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GREENWICH CALEDONIAN, LIMITED
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REVOLVING CREDIT AGREEMENT
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Dated as of June ___, 1996
THE BANK OF NEW YORK COMMERCIAL CORPORATION
(AS A LENDER AND AS AGENT)
AND
THE VARIOUS FINANCIAL INSTITUTIONS THAT BECOME LENDERS HEREUNDER
(LENDERS)
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TABLE OF CONTENTS
I. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Accounting Terms . . . . . . . . . . . . . . . . . . . . . 1
1.2 General Terms. . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Uniform Commercial Code Terms. . . . . . . . . . . . . . . 15
1.4 Certain Matters of Construction. . . . . . . . . . . . . . 15
1.5 Other Defined Terms. . . . . . . . . . . . . . . . . . . . 15
II. ADVANCES AND PAYMENTS. . . . . . . . . . . . . . . . . . . . . . . . . 15
2.1 (a) Borrowing Base. . . . . . . . . . . . . . . . . . . 15
(b) Discretionary Rights. . . . . . . . . . . . . . . . 16
(c) Inventory Advances. . . . . . . . . . . . . . . . . 16
(d) Receivables Advances. . . . . . . . . . . . . . . . 16
(e) Unbilled Receivables. . . . . . . . . . . . . . . . 16
2.2 Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.3 Procedure for Borrowing. . . . . . . . . . . . . . . . . . 17
2.4 Disbursement of Advance Proceeds . . . . . . . . . . . . . 20
2.5 Repayment of Advances. . . . . . . . . . . . . . . . . . . 20
2.6 Repayment of Excess Advances . . . . . . . . . . . . . . . 20
2.7 Manner of Borrowing and Payment. . . . . . . . . . . . . . 20
2.8 Statement of Account . . . . . . . . . . . . . . . . . . . 22
2.9 No Deductions. . . . . . . . . . . . . . . . . . . . . . . 22
2.10 Mandatory Prepayments. . . . . . . . . . . . . . . . . . . 22
2.11 Additional Payments. . . . . . . . . . . . . . . . . . . . 23
2.12 Increased Costs. . . . . . . . . . . . . . . . . . . . . . 23
2.13 Capital Adequacy . . . . . . . . . . . . . . . . . . . . . 24
2.14 Basis For Determining Interest Rate Inadequate or Unfair . 24
2.15 Letters of Credit. . . . . . . . . . . . . . . . . . . . . 25
2.16 Issuance of Letters of Credit. . . . . . . . . . . . . . . 26
2.17 Requirements For Issuance of Letters of Credit.. . . . . . 26
2.18 Defaulting Lender. . . . . . . . . . . . . . . . . . . . . 27
III. INTEREST AND FEES. . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.1 Interest . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.2 Intentionally Omitted. . . . . . . . . . . . . . . . . . . 30
3.3 Unused Facility Fee. . . . . . . . . . . . . . . . . . . . 30
3.4 Letter of Credit . . . . . . . . . . . . . . . . . . . . . 30
3.5 Computation of Interest and Fees . . . . . . . . . . . . . 31
3.6 Maximum Charges. . . . . . . . . . . . . . . . . . . . . . 31
IV. COLLATERAL: GENERAL TERMS. . . . . . . . . . . . . . . . . . . . . . . 31
4.1 Acknowledgement and Grant of Security Interests. . . . . . 31
4.2 Perfection of Security Interest. . . . . . . . . . . . . . 32
4.3 Disposition of Collateral. . . . . . . . . . . . . . . . . 32
4.4 Preservation of Collateral . . . . . . . . . . . . . . . . 32
4.5 Ownership of Collateral. . . . . . . . . . . . . . . . . . 33
4.6 Defense of Agent's Interests . . . . . . . . . . . . . . . 33
4.7 Books and Records. . . . . . . . . . . . . . . . . . . . . 34
4.8 Financial Disclosure . . . . . . . . . . . . . . . . . . . 34
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4.9 Compliance with Laws . . . . . . . . . . . . . . . . . . . 34
4.10 Inspection of Premises . . . . . . . . . . . . . . . . . . 35
4.11 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . 35
4.12 Failure to Maintain Insurance. . . . . . . . . . . . . . . 37
4.13 Payment of Taxes . . . . . . . . . . . . . . . . . . . . . 37
4.14 Payment of Leasehold Obligations . . . . . . . . . . . . . 37
4.15 Receivables. . . . . . . . . . . . . . . . . . . . . . . . 38
(a) Nature of Receivables . . . . . . . . . . . . . . . 38
(b) Solvency of Customers . . . . . . . . . . . . . . . 38
(c) Locations of Borrower . . . . . . . . . . . . . . . 38
(d) Collection of Receivables . . . . . . . . . . . . . 38
(e) Notification of Assignment of Receivables . . . . . 38
(f) Power of Agent to Act on Borrower's Behalf. . . . . 39
(g) No Liability. . . . . . . . . . . . . . . . . . . . 39
(h) Establishment of an Agency Account. . . . . . . . . 40
4.16 Inventory. . . . . . . . . . . . . . . . . . . . . . . . . 40
4.17 Exculpation of Liability . . . . . . . . . . . . . . . . . 40
4.18 Environmental Matters. . . . . . . . . . . . . . . . . . . 41
4.19 Greenwich. . . . . . . . . . . . . . . . . . . . . . . . . 43
4.20 Inconsistent Provisions. . . . . . . . . . . . . . . . . . 44
V. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . 44
5.1 Authority. . . . . . . . . . . . . . . . . . . . . . . . . 44
5.2 Formation and Qualification. . . . . . . . . . . . . . . . 44
5.3 Survival of Representations and Warranties . . . . . . . . 44
5.4 Tax Returns. . . . . . . . . . . . . . . . . . . . . . . . 44
5.5 Intentionally Omitted. . . . . . . . . . . . . . . . . . . 45
5.6 Corporate Name . . . . . . . . . . . . . . . . . . . . . . 45
5.7 O.S.H.A. and Environmental Compliance. . . . . . . . . . . 45
5.8 Solvency; No Litigation, Violation, Indebtedness or
Default . . . . . . . . . . . . . . . . . . . . . . . . . 45
5.9 Patents, Trademarks, Copyrights and Licenses . . . . . . . 46
5.10 Licenses and Permits . . . . . . . . . . . . . . . . . . . 47
5.11 Default of Indebtedness. . . . . . . . . . . . . . . . . . 47
5.12 No Default . . . . . . . . . . . . . . . . . . . . . . . . 47
5.13 No Burdensome Restrictions . . . . . . . . . . . . . . . . 47
5.14 No Labor Disputes. . . . . . . . . . . . . . . . . . . . . 47
5.15 Margin Regulations . . . . . . . . . . . . . . . . . . . . 47
5.16 Investment Company Act . . . . . . . . . . . . . . . . . . 48
5.17 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . 48
5.18 Swaps. . . . . . . . . . . . . . . . . . . . . . . . . . . 48
VI. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . 48
6.1 Payment of Fees. . . . . . . . . . . . . . . . . . . . . . 48
6.2 Conduct of Business and Maintenance of Existence and
Assets. . . . . . . . . . . . . . . . . . . . . . . . . . 48
6.3 Violations . . . . . . . . . . . . . . . . . . . . . . . . 49
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6.4 Government Receivables . . . . . . . . . . . . . . . . . . 49
6.5 Intentionally Omitted. . . . . . . . . . . . . . . . . . . 49
6.6 Intentionally Omitted. . . . . . . . . . . . . . . . . . . 49
6.7 Intentionally Omitted. . . . . . . . . . . . . . . . . . . 49
6.8 Hedging Agreements; Interest Rate Protection . . . . . . . 49
6.9 Execution of Supplemental Instruments. . . . . . . . . . . 49
6.10 Payment of Indebtedness. . . . . . . . . . . . . . . . . . 49
6.11 Standards of Financial Statements. . . . . . . . . . . . . 49
6.12 Exercise of Rights . . . . . . . . . . . . . . . . . . . . 50
6.13 Inventory Composition. . . . . . . . . . . . . . . . . . . 50
6.14 Intentionally Omitted. . . . . . . . . . . . . . . . . . . 50
VII. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.1 Merger, Consolidation, Acquisition and Sale of Assets. . . 50
7.2 Creation of Liens. . . . . . . . . . . . . . . . . . . . . 51
7.3 Guarantees . . . . . . . . . . . . . . . . . . . . . . . . 51
7.4 Investments. . . . . . . . . . . . . . . . . . . . . . . . 51
7.5 Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . 51
7.6 Capital Expenditures . . . . . . . . . . . . . . . . . . . 51
7.7 Dividends. . . . . . . . . . . . . . . . . . . . . . . . . 52
7.8 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . 52
7.9 Nature of Business . . . . . . . . . . . . . . . . . . . . 52
7.10 Transactions with Affiliates . . . . . . . . . . . . . . . 52
7.11 Leases . . . . . . . . . . . . . . . . . . . . . . . . . . 53
7.12 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . 53
7.13 Fiscal Year and Accounting Changes . . . . . . . . . . . . 53
7.14 Prepayment of Indebtedness . . . . . . . . . . . . . . . . 53
7.15 Pledge of Credit . . . . . . . . . . . . . . . . . . . . . 53
VIII. CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . . . . . . . 53
8.1 Conditions to Effectiveness. . . . . . . . . . . . . . . . 53
(a) Notes . . . . . . . . . . . . . . . . . . . . . . . 53
(b) Filings, Registrations and Recordings . . . . . . . 54
(c) Proceedings of Borrower . . . . . . . . . . . . . . 54
(d) Legal Opinions. . . . . . . . . . . . . . . . . . . 54
(e) No Litigation . . . . . . . . . . . . . . . . . . . 54
(f) Intentionally Omitted . . . . . . . . . . . . . . . 54
(g) Pledge Agreements and Other Documents . . . . . . . 54
(h) Fees. . . . . . . . . . . . . . . . . . . . . . . . 55
(i) Material Adverse Change . . . . . . . . . . . . . . 55
(j) Representations and Warranties; Covenants; Events . 55
(k) Incumbency Certificates of Borrower . . . . . . . . 55
(l) Certificates. . . . . . . . . . . . . . . . . . . . 55
(m) Good Standing Certificates. . . . . . . . . . . . . 55
(n) Financial Condition Certificates. . . . . . . . . . 55
(o) Collateral Examination. . . . . . . . . . . . . . . 56
(p) Undrawn Availability. . . . . . . . . . . . . . . . 56
(q) Insurance . . . . . . . . . . . . . . . . . . . . . 56
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(r) Payment Instructions. . . . . . . . . . . . . . . . 56
(s) Blocked Accounts. . . . . . . . . . . . . . . . . . 56
(t) Consents. . . . . . . . . . . . . . . . . . . . . . 56
(u) Leasehold Agreements. . . . . . . . . . . . . . . . 56
(v) U.K. Security Document. . . . . . . . . . . . . . . 56
(w) Contract Review . . . . . . . . . . . . . . . . . . 56
(x) Closing Certificate . . . . . . . . . . . . . . . . 57
(y) Borrowing Base. . . . . . . . . . . . . . . . . . . 57
(z) Other Agreements. . . . . . . . . . . . . . . . . . 57
(aa) Intentionally Omitted . . . . . . . . . . . . . . . 57
(ab) Environmental Reports . . . . . . . . . . . . . . . 57
(ac) Payment Instructions. . . . . . . . . . . . . . . . 57
(ad) Other . . . . . . . . . . . . . . . . . . . . . . . 57
8.2 Conditions to Each Advance . . . . . . . . . . . . . . . . 57
(a) Representations and Warranties. . . . . . . . . . . 57
(b) No Default. . . . . . . . . . . . . . . . . . . . . 58
(c) Maximum Advances. . . . . . . . . . . . . . . . . . 58
IX. INFORMATION AS TO Borrower. . . . . . . . . . . . . . . . . . . . . . . 58
9.1 Disclosure of Material Matters . . . . . . . . . . . . . . 58
9.2 Schedules. . . . . . . . . . . . . . . . . . . . . . . . . 58
9.3 Environmental Reports. . . . . . . . . . . . . . . . . . . 59
9.4 Litigation . . . . . . . . . . . . . . . . . . . . . . . . 59
9.5 Occurrence of Defaults, etc. . . . . . . . . . . . . . . . 59
9.6 Government Receivables . . . . . . . . . . . . . . . . . . 60
9.7 Intentionally Omitted. . . . . . . . . . . . . . . . . . . 60
9.8 Intentionally Omitted. . . . . . . . . . . . . . . . . . . 60
9.9 Other Reports. . . . . . . . . . . . . . . . . . . . . . . 60
9.10 Additional Information . . . . . . . . . . . . . . . . . . 60
9.11 Business Plan. . . . . . . . . . . . . . . . . . . . . . . 60
9.12 Appraisals . . . . . . . . . . . . . . . . . . . . . . . . 60
9.13 Aviall Power by the Hour Agreements. . . . . . . . . . . . 61
9.14 Additional Documents . . . . . . . . . . . . . . . . . . . 61
X. EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
XI. AGENT'S AND LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT. . . . . . . . . 63
11.1 Rights and Remedies. . . . . . . . . . . . . . . . . . . . 63
11.2 Agent's Discretion . . . . . . . . . . . . . . . . . . . . 64
11.3 Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . 64
11.4 Rights and Remedies not Exclusive. . . . . . . . . . . . . 64
XII. WAIVERS AND JUDICIAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . 65
12.1 Waiver of Notice . . . . . . . . . . . . . . . . . . . . . 65
12.2 Delay. . . . . . . . . . . . . . . . . . . . . . . . . . . 65
12.3 Jury Waiver. . . . . . . . . . . . . . . . . . . . . . . . 65
XIII. EFFECTIVE DATE AND TERMINATION. . . . . . . . . . . . . . . . . . . . 65
13.1 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
13.2 Termination. . . . . . . . . . . . . . . . . . . . . . . . 66
XIV. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
14.1 Governing Law. . . . . . . . . . . . . . . . . . . . . . . 66
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14.2 Entire Understanding and Amendments and Modifications. . . 67
14.3 Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . 68
14.4 Successors and Assigns; Participations; New Lenders. . . . 68
14.5 Application of Payments. . . . . . . . . . . . . . . . . . 70
14.6 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . 70
14.7 Survivability. . . . . . . . . . . . . . . . . . . . . . . 71
14.8 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 72
14.9 Injunctive Relief. . . . . . . . . . . . . . . . . . . . . 72
14.10 Captions . . . . . . . . . . . . . . . . . . . . . . . . . 72
14.11 Counterparts . . . . . . . . . . . . . . . . . . . . . . . 72
14.12 Recordation. . . . . . . . . . . . . . . . . . . . . . . . 72
14.13 Consequential Damages. . . . . . . . . . . . . . . . . . . 72
14.14 Construction . . . . . . . . . . . . . . . . . . . . . . . 72
XV. INTENTIONALLY OMITTED. . . . . . . . . . . . . . . . . . . . . . . . . 73
XVI. REGARDING AGENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
16.1. Appointment. . . . . . . . . . . . . . . . . . . . . . . . 73
16.2. Nature of Duties . . . . . . . . . . . . . . . . . . . . . 73
16.3. Lack of Reliance on Agent and Resignation. . . . . . . . . 74
16.4. Certain Rights of Agent. . . . . . . . . . . . . . . . . . 74
16.5. Reliance . . . . . . . . . . . . . . . . . . . . . . . . . 75
16.6. Notice of Default. . . . . . . . . . . . . . . . . . . . . 75
16.7. Indemnification. . . . . . . . . . . . . . . . . . . . . . 75
16.8. Agent in its Individual Capacity . . . . . . . . . . . . . 75
16.9. Delivery of Documents. . . . . . . . . . . . . . . . . . . 76
16.10. Borrower's Undertaking to Agent. . . . . . . . . . . . . . 76
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EXHIBITS AND SCHEDULES
EXHIBITS
1.2(a) CIT Loan Documents
1.2(b) Permitted Liens
1.2(c) World Loan Documents
2.2 Notes
2.15 Letter of Credit Agreement
4.5 Inventory Locations
5.2 States of Incorporation and Qualification To Do Business
5.5(c) Cash Flow Projections and Balance Sheets
5.7 Environmental Compliance
5.8(b) Pending Litigation
5.9 Patents, Tradenames, Copyrights and Licenses
5.10 Licenses and Permits
5.12 Defaults
5.14 Labor Disputes and Contracts
7.3 Guarantees
8.1(r) Financial Condition Opinion
9.2 Borrowing Base Certificate
SCHEDULES
1.2 Real Property
REVOLVING CREDIT AGREEMENT
Revolving Credit Agreement dated as of June ___, 1996 among GREENWICH
CALEDONIAN, LIMITED, a corporation organized under the laws of [Scotland]
("Borrower"), the undersigned financial institutions and the various financial
institutions that become Lenders hereunder (each a "Lender" and collectively,
"Lenders") and THE BANK OF NEW YORK COMMERCIAL CORPORATION ("BNYCC"), a
corporation organized under the laws of the State of New York as agent for
Lenders (BNYCC in such capacity, "Agent").
IN CONSIDERATION of the mutual covenants and undertakings herein
contained, the parties hereto hereby agree as follows:
I. DEFINITIONS.
1.1 ACCOUNTING TERMS. As used in this Agreement, the Notes, or any
certificate, report or other document made or delivered pursuant to this
Agreement, accounting terms not defined in Section 1.2 or elsewhere in this
Agreement and accounting terms partly defined in Section 1.2 to the extent not
defined, shall have the respective meanings given to them under GAAP.
1.2 GENERAL TERMS. For purposes of this Agreement the following terms
shall have the following meanings:
"ADVANCE RATES" shall have the meaning set forth in Section 2.1(a)
hereof.
"ADVANCE REQUEST" shall mean the meaning set forth in Section 2.3.
"ADVANCES" shall mean all Revolving Advances, and other financial
accommodations provided by Lenders to Borrower under or in connection with this
Agreement including, without limitation, Letters of Credit to the extent of the
undrawn amount outstanding of such Letters of Credit.
"AFFILIATE" of any Person shall mean (a) any Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is controlled by,
or is under common control with such Person, or (b) any Person who is a director
or officer (i) of such Person, (ii) of any Subsidiary of such Person or (iii) of
any Person described in clause (a) above. For purposes of this definition,
control of a Person shall mean the power, direct or indirect, (x) to vote 10% or
more of the securities having ordinary voting power for the election of
directors of such Person, or (y)
to direct or cause the direction of the management and policies of such Person
whether by contract or otherwise.
"AFFILIATE LOAN AGREEMENT" shall mean the Fourth Amended and Restated
Revolving Credit and Security Agreement dated as of this date among Agent,
Lenders, Greenwich, Turbine, GTI, Components and Engine Services, as same may be
amended, modified or supplemented from time to time.
"AGENCY ACCOUNT" shall have the meaning set forth in Section 4.15(h).
"AGENT" shall have the meaning set forth in the preamble to this
Agreement and shall include its successors and assigns.
"ALTERNATE BASE RATE" shall mean, for any day, a rate per annum equal to
the higher of (i) the Prime Rate in effect on such day and (ii) the Federal
Funds Rate in effect on such day plus 1/2 of 1%.
"APPLICABLE MARGIN" shall have the meaning given to such term in the
Affiliate Loan Agreement.
"AUTHORITY" shall have the meaning set forth in Section 4.18(d).
"AVIALL" shall mean collectively, Aviall Services, Inc. and Aviall, Inc.
"AVIALL POWER BY THE HOUR AGREEMENTS" shall mean ___________________.
"BANK" shall mean The Bank of New York.
"BNYCC" shall have the meaning set forth in the introductory paragraph
hereof.
"BORROWER" shall mean Greenwich Caledonian, Limited, and all permitted
successors and assigns.
"BUSINESS DAY" shall mean with respect to Eurodollar Rate Loans, any day
on which commercial banks are open for domestic and international business,
including dealings in dollar deposits in London, England and New York, New York
and with respect to Domestic Rate Loans, any day other than a day on which
commercial banks in New York are authorized or required by law to close.
"BUSINESS PLAN" shall mean the long range business and strategic plan of
Borrower which shall include monthly forecasts for (a) the fiscal year ending
September 30, 1997 and (b) each
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fiscal year thereafter, each of which shall be in form and substance consistent
with past practices.
"CALEDONIAN" shall have the meaning set forth in the introductory
paragraph hereof.
"CALEDONIAN ADVANCE RATES" shall have the meaning set forth in Section
2.1(a)(iii) hereof.
"CALEDONIAN FORMULA AMOUNT" shall have the meaning set forth in Section
2.1(a) hereof.
"CALEDONIAN INVENTORY ADVANCE RATE" shall have the meaning set forth in
Section 2.1(a)(ii) hereof.
"CALEDONIAN RECEIVABLES ADVANCE RATE" shall have the meaning set forth in
Section 2.1(a)(i) hereof.
"CALEDONIAN SUBLIMIT" shall mean $50,000,000.
"CAPITALIZED LEASE" means as to any Person, any lease of property by such
Person as lessee which would be capitalized on a balance sheet of such Person
prepared in accordance with GAAP.
"CHANGE OF CONTROL" shall mean the occurrence of any event (whether in
one or more transactions) that results in a transfer of control of Borrower to a
Person other than its Parent. For purposes of this definition, "control of
Borrower" shall mean the power, direct or indirect, (x) to vote 51% or more of
the securities having ordinary voting power for the election of directors of
Borrower or (y) to direct or cause the direction of the management and policies
of Borrower by contract.
"CHARGES" shall mean all taxes, charges, fees, imposts, levies or other
assessments, including, without limitation, all net income, gross income, gross
receipts, sales, use, ad valorem, value added, transfer, franchise, profits,
inventory, capital stock, license, withholding, payroll, employment, social
security, unemployment, excise, severance, stamp, occupation and property taxes,
custom duties, fees, assessments, Liens, Claims and charges of any kind
whatsoever, together with any interest and any penalties, additions to tax or
additional amounts, imposed by any taxing or other governmental authority,
domestic or foreign (including, without limitation, the Pension Benefit Guaranty
Corporation or any environmental agency or superfund), upon the Collateral,
Borrower or any of their Affiliates.
"CLAIMS" shall mean all security interests, Liens, claims or encumbrances
held or asserted by any Person against any or all
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of the Collateral, other than (A) Charges and (B) Permitted Encumbrances.
"COLLATERAL" shall mean the Charged Assets as defined in the U.K.
Security Document.
"COMMITMENT PERCENTAGE" of any Lender shall mean the percentage set forth
below such Lender's name on the signature page hereof as same may be adjusted
upon any assignment by a Lender pursuant to Section 14.4(c) hereof.
"COMPONENTS" shall mean McAllen Components, L.P., a Delaware limited
partnership.
"CONTINENTAL" shall have the meaning set forth in the definition of
Eligible Receivables.
"CUSTOMER" shall mean and include the account debtor with respect to any
of the Receivables.
"CUSTOMER DEPOSITS" shall mean cash deposits or advance payments and
progress payments received from Customers of Borrower.
"DEFAULTING LENDER" shall have the meaning set forth in Section 2.18(a)
hereof.
"DEFAULT RATE" shall have the meaning set forth in Section 3.1 hereof.
"DOCUMENT" shall have the meaning set forth in Section 8.1(c) hereof.
"DOLLAR" and the sign "$" shall mean lawful money of the United States of
America.
"DOMESTIC RATE LOAN" shall mean any Advance that bears interest based
upon the Alternate Base Rate.
"EFFECTIVE DATE" shall mean June __, 1996 or such other later date as the
conditions precedent set forth in Article VIII shall have been satisfied.
"EFFECTIVE HOURS ADJUSTMENT" shall have the meaning set forth in the
definition of Eligible Receivables.
"ELIGIBLE INVENTORY" shall mean and include all Inventory valued at book
value, determined by a moving average method consistent with the method, and
which Agent, in its reasonable discretion, shall not deem ineligible Inventory,
based
-4-
on such considerations as Agent may from time to time deem appropriate
including, without limitation, whether the Inventory is subject to a perfected,
first priority security interest in favor of Agent under the U.K. Security
Document and whether the Inventory conforms to all standards imposed by any
governmental agency, division or department thereof which has regulatory
authority over such goods or the use or sale thereof. Notwithstanding anything
to the contrary contained herein, in the event that the aggregate amount of
"repairable" Inventory (as defined in Section 6.13 hereof) ("Total Repairable
Inventory") exceeds 20% of total Inventory, repairable Inventory in an amount
equal to the difference between (a) Total Repairable Inventory MINUS (b) 20% of
total Inventory shall be excluded from Eligible Inventory. The preceding
sentence shall not constitute a waiver of any breach of Section 6.13(c) hereof.
"ELIGIBLE RECEIVABLES" shall mean and include with respect to Borrower
each Receivable of Borrower arising in the ordinary course of Borrower's
business and which Agent, in its reasonable credit judgment (but subject to the
limitations set forth below), shall deem to be an Eligible Receivable, based on
such considerations as Agent may from time to time deem appropriate.
Specifically, a Receivable shall not be deemed eligible unless such Receivable
is subject to Agent's perfected security interest and no other Lien other than
Permitted Encumbrances, and is evidenced by an invoice or other documentary
evidence satisfactory to Agent. In addition, a Receivable shall not be an
Eligible Receivable if:
(a) it arises out of a sale made by Borrower to an Affiliate of
Borrower or to a Person controlled by an Affiliate of Borrower and such
Receivable when added to the existing Receivables from Affiliates causes the
aggregate amount of outstanding Receivables from Affiliates of Borrower to be
greater than $250,000; PROVIDED, HOWEVER, in no event shall a Receivable due
from one Borrower to another Borrower constitute an Eligible Receivable;
(b) it is due or unpaid more than one hundred twenty (120) days
after the original invoice date except Receivables from (i) Affiliates which
shall be due or unpaid more than thirty (30) days after the original invoice
date and (ii) Continental ("Continental Receivables") which shall be due or
unpaid more than ninety (90) days after the original invoice date;
(c) thirty-five percent (35%) or more of the Receivables from the
subject Customer are due or unpaid more than one hundred twenty (120) days after
the original invoice date;
(d) any covenant, representation or warranty contained in this
Agreement with respect to such Receivable has been breached in any material
respect;
-5-
(e) the Customer is also Borrower's creditor or supplier for an
amount in excess of $100,000, or the Customer has disputed liability, or the
Customer has made any claim with respect to any other Receivable due from such
Customer to Borrower, or the Receivable otherwise is or may become subject to
any right of set off by the Customer; PROVIDED, HOWEVER, the portion of such
Receivable that would otherwise be deemed an Eligible Receivable and which is
not subject to dispute or set-off shall be an Eligible Receivable;
(f) (i) the Customer has commenced a voluntary case under the
federal bankruptcy laws, as now constituted or hereafter amended, or made an
assignment for the benefit of creditors, or if a decree or order for relief has
been entered by a court having jurisdiction in the premises in respect of the
Customer in an involuntary case under any state or federal bankruptcy laws, as
now constituted or hereafter amended, or if any other petition or other
application for relief under any state or federal bankruptcy law has been filed
against the Customer, or if the Customer has discontinued its business, ceased
to be solvent, or consented to or suffered a receiver, trustee, liquidator or
custodian to be appointed for it or for all or a significant portion of its
assets or affairs; or
(ii) a petition is presented by any Person or an order is
made or an effective resolution is passed for the dissolution, termination,
winding up or liquidation of the Customer or for the appointment of a receiver,
administrative receiver, administrator, trustee or similar officer of the
Customer, (ii) the Customer is unable or admits in writing its inability to pay
its debts generally as they fall due or commences negotiations with a view to,
or takes any proceedings under any law for, a readjustment, rescheduling or
deferment of its obligations generally or proposes, makes or enters into an
assignment, arrangement (including a voluntary arrangement under section 1 of
the Insolvency Act) or composition with or for the benefit of its customers
generally, (iii) the Customer ceases or threatens to cease its business, or (iv)
any execution or distress is levied against, or an encumbrancer takes possession
of the whole or any substantial part of the property, undertaking or assets of
the Customer;
(g) the sale is to a Customer outside the United States or United
Kingdom, unless the sale is on letter of credit, guaranty or acceptance terms
(and all proceeds thereunder have been assigned to Agent for benefit of Lenders)
or Borrower's maintain credit insurance with respect thereto with type of
coverage and limit levels acceptable to Agent, or unless Borrower shall have
retained in its possession the goods giving rise to such Receivable as
collateral for such Receivable and such goods shall have a market value in
excess of the face amount of the Receivable, in any such case acceptable to
Agent in its reasonable discretion;
-6-
(h) the sale to the Customer is on a bill-and-hold basis (except
where (i) the Customer has manifested its approval, in writing, to the
acceptable quality of the services rendered, goods to be delivered and its
approval of such sale or (ii) the goods to be delivered have passed all tests
required pursuant to the contract therefor), guaranteed sale, sale-and-return,
sale on approval, consignment or any other repurchase or return basis or is
evidenced by chattel paper;
(i) Agent believes, in its reasonable judgment, that collection
of such Receivable is insecure or that such Receivable may not be paid by reason
of the Customer's financial inability to pay unless, in either case, Borrower
shall have retained in its possession the goods giving rise to such Receivable
as collateral for such Receivable and such goods shall have a market value in
excess of the face amount of the Receivable, in any such case acceptable to
Agent in its reasonable discretion;
(j) the Customer is the United States of America, any state or
any department, agency or instrumentality of any of them, unless Borrower
assigns its right to payment of such Receivable to Agent pursuant to the
Assignment of Claims Act of 1940, as amended (31 U.S.C. Sub-Section 3727 ET SEQ.
and 41 U.S.C., Sub-Section 15) or has otherwise complied with other applicable
statutes or ordinances;
[(k) the services giving rise to such Receivable have not been
performed by Borrower or the Receivable is an advance or progress billing or
otherwise does not represent a final sale or performance;]
(l) the aggregate Receivables owed by the subject Customer exceed
a credit limit for such Customer as same may be determined in good faith by
Agent, in the exercise of its discretion in a reasonable manner, but only to the
extent that the aggregate Receivables owed by such Customer exceeds such limit;
(m) the Receivable is subject to any pending or asserted offset,
deduction, defense, dispute, or counterclaim (excluding claims by Customers with
respect to their respective Customer Deposits for services not yet performed in
an amount less than $150,000) or if the Receivable is contingent in any respect
or for any reason; PROVIDED, HOWEVER, the portion of each Receivable that would
otherwise be deemed an Eligible Receivable and which is not subject to offset,
deduction, defense, dispute, counterclaim or contingency shall be an Eligible
Receivable;
(n) Borrower has made any agreement with the subject Customer for
any deduction therefrom, except for discounts or allowances made in the ordinary
course of business for prompt payment, all of which discounts or allowances are
reflected on the face of each respective invoice related thereto; PROVIDED,
HOWEVER, the portion of such Receivable that would otherwise be deemed an
-7-
Eligible Receivable and which is not subject to deduction, discount or allowance
shall be an Eligible Receivable;
(o) the rendition of services has not been completed or all
supporting documentation has not been placed in the Customer file;
(p) any return, rejection or repossession of any underlying
merchandise has occurred;
(q) such Receivable is not payable to Borrower;
(r) such Receivable is not payable in Dollars or Sterling; or
(s) such Receivable is not otherwise satisfactory to the Agent as
determined in good faith by Agent in the exercise of its discretion in a
reasonable manner.
[INSERT PROVISIONS RE AVIALL POWER BY HOUR AGREEMENTS]
"ELIGIBLE UNBILLED RECEIVABLES" shall mean Receivables which, but for the
fact invoices for payment have not yet been sent to Customers, would constitute
Eligible Receivables hereunder.
"ENGINE SERVICES" shall mean Greenwich Air Services - Texas, L.P., a
Delaware limited partnership.
"ENVIRONMENTAL COMPLAINT" shall have the meaning set forth in Section
4.18(d) hereof.
"ENVIRONMENTAL LAWS" shall mean all environmental, land use, zoning,
health, chemical use, safety and sanitation laws, statutes, ordinances and codes
in the United Kingdom relating to the protection of the environment and/or
governing the use, storage, treatment, generation, transportation, processing,
handling, production or disposal of Hazardous Substances and the rules,
regulations, policies, guidelines, interpretations, decisions, orders and
directives of all governmental agencies and authorities with respect thereto.
"EURODOLLAR RATE" shall mean for any Eurodollar Rate Loan, for the then
current Interest Period relating thereto, the rate per annum (such Eurodollar
Rate to be adjusted to the next higher 1/100 of one (1%) percent) equal to the
quotient of (a) LIBOR, divided by (b) a number equal to 1.00 minus the aggregate
of the rates (expressed as a decimal) of reserve requirements current on the day
that is three Business Days prior to the beginning of the Interest Period
(including without limitation basic, supplemental, marginal and emergency
reserves) under any regulation
-8-
promulgated by the Board of Governors of the Federal Reserve System (or any
other governmental authority having jurisdiction of the Bank) as in effect from
time to time, dealing with reserve requirements prescribed for Eurocurrency
funding including any reserve requirements with respect to "Eurocurrency
liabilities" under Regulation D of the Board of Governors of the Federal Reserve
System.
"EURODOLLAR RATE LOAN" shall mean an Advance at any time that bears
interest based on the Eurodollar Rate.
"EVENT OF DEFAULT" shall mean the occurrence and continuance of any of
the events set forth in Article X hereof.
"FEDERAL FUNDS RATE" shall mean, for any day, the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or if such rate is not so published for any
day which is a Business Day, the average of quotations for such day on such
transactions received by the Bank from three Federal funds brokers of recognized
standing selected by the Bank.
"FEE LETTER" shall mean _________________________.
"FORMULA AMOUNT" shall have the meaning given to it in Section 2.1(a)
hereof.
"FUNDING DATE" shall have the meaning set forth in Section 2.7(f) hereof.
"FUNDED DEBT" shall have the meaning given to it in the Affiliate Loan
Agreement.
"GAAP" shall mean generally accepted accounting principles in the United
Kingdom in effect from time to time consistently applied.
"GASI" shall mean GASI Engine Services Corporation, a Delaware
corporation.
"GREENWICH" shall mean Greenwich Air Services, Inc., a Delaware
corporation.
"GREENWICH ON A COMBINED BASIS" shall mean _____________________.
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"GTI" shall mean Greenwich Turbine, Inc., a Delaware corporation.
"HAZARDOUS DISCHARGE" shall have the meaning set forth in Section 4.18(d)
hereof.
"HAZARDOUS SUBSTANCE" shall mean, without limitation, any flammable
explosives, radon, radioactive materials, asbestos, urea formaldehyde foam
insulation, polychlorinated biphenyls, petroleum and petroleum products,
methane, hazardous materials, hazardous wastes, hazardous or toxic substances or
related materials as defined in any applicable Environmental Law and in the
regulations adopted pursuant thereto.
"HAZARDOUS WASTES" includes all waste materials subject to regulation
under applicable laws now in force or hereafter enacted relating to hazardous
waste disposal.
"HEDGING AGREEMENTS" any agreement entered into, from time to time, by
Borrower and any one of the Lenders or a bank or financial institution
reasonably acceptable to Agent to protect Borrower against fluctuations in
foreign currency exchange rates.
"INCIPIENT EVENT OF DEFAULT" shall mean an event which, with the giving
of notice or passage of time or both, would constitute an Event of Default.
"INDEBTEDNESS" of a Person at a particular date shall mean all
obligations of such Person which in accordance with GAAP would be classified
upon a balance sheet as liabilities (except Customer Deposits, capital stock and
surplus earned or otherwise).
"INTEREST PERIOD" shall mean the period provided for any Eurodollar Rate
Loan pursuant to Section 2.3(b) hereof.
"INVENTORY" shall mean and include all of Borrower's now owned or
hereafter acquired goods, merchandise and other personal property, wherever
located, to be furnished under any contract of service or held for sale or
lease, all raw materials, work in process, finished goods and materials and
supplies of any kind, nature or description which are or might be used or
consumed in Borrower's business or used in selling or furnishing such goods,
merchandise and other personal property, and all documents of title or other
documents representing them. In addition, Inventory shall include gas turbine
engines and rotable parts even if recorded as property, plant and equipment by
Borrower for accounting purposes.
-10-
"INVENTORY ADVANCE RATE" shall have the meaning given to it in Section
2.1(a) hereof.
"LENDER" or "LENDERS" shall have the meaning set forth in the
introductory paragraph hereof.
"LENDER DEFAULT" shall have the meaning set forth in Section 2.18(a)
hereof.
"LETTER OF CREDIT FEES" shall have the meaning set forth in Section 3.4.
"LETTERS OF CREDIT" shall have the meaning set forth in Section 2.15.
"LIBOR" shall mean for any Eurodollar Rate Loan for the then current
Interest Period relating thereto, the rate per annum quoted by the Bank in 1/16
increments, if available, two (2) Business Days prior to the first day of such
Interest Period for the offering by the Bank to prime commercial banks in the
London interbank Eurodollar market of dollar deposits in immediately available
funds for a period equal to such Interest Period and in an amount equal to the
amount of such Eurodollar Rate Loan.
"LIEN" shall mean any mortgage, deed of trust, pledge, hypothecation,
assignment, security interest, lien, Charge, Claim or encumbrance, or
preference, priority or other security agreement or preferential arrangement in
respect of any asset of Borrower of any kind or nature whatsoever including,
without limitation, any conditional sale or other title retention agreement, any
lease having substantially the same economic effect as any of the foregoing, and
the filing of, or agreement to give, any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction.
"MAXIMUM LOAN AMOUNT" at any date shall mean $50,000,000.
"MONTHLY ADVANCES" shall have the meaning set forth in Section 3.1
hereof.
"NON-DEFAULTING LENDERS" shall have the meaning set forth in Section
2.18(b) hereof.
"NOTES" shall mean the promissory notes referred to in Section 2.2
hereof.
"OBLIGATIONS" shall mean and include any and all of Borrower's
Indebtedness and/or liabilities to Agent or Lenders of every kind, nature and
description, direct or indirect, secured or unsecured, joint, several, joint and
several, absolute or contingent, due or to become due, now existing or hereafter
arising,
-11-
contractual or tortious, liquidated or unliquidated, under this Agreement and
all obligations of Borrower to Agent or Lenders to perform acts or refrain from
taking any action under this Agreement.
"OTHER DOCUMENTS" shall mean any and all agreements, instruments and
documents, including, without limitation, the U.K. Security Document,
guaranties, pledges, powers of attorney, consents, and all other writings
heretofore, now or hereafter executed by Borrower and/or delivered to Agent or
any Lender in respect of the transactions contemplated by this Agreement.
"PARENT" (a) of Borrower shall mean Greenwich and (b) of any other Person
shall mean a corporation or other entity owning, directly or indirectly, at
least 50% of the shares of stock or other ownership interests having ordinary
voting power to elect a majority of the directors of the Person, or other
Persons performing similar functions for any such Person.
"PARTICIPANT" shall mean each Person who shall be granted the right by
any Lender to participate in any of the Advances and who shall have entered into
a participation agreement in respect thereof in form and substance satisfactory
to such Lender.
"PAYMENT OFFICE" shall mean initially 1290 Avenue of the Americas, New
York, New York 10104; thereafter, such other office of Agent, if any, which it
may designate by notice to Greenwich on behalf of Borrower to be the Payment
Office.
"PERMITTED ENCUMBRANCES" shall mean (a) Liens in favor of Agent for the
benefit of Lenders; (b) Liens for taxes, assessments or other governmental
charges not delinquent, or, being contested in good faith and by appropriate
proceedings and with respect to which proper reserves have been taken by
Borrower; PROVIDED, THAT the Lien shall have no effect on the priority of the
Liens in favor of Agent or the value of the assets in which Agent has such a
Lien and a stay of enforcement of any such Lien shall be in effect; (c) Liens
disclosed in the financial statements referred to in Section 5.5; (d) deposits
or pledges to secure obligations under workmen's compensation, social security
or similar laws, or under unemployment insurance; (e) deposits or pledges to
secure bids, tenders, contracts (other than contracts for the payment of money),
Leases, statutory obligations, surety, performance and appeal bonds and other
obligations of like nature arising in the ordinary course of Borrower's
business; (f) judgment Liens that have been stayed or bonded and mechanics',
worker's, materialmen's or other like Liens arising in the ordinary course of
Borrower's business with respect to obligations which are not past due or which
are being contested in good faith by Borrower; (g) Liens placed upon fixed
assets hereafter acquired to secure a portion of the purchase price thereof,
provided that (x) any such Lien shall not encumber any other property of
Borrower and (y) the aggregate amount of Indebtedness secured by such Liens
incurred as a result of such purchases during any fiscal year shall not exceed
the amount
-12-
provided for in Section 7.6; (h) Liens on Equipment in favor of CIT and World as
in existence on Closing Date; and (i) other Liens disclosed on EXHIBIT 1.2(b)
and the permissions contained in the U.K. Security Document.
"PERSON" shall mean an individual, a partnership, a corporation, a
business trust, a joint stock company, a trust, an unincorporated association, a
joint venture, a governmental authority or any other entity of whatever nature.
"PLEDGE AGREEMENT" shall mean that certain Pledge and Security Agreement
dated as of the Effective Date pursuant to which Greenwich pledges 65% of the
issued and outstanding stock of Caledonian to Agent and Trustee.
"PREPAYMENT DATE" shall have the meaning set forth in Section 13.1
hereof.
"PRIME RATE" for the purpose of this Agreement means the rate of interest
publicly announced from time to time by the Bank at its principal office in New
York as its prime rate or prime lending rate. This rate of interest is
determined from time to time by the Bank as a means of pricing some loans to its
customers and is neither tied to any external rate of interest or index nor does
it necessarily reflect the lowest rate of interest actually charged by the Bank
to any particular class or category of customers of the Bank.
"PRO FORMA BALANCE SHEET" shall have the meaning set forth in Section
5.5(a) hereof.
"PROJECTIONS" shall have the meaning set forth in Section 5.5(d) hereof.
"PROPERTY" shall have the meaning given to it in the Indenture.
"PURCHASE AGREEMENT" shall mean the Agreement of Purchase and Sale
between GASI, Greenwich, Aviall Services, Inc. and Aviall, Inc. dated April 19,
1996.
"RATE SWAP AGREEMENT" any interest rate swap, cap, interest rate collar
agreement or similar arrangement entered into, from time to time, by Borrower
and any one of the Lenders or a bank or financial institution reasonably
acceptable to Agent to protect Borrower and any Lender against fluctuations in
interest rates on the Obligations incurred by Borrower under this Agreement.
"RECEIVABLES" shall mean and include as to Borrower all of Borrower's
accounts, contract rights, instruments, documents, chattel paper, general
intangibles relating to accounts, drafts and
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acceptances, and all other forms of obligations owing to Borrower arising out of
or in connection with the sale or lease of Inventory or the rendition of
services, all guarantees and other security therefor, whether secured or
unsecured, now existing or hereafter created, and whether or not specifically
assigned or pledged to Agent hereunder.
"RECEIVABLES ADVANCE RATE" shall have the meaning set forth in Section
2.1(a) hereof.
"RELEASE" shall have the meaning set forth in Section 5.7(c)(i) hereof.
"REQUIRED LENDERS" shall mean Lenders and Specified Participants holding,
in the aggregate, at least fifty-one percent (51%) of the Advances or, if no
Advances are outstanding, at least fifty-one percent (51%) of the Commitment
Percentages.
"REVOLVING ADVANCES" shall mean Advances made other than Letters of
Credit.
"REVOLVING INTEREST RATE" shall mean an interest rate per annum equal to
(a) with respect to Domestic Rate Loans, the sum of the Alternate Base Rate plus
the Applicable Margin and (b) with respect to Eurodollar Rate Loans, the sum of
the Eurodollar Rate plus the Applicable Margin.
"SETTLEMENT DATE" shall mean the Effective Date and thereafter Wednesday
of each week unless such day is not a Business Day in which case it shall be the
next succeeding Business Day.
"SPECIFIED PARTICIPANTS" shall mean _________________.
"SUBSIDIARY" of any Person shall mean a corporation or other entity of
whose shares of stock or other ownership interests having ordinary voting power
(other than stock or other ownership interests having such power only by reason
of the happening of a contingency) to elect a majority of the directors of such
corporation, or other Persons performing similar functions for such entity, are
owned, directly or indirectly, by such Person.
"TERM" shall mean the Effective Date through _________ ___, 2001.
"TOTAL REPAIRABLE INVENTORY" shall have the meaning set forth in the
definition of Eligible Inventory.
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"TOXIC SUBSTANCE" shall mean and include any material present on
Borrower's premises which is subject to regulation under applicable United
Kingdom laws now in force or hereafter enacted relating to toxic substances.
"Toxic Substance" includes but is not limited to asbestos, polychlorinated
biphenyls (PCBs) and lead-based paints.
"TRANSACTIONS" shall have the meaning given to it in Section 5.5 hereof.
"TURBINE" shall have the meaning set forth in the Affiliate Loan
Agreement.
"UNDRAWN AVAILABILITY" shall at any given date mean the amount equal to
the difference between (a) the lesser of (i) Maximum Loan Amount, and (ii)
Formula Amount as of such date, MINUS (b) the aggregate outstanding Advances on
such date after giving effect to any outstanding requests by Borrower for
Advances as of that date.
"U.K. SECURITY DOCUMENT" shall mean the debenture dated this date between
Borrower and Agent (as agent and trustee for Lenders).
"WEEK" shall mean the time period commencing with a Wednesday and ending
on the following Tuesday.
1.3 UNIFORM COMMERCIAL CODE TERMS. All terms used herein and defined
in the Uniform Commercial Code as adopted in the State of New York shall have
the meaning given therein unless otherwise defined herein.
1.4 CERTAIN MATTERS OF CONSTRUCTION. The terms "herein", "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. Wherever appropriate in the context,
terms used herein in the singular also include the plural and VICE VERSA. The
words "include", "includes" and "including" shall be deemed to be followed by
the phrase "without limitation". In computing periods of time from a specified
date to a later specified date, the word "from" means "from and including" and
the words "to" and "until" each means "to but excluding". All references to
statutes and regulations shall include any amendments of same and any successor
statutes and regulations. All references to any instrument or agreements to
which Borrower and any Lender or Agent are parties including, without
limitation, references to any of the Other Documents, shall include any and all
modifications or amendments thereto and any and all extensions or renewals
thereof.
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1.5 OTHER DEFINED TERMS. All capitalized terms used herein and not
otherwise defined herein shall have the meaning given to them in the Affiliate
Loan Agreement.
II. ADVANCES AND PAYMENTS
2.1 (a) BORROWING BASE. Subject to the terms and conditions set
forth in this Agreement, each Lender, severally and not jointly, agrees to make
Revolving Advances to Borrower in accordance with the procedures provided for
herein in an aggregate amount outstanding at any time not greater than such
Lender's Commitment Percentage of the lesser of (x) the Maximum Loan Amount
MINUS the undrawn amount of outstanding Letters of Credit or (y) the sum of:
(i) up to 85%, subject to the provisions of Section
2.1(b) and Section 2.1(d) hereof ("Receivables Advance Rate"), of Eligible
Receivables, PLUS
(ii) up to 55%, subject to the provisions of Section
2.1(b) and Section 2.1(c) hereof ("Inventory Advance Rate"), of Eligible
Inventory, PLUS
(iii) up to 55%, subject to the provisions of Section
2.1(b) and Section 2.1(d) (the Receivables Advance Rate and the Inventory
Advance Rate and the Unbilled Receivables Advance Rate shall be referred to,
collectively, as the "Advance Rates") of the Eligible Unbilled Receivables,
MINUS
(iv) such reserves as Agent may, in a commercially
reasonable manner, reasonably deem proper and necessary, MINUS
(v) the undrawn amount of outstanding Letters of Credit.
The amounts derived from (x) the sum of Sections 2.1(a)(y)(i) PLUS
2.1(a)(y)(ii) MINUS (y) the sum of Sections 2.1(a)(y)(iii) and 2.1(a)(y)(iv) at
any time and from time to time shall be referred to as the "Formula Amount".
(b) DISCRETIONARY RIGHTS. The Advance Rates may be increased
by Agent with the consent of the Lenders or decreased by Agent at any time and
from time to time in the good faith exercise of its reasonable discretion;
PROVIDED, HOWEVER, that Agent shall not: (i) decrease any Advance Rate by more
than five (5%) percent during any forty-five (45) day period (for example, from
85% to 80% with respect to any Receivables Advance Rate); or (ii) decrease any
Inventory Advance Rate below 45%. Borrower consent to any such increases or
decreases and acknowledge that decreasing the Advance Rates may limit or
restrict Advances
-16-
requested by Borrower. Agent shall in each instance give Borrower not less than
five (5) Business Days' prior written notice of its intention to decrease any of
the Advance Rates.
(c) INVENTORY ADVANCES.In no event shall the aggregate Advances
with respect to Inventory of Borrower plus the aggregate Inventory Advances
outstanding at any time pursuant to Section 2.1(a)(ii), Section 2.1(b)(ii),
Section 2.1(c)(ii), Section 2.1(d)(ii), Section 2.1(e)(ii) and Section
2.1(f)(ii) of the Affiliate Loan Agreement exceed $130,000,000 in the aggregate.
(d) RECEIVABLES ADVANCES. In no event shall the aggregate
Advances with respect to Continental Receivables outstanding at any time plus
the aggregate Advances with respect to Contract Receivables pursuant to Sections
2.1(a)(i), 2.1(b)(i), 2.1(c)(i), 2.1(d)(i), 2.1(e)(i), 2.1(f)(i), 2.1(d)(iii),
2.1(e)(iii) and 2.1(f)(iii) of the Affiliate Loan Agreement exceed [$15,000,000]
in the aggregate.
(e) UNBILLED RECEIVABLES. In no event shall the aggregate
Advances with respect to Eligible Unbilled Receivables plus the aggregate
Advances with respect to Eligible Unbilled Receivables outstanding at any time
pursuant to Sections 2.1(d)(iii), 2.1(e)(iii) and 2.1(f)(iii) of the Affiliate
Loan Agreement exceed $12,000,000 in the aggregate.
2.2 NOTES. The Advances shall be evidenced by amended and restated
promissory notes of Borrower, substantially in the form of EXHIBIT 2.2 (the
"Notes") with appropriate insertion as to date and principal amount, payable to
the order of each Lender in an amount equal to its respective Commitment
Percentage of Advances.
2.3 PROCEDURE FOR BORROWING.
(a) In the event Borrower desires to obtain a Domestic Rate
Loan Borrower shall give Agent at least one (1) Business Days prior telephonic
notice ("Advance Request") on or before 11:00 A.M., New York time (except as may
be set forth below) specifying (i) the date of the proposed borrowing (which
shall be a Business Day) and (ii) the type of borrowing and the amount to be
borrowed, which amount on the date of such Advance shall be in a minimum amount
of $250,000 and in integral multiples of $100,000 for borrowings in excess
thereof. In addition, as a convenient means of effecting Advances, Borrower
will maintain a controlled disbursement account (business checking) with the
Bank at its branch located at 1290 6th Avenue, New York, New York 10104
(collectively, "Checking Accounts"). Each Checking Account will act as a
corporate payable account for Borrower. Once each Business Day following
receipt by the Bank of its Federal Reserve system clearing (which may be later
than 11:00 a.m. New York time but must be earlier than 1:00 p.m. New York time),
Bank will notify
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Agent of the total dollar amount of checks presented to Bank for payment for
each Checking Account since the previous Business Day's notification (the
"Payable Amount"). Such notification shall be deemed to be an Advance Request
for an Advance to be made on such Business Day to the respective Borrower's
Checking Account in an amount equal to the Payable Amount, but Agent and Lenders
shall not be obligated to honor such Advance Request except as herein
specifically required. Any request for an Advance shall be deemed reduced
automatically and without notice so as not to be in excess of, after giving
effect to the requested Advance, an amount which would cause the aggregate
amount of all Advances to be greater than the lesser of (a) for Greenwich, (i)
the Maximum Loan Amount or (ii) the Formula Amount. Subject to the provisions
of Section 2.7 hereof, the proceeds of each Advance shall be made available by
Agent to Borrower on or before 1:45 p.m., New York time (except with respect to
Advances to the Checking Accounts which shall be made available on or before
1:45 p.m. New York time), on the Business Day specified in the Advance Request
by wire transferring immediately available funds in such amount or causing
immediately available funds in such amount to be wire transferred to the account
of Borrower, as shall be designated to Agent in the Advance Request therefor.
(b) Notwithstanding the provisions of 2.3(a) above, in the
event Borrower desires to obtain a Eurodollar Rate Loan, Borrower shall give
Agent at least three (3) Business Days' prior written notice specifying (i) the
date of the proposed borrowing (which shall be a Business Day), (ii) the type of
borrowing and the amount to be borrowed, which amount on the date of such
Advance shall be in a minimum amount of $1,000,000 and in integral multiples of
$100,000 for borrowings in excess thereof and (iii) the duration of the first
Interest Period therefor. Interest Periods for Eurodollar Rate Loans shall be
for 30, 60 or 90 days. Notwithstanding anything contained herein, no Eurodollar
Rate Loan shall be made (i) until the later to occur of (x) ninety (90) days
following the Effective Date or (y) the date on which the Commitment Percentages
of all Lenders (other than BNYCC) shall aggregate _____%, (ii) upon the
occurrence and during the continuation of an Event of Default and (iii) if after
giving effect to such Eurodollar Rate Loan more than six (6) shall be
outstanding at such time.
(c) Each Interest Period of a Eurodollar Rate Loan shall
commence on the date such Eurodollar Rate Loan is made and shall end on such
date as Borrower may elect as set forth in (b)(iii) above provided that:
(i) any Interest Period which would otherwise end on a day
which is not a Business Day shall end on the next preceding or succeeding
Business Day as is the Bank's custom in the market to which such Eurodollar Rate
Loan relates;
(ii) no Interest Period shall end after the last day of
the Term;
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(iii) any Interest Period which begins on a day for which
there is no numerically corresponding day in the calendar month during which
such Interest Period is to end, shall (subject to clause (i) above) end on the
last day of such calendar month.
Borrower shall elect the initial Interest Period applicable to a
Eurodollar Rate Loan by Borrower's notice of borrowing given to Agent pursuant
to Section 2.3(b) or by its notice of conversion given to Agent pursuant to
Section 2.3(d), as the case may be. Borrower shall elect the duration of each
succeeding Interest Period by giving irrevocable written notice to Agent of such
duration not less than three (3) Business Days prior to the last day of the then
current Interest Period applicable to such Eurodollar Rate Loan. If Agent does
not receive timely notice of the Interest Period elected by Borrower, Borrower
shall be deemed to have elected to convert to a Domestic Rate Loan subject to
Section 2.3(d) hereinbelow.
(d) Provided that no Event of Default shall have occurred and
be continuing, Borrower may, on the last Business Day of the then current
Interest Period applicable to any outstanding Eurodollar Rate Loan, continue any
such loan in the same aggregate principal amount. If a Borrower desires to
convert a loan, Borrower shall give Agent not less than three (3) Business Days'
prior written notice, specifying the date of such conversion, the loans to be
converted and if the conversion is from a Domestic Rate Loan to a Eurodollar
Loan, the duration of the first Interest Period therefor. After giving effect
to each such conversion, there shall not be outstanding more than six (6)
Eurodollar Rate Loans, in the aggregate.
(e) At their option and upon three (3) Business Days' prior
written notice, Borrower may prepay the Advances in whole at any time, with
accrued interest on the principal being prepaid to the date of such prepayment.
In the event that any prepayment of a Eurodollar Rate Loan is required or
permitted on a date other than the last Business Day of the then current
Interest Period with respect thereto, Borrower shall indemnify Agent and Lenders
therefor in accordance with Section 2.3(f) hereof.
(f) Borrower shall indemnify Agent and Lenders and hold Agent
and Lenders harmless from and against any and all losses or expenses that Agent
or any Lender may sustain or incur as a consequence of any prepayment or any
default by Borrower in the payment of the principal of or interest on any
Eurodollar Rate Loan or failure by Borrower to complete a borrowing of, a
prepayment of or conversion of or to a Eurodollar Rate Loan after notice thereof
has been given, including (but not limited to) any interest payable by Agent or
Lenders to lenders of funds obtained by it in order to make or maintain its
Eurodollar Rate Loans hereunder.
(g) Notwithstanding any other provision hereof, if any
applicable law, treaty, regulation or directive, or any
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change therein or in the interpretation or application thereof, shall make it
unlawful for any Lender (for purposes of this subsection (g), Section 2.12 and
Section 2.13, the term "Lender" shall include any Lender and the office or
branch where any Lender or any corporation or bank controlling such Lender makes
or maintains any Eurodollar Rate Loans) to make or maintain its Eurodollar Rate
Loans, the obligation of any Lender to make Eurodollar Rate Loans hereunder
shall forthwith be cancelled and Borrower shall, if any affected Eurodollar Rate
Loans are then outstanding, promptly upon request from Agent, either pay all
such affected Eurodollar Rate Loans or convert such affected Eurodollar Rate
Loans into Domestic Rate Loans. If any such payment or conversion of any
Eurodollar Rate Loan is made on a day that is not applicable to such Eurodollar
Rate Loan, Borrower shall pay Lenders, upon Agent's request, such amount or
amounts as may be necessary to compensate Lenders for any loss or expense
sustained or incurred by Lenders in respect of such Eurodollar Rate Loan as a
result of such payment or conversion, including (but not limited to) any
interest or other amounts payable by the Agent or Lenders to lenders of funds
obtained by Agent or Lenders in order to make or maintain such Eurodollar Rate
Loan. A certificate as to any additional amounts payable pursuant to the
foregoing sentence submitted by Agent to Borrower shall be conclusive absent
manifest error.
(h) Should any amount required to be paid by Borrower as
principal or interest hereunder, or as fees or other charges under this
Agreement or any Other Documents, or with respect to any other Obligation,
become due and payable, same shall be deemed a request for an Advance as of the
date such payment is due, in the amount required to pay in full such interest,
principal, fee, charge or other Obligation under this Agreement and/or any Other
Documents, and such request shall be irrevocable.
2.4 DISBURSEMENT OF ADVANCE PROCEEDS. All Advances shall be disbursed
from whichever office or other place Agent may designate from time to time and,
together with any and all other Obligations of Borrower to Agent or any Lender,
shall be charged to Borrower's account on the Agent's books. During the Term,
Borrower may use the Advances (subject to the limitations set forth in Section
2.1 hereof) by borrowing, prepaying and reborrowing, all in accordance with the
terms and conditions hereof.
2.5 REPAYMENT OF ADVANCES.The Advances shall be due and payable in
full on the last day of the Term subject to earlier prepayment as herein
provided.
2.6 REPAYMENT OF EXCESS ADVANCES.
The aggregate balance of Advances outstanding at any time in
excess of the lesser of (i) Formula Amount as at such time, or (ii) Maximum Loan
Amount shall be immediately due and payable without the necessity of any demand,
at the place designated by Agent, whether or not an Incipient Event of Default
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or Event of Default has occurred hereunder. In no event shall the aggregate
balance of Advances outstanding at any time to Borrower exceed the Maximum Loan
Amount.
2.7 MANNER OF BORROWING AND PAYMENT. (a) Except as expressly provided
herein, all payments (including prepayments) to be made by Borrower on account
of principal, interest and fees shall be made without set-off or counterclaim
and shall be made to the Agent to the Payment Office, in each case on or prior
to 1:00 p.m., New York time, in Dollars and in immediately available funds.
(b) Each borrowing of Revolving Advances shall be advanced
according to the Commitment Percentages of the Lenders.
(c) (i) Notwithstanding anything to the contrary contained in
Sections 2.7(a) and (b) hereof, commencing with the first Business Day following
the Effective Date, each borrowing of Revolving Advances shall be advanced by
Agent and each payment by Borrower on account of Revolving Advances shall be
applied first to those Revolving Advances made by Agent. On or before [1:00
P.M.], New York time, on each Settlement Date commencing with the first
Settlement Date following the Effective Date, Agent and the Lenders shall make
certain payments as follows: (I) if the aggregate amount of new Revolving
Advances made by Agent during the preceding Week exceeds the aggregate amount of
repayments applied to outstanding Revolving Advances during such preceding Week,
then each Lender shall provide Agent with funds in an amount equal to its
Commitment Percentage of the difference between (w) such Revolving Advances and
(x) such repayments and (II) if the aggregate amount of repayments applied to
outstanding Revolving Advances during such Week exceeds the aggregate amount of
new Revolving Advances made during such Week, then Agent shall provide each
Lender with its Commitment Percentage of the difference between (y) such
repayments and (z) such Revolving Advances.
(ii) Each Lender shall be entitled to earn interest at
the applicable Contract Rate on outstanding Advances which it has funded.
(iii) Promptly following each Settlement Date, Agent shall
submit to each Lender a certificate with respect to payments received and
Advances made during the Week immediately preceding such Settlement Date. Such
certificate of Agent shall be conclusive in the absence of manifest error.
(d) If any Lender or Participant (a "benefitted Lender") shall
at any time receive any payment of all or part of its Advances, or interest
thereon, or receive any Collateral in respect thereof (whether voluntarily or
involuntarily or by set-off) in a greater proportion than any such payment to
and Collateral received by any other Lender, if any, in respect of such other
Lender's Advances, or interest thereon, and such greater proportionate payment
or receipt of Collateral is not expressly permitted hereunder, such benefitted
Lender shall purchase for cash
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from the other Lenders such portion of each such other Lender's Advances, or
shall provide such other Lender with the benefits of any such Collateral, or the
proceeds thereof, as shall be necessary to cause such benefitted Lender to share
the excess payment or benefits of such Collateral or proceeds ratably with each
of the Lenders; PROVIDED, HOWEVER, that if all or any portion of such excess
payment or benefits is thereafter recovered from such benefitted Lender, such
purchase shall be rescinded, and the purchase price and benefits returned, to
the extent of such recovery, but without interest. Each Lender so purchasing a
portion of another Lender's Advances may exercise all rights of payment
(including, without limitation, rights of set-off) with respect to such portion
as fully as if such Lender were the direct holder of such portion.
(e) Unless Agent shall have been notified by telephone,
confirmed in writing, by any Lender that such Lender will not make the amount
which would constitute its Commitment Percentage of the Advances available to
Agent, Agent may (but shall not be obligated to) assume that such Lender shall
make such amount available to Agent and, in reliance upon such assumption, make
available to Borrower a corresponding amount. Agent will promptly notify
Borrower of its receipt of any such notice from a Lender. If such amount is
made available to Agent on a date after a Settlement Date, such Lender shall pay
to Agent on demand an amount equal to the product of (i) the daily average
Federal Funds Rate (computed on the basis of a year of 360 days) during such
period as quoted by Agent, times (ii) such amount, times (iii) the number of
days from and including such Settlement Date to the date on which such amount
becomes immediately available to Agent. A certificate of Agent submitted to any
Lender with respect to any amounts owing under this paragraph (e) shall be
conclusive, in the absence of manifest error. If such amount is not in fact
made available to Agent by such Lender within three (3) Business Days after such
Settlement Date, Agent shall be entitled to recover such an amount, with
interest thereon at the rate per annum then applicable to Revolving Advances
hereunder, on demand from Borrower; PROVIDED, HOWEVER, that Agent's right to
such recovery shall not prejudice or otherwise adversely affect Borrower's
rights (if any) against such Lender.
2.8 STATEMENT OF ACCOUNT. Agent shall maintain, in accordance with
its customary procedures, a loan account in the name of Borrower in which shall
be recorded the date and amount of each Advance to Borrower made by Agent and
the date and amount of each repayment, prepayment or other payment in respect
thereof; PROVIDED, HOWEVER, the failure by Agent to record the date and amount
of any Advance shall not adversely affect Agent and the failure of the Agent to
record the date and amount of any repayment or prepayment of any Advance shall
not adversely affect Borrower nor give it any rights vis a vis Agent. For each
month, Agent shall send to Borrower a statement showing the accounting for the
Advances made, payments made or credited in respect thereof, and other
transactions between the Agent, Lenders and Borrower,
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during such month. The monthly statements shall be deemed correct and binding
upon Borrower in the absence of manifest error, and shall constitute an account
stated between Lenders and Borrower unless Agent receives a written statement of
specific exceptions within thirty (30) days after such statement is received by
Borrower. The records of Agent with respect to the loan accounts shall be prima
facie evidence of the amounts of Advances and other changes thereto and of
payments applicable thereto.
2.9 NO DEDUCTIONS. Borrower shall pay principal, interest, and all
other amounts payable hereunder, or under any Other Documents, without any
deduction whatsoever, including, but not limited to, any deduction for any
setoff or counterclaim.
2.10 MANDATORY PREPAYMENTS.
(a) When Borrower sells or otherwise disposes of any Collateral
(other than Inventory in the ordinary course of business) Borrower shall repay
the Advances in an amount equal to the difference between (i) the cash proceeds
of such sale or other disposition (except as otherwise provided by Section 4.3)
and (ii) the reasonable costs of such sale or other disposition (in the case of
subclauses (i) and (ii) above after giving effect to all tax benefits or
obligations in accordance with GAAP), such repayment to be made promptly but in
no event more than five (5) Business Days following receipt of the net cash
proceeds thereof, and until the date of payment, such proceeds shall be held in
trust for Lenders. The foregoing shall not be deemed to be implied consent to
any such sale otherwise prohibited by the terms and conditions hereof.
2.11 ADDITIONAL PAYMENTS. To the extent that Agent may, in the
exercise of its rights under this Agreement, make an expenditure due to
Borrower's failure to perform or comply with its obligations under this
Agreement or any Other Document, any reasonable amounts so expended by Agent may
be charged to Borrower's account as a Revolving Advance and added to the
Obligations. Agent shall provide Borrower, if requested, with documentation to
evidence such expenditure and shall provide Borrower with notice immediately
prior to the making of such payment; PROVIDED, that the failure of Agent to give
such notice shall not adversely affect Agent's rights hereunder. In the event
that at the time such sum is expended the unpaid balance of Advances to Borrower
exceeds or would exceed, with the making of such expenditure, the lesser of the
Maximum Loan Amount or Borrower shall on demand repay the Advances in the amount
by which such expenditure causes such excess.
2.12 INCREASED COSTS. In the event a change in any applicable law,
treaty or governmental regulation, in the interpretation or application thereof,
or compliance by Agent or any Lender with any new request or directive (whether
or not having the force of law) from any central bank or other financial,
monetary or other authority which is generally applicable to lenders similarly
situated to Agent or any Lender shall
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(a) subject the Agent or any Lender to any tax of any kind
whatsoever (excluding taxes based on the income of Agent or any Lender) with
respect to this Agreement or change the basis of taxation of payments to Agent
or any Lender of principal, fees, interest or any other amount payable hereunder
or under any Other Documents;
(b) impose, modify or hold applicable any reserve, special
deposit, assessment or similar requirement against assets held by, or deposits
in or for the account of, advances or loans by, or other credit extended by, any
office of Agent or any Lender, including (without limitation) pursuant to
Regulation D of the Board of Governors of the Federal Reserve System; or
(c) impose on Agent or any Lender any other condition with
respect to this Agreement or any Other Documents;
and the result of any of the foregoing is to increase the cost to Agent or any
Lender of making, renewing or maintaining its Advances hereunder by an amount
that Agent or any Lender deems to be material or to reduce the amount of any
payment by or for the account of Borrower (whether of principal, interest or
otherwise) in respect of any of the Advances by an amount that Agent or any
Lender deems to be material; then, in any case, Borrower shall promptly pay
Agent or such Lender, upon demand, such additional amount as will compensate
Agent or such Lender for such additional cost or such reduction, as the case may
be, provided that the foregoing shall not apply to increased costs which are
reflected in the Alternate Base Rate. Agent shall certify the amount of such
additional cost or reduced amount to Borrower, and such certification shall be
prima facie evidence of such additional cost or reduced amount absent manifest
error.
2.13 CAPITAL ADEQUACY.
(a) In the event that, on or after the date of this Agreement,
any adoption of or any change in any applicable law, rule, regulation or
guideline regarding capital adequacy of Agent or any Lender or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by Agent or any Lender, or any corporation or bank
controlling Agent or any Lender and the office or branch where Agent or any
Lender makes or maintains any Eurodollar Rate Loan with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on Agent's or any Lender's capital as a consequence
of its obligations hereunder to a level below that which Agent or any Lender
would have achieved but for such adoption, change or compliance (taking into
consideration Agent's and each Lender's policies with respect to capital
adequacy) by an amount deemed by Agent or any Lender to be material, then, from
time to time, Borrower shall pay upon demand
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to Agent or such Lender such additional amount or amounts as will compensate
Agent or such Lender for such reduction. In determining such amount or amounts,
Agent or such Lender may use any reasonable averaging or attribution methods.
The protection of this Section 2.13 shall be available to Agent and Lenders
regardless of any possible contention of invalidity or inapplicability with
respect to the applicable law, regulation or condition.
(b) A certificate of Agent setting forth such amount or amounts
as shall be necessary to compensate Agent or any Lender with respect to Section
2.13(a) when delivered to Borrower shall be conclusive absent manifest error.
(c) The obligations of Borrower under this Section 2.13 shall
survive for a period of one (1) year following the termination of this Agreement
and the Other Documents and payment of the Notes and the Advances.
2.14 BASIS FOR DETERMINING INTEREST RATE INADEQUATE OR UNFAIR. In the
event that Agent or any Lender shall have determined that:
(a) reasonable means do not exist for ascertaining the
Eurodollar Rate for any Interest Period; or
(b) Dollar deposits in the relevant amount and for the relevant
maturity are not available in the London interbank Eurodollar market, with
respect to an outstanding Eurodollar Rate Loan, a proposed Eurodollar Rate Loan,
or a proposed conversion of a Domestic Rate Loan into a Eurodollar Rate Loan;
THEN
Agent shall give Borrower prompt written, telephonic or telegraphic notice of
such determination. If such notice is given, (i) any such requested Eurodollar
Rate Loan shall be made as a Domestic Rate Loan, unless Borrower shall notify
the Agent, no later than 10:00 a.m. (New York City time) two (2) Business Days
prior to the date of such proposed borrowing, that their request for such
borrowing shall be cancelled or made as an unaffected type of Eurodollar Rate
Loan, (ii) any Domestic Rate Loan or Eurodollar Rate Loan which was to have been
converted to an affected type of Eurodollar Rate Loan shall be continued as or
converted into a Domestic Rate Loan, or, if Borrower shall notify Agent, no
later than 10:00 a.m. (New York City time) two (2) Business Days prior to the
proposed conversion, shall be maintained as an unaffected type of Eurodollar
Rate Loan, and (iii) any outstanding affected Eurodollar Rate Loan shall be
converted into a Domestic Rate Loan, or, if Borrower shall notify Agent, no
later than 10:00 a.m. (New York City time) two (2) Business Days prior to the
last Business Day of the then current Interest Period applicable to such
affected Eurodollar Rate Loan, shall be converted into an unaffected type of
Eurodollar Rate Loan, on the last Business Day of the then current Interest
Period for such affected Eurodollar Rate Loans. Until such notice has been
withdrawn, Lenders shall have no obligation to make an affected type of
Eurodollar Rate Loan or maintain
-25-
outstanding affected Eurodollar Rate Loans and Borrower shall not have the right
to convert a Domestic Rate Loan or an unaffected type of Eurodollar Rate Loan
into an affected type of Eurodollar Rate Loan.
2.15 LETTERS OF CREDIT. Subject to the terms and conditions hereof,
Agent shall issue or cause the issuance of Standby Letters of Credit ("Letters
of Credit") PROVIDED, HOWEVER, that Agent will not be required to issue or cause
to be issued Letters of Credit to the extent that the face amount of such
Letters of Credit would then cause the outstanding Advances (with the requested
Letter of Credit being deemed to be outstanding for purposes of this
calculation) to exceed the lesser of (A) the Maximum Loan Amount or (B) the
Formula Amount The maximum amount of outstanding Letters of Credit hereunder and
under the Affiliate Loan Agreement shall not exceed $10,000,000 in the aggregate
at any time. All disbursements or payments related to Letters of Credit shall
be deemed to be Revolving Advances and shall bear interest at the Revolving
Interest Rate for Domestic Rate Loans (unless and until converted to a
Eurodollar Rate Loan); and to the extent not drawn upon, Letters of Credit that
have not been drawn upon shall not bear interest. Letters of Credit shall be
subject to the terms and conditions set forth in the Application and Agreement
for Standby Letter of Credit attached hereto as EXHIBIT 2.15.
Upon the declaration by Agent of an Event of Default, Borrower
will cause cash to be deposited and maintained in an account with Agent, as cash
collateral, in an amount equal to the undrawn amount of outstanding Letters of
Credit, and Borrower hereby irrevocably authorizes Agent, in its discretion, on
Borrower's behalf and in Borrower's name, to open such an account and to make
and maintain deposits therein, or in an account opened by Borrower, in the
amounts required to be made by Borrower, out of the proceeds of Receivables or
other Collateral or out of any other funds of Borrower coming into Agent's
possession at any time. Agent will invest such cash collateral (less applicable
reserves) in such short-term money-market items as to which Agent and Borrower
mutually agree and the net return on such investments shall be credited to such
account and constitute additional cash collateral. Borrower may not withdraw
amounts credited to any such account except upon (a) waiver or cure of the
subject Event of Default, or (b) payment and performance in full of all
Obligations and termination of this Agreement.
2.16 ISSUANCE OF LETTERS OF CREDIT.
(a) Borrower may request Agent to issue or cause the issuance
of a Letter of Credit by delivering to Agent at the Payment Office, Bank's
standard form of Application and Agreement for Standby Letter of Credit (the
"Letter of Credit Application") completed to the satisfaction of Agent; and such
other related certificates, documents and other papers and information as Agent
may reasonably request.
-26-
(b) Each Letter of Credit shall, among other things, (i)
provide for the payment of sight drafts when presented for honor thereunder in
accordance with the terms thereof and when accompanied by the documents
described therein and (ii) have an expiry date not later than twelve months
after such Letter of Credit's date of issuance and in no event later than five
(5) days prior to the last day of the Term. Each Letter of Credit Application
and each Letter of Credit shall be subject to the Uniform Customs and Practice
for Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500, and any amendments or revisions thereof and, to the extent
not inconsistent therewith, the laws of the State of New York.
2.17 REQUIREMENTS FOR ISSUANCE OF LETTERS OF CREDIT.
(a) In connection with the issuance of any Letter of Credit,
Borrower shall indemnify, save and hold Agent and each Lender harmless from any
loss, cost, expense or liability, including, without limitation, payments made
by Agent or any Lender, and expenses and reasonable attorneys' fees incurred by
Agent or any Lender arising out of, or in connection with, any Letter of Credit
to be issued or created. Borrower shall be bound by Agent's, any Lender's or any
issuing bank's regulations and good faith interpretations of any Letter of
Credit issued or created for Borrower's account, although this interpretation
may be different from Borrower's own; and neither Agent, any Lender, the bank
which opened the Letter of Credit, nor any of its correspondents shall be liable
for any error, negligence, or mistakes, whether of omission or commission, in
following Borrower's instructions or those contained in any Letter of Credit or
of any modifications, amendments or supplements thereto or in issuing or paying
any Letter of Credit, except for its own gross negligence or willful misconduct.
(b) Borrower shall authorize and direct any bank which issues a
Letter of Credit to name Borrower as the "Account Party" therein and to deliver
to Agent all instruments, documents, and other writings and property received by
the bank pursuant to the Letter of Credit and to accept and rely upon Agent's
instructions and agreements with respect to all matters arising in connection
with the Letter of Credit or the application therefor.
(c) Each Lender shall be deemed to have irrevocably purchased
an undivided participation in Agent's credit support enhancement provided to the
issuing bank of any Letter of Credit and each Revolving Advance made as a
consequence of the issuance of a Letter of Credit and all disbursements
thereunder in an amount equal to such Lender's applicable Commitment Percentage
times the outstanding amount of the Letters of Credit and disbursements
thereunder. In the event that at the time a disbursement is made the unpaid
balance of Revolving Advances exceeds or would exceed, with the making of such
disbursement, the lesser of the Maximum Loan Amount or the Formula Amount, and
such
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disbursement is not reimbursed by Borrower within two (2) Business Days, Agent
shall promptly notify each Lender and upon Agent's demand each Lender shall pay
to Agent such Lender's proportionate share of such unreimbursed disbursement
together with such Lender's proportionate share of Agent's unreimbursed costs
and expenses relating to such unreimbursed disbursement. Upon receipt by Agent
of a repayment from Borrower of any amount disbursed by Agent for which Agent
had already been reimbursed by any of Lenders, Agent shall deliver to each of
the subject Lenders that Lender's pro rata share of such repayment. Each
Lender's participation commitment shall continue until the last to occur of any
of the following events: (A) Agent ceases to be obligated to issue Letters of
Credit hereunder; (B) no Letter of Credit issued hereunder remains outstanding
and uncancelled or (C) all Persons (other than Borrower) have been fully
reimbursed for all payments made under or relating to Letters of Credit.
2.18 DEFAULTING LENDER.
(a) Notwithstanding anything to the contrary contained herein,
in the event any Lender (x) has refused (which refusal constitutes a breach by
such Lender of its obligations under this Agreement) to make available its
portion of any Advance or (y) notifies either Agent or Borrower that it does not
intend to make available its portion of any Advance (if the actual refusal would
constitute a breach by such Lender of its obligations under this Agreement)
(each, a "Lender Default"), all rights and obligations hereunder of such Lender
(a "Defaulting Lender") as to which a Lender Default is in effect and of the
other parties hereto shall be modified to the extent of the express provisions
of this Section 2.18 while such Lender Default remains in effect.
(b) Advances shall be incurred PRO RATA from Lenders (the "Non-
Defaulting Lenders") which are not Defaulting Lenders based on their respective
Commitment Percentages, and no Commitment Percentage of any Lender or any PRO
rata share of any Advances required to be advanced by any Lender shall be
increased as a result of such Lender Default. Amounts received in respect of
principal of any type of Advances shall be applied to reduce the applicable
Advances of each Lender PRO RATA based on the aggregate of the outstanding
Advances of that type of all Lenders at the time of such application; provided,
that, such amount shall not be applied to any Advances of a Defaulting Lender at
any time when, and to the extent that, the aggregate amount of Advances of any
Non-Defaulting Lender exceeds such Non-Defaulting Lender's Commitment Percentage
of all Advances then outstanding.
(c) A Defaulting Lender shall not be entitled, during the
continuance of such Lender Default, to give instructions to Agent or to approve,
disapprove, consent to or vote on any matters relating to this Agreement and the
Other Documents. All amendments, waivers and other modifications of this
Agreement and the Other Documents may be made without regard to a Defaulting
Lender and, solely for purposes of the definition of "Required
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Lenders" and Section 14.2(b) hereof, a Defaulting Lender shall be deemed not to
be a Lender and not to have Advances outstanding.
(d) Other than as expressly set forth in this Section 2.18, the
rights and obligations of a Defaulting Lender (including the obligation to
indemnify Agent) and the other parties hereto shall remain unchanged. Nothing
in this Section 2.18 shall be deemed to release any Defaulting Lender from its
obligations under this Agreement and the Other Documents, shall alter such
obligations, shall operate as a waiver of any default by such Defaulting Lender
hereunder, or shall prejudice any rights which Borrower, Agent or any Lender may
have against any Defaulting Lender as a result of any default by such Defaulting
Lender hereunder.
(e) In the event a Defaulting Lender retroactively cures to the
satisfaction of Agent the breach which caused a Lender to become a Defaulting
Lender, such Defaulting Lender shall no longer be a Defaulting Lender and shall
be treated as a Lender under this Agreement.
(f) If a Lender Default shall occur, any Lender or Lenders may
commit to make Advances in an amount necessary to meet Borrower's request. In
such event, the Defaulting Lender's Commitment Percentage of the Advances shall
be terminated and its Commitment Percentage of the Advances outstanding (prior
to such additional Advances being made by the other Lender or Lenders) shall be
repaid by Borrower provided Borrower shall not be obligated to pay an early
termination fee to such Defaulting Lender.
2.19 WITHHOLDING TAXES.
(a) All sums payable by Borrower under this Agreement shall be
paid in full without set off or counterclaim and free and clear of and without
any deduction or withholding for or on account of any present or future
withholding taxes.
(b) If Borrower shall be required by law to make any such
deduction or withholding from any payment for the account of Agent, the Lenders
or any of them, then Borrower will ensure that such deduction or withholding
does not exceed the minimum legal liability therefor and will forthwith pay to
Agent for the account of Agent, the Lenders or any of them such additional
amount as will result in the receipt by Agent, the Lenders or any of them of the
full amount which would otherwise have been receivable hereunder had no such
deduction or withholding been made.
(c) If Borrower pays any additional amount referred to in sub-
clause (b) above ("tax payment") to Agent or any Lender pursuant to the clause
and Agent or such Lender, in its absolute discretion, effectively obtains a
refund of that tax payment ("tax credit") which it is able to identify as being
attributable to that tax payment, then if it can, in its absolute
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discretion, do so without prejudicing the retention of that tax credit, Agent or
such Lender may reimburse Borrower such proportion of that tax credit as it
determines will leave it (after such reimbursement) in no better or worse
position than if that tax payment had not been required. Agent or such Lender
shall have complete discretion as to (a) whether to claim any tax credit (and,
if so, the extent, order and manner of such claim) and (b) whether any amount is
due from it hereunder (and, if so, the amount and time of payment). Neither
Agent nor any Lender shall be obliged to disclose any information regarding its
tax affairs and computations.
III. INTEREST AND FEES.
3.1 INTEREST. Interest on Revolving Advances shall be payable in
arrears on the last day of each month with respect to Domestic Rate Loans and,
with respect to any Eurodollar Rate Loan, at the end of the Interest Period
relating to such Eurodollar Rate Loan. Interest charges for Domestic Rate Loans
shall be computed on the actual average of daily Revolving Advances outstanding
during the month (the "Monthly Advances") at a rate per annum equal to the
applicable Revolving Interest Rate. Whenever, subsequent to the date of this
Agreement, the Alternate Base Rate is increased or decreased, the Revolving
Interest Rate applicable to Domestic Rate Loans shall be similarly changed
without notice or demand of any kind by an amount equal to the amount of such
change in the Alternate Base Rate during the time such change or changes remain
in effect. Upon and after the declaration by Agent of an Event of Default, and
during the continuation thereof, the Revolving Advances shall bear interest at
the Revolving Interest Rate plus two (2%) percent per annum and fees on
outstanding Letters of Credit shall be calculated at three and one-half (3.50%)
percent (the "Default Rate").
3.2 INTENTIONALLY OMITTED.
3.3 UNUSED FACILITY FEE. On the first day of each calendar month
commencing on the first day of the first month following the Effective Date,
Borrower shall pay to Agent an unused facility fee initially, a rate per annum
equal to .3% of the average daily unused portion of the Maximum Loan Amount;
PROVIDED, however, the unused facility fee shall be amended as provided below,
commencing on the later to occur of (i) the last day of the third fiscal quarter
after the Effective Date and (ii) March 31, 1997 and at the end of each fiscal
quarter thereafter based upon the ratio of Funded Debt to EBITDA as reflected in
the financial statements (x) delivered to Agent pursuant to Section 9.7 of the
Affiliate Loan Agreement with respect to the first three (3) fiscal quarters of
any fiscal year and (y) delivered to Agent pursuant to Section 9.8 of the
Affiliate Loan Agreement with respect to the last fiscal quarter of any fiscal
year:
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Ratio of Indebtedness to EBITDA Unused Facility Fee
- --------------------------------------------------------------------------------
less than 3.0 to 1.0 0.200%
less than 3.50 and equal to or greater than 3.0 to 1.0 0.200%
less than 4.50 and equal to or greater than 3.50 to 1.0 0.300%
equal to or greater than 4.50 to 1.0 0.375%
The foregoing ratio shall be determined for Borrowers on a consolidated
basis. Notwithstanding the foregoing, the unused facility fee shall not be
reduced at such time as an Event of Default or Incipient Event of Default has
occurred and is continuing but shall be reduced (if applicable) when such Event
of Default or Incipient Event of Default has been cured or waived.
3.4 LETTER OF CREDIT.
Borrower shall pay Agent (i) for the pro-rata benefit of Lenders for
issuing or causing the issuance of a Letter of Credit, a fee computed at a rate
per annum of one and one-half percent (1-1/2%) on the original face amount
thereof ("Letter of Credit Fees"), (ii) Bank's other customary charges payable
in connection with Letters of Credit, as in effect from time to time (which
charges shall be furnished to Borrower by Agent upon request). Such fees and
charges shall be payable on the opening of each Letter of Credit, and thereafter
on the last day of each month. Any such charge in effect at the time of a
particular transaction shall be the charge for that transaction, notwithstanding
any subsequent change in Bank's prevailing charges for that type of transaction.
All Letter of Credit Fees payable hereunder shall be deemed earned in full on
the date when the same are due and payable hereunder and shall not be subject to
rebate or proration upon the termination of this Agreement for any reason.
3.5 COMPUTATION OF INTEREST AND FEES. Interest and fees hereunder
shall be computed on the basis of a year of 360 days and for the actual number
of days elapsed; PROVIDED, HOWEVER, Advances bearing interest based on the Prime
Rate shall be computed on the basis of a year of 365(6) days and for the actual
number of days elapsed. If any payment to be made hereunder becomes due and
payable on a day other than a Business Day, the due date thereof shall be
extended to the next succeeding Business Day and interest thereon shall then be
payable in respect of the period of such extension.
3.6 MAXIMUM CHARGES. In no event whatsoever shall interest and other
charges charged hereunder exceed the highest
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rate permissible under law which a court of competent jurisdiction shall, in a
final determination, deem applicable hereto. In the event that a court
determines that Agent or any Lender has received interest and other charges
hereunder in excess of the highest lawful rate applicable hereto, such excess
interest shall be first applied to any unpaid principal balance owed by
Borrower, and if the then remaining excess interest is greater than the
previously unpaid principal balance, Lenders shall promptly refund such excess
amount to Borrower and the provisions hereof shall be deemed amended to provide
for such permissible rate.
IV. COLLATERAL: GENERAL TERMS
4.1 ACKNOWLEDGEMENT AND GRANT OF SECURITY INTERESTS.
(a) Borrower hereby pledges and assigns to Agent for the ratable
benefit of the Lenders and grants to Agent for the ratable benefit of the
Lenders a continuing security interest in all of the Collateral and
acknowledges, confirms and agrees that Agent has and shall continue to have for
the ratable benefit of the Lenders a continuing security interest and fixed and
floating charges in, on or to, all the Collateral now or heretofore granted,
whether now owned or existing or hereafter acquired or arising and wheresoever
located. Borrower shall mark its books and records as may be necessary or
appropriate to evidence, protect and perfect Agent's security interest and shall
cause its financial statements to reflect such security interest.
(b) The liens and security interests of Agent for the ratable
benefit of Lenders in the Collateral shall be deemed to be continuously
perfected from the earliest date of the granting of such liens and security
interests, whether hereunder, under the Other Documents, or under the Existing
Loan Agreement.
4.2 PERFECTION OF SECURITY INTEREST. Borrower shall take all action
that may be necessary or desirable, or that Agent may reasonably request, so as
at all times to maintain the validity, perfection, enforceability and first
priority of Agent's security interest in the Collateral or to enable Agent to
protect, exercise or enforce its rights hereunder and in the Collateral,
including, but not limited to (i) immediately discharging all Liens on
Collateral other than Permitted Encumbrances, (ii) obtaining landlords' or
mortgagees' lien waivers with respect to any premises leased or purchased by
Borrower after the Initial Closing Date, (iii) delivering to Agent, endorsed or
accompanied by such instruments of assignment as Agent may reasonably specify,
and stamping or marking, in such manner as Agent may reasonably specify, any and
all chattel paper, instruments, letters of credits and advices thereof and
documents evidencing or forming a part of the Collateral, (iv) entering into
custodial arrangements satisfactory to Agent, and (v) executing and delivering
financing statements, instruments of pledge, mortgages, notices and assignments,
in each case in form and substance satisfactory to Agent, relating to the
creation, validity, perfection, maintenance
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or continuation of Agent's security interest in the Collateral under the Uniform
Commercial Code or other applicable or comparable law. All reasonable and
necessary charges, expenses and fees that Agent may incur in doing any of the
foregoing in the good faith exercise of its discretion, and any local taxes
relating thereto, shall be charged to Borrower's account and added to the
Obligations, or, at Agent's option, shall be paid to Agent immediately upon
demand.
4.3 DISPOSITION OF COLLATERAL. Borrower will safeguard and protect
all Collateral for Agent's general account and make no disposition thereof
whether by sale, lease or otherwise without Agent's prior written consent which
shall not be unreasonably withheld or delayed, except that Borrower may, without
Agent's consent, sell Inventory in the ordinary course of business.
4.4 PRESERVATION OF COLLATERAL. Agent shall have, and is hereby
granted, a right of ingress and egress to the places where the Collateral is
located, and may proceed over and through any of Borrower's owned or leased
property In addition to the rights and remedies set forth in Section 11.1
hereof, Agent may at any time following the occurrence and during the
continuance of an Event of Default take such steps as Agent deems necessary to
protect its security interest in and to preserve the Collateral including (a)
the hiring of such security guards or the placing of other security protection
measures as Agent may deem appropriate; (b) employing and maintaining at any of
Borrower's premises a custodian who shall have full authority to do all acts
necessary to protect Agent's security interest in the Collateral; (c) leasing
warehouse facilities to which Agent may move all or part of the Collateral; and
(d) subject to the provisions of the Intercreditor Agreement, using any of
Borrower's owned or leased lifts, hoists, trucks and other facilities or
equipment for handling or removing the Collateral. Borrower shall cooperate
fully with all of Agent's efforts to preserve the Collateral and will take such
actions to preserve the Collateral as Agent may direct. All of Agent's
reasonable and necessary expenses of preserving the Collateral, including any
expenses relating to the bonding of a custodian, shall be charged to Borrower's
account as an Advance and added to the Obligations.
4.5 OWNERSHIP OF COLLATERAL. With respect to the Collateral, at the
time the Collateral becomes subject to the security interest granted pursuant to
or Section 4.1 hereof, as the case may be: (a) Borrower shall be the sole owner
of and fully authorized and able to transfer, pledge and/or grant a first
security interest in each and every item of its respective Collateral to Agent;
and, except for Permitted Encumbrances, the Collateral shall be free and clear
of all Liens, Claims, Charges and encumbrances whatsoever; (b) each document and
agreement executed by Borrower or delivered to Agent or any Lender on behalf of
Borrower in connection with this Agreement shall be true and correct in all
material respects as of the date thereof;
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(c) all signatures and endorsements of Borrower that appear on such documents
and agreements shall be genuine and Borrower shall have full capacity to execute
same; and (d) Borrower's Inventory shall be located as set forth on EXHIBIT 4.5
and shall not be removed from such location(s) (except with respect to the sale
of Inventory in the ordinary course of business) unless Agent shall have
received thirty (30) days' prior written notice of such removal.
4.6 DEFENSE OF AGENT'S INTERESTS. Until (a) payment and performance
in full of all of the Obligations and (b) termination of this Agreement, Agent's
interests in the Collateral shall continue in full force and effect. During
such period none of Borrower shall, without Agent's prior written consent,
pledge, sell (except Inventory in the ordinary course of business), assign,
transfer, create or suffer to exist a security interest in, Lien, Claim or
Charge upon or encumber or allow or suffer to be encumbered in any way except
for Permitted Encumbrances, any part of the Collateral. Except as respects
Permitted Encumbrances, Borrower shall defend Agent's interests in the
Collateral against any and all Persons whatsoever. At any time following the
declaration and during the continuance of an Event of Default hereunder, Agent
shall have the right to take possession of the indicia of the Collateral and the
Collateral using all legally permitted methods in whatever physical form
contained, including without limitation: labels, stationery, documents,
instruments and advertising materials. If Agent exercises this right to take
possession of the Collateral, Borrower shall, upon demand, assemble it in the
best manner possible and make it available to Agent at a place reasonably
convenient to Agent; PROVIDED, that any request by Agent shall be made in a
commercially reasonable manner. In addition, with respect to all Collateral,
Agent and Lenders shall be entitled to all of the rights and remedies set forth
herein and further provided by the Uniform Commercial Code or other applicable
law. Following the occurrence and during the continuation of an Event of
Default, Borrower shall, and Agent may, at its option, instruct all suppliers,
carriers, forwarders, warehouses or others receiving or holding cash, checks,
Inventory, documents or instruments in which Agent holds a security interest to
deliver same to Agent and/or subject to Agent's order. If any of the foregoing
shall, at any time, come into Borrower's possession, they, and each of them,
shall be held by Borrower in trust as Agent's trustee, and Borrower will
immediately deliver them to Agent in their original form together with any
necessary endorsement.
4.7 BOOKS AND RECORDS. Borrower (a) shall keep proper books of record
and account in which full, true and correct entries will be made of all dealings
or transactions of or in relation to its business and affairs; (b) set up on its
books accruals with respect to all taxes, assessments, charges, levies and
claims; and (c) on a reasonably current basis set up on its books, from its
earnings, allowances against doubtful Receivables, advances and investments and
all other proper accruals (including
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without limitation by reason of enumeration, accruals for premiums, if any, due
on required payments and accruals for depreciation, obsolescence, or
amortization of properties), which should be set aside from such earnings in
connection with its business. All determinations pursuant to this subsection
shall be made in accordance with, or as required by, GAAP consistently applied.
4.8 FINANCIAL DISCLOSURE. Borrower hereby irrevocably authorizes and
directs all accountants and auditors employed by Borrower at any time during the
term of this Agreement to exhibit and deliver to Agent and each Lender copies of
any of Borrower's financial statements, trial balances or other accounting
records including work papers of any sort in the accountant's or auditor's
possession, and to disclose to Agent and each Lender any information such
accountants may have concerning Borrower's financial status and business
operations. Borrower hereby authorizes all federal, state and municipal
authorities to furnish to Agent and each Lender copies of reports or
examinations relating to Borrower, whether made by Borrower or otherwise;
PROVIDED, HOWEVER, that Agent and each Lender will attempt to obtain such
information or materials directly from Borrower prior to obtaining such
information or materials from such accountants or governmental authorities. Any
failure by the accountants or governmental authorities to comply with
information requests of Agent or any Lender shall not be deemed an Event of
Default hereunder unless such failure to comply is a result of instructions by
Borrower which are contrary to the provisions of this Section 4.8. Agent and
each Lender shall exercise its rights hereunder in a commercially reasonable
manner.
4.9 COMPLIANCE WITH LAWS. Borrower shall in all material respects
comply with all acts, rules, regulations and orders of any legislative,
administrative or judicial body or official applicable to the Collateral or any
part thereof or to the operation of Borrower's business the non-compliance with
which would have a material adverse effect on the Collateral, or the operations,
business or condition (financial or otherwise) of Borrower. Borrower may,
however, contest or dispute any acts, rules, regulations, orders and directions
of those bodies or officials in any reasonable manner, provided that any related
Lien or Charge which is or might be asserted with respect thereto (if applicable
to the Collateral) is inchoate or stayed and sufficient reserves are established
to the reasonable satisfaction of Agent so as not to derogate from or against
and so as to protect, Agent's lien on or security interest in the Collateral.
4.10 INSPECTION OF PREMISES. At all reasonable times Agent or any
Lender shall have full access to and the right to audit, check, inspect and make
abstracts and copies from Borrower's books, records, audits, correspondence and
all other papers relating to the Collateral and the operation of Borrower's
business. Agent or any Lender may enter upon any of Borrower's premises at any
time during business hours and at any other reasonable time, and from time to
time, for the purpose of
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inspecting the Collateral and any and all records pertaining thereto and the
operation of Borrower's business.
4.11 INSURANCE. Borrower shall bear the full risk from any loss of any
nature whatsoever with respect to the Collateral. At its own cost and expense
in amounts and with carriers acceptable to Agent (which acceptance shall not be
unreasonably withheld), Borrower shall (a) keep all its insurable properties and
properties in which Borrower has an interest insured against the hazards of
fire, flood, sprinkler leakage, those hazards covered by extended coverage
insurance and such other hazards, including, without limitation, business
interruption insurance and for such amounts, as is customary in the case of
companies engaged in a business similar to Borrower provided that such insurance
shall be for at least [$____________]; (b) maintain a bond in such amounts as is
customary in the case of companies engaged in a business similar to Borrower
insuring against larceny, embezzlement or other criminal misappropriation of
insured's officers and employees who may either singly or jointly with others at
any time have access to the assets or funds of Borrower either directly or
through authority to draw upon such funds or to direct generally the disposition
of such assets; (c) maintain product liability insurance against claims for
personal injury, death or property damage suffered by others in an amount not
less than the maximum amount which Borrower is able to obtain; PROVIDED, that
such insurance shall not be for an amount less than $______________ or more than
$____________; and PROVIDED, FURTHER, that Borrower's inability to obtain
insurance in an amount equal to $____________ for Borrower is due to market
conditions and is not a result of Borrower's actions or omissions; (d) maintain
all such worker's compensation or similar insurance as may be required under the
laws of each state or jurisdiction in which Borrower is engaged in business; (e)
furnish Agent with (i) copies of all policies and evidence of the maintenance of
such policies by the renewal thereof at least thirty (30) days before any
expiration date, and (ii) appropriate loss payable endorsements in form and
substance satisfactory to Agent, naming Agent as loss payee as its interests may
appear with respect to all insurance coverage referred to in clauses (a) and (b)
above and as an additional insured with respect to the insurance coverage
referred to in clauses (c) and (d) above, and in either case providing (A) that
all proceeds thereunder in respect of the Collateral shall be payable to Agent,
(B) that no such insurance shall be affected by any act or neglect of the
insured or owner of the property described in such policy, and (C) that such
policy and loss payable clauses may not be cancelled, amended or terminated
unless at least thirty (30) days' prior written notice is given to Agent. In
the event of any loss thereunder, the carriers named therein hereby are directed
by Agent and Borrower to make payment for such loss to Agent and not to Borrower
and Agent jointly. If any insurance losses are paid by check, draft or other
instrument payable to Borrower and Agent jointly, Agent may endorse Borrower's
name thereon and do such other things as Agent may deem advisable to reduce the
same to cash. All loss recoveries received
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by Agent upon any such insurance may be applied to the Obligations, in such
order as Agent in its sole discretion shall determine; PROVIDED, HOWEVER, Agent
shall remit to Borrower any loss recoveries received by Agent with respect to
Borrower's insurance coverage referred to in clauses (c) and (d) above which are
paid to Agent other than in its capacity as an additional insured under said
policies. Any surplus shall be paid by Agent to Borrower or applied as may be
otherwise required by law. Any deficiency in the amount of insurance proceeds
received when compared to the value of the Collateral the loss of which gave
rise to such insurance proceeds shall be paid by Borrower to Agent, on demand.
Anything hereinabove to the contrary notwithstanding (i) Agent shall permit
Borrower to adjust and compromise claims under insurance coverage provided that
no Event of Default shall have been declared and be continuing and (ii) Agent
shall promptly remit to Borrower insurance proceeds received by Agent during any
calendar year under insurance policies procured and maintained by Borrower which
insure Borrower's insurable Collateral to the extent such insurance proceeds do
not exceed $__________ per occurrence provided, (x) no Event of Default shall
have been declared and be continuing, (y) Borrower shall use such insurance
proceeds to repair, replace or restore the insurable Collateral which was the
subject of the insurable loss and for no other purpose and (z) Agent shall have
obtained a perfected security interest in such repaired, replaced or restored
Collateral. In the event the amount of insurance proceeds received by Agent for
any occurrence as aforesaid exceeds $_________ and no Event of Default shall
have been declared and be continuing, Agent shall place such proceeds in an
interest-bearing account and such proceeds shall be remitted to Borrower from
time to time to the extent (a) Borrower shall submit invoices to Agent with
respect to the repair, replacement or restoration of the insurable Collateral
which was the subject of the insurable loss, (b) Borrower shall use such
insurance proceeds to repair, replace or restore the insurable Collateral which
was the subject of the insurable loss and for no other purpose, (c) the repair,
replacement or restoration of the subject Collateral must be capable of being
accomplished during the period of time in which Borrower's business interruption
insurance is in effect and (d) Borrower shall have delivered to Agent a revised
Business Plan in form and substance satisfactory to Agent evidencing Borrower's
ability to continue to operate its business without the occurrence of any other
Event of Default hereunder. Following the declaration and during the
continuance of an Event of Default hereunder, Agent shall not be obligated to
remit the insurance proceeds to Borrower.
4.12 FAILURE TO MAINTAIN INSURANCE. If Borrower fails to obtain
insurance as hereinabove provided, or to keep the same in force, Agent may
obtain such insurance and pay the premium therefor for Borrower's account, and
charge Borrower's account therefor and such expenses so paid shall be charged to
Borrower's account as an Advance and added to the Obligations.
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4.13 PAYMENT OF TAXES. Borrower will pay, before becoming delinquent,
all taxes, assessments and other Charges or Claims lawfully levied or assessed
upon Borrower or any of the Collateral including, without limitation, real and
personal property taxes, assessments and charges and all franchise, income,
employment, social security benefits, withholding, and sales taxes. If any tax
by any governmental authority is or may be imposed on Agent or any Lender or, as
a result of any transaction between Borrower, any Agent and Lender, Agent or any
Lender may be required to withhold or pay such a tax or, if any taxes,
assessments, or other Charges remain unpaid after the delinquency date or if any
Claim shall be made which, in Agent's opinion, may possibly create a valid Lien,
Charge or Claim on the Collateral, Agent may, concurrently with giving notice to
Borrower, pay the taxes, assessments, Liens, Charges or Claims and Borrower
hereby indemnifies and holds Agent harmless in respect thereof except for gross
(not mere) negligence or willful misconduct. The amount of any payment by Agent
or any Lender under this Section 4.13 shall be charged to Borrower's account as
an Advance and added to the Obligations and, until Borrower shall furnish Agent
with an indemnity therefor (or supply Agent with evidence satisfactory to Agent
that due provision for the payment thereof has been made), Agent may hold
without interest any balance standing to Borrower's credit and Agent shall
retain its security interest in any and all Collateral held by Agent.
4.14 PAYMENT OF LEASEHOLD OBLIGATIONS. Borrower shall at all times
pay, before becoming delinquent, its rental obligations under all leases under
which it is a tenant, and shall otherwise comply, in all material respects, with
all other terms of such leases and keep them in full force and effect and, at
Agent's request, will provide evidence of having done so.
4.15 RECEIVABLES.
(a) NATURE OF RECEIVABLES. Each of the Receivables shall be a
bona fide and valid account representing a bona fide obligation of the Customer
therein named, for a fixed sum as set forth in the invoice relating thereto
(provided immaterial or unintentional invoice errors shall not be deemed to be a
breach hereof and Eligible Unbilled Receivables do not have any invoices
relating thereto) with respect to an absolute sale or lease and delivery of
goods upon stated terms of Borrower, or work, labor or services theretofore
rendered by Borrower and as of the date each Receivable is created. Same shall
be due and owing in accordance with Borrower's standard terms of sale without
dispute, setoff or counterclaim except, as may be stated on the accounts
receivable schedules delivered by Borrower to Agent.
(b) SOLVENCY OF CUSTOMERS. To the best of Borrower's
knowledge, each Customer, as of the date each Receivable is created, is and will
be solvent and able to pay all Receivables on which the Customer is obligated in
full when due or with respect to such Customers of Borrower who are not solvent
Borrower has
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set up on its books and in its financial records bad debt reserves adequate to
cover such Receivables or has collateral from such Customer sufficient to cover
such Receivables.
(c) LOCATIONS OF BORROWER. Borrower's chief executive office
is located at ________________________________. Until written notice is given
to Agent by Borrower of any other office at which it keeps its records
pertaining to Receivables, all such records shall be kept at such executive
office.
(d) COLLECTION OF RECEIVABLES. Until Borrower's authority to
do so is terminated by Agent (which notice Agent may give at any time following
the occurrence and during the continuance of an Event of Default), Borrower
will, at Borrower's sole cost and expense, but on Agent's behalf and for the
account of Agent, collect as Agent's property and in trust for Agent all amounts
received on Receivables, and shall not commingle such collections with
Borrower's funds or use the same except to pay Obligations. Borrower shall,
upon request, deliver to Agent in original form and on the date of receipt
thereof, all checks, drafts, notes, money orders, acceptances, cash and other
evidences of Indebtedness.
(e) NOTIFICATION OF ASSIGNMENT OF RECEIVABLES. At any time
following the occurrence and during the continuance of an Event of Default,
Agent shall have the right to send notice of the assignment of, and Agent's
security interest in, the Receivables to any and all Customers or any third
party holding or otherwise concerned with any of the Collateral. Thereafter,
Agent shall have the sole right to collect the Receivables, take possession of
the Collateral, or both. Agent's actual collection expenses, including, but not
limited to, stationery and postage, telephone and telegraph, secretarial and
clerical expenses and the salaries of any collection personnel used for
collection, may be charged to Borrower's account and added to the Obligations.
(f) POWER OF AGENT TO ACT ON BORROWER'S BEHALF. Agent shall
have the right to receive, endorse, assign and/or deliver in the name of Agent
or Borrower any and all checks, drafts and other instruments for the payment of
money relating to the Receivables, and Borrower hereby waives notice of
presentment, protest and non-payment of any instrument so endorsed. Borrower
hereby constitutes Agent or its designee as Borrower's attorney with power (i)
to endorse Borrower's name upon any notes, acceptances, checks, drafts, money
orders or other evidences of payment or Collateral; (ii) to sign Borrower's name
on any invoice or bill of lading relating to any of the Receivables, drafts
against Customers, assignments and verifications of Receivables; (iii) to send
verifications of Receivables to any Customer; (iv) to sign Borrower's name on
all financing statements or any other documents or instruments deemed necessary
or appropriate by Agent to preserve, protect, or perfect Agent's interest in the
Collateral and to file same; (v) following the occurrence and during the
continuance of an Event of Default, to
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demand payment of the Receivables; (vi) following the occurrence and during the
continuance of an Event of Default, to enforce payment of the Receivables by
legal proceedings or otherwise: (vii) following the occurrence and during the
continuance of an Event of Default, to exercise all of Borrower's rights and
remedies with respect to the collection of the Receivables and any other
Collateral; (viii) following the occurrence and during the continuance of an
Event of Default, to settle, adjust, compromise, extend or renew the
Receivables; (ix) following the occurrence and during the continuance of an
Event of Default, to settle, adjust or compromise any legal proceedings brought
to collect Receivables; (x) to prepare, file and sign Borrower's name on a proof
of claim in bankruptcy or similar document against any Customer if Borrower has
failed to do so no later than thirty (30) days prior to any bar date; (xi) to
prepare, file and sign Borrower's name on any notice of Lien, assignment or
satisfaction of Lien or similar document in connection with the Receivables if
Borrower has failed to do so no later than thirty (30) days prior to the
expiration of any applicable time period; and (xii) to do all other acts and
things necessary to carry out this Agreement. All acts of said attorney or
designee are hereby ratified and approved, and said attorney or designee shall
not be liable for any acts of omission or commission nor for any error of
judgment or mistake of fact or of law, unless done willfully and maliciously or
by gross (not mere) negligence; this power being coupled with an interest is
irrevocable while any of the Obligations remain unpaid. Agent shall have the
right at any time following the declaration and during the continuance of an
Event of Default to change the address for delivery of mail addressed to
Borrower to such address as Agent may designate.
(g) NO LIABILITY. Neither Agent nor any Lender shall, under
any circumstances or in any event whatsoever, have any liability for any error
or omission or delay of any kind occurring in the settlement, collection or
payment of any of the Receivables or any instrument received in payment thereof,
or for any damage resulting therefrom except for its own willful misconduct or
gross (not mere) negligence. Following the occurrence and during the
continuance of an Event of Default, Agent may, without notice or consent from
Borrower, sue upon or otherwise collect, extend the time of payment of,
compromise or settle for cash, credit or upon any terms any of the Receivables
or any other securities, instruments or insurance applicable thereto and/or
release any obligor thereof. Agent is authorized and empowered to accept,
following the occurrence and during the continuance of an Event of Default, the
return of the goods represented by any of the Receivables, without notice to or
consent by Borrower, all without discharging or in any way affecting Borrower's
liability hereunder.
(h) ESTABLISHMENT OF AN AGENCY ACCOUNT. All proceeds of
Collateral shall, at the direction of Agent, be deposited by Borrower into a
separate agency account (collectively, "Agency Accounts") as Agent may require
pursuant to
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an arrangement with such bank(s) (the "Depository Banks") as may be selected by
Borrower and be acceptable to Agent. The Depository Bank shall receive, in
writing, irrevocable instructions directing the Depository Bank to transfer such
funds so deposited to Agent by wire transfer to specified account(s) of Agent.
All funds deposited in the Agency Accounts shall immediately become the property
of Agent and Borrower shall obtain the agreement by the Depository Bank to waive
any offset rights against the funds so deposited. Neither Agent nor any Lender
assumes any responsibility for such Agency Account arrangements, including
without limitation, any claim of accord and satisfaction or release with respect
to deposits accepted by any bank thereunder. Borrower will maintain an
operating account with a Depository Bank. In the event that any check(s)
deposited in the Agency Accounts is returned unpaid, the amount thereof shall be
charged by such Depository Bank to such operating account and, to the extent
that funds are not available in the operating account, Borrower shall be solely
responsible for reimbursing the Depository Bank. Borrower shall issue, to the
respective Depository Bank, an irrevocable letter of instruction directing such
Depository Bank that, to the extent that Borrower shall receive wire transfers
representing proceeds of Collateral in such operating account, such funds shall
be automatically and immediately transferred to the applicable Agency Account.
4.16 INVENTORY. All Inventory produced by Borrower in the United
States has been, and will be produced, in accordance with the Federal Fair Labor
Standards Act of 1938, as amended, and all rules, regulations and orders
thereunder.
4.17 EXCULPATION OF LIABILITY. Except as set forth in Section 4.15(f)
hereof, nothing herein contained shall be construed to constitute Agent or any
Lender as Borrower's agent for any purpose whatsoever, nor shall Agent or any
Lender be responsible or liable for any shortage, discrepancy, damage, loss or
destruction of any part of the Collateral wherever the same may be located and
regardless of the cause thereof except for its own gross (not mere) negligence
or willful misconduct. Neither Agent nor any Lender does by anything herein or
in any Other Document or in any assignment or otherwise, assume any of
Borrower's obligations under any contract or agreement assigned to Agent or such
Lender, and neither Agent nor any Lender shall be responsible in any way for the
performance by Borrower of any of the terms and conditions thereof except for
its own willful misconduct or gross (not mere) negligence.
4.18 ENVIRONMENTAL MATTERS.
(a) Borrower will maintain its real property in substantial
compliance with all Environmental Laws and it will not place or suffer or permit
to be placed any Hazardous Substances on the real property except as not
prohibited by applicable law or appropriate governmental authorities and which
are necessary for
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the operation of the commercial business of Borrower or of its tenants.
(b) Borrower will maintain its current system to assure and
monitor continued compliance with all applicable Environmental Laws which system
includes periodic reviews of such compliance.
(c) Borrower will dispose of any and all Hazardous Waste
generated at the real property only at facilities and with carriers that
maintain valid permits under any applicable Environmental Laws. Borrower shall
use its best efforts to obtain certificates of disposal, such as hazardous waste
manifest receipts, from all treatment, transport, storage or disposal facilities
or operators employed by Borrower in connection with the transport or disposal
of any Hazardous Waste generated at the real property.
(d) In the event Borrower comes into possession of, gives or
receives notice of any Release or threat of Release of a reportable quantity of
any Hazardous Substances at the real property or any other site used by Borrower
to dispose of Hazardous Substances (any such event being hereinafter referred to
as a "Hazardous Discharge") or receives any notice of violation, request for
information or notification that it is potentially responsible for investigation
or cleanup of environmental conditions at the real property (or any other site
used by Borrower to dispose of Hazardous Substances), demand letter or
complaint, order, citation, or other written notice with regard to any Hazardous
Discharge or violation of Environmental Laws affecting the real property (or any
other site used by Borrower to dispose of Hazardous Substances) or Borrower's
interest therein (any of the foregoing is referred to herein as an
"Environmental Complaint") from any local, state or federal authority or agency
with enforcement rights, including any state agency responsible in whole or in
part for environmental matters in the state in which the real property is
located or the United States Environmental Protection Agency (any such person or
entity hereinafter the "Authority"), then such Borrower shall, within five (5)
Business Days, give written notice of same to Agent detailing non-privileged and
non-confidential facts and circumstances of which Borrower is aware giving rise
to the Hazardous Discharge or Environmental Complaint and shall forward copies
of correspondence between Borrower and the Authority regarding such claims to
Agent until the claim is settled. Borrower shall promptly forward to Agent
copies of all documents and reports concerning a Hazardous Discharge at the real
property that Borrower is required to file under any Environmental Laws. Such
information is to be provided to allow Agent to protect its security interest in
the collateral assignment of Borrower's lease interest in the real property and
is not intended to create nor shall it create any obligation upon Agent or any
Lender with respect thereto.
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(e) Borrower shall respond promptly to any Hazardous Discharge
and within thirty (30) days of receipt of any Environmental Complaint and take
all necessary action in order to comply with all applicable Environmental Laws
and to avoid subjecting the Collateral or real property to any Lien relating to
a failure to comply with Environmental Laws; PROVIDED, HOWEVER, if such
compliance cannot reasonably be completed within such thirty (30) day period,
Borrower shall commence such necessary action within such thirty (30) day period
and shall thereafter diligently and expeditiously proceed to fully comply in all
respects and in a timely fashion with all Environmental Laws. If Borrower shall
fail to respond promptly to any Hazardous Discharge or shall fail to respond
within a reasonable period of time to any Environmental Complaint or Borrower
shall fail to diligently and expeditiously proceed to comply in a timely fashion
with any of the requirements of any Environmental Laws, Agent, on behalf of
Lenders, may, in its sole and absolute discretion, but without the obligation to
do so, for the sole purpose of protecting Agent's interest in Collateral: (A)
give such notices or (B) enter onto the real property (or authorize third
parties to enter onto the real property) and take such actions as Agent (or such
third parties as directed by Agent) deem reasonably necessary or advisable, to
clean up, remove, mitigate or otherwise deal with any such Hazardous Discharge
or Environmental Complaint in a commercially reasonable manner. All reasonable
costs and expenses incurred by Agent or any Lender (or such third parties) in
the exercise of any such rights, including any sums paid in connection with any
judicial or administrative investigation or proceedings, reasonable counsel and
consultant fees and expenses, investigation and laboratory fees and expenses,
and fines and penalties, together with interest thereon from the date expended
at the Default Rate shall be paid upon demand by Borrower, and until paid shall
be charged to Borrower's account as an Advance and added to the Obligations
secured by the Liens created by the terms of this Agreement. Borrower shall
execute and deliver, promptly upon request, such instruments as Agent may
reasonably deem useful or necessary to permit Agent to take any such action, and
such additional notes and mortgages, as Agent may require to secure all sums so
advanced or paid by Agent or Lenders.
(f) Borrower shall defend and indemnify Agent and Lenders and
hold Agent and Lenders harmless from and against all loss, liability, damage and
expense, claims, costs, fines and penalties, including reasonable attorney's
fees, suffered or incurred by Agent or Lenders under or on account of any
Environmental Laws in relation to Borrower or its Collateral or real property,
including, without limitation, the assertion of any lien thereunder, with
respect to any Hazardous Discharge, the presence of any Hazardous Substances
affecting the real property, whether or not the same originates or emanates from
the real property or any contiguous real estate, except to the extent such loss,
liability or damage is directly related to Agent or Lenders (i) placing any
Hazardous Substance on the real property, (ii) failing to properly dispose of
Hazardous Waste, (iii) causing a
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Hazardous Discharge on the real property or (iv) failing to act in a
commercially reasonable manner. Agent may, in the event it is dissatisfied, in
the exercise of its reasonable judgment, with counsel employed by Borrower,
employ counsel separate from counsel employed by Borrower in any such action and
participate in the defense thereof, at the expense of Borrower. Borrower's
obligations and the indemnifications hereunder shall survive the termination of
this Agreement.
(g) If a Lien is filed against any real property by any
governmental authority resulting from the need to expend or the actual expending
of monies arising from an action or omission, whether intentional or
unintentional, of Borrower for which Borrower is responsible, resulting in the
releasing, spilling, leaking, leaching, pumping, emitting, pouring, emptying or
dumping of any Hazardous Substance into the waters or onto land located within
or without the state where the real property is located, then within thirty (30)
days from the date Borrower is first given notice that such Lien has been filed
against the real property (or within such shorter period of time as may be
specified by Agent if such governmental authority has commenced steps to cause
the real property to be sold pursuant to such Lien) either (i) pay the claim and
remove the Lien, or (ii) furnish a cash deposit, bond, or such other security
with respect thereto as is satisfactory in all respects to Agent and is
sufficient to effect a complete discharge of such Lien on the real property. If
Borrower fails to do either (i) or (ii) above in a timely manner, Agent and
Lenders shall have the right, but not the obligation, to do so and all such
costs or expenses incurred by Agent and Lenders in connection therewith,
together with interest thereon from the date expended at the Default Rate shall
be paid upon demand by Borrower and until paid shall be added to the Obligations
secured by the Liens created by the terms of this Agreement.
4.19 GREENWICH. All expenses of Agent, the Lenders or any Receiver (as
defined in the U.K. Security Document) under the U.K. Security Document shall be
charged to Borrower's account as Revolving Advance and added to the Obligations
of, at Agent's option, paid by Borrower upon written demand therefor.
4.20 INCONSISTENT PROVISIONS. If and to the extent that any
provisions of this Agreement with respect to Collateral or certain obligations
of Borrower conflict or are otherwise inconsistent with any provisions of the
U.K. Security Document, the provisions of the U.K. Security Document shall
control.
V. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants as follows:
5.1 AUTHORITY. Borrower has full power, authority and legal right to
enter into this Agreement and the Other Documents and perform all Obligations
hereunder and thereunder. The execution, delivery and performance hereof and of
the Other
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Documents are within Borrower's corporate powers, have been duly authorized, are
not in contravention of law or the terms of Borrower's by-laws, certificate of
incorporation or other applicable documents relating to Borrower's formation or
to the conduct of Borrower's business or of any material agreement or
undertaking to which Borrower is a party or by which Borrower is bound, and will
not conflict with or result in any breach of any of the provisions of or
constitute a default under or result in the creation of any Lien except
Permitted Encumbrances upon any asset of Borrower under the provisions of any
agreement, charter, instrument, by-law, or other instrument to which Borrower is
a party or by which it may be bound.
5.2 FORMATION AND QUALIFICATION. Borrower is duly incorporated and in
good standing under the laws of the United Kingdom and is qualified to do
business and is in good standing in the states listed on EXHIBIT 5.2 which
constitute all states in which qualification and good standing are necessary to
conduct its business and own its property and where the failure to so qualify
would have a material adverse effect on its business. Borrower has delivered to
Agent true and complete copies of its certificate of incorporation and by-laws
and will promptly notify Agent of any amendment or changes thereto.
5.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties of Borrower contained in this Agreement and the Other Documents
shall be true at the time of Borrower's execution of this Agreement and the
Other Documents, and shall survive the execution, delivery and acceptance
thereof by Agent and the parties thereto and the closing of the transactions
described therein or related thereto. Any misrepresentation or breach of any
representation or warranty whatsoever contained in this Agreement or the Other
Documents shall be deemed material.
5.4 TAX RETURNS. Borrower has filed or has caused to be filed all
Inland Revenue tax returns and other reports it is required by law to file and
has paid all taxes, assessments, fees and other governmental charges that are
due and payable. Borrower has been examined and reported upon by the
appropriate taxing authority and have been closed by applicable statute and
satisfied for each fiscal year prior to and including the fiscal year ending
_____________ ___, 199___. To the best of Borrower's knowledge, the provision
for taxes on the books of Borrower is adequate for all years not closed by
applicable statutes, and for its current fiscal year, and none of Borrower has
any knowledge of any deficiency or additional assessment in connection therewith
not provided for on its books.
5.5 INTENTIONALLY OMITTED.
5.6 CORPORATE NAME. Except for Aviall, Borrower has not been known by
any other corporate name in the past five years and does not sell Inventory
under any other name.
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5.7 O.S.H.A. AND ENVIRONMENTAL COMPLIANCE.
(a) Borrower has substantially complied with, and its
facilities, business assets, property, leaseholds and equipment are in
compliance in all material respects with, the provisions of all Environmental
Laws; and there are no outstanding citations, notices or orders of substantial
non-compliance issued to Borrower or relating to its business, assets, property,
leaseholds or equipment under any such laws, rules or regulations.
(b) Borrower has been issued all required material federal,
state and local licenses, certificates or permits relating to, and Borrower and
its facilities, businesses, assets, property, leaseholds and equipment are in
compliance in all material respects with, all applicable Environmental Laws.
(c) (i) There are no material releases, spills, discharges,
leaks or disposal (collectively referred to as "Releases") of Hazardous
Substances at, upon, under or within any real property or any premises leased by
Borrower; (ii) except as set forth on EXHIBIT 5.7, there are no underground
storage tanks or known polychlorinated biphenyls on the real property or any
premises leased by Borrower; (iii) to the best knowledge of Borrower, neither
the real property nor any premises leased by Borrower has ever been used as a
treatment, storage or disposal facility of Hazardous Waste; and (iv) to the best
knowledge of Borrower, no Hazardous Substances are present on the real property
or any premises leased by Borrower, excepting such quantities as are handled in
accordance with all applicable manufacturer's instructions and governmental
regulations and in proper storage containers and as are necessary for the
operation of the commercial business of Borrower or of its tenants.
5.8 SOLVENCY; NO LITIGATION, VIOLATION, INDEBTEDNESS OR DEFAULT.
(a) After giving effect to the Transactions, Borrower will be
solvent, able to pay its debts as they mature, have capital sufficient to carry
on its business and all businesses in which it is about to engage, and (i) as of
the Effective Date, the fair present saleable value of its assets, calculated on
a going concern basis, was in excess of the amount of its liabilities and (ii)
subsequent to the Effective Date, the fair saleable value of its assets
(calculated on a going concern basis) will be in excess of the amount of its
liabilities.
(b) Except as disclosed in EXHIBIT 5.8(b), Borrower has no (i)
pending or threatened litigation, actions or proceedings which involve the
possibility of materially and adversely affecting Borrower's business, assets,
operations, condition or prospects, financial or otherwise, or the Collateral,
or the ability of Borrower to perform its obligations under this
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Agreement, and (ii) any liabilities or Indebtedness for borrowed money other
than the Obligations.
(c) Borrower is not in violation of any applicable statute,
regulation or ordinance in any respect materially and adversely affecting the
Collateral or Borrower's business, assets, operations or condition or prospects,
financial or otherwise, taken as a whole, nor is Borrower in violation of any
order of any court, governmental authority or arbitration board or tribunal.
(d) Borrower has received no notice that it is not in full
compliance in all material respects with any of the requirements of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or its regulations
and, (i) it has not engaged in any Prohibited Transactions as defined in Section
406 of ERISA or Section 4975 of the Internal Revenue Code as amended, (ii) it
has met all applicable minimum funding requirements under Section 302 of ERISA
in respect of its plans and no funding requirements have been postponed or
delayed, (iii) it has no knowledge of any event or occurrence which would cause
the Pension Benefit Guaranty Corporation to institute proceedings under Title IV
of ERISA to terminate any employee benefit plan, (iv) there exists no event
described in Section 4043 of ERISA, excluding subsections 4043(b)(2) and
4043(b)(3) thereof, for which the thirty (30) days notice period contained in 12
CFR Section 26153 has not been waived, (v) they do not have any fiduciary
responsibility for investments with respect to any plan existing for the benefit
of persons other than its employees or former employees, and (vi) it has not
withdrawn, completely or partially, from any multi-employer pension plan so as
to incur liability under the Multi-Employer Pension Plan Amendments Act of 1980.
As of the Initial Closing Date and the Effective Date, Borrower does not
maintain any benefit plans or welfare plans subject to ERISA.
5.9 PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES. All patents, patent
applications, trademarks, trademark applications, copyrights, copyright
applications, trade names, trade secrets and licenses owned or utilized by
Borrower is set forth on EXHIBIT 5.9, are valid, and have been duly registered
or filed with all appropriate governmental authorities; there is no objection to
or pending challenge to the validity of any such material patent, trademark,
copyright, trade name, trade secret or license and Borrower is not aware of any
grounds for any challenge, except as set forth in EXHIBIT 5.9 hereto.
5.10 LICENSES AND PERMITS. Except as set forth in EXHIBIT 5.10,
Borrower (a) is in compliance with and (b) has procured and is now in possession
of, all material licenses or permits required by any applicable federal, state
or local law or regulation for the operation of its business in each
jurisdiction wherein it is now conducting or proposes to conduct business and
where the failure to procure such licenses or permits would have a material
adverse effect on Borrower's business, properties,
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condition (financial or otherwise) or operations, present or prospective, taken
as a whole.
5.11 DEFAULT OF INDEBTEDNESS. Borrower is not in default in the
payment of the principal of or interest on any Indebtedness (excluding trade
payables not subject to written settlements) or under any instrument or
agreement under or subject to which any Indebtedness has been issued and no
event has occurred under the provisions of any such instrument or agreement
which with or without the lapse of time or the giving of notice, or both,
constitutes or would constitute an event of default thereunder.
5.12 NO DEFAULT. To the best of Borrower's knowledge and except as set
forth on EXHIBIT 5.12 hereof, Borrower is not in default in the payment or
performance of any of its contractual obligations and no Incipient Event of
Default has occurred.
5.13 NO BURDENSOME RESTRICTIONS. Borrower is not a party to any
contract or agreement the performance of which would materially and adversely
restrict Borrower's business, assets, operations, condition or prospects
(financial or otherwise) and Borrower has not agreed or consented to cause or
permit in the future (upon the happening of a contingency or otherwise) any of
its property, whether now owned or hereafter acquired, to be subject to a Lien
which is not a Permitted Encumbrance.
5.14 NO LABOR DISPUTES. Borrower is not involved in any material labor
dispute; there are no strikes or walkouts or union organization of any of
Borrower's employees threatened or in existence and no labor contract is
scheduled to expire during the Term other than as set forth on EXHIBIT 5.14
hereto.
5.15 MARGIN REGULATIONS. Borrower is not engaged, nor will it engage,
principally or as one of its important activities, in the business of extending
credit for the purpose of "purchasing" or "carrying" any "margin stock" within
the respective meanings of each of the quoted terms under Regulation U or
Regulation G of the Board of Governors of the Federal Reserve System as now and
from time to time hereafter in effect. No part of the proceeds of any Advance
will be used for "purchasing" or "carrying" "margin stock" as defined in
Regulation U of such Board of Governors.
5.16 INVESTMENT COMPANY ACT. Borrower is not an "investment company"
registered or required to be registered under the Investment Company Act of
1940, as amended, nor is it controlled by such a company.
5.17 DISCLOSURE. No representation or warranty made by Borrower in
this Agreement or in any financial statement, report, certificate or any other
document furnished in connection herewith contains any untrue statement of fact
or omits to state any fact necessary to make the statements herein or therein
not misleading in any material respect. There is no fact known to
48-
Borrower or which reasonably should be known to Borrower which it has not
disclosed to Agent in writing with respect to the Transactions which materially
and adversely affects the condition (financial or otherwise), results of
operations, business, or assets of Borrower in any material respect.
5.18 SWAPS. Borrower is not a party to, nor will it be a party to, any
swap agreement whereby Borrower has agreed or will agree to swap interest rates
or currencies unless same provides that damages upon termination following an
event of default thereunder are payable on an unlimited "two-way basis" without
regard to fault on the part of either party.
VI. AFFIRMATIVE COVENANTS.
Borrower shall, until payment in full of the Obligations and termination
of this Agreement:
6.1 PAYMENT OF FEES. Pay to Agent on demand all usual and customary
fees and expenses which Agent incurs in connection with (a) the forwarding of
Advance proceeds and (b) the establishment and maintenance of any Agency Account
as provided for in Section 4.15(h). Agent may, without making demand, charge
the account of Borrower for all such fees and expenses as an Advance and such
amount shall be added to the Obligations.
6.2 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE AND ASSETS. (a)
Conduct continuously and operate actively its business according to good
business practices and maintain all of its properties useful or necessary in its
business in good working order and condition (reasonable wear and tear excepted
and except as may be disposed of without violation of the terms of this
Agreement), including, without limitation, all licenses, patents, copyrights,
trade names, trade secrets and trademarks; (b) keep in full force and effect its
existence and comply in all material respects with the laws and regulations
governing the conduct of its business; and (c) make all such reports and pay all
such franchise and other taxes and license fees and do all such other acts and
things as may be lawfully required to maintain its rights, licenses, leases,
powers and franchises under the laws of the United States of America or any
political subdivision thereof.
6.3 VIOLATIONS. Promptly notify Agent in writing of any violation of
any law, statute, regulation or ordinance of any governmental entity, or of any
agency thereof, applicable to Borrower which may materially adversely affect the
Collateral or Borrower's business, assets, operations, condition or prospects
(financial or otherwise).
6.4 GOVERNMENT RECEIVABLES. Take all steps necessary to protect
Agent's interest in the Collateral under the Federal
49-
Assignment of Claims Act or other applicable state or local statutes or
ordinances and deliver to Agent, appropriately endorsed, any instrument or
chattel paper connected with any Receivable arising out of contracts between
Borrower and the United States, any state or any department, agency or
instrumentality of any of them and notify Agent of the existence of such
Receivables to the extent required pursuant to Section 9.6 hereof.
6.5 INTENTIONALLY OMITTED.
6.6 INTENTIONALLY OMITTED.
6.7 INTENTIONALLY OMITTED.
6.8 HEDGING AGREEMENTS; INTEREST RATE PROTECTION. Within ninety (90)
days of the Effective Date, enter into Rate Swap Agreements with respect to at
least ___% of the outstanding Advances [and Hedging Agreements with respect to
at least __% of the outstanding Advances], each on terms and conditions
satisfactory to Agent.
6.9 EXECUTION OF SUPPLEMENTAL INSTRUMENTS. Execute and deliver to
Agent from time to time, upon demand, such supplemental agreements, statements,
assignments and transfers, or instructions or documents relating to the
Collateral, and such other instruments as Agent may reasonably request, in order
that the full intent of this Agreement may be carried into effect.
6.10 PAYMENT OF INDEBTEDNESS. Pay, discharge or otherwise satisfy at
or before maturity (subject, where applicable, to specified grace periods and,
in the case of trade payables, to normal payment practices) all its obligations
and liabilities of whatever nature, except when the amount or validity thereof
is currently being contested in good faith by appropriate proceedings and
Borrower shall have provided for such reserves as Agent may reasonably deem
proper and necessary, subject at all times to any applicable subordination
arrangement in favor of Lenders.
6.11 STANDARDS OF FINANCIAL STATEMENTS. Cause all statements referred
to in Sections 9.7, 9.8, 9.11 and 9.12 to be complete and correct in all
material respects (subject, in the case of interim financial statements, to
normal year-end audit adjustments) and to be prepared in reasonable detail and
as to those to which GAAP is applicable in accordance with GAAP applied
consistently throughout the periods reflected therein (except as concurred in by
such reporting accountants or officer, as the case may be, and disclosed
therein).
6.12 EXERCISE OF RIGHTS. Enforce all of its rights and pursue all
remedies available to it with diligence and in good faith, consistent with
reasonable business judgment, or at the reasonable request of Agent in
connection with the enforcement of
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any rights it may have against any of its Customers as a processor's,
repairman's or mechanic's lienor.
6.13 INVENTORY COMPOSITION. Maintain, at all times, a composition of
its Inventory (valued on a book value basis) in the following proportions:
(a) "new" Inventory shall be at least twenty-five percent (25%)
of total Inventory;
(b) "new", "serviceable" and "overhauled" Inventory shall be at
least forty-five percent (45%) of total Inventory; and
(c) "repairable" Inventory shall not exceed twenty percent
(20%) of total Inventory.
For the purposes hereof and in accordance with FAA regulations, "new" Inventory
shall mean Inventory which has never been used and is immediately usable,
"serviceable" or "overhauled" Inventory shall mean Inventory which is in a
condition which allows it to be returned immediately to operational status and
"repairable" Inventory shall mean Inventory which is in a condition which
requires repair prior to being returned to operational status and is usable if
repaired.
6.14 INTENTIONALLY OMITTED.
VII. NEGATIVE COVENANTS.
Borrower shall not, without Agent's and Required Lenders' prior written
approval (which approval will not be unreasonably withheld), until satisfaction
in full of the Obligations and termination of this Agreement:
7.1 MERGER, CONSOLIDATION, ACQUISITION AND SALE OF ASSETS.
(a) Enter into any merger, consolidation or other
reorganization with or into any other Person or acquire all or a substantial
portion of the assets or stock of any Person or permit any other Person to
consolidate with or merge with it.
(b) Sell, lease, transfer or otherwise dispose of any of the
Collateral, except in the ordinary course of its business or as permitted by
Section 4.3 hereof.
7.2 CREATION OF LIENS. Create or suffer to exist any Lien, Charge,
Claim or transfer upon or against any of their respective assets and properties
Collateral now owned or hereafter acquired, except Permitted Encumbrances.
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7.3 GUARANTEES. Become liable upon the obligations of any Person by
assumption, endorsement or guaranty thereof or otherwise (other than to Lenders)
except (a) as disclosed on EXHIBIT 7.3, (b) other guarantees made in the
ordinary course of business up to an aggregate amount of $_________ at any one
time outstanding and (c) the endorsement of checks in the ordinary course of
business.
7.4 INVESTMENTS. Purchase or acquire obligations or stock of, or any
other interest in, any Person, except (a) obligations issued or guaranteed by
the United States of America or any agency thereof, (b) commercial paper with
maturities of not more than 180 days and a published rating of not less than A-l
or P-l (or the equivalent rating), (c) certificates of time deposit and bankers'
acceptances having maturities of not more than 180 days and repurchase
agreements backed by United States government securities of a commercial bank if
(i) such bank has a combined capital and surplus of at least $500,000,000, or
(ii) its debt obligations, or those of a holding company of which it is a
Subsidiary, are rated not less than A (or the equivalent rating) by a nationally
recognized investment rating agency, (d) U.S. money market funds that invest
solely in obligations issued or guaranteed by the United States of America or an
agency thereof, and (e) as permitted by Section 7.12(a) hereof.
7.5 LOANS. Make advances, loans or extensions of credit to any
Person, including without limitation, any Parent, Subsidiary or Affiliate except
(a) loans to employees in an amount not to exceed $150,000 individually and
$600,000 in the aggregate outstanding at any one time, (b) loans to
___________________ in an aggregate amount not to exceed [$10,000,000]
outstanding at any time so long as after giving effect to such loan, no Event of
Default has occurred and is continuing and aggregate Undrawn Availability is at
least $______________, and (c) with respect to the extension of commercial trade
credit in connection with the sale of Inventory or rendition of services in the
ordinary course of its business.
7.6 CAPITAL EXPENDITURES. Contract for, purchase or make any
expenditure or commitments for fixed or capital assets (including Capitalized
Leases) in any fiscal year in an amount which, when added to the capital
expenditures made by ____________ in such fiscal year would exceed the amounts
shown below opposite the fiscal years corresponding thereto:
Fiscal Year Ended Amount
----------------- ------
March 31, 1997 $
March 31, 1998 $
March 31, 1999 $
March 31, 2000 $
March 31, 2001 $
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7.7 DIVIDENDS. Declare, pay or make any dividend or distribution on
any shares of the common stock or preferred stock of Borrower (other than
dividends or distributions payable in its stock, or split-ups or
reclassifications of its stock) or apply any of its funds, property or assets to
the purchase, redemption or other retirement of any common or preferred stock,
or of any options to purchase or acquire any such shares of common or preferred
stock of Borrower except that so long as (a) a notice of termination with regard
to this Agreement shall not be outstanding, (b) no Event of Default or Incipient
Event of Default shall have occurred prior to and after giving effect to such
payment, (c) solely with respect to (ii) below, Borrower shall be in compliance
with Section 6.5 hereof (computed as if the dividend has been paid as of the end
of the immediately preceding fiscal quarter), (d) after giving effect to such
dividend, aggregate Undrawn Availability is at least $___________ and (e) the
purpose for such dividend shall be set forth in writing to Agent at least five
(5) days prior to such dividend and such dividend shall in fact be used for such
purpose Borrower shall be permitted to pay dividends and distributions to
Greenwich.
7.8 INDEBTEDNESS. Create, incur, assume or suffer to exist any
Indebtedness (exclusive of trade debt) except in respect of (i) Indebtedness to
Lenders, (ii) Indebtedness incurred for capital expenditures permitted under
Section 7.6 hereof, and (iii) other Indebtedness in an amount not greater than
$__________, in the aggregate, which is unsecured and subordinated on terms and
provisions satisfactory to Required Lenders (including, without limitation, no
amortization of principal at any time, no payment of interest following the
occurrence and during the continuance of an Event of Default and no right to
accelerate such Indebtedness in the absence of acceleration by Agent); provided,
that, with respect to Indebtedness contemplated by subclause (iv) hereof prior
to and after giving effect to the incurrence of such Indebtedness no Event of
Default or Incipient Event of Default shall have occurred, Borrower shall have
provided Lender with a revised Business Plan allowing a continued ability by
Borrower to be in compliance with all covenants for the balance of the Term.
7.9 NATURE OF BUSINESS. Substantially change the nature of the
business in which it is presently engaged, nor except as specifically permitted
hereby purchase or invest, directly or indirectly, in any assets or property
other than in the ordinary course of business for assets or property which are
useful in, necessary for and are to be used in its business in the ordinary
course as presently conducted.
7.10 TRANSACTIONS WITH AFFILIATES. Directly or indirectly, purchase,
acquire or lease any property from, or sell, transfer or lease any property to,
or otherwise deal with, any Affiliate, transactions between Borrower as
expressly permitted elsewhere in this Agreement and other transactions in the
ordinary course of business, on an arm's-length basis on terms no less
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favorable than terms which would have been obtainable from a Person other than
an Affiliate, each of which transactions are disclosed to Agent on a certificate
delivered with each monthly financial statement delivered pursuant to Section
9.8 hereof.
7.11 LEASES. Enter as lessee into any new lease arrangement for real
or personal property (unless capitalized and permitted under Section 7.6 hereof)
if after giving effect thereto, aggregate annual rental payments for all newly
leased property together with all lease arrangements entered into by
_____________ during such fiscal year would exceed [$5,000,000] in such fiscal
year.
7.12 SUBSIDIARIES.
(a) Form any Subsidiary on or after the date hereof unless (i)
such Subsidiary expressly joins in this Agreement as a borrower and becomes
jointly and severally liable for the obligations of Borrower hereunder and under
any other agreement between Borrower and Lenders and (ii) Agent shall have
received all documents, including legal opinions, it may reasonably require to
establish compliance with each of the foregoing conditions.
(b) Enter into any partnership, joint venture or similar
arrangement.
7.13 FISCAL YEAR AND ACCOUNTING CHANGES. Change its fiscal year from
September 30 or make any change in accounting practices which is not disclosed
to Agent prior to the inception thereof except (i) in accounting treatment and
reporting practices as required by GAAP or (ii) in tax reporting treatment as
required by law.
7.14 PREPAYMENT OF INDEBTEDNESS. At any time, directly or indirectly,
prepay any Indebtedness (other than to Lenders), or repurchase, redeem, retire
or otherwise acquire any Indebtedness of Borrower.
7.15 PLEDGE OF CREDIT. Not now or hereafter pledge Agent's or any
Lender's credit on any purchases or for any purpose whatsoever or use any
portion of any Advance in or for any business other than Borrower's business
substantially as conducted on the date of this Agreement.
VIII. CONDITIONS PRECEDENT
8.1 CONDITIONS TO EFFECTIVENESS. Neither Agent nor any Lender will be
obligated to make any Advances hereunder unless the following conditions
precedent have been satisfied:
(a) NOTES. Agent shall have received the Notes duly executed
and delivered by an authorized officer of Borrower;
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(b) FILINGS, REGISTRATIONS AND RECORDINGS. Each document
(including, without limitation, any Uniform Commercial Code financing statement)
required by this Agreement, any related agreement or under law or reasonably
requested by Agent to be filed, registered or recorded in order to create, in
favor of Agent, a perfected security interest in or lien upon the Collateral
shall have been properly filed, registered or recorded in each jurisdiction in
which the filing, registration or recordation thereof is so required or
requested, and Agent shall have received an acknowledgment copy, or other
evidence reasonably satisfactory to it, of each such filing, registration or
recordation and satisfactory evidence of the payment of any necessary fee, tax
or expense relating thereto;
(c) PROCEEDINGS OF BORROWER. Agent shall have received a copy
of the resolutions in form and substance reasonably satisfactory to Agent, of
the Board of Directors or the General Partner of Borrower, as applicable,
authorizing (i) the execution, delivery and performance of this Agreement, the
Notes and any related agreements (collectively the "Documents") and (ii) the
granting by Borrower of the security interests in and liens upon its respective
portion of the Collateral in each case certified by the Secretary, an Assistant
Secretary or the general partners, as applicable, of Borrower as of the
Effective Date; and, such certificate shall state that the resolutions thereby
certified have not been amended, modified, revoked or rescinded as of the date
of such certificate;
(d) LEGAL OPINIONS. Agent shall have received the executed
legal opinions of Greenberg Traurig Hoffman Lipoff Rosen & Quentel, and
[Borrower's UK counsel] in form and substance satisfactory to Agent which shall
cover such matters incident to the transactions contemplated by this Agreement
as may be reasonably requested by Agent;
(e) NO LITIGATION. (i) No litigation, investigation or
proceeding before or by any arbitrator or governmental authority shall be
continuing or threatened against Borrower or against the officers or directors
of Borrower other than as set forth on EXHIBIT 5.8(b) hereto (A) in connection
with the Documents or any of the transactions contemplated thereby and which, in
the reasonable opinion of Agent, is deemed material or (B) which if adversely
determined, would, in the reasonable opinion of Agent, have a material adverse
effect on the business, assets, operations or condition (financial or otherwise)
of Borrower; and (ii) no injunction, writ, restraining order or other order of
any nature materially adverse to Borrower or the conduct of their business or
inconsistent with the due consummation of the Transactions shall have been
issued by any governmental authority;
(f) INTENTIONALLY OMITTED.
(g) PLEDGE AGREEMENTS AND OTHER DOCUMENTS. Agent shall have
received (i) the executed Pledge Agreement and (ii) the
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executed Other Documents, all in form and substance satisfactory to Agent;
(h) FEES. Agent shall have received all fees payable to Agent
and Lenders on or prior to the Effective Date pursuant to Article III hereof;
(i) MATERIAL ADVERSE CHANGE. There shall have been (i) no
material adverse change in, and there shall have occurred no development
(including, without limitation, damage, destruction or depreciation of the
Collateral) substantially likely to have a material adverse effect on, the
business, operations, prospects, properties (including, without limitation,
intangible properties), assets or financial or other conditions of Borrower
taken as a whole, and (ii) no occurrence or event subsequent to _____________
___, 199___ which shall have a material adverse effect on the rights and
remedies of Agent or any Lender or on the ability of Borrower to perform the
Obligations;
(j) REPRESENTATIONS AND WARRANTIES; COVENANTS; EVENTS.
Borrower's representations and warranties contained in this Agreement and the
Other Documents shall be true and correct as of the Effective Date;
(k) INCUMBENCY CERTIFICATES OF BORROWER. Agent shall have
received a certificate of the Secretary, Assistant Secretary or general partners
of Borrower, dated the Effective Date, as to the incumbency and signature of the
officers of Borrower executing this Agreement, any certificate or other
documents to be delivered by it pursuant hereto, together with evidence of the
incumbency of such Secretary, Assistant Secretary or general partners;
(l) CERTIFICATES. Agent shall have received a copy of the
Articles or Certificate of Incorporation of Borrower, and all amendments
thereto, certified by the Secretary of State or other appropriate official of
its jurisdiction of incorporation together with copies of the By-Laws of
Borrower and all agreements among shareholders of Borrower's shareholders
certified as accurate and complete by the Secretary of Borrower or certified
copy of Borrower's Partnership Agreement, as applicable;
(m) GOOD STANDING CERTIFICATES. Agent shall have received good
standing certificates for Borrower dated not more than thirty (30) days prior to
the Effective Date, issued by the Secretary of State or other appropriate
official of Borrower's jurisdiction of incorporation or formation and each
jurisdiction where the conduct of Borrower's business activities or the
ownership of its properties necessitates qualification;
(n) FINANCIAL CONDITION CERTIFICATES. Agent shall have
received executed Officer's Certificates substantially in the form of EXHIBIT
8.1(n);
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(o) COLLATERAL EXAMINATION. Agent shall have completed
Collateral examinations and its closing audit and received appraisals, the
results of which shall be satisfactory in form and substance to Agent, of the
Receivables and Inventory of Borrower and all books and records in connection
therewith;
(p) UNDRAWN AVAILABILITY. After giving effect to the initial
Advances hereunder, Borrower shall have Undrawn Availability of at least
$______________;
(q) INSURANCE. Agent shall have received in form and substance
satisfactory to Agent, certified copies of Borrower's casualty insurance
policies, together with loss payable endorsements on Agent's standard form of
loss payee endorsement naming Agent as loss payee, and certified copies of
Borrower's liability insurance policies, together with endorsements naming Agent
as a co-insured or additional insured;
(r) PAYMENT INSTRUCTIONS. Agent shall have received written
instructions from Borrower directing the application of proceeds of the initial
Advances made pursuant to this Agreement;
(s) BLOCKED ACCOUNTS. Agent shall have received duly executed
agreements establishing the Blocked Accounts or Depository Accounts with
financial institutions acceptable to Agent for the collection or servicing of
the Receivables and proceeds of the Collateral;
(t) CONSENTS. Agent shall have received any and all consents
necessary to permit the effectuation of the transactions contemplated by this
Agreement and the Other Documents; and, Agent shall have received such consents
and waivers of such third parties as might assert claims with respect to the
Collateral, as Agent and its counsel shall deem necessary including, without
limitation, CIT and Continental;
(u) LEASEHOLD AGREEMENTS. Agent shall have received landlord,
mortgagee or warehouseman agreements satisfactory to Agent with respect to all
premises leased by Borrower at which Inventory is located;
(v) U.K. SECURITY DOCUMENT. Agent shall have received final
executed copies of the U.K. Security Document and all related agreements,
documents and instruments;
(w) CONTRACT REVIEW. Agent shall have reviewed all material
contracts of Borrower including, without limitation, leases, union contracts,
labor contracts, vendor supply contracts, license agreements and distributorship
agreements and such contracts and agreements shall be satisfactory in all
respects to Agent;
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(x) CLOSING CERTIFICATE. Agent shall have received a closing
certificate signed on behalf of Borrower by the Chief Financial Officer of
Borrower dated as of the Effective Date, stating that (i) all representations
and warranties set forth in this Agreement and the other Documents are true and
correct on and as of such date, (ii) Borrower is on such date in compliance with
all the terms and provisions set forth in this Agreement and the Other Documents
and (iii) on such date no Incipient Event of Default or Event of Default has
occurred or is continuing;
(y) BORROWING BASE. Agent shall have received evidence from
Borrower that the aggregate amount of Eligible Receivables and Eligible
Inventory is sufficient in value and amount to support Advances in the amount
requested by Borrower on the Effective Date;
(z) OTHER AGREEMENTS. Agent shall have received final executed
copies of the Purchase Agreement and all related agreements, documents and
instruments as in effect on the Effective Date and the transactions contemplated
by such documentation shall be consummated concurrently with the making of the
initial Advances;
(aa) INTENTIONALLY OMITTED.
(ab) ENVIRONMENTAL REPORTS. Agent shall have received all
environmental studies and reports prepared by independent environmental
engineering firms with respect to all real property owned or leased by Borrower;
(ac) PAYMENT INSTRUCTIONS. Agent shall have received written
instructions from Borrower directing the application of proceeds of the initial
Advances made pursuant to this Agreement;
(ad) OTHER. All corporate and other proceedings, and all
documents, instruments and other legal matters in connection with the
transactions contemplated hereby, shall be reasonably satisfactory in form and
substance Agent and its counsel; and
8.2 CONDITIONS TO EACH ADVANCE. The agreement of Lenders to make any
Advance requested to be made on any date is subject to the satisfaction of the
following conditions precedent as of the date such Advance is made:
(a) REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties made by Borrower in or pursuant to this Agreement
and any related agreements to which it is a party, and each of the
representations and warranties contained in any certificate, document or
financial or other statement furnished at any time under or in connection with
this Agreement or any related
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agreement shall be true and correct in all material respects on and as of such
date as if made on and as of such date;
(b) NO DEFAULT. No Event of Default or Incipient Event of
Default shall have occurred and be continuing on such date, or would exist after
giving effect to the Advances requested to be made on such date; PROVIDED,
HOWEVER, that Agent, in its sole discretion, unless otherwise directed by
Required Lenders, may continue to make Advances notwithstanding the existence of
an Event of Default or Incipient Event of Default; and
(c) MAXIMUM ADVANCES. In the case of any Advances requested to
be made, after giving effect thereto, the aggregate outstanding Advances shall
not exceed the maximum Advances permitted under Article II hereof.
Each request for an Advance by Greenwich on behalf of Borrower hereunder shall
constitute a representation and warranty by Borrower as of the date of such
Advance that the conditions contained in this Section 8.2 shall have been
satisfied.
IX. INFORMATION AS TO BORROWER.
Borrower shall, until satisfaction in full of the Obligations and the
termination of this Agreement:
9.1 DISCLOSURE OF MATERIAL MATTERS. Promptly upon learning thereof,
report to Agent all matters materially affecting the value, enforceability or
collectibility of any portion of the Collateral including, without limitation,
the reclamation or repossession of, or the return of, a material amount of goods
or material claims or disputes asserted by any Customer or other obligor. No
Borrower will, without Agent's consent, compromise or adjust any Receivables (or
extend the time for payment thereof) or accept any returns of merchandise or
grant any additional discounts, allowances or credits thereon except for those
compromises, adjustments, returns, discounts, credits and allowances as have
been heretofore customary in the business of Borrower.
9.2 SCHEDULES. Deliver to Agent, daily, its daily sales register.
Also, Borrower shall deliver to Agent on or before the fifteenth (15th) day of
each month as and for the prior month (a) monthly accounts receivable agings and
(b) accounts payable schedules. Borrower will also deliver to Agent on or
before the twenty-fifth (25th) day of each month as and for the prior month a
report of Inventory. ___________ will deliver to Agent on or before the twenty-
fifth (25th) day of each month a reconciliation of Eligible Unbilled Receivables
as of the beginning and the end of the prior month. Further, Borrower shall
deliver to Agent on or before the twenty-fifth (25th) day of each month a
Borrowing Base Certificate in the form annexed hereto as EXHIBIT 9.2. In
addition, Borrower will deliver to Agent at such intervals as Agent may
reasonably require: (i) confirmatory
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assignment schedules, (ii) copies of Customers' invoices, (iii) evidence of
shipment or delivery, and (iv) such further schedules, documents and/or
information regarding the Collateral as Agent may reasonably require including,
without limitation, trial balances and test verifications. Agent shall have the
right to confirm and verify all Receivables by any manner and through any medium
it considers advisable and do whatever it may deem reasonably necessary to
protect its interests hereunder. The items to be provided under this Section
are to be in form satisfactory to Agent and executed by Borrower and delivered
to Agent from time to time solely for Agent's convenience in maintaining records
of the Collateral, and Borrower's failure to deliver any of such items to Agent
shall not affect, terminate, modify, derogate from or otherwise limit Agent's
lien on or security interest in the Collateral.
9.3 ENVIRONMENTAL REPORTS. Furnish Agent, concurrently with the
delivery of the financial statements referred to in Section 9.7 of the Affiliate
Loan Agreement, a certificate of Borrower signed on its behalf by its President
stating, to the best of his knowledge, that Borrower is in compliance in all
material respects with all federal, state and local laws relating to
environmental protection and control and occupational safety and health. To the
extent Borrower is not in compliance with the foregoing laws, the certificate
shall set forth with specificity all areas of non-compliance and the proposed
action Borrower will implement in order to achieve full compliance.
9.4 LITIGATION. Promptly notify Agent in writing of any litigation
affecting Borrower, whether or not the claim is covered by insurance, and of any
suit or administrative proceeding, which may materially and adversely affect the
Collateral or Borrower's business, assets, operations, condition or prospects
(financial or otherwise) taken as a whole.
9.5 OCCURRENCE OF DEFAULTS, ETC. Promptly notify Agent in writing
upon the occurrence of (a) any Event of Default or Incipient Event of Default;
(b) any event, development or circumstance whereby any financial statements or
other reports furnished by Borrower to Agent fail in any material respect to
present fairly, in accordance, where applicable, with GAAP consistently applied,
the financial condition or operating results of Borrower on a consolidated and
consolidating basis as of the date of such statements; (c) any accumulated
retirement plan funding deficiency which, if such deficiency continued for two
plan years and was not corrected as provided in Section 4971 of the Internal
Revenue Code, could subject Borrower to a tax imposed by Section 4971 of the
Internal Revenue Code; (d) each and every default by Borrower which might result
in the acceleration of the maturity of any Indebtedness, including the names and
addresses of the holders of such Indebtedness with respect to which there is a
default existing or with respect to which the maturity has been or could be
accelerated, and the amount of such Indebtedness; and (e) any other development
in the business or affairs of Borrower
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which might reasonably be expected to be materially adverse to Borrower; in each
case describing the nature thereof and the action Borrower proposes to take with
respect thereto.
9.6 GOVERNMENT RECEIVABLES. Notify Agent promptly if any of its
Receivables in excess of $50,000 arise out of contracts between Borrower and the
United States, any State, or any department, agency or instrumentality of any of
them.
9.7 INTENTIONALLY OMITTED.
9.8 INTENTIONALLY OMITTED.
9.9 OTHER REPORTS. Furnish Agent as soon as available, but in any
event within ten (10) days after the issuance thereof, with copies of (a) such
financial statements, reports and returns as Borrower shall send to its
stockholders in their capacity as stockholders and (b) any management letter
received by Borrower from its independent certified public accountants.
9.10 ADDITIONAL INFORMATION. Furnish Agent with additional
information as Agent shall reasonably request in order to enable Agent to
determine whether the terms, covenants, provisions and conditions of this
Agreement have been complied with by Borrower including, without limitation and
without the necessity of any request by Agent, (a) copies of all environmental
audits and reviews that have been previously obtained by Borrower or obtained
pursuant to Section 4.18 hereof, (b) at least thirty (30) days prior thereto, of
Borrower's opening of any new office or place of business or Borrower's closing
of any existing office or place of business, (c) promptly upon Borrower's
learning thereof, notice of any labor dispute to which Borrower may become a
party, any strikes or walkouts relating to any of its plants or other
facilities, and the expiration of any labor contract to which Borrower is a
party or by which Borrower is bound and (d) evidence of the payment of its
rental obligations with respect to the real property.
9.11 BUSINESS PLAN. Furnish Agent, on or before the beginning of each
of Borrower's fiscal years, its Business Plan including, without limitation, a
month by month projected operating budget and cash flow of Borrower for such
fiscal year (including an income statement for each month and a balance sheet as
at the end of the last month in each fiscal quarter) such projections to be
accompanied by a certificate signed on its behalf by its Chief Financial Officer
setting forth the assumptions on which such report has been based and including
a statement to the effect that to the best of his knowledge such projections
have been prepared on the basis of sound financial planning practice consistent
with past budgets and financial statements and that such officer has no reason
to question the reasonableness of any material assumptions on which such
projections were prepared.
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9.12 APPRAISALS. Furnish Agent, when reasonably requested by Agent
(but no more than once each year), with updates of the appraisals delivered
prior to the Effective Date prepared by _______________ or any other appraiser
satisfactory to Agent indicating any material changes from the appraisals
delivered prior to the Effective Date.
9.13 AVIALL POWER BY THE HOUR AGREEMENTS. Furnish Agent, no later than
twenty-five (25) days following the end of each month, with a calculation of
[(i) "accrued receivables" carried on Borrower's books with respect to the Power
by the Hour Agreement or any similar "block hour" agreements executed subsequent
to the Effective Date as of the end of the immediately preceding month and (ii)
the Effective Hours Adjustment under the Power by the Hour Agreement or any
similar "block hour" agreements executed subsequent to the Effective Date as of
the end of the immediately preceding month].
9.14 ADDITIONAL DOCUMENTS. Execute and deliver to
Agent, upon request, such documents and agreements as Agent may, from time to
time, reasonably request to carry out the purposes, terms or conditions of this
Agreement.
X. EVENTS OF DEFAULT.
The occurrence of any one or more of the following events shall
constitute an "Event of Default":
10.1 failure by Borrower to pay any principal or interest on the
Obligations when due, whether at maturity or by reason of acceleration pursuant
to the terms of this Agreement or by notice of intention to prepay, or by
required prepayment or failure to make any other payment, fee or charge to Agent
provided for herein when due;
10.2 any representation or warranty made or deemed made by Borrower in
this Agreement or any related agreement or in any certificate, document or
financial or other statement furnished at any time in connection herewith or
therewith shall prove to have been misleading in any material respect on the
date when made or deemed to have been made and within ten (10) days of such
occurrence Borrower shall not have proven that such representation or warranty
was true when made;
10.3 failure by Borrower to (i) furnish financial information (x) when
due which is not cured within five (5) Business Days after receipt of notice
from Agent of such failure (y) when requested which is unremedied for a period
of fifteen (15) days, or (ii) permit the inspection of its books or records;
10.4 issuance of a notice of Lien, Charge, Claim, levy, assessment,
injunction or attachment (other than a Permitted Encumbrance) against a
material portion of Borrower's property which is not stayed or lifted within
thirty (30) days;
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10.5 failure or neglect of Borrower to perform, keep or observe any
term, provision, condition or covenant herein contained, or contained in any
other agreement or arrangement, including, without limitation, the U.K. Security
Agreement Document, now or hereafter entered into between Borrower, Agent and
any Lender other than a failure or neglect of Borrower to perform, keep or
observe any term, provision, condition or covenant, contained in Sections 4.6,
4.7, 4.9, 4.11, 6.1, 6.3, 6.4, 6.14, 9.4 and 9.6 hereof which is cured within
the earlier of (i) twenty (20) days after receipt of notice of such breach from
Agent of the occurrence of such failure or neglect or (ii) twenty (20) days
following the date on which such failure or neglect becomes known to any officer
of Borrower;
10.6 any final judgment is rendered or judgment lien filed against
Borrower for an amount in excess of $1,500,000 which within thirty (30) days of
such rendering or filing is not either satisfied, stayed or discharged of
record;
10.7 If (i) a petition is presented by any person or an order is made
or an effective resolution is passed for the dissolution, termination, winding
up or liquidation of Borrower or for the appointment of a receiver,
administrative receiver, administrator, trustee or similar officer of Borrower,
(ii) Borrower is unable or admits in writing its inability to pay its debts
generally as they fall due or commences negotiations with a view to, or takes
any proceedings under any law for, a readjustment, rescheduling or deferment of
its obligations generally or proposes, makes or enters into an assignment,
arrangement (including a voluntary arrangement under section 1 of the Insolvency
Act 1986) or composition with or for the benefit of its customers generally,
(iii) BML ceases or threatens to cease its business or (iv) any execution or
distress is levied against, or an encumbrancer takes possession of the whole or
any substantial part of the property, undertaking or assets of Borrower;
10.8 any change in Borrower's condition or affairs (financial or
otherwise) which in Agent's reasonable opinion materially and adversely impairs
the Collateral or the ability of Borrower to perform its Obligations under this
Agreement or under the U.K. Security Document;
10.9 any Lien created hereunder or provided for hereby or under any
related agreement for any reason ceases to or is not a valid and perfected Lien
having a first priority interest (subject to Permitted Encumbrances);
10.10 an "event of default" has been declared with respect to the
obligations of _____________ under the CIT Loan Documents, the Subordinated
Debentures, the Senior Notes, the Indenture, the World Loan Documents, or the
Turbine Term Loan Documents, or the Service Agreement dated as of January 17,
1995 between Greenwich and Continental (as may be amended from time to time,
"Service Agreement") shall be terminated due to a breach by
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Greenwich of its obligations thereunder and as a result of such termination
Continental shall accelerate Greenwich's obligation to pay the then outstanding
balance of the Inventory Purchase Price as such term is defined in the Inventory
Purchase Agreement and require that such Inventory Purchase Price be paid in
cash;
10.11 a default of the obligations of Borrower under any other agreement
to which it is a party shall occur which materially and adversely affects the
condition, affairs or prospects (financial or otherwise) of Borrower's taken as
a whole which default is not cured within any applicable grace period;
10.12 any "Event of Default" shall occur under the Affiliate Loan
Agreement;
10.13 any material provision of this Agreement shall, for any reason,
cease to be valid and binding on Borrower, or Borrower shall so claim in writing
to Agent or any Lender;
10.14 a default by GCL of its obligations under the Inducement
Agreement;
10.15 Eugene Conese, Sr., shall cease to serve as Chairman and Chief
Executive Officer of Greenwich (whether by death or otherwise); or
10.16 termination or breach of the Pledge Agreement or if Greenwich
attempts to terminate or challenge the validity of or its liability under the
Pledge Agreement.
XI. AGENT'S AND LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT.
11.1 RIGHTS AND REMEDIES. Upon (i) an Event of Default pursuant to
Section 10.7 all Obligations shall be automatically and immediately due and
payable and this Agreement and the obligation of Lenders to make Advances shall
be deemed terminated; (ii) any of the other Events of Default and at any time
thereafter (such default not having previously been cured or waived), at the
option of Required Lenders, all Obligations shall be immediately due and payable
and Required Lenders shall have the right to terminate this Agreement and to
terminate the obligation of Lenders to make Advances and (iii) filing of a
petition against Borrower in any involuntary case under any state or federal
bankruptcy laws, the obligations of the Lenders to make Advances to Borrower
hereunder shall be terminated other than as may be permitted by an appropriate
order of the bankruptcy court having jurisdiction over Borrower. In any event,
Agent shall have the right to exercise any and all other rights and remedies
provided for herein, under the Uniform Commercial Code and at law or equity
generally, including, without limitation, the right to foreclose the security
interests granted herein and to realize upon any Collateral by any available
judicial procedure and/or to take possession of and sell any or all of the
Collateral with judicial process and, to appoint
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a Receiver (as defined in the U.K. Security Document) to take possession of and
sell any or all of the Collateral with judicial process. Agent may enter any of
Borrower's premises or other premises with required and necessary legal process
and without incurring liability to Borrower therefor, and Agent may thereupon,
or at any time thereafter in accordance with the provisions of this Agreement,
in its discretion without notice or demand, take the Collateral and remove the
same to such place as Agent may deem advisable and Agent may require Borrower to
make the Collateral available to Agent at a convenient place. With or without
having the Collateral at the time or place of sale, Agent may sell the
Collateral, or any part thereof, at public or private sale, at any time or
place, in one or more sales, at such price or prices, and upon such terms,
either for cash, credit or future delivery, as Agent may elect. Except as to
that part of the Collateral which is perishable or threatens to decline speedily
in value or is of a type customarily sold on a recognized market, Agent shall
give Borrower reasonable notification of such sale or sales, it being agreed
that in all events written notice mailed to Borrower via overnight mail at least
five (5) Business Days prior to such sale or sales is reasonable notification.
At any public sale Agent may bid for and become the purchaser, and Agent or any
other purchaser at any such sale thereafter shall hold the Collateral sold
absolutely free from any claim or right of whatsoever kind, including any equity
of redemption and such right and equity are hereby expressly waived and released
by Borrower to the fullest extent permitted by law. In connection with the
exercise of the foregoing remedies, Agent is granted permission to use all of
Borrower's trademarks, trade styles, trade names, patents, patent applications,
licenses, franchises and other proprietary rights which are used in connection
with Inventory for the purpose of disposing of such Inventory. The proceeds
realized from the sale of any Collateral shall be applied first to the
reasonable costs, reasonable expenses and reasonable attorneys' fees and
reasonable expenses incurred by Agent for collection and for acquisition,
completion, protection, removal, storage, sale and delivery of the Collateral;
secondly to interest due upon any of the Obligations; and thirdly to the
principal of the Obligations. If any deficiency shall arise, Borrower shall
remain liable to Agent and Lenders therefor. Nothing herein contained shall
limit the rights of Agent, the Lenders or any other Person under the Other
Documents (including, without limitation, the U.K. Security Document).
11.2 AGENT'S DISCRETION. Agent shall have the right in its reasonable
discretion to determine which rights, Liens, security interests or remedies
Agent may at any time pursue, relinquish, subordinate, or modify or to take any
other action with respect thereto and such determination will not in any way
modify or affect any of Agent's or Lenders' rights hereunder.
11.3 SETOFF. In addition to any other rights which Agent or any Lender
may have under applicable law, upon the occurrence and during the continuance of
an Event of Default
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hereunder, Agent and such Lender shall have a right to apply any of Borrower's
property held by Agent or any Lender to reduce the Obligations.
11.4 RIGHTS AND REMEDIES NOT EXCLUSIVE. The enumeration of the
foregoing rights and remedies is not intended to be exhaustive and the exercise
of any right or remedy shall not preclude the exercise of any other right or
remedy, all of which shall be cumulative and not alternative.
XII. WAIVERS AND JUDICIAL PROCEEDINGS
12.1 WAIVER OF NOTICE. Borrower hereby waives demand, presentment,
protest and notice of demand, presentment, protest, default, non-payment,
maturity, release, compromise, settlement, extensions or renewals with respect
to any and all instruments, commercial paper, accounts, contract rights,
documents, chattel paper and guaranties at any time held by Agent or any Lender
on which Borrower may in any way be liable, and Borrower further waives notice
of acceptance hereof, notice of loans or advances made, credit extended,
Collateral received or delivered, or any other action taken in reliance hereon,
and all other demands and notices of any description, except such as are
expressly provided for herein.
12.2 DELAY. No delay or omission on Agent's or any Lender's part in
exercising any right, remedy or option shall operate as a waiver of such or any
other right, remedy or option or of any default.
12.3 JURY WAIVER. 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 WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE: 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 CONSENTS OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY.
XIII. EFFECTIVE DATE AND TERMINATION.
13.1 TERM. This Agreement, which shall inure to the benefit of and
shall be binding upon the respective successors and permitted assigns of each of
Borrower, Agent and Lenders, shall become effective on the date hereof and shall
continue in full force and effect until the last day of the Term, unless sooner
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terminated as herein provided. In the event the Obligations are prepaid in full
prior to the last day of the Term and this Agreement is thereby terminated by
Borrower (the date of such prepayment hereinafter referred to as the "Prepayment
Date"), Borrower shall pay an early termination fee in an amount equal to (x)
$1,925,000 if the Prepayment Date occurs from the Effective Date to and
including the date immediately preceding the first anniversary of the Effective
Date, (y) $1,225,000 if the Prepayment Date occurs from the first anniversary of
the Effective Date to and including the date immediately preceding the second
anniversary of the Effective Date, and (z) $525,000 if the Prepayment Date
occurs on or after the second anniversary of the Effective Date to and including
the date immediately preceding the fifth anniversary of the Effective Date.
Notwithstanding the foregoing, in no event shall the aggregate early termination
fees paid hereunder and under the Affiliate Loan Agreement exceed the foregoing
amounts.
13.2 TERMINATION. The termination of this Agreement shall not affect
any of Borrower', Agent's or any Lender's rights, or any of the Obligations
having their inception prior to the effective date of such termination, and the
provisions hereof shall continue to be fully operative until all transactions
entered into, rights or interests created or Obligations have been fully
disposed of, concluded or liquidated. The security interests, Liens and rights
granted to Agent hereunder and the financing statements filed hereunder shall
continue in full force and effect, notwithstanding the termination of this
Agreement or the fact that Borrower's accounts may from time to time be
temporarily in a zero or credit position, until Borrower's rights to borrow
under this Agreement have been terminated all of the Obligations of Borrower has
been paid or performed in full or Borrower has furnished Agent and Lenders with
an indemnification reasonably satisfactory to Agent with respect to any
existing, pending or threatened claims or an existing state of facts which
might, in Agent's reasonable judgment which is exercised in good faith and not
in an arbitrary or capricious manner, give rise to an Obligation hereunder.
Accordingly, Borrower waives any rights which it may have under Section 9-404(1)
of the Uniform Commercial Code to demand the filing of termination statements
with respect to the Collateral, and Agent and Lenders shall not be required to
send such termination statements to Borrower, or to file them with any filing
office, unless and until this Agreement shall have been terminated in accordance
with its terms and all Obligations paid in full in immediately available funds
or satisfied as set forth in the preceding sentence. If there are no existing,
pending or threatened claims or existing state of facts which might, in Agent's
reasonable judgment which is exercised in good faith and not in an arbitrary or
capricious manner, give rise to an Obligation hereunder and the Obligations of
Borrower shall have been paid in full and this Agreement terminated, Agent shall
deliver termination statements with respect to the Collateral to Borrower. All
representations, warranties, covenants, waivers and agreements contained herein
shall survive termination hereof until
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all Obligations are paid or performed in full unless otherwise provided.
XIV. MISCELLANEOUS
14.1 GOVERNING LAW. This Agreement has been negotiated, executed and
delivered at and shall be deemed to have been made in New York and is to be
performed at New York and interpreted and the rights and liabilities of the
parties hereto determined, in accordance with the laws of the State of New York.
Any judicial proceeding by Borrower against Agent or any Lender involving,
directly or indirectly, any matter or claim in any way arising out of, related
to or connected with this or any related agreement, shall be brought only in a
state or federal court located in the City of New York, State of New York. Any
judicial proceeding brought against Borrower with respect to any of the
Obligations, or this Agreement or any Other Documents may be brought in any
court of competent jurisdiction in the City of New York, State of New York,
United States of America, and, by execution and delivery of this Agreement,
Borrower accepts for itself and in connection with its properties, generally and
unconditionally, the non-exclusive jurisdiction of the aforesaid courts, and
irrevocably agrees to be bound by any judgment rendered thereby in connection
with this Agreement. Nothing herein shall affect the right to serve process in
any manner permitted by law or shall limit the right of Agent or any Lender to
bring proceedings against Borrower in the courts of any other competent
jurisdiction. Borrower waives any objection to jurisdiction and venue of any
action instituted hereunder and shall not assert any defense based on lack of
jurisdiction or venue or based on FORUM NON CONVENIENS.
14.2 ENTIRE UNDERSTANDING AND AMENDMENTS AND MODIFICATIONS.
(a) This Agreement and the Documents executed concurrently
herewith contain the entire understanding between Borrower, Agent and Lenders
and supersede all prior agreements and understandings, if any, relating to the
subject matter hereof. Any promises, representations, warranties or guarantees
not herein or therein contained shall have no force and effect unless in
writing, signed by Borrower's, Agent's and each Lender's respective officers.
(b) The Required Lenders, Agent with the consent in writing of
the Required Lenders, and Borrower may, subject to the provisions of this
Section 14.2 (b), from time to time enter into written supplemental agreements
to this Agreement or the Other Documents executed by Borrower, for the purpose
of adding or deleting any provisions or otherwise changing, varying or waiving
in any manner the rights of Lenders, Agent or Borrower thereunder or the
conditions, provisions or terms thereof or waiving any Event of Default
thereunder, but only to the extent specified in such written agreements;
PROVIDED, HOWEVER, that no such supplemental agreement shall, without the
consent of all Lenders:
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(i) increase the Commitment Percentage of any Lender;
(ii) increase the Maximum Loan Amount;
(iii) extend the Term, the maturity of any of the Notes or
the due date for any amount payable hereunder, or decrease the rate of interest
or reduce any fee payable by Borrower to Lenders pursuant to this Agreement;
(iv) alter the several nature of the funding obligations of
Lenders or the definition of the term Required Lenders or alter, amend or modify
this Section 14.2(b);
(v) alter, amend or modify Sections 2.12, 2.13 or 2.14
hereof;
(vi) except as otherwise permitted hereunder, release any
Collateral during any calendar year having an aggregate value in excess of
$__________; or
(vii) change the rights and duties of Agent.
Any such supplemental agreement shall apply equally to each Lender and shall be
binding upon Borrower, Lenders and Agent and all future holders of the
Obligations. In the case of any waiver, Borrower, Agent and Lenders shall be
restored to their former positions and rights, and any Event of Default waived
shall be deemed to be cured and not continuing, but no waiver of a specific
Event of Default shall extend to any subsequent Event of Default (whether or not
the subsequent Event of Default is the same as the Event of Default which was
waived), or impair any right consequent thereon.
14.3 INDEMNITY. Borrower shall indemnify Agent and Lenders from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses and disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against
Agent or any Lender as a result of any violation of any law or in any
litigation, proceeding or investigation instituted or conducted by any
governmental agency or instrumentality or any other Person with respect to any
aspect of, or any transaction contemplated by, or referred to in, or any matter
related to, this Agreement, any Other Documents (whether or not Agent or any
Lender is a party thereto), except to the extent that any of the foregoing
arises out of the gross negligence (but not mere negligence) or willful
misconduct of the party being indemnified.
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14.4 SUCCESSORS AND ASSIGNS; PARTICIPATIONS; NEW LENDERS.
(a) This Agreement shall be binding upon and inure to the
benefit of Borrower, Agent, each Lender, all future holders of the Obligations
and their respective successors and assigns, except that no Borrower may assign
or transfer any of its rights or obligations under this Agreement without the
prior written consent of Agent and each Lender.
(b) Borrower acknowledges that in the regular course of
commercial banking business one or more Lenders may at any time and from time to
time sell participating interests in the Advances to other financial
institutions (each such transferee or purchaser of a participating interest, a
"Transferee"). Each Transferee may exercise all rights of payment (including
without limitation rights of set-off) with respect to the portion of such
Advances held by it or other Obligations payable hereunder as fully as if such
Transferee were the direct holder thereof provided that Borrower shall not be
required to pay to any Transferee more than the amount which it would have been
required to pay to the Lender which granted an interest in its Advances or other
Obligations payable hereunder to such Transferee had such Lender retained such
interest in the Advances hereunder or other Obligations payable hereunder and in
no event shall Borrower be required to pay any such amount arising from the same
circumstances and with respect to the same Advances or other Obligations payable
hereunder to both such Lender and such Transferee. Borrower hereby grants to
any Transferee a continuing security interest in any deposits, moneys or other
property actually or constructively held by such Transferee as security for the
Transferee's interest in the Advances.
(c) Any Lender may (i) pledge and assign as collateral to any
Federal Reserve Bank all or a portion of its interest in the Advances hereunder
and (ii) upon the prior written consent of Borrower and Agent, which consents
shall not be unreasonably withheld, sell, assign or transfer all or any part of
its rights under this Agreement and the Other Documents to one or more
additional banks or financial institutions and one or more additional banks or
financial institutions may commit to make Advances hereunder (each a "Purchasing
Lender"), in minimum amounts of not less than $5,000,000, pursuant to a
Commitment Transfer Supplement, executed by a Purchasing Lender, the Transferor
Lender, and Agent and delivered to Agent for recording. Upon such execution,
delivery, acceptance and recording, from and after the transfer effective date
determined pursuant to such Commitment Transfer Supplement, (i) Purchasing
Lender thereunder shall be a party hereto and, to the extent provided in such
Commitment Transfer Supplement, have the rights and obligations of a Lender
thereunder with a Commitment Percentage as set forth therein, and (ii) the
transferor Lender thereunder shall, to the extent provided in such Commitment
Transfer Supplement, be released from its obligations under this Agreement, the
Commitment Transfer
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Supplement creating a novation for that purpose. Such Commitment Transfer
Supplement shall be deemed to amend this Agreement to the extent, and only to
the extent, necessary to reflect the addition of such Purchasing Lender and the
resulting adjustment of the Commitment Percentages arising from the purchase by
such Purchasing Lender of all or a portion of the rights and obligations of such
transferor Lender under this Agreement and the Other Documents. By consenting
to the foregoing, Borrower hereby agree to the addition of such Purchasing
Lender and the resulting adjustment of the Commitment Percentages arising from
the purchase by such Purchasing Lender of all or a portion of the rights and
obligations of such transferor Lender under this Agreement and the Other
Documents. Borrower shall execute and deliver such further documents and do
such further acts and things in order to effectuate the foregoing.
(d) Agent shall maintain at its address a copy of each
Commitment Transfer Supplement delivered to it and a register (the "Register")
for the recordation of the names and addresses of the Advances owing to each
Lender from time to time. The entries in the Register shall be conclusive, in
the absence of manifest error, and Borrower, Agent and Lenders may treat each
Person whose name is recorded in the Register as the owner of the Advances
recorded therein for the purposes of this Agreement. The Register shall be
available for inspection by Borrower or any Lender at any reasonable time and
from time to time upon reasonable prior notice. Agent shall receive a fee in
the amount of $3,500 payable by the applicable Purchasing Lender upon the
effective date of each transfer or assignment to such Purchasing Lender.
(e) Borrower authorize each Lender to disclose to any
Transferee or Purchasing Lender and any prospective Transferee or Purchasing
Lender any and all financial information in such Lender's possession concerning
Borrower which has been delivered to such Lender by or on behalf of Borrower
pursuant to this Agreement or in connection with such Lender's credit evaluation
of Borrower.
14.5 APPLICATION OF PAYMENTS. Following the occurrence and during the
continuation of an Event of Default, Agent shall have the continuing and
exclusive right to apply or reverse and re-apply any and all proceeds of
Collateral to any portion of the Obligations. To the extent that Borrower makes
a payment or Agent or any Lender receives any payment or proceeds of the
Collateral for Borrower's benefit, which are subsequently invalidated, declared
to be fraudulent or preferential, set aside or required to be repaid to a
trustee, debtor in possession, receiver, custodian or any other party under any
bankruptcy law, common law or equitable cause, then, to such extent, the
Obligations or part thereof intended to be satisfied shall be revived and
continue as if such payment or proceeds had not been received by Agent or such
Lender.
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14.6 NOTICE. Any notice or request hereunder may be given to Borrower,
Agent or to any Lender at the respective addresses set forth below or at such
other address as may hereafter be specified in a notice designated as a notice
of change of address under this Section. Any notice or request hereunder shall
be given by (a) hand delivery or overnight courier, (b) registered or certified
mail, return receipt requested, (c) telex or telegram, subsequently confirmed by
registered or certified mail, or (d) telefax to the number set out below (or
such other number as may hereafter be specified in a notice designated as a
notice of change of address) with telephone communication to the recipient or to
a duly authorized officer of the recipient in the event the recipient is not
available by telephone, confirming its receipt or as subsequently confirmed by
electronic confirmation mail. Notices and requests shall, in the case of those
by mail or telegram, be deemed to have been given three (3) days after deposit
in the mail, or delivered to the telegraph office, in the case of overnight
courier, one (1) day after deposit in the mail addressed as provided in this
Section, or in the case of telefax, upon receipt of electronic confirmation.
(A) If to Agent, at: The Bank of New York Commercial
Corporation
1290 Avenue of the Americas
New York, New York 10104
Attention: Anthony Viola
Telephone: (212) 408-4097
Telecopier: (212) 408-4313
with a copy to: Hahn & Hessen LLP
350 Fifth Avenue
New York, New York 10118-0075
Attention: Steven J. Seif, Esq.
Telephone: (212) 736-1000
Telecopier: (212) 594-7167
(B) If to a Lender
other than Agent,
as specified on the
signature pages
hereof
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(C) If to Borrower, at: c/o Greenwich Air Services, Inc.
4590 N.W. 36th Street, Bldg. 23
Miami, Florida 33122
Attention: Eugene Conese, Jr.,
President
Telephone: (305) 526-7032
Telecopier: (305) 526-7005
or (if by mail) at: Greenwich Air Services, Inc.
P.O. Box 522187
Miami, Florida 33152-2187
Attention: Eugene Conese, Jr.
with a copy to: Greenberg Traurig Hoffman Lipoff Rosen &
Quentel
153 East 53rd Street
New York, New York 10022
Attention: Stephen A. Weiss, Esq.
Telephone: (212) 801-9200
Telecopier: (212) 223-7161
14.7 SURVIVABILITY. If any part of this Agreement is contrary to,
prohibited by, or deemed invalid under applicable laws or regulations, such
provision shall be inapplicable and deemed omitted to the extent so contrary,
prohibited or invalid, but the remainder hereof shall not be invalidated thereby
and shall be given effect so far as possible.
14.8 EXPENSES. All reasonable costs and expenses including, without
limitation, reasonable attorneys' fees incurred by (a) Agent in its efforts to
enforce payment of any Obligation or effect collection of any Collateral, or (b)
Agent in connection with the entering into, modification, amendment and
enforcement of this Agreement or any consents or waivers hereunder and all
related agreements, documents and instruments, or (c) Agent or any Lender in
instituting, maintaining, preserving, enforcing and foreclosing of or on Agent's
security interest or Lien in any of the Collateral, whether through judicial
proceedings or otherwise, or (d) Agent or any Lender in defending or prosecuting
any actions or proceedings arising out of or relating to Agent's or any Lender's
transactions with Borrower, or (e) Agent in connection with any legal advice
given to Agent or any Lender with respect to its rights and obligations under
this Agreement and all related agreements other than with respect to disputes
between Agent, any Lender or any Transferee(s), may be charged to Borrower's
accounts and shall be part of the Obligations.
14.9 INJUNCTIVE RELIEF. Borrower recognizes that, in the event
Borrower fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement, any remedy at law may prove to be inadequate
relief to Agent and Lenders; therefore, each Lender, if such Lender so requests,
shall be entitled to temporary and permanent injunctive relief in any such
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case without the necessity of proving actual damages to the extent permitted by
law.
14.10 CAPTIONS. The captions at various places in this Agreement are
intended for convenience only and do not constitute and shall not be interpreted
as part of this Agreement.
14.11 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which taken together shall constitute one and the same
instrument.
14.12 RECORDATION. Agent shall not record this document unless required
to do so in order to protect its rights hereunder and upon concurrent notice to
Borrower.
14.13 CONSEQUENTIAL DAMAGES. Neither Agent, any Lender nor any agent or
attorney for Lender shall be liable to Borrower for consequential damages
arising from any breach of contract, tort or other wrong relating to the
establishment, administration or collection of the Obligations.
14.14 CONSTRUCTION. The parties acknowledge that each party and its
counsel have reviewed this Agreement and that the normal rule of construction to
the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement or any amendments,
schedules or exhibits thereto.
XV. INTENTIONALLY OMITTED.
XVI. REGARDING AGENT.
16.1. APPOINTMENT. Each Lender hereby designates BNYCC to act as Agent
for such Lender under this Agreement and the Other Documents. Each Lender
hereby irrevocably authorizes Agent to take such action on its behalf under the
provisions of this Agreement and the Other Documents and to exercise such powers
and to perform such duties hereunder and thereunder as are specifically
delegated to or required of Agent by the terms hereof and thereof and such other
powers as are reasonably incidental thereto and Agent shall hold all Collateral,
payments of principal and interest, fees (except the fees set forth in Section
3.2 and the Fee Letter), and collections received pursuant to this Agreement,
for the ratable benefit of Lenders. Agent may perform any of its duties
hereunder by or through its agents or employees. As to any matters not
expressly provided for by this Agreement (including without limitation,
collection of the Notes), Agent shall not be required to exercise any discretion
or take any action, but shall be required to act or to refrain from acting (and
shall be fully protected in so acting or refraining from acting) upon the
instructions of the Required Lenders, and such instructions shall be binding;
PROVIDED, HOWEVER, that Agent shall not be required to take any action which
exposes Agent to liability or which is
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contrary to this Agreement or the Other Documents or applicable law unless Agent
is furnished with an indemnification reasonably satisfactory to Agent with
respect thereto.
16.2. NATURE OF DUTIES. Agent shall have no duties or responsibilities
except those expressly set forth in this Agreement and the Other Documents.
Neither Agent nor any of its officers, directors, employees or agents shall be
(i) liable for any action taken or omitted by them as such hereunder or in
connection herewith, unless caused by their willful misconduct or gross (not
mere) negligence, or (ii) responsible in any manner for any recitals,
statements, representations or warranties made by Borrower or any officer
thereof contained in this Agreement, or in any of the Other Documents or in any
certificate, report, statement or other document referred to or provided for in,
or received by Agent under or in connection with, this Agreement or any of the
Other Documents or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement, or any of the Other Documents
or for any failure of Borrower to perform its obligations hereunder. Agent
shall not be under any obligation to any Lender to ascertain or to inquire as to
the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any of the Other Documents, or to inspect the
properties, books or records of Borrower. The duties of Agent as respects the
Advances to Borrower shall be mechanical and administrative in nature; Agent
shall not have by reason of this Agreement a fiduciary relationship in respect
of any Lender; and nothing in this Agreement, expressed or implied, is intended
to or shall be so construed as to impose upon Agent any obligations in respect
of this Agreement except as expressly set forth herein.
16.3. LACK OF RELIANCE ON AGENT AND RESIGNATION. Independently and
without reliance upon Agent or any other Lender, each Lender has made and shall
continue to make (i) its own independent investigation of the financial
condition and affairs of Borrower in connection with the making and the
continuance of the Advances hereunder and the taking or not taking of any action
in connection herewith, and (ii) its own appraisal of the creditworthiness of
Borrower. Agent shall have no duty or responsibility, either initially or on a
continuing basis, to provide any Lender with any credit or other information
with respect thereto, whether coming into its possession before making of the
Advances or at any time or times thereafter except as shall be provided by
Borrower pursuant to the terms hereof. Agent shall not be responsible to any
Lender for any recitals, statements, information, representations or warranties
herein or in any agreement, document, certificate or statement delivered in
connection with or for the execution, effectiveness, genuineness, validity,
enforceability, collectability or sufficiency of this Agreement or any Other
Document, or of the financial condition of Borrower, or be required to make any
inquiry concerning either the performance or observance of any of the terms,
provisions or conditions of this Agreement, the Other Documents or the financial
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condition of Borrower, or the existence of any Event of Default or any Incipient
Event of Default.
Agent may resign on sixty (60) days' written notice to each of Lenders
and Borrower and upon such resignation, the Required Lenders will promptly
designate a successor Agent reasonably satisfactory to Borrower.
Any such successor Agent shall succeed to the rights, powers and duties
of Agent, and the term "Agent" shall mean such successor agent effective upon
its appointment, and the former Agent's rights, powers and duties as Agent shall
be terminated, without any other or further act or deed on the part of such
former Agent. After any Agent's resignation as Agent, the provisions of this
Article XVI shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement.
16.4. CERTAIN RIGHTS OF AGENT. If Agent shall request instructions from
Lenders with respect to any act or action (including failure to act) in
connection with this Agreement or any Other Document, Agent shall be entitled to
refrain from such act or taking such action unless and until Agent shall have
received instructions from the Required Lenders; and Agent shall not incur
liability to any Person by reason of so refraining. Without limiting the
foregoing, Lenders shall not have any right of action whatsoever against Agent
as a result of its acting or refraining from acting hereunder in accordance with
the instructions of the Required Lenders.
16.5. RELIANCE. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any note, writing, resolution, notice, statement,
certificate, telex, teletype or telecopier message, cablegram, order or other
document or telephone message believed by it to be genuine and correct and to
have been signed, sent or made by the proper person or entity, and, with respect
to all legal matters pertaining to this Agreement and the Other Documents and
its duties hereunder, upon advice of counsel selected by it. Agent may employ
agents and attorneys-in-fact and shall not be liable for the default or
misconduct of any such agents or attorneys-in-fact selected by Agent with
reasonable care.
16.6. NOTICE OF DEFAULT. Agent shall not be deemed to have knowledge or
notice of the occurrence of any Incipient Event of Default or Event of Default
hereunder or under the Other Documents, unless Agent has received notice from a
Lender or a Borrower referring to this Agreement or the Other Documents,
describing such Incipient Event of Default or Event of Default and stating that
such notice is a "notice of default". In the event that Agent receives such a
notice, Agent shall give notice thereof to Lenders. Agent shall take such
action with respect to such Incipient Event of Default or Event of Default as
shall be reasonably directed by the Required Lenders; PROVIDED, THAT, unless and
until Agent shall have received such directions, Agent may (but
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shall not be obligated to) take such action, or refrain from taking such action,
with respect to such Incipient Event of Default or Event of Default as it shall
deem advisable in the best interests of Lenders.
16.7. INDEMNIFICATION. To the extent Agent is not reimbursed and
indemnified by Borrower, each Lender will reimburse and indemnify Agent in
proportion to its respective portion of the Advances (or, if no Advances are
outstanding, according to its Commitment Percentage), from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by or asserted against Agent in performing its
duties hereunder, or in any way relating to or arising out of this Agreement or
any Other Document; PROVIDED THAT, Lenders shall not be liable for any portion
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from Agent's gross
negligence (but not mere negligence) or willful misconduct.
16.8. AGENT IN ITS INDIVIDUAL CAPACITY. With respect to the obligation
of Agent to lend under this Agreement, the Advances made by it shall have the
same rights and powers hereunder as any other Lender and as if it were not
performing the duties as Agent specified herein; and the term "Lender" or any
similar term shall, unless the context clearly otherwise indicates, include
Agent in its individual capacity as a Lender. Agent may engage in business with
Borrower as if it were not performing the duties specified herein, and may
accept fees and other consideration from Borrower for services in connection
with this Agreement or otherwise without having to account for the same to
Lenders.
16.9 DELIVERY OF DOCUMENTS. To the extent Agent receives documents and
information from Borrower pursuant to the terms of this Agreement, Agent will
promptly furnish such documents and information to Lenders.
16.10. BORROWER'S UNDERTAKING TO AGENT. Without prejudice to their
respective obligations to Lenders under the other provisions of this Agreement,
Borrower hereby undertakes with Agent to pay to Agent from time to time on
demand all amounts from time to time due and payable by it for the account of
Agent or Lenders or any of them pursuant to this Agreement to the extent not
already paid. Any payment made pursuant to any such demand shall PRO TANTO
satisfy the relevant Borrower's obligations to make payments for the account of
Lenders or the relevant one or more of them pursuant to this Agreement.
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Each of the parties has signed this Agreement as of the _____ day of
___________, 1996.
GREENWICH CALEDONIAN, LIMITED
By:________________________________
Its:_______________________________
THE BANK OF NEW YORK COMMERCIAL
CORPORATION, AS AGENT
By:________________________________
Its:_______________________________
THE BANK OF NEW YORK COMMERCIAL
CORPORATION, AS LENDER
By:________________________________
Its:_______________________________
Commitment Percentage _______%
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