirty (30)
consecutive days or an order or decree approving or ordering any of the
foregoing shall continue unstayed and in effect for thirty (30) consecutive
days;
6.09 Any "Event of Default" (as defined therein) shall occur under or
within the meaning of the Security Agreement;
6.10 Any "Event of Default" (as defined therein) shall occur under or
within the meaning of the Missouri Deed of Trust;
6.11 Any "Event of Default" (as defined therein) shall occur under or
within the meaning of the Assignment of Leases and Rents;
6.12 Any "Event of Default" (as defined therein) shall occur under or
within the meaning of the Illinois Mortgage;
6.13 Any default or event of default shall occur under or within the
meaning of the Guaranty;
6.14 The Guaranty shall at any time for any reason cease to be in full
force and effect or shall be declared to be null and void by a court of
competent jurisdiction, or if the validity or enforceability thereof shall be
contested or denied by any of the Guarantors, or if any of the Guarantors shall
deny that it, he or she has any further liability or obligation thereunder or if
any of the Guarantors shall fail to comply with or observe any of the terms,
provisions or conditions contained in the Guaranty;
-32-
6.15 Borrower, any other Obligor or any Subsidiary shall be declared by
Lender to be in default on, or pursuant to the terms of, (a) any other present
or future obligation to, or agreement with or in favor of, Lender, including,
without limitation, any other loan, line of credit, revolving credit, guaranty
or letter of credit reimbursement obligation, or (b) any other present or future
agreement purporting to convey to Lender a Lien upon any Property of Borrower,
such other Obligor or such Subsidiary, as the case may be;
6.16 The occurrence of any default or event of default under or within
the meaning of any agreement, document or instrument evidencing, securing,
guaranteeing the payment of or otherwise relating to any Debt of Borrower, any
other Obligor or any Subsidiary (other than the Borrower's Obligations) having
an aggregate outstanding principal balance in excess of $25,000.00 which is not
cured or waived in writing within any applicable cure or grace period (if any);
6.17 Borrower, any other Obligor or any Subsidiary shall have a
judgment entered against it by a court having jurisdiction in the premises and
such judgment shall not be appealed in good faith (and execution of such
judgment stayed during such appeal) or satisfied by Borrower, such other Obligor
or such Subsidiary, as the case may be, within thirty (30) days after the entry
of such judgment;
6.18 The occurrence of a Reportable Event with respect to any Pension
Plan; the filing of a notice of intent to terminate a Pension Plan by Borrower,
any ERISA Affiliate or any Subsidiary; the institution of proceedings to
terminate a Pension Plan by the PBGC or any other Person; the withdrawal in a
"complete withdrawal" or a "partial withdrawal" as defined in Sections 4203 and
4205, respectively, of ERISA by Borrower, any ERISA Affiliate or any Subsidiary
from any Multi-Employer Plan; or the incurrence of any material increase in the
contingent liability of Borrower or any Subsidiary with respect to any "employee
welfare benefit plan" as defined in Section 3(1) of ERISA which covers retired
employees and their beneficiaries;
6.19 The institution by Borrower, any ERISA Affiliate or any Subsidiary
of steps to terminate any Pension Plan if, in order to effectuate such
termination, Borrower, such ERISA Affiliate or such Subsidiary, as the case may
be, would be required to make a contribution to such Pension Plan, or would
incur a liability or obligation to such Pension Plan, in excess of $25,000.00;
or the institution by the PBGC of steps to terminate any Pension Plan; or
6.20 The occurrence of any Change of Control Event;
THEN, and in each such event (other than an event described in Sections
6.07 or 6.08), Lender may declare that its obligation to make Loans under this
Agreement has terminated, whereupon such obligation of Lender shall be
immediately and forthwith terminated, and Lender may further declare the entire
outstanding principal balance of and all accrued and unpaid interest on the
Notes and all of the other Borrower's Obligations to be forthwith due and
payable, whereupon all of the unpaid principal balance of and all accrued and
unpaid interest on the Notes and all of such other Borrower's Obligations shall
become and be immediately due and payable, without presentment, demand, protest
or further notice of any kind, all of which are hereby expressly waived by
Borrower, and Lender may exercise any and all other rights and remedies which it
may have under any of the other Transaction Documents or under applicable law;
provided, however, that upon the occurrence of any event described in Sections
6.07 or 6.08, Lender's obligation to make Loans under this Agreement shall
automatically terminate and the entire outstanding principal balance of and all
accrued and unpaid interest on the Notes and all of the other Borrower's
Obligations shall automatically become immediately due and payable, without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by Borrower, and Lender may exercise any and all other
rights and remedies which it may have under any of the other Transaction
Documents or under applicable law. If any Default or Event of Default under
this Agreement has occurred and is continuing, in addition to all of Lender's
other rights and remedies under this Agreement and the other Transaction
Documents and at law or in equity, Lender shall have the right, in its sole and
absolute discretion, to (a) reduce the amount of the Lender's Revolving Credit
Commitment, (b) create reserves and/or allowances against Unused Availability
and/or Eligible Accounts and/or (c) reduce the advance rates against Eligible
Accounts set forth in the definition of the Borrowing Base.
-33-
SECTION7. GENERAL.
------------------
7.01 No Waiver. No failure or delay by Lender in exercising any right,
---------
remedy, power or privilege under this Agreement or under any other Transaction
Document shall operate as a waiver thereof; nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, remedy, power or privilege. The rights and remedies
provided in this Agreement and in the other Transaction Documents are cumulative
and not exclusive of any rights or remedies provided by law. Nothing contained
in this Agreement shall in any way affect the right of Lender to exercise any
statutory or common law right of banker's lien or set-off.
7.02 Right of Set-Off. Upon the occurrence and during the continuance
-----------------
of any Event of Default, Lender is hereby authorized at any time and from time
to time, without notice to Borrower (any such notice being expressly waived by
Borrower) and to the fullest extent permitted by law, to set-off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held by Lender and any and all other indebtedness at any time owing by
Lender to or for the credit or account of Borrower against any and all of the
Borrower's Obligations irrespective of whether or not Lender shall have made any
demand hereunder or under any of the other Transaction Documents and although
such obligations may be contingent or unmatured. Lender agrees to promptly
notify Borrower after any such set-off and application made by Lender, provided,
however, that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of Lender under this Section 7.02 are
in addition to any other rights and remedies (including, without limitation,
other rights of set-off) which Lender may have. Nothing contained in this
Agreement or any other Transaction Document shall impair the right of Lender to
exercise any right of set-off or counterclaim it may have against Borrower and
to apply the amount subject to such exercise to the payment of indebtedness of
Borrower unrelated to this Agreement or the other Transaction Documents.
7.03 Cost and Expenses. Borrower agrees, whether or not any Loan is
-------------------
made under this Agreement, to pay Lender upon demand for (a) all out-of-pocket
costs and expenses and all Attorneys' Fees incurred by Lender in connection with
the preparation, documentation, negotiation, execution and/or administration of
this Agreement, the Notes and/or any of the other Transaction Documents, (b) all
recording, filing and search fees and expenses incurred by Lender in connection
with this Agreement and the other Transaction Documents, (c) all out-of-pocket
costs and expenses and all Attorneys' Fees incurred by Lender in connection with
the (i) the preparation, documentation, negotiation and execution of any
amendment, modification, extension, renewal or restatement of this Agreement,
the Notes and/or any of the other Transaction Documents, (ii) the preparation of
any waiver or consent under this Agreement and/or under any other Transaction
Document or (iii) any Default or Event of Default or alleged Default or Event of
Default hereunder, (d) if an Event of Default occurs, all out-of-pocket costs
and expenses and all Attorneys' Fees incurred by Lender in connection with such
Event of Default and collection and other enforcement proceedings resulting
therefrom and (e) all other Attorneys' Fees incurred by Lender relating to or
arising out of or in connection with this Agreement and/or any other Transaction
Document. Borrower further agrees to pay or reimburse Lender for any stamp or
other taxes which may be payable with respect to the execution, delivery,
recording and/or filing of this Agreement, the Notes or any of the other
Transaction Documents. All of the obligations of Borrower under this Section
7.03 shall survive the satisfaction and payment of the Borrower's Obligations
and the termination of this Agreement.
7.04 Environmental Indemnity. Borrower hereby agrees to defend and
------------------------
indemnify Lender and hold Lender harmless from and against any and all losses,
liabilities, damages, injuries, claims, costs and expenses of any and every kind
whatsoever (including, without limitation, court costs and reasonable attorneys'
fees and expenses) which at any time or from time to time may be paid, incurred
or suffered by, or asserted against, Lender for, with respect to or as a direct
or indirect result of the violation by Borrower or any Subsidiary of any
Environmental Laws; or with respect to, or as a direct or indirect result of the
presence on or under, or the Release from, properties owned, leased or operated
by Borrower and/or any Subsidiary in the conduct of their respective businesses
into or upon any land, the atmosphere or any watercourse, body of water or
wetland, of any Hazardous Substances or any other hazardous or toxic waste,
substance or constituent or other substance (including, without limitation, any
losses, liabilities, damages, injuries, costs, expenses or claims asserted or
arising under the Environmental Laws); and the provisions of and undertakings
and indemnification set out in this Section 7.04 shall survive the satisfaction
and payment of the Borrower's Obligations and the termination of this Agreement.
-34-
7.05 General Indemnity. In addition to the payment of expenses
------------------
pursuant to Section 7.03, whether or not the transactions contemplated hereby
shall be consummated, Borrower hereby agrees to defend, indemnify, pay and hold
Lender and any holder(s) of the Notes, and the officers, directors, employees,
agents and affiliates of Lender and such holder(s) (collectively, the
"Indemnitees") harmless from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, expenses and disbursements of any kind or nature whatsoever (including,
without limitation, the reasonable fees and disbursements of counsel for such
Indemnitees in connection with any investigative, administrative or judicial
proceeding commenced or threatened, whether or not such Indemnitees shall be
designated a party thereto), that may be imposed on, incurred by or asserted
against the Indemnitees, in any manner relating to or arising out of this
Agreement, any of the other Transaction Documents or any other agreement,
document or instrument executed and delivered by Borrower or any other Obligor
in connection herewith or therewith, the statements contained in any commitment
letters delivered by Lender, Lender's agreement to make the Loans under this
Agreement or the use or intended use of the proceeds of any Loan under this
Agreement (collectively, the "indemnified liabilities"); provided that Borrower
--------
shall have no obligation to an Indemnitee hereunder with respect to indemnified
liabilities arising from the gross negligence or willful misconduct of that
Indemnitee as determined by a court of competent jurisdiction in a final
nonappealable order. To the extent that the undertaking to indemnify, pay and
hold harmless set forth in the preceding sentence may be unenforceable because
it is violative of any law or public policy, Borrower shall contribute the
maximum portion that it is permitted to pay and satisfy under applicable law to
the payment and satisfaction of all indemnified liabilities incurred by the
Indemnitees or any of them. The provisions of the undertakings and
indemnification set out in this Section 7.05 shall survive satisfaction and
payment of the Borrower's Obligations and the termination of this Agreement.
7.06 Authority to Act. Lender shall be entitled to act on any notices
-----------------
and instructions (telephonic or written) believed by Lender in good faith to
have been sent or delivered by any person authorized to act on behalf of
Borrower pursuant hereto, regardless of whether such notice or instruction was
in fact delivered by a person authorized to act on behalf of Borrower, and
Borrower hereby agrees to defend and indemnify Lender and hold Lender harmless
from and against any and all losses and expenses, if any, ensuing from any such
action.
7.07 Notices. Any notice, request, demand, consent, confirmation or
-------
other communication under this Agreement shall be in writing and delivered in
person or sent by telecopy or registered or certified mail, return receipt
requested and postage prepaid, to the applicable party at its address or
telecopy number set forth on the signature page(s) of this Agreement, or at such
other address or telecopy number as any party hereto may designate as its
address for communications under this Agreement by notice so given. Such
notices shall be deemed effective on the day on which delivered or sent if
delivered in person or sent by telecopy, or on the third (3rd) Business Day
after the day on which mailed, if sent by registered or certified mail.
7.08 Consent to Jurisdiction; Waiver of Jury Trial. BORROWER HEREBY
------------------------------------------------
IRREVOCABLY (A) SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY MISSOURI STATE
COURT SITTING IN THE CITY OR COUNTY OF ST. LOUIS, MISSOURI OR ANY UNITED STATES
OF AMERICA COURT SITTING IN THE EASTERN DISTRICT OF MISSOURI, AS LENDER MAY
ELECT, IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT, (B) AGREES THAT ALL CLAIMS IN
RESPECT TO SUCH SUIT, ACTION OR PROCEEDING MAY BE HELD AND DETERMINED IN ANY OF
SUCH COURTS, (C) WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION
WHICH BORROWER MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH
SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT, (D) WAIVES ANY CLAIM THAT
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM AND (E) WAIVES ALL RIGHTS OF ANY OTHER JURISDICTION WHICH
BORROWER MAY NOW OR HEREAFTER HAVE BY REASON OF ITS PRESENT OR SUBSEQUENT
DOMICILES. BORROWER AUTHORIZES THE SERVICE OF PROCESS UPON BORROWER BY
REGISTERED MAIL SENT TO BORROWER AT ITS ADDRESS REFERENCED IN SECTION 7.07.
BORROWER AND LENDER HEREBY IRREVOCABLY WAIVE THE RIGHT TO TRIAL BY JURY WITH
RESPECT TO ANY ACTION IN WHICH BORROWER AND LENDER ARE PARTIES RELATING TO OR
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER
TRANSACTION DOCUMENTS.
-35-
7.09 Governing Law. This Agreement shall be governed by and construed
--------------
in accordance with the substantive laws of the State of Missouri (without
reference to conflict of law principles).
7.10 Amendments and Waivers. Any provision of this Agreement may be
------------------------
amended or waived if, but only if, such amendment or waiver is in writing and is
signed by Borrower and Lender.
7.11 References; Headings for Convenience. Unless otherwise specified
-------------------------------------
herein, all references herein to Section numbers refer to Section numbers of
this Agreement, all references herein to Exhibits "A", "B", "C" and "D" refer to
--------
annexed Exhibits "A", "B", "C" and "D" which are hereby incorporated herein by
--------
reference and all references herein to Schedules 2.02, 4.05, 4.08, 4.10, 4.12,
---------
4.16, 4.17 and 4.18 refer to annexed Schedules 2.02, 4.05, 4.08, 4.10, 4.12,
---------
4.16, 4.17 and 4.18 which are hereby incorporated herein by reference. The
Section headings are furnished for the convenience of the parties and are not to
be considered in the construction or interpretation of this Agreement.
7.12 Successors and Assigns. The provisions of this Agreement shall be
----------------------
binding upon and inure to the benefit of Borrower and Lender and their
respective successors and assigns, except that Borrower may not assign or
otherwise transfer any of its rights or delegate any of its obligations under
this Agreement.
7.13 NO ORAL AGREEMENTS; ENTIRE AGREEMENT. ORAL AGREEMENTS OR
----------------------------------------
COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT
OF A DEBT, INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT, ARE NOT ENFORCEABLE.
TO PROTECT BORROWER AND LENDER FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY
AGREEMENTS REACHED BY BORROWER AND LENDER COVERING SUCH MATTERS ARE CONTAINED IN
THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS, WHICH AGREEMENT AND OTHER
TRANSACTION DOCUMENTS ARE A COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENTS
BETWEEN BORROWER AND LENDER, EXCEPT AS BORROWER AND LENDER MAY LATER AGREE IN
WRITING TO MODIFY THEM. This Agreement embodies the entire agreement and
understanding between the parties hereto and supersedes all prior agreements and
understandings (oral or written) relating to the subject matter hereof.
7.14 Severability. In the event any one or more of the provisions
------------
contained in this Agreement should be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby.
7.15 Counterparts. This Agreement may be executed in any number of
------------
counterparts (including telecopy counterparts), each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
7.16 Resurrection of the Borrower's Obligations. To the extent that
---------------------------------------------
Lender receives any payment on account of any of the Borrower's Obligations, and
any such payment(s) or any part thereof are subsequently invalidated, declared
to be fraudulent or preferential, set aside, subordinated and/or required to be
repaid to a trustee, receiver or any other Person under any bankruptcy act,
state or Federal law, common law or equitable cause, then, to the extent of such
payment(s) received, the Borrower's Obligations or part thereof intended to be
satisfied and any and all Liens upon or pertaining to any Property or assets of
Borrower and theretofore created and/or existing in favor of Lender as security
for the payment of such Borrower's Obligations shall be revived and continue in
full force and effect, as if such payment(s) had not been received by Lender and
applied on account of the Borrower's Obligations.
-36-
7.17 Independence of Covenants. All of the covenants contained in this
-------------------------
Agreement and the other Transaction Documents shall be given independent effect
so that if a particular action, event or condition is prohibited by any one of
such covenants, the fact that it would be permitted by an exception to, or
otherwise be in compliance within the provisions of, another covenant shall not
avoid the occurrence of a Default or Event of Default if such action is taken,
such event occurs or such condition exists.
7.18 Subsidiary Reference. Any reference in this Agreement to a
---------------------
Subsidiary of Borrower, and any financial definition, ratio, restriction or
other provision of this Agreement which is stated to be applicable to Borrower
and its Subsidiaries or which is to be determined on a "consolidated" or
"consolidating" basis, shall apply only to the extent Borrower has any
Subsidiaries and, where applicable, to the extent any such Subsidiaries are
consolidated with Borrower for financial reporting purposes in accordance with
GAAP.
7.19 Compliance with Usury Laws. It is the intent of Borrower and
-----------------------------
Lender in the execution and performance of this Agreement, the Notes and the
other Transaction Documents to contract in strict compliance with any and all
applicable usury laws, including conflicts of law concepts, governing the Loans.
In furtherance thereof, Lender and Borrower stipulate and agree that none of the
terms and provisions contained in this Agreement, the Notes or any of the other
Transaction Documents shall ever be construed to create a contract to pay, as
consideration for the use, forbearance or detention of money, interest at a rate
in excess of the highest rate permitted by applicable law (the "Highest Lawful
Rate") and that for purposes hereof "interest" shall include the aggregate of
all charges which constitute interest under such laws that are contracted for,
charged or received under this Agreement, the Notes or any of the other
Transaction Documents; and in the event that, notwithstanding the foregoing,
under any circumstances the aggregate amounts taken, reserved, charged, received
or paid on the Loans include amounts which by applicable law are deemed interest
which would exceed the Highest Lawful Rate, then such excess shall be deemed to
be a mistake and Lender shall credit the same on the principal balance of the
Loans hereunder (or if all of the Borrower's Obligations shall have been paid in
full, refund said excess to Borrower). In the event of demand for payment of
the Notes and/or any of the other Borrower's Obligations by Lender, or in the
event of any required or permitted prepayment, then such consideration that
constitutes interest may never include more than the Highest Lawful Rate and any
excess interest, if any, provided for in this Agreement, the Notes or otherwise
shall be canceled automatically as of the date of such acceleration or
prepayment and, if theretofore paid, shall be credited against the principal
balance of the Loans hereunder (or, if all of the Borrower's Obligations shall
have been repaid in full, refunded to Borrower). The provisions of the section
shall control over all other provisions of this Agreement, the Notes and/or the
other Transaction Documents which may be in apparent conflict herewith.
[Signatures appear on page 40]
-37-
[Signatures appear on the following page]
-38-
IN WITNESS WHEREOF, Borrower and Lender have executed this Loan Agreement
as of the date first set forth above.
ARCH AIR MEDICAL SERVICE, INC.
By /s/ Xxxxx X. Xxxx
----------------------------------
Title: CFO
--------------------------
Address:
0000 Xxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Telecopy number: (000) 000-0000
---------------
FIRSTAR BANK, N.A.
By /s/ L. Xxxx Xxxxx III
-------------------------
Title: Vice President
---------------
Address:
Xxx Xxxxxxx Xxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Service Industries Group
Telecopy number: (000) 000-0000
-39-
SCHEDULE 2.02
-------------
Authorized Individuals
----------------------
Xxxxxx Xxxxxx
Xxxxx Xxxxxxxx
Xxxxx Xxxx
-40-
SCHEDULE 4.05
-------------
Litigation
----------
NONE.
-41-
SCHEDULE 4.08
-------------
Subsidiaries
------------
NONE.
-42-
SCHEDULE 4.10
-------------
Other Debt, Guarantees and Capitalized Leases
---------------------------------------------
NONE.
-43-
SCHEDULE 4.12
-------------
Existing Liens
--------------
Those certain liens being granted on or about the date of this Agreement to
C.I.T. Leasing Corporation on seven aircraft being purchased by Borrower from
Area Rescue Consortium of Hospitals.
-44-
SCHEDULE 4.16
-------------
Patents, Trademarks, Copyrights and Licenses
--------------------------------------------
NONE.
-45-
SCHEDULE 4.17
-------------
Environmental and Health and Safety Matters
-------------------------------------------
NONE.
-46-
SCHEDULE 4.18
-------------
Existing Investments
--------------------
NONE.
-47-
EXHIBIT A
---------
Form of Borrowing Base Certificate
----------------------------------
This Borrowing Base Certificate is delivered pursuant to Section 2.01(c) of
that certain Loan Agreement dated as of April 25, 2000, by and between ARCH Air
Medical Service, Inc., a Missouri corporation, and Firstar Bank, N.A., a
national banking association ("Lender"), as the same may from time to time be
amended, modified, extended, renewed or restated (the "Loan Agreement"). All
capitalized terms used and not otherwise defined herein shall have the
respective meanings ascribed to them in the Loan Agreement.
Borrower hereby represents and warrants to the Lender that the following
information is true, correct and complete in all material respects as of,:
1. Total Accounts of the Borrower $
--------------
2. Ineligible Accounts of the Borrower:
(a) Accounts which remain unpaid for more than
120 days after their original invoice dates and
Accounts which are not due and payable within
120 days after their invoice dates $
--------------
(b) 10% Cross-Aging $
--------------
(c) Affiliate Accounts $
--------------
(d) Contra Accounts $
--------------
(e) Government Accounts $
--------------
(f) Other $
--------------
(g) Total Ineligible Accounts [Sum of Items 2(a), 2(b)
2(c), 2(d), 2(e) and 2(f)] $
--------------
3. Eligible Accounts of the Subsidiaries of Borrower
[Sum of Item 1 minus Item 2(g)] $
--------------
4. Borrowing Base [80% of Item 3] $
--------------
5. Revolving Credit Commitment of Lender
$1,500,000.00
--------------
6. Borrower's Maximum Revolving Credit Availability
(Lesser of Item 4 or Item 5) $
--------------
7. Total Revolving Credit Outstandings $
--------------
8. Unused Revolving Credit Availability [Item 6 minus Item 7]
$
--------------
[Negative amount requires mandatory repayment] $
--------------
If Item 8 above is negative, this Certificate is accompanied by the
mandatory repayment required by Section 2.01(d) of the Loan Agreement.
-48-
This Borrowing Base Certificate is dated the day of , .
------- ---------- -----
ARCH AIR MEDICAL SERVICE, INC.
By
-------------------------------
Title:
-------------------------------
-49-
---------
EXHIBIT B
---------
Form of Revolving Credit Note
-----------------------------
-50-
EXHIBIT C
---------
Form of Term Loan Note
----------------------
-51-
EXHIBIT D
---------
_________________, 20___
Firstar Bank, N.A.
Xxx Xxxxxxx Xxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attn.: Service Industries Group
Ladies and Gentlemen:
Reference is hereby made to that certain Loan Agreement dated ___________,
2000, by and between you and the undersigned, as the same may from time to time
amended, modified, extended, renewed or restated (the "Loan Agreement"). All
capitalized terms used and not otherwise defined herein shall have the
respective meanings ascribed to them in the Loan Agreement.
Parent and Borrower hereby certifies to Lender that as of the date hereof:
(a) except as set forth below, all of the representations and
warranties made by Parent, Borrower and/or any other Obligor in the Loan
Agreement and/or in any other Transaction Document are true and correct in all
material respects on and as of the date hereof as if made on and as of the date
hereof:
Exceptions: ___________________________________________________________________
________________________________________________________________________________
___________________________________________________________;
(b) except as set forth below, no Default or Event of Default under or
within the meaning of the Loan Agreement has occurred and is continuing:
Exceptions: ___________________________________________________________________
________________________________________________________________________________
___________________________________________________________;
(c) the financial statements of Parent, Borrower and respective
Subsidiaries delivered to you with this letter are true, correct and complete
and have been prepared in accordance with GAAP consistently applied (subject, in
the case of any interim financial statements, to normal year-end adjustments and
absence of footnote disclosures); and
(d) Schedule 1 to this letter is a determination of Borrower's
compliance with the financial covenants set forth in Section 5.01(o) of the Loan
Agreement as of _________, ____, in each case calculated in accordance with the
Loan Agreement.
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(e) Schedule 2 to this letter is a determination of Parent's compliance
with the financial covenants set forth in the Guaranty as of ________________,
__________, in each case calculated in accordance with the Guaranty.
Very truly yours,
ARCH AIR MEDICAL SERVICE, INC.
By
--------------------------------
Title:
--------------------------------
AIR METHODS CORPORATION
By
--------------------------------
Title:
--------------------------------
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SCHEDULE 1
----------
Borrower
Financial Covenant Information
as of , 2000
--------------------------
Financial Covenant Actual Required
------------------- ------ --------
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SCHEDULE 2
----------
Parent
Financial Covenant Information
as of , 2000
--------------------------
Financial Covenant Actual Required
------------------- ------ --------
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