REIMBURSEMENT AGREEMENT
THIS REIMBURSEMENT AGREEMENT dated as of January 18, 1999, is
made by and between VANGUARD AIRLINES, INC., a Delaware
corporation having its principal place of business at 000 Xxxxxx
Xxxx Xxxxxx, Xxxxxx City International Airport, Xxxxxx Xxxx, XX
00000 ("Corporation"), in favor of X. X. XXXX CO., INC., a Nevada
Corporation ("Xxxx") and THE XXXXXXXXX 1980 REVOCABLE TRUST,
XXXXXXX XXXXXXXXX AS TRUSTEE (the "Xxxxxxxxx Trust")
(individually, a "Lender" and, collectively, the "Lenders").
RECITALS
A. Corporation has established with H & Q TSP II Investors,
LP a guaranty in favor of Michigan National Bank for the account
of the Corporation in the aggregate amount of Two Million Dollars
($2,000,000.00) (the "Guaranty") to secure and provide a source of
payments of the Corporation under the MNB Merchant Agreement, as
hereinafter defined.
B. Corporation has requested that Lenders arrange for the
issuance of letters of credit to be issued in favor of Michigan
National Bank for the account of the Corporation in the aggregate
amount of Four Million Dollars ($4,000,000) (the "Letters of
Credit") as additional collateral to secure and provide a source
of payments of the Corporation under the MNB Merchant Agreement.
C. Lenders are willing to arrange for the issuance of the
Letters of Credit, but only upon the condition, among others, that
Corporation shall have executed and delivered to Lenders this
Reimbursement Agreement.
AGREEMENT
NOW, THEREFORE, in order to induce Lenders to cause the
issuance of the Letters of Credit and for other good and valuable
consideration, the receipt and adequacy of which are hereby
acknowledged, and intending to be legally bound, the parties
hereto represent, warrant, covenant and agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1 DEFINITIONS. Unless otherwise defined herein
the following terms shall have the following meanings (such
meanings being equally applicable to both the singular and plural
forms of the terms defined):
"ACT OF BANKRUPTCY" shall mean the Corporation shall
commence a voluntary case or other proceeding in seeking
liquidation, reorganization, arrangement, readjustment of its
debts or for any other relief under the federal bankruptcy laws,
including the Federal Bankruptcy Code, as amended, or under any
other insolvency act or law, state or federal, now or hereafter
existing, or shall take any other action indicating its consent
to, approval of, or acquiescence in, any such petition or
proceedings; the Corporation shall apply for, or consent to or
acquiesce in, the appointment of a receiver, liquidator,
custodian, sequestrator, or a trustee for all or a substantial
part of its property; the Corporation shall make an assignment for
the benefit of its creditors; the Corporation shall be unable, or
shall admit in writing its inability, to pay its debts when due;
or a petition in bankruptcy shall be filed against the
Corporation, as a debtor, under any applicable bankruptcy,
insolvency or similar law as now or hereafter in effect which
shall not be discharged by a court of competent jurisdiction
within sixty (60) days of the date of such filing.
"AGREEMENT" shall mean this Reimbursement Agreement
together with all duly authorized and executed amendments thereto.
"APPLICATIONS" shall mean that certain Applications and
Agreements for the Standby Letters of Credit by and between
Issuing Bank and Lenders in connection with the Letters of Credit
to be issued to and MNB.
"BUSINESS DAY" shall mean any day other than (i) a
Saturday or Sunday, (ii) a day on which banking institutions in
the States of California, Michigan or Missouri are authorized or
required by law or executive order not to be open for the conduct
of their commercial banking business, or (iii) a day on which the
federal reserve bank for the federal reserve district in which MNB
is located is closed.
"COLLATERAL" shall have the meaning assigned to such term
in SECTION 2 of the Security Agreement.
"DATE OF DELIVERY" shall mean January 18, 1999 or any
other date agreed upon by the Corporation and Lenders as the date
upon which the Letters of Credit shall be issued to MNB.
"DEFAULT RATE" shall mean a rate per annum equal to five
(5) percentage points above the interest rate applicable
immediately prior to the occurrence of the Event of Default.
"DRAWING" shall mean a drawing under the Letters of
Credit in accordance with their terms.
"EVENT OF DEFAULT" shall have the meaning set forth in
SECTION 7.1 hereof.
"INTEREST RATE" shall mean [nine percent (9%)] per annum.
"ISSUING BANK" shall mean Xxxxx Fargo Bank or Bank of
America National Trust and Savings Association acting through its
Chicago branch, or any surviving, resulting or transferee entity,
whichever is applicable.
"LETTERS OF CREDIT" shall mean the Letters of Credit
arranged by Lenders and issued by a Issuing Bank pursuant to the
Applications on the Date of Delivery, as the same may from time to
time be amended, modified, supplemented or restated, and shall
include any substitute Letter of Credit issued pursuant to
Lenders' obligations hereunder including without limitations any
replacement Letters of Credit in connection with the switch of
credit card processors.
"MAXIMUM CREDIT" initially shall mean, as of any date of
calculation, the aggregate maximum amount available to be drawn
under the Letters of Credit. Initially, the Maximum Credit shall
be $2,000,000 for Xxxx and $2,000,000 for the Xxxxxxxxx Trust, or,
collectively for the lenders, $4,000,000.
"MNB" shall mean Michigan National Bank, a national
banking association with its principal office located at or any
surviving, resulting or transferee entity.
"MNB MERCHANT AGREEMENT" shall mean any Merchant
Agreement between Corporation and MNB that may be entered into
with respect to credit card processing, as the same may from time
to time be amended, modified, supplemented or restated.
"PERSON" shall mean any individual, sole proprietorship,
partnership, limited liability company, limited liability
partnerships, joint venture, trust, unincorporated organization,
association, corporation, institution, public benefit corporation,
firm, joint stock corporation, estate, entity or governmental
agency.
"REIMBURSEMENT LOAN NOTE" shall mean the note evidencing
the Reimbursement Loans, substantially in the form attached hereto
as EXHIBITS A AND B.
"REIMBURSEMENT LOANS" shall mean the reimbursement loans
described in SECTION 2.8 hereof.
"SECURITY AGREEMENT" shall mean that certain Security
Agreement dated as of January 18, 1999 made by Corporation in
favor of Lenders.
"TERMINATION DATE" shall mean the date determined in the
manner provided in SECTION 2.7 hereof.
"TRANSACTION DOCUMENTS" means, collectively, this
Agreement, the Security Agreement, the Reimbursement Loan Note,
and any other agreement entered into between Corporation and
Lender, and any certificate or instrument executed by Lender, in
connection with said agreements and note, as the same may from
time to time be amended, modified, supplemented or restated.
SECTION 1.2 CONSTRUCTION. In this Agreement, unless the
context otherwise requires:
(A) Articles and Sections referred to by number shall
mean the corresponding Articles and Sections of this Agreement.
(B) The terms "hereby," "hereof," "hereto," "herein,"
"hereunder," and any similar terms, as used in this Agreement
refer to this Agreement, and the term "hereafter" shall mean
after, and the term "heretofore" shall mean before the date of
execution of this Agreement.
(C) Words of the masculine gender shall be deemed and
construed to include correlative words of the feminine and neuter
genders. Words importing the singular number shall include the
plural number and vice versa, and words importing persons shall
include corporations and associations, including public bodies, as
well as natural persons.
ARTICLE 2
LETTER OF CREDIT
SECTION 2.1 AMOUNT AND TERMS OF LETTER OF CREDIT. At the
request of Corporation, each Lender agrees, on the terms and
subject to the conditions set forth in this Agreement, including
without limitation the conditions set forth in ARTICLE 3 hereof,
to on or before the applicable Date of Delivery cause the issuance
of a Letter of Credit by a Issuing Bank, in favor of MNB, for the
account of Corporation, to secure, and to provide a source of
payment of the obligations of the Corporation under the MNB
Merchant Agreement. The Letters of Credit will be issued in an
initial aggregate amount equal to the Maximum Credit. The Letters
of Credit shall be issued in favor of MNB for the account of the
Corporation substantially in the form of EXHIBIT C and EXHIBIT D
attached hereto.
SECTION 2.2 DRAWINGS AND REINSTATEMENT.
(A) Drawings under the Letters of Credit are intended
to be made by MNB for the account of the Corporation and to be
honored by Issuing Bank, all pursuant to the provisions, on the
terms and subject to the conditions set forth in the applicable
Letter of Credit. The honoring of any Drawing shall automatically
reduce by like amount the Maximum Credit. No Drawing under the
Letters of Credit shall be honored in an amount exceeding the
Maximum Credit.
(B) The Maximum Credit, or any lesser amount, may be
reinstated by Lenders at its sole option, provided Lenders has
been reimbursed by Corporation any such amounts to be reinstated.
SECTION 2.3 FEES AND OTHER PAYMENT.
(A) The Corporation hereby agrees to pay to or
reimburse Lenders:
(I) On or before a Date of Delivery, the
origination fees paid to an Issuing Bank;
(II) On or before a Date of Delivery, an amount
equal to all costs and expenses (including attorneys' fees and
expenses) incurred by Lenders in connection with the preparation
and negotiation of this Agreement, the Reimbursement Loan Note,
the other Transaction Documents and the closing of the
transactions contemplated hereby; provided, however, such
attorney's fees and expenses shall not exceed Five Thousand
Dollars ($5,000.00);
(III) On demand from time to time from Lenders,
any fees or other amounts (not otherwise reimbursed by Corporation
to Lenders pursuant to SECTION 2.4 hereof) required to be paid by
Lenders to the Issuing Bank in connection with the Letters of
Credit, including, without limitation, a one percent (1%) per
annum fee, payable quarterly by Lenders to Issuing Bank;
(IV) On demand from time to time by Lenders, an
amount equal to all costs and expenses (including attorneys' fees
and expenses) (not otherwise reimbursed by Corporation to Lenders
pursuant to SECTION 2.4 hereof) incurred by Lenders relative to a
Drawing under a Letter of Credit;
(V) On demand from time to time by Lenders, an
amount equal to all costs and expenses (including attorneys' fees
and expenses) incurred by Lenders relative to the Letters of
Credit (not otherwise reimbursed by Corporation to Lenders
pursuant to this SECTION 2.3 or SECTION 2.4) or each Reimbursement
Loan or the enforcement or preservation of any rights of Lenders
under this Agreement, the other Transaction Documents, each
Reimbursement Loan or the Reimbursement Loan Note, or in
connection with the exercise or waiver of any of Lenders'
discretionary rights under this Agreement, the Reimbursement Loan
Note or under the other Transaction Documents; and,
(VI) On demand from time to time by Lenders,
interest, at the Default Rate, on any and all amounts unpaid by
the Corporation when due under this Agreement or the Reimbursement
Loan Note, but in no event shall such rates exceed the maximum
rate of nonusurious interest allowed from time to time by law, as
is now or, to the extent allowable by law, as hereinafter may be
in effect, to be paid by the Corporation.
Each such payment or reimbursement shall be deemed to be
earned in full the date on which such amount is due and payable by
the Corporation.
(B) The Corporation agrees to pay, on demand from time
to time by the Lenders, all reasonable costs and expenses incurred
by the Lenders, in connection with (i) any transfer or amendment
of the Letter of Credit or amendment of this Agreement, (ii) any
review by the Lenders of the documents necessary for Lenders to
honor a Drawing under the Letter of Credit, or relative to the
Lenders' curing of any event of default by Borrower under any of
the Transaction Documents, (iii) the exercise, enforcement or
preservation of any rights of Lenders under this Agreement, (iv)
any action or proceeding relating to a court order, injunction, or
other process or decree restraining or seeking to restrain Lenders
from paying any amount under the Letter of Credit, and (v) the
waiver or amendment of any of the Lenders' rights under any of the
Transaction Documents; PROVIDED, HOWEVER, that no payment shall be
required under this SECTION 2.3(B) in respect of any cost or
expense Lenders has incurred because of its gross negligence or
willful misconduct if so determined by a court of competent
jurisdiction.
SECTION 2.4 REIMBURSEMENT. The Corporation agrees to pay
to or reimburse Lenders in full for any and all Drawings made
under the Letter of Credit on the date any Drawing is made. Any
amount drawn under a Letter of Credit shall be, to the extent
permitted by and in accordance with SECTION 2.8 hereof,
automatically converted
into a Reimbursement Loan. A Reimbursement Loan, when made, will
satisfy the reimbursement obligation of the Corporation to Lenders
in the principal amount of such Reimbursement Loan.
SECTION 2.5 SECURITY. The obligations of the Corporation
under this Agreement, including, without limitation, the
Corporation's obligations to make payments under SECTIONS 2.3 and
2.4 hereof, are secured by the Collateral identified and described
as security therefore in the Security Agreement.
SECTION 2.6 PLACE OF PAYMENT. All payments to be made by
the Corporation to the Lenders hereunder shall be made in lawful
currency of the United States of America and in immediately
available funds by wire to the following accounts to the
appropriate Lender:
X. X. Xxxx Co., Inc.
c/o Wells Fargo Bank
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX
ABA # 000000000
Account # 4776-019002
The Xxxxxxxxx 1980 Revocable Trust
c/o Union Bank of California
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
ABA: 121000496
Account #: 0012913414
Account Name: Xxxxxxx X. Xxxxxxxxx Account
or at such other address as Lenders may specify from time to time
by notice to the Corporation.
SECTION 2.7 TERMINATION OF AGREEMENT. This Agreement
(except for the obligations of the Corporation set forth in
SECTIONS 2.3(B) and 9.4) shall terminate at such time as the
Letters of Credit shall have expired and when all amounts due and
payable to Lenders hereunder shall be paid in full (the
"Termination Date").
SECTION 2.8 REIMBURSEMENT LOANS.
(A) Each Lender agrees, upon the terms, subject to the
conditions and relying upon the representations and warranties set
forth in this Agreement and the other Transaction Documents, that,
unless an Event of Default shall have occurred and be continuing a
Drawing under a Letter of Credit that is not repaid in full by the
Corporation on the date thereof shall automatically be converted
into a Reimbursement Loan. On and as of the date of the making of
each Reimbursement Loan, the Corporation shall be deemed to have
(A) remade, ratified and confirmed all representations and
warranties of the Corporation contained in SECTION 5.1 of this
Agreement, and (B) certified compliance with all covenants
contained in ARTICLE 6 hereof.
(B) The principal amount of each Reimbursement Loan
shall not exceed the applicable Maximum Credit available under the
Letter of Credit on such date. All the Reimbursement Loans with
each Lender shall be evidenced by a single Reimbursement Loan Note
to each Lender substantially in the forms of EXHIBIT A and EXHIBIT
B hereto with appropriate insertions, duly executed and delivered
by the Corporation to the respective Lender, dated by each Lender
on the attached schedule the date of each Drawing under a Letter
of Credit that gives rise to a Reimbursement Loan, and payable to
a Lender or its assigns in an amount equal to the amount drawn on
the Letter of Credit that is not reimbursed as provided in the
first sentence of SECTION 2.4 of this Agreement. The principal
amount of each Reimbursement Loan, together with any unpaid and
accrued interest thereon, shall be due and payable on the later of
(a) the first anniversary of such Reimbursement Loan or (b) such
time as the Letter of Credit shall have expired.
(C) Each Reimbursement Loan shall bear interest at the
Interest Rate. Such interest shall be calculated on the basis of
a 365 or 366 day year and actual number of days elapsed. Lenders
shall, and is hereby authorized by the Corporation to, date the
schedule attached to the Reimbursement Loan Notes the date of any
Drawing under a Letter of Credit that is not reimbursed as
provided in the first sentence of SECTION 2.4 of this Agreement
and insert the amount (or the portion thereof not so reimbursed,
as the case may be), and endorse on such schedule an appropriate
notation evidencing the date and amount of each repayment and any
other information provided for on such schedule; PROVIDED,
HOWEVER, that the failure of Lenders to insert any such date or
amount or set forth such repayments and other information on such
schedule shall not in any manner affect the obligation of the
Corporation to repay the related Reimbursement Loans in accordance
with the terms of this Agreement.
(D) Lenders agree that the Corporation may prepay a
Reimbursement Loan in whole or in part without premium or penalty
at any time.
ARTICLE 3
CONDITIONS PRECEDENT TO ISSUANCE
OF LETTER OF CREDIT
SECTION 3.1 DOCUMENTS TO BE RECEIVED. Lenders' obligations
to cause the issuance of the Letters of Credit as set forth in
SECTION 2.1 hereof are subject to the conditions precedent that,
on or prior to the Date of Delivery, Lenders shall receive the
following documents, all in form and substance satisfactory to
Lenders:
(A) executed counterparts of this Agreement, the
Security Agreement and the Reimbursement Loan Note, which shall be
duly executed and dated by the Corporation (except for the
schedule attached thereto, which shall be undated and blank as to
amount);
(B) a certificate of the appropriate officer(s) of the
Corporation certifying (i) that the statements contained in
SECTIONS 3.2(A) and 5.1 are true and correct, (ii) the name and
true signatures of the officers of the Corporation authorized to
sign this Agreement and the other documents to be delivered by the
Corporation hereunder and (iii) as to such other matters as
Lenders shall determine, in substantially the form attached hereto
as EXHIBIT E;
(C) all filings, notices and recordings necessary to
perfect the security interest granted Lenders pursuant to the
Security Agreement shall have been delivered to Lenders;
(D) the Warrant duly executed and delivered by
Corporation in the form attached hereto as EXHIBIT F;
(E) such other documents, certificates, instruments,
approvals or filings as Lenders may reasonably deem necessary or
appropriate.
SECTION 3.2 OTHER CONDITIONS PRECEDENT. The Lenders'
obligation to cause the issuance of the Letters of Credit as set
forth in SECTION 2.1 hereof shall be subject to the additional
conditions precedent that:
(A) the following statements shall be true and correct
on a Date of Delivery and Lenders shall have received a
certificate signed by a duly authorized officer of the
Corporation, dated the Date of Delivery to the following effect
and to such other effects as the Lenders may request,
substantially in the form attached hereto as EXHIBIT E:
(I) the representations and warranties of the
Corporation set forth in SECTION 5.1 hereof and in the other
Transaction Documents are true and correct as of the Date of
Delivery as though made on and as of such date;
(II) no event has occurred and is continuing, or
would result directly or indirectly from the issuance of the
Letters of Credit, which constitutes an Event of Default hereunder
or which would constitute such an Event of Default, but for the
requirement that notice be given or time elapse, or both; and
(III) no "event of default" (however defined or
designated) has occurred under any of the Transaction Documents,
and no event has occurred and is continuing which would constitute
such an event of default, but for the requirement that notice be
given or time elapse, or both.
(B) On or before the Date of Delivery, the Corporation
shall have duly adopted a resolution authorizing the execution,
delivery and performance by the Corporation of the Transaction
Documents to which it is a party, and on and after the Date of
Delivery such resolution shall continue to be in full force and
effect.
ARTICLE 4
OBLIGATIONS OF THE CORPORATION
SECTION 4.1 OBLIGATIONS OF THE CORPORATION.
(A) The obligations of the Corporation under this
Agreement shall be absolute, unconditional and irrevocable, and
shall be performed strictly in accordance with the terms of this
Agreement, under all circumstances whatsoever, including without
limitation the following circumstances:
(I) any lack of validity or enforceability of any
of the Transaction Documents (other than this Agreement) or any
other agreement or instrument contemplated thereby or related
thereto;
(II) any amendment or waiver of or any consent to
departure from all or any of the documents contemplated hereby;
(III) the existence of any claim, setoff,
defense or other rights which the Corporation may have at any time
against any beneficiary or any transferee of a Letter of Credit
(or any Persons for whom such beneficiary may be acting), the
Lenders or any other Person, whether in connection with the
Transaction or any unrelated transaction;
(IV) any breach of contract or other dispute
between the Corporation and any beneficiary of the Letters of
Credit (or any persons or entities for whom any such beneficiary
may be acting), Lenders, Issuing Bank, Bank or any other Person;
(V) any statement or any other document presented
under the Transaction Documents proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect whatsoever;
(VI) payment by the Issuing Bank under the Letters
of Credit against presentation of a sight draft or certificate
which does not comply with the terms of the Letter of Credit,
provided that such payment shall not have constituted an act of
gross negligence or willful misconduct by Lenders as determined by
a court of competent jurisdiction; or
(VII) any delay, extension of time, renewal,
compromise or other indulgence or modification granted or agreed
to by Lenders, with or without notice to or approval by the
Corporation, as the case may be, in respect of any of the
Corporation's indebtedness to Lenders under this Agreement.
(B) Lenders shall not be deemed to have waived or
released any of its rights or remedies (whether specified in or
arising under this Agreement or otherwise available to it by law
or agreement) unless it signs a written waiver or release. Delay
or failure to act on the Lenders' part shall not constitute a
waiver of or otherwise preclude enforcement of any of its rights
and remedies. All of Lenders' rights and remedies shall be
cumulative and may be exercised singularly or concurrently.
Lenders need not resort to any particular right or remedy before
exercising or enforcing any other, and Lenders' resort to any
right or remedy shall not preclude the exercise or enforcement of
each other right and remedy.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
SECTION 5.1 REPRESENTATIONS AND WARRANTIES OF THE
CORPORATION.
The Corporation represents and warrants as follows:
(A) ORGANIZATION AND POWERS. The Corporation is a
corporation duly organized and validly existing under the laws of
the State of Delaware and is authorized to transact business and
exercise its power under the applicable laws of any state in which
the conduct of its business or its ownership of property requires
that it be so qualified except where failure to do so would not
have a material adverse effect on the ability of the Corporation
to conduct its business as currently conducted or as proposed or
contemplated to be conducted.
(B) AUTHORIZATION AND ABSENCE OF CONFLICTS. The
execution, delivery and performance of the Transaction Documents
(i) have been duly authorized by all necessary action on the part
of the Corporation, (ii) do not and will not conflict with, or
result in a violation of, any provision of law, or any order,
writ, rule or regulation of any court or governmental agency or
instrumentality binding upon or applicable to the Corporation and
(iii) do not and will not conflict with, result in a violation of,
or constitute a default under, any resolution, material agreement
or instrument to which the Corporation is a party or by which the
Corporation or any of its property is bound.
(C) BINDING OBLIGATION. Each of the Transaction
Documents will be a valid and binding obligation of the
Corporation enforceable in accordance with its terms.
(D) GOVERNMENTAL CONSENT OR APPROVAL. No consent,
approval, permit, authorization or order of, or registration or
filing with, any court or governmental agency, authority or other
instrumentality not already obtained, given or made is required on
the part of the Corporation for the execution, delivery and
performance by the Corporation of any of the Transaction
Documents.
(E) ABSENCE OF LITIGATION. There is no action, suit,
proceeding, inquiry or investigation, at law or in equity, before
or by any court, arbitrator, governmental or other board, body or
official, pending or, to the best knowledge of the Corporation,
threatened against or affecting the Corporation, questioning the
validity of any proceeding taken or to be taken by the Corporation
in connection with the execution, delivery and performance by the
Corporation of the Transaction Documents or seeking to prohibit,
restrain or enjoin the execution, delivery or performance by the
Corporation of any of the foregoing, nor, to the best knowledge of
the Corporation, is there any basis therefor, wherein an
unfavorable decision, ruling or finding would (i) adversely affect
the validity or enforceability of, or the authority or ability of
the Corporation to perform its obligations under the Transaction
Documents or (ii) have a material adverse effect on the ability of
the Corporation to conduct its business as currently conducted or
as proposed or contemplated to be conducted.
(F) NO DEFAULTS BY THE CORPORATION. The Corporation is
not in default in the performance, observance or fulfillment of
any
of the obligations, covenants or conditions contained in any
agreement or instrument to which the Corporation is a party or by
which the Corporation or any of its property is bound, except for
such defaults as would not have a material adverse effect on the
ability of the Corporation to conduct its business as currently
conducted or as proposed or contemplated to be conducted.
(G) INCORPORATION OF REPRESENTATIONS. The Corporation
hereby makes to the Lenders the same representations and
warranties as are made by the Corporation and set forth in any
other Transaction Documents, which representations and warranties,
as well as the defined terms contained therein (or in such defined
terms), are hereby incorporated by reference with the same effect
as if each and every such representation and warranty and defined
term were set forth herein in its entirety. No amendment to such
representations and warranties or defined terms made pursuant
thereto shall be effective to amend such representations and
warranties and defined terms as incorporated by reference herein
without the consent of Lenders.
(H) COMPLIANCE WITH LAWS. The Corporation is in
material compliance with all provisions of applicable law.
ARTICLE 6
COVENANTS OF THE CORPORATION
SECTION 6.1 AFFIRMATIVE COVENANTS. So long as the
Termination Date has not occurred or so long as any amount is due
and owing to Lenders hereunder, the Corporation will, unless
Lenders otherwise shall consent in writing:
(A) DELIVERY OF INFORMATION, REPORTS AND OPINIONS.
Furnish to Lenders the following: (i) as soon as possible and in
any event within two (2) Business Days after the occurrence of (A)
each Event of Default or any event or condition that, with the
passage of time or the giving of notice or both, would constitute
an Event of Default, under this Agreement, and (B) each "event of
default" (however defined or designated) or any event or condition
that, with the passage of time or the giving of notice or both,
would constitute an "event of default" under any Transaction
Document, a statement of an officer of the Corporation setting
forth details thereof and the action which the Corporation
proposes to take with respect thereto; (ii) audited financial
statements, if any, of the Corporation within ten (10) days after
the Corporation's receipt of the same from the respective
accountants; and (iii) as promptly as practicable, written notice
to the Lenders of all proceedings before any court or governmental
authority which, if adversely determined, would materially and
adversely
affect (i) the ability of the Corporation to pay when due the
principal of or any interest on the Reimbursement Loan Note or
(ii) the priority or enforceability of Lenders' security interest
in the collateral.
(B) PAYMENT OF INDEBTEDNESS. Duly and punctually pay or
cause to be paid all principal and interest on the indebtedness of
the Corporation legally due and owing to third parties, comply
with and perform all conditions, terms and obligations of the
notes or bonds evidencing such indebtedness and the security
agreements, deeds of trust and mortgages securing such
indebtedness, and upon being notified of or learning of a default
or having made a determination not to pay an indebtedness when
due, promptly inform Lenders of any such default, or anticipated
default, under any such note, bond, security agreement, deed of
trust or mortgage, and forward to the Lenders a copy of any notice
of default or notice of an event that might result in default
under any such note, bond, security agreement, deed of trust or
mortgage;
(C) ACCESS TO RECORDS AND AUDIT. Upon reasonable
notice to Corporation (unless an Event of Default has occurred and
is continuing, in which case no notice is necessary) (i)
Corporation shall permit Lenders to at all times have full and
free access during normal business hours to all the books and
records and correspondence of Corporation, and Lenders or any
agents or representatives of Lenders may examine the same, take
extracts therefrom and make photocopies thereof, and Corporation
agrees to render to Lenders, at Corporation's cost and expense,
such clerical and other assistance as may be reasonably requested
with regard thereto and (ii) Corporation shall permit Lender to
discuss the Corporation's financial affairs with the Corporation's
accountants; and permit Lenders to have all rights of the
Corporation to audit, copy or make extracts of the records of MNB
as are specified under the MNB Merchant Agreement and applicable
to the Corporation's account.
(D) RELATED COVENANTS. Fully and faithfully perform
each of the covenants and agreements required of it pursuant to
the provisions of the Transaction Documents;
(E) FURTHER ACTION. At any and all times, insofar as it
may be authorized to do so by law, pass, make, do, execute,
acknowledge and deliver all and every such further resolutions,
acts, deeds, conveyances, assignments, recordings, filings,
transfers and assurances as may be necessary or reasonably
desirable for the better assuring, conveying, granting, assigning
and confirming the amounts due hereunder and under the
Reimbursement Loan Note, or intended so to be, or which the
Corporation may hereafter become bound to pledge or assign
thereto;
(F) COMPLIANCE WITH LAWS. Comply in all material
respects with all applicable (A) laws (including, rules,
regulations, writs, decrees and orders of all Federal, state,
local or foreign courts or governmental agencies, authorities,
instrumentalities or regulatory bodies and (B) rules, regulations
and requirements necessary to maintain its operating and business
licenses, authorizations and permits;
(G) INCORPORATION OF COVENANTS. The Corporation hereby
makes to Lenders the same covenants as are made by the Corporation
and set forth in any other Transaction Document, which covenants,
as well as the defined terms contained therein (or in such defined
terms), are hereby incorporated by reference with the same effect
as if each and every such covenant and defined term were set forth
herein in its entirety. No amendment to such covenants or defined
terms made pursuant thereto shall be effective to amend such
covenants and defined terms as incorporated by reference herein
without the consent of the Lenders.
SECTION 6.2 NEGATIVE COVENANTS. So long as the Termination
Date has not occurred or any amount remains due and owing to
Lenders hereunder, unless the Lenders otherwise shall consent in
writing, the Corporation agrees not to issue any indebtedness
which would be secured (whether on a senior, parity or junior lien
basis) by any pledge of or security interest in the Collateral.
ARTICLE 7
EVENTS OF DEFAULT
SECTION 7.1 EVENTS OF DEFAULT. The occurrence of any of
the following events shall be an "Event of Default" hereunder
unless waived by Lenders pursuant to SECTION 9.1 hereof:
(A) the Corporation shall fail to pay when due any
amount specified under the terms of this Agreement, including,
without limitation, amounts due under any of the Reimbursement
Loan Notes;
(B) any representation or warranty made by the
Corporation pursuant to SECTION 5.1 hereof or under the Security
Agreement or any other Transaction Document shall prove to have
been incorrect in any material respect when made;
(C) the Corporation shall fail to perform or observe
any other term, covenant or agreement contained in this Agreement
(other than those specifically referenced in SECTION 7.1(A) and
(B) above) or any other Transaction Document and such failure
shall remain unremedied for thirty (30) days after written notice
thereof shall have been given to the Corporation, by Lenders;
(D) an "event of default" (however defined or
designated) under any Transaction Document shall have occurred and
be continuing;
(E) an event of default under any indebtedness of the
Corporation from time to time outstanding or under any agreement
to which Borrower is a party with a third party or parties
resulting in a right by such third party or parties, whether or
not exercised, to accelerate the maturity of any indebtedness in
an amount in excess of Five Hundred Thousand Dollars ($500,000) or
that could materially and adversely affect the ability of the
Corporation to pay when due the principal of or any interest on
any outstanding amounts under a Reimbursement Loan Note.
(F) any material provision of this Agreement or the
other Transaction Documents shall at any time for any reason cease
to be valid and binding on the Corporation, or shall be declared
to be null and void, or the validity or enforceability thereof
shall be contested by the Corporation or any governmental agency
or authority, and the happening of the events heretofore set forth
in this SUBSECTION (F) shall materially and adversely affect
Lenders' rights under this Agreement or under any other
Transaction Document, including its security interest in the
collateral or the Corporation shall deny that it has any or
further liability or obligation under this Agreement or any other
Transaction Document;
(G) Lenders shall fail to have a valid and enforceable
perfected first priority security interest under the Security
Agreement, subject only to the Permitted Liens;
(H) The occurrence of (or with the giving of notice,
lapse of time, determination of materiality or the fulfillment of
any other applicable condition or any combination of the
foregoing, might constitute) a default by Borrower under, or the
termination of, the Credit Card Agreement; or
(I) an Act of Bankruptcy.
ARTICLE 8
RIGHTS AND REMEDIES
SECTION 8.1 RIGHTS AND REMEDIES.
(A) DEFAULTS UNDER THIS AGREEMENT. Upon the occurrence
of an Event of Default hereunder, or at any time thereafter while
such default continues, Lenders, in their sole discretion, may do
any one or more of the following:
(I) send notice of such Event of Default to the
Corporation;
(II) declare the Reimbursement Loan Note, if
outstanding, and any and all amounts due and owing under this
Agreement or under the other Transaction Documents, to be
immediately due and payable;
(III) terminate the Letter of Credit; and
(IV) exercise any rights and remedies available to
it by law or under this Agreement, the Security Agreement, any
other Transaction Document or any other agreement, document or
instrument contemplated hereby.
(B) DEFAULTS UNDER THE MERCHANT AGREEMENTS. Lenders may
cure an event of default under the MNB Merchant Agreement;
PROVIDED, HOWEVER, that nothing contained herein shall obligate
Lenders to cure any such event of default.
ARTICLE 9
MISCELLANEOUS
SECTION 9.1 MODIFICATION OF AGREEMENT. No modification or
waiver of any provision of this Agreement, and no consent to any
departure by the Corporation therefrom, shall be effective unless
the same shall be in writing and signed by Lenders and the
Corporation and no modification or waiver of any provision of the
Letters of Credit, and no consent to any departure by the
Corporation or MNB therefrom, shall in any event be effective
unless the same shall be in writing and signed by Lenders. Any
such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice to or
demand on the Corporation in any case shall entitle the
Corporation to or any other or further notice or demand in the
same, similar or other circumstances.
SECTION 9.2 WAIVER OF RIGHTS BY LENDERS; REMEDIES. No
course of dealing or failure or delay on the part of Lenders in
exercising any right, power or privilege hereunder or under the
Letters of Credit shall operate as a waiver hereof or thereof, nor
shall a single or partial exercise thereof preclude any other or
further exercise or the exercise of any other right, power or
privilege. The rights of Lenders under this Agreement are
cumulative and not exclusive of any rights or remedies which
Lenders would otherwise have.
SECTION 9.3 NOTICES. All notices, requests, consents and
other communications hereunder shall be in writing and shall be
deemed effectively given: (i) upon personal delivery to the party
to be notified; (ii) upon receipt at the address specified below
after having been sent by certified or registered mail, return
receipt requested, postage prepaid; or (iii) one (1) day after
deposit with a nationally recognized overnight courier, specifying
next day delivery, with written verification of receipt. All
communications shall be sent to the party to be notified at the
address set forth below:
If to the Corporation:
Vanguard Airlines, Inc.
0000 Xxxxxx Xxxx
Xxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxx, Vice President
and General Counsel
Facsimile: (000) 000-0000
If to Lenders:
X. X. Xxxxxxxxx & Company
attn: Xxxxxxx X. Xxxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Facsimile: 000-000-0000
X. X. Xxxx Co., Inc.
attn: Xxxxxx Xxxx, Xx.
000 Xxxx Xxxxxx Xxxx
Xxxxxx, XX 00000-0000
Facsimile: 000-000-0000
or, in any such case, at such other address or addresses as shall
have been furnished in writing by such party to the others.
SECTION 9.4 INDEMNIFICATION. In addition to other amounts
payable by the Corporation under this Agreement, the Corporation
hereby agrees to the fullest extent permitted by applicable law,
to protect, defend, indemnify and hold harmless each Lender and,
its affiliates and assignees, the Issuing Banks, and their
respective directors, officers, employees, agents, counsel,
successors and assigns from and against any and all claims,
demands, judgments, damages, actions, injuries, losses,
liabilities, penalties, costs, charges and expenses whatsoever
which such Person may (or which may be claimed against such Person
whatsoever), including, without limitation, the fees and expenses
of counsel for such Person by reason of or in connection with: (a)
the issuance of the Letters of Credit; or (b) the Transaction
Documents or any act or omission by them with respect thereto,
including all reasonable fees or expenses resulting from the
settlement or defense of any claims or liabilities arising as a
result of any such breach or default; PROVIDED, HOWEVER, that the
Corporation shall not be required to indemnify any such Person for
any claims, demands, damages, losses, liabilities, costs, charges
and expenses to the extent, but only to the extent, that a court
of competent jurisdiction determines that resulted from the gross
negligence or willful misconduct of such Persons. The
indemnification obligations in this SECTION 9.4 shall survive the
expiration of this Agreement or the Letters of Credit.
SECTION 9.5 LIABILITY OF LENDERS. The Corporation assumes
all risks of the acts or omissions of MNB and any transferee of
the Letters of Credit with respect to its use of the Letters of
Credit or the proceeds thereof; PROVIDED, HOWEVER, this assumption
is not intended to, and shall not, preclude the Corporation from
pursuing such rights and remedies as it may have against MNB at
law or under the MNB Merchant Agreement or any other agreement.
Neither the Lenders nor any Person participating in the Letters of
Credit or the Reimbursement Loan Note shall be liable or
responsible for: (a) the use which may be made of the Letters of
Credit or the proceeds thereof or for any acts or omissions of MNB
and any transferee of the Letters of Credit in connection
therewith; (b) the validity, sufficiency or genuineness of
documents presented under the Letters of Credit, or of any
endorsement(s) thereon, even if such documents should in fact
prove to be in any or all respects invalid, insufficient,
fraudulent or forged; PROVIDED, HOWEVER, (a) and (b) to the
contrary notwithstanding, the Corporation shall have a claim
against the Lenders, and the Lenders shall be liable to the
Corporation, to the extent, but only to the extent, of any direct,
as opposed to consequential, damages suffered by the Corporation
which the Corporation proves, as determined by a court of
competent jurisdiction, were caused by (i) Lenders' gross
negligence or (ii) Lenders' willful act that prevents payment
under the Letters of Credit after the presentation to Issuing Bank
by MNB (or a successor under the MNB Merchant Agreement to whom
the Letters of
Credit has been transferred in accordance with its terms) of a
sight draft and all required certificates strictly complying with
the terms and conditions of the Letters of Credit. In furtherance
and not in limitation of the foregoing, the Lenders may accept
documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice
or information to the contrary; PROVIDED, HOWEVER, that if Lenders
shall receive timely written notification from each of MNB or the
Corporation and that sufficiently identifies (in the reasonable
opinion of Lenders) documents that thereafter may be presented to
Issuing Bank or Lenders which are not to be honored, Lenders
agrees to use its best efforts to avoid honoring such documents
thereafter. Lenders assumes no responsibility for any failure or
delay in the transmission to MNB of funds drawn under the Letters
of Credit through the federal funds wire system.
SECTION 9.6 PARTICIPATIONS. Lenders may participate to
other Persons and institutions of the Lenders' choosing all or any
portion of its obligations under the Letter of Credit and the
obligations of the Corporation under the Reimbursement Loan Note.
No such participation shall relieve the Lenders of its obligations
hereunder nor shall it cause an increase in Corporation's
obligations under this Agreement, including under SECTION 2.3(B)
above.
SECTION 9.7 SATISFACTION REQUIREMENT. If any agreement,
certificate or other writing, or any action taken or to be taken,
is by the terms of this Agreement required to be satisfactory to
the Lenders, the determination of such satisfaction shall be made
by Lenders in its sole and exclusive judgment exercised in good
faith.
SECTION 9.8 GOVERNING LAW. In all respects, including all
matters of construction, validity and performance, this Agreement,
the Reimbursement Loan Note and the other Transaction Documents,
and any obligations arising hereunder or thereunder, shall be
governed by, and construed and enforced in accordance with, the
laws of the State of California applicable to contracts made and
performed in such state, without regard to the principles thereof
regarding conflict of laws.
SECTION 9.9 WAIVER OF JURY TRIAL. THE CORPORATION HEREBY
WAIVES TRIAL BY JURY IN ANY LITIGATION IN ANY COURT WITH RESPECT
TO, IN CONNECTION WITH, OR ARISING OUT OF THIS AGREEMENT, THE
REIMBURSEMENT LOAN NOTE, THE OTHER TRANSACTION DOCUMENTS OR ANY
INSTRUMENT OR DOCUMENT DELIVERED PURSUANT TO THIS AGREEMENT, THE
REIMBURSEMENT LOAN NOTE OR THE OTHER TRANSACTION DOCUMENTS, OR THE
VALIDITY, PROTECTION, INTERPRETATION, COLLECTION OR ENFORCEMENT
THEREOF, OR ANY OTHER CLAIM OR DISPUTE HOWSOEVER ARISING, BETWEEN
THE CORPORATION, ON THE ONE HAND, AND LENDERS, ON THE OTHER HAND.
SECTION 9.10 JURISDICTION: SERVICE OF PROCESS. The
Corporation hereby irrevocably consents to the jurisdiction of the
Courts of the State of California, County of San Francisco and of
any Federal Court located in the county of San Francisco
California, and agree that venue in each of such Courts is proper
in connection with any action or proceeding arising out of or
relating to this Agreement, the other Transaction Documents, or
any document or instrument delivered pursuant to this Agreement or
the other Transaction Documents. Corporation waives any right it
may have to assert the doctrine of forum non-conveniens or to
object to such venue, and consents to any court ordered relief.
Corporation waives personal service of process and agrees that a
summons and complaint commencing an action or proceeding in any
such Court shall be promptly served and shall confer personal
jurisdiction if served by registered or certified mail to
Corporation. If Corporation fails to appear or answer any
summons, complaint, process or papers so served within thirty (30)
days after the mailing or other service thereof, it shall be
deemed in default and an order of judgment may be entered against
it as demanded or prayed for in such summons, complaint, process
or papers. The choice of forum set forth herein shall not be
deemed to preclude the enforcement of the same forum, or the
taking of any action under the Transaction Documents to enforce
the same, in any appropriate jurisdiction. Nothing herein shall
affect the right of Lenders to serve process in any other manner
permitted by law or to commence legal proceedings or otherwise
proceed against the Corporation in any other jurisdiction.
SECTION 9.11 SURVIVAL OF AGREEMENT. All covenants,
agreements, representations and warranties made in this Agreement
shall survive the issuance of the Letters of Credit by Issuing
Bank and shall continue in full force and effect so long as the
Letters of Credit shall be unexpired or any sums drawn or due
hereunder or under the Reimbursement Loan Note shall be
outstanding and unpaid, regardless of any investigation made by
any Person and so long as any amount payable hereunder remains
unpaid. Whenever in this Agreement Lenders is referred to, such
reference shall be deemed to include the successors and assigns of
Lenders, and all covenants, promises and agreements by or on
behalf of the Corporation which are contained in this Agreement
shall inure to the benefit of the successors and assigns of
Lenders and such other Persons as are indemnified herein, subject
to such limitations as are set forth in SECTION 9.6 above
regarding participations. The rights and duties of the
Corporation, however, may not be assigned or transferred, except
as specifically provided in this Agreement or with the prior
written consent of the Lenders, and all obligations of the
Corporation shall continue in full force and effect
notwithstanding
any assignment by the Corporation of any of their respective
rights or obligations under any of the Transaction Documents or
the Reimbursement Loan Note or any entering into, or consent by
the Corporation supplement or amendment to any of the Transaction
Documents.
SECTION 9.12 SEVERABILITY. Any provision of this Security
Agreement which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
SECTION 9.13 HEADINGS. The various headings in this
Agreement are inserted for convenience only and shall not affect
the meaning or interpretation of this agreement or any provisions
hereof.
SECTION 9.14 COUNTERPARTS. This Agreement may be executed
in any number of counterparts, each of which when so delivered
shall be deemed an original, but all such counterparts shall
constitute but one and the same instrument. Each such agreement
shall become effective upon the execution of a counterpart hereof
or thereof by each of the parties hereto and telephonic
notification thereof has
been received by Corporation and Lenders.
IN WITNESS WHEREOF, each of the parties hereto has caused
this Agreement to be executed and delivered by its duly authorized
officer on the date first set forth above.
CORPORATION: VANGUARD AIRLINES, INC.
By:
-----------------------------
Printed Name:
------------------
Title:
---------------------------
ATTEST:
------------------------------
Name: Xxxxx Xxxxxxx
Title: Vice President, General
Counsel and Secretary
THE XXXXXXXXX 1980 REVOCABLE TRUST,
XXXXXXX X. XXXXXXXXX AS TRUSTEE
By:
-------------------------------
Printed Name:
--------------------
Title:
--------------------------
X. X. XXXX CO., INC.
By:
-------------------------------
Printed Name:
--------------------
Title:
--------------------------
EXHIBIT A
FORM OF
REIMBURSEMENT LOAN NOTE
$2,000,000 SAN FRANCISCO, CALIFORNIA
JANUARY 18, 1999
FOR VALUE RECEIVED, VANGUARD AIRLINES, INC., a Delaware
corporation (the "Corporation") hereby unconditionally promises to
pay to the order of X. X. XXXX CO., INC., a Nevada Corporation
("Xxxx"), or its assigns, in lawful money of the United States of
America and in immediately available funds, the sum of Two Million
Dollars ($2,000,000) or so much thereof as from time to time may
be advanced hereunder pursuant to SECTION 2.8 of that certain
Reimbursement Agreement, dated as of January 18, 1999, between the
Corporation and Lenders, as amended from time to time (the
"Agreement"), in connection with drawings under the certain Letter
of Credit Xx. XXX000000 dated January 15, 1999, issued by Xxxxx
Fargo Bank, N.A. in favor of MICHIGAN NATIONAL BANK (including any
amendment thereof or substitute therefor or replacement thereof)
(collectively, the "Letters of Credit") in accordance with the
terms and conditions set forth in the Agreement. Borrower shall
also pay interest (calculated on the basis of a 365 or 366 day
year and actual number of days elapsed) on such sum or the portion
thereof from time to time outstanding hereunder, monthly, at the
rates and in accordance with the terms and conditions set forth in
the Agreement.
This Reimbursement Loan Note is issued under and is subject
to the terms and conditions of the Agreement. All definitions,
terms, conditions, rights and provisions set forth in the
Agreement, are hereby incorporated herein in their entirety.
Annexed hereto and made a part hereof is a schedule (the
"Loan and Repayment Schedule") on which shall be shown all
advances by Xxxx pursuant to the Agreement (each such advance, a
"Reimbursement Loan") and all repayments of principal made to Xxxx
hereunder. The Corporation hereby appoints Xxxx as its agent to
endorse the date and the amount of each such Reimbursement Loan or
principal repayment made hereunder. Such endorsement shall
constitute prima facie evidence of the accuracy of the information
endorsed; provided, however, that failure to make any such
endorsement (or any errors in notation) shall not affect in any
manner the obligations of Corporation with respect to the amounts
payment hereunder.
This Reimbursement Loan Note is subject to acceleration upon
the occurrence of certain events as provided in the Agreement.
The Corporation shall have the right to prepay this Reimbursement
Loan Note in whole or in part, without penalty or premium, at any
time.
All payments or prepayments of principal of and interest on
this Reimbursement Loan Note shall be payable to the Account of
Xxxx as specified in SECTION 2.6 of the Agreement.
All payments and prepayments hereon shall be applied FIRST,
to costs and expenses and other amounts due and owing to Xxxx
under the Agreement; SECOND, to accrued interest then payable; and
THIRD to principal of the Reimbursement Loans in chronological
order of funding of the Reimbursement Loans and within each
Reimbursement Loan in inverse chronological order of principal
amortization.
The full amount of this Reimbursement Loan Note is secured by
the Collateral identified and described as security therefor in
that certain Security Agreement executed and delivered by
Corporation as of January 18, 1999. Corporation shall not,
directly or indirectly, suffer or permit to be created or to
remain, and shall promptly discharge, any lien on or in the
Collateral, or in any portion thereof, except as permitted
pursuant to the Security Agreement. In addition, Corporation
shall not suffer any other matter whereby an interest of Xxxx
under the Security Agreement in the Collateral or in any lien
pursuant to the Security Agreement or any part of the foregoing
might by impaired, except as permitted pursuant to the Security
Agreement.
The Corporation hereby waives presentment, demand, protest,
notice of protest or other notice of dishonor of any kind or of
non-payment of this Reimbursement Loan Note, and promises to pay
all reasonable costs of collection when incurred, including,
without limitation, reasonable attorneys' fees, costs and other
expenses.
The right to plead any and all statutes of limitations as a
defense to any demands hereunder is hereby waived to the full
extent permitted by law.
No extension of the time for the payment of this
Reimbursement Loan Note or any installment hereof made by
agreement with any Person now or hereafter liable for the payment
of this Reimbursement Loan Note shall operate to release or
discharge the original liability under this Reimbursement Loan
Note, either in whole or in part, of the Corporation.
This Reimbursement Loan Note is to be construed according to
the laws of the State of California, without regard to principles
of conflict of laws.
The provisions of this Note shall inure to the benefit of
and be binding on any successor to Xxxx and shall extend to any
holder hereof.
CORPORATION: VANGUARD AIRLINES, INC.
By:
----------------------
Printed Name:
--------------------
Title:
--------------------------
REIMBURSEMENT LOAN NOTE
$2,000,000 San Francisco, California
January 18, 1999
FOR VALUE RECEIVED, VANGUARD AIRLINES, INC., a Delaware
corporation (the "Corporation") hereby unconditionally promises to
pay to the order of X. X. XXXX CO., INC., a Nevada Corporation
("XXXX"), or its assigns, in lawful money of the United States of
America and in immediately available funds, the sum of Two Million
Dollars ($2,000,000) or so much thereof as from time to time may
be advanced hereunder pursuant to SECTION 2.8 of that certain
Reimbursement Agreement, dated as of January 18, 1999 between the
Corporation and Xxxx, as amended from time to time (the
"Agreement"), in connection with drawings under the certain Letter
of Credit Xx. XXX000000 dated January 15, 1999, issued by Xxxxx
Fargo Bank, N.A. in favor of Michigan National Bank (including any
amendment thereof or substitute therefor or replacement (the
"Letter of Credit") in accordance with the terms and conditions
set forth in the Agreement. Borrower shall also pay interest
(calculated on the basis of a 365 or 366 day year and actual
number of days elapsed) on such sum or the portion thereof from
time to time outstanding hereunder, monthly, at the rates and in
accordance with the terms and conditions set forth in the
Agreement.
This Reimbursement Loan Note is issued under and is subject
to the terms and conditions of the Agreement. All definitions,
terms, conditions, rights and provisions set forth in the
Agreement, are hereby incorporated herein in their entirety.
Annexed hereto and made a part hereof is a schedule (the
"Loan and Repayment Schedule") on which shall be shown all
advances by Xxxx pursuant to the Agreement (each such advance, a
"Reimbursement Loan") and all repayments of principal made to Xxxx
hereunder. The Corporation hereby appoints Xxxx as its agent to
endorse the date and the amount of each such Reimbursement Loan or
principal repayment made hereunder. Such endorsement shall
constitute prima facie evidence of the accuracy of the information
endorsed; provided, however, that failure to make any such
endorsement (or any errors in notation) shall not affect in any
manner the obligations of Corporation with respect to the amounts
payment hereunder.
This Reimbursement Loan Note is subject to acceleration upon
the occurrence of certain events as provided in the Agreement.
The Corporation shall have the right to prepay this Reimbursement
Loan Note in whole or in part, without penalty or premium, at any
time.
All payments or prepayments of principal of and interest on
this Reimbursement Loan Note shall be payable to the Account of
Xxxx as specified in SECTION 2.6 of the Agreement.
All payments and prepayments hereon shall be applied FIRST,
to costs and expenses and other amounts due and owing to Xxxx
under the Agreement; SECOND, to accrued interest then payable; and
THIRD to principal of the Reimbursement Loans in chronological
order of funding of the Reimbursement Loans and within each
Reimbursement Loan in inverse chronological order of principal
amortization.
The full amount of this Reimbursement Loan Note is secured
by the Collateral identified and described as security therefor in
that certain Security Agreement executed and delivered by
Corporation as of January 18, 1999. Corporation shall not,
directly or indirectly, suffer or permit to be created or to
remain, and shall promptly discharge, any lien on or in the
Collateral, or in any portion thereof, except as permitted
pursuant to the Security Agreement. In addition, Corporation
shall not suffer any other matter whereby an interest of Xxxx
under the Security Agreement in the Collateral or in any lien
pursuant to the Security Agreement or any part of the foregoing
might by impaired, except as permitted pursuant to the Security
Agreement.
The Corporation hereby waives presentment, demand, protest,
notice of protest or other notice of dishonor of any kind or of
non-payment of this Reimbursement Loan Note, and promises to pay
all reasonable costs of collection when incurred, including,
without limitation, reasonable attorneys' fees, costs and other
expenses.
The right to plead any and all statutes of limitations as a
defense to any demands hereunder is hereby waived to the full
extent permitted by law.
No extension of the time for the payment of this
Reimbursement Loan Note or any installment hereof made by
agreement with any Person now or hereafter liable for the payment
of this Reimbursement Loan Note shall operate to release or
discharge the original liability under this Reimbursement Loan
Note, either in whole or in part, of the Corporation.
This Reimbursement Loan Note is to be construed according to
the laws of the State of California, without regard to principles
of conflict of laws.
The provisions of this Note shall inure to the benefit of and
be binding on any successor to Xxxx and shall extend to any holder
hereof.
CORPORATION: VANGUARD AIRLINES, INC.
By:
-------------------------------
Printed Name:
--------------------
Title:
--------------------------
EXHIBIT B
FORM OF
REIMBURSEMENT LOAN NOTE
$2,000,000 SAN FRANCISCO, CALIFORNIA
JANUARY 18, 1999
FOR VALUE RECEIVED, VANGUARD AIRLINES, INC., a Delaware
corporation (the "Corporation") hereby unconditionally promises to
pay to the order of THE XXXXXXXXX 1980 REVOCABLE TRUST (THE
"XXXXXXXXX TRUST"), or its assigns, in lawful money of the United
States of America and in immediately available funds, the sum of
Two Million Dollars ($2,000,000) or so much thereof as from time
to time may be advanced hereunder pursuant to SECTION 2.8 of that
certain Reimbursement Agreement, dated as of January 18, 1999, by
and among the Corporation and Xxxxxxxxx Trust, as amended from
time to time (the "Agreement"), in connection with drawings under
the certain Standby Letter of Credit No. V01-519 dated January
19, 1999, issued by the Union Bank of California, N.A. in favor of
MICHIGAN NATIONAL BANK (including any amendment thereof or
substitute therefor or replacement thereof) (collectively, the
"Letters of Credit") in accordance with the terms and conditions
set forth in the Agreement. Borrower shall also pay interest
(calculated on the basis of a 365 or 366 day year and actual
number of days elapsed) on such sum or the portion thereof from
time to time outstanding hereunder, monthly, at the rates and in
accordance with the terms and conditions set forth in the
Agreement.
This Reimbursement Loan Note is issued under and is subject
to the terms and conditions of the Agreement. All definitions,
terms, conditions, rights and provisions set forth in the
Agreement, are hereby incorporated herein in their
entirety.Annexed hereto and made a part hereof is a schedule (the
"Loan and Repayment Schedule") on which shall be shown all
advances by Xxxxxxxxx Trust pursuant to the Agreement (each such
advance, a "Reimbursement Loan") and all repayments of principal
made to Xxxxxxxxx Trust hereunder. The Corporation hereby
appoints Xxxxxxxxx Trust as its agent to endorse the date and the
amount of each such Reimbursement Loan or principal repayment made
hereunder. Such endorsement shall constitute prima facie evidence
of the accuracy of the information endorsed; provided, however,
that failure to make any such endorsement (or any errors in
notation) shall not affect in any manner the obligations of
Corporation with respect to the amounts payment hereunder.
This Reimbursement Loan Note is subject to acceleration upon
the occurrence of certain events as provided in the Agreement.
The Corporation shall have the right to prepay this Reimbursement
Loan Note in whole or in part, without penalty or premium, at any
time.
All payments or prepayments of principal of and interest on
this Reimbursement Loan Note shall be payable to the Account of
Xxxxxxxxx Trust as specified in SECTION 2.6 of the Agreement.
All payments and prepayments hereon shall be applied FIRST,
to costs and expenses and other amounts due and owing to Xxxxxxxxx
Trust under the Agreement; SECOND, to accrued interest then
payable; and THIRD to principal of the Reimbursement Loans in
chronological order of funding of the Reimbursement Loans and
within each Reimbursement Loan in inverse chronological order of
principal amortization.
The full amount of this Reimbursement Loan Note is secured by
the Collateral identified and described as security therefor in
that certain Security Agreement executed and delivered by
Corporation as of January 18, 1999. Corporation shall not,
directly or indirectly, suffer or permit to be created or to
remain, and shall promptly discharge, any lien on or in the
Collateral, or in any portion thereof, except as permitted
pursuant to the Security Agreement. In addition, Corporation
shall not suffer any other matter whereby an interest of Xxxxxxxxx
Trust under the Security Agreement in the collateral or in any
lien pursuant to the Security Agreement or any part of the
foregoing might by impaired, except as permitted pursuant to such
Security Agreement.
The Corporation hereby waives presentment, demand, protest,
notice of protest or other notice of dishonor of any kind or of
non-payment of this Reimbursement Loan Note, and promises to pay
all reasonable costs of collection when incurred, including,
without limitation, reasonable attorneys' fees, costs and other
expenses.
The right to plead any and all statutes of limitations as a
defense to any demands hereunder is hereby waived to the full
extent permitted by law.
No extension of the time for the payment of this
Reimbursement Loan Note or any installment hereof made by
agreement with any Person now or hereafter liable for the payment
of this Reimbursement Loan Note shall operate to release or
discharge the original liability under this Reimbursement Loan
Note, either in whole or in part, of the Corporation.
This Reimbursement Loan Note is to be construed according to
the laws of the State of California, without regard to principles
of conflict of laws.
The provisions of this Note shall inure to the benefit of and
be binding on any successor to Lenders and shall extend to any
holder hereof.
CORPORATION: VANGUARD AIRLINES, INC.
By:
-------------------------------
Printed Name:
--------------------
Title:
---------------------------
REIMBURSEMENT LOAN NOTE
$2,000,000 San Francisco, California
January 18, 1999
FOR VALUE RECEIVED, VANGUARD AIRLINES, INC., a Delaware
corporation (the "Corporation") hereby unconditionally promises to
pay to the order of THE XXXXXXXXX 1980 REVOCABLE TRUST (the
"XXXXXXXXX TRUST"), or their assigns, in lawful money of the
United States of America and in immediately available funds, the
sum of Two Million Dollars ($2,000,000) or so much thereof as from
time to time may be advanced hereunder pursuant to SECTION 2.8 of
that certain Reimbursement Agreement, dated as of January 18, 1999
by and among the Corporation and Xxxxxxxxx Trust, as amended from
time to time (the "Agreement"), in connection with drawings under
the certain Standby Letter of Credit No. V01-519 dated January
19, 1999, issued by the Union Bank of California, N.A. in favor of
Michigan National Bank (including any amendment thereof or
substitute therefor or replacement (the "Letter of Credit") in
accordance with the terms and conditions set forth in the
Agreement. Borrower shall also pay interest (calculated on the
basis of a 365 or 366 day year and actual number of days elapsed)
on such sum or the portion thereof from time to time outstanding
hereunder, monthly, at the rates and in accordance with the terms
and conditions set forth in the Agreement.
This Reimbursement Loan Note is issued under and is subject
to the terms and conditions of the Agreement. All definitions,
terms, conditions, rights and provisions set forth in the
Agreement, are hereby incorporated herein in their entirety.
Annexed hereto and made a part hereof is a schedule (the
"Loan and Repayment Schedule") on which shall be shown all
advances by Xxxxxxxxx Trust pursuant to the Agreement (each such
advance, a "Reimbursement Loan") and all repayments of principal
made to
Xxxxxxxxx Trust hereunder. The Corporation hereby appoints
Xxxxxxxxx Trust as its agent to endorse the date and the amount of
each such Reimbursement Loan or principal repayment made
hereunder. Such endorsement shall constitute prima facie evidence
of the accuracy of the information endorsed; provided, however,
that failure to make any such endorsement (or any errors in
notation) shall not affect in any manner the obligations of
Corporation with respect to the amounts payment hereunder.
This Reimbursement Loan Note is subject to acceleration upon
the occurrence of certain events as provided in the Agreement.
The Corporation shall have the right to prepay this Reimbursement
Loan Note in whole or in part, without penalty or premium, at any
time.
All payments or prepayments of principal of and interest on
this Reimbursement Loan Note shall be payable to the Account of
Xxxxxxxxx Trust as specified in SECTION 2.6 of the Agreement.
All payments and prepayments hereon shall be applied FIRST,
to costs and expenses and other amounts due and owing to Xxxxxxxxx
Trust under the Agreement; SECOND, to accrued interest then
payable; and THIRD to principal of the Reimbursement Loans in
chronological order of funding of the Reimbursement Loans and
within each Reimbursement Loan in inverse chronological order of
principal amortization.
The full amount of this Reimbursement Loan Note is secured by
the Collateral identified and described as security therefor in
that certain Security Agreement executed and delivered by
Corporation as of January 18, 1999. Corporation shall not,
directly or indirectly, suffer or permit to be created or to
remain, and shall promptly discharge, any lien on or in the
Collateral, or in any portion thereof, except as permitted
pursuant to the Security Agreement. In addition, Corporation
shall not suffer any other matter whereby an interest of Xxxxxxxxx
Trust under the Security Agreement in the collateral or in any
lien pursuant to the Security Agreement or any part of the
foregoing might by impaired, except as permitted pursuant to such
Security Agreement.
The Corporation hereby waives presentment, demand, protest,
notice of protest or other notice of dishonor of any kind or of
non-payment of this Reimbursement Loan Note, and promises to pay
all reasonable costs of collection when incurred, including,
without limitation, reasonable attorneys' fees, costs and other
expenses.
The right to plead any and all statutes of limitations as a
defense to any demands hereunder is hereby waived to the full
extent permitted by law.
No extension of the time for the payment of this
Reimbursement Loan Note or any installment hereof made by
agreement with any Person now or hereafter liable for the payment
of this Reimbursement Loan Note shall operate to release or
discharge the original liability under this Reimbursement Loan
Note, either in whole or in part, of the Corporation.
This Reimbursement Loan Note is to be construed according to
the laws of the State of California, without regard to principles
of conflict of laws.
The provisions of this Note shall inure to the benefit of and
be binding on any successor to Xxxxxxxxx Trust and shall extend to
any holder hereof.
CORPORATION: VANGUARD AIRLINES, INC.
By:
-------------------------------
Printed Name:
--------------------
Title:
--------------------------
EXHIBIT C
LETTER OF CREDIT
X. X. XXXX CO., INC.
EXHIBIT D
LETTER OF CREDIT
THE XXXXXXXXX 1980 REVOCABLE TRUST, XXXXXXX X. XXXXXXXXX AS
TRUSTEE
EXHIBIT E
FORM OF
CERTIFICATE RELATING TO ACCURACY OF CERTAIN CORPORATION
REPRESENTATIONS CONTAINED IN, AND THE
AUTHORIZATION TO EXECUTE, CERTAIN DOCUMENTS
We, the undersigned, DO HEREBY CERTIFY to X. X. Xxxx Co.,
Inc., a Nevada Corporation and The Xxxxxxxxx 1980 Revocable Trust,
Xxxxxxx X. Xxxxxxxxx as Trustee (collectively, the "Lenders")
that:
1. We are the duly qualified and acting Vice President
- Finance, and Secretary, respectively, of Vanguard Airlines, Inc.
(the "Corporation").
2. The statements contained in SECTIONS 3.2 and 5.1 of
the Reimbursement Agreement (the "Agreement"), dated as of January
18, 1999 by and among the Corporation and the Lenders are true and
correct as of the date hereof.
3. The names and true signatures of the officers of
the Corporation authorized to sign the Agreement, and the other
documents to be delivered by the Corporation under the Agreement,
are as follows:
NAME SIGNATURE TITLE
Xxxxxx X. Xxxxx ------------------ Chairman of the Board,
President and CEO
Xxxxxxx X. Xxxxxxx ------------------ Vice President -
Finance and Chief
Financial Officer
Xxxxx X. Xxxxxxx ------------------ Vice President,
General Counsel and
Secretary
4. All conditions precedent to the issuance of the Letter
of Credit have been satisfied by the Corporation.
5. No Event of Default has occurred and is continuing, or
no event which would result directly or indirectly from the
execution and delivery of the Agreement by the Corporation or the
issuance of the Letter of Credit which constitutes an Event of
Default or which would constitute such an Event of Default but for
the requirement that notice be given or time elapse, or both.
6. All capitalized terms not otherwise defined shall have
the meaning ascribed thereto in the Agreement.
IN WITNESS WHEREOF, we have hereunto set our hands and the
seal of the Corporation as of January 18, 1999.
VANGUARD AIRLINES, INC.
By:
--------------------
Printed Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
By:---------------------------
Printed Name: Xxxxx X. Xxxxxxx
Title: Secretary
CERTIFICATE RELATING TO ACCURACY OF CERTAIN CORPORATION
REPRESENTATIONS CONTAINED IN, AND THE
AUTHORIZATION TO EXECUTE, CERTAIN DOCUMENTS
We, the undersigned, DO HEREBY CERTIFY to X. X. Xxxx Co.,
Inc., a Nevada Corporation and The Xxxxxxxxx 1980 Revocable Trust
(collectively, the "Lenders") that:
1. We are the duly qualified and acting Vice President -
Finance, and Secretary, respectively, of Vanguard Airlines, Inc.
(the "Corporation").
2. The statements contained in SECTIONS 3.2 and 5.1 of the
Reimbursement Agreement (the "Agreement"), dated as of January 18,
1999 by and among the Corporation and the Lenders are true and
correct as of the date hereof.
3. The names and true signatures of the officers of the
Corporation authorized to sign the Agreement, and the other
documents to be delivered by the Corporation under the Agreement,
are as follows:
NAME SIGNATURE TITLE
Xxxxxx X. Xxxxx ------------------- Chairman of the Board,
President and CEO
Xxxxxxx X. Xxxxxxx ------------------- Vice President -
Finance and Chief
Financial Officer
Xxxxx X. Xxxxxxx ------------------- Vice President, General
Counsel and Secretary
4. All conditions precedent to the issuance of the Letter
of Credit have been satisfied by the Corporation.
5. No Event of Default has occurred and is continuing, or
no event which would result directly or indirectly from the
execution and delivery of the Agreement by the Corporation or the
issuance of the Letter of Credit which constitutes an Event of
Default or which would constitute such an Event of Default but for
the requirement that notice be given or time elapse, or both.
6. All capitalized terms not otherwise defined shall have
the meaning ascribed thereto in the Agreement.
IN WITNESS WHEREOF, we have hereunto set our hands and the
seal of the Corporation as of January 18, 1999.
VANGUARD AIRLINES, INC.
By:
----------------------------
Printed Name: Xxxxxxx X. Xxxxxxx
Title: Vice President - Finance
and Chief Financial Officer
By:
------------------------------
Printed Name: Xxxxx X. Xxxxxxx
Title: Vice President, General
Counsel and Secretary
REIMBURSEMENT AGREEMENT
BY AND AMONG
VANGUARD AIRLINES, INC.
AND
THE XXXXXXXXX 1980 REVOCABLE TRUST
AND
X. X. XXXX CO., INC.
DATED AS OF JANUARY 18, 1999
RELATING TO THE ISSUANCE OF
LETTERS OF CREDIT
in the aggregate amount of
$4,000,000
TABLE OF CONTENTS
PAGE
ARTICLE 1 DEFINITIONS 1.
Section 1.1 Definitions 1.
Section 1.2 Construction 4.
ARTICLE 2 LETTER OF CREDIT 4.
Section 2.1 Amount and Terms of Letter of Credit 4.
Section 2.2 Drawings and Reinstatement 5.
Section 2.3 Fees and Other Payment 5.
Section 2.4 Reimbursement 6.
Section 2.5 Security 6.
Section 2.6 Place of Payment 6.
Section 2.7 Termination of Agreement 7.
Section 2.8 Reimbursement Loans 7.
ARTICLE 3 CONDITIONS PRECEDENT TO ISSUANCE OF LETTER
OF CREDIT 8.
Section 3.1 Documents To Be Received 8.
Section 3.2 Other Conditions Precedent 9.
ARTICLE 4 OBLIGATIONS OF THE CORPORATION 9.
Section 4.1 Obligations of the Corporation 9.
ARTICLE 5 REPRESENTATIONS AND WARRANTIES 11.
Section 5.1 Representations and Warranties of the
Corporation 11.
ARTICLE 6 COVENANTS OF THE CORPORATION 12.
Section 6.1 Affirmative Covenants 12.
Section 6.2 Negative Covenants 14.
ARTICLE 7 EVENTS OF DEFAULT 14.
Section 7.1 Events of Default 14.
ARTICLE 8 RIGHTS AND REMEDIES 15.
Section 8.1 Rights and Remedies 15.
ARTICLE 9 MISCELLANEOUS 16.
Section 9.1 Modification of Agreement 16.
Section 9.2 Waiver of Rights by Lenders; Remedies 16.
Section 9.3 Notices 16.
Section 9.4 Indemnification 17.
Section 9.5 Liability of Lenders 17.
Section 9.6 Participations 18.
Section 9.7 Satisfaction Requirement 18.
Section 9.8 Governing Law 18.
Section 9.9 Waiver of Jury Trial 18.
Section 9.10 Jurisdiction: Service of Process 19.
Section 9.11 Survival of Agreement 19.
Section 9.12 Severability 19.
Section 9.13 Headings . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19.
Section 9.14 Counterparts 19.
EXHIBITS
EXHIBIT A Form of Reimbursement Loan Note with X. X.
Xxxx Co., Inc.
EXHIBIT B Form of Reimbursement Loan Note with The
Xxxxxxxxx 1980 Revocable Trust
EXHIBIT C Form of Letter of Credit, X. X. Xxxx Co., Inc.
EXHIBIT D Form of Letter of Credit, The Xxxxxxxxx 1980
Revocable Trust, Xxxxxxx X. Xxxxxxxxx as Trustee
EXHIBIT E Form of Certificate Relating to Accuracy of
Certain Corporation Representations Contained
in, and the Authorization to Execute, Certain
Documents
EXHIBIT E Form of Warrant
EXHIBIT F Merchant Agreement between Michigan National Bank and
Vanguard Airlines, Inc.
