SECURED LOAN AGREEMENT
-between-
FINOVA CAPITAL CORPORATION,
Lender,
-and-
MERCY AIR SERVICE, INC.
Borrower.
SECURED LOAN AGREEMENT
THIS SECURED LOAN AGREEMENT is made as of July 31, 1997 between FINOVA
CAPITAL CORPORATION, a corporation organized and existing under the laws of the
State of Delaware, and MERCY AIR SERVICE, INC., a corporation organized and
existing under the laws of the State of California.
1. PURPOSE; DEFINITIONS AND CONSTRUCTION.
1.1 This Agreement sets out the terms and conditions upon which the Lender
will lend to the Borrower the amount of the Commitment. The Lender agrees to
make the Loan to the Borrower: (i) to enable Borrower to pay in full all of the
Borrower's outstanding indebtedness other than Permitted Indebtedness and (ii)
to enable Borrower to declare and pay to the Guarantor a dividend in an amount
equal to the Guarantor's indebtedness to the Lender on the Closing Date.
1.2 In this Agreement the following words and expressions, except where the
context otherwise requires, shall have the following meanings:
WORDS MEANINGS
"Accepted Appraiser" as defined in Section 7.2(b).
"Advance" the advance in the amount of the
Commitment which will be made
available to the Borrower by the
Lender on the Closing Date, subject
to the terms hereof.
"Agreement" this Secured Loan Agreement.
"Aircraft" collectively, Aircraft 47135,
Aircraft 47516, Aircraft 47526,
Aircraft 47568, Aircraft 33060 and
Aircraft 36009.
"Aircraft 47135" collectively, (a) one Xxxx
model 222B helicopter bearing
manufacturer's serial number 47135
and U.S. registration number N408MA
(the "47135 Airframe"), (b) two Avco
Lycoming Model LTS101-750C-1 aircraft
engines bearing manufacturer's serial
numbers
LE-47155AE and LE-47158AE, and any
replacement or substitute for any
such engines, whether or not from
time to time installed on the
Airframe (the "47135 Engines") and
(c) any and all Parts so long as the
same shall be incorporated in the
47135 Airframe or the 47135 Engines,
and any and all Parts removed from
the 47135 Airframe or the 47135
Engines, so long as title to such
Parts shall remain vested in the
Borrower, and any and all Parts
installed on the 47135 Airframe or
the 47135 Engines where title to such
installed Parts vests in the
Borrower.
"Aircraft 47516" collectively, (a) one Xxxx
model 222U helicopter bearing
manufacturer's serial number 47516
and U.S. registration number N403MA
(the "47516 Airframe"), (b) two Avco
Lycoming Model LTS101-750C-1
aircraft engines bearing
manufacturer's serial numbers
LE-47008AE and LE-47041AE, and any
replacement or substitute for any
such engines, whether or not from
time to time installed on the
Airframe (the "47516 Engines") and
(c) any and all Parts so long as the
same shall be incorporated in the
47516 Airframe or the 47516 Engines,
and any and all Parts removed from
the 47516 Airframe or the 47516
Engines, so long as title to such
Parts shall remain vested in the
Borrower, and any and all Parts
installed on the 47516 Airframe or
the 47516 Engines where title to
such installed Parts vests in the
Borrower.
"Aircraft 47526" collectively, (a) one Xxxx model
222U helicopter bearing
manufacturer's serial number 47526
and U.S. registration number N416MA
(the "47526 Airframe"), (b) two Avco
Lycoming Model LTS101-750C-1
aircraft engines bearing
manufacturer's serial numbers
LE-47075AE and LE-47061AE, and any
replacement or substitute for any
such engines, whether or not from
time to time installed on the
Airframe (the "47526 Engines") and
(c) any and all Parts so long as the
same shall be incorporated in the
47526 Airframe or the
-2-
47526 Engines, and any and all Parts
removed from the 47526 Airframe or
the 47526 Engines, so long as title
to such Parts shall remain vested in
the Borrower, and any and all Parts
installed on the 47526 Airframe or
the 47526 Engines where title to such
installed Parts vests in the
Borrower.
"Aircraft 47568" collectively, (a) one Xxxx model
222U helicopter bearing
manufacturer's serial number 47568
and U.S. registration number N415MA
(the "47568 Airframe"), (b) two Avco
Lycoming Model LTS101-750C-1
aircraft engines bearing
manufacturer's serial numbers
LE-47063AE and LE-47140AE, and any
replacement or substitute for any
such engines, whether or not from
time to time installed on the
Airframe (the "47568 Engines") and
(c) any and all Parts so long as the
same shall be incorporated in the
47568 Airframe or the 47568 Engines,
and any and all Parts removed from
the 47568 Airframe or the 47568
Engines, so long as title to such
Parts shall remain vested in the
Borrower, and any and all Parts
installed on the 47568 Airframe or
the 47568 Engines where title to
such installed Parts vests in the
Borrower.
"Aircraft 33060" collectively, (a) one Xxxx model 412
helicopter bearing manufacturer's
serial number 33060 and U.S.
registration number N401MA (the
"33060 Airframe"), (b) two Xxxxx &
Whitney Canada Model PT6T-3B
aircraft engines bearing
manufacturer's serial numbers 61584
and 61585, and any replacement or
substitute for any such engines,
whether or not from time to time
installed on the Airframe (the
"33060 Engines") and (c) any and all
Parts so long as the same shall be
incorporated in the 33060 Airframe
or the 33060 Engines, and any and
all Parts removed from the 33060
Airframe or the 33060 Engines, so
long as title to such Parts shall
remain vested in the Borrower, and
any and all Parts installed on the
33060 Airframe or the 33060
-3-
Engines where title to such installed
Parts vests in the Borrower.
"Aircraft 36009" collectively, (a) one Xxxx model
412SP helicopter bearing
manufacturer's serial number 36009
and U.S. registration number N586AC
(the "36009 Airframe"), (b) two
Xxxxx & Whitney Canada Model PT6T-3B
aircraft engines bearing
manufacturer's serial numbers 63209
and 63210, and any replacement or
substitute for any such engines,
whether or not from time to time
installed on the Airframe (the
"36009 Engines") and (c) any and all
Parts so long as the same shall be
incorporated in the 36009 Airframe
or the 36009 Engines, and any and
all Parts removed from the 36009
Airframe or the 36009 Engines, so
long as title to such Parts shall
remain vested in the Borrower, and
any and all Parts installed on the
36009 Airframe or the 36009 Engines
where title to such installed Parts
vests in the Borrower.
"AMC" Air Methods Corporation, a
corporation organized and existing
under the laws of the State of
Delaware.
"Asset Purchase Agreement" the Asset Purchase Agreement dated
as of July 11, 1997 between
Helicopter Services, Inc. and AMC.
"Assignments" the assignment(s), in form and
substance reasonably acceptable to
the Lender, to be entered into
between the Borrower and the Lender
with respect to any lease or any
Service Contract entered into by the
Borrower with respect to any of the
Aircraft together with a consent
executed by the other party to such
lease or Service Contract.
"Banking Day" in the context of any date on
which a payment of interest or
principal is due hereunder, a day on
which federally chartered banking
institutions in New York City, New
York, Phoenix, Arizona and the State
of New Jersey are
-4-
open for the transaction of business
of the nature required by this
Agreement.
"Borrower" Mercy Air Service, Inc., a
corporation organized and existing
under the laws of the laws of the
State of California and having its
principal place of business at 8190
Mango, Xxxxxxx, Xxxxxxxxxx 00000;
Telephone No. (000) 000-0000;
Telefax No. (000) 000-0000.
"Closing Appraisal" the appraisal issued by Aviation
Management in June, 1997 relating to
the Aircraft.
"Closing Date" July 31, 1997, or such other
date mutually agreed to between the
Borrower and the Lender.
"Commitment" the obligation of the Lender to make
a loan in an amount of $10,152,950,
to be made available to the Borrower
on the Closing Date for the Loan Term
under this Agreement and subject to
the terms herein contained.
"Default" an event which, with the passage of
time, or giving of notice, or both,
would constitute an Event of Default.
"Dollars" or "($)" the legal currency, at any relevant
time hereunder, of the United States
of America.
"Engine" each engine referred to in the
definition of Aircraft.
"ERISA" the Employment Retirement Income
Security Act of 1974, as amended, and
the regulations thereunder.
"GAAP" means generally accepted accounting
principles in the United States of
America and Canada (as such
principles may change from time to
time) applied on a consistent basis
(except for changes in application
in which Borrower's independent
certified public accountants
concur), applied both to
classification of items and amounts.
-5-
"Guarantor" AMC.
"Guaranty" shall mean the Continuing Guaranty
and Subordination Agreement, dated as
of the Closing Date, between the
Guarantor and the Lender.
"Insurance Side
Letter" the Letter Agreement dated on or
before the Closing Date between the
Borrower and the Lender with respect
to the insurance requirements in
connection with the Aircraft.
"Interest Rate" as defined in Section 6.1 hereof.
"Law" means any law (including common law),
constitution, statute, treaty,
regulation, rule, ordinance, order,
injunction, writ, decree or award of
any government, or any administrative
agency thereof or any court in any
jurisdiction.
"Lender" FINOVA Capital Corporation, a
corporation organized and existing
under the laws of the State of
Delaware and having an office at 000
Xxxx Xxxxxxx Xxxx, Xxxxxxx, Xxx
Xxxxxx 00000; Telephone No. (201)
634-3397; Telefax No. (000) 000-0000.
"Lien" any mortgage, pledge, lien, charge,
encumbrance, option, security
interest or lease (including any
conditional sale agreement, equipment
trust agreement, or other title
retention agreement) or right or
claim of any person, whether
voluntary or involuntary in nature.
"Loan" the aggregate principal amount of the
loan made by the Lender pursuant to
this Agreement outstanding from time
to time and due the Lender under this
Agreement and the Note.
"Loan Documents" collectively, this Agreement, the
Note, the Security Agreement, the
Assignments, the Guaranty, the
-6-
Insurance Side Letter and all other
documents executed in connection with
each of the foregoing agreements or
contemplated thereby or the
transactions related thereto.
"Loan Term" the period commencing on the Closing
Date through and including that date
which shall be the earlier of: (i)
the date on which the Loan together
with all fees and sums which may
become payable hereunder and under
the other Loan Documents becomes
repayable, or (ii) the date on which
the Loan becomes payable in full
under the provisions of Section 7 or
8.
"Maturity Date" the last scheduled Repayment
Date on the Repayment Schedule, which
shall be the date on which all
remaining amounts of principal,
accrued interest thereon and all
other amounts hereunder are due and
payable by the Borrower to the
Lender.
"Multiemployer Plan" means a "multiemployer plan" as
defined in ERISA Sections 3(37) or
4001(a)(3) or Internal Revenue Code
Section 414(f) which covers employees
of Borrower or the Guarantor.
"Note" the Promissory Note dated the Closing
Date in the principal amount of the
Commitment issued by the Borrower to
the Lender.
"Overdue Interest
Rate" the rate equal to the Interest Rate
plus two (2%) percent.
"Parts" shall mean all appliances, rotor
blades, rotors, parts, instruments,
avionics, appurtenances,
accessories, furnishings and other
equipment or components, of whatever
nature (other an complete Engines),
which are, from time to time,
incorporated on an airframe or an
engine, or so long as title to such
Parts shall remain vested in the
owner of such airframe, after
removal from such airframe or
engine.
-7-
"Permitted
Indebtedness" shall mean collectively: (a) ordinary
course of business trade payables;
(b) the indebtedness of the Borrower
described on Schedule I attached
hereto; (c) secured non-recourse debt
of the Borrower; and (d) any other
indebtedness consented to by the
Lender.
"Person" means an individual, corporation,
national banking association,
partnership, trust, unincorporated
association, joint venture,
joint-stock company, government
(including political subdivisions),
governmental authority or agency,
Indian tribe, or any other entity.
"Plan" means any plan described in ERISA
Section 3(2) maintained for employees
of the Borrower or the Guarantor
other than a Multiemployer Plan.
"Prepayment Aircraft" as defined in Section 7.2(b).
"Prepayment Appraisal" in connection with: (a) a prepayment
of the Loan pursuant to 7.2, the
appraisal rendered by the Accepted
Appraiser of all of the remaining
Aircraft (including the Prepayment
Aircraft) that the Borrower has
requested or (b) a prepayment of the
Loan pursuant to Section 8.1, the
appraisal rendered by an appraiser
selected by the Lender of all of the
remaining Aircraft and the Aircraft
that has suffered the Event of Loss
which caused the prepayment.
"Repayment Date" each of the dates noted on the
Repayment Schedule on which a payment
of interest or a payment of principal
and interest is due hereunder to be
paid by the Borrower.
"Repayment Schedule" the schedule attached
hereto as APPENDIX I setting forth
the amounts and dates of payments of
principal required to be made by the
Borrower in repayment of the Loan.
-8-
"Reportable Event" a reportable event described
in Section 4043 of ERISA or the
regulations thereunder, a withdrawal
from a Plan described in Section 4063
of ERISA, or a cessation of
operations described in Section
4068(f) of ERISA.
"Security Agreement" the First Priority
Aircraft Chattel Mortgage and
Security Agreement, dated the Closing
Date, to be entered into between the
Borrower and the Lender pursuant to
which the Borrower grants to the
Lender a first priority purchase
money security interest in and to the
Aircraft.
"Sellers" collectively, Xxxxx X. Xxxxx, J.
Xxxxxx Xxxxxxxxx, Xxx X. Xxxx, Xxxxx
X. Xxxx and Xxxxxxx X. Xxxxx.
"Service Contract" any service contract or wet lease for
the charter of any of the Aircraft.
"Stock Purchase Agreement" the Stock Purchase Agreement dated as
of July 11, 1997 among the Sellers
and the Guarantor relating to the
sale of all of the outstanding
capital stock of the Borrower.
"Subsequent Agreement" any credit facility, loan
agreement, lease or other financing
document entered into between the
Borrower or the Guarantor and the
Lender after the date hereof in
connection with a financing or lease.
"Taxes" as defined in Section 11.3 hereof.
"Transaction Documents" collectively, the Loan Documents, the
Stock Purchase Agreement and the
Asset Purchase Agreement.
"Xxxxx Fargo Loan Agreement" collectively, (a) the Letter
Agreement dated October 21, 1996
between Xxxxx Fargo Bank (Colorado)
("Xxxxx Fargo") and the Guarantor
and the Promissory Note executed and
delivered by the Guarantor to Xxxxx
Fargo in connection therewith
(collectively, the "Original Xxxxx
Fargo Facility") and (b) any
subsequent working capital facility
entered into by the Guarantor which
replaces: (i) the Original Xxxxx
Fargo Facility or (ii) any
-9-
working capital facility that is
subsequent to the Original Xxxxx
Fargo Facility.
Terms defined in the Security Agreement, unless otherwise defined herein, shall
be used herein as therein defined.
1.3 CONSTRUCTION. (a) Unless the context of this Agreement otherwise
clearly requires, references to the plural include the singular, the singular
the plural, the part the whole, and "or" has the inclusive meaning frequently
identified by the phrase "and/or." References to "determination" by Lender
include a good-faith estimate by Lender (in the case of a quantitative
determination) and a good faith belief by Lender (in the case of a qualitative
determination). References to the terms "acting reasonably" or "reasonably
satisfactory to Lender, acting reasonably" or terms of similar import mean
satisfactory or acceptable to the Lender acting in a reasonable manner but in
accordance with the Lender's regular business practices. The words "herein,"
"hereunder" and "hereof" and similar terms in this Agreement refer to this
Agreement as a whole and not to any particular provision of this Agreement. The
Section and other headings contained in this Agreement are for reference
purposes only and shall not control or affect the construction of this Agreement
or the interpretation thereof in any respect.
(b) Any defined term in Section 1.2 or in any of the Loan Documents
which refers to a document, instrument, agreement or mortgage shall include any
amendments, supplements or modifications entered into from time to time with
respect to such document, instrument, agreement or mortgage.
2. COMMITMENT.
2.1 Subject always to the terms and conditions of this Agreement, Lender
hereby agrees with the Borrower that on the Closing Date, Lender will make the
Commitment available to the Borrower and Borrower will borrow the Commitment
from the Lender.
2.2 The obligation of the Lender to make the Commitment available to the
Borrower under this Agreement shall be expressly subject to the terms of this
Agreement in general and in particular to the fulfillment by the Borrower of all
of the conditions set forth in Section 5 hereof not later than at the time or
times therein specified. Lender shall have no obligation in respect of its
Commitment except as expressly set forth in this Agreement.
-10-
3. LOAN.
3.1 The Commitment shall be made available to the Borrower on the Closing
Date, in U.S. Dollars via wire transfer (and the Borrower shall borrow the
same), subject to the terms of this Agreement.
3.2 The Borrower shall deliver a drawdown notice (the "Drawdown Notice") to
the Lender at least two (2) Banking Days prior to the Closing Date. The notice
may not be rescinded once received. The notice shall contain:
(a) the date requested for the Closing Date;
(b) the amount of the Advance;
(c) a representation from the Borrower that the Borrower will use the
Advance for the purposes set forth in Section 1.1 of this
Agreement; and
(d) information specifying the account(s) to which the Advance is to
be made available (subject to Lender's agreement).
3.3 If the Borrower shall have sent the Drawdown Notice and the Lender does
not advance the amount to the Borrower because the Borrower has failed to
satisfy the conditions precedent set forth in Section 5 hereof, the Borrower
shall, upon the Lender's demand, indemnify the Lender against all or any costs,
losses, expenses, damages, charges, premiums, penalties or fees (collectively,
the "Costs") incurred by the Lender as a result (direct or indirect) of such
amount not being advanced following the delivery of the Drawdown Notice,
including without limitation, in connection with funds borrowed by the Lender to
fund such amount or any portion thereof, the difference, if any, between the
amount of interest accrued upon such amount less the interest earned upon any
funds deposited by the Lender pursuant to this Section.
4. DESCRIPTION OF SECURITY.
As collateral security for the prompt and complete payment of Borrowers'
obligations hereunder and under the Note and other Loan Documents and the
payment of any sum advanced or subsequently advanced or obligation incurred
pursuant to any provision hereof or thereof the Borrower shall grant to the
Lender a first priority
-11-
purchase money Lien upon and security interest in the Aircraft pursuant to the
Security Agreement.
5. CONDITIONS PRECEDENT.
5.1 The Lender's obligation to make the Loan is conditional upon the
following, all of which shall take place, occur or be delivered to the Lender
not later than the Closing Date:
(a) The Borrower shall have performed all of its agreements and paid
all sums hereunder to be performed or paid (including sums payable under
Section 14.1 hereof) on or prior to the Closing Date and the
representations and warranties of the Borrower and the Guarantor contained
in each Loan Document to which each is respectively a party shall be true
and correct as of the Closing Date as if made on and as of the Closing Date
and the Borrower shall have so certified to Lender;
(b) The Borrower shall have duly executed and delivered to Lender and
Lender shall have approved and accepted the Note, the Security Agreement,
the UCC-1 financing statements, any other assignments or other similar
documents deemed reasonably necessary by Lender to perfect, maintain and
preserve the Liens in and to, and the security interest in, the Aircraft
and such documents as Lender may reasonably require in connection with the
termination of any and all liens, claims or encumbrances affecting the
Aircraft (other than Permitted Liens) ;
All such security agreements, mortgages, financing statements,
assignments, releases or other similar documents shall be suitable for
filing in all public offices deemed necessary by the Lender to perfect the
security interests granted to the Lender under the Security Agreement.
Further, the Borrower shall have furnished satisfactory proof to the Lender
that the Borrower has delivered an executed copy of the Security Agreement
and related documents to special FAA counsel, Xxxxxxx X. Boston &
Associates, who shall have approved the same as being in appropriate form
for recordation with the Federal Aviation Administration Aircraft Registry
in accordance with Title 14, Part 49 of the Code of Federal Regulations.
(c) There shall not have occurred and not be continuing an Event of
Default under this Agreement or any other Loan Document, or an event which,
with notice or lapse of time or both, would constitute an Event of Default
(or the equivalent thereof);
-12-
(d) All documents, instruments and certificates relating to the making
of the Loan and delivery of the Note, and all proceedings in connection
with the transactions contemplated by this Agreement or any other Loan
Document shall be satisfactory in form and substance to the Lender, acting
reasonably, and the Lender shall have received copies of all such
instruments, certificates, and other evidence as Lender may reasonably
request with respect to such transactions in form reasonably satisfactory
to the Lender and its counsel including, but not limited to, the following:
(i) a copy of the FAA Form 8050-2 Xxxx of Sale for each of the
Aircraft listing the Borrower as purchaser of each such Aircraft
certified as being a true, accurate and complete copies by an officer
of the Borrower;
(ii) a copy of the warranty xxxx of sale for each of the Aircraft
pursuant to which good title to the Aircraft was conveyed to the
Borrower certified as being a true accurate and complete copies by an
officer of the Borrower;
(iii) a copy of the FAA Registration Certificate for each of the
Aircraft evidencing the registration of each of the Aircraft in the
name of the Borrower certified as being a true, accurate and complete
copies by an officer of the Borrower;
(iv) a copy of the FAA Certificate of Airworthiness relating to
each of the Aircraft certified as being a true, accurate and complete
copies by an officer of the Borrower;
(v) a certificate(s) of insurance evidencing that insurance
conforming to all of the requirements of the Security Agreement is in
full force and effect with respect to the Aircraft and containing, or
together with, a report of the broker issuing such certificate that
such insurance complies with the provisions of the Security Agreement;
(vi) a favorable opinion dated the Closing Date, in form and
substance reasonably satisfactory to the Lender, of Xxxxxxx X. Boston
and Associates, special FAA counsel;
-13-
(vii) a favorable opinion dated the Closing Date, in form and
substance reasonably satisfactory to the Lender, of Xxxxx, Xxxxxx &
Xxxxxx LLP, counsel to the Borrower and the Guarantor;
(viii) the Guaranty executed by the Guarantor;
(ix) the Stock Purchase Agreement and the Asset Purchase
Agreement certified as being a true, accurate and complete copies by
an officer of the Guarantor;
(e) The Lender shall have received a copy of the Articles of
Incorporation and the By-laws of the Borrower, certified as being true,
complete and accurate by the corporate secretary of the Borrower together
with a good standing certificate issued by the Secretary of State of the
State of California;
(f) The Lender shall have received a copy of a resolution adopted by
the board of directors of the Borrower, certified by an officer of the
Borrower as being true, accurate and complete, authorizing the entering
into, and the performing of the Borrower's obligations under, this
Agreement, and each other Loan Document to which the Borrower is a party,
and all transactions contemplated herein and therein;
(g) The Lender shall have received a certificate of an officer of the
Borrower certifying as to the officers of the Borrower and a specimen
signature of each of the officers of the Borrower;
(h) The Lender shall have received a certificate from an officer of
the Borrower certifying that no Event of Default or, to the knowledge of
such officer, Default has occurred and is continuing;
(i) The Lender shall have received a copy of the Articles of
Incorporation and By-Laws of the Guarantor certified as being true,
complete and accurate by the corporate Secretary of the Guarantor, together
with a good standing certificate issued by the Secretary of State of the
State of Delaware;
(j) The Lender shall have received a copy of a resolution passed by
the Board of Directors of the Guarantor, certified by the corporate
Secretary of the Guarantor as being true, accurate and complete,
authorizing the entering into, and the performing of the Guarantor's
obligations under, the Guaranty and each other Loan
-14-
Document to which the Guarantor is a party, and all transactions
contemplated herein and therein;
(k) The Lender shall have received a certificate of the corporate
Secretary of the Guarantor certifying as to the signing authority of the
officers of the Guarantor to sign this Agreement and each Loan Document to
which the Guarantor is a party and all documents and instruments executed
in connection herewith or therewith;
-15-
(l) All of the conditions precedent set forth in Section 9 of the
Stock Purchase Agreement shall have been satisfied or waived and AMC shall
have acquired all of the Mercy Air Stock and all of the conditions
precedent set forth in Section 9 of the Asset Purchase Agreement shall have
been satisfied or waived;
(m) No material adverse change shall have occurred in the values of
the Aircraft as compared to the values set forth in the Closing Appraisal;
(n) No Event of Loss shall have occurred with respect to any of the
Aircraft;
(o) The Lender shall have received audited financial statements of the
Borrower for the year ending December 31, 1996; and
(p) The Borrower shall have delivered any other item reasonably
requested by Lender, provided that the Lender shall have given the Borrower
reasonable notice prior to the Closing Date of the requirement therefor.
6. INTEREST.
Interest payable on the Loan:
(a) shall accrue from the Closing Date at a rate of 9.52% per annum
(the "Interest Rate");
(b) shall be paid by the Borrower, in arrears, on each Repayment Date
and whenever else a payment of principal is due and payable; and
(c) shall be calculated on the basis of a year of 360 days consisting
of twelve 30-day months.
7. REPAYMENT AND VOLUNTARY PREPAYMENT.
7.1 Until the Loan shall be repaid, prepaid or discharged under the
provisions of this Agreement, in addition to any other sums which may become
payable hereunder or under any other Loan Document, the Borrower shall repay the
Loan in the amounts, and on the dates, set forth on the Repayment Schedule;
provided, however, that the final payment hereunder shall be in an amount
necessary to pay in full all outstanding principal, accrued interest and all
other amounts due hereunder. Each payment shall be
-16-
applied first to fees, costs or expenses due Lender under the Loan Documents,
second, against accrued interest on the Loan, and third, the balance against
principal of the Loan, as more fully set forth in the Repayment Schedule.
7.2 (a) Provided no Event of Default has occurred and is continuing, the
Borrower shall be entitled to prepay the entire amount of the Loan on any
Repayment Date occurring after the three year anniversary of the Closing Date on
not less than ninety (90) days' prior written notice specifying such Repayment
Date and the amount of such prepayment, which notice shall become irrevocable
upon delivery to the Lender. Such prepayment shall be made together with (i)
accrued interest on the amount of such prepayment through the date of such
prepayment; (ii) a prepayment fee equal to the Rate Prepayment Amount (defined
in Section 7.2(d)) and (iii) any other amounts due and owing by the Borrower
and/or the Guarantor under any of the Loan Documents.
(b) Provided no Event of Default has occurred and is continuing, the
Borrower shall be entitled to prepay a portion of the Loan applicable to a
particular Aircraft on any Repayment Date occurring after the three year
anniversary of the Closing Date on not less than ninety (90) days' prior written
notice to the Lender (the "Prepayment Notice") specifying: (i) the Aircraft
which the Borrower desires the Lender to release from the Lien of the Security
Agreement (the "Prepayment Aircraft"); (ii) the Borrower's commitment to pay
that portion of the Applicable Amount (defined below) with respect to such
Aircraft; and (iii) the internationally recognized appraiser the Borrower
proposes to retain for purposes of performing the Prepayment Appraisal (the
"Proposed Appraiser"). Within fourteen Banking Days of receipt of the Prepayment
Notice, the Lender, by written notice to the Borrower, shall either accept or
reject the Proposed Appraiser; provided, however, that the Lender shall not
unreasonably reject the Proposed Appraiser set forth in the Prepayment Notice.
If the Lender rejects the Proposed Appraiser, the Lender shall include in the
Lender's notice to the Borrower another internationally recognized appraiser
(such appraiser or the Proposed Appraiser, to the extent such Proposed Appraiser
is not rejected by the Lender, being hereinafter referred to as the "Accepted
Appraiser") which the Borrower shall be obligated to retain for purposes of
performing the Prepayment Appraisal. Not less than thirty (30) days prior to the
Repayment Date set forth in the Prepayment Notice, the Borrower shall deliver
(or cause to be delivered) to the Lender the Prepayment Appraisal prepared by
the Accepted Appraiser which shall include an appraisal of all of the then
remaining Aircraft (excluding any Aircraft that, prior to the date of the
prepayment in question, has been sold, suffered an Event of Loss or has been
released from the Lien of the Security Agreement). On the Repayment Date
specified in the Prepayment Notice, the Borrower shall pay to the Lender: (A)
the scheduled payment of principal and accrued interest
-17-
payable set forth in the Repayment Schedule; (B) an amount equal to the
Applicable Amount (defined in Section 7.2(c)); and (C) a prepayment fee equal to
the Rate Prepayment Amount.
(c) In connection with a partial prepayment of the Loan pursuant to Section
7.2(b), the "Applicable Amount" shall equal the product of (i) the outstanding
amount of the Loan immediately prior to such prepayment multiplied by (ii) the
greater of (A) a ratio, the numerator of which is the appraised value of the
Prepayment Aircraft as set forth in the Prepayment Appraisal and the denominator
of which is the aggregate appraised value of all of the Aircraft (excluding any
Aircraft that, prior to the date of the prepayment, has been sold, suffered an
Event of Loss or has been released from the Lien of the Security Agreement) as
set forth in the Prepayment Appraisal or (B) a ratio, the numerator of which is
the appraised value of the Prepayment Aircraft as set forth in the Closing
Appraisal and the denominator of which is the aggregate appraised value of all
of the Aircraft (excluding any Aircraft that, prior to the date of the
prepayment, has been sold, suffered an Event of Loss or has been released from
the Lien of the Security Agreement) as set forth in the Closing Appraisal.
(d) The "Rate Prepayment Amount" shall equal: (i) if such prepayment is
made after the Closing Date but on or prior to the third year anniversary of the
Closing Date, 5.0% of the principal amount prepaid (provided, however, that this
clause (i) shall only apply to prepayments under Sections 8.1 and 8.2 hereof);
(ii) if such prepayment is made after the third year anniversary and on or prior
to the fourth year anniversary of the Closing Date, 4.0% of the principal amount
prepaid; (iii) if such prepayment is made after the fourth year anniversary and
on or prior to the fifth year anniversary of the Closing Date, 3.0% of the
principal amount prepaid; (iv) if such prepayment is made after the fifth year
anniversary and on or prior to the sixth year anniversary of the Closing Date,
1.35% of the principal amount prepaid; (v) if such prepayment is made after the
sixth year anniversary and on or prior to the seventh year anniversary of the
Closing Date, 1.10% of the principal amount prepaid; (vi) if such prepayment is
made after the seventh year anniversary and on or prior to the ninth year
anniversary of the Closing Date, 1.00% of the principal amount prepaid; and
(vii) if such prepayment is made after the ninth year anniversary and prior to
the tenth year anniversary of the Closing Date, 0.40% of the principal amount
prepaid.
7.3 The amount of any prepayment under Section 7.2(a), 7.2(b), 8.1,
8.2,11.2 or 11.3 hereof shall be applied: (a) first, against the Rate Prepayment
Amount; (b) second, against accrued interest; and (c) thereafter, against
principal, subject to the applicable provisions of the Security Agreement. The
amount of any prepayment applied
-18-
to principal of the Loan shall be applied to the payments of principal due with
respect to the Loan in inverse chronological order.
8. MANDATORY PREPAYMENTS.
8.1 Immediately upon the 90th day after an Event of Loss with respect to an
Aircraft then: (i) the Applicable Amount; (ii) all accrued but unpaid interest
thereon; and (iii) a fee equal to the Rate Prepayment Amount shall become
immediately due and payable. Notwithstanding the immediately preceding sentence,
provided that no Event of Default has occurred and is continuing, the Borrower
for a period of 90 days after receipt by the Lender of any insurance proceeds in
connection with an Event of Loss to an Aircraft, shall have the right to apply
such proceeds to the purchase price of a new aircraft; provided, however, that:
(a) the appraised value of such replacement aircraft as determined by an
Accepted Appraiser, must be greater than or equal to the value of the Aircraft
that suffered the Event of Loss and (b) the Borrower shall have granted to the
Lender a first priority lien and security interest with respect to such
replacement aircraft on or prior to the date of the release by the Lender to the
Borrower of the insurance proceeds.
8.2 Upon the occurrence of an Event of Default: (i) the Loan; (ii) all
accrued but unpaid interest thereon; (iii) the Rate Prepayment Amount and (iv)
any and all other fees and amounts which may be or become payable hereunder and
under the Note, the Security Agreement and any other Loan Document shall become
immediately due and payable.
9. REPRESENTATIONS AND WARRANTIES.
9.1 The Borrower hereby represents and warrants to the Lender as of the
date hereof:
(a) the Borrower is a corporation duly formed, validly existing and in good
standing under the laws of the State of California and maintains its principal
place of business and its chief executive office at 8190 Mango, Xxxxxxx,
Xxxxxxxxxx 00000; the Borrower's Federal employer tax identification number is ;
(b) on the Closing Date, the Borrower will have good and marketable title
to, and will be the sole legal owner of, all the Mortgaged Property (as defined
in Security Agreement) free and clear of all liens, pledges, options, mortgages,
claims, charges, encumbrances, security interests and use restrictions, except
for Permitted Liens (as
-19-
defined in the Security Agreement) and no security agreement, financing
statement, equivalent security or lien instrument or continuation statement or
other Lien, whether voluntary or involuntary, covering all or any part of the
Mortgaged Property (as defined in the Security Agreement) has been placed on
file or of record by the Borrower with any governmental agency or bureau or any
political subdivision thereof or is otherwise in effect with respect to any of
the Mortgaged Property (as defined in Security Agreement) except such as may
have been filed by the Borrower pursuant to the Security Agreement and for
Permitted Liens (as defined in the Security Agreement);
(c) the Borrower has full power to carry on its business as it is now being
conducted and to enter into, legally bind itself by, and perform its obligations
under this Agreement, and all of the other Loan Documents to which it is a
party, and has complied with all material statutory and other requirements
relative to the business carried on by it; it is duly qualified and in good
standing in all of the jurisdictions in which the character of the properties
owned or leased by it or the business transacted by it makes such qualification
necessary and where the failure to so qualify would preclude it from being able
to fulfill its obligations and to enforce its rights with respect to the Loan
Documents;
(d) all necessary consents, resolutions and authorizations for the Borrower
to enter into this Agreement and all of the other Loan Documents to which it is
a party, and to make and repay the borrowings in respect of the Commitment have
been obtained, no further consents or authorizations are necessary for the
service and repayment of the Loan pursuant to the provisions hereof and of the
Note and for the performance by the Borrower of all its obligations pursuant to
the provisions of all of the Loan Documents to which it is a party;
(e) the Borrower is a United States Citizen as that term is defined in
Title 49 of the United States Code (a "United States Citizen");
(f) this Agreement, and all of the other Loan Documents to which the
Borrower is a party, have been duly and validly executed and delivered by it and
constitute valid and binding obligations of it, enforceable in accordance with
their terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency or other laws affecting creditors' rights in general;
(g) the execution and delivery of, and the performance of the provisions
of, this Agreement and each other Loan Document to which the Borrower is a party
and of the transactions contemplated thereby and hereby do not and will not
during the Loan Term contravene or violate in any material respect its Articles
of Incorporation or by-laws
-20-
or any applicable Law, regulation, decree, order, license or permit or result in
a default under any contractual or other restriction now existing and binding on
the Borrower or on any of its properties or result in the creation of any Lien
on any of such properties;
(h) there are no outstanding judgments against the Borrower and no action,
claim, suit or proceeding is pending or, to the best of the Borrower's knowledge
threatened (including, but not limited to, tax liens or tax actions) against or
affecting the Borrower before any court, board or arbitration or administrative
agency which would likely result in any material adverse change in the business
or condition (financial or otherwise) of the Borrower or on the ability of the
Borrower to perform its obligations under any Loan Document;
(i) all tax returns required to be filed by the Borrower have been properly
prepared, executed and filed. All taxes, assessments, fees and other
governmental charges upon the Borrower or upon any of its properties, incomes,
sales or franchises which are due and payable have been paid, other than those
taxes which the Borrower is contesting in good faith by appropriate proceedings
and for which the Borrower has recorded sufficient reserves in its financial
statements in accordance with GAAP;
(j) the Borrower is not engaged in the business of extending credit for the
purpose of purchasing or carrying "margin stock", as such term is used in
Regulations G or U promulgated by the Board of Governors of the Federal Reserve
System as amended from time to time. No part of the proceeds of the Loan will be
used to purchase or carry any margin stock or to extend credit to others for the
purpose of purchasing or carrying any "margin stock". The Borrower does not own
any "margin stock";
(k) no written information given by the Borrower in relation to this
Agreement or any other Loan Document to which it is a party contains any
misstatement of fact or omits to state a fact which would be adverse to the
interest of the Lender or which would be necessary to make any statement or
representation or warranty contained herein or therein not misleading;
(l) No Default or Event of Default has occurred and is continuing;
(m) the Borrower does not transact or do business under any assumed or
trade name;
-21-
(n) The Borrower will use the proceeds of the Loan for the purpose set
forth in Section 1.1 hereof and for no other purpose;
(o) The Borrower has no outstanding indebtedness other than the
indebtedness created by this Agreement and Permitted Indebtedness.
(p) Neither the Borrower nor the Guarantor nor any Plan is or has been in
violation of any of the provisions of ERISA, any of the qualification
requirements of the Internal Revenue Code Section 401(a) or any of the published
interpretations thereunder, nor has Borrower or the Guarantor received any
notice to such effect. No notice of intent to terminate a Plan has been filed
under Section 4041 of ERISA, nor has any Plan been terminated under ERISA. The
Pension Benefit Guarantee Corporation has not instituted proceedings to
terminate, or appointed a trustee to administer, a Plan and no lien upon the
assets of the Borrower or the Guarantor has arisen with respect to a Plan. No
prohibited transaction or Reportable Event has occurred with respect to a Plan.
Neither Borrower nor Guarantor has incurred any withdrawal liability with
respect to any Multiemployer Plan. There is no accumulated funding deficiency in
any Plan, whether or not waived; and
(q) the Borrower has furnished to Lender certain audited financial
statements for the annual period ending December 31, 1996 and unaudited
quarterly financial statements for the periods ending March 31, 1997
(collectively, the "Financial Statements"). Such Financial Statements (including
the notes thereto) present fairly the financial condition of the Borrower as of
the dates of the balance sheets contained therein, and the results of its
operations for the periods then ended, all in conformity with GAAP on a basis
consistent with that of Financial Statements for corresponding prior periods.
Except as disclosed therein, the Borrower does not have any material contingent
liabilities (including liabilities for taxes), unusual forward or long-term
commitments or unrealized or anticipated losses from unfavorable commitments.
Since the date of such Financial Statements there has been no material adverse
change in the business, operations or financial condition of the Borrower.
9.2 The rights and remedies of the Lender in relation to any
misrepresentation or breach of warranty on the part of the Borrower or the
Guarantor shall not be prejudiced by any lack of investigation by or on behalf
of the Lender into the affairs of any of the Borrower or the Guarantor or by the
performance of this Agreement or by any other act or thing which may be done by
it in connection with this Agreement and which would, apart from this Section 9,
prejudice such rights or remedies.
-22-
10. UNDERTAKINGS.
The Borrower hereby undertakes during the Loan Term:
10.1 to furnish Lender with proof satisfactory to Lender that all insurance
required under the Security Agreements and the Mortgage is in full force and
effect at each renewal of any such contract or policy of insurance or upon
Lender's request;
10.2 to inform the Lender immediately upon the occurrence of a Default or
an Event of Default;
10.3 (a) to comply with all Laws relative to the conduct of its business or
the location of the properties owned or leased by it, (including, but not
limited to, the payment of all Taxes when due (other than those Taxes which the
Borrower is contesting in good faith by appropriate proceedings and for which
the Borrower has allocated sufficient reserves in accordance with GAAP )), the
non-compliance with which could have a material adverse effect on its business,
operations, assets or financial or other condition, as contemplated hereby, or
the ability of the Borrower to perform its obligations under this Agreement, the
Note, or the other Loan Documents and (b) to maintain, to obtain or to cause to
be obtained any permit, license, consent or approval of any governmental
authority and make any filing or registration therewith which is or shall be
required with respect to the performance of its obligations under this
Agreement, the Note or the other Loan Documents or for the operation of its
business as presently conducted or as contemplated by it.
10.4 to at all times preserve and keep in full force and effect its
corporate existence and remain a United States Citizen.
10.5 promptly upon becoming aware thereof, to give Lender written notice
about any material adverse change in the business, operations or financial
condition of the Borrower.
10.6 promptly upon becoming aware thereof, to give Lender written notice of
the commencement, existence or threat of any proceeding by or before any court
or administrative agency against or affecting the Borrower which, if adversely
decided, would have a material adverse effect on the business, operations or
financial condition of the Borrower or on the ability of the Borrower to perform
its obligations under this Agreement, the Note, or the other Loan Documents to
which it is a party.
-23-
10.7 not to enter into any merger, reorganization, or consolidation or wind
up, liquidate or dissolve, nor agree to do any of the foregoing.
10.8 not to convey, assign, sell, mortgage, encumber, pledge, hypothecate,
grant a security interest in, grant options with respect to, lease or otherwise
dispose of all or any part of any legal or beneficial interest in the Aircraft
or any interest therein other than a Permitted Lien (as defined in Security
Agreement);
10.9 not to convey, assign, transfer or otherwise dispose of all or
substantially all of the assets of the Borrower.
10.10 to furnish to the Lender simultaneously with the delivery of any
financial statements delivered by the Guarantor to the Lender pursuant to the
terms of the Guaranty, an officer's certificate from the chief financial officer
of the Borrower certifying that the Borrower has complied with all of the
covenants of the Borrower set forth in the Loan Documents and that no Default or
Event of Default has occurred and is continuing.
10.11 to promptly furnish to Lender any other information concerning the
Borrower in such form as Lender may reasonably request.
10.12 in connection with the execution of any Service Agreement with
respect to any of the Aircraft, to simultaneously deliver to Lender an
Assignment.
10.13 the Borrower shall take all actions as are required to keep the
representations and warranties applicable to it in Section 9.1 (b), (c), (d),
(i), (j), (k) and (p), hereof true and correct, in all material respects, until
such time as all of the Loan shall have been paid in full.
11. FORCE MAJEURE, CHANGE IN LAW, INCREASED COSTS.
11.1 The Lender shall not be held responsible for any loss or damage
arising out of any action taken or omitted by Lender (including but not limited
to the failure to advance the Commitment) or to which Lender becomes subject
resulting from a legal enactment or any measure of a public authority, or any
war, strike, boycott, blockade, flood, natural disaster, act of God or any other
cause beyond the Lender's control (a "Force Majeure").
-24-
11.2 In the event that in the reasonable judgment of Lender, the making or
maintaining of the Loan by the Lender or the performance by the Borrower of any
obligation on its part to be performed hereunder or under any other Loan
Document to which they are a party has become unlawful by reason of any change
after the date of this Agreement in any applicable law or governmental
regulation or order or in any requirement of any monetary authority whether or
not having the force of law, or in the interpretation of any of the same, with
respect to this Agreement, any other Loan Document to which it is a party or the
Loan, then the Lender shall notify the Borrower thereof immediately and to the
extent that the Commitment has not been made available, the obligation pursuant
to Section 2 of the Lender to make its Commitment available shall terminate, and
in the case the Commitment has been made available the Borrower shall within 30
days after receipt of such notice or any later date permitted by applicable law
or governmental regulation or order repay the Loan and pay interest accrued
thereon at the Interest Rate and all other sums payable hereunder and all actual
out-of-pocket expenses incurred by Lender in complying with any changed law,
governmental regulation or order or any requirement of any monetary authority
prior to the date on which the Borrower repays the Loan, and all accrued
interest thereon, pursuant to this Section 11.2, if and to the extent such
expenses are incurred in relation to the Commitment.
11.3 Should the Lender become subject to levies, imposts, duties, fees, or
sales, use, excise, gross receipts, value added, personal property, stamp or
documentary taxes, ad valorem taxes, license fees, registration fees,
assessments, fines, penalties or similar charges imposed on the Aircraft and all
other taxes of whatsoever kind imposed upon Lender with respect to the Aircraft
or this Agreement, any other Loan Document, the transactions contemplated by any
of the aforesaid documents or any documents executed in connection therewith or
contemplated thereby, or the payments to be made pursuant to this Agreement and
the Note and any other payments of whatsoever kind required to be paid by the
Borrower to the Lender pursuant to the terms of this Agreement excluding,
however, any taxes imposed upon or measured by the income or earnings and
profits of Lender resulting from the transactions contemplated by this Agreement
or otherwise (collectively, "Taxes"), which will increase the Lender's total
cost with respect to the Loan, then, in such event, the Borrower, upon receipt
of written notice from the Lender (the "Tax Notice"), shall pay to the Lender an
amount which will compensate the Lender for such increased costs.
12. PAYMENTS.
12.1 All payments required to be made to the Lender hereunder or under the
Note shall be due at 12:00 noon, New York time, on the date when due, without
-25-
presentment, demand, protest or notice of any kind, all of which are expressly
waived. Such payments shall be made in Dollars via wire transfer to the
following account at the financial institution listed below:
Citibank
New York, New York
ABA No.: 000000000
In Favor of: FINOVA Capital Corporation
Account No.: 4072-7239
Reference: CEF/ Mercy Air
Attention: X. Xxxxxxxx
or to such other account at such other financial institution as Lender may
designate by written notice sent pursuant to Section 15 hereof.
12.2 All payments falling due on a date that is not a Banking Day shall be
paid on the next succeeding Banking Day.
12.3 Should the Borrower fail to pay any sum on the due date for payment
thereof, whether by acceleration, prepayment or otherwise, and in addition to
any other sum or fees which may become payable hereunder or under the Note or
the Security Agreement, the Borrower shall pay interest on such sum from the due
date up to and including the date of actual payment at an annual interest rate
equal to the Overdue Interest Rate.
12.4 All payments by the Borrower under this Agreement shall be made
without deduction by reason of any defense, set off or counterclaim of any kind,
nature or description whatever (subject to the provisions of Section 12.5
hereof).
12.5 All payments under this Agreement shall be made free and clear of, and
without deduction for, any Taxes, now or hereafter imposed by or within any
governmental authority or pursuant to any governmental rule or regulation or any
administrative subdivision or taxing authority thereof or herein, respectively,
unless the Borrower is compelled by law to deduct or withhold such Taxes, in
which event the Borrower shall pay to the Lender such additional amounts as
shall result in the effective receipt by the Lender of the gross amount of all
sums due the Lender hereunder and under the Note had no such deduction or
withholding been made; PROVIDED, HOWEVER, that Borrower shall have no obligation
to pay any additional amount with respect to United
-26-
States withholding taxes imposed as a result of any transfer, assignment or
grant of a participation in Lender's rights hereunder to a foreign party.
13. EVENTS OF DEFAULT.
13.1 Upon the occurrence of any of the following, each of which is referred
to as an Event of Default:
(a) (i) The failure of the Borrower to pay when due and payable any
principal portion of the Loan or accrued interest thereon within ten (10)
days of the due date thereof (whether by reason of stated maturity or due
date, notice of prepayment, cancellation, acceleration or otherwise);
(ii) The failure of the Borrower to pay when due and payable any
amounts (other than principal or interest) due with respect to this
Agreement, the Note, or the Security Agreement, or other sums which may
become due hereunder or under any Loan Document within fifteen (15) days
after delivery of notice thereof from the Lender to the Borrower;
(b) (i) Any lapse of, or failure to maintain, insurance coverage on
the Aircraft required to be maintained under the Security Agreement and the
Insurance Side Letter;
(ii) Any failure of the Borrower to perform its obligations set forth
in Sections 10.2, 10.5, 10.6 or 10.8 hereof;
(iii) Any failure by the Borrower to perform or cause to be performed
its obligations as set forth in the Security Agreement concerning the
preparation or recordation of any document or instrument required by Lender
for the maintenance or perfection of any lien on the Mortgaged Property;
(iv) Any failure of the Borrower to perform or cause to be performed
its obligations set forth in the Security Agreement concerning the
maintenance of the Aircraft within thirty (30) days after notice thereof
from the Lender; or
(v) Any failure by either the Borrower or the Guarantor to fulfill any
other covenant or to perform any other obligation on its part to be
performed under any Loan Document to which it is a party and such failure
is not cured within thirty (30) days after notice thereof from the Lender;
-27-
(c) Any representation or warranty made by the Borrower or the Guarantor in
this Agreement or any other Loan Document or any financial statement shall prove
to have been untrue, inaccurate or incomplete in any material respect at the
time when made or when effective and such party fails to do that which shall be
necessary in order that said representation or warranty shall be true, accurate
or complete within thirty (30) days after the earlier of actual knowledge
thereof by an officer of the Borrower or the Guarantor or of receipt of notice
thereof;
(d) Any approval required from or to be issued by the Borrower or by the
Guarantor in connection with this Agreement or under any Loan Document or the
transactions contemplated herein or therein, shall be revoked, rescinded,
suspended or otherwise limited in effect and same shall not have been reinstated
within thirty (30) days after the first effective date of such revocation,
rescission, suspension or limitation;
(e) Either of the Borrower or the Guarantor shall file a voluntary petition
in bankruptcy or a voluntary petition or an answer seeking readjustment of its
debts or for any other relief under any bankruptcy, insolvency, or other similar
act or law of any jurisdiction, domestic or foreign, now or hereafter existing,
or any action by either of the Borrower or the Guarantor indicating its consent
to, approval of, or acquiescence in, any such petition or proceeding; or if
either of the Borrower or the Guarantor shall apply or sustain the appointment
by consent or acquiescence of, a receiver or trustee for either of the Borrower
or the Guarantor or for all or a substantial part of their respective
properties; or if either of the Borrower or the Guarantor shall make an
assignment for the benefit of its creditors, or if either of the Borrower or the
Guarantor shall fail to pay or becomes unable to pay its debts as they mature;
(f) An involuntary petition against either of the Borrower or the Guarantor
in bankruptcy or seeking readjustment of its debts or for any other relief under
any bankruptcy, insolvency, or other similar act or law of any jurisdiction,
domestic or foreign, now or hereafter existing; or a receiver or trustee shall
be involuntarily appointed for either of the Borrower or the Guarantor or for
all or a substantial part of its property; or a warrant of attachment, execution
or similar process against any substantial part of the property of either of the
Borrower or the Guarantor shall be served on either of the Borrower or the
Guarantor and such events continues for sixty (60) days undismissed, unbonded or
undischarged;
(g) This Agreement or any Loan Document shall at any time after its
respective execution and delivery and for any reason cease to be in full force
and effect or any certificate, instrument or documents issued and executed
pursuant hereto or thereto
-28-
shall for any reason cease to be effective to constitute a valid and perfected
first priority Lien and security interest in and to the Mortgaged Property
except for Permitted Liens;
(h) A material, adverse change in the financial condition of either of the
Borrower or the Guarantor shall occur;
(i) An "Event of Default" under and as defined in the Xxxxx Fargo Loan
Agreement shall have occurred and be continuing;
(j) If an event of default occurs under a Subsequent Agreement; or
(k) If at any time during the Loan Term, the Borrower is not the wholly
owned subsidiary of the Guarantor.
13.2 Upon the occurrence of any Event of Default set forth in Section
13.1(e) or (f) hereof and without notice to the Borrower, the outstanding
principal of, and all accrued interest on, the Loan and the Note, and any and
all other sums due to Lender under this Agreement, the Note and any other Loan
Document shall be due and payable. Upon the occurrence of any other Event of
Default, Lender may declare the entire outstanding principal of, and all accrued
interest on, the Loan and the Note and any and all other sums due to Lender
under this Agreement, the Note or any other Loan Document to be forthwith due
and payable and such principal, interest and other amounts shall thereupon
become due and payable. Presentment, demand (other than as set forth in the
immediately previous sentence), protest or other notice of any kind are hereby
expressly waived, anything contained herein or in the Note or other Loan
Document to the contrary notwithstanding, and Lender may exercise any and all
rights and remedies of a secured party under the Arizona Uniform Commercial Code
hereunder and under the Security Agreement, or under any governing law.
13.3 If Lender shall be prevented by any order of any court or by operation
of any law from sending any notice permitted or required to commence a period
during which the Borrower may cure any Event of Default hereunder, then the
period during which the Borrower may cure such Event of Default shall commence
to run without notice on the first date on which Lender would have been entitled
to give such notice but for the effectiveness of such order or law.
-29-
14. FEES AND EXPENSES.
14.1 The Borrower will on the Closing Date and subsequently thereafter upon
receipt of invoices by Lender or upon Lender's demand, pay to or reimburse
Lender for: (a) all reasonable out-of-pocket expenses of Lender incurred in
connection with the negotiation, drafting, execution and delivery of this
Agreement and each Loan Document, including, without limitation, all travel
expenses, inspection costs, appraisal fees, audit fees, due diligence search
costs, registration fees and costs, and reasonable legal fees and disbursements
of Lender's counsel (including, without limitation, the amount of the fees and
disbursements incurred by, Xxxxxxx X. Boston & Associates, special FAA counsel,
-30-
and Xxxx & Xxxx, LLP); provided, however, that the Borrower's obligation with
respect to legal fees and disbursements shall not exceed $25,000.00; provided,
further, that the $25,000.00 limitation on legal fees and expenses shall not
apply to any other out-of-pocket costs and expenses incurred by the Lender and
(b) for all out-of-pocket expenses
-31-
of Lender reasonably incurred in connection with the preservation and/or
enforcement of any rights granted to the Lender hereunder or under any other
Loan Document.
14.2 The Guarantor has previously paid to the Lender a commitment fee equal
to $100,000.00 (the "Commitment Fee"). The Lender shall apply such fee to the
expenses payable by the Borrower pursuant to Section 14.1 and the remainder
shall be applied to the amounts due by the Borrower to the Lender on the first
Repayment Date with respect to the Loan.
14.3 The Borrower's obligations under this Section 14 shall survive the
payment in full of the principal of the Loan, accrued interest thereon and all
other amounts due hereunder. This Agreement shall remain in full force effect
until Borrower's obligations under this Section 14 are satisfied.
15. NOTICES.
Except as otherwise specifically provided to the contrary herein or in the
Security Agreement:
15.1 Every notice or demand under this Agreement shall be in writing and
may be given or made by registered mail, return receipt requested, or by
internationally recognized overnight courier service.
15.2 Every notice or demand shall be sent, in the case of internationally
recognized overnight courier or registered mail, to the Lender or to the
Borrower, at its respective address, as set forth in Section 1.2 hereof.
15.3 Every notice or demand shall, except so far as otherwise expressly
provided by this Agreement, be deemed to have been received, in the case of a
notice or demand sent by internationally recognized overnight courier service or
registered mail, when actually delivered to the Borrower or the Lender at their
respective addresses referred to in Section 15.2 or as of the date on which
receipt of such notice or demand delivered by overnight courier or registered
mail is refused or such courier or the U.S. Postal Service advises that such
notice or demand is not deliverable at the address set out in Section 1.2.
-32-
16. ENTIRE AGREEMENT; NO ORAL CHANGE.
This Agreement (including all Exhibits and Appendices hereto and documents
or instruments executed in connection herewith) and all of the other Transaction
Documents embody the entire agreement and understanding between the Borrower and
Lender relating to the subject matter hereof and thereof and supersede all prior
agreements and understandings relating hereto and thereto and none of the
parties hereto or thereof shall be bound by or charged with any oral or written
agreements, representations, warranties, statements, promises or understandings
not specifically set forth herein or therein. This Agreement may not be changed
and no right granted or obligation imposed hereunder may be waived orally, but
only by an instrument in writing signed by the party against whom enforcement of
any waiver, change, modification or discharge is sought.
17. GOVERNING LAW; JURISDICTION AND VENUE.
THIS AGREEMENT SHALL BE DEEMED TO HAVE BEEN NEGOTIATED AND MADE IN, AND
SHALL BE GOVERNED AND INTERPRETED UNDER THE LAWS OF, THE STATE OF ARIZONA
APPLICABLE TO AGREEMENTS MADE BY RESIDENTS THEREOF TO BE WHOLLY PERFORMED
THEREIN. Each of the Borrower and the Lender hereby agree that all actions or
proceedings initiated by the Borrower and arising directly or indirectly out of
this Loan Agreement shall be litigated exclusively in the Superior Court of
Arizona, Maricopa County, or the United States District Court for the District
of Arizona (the "Arizona Courts"), and that any action initiated by the Lender
and arising directly or indirectly out of this Loan Agreement may be litigated
in any jurisdiction, at Lender's discretion. Each of the Borrower and Lender
hereby: (a) expressly submit and consent in advance to the jurisdiction and
venue of the Arizona Courts in any action or proceeding commenced by the
Borrower or the Lender in any of the Arizona Courts, and (b) agree that
jurisdiction and venue is proper in such courts. Each of the Borrower and the
Lender waives any claim that Phoenix, Arizona or the District of Arizona is an
inconvenient forum or an improper forum based on lack of venue. Should either of
the Borrower or the Lender, as the case may be, after being properly served,
fail to appear or answer any summons, complaint, process or paper so served
within 30 days after service thereof, each of the Borrower and the Lender
acknowledge that as a result thereof, an order and/or judgment may be entered by
the Lender or the Borrower against the other as demanded or pleaded for in such
summons, complaint, process or papers. The exclusive choice of forum set forth
herein shall not be deemed to preclude the enforcement by the
-33-
Lender or the Borrower, as the case may be, of any judgment in any other
appropriate jurisdiction.
18. USURY.
Notwithstanding any provision to the contrary herein contained, Lender
shall not collect a rate of interest on any obligation owing by the Borrower to
Lender in excess of the maximum rate of interest permitted by applicable law.
The Borrower understands and believes that the lending transaction which is the
subject of this Agreement complies with all applicable usury laws; however, if
any interest or other charges in connection with such lending transaction is
ever determined to exceed the maximum amount permitted by law, then the Borrower
agrees that (a) the amount of interest or charges payable pursuant to this
Agreement and the Note shall be reduced to the maximum amount permitted by law,
and (b) any excess amount previously collected from the Borrower in connection
with this Agreement or Note that exceeds the maximum amount permitted by law
shall be credited against the principal amount of the Loan then outstanding. If
the outstanding principal balance of the Loan has been paid in full, the excess
amount paid shall be refunded to the Borrower. The "contracted for rate of
interest" of the Commitment to be advanced pursuant to the terms hereof
includes, without limitation, the following: (i) the Interest Rate, calculated
and applied to the principal balance of the Loan in accordance with the
provisions of this Agreement and the Note; (ii) the Overdue Interest Rate to be
applied with respect to the principal balance of the Loan outstanding in
accordance with the provisions of Section 12.3 hereof; (iii) the amounts
referred to in Section 14 hereof, and (iv) all fees, charges, goods, things in
action or any sum or things of value ("Additional Sums") paid or payable by the
Borrower whether pursuant to this Agreement or any other Loan Document. If any
such Additional Sums may, under applicable law, be deemed to be interest with
respect to the lending transaction which is the subject of this Agreement, then,
for the purpose of any applicable law that may limit the maximum amount of
interest to be charged with respect to the lending transaction which is the
subject of this Agreement, such Additional Sums shall be payable by the Borrower
as, and shall be deemed to be, additional interest, and for such purposes only,
the agreed upon and "contracted for rate of interest" of this transaction shall
be deemed to be increased by the rate of interest resulting from the Additional
Sums.
19. NO BROKER.
The Borrower hereby represents and warrants to the Lender that no broker
retained by the Borrower brought about the transactions contemplated hereby and
each Borrower hereby agrees to indemnify and hold the Lender harmless from, any
and all
-34-
liabilities and costs (including with out limitation, costs of counsel) to any
person or entity claiming brokerage commissions or finder's fees on account of
such broker being retained by the Borrower in connection with this transaction.
20. SURVIVAL.
Each of the representations, warranties and covenants of the Borrower
contained herein shall survive the closing of the transactions herein
contemplated.
21. INDEMNIFICATION.
In addition to the Borrower's obligations and Lender's remedies provided
elsewhere in this Agreement: (a) the Borrower hereby indemnifies Lender and
agrees to hold Lender harmless against any and all liabilities, damages, losses,
claims, reasonable costs or expenses whatsoever, and to reimburse Lender for any
reasonable legal or other fees or expenses (including but not limited to legal
fees and expenses and the fees and expenses of expert witnesses) incurred by it
in connection with any claim or defending or prosecuting any action or
proceeding relating to the use, possession, ownership and operation of the
Aircraft; and (b) the Borrower hereby indemnifies the Lender and agrees to hold
Lender harmless against any and all liabilities, damages, losses, claims, costs
or expenses whatsoever and to reimburse Lender for any reasonable legal or other
fees or expenses incurred by it in connection with or arising out of or
resulting from any breach of warranty or material misrepresentation by the
Borrower, or the performance or non-performance of any covenant or obligation to
be performed on the part of the Borrower, under this Agreement, the Note or any
Loan Document, or arising out of or resulting from any misrepresentation or
omission from any certificate, instrument or paper delivered or to be delivered
by the Borrower to Lender pursuant to this Agreement or any Loan Document or in
connection with the transactions contemplated herein or therein.
22. WAIVER OF JURY.
EACH OF THE BORROWER AND LENDER IRREVOCABLY WAIVE THE RIGHT TO A TRIAL BY
JURY IN ANY ACTION OR PROCEEDING BROUGHT TO ENFORCE ANY PROVISION OF ANY OF THE
LOAN DOCUMENTS.
-35-
23. ASSIGNMENT, SUCCESSORS AND ASSIGNS.
23.1 The Borrower shall not assign any rights under this Agreement nor
shall any of the Borrower's duties hereunder or under the Note, the Security
Agreement, or any of the other Loan Document be assigned or delegated without
the prior written consent of Lender.
23.2 Lender may assign or obtain participations with other Persons in
regard to its rights hereunder and under the Note and any other Loan Document
and in respect of the Loan, provided only that no such assignment or
participation shall impose any greater obligation on the Borrower than set forth
herein or therein. Nothing contained in this Agreement, express or implied, is
intended to confer upon any person or entity, other than the parties hereto and
their permitted successor in interest and permitted assigns, any rights or
remedies under or by reason of this Agreement unless expressly herein stated to
the contrary. All covenants, representations, warranties and agreements of the
parties contained herein shall, subject to the provisions of the preceding
sentence, be binding upon and inure to the benefit of their respective
successors and permitted assigns.
24. CAPTIONS AND SECTION HEADINGS; CONSTRUCTION.
Captions and section headings used herein are for convenience only and are
not a part of this Agreement and shall not be used in construing it. This
Agreement and all documents executed in connection herewith shall be construed
without regard to the identity of the party which prepared the same, and no
presumption shall arise as a result thereof.
25. SEVERABILITY.
In the event that any one or more of the provisions of this Agreement, any
Loan Document, or the Note shall be invalid, illegal or unenforceable in any
respect or in any jurisdiction, the validity, legality and enforceability of the
remaining provisions contained herein therein or of the same provisions in any
other jurisdiction shall not in any way be affected or impaired thereby.
-36-
26. TIME OF THE ESSENCE.
Time is of the essence with respect to all of the payment and performance
obligations of the Borrower hereunder. Time is of the essence with respect to
all of the performance obligations of Lender hereunder.
27. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of which
shall constitute an original and, when taken together, all of which shall
constitute one and the same Agreement.
28. TERM OF AGREEMENT.
This Agreement and all covenants, agreements, representations and
warranties made herein shall survive the making by the Lender of the Loans and
the execution and delivery to the Lender of the Note and shall continue in full
force and effect until the payment in full of all of the Borrower's obligations
under the Loan Documents.
29. PERFORMANCE BY THE LENDER.
If the Borrower fails to perform any of its obligations under the Loan
Documents in a timely fashion, the Lender shall be entitled, but not obligated,
to perform such obligation at the expense of the Borrower. The Lender shall
promptly be reimbursed for all reasonable expenses incurred by it pursuant to
this Section 29 with interest from the date such expenses shall have been
incurred until such expenses shall have been paid in full in an amount equal to
the Overdue Interest Rate.
30. PUBLICITY. Lender is hereby authorized to issue appropriate press
releases and to cause a tombstone to be published announcing the consummation of
this transaction and the aggregate amount thereof.
-37-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers as of the day and year first
above written.
Borrower: Lender:
MERCY AIR SERVICE, INC. FINOVA CAPITAL CORPORATION
By: /s/ Xxxxx X. Xxxxxxxx By: /s/ Xxxxxx Xxxxxxxx
------------------------------- -------------------------------
Name: Xxxxx X. Xxxxxxxx Name: Xxxxxx Xxxxxxxx
----------------------------- -----------------------------
Title: President Title: Vice President
---------------------------- ----------------------------
-38-
APPENDIX "I" - REPAYMENT SCHEDULE
TO SECURED LOAN AGREEMENT
The Borrower shall repay the Loan in accordance with the amortization
schedule provided on the following three pages; provided, however, that on the
final Repayment Date, the Borrower shall repay the remaining unpaid principal
balance of the Loan, plus all interest accrued and unpaid on the Loan calculated
at the Interest Rate and all other amounts payable by the Borrower to the Lender
under the Loan Documents.
-39-
SCHEDULE I
PERMITTED INDEBTEDNESS
(i) a working capital facility in an amount not more than $700,000.00 with
California State Bank, N.A. or any other bank or financing party .
(ii) a loan from the Sellers to the Guarantor in an amount not to exceed
$1,500,000.00 (plus or minus 15% based on the actual purchase price in
connection with the stock and asset acquisition) which will be secured by
accounts receivable of the Borrower
-40-
