EXHIBIT 10.1
LOAN AGREEMENT
THIS LOAN AGREEMENT ("Loan Agreement") is made this 16th day of June,
2005, by and among PINNACLE AIRLINES, INC., a Georgia corporation whose address
is 0000 Xxxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxxx 00000 (the
"Borrower"), PINNACLE AIRLINES CORP., a Delaware corporation whose address is
0000 Xxxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxxx 00000 (the "Guarantor"),
and FIRST TENNESSEE BANK NATIONAL ASSOCIATION, a national banking association
organized and existing under the statutes of the United States of America, with
offices at 000 Xxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxx 00000 (hereinafter referred to
as the "Bank").
Recitals of Fact
Borrower has requested that the Bank commit to make loans and advances
to it on a revolving credit basis in an amount not to exceed at any one time
outstanding the principal sum of SEVENTEEN MILLION Dollars ($17,000,000.00).
Borrower has also requested that the Bank create a letter of credit sub-facility
providing for the issuance of letters of credit from time to time in a maximum
aggregate amount of Two Million Dollars ($2,000,000.00) at any one time
outstanding; provided, however, that the amount of indebtedness outstanding
under the revolving credit loan described herein and the aggregate amount of
indebtedness outstanding under letters of credit outstanding at any one time
shall never exceed Seventeen Million Dollars ($17,000,000.00). The loans
provided herein are to be used for short-term working capital purposes and for
pursuit and acquisition of Airline Services Agreements ("ASAs"). The Bank has
agreed to make such loans and advances on the terms and conditions herein set
forth.
NOW, THEREFORE, incorporating the Recitals of Fact set forth above and
in consideration of the mutual agreements herein contained, the parties agree as
follows:
AGREEMENTS
SECTION 1: DEFINITIONS AND ACCOUNTING TERMS
1.1 CERTAIN DEFINED TERMS. For the purposes of this Loan Agreement, the
following terms shall have the following meanings (such meanings to be
applicable equally to both the singular and plural forms of such terms) unless
the context otherwise requires:
"Acceptable Accounts" shall mean Accounts Receivable on which the Bank
has a negative pledge; (b) which arise from goods theretofore sold and delivered
or services theretofore rendered to the Account Debtor; (c) with respect to
which no setoffs, counterclaims or defenses are claimed by the Account Debtor;
and (d) which do not remain unpaid more than ninety (90) days after the date of
the related invoice.
"Acceptable Inventory" shall mean Borrower's Inventory (a) in which the
Bank holds a valid, perfected first security interest; and (b) which, in the
reasonable judgment of the Bank at the time a Revolving Credit Loan advance is
requested based upon such Inventory and at all times thereafter while a Loan
advance remains outstanding based upon such Inventory, is in good, undamaged
condition and is not obsolete or otherwise unmarketable in the ordinary course
of business as a result of age, type, category, quality and/or quantity.
"Account Debtor" shall mean any Person which is now or hereafter
obligated or indebted to Borrower on any Account Receivable.
"Accounts Receivable" shall mean all amounts owed to the Borrower on
account of sales, leases or rentals of goods or services rendered in the
ordinary course of the Borrower's trade or business, net of (i) any reserve for
bad debt, (ii) unearned interest, discounts or finance charges, and (iii)
deposits and advance payments made by Account Debtors (including, but not
limited to, items listed on Borrower's financial statement as Deferred Sales).
"Base Rate" means the base commercial rate of interest established from
time to time by the Bank. The Base Rate is one of several interest rate indices
employed by the Bank. The Borrower acknowledges that the Bank has made, and may
hereafter make, loans bearing interest at rates which are lower and higher than
the Base Rate.
"Borrowing Base" is the limitation on the aggregate Revolving Credit
Loan indebtedness which may be outstanding at any time during the term of this
Agreement. The Borrowing Base is the sum of (a) cash and marketable securities,
plus (b) eighty percent (80%) of Acceptable Accounts, plus (c) forty percent
(40%) of the market value appraisal of Acceptable Inventory, minus (d) accounts
payable and accrued expenses.
"Business day" means a banking business day of the Bank.
"Capital expenditure" means any expenditure for the acquisition of any
asset, tangible or intangible, which under generally accepted accounting
principles is deemed a capital asset, including, without limitation, real
estate, buildings, fixtures, machinery and equipment, and furniture, including
the acquisition by a lease which under generally accepted accounting principles
must be treated as a capital asset.
"Closing Date" means the date set out in the first paragraph of this
Loan Agreement.
"Committed Amount" means the amount of the Bank's commitment to lend as
provided in Section 2.1 hereof.
"Equipment" means furniture, furnishings, fixtures, machinery, tools
and equipment of every kind and nature, movable or immovable, wherever located,
and all parts thereof and replacements, additions, accessions and substitutions
thereto, but excluding aircraft.
"Environmental Laws" means all local, state or federal laws, rules or
regulations pertaining to environmental regulation, contamination or cleanup,
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Resource Conservation and Recovery
Act of 1976 or any state lien or superlien or environmental cleanup statutes.
"Event of Default" has the meaning assigned to that phrase in Section
8.
"Guarantor" shall mean Pinnacle Airlines Corp., a Delaware corporation.
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"Guaranty Agreement" shall mean the guaranty agreement executed by the
Guarantor, of even date herewith, guaranteeing the payment of indebtednesses of
Borrower not to exceed SEVENTEEN MILLION DOLLARS ($17,000,000.00).
"Hazardous Substances" shall mean and include all hazardous and toxic
substances, wastes or materials, any pollutants or contaminants (including,
without limitation, asbestos and raw materials which include hazardous
constituents), or any other similar substances or materials which are included
under or regulated by any Environmental Laws.
"Inventory" shall have the meaning ascribed to it in the Security
Agreement (hereinafter defined).
"Letter of Credit" shall mean any standby letter or letters of credit
as described and issued pursuant to the provisions of Section 2 of this Loan
Agreement, as same may be modified, renewed, or extended.
"Lien" means any interest in Property securing an obligation owed to,
or a claim by, a Person other than the owner of the Property, whether such
interest is based on the common law, statute or contract, and including but not
limited to the security interest or lien arising from a deed of trust, mortgage,
encumbrance, pledge, conditional sale or trust receipt or a lease, consignment
or bailment for security purposes, and including but not limited to
reservations, exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases, and other title exceptions and encumbrances
affecting Property. For the purposes of this Agreement, the Borrower shall be
deemed to be the owner of any Property which it has acquired or holds subject to
a conditional sale agreement, lease, financing lease or other arrangement
pursuant to which title to the Property has been retained by or is vested in
some other Person.
"Loan Agreement" means this Loan Agreement between the Borrower and the
Bank.
"Maximum Rate" means the lesser of: (a) the Base Rate plus four percent
(4%) per annum; or (b) the maximum variable contract rate of interest which the
Bank may lawfully charge under applicable statutes and laws from time to time in
effect.
"Note" means the Revolving Credit Note executed by the Borrower to the
Bank, of even date herewith, as such note may be modified, renewed or extended
from time to time; and any other note or notes executed at any time to evidence
the indebtedness under this Loan Agreement, in whole or in part, and any
renewals, modifications and extensions thereof, in whole or in part. The term
"Note" as used herein shall also collectively include any Letter of Credit
issued by the Bank pursuant to Section 2.6 hereof, as such Letters of Credit may
be modified, renewed or extended from time to time, and any additional note
issued pursuant to the provisions of Section 2.4 hereof, related to certain
borrowings used to acquire additional ASAs.
"Permitted Encumbrances" shall mean and include:
(a) liens for taxes, assessments or similar governmental charges not in
default or being contested in good faith by appropriate proceedings;
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(b) workmen's, vendors', mechanics' and materialmen's liens and other
liens imposed by law incurred in the ordinary course of business, and easements
and encumbrances which are not substantial in character or amount and do not
materially detract from the value or interfere with the intended use of the
properties subject thereto and affected thereby;
(c) liens in respect of pledges or deposits under social security laws,
workmen's compensation laws, unemployment insurance or similar legislation and
in respect of pledges or deposits to secure bids, tenders, contracts (other than
contracts for the payment of money), leases or statutory obligations;
(d) any liens and security interests specifically listed and described
in EXHIBIT "A" hereto attached; and
(e) such other liens and encumbrances to which Bank shall consent in
writing.
"Person" means an individual, partnership, corporation, trust,
unincorporated organization, association, joint venture or a government or
agency or political subdivision thereof.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, tangible or intangible.
"Revolving Credit Advances" means advances of principal on the
Revolving Credit Loan by the Bank under the terms of this Loan Agreement to the
Borrower during the term of the Revolving Credit Loan pursuant to Section 3.1.
"Revolving Credit Loan" means the Borrower's revolving credit
indebtedness to the Bank pursuant to Section 2 of this Loan Agreement.
"Revolving Credit Note" means the Note as described in Section 2.3
hereof.
"Security Agreement" means the Security Agreement pursuant to which
Borrower has pledged accounts receivable and inventory and certain machinery and
equipment to the Bank, referred to in Section 4.1(c) hereof.
"Termination Date of Revolving Credit Loan" shall mean the earlier of
(a) June 16, 2006, or in the event that the Bank and Borrower shall hereafter
mutually agree in writing that the Revolving Credit Loan and the Bank's
commitment hereunder shall be extended to another date, and the Note shall be
modified or amended to reflect such extension, such other date mutually agreed
upon between Bank and Borrower to which the Bank's commitment shall have been
extended, or (b) the date as of which Borrower shall have terminated the Bank's
commitment under the provisions of Section 2.5 hereof.
"Working Capital" means the amount by which Borrower's current assets
exceed Borrower's current liabilities, all as determined in accordance with
generally accepted accounting principles, applied on a consistent basis.
1.2 ACCOUNTING TERMS. All accounting terms not specifically defined
herein shall be construed in accordance with generally accepted accounting
principles consistent with those applied in
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the preparation of the financial statements required to be delivered from
time to time pursuant to Section 6.5 hereof.
SECTION 2: COMMITMENT, FUNDING AND TERMS OF REVOLVING CREDIT LOAN; LETTERS OF
CREDIT
2.1 THE COMMITMENT. Subject to the terms and conditions herein set out,
Bank agrees and commits to make loan advances to the Borrower from time to time,
from the Closing Date until the Termination Date of Revolving Credit Loan, in an
aggregate principal amount not to exceed, at any one time outstanding, the
lesser of (a) Seventeen Million and 00/100 Dollars ($17,000,000.00) or (b) the
Borrower's Borrowing Base, as defined in Section 1.
2.2 FUNDING THE REVOLVING CREDIT LOAN. Each loan advance hereunder
shall be made upon the written request of the Borrower to the Bank, specifying
the date and amount thereof. All advances hereunder shall be made by depositing
the same to the checking account of Borrower at the Bank.
2.3 THE REVOLVING CREDIT NOTE AND INTEREST. The Revolving Credit Loan
shall be evidenced by one (1) promissory note of the Borrower, payable to the
order of the Bank in the principal amount of Seventeen Million and 00/100
Dollars ($17,000,000.00), in form substantially the same as the copy of the
Revolving Credit Note attached hereto as EXHIBIT "B." The entire principal
amount of the Loan shall be due and payable on the Termination Date of Revolving
Credit Loan. The unpaid principal balances of the Revolving Credit Loan shall
bear interest from the Closing Date on disbursed and unpaid principal balances
as provided in the Revolving Credit Note; provided, however, that the rate of
interest on the Revolving Credit Loan never be more than the maximum effective
variable contract rate which may be charged by the Bank under applicable law
from time to time in effect. Said interest shall be payable monthly on the first
day of each month after the Closing Date, commencing July 1, 2005, with the
final installment of interest, together with the entire outstanding principal
balance of the Revolving Credit Loan, being due and payable on the Termination
Date of Revolving Credit Loan.
2.4 SPECIAL PROVISIONS RELATED TO REVOLVING CREDIT LOAN ADVANCES FOR
THE ACQUISITION OF ASAS. To the extent that Borrower shall intend to use the
proceeds of any advance under the Revolving Credit Loan for the pursuit and
acquisition of additional ASAs, Borrower shall give Bank prior written notice of
such use and Borrower and Bank shall, at the time of such requested advance,
enter into a promissory note or notes to document such advances and to provide
for the amortization of such advances on terms and over a period which are
acceptable to Bank.
2.5 COMMITMENT FEES.
(a) On the Closing Date, the Borrower agrees to pay to the Bank a
commitment fee in the amount of Sixty-Three Thousand Seven Hundred Fifty Dollars
($63,750.00), in consideration of the Bank's agreement to make funds available
to Borrower under the terms and provisions hereof from the Closing Date until
the initial Termination Date of Revolving Credit Loan specified in Section 1
hereof. Borrower agrees that this commitment fee is fair and reasonable
considering the condition of the money market, the creditworthiness of Borrower,
the interest rate to be paid, and the nature of the security for the Loan. In
the event that Borrower and Bank shall hereafter mutually agree to extend the
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term of the Bank's commitment hereunder, they may also agree at that time as to
an additional commitment fee to be paid for such further commitment by the Bank,
but not to exceed the maximum permitted by applicable law.
(b) The Borrower further agrees to pay a quarterly one-quarter per cent
(0.25%) fee on the unused portion of the Committed Amount, calculated quarterly,
in arrears, each June 30, September 30, December 31, and March 31, hereafter.
2.6 PREPAYMENTS OR TERMINATION OF THE REVOLVING CREDIT LOAN. The
Borrower may, at its option, from time to time, subject to the terms and
conditions hereof, without penalty, borrow, repay and reborrow amounts under the
Revolving Credit Loan. By notice to the Bank in writing, Borrower shall be
entitled to terminate the Bank's commitment to make further advances on the
Revolving Credit Loan; and provided that no Event of Default shall have
occurred, that the Revolving Credit Loan and all interest thereon shall have
been paid in full, and there are no Letters of Credit outstanding, Bank shall
thereupon release its security interest in all of Borrower's Collateral.
2.7 LETTERS OF CREDIT. The Bank agrees, on the terms and conditions
hereinafter set forth, to issue standby letters of credit in U.S. Dollars for
the account of Borrower from time to time on any Business Day during the period
from the Closing Date until thirty (30) days before the Termination Date of
Revolving Credit Loan in an aggregate amount of the lesser of: (a) Two Million
Dollars ($2,000,000.00) at any one time outstanding; or (b) the then-outstanding
unused portion of the Committed Amount. To the extent that Borrower may request
issuance of a Letter of Credit pursuant to the provisions of this Section 2, the
Bank's Committed Amount shall be reduced by the principal amount of such Letter
of Credit as if such Letter of Credit was a revolving credit advance. In no
event shall the aggregate principal amount of revolving credit advances and
Letters of Credit at any one time outstanding ever exceed Seventeen Million
Dollars ($17,000,000.00). No such Letter of Credit shall have an expiration date
(including all rights of the Borrower or the beneficiary to require renewal)
later than thirty (30) days before the Termination Date of Revolving Credit
Loan, but each Letter of Credit may by its terms be renewable annually upon a
written notice (a "Notice of Renewal") given to the Bank on or prior to any date
for notice of renewal set forth in such Letter of Credit but in any event at
least ten (10) Business Days prior to the date of the proposed renewal of such
Letter of Credit and upon fulfillment of the applicable conditions set forth
herein, unless the Bank has notified the Borrower on or prior to the date for
notice of termination set forth in such letter of credit but in any event at
least thirty (30) Business Days prior to the date of automatic renewal of its
election not to renew such letter of credit (a "Notice of Termination");
provided that the terms of each Letter of Credit that is automatically renewable
annually shall (a) require the Bank to give the beneficiary named in such Letter
of Credit notice of any Notice of Termination, (b) permit such beneficiary, upon
receipt of such notice, to draw under such Letter of Credit prior to the date
such Letter of Credit otherwise would have been automatically renewed and (c)
not permit the expiration date (after giving effect to any renewal) of such
letter of credit in any event to be extended to a date later than thirty (30)
days before the Termination Date of Revolving Credit Loan. If either a Notice of
Renewal is not given by the Bank or a Notice of Termination is given by the Bank
pursuant to the immediately preceding sentence, such Letter of Credit shall
expire on the date on which it otherwise would have been automatically renewed.
Within the limits of the Committed Amount, and subject to the limits referred to
herein, the Borrower may request the issuance of Letters of Credit under this
section, repay any Letter of Credit loan resulting from drawings thereunder, and
request the issuance of additional Letters of Credit under this section. Should
Borrower terminate the Revolving Credit Loan prior to the Termination Date of
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Revolving Credit Loan and desire to continue any then-outstanding Letters of
Credit, Borrower shall be permitted to cash collateralize any remaining
outstanding Letters of Credit until the stated expiration or termination date of
such Letter of Credit.
2.8 ISSUANCE OF THE LETTERS OF CREDIT. Each Letter of Credit shall be
issued upon notice, given not later than 12:00 p.m. (Memphis, Tennessee time) on
the fifth Business Day prior to the date of the proposed issuance of such Letter
of Credit, by a Borrower to the Bank. Each such notice of issuance of a Letter
of Credit ("Notice of Issuance") shall be by telephone, confirmed immediately in
writing, or telecopier or electronic communication, specifying therein the
requested (A) date of such issuance (which shall be a Business Day), (B) amount
of such Letter of Credit (which shall not be less than $1,000.00), (C)
expiration date of such Letter of Credit, (D) name and address of the
beneficiary of such Letter of Credit, and (E) form of such Letter of Credit, and
shall be accompanied by such application and agreement for Letter of Credit as
the Bank may specify to Borrower for use in connection with such Letter of
Credit ("Letter of Credit Agreement"). If (a) the requested form of such Letter
of Credit is acceptable to the Bank in its sole discretion, Bank will, upon
fulfillment of the applicable conditions referred to herein, make such Letter of
Credit available to the Borrower at its office referred to in the first
paragraph hereof or as otherwise agreed with Borrower in connection with such
issuance. In the event and to the extent that the provisions of any Letter of
Credit Agreement shall conflict with this Loan Agreement, the provisions of this
Loan Agreement shall govern.
2.9 DRAWING AND REIMBURSEMENT. The payment by Bank of a draft drawn
under any Letter of Credit shall constitute for all purposes of this Loan
Agreement the making by the Bank of a Letter of Credit loan, which shall be
deemed a revolving credit advance in the amount of such draft.
2.10 LETTER OF CREDIT FEES. The Borrower agrees to pay to the Bank: (a)
a preparation and issuance fee in the amount of One Hundred Twenty-Five Dollars
($125.00) for each Letter of Credit requested hereunder; and (b) an amendment
fee of Sixty-Five Dollars ($65.00) for any subsequent amendments to issued
Letters of Credit, including, but not limited to, renewals, extensions, and
modifications. Borrower further agrees to pay to the Bank an underwriting fee of
one and one-half per cent (1.5%) per annum, payable on the first (1st) day of
each June hereafter on the principal amount of each outstanding Letter of Credit
Borrower agrees that these Letter of Credit preparation, issuance, amendment,
and underwriting fees are fair and reasonable considering the condition of the
money market, the creditworthiness of Borrower, the interest rate to be paid,
and the nature of the security for the Letters of Credit.
2.11 APPLICABILITY OF ISP98. Unless otherwise agreed by the Bank and
the Borrower when a Letter of Credit is issued, the rules of the "International
Standby Practices 1998" published by the Institute of International Banking Law
& Practice (or such later version thereof as may be in effect at the time of
issuance) shall apply to each Letter of Credit.
2.12 WAIVER OF RIGHT OF SET-OFF. The Bank hereby waives all rights of
set off (common law and otherwise) against funds of the Borrower on deposit with
the Bank (except for cash proceeds of collateral securing the Borrower's
obligations to the Bank as described herein).
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SECTION 3: REQUIRED PAYMENTS, PLACE OF PAYMENT, ETC.
3.1 REQUIRED REPAYMENTS. In the event that the outstanding principal
balance of the Revolving Credit Loan shall at any time exceed the Borrower's
Borrowing Base, the Borrower will immediately upon discovery of the existence of
such excess borrowings, make a principal payment which will reduce the
outstanding principal balance of the Revolving Credit Loan to an amount which
does not exceed the Borrowing Base.
3.2 PLACE OF PAYMENTS. All payments of principal and interest on the
Revolving Credit Loan and all payments of fees required hereunder shall be made
to the Bank, at its address listed in Section 9.2 of this Agreement in
immediately available funds.
3.3 PAYMENT ON NON-BUSINESS DAYS. Whenever any payment of principal,
interest or fees to be made on the indebtednesses evidenced by the Note shall
fall due on a Saturday, Sunday or public holiday under the laws of the State of
Tennessee, such payment shall be made on the next succeeding business day.
SECTION 4: CONDITIONS OF LENDING
4.1 CONDITIONS PRECEDENT TO CLOSING AND FUNDING INITIAL ADVANCE. The
obligation of the Bank to fund the initial Revolving Credit Loan Advance
hereunder is subject to the condition precedent that the Bank shall have
received, on or before the Closing Date (unless otherwise provided herein), all
of the following in form and substance satisfactory to the Bank:
(a) This Loan Agreement.
(b) Revolving Credit Note (the "Revolving Credit Note") from the
Borrower payable to the order of the Bank in the principal amount of Seventeen
Million and 00/100 Dollars ($17,000,000.00).
(c) The Security Agreement (the "Security Agreement") of the Borrower,
pledging all of its inventory, general intangibles, machinery, equipment, and
rotable aircraft components and spare parts (but excluding aircraft) as
collateral security for the Revolving Credit Loan, together with such financing
statements as the Bank may require to perfect its security interest therein.
(d) The Guaranty Agreement of the Guarantor, unconditionally
guaranteeing indebtednesses of the Borrower under the Loan Documents in amounts
not to exceed the principal sum of SEVENTEEN MILLION and 00/100 Dollars
($17,000,000.00) plus interest and costs of collection.
(e) The Negative Pledge Agreements (each a "Negative Pledge Agreement")
of the Borrower and of the Guarantor, whereby each shall pledge not to encumber
its Accounts Receivable and Chattel Paper.
(f) Current financial statements of the Borrower and Guarantor in form
satisfactory to the Bank.
(g) Certified corporate resolutions of Borrower, and certificate(s) of
good standing for Borrower from the state of its incorporation and such other
states as Bank shall require, together with a copy of the charter and bylaws of
the Borrower.
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(h) Certified corporate resolutions of the Guarantor, and a certificate
of good standing from the State of Delaware.
(i) UCC lien searches and Federal Aviation Administration lien searches
from such recording offices as Bank shall specify, evidencing that there are no
liens which have priority over the Bank's lien being granted under the Security
Agreement.
(j) A certificate from an insurance broker, satisfactory to Bank
setting forth the information concerning insurance which is required by Section
6.3 of this Loan Agreement; or, if the Bank shall so require, the original
insurance policies evidencing such insurance.
(k) An independent market evaluation or appraisal of Borrower's rotable
aircraft component inventories, prepared by S H & E, Inc., showing a minimum
appraised value of not less than Twenty-Five Million Dollars ($25,000,000.00).
The delivery of such appraisal shall not be a condition to the closing of the
Revolving Credit Loan as described herein, but shall be a condition to the
initial funding of any advances or the issuance of any Letters of Credit under
the Revolving Credit Loan. Borrower agrees to use its commercially reasonable
best efforts to deliver such appraisal to the Bank by June 30, 2005.
(l) Such other information and documentation as Bank shall deem to be
necessary or desirable in connection with the funding of the Loan.
4.2 CONDITIONS PRECEDENT TO ALL REVOLVING CREDIT LOAN ADVANCES. The
obligation of the Bank to make Revolving Credit Advances pursuant hereto
(including the initial advance at the Closing Date) shall be subject to the
following additional conditions precedent:
(a) The Borrower shall have furnished to the Bank each of the items
referred to in Section 4.1 hereof, all of which shall remain in full force and
effect as of the date of such Revolving Credit Advance (notwithstanding that the
Bank may not have required any such item to be furnished prior to the Closing
Date).
(b) The Borrower shall not be in default of any of the terms and
provisions hereof or of any instrument or document now or at any time hereafter
evidencing or securing all or any part of the Revolving Credit Loan
indebtednesses. Each of the Warranties and Representations of the Borrower, as
set out in Section 5 hereof shall remain true and correct in all material
respects as of the date of such Loan advance.
(c) On the Closing Date and not later than the fifteenth day of each
calendar month thereafter, Borrower shall furnish to the Bank a Borrowing Base
Certificate and a Non-Default Certificate executed by a duly authorized officer
of Borrower, in the form of EXHIBITS "C" AND "D" attached hereto.
SECTION 5: REPRESENTATIONS AND WARRANTIES
5.1 INCORPORATION OF BORROWER. Borrower represents and warrants that it
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Georgia; it has the power and authority to own its
properties and assets and is duly qualified to carry on its business in every
jurisdiction wherein such qualification is necessary.
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5.2 INCORPORATION OF GUARANTOR. Guarantor represents and warrants that
it is a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware; it has the power and authority to own its
properties and assets and is duly qualified to carry on its business in every
jurisdiction wherein such qualification is necessary.
5.3 POWER AND AUTHORITY. Borrower and Guarantor each represent and
warrant that the execution, delivery and performance of the Loan Agreement and
the Note, and the Security Agreement executed pursuant thereto by the Borrower
and by the Guarantor (if executed by the Guarantor) have been duly authorized by
all requisite action and will not violate any provision of law, any order of any
court or other agency of government, the Certificate of Incorporation or Bylaws
of the Borrower or the Guarantor, any provision of any indenture, agreement or
other instrument to which Borrower or Guarantor is a party, or by which
Borrower's or Guarantor's respective properties or assets are bound, or be in
conflict with, result in a breach of, or constitute (with due notice or lapse of
time or both) a default under any such indenture, agreement or other instrument,
or result in the creation or imposition of any lien, charge or encumbrance of
any nature whatsoever upon any of the properties or assets of Borrower or
Guarantor, except for liens and other encumbrances provided for and securing the
indebtedness covered by this Loan Agreement.
5.4 FINANCIAL CONDITION OF THE BORROWER. Borrower and Guarantor each
represents and warrants that: (a) (i) The consolidated balance sheet of Borrower
and Guarantor for the fiscal year ended as of December 31, 2004, and the related
statement of income and changes in financial conditions for the year then ended,
certified by Ernst & Young, LLP, Certified Public Accountants, and (ii) the
unaudited consolidated balance sheet of the Borrower and Guarantor dated as of
March 31, 2005, a copy of each of which has been furnished to the Bank, together
with any explanatory notes therein referred to and attached thereto, are correct
and complete and fairly present the financial condition of Borrower and
Guarantor as at the date of said balance sheets and the results of their
operations for said periods and as of the date of closing of this Loan Agreement
and related transactions, respectively. All such financial statements have been
prepared in accordance with Generally Accepted Accounting Principles applied on
a consistent basis maintained through the period involved.
(a) Borrower and Guarantor each represents and warrants that there has
been no material adverse change in the business, properties or condition,
financial or otherwise, of Borrower or Guarantor since March 31, 2005.
(b) [INTENTIONALLY OMITTED].
5.5 TITLE TO ASSETS. Borrower and Guarantor each represent and warrant
that each has good and marketable title to all its properties and assets
reflected on the balance sheet referred to in Sections 5.4 and 5.5 hereof,
except for (i) such assets as have been disposed of since said date as no longer
used or useful in the conduct of business, (ii) inventory sold in the ordinary
course of business and thereafter accounted for as accounts receivable or cash,
(iii) accounts receivable collected and properly accounted for, and (iv) items
which have been amortized in accordance with Generally Accepted Accounting
Principles applied on a consistent basis; and all such properties and assets are
free and clear of Liens except as otherwise expressly permitted by the
provisions hereof.
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5.6 LITIGATION. Borrower and Guarantor each represent and warrant that
there is no action, suit or proceeding at law or in equity or by or before any
governmental instrumentality or other agency now pending, or, to the knowledge
of the Borrower or the Guarantor threatened against or affecting Borrower or
Guarantor, or any properties or rights of Borrower or Guarantor, which, if
adversely determined, would materially adversely affect the financial or any
other condition of Borrower or Guarantor.
5.7 TAXES. Borrower and Guarantor each represent and warrant that each
has filed or caused to be filed all federal, state or local tax returns which
are required to be filed, and has paid all taxes as shown on said returns or on
any assessment received by it, to the extent that such taxes have become due,
except as otherwise permitted by the provisions hereof.
5.8 CONTRACTS OR RESTRICTIONS AFFECTING BORROWER. Borrower and
Guarantor each represent and warrant that it is not a party to any agreement or
instrument or subject to any charter or other corporate restrictions adversely
affecting its business, properties or assets, operations or condition (financial
or otherwise).
5.9 NO DEFAULT. Borrower and Guarantor each represent and warrant that
it 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 it is a party, which default if not cured would materially and
substantially affect the financial condition, property or operations of the
Borrower or Guarantor.
5.10 PATENTS AND TRADEMARKS. Borrower and Guarantor each represent and
warrant that it possesses all necessary patents, trademarks, trade names,
copyrights, and licenses necessary to the conduct of its businesses.
5.11 ERISA. Borrower and Guarantor each represent and warrant that it
is in compliance with all applicable provisions of the Employees Retirement
Income Security Act of 1974 ("ERISA") and all other laws, state or federal,
applicable to any employees' retirement plan maintained or established by it.
5.12 HAZARDOUS SUBSTANCES. Borrower and Guarantor each represent and
warrant that no Hazardous Substances are located on or have been stored,
processed or disposed of on or released or discharged (including ground water
contamination) from any property owned by Borrower or Guarantor. No private or
governmental lien or judicial or administrative notice or action related to
Hazardous Substances or other environmental matters has been filed against any
property owned by Borrower or Guarantor or otherwise issued to or received by
Borrower or Guarantor. Any above or underground storage tanks existing on such
property has been maintained in material compliance with all applicable
environmental laws and regulations.
5.13 NO SUBSIDIARIES.
(a) Borrower represents and warrants that it does not own all or a
substantial part of the stock (or other ownership interest) in any other
corporation (or other form of business organization). (In the event that the
Bank shall hereafter consent to the purchase or other acquisition by Borrower of
any other business or subsidiary, as an exception to Borrower's covenants set
out in Sections 7.5 and 7.8 hereof, the warranty and representation in this
Section 5.14 shall not be deemed to have been
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breached as a result thereof by virtue of Borrower's execution and delivery of a
Non-Default Certificate, notwithstanding that such Non-Default Certificate may
fail to make reference to the business or subsidiary so consented to by Bank.)
5.14 Guarantor represents and warrants that it does not own all or a
substantial part of the stock (or other ownership interest) in any other
corporation (or other form of business organization) other than the Borrower.
(In the event that the Bank shall hereafter consent to the purchase or other
acquisition by Guarantor of any other business or subsidiary, as an exception to
Guarantor's covenants set out in Section 7.4 hereof, the warranty and
representation in this Section 5.14 shall not be deemed to have been breached as
a result thereof by virtue of Borrower's execution and delivery of a Non-Default
Certificate, notwithstanding that such Non-Default Certificate may fail to make
reference to the business or subsidiary so consented to by Bank.).
SECTION 6: AFFIRMATIVE COVENANTS OF BORROWER AND GUARANTOR
Borrower and Guarantor, as appropriate, each covenant and agree that
from the date hereof and until payment in full of the principal of and interest
on indebtednesses evidenced by the Note, unless the Bank shall otherwise consent
in writing, such consent to be at the discretion of the Bank, Borrower and/or
Guarantor, as appropriate, will:
6.1 BUSINESS AND EXISTENCE. Borrower and Guarantor will each perform
all things necessary to preserve and keep in full force and effect its
existence, rights and franchises, comply with all laws applicable to it and
continue to conduct and operate its business substantially as conducted and
operated during the present and preceding calendar years.
6.2 MAINTAIN PROPERTY. Borrower and Guarantor will each maintain,
preserve, and protect all leases, franchises, and trade names and preserve all
the remainder of its properties used or useful in the conduct of its business
substantially as conducted and operated during the present and preceding fiscal
year; preserve all the remainder of its properties used or useful in the conduct
of its business and keep the same in good repair, working order and condition,
and from time to time make, or cause to be made, all needed and proper repairs,
renewals, replacements, betterments and improvements thereto so that the
business carried on in connection therewith may be properly conducted at all
times.
6.3 INSURANCE. (a) Borrower and Guarantor will at all times maintain in
some company or companies (having a Best's rating of A- or better) approved by
Bank:
(i) Comprehensive public liability insurance covering claims
for bodily injury, death, and property damage, with minimum limits
satisfactory to the Bank, but in any event not less than those amounts
customarily maintained by companies in the same or substantially
similar business;
(ii) Hazard insurance insuring Borrower's and Guarantor's
property and assets against loss by fire (with extended coverage) and
against such other hazards and perils (including but not limited to
loss by windstorm, hail, explosion, riot, aircraft, smoke, vandalism,
malicious mischief and vehicle damage) as Bank, in its sole discretion,
shall from time to time require, all such insurance to be issued in
such form, with such deductible provision not to exceed $500,000.00,
and for such amount as shall be satisfactory to Bank, with loss payable
clause in favor of Bank. Upon the occurrence of an Event of Default,
the Bank is hereby authorized and
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empowered, at its option, to adjust or compromise any loss under any
such insurance policies and to collect and receive the proceeds from
any such policy or policies; and
(iii) Such other insurance as the Bank may, from time to time,
reasonably require by notice in writing to the Borrower and/or
Guarantor.
(b) All required insurance policies shall provide for not less than
thirty (30) days' prior written notice to the Bank of any cancellation,
termination, or material amendment thereto; and in all such liability insurance
policies, Bank shall be named as an additional insured. Hazard insurance
policies shall contain the agreement of the insurer that any loss thereunder
shall be payable to the Bank notwithstanding any action, inaction or breach of
representation or warranty by the Borrower or the Guarantor. The Borrower and/or
Guarantor will deliver to Bank original or duplicate policies of such insurance,
or satisfactory certificates of insurance, and, as often as Bank may reasonably
request, a report of a reputable insurance broker with respect to such
insurance. Any insurance proceeds received by Bank shall be applied upon the
indebtednesses, liabilities, and obligations of the Borrower to the Bank
(whether matured or unmatured) or, at Bank's option, released to the Borrower.
6.4 OBLIGATIONS, TAXES AND LIENS. Borrower and Guarantor will each pay
all of its indebtednesses and obligations promptly in accordance with normal
terms and practices of its business and pay and discharge or cause to be paid
and discharged promptly all taxes, assessments, and governmental charges or
levies imposed upon it or upon any of its income and profits, or upon any of its
properties, real, personal or mixed, or upon any part thereof, before the same
shall become in default, as well as all lawful claims for labor, materials, and
supplies which otherwise, if unpaid, might become a lien or charge upon such
properties or any part thereof; provided, however, that the Borrower and the
Guarantor shall not be required to pay and discharge or to cause to be paid and
discharged any such tax, assessment, trade payable, charge, levy or claim so
long as the validity thereof shall be contested in good faith by appropriate
proceedings satisfactory to Bank, and Bank shall be furnished, if Bank shall so
request, bond or other security protecting it against loss in the event that
such contest should be adversely determined.
6.5 FINANCIAL REPORTS AND OTHER DATA. Guarantor will furnish to the
Bank as soon as available and in any event within ninety (90) days after the end
of each fiscal year of such party an unqualified audit as of the close of such
fiscal year of such party, including a consolidated balance sheet and statement
of income and surplus of Guarantor and Borrower together with the unqualified
audit report and opinion of Ernst & Young, LLP, Certified Public Accountant, or
other independent Certified Public Accountant acceptable to the Bank, showing
the financial condition of Guarantor and Borrower, on a consolidated basis, at
the close of such year and the results of operations during such year, and,
within forty-five (45) days after the end of each fiscal quarter, financial
statements similar to those described above for Guarantor and Borrower, on a
consolidated basis, not audited but prepared in accordance with GAAP (Form 10-Q)
and certified by the Chief Financial Officer of Guarantor, such balance sheets
to be as of the end of such quarter and such statements of income and surplus to
be for the period from the beginning of said year to the end of such quarter, in
each case subject only to audit and year-end adjustment. Further, Guarantor will
furnish Bank with a copy of its Form 10-K filed with the United States
Securities and Exchange Commission within ninety (90) days of each fiscal year
end.
6.6 NOTICE OF DEFAULT. At the time of Borrower's or Guarantor's first
knowledge or notice, furnish the Bank with written notice of the occurrence of
any event or the existence of any condition
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which constitutes or upon written notice or lapse of time or both would
constitute an Event of Default under the terms of this Loan Agreement.
6.7 ADDITIONAL INFORMATION. Borrower and Guarantor will each furnish
such other information regarding the operations, business affairs and financial
condition of the Borrower and the Guarantor as Bank may reasonably request,
including but not limited to accounts payable aging reports, written
confirmation of requests for loan advances, true and exact copies of its books
of account and tax returns, and all information furnished to shareholders, or
any governmental authority, and permit the copying of the same.
6.8 RIGHT OF INSPECTION. Permit any person designated by the Bank, at
the Bank's expense, to visit and inspect any of the properties, books and
financial reports of the Borrower and the Guarantor and to discuss its affairs,
finances and accounts with its principal officers, at all such reasonable times
and as often as a Bank may reasonably request.
6.9 ENVIRONMENTAL LAWS. Maintain at all times all of Borrower's and
Guarantor's property in compliance with all Environmental Laws, and immediately
notify the Bank of any notice, action, lien or other similar action alleging
either the location of any Hazardous Substances or the violation of any
Environmental Laws with respect to any of Borrower's or Guarantor's property or
operations.
6.10 NOTICE OF ADVERSE CHANGE IN ASSETS. At the time of Borrower's or
Guarantor's first knowledge or notice, immediately notify the Bank of any
information that may adversely affect in any material manner the assets of the
Borrower or the Guarantor, including but not limited to the amount or
collectibility of any Accounts Receivable or the value or marketability of
Inventory.
6.11 NOTICE OF MATERIAL CHANGE OR AMENDMENT TO NORTHWEST AIRLINES, INC.
ASA. At the time of Borrower's or Guarantor's first knowledge or notice,
immediately notify the Bank of any material change or amendment to its ASA with
Northwest Airlines, Inc.
6.12 BORROWING BASE CERTIFICATE. Borrower will furnish on the fifteenth
(15th) day of each calendar month a Borrowing Base Certificate substantially in
the form of EXHIBIT "C" attached hereto stating the Borrowing Base as of the
last day of the immediately preceding calendar month, certified by the Chief
Financial Officer of Borrower. To the extent that Borrower has no outstanding
indebtedness under the Revolving Credit Loan, Borrower shall not be required to
provide the Borrowing Base Certificate provided for in this Section 6.12.
6.13 WORKING CAPITAL. Guarantor will maintain at all times beginning on
the Closing Date, Working Capital (as defined in Section 1) of not less than
Fifteen Million Dollars ($15,000,000.00), measured as of the end of each monthly
reporting period.
6.14 MINIMUM LIQUIDITY POSITION. Guarantor will maintain at all times
beginning on the Closing Date a minimum Liquidity Position of not less than
Thirty Million Dollars ($30,000,000.00), measured as the end of each monthly
accounting period. Liquidity Position shall be defined as all cash and cash
equivalents, plus any unused amounts available under this Loan Agreement.
6.15 MINIMUM CASH FLOW COVERAGE. Guarantor will maintain at all times
beginning on the Closing date a minimum cash flow coverage ratio of 1.20 to 1,
measured at fiscal year end 12/31/05. Cash flow coverage shall be defined as net
income after taxes, plus interest expense, plus non-cash
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depreciation and amortization expenses, minus non-financed Capital Expenditures,
divided by current maturities of long-term debt, plus interest expense.
6.16 NET INCOME AFTER TAXES. Guarantor will maintain at all times
beginning on the Closing Date an annualized net income after taxes, measured on
a rolling four quarter basis, of not less than Twenty-Five Million Dollars
($25,000,000.00).
SECTION 7: NEGATIVE COVENANTS OF BORROWER AND GUARANTOR
Borrower and Guarantor each covenant and agree that at all times from
and after the Closing Date, unless the Bank shall otherwise consent in writing
(or unless such Borrower or Guarantor shall provide Bank with prior written
notice, in the case of Section 7.4 hereof only), such consent to be at the
reasonable discretion of the Bank, it will not, either directly or indirectly:
7.1 SALE OF ASSETS. Sell, lease, transfer or dispose (other than in the
normal course of business) of all or a substantial part of its assets.
7.2 SALE OF ACCOUNTS RECEIVABLE. Sell, discount or otherwise dispose of
any of its Accounts Receivable or any promissory note or obligation held by it,
with or without recourse.
7.3 NEW BUSINESS. Expand, acquire or enter into any business other than
its present business, or any management contract whereby the effective
management or control of Borrower or Guarantor is delegated to third parties,
without the prior written consent of the Bank.
7.4 CONSOLIDATION OR MERGER; ACQUISITION OF ASSETS. Enter into any
transaction of merger or consolidation, acquire any other business or
corporation, or acquire all or substantially all of the property or assets of
any other Person.
SECTION 8: EVENTS OF DEFAULT
An "Event of Default" shall exist if any of the following shall occur:
8.1 PAYMENT OF PRINCIPAL, INTEREST. Either the Borrower or the
Guarantor defaults in the prompt payment as and when due of principal or
interest on the Note or any fees due under this Loan Agreement or any Guaranty
Agreement executed in connection therewith and such default is not cured within
five (5) days after written notice of default; or in the prompt payment when due
of any other indebtednesses, liabilities, or obligations to the Bank, whether
now existing or hereafter created or arising; direct or indirect, absolute or
contingent which is not cured within any grace or cure period applicable
thereto; or
8.2 PAYMENT OF OTHER OBLIGATIONS. Either the Borrower or the Guarantor
defaults with respect to any other agreement to which it is a party or with
respect to any other indebtedness when due or the performance of any other
obligation incurred in connection with any indebtedness for borrowed money, if
the effect of such default results in the acceleration of the maturity of such
indebtedness in an amount greater than Ten Million Dollars ($10,000,000.00), or
if the effect of such default results in the holder thereof causing such
indebtedness in an amount greater than Ten Million Dollars ($10,000,000.00) to
become due prior to its stated maturity; or
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8.3 TERMINATION OF ASA FOR CAUSE. The ASA with Northwest Airlines, Inc.
shall be terminated for cause by Northwest Airlines, Inc.
8.4 REPRESENTATION OR WARRANTY. Any representation or warranty made by
the Borrower or the Guarantor herein, or in any report, certificate, financial
statement or other writing furnished in connection with or pursuant to this Loan
Agreement shall prove to be false, misleading or incomplete in any material
respect on the date as of which made; or
8.5 BANKRUPTCY, ETC. The Borrower or any Guarantor shall make an
assignment for the benefit of creditors, file a petition in bankruptcy, petition
or apply to any tribunal for the appointment of a custodian, receiver or any
trustee for it or him or a substantial part of its or his assets, or shall
commence any proceeding under any bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction, whether now or hereafter in effect; or if there shall have been
filed any such petition or application, or any such proceeding shall have been
commenced against Borrower or any Guarantor, in which an order for relief is
entered or which remains undismissed for a period of thirty (30) days or more;
or Borrower or any Guarantor by any act or omission shall indicate its or his
consent to, approval of or acquiescence in any such petition, application or
proceeding or order for relief or the appointment of a custodian, receiver or
any trustee for it or him or any substantial part of any of its or his
properties, or shall suffer any such custodianship, receivership or trusteeship
to continue undischarged for a period of thirty (30) days or more; or Borrower
or any Guarantor shall generally not pay its or his debts as such debts become
due; or
8.6 CONCEALMENT OF PROPERTY, ETC. The Borrower or any Guarantor shall
have concealed, removed, or permitted to be concealed or removed, any part of
its or his property, with intent to hinder, delay or defraud its or his
creditors or any of them, or made or suffered a transfer of any of its or his
property which may be fraudulent under any bankruptcy, fraudulent conveyance or
similar law; or shall have made any transfer of its or his property to or for
the benefit of a creditor at a time when other creditors similarly situated have
not been paid; or shall have suffered or permitted, while insolvent, any
creditor to obtain a lien upon any of its or his property through legal
proceedings or distraint which is not vacated within thirty (30) days from the
date thereof.
8.7 CHANGE IN OWNERSHIP. There shall occur any change in the ownership
of the capital stock of Borrower, or Borrower shall grant or convey or permit to
be granted or conveyed, voluntarily or involuntarily, directly or indirectly,
any security interest in, pledge of or other lien or encumbrance on such owner's
capital stock in Borrower.
8.8 LOAN DOCUMENTS TERMINATED OR VOID. This Loan Agreement, the Note,
the Guaranty Agreements or any instrument securing the Note shall, at any time
after their respective execution and delivery and for any reason, cease to be in
full force and effect or shall be declared to be null and void; any Guarantor
shall die, or the Borrower or any Guarantor shall deny that either or any of
them has any or further liability under this Loan Agreement and the Note, or
under the Guaranty Agreements, respectively.
8.9 COVENANTS. The Borrower or the Guarantor defaults in the
performance or observance of any other covenant, agreement or undertaking on its
part to be performed or observed, contained herein, in the Security Agreement,
or in any other instrument or document which now or hereafter
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evidences or secures all or any part of the loan indebtedness, and such default
is not cured within any grace or cure period applicable thereto.
8.10 IMMEDIATE DEFAULTS. The Events of Default described in Sections
8.5, 8.6, 8.7, and 8.8 shall be immediate events of default with no grace or
cure period.
8.11 REMEDY. Upon the occurrence of any Event of Default, as specified
herein, which is not cured within any applicable grace or cure period, the Bank
shall, at its option, be relieved of any obligation to make further Revolving
Credit Advances under this Agreement; and the Bank may, at its option, thereupon
declare the entire unpaid principal balances of the Note of Borrower, all
interest accrued and unpaid thereon and all other amounts payable under this
Loan Agreement to be immediately due and payable for all purposes, and may
exercise all rights and remedies available to it under the Security Agreement,
Guaranty Agreements, any other instrument or document which secures the Note, or
available at law or in equity. Further, the Bank shall have the right to the
appointment of a receiver to take possession of Borrower's premises, properties,
assets, books and records, without consideration of the value of the collateral
pledged as security for the Note or the solvency of any person liable for the
payment of the amounts then owing, and all amounts collected by the receiver
shall, after expenses of the receivership, be applied to the payment of the
Note, and interest thereon; and the Bank, at its option, shall have the right to
do the same, without the appointment of a receiver. All such rights and remedies
are cumulative and nonexclusive, and may be exercised by the Bank concurrently
or sequentially, in such order as the Bank may choose.
SECTION 9: MISCELLANEOUS
9.1 AMENDMENTS. The provisions of this Loan Agreement, the Note, or any
instrument or document executed pursuant hereto or securing the indebtednesses
may be amended or modified only by an instrument in writing signed by the
parties hereto.
9.2 NOTICES. All notices and other communications provided for
hereunder shall be in writing and shall be mailed, certified mail, return
receipt requested, or delivered, if to the Borrower or to the Guarantor, to it
at 0000 Xxxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxxx 00000, attention:
Xxxxx X. Xxxx, Chief Financial Officer; if to the Bank, to it at 000 Xxxxxxx
Xxxxxx, Xxxxxxx, Xxxxxxxxx 00000, Attention: Metropolitan Division; or as to any
such person at such other address as shall be designated by such person in a
written notice to the other parties hereto complying as to delivery with the
terms of this Section 9.2. All such notices and other communications shall be
effective (i) if mailed, when received or three business days after mailing,
whichever is earlier; or (ii) if delivered, upon delivery.
9.3 NO WAIVER, CUMULATIVE REMEDIES. No failure to exercise and no delay
in exercising, on the part of the Bank, any right, power or privilege hereunder,
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. Waiver of any
right, power, or privilege hereunder or under any instrument or document now or
hereafter securing the indebtedness evidenced hereby or under any guaranty at
any time given with respect thereto is a waiver only as to the specified item.
The rights and remedies herein provided are cumulative and not exclusive of any
rights or remedies provided by law.
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9.4 INDEMNIFICATION. Borrower agrees to indemnify Bank from and against
any and all claims, losses and liabilities, including, without limitation,
reasonable attorneys' fees, growing out of or resulting from this Agreement
(including, without limitation, enforcement of this Agreement), except claims,
losses or liabilities resulting solely and directly from Bank's gross negligence
or willful misconduct. The indemnification provided for in this Section shall
survive the payment in full of the loan.
9.5 SURVIVAL OF AGREEMENTS. All agreements, representations and
warranties made herein shall survive the delivery of the Note. This Loan
Agreement shall be binding upon, and inure to the benefit of, the parties hereto
and their respective successors and assigns, except that the Borrower shall not
have the right to assign its rights hereunder or any interest therein.
9.6 GOVERNING LAW. This Loan Agreement shall be governed and construed
in accordance with the laws of the State of Tennessee; except (a) that the
provisions hereof which relate to the payment of interest shall be governed by
(i) the laws of the United States or, (ii) the laws of the State of Tennessee,
whichever permits the Bank to charge the higher rate, as more particularly set
out in the Note, and (b) to the extent that the Liens in favor of the Bank, the
perfection thereof, and the rights and remedies of the Bank with respect
thereto, shall, under mandatory provisions of law, be governed by the laws of a
state other than Tennessee.
9.7 EXECUTION IN COUNTERPARTS. This Loan Agreement may be executed in
any number of counterparts, each of which when so executed shall be deemed to be
an original and all of which taken together shall constitute but one and the
same instrument.
9.8 TERMINOLOGY; SECTION HEADINGS. All personal pronouns used in this
Loan Agreement whether used in the masculine, feminine, or neuter gender, shall
include all other genders; the singular shall include the plural, and vice
versa. Section headings are for convenience only and neither limit nor amplify
the provisions of this Loan Agreement.
9.9 ENFORCEABILITY OF AGREEMENT. Should any one or more of the
provisions of this Loan Agreement be determined to be illegal or unenforceable,
all other provisions, nevertheless, shall remain effective and binding on the
parties hereto.
9.10 INTEREST LIMITATIONS. (a) The loan and the Notes evidencing the
loans, including any renewals or extensions thereof, may provide for the payment
of any interest rate (i) permissible at the time the contract to make the loan
is executed, (ii) permissible at the time the loan is made or any advance
thereunder is made, or (iii) permissible at the time of any renewal or extension
of the loan or the Note.
(b) It is the intention of the Bank and the Borrower to comply strictly
with applicable usury laws; and, accordingly, in no event and upon no
contingency shall the Bank ever be entitled to receive, collect, or apply as
interest any interest, fees, charges or other payments equivalent to interest,
in excess of the maximum rate which the Bank may lawfully charge under
applicable statutes and laws from time to time in effect; and in the event that
the holder of the Note ever receives, collects, or applies as interest any such
excess, such amount which, but for this provision, would be excessive interest,
shall be applied to the reduction of the principal amount of the indebtedness
thereby evidenced; and if the principal amount of the indebtedness evidenced
thereby, and all lawful interest
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thereon, is paid in full, any remaining excess shall forthwith be paid to the
Borrower, or other party lawfully entitled thereto. In determining whether or
not the interest paid or payable, under any specific contingency, exceeds the
highest rate which Bank may lawfully charge under applicable law from time to
time in effect, the Borrower and the Bank shall, to the maximum extent permitted
under applicable law, characterize any non-principal payment as a reasonable
loan charge, rather than as interest. Any provision hereof, or of any other
agreement between the Bank and the Borrower, that operates to bind, obligate, or
compel the Borrower to pay interest in excess of such maximum rate shall be
construed to require the payment of the maximum rate only. The provisions of
this paragraph shall be given precedence over any other provision contained
herein or in any other agreement between the Bank and the Borrower that is in
conflict with the provisions of this paragraph.
The Note shall be governed and construed according to the statutes and
laws of the State of Tennessee from time to time in effect, except to the extent
that Section 85 of Title 12 of the United States Code (or other applicable
federal statue) may permit the charging of a higher rate of interest than
applicable state law, in which event such applicable federal statute, as amended
and supplemented from time to time shall govern and control the maximum rate of
interest permitted to be charged hereunder; it being intended that, as to the
maximum rate of interest which may be charged, received, and collected
hereunder, those applicable statutes and laws, whether state or federal, from
time to time in effect, which permit the charging of a higher rate of interest,
shall govern and control; provided, always, however, that in no event and under
no circumstances shall the Borrower be liable for the payment of interest in
excess of the maximum rate permitted by such applicable law, from time to time
in effect.
9.11 NON-CONTROL. In no event shall the Bank's rights hereunder be
deemed to indicate that the Bank is in control of the business, management or
properties of the Borrower or has power over the daily management functions and
operating decisions made by the Borrower.
9.12 CONTINUING SECURITY. Upon the specific Termination Date of
Revolving Credit Loan so fixed in Article One, or in the event of the extension
of this Agreement to a subsequent Termination Date (when no effective extension
is in force), the Revolving Credit Loan and all other extensions of credit
(unless sooner declared to be due and payable by the Bank pursuant to the
provisions hereof) shall become due and payable for all purposes. Until all such
indebtednesses, liabilities and obligations secured by the Security Agreement
are satisfied in full, such termination shall not affect the security interest
granted to Bank pursuant to the Security Agreement, nor the duties, covenants,
and obligations of the Borrower therein and in this Agreement; and all of such
duties, covenants and obligations shall remain in full force and effect until
the Revolving Credit Loan and all other indebtednesses, liabilities and
obligations of the Borrower to the Bank shall have been fully paid and satisfied
in all respects.
9.13 FEES AND EXPENSES. The Borrower agrees to pay, or reimburse the
Bank for, the actual out-of-pocket expenses, including reasonable counsel fees
and fees of any accountants, inspectors or other similar experts, as deemed
necessary by the Bank, incurred by the Bank in connection with the development,
preparation, execution, amendment, recording, administration (excluding the
salary of Bank's employees and Bank's normal and usual overhead expenses) or
enforcement of, or the preservation of any rights under this Loan Agreement, the
Notes, and any instrument or document now or hereafter securing the Revolving
Credit Loan indebtednesses.
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9.14 TIME OF ESSENCE. Time is of the essence of this Loan Agreement,
the Note, and the other instruments and documents executed and delivered in
connection herewith.
9.15 COMPROMISES, RELEASES, ETC. Bank is hereby authorized from time to
time, without notice to anyone, to make any sales, pledges, surrenders,
compromises, settlements, releases, indulgences, alterations, substitutions,
exchanges, changes in, modifications, or other dispositions including, without
limitation, cancellations, of all or any part of the Loan indebtedness, or of
any contract or instrument evidencing any thereof, or of any security or
collateral therefor, and/or to take any security for or other guaranties upon
any of said indebtedness; and the liability of the Guarantor shall not be in any
manner affected, diminished, or impaired thereby, or by any lack of diligence,
failure, neglect, or omission on the part of Bank to make any demand or protest,
or give any notice of dishonor or default, or to realize upon or protect any of
said indebtedness or any collateral or security therefor. Bank shall have the
exclusive right to determine how, when, and what application of payments and
credits, if any, shall be made on the Loan and extensions of credit or any part
thereof, and shall be under no obligation, at any time, to first resort to, make
demand on, file a claim against, or exhaust its remedies against the Borrower,
or its property or estate, or to resort to or exhaust its remedies against any
collateral, security, property, liens, or other rights whatsoever. It is
expressly agreed that Bank may at any time make demand for payment on, or bring
suit against, the Guarantor, or the Borrower, and may compound with any one or
more of the Guarantor for such sums or on such terms as it may see fit.
9.16 JOINDER OF GUARANTOR. The Guarantor joins herein for the purpose
of acknowledging and consenting to the terms and provisions hereof (and
especially the provisions of Section 9.15), and does further, jointly and
severally, absolutely and unconditionally guarantee the payment and performance
of each and every obligation and undertaking of the Borrower hereunder.
9.17 BANK'S CONSENT. Except as otherwise expressly provided herein, in
any instance hereunder where Bank's approval or consent is required or the
exercise of its judgment is required, the granting or denial of such approval or
consent and the exercise of such judgment shall be within the sole discretion of
Bank, and Bank shall not, for any reason or to any extent, be required to grant
such approval or consent or exercise such judgment. Bank may consult with
counsel, and the written advice or opinion of such counsel shall be full and
complete authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in reliance thereon.
9.18 VENUE OF ACTIONS. As an integral part of the consideration for the
making of the loan, it is expressly understood and agreed that no suit or action
shall be commenced by the Borrower, by Guarantor, or by any successor, personal
representative or assignee of any of them, with respect to the loan contemplated
hereby, or with respect to this Loan Agreement or any other document or
instrument which now or hereafter evidences or secures all or any part of the
loan indebtedness, other than in a state court of competent jurisdiction in and
for the County of the State in which the principal place of business of the Bank
is situated, or in the United States District Court for the District in which
the principal place of business of the Bank is situated, and not elsewhere.
Nothing in this paragraph contained shall prohibit Bank from instituting suit in
any court of competent jurisdiction for the enforcement of its rights hereunder
or in any other document or instrument which evidences or secures the loan
indebtedness.
-20-
9.19 WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY TO THIS AGREEMENT
HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION
OR CAUSE OF ACTION (a) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (b) IN
ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES
HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE
TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR
A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
9.20 CONFLICT. In the event of any conflict between the provisions
hereof and the provisions of the Security Agreement, during the continuance of
this Agreement the provisions of this Agreement shall control.
[SIGNATURE PAGE TO FOLLOW]
-21-
IN WITNESS WHEREOF, the Borrower, the Guarantor, and the Bank have
caused this Agreement to be executed by their duly authorized officers, all as
of the day and year first above written.
PINNACLE AIRLINES, INC.
By:
---------------------------------
Title:
------------------------------
BORROWER
PINNACLE AIRLINES CORP.
By:
---------------------------------
Title:
------------------------------
GUARANTOR
FIRST TENNESSEE BANK NATIONAL
ASSOCIATION
By:
---------------------------------
Title:
------------------------------
BANK
-22-
EXHIBIT "A"
PERMITTED ENCUMBRANCES
1. Lien against Two Million Dollars ($2,000,000.00) of Borrower's cash by
Regions Bank, pursuant to pledge as security for certain currently outstanding
letters of credit, until the expiration, transfer, or termination of such
letters of credit.
A-1
EXHIBIT "B"
REVOLVING CREDIT NOTE
[See attached]
B-1
EXHIBIT "C"
BORROWING BASE CERTIFICATE
[See attached]
Dated as of: ________________
To: First Tennessee Bank National
Association
000 Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Attention: Metropolitan Division
1. Computation of Borrowing Base and Available Credit
Cash and Marketable Securities $
-------------
Acceptable Accounts
Current to 60 days $
-------------
60 to 90 days
-------------
less Deposits and Deferred
Payments ( )
-------------
Subtotal (Acceptable Accounts)
-------------
x 80%
-------------
Accounts Receivable
Borrowing Base
--------
Acceptable Inventory
Value of Acceptable Inventory (based
on Company records after initial appraisal) $
-------------
40%
-------------
Inventory Borrowing
Base
--------
Total Borrowing Base
--------
Total Debt Outstanding ( )
--------
Available Credit
--------
2. Accounts Receivable Over 120 days $
-------------
C-1
Other Accounts Receivable Not
Listed Above _____________
Other Inventory Not Listed
Above _____________
3. Exhibits Attached Hereto:
(a) Aging of Accounts Receivable (and Listing of Accounts
Receivable)
(b) Identification of Inventory not located at locations specified
in the Security Agreement.
The undersigned certifies that the information set out herein and the
Exhibits attached hereto is true and correct in all material respects as of the
date first above set out. The undersigned further certifies that the figures set
out in Paragraph 1 hereof pertain only to Acceptable Accounts, and Acceptable
Inventory as those items are defined in the Loan Agreement by and among Pinnacle
Airlines, Inc., Pinnacle Airlines Corp., and First Tennessee Bank National
Association.
PINNACLE AIRLINES, INC.
------------------------------------
By:
---------------------------------
Title:
------------------------------
C-2
EXHIBIT "D"
NON-DEFAULT CERTIFICATE
The undersigned, a duly authorized officer of PINNACLE AIRLINES, INC.,
a Georgia corporation [referred to as "Borrower" in that certain Loan Agreement
(the "Loan Agreement") dated June ____, 2005, between Borrower and First
Tennessee Bank National Association, Memphis, Tennessee ("Bank")], certifies to
said Bank, in accordance with the terms and provisions of said Loan Agreement,
as follows:
1. All of the representations and warranties set forth in Section 5 of
the Loan Agreement are and remain true and correct on and as of the date of this
Certificate with the same effect as though such representations and warranties
had been made on and as of this date.
2. As of the date hereof, the Borrower is in full compliance with all
of the terms and provisions set forth in the Loan Agreement and all of the
instruments and documents executed in connection therewith, and no Event of
Default, as specified in Section 8 of the Loan Agreement, nor any event which,
upon notice, lapse of time or both, would constitute an Event of Default, has
occurred or is continuing.
DATED this ____ day of ______________________, 20__.
------------------------------------
By:
---------------------------------
Title:
------------------------------
D-1
