EXHIBIT 10.19
SECURITY AGREEMENT
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This SECURITY AGREEMENT dated as of January 9, 1998 (this "Agreement") is
by and between TOWER AIR, INC., a Delaware corporation ("Debtor"), and
TRANSAMERICA BUSINESS CREDIT CORPORATION, a Delaware corporation (together with
its successors and assigns, the "Secured Party").
WITNESSETH:
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WHEREAS, Debtor is the owner of the twelve (12) Xxxxx & Xxxxxxx JT9D
engines described herein and desires to have Secured Party provide it with a
loan on the terms provided herein, the proceeds of which will be applied to
refinance the indebtedness currently existing with respect to certain engines
and for other corporate purposes; and
WHEREAS, Secured Party has required as a condition to the making of its
initial Loan (as defined below) that Debtor grant to Secured Party a security
interest in the Collateral (as defined below) to secure Debtor's obligations to
Secured Party in connection with the Note (as defined below); and
NOW, THEREFORE, in consideration of the promises and of the mutual
covenants contained herein, the parties hereto agree as follows:
1. Definitions. The following definitions apply to the Agreement:
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a. "AAR FAA Releases" means collectively, all necessary or desirable
documentation to reflect, for FAA recording purposes, the release
by AAR Engine Group, Inc. of its security interest in certain of
the Engines, in each case in form necessary to file such release
with the FAA.
b. "Aggregate Original Amount" has the meaning specified in Article
2(b).
c. "Business Day" means any day other than a day on which banking
institutions in Chicago, Illinois or New York City, New York are
authorized by law to close.
d. "Closing Date" means the date on which the conditions precedent
specified in Article 4 herein have been satisfied (or waived in
writing by Secured Party) and Secured Party has made the initial
Loan.
e. "Collateral" means (i) each Engine, (ii) all Parts of whatever
nature, which
are from time to time incorporated or installed in or attached to
the Engines (including any QEC related thereto), whether now
owned or hereafter acquired, and all substitutions, renewals and
replacements of and additions, improvements, accessions and
accumulations to the Engines, (iii) all Engine Documents, (iv)
all insurance policies relating to the Engines, (v) all right,
title, interest, claims and demands of Debtor, in to and under
any purchase agreement, any bills of sale and any other agreement
to which Debtor is now or may hereafter be a party, with respect
to the Engines or any other Collateral, together with all rights,
powers, privileges, licenses, easements, options and other
benefits of the Debtor under each purchase agreement, xxxx of
sale or any other agreement or contract, (vi) all rents, issues,
profits, revenues and other income of the property subjected or
required to be subjected to the Lien of this Security Agreement,
including all payments or proceeds as the result of the sale,
lease or other disposition thereof, (vii) the Other Collateral,
and (viii) all proceeds of the foregoing.
f. "Default" means an event which, with the passage of time or the
giving of notice or both, would constitute an Event of Default.
g. "Documents" means this Agreement (and any supplements hereto),
the Note, the Other Security Agreements and any other documents
entered into in connection with the transactions contemplated
hereby or under the Other Security Agreements.
h. "Drawdown Date" means, with respect to each advance under the
Loan to be made hereunder, the date the Secured Party advances
such Loan to Debtor, the first such advance to take place on the
Closing Date and any subsequent advances to take place upon
satisfaction (or waiver in writing by Secured Party) of the
conditions specified in Article 5 hereof.
i. "Engine" means and includes (i) each of the (A) three (3) Xxxxx &
Whitney Model JT9D-7J engines; (B) eight (8) Xxxxx & Xxxxxxx
Model JT9D-7A engines; and (C) one (1) Xxxxx & Whitney Model
JT9D-7Q secured hereby as more particularly described in a
security agreement supplement in substantially the form of
Attachment 1 hereto (which has 750 or more rated take-off
horsepower or the equivalent thereof) and (ii) any and all Parts
related thereto.
j. "Engine Documents" means all books, manuals, logs, records,
writings, data, information and other like property relating to
the Engines or any Part (including, without limitation, any
warranties and all such logs, manuals, data
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and records required to be maintained by the FAA or by the
applicable regulatory agency or body or any manufacturer or
supplier).
k. "Engine Original Amount" has the meaning specified on Attachment
3.
l. "Event of Default" has the meaning specified in Article 11.
m. "Event of Loss" means, with respect to any Engine, any of the
following events with respect to such property: (i) the loss of
such property or the use thereof due to the destruction of or
damage to such property which renders repair uneconomic or which
renders such property permanently unfit for normal use for any
reason whatsoever; (ii) any damage to such property which results
in an insurance settlement with respect to such property on the
basis of a total loss, or a constructive or compromised total
loss; (iii) the theft or disappearance of such property; (iv) the
confiscation, condemnation, or seizure of, or requisition of
title to, or use of, such property by any governmental or
purported governmental authority, which in the case of any
requisition of use of such property referred to in such clause
(iv) shall have resulted in the loss of possession of such
property by Debtor for a period in excess of thirty (30)
consecutive days; and (v) as a result of any law, rule,
regulation, order or other action by the FAA or other
governmental body asserting jurisdiction over such property, use
of such property in the normal course of the business of air
transportation shall have been prohibited for a period of thirty
(30) consecutive days.
n. "Event of Loss Prepayment Fee" has the meaning specified in
Attachment 3.
o. "FAA" or "Federal Aviation Administration" means the Federal
Aviation Administration of the United States of America and any
successor governmental authority.
p. "Federal Aviation Act" means the Sections of Title 49 of the
United States Code relating to aviation, as amended.
q. "Interest Period" means, with respect to the Note, successive
periods commencing on (and including) the applicable Drawdown
Date with respect to such Note to (but excluding) the immediately
following Payment Date and thereafter from (and including) such
Payment Date to (but excluding) the immediately following Payment
Date.
r. "Interest Rate" has the meaning specified in Attachment 3.
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s. "Lien" means any mortgage, charge, pledge, security interest,
hypothecation, assignment, claim, right, deposit arrangement,
right or possession or detention, right of set-off (but excluding
any right of set-off, consolidation, merger or combination of
accounts arising in favor of a bank by operation of law),
encumbrance, lien (statutory or other), preference, priority or
other security agreement or preferential arrangement of any kind
or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement, any lease
having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement under the
Uniform Commercial Code or comparable law of any jurisdiction in
respect of any of the foregoing).
t. "Loan" has the meaning specified in Article 2(a) hereof.
u. "Loan Fee" has the meaning specified in Attachment 3.
v. "Margin" has the meaning specified in Attachment 3.
w. "Maturity Date" has the meaning specified in Attachment 3.
x. "Maximum Aggregate Original Amount" has the meaning specified in
Attachment 3.
y. "Maximum Original Amount" means, with respect to any applicable
Engine, the amount specified as such in Attachment 3.
z. "Note" means that certain promissory note dated the date hereof
and executed by Debtor to Secured Party, the form of which is
attached hereto as Attachment 2, and any replacement Note issued
in exchange or replacement therefor pursuant to the provisions
hereof.
aa. "Obligations" means (a) the amount of principal and interest (if
any) and the Prepayment Fee (if any) and all other amounts due
and owing, from time to time, on the Note (including, without
limitation, interest accruing after the maturity of the Loan and
interest accruing after the filing of any petition in bankruptcy,
or the commencement of any insolvency, reorganization or like
proceeding, relating to the Debtor, whether or not a claim for
post-filing or post-petition interest is allowed in such
proceeding) outstanding from time to time; (b) any and all other
obligations and liabilities any time due and owing from or
required to be paid by Debtor now existing or hereinafter
incurred which may arise under, out of, or in connection with,
this Agreement or any other Document; (c) any expenses
(including, but not
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limited to, reasonable attorneys fees) incurred by Secured Party
in enforcing its rights hereunder; and (d) any other covenants,
duties, agreements and obligations of Debtor to Secured Party
hereunder or under any other Document.
bb. "Other Collateral" means, with respect to any Other Security
Agreement, the "Collateral" described under such Other Security
Agreement.
cc. "Other Security Agreement" means any other agreement pursuant to
which Secured Party provides Debtor with a loan secured by, among
other things, the Other Collateral.
dd. "Overdue Rate" has the meaning specified in Attachment 3.
ee. "Parts" means any and all appliances, parts, instruments,
appurtenances, accessories, furnishings, quick engine change kits
and other equipment of whatever nature (other than complete
Engines or Engine) which are from time to time incorporated or
installed in or attached to any Engine or which have been removed
therefrom but where title to which remains vested in the Debtor.
ff. "Payment Date" has the meaning specified in Attachment 3.
gg. "Person" means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association,
joint venture governmental authority or other entity of whatever
nature.
hh. "Prepayment Fee" has the meaning specified in Attachment 3.
ii. "Prime Rate" has the meaning specified in Article 2(d) hereof.
jj. "Principal Amount" with respect to the Note, means the aggregate
amount of principal unpaid from time to time under the Note.
kk. "UCC" means Uniform Commercial Code as enacted in the State of
Illinois, as amended at the time in question.
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2. Amount and Terms of Loan.
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(a) Loan. Subject to the terms and conditions hereof, Secured Party
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agrees to make a loan in the maximum aggregate principal amount of FIFTEEN
MILLION DOLLARS ($15,000,000) (the "Loan") in one or more advances to Debtor on
such dates as Debtor may specify in writing to Secured Party (each, a "Drawdown
Date"), which advances shall under no circumstances exceed an aggregate
principal amount equal to the Maximum Aggregate Original Amount or, unless
otherwise agreed in writing by Secured Party, be advanced after February 28,
1998 (the "Commitment Cut-off Date"). Debtor agrees to provide the Secured
Party with a written request for any drawdown of the Loan hereunder (a "Request
for Drawdown") at least three (3) Business Days prior to the proposed Drawdown
Date, which notice shall specify the proposed Drawdown Date and the principal
amount to be advanced on such date; provided however that (i) the principal
amount of the amount to be advanced on any Drawdown Date shall not exceed the
Maximum Original Amount with respect to the applicable Engine or, together with
all other amounts advanced on prior Drawdown Dates, exceed the Maximum Aggregate
Original Amount; (ii) each advance shall amortize over the remaining Payment
Dates and mature on the Maturity Date; (iii) the Loan shall not be advanced in
more than four fundings; and (iv) no amount shall, unless otherwise agreed in
writing by Secured Party, be advanced after the Commitment Cut-off Date. In
order to induce the Secured Party to make its Loan available hereunder, the
Debtor has agreed to pay the Secured Party a fee equal to the Loan Fee. Whether
or not the transactions contemplated hereby shall be consummated on the Closing
Date, the Debtor agrees that the Loan Fee will be earned by the Secured Party as
a processing fee; provided, however, that if the transactions contemplated
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hereby shall fail to be consummated solely on the Closing Date due to Secured
Party's failure to provide the initial advance after satisfaction of all other
conditions precedent set forth herein, Secured Party agrees to refund the Loan
Fee less an amount equal to the costs and expenses (including, without
limitation, legal fees and expenses and the fees of the appraiser who prepared
the appraisal referred to in Articles 4(t) and 5(h) hereof) incurred by the
Secured Party in connection with the negotiation and documentation of the
transactions contemplated hereby.
(b) Note. On the Closing Date, Debtor will furnish to Secured Party
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the Note substantially in the form of Attachment 2 hereto, dated the Closing
Date and in an amount equal to the initial loan advance which will be made on
the Closing Date. Debtor hereby agrees to execute and deliver to Secured Party,
on each subsequent Drawdown Date, a replacement Note in an aggregate principal
amount equal to the sum of all loan advances made on or prior to such Drawdown
Date. The Note issued on the final Drawdown Date shall be in an aggregate
principal amount of FIFTEEN MILLION DOLLARS ($15,000,000) ("Aggregate Original
Amount"). Secured Party is hereby authorized to record the date and amount of
each payment applied to principal and interest on the Note on the schedule
annexed to and constituting a part of the Note, and any such recordation shall
constitute prima facie (but not conclusive) evidence of the accuracy of the
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information so recorded. No failure to make any such notations shall affect the
validity of Debtor's obligations to repay the full unpaid principal amount of
the Note or the duties of Debtor hereunder or thereunder. The Note shall be
stated to be repaid in consecutive monthly principal installments commencing on
the 1st day of the month immediately succeeding the Closing Date and thereafter
on the 1st day of each month through (and including) the Maturity Date (each, a
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"Payment Date"). Accrued and unpaid interest with respect to the Note shall be
due and payable on each Payment Date..
(c) Prepayments.
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(i) Debtor may prepay all (but not less than all) of the Note
by payment of 100% of the outstanding Principal Amount of the Note and
accrued interest thereon to the date of such prepayment plus the Prepayment
Fee, together with all other amounts due hereunder and under the Note and
the other Documents; provided, that Debtor will provide Secured Party at
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least 30 days' prior irrevocable written notice of any such prepayment
(which notice shall specify the date of prepayment and the principal,
interest and Prepayment Fee to be paid on such date).
(ii) If an Event of Loss with respect to any Engine shall occur,
then on the date on which Debtor is required to make payment of the amounts
specified in Article 10 hereof, Debtor shall prepay a portion of the
outstanding Principal Amount of the Note by payment to the Secured Party of
the amounts specified in Article 10 hereof.
(iii) Debtor shall pay, with respect to the Note, the principal
amount of the Note on the dates and in the amounts set forth in Annex A to
the Note.
(iv) As used herein, "Prepayment Fee" means either (A) with
respect to any prepayment of a portion of the Note due solely to an Event
of Loss with respect to an Engine, an amount equal to the Event of Loss
Prepayment Fee or (B) with respect to any other prepayment of the Note, an
amount equal to the Prepayment Fee specified as such on Attachment 3.
(v) Amounts prepaid on account of the Loan may not be
reborrowed.
(vi) The Note may not be prepaid in whole or in part except in
accordance with this Article 2(c) or in connection with the exercise of
remedies by Secured Party hereunder.
(d) Interest Rate and Payment Dates. (a) Amounts advanced pursuant to
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this Agreement shall bear interest at a rate with respect to each Interest
Period equal to the lesser of (a) as of any date of determination, the highest
published prime rate which appears in the Money Rates section of The Wall Street
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Journal on the applicable Drawdown Date (with respect to the first Interest
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Period) and three Business Days prior to each Payment Date (with respect to each
subsequent Interest Period) (the "Prime Rate") plus the Margin and (b) the
maximum rate allowed under applicable law (the "Interest Rate") on the unpaid
principal amount thereof from time to time outstanding, payable in arrears on
each Payment Date until the Maturity Date, provided, however such interest rate
is subject to adjustment pursuant to Article 7(e) hereof. In the event that a
court
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determines that Secured Party has received interest hereunder in excess of
the maximum amount permitted by law, (i) Secured Party shall apply such excess
to any unpaid principal owed by Debtor to Secured Party or, if the amount of
such excess exceeds the unpaid balance of such principal, Secured Party shall
promptly refund such excess interest to the Debtor and (ii) the provisions
hereof shall be deemed amended to provided for such permissible rate. All sums
paid, or agreed to be paid, by Debtor which are, or hereafter may be construed
to be, compensation for the use, forbearance or detention of money shall, to the
extent permitted by applicable law, be amortized, prorated, spread and allocated
throughout the full term of all such indebtedness until the indebtedness is paid
in full.
Notwithstanding the foregoing, the final payment made under the Note shall
be in an amount sufficient to discharge in full the unpaid principal amount, and
all accrued and unpaid interest on, and any other amounts due under, the Note
and the other Documents. Debtor shall pay Secured Party, on demand, interest at
Overdue Rate on any part of the principal amount, Prepayment Fee, if any, and to
the extent permitted by applicable law, interest and any other amounts payable
hereunder or under the Note or any other Document not paid when due for any
period during which the same shall be overdue, in each case for the period the
same is overdue. Amounts shall be overdue if not paid when due (whether stated
maturity, by acceleration or otherwise).
Each payment made by Debtor under the Note shall be distributed as follows:
First, so much of such funds as shall be required for the purpose
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shall be distributed and paid to Secured Party to pay any fees, costs,
charges, or expenses (including interest on overdue amounts and Prepayment
Fee, if any) due and payable to Secured Party hereunder or under any other
Document;
Second, if any amounts shall remain after satisfying the amounts
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specified in clause First, above, so much of such funds as shall be
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required for the purpose shall be distributed and paid to Secured Party to
pay in full the aggregate amount of interest and Prepayment Fee, if any,
then due under the Note;
Third, if any amounts shall remain after satisfying the amounts
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specified in clauses First and Second above, such remaining amounts shall
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to the extent available be applied to pay the due and owing principal
payments under the Note; and
Fourth, if any amounts shall remain after satisfying the amounts
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specified in clauses, First, Second, and Third above, so much of such funds
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as shall be required for the purpose shall be distributed and paid to
Secured Party to pay in full all other amounts due and owing to such party
hereunder or under any other Document on a pro rata basis.
(e) Payments. All payments (including prepayments) to be made by
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Debtor hereunder, under the Note, and under any other Document, whether on
account of principal, interest, fees or otherwise, shall be made without set-
off, counterclaim or withholding of any kind by wire
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transfer of good, unrestricted and immediately available bank funds to Secured
party's account number 55-41948, ABA #000000000, Reference: Transamerica
Equipment Finance and Leasing, Attention: Xxx Xxxxxxx, at The First National
Bank of Chicago, Xxx Xxxxx Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000 (or such
other accounts as Secured Party may specify to Debtor) and shall be made prior
to 12:00 Noon, Chicago time, on the due date thereof. If any payment hereunder
becomes due and payable on a day other than a Business Day, then such payment
shall be made on next succeeding Business Day and if such payment is made on the
next succeeding Business Day, no interest shall accrue on the amount of such
payment during such extension; provided, however, that any such "extension day"
shall be included in the interest calculation in connection with the next
payment under the Note.
(f) Mutilation, Destruction, Loss or Theft. If the Note shall become
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mutilated, destroyed, lost or stolen, Debtor shall, upon the written request and
at the expense of Secured Party execute and deliver to Secured Party, in
replacement thereof, a new Note in the same face amount and dated the same date
as the Note so mutilated, destroyed, lost or stolen. If the Note being replaced
has become mutilated, such Note shall be surrendered to Debtor. If the Note
being replaced has been destroyed, lost or stolen, Secured Party shall furnish
to Debtor such security or indemnity as may reasonably be required by it to save
it harmless and evidence reasonably satisfactory to Debtor of the destruction,
loss or theft of such Note and the ownership thereof; provided, however, that if
Secured Party is Transamerica Business Credit Corporation or any institutional
investor, the written undertaking of such holder delivered to Debtor shall be
sufficient security and indemnity.
3. Security Interest. In order to secure the full and complete payment
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and performance of the Obligations when due, and in consideration of the
premises and of the premises and of the covenants herein and in the other
Documents, Debtor hereby grants, transfers, assigns, bargains, sells, conveys,
mortgages, hypothecates and pledges to Secured Party a valid and perfected first
priority security interest in and Lien on all right, title and interest of
Debtor in and to the Collateral. The Lien granted by this Agreement is granted
as security only and shall not offset or modify any Obligations of Debtor with
respect to any of the Collateral or any transaction involving or giving rise
thereto and the Secured Party shall have no obligation or liability by reason of
or arising out of the assignment hereunder, nor shall the Secured Party be
required or obligated to perform or fulfill any obligations of Debtor under any
other Document.
Debtor hereby constitutes the Secured Party the true and lawful attorney of
Debtor, irrevocably, coupled with an interest and with full power of
substitution, and with full power (in the name of Debtor or otherwise) to ask
for, require, demand, and receive, any and all monies and claims for monies (in
each case including insurance and requisition proceeds) due and to be come due
under or arising out of any agreement assigned or pledged hereunder and all
other property which now or hereafter constitutes part of the Collateral, to
endorse any checks or other instruments or orders in connection there with and
to file any claims or to take any action or to institute any proceedings which
the Secured Party may deem to be necessary or advisable in the circumstances.
Without limiting the provisions of the foregoing and subject to the terms
hereof, the Secured Party
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shall have the right under such power of attorney to xxx for, compound and give
acquittance for, to accept any offer of any purchaser to purchase the Engines as
provided herein and upon such purchase to execute and deliver in the name of and
on behalf of Debtor an appropriate xxxx of sale and other instruments of
transfer relating to the Engines, when purchased by such purchaser, and to
perform all other necessary or appropriate acts with respect to any such
purchase, and in its discretion to file any claim or take any other action or
proceedings, either in its own name or in the name of Debtor or otherwise, which
the Secured Party may reasonably deem necessary or appropriate to protect and
preserve the right, title and interest of the Secured Party in and to such rents
and other sums and the security intended to be afforded hereby.
It is hereby further agreed that any and all property described or referred
to in the definition of Collateral which is hereafter acquired by Debtor shall
ipso facto, and without any further conveyance, assignment or act on the part of
Debtor or the Secured Party, become and be subject to the Lien and security
interest herein granted as fully and completely as though specifically described
herein.
4. Conditions Precedent to Closing Date. The agreement of Secured Party
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to make the initial Loan to Debtor and to enter into this Agreement and each of
the other Documents to which it is a party on the Closing Date is subject to the
satisfaction (or written waiver by Secured Party) of the following conditions
precedent:
(a) Secured Party shall have received each of the following documents,
duly authorized, executed and delivered by all parties thereto, in form and
substance satisfactory to the Secured Party:
(i) this Agreement and the Supplement hereto dated the Closing
Date; and
(ii) the Note;
(b) the Secured Party shall have received a duly executed officer's
incumbency certificate of Debtor, in form and substance satisfactory to the
Secured Party;
(c) the Secured Party shall have received independent insurance
certificates and broker's undertaker letter, in form and substance satisfactory
to the Secured Party relating to the Engines;
(d) the Secured Party each shall have received true and complete
copies of (i) the Articles of Incorporation of Debtor; (ii) the By-laws of
Debtor; (iii) the resolutions of the Board of Directors or other competent
authority of Debtor with respect to the due authorization of the transactions
contemplated by this Agreement and the other Operative Documents; and (iv) good
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standing certificates for Debtor in the States of Delaware and New York,
certified by the Secretary of Debtor;
(e) the Secured Party shall have received the legal opinions of (i)
Hewes, Gelband, Xxxxxxx & Xxxx, counsel to Debtor and (ii) Xxxxxxxxx, Xxxxxx &
Xxxxxxxx, special counsel in Oklahoma City, Oklahoma, in each case, in form and
substance satisfactory to the Secured Party and addressed to the Secured Party;
(f) Debtor shall provide Secured Party with a copy of the servicing
agreement between Debtor and GE Aircraft Engine Services with respect to Engine
bearing manufacturer serial number 662338;
(g) the Secured Party shall have received a copy, certified as true
and correct by an officer of Debtor of each approval and consent, if any, of any
governmental or other regulatory authorities in the United States, which are
necessary for the execution, performance and delivery of each of the Documents
by each of the parties thereto;
(h) the Secured Party shall have received evidence satisfactory to it
that the Engines and all other Mortgaged Property are the property of Debtor
free and clear of all Liens and adverse claims or rights and that the Secured
Party has, or will on the Closing Date have, a first priority perfected Lien
therein;
(i) no Default or Event of Default shall have occurred and be
continuing and no Event of Loss or event which, with the passage of time or the
giving of notice or both, would constitute an Event of Loss with respect to any
Engine shall have occurred;
(j) no action or proceeding shall have been instituted nor shall any
governmental action be threatened before any court or governmental agency, nor
shall any order, judgment or decree have been issued or proposed to be issued by
any court or governmental agency pertaining in any way to the Engines or the
transactions contemplated by this Agreement;
(k) there shall not have been, in the opinion of the Secured Party,
any material adverse change in the business, operations, property or condition
(financial or other) of Debtor;
(l) the representations and warranties made by Debtor in this
Agreement and each other Document shall be true and correct on and as of the
Closing Date and the Debtor shall provide a certificate of an appropriate
officer of Debtor to such effect;
(m) on the Closing Date, the following statements shall be true and
the Secured Party shall have received evidence satisfactory to it to the effect
that:
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(i) Debtor has authority to operate the Engines and the
aircraft on which the Engines are installed; and
(ii) this Agreement and the Supplement have been duly filed with
the FAA for recordation;
(n) a Uniform Commercial Code financing statement or statements
covering all the security interests created by this Agreement shall have been
executed and delivered by Debtor, and such financing statement or statements
shall have been duly filed in all places necessary or advisable, and any
additional Uniform Commercial Code financing statements deemed advisable by the
Secured Party shall have been executed and delivered by Debtor and duly filed;
(o) the Secured Party shall have received evidence satisfactory to it
that (i) the AAR FAA Releases have been duly executed and delivered by the
parties thereto, (ii) any other Liens with respect to the Engines shall have
been released and (iii) any other necessary release documentation shall have
been filed with the FAA or other applicable agency.
(p) all appropriate action required to have been taken prior to such
Drawdown Date by the Federal Aviation Administration or any governmental or
political agency, subdivision or instrumentality of the United States in
connection with the transactions contemplated hereby shall have been taken and
all orders, permits, waivers, authorizations, exemptions and approvals of such
entities required to be in effect on such Drawdown Date in connection with the
transactions contemplated hereby shall have been issued, and all such orders,
permits, waivers, authorizations, exemptions and approvals shall be in full
force and effect on the date hereof and on such Drawdown Date;
(q) Secured Party shall have received proof of ownership, satisfactory
to Secured Party, from Debtor as to Debtor's ownership of the Engines, including
bills of sale for such Engines;
(r) Secured Party shall have received the current engine status
reports for each Engine, certified by a vice president of quality assurance of
Debtor as being "true, accurate and correct";
(s) the Secured Party shall have received an appraisal and inspection
report;
(t) Secured Party shall have received the Loan Fee; and
(u) the Secured Party shall have received such further documents,
instruments and agreements as it shall reasonably require in connection with the
transactions contemplated by the Documents.
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5. Conditions Precedent to Subsequent Drawdown Dates. The agreement of
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Secured Party to make subsequent advances of the Loan to Debtor is subject to
the satisfaction (or written waiver by Secured Party) of the following
conditions precedent:
(a) Secured Party shall have received a certificate signed by an
Officer of Debtor stating that the maintenance work to be performed in
connection with such advance has been performed and that Debtor has irrevocably
accepted such work and that either (i) all amounts to be paid by Debtor in
connection with such maintenance have been paid or (ii) such financing has been
obtained from such maintenance provider without the granting of any Lien by
Debtor to such maintenance provider;
(b) Secured Party shall have received from any maintenance provider
providing maintenance in connection with such advance a letter stating that all
such maintenance has been completed and accepted as satisfactory by Debtor and
that any amounts due from Debtor have been either (i) paid in full or (ii) are
subject to a financing agreement between Debtor and such maintenance provider
and, if subject to a financing agreement, the maintenance provider has not and
shall not obtain a Lien on the relevant Engine;
(c) no Default or Event of Default shall have occurred and be
continuing and no Event of Loss or event which, with the passage of time or the
giving of notice or both, would constitute an Event of Loss with respect to any
Engine shall have occurred;
(d) no action or proceeding shall have been instituted nor shall any
governmental action be threatened before any court or governmental agency, nor
shall any order, judgment or decree have been issued or proposed to be issued by
any court or governmental agency pertaining in any way to the Engines or the
transactions contemplated by this Agreement;
(e) there shall not have been, in the opinion of the Secured Party,
any material adverse change in the business, operations, property or condition
(financial or other) of Debtor;
(f) the representations and warranties made by Debtor in this
Agreement and each other Document shall be true and correct on and as of the
Closing Date and the Debtor shall provide a certificate of an appropriate
officer of Debtor to such effect;
(g) all appropriate action required to have been taken prior to such
Drawdown Date by the Federal Aviation Administration or any governmental or
political agency; subdivision or instrumentality of the United States in
connection with the transactions contemplated hereby shall have been taken and
all orders, permits, waivers, authorizations, exemptions and approvals of such
entities required to be in effect on such Drawdown Date in connection with the
transactions contemplated hereby shall have been issued, and all such order,
permits, waivers, authorizations, exemptions and approvals shall be in full
force and effect on the date hereof and on such Drawdown Date;
13
(h) the Secured Party shall have received an appraisal and such
appraisal, if required, shall be in form and substance (including, without
limitation, the values set forth in such appraisal) satisfactory to Secured
Party and evidence of the satisfactory completion of the maintenance work being
performed with respect to one or more of the Engines bearing manufacturer serial
numbers 662323, 686106 or 702083;
(i) the Secured Party shall have received a letter from Debtor setting
forth the payee and its wire transfer instructions;
(j) the Secured Party shall have received a Note, substantially in the
form of Attachment 2 hereto, duly executed, authorized and delivered by Debtor
in favor of Secured Party and in an aggregate principal amount equal to the sum
of all advances made on or prior to such Drawdown Date; and
(k) the Secured Party shall have received such further documents,
instruments and agreements as it shall reasonably require in connection with the
transactions contemplated by the Documents.
6. Representations and Warranties of Debtor Debtor represents and
----------------------------------------
warrants to Secured Party as of the date hereof and each Drawdown Date that:
(a) It has (i) good and marketable title to the Collateral, free and
clear of all Liens, charges, mortgages, and encumbrances except for the Lien
granted hereby; (ii) full power and authority to give, sell, transfer, convey,
mortgage, and grant the Lien in the Collateral as herein provided; and (iii)
obtained any and all consents necessary to create the Lien in the Collateral
granted pursuant to this Agreement.
(b) The Documents have been duly authorized, executed and delivered by
Debtor and constitute the legal, valid and binding obligations of Debtor,
enforceable against Debtor in accordance with their respective terms.
(c) It (i) is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, (ii) has the power and
authority, and the legal right, to conduct the business in which it is currently
engaged, (iii) is in compliance with its organizational documents, (iv) is in
compliance with all laws, treaties, rules, regulations and determinations of any
arbitrator, court or governmental authority applicable to or binding upon it and
holds all licenses, certificates, approvals and permits from the Federal
governmental authorities of the United States to use and operate the Engines in
accordance with this Agreement and applicable law and (v) is a "citizen of the
United States" as defined in Section 40102(a)(15) of the Federal Aviation Act
holding a carrier operating certificate issued by the Secretary of
Transportation pursuant to Section 44705 of the Federal Aviation Act for
aircraft capable of carrying ten or more individuals or 6,000 pounds or more of
cargo.
14
(d) It has the power and authority to make, deliver and perform the
transactions contemplated in the Documents. No consent or authorization of,
filing with or notice to or approval or other act by or in respect of any
governmental authority is required in connection with the borrowing hereunder or
with the execution, delivery, performance, validity or enforceability of the
Documents except the filing of this Agreement (and any supplements hereto) with
the FAA and any necessary or relevant UCC Filings.
(e) The execution, delivery and performance of the Documents, the
borrowings hereunder and the use of the proceeds thereof and the creation of the
Liens under the Documents will not violate any laws, treaties, rules,
regulations and determinations of any arbitrator, court or governmental
authority applicable to or binding upon it or any lease, mortgage or other
contract binding on Debtor or the organizational documents of Debtor and to the
best of Debtor's knowledge will not result in, or require, the creation or
imposition of any Lien on any of its or its properties or revenues.
(f) No event has occurred which constitutes, or with the giving of
notice and/or the passage of time and/or a relevant determination would
constitute, a contravention of, or default under, any lease, montage or other
contract binding on Debtor. No Default or Event of Default has occurred or will
occur as a result of the consummation of the transactions contemplated hereby.
(g) There is no pending or, to the best of Debtor's knowledge,
threatened action or proceeding affecting Debtor before any court, tribunal,
governmental agency or arbitrator which may adversely affect the financial
condition or operations of Debtor or the ability of Debtor to perform its
obligations under the Documents or the Engines or any other Collateral.
(h) The chief executive office and principal place of business (as
such terms are defined in the UCC) of Debtor are located at Xxxxxx 00, XXX
International Airport, Jamaica, NY 11430.
(i) The Secured Party is entitled to the benefits of Section 1110 of
the United States Bankruptcy Code with respect to the right to repossess the
Engines and Parts.
7. Covenants. So long as the Obligations are, or any part thereof is,
---------
outstanding, Debtor hereby covenants that, at its own cost and expense:
(a) Debtor shall make due and punctual payment of the principal and
interest and Prepayment Fee, if any, on the Note and perform all covenants and
agreements hereunder.
(b) Debtor shall not permit the Collateral to become subject to any
Lien of any kind or character other than the Lien granted herein and it will
promptly at its own expense, take such action as may be necessary duly to
discharge any such Lien with respect to the Collateral and
15
it will indemnify and hold harmless the Secured Party against any and all
liabilities, obligations, losses, damages, penalties, claims, actions, costs,
expenses and disbursements incurred or suffered in connection with the existence
of such Lien or the removal thereof.
(c) Debtor shall promptly notify Secured Party of any claim, action or
proceeding affecting title to all or any portion of the Collateral, or the Lien
granted hereby, and at the request of Secured Party appear in and defend, at
Debtor's expense, any such action or proceeding.
(d) Debtor shall keep the Collateral in as good condition and repair
as the same now is, ordinary wear and tear excepted.
(e) Debtor shall promptly either (A) pay all amounts owed by Debtor to
any maintenance provider with respect to maintenance relating to any of the
Engines and if any such amount due to any such maintenance provider from Debtor
is not paid in full by Debtor within thirty (30) days of receipt of an invoice
or any other notice from any maintenance provider of payment being due by Debtor
for such maintenance, an Event of Default shall have occurred and interest on
all outstanding amounts due under the Note shall accrue at the Overdue Rate or
(B) enter into a financing agreement providing for the financing by the relevant
maintenance provider of such maintenance work and provide to Secured Party,
within three (3) Business Days of entering into such financing agreement, a
certificate of Debtor containing the representation described in Article
5(a)(ii) and a letter from the applicable maintenance provider containing the
representation described in Article 5(b)(ii), and, if Debtor fails to provide
either such certificates or letters to Secured Party within such three (3)
Business Day Period, an Event of Default shall have occurred and interest on all
outstanding amounts due under the Note shall accrue at the Overdue Rate.
(f) Debtor shall install and keep affixed to each Engine a placard in
the following form:
"This Engine is subject to a security interest in favor of
TRANSAMERICA BUSINESS CREDIT CORPORATION, 00000 Xxxx Xxxx, Xxxxx 0000,
Xxxxxx, Xxxxx, 00000"
(such placard to be replaced, if necessary, with a nameplate reflecting the name
of any successor Secured Party).
(g) Debtor shall keep the Collateral insured with policies of
insurance of the type and in the minimum amounts stated below with insurers and
under terms satisfactory to Secured Party; and, prior to the Closing Date and
upon each annual anniversary thereafter so long as the Obligations remain
outstanding, Debtor will furnish to Secured Party certificates of insurance (and
16
a report of an independent insurance broker, which broker and report shall be
satisfactory to Secured Party) evidencing such coverage; provided, however, that
such insurance policies shall not provide any party with any recourse against
Secured Party for payment of any premium or any other costs related thereto.
(i) Comprehensive Airline Liability Insurance with an aggregate
limit of not less than Seven Hundred and Fifty Million Dollars
($750,000,000), naming Secured Party, its directors, officers, agents,
employees, successors and assigns as additional insureds, such insurance
covering, among other things, Debtor's indemnification obligations under
this Agreement.
(ii) Aircraft hull insurance covering all risks, ground and
flight, with respect to each Engine, in a minimum amount not less than the
applicable Engine Original Amount (it being agreed and understood that when
an Engine is on wing, such minimum amount is in addition to any insurance
maintained in respect of the aircraft on which such Engine is installed and
that such minimum amount is maintained for the sole benefit of Secured
Party); provided, however that with respect to all Engines, such hull
insurance shall be in a minimum amount of not less than one hundred five
percent (105%) of the principal and interest outstanding on the Note. Such
policy will include Secured Party as first loss payee to the extent that
the Obligations are outstanding.
(iii) All risk spares insurance, including in transit coverage,
on the Engines covering any damage which may occur while in Debtor's care,
custody, and control but not then attached to an aircraft in a minimum
amount not less than the amount stated in paragraph f(ii) above. Such
policy will include Secured Party as first loss payee to the extent that
the Obligations are outstanding.
(iv) All insurance coverages listed above will include war risk,
hijack, and confiscation coverage in the amounts listed therein.
(v) All policies will provide that all insurance carriers,
including the hull insurance carrier for the Engines, waive any and all
rights of subrogation that such carriers may or could have against Secured
Party, its directors, officers, agents, and employees by virtue of such
insurance contracts.
(vi) The hull insurance deductible shall not exceed $500,000
when an Engine is on wing and $10,000 when an Engine is off wing. Any
permitted deductibles in the insurance coverage described in this Article
7(f) are the sole responsibility of Debtor and will be paid to Secured
Party by Debtor in the event of a loss or claim as Secured Party's
interests may appear.
17
(vii) All of the policies of insurance required of Debtor
will include breach of warranty protection in favor of Secured Party.
(viii) All policies required of Debtor will provide that such
insurance will be primary insurance and that any other insurance of Secured
Party is secondary or excess insurance.
(ix) All policies will provide that Secured Party will be
given thirty (30) days' prior written notice by the insurers of policy
cancellation or material change thereof except for coverages in Article
7(f)(iv) which will require seven (7) days prior written notice.
(x) All losses will be adjusted with Secured Party and
Debtor.
(xi) All hull insurance policies will contain a fifty-fifty
(50/50) clause.
(h) Debtor shall not transfer, lease, sell, assign, pledge or
otherwise transfer possession of the Collateral or any part thereof without the
prior written consent of Secured Party.
(i) Debtor shall not maintain, use, service, repair, overhaul or
operate the Collateral or any aircraft on which the Collateral is installed in
violation of any law, regulation, or ordinance of any governmental authority or
in violation of any airworthiness certification, or policy of insurance
affecting the maintenance or use of such Collateral or such aircraft.
(j) Debtor shall maintain, service, repair and overhaul the Engines
so as to keep the Engines in as good operating condition as when originally
subjected to the Lien hereof and in such manner as may be necessary to enable
the applicable airworthiness certification for the Engines to be maintained in
good standing at all times under the Federal Aviation Act, and in substantially
the same manner as Debtor maintains, services, repairs and overhauls similar
engines operated by Debtor in similar circumstances and without in any way
discriminating against the Engines.
(k) Debtor shall maintain (in English) all records, logs, and other
materials required by the FAA to be maintained in respect of the Engines.
(l) Debtor shall perform or cause to be performed all FAA
airworthiness directives or any other mandatory or recommended regulation,
directive or instruction (including manufacturer's changes, notices and/service
bulletins) issued by the manufacturer, the FAA or any other governmental agency
or authority asserting jurisdiction over the Engines or their use, operation or
maintenance which may from time to time be issued affecting engines of the same
type as the Engines (collectively, "Airworthiness Directives").
18
(m) Debtor shall at all times (i) preserve and maintain in full force
and effect its existence as a Delaware corporation under the laws of the State
of Delaware and its qualification to do business in each jurisdiction in which
the conduct of its business requires such qualification, (ii) obtain and
maintain in full force and effect all consents, approvals, licenses and
franchises required at any time in connection with the registration, ownership
or operation of the Engines and its other properties and businesses and (iii) be
a "citizen of the United States" as defined in Section 40102(a)(15) of the
Federal Aviation Act holding a carrier operating certificate issued by the
Secretary of Transportation pursuant to Section 44705 of the Federal Aviation
Act, for aircraft capable of carrying then or more individuals or 6,000 pounds
or more of cargo.
(n) Debtor shall promptly replace or cause to be replaced all Parts
which may from time to time become worn out, lost, stolen, destroyed, seized,
confiscated, damaged beyond repair or permanently rendered unfit for use for any
reason whatsoever, with replacement Parts owned by Debtor free and clear of all
Liens in as good an operating condition as and having a value and utility
substantially equal to the Parts replaced assuming such replaced Parts were in
the condition and repair required to be maintained by the terms hereof. All
Parts at any time removed from any Engine shall remain the property of Debtor,
no matter where located, until such time as such Parts shall be replaced by
Parts which meet the requirements for replacement Parts specified above.
(o) Debtor shall make such alterations and modifications in and
additions to the Engines as may be required to meet the applicable standards of
the FAA or any applicable regulatory agency or body of any other governmental
body asserting jurisdiction over the Engines.
(p) Debtor shall not, without the prior written consent of Secured
Party, submit any or all of the Engines for servicing or maintenance under any
engine servicing agreement applicable to such Engine or Engines (it being
understood and agreed that Secured Party consents to the maintenance being
performed (or proposed to be performed) by Greenwich Air Services with respect
to Engines bearing manufacturer's serial numbers 662323, 686106; GE Aircraft
Engine Services with respect to Engine bearing manufacturer's serial number
662338; and SIA Engineering Company with respect to Engine bearing
manufacturer's serial number 702083, as of the Closing Date; provided, however,
that no Lien shall attach to any Engine in connection with any such
maintenance).
(q) Debtor shall maintain at all times the lien of and first priority
perfected security interest in the Collateral created by this Agreement.
(r) Debtor shall cause any lessor or secured party of any airframe
leased to Debtor or purchased by Debtor subject to a conditional sale or other
security agreement or any mortgagee of or any other holder of a security
interest in an airframe owned by Debtor, to expressly agree in writing (which
agreement may be contained in such lease, conditional sale or other security
agreement or mortgage) that neither it nor its successors or assigns will
acquire, as against Secured
19
Party, any right, title or interest in an Engine as a result of such Engine
being installed on such airframe.
(s) Debtor shall furnish to Secured Party:
(i) As soon as practicable after the end of the first, second
and third quarterly fiscal periods in each fiscal year of Debtor, and in
any event within 60 days thereafter, duplicate copies of:
(x) a balance sheet of Debtor as at the end of such quarter
setting forth in comparative form the amount for the end of the
corresponding period of the preceding fiscal year,
(y) statements of income and retained earnings of Debtor for
such quarterly period, and
(z) statements of cash flow of Debtor for the portion of the
fiscal year ending with said quarter;
in each case prepared in accordance with generally accepted accounting
principles in the United States of America in effect from time to time and
consistently applied ("GAAP") and certified by the Chief Financial Officer
of Debtor as having been prepared in accordance with GAAP; and
(ii) As soon as practicable after the end of each fiscal year of
Debtor, and in any event within 90 days thereafter, duplicate copies of:
(x) a balance sheet of Debtor as at the end of such year,
(y) statements of income and retained earnings of Debtor for
such year, and
(z) statements of cash flow of Debtor as at the end of such
year,
in each case prepared in accordance with generally accepted accounting
principles in the United States of America in effect from time to time and
consistently applied and setting forth in each case in comparative form the
figures for the previous fiscal year and accompanied by an unqualified
auditor's report of a firm of independent certified public accountants of
recognized national standing satisfactory to the Secured Party stating that
such balance sheet and combined and combining statements have been prepared
in accordance with GAAP;
20
(iii) Concurrently with the delivery of the financial statements
referred to in clauses (i) and (ii) above, Debtor will deliver to Secured
Party a certificate of Debtor, signed by the President, a Vice President,
the Chief Financial Officer or the principal accounting officer of Debtor
to the effect that the signer is familiar with or has reviewed the relevant
terms of each of the Documents and the signer does not have knowledge of
the existence, as of the date of such certificate, of any condition or
event which constitutes a Default or an Event of Default;
(iv) Debtor shall, upon request from Secured Party, promptly
provide Secured Party with any additional information Secured Party may
deem necessary or appropriate to protect its interest in the Engines, the
Documents or any other portion of the Collateral.
(t) Debtor shall not consolidate with or merge into any other
corporation or convey, transfer or lease all or substantially all of its assets
as an entirety to any person unless:
(i) the corporation formed by such consolidation or into which
Debtor is merged or the person which acquires by conveyance, transfer or
lease all or substantially all of the assets of Debtor as an entirety (the
"Successor") shall be an "air carrier" and a "citizen of the United
States", as such terms are defined in Section 40102(a) of the Federal
Aviation Act, operating under certificates issued under Sections 41102 and
44705 of the Federal Aviation Act and shall have a tangible net worth not
less than the tangible net worth of Debtor immediately prior to such
merger, conveyance, transfer or lease;
(ii) Successor shall execute and deliver to Secured Party a duly
authorized, valid, binding and enforceable agreement in form and substance
reasonably satisfactory to Debtor containing an assumption by the Successor
of the due and punctual performance and observance of each covenant and
condition of the Documents to be performed or observed by Debtor;
(iii) immediately after giving effect to such transaction and as
a result of giving effect to such transaction, no Default or Event of
Default shall have occurred and be continuing; and
(iv) Debtor shall have delivered to Secured Party a certificate
signed by the President or any Vice President of Debtor, and an opinion of
counsel satisfactory to Secured Party, each stating that such
consolidation, merger, conveyance, transfer or lease and the assumption
agreement mentioned in clause (ii) above comply with this Article 7(s) and
that all conditions precedent herein provided for relating to such
transaction have been complied with.
21
Upon any consolidation or merger, or any conveyance, transfer or lease of all or
substantially all of the assets of Debtor in accordance with this Article 7(s),
the Successor shall succeed to, and be substituted for, and may exercise every
right and power of, and shall have every obligation to the same extent as,
Debtor under this Agreement with the same effect as if such Successor had been
named as Debtor herein. No such conveyance, transfer or lease of all or
substantially all of the assets of Debtor as an entirety shall have the effect
of releasing Debtor or any Successor which shall theretofore have become such in
the manner prescribed in this Article 7(s) from its liability in respect of any
Document to which it is a party.
(u) Debtor shall furnish to Secured Party:
(i) Within 15 days after the end of each month and with respect
to each Engine, (A) if requested by Secured Party, a report containing the
information and certification described in Article 4(r) hereof, and (B) a
maintenance status report identifying engine time and cycles since new,
since overhaul, since hot section, and since gear box inspection (if
required), a list of major components removed for repair/overhaul during
the previous month; the location of Engines and a list of major repairs or
modifications performed during the previous month (reports under this
paragraph will be based on information and reports ordinarily compiled by
and reasonably available to Debtor).
(ii) If requested by Secured Party, within 15 days after the end
of each calendar month and with respect to each Engine, a maintenance
status report identifying current status of all major time controlled or
life components relative to Debtor's approved maintenance program and
schedule, including engine/turbine wheel and discs, cooling/air cycle
machines; current status and frequency of maintenance inspections as per
Debtor's approved maintenance program; a listing of Manufacturer's Service
Bulletins that have been embodied during the previous quarter; a listing of
the Airworthiness Directives that have been embodied or complied with
during the previous month, annotated by method of compliance (reports under
this paragraph will be based on information and reports ordinarily complied
by and reasonably available to Debtor).
8. US Government Indemnification. Secured Party agrees to accept
-----------------------------
indemnification by the United States Government in lieu of the insurance
required pursuant to Article 7(f) so long as the Obligations are outstanding, if
Debtor is unable to provide the insurance required pursuant to Article 7(f);
provided, however, that such indemnification shall provide substantially the
same coverage as the insurance required pursuant to Article 7(f) shall not be an
Event of Default hereunder so long as such indemnification is in effect.
9. Further Agreements of Debtor. Debtor further agrees as follows:
----------------------------
(a) to defend at Debtor's own cost any action, proceeding, or claim
affecting the Collateral;
22
(b) to pay reasonable attorneys' fees and other expenses incurred by
Secured Party in enforcing its rights (including collection rights) under this
Agreement, the Note and the other Documents;
(c) to reimburse Secured Party for all expenses (including reasonable
attorneys' fees) incurred by Secured Party in connection with the preparation,
negotiation, review, and recordation of this Agreement and other Documents,
filing financing statements, and searches of any appropriate records including
the FAA records;
(d) to pay when due all taxes, assessments, license fees, and other
public or private charges when levied or assessed against the Collateral, and
the security interest of Secured Party in the Collateral, so that the lien of
and first priority perfected security interest created by this Agreement in the
Collateral shall at all times be wholly preserved at the cost of Debtor and
without expense to Secured Party;
(e) that the Collateral will be used at all times in accordance with
the laws, rules, regulations, and ordinances of the Unites States, the several
states and municipalities thereof, and any other foreign jurisdictions in which
the Collateral may be used;
(f) that under no circumstances will the Collateral be operated at any
time when the full amount of insurance required under Article 7(f) is not in
effect, or in any area excluded from coverage of any insurance in effect, or in
violation of any term of any policy of insurance in effect;
(g) that Debtor shall not change its corporate name or the location of
its chief executive office without providing at least thirty (30) Business Days'
prior written notice thereof to Secured Party;
(h) that Debtor shall notify Secured Party within four (4) days after
each and every occasion the domicile location of the Collateral (or any portion
thereof) has changed and advise Secured Party of such new domicile location (for
the purposes hereof, domicile location of the Collateral means the location
where the Collateral is based);
(i) that Debtor shall promptly give Secured Party notice of any Event
of Default, as hereinafter defined, or any event which, after notice or lapse of
time or both, would cause an Event of Default; and
(j) at all reasonable times, and upon at least five (5) days' prior
written notice to Debtor (except during the continuance of a Default or Event of
Default when the inspections do not have to be at reasonable times and do not
require prior written notice), Secured Party may inspect the Collateral and
inspect and make copies (at Secured Party's expense) of the books and records of
Debtor relating to maintenance of the Collateral; provided, however, that any
such
23
inspection shall be limited to a visual, walk around inspection and shall not
include opening any panels or the like (e.g. borescope) without the express
consent of Debtor, which consent shall not be unreasonably withheld. Debtor will
give Secured Party not less than fifteen (15) days' notice of any scheduled
Engine removals. The Secured Party shall not have any duty to make any such
inspection and shall not incur any liability or obligation by reason of not
making any such inspection.
10. Event of Loss. Upon the occurrence of an Event of Loss with respect
-------------
to any Engine, Debtor shall (a) forthwith (and in any event, within ten (10)
days after such occurrence) give the Secured Party written notice of such Event
of Loss and (b) not later than the earlier of (x) the Business Day next
succeeding the 60th day following the occurrence of such Event of Loss, to the
extent not previously paid to Secured Party as insurance proceeds, and (y) two
(2) Business Days following receipt by Debtor of insurance/requisition proceeds,
pay or cause to be paid to Secured Party (i) a portion of the outstanding
Principal Amount of the Note equal to the Engine Original Amount with respect to
the Engine that suffered the Event of Loss; (ii) that portion of accrued and
unpaid interest with respect to the Principal Amount of the Note to be repaid as
of the Loss Payment Date; (iii) the Event of Loss Prepayment Fee with respect to
the Principal Amount of the Note to be prepaid; and (iv) all other Obligations
due and owing hereunder and under the other Documents with respect to (A) such
Engine and (B) the Principal Amount of the Note to be prepaid. At such time as
Secured Party shall have received the amount specified in the immediately
preceding sentence, together with all other amounts that then may be due
hereunder and under the other Documents (y) this Agreement shall terminate
solely with respect to the Engine which was subject to such Event of Loss and
(z) Debtor will be subrogated to all claims of Secured Party, if any, against
third parties to the extent the same relate to physical damage to or loss of
such Engine.
11. Events of Default. The occurrence of any of the following events of
-----------------
default (each, an "Event of Default"), including but not limited to the Events
of Default set forth in clause (a) below, shall permit Secured Party to declare
the principal of, and accrued interest (if any) and Prepayment Fee (if any) on
the Note to be immediately due and payable in full, whereupon the same shall
immediately become due and payable in full without presentment, demand, protest,
or other notice of any kind (including without limitation notice of intention to
accelerate or notice of acceleration) all of which are hereby waived by Debtor;
provided, however, that if any of the Events of Default set forth in clauses
(a), (f) or (g) below shall occur, then the principal of and accrued interest
(if any) and Prepayment Fee (if any) on the Note shall automatically, without
any action of Secured Party, become immediately due and payable in full, without
presentment, demand, protest or other notice of any kind (including without
limitation, notice of intention to accelerate or notice of acceleration) all of
which are hereby waived by Debtor:
(a) Debtor fails to pay when due, whether at maturity, by acceleration
or otherwise, and payment of principal or interest (if any) and Prepayment Fee
(if any) on the Note or any other amount due hereunder or under any other
Document;
24
(b) Debtor fails to observe or perform any agreement or covenant
contained in Article 7(b), 7(f), 9(d) or 9(f) above;
(c) Debtor fails to observe to perform any agreement or covenant
contained in this Agreement or the Note or any other Document (other than an
agreement or covenant contained in the provisions referred to in Article 11(b)
above) and such failure continues for ten (10) days after written notice thereof
to Debtor from Secured Party;
(d) Any statement, representation, warranty, or certificate made or
furnished by Debtor to Secured Party in connection with this Agreement, the Note
or any other Document, or as inducement to Secured Party to enter into this
Agreement or any other Document or to accept the Note, shall have been false,
incorrect, or incomplete in any material respect when made, or shall have
contained a misstatement, or shall have omitted to state a fact necessary to
make such statement, representation, warranty, or certificate not misleading,
which falsehood, misstatement or omission shall remain at the time in question;
(e) A default occurs under any material agreement to which Debtor is a
party with a third party (or parties) resulting in a right of such third party
(or parties) to declare any indebtedness thereunder due and payable before its
stated maturity, whether or not acceleration occurs;
(f) Debtor (i) becomes generally unable or admits in writing its
inability to pay its debts as they become due, (ii) makes an assignment for the
benefit of creditors, (iii) is adjudicated insolvent or bankrupt, (iv) files a
petition in bankruptcy, (v) petitions or applies for the appointment or any
taking of possession by a receiver, custodian, trustee, or liquidator of itself
or of all or a substantial part of its property, (vi) commences any case,
proceeding or other action relating to Debtor under any bankruptcy,
reorganization, arrangement, readjustment of debt, dissolution or liquidation
law or state of any jurisdiction (domestic or foreign), whether now or hereafter
in effect;
(g) There is commenced against Debtor any proceedings described in
Article 11(f)(iv), (v) or (vi) above, and Debtor acquiesces or consents thereto
or such proceedings remain undismissed for a period of sixty (60) days;
(h) Debtor suffers a final judgment for payment of money aggregating
in excess of $250,000 and does not discharge the same within a period of thirty
(30) days, unless execution of such judgment has been effectively stayed or
fully bonded;
(i) Secured Party shall not have a first priority perfected security
interest in the Collateral; or
(j) Debtor shall default under any other agreement between Debtor and
Secured Party, including without limitation, any Other Security Agreements.
25
12. Remedies.
--------
(a) After the occurrence of an Event of Default, Secured Party shall
have all of the rights and remedies available to a secured party under the
Uniform Commercial Code of any applicable jurisdiction, and all rights and
remedies available to it under any other law or otherwise available to it,
including, without limitation, the right to: (i) without notice, demand or
legal process enter upon any premises of Debtor and take possession of all or
any part of the Collateral, (ii) require Debtor to assemble, at Debtor's
expense, the Collateral at any place designated by Secured Party and to make the
same available to Secured Party for repossession or otherwise, and (iii) without
demand of performance and, to the extent permitted by applicable law, without
notice of instruction to sell or of time or place of sale or of redemption or
other notice or demand whatsoever to Debtor, all of which are hereby expressly
waived, sell, lease, assign, transfer, and deliver all or any part of the
Collateral at public or private sale for cash, upon credit or for other
property, for immediate or future delivery, for such price or prices and on such
terms as Secured Party in its sole discretion shall deem appropriate. Upon
consummation of any such sale, Secured Party shall have the right to assign,
transfer, and deliver the applicable Collateral to the purchaser thereof. Such
purchaser at any such sale shall hold the property so sold absolutely free from
any claim or right on the part of Debtor, and Debtor does hereby waive (to the
extent permitted by law) all rights of redemption, stay and appraisal which
Debtor now has or may at any time in the future have under any rule of law,
statute, or otherwise now existing or hereafter enacted;
(b) Any notice required to be given by Secured Party or other
disposition or other intended action by Secured Party with respect to any of the
Collateral which is deposited in the United States mails, postage prepaid and
duly addressed to Debtor at the address specified in Article 18 hereof, at least
ten (10) Business Days prior to such proposed action shall constitute fair and
reasonable notice to Debtor of any such action. Secured Party shall not be
obligated to make any sale of the Collateral if it shall determine not to do so,
regardless of the fact that notice of sale of the Collateral may have been
given;
(c) Secured Party may, without notice or publication, adjourn any
public or private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for sale, and such sale may, without
further notice, be made at the time and place to which the same was so
adjourned. In case sale of the Collateral is made on credit or for future
delivery, the Collateral so sold may be retained by Secured Party until the sale
price is paid by the purchaser or purchasers thereof, but Secured Party shall
not incur any liability in case any such purchaser or purchasers shall fail to
take up and pay for the Collateral so sold and, in case of any such failure,
such Collateral may be sold again by Secured Party;
(d) At any sale made pursuant to this Article 11, Secured Party may
bid for or purchase, free (to the extent permitted by law) from any right of
redemption, stay and appraisal of the part of Debtor (all said rights being
hereby waived and released to the extent permitted by law),
26
any portion of or all the Collateral offered for sale and may make payment on
account thereof by using any of the obligations, or any portion thereof, then
due and payable to Secured Party from Debtor as a credit against the purchase
price;
(e) As an alternative to exercising the power of sale herein conferred
upon it, Secured Party may proceed by suit or suits at law or in equity to
foreclose the security interest created under this Agreement or otherwise
enforce its rights with respect to the Collateral, and sell the Collateral
pursuant to judgment or decree of any court having competent jurisdiction; and
(f) Each and every right, power and remedy given to the Secured Party
specifically or otherwise in this Agreement shall be cumulative and shall be in
addition to every other right, power and remedy herein specifically given or now
or hereafter existing at law, in equity or by statute, and each and every right,
power and remedy whether specifically herein given or otherwise existing may be
exercised from time to time and as often and in such order as may be deemed
expedient by the Secured Party, and the exercise or the beginning of the
exercise of any power or remedy shall not be construed to be a waiver of the
right to exercise at the same time or thereafter any other right, power or
remedy. No delay or omission by the Secured Party in the exercise of any right,
remedy or power or in the pursuance of any remedy shall impair any such right,
power or remedy or be construed to be a waiver of any default on the part of the
Debtor or to be an acquiescence therein.
13. Payment. Upon satisfaction in full of the Obligations, Secured Party
-------
will, at the Debtor's sole cost and expense, take such steps as are necessary to
release the Collateral. Upon payment in full of the Obligations, the security
interests granted hereby shall cease and become null and void.
14. Section 1110. It is the intention of the parties hereto that Secured
------------
Party shall be entitled to the benefits of Section 1110 of the United States
Bankruptcy Code with respect to the right to repossess the Engines and Parts as
provided herein, and in any circumstances where more than one construction of
the terms and conditions of this Agreement is possible, a construction which
would preserve such benefits shall control over any construction which would not
preserve such benefits or would render them doubtful. Debtor further agrees
that neither it nor any successor will take a contrary position in any
bankruptcy proceedings, nor will it take any action to interfere with Secured
Party's rights under such Section 1110.
15. Indemnification, Release and Waiver.
------------------------------------
(a) Debtor hereby releases, and agrees to indemnify, defend and hold
harmless, on an after-tax basis, Secured Party and its assignee, if any, their
directors, officers, employees and agents ("Indemnitee(s)") from and against any
and all liabilities, damages, losses, expenses, demands, claims, suits or
judgments of any kind whatsoever (including reasonable attorneys' fees, costs
and expenses in connection therewith or incident thereto), in any way relating
to or arising out
27
of or which would not have occurred but for (i) this Agreement, the other
Documents or any documents contemplated hereby or thereby or any amendments,
supplements or modifications hereto or thereto (including any misrepresentations
or breach of warranty of Debtor contained herein or therein and the breach by
Debtor of any covenant or agreement contained herein or therein) or the
enforcement of any of the terms of any thereof; (ii) the manufacture, purchase
or acceptance of any Engine; (iii) any Engine whether or not arising out of the
finance, ownership, delivery, nondelivery, storage, lease, sublease, possession,
use, non-use, operation, maintenance, modification, alteration, condition,
replacement, repair, substitution, sale, return, transfer of title or other
disposition, registration, re-registration or airworthiness of any Engine,
including, without limitation, latent or other defects, whether or not
discoverable, strict tort liability and any claim for patent, trademark or
copyright infringement; (iv) any payment or prepayment of the principal of, and
interest on, or Prepayment Fee, if any, on the Note or any other amounts payable
hereunder or under the other Documents; (v) the offer, sale or delivery of the
Note (the indemnity in this clause (v) to extend also to any person who controls
an Indemnitee, its successors, assigns, employees, servants and agents within
the meaning of Section 15 of the Securities Act of 1933, as amended); or (vi)
deaths of or injuries to any persons whomsoever, and for the loss of, damage to,
delay in delivery of or destruction of any property whatsoever (including
without any limitation the Collateral, and any property installed on or
contained in the Collateral), in any manner arising out of or in any way
connected with the Collateral sold hereunder or the use of any such Collateral
by Debtor, or by Debtor's assignees, or by any third party with Debtor's
consent, regardless of the negligence, active or passive, of any Indemnitee,
except to the extent caused by the willful or wanton misconduct of any
Indemnitee. Debtor will, at the request of Secured Party, negotiate any claim or
defend any action or suit brought against Secured Party, based upon any matters
for which Debtor has indemnified any Indemnitee as hereinabove provided.
(b) IN NO EVENT WILL EITHER PARTY BE LIABLE FOR ANY REASON FOR
SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, SUCH AS LOST REVENUES, LOST
PROFITS, OR LOSS OF PROSPECTIVE ECONOMIC ADVANTAGE.
(c) It is intended that Debtor shall pay all costs and expenses of
every character, whether foreseen or unforeseen, ordinary or extraordinary or
structural or nonstructural, in connection with the use, operation, maintenance,
repair, replacement of Parts, taxes and required alterations and modifications
of, on or in respect of the Engines by Debtor, including the costs and expenses
particularly set forth in this Agreement and the other Documents. The principal
amount of, all interest on and Prepayment Fee, if any, with respect to the Note
and all other amounts which Debtor is obligated to pay shall be paid without
notice or demand and without set-off, counterclaim, abatement, suspension,
deduction or defense or any other right which Debtor may have against Secured
Party for any reason whatsoever.
(d) Except as otherwise expressly provided, this Agreement shall not
terminate, nor shall Debtor have any right to terminate this Agreement or the
other Documents or be entitled to abatement, suspension, deferment or reduction
of the principal amount of, any interest on, or
28
Prepayment Fee, if any, or other amount which Debtor is obligated to pay
hereunder or thereunder, nor shall the obligations hereunder of Debtor be
affected, by reason of (A) any damage to or the destruction or loss of all or
any portion of any Engine or Part from whatever cause, (B) the loss, theft or
inaccessibility of any portion of any Engine or Part, (C) the taking of any
Engine or Part or any portion thereof by condemnation, confiscation, requisition
or otherwise, (D) the prohibition, limitation or restriction of Debtor's use of
all or any part of any Engine or Part, or the interference with such use by any
person, (E) the inadequacy or incorrectness of the description of any portion of
any Engine or Part, (F) Debtor's ownership of all or any part of any Engine or
Part, (G) any defect in compliance with specifications, condition,
merchantability, design, airworthiness, quality, durability, operation or
fitness for use or any purpose of any Engine or Part or any portion thereof, (H)
any defect in the title to, or registration of or the existence of any Liens or
rights of others whatsoever with respect to, any Engine or Part or any portion
thereof, (I) any insolvency, bankruptcy, reorganization or similar proceedings
by or against Debtor or any other person, (J) any breach, default or
misrepresentation by the Secured Party under this Agreement or any other
Document or any of the documents referred to herein or therein, (K) any
invalidity or unenforceability, in whole or in part, of this Agreement or any
other Document or any of the documents referred to herein or therein, or any
other infirmity herein or therein, or any lack of power or authority of any
party to this Agreement or any other Document or any such documents to enter
into the same or any termination of this Agreement by operation of law, or (L)
any other circumstance, happening or act whatsoever, whether or not foreseen or
similar to any of the foregoing, it being the intention of the parties hereto
that the obligations of Debtor shall be absolute and unconditional and shall be
separate and independent covenants and agreements and shall continue unaffected
unless and until the covenants have been terminated pursuant to an express
provision of this Agreement.
Except as expressly provided herein, Debtor waives all rights now or
hereafter conferred by law (x) to quit, terminate, rescind or surrender this
Agreement or any Engine or any part thereof, or (y) to any abatement,
suspension, deferment, return or reduction of the outstanding principal amount
of the Note, accrued and unpaid interest thereon, or Prepayment Fee, if any.
16. Other Documents and Further Assurances.
--------------------------------------
(a) Secured Party shall be entitled at any time to file a financing
statement or the Agreement or a facsimile or other reproduction of the Agreement
as a financing statement, but the failure of Secured Party to do so shall not
impair the validity or enforceability of the Agreement. Debtor will execute, at
the closing, a UCC-1 form applicable to the transaction. Debtor will reimburse
Secured Party for all documentary stamp taxes, filing fees, and recording fees
associated with the perfection of Secured Party's security interest in the
Collateral.
(b) Debtor shall, from time to time, do and perform such other and
further acts and execute and delivery such other instruments as may be required
by law or reasonably requested
29
by Secured Party, including a UCC-1 financing statement, to establish, maintain
or protect Secured Party's rights and remedies or to carry out and effect the
intent and purpose of this Agreement.
(c) Debtor agrees that it will execute and deliver all amendments or
supplements to this Agreement and the Other Security Agreements in order to
effectuate the intent of the parties hereto to cross-collateralize this
Agreement and the Other Security Agreements.
(d) Secured Party may carry for its own account at its sole cost and
expense insurance with respect to its interest in the Engines.
17. Governing Law. THE TERMS AND PROVISIONS OF THIS AGREEMENT WILL BE
-------------
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND ANY DISPUTE ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT, WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF ILLINOIS WITHOUT REGARD TO PRINCIPLES OF CONFLICT
OF LAWS.
THIS AGREEMENT HAS BEEN DELIVERED IN CHICAGO, ILLINOIS. EACH OF DEBTOR AND
SECURED PARTY HEREBY (I) WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION TO
ENFORCE OR DEFEND ANY MATTER ARISING FROM OR RELATED TO THIS AGREEMENT OR THE
OTHER DOCUMENTS; (II) IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY STATE OR
FEDERAL COURT LOCATED IN XXXX COUNTY, ILLINOIS, OVER ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY MATTER ARISING FROM OR RELATED TO THIS AGREEMENT OR THE
OTHER DOCUMENTS; (III) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF
ANY SUCH ACTION OR PROCEEDING; (IV) AGREES THAT A FINAL JUDGMENT IN ANY SUCH
ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN ANY OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW;
AND (V) AGREES NOT TO INSTITUTE ANY LEGAL ACTION OR PROCEEDING AGAINST ANY OTHER
PARTY HERETO OR ANY OF SUCH PARTY'S DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR
PROPERTY, CONCERNING ANY MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT IN
ANY COURT OTHER THAN ONE LOCATED IN XXXX COUNTY, ILLINOIS.
18. Notices. Notices under the terms of this Agreement will be in writing
-------
and sent by prepaid certified mail, return receipt requested, or by telegram,
telex, or facsimile to the following:
30
To Secured Party: TRANSAMERICA BUSINESS CREDIT CORPORATION
Equipment Finance and Lease Division
00000 Xxxx Xxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attn: IFG Region Manager and Legal Department
Fax: (000) 000-0000
With a copy to: VEDDER, PRICE, XXXXXXX & KAMMHOLZ
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxxx X. Xxxxx, Esq.
Fax: (000) 000-0000
To Debtor: TOWER AIR, INC.
Hangar #00
XXX Xxxxxxxxxxxxx Xxxxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxx, Vice President, Finance
Facsimile: 000-000-0000
(or such other address as either party shall inform the other party). Notices
will be effective on the first Business Day following receipt thereof. Notices
sent by certified mail will be deemed received on the date of delivery as
indicated on the return receipt; notices sent by telegram, telex or facsimile
will be deemed received on the date transmitted.
19. Waiver. No waiver by either party of any default or breach by the
------
other party of any provision of this Agreement will operate as or be deemed a
waiver of any subsequent default or breach.
20. Assignment. Debtor shall not assign this Agreement, in whole or in
----------
part, to anyone for any purpose. Secured Party, without the consent of Debtor,
may from time to time assign all or any portion of its right, title and interest
in and to this Agreement, including but not limited to the Note, or grant an
interest in or assign all or any portion or portions of its security interest in
this Agreement and the Collateral, in whole or part, to various assignees, their
agents or trustees (each and any one hereinafter referred to as an "Assignee").
Any such Assignee shall have all of the assigned rights of Secured Party under
this Agreement. Any assignment of any of Secured Party's right, title or
interest in this Agreement or the Collateral shall be effective without notice
to or consent of Debtor. DEBTOR AGREES THAT, UPON NOTICE OF ASSIGNMENT AND IF
SO INSTRUCTED, IT SHALL PAY DIRECTLY TO THE ASSIGNEE OR ITS TRUSTEE OR AGENT,
WITHOUT ABATEMENT, DEDUCTION OR SET-OFF, ALL AMOUNTS WHICH BECOME DUE HEREUNDER.
DEBTOR FURTHER AGREES THAT IT SHALL NOT ASSERT AGAINST ANY ASSIGNEE, TRUSTEE OR
AGENT ANY DEFENSE, CLAIM,
31
COUNTERCLAIM OR SET-OFF ON ACCOUNT OF ANY REASON WHATSOEVER WITH RESPECT TO ANY
PAYMENTS OR OTHER AMOUNTS DUE HEREUNDER OR WITH RESPECT TO ANY ACTION BROUGHT TO
OBTAIN POSSESSION OF THE ENGINE PURSUANT TO THIS AGREEMENT.
21. Counterparts. This Agreement may be executed in any number of
------------
separate counterparts, each of which will be deemed to be an original but which
together shall constitute one and the same instrument. A facsimile signature on
any counterpart hereto will be deemed an original for all purposes.
22. Severability. Any provision of this Agreement which is prohibited or
------------
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provisions in any
other jurisdiction.
23. Amendments. This Agreement may be changed, modified or amended from
----------
time to time only by express written agreement of the parties executed by their
authorized representatives.
24. Entire Agreement. This Agreement constitutes the entire agreement and
----------------
understanding of the parties hereto with respect to the transactions
contemplated hereby, supersedes any and all prior agreements and understandings
related to the subject matter hereof, and may not be modified or amended except
in writing signed by all of the parties hereto. The attachments hereto form an
integral part of this Agreement. If there is any actual or apparent conflict
between the term of any attachments hereto and the body of this Agreement, the
provisions of the attachment shall apply.
25. Headings. The headings contained in this Agreement are inserted for
--------
convenience of reference only and will not affect the meaning or interpretation
of this Agreement.
26. Payment of Expenses and Taxes. Regardless of whether or not the
-----------------------------
transactions contemplated hereby are consummated, Debtor agrees (a) to pay or
reimburse the Secured Party for all of its out-of-pocket costs and expenses
incurred in connection with the development, preparation and execution of this
Agreement and the Note and the other Documents and any other documents prepared
in connection herewith or therewith, and the consummation of the transactions
contemplated hereby and thereby, including, without limitation, the reasonable
fees and disbursements of special counsel to the Secured Party, of FAA counsel
and of the appraiser who prepared the appraisal referred to in Sections 4(t) and
5(h), (b) to pay or reimburse the Secured Party for all of its out-of-pocket
costs and expenses incurred in connection with any amendment, supplement or
modification to this Agreement, the Note, and the other Documents, including
without limitation, the reasonable fees and disbursements of their respective
counsel, (c) to pay or reimburse the Secured Party for all its costs and
expenses incurred in connection with the enforcement or
32
preservation of any rights under this Agreement, the Note, the other Documents
and any such other documents, including, without limitation, reasonable fees and
disbursements of their respective counsel, and (d) to pay, indemnify, and hold
the Secured Party harmless from, any and all recording and filing fees and any
and all liabilities with respect to, or resulting from any delay in paying,
stamp, excise and other taxes, if any, which may be payable or determined to be
payable in connection with the execution and delivery of, or consummation of any
of the transactions contemplated by, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of, this
Agreement, the Note, the other Documents and any such other documents. The
agreements in this Section 26 shall survive repayment of the Note and all other
amounts payable hereunder.
* * *
33
IN WITNESS WHEREOF, the Debtor and the Secured Party have executed this
Security Agreement as of the day and year first above written.
TOWER AIR, INC.,
Debtor
By: /s/ R. K. Qunuani
---------------------------
Its: V.P. - Finance
--------------------------
TRANSAMERICA BUSINESS CREDIT
CORPORATION,
Secured Party
By: /s/ Xxxx X. Fate
---------------------------
Its: Senior Vice President
--------------------------
ATTACHMENT 1
TO SECURITY AGREEMENT BETWEEN
TRANSAMERICA BUSINESS CREDIT CORPORATION AND
TOWER AIR, INC.
SECURITY AGREEMENT SUPPLEMENT NO.
-------------------------------------
Security Agreement Supplement No. _____ dated __________________, between
Tower Air, Inc., a Delaware corporation having its general office at Xxxxxx
00, XXX International Airport, Jamaica, New York 11430 (the "Debtor") and
Transamerica Business Credit Corporation, a Delaware corporation with
offices at 00000 Xxxx Xxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000 (together with
its successors and assigns, the "Secured Party").
WHEREAS, the Debtor and the Secured Party, having heretofore entered into a
Security Agreement dated as of January __, 1998, which security agreement is
being filed concurrently herewith (the "Security Agreement" and the defined
terms therein, unless otherwise noted, being hereinafter used with the same
meaning). The Security Agreement provides for the execution and delivery from
time to time of Security Agreement Supplements, each substantially in the form
hereof, for the purpose of mortgaging and granting a security interest to the
Secured Party in specific Collateral under the Security Agreement.
The Security Agreement relates to the Collateral described below.
NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, the Debtor and the Secured Party hereby agree as
follows:
1. The Debtor does hereby grant, transfer, assign, bargain, sell, convey,
mortgage, hypothecate and pledge unto the Secured Party, its successors and
assigns, a valid and perfected first priority security interest in and lien on
all right, title and interest of Debtor in and to the Collateral (as defined
below) under the Security Agreement and the Secured Party does hereby accept
such security interest under the Security Agreement in the following Engines:
(a) Three (3) Xxxxx & Xxxxxxx Model JT9D-7J engines, bearing
manufacturer's serial numbers 662323, 662751 and 686106;
(b) Eight (8) Xxxxx & Whitney model JT9D-7A engines, bearing
manufacturer's serial numbers 662993, 662550, 662338, 662838, 662270,
662498, 662420, 662749;
35
(c) One (1) Xxxxx & Xxxxxxx Model JT9D-7Q engine, bearing
manufacturer's serial number 702083.
(together with all Parts of whatever nature which are from time to
time incorporated or installed in or attached to the Engines),
(including any QEC related thereto, whether now owned or hereafter
acquired, and all substitutions, renewals and replacements of and
additions, improvements, accessions and accumulations to the Engines)
(each of which engines described in subparagraphs (a), (b) and (c)
above has 750 or more rated takeoff horsepower or the equivalent of
such horsepower).
2. The Debtor hereby represents and warrants that it is an air carrier as
defined in Section 40102(a) of Title 49 of the US Code.
3. All of the terms and provisions of the Security Agreement are hereby
incorporated by reference in this Security Agreement Supplement to the same
extent as if fully set forth herein.
* * *
36
IN WITNESS WHEREOF, the Debtor and the Secured Party have caused this
Security Agreement Supplement to be duly executed as of the day and year first
above written.
TOWER AIR INC.,
Debtor
By:
-------------------------------------
Its:
-------------------------------------
TRANSAMERICA BUSINESS CREDIT
CORPORATION,
Secured Party
By:
-------------------------------------
Its:
-------------------------------------
37
ATTACHMENT 2
TO SECURITY AGREEMENT BETWEEN
TRANSAMERICA BUSINESS CREDIT CORPORATION AND
TOWER AIR, INC.
THIS NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR PURSUANT TO THE SECURITIES LAWS OF ANY STATE.
ACCORDINGLY, THIS NOTE MAY NOT BE SOLD UNLESS EITHER REGISTERED UNDER THE ACT
AND SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE. THIS NOTE IS SENIOR IN ALL RESPECTS TO THE NOTE ISSUED UNDER THE
JUNIOR SECURITY AGREEMENT BETWEEN DEBTOR AND SECURED PARTY.
Note
----
$ _______________ _________________________(City, State)
Date: January 9, 1998
FOR VALUE RECEIVED, the undersigned, Tower Air, Inc. (the "Debtor"),
hereby promises to pay to the order of Transamerica Business Credit Corporation
(together with its successors and assigns "Secured Party"), at its office at
00000 Xxxx Xxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000, or at such other place as the
holder of this Note shall specify in immediately available funds, the principal
sum of _________________________ ($___________), plus interest at a rate with
respect to each Interest Period equal to the lesser of (a) as of any date of
determination, the highest published prime rate which appears in the Money Rates
section of The Wall Street Journal on the applicable Drawdown Date (with respect
-----------------------
to the first Interest Period) and three Business Days prior to each Payment Date
(with respect to each subsequent Interest Period) (the "Prime Rate") plus
__________________ and (b) the maximum rate allowed under applicable law (the
"Interest Rate"). This Note is referred to in, and was executed and delivered
pursuant to that certain Security Agreement dated as of January 9, 1998 between
Debtor and Secured Party (the "Security Agreement"), to which reference is
hereby made. The holder of this Note is entitled to the benefits of the
Security Agreement. Capitalized terms used herein without definition shall have
the meanings attributed thereto in the Security Agreement.
The principal indebtedness evidenced hereby shall be due and payable
in consecutive monthly principal installments commencing February 1, 1998 and
the 1st day of each month thereafter through (and including) January 1, 2000
(each a "Payment Date").
38
Accrued and unpaid interest shall be due and payable on each Payment Date. Any
principal or interest, Prepayment Fee or other amount of this Note or any other
amount due under the Security Agreement or any other Document from Debtor to
Secured Party which is not paid when due (whether at maturity, by acceleration
or otherwise), shall bear interest at the Overdue Rate.
Notwithstanding the foregoing, the final payment made on this Note
hall be in an amount sufficient to discharge in full the unpaid principal amount
and all accrued and unpaid interest on, and any other amounts due under, this
Note and the other Documents. Notwithstanding anything to the contrary contained
herein, if any date on which a payment under this Note becomes due and payable
is not a Business Day then such payment shall be made on the next succeeding
Business Day and, if such payment is made on the next succeeding Business Day,
no interest shall accrue on the amount of such payment during such extension;
provided, however, that any such "extension day" shall be included in the
interest calculation in connection with the next payment under this Note.
In no event whatsoever shall interest charged hereunder, however such
interest may be characterized or computed, exceed the lawful limit and, if any
amount in excess of such limit shall have been paid, then such amount shall be
applied to the unpaid principal amount of this Note or be refunded so that under
no circumstances shall the interest required to be paid by Debtor hereunder
exceed the maximum amount allowed by applicable law.
The Debtor may prepay this Note, in whole or in part, but only on the
terms specified in the Security Agreement and upon payment of the Prepayment Fee
referred to therein.
Upon and after the occurrence of an Event of Default (as defined in
Article 11 of the Security Agreement) the entire unpaid principal amount of this
Note, together with accrued and unpaid interest hereon and the Prepayment Fee
shall immediately and automatically, without notice of any kind (including
notice of intention to accelerate or notice of acceleration), be due and
payable.
Payments received by Secured Party from the Debtor on this Note shall
be applied first to the payment of any and all collection costs and only
thereafter to the payment of outstanding interest and Prepayment Fee and then
the principal balance.
Presentment, protest, and notice of nonpayment and protest are hereby
waived by the Debtor.
This Note shall be interpreted and the rights and the liabilities of
the parties hereto determined in accordance with the laws of the State of
Illinois. Whenever possible, each provision of this Note shall be interpreted
in such manner as to be effective and valid under
39
applicable law, but if any provision of this Note shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Note.
* * *
40
The provisions of this Note shall be binding upon Debtor and its
successors and assigns, and shall inure to the benefit of the Secured Party and
its successors and assigns.
TOWER AIR, INC.
By:
-------------------------------------
Name:
Title:
41
ANNEX A
TO NOTE
-------
[THIS ATTACHMENT IS INTENTIONALLY BLANK
FOR FAA RECORDING PURPOSES]
42
ATTACHMENT 3
TO SECURITY AGREEMENT BETWEEN
TRANSAMERICA BUSINESS CREDIT
CORPORATION AND TOWER AIR, INC.
CERTAIN ECONOMIC TERMS
----------------------
Engine Original Amount: means, originally, $3,500,000 with respect to that
certain Xxxxx & Xxxxxxx model JT9D-7J Engine with
serial number 662323; $2,750,000 with respect to
that certain Xxxxx & Whitney model JT9D-7J Engine
with serial number 662751; $3,500,000, with
respect to that certain Xxxxx & Xxxxxxx model
JT9D-7J Engine with serial number 686106;
$1,250,000 with respect to that certain Xxxxx &
Whitney model JT9D-7A Engine with serial number
662993; $1,450,000 with respect to that certain
Xxxxx & Xxxxxxx model JT9D-7A Engine with serial
number 662270;$1,850,000 with respect to that
certain Xxxxx & Whitney model JT9D-7A Engine with
serial number 662498; $1,750,000 with respect to
that certain Xxxxx & Xxxxxxx model JT9D-7A Engine
with serial number 662420; $1,450,000 with respect
to that certain Xxxxx & Whitney model JT9D-7A with
serial number 662749; $1,250,000 with respect to
that certain Xxxxx & Xxxxxxx model JT9D-7A Engine
with serial number 662550; $1,250,000 with respect
to that certain Xxxxx & Whitney model JT9D-7A
Engine with serial number 662338; $1,250,000 with
respect to that certain Xxxxx & Xxxxxxx model
JT9D-7A Engine with serial number 662838; and
$2,800,000 with respect to that certain Xxxxx &
Whitney model JT9D-7Q Engine with serial number
702083.
Event of Loss Prepayment Fee with respect to any prepayment of a portion of the
Note due solely to an Event of Loss with respect
to an Engine, 0.5% of the portion of the Principal
Amount of the Note to be prepaid
Interest Rate: has the meaning specified in Article 2(d) hereof
Loan Fee: $150,000
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Overdue Rate: a rate per annum equal to the Interest Rate plus
7.0% (calculated on the basis of a 360-day year
comprised of twelve thirty-day months)
Maturity Date January 1, 2000
Margin: two point seven five percent (2.75%) per annum
(calculated on the basis of a 360-day year
comprised of twelve 30-day months)
Maximum Aggregate
Original Amount: $15,000,000
Maximum Original Amount: amounts to be advanced under the Loan, except for
the Aggregate Original Amount, on the Drawdown
Dates with respect to the Engines bearing
manufacturer's serial numbers 702083, 662323 and
686106; provided that such amounts will in no
event exceed $800,000 advanced for 702083;
$488,000 for 662323; and $560,000 for 686106 and
provided that in no case shall the amounts
advanced on any Engine together with any amounts
previously advanced (including the Aggregate
Original Amount) exceed the Maximum Aggregate
Original Amount.
Payment Dates February 1, 1998 and the 1st day of each month
thereafter through (and including) the Maturity
Date
Prepayment Fee: an amount equal to (i) 2% of the then outstanding
Principal Amount of the Note to be prepaid if such
prepayment occurs on or prior to the first
anniversary of the Closing Date or (ii) 1% of the
then outstanding Principal Amount of the Note if
such prepayment occurs at any time thereafter.
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ATTACHMENT 3
TO SECURITY AGREEMENT BETWEEN
TRANSAMERICA BUSINESS CREDIT CORPORATION AND
TOWER AIR, INC.
CERTAIN ECONOMIC TERMS
----------------------
[THIS ATTACHMENT IS INTENTIONALLY BLANK FOR FAA RECORDING PURPOSES]
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