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EXHIBIT 4.4(e)
Amended and Restated Revolving Credit Agreement dated as of November 25,
1992 among Hudson General Corporation, Hudson General LLC and The First National
Bank of Boston, European American Bank, The Chase Manhattan Bank, N.A. and The
First National Bank of Boston, as agent, as amended and restated as of June 1,
1996.
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AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
AMONG
HUDSON GENERAL CORPORATION
HUDSON GENERAL LLC
AND
THE FIRST NATIONAL BANK OF BOSTON
EUROPEAN AMERICAN BANK
THE CHASE MANHATTAN BANK, N.A.
THE FIRST NATIONAL BANK OF BOSTON,
AS AGENT
DATED AS OF NOVEMBER 25, 1992
AND AMENDED AND RESTATED AS OF JUNE 1, 1996
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HUDSON GENERAL CORPORATION
HUDSON GENERAL LLC
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
TABLE OF CONTENTS
Page
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1. THE REVOLVING CREDIT FACILITY; LETTERS OF CREDIT ...................... 2
1.1. Commitment to Lend; Existing Revolving Credit Loan .............. 2
1.2. Notes to Evidence Revolving Credit Loans ........................ 3
1.3. Election of Form of Revolving Credit Loan ....................... 3
1.4. Aggregate Loan Limit ............................................ 4
1.5. Repayment of Revolving Credit Loans ............................. 5
1.6. Revolving Credit Loans Commitment Fee ........................... 5
1.7. Letters of Credit ............................................... 5
1.8. Drawings ........................................................ 6
1.9. Letter of Credit Loan Obligations Absolute ...................... 7
1.10. Banks' Obligations in Respect of Letters of Credit .............. 8
1.11. Letter of Credit Fee ............................................ 8
1.12. Existing Letters of Credit ...................................... 8
2. CERTAIN GENERAL PROVISIONS ............................................ 9
2.1. Agent's Fee ..................................................... 9
2.2. Facility Fee .................................................... 9
2.3. Interest ........................................................ 9
2.4. Place and Mode of Payments ...................................... 10
2.5. Inability of Agent to Determine LIBO Rates; Illegality .......... 10
2.6. Indemnification for Losses ...................................... 11
2.7. Payments to be Free of Deductions ............................... 11
2.8. Change in Circumstances; Additional Costs ....................... 12
2.9. Additional Amounts Payable on Account of Credit Facilities ...... 14
2.10. Certificates .................................................... 14
2.11. Delinquent Banks ................................................ 14
2.12. Concerning Joint and Several Liability of HGC and
the Company ................................................... 15
3. REPRESENTATIONS AND WARRANTIES ........................................ 16
3.1. Organization and Qualification; Authority ....................... 16
3.2. Valid Obligation ................................................ 16
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3.3. Governmental Approvals ........................................ 17
3.4. Title to Properties; Absence of Liens ......................... 17
3.5. Financial Statements .......................................... 17
3.6. Changes ....................................................... 17
3.7. Taxes ......................................................... 18
3.8. Litigation .................................................... 18
3.9. Use of Proceeds; Regulations U and X .......................... 18
3.10. Offering by HGC or the Company ................................ 18
3.11. No Default or Violation of Law ................................ 18
3.12. No Default .................................................... 19
3.13. Franchises, Patents, Copyrights ............................... 19
3.14. No Materially Adverse Contracts ............................... 19
3.15. Holding Company and Investment Company Acts ................... 19
3.16. Certain Transactions .......................................... 19
3.17. Employee Benefit Plans ........................................ 20
3.18. Environmental Compliance ...................................... 21
3.19. Insurance ..................................................... 22
3.20. Loans as Senior Indebtedness .................................. 22
3.21. Perfection of Security Interest ............................... 23
3.22. HGC Representations and Warranties ............................ 23
4A. EFFECTIVE DATE; CONDITIONS TO EFFECTIVENESS .......................... 23
4A.1. Loan Documents ................................................ 23
4A.2. Representations and Warranties True ........................... 23
4A.3. Corporate Standing and Action ................................. 23
4A.4. Opinion of HGC's and Company's Counsel ........................ 24
4A.5. Payment of Fees ............................................... 24
4A.6. Validity of Liens ............................................. 24
4A.7. Perfection Certificate and UCC Search Results ................. 24
4A.8. Original Credit Agreement ..................................... 25
4A.9. HGC Credit Agreement .......................................... 25
4A.10. Amendment to Aviation Revolving Credit Agreement .............. 25
4A.11. Purchase Agreement ............................................ 25
4A.12. Certain Assignments ........................................... 25
4B. CONDITIONS OF REVOLVING CREDIT LOANS AND LETTERS
OF CREDIT .......................................................... 25
4B.1 Notice ........................................................ 25
4B.2. Representations and Warranties True ........................... 26
4B.3. No Adverse Change ............................................. 26
4B.4. Legality ...................................................... 26
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5. COVENANTS ........................................................... 26
5.1. Punctual Payment ............................................. 26
5.2. Financial Statements and Other Written
Materials .................................................. 27
5.3. Inspection ................................................... 28
5.4. Conduct of Business .......................................... 28
5.5. Maintenance and Insurance .................................... 29
5.6. Taxes ........................................................ 29
5.7. Ratio of Consolidated Liabilities to
Effective Net Worth ........................................ 29
5.8. Effective Net Worth .......................................... 29
5.9. Ratio of Consolidated EBDIT to Consolidated
Cash Interest .............................................. 30
5.10. Consolidated Net Loss ........................................ 30
5.11. Debt Service Coverage Ratio .................................. 30
5.12. Limitation on Borrowing ...................................... 30
5.13. Restriction on Liens ......................................... 31
5.14. Limitation on Lease Commitments .............................. 33
5.15. Investments and Contingent Liabilities ....................... 33
5.16. Merger and Sale of Assets .................................... 35
5.17. Dividends .................................................... 36
5.18. Limitations on Capital Expenditures .......................... 36
5.19. Subordinated Debt ............................................ 36
5.20. Notices ...................................................... 37
5.21. Existence; Maintenance of Properties ......................... 38
5.22. Compliance with Laws, Contracts, Licenses,
and Permits ................................................. 38
5.23. Employee Benefit Plans ....................................... 39
5.24. Use of Proceeds .............................................. 39
5.25. Limited Liability Agreement .................................. 39
5.26. Covenants in HGC Credit Agreement ............................ 40
5.27. Further Assurances ........................................... 40
6. DEFAULTS ............................................................ 40
7. AGENT'S RELATIONSHIP WITH BANKS; AGENT'S DUTIES ..................... 43
8. SETOFF .............................................................. 45
9. INDEMNIFICATION ..................................................... 45
10. SECURITY AND GUARANTIES ............................................. 46
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11. MISCELLANEOUS ....................................................... 47
11.1. Notices ...................................................... 47
11.2. Copies of Certificates, Etc .................................. 47
11.3. No Waivers ................................................... 47
11.4. Massachusetts Law ............................................ 48
11.5. Expenses; Taxes .............................................. 48
11.6. Confidentiality of Information ............................... 48
11.7. Changes, Waivers ............................................. 48
11.8. Binding Effect of Agreement .................................. 49
11.9. Counterparts ................................................. 49
11.10. Entire Agreement ............................................. 49
11.11. Assignments or Participations by Banks or Affiliates ......... 49
11.12. Term of Agreement ............................................ 50
11.13. Certain Transitional Arrangements ............................ 50
11.14. Assumption of Obligations .................................... 51
11.15. Obligations of HGC ........................................... 51
Exhibits:
Exhibit A - Definitions
Exhibit B - Form of Revolving Credit Note
Exhibit C - Form of Subsidiary Guaranty
Exhibit D - Form of Subsidiary Security
Agreement
Exhibit E - Form of Company Security Agreement
Exhibit F - Form of Opinion
Schedules:
Schedule 1.12 - Existing Letters of Credit
Schedule 3.1 - Subsidiaries
Schedule 3.8 - Litigation
Schedule 3.18(b) - Environmental Notices
Schedule 3.18(c) - Underground Tanks
Schedule 3.19 - Insurance
Schedule 5.12(a) - Indebtedness
Schedule 5.12(h) - Terms of Intercompany Debt
Schedule 5.13 - Liens
Schedule 5.15 - Investments
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HUDSON GENERAL CORPORATION
HUDSON GENERAL LLC
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
This AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT (the "Agreement")
dated as of November 25, 1992 and amended and restated as of June 1, 1996, among
Hudson General Corporation ("HGC"), a Delaware corporation having its principal
place of business at 111 Great Neck Road, Great Neck, New York 11022, Hudson
General LLC (the "Company"), a Delaware limited liability company having its
principal place of business at 111 Great Neck Road, Great Neck, New York 11022,
The First National Bank of Boston, 100 Federal Street, Boston, Massachusetts
02110, in its individual capacity ("FNB"), European American Bank, 1 EAB Plaza,
Uniondale, New York 11555 ("EAB"), The Chase Manhattan Bank, N.A., 135 Pinelawn
Street, Melville, New York 11747 ("Chase") and such other banks as may become
parties hereto from time to time in accordance with the provisions hereof (each
singly, a "Bank" and collectively, the "Banks"), and The First National Bank of
Boston as agent for the Banks (the "Agent"). Capitalized terms used in this
Agreement shall have the meanings set forth in Exhibit A attached hereto or in
the sections of this Agreement referred to in Exhibit A. All accounting terms
shall, unless otherwise specified, be given the meanings ascribed to them by
generally accepted accounting principles.
WHEREAS, HGC, the Banks and the Agent are parties to that certain
Revolving Credit and Term Loan Agreement, dated as of November 25, 1992, as
amended (as so amended, the "Original Credit Agreement"), pursuant to which the
Banks made revolving credit loans and a term loan to HGC, and issued letters of
credit for the account of HGC; and
WHEREAS, HGC has repaid in full the term loan made to it by the Banks
under the Original Credit Agreement; and
WHEREAS, HGC has formed the Company and wishes to transfer to the
Company, subject to the Collateral Agent's liens and security interests,
substantially all of the assets of HGC's aviation services business (the
"Aviation Services Business"), including, without limitation, the assets of
certain of its Subsidiaries which are actively engaged in the Aviation Services
Business and the stock of Aviation; and
WHEREAS, the Company wishes to assume, and become jointly and severally
liable with HGC for, all of HGC's obligations under the Original Credit
Agreement; and
WHEREAS, HGC, the Company, the Banks and the Agent wish to amend and
restate the Original Credit Agreement in its entirety in order to reflect the
transfer by HGC and certain of its Subsidiaries, subject to the Collateral
Agent's liens and security
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interests, of substantially all of the Aviation Services Business to the Company
and the Company's agreement to become jointly and severally liable for HGC's
obligations under the Original Credit Agreement and to make certain other
changes to the terms and provisions of the Original Credit Agreement;
NOW, THEREFORE (the foregoing recitals being part of this Agreement),
HGC, the Company, the Banks and the Agent agree that as of the Effective Date,
the Original Credit Agreement shall be amended and restated in its entirety as
set forth herein and shall be in full force and effect as provided herein.
SECTION 1. THE REVOLVING CREDIT FACILITY; LETTERS OF CREDIT.
SECTION 1.1. COMMITMENT TO LEND; EXISTING REVOLVING CREDIT LOANS. (a)
Subject to the terms and conditions of this Agreement, including, without
limitation, the conditions precedent set forth in Paragraph 4B hereof, and upon
prior notice given to the Agent by the Company, as provided in Paragraph 1.3,
each Bank severally agrees from time to time to make loans to the Company
(individually, a "Revolving Credit Loan" and collectively, the "Revolving Credit
Loans") in an aggregate principal amount requested by the Company from time to
time between the Effective Date and the Revolving Credit Loan Maturity Date, up
to a maximum aggregate amount outstanding (after giving effect to all amounts
requested) at any one time equal to such Bank's Commitment Percentage of the
Aggregate Loan Limit, provided that the sum of the aggregate outstanding and
unpaid principal amount of all Revolving Credit Loans (after giving effect to
all amounts requested) plus the aggregate Maximum Drawing Amount of all
outstanding Letters of Credit plus the Aviation Loan Amounts shall at no time
exceed the Aggregate Loan Limit. Promptly upon receipt of a request for
Revolving Credit Loans by the Company, the Agent will notify the Banks thereof,
and each Bank will make the proceeds of its Revolving Credit Loan available in
United States dollars in immediately available funds on the requested date at
the head office of the Agent, 100 Federal Street, Boston, Massachusetts 02110.
The Revolving Credit Loans shall be made pro rata in accordance with each Bank's
Commitment Percentage. The Banks' obligations hereunder shall be several and not
joint, and except as otherwise specifically provided in this Agreement, no
Bank's obligation to lend shall be affected by any other Bank's failure to make
any Revolving Credit Loan.
(b) On and as of the Effective Date (i) all Revolving Credit Loans (if
any) outstanding under (and as defined in) the Original Credit Agreement shall
constitute Revolving Credit Loans outstanding under this Agreement, (ii) each
Base Rate Loan outstanding under (and as defined in) the Original Credit
Agreement shall constitute a Base Rate Loan outstanding hereunder, shall bear
interest from and after the Effective Date at the rate of interest for Base Rate
Loans as set forth in Paragraph 2.3 hereof and all interest accrued with respect
to such Base Rate Loan, including all interest accrued prior to the Effective
Date, shall be payable by HGC and the Company on June 30, 1996 and thereafter in
accordance with the terms of this Agreement and (iii) each LIBO Rate Loan
outstanding under (and as defined in) the Original Credit Agreement shall
constitute a LIBO Rate Loan outstanding hereunder with the same Interest Period
as was applicable to such LIBO Rate Loan outstanding under the Original Credit
Agreement, shall bear interest from and after the Effective Date at the
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rate of interest for LIBO Rate Loans as set forth in Paragraph 2.3 hereof and
all interest accrued with respect to such LIBO Rate Loan, including all interest
accrued prior to the Effective Date, shall be payable by HGC and the Company on
the next Interest Payment Date for such LIBO Rate Loan hereunder. The
obligations of HGC and the Company with respect to all such Revolving Credit
Loans shall be subject to and governed by the applicable terms and provisions of
this Agreement and the other Loan Documents.
SECTION 1.2. NOTES TO EVIDENCE REVOLVING CREDIT LOANS. The Revolving
Credit Loans will be evidenced by separate restated promissory notes of HGC and
the Company in the form of Exhibit B attached hereto (each a "Revolving Credit
Note") appropriately completed, executed and delivered by HGC and the Company to
the Banks on the Effective Date. Prior to any transfer of a Revolving Credit
Note, each Bank shall record thereon any appropriate notations evidencing each
Revolving Credit Loan and payment of principal made thereunder. The outstanding
amount of the Revolving Credit Loans recorded on each Bank's Revolving Credit
Note shall be prima facie evidence of the principal amount thereof owing and
unpaid to such Bank, but the failure to record, or any error in so recording,
any such amount shall not limit or otherwise affect the obligations of HGC or
the Company hereunder or under any Revolving Credit Note to make payments of
principal or interest on any Revolving Credit Note when due.
SECTION 1.3. ELECTION OF FORM OF REVOLVING CREDIT LOAN. (a) As long as
no Default has occurred and is continuing and no condition which would, with
either or both the giving of notice or the lapse of time, result in a Default
has occurred and is continuing, the Banks agree from time to time between the
Effective Date and the Revolving Credit Loan Maturity Date to make Revolving
Credit Loans as either Base Rate Loans or LIBO Rate Loans, to permit conversion
of Revolving Credit Loans that are Base Rate Loans or LIBO Rate Loans to
Revolving Credit Loans of the other Type subject where applicable to Paragraph
2.6 hereof or to continue a Revolving Credit Loan as a LIBO Rate Loan for the
same Interest Period or a different Interest Period, provided that no Interest
Period shall extend beyond the Revolving Credit Loan Maturity Date, and further
provided that the aggregate outstanding principal amount of Revolving Credit
Loans having Interest Periods ending after any date on which a reduction of such
principal is required under Paragraph 1.4(a) or (b) hereof shall not exceed the
aggregate principal balance of Revolving Credit Loans permitted to be
outstanding after such date. Each Base Rate Loan made on any single occasion
shall be in the minimum aggregate principal amount of $100,000 or an integral
multiple thereof. Each LIBO Rate Loan, or a conversion thereto or a continuation
thereof, made on any single occasion shall be in the minimum aggregate principal
amount of $1,000,000 or if higher, in integral multiples of $250,000.
(b) Each Revolving Credit Loan shall be made, each conversion of a
Revolving Credit Loan from one Type to another Type and each continuation of a
Revolving Credit Loan as a LIBO Rate Loan for the same Interest Period or a
different Interest Period shall occur, upon notice (confirmed in writing, if
oral) given to the Agent by the Company no later than:
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(i) if a Base Rate Loan, the same Business Day prior to 10:00
a.m. (Boston time); or
(ii) if a LIBO Rate Loan, 11:00 a.m. (Boston time), three
Business Days prior to commencement of the applicable Interest Period.
In the notice, the Company shall specify the amount of such Revolving Credit
Loan and, if a LIBO Rate Loan, the applicable Interest Period. Each notice with
regard to borrowing or a conversion to or a continuation of a LIBO Rate Loan
shall be irrevocable and binding upon the Company. Any LIBO Rate Loan shall
automatically convert to a Base Rate Loan at the end of the applicable Interest
Period unless the Company in accordance with the procedures set forth in this
Paragraph 1.3 shall give the requisite notice to continue such LIBO Rate Loan
for the same or a different Interest Period.
SECTION 1.4. AGGREGATE LOAN LIMIT. (a) The "Aggregate Loan Limit" shall
initially be $18,000,000 and shall be irrevocably reduced (i) on the last day of
each March, June, September and December commencing on the first such date after
the Reduction Commencement Date, and thereafter until the Revolving Credit Loan
Maturity Date, or until the Company has elected to reduce the full remaining
amount of the Aggregate Loan Limit as provided in the following clause (iv) and
the Revolving Credit Loans are repaid in full, by 1/16 of the Aggregate Loan
Limit in effect at the close of business on the Reduction Commencement Date,
(ii) from time to time in accordance with the parenthetical of Paragraph
5.13(f)(ii) hereof, (iii) from time to time in accordance with Paragraph
5.16(a)(iv) hereof, and (iv) by such amounts by which the Company may from time
to time, upon three Business Days' prior written notice to the Banks, elects to
reduce the same (in integral multiples of $100,000 or in the full remaining
amount of the Aggregate Loan Limit). Any reduction in the Aggregate Loan Limit
which occurs after the Reduction Commencement Date, by reason of application of
clause (ii), clause (iii) or clause (iv) above shall be applied pro rata to
reduce the remaining required reductions in the Aggregate Loan Limit under
clause (i) above. On the effective date of any reduction, there shall become due
and payable and HGC and the Company will, jointly and severally, pay or cause to
be paid the amount, if any, by which the sum of the aggregate outstanding and
unpaid principal amount of all Revolving Credit Loans plus the aggregate Maximum
Drawing Amount of all outstanding Letters of Credit plus the Aviation Loan
Amounts, exceeds the reduced Aggregate Loan Limit on the effective date of such
reduction. Each repayment of Revolving Credit Loans shall be made ratably among
the Banks in accordance with their Commitment Percentages and each reduction in
the Aggregate Loan Limit shall be made ratably among the Banks in accordance
with their Commitment Percentages.
(b) Upon the written request by the Company to the Banks received by
the Banks no later than 90 days prior to the Reduction Commencement Date and the
written consent of all of the Banks (such consent to be given at the sole
discretion of each Bank), the Initial Revolving Period may be extended for
successive annual periods and the Reduction Commencement Date and the Revolving
Credit Loan Maturity Date shall be reset accordingly. In the event that any
revolving period is extended, HGC and the Company shall (A) (i) execute and
deliver to each of the Banks restated Revolving Credit Notes reflecting the
extended Revolving Credit Loan Maturity Date
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and each of the Banks shall return to HGC and the Company the existing Revolving
Credit Notes, or (ii) execute and deliver to each of the Banks a letter
authorizing such Bank to change the Revolving Credit Loan Maturity Date set
forth in such Bank's existing Revolving Credit Note to the extended Revolving
Credit Loan Maturity Date and (B) provide each Bank with such evidence of
existence and due authorization of such extended period of borrowing, including
an opinion of counsel to HGC and the Company as to the due execution, delivery,
validity and binding effect of such Revolving Credit Note as restated or
extended, as such Bank reasonably may request. In no event shall any revolving
period be extended unless at the time of such extension each of the conditions
precedent to the making of a Revolving Credit Loan set forth in Paragraph 4B of
this Agreement has been satisfied.
SECTION 1.5. REPAYMENT OF REVOLVING CREDIT LOANS. The sum of the
aggregate outstanding and unpaid principal amounts of all Revolving Credit Loans
plus the aggregate Maximum Drawing Amounts of all outstanding Letters of Credit
plus the Aviation Loan Amounts shall at no time exceed the Aggregate Loan Limit,
and HGC and the Company, jointly and severally, will make or cause to be made
such payments on account of principal as are necessary to comply with the
foregoing limitation, with accrued interest to the date of prepayment on the
principal amount prepaid. Payment in full of all obligations on or with respect
to the Revolving Credit Notes shall be due on the Revolving Credit Loan Maturity
Date and each of HGC and the Company, jointly and severally, promises to pay in
full on the Revolving Credit Loan Maturity Date all Obligations on or with
respect to the Revolving Credit Notes. HGC and the Company may at any time upon
three Business Days' prior written notice to the Agent make or cause to be made
full or partial prepayment of the Revolving Credit Loans in an integral multiple
of $100,000, with accrued interest to the date of such prepayment on the
principal amount prepaid, for pro-rata application to the Revolving Credit Loans
outstanding under the Revolving Credit Notes, with adjustments to the extent
practicable to equalize any prior prepayment not exactly in proportion, without
premium or penalty, provided that LIBO Rate Loans may be prepaid only on the
last day of the Interest Period applicable thereto (or otherwise with the
consequences set forth in Paragraph 2.6). Subject to the terms and conditions of
this Agreement, HGC and the Company may reborrow any amount so prepaid.
SECTION 1.6. REVOLVING CREDIT LOANS COMMITMENT FEE. Each of HGC and the
Company, jointly and severally, agrees to pay to the Agent, for the account of
the Banks in accordance with their respective Commitment Percentages, quarterly
in arrears on the last day of each calendar quarter commencing June 30, 1996, a
commitment fee, computed from the Effective Date at the rate of 1/2 of 1% per
annum on the aggregate daily unused portion of the Aggregate Loan Limit.
SECTION 1.7. LETTERS OF CREDIT. Subject to the terms and conditions set
forth in this Agreement, upon written request of the Company to the Letter of
Credit Bank in accordance with this Paragraph 1.7, the Letter of Credit Bank
shall issue, with pro rata participation by all of the Banks, at any time
between the Effective Date and the Revolving Credit Loan Maturity Date and
subject to the satisfaction of the conditions precedent set forth in Paragraph
4B hereof, Letters of Credit in such form as the Company and the Letter of
Credit Bank may agree for the account of the Company,
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provided that at no time shall the aggregate Maximum Drawing Amounts of all
outstanding Letters of Credit exceed $6,000,000, and provided further that at no
time shall the sum of the aggregate outstanding and unpaid principal balance of
all outstanding Revolving Credit Loans plus the aggregate Maximum Drawing
Amounts of all outstanding Letters of Credit plus the Aviation Loan Amounts
exceed the Aggregate Loan Limit. Letters of Credit shall be issued only for the
following purposes: (i) to support the Company's insurance policies, and (ii)
for the Company's business purposes in the ordinary course of the Company's
business. Each request for issuance of a Letter of Credit shall be in writing
and shall be received by the Letter of Credit Bank at least three Business Days
prior to the proposed date of issuance. The expiry dates, amounts and
beneficiaries of the Letters of Credit will be as designated by the Company and
reasonably approved by the Letter of Credit Bank. The Letter of Credit Bank
promptly shall notify the Banks of the amounts of all Letters of Credit issued
hereunder and of any extension, reduction or termination thereof, and the Letter
of Credit Bank shall send the Banks copies of all Letters of Credit issued
hereunder as soon as reasonably practicable after the issuance thereof. The
Company may request, and the Letter of Credit Bank, upon terms and conditions
approved by the Company, shall issue, with pro rata participation by all of the
Banks, substitute Letters of Credit for the Letters of Credit to reflect
reductions in the amount of the Company's obligations supported by such Letters
of Credit. Each Letter of Credit issued by the Letter of Credit Bank hereunder
shall identify: (i) the dates of issuance and expiry of such Letter of Credit,
(ii) the amount of such Letter of Credit (which shall be a sum certain), (iii)
the beneficiary and account party of such Letter of Credit, and (iv) the drafts
and other documents necessary to be presented to the Letter of Credit Bank upon
drawing thereunder. No Letter of Credit issued hereunder shall expire after the
first anniversary of its date of issuance (provided that, at the Company's
request, Letters of Credit may contain provisions for extension or renewal,
which such extension or renewal shall be at the Banks' option, for additional
terms not in excess of one year), and in no event shall any Letter of Credit
issued hereunder expire after the Revolving Credit Loan Maturity Date. The
Company agrees to execute and deliver to the Letter of Credit Bank such further
documents and instruments in connection with any Letter of Credit issued
hereunder as the Letter of Credit Bank in accordance with its customary
practices may request.
SECTION 1.8. DRAWINGS. Each of HGC and the Company hereby, jointly and
severally, absolutely and unconditionally promises to pay the Letter of Credit
Bank as soon as possible but in any event within one Business Day after any
drawing under a Letter of Credit, in immediately available funds, the amount of
such drawing under such Letter of Credit, plus interest thereon from the date of
such drawing until repaid in full at an annual rate equal to the Base Rate in
effect from time to time. If the Company so requests in accordance with
Paragraph 4B.1 and if each of the conditions precedent to the making of a
Revolving Credit Loan set forth in Paragraph 4B of this Agreement has been
satisfied on the Business Day following a drawing under a Letter of Credit, the
amount of such drawing, plus interest thereon, for which the Letter of Credit
Bank has not been reimbursed by HGC or the Company shall become a Revolving
Credit Loan made by the Banks to the Company on such day as provided in
Paragraph 1.1 hereof bearing interest at an annual rate equal to the Base Rate
in effect from time to time. The Letter of Credit Bank shall give written notice
(which written notice shall
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be by facsimile transmission or telex) to HGC, the Company and the Banks of the
occurrence and amount of each drawing under a Letter of Credit promptly upon the
occurrence thereof. Each Bank agrees that on the second Business Day after any
such drawing, such Bank will immediately make available to the Letter of Credit
Bank at its head office in Boston, Massachusetts, in Federal or other
immediately available funds, its ratable share of any such drawing, plus any
interest which shall have accrued thereon, provided that each Bank's obligation
shall be reduced by its pro rata share of any reimbursement by HGC or the
Company in respect of such drawing pursuant to this Paragraph 1.8. Paragraph 1.9
hereof shall govern HGC's and the Company's obligations with respect to drawings
under Letters of Credit.
SECTION 1.9. LETTER OF CREDIT LOAN OBLIGATIONS ABSOLUTE. (a) The joint
and several obligations of HGC and the Company to reimburse the Letter of Credit
Bank as provided hereunder in respect of drawings under Letters of Credit shall
rank pari passu with the obligations of HGC and the Company to repay the
Revolving Credit Loans hereunder, and shall be absolute and unconditional under
any and all circumstances and shall be secured pro rata with the other
Obligations pursuant to the Security Agreements. Without limiting the generality
of the foregoing, HGC's and the Company's obligations to reimburse the Letter of
Credit Bank in respect of drawings under Letters of Credit shall not be subject
to any defense based on the non-application or misapplication by the beneficiary
of the proceeds of any such payment or the legality, validity, regularity or
enforceability of the Letters of Credit or any related document or any dispute
between or among the Company, HGC, the beneficiary of any Letter of Credit or
any financing institution or other party to which any Letter of Credit may be
transferred. The Letter of Credit Bank may accept or pay any draft presented to
it under any Letter of Credit regardless of when drawn or made and whether or
not negotiated, if such draft, accompanying certificate or documents and any
transmittal advice are presented or negotiated on or before the expiry date of
the Letter of Credit, or any renewal or extension thereof then in effect.
Furthermore, neither the Letter of Credit Bank nor any of its correspondents
shall be responsible, as to any document presented under a Letter of Credit
which appears to be regular on its face, and appears on its face to conform to
the terms of the Letter of Credit, for the validity or sufficiency of any
signature or endorsement, for delay in giving any notice or failure of any
instrument to bear adequate reference to the Letter of Credit, or for failure of
any person to note the amount of any draft on the reverse of the Letter of
Credit.
(b) Any action, inaction or omission on the part of the Letter of
Credit Bank or any of its correspondents under or in connection with any Letter
of Credit or the related instruments, documents or property, if in good faith
and in conformity with such laws, regulations or customs as are applicable,
shall be binding upon HGC and the Company and shall not place the Letter of
Credit Bank or any of its correspondents under any liability to HGC or the
Company, in the absence of (i) gross negligence or willful misconduct by the
Letter of Credit Bank or its correspondents or (ii) the failure by the Letter of
Credit Bank to pay under a Letter of Credit after presentation of a draft and
documents strictly complying with such Letter of Credit. The Letter of Credit
Bank's rights, powers, privileges and immunities specified in or arising under
this Agreement are in addition to any heretofore or at any time hereafter
otherwise
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created or arising, whether by statute or rule of law or contract. All Letters
of Credit issued hereunder will, except to the extent otherwise expressly
provided hereunder, be governed by the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce,
Publication No. 500, and any subsequent revisions thereof.
SECTION 1.10. BANKS' OBLIGATIONS IN RESPECT OF LETTERS OF CREDIT. Each
Bank acknowledges that each Letter of Credit issued by the Letter of Credit Bank
pursuant to this Agreement is issued by the Letter of Credit Bank on behalf of
and with the pro rata participation of all of the Banks, agrees to make the
payments required by Paragraph 1.8 hereof and agrees to be responsible for its
pro rata share of all liabilities incurred by the Letter of Credit Bank in
respect of each Letter of Credit opened or extended by the Letter of Credit Bank
hereunder for the account of the Company. Each Bank agrees with the Letter of
Credit Bank and the other Banks that its obligation to make the payments
required by Paragraph 1.8 hereof shall not be affected in any way by any
circumstances (other than the gross negligence or willful misconduct of the
Letter of Credit Bank) occurring before or after the making of any payment by
the Letter of Credit Bank pursuant to any Letter of Credit, including, without
limitation:
(a) any modification or amendment of, or any consent, waiver,
release or forbearance with respect to, any of the terms of this
Agreement or any other instrument or document referred to herein;
(b) the existence of any Default; or
(c) any change of any kind whatsoever in the financial position
or creditworthiness of HGC or the Company.
SECTION 1.11. LETTER OF CREDIT FEE. HGC and the Company shall pay to
the Letter of Credit Bank for its own account a fee in respect of each Letter of
Credit issued pursuant to Paragraph 1.7 hereof calculated at the rate of 1/4%
per annum on the Maximum Drawing Amount of each such Letter of Credit, payable
quarterly in advance during the term of such Letter of Credit, commencing upon
the date of issuance thereof. HGC and the Company also shall pay to the Letter
of Credit Bank for the accounts of the Banks (including FNB) in accordance with
their Commitment Percentages a fee in respect of each such Letter of Credit
calculated at the rate of 1-3/8% per annum on the Maximum Drawing Amount
thereof, payable quarterly in advance during the term of such Letter of Credit,
commencing upon the date of issuance thereof (the foregoing fees are referred to
collectively as the "Letter of Credit Fee"). In addition (but without
duplication), HGC and the Company shall pay to the Letter of Credit Bank for its
own account its standard processing, negotiating, amendment and administrative
fees, as determined in accordance with the Letter of Credit Bank's customary
fees and charges for similar facilities.
SECTION 1.12. EXISTING LETTERS OF CREDIT. Each of HGC, the Company and
the Banks hereby agree that from and after the Effective Date, the letters of
credit issued by FNB as letter of credit bank under the Original Credit
Agreement for the account of HGC
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and listed and described on Schedule 1.12 attached hereto shall be Letters of
Credit for all purposes of this Agreement (including, without limitation, the
provisions of Paragraph 1.11 hereof, provided that there shall be no duplication
of the fees previously paid or payable under the Original Credit Agreement with
respect to such outstanding letters of credit), and the Banks hereby affirm
their pro rata participation in such Letters of Credit. Each of HGC and the
Company hereby affirms its liability with respect to the reimbursement
obligations under each such Letter of Credit as provided herein. The Letter of
Credit Bank, the Agent, the Banks, HGC and the Company hereby further agree that
from and after the Effective Date, the Letter of Credit Fee payable with respect
to each letter of credit listed and described on Schedule 1.12 attached hereto
shall be calculated and payable in accordance with Paragraph 1.11 hereof. The
Company and HGC represent and warrant that on the date hereof the aggregate
Maximum Drawing Amount of all outstanding Letters of Credit is $3,050,007.00.
SECTION 2. CERTAIN GENERAL PROVISIONS.
SECTION 2.1. AGENT'S FEE. Each of HGC and the Company, jointly and
severally, shall pay to the Agent annually in advance, for the Agent's own
account, an Agent's fee in the amount of $22,500 on the Effective Date and an
Agent's fee of $15,000 on each anniversary of the Effective Date during the term
of this Agreement.
SECTION 2.2. FACILITY FEE. Each of HGC and the Company, jointly and
severally, agrees to pay to the Agent for the pro rata accounts of the Banks on
the Effective Date a facility fee in the amount of $56,250.
SECTION 2.3. INTEREST. Except as otherwise provided in the last
sentence of this Paragraph 2.3, the Revolving Credit Notes shall bear interest
on the unpaid principal amount thereof not then due and payable, computed as
follows:
(a) for Base Rate Loans, at a rate per annum equal to the Base
Rate as in effect from time to time; and
(b) with respect to LIBO Rate Loans, at a rate per annum equal to
1-3/8% above the LIBO Rate determined for the applicable Interest
Period;
provided that notwithstanding anything to the contrary contained in this
Agreement or in the Revolving Credit Notes, the Banks shall not charge nor shall
HGC or the Company be required to pay interest in an amount in excess of that
permitted by applicable law. All payments of interest on Base Rate Loans shall
be made quarterly in arrears on the last day of each calendar quarter commencing
June 30, 1996, and on the date when any Base Rate Loan is paid in full. Interest
on each LIBO Rate Loan shall be payable (i) on the last day of each Interest
Period relating thereto, and (ii) if any Interest Period is longer than three
months, also on the last day of each three-month period following the
commencement of such Interest Period. Any change in the Base Rate shall result
in an immediate corresponding change in the rate of interest payable on Base
Rate Loans. The Agent shall promptly notify HGC and the Company of any change in
the Base Rate. Overdue principal of and, to the extent permitted by
16
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law, overdue interest on each Revolving Credit Note shall bear interest at a
rate which is two percentage points (2%) per annum above the Base Rate in effect
from time to time, compounded monthly, whether before or after judgment. All
computations of interest and commitment fees shall be made on the basis of the
actual number of days elapsed divided by 360.
SECTION 2.4. PLACE AND MODE OF PAYMENTS. All payments due hereunder
shall be made, in immediately available funds in United States dollars, by HGC
and the Company to the Agent at its head office at 100 Federal Street, Boston,
Massachusetts 02110. Promptly upon receipt by the Agent of any payment, it shall
wire, in immediately available funds, to each Bank its applicable share (taking
into account the provisions of Paragraph 2.11 hereof) of such payment. Whenever
a payment becomes due on a day which is not a Business Day, the maturity thereof
shall be extended to the next succeeding Business Day, and interest and
commitment fees shall accrue during such extension. Each of HGC and the Company
hereby requests and authorizes the Agent to charge such entity's deposit account
with the Agent for all interest on the Revolving Credit Loans and all fees
payable hereunder on the dates when any such amounts are due.
SECTION 2.5. INABILITY OF AGENT TO DETERMINE LIBO RATES; ILLEGALITY.
(a) If the Agent shall in good faith determine that it is unable to ascertain
the LIBO Rate prior to any Interest Period, the Agent shall promptly notify HGC
and the Company of such determination (which shall be conclusive and binding on
HGC, the Company and the Banks). In such event (i) any loan request with respect
to a LIBO Rate Loan to which such Interest Period would otherwise relate shall
be deemed to be a request for a Base Rate Loan (unless HGC and the Company
withdraw their request therefor), (ii) each LIBO Rate Loan will automatically,
on the last day of the then current Interest Period relating thereto, become a
Base Rate Loan, and (iii) the obligations of the Banks to make LIBO Rate Loans
or convert Base Rate Loans to LIBO Rate Loans shall be suspended until the Agent
determines that the circumstances giving rise to such suspension no longer
exist, whereupon the Agent shall so notify HGC, the Company and the Banks. Such
determination shall be made by the Agent on the day preceding the first day of
the applicable Interest Period.
(b) Notwithstanding any other provisions herein, if any present or
future law, regulation, treaty or directive or in the interpretation or
application thereof shall make it unlawful for any Bank to make or maintain LIBO
Rate Loans, such Bank shall forthwith give notice of such circumstances to HGC,
the Company and the other Banks and thereupon (i) the obligation of such Bank to
make LIBO Rate Loans or convert Base Rate Loans to LIBO Rate Loans shall
forthwith be suspended and such Bank shall have no obligation to make LIBO Rate
Loans for purposes of Paragraph 2.11 hereof but shall make Base Rate Loans in
like amount (HGC and the Company hereby agreeing to accept such Base Rate
Loans), and (ii) such LIBO Rate Loans, if any, shall be converted automatically
to Base Rate Loans on the last day of the then current Interest Period
applicable to such LIBO Rate Loans or within such earlier period as may be
required by law. Each of HGC and the Company hereby, jointly and severally,
agrees promptly to pay the Agent for the account of such Bank, upon demand by
such Bank, any additional amounts necessary to compensate such Bank for any
17
-11-
costs incurred by such Bank in making any conversion in accordance with this
Paragraph 2.5, including any interest or fees payable by such Bank to lenders of
funds obtained by it in order to make or maintain its LIBO Rate Loans hereunder.
SECTION 2.6. INDEMNIFICATION FOR LOSSES. Without prejudice to any of
the other provisions of this Agreement, HGC and the Company will, on demand by
any Bank, at any time and from time to time and as often as the occasion
therefor may arise, indemnify such Bank against any losses, costs or expenses
which such Bank may at any time and from time to time sustain or incur as a
consequence of:
(a) the failure by the Company to borrow any LIBO Rate Loan,
convert any Base Rate Loan to a LIBO Rate Loan or continue any LIBO
Rate Loan on the date of borrowing, conversion or continuation
designated by the Company; or
(b) the failure by HGC or the Company to pay, punctually on
the due date thereof, any amount payable by HGC and the Company with
respect to or on account of any LIBO Rate Loan; or
(c) repayment or conversion by HGC or the Company of all or any
portion of any LIBO Rate Loan prior to the last day of the applicable
Interest Period, whether due to acceleration of the maturity of the
Revolving Credit Loans or due to any other reason;
such losses, costs or expenses to include, without limitation:
(i) any costs incurred by such Bank in carrying funds
which were to have been borrowed by the Company (net of any
interest or other amounts received in any redeployment of such
funds) or in carrying funds to cover the amount of any overdue
principal of or overdue interest on any of the LIBO Rate Loans;
(ii) any interest payable by such Bank to lenders of the
funds borrowed by such Bank in order to carry the funds referred
to in the immediately preceding subclause (i) (net of any interest
or other amounts received in any redeployment of such funds); and
(iii) any losses (excluding losses of anticipated profit)
incurred by such Bank in liquidating or reemploying funds acquired
from third parties to effect or maintain all or any part of any
LIBO Rate Loan.
SECTION 2.7. PAYMENTS TO BE FREE OF DEDUCTIONS. (a) All payments by HGC
and the Company hereunder shall be made without setoff or counterclaim, and free
and clear of and without deduction for any taxes, levies, imposts, duties,
charges, fees, deductions, withholdings, compulsory loans, restrictions or
conditions of any nature now or hereafter imposed or levied by any jurisdiction
or any political subdivision thereof or taxing or other authority therein
(excluding in the case of the Agent and each Bank, net income and profit and
franchise taxes imposed on the Agent or such Bank by the
18
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jurisdiction under the laws of which the Agent or such Bank is organized or any
subdivision or taxing authority thereof or therein or by the United States of
America or any taxing authority thereof), unless HGC or the Company is compelled
by law to make such deduction or withholding. If any such obligation is imposed
upon HGC or the Company with respect to any amount payable by it hereunder, it
will pay to the Banks on the date on which such amount becomes due and payable
hereunder, such additional amount as shall be necessary to enable the Banks to
receive the same net amount which they would have received on such due date had
no such obligation been imposed upon HGC or the Company, as applicable. If HGC
or the Company shall be required by law to make such deduction or withholding,
it will deliver to the Banks tax receipts or other appropriate evidence of
payment.
(b) Each Bank organized under the laws of a jurisdiction outside the
United States, on or prior to the Effective Date, and from time to time
thereafter if requested in writing by HGC or the Company, shall provide each of
HGC or the Company with two original Internal Revenue Service forms 1001, 4224
or W-8 as appropriate, or any successor or other form prescribed by the Internal
Revenue Service, certifying that such Bank is exempt from or entitled to a
reduced rate of United States withholding tax on payments pursuant to this
Agreement. If a Bank provides a form W-8 (or any successor or related form) to
the Agent and HGC or the Company pursuant to this Paragraph 2.7, such Bank shall
also provide a certificate stating that such Bank is not a "bank" within the
meaning of section 881(c)(3)(A) of the Internal Revenue Code of 1986 and shall
promptly notify the Agent and HGC or the Company if such Bank determines that it
is no longer able to provide such certification. Upon the reasonable request of
HGC or the Company or the Agent, each Bank that has not provided the forms or
other documents, as provided above, on the basis of being a United States person
shall submit to HGC or the Company and the Agent a certificate to the effect
that it is such a "United States person" (as defined in Section 7701(a)(30) of
the Internal Revenue Code).
(c) For any period with respect to which a Bank has failed to provide
HGC or the Company with the appropriate form described in Paragraph 2.7(b)
(other than if such failure is due to a change in law occurring subsequent to
the date on which such Bank became a party hereunder), such Bank shall not be
entitled to indemnification under this Agreement with respect to taxes imposed
by the United States.
SECTION 2.8. CHANGE IN CIRCUMSTANCES; ADDITIONAL COSTS. Anything herein
to the contrary notwithstanding, if any present or future applicable law (which
expression, as used herein, includes statutes, rules and regulations thereunder
and interpretations thereof by any competent court or by any governmental or
other regulatory body or official charged with the administration or the
interpretation thereof, and requests, directives, instructions and notices at
any time or from time to time hereafter made upon or otherwise issued to any
Bank or the Agent by any central bank or other fiscal, monetary or other
authority, whether or not having the force of law) shall:
(a) subject any Bank or the Agent to any tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature with respect to
this Agreement, any Letters of Credit, such Bank's Commitment or the
Revolving
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Credit Loans (other than taxes based upon or measured by the income or
profits of such Bank or the Agent), or
(b) materially change the basis of taxation of (except for changes
in taxes on income or profits) payments to any Bank or the Agent of the
principal of or the interest on any Revolving Credit Loans or any other
amounts payable to any Bank or the Agent hereunder with respect to the
Revolving Credit Loans, or
(c) impose or increase or render applicable (other than to the
extent specifically provided for elsewhere in this Agreement) any
special deposit, reserve, assessment, liquidity, capital adequacy or
other similar requirements, whether or not having the force of law,
against assets held by, or deposits in or for the account of, or loans
by, or letters of credit issued by, or commitments of a class of banks
including an office of any Bank, or
(d) impose on a class of banks including any Bank or the Agent any
other conditions or requirements with respect to this Agreement, any
Revolving Credit Note, any Letters of Credit, the Revolving Credit
Loans, such Bank's Commitment, or any class of loans, letters of credit
or commitments of which the Revolving Credit Loans, the Letters of
Credit or such Bank's Commitment forms a part;
and the result of any of the foregoing is:
(i) to increase the cost to any Bank or the Agent of
making, funding, issuing, renewing, extending or maintaining any
of the Revolving Credit Loans or such Bank's Commitment or any
Letter of Credit, or
(ii) to reduce the amount of principal, interest or other
amount payable to any Bank or the Agent hereunder, on account of
such Bank's Commitment, any Letter of Credit or any of the
Revolving Credit Loans, or
(iii) to require any Bank or the Agent to make any payment or
to forego any interest or other sum payable hereunder, the amount
of which payment or foregone interest or other sum is calculated
by reference to the gross amount of any sum receivable or deemed
received by such Bank or the Agent from HGC and the Company
hereunder,
then, and in each case, HGC and the Company will, promptly upon demand made by
such Bank or (as the case may be) the Agent, at any time and from time to time
and as often as the occasion therefor may arise, pay or cause to be paid to such
Bank or the Agent such additional amounts as will be sufficient to compensate
such Bank or the Agent for such additional cost, reduction, payment or foregone
interest or other sum.
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SECTION 2.9. ADDITIONAL AMOUNTS PAYABLE ON ACCOUNT OF CREDIT
FACILITIES. If any present or future law, governmental rule, regulation, policy,
guideline or directive (whether or not having the force of law) or the
interpretation thereof by any court or by any governmental or other regulatory
body or official charged with the administration or interpretation thereof
affects the amount of capital required to be maintained by any Bank or the Agent
or any corporation controlling such Bank or the Agent and such Bank or the Agent
determines that the amount of capital required to be maintained by it is
increased by or based upon the existence of such Banks' or the Agent's
Commitment with respect to any Revolving Credit Loans or Letters of Credit, in
any case, other than any change already reflected in the Reserve Rate then in
effect, then such Bank or the Agent shall notify HGC and the Company of such
fact (the "Notice Date"), and, in the case of a Bank, shall send a copy of such
notice to the Agent. HGC, the Company and such Bank or (as the case may be) the
Agent shall thereafter attempt to negotiate an adjustment to the compensation
payable hereunder which will adequately compensate such Bank or (as the case may
be) the Agent in light of these circumstances. If HGC, the Company and such Bank
or (as the case may be) the Agent are unable to agree to such adjustment within
thirty days of the day on which HGC and the Company receive such notice, then
commencing on the 90th day after the Notice Date, the fees and interest payable
hereunder shall increase by an amount which will, in such Bank's or (as the case
may be) the Agent's reasonable determination, provide adequate compensation.
SECTION 2.10. CERTIFICATES. A certificate signed by an officer of any
Bank or the Agent, setting forth any additional amount required to be paid to
such Bank or the Agent under Paragraphs 2.6 through 2.9 hereof, and the
computations made by such Bank or the Agent to determine such additional amount,
shall be submitted by the Bank or the Agent to HGC and the Company (and, with
respect to demands made by a Bank, to the Agent) in connection with each such
demand, and each such certificate shall, save for manifest error, constitute
prima facie evidence of the additional amount due. A claim by any Bank or the
Agent for all or any part of any additional amount due may be made promptly
before and/or after the end of the Interest Period to which such claim relates
or during which such claim has arisen, and before and/or after any repayment to
which such claim relates.
SECTION 2.11. DELINQUENT BANKS. Notwithstanding anything to the
contrary contained in this Agreement, any Bank that fails (i) to make available
to the Agent its pro rata share of any Revolving Credit Loan or any drawing
under any Letter of Credit or (ii) to comply with the provisions of Paragraph 8
with respect to making dispositions and arrangements with the other Banks, where
such Bank's share of any payment received, whether by setoff or otherwise, is in
excess of its pro rata share of such payments due and payable to all of the
Banks, in each case as, when and to the full extent required by the provisions
of this Agreement, shall be deemed delinquent (a "Delinquent Bank") and shall be
deemed a Delinquent Bank until such time as such delinquency is satisfied. A
Delinquent Bank shall be deemed to have assigned any and all payments due to it
from HGC and the Company, whether on account of outstanding Revolving Credit
Loans, interest, fees or otherwise, to the remaining nondelinquent Banks for
application to, and reduction of, their respective pro rata shares of all
outstanding Revolving Credit Loans (it being understood that any such assignment
21
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shall not affect the obligation of any Bank, including the Delinquent Bank, to
make the percentage of the Revolving Credit Loans or to participate in the
issuance of Letters of Credit requested by HGC and the Company hereunder equal
to such Bank's Commitment Percentage). The Delinquent Bank hereby authorizes the
Agent to distribute such payments to the nondelinquent Banks in proportion to
their respective pro rata shares of all outstanding Revolving Credit Loans. A
Delinquent Bank shall be deemed to have satisfied in full a delinquency when and
if, as a result of application of the assigned payments to all outstanding
Revolving Credit Loans of the nondelinquent Banks, the Banks' respective pro
rata shares of all outstanding Revolving Credit Loans have returned to those in
effect immediately prior to such delinquency and without giving effect to the
nonpayment causing such delinquency.
SECTION 2.12. CONCERNING JOINT AND SEVERAL LIABILITY OF HGC AND THE
COMPANY. Subject to Paragraph 11.15 hereof, in consideration of the financial
accommodations to be provided by the Banks and the Agent hereunder for the
mutual benefit, direct and indirect, of each of HGC and the Company, and in
consideration of the undertaking of each of HGC and the Company to accept joint
and several liability for the obligations of each of them, each of HGC and the
Company jointly and severally irrevocably and unconditionally hereby accepts,
not merely as a surety but also as a co-debtor, joint and several liability with
each other hereunder with respect to the payment and performance of all of the
Obligations arising under this Agreement, it being the intention of the parties
hereto that all the Obligations shall be the joint and several obligations of
HGC and the Company without preferences or distinction among them. Subject to
Paragraph 11.15 hereof, if and to the extent that either HGC or the Company
shall fail to make any payment with respect to any of the Obligations hereunder
as and when due or to perform any of such Obligations in accordance with the
terms thereof, then in each such event, the other entity will make such payment
with respect to, or perform, such Obligations. Subject to Paragraph 11.15
hereof, the obligations of each of HGC and the Company under the provisions of
this Paragraph constitute full recourse obligations of such entity enforceable
against it to the full extent of its properties and assets, irrespective of the
validity, regularity or enforceability of this Agreement or any other
circumstance whatsoever. Subject to Paragraph 11.15 hereof, the joint and
several liability of HGC and the Company hereunder shall continue in full force
and effect notwithstanding any merger, amalgamation or any other change
whatsoever in the name, constitution or place of formation of either of HGC or
the Company, any of the Banks or the Agent. The provisions of this Paragraph are
made for the benefit of each of the Banks and the Agent and their successors and
assigns, and, subject to Paragraph 11.15 hereof, may be enforced by them from
time to time against either HGC or the Company as often as occasion therefor may
arise and without requirement on the part of any of the Banks or the Agent first
to marshall any of its claims or to exercise any of its rights against the other
entity or to exhaust any remedies available to them against the other entity or
to resort to any other source or means of obtaining payment of any of the
Obligations hereunder or to elect any other remedy. Subject to Paragraph 11.15
hereof, the provisions of this Paragraph shall remain in effect until all the
Obligations shall have been paid in full or otherwise fully satisfied and the
Commitments shall have terminated.
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SECTION 3. REPRESENTATIONS AND WARRANTIES. Each of the Company and,
prior to the HGC Release Date, HGC jointly and severally represents and warrants
that:
SECTION 3.1. ORGANIZATION AND QUALIFICATION; AUTHORITY. (a) Each of the
Company and its Subsidiaries (i) is a corporation or, in the case of the Company
or any other limited liability company, a limited liability company, duly
organized, validly existing and in good standing under the laws of the state of
its incorporation or formation, as applicable, (ii) has all requisite power to
own its property and conduct its business as now conducted and as presently
contemplated, and (iii) is duly qualified and in good standing as a foreign
entity and is duly authorized to do business in each jurisdiction where the
nature of its properties or its business requires such qualification.
(b) The execution, delivery and performance by each of HGC, the
Company and the Guarantors of this Agreement and the other Loan Documents to
which such entity is a party, and in the case of HGC and the Company, the
borrowings hereunder and the transactions contemplated under this Agreement and
the other Loan Documents to which HGC and the Company are a party, and in the
case of each of the Guarantors, the transactions contemplated by the Loan
Documents to which such Guarantor is a party (i) are within the authority of
such entity, (ii) have been duly authorized by all necessary proceedings, (iii)
will not contravene any provision of such entity's limited liability company
agreement or charter documents, as applicable, or bylaws or operating agreement,
as applicable, or contravene any provision of, or result in the creation of any
mortgage, lien, pledge, charge, security interest or other encumbrance upon any
of the property of such entity (other than the Liens created under the Security
Documents) under, any other agreement, instrument or undertaking binding upon
such entity or any property of such entity, and (iv) do not conflict with or
result in any breach or contravention of any provision of law, statute, rule or
regulation to which such entity is subject or any judgment, order, writ,
injunction, license or permit applicable to such entity.
(c) Schedule 3.1 attached hereto is a complete and correct list
of all the presently existing Subsidiaries of the Company and the percentage of
the capital stock thereof owned by the Company or a Subsidiary of the Company,
as such schedule may be supplemented from time to time by written notice from
the Company to the Banks. Except for the Joint Ventures, neither the Company nor
any Subsidiary of the Company is engaged in any joint venture or partnership
with any other entity.
SECTION 3.2. VALID OBLIGATION. Each of this Agreement and the other
Loan Documents has been duly executed and delivered by HGC, the Company, and
each Guarantor party to such Loan Document, and each of this Agreement and the
other Loan Documents to which HGC, the Company or any Guarantor is a party
constitutes a valid and legally binding obligation of each such entity,
enforceable against such entity in accordance with its terms, except as the
enforcement of remedies may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting generally the
enforcement of creditors' rights.
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SECTION 3.3. GOVERNMENTAL APPROVALS. The execution, delivery and
performance of this Agreement and the other Loan Documents, the borrowings
hereunder and the transactions contemplated hereby and thereby do not require,
except as set forth in clauses (a) through (d) of Section18 of each of the
Security Agreements and clauses (a) and (b) of Section12 of the Pledge Agreement
and except for consents to the assignment of permits and licenses assigned to
the Company in connection with the Contribution which, if not obtained on or
before the Effective Date, will not have a material adverse effect on the
Company and its Subsidiaries, taken as a whole, any approval or consent of, or
filing by HGC, the Company or any Guarantor with, any governmental or other
agency or authority or any other party, or the giving of notice to any
governmental or other agency or authority or any other party, or the recording
or the delivery to other persons of an environmental disclosure document or
statement.
SECTION 3.4. TITLE TO PROPERTIES; ABSENCE OF LIENS. Except for liens
permitted by Paragraph 5.13 hereof, each of the Company and its Subsidiaries has
good and merchantable title to all of its properties, assets and rights of every
name and nature now purported to be owned by it, free from all defects, liens,
charges and encumbrances whatsoever. The Company and its Subsidiaries have, or
have access to, everything they need to conduct the Aviation Services Business
substantially as it was being conducted by HGC and its Subsidiaries prior to the
transfer contemplated by the Purchase Agreement. The fact that certain assets
that are used by HGC and its Subsidiaries in connection with the Aviation
Services Business are not being transferred to the Company on the Effective Date
will not have a material adverse effect on the Company and its Subsidiaries,
taken as a whole.
SECTION 3.5. FINANCIAL STATEMENTS. The Company has previously furnished
to the Banks unaudited pro forma consolidated financial statements of the
Company and its Subsidiaries for the fiscal year ended June 30, 1995, and at
December 31, 1995, and for the six-month period ended on such date. Such
financial statements give effect to the Contribution and the other transactions
contemplated under the Purchase Agreement, were prepared on the basis described
in the notes to them, were prepared in accordance with generally accepted
accounting principles and fairly present the pro forma consolidated assets and
liabilities of the Company and its Subsidiaries and the consolidated results of
operations of the Company and its Subsidiaries, at the dates, and for the
periods, to which they relate.
SECTION 3.6. CHANGES. Since December 31, 1995, there have been no
changes in the Aviation Services Business or the consolidated financial
condition or results of operations of the Aviation Services Business, other than
changes in the ordinary course of business, the effect of which has not, in the
aggregate, been materially adverse to the business or financial condition of the
Company and its Subsidiaries, taken as a whole. Since the date of the Company's
formation, there have been no changes in the assets, liabilities, financial
condition or business of the Company or its Subsidiaries, other than changes in
the ordinary course of business and the Contribution, the effect of which has
not, in the aggregate, been materially adverse to the business or financial
condition of the Company and its Subsidiaries, taken as a whole.
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SECTION 3.7. TAXES. Each of the Company and its Subsidiaries has filed
all federal, state and other tax returns required to be filed, and all taxes,
assessments and other such governmental charges due from each such entity have
been fully paid except for taxes which are being contested in good faith by
appropriate proceedings. Each of the Company and its Subsidiaries has
established on its books reserves adequate for the payment of all federal, state
and other income tax liabilities, including those being contested as aforesaid.
SECTION 3.8. LITIGATION. Except as described in Schedule 3.8 attached
hereto (as such Schedule may be supplemented by HGC and the Company from time to
time with the consent of the Majority Banks), there is no litigation pending or,
to the knowledge of HGC's or the Company's officers, threatened against the
Company or any Subsidiary of the Company before any court, tribunal or
administrative agency or board which is of a substantial amount and which, if
adversely determined, might reasonably be expected to materially adversely
affect the ability of HGC or the Company to perform its obligations hereunder or
under any of the other Loan Documents or in respect of the Revolving Credit
Loans (after taking into account any applicable insurance coverage).
SECTION 3.9. USE OF PROCEEDS; REGULATIONS U AND X. The proceeds of the
Revolving Credit Loans will be used for general corporate purposes. No portion
of any Revolving Credit Loan is to be used, and no portion of any Letter of
Credit is to be obtained, for the purpose, whether immediate or ultimate, of
purchasing or carrying any "margin security" or "margin stock," as such terms
are used in Regulations U and X of the Board of Governors of the Federal Reserve
System, 12 C.F.R. Parts 221 and 224 in violation of such regulations. Neither
the Company nor any of its Subsidiaries is engaged principally in or has as one
of its important activities the business of extending credit for the purposes of
purchasing or carrying any such "margin stock".
SECTION 3.10. OFFERING BY HGC OR THE COMPANY. None of HGC, the Company
or anyone acting on such entity's behalf has directly or indirectly offered any
interest hereunder or in the Revolving Credit Notes or any similar security for
sale to, or solicited any offer to buy any thereof from or otherwise negotiated
with respect thereto with, anyone other than the Banks and other banks. Each
Bank represents to HGC and the Company that it will not sell or otherwise
dispose of any interest in its Revolving Credit Notes so as to bring the
execution and delivery of this Agreement within the provisions of Section 5 of
the Securities Act of 1933, as now in effect or as later amended. Each of HGC
and the Company hereby notifies each of the Banks that (a) the transactions
pursuant to which the Revolving Credit Notes will be issued hereunder will not
be registered pursuant to the Securities Act of 1933 or pursuant to any state
statute or regulations governing the sale of securities generally and unless an
exemption from such registration is available, the Revolving Credit Notes must
be held indefinitely, and (b) neither HGC nor the Company has any intention to
so register in the future.
SECTION 3.11. NO DEFAULT OR VIOLATION OF LAW. None of HGC, the Company
nor any of its Subsidiaries is in violation of any provision of its charter
documents or limited liability company agreement, as the case may be, or by-laws
or operating agreement, as the case may be, or in default in any material
respect under any contract, agreement or
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obligation to which it may be subject or by which it or any of its properties
may be bound, which default or violation might reasonably be expected to result
in a material impairment of the ability of HGC or the Company to fulfill its
obligations hereunder or under the other Loan Documents or a material impairment
of the financial condition or business of the Company and its Subsidiaries,
taken as a whole. Neither the Company nor any Subsidiary of the Company is in
violation of any law, decree, order, judgment, statute, license, rule or
regulation applicable to it or its properties or business operations, which
violation might reasonably be expected to have a material adverse effect on the
financial condition or business of the Company and its Subsidiaries, taken as a
whole.
SECTION 3.12. NO DEFAULT. No Default or event which, with notice or
lapse of time or both, would constitute a Default has occurred and is
continuing.
SECTION 3.13. FRANCHISES, PATENTS, COPYRIGHTS. Each of the Company and
its Subsidiaries possesses all franchises, patents, copyrights, trademarks,
trade names, licenses and permits, and rights in respect of the foregoing,
adequate for the conduct of its business substantially as now conducted without
known conflict with any rights of others.
SECTION 3.14. NO MATERIALLY ADVERSE CONTRACTS. Neither the Company nor
any of its Subsidiaries is subject to any charter, corporate, organizational or
other legal restriction, or any judgment, decree, order, rule or regulation that
is expected in the future to have a materially adverse effect on the business,
assets or financial condition of the Company and its Subsidiaries, taken as a
whole. Neither the Company nor any of its Subsidiaries is a party to any
contract or agreement that is expected, in the judgment of HGC's or the
Company's officers, to have any materially adverse effect on the business of the
Company and its Subsidiaries, taken as a whole.
SECTION 3.15. HOLDING COMPANY AND INVESTMENT COMPANY ACTS. Neither the
Company nor any of its Subsidiaries is a "holding company", or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding company", as
such terms are defined in the Public Utility Holding Company Act of 1935; nor is
it an "investment company", or an "affiliated company" or a "principal
underwriter" of an "investment company", as such terms are defined in the
Investment Company Act of 1940.
SECTION 3.16. CERTAIN TRANSACTIONS. Except for arm's length
transactions pursuant to which the Company or any of its Subsidiaries makes
payments in the ordinary course of business upon terms no less favorable than
such entity could obtain from third parties and for transactions disclosed in
the Company's financial statements or public filings, none of the officers,
directors, Shareholders (as defined below), or employees of the Company or any
of its Subsidiaries is presently a party to any transaction with the Company or
any of its Subsidiaries (other than as Shareholders, or for services as
employees, officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments
to or from any officer, director, Shareholder, or employee or, to the knowledge
of the Company, any corporation, partnership, trust or other entity in which any
officer,
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director, Shareholder, or any such employee has a substantial interest or is an
officer, director, trustee or partner. For purposes hereof, the term
"Shareholder" shall mean any Member of the Company (as defined in the Company's
Limited Liability Company Agreement) and those shareholders of any Member of the
Company who have filed with the Securities and Exchange Commission Schedules 13D
or 13G with respect to the securities of such Member of the Company pursuant to
the Securities Exchange Act of 1934, as amended.
SECTION 3.17. EMPLOYEE BENEFIT PLANS.
(a) In General. Each Employee Benefit Plan has been maintained
and operated in compliance in all material respects with the provisions of ERISA
and, to the extent applicable, the Code, including but not limited to the
provisions thereunder respecting prohibited transactions.
(b) Terminability of Welfare Plans. Under each Employee Benefit
Plan which is an employee welfare benefit plan within the meaning of Section3(1)
or Section3(2)(B) of ERISA, no benefits are due unless the event giving rise to
the benefit entitlement occurs prior to plan termination (except as required by
Title I, Part 6 of ERISA). The Company or an ERISA Affiliate, as appropriate,
may terminate each such Plan at any time (or at any time subsequent to the
expiration of any applicable bargaining agreement) in the discretion of the
Company or such ERISA Affiliate without liability to any Person.
(c) Guaranteed Pension Plans. Each contribution required to be
made to a Guaranteed Pension Plan, whether required to be made to avoid the
incurrence of an accumulated funding deficiency, the notice or lien provisions
of Section302(f) of ERISA, or otherwise, has been timely made. No waiver of an
accumulated funding deficiency or extension of amortization periods has been
received with respect to any Guaranteed Pension Plan. No liability to the PBGC
(other than required insurance premiums, all of which have been paid) has been
incurred by the Company or any ERISA Affiliate with respect to any Guaranteed
Pension Plan and there has not been any ERISA Reportable Event. Based on the
latest valuation of each Guaranteed Pension Plan (which in each case occurred
within twelve months of the date of this representation), and on the actuarial
methods and assumptions employed for that valuation, the aggregate benefit
liabilities of all such Guaranteed Pension Plans within the meaning of
Section4001 of ERISA did not exceed the aggregate value of the assets of all
such Guaranteed Pension Plans, disregarding for this purpose the benefit
liabilities and assets of any Guaranteed Pension Plan with assets in excess of
benefit liabilities, by more than $1,000,000.
(d) Multiemployer Plans. Neither the Company nor any ERISA
Affiliate has incurred any material liability (including secondary liability) to
any Multiemployer Plan as a result of a complete or partial withdrawal from such
Multiemployer Plan under Section 4201 of ERISA or as a result of a sale of
assets described in Section 4204 of ERISA. Neither the Company nor any ERISA
Affiliate has been notified that any Multiemployer Plan is in reorganization or
insolvent under and within the
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meaning of Section 4241 or Section 4245 of ERISA or that any Multiemployer Plan
intends to terminate or has been terminated under Section 4041A of ERISA.
SECTION 3.18. ENVIRONMENTAL COMPLIANCE. (a) None of the Company, its
Subsidiaries or any operator of the Real Estate is in material violation, or
alleged material violation, of any judgment, decree, order, law, license, rule
or regulation pertaining to environmental matters, including without limitation,
those arising under the Resource Conservation and Recovery Act ("RCRA"), the
Comprehensive Environmental Response, Compensation and Liability Act of 1980 as
amended ("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986
("SARA"), the Federal Clean Water Act, the Federal Clean Air Act, the Toxic
Substances Control Act, or any federal, state or local statute, regulation,
ordinance, order or decree relating to health, safety or the environment
(hereinafter "Environmental Laws"), which violation could reasonably be expected
to have a material adverse effect on the business, assets or financial condition
of the Company and its Subsidiaries, taken as a whole, other than those
violations which have been concluded prior to the date hereof.
(b) Except as set forth on Schedule 3.18(b) attached hereto (as
such Schedule may be supplemented by HGC and the Company from time to time with
the consent of the Majority Banks), neither the Company nor any of its
Subsidiaries has received notice from any third party including, without
limitation, any federal, state or local governmental authority: (i) that any one
of them has been identified by the United States Environmental Protection Agency
("EPA") as a potentially responsible party under CERCLA with respect to a site
listed on the National Priorities List, 40 C.F.R. Part 300 Appendix B (1986);
(ii) that any hazardous waste, as defined by 42 U.S.C. Section 9601(5), any
hazardous substances as defined by 42 U.S.C. Section 9601(14), any pollutant or
contaminant as defined by 42 U.S.C. Section9601(33) and any toxic substances,
oil or hazardous materials or other chemicals or substances regulated by any
Environmental Laws ("Hazardous Substances") which any one of them has generated,
transported or Disposed of has been found at any site at which a federal, state
or local agency or other third party has conducted or has ordered that the
Company or any of its Subsidiaries conduct a remedial investigation, removal or
other response action pursuant to any Environmental Law; or (iii) that it is or
shall be a named party to any claim, action, cause of action, complaint, or
legal or administrative proceeding (in each case, contingent or otherwise)
arising out of any third party's incurrence of costs, expenses, losses or
damages of any kind whatsoever in connection with the Release of Hazardous
Substances which might reasonably be expected to have a material adverse effect
on the assets, business or financial condition of the Company and its
Subsidiaries, taken as a whole.
(c) The Company and each of its Subsidiaries have handled the
processing, storage or Disposal of Hazardous Substances in material compliance
with all applicable Environmental Laws; and, (i) except as set forth on Schedule
3.18(c) attached hereto (as such Schedule may be supplemented by the Company and
HGC from time to time (A) with respect to disclosure of new underground tanks
installed in accordance with applicable law, without the consent of the Majority
Banks and (B) with respect to disclosure of all other matters, with the consent
of the Majority Banks), no underground tanks or other underground storage
receptacles for Hazardous
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Substances are located on any portion of the Real Estate owned by the Company or
any of its Subsidiaries or where the Company or any of its Subsidiaries is
responsible for the maintenance or replacement of any such tanks; (ii) in the
course of any activities conducted by the Company, Subsidiaries of the Company
or operators of its Real Estate, no Hazardous Substances have been generated or
are being used on the Real Estate except in material compliance with all
applicable Environmental Laws; (iii) to the best of HGC's and the Company's
knowledge, there have been no Releases on, upon, from or into any Real Estate or
real property in the vicinity of any of the Real Estate which, through soil or
groundwater contamination, may have come to be located on any of the Real
Estate, and which might reasonably be expected to have a material adverse effect
on the value of, all of the Real Estate or on the business or financial
condition of the Company and its Subsidiaries, taken as a whole; and (iv) in
addition, any Hazardous Substances that have been generated by the Company or
any of its Subsidiaries on any of the Real Estate have in all material respects
to the extent required by law or regulation been transported offsite for
treatment or disposal and, to the best of HGC's and the Company's knowledge,
without having made any special investigation other than to review the
information and documents supplied to the Company by carriers employed by the
Company with respect to such matters, have been transported only by carriers
having an identification number issued by the EPA and have been treated or
disposed of only by treatment or disposal facilities maintaining permits as
required under applicable Environmental Laws.
SECTION 3.19. INSURANCE. Schedule 3.19 attached hereto (as such
Schedule may be supplemented from time to time by written notice from HGC and
the Company to the Agent) lists the policies and types and amounts of coverage
(including all deductibles) of theft, fire, liability, life, property, casualty,
environmental impairment and accidental spill insurance and other insurance
owned or held by HGC and the Company and its Subsidiaries as of May 1, 1996.
Such policies of insurance are maintained with, to the best of HGC's and the
Company's knowledge, financially sound and reputable insurance companies, funds
or underwriters. Such policies of insurance are of the kinds and cover such
risks and are in such amounts and with such deductibles and exclusions as are
consistent with the customary business practice of corporations of established
reputations engaged in the same or similar businesses and similarly situated.
All such policies are in full force and effect; are sufficient for compliance by
the Company and its Subsidiaries with all requirements of law and of all
agreements to which such Persons are parties; are valid, outstanding and
enforceable policies and provide that they will remain in full force and effect
through the respective dates set forth in such schedule; and coverage thereunder
will not be reduced by or terminate or lapse by reason of, the transactions
contemplated by or referred to in this Agreement or the other Loan Documents.
SECTION 3.20. LOANS AS SENIOR INDEBTEDNESS. All indebtedness of HGC and
the Company to the Banks in respect of the principal of and interest on the
Revolving Credit Notes and all contingent liabilities of HGC and the Company in
respect of Letters of Credit constitute and will constitute "Superior
Indebtedness" under the terms of the 7% Notes and senior debt however defined
under the terms of any other instrument evidencing indebtedness which purports
to be Subordinated Debt.
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SECTION 3.21. PERFECTION OF SECURITY INTEREST. On the Effective Date,
all filings, assignments, pledges and deposits of documents or instruments shall
have been made and all other actions shall have been taken that are necessary or
advisable, under applicable law, to establish and, to the extent enumerated in
clauses (a) through (d) of Section18 of each of the Security Agreements and
clauses (a) and (b) of Section12 of the Pledge Agreement, perfect the Collateral
Agent's security interest in the Collateral. The Collateral and the Collateral
Agent's rights with respect to the Collateral are not subject to any setoff,
claims, withholdings or other defenses except as arising under applicable law.
SECTION 3.22. HGC REPRESENTATIONS AND WARRANTIES. Unless and until the
HGC Release Date has occurred, each of the representations and warranties of HGC
set forth in the HGC Credit Agreement and each of the documents and instruments
executed and delivered by HGC in connection therewith, along with the
definitions contained in such representations and warranties, are hereby
incorporated herein as if set forth herein.
SECTION 4A. EFFECTIVE DATE; CONDITIONS TO EFFECTIVENESS. This Agreement
shall not become effective and the Original Credit Agreement shall remain in
full force and effect unless and until the date (the "Effective Date") that each
of the following conditions precedent is satisfied, provided that if the
Effective Date does not occur on or before July 31, 1996 this Agreement shall be
of no further effect.
SECTION 4A.1. LOAN DOCUMENTS. (a) Each of the Loan Documents shall
have been duly executed and delivered as contemplated hereby and shall be in
full force and effect.
(b) Executed original counterparts of each of the Loan Documents
shall have been furnished to the Agent.
SECTION 4A.2. REPRESENTATIONS AND WARRANTIES TRUE. The representations
and warranties contained in Paragraph 3 shall be true and accurate on and as of
the date of this Agreement and as though made on and as of the Effective Date,
no Default shall have occurred and be continuing, and no condition shall exist,
or would result from the consummation of the transactions on the Effective Date
which, with lapse of time or the giving of notice or both, would constitute a
Default. The Banks shall have received from HGC and the Company a certificate
dated the Effective Date and signed by the President or Chief Financial Officer
of each of HGC and the Company as to the matters set forth in this Paragraph
4A.2 and Paragraph 4A.3 hereof, and as to the aggregate Maximum Drawing Amount
of all outstanding Letters of Credit on the Effective Date.
SECTION 4A.3. CORPORATE STANDING AND ACTION. The Agent shall have
received, with copies for each Bank:
(a) certificates of the Secretary of State of the State of Delaware as
to the due good standing of HGC and the qualification of the Company dated as of
a recent date,
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(b) certificates of the Secretary of State of the State of New York
and of each other state in which HGC and/or the Company is required to qualify
to do business as a foreign entity as to the good standing of HGC and/or the
qualification of the Company as a foreign entity dated as of a recent date, and
(c) a certificate of the Secretary or Assistant Secretary of each of
HGC and the Company, dated the Effective Date, certifying (i) that attached
thereto is a true and complete copy of the Certificate of Incorporation or
Limited Liability Company Agreement, as applicable, and the bylaws or operating
agreement, as applicable, of such entity, each as amended to the Effective Date,
or, with respect to HGC, that its Certificate of Incorporation and bylaws have
not been amended or supplemented since November 25, 1992, (ii) that attached
thereto is a true and complete copy of resolutions of the Board of Directors or
Board of Member Representatives, as applicable, of such entity authorizing the
execution and delivery of this Agreement, the borrowings hereunder and the
execution and delivery of the other Loan Documents to which such entity is a
party, which resolutions are in full force and effect without modification on
the Effective Date, and (iii) the incumbency and signatures of the officers of
such entity executing the Loan Documents to which such entity is a party and any
other instrument or document delivered by such entity in connection herewith or
therewith.
SECTION 4A.4. OPINION OF HGC'S AND COMPANY'S COUNSEL. The Agent shall
have received an opinion, dated the Effective Date, addressed to the Banks from
Noah Rockowitz, Vice President - General Counsel, counsel for HGC and the
Company, substantially in the form attached hereto as Exhibit F. Such counsel
may rely on the advice and opinions of Canadian counsel as to matters of
Canadian law.
SECTION 4A.5. PAYMENT OF FEES. Each of HGC and the Company shall have
authorized (in writing or verbally) the Agent to charge HGC's or the Company's
account on the Effective Date for the facility fee, the Agent's fee, the
commitment fee under the Original Credit Agreement and, if applicable, the
Letter of Credit Fee, pursuant to Paragraphs 2.1, 2.2, 1.1 and 1.11 hereof.
SECTION 4A.6. VALIDITY OF LIENS. The Security Documents shall be
effective to continue in favor of the Collateral Agent for the benefit of the
Banks a legal, valid and enforceable first priority (except for liens permitted
under Paragraph 5.13 hereof entitled to priority under applicable law) security
interest in the Collateral. All filings, recordings, deliveries of instruments
and other actions necessary or desirable in the opinion of the Collateral Agent
to protect and preserve such security interests shall have been duly effected,
except as enumerated in clauses (c) through (d) of Section18 of each of the
Security Agreements if such actions are not then required. The Collateral Agent
shall have received evidence thereof in form and substance satisfactory to the
Collateral Agent.
SECTION 4A.7. PERFECTION CERTIFICATE AND UCC SEARCH RESULTS. The
Collateral Agent shall have received from the Company, a completed and fully
executed Perfection Certificate (as defined in the Company Security Agreement)
and the results of UCC searches with respect to the Company Collateral,
indicating no liens other than liens permitted under Paragraph 5.13 hereof or
for which UCC lien releases
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satisfactory to the Collateral Agent have been delivered to the Collateral Agent
and otherwise in form and substance satisfactory to the Collateral Agent.
SECTION 4A.8. ORIGINAL CREDIT AGREEMENT. All fees, including the
Commitment Fee (as defined in the Original Credit Agreement), expenses and other
amounts payable pursuant to the Original Credit Agreement, excluding all
outstanding Revolving Credit Loans (as defined in the Original Credit Agreement)
and accrued interest thereon, shall have been paid in full.
SECTION 4A.9. HGC CREDIT AGREEMENT. The HGC Credit Agreement and all
other Loan Documents (as defined in the HGC Credit Agreement) shall have been
duly executed and delivered as contemplated thereby and shall be in full force
and effect. The conditions set forth in Paragraph 4A of the HGC Credit Agreement
shall have been satisfied or waived pursuant to the terms thereof.
SECTION 4A.10. AMENDMENT TO AVIATION REVOLVING CREDIT AGREEMENT. Each
of Aviation and the lenders which are parties to the Aviation Revolving Credit
Agreement on the Effective Date shall have executed and delivered an amendment
to the Aviation Revolving Credit Agreement which is satisfactory to the Banks in
all respects and such amendment and the Aviation Revolving Credit Agreement as
amended by such amendment shall be in full force and effect.
SECTION 4A.11. PURCHASE AGREEMENT. HGC and its Subsidiaries shall have
transferred, or have given the Company and its Subsidiaries access to, all
assets necessary for the Company and its Subsidiaries to conduct the Aviation
Services Business (including the stock of Aviation) substantially as it was
being conducted by HGC and its Subsidiaries before the transfer of assets
contemplated by Paragraph 5.2 of the Purchase Agreement (the "Contribution").
The Closing under and as defined under the Purchase Agreement shall have
occurred in accordance with the terms of such agreement. The Banks shall have
received from HGC and the Company a certificate dated the Effective Date and
signed by the President or Chief Financial Officer of each of HGC and the
Company as to the matters set forth in this Paragraph 4A.11 along with certified
copies of the fully-executed Purchase Agreement and all documents and
instruments executed or delivered in connection therewith.
SECTION 4A.12. CERTAIN ASSIGNMENTS. Chase shall have assigned such
interests, rights and obligations under the Original Credit Agreement to FNB and
EAB as shall be necessary to achieve the Commitment Percentages set forth
herein.
SECTION 4B. CONDITIONS OF REVOLVING CREDIT LOANS AND LETTERS OF CREDIT.
The obligation of the Banks to make any Revolving Credit Loan on or after the
Effective Date and the obligation of the Letter of Credit Bank, with the pro
rata participation of the Banks, to issue any Letter of Credit on or after the
Effective Date, is subject to the following conditions precedent.
SECTION 4B.1. NOTICE. In the case of Revolving Credit Loans, the Agent
shall have received from the Company in accordance with Paragraph 1.3 a written,
telegraphic or telephonic (confirmed in writing) request for Revolving Credit
Loans, signed by the
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President or the Chief Financial Officer of the Company. Such request, without
more, will constitute a certification by the Company and such officers as to the
matters set forth in Paragraphs 4B.2 and 4B.3 hereof. In the case of a Letter of
Credit, the Letter of Credit Bank shall have received from the Company in
accordance with Paragraph 1.7 a written, telegraphic or telephonic (confirmed in
writing) request for the issuance of a Letter of Credit and a signed letter of
credit application in form and substance satisfactory to the Letter of Credit
Bank (which will not contain any terms which are inconsistent with the terms of
this Agreement), each signed by the President or the Chief Financial Officer of
the Company. Such request, without more, will constitute a certification by the
Company and such officers as to the matters set forth in Paragraphs 4B.2 and
4B.3 hereof.
SECTION 4B.2. REPRESENTATIONS AND WARRANTIES TRUE. The representations
and warranties contained in Paragraph 3 shall be true and accurate in all
material respects on and as of the date of this Agreement and as though made on
and as of the date of the Revolving Credit Loan or Letter of Credit, as the case
may be (except to the extent that such representations and warranties relate to
an earlier date), no Default shall have occurred and be continuing, or would
result from the proposed Revolving Credit Loan or Letter of Credit, as the case
may be, and no condition shall exist, or would result from the proposed
Revolving Credit Loan or Letter of Credit, as the case may be, which, with lapse
of time or the giving of notice or both, would constitute a Default.
SECTION 4B.3. NO ADVERSE CHANGE. As of the date of any Revolving Credit
Loan or Letter of Credit, as the case may be, (a) there shall have been no
material adverse change since December 31, 1995 in the Aviation Services
Business and (b) there shall have been no material adverse change since the date
of the formation of the Company in the business or financial affairs of the
Company and its Subsidiaries, taken as a whole.
SECTION 4B.4. LEGALITY. The making of the Revolving Credit Loan or
Letter of Credit, as the case may be, shall not contravene any law or rule or
regulation thereunder binding upon HGC, the Company, any Subsidiary of HGC or
the Company or any Bank.
SECTION 5. COVENANTS. During the term of this Agreement and so long as
any Revolving Credit Loan, Letter of Credit or Revolving Credit Note is
outstanding or any amounts are owed hereunder or any Bank has any obligation to
make Revolving Credit Loans or the Letter of Credit Bank has any obligation to
issue, extend or renew any Letters of Credit with the pro rata participation of
the Banks, each of HGC (but only prior to the HGC Release Date) and the Company,
jointly and severally, agrees that:
SECTION 5.1. PUNCTUAL PAYMENT. It will duly and punctually pay or cause
to be paid the principal and interest on the Revolving Credit Loans, the amount
of any drawing under a Letter of Credit, the commitment fees, the Agent's fee,
the Letter of Credit Fee and all other amounts provided for in this Agreement or
in any other Loan Document, all in accordance with the terms of this Agreement
and such other Loan Documents.
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SECTION 5.2. FINANCIAL STATEMENTS AND OTHER WRITTEN MATERIALS. It will
furnish to each Bank:
(a) as soon as available but in any event within ninety days
after the end of each of its fiscal years, consolidated and
consolidating balance sheets of HGC and its Subsidiaries and of the
Company and its Subsidiaries as at the end of, and the related
consolidated and consolidating statements of income and consolidated
statements of cash flows for, such year, and all such statements shall
be in reasonable detail, prepared in accordance with generally accepted
accounting principles and accompanied by the opinion (as to
consolidated statements only and, with respect to the Company and its
Subsidiaries, only if such financial statements are required to be
publicly published) of (in form and substance reasonably satisfactory
to the Banks) independent public accountants of nationally recognized
standing selected by HGC or the Company, as applicable, and,
concurrently with such financial statements (if, with respect to the
Company and its Subsidiaries, such financial statements are required to
be publicly published) a written statement by such accountants that, in
the making of the audit necessary for their report and opinion upon
such financial statements (but without any special or additional audit
procedures for the purpose), they have obtained no knowledge of any
Default, or if in the opinion of such accountants any Default exists,
they shall disclose in such written statement the nature and status
thereof, and in either case such statement shall set forth calculations
showing compliance or noncompliance with Paragraphs 5.7 through 5.11
hereof (it being understood, however, that such accountants shall not
be liable, directly or indirectly, to anyone for failure to obtain
knowledge of any Default or the status thereof);
(b) as soon as available but in any event within sixty days after
the end of each of the first three fiscal quarters of each fiscal year
of the Company and its Subsidiaries, consolidated and consolidating
balance sheets as at the end of such fiscal quarter, and consolidated
and consolidating statements of income and consolidated cash flows for
the portion of the fiscal year then ended, all in reasonable detail and
prepared in accordance with generally accepted accounting principles,
certified by the Chief Financial Officer of the Company, subject,
however, to audit and year-end adjustments;
(c) as soon as available and if prepared in the normal course,
but in any event within 15 days of its preparation, the budget report
for the portion of the fiscal period then ended, in reasonable detail
and prepared in a manner consistent with past practices;
(d) promptly upon receipt by the Company, copies of all
management letters and other reports of substance submitted to the
Company or any Subsidiary of the Company by independent public
accountants in connection with any annual or interim audit of the books
of the Company or such Subsidiary by such accountants;
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(e) promptly as they become available, (i) copies of all such
financial statements, reports and proxy statements as it shall send to
or make available to its stockholders, and (ii) copies of all reports
filed by it with the Securities and Exchange Commission;
(f) concurrently with each delivery of financial statements
pursuant to clauses (a) or (b) of this Paragraph 5.2, a certificate
signed by the Chief Financial Officer of the Company setting forth
calculations showing, when required, compliance with Paragraphs 5.7
through 5.11 hereof, certifying as to the matters set forth in
Paragraph 5.16(a)(v) hereof with respect to dispositions of equipment
made during the period covered by such financial statements and stating
that a review of the activities of, the Company and its Subsidiaries
during the period covered by such financial statements has been made
under the immediate supervision of the signers with a view to
determining whether, during such period, the Company has kept,
observed, performed and fulfilled each and every covenant and condition
of this Agreement and either (i) stating that, to the best of their
knowledge and belief, there neither exists on the date of such
certificate, nor existed during such period, any Default, or (ii) if
any such Default existed or exists, specifying the nature thereof, the
period of existence thereof and what action the Company has taken, is
taking or proposes to take with respect thereto; and
(g) with reasonable promptness, such other information, including,
without limitation, quarterly reports as to the aging of accounts
receivable, as any Bank may reasonably request.
SECTION 5.3. INSPECTION. The Company will permit any representative or
representatives designated by any Bank, at such Bank's expense and subject to
applicable laws and regulations, to visit and inspect any of the properties of
the Company and its Subsidiaries and on request to examine the books of account,
records, reports and other papers of the Company and its Subsidiaries (and to
make copies thereof and extracts therefrom) and to discuss the affairs and
finances of the Company and its Subsidiaries with its officers, all at such
reasonable times and as often as may be reasonably requested.
SECTION 5.4. CONDUCT OF BUSINESS. The Company and each of its
Subsidiaries will:
(a) do or cause to be done all things necessary to keep in full
force and effect its existence, rights and franchises and will maintain
and keep in full force and effect all licenses and permits necessary to
the proper conduct of its business;
(b) not change the nature or character of its business from that
described in the Proxy, after giving effect to the Contribution and the
transactions contemplated under the Purchase Agreement, except that the
Company or any Subsidiary of the Company, as the case may be, may
withdraw from any business activity which it deems unprofitable or
unsound; and
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(c) not, except for arm's length transactions pursuant to which
the Company or such Subsidiary makes payments in the ordinary course of
business upon terms no less favorable than such entity could obtain
from third parties and for transactions disclosed in the Company's
financial statements or public filings, enter into any transaction with
any officer, director, Shareholder or employee of the Company or any
Subsidiary of the Company (other than as Shareholders or for services
as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services
to or by, providing for rental of real or personal property to or from,
or otherwise requiring payments to or from any officer, director,
Shareholder or employee or any corporation, partnership, trust or other
entity in which to the knowledge of the Company any officer, director,
Shareholder, or any employee has a substantial interest or is an
officer, director, trustee or partner.
SECTION 5.5. MAINTENANCE AND INSURANCE. The Company will maintain and
keep its properties, and will cause each of its Subsidiaries to maintain and
keep its properties, in good repair, working order and condition, and from time
to time the Company will make and will cause each of its Subsidiaries to make
all needed and proper repairs, renewals, replacements, additions and
improvements thereto so that its business may be properly and advantageously
conducted at all times in accordance with the terms of this Agreement. The
Company will maintain and will cause each of its Subsidiaries to maintain, with
financially sound and reputable insurers, insurance with respect to its
properties and business against such casualties and contingencies, of such types
and in such amounts as is customary in the case of corporations of established
reputations engaged in the same or similar businesses and similarly situated.
SECTION 5.6. TAXES. The Company will pay or cause to be paid and
discharged all taxes, assessments or governmental charges on or against it or
any of its Subsidiaries or its or their properties, sales and activities, or any
part thereof, or upon the income or profits therefrom prior to the time when
they become delinquent, as well as all claims for labor, materials or supplies
that if unpaid might by law become a lien or charge upon any of its or their
properties provided that this covenant shall not apply to any tax, assessment,
charge, levy or claim which is being contested in good faith and with respect to
which adequate reserves have been established and are being maintained, and
provided further that the Company and each of its Subsidiaries will pay all
taxes, assessments, charges, levies and claims forthwith upon the commencement
of proceedings to foreclose any lien that may have attached as security
therefor.
SECTION 5.7. RATIO OF CONSOLIDATED LIABILITIES TO EFFECTIVE NET WORTH.
The Company will not, as at the end of each fiscal quarter in each fiscal year
of the Company, permit the ratio of (a) Consolidated Liabilities less
Subordinated Debt to (b) Effective Net Worth to equal or exceed 1.875 to 1.00.
SECTION 5.8. EFFECTIVE NET WORTH. The Company will not, as at the end
of each fiscal quarter in each fiscal year of the Company, permit Effective Net
Worth to be less than $16,000,000 at June 30, 1996 and $18,000,000 at the end of
each fiscal quarter thereafter, which requirement shall increase on June 30 of
each year beginning
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June 30, 1997 by 25% of positive Consolidated Net Income for the fiscal
year of the Company ending on such date, with no deductions for losses,
provided that at no time shall the required Effective Net Worth under
this Paragraph 5.8 exceed $25,000,000.
SECTION 5.9. RATIO OF CONSOLIDATED EBDIT TO CONSOLIDATED CASH INTEREST.
The Company will not, as at the end of each fiscal quarter in each fiscal year
of the Company, permit the ratio of the Consolidated EBDIT for the period
consisting of such fiscal quarter and the three preceding fiscal quarters of the
Company and its Subsidiaries to Consolidated Cash Interest for the same period
to be less than 3.00 to 1.00. With respect to the fiscal quarters of the Company
ended on or prior to March 31, 1997, Consolidated EBDIT and Consolidated Cash
Interest shall be calculated based on the pro forma financial statements
referred to in Paragraph 3.5 hereof.
SECTION 5.10. CONSOLIDATED NET LOSS. The Company will not incur any
Consolidated Net Loss for any fiscal year of the Company.
SECTION 5.11. DEBT SERVICE COVERAGE RATIO. The Company will not as at
the end of each fiscal quarter in each fiscal year of the Company permit the
ratio of (i) Consolidated EBDIT for the period consisting of the four
consecutive fiscal quarters of the Company ending on such date (each such
period, a "Measuring Period"), minus the aggregate amount of federal and state
income taxes paid in cash by the Company and its Subsidiaries (net of any cash
refunds received by the Company and its Subsidiaries) during such period to (ii)
Consolidated Debt Service determined with respect to the Measuring Period (as
set forth in the definition of Consolidated Debt Service), to be less than 1.30
to 1.00. With respect to the fiscal quarters of the Company ended on or prior to
March 31, 1997, Consolidated EBDIT and Consolidated Debt Service shall be
calculated based on the pro forma financial statements referred to in Paragraph
3.5 hereof.
SECTION 5.12. LIMITATION ON BORROWING. Neither the Company nor any of
its Subsidiaries will assume, incur or suffer to exist any indebtedness for
borrowed money, except:
(a) the indebtedness existing on the date of this Agreement and
shown on Schedule 5.12(a) attached hereto and extensions, renewals and
refinancings thereof provided that neither the aggregate principal
amount of such indebtedness nor the interest rate applicable thereto is
increased as a result of such extension, renewal or refinancing;
(b) the Revolving Credit Loans and the Aviation Loans;
(c) Subordinated Debt consisting of not more than $29,000,000 in
aggregate principal amount of 7% Notes;
(d) indebtedness of Subsidiaries (other than Aviation and any
other Subsidiary, direct or indirect, of the Company not organized
under the laws of a State of the United States of America (the "Foreign
Subsidiaries")) to the Company;
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(e) indebtedness on account of capitalized leases permitted by
Paragraph 5.14 or 5.16(a)(iv);
(f) additional indebtedness of the Company and its Subsidiaries
(including the amount of indebtedness from time to time outstanding in
transactions permitted by Paragraph 5.13(f)(ii)) to persons other than
the Company or any of its Subsidiaries of not more than $5,000,000 in
the aggregate outstanding at any one time;
(g) indebtedness of Aviation and the Foreign Subsidiaries to the
Company and its Subsidiaries to the extent permitted by Paragraph
5.15(k) hereof;
(h) unsecured Indebtedness of the Company to HGC incurred as a
result of the conversion of all or a portion of the 7% Notes into
common stock of HGC in an amount not to exceed the principal amount of
the 7% Notes so converted and any principal, premium, if any, interest
and other payments made by HGC in respect of the 7% Notes, provided
that such indebtedness is expressly subordinated to the payment and
performance of the Obligations upon substantially the terms set forth
in Schedule 5.12(h) attached hereto; and
(i) (i) the Guaranty, (ii) each Subsidiary Guaranty, and (iii)
unsecured guaranties by the Company of obligations of Subsidiaries
(other than Aviation and the Foreign Subsidiaries) aggregating no more
than $5,000,000 at any one time outstanding.
SECTION 5.13. RESTRICTION ON LIENS. Neither the Company nor any of its
Subsidiaries will create, incur, assume or suffer to exist any mortgage, pledge,
security interest, lien or other charge or encumbrance upon or with respect to
any of its property or assets, or assign or otherwise convey any right to
receive income, except:
(a) liens for taxes, fees, assessments and other governmental
charges to the extent that payment of the same may be postponed or is
not required in accordance with the provisions of Paragraph 5.6;
(b) landlords' liens in respect of rent not in default or liens
in respect of pledges or deposits under worker's compensation,
unemployment insurance, social security laws or similar legislation or
in connection with appeal and similar bonds incidental to litigation,
mechanics', laborers' and materialmen's and similar liens, if the
obligations secured by such liens are not then delinquent, and liens
securing the performance of bids, tenders, contracts (other than for
the payment of money) and statutory obligations incidental to the
conduct of the business of the Company and its Subsidiaries and which
do not in the aggregate materially detract from the value of the
property of the Company and its Subsidiaries, or materially impair the
use thereof in the operation of their businesses;
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(c) judgment liens which shall not have been in existence for a
period longer than thirty days after the creation thereof or, if a stay
of execution shall have been obtained, for a period longer than thirty
days after the expiration of such stay;
(d) liens securing indebtedness permitted by Paragraph 5.12(d)
hereof (other than indebtedness of any Secured Guarantor (as such times
as such Secured Guarantor's Subsidiary Security Agreement is in effect)
to the Company);
(e) liens securing the Obligations;
(f) (i) liens in existence on the date of this Agreement, all of
the same of any materiality being shown on Schedule 5.13 attached
hereto, (ii) mortgages on real property now owned or hereafter acquired
(provided that if any such mortgage is not created in connection with
the purchase of or acquisition of an interest in real property and
secures indebtedness exceeding an aggregate of $750,000 incurred in any
single fiscal year or $1,500,000 incurred during the term of this
Agreement, then the Aggregate Loan Limit shall be reduced by an amount
equal to such excess, with such reductions to be applied in accordance
with the provisions of Paragraph 1.4 hereof), and (iii) similar liens
securing any renewals, extensions or refinancings of the indebtedness
secured by the foregoing permitted liens, provided that the amount of
such indebtedness is not increased and such liens are not extended to
cover assets or properties (other than real property) not covered on
the date of this Agreement;
(g) liens held by vendors on personal property sold by such
vendors under conditional sales contracts or other similar security
agreements;
(h) liens on assets of Aviation securing obligations owed by
Aviation to the Company, provided that, from and after the Effective
Date and for so long as the Assignment Agreement remains in effect,
such liens have been subordinated and assigned by the Company to the
lenders that are or may become parties to the Aviation Revolving Credit
Agreement as security for the obligations of the Company to such
lenders under the Guaranty;
(i) liens securing the Obligations (as defined in the Aviation
Revolving Credit Agreement);
(j) liens on assets of each Secured Guarantor securing such
corporation's obligations under its Subsidiary Guaranty;
(k) other liens and encumbrances incidental to the conduct of its
business or the ownership of its assets which were not incurred in
connection with the borrowing of money or the obtaining of advances of
credit, and which do not in the aggregate materially detract from the
value of its assets or materially impair the use thereof in the
operation of its business; and
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(l) liens incurred to secure indebtedness permitted by Paragraph
5.12(e).
The Company will not and will not permit any of its Subsidiaries to
enter into or permit to exist or be binding on any of such persons any contract
or agreement which prohibits the Company or any Subsidiary of the Company from
granting a lien on any or all of its property or assets to the Banks except for
(A) revenue and service contracts or agreements concerning a single asset or
group of assets which contain usual and customary terms for contracts or
agreements of such type and which prohibit the granting of any lien on or
security interest in such asset or group of assets, (B) other agreements
permitted under Paragraph 5.13(f) hereof, provided that such agreements secure
purchase money indebtedness permitted by Paragraph 5.12 hereof incurred in
connection with the acquisition of such property and such agreements cover only
the property so acquired, (C) encumbrances and restrictions arising under
applicable law, (D) customary provisions restricting subletting or assignment of
any lease governing a leasehold interest of the Company or any of the its
Subsidiaries, (E) customary restrictions on dispositions of real property
interests found in reciprocal easement agreements of the Company or any of its
Subsidiaries, and (F) any agreement relating to permitted indebtedness incurred
by a Subsidiary of the Company prior to the date on which such Subsidiary was
acquired by the Company or any other Subsidiary of the Company and outstanding
on such acquisition date.
SECTION 5.14. LIMITATION ON LEASE COMMITMENTS. The aggregate of the
rental payments of the Company and its Subsidiaries with respect to leases of
personal property having original terms of three years or more, other than
leases on which a Subsidiary of the Company is lessee and the Company is lessor,
shall not exceed $7,500,000 at any time.
SECTION 5.15. INVESTMENTS AND CONTINGENT LIABILITIES. Neither the
Company nor any of its Subsidiaries will make or have outstanding at any time
any investments or contingent liabilities, including, without limitation, any
investments or contingent liabilities in or with respect to Hudson Kohala Inc.,
whether by way of loan, advance, guaranty, letter of credit exposure, extension
of credit, purchase of stocks, notes, bonds or other securities or evidences of
indebtedness, or acquisition of limited or general partnership interests, other
than:
(a) those in existence on the date of this Agreement and shown on
Schedule 5.15 attached hereto, and any renewals, extensions or
refinancings thereof, provided that the amount thereof is not
increased;
(b) investments in marketable, investment grade, direct or
guaranteed obligations of the United States of America or any State or
municipality thereof which mature within ten years from the date of
purchase;
(c) investments in demand deposits, certificates of deposits,
time deposits and notes of any Bank or any United States bank having
total capital and unimpaired surplus of at least $1,000,000,000;
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(d) securities commonly known as "commercial paper", or corporate
bonds which mature within ten years from the date of purchase, in each
case issued by a corporation organized and existing under the laws of
the United States of America or any state thereof which at the time of
purchase have been rated by either or both of Moody's Investors
Service, Inc. and Standard and Poor's Ratings Group and the ratings for
such commercial paper are not less than "P-1" if rated by Moody's
Investors Service, Inc. and not less than "A-1" if rated by Standard
and Poor's Ratings Group or, for such bonds, are not less than "Aa" if
rated by Moody's Investors Service, Inc. and not less than "AA" if
rated by Standard & Poor's Ratings Group;
(e) (i) the Guaranty, (ii) each Subsidiary Guaranty, and (iii)
unsecured guaranties by the Company of obligations of Subsidiaries
(other than Aviation and the Foreign Subsidiaries) aggregating no more
than $5,000,000 at any one time outstanding;
(f) those arising in the ordinary course of business or
consistent with the past business practices of the Company and its
Subsidiaries;
(g) investments in Subsidiaries (other than Aviation and the
Foreign Subsidiaries);
(h) letters of credit (including Letters of Credit) of not more
than $7,000,000 in the aggregate at any one time outstanding;
(i) with respect to Aviation, investments permitted under the
Aviation Revolving Credit Agreement;
(j) in addition to the foregoing, investments by the Company and
its Subsidiaries not exceeding $3,000,000 in the aggregate at any one
time outstanding;
(k) investments in Aviation and the Foreign Subsidiaries and
investments in Joint Ventures, provided that the aggregate amount by
which such investments increase during the period commencing on the
date hereof and ending on any date of determination (disregarding for
purposes of this calculation an investment of one type which is
replaced by an investment of another type in an identical amount) shall
not exceed $5,000,000;
(l) investments by the Company in LAGS or an affiliate of LAGS in
an amount not to exceed the amount of the deferred purchase price owed
to the Company under Paragraph 1.3 of the Purchase Agreement; and
(m) investments by the Company in a passenger handling services
entity which is an affiliate of LAGS or Deutsche Lufthansa AG, as set
forth in Paragraph 10.3 of the Purchase Agreement.
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SECTION 5.16. MERGER AND SALE OF ASSETS. (a) The Company will not and
will not permit any of its Subsidiaries to liquidate, consolidate or merge with
or into any other corporation, or sell, lease, transfer or otherwise dispose of
any material portion of its assets, other than in the ordinary course of
business, provided that:
(i) a Subsidiary of the Company may be liquidated, merged or
consolidated with the Company if the Company shall be the surviving
corporation, or with any one or more other Subsidiaries of the Company
if the successor formed by or resulting from such liquidation, merger
or consolidation shall be a Subsidiary of the Company, provided that if
such Subsidiary is a Secured Guarantor the Collateral Agent shall have
received 30 days' prior written notice of such merger or consolidation
and such Secured Guarantor and the successor formed by or resulting
from such merger or consolidation shall have delivered all such
documents, instruments and opinions of counsel as the Collateral Agent
may have reasonably requested to preserve and continue its first
priority, perfected security interest in and lien on the assets of such
Secured Guarantor;
(ii) (A) any Subsidiary of the Company that is not a Secured
Guarantor may sell, lease, transfer or otherwise dispose of its assets
to the Company or another Subsidiary of the Company, and any Secured
Guarantor may sell, lease, transfer or otherwise dispose of its assets
to the Company or any other Secured Guarantor if, in each case, after
giving effect to such merger, consolidation, sale, lease, transfer or
other disposition, no Default exists, and (B) any Secured Guarantor may
sell Collateral to any Subsidiary of the Company that is not a Secured
Guarantor to the extent that the limitations of Paragraph 5.16(a)(v)
are not exceeded by giving effect to such sale and if after giving
effect to such sale no Default exists;
(iii) the Company or any Subsidiary of the Company may
consolidate, liquidate or merge with any other corporation if (A) the
Company or the Subsidiary of the Company is the survivor in such
transaction, (B) the transaction qualifies as a tax-free reorganization
under Section 368 of the Internal Revenue Code of 1986, as amended, and
(C) after giving effect to such transaction, no Default exists or would
result from such consolidation or merger;
(iv) the Company or any of its Subsidiaries may enter into sale
and leaseback transactions and may sell assets (other than Collateral)
at reasonable commercial prices in the ordinary course of business,
provided that all cash proceeds of any sale and leaseback transaction
and cash proceeds in excess of $500,000 from the sale of any single
asset shall, as received, but after deducting all direct out-of-pocket
expenses resulting from the transaction, be used by the Company to
reduce the Aggregate Loan Limit by such amount, with such reductions to
be applied in accordance with the provisions of Paragraph 1.4 hereof;
and
(v) the Company or any Secured Guarantor may dispose of
(including by sale to a Subsidiary that is not a Secured Guarantor)
Collateral consisting of
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equipment of such corporation, provided that (A) such equipment is no
longer needed and is not used in the operation of such corporation's
businesses, (B) such disposition is in the ordinary course of business,
consistent with past practices, and (C) the aggregate net book value of
such equipment and all other equipment disposed of by the Company and
the Secured Guarantors pursuant to this Paragraph 5.16(a)(v) (other
than equipment that has been sold by the Company or any Secured
Guarantor pursuant to this Paragraph 5.16(a)(v) to the Company or any
Secured Guarantor) does not exceed $1,000,000 in any fiscal year.
(b) Each of the Banks and the Agent hereby consents to the
Contribution.
SECTION 5.17. DIVIDENDS. The Company may declare and pay dividends or
purchase, redeem or otherwise retire any of its membership interests so long as
(a) no Default has occurred and is continuing and no condition which would, with
either or both the giving of notice or the lapse of time, result in a Default
has occurred and is continuing at the time such dividend is declared or paid or
such membership interests are purchased, redeemed or otherwise retired and (b)
no Default or condition which would, with either or both the giving of notice or
the lapse of time, result in a Default shall result from the payment of such
dividend or the purchase, redemption or retirement of such membership interests,
provided that no portion of the deferred purchase price owed to the Company from
LAGS (or an affiliate of LAGS) under Paragraph 1.3 of the Purchase Agreement may
be distributed until such purchase price is paid in cash to the Company by LAGS
(or such affiliate).
SECTION 5.18. LIMITATIONS ON CAPITAL EXPENDITURES. The Company or any
of its Subsidiaries, in the aggregate, shall not make any expenditures for the
acquisition or improvement of capital assets unless (a) such capital
expenditures are made in connection with its business as described in Paragraph
5.4(b) hereof and (b) the aggregate amount of all such capital expenditures does
not exceed $16,000,000 in any fiscal year of the Company.
SECTION 5.19. SUBORDINATED DEBT. (a) Notwithstanding any other
provision of this Agreement, HGC and the Company may (i) with the prior written
consent of the Majority Banks, prepay in whole or in part at any time, any of
its Subordinated Debt except that incurred after the date hereof, and (ii)
without the consent of the Majority Banks, redeem, prepay, convert or otherwise
purchase all outstanding 7% Notes with the proceeds received by the Company in
connection with the transactions contemplated under the Purchase Agreement and
prepay any Subordinated Debt of the Company to HGC described in Paragraph
5.12(h) hereof, provided that in each case of redemption, prepayment, conversion
or purchase no Default has occurred and is continuing and no condition which
would, with either or both the giving of notice or lapse of time, result in a
Default has occurred and is continuing and, after giving effect to any such
redemptions, prepayments, conversions or purchases, no Default will occur and be
continuing and no condition which would, with either or both the giving of
notice or the lapse of time, result in a Default will occur or be continuing.
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(b) Neither HGC nor the Company will amend, modify or waive any
term of, or permit the amendment, modification or waiver of any term of, any
Subordinated Debt if such amendment, modification or waiver would in the
reasonable judgment of the Agent have any material adverse effect on the
interests of the Banks hereunder.
SECTION 5.20. NOTICES.
(a) Defaults. Each of HGC and the Company will promptly notify
the Agent and each of the Banks in writing of the occurrence of any Default. If
any party shall give any notice or take any other action in respect of a claimed
default (whether or not constituting a Default) under this Agreement or any
other note, evidence of indebtedness, indenture or other obligation in an
aggregate principal amount of $1,500,000 or more to which or with respect to
which the Company or any of its Subsidiaries is a party or obligor, whether as
principal, guarantor, surety or otherwise, HGC and the Company shall forthwith
give written notice thereof to the Agent and each of the Banks, describing the
notice or action and the nature of the claimed default.
(b) Environmental Events. Each of HGC and the Company will
promptly give notice to the Agent and each of the Banks (i) upon HGC's or the
Company's obtaining knowledge of any material violation of any Environmental Law
regarding the Real Estate or operations of the Company or any Subsidiary of the
Company; (ii) upon HGC's or the Company's obtaining knowledge of any material
known Release of any Hazardous Substances at, from, or into the Real Estate
which it reports in writing or is reportable by it in writing (or for which any
written report supplemental to any oral report is made) to any governmental
authority and which might reasonably be expected to materially adversely affect
the business or financial condition of the Company and its Subsidiaries, taken
as a whole; (iii) upon becoming aware of any inquiry relating to a material
environmental liability or a material potential environmental liability,
including any notice of material violation of any Environmental Laws or of any
material Release of Hazardous Substances, including a notice or claim of
material liability or material potential responsibility from any third party
(including without limitation any federal, state or local governmental
officials), or any formal inquiry, proceeding, demand or investigation with
regard to (A) the Company's or any person's operation of the Real Estate, (B)
material contamination on, from or into the Real Estate, or (C) investigation or
remediation of offsite locations at which the Company, any Subsidiary of the
Company or any such person's predecessors are alleged to have directly or
indirectly Disposed of material quantities of Hazardous Substances, or (D) upon
the Company's obtaining knowledge that any material expense or loss has been
incurred by such governmental authority in connection with the assessment,
containment, removal or remediation of any Hazardous Substances with respect to
which the Company or any Subsidiary of the Company may be liable or for which a
lien may be imposed on the Real Estate.
(c) Notice of Litigation and Judgments. The Company will, and
will cause each of its Subsidiaries to, give notice to the Agent and each of the
Banks in writing within fifteen (15) days of becoming aware of any material
litigation or
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proceedings threatened in writing or any pending litigation and proceedings or
any material change in any existing litigation affecting the Company or any of
its Subsidiaries or to which the Company or any of its Subsidiaries is or
becomes a party involving an uninsured claim against the Company or any of its
Subsidiaries that could reasonably be expected to have a materially adverse
effect on the Company and its Subsidiaries, taken as a whole and stating the
nature and status of such litigation or proceedings or nature of the material
change in such existing litigation or proceedings, as the case may be. The
Company will, and will cause each of its Subsidiaries to, give notice to the
Agent and each of the Banks, in writing, in form and detail satisfactory to the
Agent, within ten (10) days of any judgment not covered by insurance, final or
otherwise, against the Company or any of its Subsidiaries in an amount in excess
of $500,000.
(d) Proceeds. The Company will promptly notify the Agent and each
of the Banks of the receipt of any proceeds realized by the Company or its
Subsidiaries from (i) sales of assets and leaseback transactions permitted by
Paragraph 5.16(a)(iv), and (ii) mortgages contemplated by the first
parenthetical of clause (ii) of Paragraph 5.13(f).
SECTION 5.21. EXISTENCE; MAINTENANCE OF PROPERTIES. (a) The Company (i)
will cause all of its properties and those of its Subsidiaries used or useful in
the conduct of its business or the business of its Subsidiaries to be maintained
and kept in good condition, repair and working order and supplied with all
necessary equipment and (ii) will cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof, all as in the
judgment of the Company may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
provided that nothing in this Paragraph 5.21 shall prevent the Company from
discontinuing the operation and maintenance of any of its properties or any of
those of its Subsidiaries if such discontinuance is, in the judgment of the
Company, desirable in the conduct of its or their business and that do not in
the aggregate materially adversely affect the business of the Company and its
Subsidiaries on a consolidated basis.
(b) Each of HGC and the Company will, and HGC will cause each of its
Subsidiaries to, use its best efforts (which best efforts shall not be required
to include modification of current or future terms of agreements or offering or
agreeing to any economic consideration) to cause all of the operating agreements
and contracts of HGC and its Subsidiaries with respect to the Aviation Services
Business which are not transferred to the Company or any of its Subsidiaries on
the Effective Date to be transferred to the Company or any of its Subsidiaries
as soon as practicable.
SECTION 5.22. COMPLIANCE WITH LAWS, CONTRACTS, LICENSES, AND PERMITS.
The Company will, and will cause each of its Subsidiaries to, comply in all
material respects with (a) the applicable laws and regulations wherever its
business is conducted, including all Environmental Laws, (b) the provisions of
its organizational documents and by-laws or operating agreement, as applicable,
(c) all material agreements and instruments by which it or any of its properties
may be bound and (d) all applicable decrees, orders, and judgments. If any
authorization, consent, approval,
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permit or license from any officer, agency or instrumentality of any government
shall become necessary or required in order that the Company or any of its
Subsidiaries may fulfill any of its obligations hereunder or in any document or
instrument executed and delivered in connection with this Agreement to which
HGC, the Company or such Subsidiary is a party, HGC or the Company will, or (as
the case may be) will cause such Subsidiary to, immediately take or cause to be
taken all reasonable steps within the power of HGC, the Company or such
Subsidiary to obtain such authorization, consent, approval, permit or license
and furnish the Agent and the Banks with evidence thereof.
SECTION 5.23. EMPLOYEE BENEFIT PLANS. (a) The Company will (i) promptly
upon request by any Bank or the Agent, furnish to the Agent and such Bank a copy
of the most recent actuarial statement required to be submitted under
Section103(d) of ERISA and Annual Report, Form 5500, with all required
attachments, in respect of each Guaranteed Pension Plan and (ii) promptly upon
receipt or dispatch, furnish to the Agent any notice, report or demand sent or
received in respect of a Guaranteed Pension Plan under Sections 302, 4041,
4042, 4043, 4063, 4065, 4066 and 4068 of ERISA, or in respect of a Multiemployer
Plan, under Sections 4041A, 4202, 4219, 4242, or 4245 of ERISA.
(b) Neither the Company nor any ERISA Affiliate will:
(i) engage in any "prohibited transaction" within the
meaning of Sections 406 of ERISA or Sections 4975 of the Code which
could result in a material liability for the Company or any of its
Subsidiaries; or
(ii) permit any Guaranteed Pension Plan to incur an
"accumulated funding deficiency", as such term is defined in Section
302 of ERISA, whether or not such deficiency is or may be waived; or
(iii) fail to contribute to any Guaranteed Pension Plan to an
extent which, or terminate any Guaranteed Pension Plan in a manner
which, could result in the imposition of a lien or encumbrance on the
assets of the Company or any of its Subsidiaries pursuant to
Section 302(f) or Section 4068 of ERISA; or
(iv) permit or take any action which would result in the
aggregate benefit liabilities (with the meaning of Section4001 of
ERISA) of all Guaranteed Pension Plans exceeding the value of the
aggregate assets of such Plans, disregarding for this purpose the
benefit liabilities and assets of any such Plan with assets in excess
of benefit liabilities, by more than the amount set forth in Paragraph
3.17(c).
SECTION 5.24. USE OF PROCEEDS. The Company and HGC will use the
proceeds of the Revolving Credit Loans solely for the purposes set forth in
Paragraph 3.9 hereof. The Company will obtain Letters of Credit solely for the
purposes set forth in Paragraph 1.7 hereof.
SECTION 5.25. LIMITED LIABILITY AGREEMENT. The Company will not effect
or permit any change in or amendment to the terms of its Limited Liability
Company Agreement
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if such change or amendment would have a material adverse effect on HGC or the
interests of the Banks hereunder and under the other Loan Documents.
SECTION 5.26. COVENANTS IN HGC CREDIT AGREEMENT. Unless and until the
HGC Release Date has occurred, HGC shall observe and comply, and shall cause its
Subsidiaries to observe and comply, with each of the covenants of HGC and its
Subsidiaries set forth in the HGC Credit Agreement and the documents and
instruments executed and delivered in connection therewith and such covenants
and the definitions contained in such covenants shall be incorporated herein as
if set forth herein.
SECTION 5.27. FURTHER ASSURANCES. Each of HGC and the Company will, and
will cause each of its Subsidiaries to, execute and deliver any and all such
instruments and documents, and take all such other action, as may reasonably be
required by the Agent in order to perfect, insure and continue the rights,
interests and powers of the Agent in respect of any collateral for the Revolving
Credit Loans and the Revolving Credit Notes and the rights and interests of the
Banks under this Agreement.
SECTION 6. DEFAULTS. If any of the following events (each a "Default")
shall occur:
SECTION 6.1. the Company or HGC shall fail to pay any principal of the
Revolving Credit Loans when due (whether at any stated maturity date therefor or
upon declaration or acceleration or otherwise), or shall fail to pay any fee or
any interest on the Revolving Credit Loans or any other amount due hereunder
(other than the Agent's fee due under Paragraph 2.1 hereof) in connection with
the Revolving Credit Loans within ten days after the due date thereof, or the
Company or HGC shall fail to reimburse the Letter of Credit Bank on the Business
Day after any drawing under a Letter of Credit, or the Company or HGC shall fail
to pay the Letter of Credit Fee or any other amounts in respect of Letters of
Credit within ten days after the due date thereof, or the Company or HGC shall
fail to pay the Agent's fee payable pursuant to Paragraph 2.1 hereof when due
and such failure shall continue for ten days after written notice thereof has
been given to the Company and HGC by the Agent;
SECTION 6.2. the Company shall fail to perform or violate any covenant
contained in any of Paragraphs 5.5 through 5.20 or 5.25 hereof;
SECTION 6.3. the Company or HGC shall fail to perform or violate any
term, covenant or agreement herein contained (other than those specified in
Paragraphs 6.1 and 6.2) and such failure shall continue for five days as to a
failure under Paragraph 5.2 or as to a failure under Paragraph 5.27 and thirty
days as to a failure under other paragraphs, in each case after written notice
thereof has been given to HGC and the Company by any Bank;
SECTION 6.4. the Company or any Guarantor shall fail to perform any
term, covenant or agreement contained in any of the Security Documents;
SECTION 6.5. any representation or warranty of the Company or HGC in
Paragraph 3 hereof or in any other Loan Document, or any representation or
warranty of any of the
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Guarantors in any of the Loan Documents to which such Guarantor is a party shall
prove to have been false in any material respect upon the date when made or
deemed to have been made or repeated;
SECTION 6.6. the Company or any Subsidiary of the Company shall fail to
pay at maturity, or within any applicable period of grace, any obligation or
obligations for borrowed monies or advances, or fail to observe or perform
(within any appropriate grace period, if any) any term, covenant or agreement
contained in any agreement by which it is bound, evidencing or securing borrowed
monies or advances in an aggregate principal amount of $1,500,000 or more;
SECTION 6.7. (a) prior to the Collateral Release Date or the HGC
Release Date, any person or group of persons (within the meaning of Section 13
or 14 of the Securities Exchange Act of 1934, as amended), other than any
employee benefit plan or plans (within the meaning of Section 3(3) of ERISA) of
HGC or any of its Subsidiaries and other than shareholders of HGC which have
filed with the Securities and Exchange Commission prior to the date of the Proxy
Schedules 13D or 13G pursuant to the Securities Exchange Act of 1934, as
amended, with respect to the securities of HGC, shall hereafter have acquired
beneficial ownership (within the meaning of Rule 13d-3 promulgated by the
Securities and Exchange Commission under said act) of more than 50% in voting
power of the outstanding voting stock of HGC, or during any period of twelve
consecutive calendar months, individuals who were directors of HGC on the first
day of such period shall cease to constitute a majority of the board of
directors of HGC, other than because of replacement as a result of death or
disability of one or more such directors or replacement with the approval of a
majority of those individuals who were members of the board of directors of HGC
on the first day of such period or a majority of the directors of HGC appointed
thereafter with the approval of such individuals;
(b) HGC shall own, directly or indirectly, less than 51% of the
membership interests of the Company at any time;
SECTION 6.8. HGC (prior to the Collateral Release Date or the HGC
Release Date), the Company, any Subsidiary of HGC (prior to the Collateral
Release Date or the HGC Release Date) or any Subsidiary of the Company shall
make an assignment for the benefit of creditors, or admit in writing its
inability to pay or generally fail to pay its debts as they mature or become
due, or shall petition or apply for the appointment of a trustee or other
custodian, liquidator or receiver of HGC, the Company or any Subsidiary of HGC
or the Company or of any substantial part of the assets of HGC, the Company or
any Subsidiary of HGC or the Company or shall commence any case or other
proceeding relating to HGC, the Company or any Subsidiary of HGC or the Company
under any bankruptcy, reorganization, arrangement, insolvency, readjustment of
debt, dissolution or liquidation or similar law of any jurisdiction, now or
hereafter in effect, or shall take any action to authorize or in furtherance of
any of the foregoing, or if any such petition or application shall be filed or
any such case or other proceeding shall be commenced against HGC (prior to the
Collateral Release Date or the HGC Release Date), the Company, any Subsidiary of
HGC (prior to the Collateral Release Date or the HGC Release Date) or any
Subsidiary of the Company
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and HGC, the Company or any of such Subsidiaries shall indicate its approval
thereof, consent thereto or acquiescence therein;
SECTION 6.9. a decree or order is entered appointing any such trustee,
custodian, liquidator or receiver or adjudicating HGC (prior to the Collateral
Release Date or the HGC Release Date), the Company, any Subsidiary of HGC (prior
to the Collateral Release Date or the HGC Release Date) or any Subsidiary of the
Company bankrupt or insolvent, or approving a petition in any such case or other
proceeding, or a decree or order for relief is entered in respect of HGC (prior
to the Collateral Release Date or the HGC Release Date), the Company, any
Subsidiary of HGC (prior to the Collateral Release Date or the HGC Release Date)
or any Subsidiary of the Company in an involuntary case under federal bankruptcy
laws as now or hereafter constituted;
SECTION 6.10. the Company or any Subsidiary of the Company shall suffer
any judgment in excess of $1,500,000 which is not covered by insurance to be
entered against it, or any writ of attachment or execution or any similar
process to be issued or levied against a substantial part of its property, which
judgment, writ or process is not discharged, released, stayed, bonded or vacated
within thirty days after its entry, issue or levy;
SECTION 6.11. if this Agreement or any of the other Loan Documents
shall be cancelled, terminated, revoked or rescinded otherwise than in
accordance with the terms thereof or with the express prior written agreement,
consent or approval of the Banks, or any action at law or in equity or other
legal proceeding to cancel, revoke or rescind any of this Agreement or any of
the other Loan Documents shall be commenced by or on behalf of HGC, the Company
or any Subsidiary of the Company party thereto or any of their respective
stockholders, or any court or any other governmental or regulatory authority or
agency of competent jurisdiction shall make a determination that, or issue a
judgment, order, decree or ruling to the effect that, any one or more of this
Agreement or any of the other Loan Documents is illegal, invalid or
unenforceable in accordance with the terms hereof or thereof;
SECTION 6.12. with respect to any Guaranteed Pension Plan, an ERISA
Reportable Event shall have occurred and the Majority Banks shall have
determined in their reasonable discretion that such event reasonably could be
expected to result in liability of the Company or any of its Subsidiaries to the
PBGC or such Guaranteed Pension Plan in an aggregate amount exceeding $1,000,000
and such event in the circumstances occurring reasonably could constitute
grounds for the termination of such Guaranteed Pension Plan by the PBGC or for
the appointment by the appropriate United States District Court of a trustee to
administer such Guaranteed Pension Plan; or a trustee shall have been appointed
by the United States District Court to administer such Plan; or the PBGC shall
have instituted proceedings to terminate such Guaranteed Pension Plan;
SECTION 6.13. the occurrence of a Default under and as defined in the
Aviation Revolving Credit Agreement; or
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SECTION 6.14. the occurrence of a Default under and as defined in the
HGC Credit Agreement prior to the occurrence of the HGC Release Date;
then (a) if such event is a Default under Paragraph 6.7, the Aggregate Loan
Limit shall automatically be reduced to an amount equal to the principal balance
of the Revolving Credit Loans then outstanding, (b) if such event is a Default
under any of Paragraph 6.8 or Paragraph 6.9, the Banks' Commitment shall
automatically terminate, the Letter of Credit Bank with the pro rata
participation of the Banks shall be relieved of all further obligations to
issue, extend or renew Letters of Credit and all amounts owing with respect to
the Revolving Credit Notes and under this Agreement shall forthwith become due
and payable, and (c) in every other such event, and so long as such Default is
continuing, the Agent shall, if so directed by the Majority Banks, by notice in
writing to HGC and the Company, terminate immediately the Banks' Commitment and
the obligation of the Letter of Credit Bank with the pro rata participation of
the Banks, to issue, extend or renew Letters of Credit and declare all amounts
owing with respect to the Revolving Credit Notes and under this Agreement to be,
and the Revolving Credit Notes and such amounts shall thereupon forthwith
become, due and payable. If any Letters of Credit are outstanding upon the
occurrence of a Default the Agent may demand that cash or other readily
marketable securities acceptable to it in an amount equal to the Maximum Drawing
Amount of all then outstanding Letters of Credit be deposited with the Agent in
pledge pursuant to pledge agreements in form and substance satisfactory to the
Agent, as collateral security for all obligations of HGC and the Company to the
Banks hereunder. Each of HGC and the Company, jointly and severally, agrees to
either make such deposit with the Agent immediately upon such demand or cause
such Letters of Credit to be cancelled and returned to the Letter of Credit Bank
undrawn. Except as expressly provided above in this Paragraph 6, presentment,
demand, protest or other notice of any kind are hereby expressly waived. Nothing
herein contained shall in any way impair the right of any Bank to enforce
payment of its Revolving Credit Note when due. In case any one or more of the
Defaults shall have occurred and be continuing, and whether or not the Banks
shall have accelerated the maturity of the Revolving Credit Loans pursuant to
this Paragraph 6, each Bank, if owed any amount with respect to the Revolving
Credit Loans, may proceed to protect and enforce its rights by suit in equity,
action at law or other appropriate proceeding, whether for the specific
performance of any covenant or agreement contained in this Agreement and the
other Loan Documents or any instrument pursuant to which the Obligations to such
Bank are evidenced, including as permitted by applicable law the obtaining of
the ex parte appointment of a receiver, and, if such amount shall have become
due, by declaration or otherwise, proceed to enforce the payment thereof or any
other legal or equitable right of such Bank. No remedy herein conferred upon any
Bank or the Agent or the holder of any Revolving Credit Note is intended to be
exclusive of any other remedy and each and every remedy shall be cumulative and
shall be in addition to every other remedy given hereunder or now or hereafter
existing at law or in equity or by statute or any other provision of law.
SECTION 7. AGENT'S RELATIONSHIP WITH BANKS; AGENT'S DUTIES. Each of the
Banks irrevocably authorizes the Agent to receive all payments of principal of
and interest on the Revolving Credit Loans and of commitment fees, and to take
all other action delegated to it hereunder or reasonably incidental thereto. The
Agent may
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exercise its powers and execute its duties by or through employees or agents and
shall be entitled to take, and to rely on, advice of counsel concerning all
matters pertaining to its rights and duties under this Agreement and the other
Loan Documents. Neither the Agent nor any of its shareholders, directors,
officers or employees nor any other person assisting it in its duties nor any
agent or employee thereof shall be liable for any waiver, consent or approval
given or any action taken or omitted to be taken in good faith by it or them in
connection herewith, or be responsible for the consequence of any oversight or
error of judgment whatsoever, except that the Agent or such other person, as the
case may be, shall be liable for losses due to its own gross negligence or
willful misconduct. The Agent shall not be responsible for the execution or
validity or enforceability of this Agreement or any of the other Loan Documents,
or for any recitals or statements, warranties or representations herein or made
in any certificate or instrument hereafter furnished to it by or on behalf of
HGC or the Company, or be bound to ascertain or inquire as to the performance or
observance of any of the terms, conditions, covenants or agreements herein or in
any other Loan Document. The Agent shall not be bound to ascertain whether any
notice, consent, waiver or request delivered to it by HGC or the Company or by
any Bank owed amounts with respect to the Loans shall have been duly authorized
or is true, accurate or complete. Each of HGC and the Company shall certify to
the Agent the names and signatures of its officers authorized to execute
certificates and otherwise act in respect hereof, and the Agent may conclusively
rely thereon until receipt by it of notice to the contrary. The Agent has not
made nor does now make any representations or warranties, express or implied,
nor does it assume any liability to the Banks, with respect to the credit
worthiness or financial condition of HGC or the Company or any Subsidiary of HGC
or the Company. Each Bank acknowledges that it has, independently and without
reliance upon the Agent or any other Bank, and based upon such information and
documents as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. If in the opinion of the Agent the
distribution of any amount received by it in such capacity hereunder might
involve it in a dispute resulting in its liability, it may refrain from making
distribution until its right to make distribution shall have been adjudicated by
a court of competent jurisdiction. If a court of competent jurisdiction shall
adjudge that any amount received and distributed by the Agent is to be repaid,
each person to whom any such distribution shall have been made shall either
repay to the Agent its proportionate share of the amount so adjudged to be
repaid or pay over the same in such manner and to such persons as shall be
determined by such court. FNB shall have the same obligations and the same
rights, powers and privileges with respect to its Commitment and the Revolving
Credit Loans as it would have were it not also the Agent. The Agent may resign
as Agent for the Banks upon thirty days' written notice to HGC, the Company and
each Bank, whereupon a new agent shall be appointed by the Banks. The Agent may
be removed as Agent for the Banks upon thirty days' written notice to HGC, the
Company and the Agent from the Majority Banks, whereupon a new Agent shall be
appointed by the Banks. The Banks (including FNB) ratably agree hereby to
indemnify and hold harmless the Agent from and against any and all claims,
actions and suits (whether groundless or otherwise), losses, damages, costs,
expenses (including any expenses for which the Agent has not been reimbursed by
HGC or the Company as required by Paragraph 11.5), and liabilities of every
nature and character arising out of or related to this Agreement or the other
Loan Documents, or the transactions contemplated or
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evidenced hereby or thereby, or the Agent's actions taken hereunder or
thereunder, except to the extent that any of the same shall be directly caused
by the Agent's willful misconduct or gross negligence. The Agent shall not take
any actions with respect to any Default unless it shall have received such
instructions from the Majority Banks. The Collateral Agent shall not exercise
any remedy under any Security Document unless it shall have received such
instructions as are required by the Intercreditor Agreement.
SECTION 8. SETOFF. Each of HGC (prior to the HGC Release Date) and the
Company grants to each of the Banks, as security for the full and punctual
payment and performance of its obligations hereunder, a continuing lien and
security interest in all deposits or other sums credited by or due from any Bank
to HGC or the Company and all securities or other property of HGC or the Company
in the possession of such Bank and, regardless of the adequacy of any
collateral, such sums at any time may be applied to or set off by such Bank
against any and all liabilities, direct or indirect, absolute or contingent, due
or to become due, now existing or hereafter arising, of HGC and the Company to
such Bank. The offsetting Bank shall provide HGC and the Company with prompt
notice of any such action. Each Bank agrees with the other Banks that (a) if any
deposits or other sums credited by or due from such Bank to HGC or the Company
are applied to indebtedness of HGC or the Company to such Bank, other than
amounts owing with respect to the Revolving Credit Loans, such amount shall be
applied ratably to such other indebtedness and to the amounts owing with respect
to the Revolving Credit Loans, and (b) if such Bank (i) shall receive any
payment from HGC or the Company, whether by distributions made by the Agent,
voluntary payment, exercise of the right of setoff (including, but not limited
to, a secured claim under Section 506 of Title II of the United States Code or
other security or interest arising from, or in lieu of, such secured claim,
received by such Bank under any applicable bankruptcy, insolvency or other
similar law), counterclaim, cross action or enforcement of any claim with
respect to the Revolving Credit Loans by proof thereof in bankruptcy,
reorganization, liquidation, receivership or similar proceedings, or otherwise,
and (ii) shall retain and apply to the payment of such Bank's Revolving Credit
Loans any amount in excess of its ratable portion of the payments received by
all Banks with respect to the Revolving Credit Loans as contemplated hereby,
such Bank will make such disposition and arrangements with the other Banks with
respect to such excess, either by way of distribution, pro tanto assignment of
claims, subrogation or otherwise, as shall result in each Bank's receiving in
respect of the Revolving Credit Loans its proportionate payment as contemplated
hereby.
SECTION 9. INDEMNIFICATION. Each of HGC and the Company, jointly and
severally, agrees to indemnify and hold harmless the Agent and the Banks from
and against any and all claims, actions and suits whether groundless or
otherwise, and from and against any and all liabilities, losses, damages and
expenses of every nature and character arising out of this Agreement or any of
the other Loan Documents or the transactions contemplated hereby or thereby
including, without limitation, (a) any actual or proposed use by HGC, the
Company or any Subsidiary of HGC or the Company of the proceeds of any of the
Revolving Credit Loans or Letters of Credit, (b) HGC, the Company or any
Subsidiary of HGC or the Company entering into or performing this Agreement or
any of the other Loan Documents or (c) with respect to
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HGC, the Company and Subsidiaries of HGC or the Company and their respective
properties and assets, (i) the violation of any Environmental Law, (ii) the
presence, Disposal, escape, seepage, leakage, spillage, discharge, emission,
Release or threatened Release of any Hazardous Substances, (iii) the
investigation or remediation of offsite locations at which HGC, the Company, any
Subsidiary of HGC or the Company or any of such Person's predecessors are
alleged to have directly or indirectly Disposed of Hazardous Substances or (iv)
any action, suit, proceeding or investigation brought or threatened with respect
to any Hazardous Substances (including, but not limited to, claims with respect
to wrongful death, personal injury or damage to property), in each case
including, without limitation, the reasonable fees and disbursements of counsel
and allocated costs of internal counsel incurred in connection with any such
investigation, litigation or other proceeding (but excluding any such
liabilities, losses, damages and expenses incurred by any of the Agent or any
Bank by reason of the gross negligence or willful misconduct of the Agent or any
Bank). In litigation, or the preparation therefor, the Banks and the Agent shall
be entitled to select their own counsel and, in addition to the foregoing
indemnity, each of HGC and the Company, jointly and severally, agrees to pay
promptly the reasonable fees and expenses of such counsel. If, and to the extent
that the obligations of HGC and the Company under this Paragraph 9 are
unenforceable for any reason, each of HGC and the Company hereby agrees to make
the maximum contribution to the payment in satisfaction of such obligations
which is permissible under applicable law. The covenants contained in this
Paragraph 9 shall survive payment or satisfaction in full of all other
Obligations.
SECTION 10. SECURITY AND GUARANTIES. (a) The Obligations shall continue
to be secured by a perfected first priority security interest (subject only to
liens permitted under Paragraph 5.13 hereof and entitled to priority under
applicable law) in the Company Collateral pursuant to and to the extent required
by the terms of the Company Security Documents.
(b) HGC and the Company will execute and deliver on the Effective
Date, in form and substance satisfactory to the Banks, an amendment and
restatement of HGC's absolute and unconditional guaranty (the "Guaranty") of all
obligations of Aviation to the lenders that are or may become parties to the
Aviation Revolving Credit Agreement and the agent thereunder.
(c) The Company shall cause each of its Subsidiaries with a net worth
determined in accordance with generally accepted accounting principles of
$500,000 or more organized under the laws of any state of the United States of
America and acquired or formed by the Company after the date hereof, no later
than 60 days after the acquisition or formation of such Subsidiary, to:
(i) execute and deliver to each of the Banks, the Agent, the
lenders which are or may become parties to the Aviation Revolving
Credit Agreement and the agent thereunder, a Subsidiary Guaranty;
(ii) if the Collateral Release Date has not occurred, execute
and deliver to the Collateral Agent for the benefit of the Banks, the
Agent, the lenders which are or may become parties to the Aviation
Revolving Credit Agreement and the
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agent thereunder, a Subsidiary Security Agreement and all other
documents and instruments required to be delivered pursuant thereto;
and
(iii) execute and deliver all other documents and
instruments, including, without limitation, corporate authority
documents as the Banks may reasonably request.
(d) The Banks acknowledge and agree that, upon receipt from the
Company or any Secured Guarantor of evidence satisfactory to the Banks in all
respects that such entity has disposed of Collateral in accordance with the
terms of this Agreement, they shall execute and deliver to the Collateral Agent
a letter authorizing and directing the Collateral Agent to execute and deliver
such releases with respect to its lien on such entity as such entity shall
reasonably request.
(e) The Banks acknowledge and agree that, upon receipt of evidence
satisfactory to them that (i) all litigation against HGC and Aviation resulting
from or relating to the acquisition in 1984 of certain assets of the airport
ground services business of Innotech Aviation Limited has been fully and finally
dismissed (which dismissal is not appealable) or settled in full, (ii) HGC and
Aviation have satisfied in full all of their payment obligations, if any, with
respect to such litigation, (iii) the payment thereof has not resulted in the
occurrence of any Default or condition which would, with either or both the
giving of notice or lapse of time, result in a Default, and (iv) no Default or
condition which would, with either or both the giving of notice or the lapse of
time, result in a Default then exists, they shall execute and deliver to the
Collateral Agent a letter acknowledging receipt of such evidence in accordance
with Section 28(a) of each of the Security Agreements and Section 18 of the
Pledge Agreement.
SECTION 11. MISCELLANEOUS.
SECTION 11.1. NOTICES. Unless provided elsewhere in this Agreement to
the contrary, all written notices hereunder to any party hereto shall be
delivered in hand, sent by telegraph, telex, telecopy or overnight courier or
mailed by certified mail, and if so mailed shall be deemed to have been given
three calendar days after the same shall have been properly deposited in the
mails, addressed to such party at its address given at the beginning of this
Agreement, or at any other address specified by such party in writing to the
person giving such notice.
SECTION 11.2. COPIES OF CERTIFICATES, ETC. Whenever HGC or the Company
is required to deliver notices, certificates, opinions, statements or other
information hereunder to the Agent, it shall do so in such reasonable number of
copies as the Agent shall specify.
SECTION 11.3. NO WAIVERS. No waiver shall extend to or affect any
obligation not expressly waived or impair any right consequent thereon. No
failure or delay by the Agent or any Bank in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The
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rights and remedies herein provided are cumulative and not exclusive of any
rights or remedies otherwise provided by law.
SECTION 11.4. MASSACHUSETTS LAW. THIS AGREEMENT AND THE REVOLVING
CREDIT NOTES SHALL BE DEEMED TO BE A CONTRACT MADE UNDER SEAL AND SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE COMMONWEALTH OF
MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW) AND
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
SECTION 11.5. EXPENSES; TAXES. Whether or not the transactions
contemplated hereby shall be consummated, HGC and the Company will pay the
reasonable fees, expenses and disbursements of the Banks' and the Agent's
special counsel incurred in connection with the review of this Agreement and the
other Loan Documents, the closings hereunder and thereunder, amendments,
modifications, approvals, consents or waivers hereto and thereto, and all
reasonable out-of-pocket expenses (including reasonable attorneys' fees and
costs) incurred by the Agent and by each Bank in connection with the
preparation, administration, interpretation or enforcement of this Agreement and
the other Loan Documents and in connection with any so-called "workout" of the
Revolving Credit Loans, including as to any "workout" or in the event of
acceleration, losses or expenses associated with foreign exchange conversions or
transactions. To the extent the Agent is not reimbursed by HGC and the Company
for the foregoing fees, expenses and disbursements, each Bank shall pay to the
Agent, promptly upon notice by the Agent, its pro-rata share of such fees,
expenses and disbursements, provided that the Majority Banks requested such
action be undertaken by the Agent. The covenants of this Paragraph 11.5 shall
survive payment or satisfaction of payment of amounts owing with respect to the
Revolving Credit Loans. Each of HGC and the Company, jointly and severally,
agrees to indemnify the Banks and the Agent from, and hold them harmless
against, any taxes, assessments, charges or penalties made by any governmental
authority by reason of the execution and delivery of this Agreement or any of
the other Loan Documents, unless any such assessment, charge or penalty shall be
the result of the negligence or misconduct of any Bank.
SECTION 11.6. CONFIDENTIALITY OF INFORMATION. Each Bank agrees that any
reports or other information furnished to it by HGC or the Company under this
Agreement and not disclosed by HGC or the Company to the public will be held in
confidence by it for use only in connection with the purposes contemplated by
this Agreement, except to the extent that disclosure is required by law (whether
by appropriate regulatory authorities, judicial process or otherwise).
SECTION 11.7. CHANGES, WAIVERS. For all purposes of this Agreement, a
Default shall be deemed to be continuing until such time as it has been waived
by the Banks in accordance with this Paragraph 11.7. None of this Agreement or
the Revolving Credit Notes or any provision hereof or thereof may be changed,
waived, discharged or terminated orally but only by a statement in writing. Any
waiver or amendment of any provision of this Agreement or the Revolving Credit
Notes may be granted or effected, with the consent of HGC (prior to the HGC
Release Date) and the Company, by one or
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more substantially concurrent written instruments signed by the Majority Banks;
provided, however, that no such consent shall be effective to (a) increase the
Aggregate Loan Limit or any Bank's Commitment without the consent of such Bank,
or (b) reduce the amount of any payment of principal or rate of interest on any
Revolving Credit Note or postpone any date fixed for the payment of any
principal of or interest on any Revolving Credit Note without the consent of the
holder thereof (except by waiver after acceleration pursuant to Paragraph 6), or
(c) modify this Paragraph 11.7 or (d) amend the definition of Majority Banks,
without the consent of all the Banks, or (e) modify or waive any of the
conditions precedent set forth in Paragraphs 4A and 4B hereof, or (f)
notwithstanding anything contained above, amend or waive any of the last three
sentences of Paragraph 6 hereof. The Security Documents may be amended or any
provision thereof waived only in accordance with the terms of the Intercreditor
Agreement.
SECTION 11.8. BINDING EFFECT OF AGREEMENT. This Agreement shall be
binding upon and inure to the benefit of HGC, the Company, the Banks and their
respective successors and assigns, provided that neither HGC nor the Company may
assign or transfer its rights hereunder.
SECTION 11.9. COUNTERPARTS. This Agreement and any amendment hereof may
be signed in any number of counterparts with the same effect as if the
signatures hereto and thereto were upon the same instrument. Complete sets of
counterparts shall be lodged with HGC, the Company and the Agent. In proving
this Agreement it shall not be necessary to produce or account for more than one
counterpart signed by the party against whom enforcement is sought.
SECTION 11.10. ENTIRE AGREEMENT. This Agreement and the other Loan
Documents express the entire understanding of the parties with respect to the
transactions contemplated hereby.
SECTION 11.11. ASSIGNMENTS OR PARTICIPATIONS BY BANKS OR AFFILIATES.
Each Bank may assign to one or more banks or other financial institutions having
total capital and surplus of $100,000,000 or more, and otherwise reasonably
acceptable to HGC (prior to the HGC Release Date) and the Company (which
acceptance shall be in writing) all or any part of, or (without the consent of
HGC and the Company) may grant participations to one or more of such banks or
financial institutions in or to all or any part of, any Revolving Credit Loan or
Revolving Credit Loans owing to such Bank and the Revolving Credit Notes held by
such Bank, provided that, following the consummation of any such assignment or
participation, such Bank's or bank's Commitment Percentage shall not be less
than 10%, and to the extent of any such assignment or participation (unless
otherwise stated therein) the assignee or participant of such assignment or
participation shall have the same rights and benefits hereunder and under such
Revolving Credit Note as it would have if it were such Bank hereunder. In the
event of such assignment HGC (prior to the HGC Release Date) and the Company
will consent, such consent not to be unreasonably withheld, to release the
assigning Bank from the obligations hereunder to the extent of such assignment
and to sign and deliver any releases or documents necessary to effectuate such
assignment as such Bank shall reasonably request. Notwithstanding Paragraph 11.6
hereof, each
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Bank may disclose any information concerning HGC or the Company or the credit
facilities to any such bank or financial institution, provided that such bank or
financial institution agrees to be bound by the provisions of Paragraph 11.6
hereof. It shall be a condition of any assignment as described in this Paragraph
11.11, that (a) such assignee provides a written acknowledgment, in form and
substance reasonably acceptable to the Agent and its special counsel and HGC,
the Company and their counsel, that such assignee assumes the obligations and
the rights of the assigning Bank under this Agreement and the other Loan
Documents and, if such assignee is not organized under the laws of the United
States or any state thereof, that such assignee shall provide the Agent and HGC
and the Company with satisfactory evidence that any payments made to the
assignee hereunder may be made free and clear of any withholding taxes and (b)
such assignee or an affiliate thereof accepts an assignment from the assigning
Bank (or an affiliate thereof) of a pro rata portion of such Bank's interest in
the Aviation Loans and the revolving credit loans made to HGC under the HGC
Credit Agreement. Notwithstanding anything contained in this Paragraph 11.11 to
the contrary, upon the occurrence and during the continuance of a Default, each
Bank may make assignments or grant participations hereunder without the consent
of HGC or the Company. Each of HGC and the Company agrees, at its own expense,
to execute and deliver to the assignee Bank, in exchange for each surrendered
Revolving Credit Note of the assigning Bank, a new Revolving Credit Note to the
order of such assignee Bank in an amount equal to the amount assumed by such
Bank and, if the assigning Bank has retained some portion of its obligations
hereunder, a new Revolving Credit Note to the order of the assigning Bank in an
amount equal to the amount retained by it hereunder. Such new Revolving Credit
Notes shall provide that they are replacements for the surrendered Revolving
Credit Notes, shall be in an aggregate principal amount equal to the aggregate
principal amount of the surrendered Revolving Credit Notes, shall be dated the
effective date of such assignment and shall otherwise be in substantially the
form of the assigned Revolving Credit Notes.
SECTION 11.12. TERM OF AGREEMENT. This Agreement shall continue in full
force and effect from the date hereof so long as any commitment to lend any
principal with respect to the Revolving Credit Loans or any commitment to issue
letters of credit or any obligation of HGC or the Company for any interest or
commitment or other fee or obligation hereunder or on the Revolving Credit Notes
shall be outstanding.
SECTION 11.13. CERTAIN TRANSITIONAL ARRANGEMENTS. Promptly after the
Effective Date, the Banks will cancel and return to HGC the promissory notes
previously delivered by HGC to the Banks pursuant to the Original Credit
Agreement. For purposes of this Agreement, any Letters of Credit previously
issued under the Original Credit Agreement which remain outstanding on the
Effective Date shall be deemed to Letters of Credit hereunder, and the
provisions of this Agreement, including without limitation, Paragraph 1.8
hereof, shall apply thereto. Pursuant to Paragraph 1.1(b) hereof, all accrued
and unpaid interest (if any) attributable to periods prior to the Effective Date
shall be payable on the dates such amounts would have been due under the
Original Credit Agreement. Such amounts shall be payable to the Agent for the
respective accounts of the Persons entitled thereto under the Original Credit
Agreement, according to their applicable shares of such amounts as provided in
the Original Credit Agreement.
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SECTION 11.14. ASSUMPTION OF OBLIGATIONS. (a) The Company hereby
expressly assumes, confirms and agrees to pay and perform, observe and maintain
in full force and effect all of the covenants, agreements, liabilities and
indebtedness of HGC under the Original Credit Agreement as amended and restated
as set forth herein, including, without limitation, any and all Obligations in
respect of principal, interest, fees, expenses and other amounts payable or to
become payable under the Loan Documents.
(b) From and after the Effective Date, the Company is and shall be
subject to and bound by, and shall be entitled to the benefits of, each of the
Loan Documents as if the Company had been the "Company" and the obligor party
under the Original Credit Agreement from the original execution and delivery
thereof.
(c) The Company hereby expressly acknowledges, assumes, and agrees to
be subject to and to maintain in full force and effect, the Security Documents
to which HGC was or is a party and the continuously perfected, first-priority
liens and security interests of the Collateral Agent and the Banks thereunder,
with respect to all assets of the Company, without any lapse or change in the
perfection or priority thereof, such that the consummation of the Contribution
shall not adversely affect or impair the rights and remedies of the Collateral
Agent and the Banks under the Security Documents in any way whatsoever.
SECTION 11.15. OBLIGATIONS OF HGC. (a) The Banks and the Agent hereby
agree that the aggregate amount of HGC's payment obligations hereunder and under
the other Loan Documents shall at no time exceed an amount equal to the
aggregate amount of HGC's obligations with respect to the 7% Notes outstanding
at such time.
(b) The Banks and the Agent hereby agree that from and after the date
on which all of the 7% Notes are indefeasibly paid in full in cash or converted,
as certified to the Agent and the Banks by HGC and the Company, HGC shall no
longer be a borrower hereunder and shall be released of all of its payment and
performance obligations hereunder (including, without limitation, the
Obligations) and under the other Loan Documents, provided that HGC shall not be
released under (i) the Pledge Agreement and (ii) the Company Security Agreement
(solely to the extent of HGC's obligations with respect to the HGC Credit
Agreement) until the Collateral Release Date shall have occurred, and of its
agreement under Paragraph 8 hereof. In addition, upon and after such date, no
Default or event with the passage of time or the giving of notice (or both)
which would become a Default (other than (x) the Default set forth in Paragraph
6.7(b) hereof, and (y) with respect to the Defaults set forth in Paragraphs
6.7(a), 6.8 and 6.9 hereof unless, at such time, the Collateral Release Date
shall have occurred) or any failure to satisfy a condition precedent shall be
deemed to occur or arise as a result of any event or matter related to HGC
(other than any matter related to the Pledge Agreement unless, at such time, the
Collateral Release Date has occurred) and HGC shall not be deemed to represent
or warrant as to any matter set forth herein (including, without limitation, as
to matters set forth in Paragraph 3 hereof) or in any other Loan Document,
provided that HGC shall continue to make the representations and warranties
under (i) the Pledge Agreement and (ii) the Company Security Agreement (solely
to the extent of HGC's obligations with respect to the HGC
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Credit Agreement) until the Collateral Release Date shall have occurred. HGC
shall continue to be obligated to the Banks and the Agent as set forth herein
and under the other Loan Documents, or its obligations to the Banks and the
Agents hereunder and under the other Loan Documents shall be reinstated,
notwithstanding any prior certification to the Banks and the Agent pursuant to
this Paragraph, if at any time any payment made with respect to the 7% Notes is
rescinded or must otherwise be returned to HGC or the Company upon the
insolvency, bankruptcy or reorganization of HGC or the Company, or otherwise,
all as though such payment had not been made or value received.
[The remainder of this page has been intentionally left blank.]
59
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
HUDSON GENERAL CORPORATION
By: /s/ illegible
-------------------------------------------
Title: Executive Vice President
HUDSON GENERAL LLC
By: /s/ illegible
-------------------------------------------
Title: Executive Vice President
THE FIRST NATIONAL BANK OF
BOSTON, AS AGENT
By: /s/ illegible
-------------------------------------------
Title:
THE FIRST NATIONAL BANK
OF BOSTON
By: /s/ illegible
-------------------------------------------
Title: Executive Vice President
EUROPEAN AMERICAN BANK
By: /s/ illegible
-------------------------------------------
Title: Vice President
THE CHASE MANHATTAN BANK, N.A.
By: /s/ illegible
-------------------------------------------
Title: Vice President
60
EXHIBIT A
DEFINITIONS
Agent - See the introductory paragraphs.
Aggregate Loan Limit - See Paragraph 1.4.
Agreement - See the introductory paragraphs.
Assignment Agreement - The Amended and Restated Assignment,
Postponement and Subordination and Intercreditor Agreement, dated as of November
25, 1992 and amended and restated as of the Effective Date, among HGC, the
Company, Aviation and the lenders which are or may become parties under the
Aviation Revolving Credit Agreement, as the same may be amended and in effect
from time to time.
Aviation - Hudson General Aviation Services Inc./Societe de Services
Hudson General (Aviation) Inc., a wholly owned Subsidiary of the Company.
Aviation Loan Amounts - The U.S. Dollar Equivalent of the aggregate
principal amount of all outstanding Aviation Loans.
Aviation Loans - Revolving credit loans made to Aviation under the
Aviation Revolving Credit Agreement.
Aviation Revolving Credit Agreement - That certain Revolving Credit
Agreement, dated as of November 25, 1992, among Aviation and the lenders which
are or may become parties thereto, as amended and in effect from time to time.
Aviation Services Business - See the introductory paragraphs.
Banks - See the introductory paragraphs.
Base Rate - The higher of (a) the annual rate of interest publicly
announced by the Agent from time to time at its head office in Boston,
Massachusetts as its "base rate" and (b) 1/2% above the overnight federal funds
effective rate, as published by the Board of Governors of the Federal Reserve
System, as in effect from time to time.
Base Rate Loan - Any Revolving Credit Loan bearing interest at a rate
determined by reference to the Base Rate.
Business Day - Any day on which banking institutions in Boston,
Massachusetts and New York, New York are open for the transaction of banking
business and, in the case of LIBO Rate Loans, any day on which commercial banks
are open for international business in London or such other eurodollar interbank
market as may be selected by the Agent in its sole discretion acting in good
faith.
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CERCLA - See Paragraph 3.18.
Chase - See the introductory paragraph.
Code - The Internal Revenue Code of 1986, as amended and in effect from
time to time.
Collateral - Collectively, the Company Collateral and the Subsidiary
Collateral.
Collateral Agent - As defined in each of the Security Agreements.
Collateral Release Date - That date on which the Banks deliver a letter
to the Collateral Agent in accordance with Paragraph 10(e) hereof.
Commitment - The agreement of each Bank, subject to the terms and
conditions of the Agreement, to make Revolving Credit Loans to, and to
participate in the issuance, extension or renewals of Letters of Credit for the
account of, the Company and HGC.
Commitment Percentage - With respect to each Bank, the percentage set
forth opposite its name below as such Bank's percentage of the aggregate
Commitments of all of the Banks (subject to adjustments permitted by the terms
of the Agreement):
Commitment
Bank Percentage
---- ----------
The First National Bank of Boston 60%
The Chase Manhattan Bank, N.A. 20%
European American Bank 20%
---
Total 100%
Company - See the introductory paragraphs.
Company Collateral - All of the property, rights and interests of each
of HGC and the Company that are or are intended to be subject to the security
interests created by the Company Security Documents.
Company Security Agreement - The Amended and Restated Security
Agreement, dated as of December 28, 1992 and amended and restated as of the
Effective Date, between HGC, the Company and the Collateral Agent substantially
in the form attached hereto as Exhibit E, as the same may be amended and in
effect from time to time.
Company Security Documents - The Company Security Agreement, the
Guaranty, the Assignment Agreement, the Pledge Agreement and any and all
instruments and documents required to be delivered pursuant thereto, in each
case as
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originally executed, or if amended, restated, modified or supplemented from time
to time, as so amended, restated, modified or supplemented.
Consolidated Cash Interest - For any fiscal period, the sum of the
consolidated expenses for the Company and its Subsidiaries paid in cash or
accrued during such period for interest on indebtedness of the Company and its
Subsidiaries for such period, determined in accordance with generally accepted
accounting principles.
Consolidated Debt Service - For any Measuring Period, the sum of (i)
Consolidated Cash Interest for such period, plus (ii) the aggregate amount of
principal that will become due and payable by the Company and its Subsidiaries
during the four consecutive fiscal quarters immediately succeeding such period
on long-term indebtedness (excluding the Revolving Credit Loans) of the Company
and its Subsidiaries, plus (iii) an amount equal to 20% of the average daily
outstanding and unpaid principal amount of the Revolving Credit Loans for the
Measuring Period, each as determined in accordance with generally accepted
accounting principles.
Consolidated EBDIT - For any fiscal period, the Consolidated Net Income
of the Company and its Subsidiaries before provision for federal and state
income taxes, minus all extraordinary nonrecurring items of income (excluding
any net operating loss carryforward), plus all extraordinary nonrecurring items
of expense, plus the consolidated interest expense of the Company and its
Subsidiaries for such fiscal period, plus the aggregate amount of depreciation
and amortization charges made in calculating Consolidated Net Income for such
period, all as determined in accordance with generally accepted accounting
principles.
Consolidated Liabilities - The consolidated liabilities of the Company
and its Subsidiaries, including without limitation, all consolidated liabilities
of the Company and its Subsidiaries in respect of letters of credit, but
excluding therefrom an amount equal to the consolidated deferred tax debits of
the Company and its Subsidiaries, all as determined in accordance with generally
accepted accounting principles.
Consolidated Net Income (or Loss) - For any fiscal period, the
consolidated net income (or loss) of the Company and its Subsidiaries, after
deduction of all expenses, taxes and other proper charges, determined in
accordance with generally accepted accounting principles.
Consolidated Tangible Net Worth - The consolidated capital and surplus
accounts of the Company and its Subsidiaries, determined in accordance with
generally accepted accounting principles, however excluding all amounts
representing adjustments resulting from foreign currency translation, whether
any such adjustment is expressed as a positive or negative number, and
eliminating all assets of the Company and its Subsidiaries properly classified
as intangible assets under generally accepted accounting principles, except for
leasehold rights of the Company used in its operations.
Contribution - See Paragraph 4A.11.
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Default - See Paragraph 6.
Delinquent Bank - See Paragraph 2.11.
Disposal; Dispose(d) - Disposal or dispose(d) as such term is defined
in RCRA and the regulations promulgated thereunder; provided that to the extent
the laws of a state wherein the subject property lies establishes a meaning for
such term that is broader than that specified in RCRA and the regulations
promulgated thereunder, such broader meaning shall apply.
EAB - See the introductory paragraphs.
Effective Date - See Paragraph 4A.
Effective Net Worth - As at any date of determination, the sum of
Consolidated Tangible Net Worth plus Subordinated Debt outstanding as at such
date plus an amount equal to the aggregate amount of the deferred purchase price
owed by LAGS (or an affiliate of LAGS) to the Company on such date under
Paragraph 1.3 of the Purchase Agreement.
Employee Benefit Plan - Any employee benefit plan within the meaning of
Section 3(3) of ERISA maintained oR contributed to by the Company or any ERISA
Affiliate, other than a Multiemployer Plan.
Environmental Laws - See Paragraph 3.18.
EPA - See Paragraph 3.18.
ERISA - The Employee Retirement Income Security Act of 1974, as amended
and in effect from time to time.
ERISA Affiliate - Any individual or legal entity which is treated as a
single employer with the Company under Section 414 of the Code.
ERISA Reportable Event - A reportable event with respect to a
Guaranteed Pension Plan within the meaning of Section 4043 of ERISA and the
regulations promulgated thereunder other than a reportable event as to which the
provisions of the 30 day notice to the PBGC is waived under applicable
regulations.
FNB - See the introductory paragraphs.
Foreign Subsidiaries - See Paragraph 5.12(d).
generally accepted accounting principles - (a) When used in Paragraphs
5.7, 5.8, 5.9, 5.10 or 5.11, whether directly or indirectly through reference to
a capitalized term used therein means (i) principles that are consistent with
the principles promulgated or adopted by the Financial Accounting Standards
Board and its predecessors, in effect for the fiscal year ended on June 30,
1995, and (ii) to the extent consistent with such
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principles, the accounting practice of the Company reflected in the pro forma
financial statements for the fiscal year ended on June 30, 1995, and (b) when
used in general, other than as provided above, means principles that are (i)
consistent with the principles promulgated or adopted by the Financial
Accounting Standards Board and its predecessors, in effect from time to time,
and (ii) consistently applied with past financial statements of HGC and the
Company adopting the same principles, provided that in each case a certified
public accountant would, insofar as the use of such accounting principles is
pertinent, be in a position to deliver an unqualified opinion (other than a
qualification regarding changes in generally accepted accounting principles) as
to financial statements in which such principles have been properly applied.
Guaranteed Pension Plan - Any employee pension benefit plan within the
meaning of Section3(2) of ERISA maintained or contributed to by the Company or
any ERISA Affiliate the benefits of which are guaranteed on termination in full
or in part by the PBGC pursuant to Title IV of ERISA, other than a Multiemployer
Plan.
Guarantor(s) - Collectively, all of, and individually, each of, the
Subsidiaries of the Company organized under the laws of a State of the United
States of America and acquired or formed by the Company after the date hereof
with a net worth determined in accordance with generally accepted accounting
principles of at least $500,000.
Guaranty - See Paragraph 10.
Hazardous Substances - See Paragraph 3.18.
HGC - See the introductory paragraphs.
HGC Credit Agreement - That certain Revolving Credit Agreement, dated
as of June 1, 1996, among HGC and the lenders which are or may become parties
thereto, as amended and in effect from time to time, or if no longer in effect,
as in effect immediately prior to the termination thereof.
HGC Release Date - That date on which HGC is released of its
obligations hereunder and under the other Loan Documents (other than the Company
Security Agreement) in accordance with Paragraph 11.15(b) hereof.
Initial Revolving Period - The period commencing on the Effective Date
and ending on June 30, 1998.
Intercreditor Agreement -The Amended and Restated Intercreditor
Agreement, dated as of November 25, 1992, and amended and restated on or before
the Effective Date, among the Banks, the Agent, the Collateral Agent, the
lenders that are parties to the Aviation Revolving Credit Agreement, the Agent
thereunder and acknowledged and consented to by HGC, the Company and the Secured
Guarantors, in form and substance satisfactory to the Banks and the Agent, as
the same may be amended and in effect from time to time.
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Interest Period - A period commencing on the date of making of, or
renewal of, or conversion of a Loan to, a LIBO Rate Loan, and expiring one, two,
three or six months thereafter, as designated by HGC and the Company in the
notice given the Agent under Paragraph 1.3; provided that,
(i) the initial Interest Period for any LIBO Rate Loan shall
commence on the date of the making of such Loan (including the date of
any conversion from a Base Rate Loan) and each Interest Period
occurring thereafter in respect of such LIBO Rate Loan shall commence
on the date on which the next preceding Interest Period expires;
(ii) if any Interest Period would otherwise expire on a day
which is not a Business Day, such Interest Period shall expire on the
next succeeding Business Day, provided, however, that if any Interest
Period would otherwise expire on a day which is not a Business Day but
is a day of the month after which no further Business Day occurs in
such month, such Interest Period shall expire on the next preceding
Business Day;
(iii) if any Interest Period begins on a day for which there is
no numerically corresponding day in the calendar month at the end of
such Interest Period, such Interest Period shall end on the last
Business Day of such calendar month; and
(iv) no Interest Period in respect of any Revolving Credit Loan
shall extend beyond the Revolving Credit Loan Maturity Date.
Joint Ventures - Joint ventures entered into by the Company or any of
its Subsidiaries after the date of this Agreement in the ordinary course of its
Aviation Services Business.
LAGS - Lufthansa Airport and Ground Services GmbH, a German
corporation.
Letter(s) of Credit - Any United States dollar-denominated irrevocable
standby letter(s) of credit issued from time to time pursuant to the terms
hereof by the Letter of Credit Bank for the account of the Company.
Letter of Credit Bank - FNB, in its capacity as issuer of the Letter(s)
of Credit.
Letter of Credit Fee - See Paragraph 1.11.
LIBO Bid Rate - The annual rate of interest determined by the Agent, at
or about 11 a.m., London time, on the second Business Day prior to the first day
of an Interest Period, as being that at which deposits of United States dollars
during such Interest Period are offered to the Agent by prime banks in the
London interbank market at the time of determination and in accordance with the
usual practice in such market, for delivery on the first day of such Interest
Period and for the number of days comprised therein, in amounts equal (as nearly
as may be) to the amount of the unpaid principal of a Revolving Credit Loan to
which such Interest Period shall relate.
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LIBO Rate - The rate of interest (rounded upwards to the nearest 1/16th
of one percent) equal to the following (with the LIBO Bid Rate and the Reserve
Rate expressed as decimals);
(LIBO Bid Rate)
------------------
(1 - Reserve Rate)
LIBO Rate Loan - Any Revolving Credit Loan bearing interest at a rate
determined by reference to the LIBO Rate pursuant to Paragraph 2.3(b) of the
Agreement.
Loan Documents - Collectively, this Agreement, the Revolving Credit
Notes, the Intercreditor Agreement and the Security Documents, and all other
instruments and documents delivered and to be delivered pursuant to any such
agreements.
Majority Banks - Those Banks which are owed or participate in 75% or
more of the sum of aggregate principal amount of Revolving Credit Loans at the
time outstanding and unpaid plus the aggregate Maximum Drawing Amount of all
outstanding Letters of Credit, or, if no Revolving Credit Loans or Letters of
Credit are outstanding, those Banks having 75% or more of the outstanding
Commitment to make Revolving Credit Loans.
Maximum Drawing Amount - As at any date of determination, with respect
to any Letter of Credit issued pursuant to the terms hereof, the maximum amount
which the beneficiary thereof may draw under such Letter of Credit as at such
date pursuant to the terms of such Letter of Credit, plus any amounts previously
drawn thereunder and not yet reimbursed by HGC or the Company, whether from the
proceeds of Revolving Credit Loans or otherwise.
Measuring Period - See Paragraph 5.11.
Multiemployer Plan - Any multiemployer plan within the meaning of
Section 3(37) of ERISA maintained or contributed to by the Company or any ERISA
Affiliate.
7% Notes - The 7% Convertible Subordinated Debentures Due 2011 issued
pursuant to the Indenture dated as of July 1, 1986, between HGC and Chemical
Bank Delaware, as Trustee, as amended by the First Supplemental Indenture
thereto.
Notice Date - See Paragraph 2.9.
Obligations - All indebtedness, obligations and liabilities of HGC and
the Company to any of the Banks and the Agent, individually or collectively,
existing on the date of this Agreement or arising thereafter, and all
indebtedness, obligations and liabilities of the Company under the Guaranty,
existing on the date of this Agreement or arising thereafter, direct or
indirect, joint or several, absolute or contingent, matured or unmatured,
liquidated or unliquidated, secured or unsecured, arising by contract, operation
of law or otherwise, arising or incurred under this Agreement or
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any of the other Loan Documents or in respect of any of the Revolving Credit
Loans or any of the Revolving Credit Notes or other instruments at any time
evidencing any thereof.
Original Credit Agreement - See the introductory paragraphs.
PBGC - The Pension Benefit Guaranty Corporation created by Section4002
of ERISA and any successor entity or entities having similar responsibilities.
Pledge Agreement - The Pledge Agreement, dates as of the Effective
Date, between HGC and the Collateral Agent substantially in the form of Exhibit
C to the HGC Credit Agreement, as the same may be amended and in effect from
time to time.
Proxy - The definitive Proxy Statement dated April 25, 1996 relating to
the meeting of HGC's stockholders for the purpose of voting upon a proposal to
approve the transactions contemplated by the Purchase Agreement, as filed by HGC
with the Securities and Exchange Commission.
Purchase Agreement - That certain Unit Purchase and Option Agreement,
dated February 27, 1996, between LAGS and HGC, as such agreement is in effect on
the Effective Date as supplemented by a letter agreement dated May 31, 1996.
RCRA - See Paragraph 3.18.
Real Estate - All real property at any time owned, leased (as lessee or
sublessee), operated or managed by the Company or any Subsidiary of the Company.
Reduction Commencement Date - June 30, 1998, or such later date set by
the Banks pursuant to Paragraph 1.4(b).
Release - A release as defined in CERCLA and the regulations
promulgated thereunder; provided that to the extent the laws of a state wherein
the subject property lies establishes a meaning for such term that is broader
than that specified in CERCLA and the regulations promulgated thereunder, such
broader meaning shall apply.
Reserve Rate - For any day with respect to a LIBO Rate Loan, the
maximum rate at which the Agent would be required to maintain reserves under
Regulation D of the Board of Governors of the Federal Reserve System (or any
successor or similar regulation relating to such reserve requirements) against
"Eurocurrency Liabilities" (as that term is used in Regulation D) regardless of
whether there are such liabilities outstanding. The Reserve Rate shall be
adjusted automatically on and as of the effective date of any change in the
Reserve Rate and promptly thereafter the Agent shall provide HGC and the Company
with written notice of such adjustment.
Revolving Credit Loan Maturity Date - The date which occurs on the
fourth anniversary of the Reduction Commencement Date or, if earlier, such date
on which the Commitments are terminated in accordance with the provisions of the
Agreement.
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Revolving Credit Loans - Revolving credit loans made or to be made by
the Banks to HGC and the Company pursuant to Paragraph 1.1.
Revolving Credit Note(s) - See Paragraph 1.2.
SARA - See Paragraph 3.18.
Secured Guarantor(s) - Collectively, all of, and individually, each of
the Subsidiaries of the Company organized under the laws of any state of the
United States of America and acquired or formed by the Company after the date
hereof with a net worth determined in accordance with generally accepted
accounting principles of at least $500,000.
Security Agreements - Collectively, the Company Security Agreement and
the Subsidiary Security Agreements.
Security Documents - Collectively, the Company Security Documents and
the Subsidiary Security Documents.
Shareholder - See Paragraph 3.16.
Subordinated Debt - Collectively, (a) the indebtedness referred to in
Paragraph 5.12(c) hereof, (b) the indebtedness referred to in Paragraph 5.12(h)
hereof and (c) other indebtedness of the Company and its Subsidiaries that is
subordinated to the Revolving Credit Loans, the Letters of Credit and the
Revolving Credit Notes in form and substance reasonably satisfactory to the
Majority Banks.
Subsidiary - Any corporation, association, joint stock company,
business trust or other similar organization of whose voting stock HGC or the
Company owns or controls, directly or indirectly, more than 50%.
Subsidiary Collateral - All of the property, rights and interests of
the Secured Guarantors that are or are intended to be subject to the security
interests created by the Subsidiary Security Documents.
Subsidiary Guaranties - Collectively, all of, and individually, each
of, the Unlimited Guaranties of the Guarantors delivered to the Banks, the
Agent, the lenders that are or may become parties to the Aviation Revolving
Credit Agreement, and the agent thereunder after the date hereof, in each case
substantially in the form of Exhibit C attached hereto, as the same may be
amended and in effect from time to time.
Subsidiary Security Agreements - Collectively, all of, and
individually, each of the Security Agreements executed and delivered to the
Collateral Agent by the Secured Guarantors after the date hereof, in each case
substantially in the form of Exhibit D attached hereto, as the same may be
amended and in effect from time to time.
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Subsidiary Security Documents - The Subsidiary Security Agreements, the
Subsidiary Guaranties, and any and all instruments and documents required to be
delivered pursuant thereto, in each case as originally executed, or if amended,
restated, modified or supplemented from time to time, as so amended, restated,
modified or supplemented.
Type - As to any Revolving Credit Loan, its nature as a Base Rate Loan
or a LIBO Rate Loan.
U.S. Dollar Equivalent - With respect to any amounts denominated in
Canadian dollars, the amount of United States dollars which would be obtained
upon conversion of Canadian dollars into United States dollars, calculated at
the middle spot rate of exchange of the Toronto, Canada, office of the Agent
under the Aviation Revolving Credit Agreement as of the close of business on the
date of determination.
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EXHIBIT B
FORM OF RESTATED REVOLVING CREDIT NOTE
HUDSON GENERAL CORPORATION
HUDSON GENERAL LLC
$[INSERT AMOUNT] ________________, 1996
FOR VALUE RECEIVED, each of the undersigned, HUDSON GENERAL CORPORATION,
a Delaware corporation ("HGC"), and HUDSON GENERAL LLC, a Delaware limited
liability company (the "Company"), hereby absolutely and unconditionally,
jointly and severally, promises to pay to the order of [INSERT NAME OF PAYEE
BANK] (the "Bank") at the office of the Agent (as defined in the Credit
Agreement referred to below) at 100 Federal Street, Boston, Massachusetts 02110
and in United States dollars in immediately available funds:
(a) the principal amount of [INSERT BANK'S COMMITMENT PERCENTAGE OF
AGGREGATE LOAN LIMIT] Dollars ($___) or, if less, the aggregate unpaid principal
amount of Revolving Credit Loans made by the Bank pursuant to the Amended and
Restated Revolving Credit Agreement, dated as of November 25, 1992 and amended
and restated as of ______________, 1996, as the same is amended and in effect
from time to time (such agreement, as amended and in effect from time to time,
the "Credit Agreement"), among HGC, the Company, the Bank, the other lenders
named therein, such other lenders as may become parties thereto from time to
time and The First National Bank of Boston as Agent, payable at the times and in
accordance with the terms and conditions of the Credit Agreement but in no event
later than the Revolving Credit Loan Maturity Date (which shall be no later than
June 30, 2002); and
(b) interest on the principal balance hereof from time to time
outstanding from the date hereof through the date on which such principal amount
is paid in full at the rates provided in the Credit Agreement, payable as
provided in the Credit Agreement.
This Note evidences borrowings under, is subject to the terms and
conditions of, and has been issued by HGC and the Company in accordance with the
terms of, the Credit Agreement and is secured by the collateral described in the
Security Documents. The Bank and any holder hereof are entitled to the benefits
of the Credit Agreement and may enforce the agreements of HGC and the Company
contained therein. Capitalized terms which are used in this Note without
definition and which are defined in the Credit Agreement shall have the same
meanings herein as in the Credit Agreement.
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The Bank shall endorse, and is hereby irrevocably authorized by HGC and
the Company to endorse, on the schedule attached to this Note or a continuation
of such schedule attached hereto and made a part hereof, an appropriate notation
evidencing advances and repayments of principal of this Note, provided that
failure by the Bank to make any such notations shall not affect any of HGC's or
the Company's obligations in respect of this Note.
Each of HGC and the Company has the right in certain circumstances and
the obligation in certain other circumstances to prepay the whole or part of the
principal of this Note on the terms and conditions specified in the Credit
Agreement.
If any one or more Defaults shall occur, the entire unpaid principal
amount of this Note and all of the unpaid interest accrued thereon may become or
be declared due and payable in the manner and with the effect provided in the
Credit Agreement.
Each of HGC and the Company and every endorser and guarantor of this
Note or the obligation represented hereby waive presentment, demand, notice,
protest and all other demands and notices in connection with the delivery,
acceptance, performance, default or enforcement of this Note, assent to any
extension or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of collateral and to the addition or release
of any other party or person primarily or secondarily liable.
This Note has been issued as a replacement and in exchange for (but does
not evidence payment or satisfaction of) the Revolving Credit Note issued to the
Bank by HGC pursuant to the Original Credit Agreement.
THIS NOTE SHALL BE DEEMED TO TAKE EFFECT AS A SEALED INSTRUMENT UNDER
THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS AND FOR ALL PURPOSES SHALL BE
CONSTRUED IN ACCORDANCE WITH SUCH LAWS.
IN WITNESS WHEREOF, each of HGC and the Company has caused this Note to
be signed on its behalf by its duly authorized officer as a sealed instrument as
of the day and year first above written.
HUDSON GENERAL CORPORATION
By:____________________________________
Title:
HUDSON GENERAL LLC
By:____________________________________
Title:
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Amount of
Principal Balance of
Amount of Paid or Principal Notation
Date Loan Prepaid Unpaid Made By
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73
EXHIBIT C
FORM OF SUBSIDIARY
UNLIMITED GUARANTY
[INSERT NAME OF SUBSIDIARY]
TO: (a) THE FIRST NATIONAL BANK OF BOSTON, EUROPEAN AMERICAN BANK, THE
CHASE MANHATTAN BANK, N.A. and each of the other financial institutions
(the "US Banks") which are or may become parties to that certain
Amended and Restated Revolving Credit Agreement, dated as of November
25, 1992 and amended and restated as of June 1, 1996, as amended,
restated, modified or supplemented from time to time (as the same is in
effect from time to time, the "US Credit Agreement"), among the US
Banks, The First National Bank of Boston as agent (the "US Agent"),
Hudson General Corporation ("HGC") and Hudson General LLC (the
"Company") and the US AGENT; and
(b) ABN AMRO BANK CANADA, THE CHASE MANHATTAN BANK OF CANADA and each
of the other financial institutions (the "Canada Banks") which are or
may become parties to that certain Revolving Credit Agreement, dated as
of November 25, 1992, as amended (as so amended and in effect from time
to time, the "Aviation Credit Agreement"), among the Canada Banks, The
Chase Manhattan Bank of Canada as successor agent (the "Canadian
Agent") and Hudson General Aviation Services Inc./Societe de Services
Hudson General (Aviation) Inc. ("Aviation"), a wholly owned Subsidiary
of the Company, and the CANADIAN AGENT.
1. DEFINITIONS. For purposes hereof, the term "Banks" shall mean (a)
the US Banks, (b) the Canada Banks and (c) the successors and assigns of the
foregoing, the term "Obligations" shall have the meaning set forth in Section 2
hereof and the term "Agents" shall mean the US Agent and the Canadian Agent. All
other capitaliZed terms which are used herein without definition and which are
defined in the US Credit Agreement shall have the same meanings herein as in the
US Credit Agreement.
2. GUARANTY OF PAYMENT AND PERFORMANCE OF OBLIGATIONS. In consideration
of the US Banks' extending credit or otherwise in their discretion giving from
time to time, financial or banking facilities or accommodations to HGC and the
Company and the Canada Banks' extending credit or otherwise in their discretion
giving time, financial or other banking facilities or accommodations to
Aviation, [INSERT NAME OF GUARANTOR] (the "Guarantor"), a wholly owned
Subsidiary of the Company, hereby absolutely and unconditionally (a) promises to
pay to the Banks and the Agents the amount of any Obligations (as defined below)
not paid when due (subject to any applicable grace periods with respect to the
payment of any such Obligations); (b) guarantees to the Banks and the Agents
that HGC and the Company will duly and punctually pay or perform, at the place
specified therefor or, if no place is specified, at the US Agent's head office
located at 100 Federal Street, Boston, Massachusetts 02110 or at the branch of
the US Agent where this Guaranty is given, all indebtedness, obligations and
liabilities, joint
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or several, direct or indirect, matured or unmatured, liquidated or
unliquidated, primary or secondary, absolute or contingent, of HGC and the
Company to the Banks and the Agents, or any of them, now or hereafter owing or
incurred (including, without limitation, costs and expenses incurred by the
Banks and the Agents in attempting to collect or enforce any of the foregoing)
which are chargeable to HGC or the Company either by law or under the terms of
(i) the US Credit Agreement and the Notes and (ii) the Guaranty, accrued in each
case to the date of payment hereunder (collectively, the "Obligations" and
individually, an "Obligation"); and (c) guarantees to the Banks and the Agents
that if there is an agreement evidencing or executed and delivered in connection
with any Obligation, each of HGC and the Company will perform in all other
respects strictly in accordance with the terms thereof. This Guaranty is an
absolute, unconditional and continuing guaranty of the full and punctual payment
and performance by each of HGC and the Company of the Obligations and not of
their collectability only and is in no way conditioned upon any requirement that
the Banks or the Agents first attempt to collect any of the Obligations from HGC
or the Company or resort to any security or other means of obtaining payment of
any of the Obligations which the Banks or the Agents now have or may acquire
after the date hereof, or upon any other contingency whatsoever. Upon any
default by HGC or the Company in the full and punctual payment and performance
of any of the Obligations (upon the expiration of any applicable grace periods),
the liabilities and obligations of the Guarantor hereunder with respect to such
Obligations in default shall, at the option of the Banks and the Agents, or any
of them, become forthwith due and payable to the Banks and the Agents without
demand or notice of any nature, all of which are expressly waived by the
Guarantor. Payments by the Guarantor hereunder may be required by the Banks and
the Agents on any number of occasions.
3. GUARANTOR'S FURTHER AGREEMENTS TO PAY. The Guarantor further agrees,
as the principal obligor and not as a guarantor only, to pay to the Banks and
the Agents forthwith upon demand, in funds immediately available to the Banks
and the Agents, all costs and expenses (including court costs and legal
expenses, including, without limitation, reasonable allocated costs of staff
counsel) incurred or expended by the Banks and/or the Agents in connection with
this Guaranty and the enforcement hereof, together with interest on amounts
recoverable under this Guaranty from the time such amounts become due until
payment, whether before or after judgment, at the rate of interest charged by
the Banks in similar circumstances, but in no event less than 2% per annum above
the Base Rate in effect from time to time provided, that if such interest
exceeds the maximum amount permitted to be paid under applicable law, then such
interest shall be reduced to such maximum permitted amount. Any change in the
Base Rate shall result in an immediate corresponding change in the rate of
interest payable on amounts recoverable under this Guaranty.
4. PAYMENTS. The Guarantor agrees that the Obligations will be paid and
performed strictly in accordance with their respective terms, regardless of any
law, regulation or order now or hereinafter in effect in any jurisdiction
affecting any of such terms or the rights of any Agent or any Bank with respect
thereto.
5. UNLIMITED LIABILITY OF GUARANTOR. Subject to Section 16 hereof, the
liability of the Guarantor hereunder shall be unlimited.
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6. TERMINATION OF GUARANTY. The obligations of the Guarantor under this
Guaranty shall continue in full force and effect until payment in full of, and
performance of all of the Obligations and all other amounts payable hereunder.
Notwithstanding the foregoing, this Guaranty shall continue to be effective or
shall be reinstated, as the case may be, if at any time any payment made or
value received with respect to any Obligation is rescinded or must otherwise be
restored or returned by the Banks and/or the Agents upon the insolvency,
bankruptcy or reorganization of HGC, the Company or otherwise, as though such
payment had not been made or value received.
7. SECURITY; SETOFF. The obligations of the Guarantor under this
Guaranty are secured by a lien on certain of its assets in favor of the
Collateral Agent, for the benefit of the Banks, pursuant to a Security Agreement
dated as of the date hereof. The Guarantor also grants to each of the Agents and
the Banks, as security for the full and punctual payment and performance of the
Guarantor's obligations hereunder, a continuing lien on and security interest in
all securities and other property belonging to the Guarantor now or hereafter
held by such Agent or such Bank and in all deposits (general or special, time or
demand, provisional or final) and other sums credited by or due from such Agent
or such Bank to the Guarantor or subject to withdrawal by the Guarantor; and
regardless of the adequacy of any collateral or other means of obtaining
repayment of the Obligations, each of the Agents and the Banks is hereby
authorized at any time and from time to time, without notice to the Guarantor
(any such notice being expressly waived by the Guarantor) and to the fullest
extent permitted by law, to set off the whole or any portion or portions of any
or all such deposits and other sums and apply such deposits and other sums
against obligations of the Guarantor which are due under this Guaranty, whether
or not such Agent or such Bank shall have made any demand under this Guaranty.
8. GUARANTOR'S REPRESENTATIONS, WARRANTIES AND COVENANTS. (a) The
Guarantor represents and warrants to the Banks and the Agents that it is a
corporation duly organized, validly existing and in good standing under the laws
of [ _________ ].
(b) The Guarantor represents and warrants to the Banks and the Agents
that it has all requisite power and authority and full legal right to execute
and deliver and to perform all of its obligations under this Guaranty. The
execution, delivery, and performance of this Guaranty has been duly authorized
by all necessary corporate action, and does not and will not (under present law)
contravene any law or governmental regulation or order presently binding on the
Guarantor, or contravene any provisions of or constitute a default under any
indenture, contract, or other instrument to which the Guarantor is a party or by
which the Guarantor is bound.
(c) The Guarantor represents and warrants to the Banks and the Agents
that this Guaranty is the legal, valid and binding obligation of the Guarantor,
enforceable against it in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to or affecting the enforcement of creditors' rights as applied to
the Guarantor, and except to the extent that enforceability is subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
76
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(d) The Guarantor covenants with the Banks and the Agents that it will
cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence and its rights and franchises, that it shall not
default under any provision of its charter, other incorporation papers, by-laws
or stock provisions or any amendment thereof or under any indenture or agreement
to which it is a party or by which it is bound, that it shall comply with all
covenants set forth in the U.S. Credit Agreement which are applicable to
Subsidiaries of the Company, and that it shall not violate any applicable laws
or orders, regulations, rulings or requirements of a court or public body or
authority by which it or its properties are bound, which default or violation
might reasonably be expected to have a material adverse effect on the business
or financial condition of the Guarantor, the Company and its Subsidiaries, taken
as a whole.
9. AGENTS' AND BANKS' FREEDOM TO DEAL WITH HGC AND OTHER PARTIES. The
Banks and the Agents shall be at liberty, without giving notice to or obtaining
the assent of the Guarantor and without relieving the Guarantor of any liability
hereunder, to deal with HGC, the Company and with each other party who now is or
after the date hereof becomes liable in any manner for any of the Obligations,
in such manner as the Banks and the Agents in their sole discretion deem fit,
and to this end the Guarantor gives to the Banks and the Agents full authority
in their sole discretion to do any or all of the following things: (a) extend
credit, make loans and afford other financial accommodations to HGC or the
Company at such times, in such amounts and on such terms as the Banks may
approve, (b) vary the terms and grant extensions or renewals of any present or
future indebtedness or obligation to the Banks and/or the Agents of HGC, the
Company or of any such other party, (c) grant time, waivers and other
indulgences in respect thereof, (d) vary, exchange, release or discharge, wholly
or partially, or delay in or abstain from perfecting and enforcing any security
or guaranty or other means of obtaining payment of any of the Obligations which
the Banks and/or the Agents now have or acquire after the date hereof, (e)
accept partial payments from HGC, the Company or any such other party, (f)
release or discharge, wholly or partially, any endorser or guarantor, and (g)
compromise or make any settlement or other arrangement with HGC, the Company or
any such other party.
10. UNENFORCEABILITY OF OBLIGATIONS AGAINST HGC OR THE COMPANY;
INVALIDITY OF SECURITY OR OTHER GUARANTIES. If for any reason either HGC or the
Company has no legal existence or is under no legal obligation to discharge any
of the Obligations undertaken or purported to be undertaken by it or on its
behalf, or if any of the monies included in the Obligations have become
irrecoverable from HGC or the Company by operation of law or for any other
reason, this Guaranty shall nevertheless be binding on the Guarantor to the same
extent as if the Guarantor at all times had been the principal debtor on all
such Obligations. In the event that acceleration of the time for payment of the
Obligations is stayed upon the insolvency, bankruptcy or reorganization of HGC
or the Company, or for any other reason, all such amounts otherwise subject to
acceleration under the terms of any agreement evidencing, securing or otherwise
executed in connection with any Obligation shall be immediately due and payable
by the Guarantor. This Guaranty shall be in addition to any other guaranty or
other security for the Obligations, and it shall not be prejudiced or rendered
unenforceable by the invalidity of any such other guaranty or security.
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11. TAXES. All payments hereunder shall be made without any
counterclaim or setoff, free and clear of, and without reduction by reason of,
any taxes, levies, imposts, charges and withholdings, restrictions or conditions
of any nature, which are now or may hereafter be imposed, levied or assessed by
any country, political subdivision or taxing or other authority therein
(excluding in the case of each Agent and each Bank, net income and profit and
franchise taxes imposed on such Agent or such Bank by the jurisdiction under the
laws of which such Agent or such Bank is organized or any subdivision or taxing
authority thereof or therein or by the United States or Canada or any taxing
authority thereof) ("Taxes"), all of which will be for the account of and paid
by the Guarantor. If for any reason, any such reduction is made or any Taxes are
paid by any Agent or any Bank, the Guarantor will pay to such Agent or such Bank
such additional amounts as may be necessary to ensure that such Agent or such
Bank receives the same net amount which it would have received had no reduction
been made or Taxes paid.
12. WAIVERS BY GUARANTOR. The Guarantor waives: demand, protest, notice
of acceptance hereof, notice of any action taken or omitted by the Banks or the
Agents in reliance hereon, notice of any Obligations incurred, any requirement
that the Banks or the Agents be diligent or prompt in making demands hereunder,
giving notice of any default by HGC or the Company or asserting any other right
of the Banks or the Agents hereunder and all other notices of any kind. The
Guarantor also irrevocably waives, to the fullest extent permitted by law, all
defenses which at any time may be available in respect of the Guarantor's
obligations hereunder by virtue of any homestead exemption, statute of
limitations, valuation, stay, moratorium law or other similar law now or
hereafter in effect, any right to require the marshalling of assets of HGC, the
Company or any other entity or other person primarily or secondarily liable with
respect to any of the Obligations, and all suretyship defenses generally.
13. SUBROGATION; SUBORDINATION. Until the payment and performance in
full of all Obligations, the Guarantor shall not exercise any rights against HGC
or the Company arising as a result of payment by the Guarantor hereunder, by way
of subrogation or otherwise, and will not prove any claim in competition with
the Banks or the Agents in respect of any payment hereunder in bankruptcy or
insolvency proceedings of any nature; the Guarantor will not claim any setoff or
counterclaim against HGC or the Company in respect of any liability of the
Guarantor to HGC or the Company; and the Guarantor waives any benefit of and any
right to participate in any collateral which may be held by the Banks and/or the
Agents. The payment of any amount due with respect to any indebtedness of HGC or
the Company now or hereafter held by the Guarantor is hereby subordinated to the
prior payment in full of the Obligations. The Guarantor agrees that after the
occurrence of any default in the payment or performance of the Obligations, the
Guarantor will not demand, sue for or otherwise attempt to collect any such
indebtedness of HGC or the Company to the Guarantor until the Obligations shall
have been paid in full. Notwithstanding the foregoing sentence, if the Guarantor
shall collect, enforce or receive any amount in respect of such indebtedness,
such amount shall be collected, enforced and received by the Guarantor as
trustee for the Banks and the Agents and be paid over to the Collateral Agent
for the benefit of the Agents and the Banks on account of the Obligations
without affecting in any manner the liability of the Guarantor under any other
provision of this Guaranty.
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14. DEMANDS AND NOTICES. Any demand on or notice to the Guarantor shall
be in writing and shall be effective when handed to the Guarantor or left at or
mailed or sent by telegraph to the Guarantor's address set forth on the
signature page hereof.
15. AMENDMENTS, WAIVERS. No provision of this Guaranty can be changed,
waived, discharged or terminated except by an instrument in writing signed by
the Majority US Banks and the Majority Canada Banks (in each case, as defined in
the Intercreditor Agreement) and the Guarantor expressly referring to the
provision of this Guaranty to which such instrument relates; and no such waiver
shall extend to, affect or impair any right with respect to any Obligation which
is not expressly dealt with therein. No course of dealing or delay or omission
on the part of the Banks or the Agents in exercising any right shall operate as
a waiver thereof or otherwise be prejudicial thereto.
16. SEVERABILITY, ETC. It is the intention and agreement of the
Guarantor, the Agents and the Banks that the obligations of the Guarantor under
this Guaranty shall be valid and enforceable against the Guarantor to the
maximum extent permitted by applicable law. Accordingly, if any provision of
this Guaranty creating any obligation of the Guarantor in favor of the Banks or
the Agents shall be declared to be invalid or unenforceable in any respect or to
any extent, it is the stated intention and agreement of the Guarantor, the
Agents and the Banks that any balance of the obligation created by such
provision and all other obligations of the Guarantor to the Banks and the Agents
created by other provisions of this Guaranty shall remain valid and enforceable.
Likewise, if by final order a court of competent jurisdiction shall declare any
sums which the Banks or the Agents may be otherwise entitled to collect from the
Guarantor under this Guaranty to be in excess of those permitted under any law
(including any federal or state fraudulent conveyance or like statute or rule of
law) applicable to the Guarantor's obligations under this Guaranty, it is the
stated intention and agreement of the Guarantor, the Agents and the Banks that
all sums not in excess of those permitted under such applicable law shall remain
fully collectible by the Banks and the Agents from the Guarantor.
17. FURTHER ASSURANCES. The Guarantor agrees that it will from time to
time, at the request of an Agent, do all such things and execute all such
documents as such Agent may reasonably consider necessary or desirable to give
full effect to this Guaranty and to perfect and preserve the rights and powers
of the Banks and the Agents hereunder.
18. MISCELLANEOUS PROVISIONS. THIS GUARANTY IS INTENDED TO TAKE EFFECT
AS A SEALED INSTRUMENT TO BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO
CONFLICTS OR CHOICE OF LAW). This Guaranty shall inure to the benefit of the
Banks, the Agents and their successors in title and assigns, and shall be
binding on the Guarantor and the Guarantor's successors in title, assigns and
legal representatives. This Guaranty may be executed in several counterparts and
by each party on a separate counterpart, each of which when so executed and
delivered shall be an original, but all of which together shall constitute one
instrument. In proving this Guaranty it shall not be necessary to produce or
account for more than one such counterpart signed by the party against whom
enforcement is sought.
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IN WITNESS WHEREOF, the Guarantor has executed this Guaranty or has
caused this Guaranty to be executed on its behalf by an officer or other person
thereunto duly authorized as of the _____ day of ______________, 19___.
111 Great Neck Road [INSERT NAME OF GUARANTOR]
Great Neck, N.Y. 11021
Attention: President
By:___________________________________
Title:
Accepted and agreed:
THE FIRST NATIONAL BANK OF
BOSTON
By:___________________________________
Title:
EUROPEAN AMERICAN BANK
By:___________________________________
Title:
THE CHASE MANHATTAN BANK, N.A.
By:___________________________________
Title:
THE FIRST NATIONAL BANK OF
BOSTON, AS US AGENT
By:___________________________________
Title:
80
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ABN AMRO BANK CANADA
By:___________________________________
Title:
THE CHASE MANHATTAN BANK OF CANADA
By:___________________________________
Title:
THE CHASE MANHATTAN BANK OF CANADA,
AS CANADIAN AGENT
By:___________________________________
Title:
81
EXHIBIT D
FORM OF SUBSIDIARY
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of [_________________, 19__], between
[INSERT NAME], a [___] corporation (the "Company"), and The First National Bank
of Boston, a national banking association, as collateral agent (hereinafter, in
such capacity, the "Collateral Agent") for the Banks (as hereinafter defined).
WHEREAS, Hudson General Corporation ("HGC") and Hudson General LLC (the
"LLC") have entered into an Amended and Restated Revolving Credit Agreement,
dated as of November 25, 1992 and amended and restated as of June 1, 1996 (as
amended and in effect from time to time, the "Credit Agreement"), with The First
National Bank of Boston, European American Bank, The Chase Manhattan Bank, N.A.,
certain other financial institutions (collectively, the "US Banks"), and The
First National Bank of Boston as agent (the "US Agent") pursuant to which the US
Banks, subject to the terms and conditions contained therein, have agreed to
make loans or otherwise to extend credit to HGC and the LLC; and
WHEREAS, pursuant to that certain Amended and Restated Guaranty dated
February 3, 1993 and amended and restated June 1, 1996 (the "LLC Guaranty") in
favor of ABN AMRO Bank Canada and The Chase Manhattan Bank of Canada
(collectively, the "Canada Banks") and the Canadian Agent (as defined below),
the LLC has guaranteed all of the obligations of Hudson General Aviation
Services Inc./Societe de Services Hudson General (Aviation) Inc. ("HGAS"), a
wholly owned subsidiary of the LLC, to the Canada Banks and the Canadian Agent
under a Revolving Credit Agreement, dated as of November 25, 1992, as amended
(as amended and in effect from time to time, the "HGAS Credit Agreement"), among
HGAS, the Canada Banks and The Chase Manhattan Bank of Canada as successor agent
(the "Canadian Agent"), and certain promissory notes executed and delivered in
connection therewith; and
WHEREAS, pursuant to that certain guaranty of even date herewith (the
"Guaranty") in favor of each of the US Banks, the US Agent, the Canada Banks and
the Canadian Agent, the Company has guaranteed all obligations of HGC and the
LLC under (i) the Credit Agreement and certain promissory notes executed and
delivered in connection therewith, and (ii) the LLC Guaranty; and
WHEREAS, it is a condition precedent to the US Banks' making any loans
or otherwise extending credit to HGC and the LLC under the Credit Agreement and
the Canada Banks' making any loans or otherwise extending credit to HGAS under
the HGAS Credit Agreement that the Company execute and deliver to the Collateral
Agent, for the benefit of the Banks (as defined below) and the Collateral Agent,
a security agreement in substantially the form hereof;
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NOW, THEREFORE, in consideration of the promises contained herein and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINITIONS. For purposes hereof, the term "Banks" shall
mean (a) the US Banks, (b) the CanadA Banks, (c) the US Agent, (d) the Canadian
Agent and (e) the successors and assigns of the foregoing, and the term
"Obligations" shall have the meaning set forth in Section 3 hereof. All other
capitalized terms used herein withouT definitions shall have the respective
meanings provided therefor in the Credit Agreement. All terms defined in the
Uniform Commercial Code of the Commonwealth of Massachusetts and used herein
shall have the same definitions herein as specified therein.
SECTION 2. GRANT OF SECURITY INTEREST.
(a) The Company hereby grants to the Collateral Agent, for the benefit
of the Banks and the Collateral Agent, to secure the payment and performance in
full of all of the Obligations (as defined below), a continuing security
interest in and so pledges and assigns to the Collateral Agent, for the benefit
of the Banks and the Collateral Agent, the following properties, assets and
rights of the Company, wherever located, whether now owned or hereafter acquired
or arising, and all proceeds and products thereof (all of the same being
hereinafter called the "Collateral"):
(i) all accounts of every kind and nature whether now owned or
hereafter acquired by the Company, including accounts receivable, all
instruments pertaining thereto, all security and guaranties with
respect thereto, all rights of the Company pertaining to goods giving
rise thereto, including the right of stoppage in transit, and all
security interests, liens and pledges, whether voluntary or
involuntary, securing the account debtors' obligations to the Company
thereunder, and all contract rights (to the extent that such rights are
to the payment of money), rights to the payment of money, chattel
paper, documents, instruments (including certificated securities) and
uncertificated securities, in each case whether now owned or hereafter
acquired by the Company;
(ii) all inventory (other than any fuel), raw materials, and
work in progress, in each case whether now owned or hereafter acquired
by the Company;
(iii) all general intangibles now owned or hereafter acquired
by the Company, including, without limitation, license fees, patents,
patent applications, trademarks, trademark applications, trade names,
copyrights, copyright applications, rights to sue and recover for past
infringement of patents, trademarks and copyrights, computer programs,
computer software, engineering drawings, service marks, customer lists,
goodwill, and all recorded data of any kind or nature, regardless of
the medium of recording including, without limitation, all software,
writings, plans, specifications and schematics (other than any general
intangibles relating to contracts except as expressly granted herein);
(iv) all equipment now owned or acquired by the Company after
the date hereof and all related equipment, parts and accessions and
additions with respect
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thereto and tires thereon which are now owned or hereafter acquired,
and all substitutions and replacements which are now owned or hereafter
acquired by the Company; and
(v) all proceeds, including, without limitation, insurance
refund claims and all other insurance claims and proceeds, with respect
to any of the foregoing.
Notwithstanding the foregoing, the term "Collateral" shall not include:
(A) any property, asset or right of the Company described in
clauses (i), (ii) and (iii) above to the extent that such property,
asset or right of the Company is subject to any legally binding
contract provision restricting the pledge or assignment of such
property, right or asset as contemplated herein;
(B) any of the shares of capital stock of the Subsidiaries of
the Company;
(C) certificated and uncertificated securities owned by the
Company (other than of any Subsidiary of the Company) provided, that if
the market value of such securities exceeds $50,000 in the aggregate
then all such certificated and uncertificated securities owned by the
Company (other than of any Subsidiary of the Company) shall constitute
the Collateral;
(D) any of the equipment now owned by the Company which is
specifically identified on Schedule 1 attached hereto (except as set
forth to the contrary in Section 6(a) hereof); and
(E) any equipment hereafter acquired by the Company either (x)
with financing provided by a purchase money lender to the extent
permitted by Paragraph 5.13(f) of the Credit Agreement, or (y) for
purposes of fulfilling the Company's obligations under any contract
with an account debtor which by its terms prohibits the Company from
subjecting any of the equipment identified to such contract to any
lien, which equipment the Company shall have identified in a supplement
to Schedule 1 attached hereto delivered to the Collateral Agent
together with certificate of the Company certifying that such equipment
has been so financed or has been so identified with such a contract.
(b) Pursuant to the terms hereof, the Company has endorsed, assigned
and delivered to the Collateral Agent all negotiable or non-negotiable
instruments (including certificated securities) and chattel paper which
constitute Collateral, together with stock powers or other appropriate
instruments of transfer or assignment duly executed in blank as the Collateral
Agent may have specified. In the event that the Company shall, after the date of
this Agreement, acquire any other negotiable or non-negotiable instruments
(including certificated securities but excluding checks received by the Company
in the ordinary course of its business in connection with the collection of its
accounts) or chattel paper which constitute Collateral, the Company shall
forthwith endorse, assign and deliver the same to the Collateral Agent,
accompanied by such stock powers or other instruments of transfer or assignment
duly executed in blank as the Collateral Agent may from time to time specify. To
the extent that any such securities are uncertificated, appropriate book-
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entry transfers reflecting the pledge of such securities created hereby have
been or, in the case of uncertificated securities which constitute Collateral
hereafter acquired by the Company, will at the time of such acquisition be, duly
made for the account of the Collateral Agent or one or more nominees of the
Collateral Agent with the issuer of such securities or other appropriate
book-entry facility or financial intermediary, with the Collateral Agent having
at all times the right to obtain definitive certificates (in the Collateral
Agent's name or in the name of one or more nominees of the Collateral Agent)
where the issuer customarily or otherwise issues certificates, all to be held as
Collateral hereunder. The Company hereby acknowledges that the Collateral Agent
may, in its discretion, appoint one or more financial institutions to act as the
Collateral Agent's agent in holding in custodial accounts instruments or other
financial assets in which the Collateral Agent is granted a security interest
hereunder, including, without limitation, certificates of deposit and other
instruments evidencing short term obligations.
SECTION 3. OBLIGATIONS SECURED. The Collateral hereunder constitutes
and will constitute continuing secuRity for (i) all of the obligations of the
Company to the Banks under or in relation to the Guaranty as such guaranty is
originally executed or as modified, amended, restated, supplemented or extended
and (ii) all obligations of the Company to the Banks arising out of any
extension, refinancing or refunding of any of the foregoing obligations, whether
such obligations are now existing or hereafter acquired or arising, direct or
indirect, joint or several, absolute or contingent, due or to become due,
matured or unmatured, liquidated or unliquidated, arising by contract, operation
of law or otherwise (hereinafter collectively referred to as the "Obligations").
SECTION 4. CONCERNING ACCOUNTS AND CHATTEL PAPER. The Company
represents and warrants to the Collateral Agent that it keeps or causes to be
kept, and covenants with the Collateral Agent that it shall keep or cause to be
kept, separate records of accounts, chattel paper and instruments which are
complete and accurate in all material respects. The Company covenants and agrees
that from time to time upon the request of the Collateral Agent, it shall
deliver to the Collateral Agent a list of the names, addresses, face value, and
dates of invoice(s) for each account debtor obligated on any account or chattel
paper and for each obligor on instruments for which the Company is an obligee,
along with such additional information with respect to its accounts, chattel
paper and instruments as the Collateral Agent reasonably may request. The
Company covenants with the Collateral Agent that, except with respect to any
renewal of any contract existing on the date hereof which restricts such
assignment, it shall use its reasonable efforts to enter into contracts with
account debtors which do not restrict the assignment by the Company of any of
its property, assets or rights of the kind described in Section 2(a)(i) hereof
with respect to such contract.
SECTION 5. CONCERNING SECURITIES. (a) Any sums or other property paid
or distributed upon or with respeCt to any securities which constitute
Collateral, whether by dividend or redemption or upon the liquidation or
dissolution of the issuer thereof or otherwise, shall, except to the limited
extent provided in Section 5(b), be paId over and delivered to the Collateral
Agent to be held by the Collateral Agent, for the benefit of the Banks and the
Collateral Agent, as security for the payment and performance in full of all of
the Obligations. In case, pursuant to the recapitalization or reclassification
of the capital of the issuer thereof or pursuant to the reorganization thereof,
any distribution of capital shall be made on or in
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respect of any of the securities which constitute Collateral or any property
shall be distributed upon or with respect to any of such securities, the
property so distributed shall be delivered to the Collateral Agent, for the
benefit of the Banks and the Collateral Agent, to be held by it as security for
the Obligations. Except to the limited extent provided in Section 5(b), all sums
of money and property paid or distributed in respect of any securities which
constitute Collateral, whether as a dividend or upon such a liquidation,
dissolution, recapitalization or reclassification or otherwise, that are
received by the Company shall, until paid or delivered to the Collateral Agent,
be held in trust for the Collateral Agent, for the benefit of the Banks and the
Collateral Agent, as security for the payment and performance in full of all of
the Obligations.
(b) So long as no Default shall have occurred and be continuing, the
Company shall be entitled to receive all cash dividends paid in respect of any
securities which constitute Collateral, to vote such securities and to give
consents, waivers and ratifications in respect of such securities; provided,
however, that no vote shall be cast or consent, waiver or ratification given by
the Company if the effect thereof would impair any of such securities or be
inconsistent with or result in any violation of any of the provisions of the
Credit Agreement or any of the other Loan Documents. All such rights of the
Company to receive cash dividends shall cease in case a Default shall have
occurred and be continuing. All such rights of the Company to vote and give
consents, waivers and ratifications with respect to any securities which
constitute Collateral shall, at the Collateral Agent's option, as evidenced by
the Collateral Agent's notifying the Company of such election, cease in case a
Default shall have occurred and be continuing.
SECTION 6. CONCERNING EQUIPMENT. (a) The Company represents and
warrants to the Collateral Agent and covenants with the Collateral Agent that
the equipment identified on Schedule 1 attached hereto (as such schedule may be
supplemented from time to time by the Company in accordance with Section 2(a)(E)
hereof) was and will be either acquired by the Company (i) with financing
provided by a purchase money lender to the extent permitted by Paragraph 5.13(f)
of the Credit Agreement, or (ii) for purposes of fulfilling the Company's
obligations under any contract with an account debtor which by its terms
prohibits the Company from subjecting any of the equipment identified with such
contract to any lien. Any equipment identified on Schedule 1 attached hereto
which was not either acquired by the Company (i) with the financing provided by
a purchase money lender to the extent permitted by Paragraph 5.13(f) of the
Credit Agreement, or (ii) for the purposes of fulfilling the Company's
obligations under any contract with an account debtor which by its terms
prohibits the Company from subjecting such equipment identified with such
contract to any lien, shall be deemed to be Collateral.
(b) The Company covenants with the Collateral Agent that, except with
respect to any renewal of any contract existing on the date hereof which
prohibits such assignment, it shall use its reasonable efforts to enter into
contracts with account debtors which do not prohibit the Company from subjecting
any of the equipment identified with such contracts to any lien, encumbrance or
assignment.
(c) The Company represents and warrants to the Collateral Agent and
covenants with the Collateral Agent that (i) Collateral for which motor vehicle
or any other certificate of title is required is listed on Schedule 2 attached
hereto, and such Collateral is titled in
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the jurisdictions located in the United States of America listed on Schedule 2
attached hereto and will remain titled in such jurisdictions, provided that the
Company may retitle any Collateral for which motor vehicle or any other
certificate of title is required in another jurisdiction located in the United
States of America provided that the retitling of such Collateral is reflected in
the revised Schedule 2 next delivered to the Collateral Agent pursuant to the
terms hereof; and (ii) Collateral for which no certificate of title is required,
but for which registration under motor vehicle laws is required, is registered
in the jurisdictions located in the United States of America listed on Schedule
2 and will remain registered in such jurisdictions, provided that the Company
may terminate any such registration which is no longer required under applicable
law and may reregister any Collateral in a different or the same jurisdiction
provided that such reregistration is reflected in the revised Schedule 2 next
delivered to the Collateral Agent pursuant to the terms hereof. The Company
shall deliver to the Collateral Agent, concurrently with each delivery by the
Borrower of the compliance certificate pursuant to Paragraph 5.2(f) of the
Credit Agreement, a revised Schedule 2 reflecting equipment acquired by the
Company after the date hereof and, if any equipment has been retitled or
reregistered after the date hereof in accordance with the terms of this
Agreement, the jurisdiction in which such equipment has been retitled or
reregistered.
(d) The Company covenants with the Collateral Agent that if a Default
shall have occurred and be continuing, the Company shall, within 30 days of the
request of the Collateral Agent, deliver to the Collateral Agent all
certificates of title and related applications for title for all Collateral for
which motor vehicle or any other certificate of title is required, endorsed by
the Company to reflect the security interest granted hereunder to the Collateral
Agent.
SECTION 7. CONCERNING PATENTS AND TRADEMARKS. (a) The Company
represents and warrants to the CollatEral Agent that as of the date hereof, the
Company does not have any right to and is not entitled to the benefits of any
patents, trademarks, service marks, tradenames or logos. If the Company shall
acquire rights to any new trademarks, trade names, logos, service marks or
patentable inventions, or becomes entitled to the benefit of any patent or
trademark or service mark registration application, or application for any
reissue, division, continuation, renewal, extension or continuation-in-part of
any patent, any improvement on any patent, or any trademark or service mark
registration after the date hereof, within 15 days after acquiring such rights,
the Company shall execute and deliver to the Collateral Agent as a supplement to
this Agreement a Patent Collateral Assignment and Security Agreement
satisfactory to the Collateral Agent in all respects and the provisions of this
Agreement shall automatically apply thereto. The Company shall provide to the
Collateral Agent all information reasonably requested by the Collateral Agent
and reasonably necessary to perfect the Collateral Agent's security interest in
such trademark, trade name, logo, service mark and patent registrations and
applications. The Company will not enter into any agreements outside of the
ordinary course of its business affecting any of its trademarks, trade names,
logos, service marks or patents acquired after the date hereof without the prior
written consent of the Collateral Agent. The Company grants to the Collateral
Agent the right upon the occurrence of a Default to sue for any infringement
(past, present or future) of the Company's patent, trademark, trade name, logo,
or service mark rights and/or to join the Company as a nominal party plaintiff
in any trademark, service mark, trade name, logo or patent infringement suit.
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(b) The Company represents and warrants to the Collateral Agent that as
of the date hereof, the Company does not own or have any rights to any
copyrights which are registered with the United States Copyright Office. If the
Company acquires copyright rights or such rights accrue to the Company after the
date hereof, the provisions of this Agreement shall automatically apply thereto.
The Company will give written notice to the Collateral Agent of any federal
copyright registration or application obtained or filed after the date hereof.
The Company shall provide to the Collateral Agent all information reasonably
requested by the Collateral Agent and reasonably necessary to perfect the
Collateral Agent's security interest in such copyright registrations and
applications. The Company will not enter into any agreements outside of the
ordinary course of its business affecting any of its copyrights acquired after
the date hereof without the prior written consent of the Collateral Agent. The
Company grants to the Collateral Agent the right upon the occurrence and
continuance of a Default to sue for any infringement (past, present or future)
of the Company's copyright rights and/or to join the Company as a nominal party
plaintiff in any copyright infringement suit.
SECTION 8. GOVERNMENT CONTRACTS. If a Default shall have occurred and
be continuing, the Company shaLl upon the request of the Collateral Agent,
execute all such documents, and take all such actions, as the Collateral Agent
shall determine to be necessary or appropriate from time to time under the
Federal Assignment of Claims Act of 1940, as amended, in order to confirm and
assure to the Collateral Agent its rights under this Agreement with respect to
any and all Collateral consisting of the Company's rights to moneys due or to
become due under any contracts or agreements with or orders from the United
States government or any agency or department thereof, the assignment of which
is not prohibited by such contract or agreement (collectively, "Government
Receivables"). Without limiting the generality of the foregoing, the Company
agrees that (i) within three Business Days after such request from the
Collateral Agent, it shall execute and deliver to the Collateral Agent a
confirmatory assignment substantially in the form of Exhibit A attached hereto
(a "Confirmatory Assignment") with respect to each Government Receivable
existing on the date of such request, and (ii) within ten Business Days after
the creation of any new Governmental Receivable after the date of such request
from the Collateral Agent, it shall execute and deliver to the Collateral Agent
a Confirmatory Assignment with respect to such Government Receivable. The
Company hereby irrevocably authorizes the Collateral Agent, or its designee, at
the Company's expense, to file with the United States government (or the
appropriate agency or instrumentality thereof) a notice of each such assignment
of a Government Receivable substantially in the form of Exhibit B attached
hereto (a "Notice of Assignment"), to which a copy of the relevant Confirmatory
Assignment may be attached, and appoints the Collateral Agent as the Company's
attorney-in-fact to execute and file any such Confirmatory Assignments, Notices
of Assignment and any ancillary documents relating thereto.
SECTION 9. TITLE TO COLLATERAL, ETC. The Company is the owner of the
Collateral free from any adverse liEn, security interest or other encumbrance,
except for the security interest created by this Agreement and other liens
permitted by the Credit Agreement. None of the Collateral constitutes, or is the
proceeds of, "farm products" as defined in Section 9-109(3) of the Uniform
Commercial Code of the Commonwealth of Massachusetts.
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SECTION 10. CONTINUOUS PERFECTION. The Company's place of business or,
if more than one, chief executive office is indicated on the Perfection
Certificate delivered by the Company to the Collateral Agent herewith (the
"Perfection Certificate"). The Company will not change the same, or the name,
identity or corporate structure of the Company in any manner, without providing
at least 30 days' prior written notice to the Collateral Agent. The Collateral,
to the extent not delivered to the Collateral Agent pursuant to Section 2(b),
will be kept at those locations listed on the Perfection Certificate and the
Company will not remove the Collateral (except to the extent that equipment
which consists of titled vehicles is moved in the ordinary course of business)
from such locations, without providing at least 30 days' prior written notice to
the Collateral Agent.
SECTION 11. NO LIENS. Except for the security interest herein granted
and liens permitted by the Credit Agreement, the Company shall be the owner of
the Collateral free from any lien, security interest or other encumbrance, and
the Company shall defend the same against all claims and demands of all persons
at any time claiming the same or any interests therein adverse to the Collateral
Agent or any of the Banks. The Company shall not pledge, mortgage or create, or
suffer to exist a security interest in the Collateral in favor of any person
other than the Collateral Agent, for the benefit of the Banks and the Collateral
Agent, except for liens permitted by the Credit Agreement.
SECTION 12. NO TRANSFERS. The Company will not sell or offer to sell or
otherwise transfer the CollateraL or any interest therein except as permitted by
the Credit Agreement.
SECTION 13. INSURANCE.
(a) The Company will maintain with financially sound and reputable
insurers such insurance with respect to its properties and business as is
required to be maintained under the Credit Agreement. In addition, all property
insurance with respect to the Collateral shall be payable to the Collateral
Agent as loss payee under a "standard" or "New York" loss payee clause for the
benefit of the Banks and the Collateral Agent.
(b) The proceeds of any property insurance in respect of any casualty
loss of any of the Collateral shall, subject to the rights, if any, of other
parties with a prior interest in the property covered thereby, (i) so long as no
Default or condition which would, with either or both the giving of notice or
the lapse of time, result in a Default has occurred and is continuing and to the
extent that the amount of such proceeds is less than $100,000, be disbursed to
the Company for direct application by the Company solely to the repair or
replacement of the Company's property so damaged or destroyed and (ii) in all
other circumstances, be held by the Collateral Agent as cash collateral for the
Obligations of the Company. The Collateral Agent may, at its sole option,
disburse from time to time all or any part of such proceeds so held as cash
collateral, upon such terms and conditions as the Collateral Agent may
reasonably prescribe, for direct application by the Company solely to the repair
or replacement of the Company's property so damaged or destroyed, or the
Collateral Agent may, if a Default has occurred and is continuing, apply all or
any part of such proceeds to the Obligations with the Aggregate Loan Limit (if
not then terminated) being reduced by the amount so applied to the Obligations.
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(c) All such policies of insurance shall provide for at least thirty
days' prior written cancellation notice to the Collateral Agent. In the event of
failure by the Company to provide and maintain insurance as herein provided, the
Collateral Agent may, at its option, provide such insurance and charge the
amount thereof to the Company. The Company shall furnish the Collateral Agent
with certificates of insurance and, upon the request of the Collateral Agent,
policies evidencing compliance with the foregoing insurance provisions.
SECTION 14. MAINTENANCE OF COLLATERAL; COMPLIANCE WITH LAW. The Company
will keep the Collateral in good order and repair (ordinary wear and tear
excepted) and will not use the same in violation of law or any policy of
insurance thereon and will take all other necessary and appropriate steps
(including, but not limited to, defending any of the patents, copyrights,
trademarks, service marks, tradenames or logos, and any registrations thereof
which constitute Collateral, against any infringement thereof or any opposition
or other adversary action or proceeding when the defense of such patents,
copyrights, trademarks, service marks, tradenames or logos has been determined
to be necessary and appropriate in the business judgment of the Company) to
preserve the value thereof and the goodwill, business and assets associated
therewith or appurtenant thereto. The Collateral Agent, or its designee, may
inspect the Collateral at any reasonable time, wherever located provided that so
long as no Default or condition which would, with either or both the giving of
notice or the lapse of time, result in a Default has occurred and is continuing,
the Collateral Agent shall give reasonable notice to the Company of such
inspection. The Company will pay promptly when due all taxes, assessments,
governmental charges and levies upon the Collateral or incurred in connection
with the use or operation of such Collateral or incurred in connection with this
Agreement.
SECTION 15. COLLATERAL PROTECTION EXPENSES; PRESERVATION OF COLLATERAL.
(a) In its discretion, the Collateral Agent may discharge taxes and
other encumbrances at any time levied or placed on any of the Collateral, make
repairs thereto and pay any necessary filing fees. The Company agrees to
reimburse the Collateral Agent on demand for any and all expenditures so made.
The Collateral Agent shall have no obligation to the Company to make any such
expenditures, nor shall the making thereof relieve the Company of any default.
The Collateral Agent shall inform the Company before incurring any such expense.
(b) Anything herein to the contrary notwithstanding, the Company shall
remain liable under each contract or agreement comprised in the Collateral to be
observed or performed by the Company thereunder. Neither the Collateral Agent
nor any Bank shall have any obligation or liability under any such contract or
agreement by reason of or arising out of this Agreement or the receipt by the
Collateral Agent or any Bank of any payment relating to any of the Collateral,
nor shall the Collateral Agent or any Bank be obligated in any manner to perform
any of the obligations of the Company under or pursuant to any such contract or
agreement, to make inquiry as to the nature or sufficiency of any payment
received by the Collateral Agent or any Bank in respect of the Collateral or as
to the sufficiency of any performance by any party under any such contract or
agreement, to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been
assigned to the Collateral Agent
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or to which the Collateral Agent or any Bank may be entitled at any time or
times. The Collateral Agent's sole duty with respect to the custody, safe
keeping and physical preservation of the Collateral in its possession, under
Section 9-207 of the Uniform Commercial Code of the CommonwEalth of
Massachusetts or otherwise, shall be to deal with such Collateral in the same
manner as the Collateral Agent deals with similar property for its own account.
SECTION 16. SECURITIES AND DEPOSITS. The Collateral Agent may at any
time after the occurrence and durinG the continuance of a Default, at its
option, transfer to itself or any nominee any securities constituting
Collateral, receive any income thereon and hold such income as additional
Collateral or apply it to the Obligations. Whether or not any Obligations are
due, after the occurrence and during the continuance of a Default, the
Collateral Agent may demand, sue for, collect, or make any settlement or
compromise which it deems desirable with respect to the Collateral. Regardless
of the adequacy of Collateral or any other security for the Obligations, any
deposits or other sums at any time credited by or due from the Collateral Agent
or any Bank to the Company may at any time be applied to or set off against any
of the Obligations as provided in the Guaranty.
SECTION 17. NOTIFICATION TO ACCOUNT DEBTORS AND OTHER OBLIGORS. If a
Default shall have occurred and be continuing the Company shall, at the request
of the Collateral Agent, notify account debtors on accounts and chattel paper of
the Company and obligors on instruments for which the Company is an obligee of
the security interest of the Collateral Agent in any such account, chattel paper
or instrument and that payment thereof is to be made directly to the Collateral
Agent or to any financial institution designated by the Collateral Agent as the
Collateral Agent's agent therefor, and the Collateral Agent may itself, if a
Default shall have occurred and be continuing, without notice to or demand upon
the Company, so notify account debtors and obligors. After the making of such a
request or the giving of any such notification (provided the same has also been
sent to the Company), the Company shall hold any proceeds of collection of
accounts, chattel paper and instruments received by the Company as trustee for
the Collateral Agent, for the benefit of the Banks and the Collateral Agent,
without commingling the same with other funds of the Company and shall turn the
same over to the Collateral Agent in the identical form received, together with
any necessary endorsements or assignments. The Collateral Agent shall apply the
proceeds of collection of accounts, chattel paper and instruments received by
the Collateral Agent to the Obligations as provided in the Intercreditor
Agreement, such proceeds to be immediately entered after final payment in cash
or solvent credits of the items giving rise to them.
SECTION 18. NO FURTHER ACTIONS. No authorization, approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body or other person that has not been received, taken or made is
required for the grant by the Company of the security interests granted hereby
or for the execution, delivery or performance of this Agreement by the Company,
or, except for (i) the filing of financing statements and continuation
statements with respect thereto, (ii) the delivery of the instruments, chattel
paper and share certificates referred to in Section 2(b) hereof, (iii) the
presentation to the Departments of Motor Vehicles of the applications for title
referred to in Section 6(d) hereof, at the times required in Section 6(d)
hereof, and (iv) the execution and delivery of the Patent Collateral Assignment
and Security Agreements referred to in Section 7 hereof and the filing of
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such instruments at the times provided herein, and the execution and delivery of
the Confirmatory Assignments and Notices of Assignment referred to in Section 8
hereof, at the times required in Section 8 hereof, for (A) the perfection and
maintenance of the security interests hereunder (including the first priority
nature of such security interests), or (B) the exercise by the Collateral Agent
of the rights or the remedies in respect of the Collateral pursuant to this
Agreement (other than the authorization and direction of the requisite Banks
pursuant to the terms of the Intercreditor Agreement).
SECTION 19. FURTHER ASSURANCES. The Company, at its own expense, shall
do, make, execute and deliver all such additional and further acts, things,
deeds, assurances and instruments as the Collateral Agent may reasonably require
more completely to vest in and assure to the Collateral Agent and the Banks
their respective rights hereunder or in any of the Collateral, including,
without limitation, (a) executing, delivering and, where appropriate, filing
financing statements and continuation statements under the Uniform Commercial
Code, (b) obtaining governmental and other third party consents and approvals,
(c) obtaining waivers from mortgagees and landlords and (d) taking all actions
required by Sections 8-313 and 8-321 of the Uniform Commercial Code, as
applicable in each relevant jurisdiction, with respect to certificated and
uncertificated securities.
SECTION 20. POWER OF ATTORNEY.
(a) The Company hereby irrevocably constitutes and appoints the
Collateral Agent and any officer or agent thereof, with full power of
substitution, as its true and lawful attorneys-in-fact with full irrevocable
power and authority in the place and stead of the Company or in the Collateral
Agent's own name, for the purpose of carrying out the terms of this Agreement,
to take any and all appropriate action and to execute any and all documents and
instruments that may be necessary or desirable to accomplish the purposes of
this Agreement and, without limiting the generality of the foregoing, hereby
gives said attorneys the power and right, on behalf of the Company, without
notice to or assent by the Company, to do the following:
(i) upon the occurrence and during the continuance of a
Default generally to sell, transfer, pledge, make any agreement with
respect to or otherwise deal with any of the Collateral in such manner
as is consistent with the Uniform Commercial Code of the Commonwealth
of Massachusetts and as fully and completely as though the Collateral
Agent were the absolute owner thereof for all purposes, and to do at
the Company' expense, at any time, or from time to time, all acts and
things which the Collateral Agent deems necessary to protect, preserve
or realize upon the Collateral and the Collateral Agent's security
interest therein, in order to effect the intent of this Agreement, all
as fully and effectively as the Company might do, including, without
limitation, (A) upon written notice to the Company, the exercise of
voting rights with respect to voting securities, which rights may be
exercised, if the Collateral Agent so elects, with a view to causing
the liquidation in a commercially reasonable manner of assets of the
issuer of any such securities and (B) the execution, delivery and
recording, in connection with any sale or other disposition of any
Collateral, of the endorsements, assignments or other instruments of
conveyance or transfer with respect to such Collateral; and
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(ii) to file such financing statements with respect hereto,
with or without the Company's signature, or a photocopy of this
Agreement in substitution for a financing statement, as the Collateral
Agent may deem appropriate and to execute in the Company's name such
financing statements and continuation statements which may require the
Company's signature.
(b) To the extent permitted by law, the Company hereby ratifies all
that said attorneys shall lawfully do or cause to be done by virtue hereof. This
power of attorney is a power coupled with an interest and shall be irrevocable.
(c) The powers conferred on the Collateral Agent hereunder are solely
to protect the interests of the Collateral Agent and the Banks in the Collateral
and shall not impose any duty upon the Collateral Agent to exercise any such
powers. The Collateral Agent shall be accountable only for the amounts that it
actually receives as a result of the exercise of such powers and neither it nor
any of its officers, directors, employees or agents shall be responsible to the
Company for any act or failure to act, except for the Collateral Agent's own
gross negligence or willful misconduct.
SECTION 21. REMEDIES. (a) If a Default shall have occurred and be
continuing, the Collateral Agent may uPon written instruction of the Banks in
accordance with the Intercreditor Agreement, without notice to or demand upon
the Company, declare this Agreement to be in default, and the Collateral Agent
shall thereafter have in any jurisdiction in which enforcement hereof is sought,
in addition to all other rights and remedies, the rights and remedies of a
secured party under the Uniform Commercial Code, including, without limitation,
the right to take possession of the Collateral, and for that purpose the
Collateral Agent may, so far as the Company can give authority therefor, enter
upon any premises on which the Collateral may be situated and remove the same
therefrom and in addition, the Collateral Agent shall thereafter have the
following rights and remedies (to the extent permitted by applicable law) in any
jurisdiction in which enforcement is sought:
(i) if the Collateral Agent so elects and gives notice of such
election to the Company, the Collateral Agent may vote any or all
securities which constitute Collateral whether or not the same shall
have been transferred into its name or the name of its nominee or
nominees) for any lawful purpose, including, without limitation, if the
Collateral Agent so elects, for the liquidation of the assets of the
issuer thereof, and give all consents, waivers and ratifications in
respect of such securities and otherwise act with respect thereto as
though it were the outright owner thereof (the Company hereby
irrevocably constituting and appointing the Collateral Agent the proxy
and attorney-in-fact of the Company, with full power of substitution,
to do so); and
(ii) the Collateral Agent may cause all or any part of the
securities held by it to be transferred into its name or the name of
its nominee or nominees, if it has not already done so.
The Company recognizes that the Collateral Agent may be unable to
effect a public sale of the securities which constitute Collateral by reason of
certain prohibitions contained
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in the Securities Act of 1933, as amended, but may be compelled to resort to one
or more private sales thereof to a restricted group of purchasers. The Company
recognizes that any such private sales may be at prices and other terms less
favorable to the seller than if sold at public sales and that such private sales
shall not by reason thereof be deemed not to have been made in a commercially
reasonable manner. The Collateral Agent shall be under no obligation to delay a
sale of any security for the period of time necessary to permit the issuer of
such securities to register such securities for public sale under the Securities
Act of 1933, as amended, even if the issuer would agree to do so.
(b) The Collateral Agent may in its discretion require the Company to
assemble all or any part of the Collateral at such location or locations within
the state(s) of the Company's principal office(s) or at such other locations as
the Collateral Agent may designate. Unless the Collateral is perishable or
threatens to decline speedily in value or is of a type customarily sold on a
recognized market, the Collateral Agent shall give to the Company at least five
Business Days' prior written notice of the time and place of any public sale of
Collateral or of the time after which any private sale or any other intended
disposition is to be made. The Company hereby acknowledges that five Business
Days' prior written notice of such sale or sales shall be reasonable notice. In
addition, the Company waives any and all rights that it may have to a judicial
hearing in advance of the enforcement of any of the Collateral Agent's rights
hereunder, including, without limitation, its right following a Default to take
immediate possession of the Collateral and to exercise its rights with respect
thereto.
SECTION 22. NO WAIVER, ETC. The Company waives demand, notice, protest,
notice of acceptance of this Agreement, notice of loans made, credit extended,
Collateral received or delivered or other action taken in reliance hereon and
all other demands and notices of any description; provided that the Company
shall be sent copies of any notices sent by the Collateral Agent to account
debtors, it being understood that the Collateral Agent shall not be liable for
any failure to send any such copy. With respect to both the Obligations and the
Collateral, the Company assents to any extension or postponement of the time of
payment or any other indulgence, to any substitution, exchange or release of
Collateral, to the addition or release of any party or person primarily or
secondarily liable, to the acceptance of partial payment thereon and the
settlement, compromising or adjusting of any thereof, all in such manner and at
such time or times as the Collateral Agent may deem advisable. The Collateral
Agent shall have no duty as to the collection or protection of the Collateral or
any income thereon, nor as to the preservation of rights against prior parties,
nor as to the preservation of any rights pertaining thereto beyond the safe
custody thereof as set forth in Section 15(b). The Collateral Agent shalL not be
deemed to have waived any of its rights upon or under the Obligations or the
Collateral unless such waiver shall be in writing and signed by the Collateral
Agent with the consent of the Majority Banks. No delay or omission on the part
of the Collateral Agent in exercising any right shall operate as a waiver of
such right or any other right. A waiver on any one occasion shall not be
construed as a bar to or waiver of any right on any future occasion. All rights
and remedies of the Collateral Agent with respect to the Obligations or the
Collateral, whether evidenced hereby or by any other instrument or papers, shall
be cumulative and may be exercised singularly, alternatively, successively or
concurrently at such time or at such times as the Collateral Agent deems
expedient.
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SECTION 23. MARSHALLING. Neither the Collateral Agent nor any Bank
shall be required to marshal any present or future collateral security
(including but not limited to this Agreement and the Collateral) for, or other
assurances of payment of, the Obligations or any of them or to resort to such
collateral security or other assurances of payment in any particular order, and
all of the rights of the Collateral Agent hereunder and of the Collateral Agent
or any Bank in respect of such collateral security and other assurances of
payment shall be cumulative and in addition to all other rights, however
existing or arising. To the extent that it lawfully may, the Company hereby
agrees that it will not invoke any law relating to the marshalling of collateral
which might cause delay in or impede the enforcement of the Collateral Agent's
rights under this Agreement or under any other instrument creating or evidencing
any of the Obligations or under which any of the Obligations is outstanding or
by which any of the Obligations is secured or payment thereof is otherwise
assured, and, to the extent that it lawfully may, the Company hereby irrevocably
waives the benefits of all such laws.
SECTION 24. PROCEEDS OF DISPOSITIONS; EXPENSES. The Company shall pay
to the Collateral Agent on demand Any and all reasonable expenses, including
reasonable attorneys' fees and disbursements, incurred or paid by the Collateral
Agent in protecting, preserving or enforcing the Collateral Agent's rights under
or in respect of any of the Obligations or any of the Collateral. After
deducting all of said expenses, the residue of any proceeds of collection or
sale of the Obligations or Collateral shall, to the extent actually received in
cash, be applied to the payment of the Obligations in accordance with Section
4(f) of the Intercreditor Agreement, with proper allowance being made for any
Obligations not then due. Upon the final payment and satisfaction in full of all
of the Obligations and after making any payments required by Section 9-504(1)(c)
of the Uniform Commercial Code of the Commonwealth of Massachusetts, any excess
shall be returned to the Company or its successors, and the Company shall remain
liable for any deficiency in the payment of the Obligations.
SECTION 25. OVERDUE AMOUNTS. Until paid, all amounts due and payable by
the Company hereunder shall be a debt secured by the Collateral and shall bear,
whether before or after judgment, interest from and after the date on which
written demand therefor shall have been sent to the Company, at the rate of
interest for overdue principal set forth in the Credit Agreement.
SECTION 26. GOVERNING LAW; CONSENT TO JURISDICTION. THIS AGREEMENT IS
INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS
(EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). The Company
agrees that any suit for the enforcement of this Agreement may be brought in the
courts of the Commonwealth of Massachusetts or any federal court sitting therein
and consents to the non-exclusive jurisdiction of such court and to service of
process in any such suit being made upon the Company by mail at the address
specified in the Credit Agreement. The Company hereby waives any objection that
it may now or hereafter have to the venue of any such suit or any such court or
that such suit is brought in an inconvenient court.
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SECTION 27. MISCELLANEOUS. The headings of each section of this
Agreement are for convenience only and shall not define or limit the provisions
thereof. This Agreement and all rights and obligations hereunder shall be
binding upon the Company and its respective successors and assigns, and shall
inure to the benefit of the Collateral Agent, the Banks and their respective
successors and assigns. If any term of this Agreement shall be held to be
invalid, illegal or unenforceable, the validity of all other terms hereof shall
in no way be affected thereby, and this Agreement shall be construed and be
enforceable as if such invalid, illegal or unenforceable term had not been
included herein. The Company acknowledges receipt of a copy of this Agreement.
SECTION 28. TERM OF AGREEMENT. (a) Notwithstanding any other provision
of this Agreement, this Agreement shall terminate and the Company shall be
entitled to the return, at the Company's expense, of such Collateral in the
possession or control of the Collateral Agent either (i) upon delivery of a
letter addressed to the Collateral Agent and signed by each of the Banks
specifying that the Banks have received evidence satisfactory to them that (A)
all litigation against HGC and HGAS resulting from or relating to the
acquisition in 1984 of certain assets of the airport ground services business of
Innotech Aviation Limited has been fully and finally dismissed (and such
dismissal is not appealable) or settled in full, (B) HGC and HGAS have satisfied
in full all of their payment obligations, if any, with respect to such
litigation, (C) the payment thereof has not resulted in the occurrence of any
Default or condition which would, with either or both the giving of notice or
lapse of time, result in a Default, and (D) no Default or condition which would,
with either or both the giving of notice or lapse of time, result in a Default
then exists or (ii) upon the indefeasible payment and performance of the
Obligations in full.
(b) Upon the delivery of a letter addressed to the Collateral Agent
signed by the US Banks specifying that the US Banks have received evidence that
the disposition of any of the Collateral is permitted by the Credit Agreement,
the Collateral Agent shall execute and deliver to the Company such releases with
respect to the lien hereof as the Company may reasonably request with respect to
such Collateral.
IN WITNESS WHEREOF, intending to be legally bound, the Company has
caused this Agreement to be duly executed as of the date first above written.
[INSERT NAME]
By:___________________________________
Title:
Accepted:
THE FIRST NATIONAL BANK OF BOSTON,
AS COLLATERAL AGENT
By:___________________________________
Title:
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CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF ____________)
) ss
COUNTY OF ___________________________)
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this ____ day of ______________, 19__, personally appeared to me
known personally, and who, being by me duly sworn, deposes and says that he/she
is the __________________ of _______________, and that said instrument was
signed and sealed on behalf of said corporation by authority of its Board of
Directors, and said ___________________ acknowledged said instrument to be the
free act and deed of said corporation.
________________________________
Notary Public
My Commission Expires:
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EXHIBIT A
FORM OF CONFIRMATORY ASSIGNMENT OF CONTRACT
This ASSIGNMENT, dated as of ___________, is by [_________] (the
"Debtor") in favor of The First National Bank of Boston (the "Collateral Agent")
as agent for itself, and certain lenders (the "Lenders").
WHEREAS, the Debtor is party to Contract No. ________ dated ___________
between the Debtor and ____________________ (the "Contract"); and
WHEREAS, the Debtor and the Collateral Agent have entered into a
certain Security Agreement, dated as of [________] (the "Security Agreement"),
pursuant to which the Debtor has granted to the Collateral Agent, for the
benefit of the Lenders, a security interest in certain assets of the Debtor,
including all of the Debtor's rights in and to all moneys due or to become due
under the Contract, to secure the Obligations referred to in the Security
Agreement;
NOW, THEREFORE, the Debtor hereby confirms, acknowledges and agrees
that, pursuant to and subject to the terms of the Security Agreement, the Debtor
hereby assigns, transfers, pledges and grants to the Agent for the benefit of
the Lenders a security interest in all of the Debtor's right, title and interest
in and to all moneys due or to become due under the Contract.
EXECUTED as of the date first above written.
Attest: [INSERT NAME]
_____________________________ By:____________________________
[Secretary or Assistant Title:
Secretary]
[Corporate Seal]
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EXHIBIT B
FORM OF
NOTICE OF ASSIGNMENT
The First National Bank of Boston
Date: __________________
To: [Contracting Official or Head of
Agency, Surety on any bond
applicable to the contract
and Disbursing Official]
Re: Payments to:
Contract Number:
Made by the United States of America
Department:
Division:
For:
Dated:
Ladies and Gentlemen:
This has reference to Contract No. ________ dated _______, entered into
between [contractor's name and address] (the "Contractor") and [government
agency, name of office and address], for [describe nature of contract].
Money due or to become due under the contract described above have been
assigned to the undersigned under the provisions of the Assignment of Claims Act
of 1940, as amended, 31 U.S.C. 3727, 41 U.S.C. 15.
A true copy of the instrument of assignment executed by the Contractor
on [date] is attached to the original notice.
Payments due or to become due under this contract should be made to the
undersigned assignee.
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Please return to the undersigned the three enclosed copies of this
notice with appropriate notations showing the date and hour of receipt, and
signed by the person acknowledged receipt on behalf of the addressee.
Very truly yours,
THE FIRST NATIONAL BANK OF BOSTON
as collateral agent for the banks under
that certain Security Agreement dated as
of [_________]
By:___________________________________
Authorized Official
100 Federal Street
Boston, MA 02110
ACKNOWLEDGMENT
Receipt is acknowledged of the above notice and a copy of the
instrument of assignment. These were received at ____a.m./p.m. on
_______________, 19 _ .
________________________________
Signature
Title:
On Behalf of: [Name and Title of
Addressee of Notice]
100
EXHIBIT E
FORM OF AMENDED AND RESTATED SECURITY AGREEMENT
AMENDED AND RESTATED SECURITY AGREEMENT, dated as of December 28, 1992
and amended and restated as of _________________, 1996, between each of Hudson
General Corporation ("HGC"), a Delaware corporation having its principal place
of business at 111 Great Neck Road, Great Neck, New York 11021, and Hudson
General LLC (the "Company"), a Delaware limited liability company having its
principal place of business at 111 Great Neck Road, Great Neck, New York 11021,
and The First National Bank of Boston, 100 Federal Street, Boston, Massachusetts
02110, as agent (the "Collateral Agent") for the Banks (as defined below).
WHEREAS, HGC has entered into a Revolving Credit and Term Loan
Agreement, dated as of November 25, 1992, as amended (as so amended, the
"Original Credit Agreement"), with The First National Bank of Boston, European
American Bank, The Chase Manhattan Bank, N.A. (each singly, a "US Bank" and
collectively, the "US Banks"), and The First National Bank of Boston as agent
(the "US Agent"); and
WHEREAS, pursuant to that certain Guaranty dated February 3, 1993 (the
"Original Guaranty") in favor of ABN AMRO Bank Canada and The Chase Manhattan
Bank of Canada (collectively, the "Canada Banks") and the Canadian Agent (as
defined below), HGC has guaranteed all of the obligations of Hudson General
Aviation Services Inc./Societe de Services Hudson General (Aviation) Inc.
("HGAS") to the Canada Banks and the Canadian Agent under a Revolving Credit
Agreement, dated as of November 25, 1992, as amended (as amended and in effect
from time to time, the "HGAS Credit Agreement"), among HGAS, the Canada Banks
and The Chase Manhattan Bank of Canada as successor agent (the "Canadian
Agent"), and certain promissory notes executed and delivered in connection
therewith; and
WHEREAS, each of HGC, Hudson Aviation Services, Inc. (the "MA
Subsidiary") and Hudson Aviation Services, Inc. California (the "CA Subsidiary")
and the Collateral Agent are parties to Security Agreements, each dated as of
December 28, 1992 (collectively the "Original Security Agreements"), pursuant to
which each of HGC, the MA Subsidiary and the CA Subsidiary has granted to the
Collateral Agent a security interest in and lien on certain of its assets to
secure such entity's Obligations as defined in the Original Security Agreement
to which such entity is a party; and
WHEREAS, HGC has formed the Company and wishes to transfer to the
Company, subject to the Collateral Agent's liens and security interests,
substantially all of the assets of HGC's aviation services business (the
"Aviation Services Business"), including, without limitation, the assets of
certain of its Subsidiaries (including the assets of the MA Subsidiary and the
CA Subsidiary) which are actively engaged in the Aviation Services Business and
the stock of HGAS; and
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WHEREAS, the Company wishes to assume, and become jointly and severally
liable with HGC for, all of HGC's obligations under the Original Credit
Agreement and to assume all of HGC's obligations under the Original Guaranty;
and
WHEREAS, HGC, the Company, the US Banks and the US Agent have entered
into an Amended and Restated Revolving Credit Agreement, dated as of November
25, 1992 and amended and restated as of the date hereof (as amended and in
effect from time to time, the "Credit Agreement"), to amend and restate the
Original Credit Agreement in its entirety in order to reflect the transfer by
HGC and its Subsidiaries, subject to the Collateral Agent's liens and security
interests, of the Aviation Services Business to the Company and the Company's
agreement to become jointly and severally liable for HGC's obligations under the
Original Credit Agreement and to make certain other changes to the terms and
provisions of the Original Credit Agreement; and
WHEREAS, HGC, the US Banks and the US Agent have entered into a
Revolving Credit Agreement, dated as of the date hereof (as amended and in
effect from time to time, the "HGC Credit Agreement"), pursuant to which the US
Banks have agreed to make loans or otherwise to extend credit to HGC; and
WHEREAS, the Company has entered into an Amended and Restated Unlimited
Guaranty, dated February 3, 1993 and amended and restated on the date hereof (as
amended and in effect from time to time, the "Company Guaranty"), and accepted
and agreed to by HGC, the Canada Banks and the Canadian Agent, to amend and
restate the Original Guaranty in its entirety in order to reflect the Company's
agreement to assume all of HGC's obligations thereunder; and
WHEREAS, it is a condition precedent to (i) the US Banks' making any
loans or otherwise extending credit to the Company under the Credit Agreement,
(ii) the US Banks' making any loans or otherwise extending any credit to HGC
under the HGC Credit Agreement, and (iii) the Canada Banks' making any loans or
otherwise extending credit to HGAS under the HGAS Credit Agreement that each of
HGC and the Company executes and delivers to the Collateral Agent, for the
benefit of the Banks (as defined below) and the Collateral Agent, an amended and
restated security agreement in substantially the form hereof; and
WHEREAS, each of HGC and the Company wishes to continue the security
interests granted to the Collateral Agent under the Original Security
Agreements, for the benefit of the Banks and the Collateral Agent, as herein
provided; and
WHEREAS, the Collateral Agent, the US Banks, the US Agent, the Canada
Banks and the Canadian Agent have entered into an Amended and Restated
Intercreditor Agreement (as amended and in effect from time to time, the
"Intercreditor Agreement"), dated as of November 25, 1992 and amended and
restated as of the date hereof, in order to set forth their respective rights in
and to the security interests continued hereunder;
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NOW, THEREFORE, in consideration of the promises contained herein and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree that the Original Security
Agreement shall be amended and restated in its entirety as set forth herein and
shall be in full force and effect as provided herein.
SECTION 1. DEFINITIONS. For purposes hereof, (a) the term "Banks" shall
mean (i) the US Banks, (ii) the Canada Banks, (iii) the US Agent, (iv) the
Canadian Agent and (v) the successors and assigns of the foregoing, (b) the term
"Obligations" shall have the meaning set forth in Section 3 hereof, (c) the term
"Debtors" shall mean HGC and the Company collectively and the term "Debtor"
shall mean each of HGC and the Company individually, and (d) the term "Default"
shall mean, with respect to the Company, a Default as defined in the Credit
Agreement and, with respect to HGC, a Default as defined in the HGC Credit
Agreement or, if the HGC Release Date has not occurred, the Credit Agreement.
All other capitalized terms used herein without definitions shall have the
respective meanings provided therefor in the Credit Agreement. All terms defined
in the Uniform Commercial Code of the Commonwealth of Massachusetts and used
herein shall have the same definitions herein as specified therein.
SECTION 2. GRANT OF SECURITY INTEREST.
(a) Each of the Debtors hereby grants to the Collateral Agent, for the
benefit of the Banks and the Collateral Agent, to secure the payment and
performance in full of all of such Debtor's Obligations (as defined below), a
continuing security interest in and so pledges and assigns to the Collateral
Agent, for the benefit of the Banks and the Collateral Agent, the following
properties, assets and rights of such Debtor, wherever located, whether now
owned or hereafter acquired or arising, and all proceeds and products thereof
(all of the same being hereinafter called the "Collateral"):
(i) all accounts of every kind and nature whether now owned or
hereafter acquired by such Debtor, including accounts receivable, all
instruments pertaining thereto, all security and guaranties with
respect thereto, all rights of such Debtor pertaining to goods giving
rise thereto, including the right of stoppage in transit, and all
security interests, liens and pledges, whether voluntary or
involuntary, securing the account debtors' obligations to such Debtor
thereunder, and all contract rights (to the extent that such rights are
to the payment of money), rights to the payment of money, chattel
paper, documents, instruments (including certificated securities) and
uncertificated securities, in each case whether now owned or hereafter
acquired by such Debtor;
(ii) all inventory (other than any fuel), raw materials and
work in progress, in each case whether now owned or hereafter acquired
by such Debtor;
(iii) all general intangibles now owned or hereafter acquired
by such Debtor, including, without limitation, license fees, patents,
patent applications, trademarks, trademark applications, trade names,
copyrights, copyright
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applications, rights to sue and recover for past infringement of
patents, trademarks and copyrights, computer programs, computer
software, engineering drawings, service marks, customer lists,
goodwill, and all recorded data of any kind or nature, regardless of
the medium of recording including, without limitation, all software,
writings, plans, specifications and schematics (other than any general
intangibles relating to contracts except as expressly granted herein);
(iv) all equipment now owned or acquired by such Debtor after
the date hereof and all related equipment, parts and accessions and
additions with respect thereto and tires thereon which are now owned or
hereafter acquired, and all substitutions and replacements which are
now owned or hereafter acquired by such Debtor; and
(v) all proceeds, including, without limitation, insurance
refund claims and all other insurance claims and proceeds, with respect
to any of the foregoing.
Notwithstanding the foregoing, the term "Collateral" shall not include:
(A) any property, asset or right of a Debtor described in
clauses (i), (ii) and (iii) above to the extent that such property,
asset or right of such Debtor is subject to any legally binding
contract provision restricting the pledge or assignment of such
property, right or asset as contemplated herein;
(B) any of the shares of capital stock of the Subsidiaries of
a Debtor;
(C) certificated and uncertificated securities owned by a
Debtor (other than of any Subsidiary of such Debtor) provided, that if
the market value of all such securities owned by such Debtor exceeds
$50,000 in the aggregate then all such certificated and uncertificated
securities owned by such Debtor (other than of any Subsidiary of such
Debtor) shall constitute Collateral;
(D) with respect to the Company, all intercompany notes and
instruments executed and delivered by, and all receivables and rights
to the payment of money due from, HGAS to the Company and all security
granted by HGAS to the Company with respect thereto;
(E) any of the equipment now owned by a Debtor which is
specifically identified on Schedule 1 attached hereto (except as set
forth to the contrary in Section 6(a) hereof);
(F) any equipment hereafter acquired by a Debtor either (x)
with financing provided by a purchase money lender to the extent
permitted by Paragraph 5.13(f) of the Credit Agreement or Paragraph
5.11(f) of the HGC Credit Agreement, as applicable, or (y) for purposes
of fulfilling such Debtor's obligations under any contract with an
account debtor which by its terms prohibits such Debtor from subjecting
any of the equipment identified to such
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contract to any lien, which equipment of such Debtor shall have been
identified in a supplement to Schedule 1 attached hereto delivered to
the Collateral Agent together with a certificate of such Debtor
certifying that such equipment has been so financed or has been so
identified with such a contract;
(G) any royalties or other rights received by a Debtor with
respect to mineral rights now owned by such Debtor; and
(H) the copyright owned by the Company on the video tape
titled "Guideway Bus Systems-Video Tape", and the Company's rights to
the service mark of "Snowlift".
(b) Pursuant to the terms hereof, each of the Debtors has endorsed,
assigned and delivered to the Collateral Agent all negotiable or non-negotiable
instruments (including certificated securities) and chattel paper which
constitute Collateral pledged by such Debtor hereunder, together with stock
powers or other appropriate instruments of transfer or assignment duly executed
in blank as the Collateral Agent may have specified. In the event that either of
the Debtors shall, after the date of this Agreement, acquire any other
negotiable or non-negotiable instruments (including certificated securities but
excluding checks received by a Debtor in the ordinary course of its business in
connection with the collection of its accounts) or chattel paper which
constitute Collateral pledged by such Debtor hereunder, such Debtor shall
forthwith endorse, assign and deliver the same to the Collateral Agent,
accompanied by such stock powers or other instruments of transfer or assignment
duly executed in blank as the Collateral Agent may from time to time specify. To
the extent that any such securities are uncertificated, appropriate book-entry
transfers reflecting the pledge of such securities created hereby have been or,
in the case of uncertificated securities which constitute Collateral hereafter
acquired by a Debtor, will at the time of such acquisition be, duly made for the
account of the Collateral Agent or one or more nominees of the Collateral Agent
with the issuer of such securities or other appropriate book-entry facility or
financial intermediary, with the Collateral Agent having at all times the right
to obtain definitive certificates (in the Collateral Agent's name or in the name
of one or more nominees of the Collateral Agent) where the issuer customarily or
otherwise issues certificates, all to be held as Collateral hereunder. Each of
the Debtors hereby acknowledges that the Collateral Agent may, in its
discretion, appoint one or more financial institutions to act as the Collateral
Agent's agent in holding in custodial accounts instruments or other financial
assets in which the Collateral Agent is granted a security interest hereunder,
including, without limitation, certificates of deposit and other instruments
evidencing short term obligations.
SECTION 3. OBLIGATIONS SECURED. (a) The Collateral pledged by the
Company hereunder constitutes and will constitute continuing security for (i)
all of the obligations of each of HGC and the Company to the US Banks and the US
Agent under or in relation to the Credit Agreement, the promissory notes
executed and delivered by HGC and the Company to the US Banks in connection
therewith and the other Loan Documents, as such instruments are originally
executed or as modified, amended, restated, supplemented or extended, (ii) all
of the obligations of the Company to the Canada Banks and the Canadian Agent
under or in relation to the Company Guaranty,
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as such guaranty is originally executed or as modified, amended, restated,
supplemented or extended, and (iii) all obligations of the Company to the Banks
arising out of any extension, refinancing or refunding of any of the foregoing
obligations, whether such obligations are now existing or hereafter acquired or
arising, direct or indirect, joint or several, absolute or contingent, due or to
become due, matured or unmatured, liquidated or unliquidated, arising by
contract, operation of law or otherwise.
(b) The Collateral pledged by HGC hereunder constitutes and will
constitute continuing security for (i) all obligations of HGC to the US Banks
and the US Agent under or in relation to the HGC Credit Agreement, the
promissory notes executed and delivered by HGC to the US Banks in connection
therewith and the other Loan Documents (as defined in the HGC Credit Agreement),
as such instruments are originally executed or as modified, amended, restated,
supplemented or extended, (ii) until the HGC Release Date has occurred, all of
the obligations of HGC to the US Banks and the US Agent under or in relation to
the Credit Agreement, the promissory notes executed and delivered by HGC and the
Company to the US Banks in connection therewith and the other Loan Documents, as
such instruments are originally executed or as modified, amended, restated,
supplemented or extended, and (iii) all obligations of HGC to the Banks arising
out of any extension, refinancing or refunding of any of the foregoing
obligations, whether such obligations are now existing or hereafter acquired or
arising, direct or indirect, joint or several, absolute or contingent, due or to
become due, matured or unmatured, liquidated or unliquidated, arising by
contract, operation of law or otherwise.
(c) The obligations referred to in clause (a) and clause (b) hereof
shall be referred to herein, collectively, as the "Obligations".
SECTION 4. CONCERNING ACCOUNTS AND CHATTEL PAPER. Each of the Debtors
represents and warrants to the Collateral Agent that it keeps or causes to be
kept, and covenants with the Collateral Agent that it shall keep or cause to be
kept, separate records of accounts, chattel paper and instruments which are
complete and accurate in all material respects. Each of the Debtors covenants
and agrees that from time to time upon the request of the Collateral Agent, it
shall deliver to the Collateral Agent a list of the names, addresses, face
value, and dates of invoice(s) for each account debtor obligated on any account
or chattel paper and for each obligor on instruments for which such Debtor is an
obligee, along with such additional information with respect to its accounts,
chattel paper and instruments as the Collateral Agent reasonably may request.
Each of the Debtors covenants with the Collateral Agent that, except with
respect to any renewal of any contract existing on the date hereof which
restricts such assignment, it shall use its reasonable efforts to enter into
contracts with account debtors which do not restrict the assignment by such
Debtor of any of its property, assets or rights of the kind described in
Section 2(a)(i) hereof with respect to such contract.
SECTION 5. CONCERNING SECURITIES. (a) Any sums or other property paid
or distributed upon or with respect to any securities which constitute
Collateral pledged by a Debtor hereunder, whether by dividend or redemption or
upon the liquidation or dissolution of the issuer thereof or otherwise, shall,
except to the limited extent
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provided in Section 5(b), be paid over and delivered to the Collateral Agent to
be held by the Collateral Agent, for the benefit of the Banks and the Collateral
Agent, as security for the payment and performance in full of all of the
Obligations of such Debtor. In case, pursuant to the recapitalization or
reclassification of the capital of the issuer thereof or pursuant to the
reorganization thereof, any distribution of capital shall be made on or in
respect of any of the securities which constitute Collateral pledged by a Debtor
hereunder or any property shall be distributed upon or with respect to any of
such securities, the property so distributed shall be delivered to the
Collateral Agent, for the benefit of the Banks and the Collateral Agent, to be
held by it as security for the Obligations of such Debtor. Except to the limited
extent provided in Section 5(b), all sums of money and property paid or
distributed in respect of any securities which constitute Collateral pledged by
a Debtor hereunder, whether as a dividend or upon such a liquidation,
dissolution, recapitalization or reclassification or otherwise, that are
received by such Debtor shall, until paid or delivered to the Collateral Agent,
be held in trust for the Collateral Agent, for the benefit of the Banks and the
Collateral Agent, as security for the payment and performance in full of all of
the Obligations of such Debtor.
(b) So long as no Default with respect to such Debtor shall have
occurred and be continuing, a Debtor shall be entitled to receive all cash
dividends paid in respect of any securities which constitute Collateral pledged
by such Debtor hereunder, to vote such securities and to give consents, waivers
and ratifications in respect of such securities; provided, however, that no vote
shall be cast or consent, waiver or ratification given by a Debtor if the effect
thereof would impair any of such securities or be inconsistent with or result in
any violation of any of the provisions of the Credit Agreement, any of the other
Loan Documents, the HGC Credit Agreement, any of the other Loan Documents (as
defined in the HGC Credit Agreement) or the Company Guaranty, as applicable. All
such rights of a Debtor to receive cash dividends shall cease in case a Default
with respect to such Debtor shall have occurred and be continuing. All such
rights of a Debtor to vote and give consents, waivers and ratifications with
respect to any securities which constitute Collateral pledged by such Debtor
hereunder shall, at the Collateral Agent's option, as evidenced by the
Collateral Agent's notifying such Debtor of such election, cease in case a
Default with respect to such Debtor shall have occurred and be continuing.
SECTION 6. CONCERNING EQUIPMENT. (a) Each of the Debtors represents and
warrants to the Collateral Agent and covenants with the Collateral Agent that
the equipment of such Debtor identified on Schedule 1 attached hereto (as such
schedule may be supplemented from time to time by such Debtor in accordance with
Section 2(a)(F) hereof) was and will be either acquired by such Debtor (i) with
financing provided by a purchase money lender to the extent permitted by
Paragraph 5.13(f) of the Credit Agreement or Paragraph 5.11(f) of the HGC Credit
Agreement, as applicable, or (ii) for purposes of fulfilling such Debtor's
obligations under any contract with an account debtor which by its terms
prohibits such Debtor from subjecting any of the equipment identified with such
contract to any lien. Any equipment identified on Schedule 1 attached hereto
which was not either acquired by a Debtor (i) with the financing provided by a
purchase money lender to the extent permitted by Paragraph 5.13(f) of the Credit
Agreement or Paragraph 5.11(f) of the HGC Credit Agreement, as
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applicable, or (ii) for the purposes of fulfilling such Debtor's obligations
under any contract with an account debtor which by its terms prohibits such
Debtor from subjecting such equipment identified with such contract to any lien,
shall be deemed to be Collateral provided by such Debtor hereunder. The
aggregate net book value of all equipment of the Debtors identified on Schedule
1 attached hereto, as of the Effective Date, does not exceed $2,500,000.
(b) Each of the Debtors covenants with the Collateral Agent that,
except with respect to any renewal of any contract existing on the date hereof
which prohibits such assignment, it shall use its reasonable efforts to enter
into contracts with account debtors which do not prohibit such Debtor from
subjecting any of the equipment identified with such contracts to any lien,
encumbrance or assignment.
(c) Each of the Debtors represents and warrants to the Collateral Agent
and covenants with the Collateral Agent that (i) Collateral provided by such
Debtor for which motor vehicle or any other certificate of title is required is
listed on Schedule 2 attached hereto, and such Collateral is titled in the
jurisdictions located in the United States of America listed on Schedule 2
attached hereto and will remain titled in such jurisdictions, provided that such
Debtor may retitle any such Collateral for which motor vehicle or any other
certificate of title is required in another jurisdiction located in the United
States of America provided that the retitling of such Collateral is reflected in
the revised Schedule 2 next delivered to the Collateral Agent pursuant to the
terms hereof; and (ii) Collateral provided by such Debtor for which no
certificate of title is required, but for which registration under motor vehicle
laws is required, is registered in the jurisdictions located in the United
States of America listed on Schedule 2 and will remain registered in such
jurisdictions, provided that such Debtor may terminate any such registration
which is no longer required under applicable law and may reregister any such
Collateral in a different or the same jurisdiction provided that such
reregistration is reflected in the revised Schedule 2 next delivered to the
Collateral Agent pursuant to the terms hereof. Each Debtor shall deliver to the
Collateral Agent, concurrently with each delivery of the compliance certificate
pursuant to Paragraph 5.2(f) of the Credit Agreement, a revised Schedule 2
reflecting equipment acquired by such Debtor after the date hereof and, if any
equipment has been retitled or reregistered after the date hereof in accordance
with the terms of this Agreement, the jurisdiction in which such equipment has
been retitled or reregistered.
(d) Each of the Debtors covenants with the Collateral Agent that if a
Default with respect to such Debtor shall have occurred and be continuing, such
Debtor shall, within 30 days of the request of the Collateral Agent, deliver to
the Collateral Agent all certificates of title and related applications for
title for all Collateral provided by such Debtor for which motor vehicle or any
other certificate of title is required, endorsed by such Debtor to reflect the
security interest granted hereunder to the Collateral Agent.
SECTION 7. CONCERNING PATENTS AND TRADEMARKS. (a) Except as set forth
in Section 2(a)(H) hereof, each of the Debtors represents and warrants to the
Collateral Agent that, as of the date hereof, such Debtor does not have any
right to and is not entitled to the benefits of any patents, trademarks, service
marks, tradenames or logos. If either of the Debtors shall acquire rights to any
trademarks, trade names, logos, service
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marks or patentable inventions, or becomes entitled to the benefit of any patent
or trademark or service mark registration application, or application for any
reissue, division, continuation, renewal, extension or continuation-in-part of
any patent, any improvement on any patent, or any trademark or service mark
registration after the date hereof, within 15 days after acquiring such rights,
such Debtor shall execute and deliver to the Collateral Agent as a supplement to
this Agreement a Patent Collateral Assignment and Security Agreement
satisfactory to the Collateral Agent in all respects and the provisions of this
Agreement shall automatically apply thereto. Such Debtor shall provide to the
Collateral Agent all information reasonably requested by the Collateral Agent
and reasonably necessary to perfect the Collateral Agent's security interest in
such trademark, trade name, logo, service mark and patent registrations and
applications. Neither of the Debtors will enter into any agreements outside of
the ordinary course of its business affecting any of its trademarks, trade
names, logos, service marks or patents acquired after the date hereof without
the prior written consent of the Collateral Agent. Each Debtor grants to the
Collateral Agent the right upon the occurrence of a Default with respect to such
Debtor to sue for any infringement (past, present or future) of such Debtor's
patent, trademark, trade name, logo, or service mark rights and/or to join such
Debtor as a nominal party plaintiff in any trademark, service mark, trade name,
logo or patent infringement suit.
(b) Except as set forth in Section 2(a)(H) hereof, each of the Debtors
represents and warrants to the Collateral Agent that as of the date hereof, such
Debtor does not own or have any right to any copyrights which are registered
with the United States Copyright Office. If either Debtor acquires copyright
rights or such rights accrue to either Debtor after the date hereof, the
provisions of this Agreement shall automatically apply thereto. Each of the
Debtors will give written notice to the Collateral Agent of any federal
copyright registration or application obtained or filed after the date hereof.
Each of the Debtors shall provide to the Collateral Agent all information
reasonably requested by the Collateral Agent and reasonably necessary to perfect
the Collateral Agent's security interest in such copyright registrations and
applications. Neither of the Debtors will enter into any agreements outside of
the ordinary course of its business affecting any of its copyrights acquired
after the date hereof without the prior written consent of the Collateral Agent.
Each of the Debtors grants to the Collateral Agent the right upon the occurrence
and continuance of a Default with respect to such Debtor to sue for any
infringement (past, present or future) of such Debtor's copyright rights and/or
to join such Debtor as a nominal party plaintiff in any copyright infringement
suit.
SECTION 8. GOVERNMENT CONTRACTS. If a Default shall have occurred and
be continuing with respect to a Debtor, such Debtor shall upon the request of
the Collateral Agent, execute all such documents, and take all such actions, as
the Collateral Agent shall determine to be necessary or appropriate from time to
time under the Federal Assignment of Claims Act of 1940, as amended, in order to
confirm and assure to the Collateral Agent its rights under this Agreement with
respect to any and all Collateral consisting of such Debtor's rights to moneys
due or to become due under any contracts or agreements with or orders from the
United States government or any agency or department thereof, the assignment of
which is not prohibited by such contract or agreement (collectively, "Government
Receivables"). Without limiting the
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generality of the foregoing, each of the Debtors agrees that (i) within three
Business Days after such request from the Collateral Agent, it shall execute and
deliver to the Collateral Agent a confirmatory assignment substantially in the
form of Exhibit A attached hereto (a "Confirmatory Assignment") with respect to
each of its Government Receivables existing on the date of such request, and
(ii) within ten Business Days after the creation of any new Government
Receivable after the date of such request from the Collateral Agent, it shall
execute and deliver to the Collateral Agent a Confirmatory Assignment with
respect to such Government Receivable. Each of the Debtors hereby irrevocably
authorizes the Collateral Agent, or its designee, at such Debtor's expense, to
file with the United States government (or the appropriate agency or
instrumentality thereof) a notice of each such assignment of a Government
Receivable substantially in the form of Exhibit B attached hereto (a "Notice of
Assignment"), to which a copy of the relevant Confirmatory Assignment may be
attached, and appoints the Collateral Agent as such Debtor's attorney-in-fact to
execute and file any such Confirmatory Assignments, Notices of Assignment and
any ancillary documents relating thereto.
SECTION 9. TITLE TO COLLATERAL, ETC. Each of the Debtors is the owner
of the Collateral provided by it hereunder free from any adverse lien, security
interest or other encumbrance, except for the security interest created by this
Agreement and other liens permitted by the Credit Agreement or, with respect to
HGC, the HGC Credit Agreement. None of the Collateral constitutes, or is the
proceeds of, "farm products" as defined in Section 9-109(3) of the Uniform
Commercial Code of the Commonwealth of Massachusetts.
SECTION 10. CONTINUOUS PERFECTION. Each of the Debtors' place of
business or, if more than one, chief executive office is indicated on the
Perfection Certificate delivered by such Debtor to the Collateral Agent herewith
(the "Perfection Certificate"). Neither of the Debtors will change the same, or
its name, identity or structure in any manner, without providing at least 30
days' prior written notice to the Collateral Agent. The Collateral provided by
each Debtor, to the extent not delivered to the Collateral Agent pursuant to
Section 2(b), will be kept at those locations listed on the Perfection
Certificate of such Debtor and such Debtor will not remove such Collateral
(except to the extent that equipment which consists of titled vehicles is moved
in the ordinary course of business) from such locations, without providing at
least 30 days' prior written notice to the Collateral Agent.
SECTION 11. NO LIENS. Except for the security interest herein granted
and liens permitted by the Credit Agreement or, with respect to the HGC, the HGC
Credit Agreement, each of Debtors shall be the owner of the Collateral provided
by it hereunder free from any lien, security interest or other encumbrance, and
each of the Debtors shall defend the same against all claims and demands of all
persons at any time claiming the same or any interests therein adverse to the
Collateral Agent or any of the Banks. Neither of the Debtors shall pledge,
mortgage or create, or suffer to exist a security interest in the Collateral
provided by it hereunder in favor of any person other than the Collateral Agent,
for the benefit of the Banks and the Collateral Agent, except for liens
permitted by the Credit Agreement or, with respect to HGC, the HGC Credit
Agreement.
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SECTION 12. NO TRANSFERS. Neither of the Debtors will sell or offer to
sell or otherwise transfer any of the Collateral provided by such Debtor
hereunder or any interest therein except as permitted by the Credit Agreement
or, with respect to HGC, the HGC Credit Agreement.
SECTION 13. INSURANCE.
(a) Each of the Debtors will maintain with financially sound and
reputable insurers such insurance with respect to its properties and business as
is required to be maintained under the Credit Agreement or, with respect to HGC,
the HGC Credit Agreement. In addition, all property insurance with respect to
the Collateral shall be payable to the Collateral Agent as loss payee under a
"standard" or "New York" loss payee clause for the benefit of the Banks and the
Collateral Agent.
(b) The proceeds of any property insurance in respect of any casualty
loss of any of the Collateral shall, subject to the rights, if any, of other
parties with a prior interest in the property covered thereby, (i) so long as no
Default with respect to a Debtor or condition which would, with either or both
the giving of notice or the lapse of time, result in a Default with respect to a
Debtor has occurred and is continuing and to the extent that the amount of such
proceeds is less than $100,000, be disbursed to such Debtor for direct
application by such Debtor solely to the repair or replacement of such Debtor's
property so damaged or destroyed and (ii) in all other circumstances, be held by
the Collateral Agent as cash collateral for the Obligations of such Debtor. The
Collateral Agent may, at its sole option, disburse from time to time all or any
part of such proceeds so held as cash collateral, upon such terms and conditions
as the Collateral Agent may reasonably prescribe, for direct application by the
applicable Debtor solely to the repair or replacement of such Debtor's property
so damaged or destroyed, or the Collateral Agent may, if a Default with respect
to such Debtor has occurred and is continuing, apply all or any part of such
proceeds to the Obligations of such Debtor with the Aggregate Loan Limit (as
defined in the Credit Agreement or, with respect to HGC, the HGC Credit
Agreement) (if not then terminated) being reduced by the amount so applied to
such Obligations.
(c) All such policies of insurance shall provide for at least thirty
days' prior written cancellation notice to the Collateral Agent. In the event of
failure by either of the Debtors to provide and maintain insurance as herein
provided, the Collateral Agent may, at its option, provide such insurance and
charge the amount thereof to such Debtor. Each of the Debtors shall furnish the
Collateral Agent with certificates of insurance and, upon the request of the
Collateral Agent, policies evidencing compliance with the foregoing insurance
provisions.
SECTION 14. MAINTENANCE OF COLLATERAL; COMPLIANCE WITH LAW. Each of the
Debtors will keep the Collateral provided by it hereunder in good order and
repair (ordinary wear and tear excepted) and will not use the same in violation
of law or any policy of insurance thereon and will take all other necessary and
appropriate steps (including, but not limited to, defending any of the patents,
copyrights, trademarks, service marks, tradenames or logos, and any
registrations thereof which constitute
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such Collateral, against any infringement thereof or any opposition or other
adversary action or proceeding when the defense of such patents, copyrights,
trademarks, service marks, tradenames or logos has been determined to be
necessary and appropriate in the business judgment of such Debtor) to preserve
the value thereof and the goodwill, business and assets associated therewith or
appurtenant thereto. The Collateral Agent, or its designee, may inspect the
Collateral at any reasonable time, wherever located provided that so long as no
Default with respect to such Debtor or condition which would, with either or
both the giving of notice or the lapse of time, result in a Default with respect
to such Debtor has occurred and is continuing, the Collateral Agent shall give
reasonable notice to the applicable Debtor of such inspection. Each of the
Debtors will pay promptly when due all taxes, assessments, governmental charges
and levies upon the Collateral provided by such Debtor or incurred in connection
with the use or operation of such Collateral or incurred in connection with this
Agreement.
SECTION 15. COLLATERAL PROTECTION EXPENSES; PRESERVATION OF COLLATERAL.
(a) In its discretion, the Collateral Agent may discharge taxes and
other encumbrances at any time levied or placed on any of the Collateral, make
repairs thereto and pay any necessary filing fees. Each of the Debtors agrees to
reimburse the Collateral Agent on demand for any and all expenditures so made.
The Collateral Agent shall have no obligation to either of the Debtors to make
any such expenditures, nor shall the making thereof relieve either of the
Debtors of any default. The Collateral Agent shall inform the applicable Debtor
before incurring any such expense.
(b) Anything herein to the contrary notwithstanding, each of the
Debtors shall remain liable under each contract or agreement comprised in the
Collateral to be observed or performed by such Debtor thereunder. Neither the
Collateral Agent nor any Bank shall have any obligation or liability under any
such contract or agreement by reason of or arising out of this Agreement or the
receipt by the Collateral Agent or any Bank of any payment relating to any of
the Collateral, nor shall the Collateral Agent or any Bank be obligated in any
manner to perform any of the obligations of either of the Debtors under or
pursuant to any such contract or agreement, to make inquiry as to the nature or
sufficiency of any payment received by the Collateral Agent or any Bank in
respect of the Collateral or as to the sufficiency of any performance by any
party under any such contract or agreement, to present or file any claim, to
take any action to enforce any performance or to collect the payment of any
amounts which may have been assigned to the Collateral Agent or to which the
Collateral Agent or any Bank may be entitled at any time or times. The
Collateral Agent's sole duty with respect to the custody, safe keeping and
physical preservation of the Collateral in its possession, under Section 9-207
of the Uniform Commercial Code of the Commonwealth of Massachusetts or
otherwise, shall be to deal with such Collateral in the same manner as the
Collateral Agent deals with similar property for its own account.
SECTION 16. SECURITIES AND DEPOSITS. The Collateral Agent may at any
time after the occurrence and during the continuance of a Default with respect
to a Debtor, at its option, transfer to itself or any nominee any securities
constituting Collateral pledged by such Debtor, receive any income thereon and
hold such income as additional Collateral of such Debtor or apply it to the
Obligations of such Debtor. Whether or not
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any Obligations of a Debtor are due, after the occurrence and during the
continuance of a Default with respect to such Debtor, the Collateral Agent may
demand, sue for, collect, or make any settlement or compromise which it deems
desirable with respect to the Collateral provided by such Debtor. Regardless of
the adequacy of Collateral provided by such Debtor or any other security for the
Obligations of such Debtor, any deposits or other sums at any time credited by
or due from the Collateral Agent or any Bank to a Debtor may at any time be
applied to or set off against any of the Obligations of such Debtor as provided
in the Credit Agreement, the HGC Credit Agreement or the Company Guaranty, as
applicable.
SECTION 17. NOTIFICATION TO ACCOUNT DEBTORS AND OTHER OBLIGORS. If a
Default with respect to a Debtor shall have occurred and be continuing such
Debtor shall, at the request of the Collateral Agent, notify account debtors on
accounts and chattel paper of such Debtor and obligors on instruments for which
such Debtor is an obligee of the security interest of the Collateral Agent in
any such account, chattel paper or instrument and that payment thereof is to be
made directly to the Collateral Agent or to any financial institution designated
by the Collateral Agent as the Collateral Agent's agent therefor, and the
Collateral Agent may itself, if a Default with respect to a Debtor shall have
occurred and be continuing, without notice to or demand upon such Debtor, so
notify account debtors and obligors. After the making of such a request or the
giving of any such notification (provided the same has also been sent to the
applicable Debtor), such Debtor shall hold any proceeds of collection of
accounts, chattel paper and instruments received by such Debtor as trustee for
the Collateral Agent, for the benefit of the Banks and the Collateral Agent,
without commingling the same with other funds of such Debtor and shall turn the
same over to the Collateral Agent in the identical form received, together with
any necessary endorsements or assignments. The Collateral Agent shall apply the
proceeds of collection of accounts, chattel paper and instruments received by
the Collateral Agent to the Obligations of the Debtors as provided in the
Intercreditor Agreement, or the HGC Credit Agreement, as applicable, such
proceeds to be immediately entered after final payment in cash or solvent
credits of the items giving rise to them.
SECTION 18. NO FURTHER ACTIONS. No authorization, approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body or other person that has not been received, taken or made is
required for the grant by each of the Debtors of the security interests granted
hereby or for the execution, delivery or performance of this Agreement by each
of the Debtors, or, except for (a) the filing of financing statements and
continuation statements with respect thereto, (b) the delivery of the
instruments, chattel paper and share certificates referred to in Section 2(b)
hereof, (c) the presentation to the Departments of Motor Vehicles of the
applications for title referred to in Section 6(d) hereof, at the times required
in Section 6(d) hereof, and (d) the execution and delivery of the Patent
Collateral Assignment and Security Agreements referred to in Section 7 hereof
and the filing of such instruments at the times provided herein, and the
execution and delivery of the Confirmatory Assignments and Notices of Assignment
referred to in Section 8 hereof, at the times required in Section 8 hereof, for
(A) the perfection and maintenance of the security interests hereunder
(including the first priority nature of such security interests), or (B) the
exercise by the Collateral Agent of the rights or the remedies in respect of the
Collateral pursuant to this Agreement
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(other than the authorization and direction of the requisite Banks pursuant to
the terms of the Intercreditor Agreement or the HGC Credit Agreement, as
applicable).
SECTION 19. FURTHER ASSURANCES. Each of the Debtors, at its own
expense, shall do, make, execute and deliver all such additional and further
acts, things, deeds, assurances and instruments as the Collateral Agent may
reasonably require more completely to vest in and assure to the Collateral Agent
and the Banks their respective rights hereunder or in any of the Collateral,
including, without limitation, (a) executing, delivering and, where appropriate,
filing financing statements and continuation statements under the Uniform
Commercial Code, (b) obtaining governmental and other third party consents and
approvals, (c) obtaining waivers from mortgagees and landlords and (d) taking
all actions required by Sections 8-313 and 8-321 of the Uniform Commercial Code,
as applicable in each relevant jurisdiction, with respect to certificated and
uncertificated securities.
SECTION 20. POWER OF ATTORNEY.
(a) Each of the Debtors hereby irrevocably constitutes and appoints the
Collateral Agent and any officer or agent thereof, with full power of
substitution, as its true and lawful attorneys-in-fact with full irrevocable
power and authority in the place and stead of such Debtor or in the Collateral
Agent's own name, for the purpose of carrying out the terms of this Agreement,
to take any and all appropriate action and to execute any and all documents and
instruments that may be necessary or desirable to accomplish the purposes of
this Agreement and, without limiting the generality of the foregoing, hereby
gives said attorneys the power and right, on behalf of such Debtor, without
notice to or assent by such Debtor, to do the following:
(i) upon the occurrence and during the continuance of a
Default with respect to such Debtor generally to sell, transfer,
pledge, make any agreement with respect to or otherwise deal with any
of the Collateral provided by such Debtor in such manner as is
consistent with the Uniform Commercial Code of the Commonwealth of
Massachusetts and as fully and completely as though the Collateral
Agent were the absolute owner thereof for all purposes, and to do at
such Debtor's expense, at any time, or from time to time, all acts and
things which the Collateral Agent deems necessary to protect, preserve
or realize upon such Collateral and the Collateral Agent's security
interest therein, in order to effect the intent of this Agreement, all
as fully and effectively as such Debtor might do, including, without
limitation, (A) upon written notice to such Debtor, the exercise of
voting rights with respect to voting securities, which rights may be
exercised, if the Collateral Agent so elects, with a view to causing
the liquidation in a commercially reasonable manner of assets of the
issuer of any such securities and (B) the execution, delivery and
recording, in connection with any sale or other disposition of any such
Collateral, of the endorsements, assignments or other instruments of
conveyance or transfer with respect to such Collateral; and
(ii) to file such financing statements with respect hereto,
with or without such Debtor's signature, or a photocopy of this
Agreement in substitution for
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a financing statement, as the Collateral Agent may deem appropriate and
to execute in such Debtor's name such financing statements and
continuation statements which may require each of such Debtor's
signature.
(b) To the extent permitted by law, each of the Debtors hereby ratifies
all that said attorneys shall lawfully do or cause to be done by virtue hereof.
This power of attorney is a power coupled with an interest and shall be
irrevocable.
(c) The powers conferred on the Collateral Agent hereunder are solely
to protect the interests of the Collateral Agent and the Banks in the Collateral
and shall not impose any duty upon the Collateral Agent to exercise any such
powers. The Collateral Agent shall be accountable only for the amounts that it
actually receives as a result of the exercise of such powers and neither it nor
any of its officers, directors, employees or agents shall be responsible to
either of the Debtors for any act or failure to act, except for the Collateral
Agent's own gross negligence or willful misconduct.
SECTION 21. REMEDIES. (a) If a Default shall have occurred and be
continuing with respect to a Debtor, the Collateral Agent may upon written
instruction of the Banks in accordance with the Intercreditor Agreement or the
HGC Credit Agreement, as applicable, without notice to or demand upon such
Debtor, declare this Agreement to be in default, and the Collateral Agent shall
thereafter have in any jurisdiction in which enforcement hereof is sought, in
addition to all other rights and remedies, the rights and remedies of a secured
party under the Uniform Commercial Code, including, without limitation, the
right to take possession of the Collateral provided by such Debtor, and for that
purpose the Collateral Agent may, so far as such Debtor can give authority
therefor, enter upon any premises on which such Collateral may be situated and
remove the same therefrom and in addition, the Collateral Agent shall thereafter
have the following rights and remedies (to the extent permitted by applicable
law) in any jurisdiction in which enforcement is sought:
(i) if the Collateral Agent so elects and gives notice of such
election to such Debtor, the Collateral Agent may vote any or all
securities which constitute Collateral pledged by such Debtor whether
or not the same shall have been transferred into its name or the name
of its nominee or nominees) for any lawful purpose, including, without
limitation, if the Collateral Agent so elects, for the liquidation of
the assets of the issuer thereof, and give all consents, waivers and
ratifications in respect of such securities and otherwise act with
respect thereto as though it were the outright owner thereof (each
Debtor hereby irrevocably constituting and appointing the Collateral
Agent the proxy and attorney-in-fact of such Debtor, with full power of
substitution, to do so); and
(ii) the Collateral Agent may cause all or any part of the
securities held by it to be transferred into its name or the name of
its nominee or nominees, if it has not already done so.
Each of the Debtors recognizes that the Collateral Agent may be unable
to effect a public sale of the securities which constitute Collateral by reason
of certain
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prohibitions contained in the Securities Act of 1933, as amended, but may be
compelled to resort to one or more private sales thereof to a restricted group
of purchasers. Each of the Debtors recognizes that any such private sales may be
at prices and other terms less favorable to the seller than if sold at public
sales and that such private sales shall not by reason thereof be deemed not to
have been made in a commercially reasonable manner. The Collateral Agent shall
be under no obligation to delay a sale of any security for the period of time
necessary to permit the issuer of such securities to register such securities
for public sale under the Securities Act of 1933, as amended, even if the issuer
would agree to do so.
(b) The Collateral Agent may in its discretion require a Debtor to
assemble all or any part of the Collateral provided by such Debtor at such
location or locations within the state(s) of such Debtor's principal office(s)
or at such other locations as the Collateral Agent may designate. Unless such
Collateral is perishable or threatens to decline speedily in value or is of a
type customarily sold on a recognized market, the Collateral Agent shall give to
the applicable Debtor at least five Business Days' prior written notice of the
time and place of any public sale of Collateral provided by such Debtor or of
the time after which any private sale or any other intended disposition is to be
made. Each of the Debtors hereby acknowledges that five Business Days' prior
written notice of such sale or sales shall be reasonable notice. In addition,
each of the Debtors waives any and all rights that it may have to a judicial
hearing in advance of the enforcement of any of the Collateral Agent's rights
hereunder, including, without limitation, its right following a Default with
respect to such Debtor to take immediate possession of the Collateral provided
by such Debtor and to exercise its rights with respect thereto.
SECTION 22. NO WAIVER, ETC. Each of the Debtors waives demand, notice,
protest, notice of acceptance of this Agreement, notice of loans made, credit
extended, Collateral received or delivered or other action taken in reliance
hereon and all other demands and notices of any description; provided that each
of the Debtors shall be sent copies of any notices sent by the Collateral Agent
to account debtors, it being understood that the Collateral Agent shall not be
liable for any failure to send any such copy. With respect to both the
Obligations and the Collateral of a Debtor, such Debtor assents to any extension
or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of Collateral, to the addition or release of
any party or person primarily or secondarily liable, to the acceptance of
partial payment thereon and the settlement, compromising or adjusting of any
thereof, all in such manner and at such time or times as the Collateral Agent
may deem advisable. The Collateral Agent shall have no duty as to the collection
or protection of the Collateral or any income thereon, nor as to the
preservation of rights against prior parties, nor as to the preservation of any
rights pertaining thereto beyond the safe custody thereof as set forth in
Section 15(b). The Collateral Agent shall not be deemed to have waived any of
its rights upon or under the Obligations or the Collateral of either Debtor
unless such waiver shall be in writing and signed by the Collateral Agent with
the consent of the appropriate Banks. No delay or omission on the part of the
Collateral Agent in exercising any right shall operate as a waiver of such right
or any other right. A waiver on any one occasion shall not be construed as a bar
to or waiver of any right on any future occasion. All rights and remedies of the
Collateral Agent
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with respect to the Obligations or the Collateral of either Debtor, whether
evidenced hereby or by any other instrument or papers, shall be cumulative and
may be exercised singularly, alternatively, successively or concurrently at such
time or at such times as the Collateral Agent deems expedient.
SECTION 23. MARSHALLING. Neither the Collateral Agent nor any Bank
shall be required to marshal any present or future collateral security
(including but not limited to this Agreement and the Collateral) for, or other
assurances of payment of, the Obligations of either Debtor or any of them or to
resort to such collateral security or other assurances of payment in any
particular order, and all of the rights of the Collateral Agent hereunder and of
the Collateral Agent or any Bank in respect of such collateral security and
other assurances of payment shall be cumulative and in addition to all other
rights, however existing or arising. To the extent that it lawfully may, each of
the Debtors hereby agrees that it will not invoke any law relating to the
marshalling of collateral which might cause delay in or impede the enforcement
of the Collateral Agent's rights under this Agreement or under any other
instrument creating or evidencing any of the Obligations of such Debtor or under
which any of the Obligations of such Debtor is outstanding or by which any of
the Obligations of such Debtor is secured or payment thereof is otherwise
assured, and, to the extent that it lawfully may, each of the Debtors hereby
irrevocably waives the benefits of all such laws.
SECTION 24. PROCEEDS OF DISPOSITIONS; EXPENSES. Each of the Debtors
shall pay to the Collateral Agent on demand any and all reasonable expenses,
including reasonable attorneys' fees and disbursements, incurred or paid by the
Collateral Agent in protecting, preserving or enforcing the Collateral Agent's
rights under or in respect of any of the Obligations of such Debtor or any of
the Collateral provided by such Debtor. After deducting all of said expenses,
the residue of any proceeds of collection or sale of the Obligations of such
Debtor or Collateral of such Debtor shall, to the extent actually received in
cash, be applied to the payment of the Obligations of such Debtor in accordance
with Section 4(f) of the Intercreditor Agreement or Paragraph 10(e) of the HGC
Credit Agreement, as applicable, with proper allowance being made for any
Obligations of such Debtor not then due. Upon the final payment and satisfaction
in full of all of the Obligations of a Debtor and after making any payments
required by Section 9-504(1)(c) of the Uniform Commercial Code of the
Commonwealth of Massachusetts, any excess shall be returned to such Debtor or
its successors, and such Debtor shall remain liable for any deficiency in the
payment of the Obligations of such Debtor.
SECTION 25. OVERDUE AMOUNTS. Until paid, all amounts due and payable by
a Debtor hereunder shall be a debt secured by the Collateral provided by such
Debtor and shall bear, whether before or after judgment, interest from and after
the date on which written demand therefor shall have been sent to such Debtors,
at the rate of interest for overdue principal set forth in the Credit Agreement.
SECTION 26. GOVERNING LAW; CONSENT TO JURISDICTION. THIS AGREEMENT IS
INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS
(EXCLUDING THE LAWS APPLICABLE
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TO CONFLICTS OR CHOICE OF LAW). Each of the Debtors agrees that any suit for the
enforcement of this Agreement may be brought in the courts of the Commonwealth
of Massachusetts or any federal court sitting therein and consents to the
non-exclusive jurisdiction of such court and to service of process in any such
suit being made upon such Debtor by mail at the address specified in the Credit
Agreement. Each of the Debtors hereby waives any objection that it may now or
hereafter have to the venue of any such suit or any such court or that such suit
is brought in an inconvenient court.
SECTION 27. MISCELLANEOUS. The headings of each section of this
Agreement are for convenience only and shall not define or limit the provisions
thereof. This Agreement and all rights and obligations hereunder shall be
binding upon each of Debtors and its respective successors and assigns, and
shall inure to the benefit of the Collateral Agent, the Banks and their
respective successors and assigns. If any term of this Agreement shall be held
to be invalid, illegal or unenforceable, the validity of all other terms hereof
shall in no way be affected thereby, and this Agreement shall be construed and
be enforceable as if such invalid, illegal or unenforceable term had not been
included herein. Each of the Debtors acknowledges receipt of a copy of this
Agreement.
SECTION 28. TERM OF AGREEMENT. (a) Notwithstanding any other provision
of this Agreement, this Agreement shall terminate and a Debtor shall be entitled
to the return, at such Debtor's expense, of the Collateral provided by such
Debtor in the possession or control of the Collateral Agent either (i) upon
delivery of a letter addressed to the Collateral Agent and signed by each of the
Banks specifying that the Banks have received evidence satisfactory to them that
(A) all litigation against HGC and HGAS resulting from or relating to the
acquisition in 1984 of certain assets of the airport ground services business of
Innotech Aviation Limited has been fully and finally dismissed (and such
dismissal is not appealable) or settled in full, (B) HGC and HGAS have satisfied
in full all of their payment obligations, if any, with respect to such
litigation, (C) the payment thereof has not resulted in the occurrence of any
Default with respect to such Debtor or condition which would, with either or
both the giving of notice or lapse of time, result in a Default with respect to
such Debtor, and (D) no Default with respect to such Debtor or condition which
would, with either or both the giving of notice or lapse of time, result in a
Default with respect to such Debtor then exists or (ii) upon the indefeasible
payment and performance of the Obligations of such Debtor in full.
(b) Upon the delivery of a letter addressed to the Collateral Agent
signed by the US Banks specifying that the US Banks have received evidence that
the disposition of any of the Collateral is permitted by the Credit Agreement or
the HGC Credit Agreement, as applicable, the Collateral Agent shall execute and
deliver to the appropriate Debtor such releases with respect to the lien hereof
as such Debtor may reasonably request with respect to such Collateral.
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IN WITNESS WHEREOF, intending to be legally bound, each of the HGC and
the Company has caused this Agreement to be duly executed as of the date first
above written.
HUDSON GENERAL CORPORATION
By:__________________________________
Title:
HUDSON GENERAL LLC
By:__________________________________
Title:
Accepted:
THE FIRST NATIONAL BANK OF BOSTON,
as Collateral Agent
By:________________________________
Title:
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CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF __________)
) ss
COUNTY OF _________________________)
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this ____ day of ______________, 1996, personally appeared
________________ to me known personally, and who, being by me duly sworn,
deposes and says that he/she is the __________________ of Hudson General
Corporation, and that said instrument was signed and sealed on behalf of said
corporation by authority of its Board of Directors, and said ___________________
acknowledged said instrument to be the free act and deed of said corporation.
______________________________
Notary Public
My Commission Expires:
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CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF ________)
) ss
COUNTY OF _______________________)
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this ____ day of ______________, 1996, personally appeared
_____________ to me known personally, and who, being by me duly sworn, deposes
and says that he/she is the __________________ of Hudson General LLC, and that
said instrument was signed on behalf of said limited liability company by
authority of its Board of Member Representatives, and said ___________________
acknowledged said instrument to be the free act and deed of said limited
liability company.
______________________________
Notary Public
My Commission Expires:
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EXHIBIT A
FORM OF CONFIRMATORY ASSIGNMENT OF CONTRACT
This ASSIGNMENT, dated as of ________, is by [____________] (the
"Debtor") in favor of The First National Bank of Boston (the "Collateral Agent")
as collateral agent for itself, and certain banks (the "Banks").
WHEREAS, the Debtor is party to Contract No. ___________ dated
__________ between the Debtor and ____________ (the "Contract"); and
WHEREAS, the Debtor and the Collateral Agent have entered into a
certain Amended and Restated Security Agreement, dated as of December 28, 1992
and amended and restated as of [_____________] (the "Security Agreement"),
pursuant to which the Debtor has granted to the Collateral Agent, for the
benefit of the Banks, a security interest in certain assets of the Debtor,
including all of the Debtor's rights in and to all money due or to become due
under the Contract, to secure the Obligations referred to in the Security
Agreement;
NOW, THEREFORE, the Debtor hereby confirms, acknowledges and agrees
that, pursuant to and subject to the terms of the Security Agreement, the Debtor
hereby assigns, transfers, pledges and grants to the Collateral Agent for the
benefit of the Banks a security interest in all of the Debtor's right, title and
interest in and to all moneys due or to become due under the Contract.
EXECUTED as of the date first above written.
Attest: [INSERT NAME]
______________________________ By:______________________________
[Secretary or Assistant Title:
Secretary]
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EXHIBIT B
FORM OF
NOTICE OF ASSIGNMENT
The First National Bank of Boston
Date: __________________
To: [Contracting Official or Head of
Agency, Surety on any bond
applicable to the contract
and Disbursing Official]
Re: Payments to:
Contract Number:
Made by the United States of America
Department:
Division:
For:
Dated:
Ladies and Gentlemen:
This has reference to Contract No. _________ dated ________, entered
into between [contractor's name and address] (the "Contractor") and [government
agency, name of office and address], for [describe nature of contract].
Money due or to become due under the contract described above have been
assigned to the undersigned under the provisions of the Assignment of Claims Act
of 1940, as amended, 31 U.S.C. 3727, 41 U.S.C. 15.
A true copy of the instrument of assignment executed by the Contractor
on [date] is attached to the original notice.
Payments due or to become due under this contract should be made to the
undersigned assignee.
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Please return to the undersigned the three enclosed copies of this
notice with appropriate notations showing the date and hour of receipt, and
signed by the person who acknowledged receipt on behalf of the addressee.
Very truly yours,
THE FIRST NATIONAL BANK OF BOSTON
as collateral agent for the banks
under that certain Amended and
Restated Security Agreement dated as
of December 28, 1992 and amended and
restated as of _______________
By: _____________________________________
Authorized Official
100 Federal Street
Boston, MA 02110
ACKNOWLEDGMENT
Receipt is acknowledged of the above notice and a copy of the
instrument of assignment. These were received at _____ a.m./p.m. on
____________, 19___.
____________________________________
Signature
Title:
On Behalf of: [Name and Title of
Addressee of Notice]
124
EXHIBIT F
[LETTERHEAD OF HUDSON GENERAL CORPORATION]
June 1, 1996
The Persons Set Forth on
Schedule I Hereto
Re: Hudson General Corporation and Hudson General LLC
Ladies and Gentlemen:
I am Vice President-General Counsel of Hudson General Corporation,
a Delaware corporation ("HGC"), and of Hudson General LLC, a Delaware limited
liability company (the "Company"), and have acted as counsel for HGC and the
Company in connection with the execution and delivery by HGC and the Company of
the Amended and Restated Revolving Credit Agreement, dated as of November 25,
1992 and amended and restated as of June 1, 1996 (the "Restated Credit
Agreement") among HGC, the Company, The First National Bank of Boston ("FNB"),
in its individual capacity, European American Bank ("EAB"), The Chase Manhattan
Bank, N.A. ("Chase", and collectively with FNB and EAB, the "Banks"), and The
First National Bank of Boston, as agent for the Banks (the "Agent"), the Amended
and Restated Security Agreement, dated as of December 28, 1992 and amended and
restated as of June 1, 1996 ( the "Restated Security Agreement") among HGC, the
Company and The First National Bank of Boston, as collateral agent (the
"Collateral Agent"), and certain other agreements, instruments and documents
related to the Restated Credit Agreement. This opinion is being delivered
pursuant to Paragraph 4A.4 of the Restated Credit Agreement and Paragraph 26(e)
of the Second Amendment, dated as of June 1, 1996 to the Aviation Revolving
Credit Agreement. Capitalized terms used and not otherwise defined herein shall
have the same meanings herein as in the Restated Credit Agreement.
In rendering the opinions set forth herein, I have examined
originals or copies, certified or otherwise identified to my satisfaction, of
the following:
(a) the Revolving Credit and Term Loan Agreement, dated as of
November 25, 1992 (the "Original Credit Agreement"), among HGC, the Banks and
the Agent;
(b) the Restated Credit Agreement;
(c) the Restated Revolving Credit Notes, each dated as of June 1,
1996, issued by HGC and the Company to the respective Banks (each a "Note" and
collectively, the "Notes");
125
The Persons Set Forth on
Schedule I Hereto
June 1, 1996
Page 2
(d) the Revolving Credit Agreement, dated as of June 1, 1996 (the
"HGC Credit Agreement"), among HGC, the Banks and the Agent named therein (the
"HGC Credit Agreement Secured Parties");
(e) the Revolving Credit Agreement, dated as of November 25, 1992
and amended as of March 15, 1995 and June 1, 1996 (the "Aviation Credit
Agreement"), among Aviation, ABN Amro Bank Canada, The Chase Manhattan Bank of
Canada, in its individual capacity (and collectively with ABN Amro Bank Canada,
the "Canadian Banks"), and The Chase Manhattan Bank of Canada, as agent for the
Canadian Banks (the "Canadian Agent");
(f) the Amended and Restated Unlimited Guaranty, dated as of
February 3, 1993 (the "Original Guaranty") and amended and restated as of June
1, 1996, from the Company and acknowledged by HGC to the Canadian Banks and the
Canadian Agent (the "Restated Guaranty");
(g) the HGC Security Agreement, dated as of December 28, 1992 (the
"Original Security Agreement"), between HGC and the Collateral Agent;
(h) the Restated Security Agreement;
(i) my opinion, dated December 28, 1992 (the "Original Opinion"),
delivered pursuant to paragraph 5.7 of the Original Credit Agreement;
(j) my opinion, dated March 15, 1993 (the "Aviation Opinion"),
delivered pursuant to paragraph 4.7 of the Aviation Credit Agreement;
(k) the Amended and Restated Intercreditor Agreement, dated as of
November 25, 1992 and amended and restated as of June 1, 1996 (the
"Intercreditor Agreement"), among the Banks, the Agent, the Collateral Agent,
the Canadian Banks, the Canadian Agent and acknowledged and consented to by HGC
and the Company;
(l) the Amended and Restated Assignment, Postponement and
Subordination and Intercreditor Agreement, dated as of February 1, 1993 and
amended and restated as of June 1, 1996 (the "Postponement Agreement"), among
the Company, Aviation, the Canadian Banks and the Canadian Agent;
(m) certified copies of the Certificate of Incorporation and
By-Laws of HGC;
(n) certified copies of the Certificate of Formation of the
Company and the Company's Limited Liability Company Agreement (collectively, the
"LLC Documents") ;
(o) a certified copy of certain resolutions of the Board of
Directors of HGC adopted on May 17, 1996;
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The Persons Set Forth on
Schedule I Hereto
June 1, 1996
Page 3
(p) a certified copy of certain resolutions of the Members of the
Company adopted on May 17, 1996;
(q) unfiled, but signed copies of financing statements naming
Hudson General LLC, as debtor, and The First National Bank of Boston, as
Collateral Agent, as secured party, which I understand will be filed within ten
(10) days of the transfer of the security interest recited therein in the
offices of the Secretary of State of the State of New York and Nassau, Queens
and Suffolk Counties, New York (such filing offices, the "Filing Offices" and
such financing statements, the "Financing Statements");
(r) the Perfection Certificate of each of HGC (the "HGC Perfection
Certificate") and the Company (the "Company Perfection Certificate" and together
with the HGC Perfection Certificate, the "Perfection Certificates");
(s) certificates from public officials in the State of Delaware
and in the jurisdictions listed on Schedule II hereto (such jurisdictions, other
than the State of Delaware, collectively the "Foreign Jurisdictions") as to the
good standing of HGC or the Company, as indicated in Schedule II, in each such
jurisdiction; and
(t) such other documents as I have deemed necessary or appropriate
as a basis for the opinions set forth below.
In my examination I have assumed the genuineness of all
signatures, including indorsements (other than those on behalf of HGC and the
Company, with all of which I am familiar), the legal capacity of natural
persons, the authenticity of all documents submitted to me as originals, the
conformity to original documents of all documents submitted to me as certified,
conformed or photostatic copies, and the authenticity of the originals of such
copies. As to any facts material to this opinion which I did not independently
establish or verify, I have relied upon statements and representations of
officers and other representatives of HGC, the Company and others.
Unless otherwise indicated, references in this opinion to the
"Relevant UCC" shall mean the Uniform Commercial Code as in effect on the date
hereof in each of the State of New York and the Commonwealth of Massachusetts.
References to the "New York UCC" shall mean the Uniform Commercial Code as in
effect on the date hereof in the State of New York and references to the "Mass.
UCC" shall mean the Uniform Commercial Code as in effect on the date hereof in
the Commonwealth of Massachusetts. The Restated Credit Agreement, the Notes, the
Restated Guaranty, the Intercreditor Agreement, the Postponement Agreement and
the Restated Security Agreement shall hereinafter be referred to as the "Loan
Documents". The Agent, the Collateral Agent, the Banks, the HGC Credit Agreement
Secured Parties, the Canadian Banks and the Canadian Agent shall hereinafter be
referred to as the "Secured Parties".
I am admitted to the Bar in the State of New York, and I express
no opinion as to the laws of any jurisdiction other than (i) the laws of the
State of New York, (ii) the General
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The Persons Set Forth on
Schedule I Hereto
June 1, 1996
Page 4
Corporation Law of the State of Delaware, (iii) the Limited Liability Company
Act of the State of Delaware, (iv) the federal laws of the United States of
America, other than such federal laws which relate to the creation and
perfection of security interests or the assignment of rights, including without
limitation, the Federal Assignment of Claims Act of 1940, as amended, (v) the
Mass. UCC to the extent necessary to express the opinions set forth in
paragraphs 8 and 10 hereof, and (vi) based solely on the certificates of public
officials of each Foreign Jurisdiction, the laws of each such Foreign
Jurisdiction, with respect to my opinion as to HGC's and the Company's, as
applicable, qualification to do business and good standing in each such Foreign
Jurisdiction. Each of the Loan Documents provides that it is governed by, and to
be construed in accordance with, the laws of the Commonwealth of Massachusetts,
United States of America and, in the case of the Postponement Agreement, the
laws of the Province of Ontario, Canada. For purposes of my opinion with respect
to the laws of the Commonwealth of Massachusetts, I have assumed with your
consent and without any inquiry that the applicable laws of the Commonwealth of
Massachusetts are the same as those of the State of New York.
My opinions are also subject to the following qualifications:
(a) each of the Loan Documents (other than the Notes) has been
duly authorized, executed and delivered by the applicable Secured Parties and is
enforceable against such parties in accordance with its terms;
(b) enforcement of the Loan Documents may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and by general principles of equity
(regardless of whether enforcement is sought in equity or at law);
(c) certain of the remedial provisions contained in the Restated
Security Agreement and in the Restated Guaranty, including waivers, with respect
to the exercise of remedies against the collateral may be unenforceable in whole
or in part, but the inclusion of such provisions does not affect the validity of
the Restated Security Agreement and the Restated Guaranty, and each of the
Restated Security Agreement and the Restated Guaranty taken as a whole, together
with applicable law, contains adequate provisions for the practical realization
of the benefits of the security created thereby;
(d) enforcement of the Restated Security Agreement may be subject
to the terms of instruments, leases, contracts or other agreements among HGC and
the Company, as applicable, and the other parties to such agreements, the rights
of such other parties and any claims or defenses of such other parties against
HGC and the Company arising under or outside such agreements; and
(e) I express no opinion as to the effect on the opinions
expressed herein of (i) the compliance or non-compliance of any party (other
than HGC and the Company) to the Loan Documents with any state, federal or other
laws or regulations applicable to them, (ii) the legal or regulatory status or
the nature of the business of any of the Secured Parties, (iii) the sale or
other disposition by any of the Secured Parties of all or any portion of any
securities pledged by HGC or
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The Persons Set Forth on
Schedule I Hereto
June 1, 1996
Page 5
or the Company (which will require compliance with applicable federal and state
securities laws) or (iv) any fraudulent transfer or similar laws.
Based upon the foregoing and subject to the limitations,
qualifications, exceptions and assumptions set forth herein, I am of the opinion
that:
1. HGC is a corporation which has been duly incorporated and
is subsisting and in good standing under the laws of the State of Delaware, and
has all requisite corporate power to own its property and conduct its business
as now conducted and as presently contemplated. The Company is a limited
liability company which has been duly formed and is validly existing and in good
standing under the laws of the State of Delaware, and has all requisite power to
own its property and conduct its business as now conducted and as presently
contemplated.
2. To the best of my knowledge, HGC is duly qualified and in
good standing as a foreign corporation and is duly authorized to do business in
each jurisdiction where the nature of its properties or its business requires
such qualification except for the State of Alabama. To the best of my knowledge,
the Company is duly qualified and in good standing as a foreign entity and is
duly authorized to do business in each jurisdiction where the nature of its
properties or its business requires such qualification.
3. The execution and delivery by HGC of the Loan Documents
to which it is a party, and the performance by HGC of its obligations under such
Loan Documents, are within the corporate authority of HGC, have been duly
authorized by proper corporate proceedings, will not contravene any provision of
HGC's Certificate of Incorporation or By-Laws, or contravene any provision of,
or result in the creation of any mortgage, lien, pledge, charge, security
interest or other encumbrance upon any of the property of HGC (other than liens
created under or permitted by the terms of the Loan Documents) under, any other
agreement, instrument or undertaking binding upon HGC or any property of HGC,
and do not conflict with or result in any breach or contravention of any
provision of any law, statute, rule or regulation to which HGC is subject or any
judgment, order, writ, injunction, license or permit applicable to HGC. HGC has
duly executed and delivered each of the Loan Documents to which it is a party.
4. The execution and delivery by the Company of the Loan
Documents to which it is a party, and the performance by the Company of its
obligations under such Loan Documents, are within the authority of the Company,
have been duly authorized by proper proceedings, will not contravene any
provision of the Company's LLC Documents, or contravene any provision of, or
result in the creation of any mortgage, lien, pledge, charge, security interest
or other encumbrance upon any of the property of the Company (other than liens
created under or permitted by the terms of the Loan Documents) under, any other
agreement, instrument or undertaking binding upon the Company or any property of
the Company, and do not conflict with or result in any breach or contravention
of any provision of any law, statute, rule or regulation to which the Company is
subject or any judgment, order, writ, injunction, license or permit applicable
to the Company. The Company has duly executed and delivered each of the Loan
Documents to which it is a party.
129
The Persons Set Forth on
Schedule I Hereto
June 1, 1996
Page 6
5. Each of the Loan Documents to which it is a party (other
than the Postponement Agreement) constitutes the valid and legally binding
obligation of HGC and the Company, enforceable against each in accordance with
its terms. With respect to the foregoing, I express no opinion, however, as to
rights to indemnification and rights of contribution provided for in any of the
Loan Documents to the extent such rights are violative of federal or state
securities laws, rules or regulations or public policy.
6. To the best of my knowledge, except as described in
Schedule 3.8 to each of the Restated Credit Agreement and the Aviation Revolving
Credit Agreement, there is no litigation pending or threatened against the
Company or Aviation before any court, tribunal or administrative agency or board
which is of a substantial amount and which, if adversely determined, might
reasonably be expected to materially adversely affect the ability of the Company
or Aviation to perform its respective obligations under the Loan Documents to
which it is a party, or in respect of the Revolving Credit Loans (or in the case
of Aviation, in respect of the Aviation Revolving Credit Agreement or the
Restated Revolving Credit Notes to be issued thereunder or in respect of the
Revolving Credit Loans to be made thereunder), after taking into account any
applicable insurance coverage.
7. The execution and delivery by each of HGC and the Company
of each of the Loan Documents to which it is a party, and the performance by HGC
and the Company of their respective obligations under each of such Loan
Documents, each in accordance with its terms, do not require any approval or
consent of, or filing with, any governmental or other agency or authority except
for (a) approvals, consents and filings specified in the Loan Documents, and (b)
those already obtained or made. Notwithstanding the foregoing, except as
expressly set forth in paragraphs 8,9,10 and 11, I express no opinion as to the
validity, perfection or priority of any security interest created by the
Restated Security Agreement.
8. The provisions of the Restated Security Agreement are
effective to create, in favor of the Collateral Agent for the benefit of the
Secured Parties to secure the Obligations (as defined in the Restated Security
Agreement), a valid security interest under the Mass. UCC in the Company's
rights in that portion of the Collateral described therein which is subject to
Article 9 of the Mass. UCC (the "Article 9 Collateral").
9. The Financing Statements are in appropriate form for
filing in each of the Filing Offices under the New York UCC. With respect to
that portion of the Article 9 Collateral as to which the filing of a financing
statement in the State of New York is a permissible method of perfection under
the New York UCC (the "UCC Filing Collateral") the security interest in favor of
the Collateral Agent for the benefit of the Secured Parties in the UCC Filing
Collateral which is described in the Financing Statements will be perfected upon
the filing of the Financing Statements in the respective Filing Offices.
My opinions with respect to the security interest of the
Collateral Agent for the benefit of the Secured Parties in the Collateral are
subject to the following qualifications:
130
The Persons Set Forth on
Schedule I Hereto
June 1, 1996
Page 7
(a) The security interest opinions are limited to Article 9
of the Relevant UCC, and therefore such opinions do not address (i) laws of
jurisdictions other than the State of New York and the Commonwealth of
Massachusetts, and of the State of New York and of the Common wealth of
Massachusetts except for Article 9 of the Relevant UCC, (ii) collateral of a
type not subject to Article 9 of the Relevant UCC, and (iii) under Section 9-103
of the Relevant UCC, what law governs perfection of the security interests
granted in the collateral covered by this opinion. In addition, as noted above,
I have assumed without any inquiry that the Mass. UCC is identical in all
respects to the New York UCC;
(b) I call to your attention that under the Relevant UCC,
events occurring subsequent to the date hereof may affect any security interest
subject to the Relevant UCC including, but not limited to, factors of the type
identified in Section 9-306 with respect to proceeds; Section 9-402 with respect
to changes in name, structure and corporate identity of the debtor; Section
9-103 with respect to changes in the location of the collateral and the location
of the debtor; Section 9-316 with respect to subordination agreements; Section
9-403 with respect to continuation statements; and Sections 9-307, 9-308 and
9-309 with respect to subsequent purchasers of the collateral. In addition,
actions taken by a secured party (e.g., releasing or assigning the security
interest, delivering possession of the collateral to the debtor or another
person and voluntarily subordinating a security interest) may affect the
validity, perfection or priority of a security interest;
(c) I express no opinion with respect to the priority of the
security interest of the Collateral Agent for the benefit of the Secured Parties
in any of the Collateral;
(d) in the case of chattel paper, accounts or general
intangibles, I call to your attention that the security interest of the
Collateral Agent for the benefit of the Secured Parties may be subject to the
rights of account debtors, claims and defenses of account debtors and the terms
of agreements with account debtors;
(e) in the case of goods, I express no opinion regarding the
security interest of the Collateral Agent for the benefit of the Secured Parties
in any goods which are (i) an accession to, or commingled or processed with
other goods to the extent that the security interest of the Collateral Agent for
the benefit of the Secured Parties is limited by Section 9-314 or 9-315 of the
Relevant UCC or (ii) subject to a certificate of title or a document of title;
(f) I express no opinion regarding the security interest of
the Collateral Agent for the benefit of the Secured Parties in any items which
are subject to a statute, regulation or treaty of the United States of America
which provides for a national or international registration or a national or
international certificate of title for the perfection of a security interest
therein or which specifies a place of filing different from the place specified
in the New York UCC for filing to perfect such security interest;
(g) I express no opinion regarding the security interest of
the Collateral Agent for the benefit of the Secured Parties in any of the
collateral consisting of claims against any government or governmental agency
(including without limitation the United States of America or
131
The Persons Set Forth on
Schedule I Hereto
June 1, 1996
Page 8
any state thereof or any agency or department of the United States of America or
any state thereof);
(h) in the case of any instrument, chattel paper, account or
general intangible which is itself secured by other property, I express no
opinion with respect to the rights of the Collateral Agent for the benefit of
the Secured Parties in and to such underlying property;
(i) I have assumed that the collateral is and will be
located at the locations set forth in the Perfection Certificates;
(j) I express no opinion with respect to any of the
collateral consisting of goods which are or are to become fixtures, equipment
used in farming operations, or farm products, or accounts or general intangibles
arising from or relating to the sale of farm products by a farmer, consumer
goods, crops growing or to be grown, timber to be cut or minerals or the like
(including oil and gas), accounts subject to subsection 5 of Section 9-103 of
the Relevant UCC, or an owner ship interest evidenced by certificates of stock
or other instruments and a leasehold evidenced by a proprietary lease, or either
of the foregoing, from a corporation or partnership formed for the purpose of
cooperative ownership of real estate; and
(k) I express no opinion regarding the security interest of
the Collateral Agent for the benefit of the Secured Parties in any copyrights,
patents, trademarks, service marks or other intellectual property, the proceeds
thereof or any rights (including accounts or general intangibles) with respect
to the lease, license or use thereof.
10. The amendment and restatement of each of the
Original Credit Agreement, the Original Security Agreement and the Original
Guaranty by the Restated Credit Agreement, the Restated Security Agreement and
the Restated Guaranty, respectively, do not, of them selves, adversely affect
the validity under Article 9 of the Mass. UCC, of the security interest of the
Collateral Agent for the benefit of the Secured Parties in the Collateral (as
defined in the Original Security Agreement) under the Original Security
Agreement, and after giving affect to such amendment and restatement of the
Original Credit Agreement, the Original Security Agreement and the Original
Guaranty, the security interest of the Collateral Agent for the benefit of the
Secured Parties in the Collateral (as defined in the Original Security
Agreement) subject to Article 9 of the Mass. UCC will be entitled to the same
status as a valid security interest to which it would otherwise have been
entitled immediately prior to giving effect to such amendment and restatement of
the Original Credit Agreement, the Original Security Agreement and the Original
Guaranty.
11. The amendment and restatement of each of the
Original Credit Agreement, the Original Security Agreement and the Original
Guaranty by the Restated Credit Agreement, the Restated Security Agreement and
the Restated Guaranty, respectively, do not, of them selves, adversely affect
the perfection under the New York UCC, of the security interest of the
Collateral Agent for the benefit of the Secured Parties in the Collateral (as
defined in the Original Security
132
The Persons Set Forth on
Schedule I Hereto
June 1, 1996
Page 9
Agreement) under the Original Security Agreement, and after giving effect to
such amendment and restatement of the Original Credit Agreement, the Original
Security Agreement and the Original Guaranty, the security interest of the
Collateral Agent for the benefit of the Secured Parties in the Collateral (as
defined in the Original Security Agreement) subject to the New York UCC will be
entitled to the same status as a perfected security interest to which it would
otherwise have been entitled immediately prior to giving effect to such
amendment and restatement of the Original Credit Agreement, the Original
Security Agreement and the Original Guaranty.
My opinions in paragraphs 10 and 11 are subject to the following
qualifications:
(a) The security interest opinions are limited to Article 9 of the
Relevant UCC, and therefore such opinions do not address (i) laws of
jurisdictions other than the State of New York and the Commonwealth of
Massachusetts, and of the State of New York and of the Commonwealth of
Massachusetts except for Article 9 of the Relevant UCC and (ii) collateral of a
type not subject to Article 9 of the Relevant UCC. In addition, as noted above,
I have assumed without any inquiry that the Mass. UCC is identical in all
respects to the New York UCC;
(b) I have assumed that none of the Original Security Agreement,
the Original Credit Agreement or the Original Guaranty have been amended,
modified or supplemented prior to the date hereof (other than in the case of the
Original Credit Agreement, with respect to the First Amendment thereto, dated as
of August 31, 1993, the Second Amendment thereto, dated as of December 28, 1993
and the Third Amendment thereto, dated as of March 15, 1995) and that no rights
pursuant thereto have been released, waived or modified by any actions of the
parties thereto subsequent to December 28, 1992, the date of the Original
Opinion and subsequent to March 15, 1993, the date of the Aviation Opinion;
(c) I have assumed that the actions specified, assumed or relied
upon in the Original Opinion and the Aviation Opinion with respect to the
collateral have been taken and that all of the facts and conditions specified,
assumed or relied upon in such opinions remain correct; and
(d) I express no opinion with respect to the priority of the
security interests for the benefit of the Secured Parties in any of the
Collateral.
12. To the best of my knowledge, without having made any
special investigation other than obtaining the lien search reports certified
pursuant to the Perfection Certificates delivered in connection with the
Restated Security Agreement, except for the liens permitted by paragraph 5.13 of
the Restated Credit Agreement or otherwise permitted by the Banks under the
Restated Credit Agreement, each of HGC and the Company has good and merchantable
title to all of its properties, assets and rights of every name and nature now
purported to be owned by it, free from all defects, liens, charges and
encumbrances whatsoever, except that I express no opinion with respect to any
properties, assets or rights to the extent that the transfer or assignment
thereof requires the consent of a third party which has not been obtained.
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The Persons Set Forth on
Schedule I Hereto
June 1, 1996
Page 10
13. The Notes constitute "Superior Indebtedness" under the
Indenture, dated as of July 1, 1986 (the "Indenture") between HGC and Chemical
Bank Delaware, as trustee (the "Trustee") as amended by the First Supplemental
Indenture, dated as of April 22, 1996, among HGC, the Company and the Trustee,
relating to HGC's 7% Convertible Subordinated Debentures Due 2011 (the
"Debentures"). The Notes are entitled to the benefits of the provisions of such
Indenture which subordinate such Debentures to "Superior Indebtedness".
This opinion is being furnished only to you and is solely for your
benefit, and is not to be used, circulated, relied upon or otherwise referred to
for any other purpose without my prior written consent, provided that the HGC
Credit Agreement Secured Parties on the date hereof may rely on this opinion on
order of the date hereof.
Very truly yours,
/s/ Noah E. Rockowitz
Noah E. Rockowitz
Vice President & General Counsel
134
Schedule I
The First National Bank of Boston
100 Federal Street
Boston, MA 02110
European American Bank
1 EAB Plaza
Uniondale, NY 11555
The Chase Manhattan Bank, N.A.
135 Pinelawn Street
Melville, NY 11747
The Chase Manhattan Bank of Canada
Suite 1600
150 King Street West
Toronto, Ontario
M5H 1J9
ABN Amro Bank Canada
Suite 860
2000 Peel Street
Montreal, Quebec
H3A 2W5
Meighen Demers
Merril Lynch Canada Tower
Suite 1100
200 King Street West
Toronto, Ontario
M5H 3T4
Fraser & Beatty
1 First Canadian Place
Toronto, Ontario
M5X 1B2
135
Schedule II
Foreign Jurisdictions of HGC and the Company
HGC:
New York
Company:
New York
Massachusetts
Florida
Illinois
California
Maryland
Texas
Virginia
New Jersey
Utah
136
HUDSON GENERAL LLC
EXISTING LETTERS OF CREDIT
SCHEDULE 1.12
L/C No. Amount Billed To Issued To
------- ------ --------- ---------
50073004 $1,200,007 7/1/96 Hartford Specialty
50086018 1,820,000 7/1/96 National Union Fire Insurance
50086830 5,000 12/31/96 Metropolitan Dade County
50102270 25,000 7/25/96 Defense Finance and Accounting Services
----------
Total $3,050,007
==========
137
HUDSON GENERAL LLC
SUBSIDIARIES
SCHEDULE 3.1
Percentage
Jurisdiction of
of Capital
Incorporation Stock Owned
------------- -----------
Hudson General Aviation Services Inc. Canada 100%
150947 Canada Inc. (1) Canada 100%
(1) Owned by Hudson General Aviation Services Inc.
138
HUDSON GENERAL LLC
LITIGATION
SCHEDULE 3.8
1. Texaco Canada Inc. (now McColl-Frontenac Inc.) v. Petro-Canada Inc.,
Hudson General Aviation Services Inc. and Hudson General Corporation
In 1988, Texaco Canada Inc. ("Texaco") (now McColl-Frontenac Inc.)
instituted a lawsuit in the Supreme Court of Ontario, Canada against HGC,
Aviation and Petro-Canada Inc., the corporation which supplied aviation fuel for
Aviation's fixed base operations. The suit's allegations, as amended, are that
the defendants interfered with contractual and fiduciary relations, conspired to
injure, and induced the breach of a fuel supply agreement between Texaco and
Innotech Aviation Limited ("Innotech") in connection with the purchase by
Aviation from Innotech in 1984 of certain assets of Innotech's airport ground
services business. The suit seeks compensatory and punitive damages totaling
$110,000,000 (Canadian) plus all profits earned by the defendants subsequent to
the alleged breach. The trial of this suit commenced on May 6, 1996 and is
anticipated to be lengthy. Innotech (which due to a name change is now called
Aerospace Realties (1986) Limited ("Aerospace")) had agreed to defend and
indemnify HGC and Aviation against claims of whatever nature asserted in
connection with, arising out of or resulting from the fuel supply agreement with
Texaco. By a letter dated February 15, 1996, HGC was notified by Aerospace that
Aerospace has entered into a liquidation phase and can no longer defray the cost
of defending this lawsuit or pay for any damages resulting therefrom. HGC's
management believes, and counsel for HGC and Aviation has advised based on
available facts, that HGC and Aviation will successfully defend this action.
2. Michael and Kerri Balletta, Melody and Jeffrey Gross, James and Bari
Rodgers v. Russell Worrell, et. al.
These three lawsuits, which have been consolidated, were commenced in
1991 by the parents of three children and allege that the children were sexually
abused by the driver and matron of a school bus operated by Valley Transit
("Valley") used to transport handicapped children to special schools under
contract with the County of Nassau, N.Y. (the "County"). Besides the driver and
matron, the defendants include Valley, the County, the local school district of
each child and HGC. HGC provides management services to the County with respect
to the County's program to transport handicapped school children, but does not
itself operate the transportation services. The lawsuits seek a total of
$150,000,000 of compensatory and $150,000,000 of punitive damages.
The alleged intentional torts (which were not committed by HGC) and
punitive damages may not be covered by insurance. In the Management Services
Agreement between HGC and the County, the County has agreed to indemnify HGC,
and to cause the transportation contractor to indemnify HGC, against claims
arising out of or in connection with the conduct or operation of the
transportation services and any acts of the contractor and its employees. The
insurance company for Valley is defending HGC pursuant to an insurance policy
under which HGC is an additional insured.
139
HUDSON GENERAL LLC
ENVIRONMENTAL NOTICES
SCHEDULE 3.18(b)
1. Salt Lake City-County Health Department Notice of Violation and Order
of Compliance HDWQR 21/2-14-91
This Notice and Order results from a spill on February 13, 1991 of
approximately 4,500 gallons of jet fuel at the Company's fuel farm at Salt Lake
City International Airport. The spill occurred when the driver of an
unaffiliated company's fuel delivery truck overfilled one of the Company's fuel
storage tanks. No fine or other penalty has been assessed against the Company.
HGC took immediate action to remove surface contamination and is
cooperating with the Salt Lake City Airport authorities in the environmental
investigation to determine the impact of the spill on subsurface soil and ground
water. HGC brought a lawsuit against the fuel delivery company which caused the
spill.
2. Vancouver International Airport Authority
Aviation is in the process of cleaning up soil contaminated by two
leaking underground waste oil tanks on one of its former leaseholds at Vancouver
International Airport, which tanks were negligently installed by a preceding
leaseholder. Aviation has reserved its rights against this leaseholder.
3. Massport Environmental Claim
In April 1994, a law firm representing the Massachusetts Port Authority
("Massport") sent a letter (the "Original Demand") to thirty-seven (37)
companies, including HGC, notifying the addressees that Massport believed that
they were liable for contamination of soil and groundwater at Logan
International Airport in East Boston, Massachusetts (the "Airport"). Massport
claimed that it was performing response actions at the Airport, and stated that
it was seeking "contribution, reimbursement and payment of an equitable share of
the costs of past, current and future response actions undertaken by
Massport...".
The Original Demand identified twenty-four (24) spills of fuel, oil and
hydraulic fluid at various places at the Airport which allegedly had been caused
by HGC between January 1982 and September 1992. In addition, the Original Demand
proposed a settlement by which HGC would pay a per capita share of past response
costs (such share to be a minimum of $311,761) and agree to pay a per capita
share of all future response costs or undertake to perform all necessary future
response actions at locations where it had releases.
140
HUDSON GENERAL LLC
ENVIRONMENTAL NOTICES
SCHEDULE 3.18(b)
In July 1994, HGC responded to the Original Demand, raising numerous
objections to Massport's allegations and requesting considerable additional
information in Massport's possession.
Following an informational meeting held by Massport in September 1994
for all parties which had received the Original Demand, Massport sent a letter
dated October 5, 1994 to HGC (the "Massport Proposal") clarifying its position
and proposing a greatly reduced settlement payment. The Massport Proposal first
proposed a cash-out payment by HGC for past response costs of $29,968 in respect
of a reduced total of twenty-two (22) spills. (By contrast, Massport alleged a
grand total of 2,462 spills at the Airport since 1953.) The Massport Proposal
further limited Massport's claim against HGC for future response costs to three
sites where HGC allegedly had a total of only ten (10) spills. The proposed
settlement in respect of these future response costs was $526,154, bringing
Massport's aggregate settlement proposal to $556,122.
After obtaining additional information from Massport, HGC responded to
the Massport Proposal by letter dated January 20, 1995, reiterating objections
made previously and stating additional objections. However, HGC offered to pay
Massport $75,000 in return for a complete release and a mutually acceptable
settlement agreement that would include indemnification by Massport against any
claims brought against HGC by any other party, including government agencies.
HGC did not hear further from Massport until it received a letter dated
March 5, 1996 (the "Massport 1996 Letter") in which Massport stated that it had
now identified a grand total of 2,593 spills at the Airport prior to March 9,
1994. The Massport 1996 Letter proposed a revised cash-out payment by HGC for
past response costs of $32,334, and expanded Massport's claim against HGC for
future response costs to a total of twenty-seven (27) spills at five (5) sites.
Massport's proposed settlement in respect of these future response costs totaled
$1,500,347, for an aggregate settlement demand of $1,532,681.
HGC is considering how it will respond to the new Massport proposal.
4. Notices Referred to in Paragraph 3.18(b) of this Agreement Relating to
Violations, Claims, Proceedings and Other Matters Which Have Been Concluded.
141
HUDSON GENERAL LLC
UNDERGROUND STORAGE TANKS
SCHEDULE 3.18(c)
BRANCH LOCATION CAPACITY/GALLONS
- ------ -------- ----------------
U.S.
JFK Building 69 4,000
4,000
350
EWR Julia Street 5,000
LAX Imperial Highway 10,000
10,000
500
HOU Fuel Farm 20,000
20,000
20,000
20,000
20,000
BOS Delta Fuel Farm Twelve (12)
(operated @ 30,000
for
Delta)
CANADA
Toronto Maintenance 500
Calgary Maintenance 200
142
HUDSON GENERAL LLC
SCHEDULE OF INSURANCE
SCHEDULE 3.19
POLICY TYPE LIMITS DEDUCTIBLE
- ----------- ------ ----------
Commercial Blanket Bond $ 3Mill $25,000
Airport Liability 500Mill 10,000(PD)
Excess Auto * 25Mill 0
Directors & Officers Liability 10Mill 5-100,000
Excess Directors & Officers Liability 10Mill 0
Fiduciary Liability 4Mill 1,000
General/Auto Liability 2Mill 500,000
Worker's Compensation (U.S.) Statutory 500,000
Worker's Compensation (Canada) Statutory 0
Pollution Liability 2Mill 100,000
Property - Primary 10Mill 50/100,000(PP/Real)
Property - Excess 10Mill 0
Cargo Legal Liability * 25Mill 10,000
Warehouseman's LL (JFK) 20Mill 50,000
Warehouseman's LL (Orlando) 5Mill 2,500
Contractor's Environmental Impairment Liability 10Mill 100,000
General/Auto Liability (Buses) 1Mill 50,000
General/Auto Liability Excess (Buses) 1Mill 0
* Included under Airport Liability Policy.
143
HUDSON GENERAL LLC
SCHEDULE OF INDEBTEDNESS
SCHEDULE 5.12(a)
7% Convertible Subordinated Debentures due 2011............. $28,901,000
Amended and Restated Revolving Credit Agreement
dated as of November 25, 1992 as amended and
restated as of June 1, 1996................................. 0
144
SCHEDULE 5.12(h)
TERMS OF SUBORDINATION
1. "Senior Debt" as defined with respect to the Subordinated Debt shall
mean the Obligations and all fees, costs, enforcement expenses
(including legal fees and disbursements), collateral protection
expenses and other reimbursement or indemnity obligations created or
evidenced by the Credit Agreement or any of the other Loan Documents or
any prior, concurrent, or subsequent notes, instruments or agreements
of indebtedness, liabilities or obligations of any type or form
whatsoever relating thereto in favor of the Agent or any of the Banks.
"Senior Debt" shall expressly include any and all interest accruing or
out of pocket costs or expenses incurred after the date of any filing
by or against the Company of any petition under the federal Bankruptcy
Code or any other bankruptcy, insolvency or reorganization act
regardless of whether the Agent's or any Bank's claim therefor is
allowed or allowable in the case or proceeding relating thereto.
2. The Subordinated Debt shall be subordinated and the payment thereof
shall be deferred until the full and final payment in cash of the
Senior Debt. Notwithstanding the immediately preceding sentence, the
Company shall be permitted to pay, and HGC shall be permitted to
receive, any regularly scheduled payment of interest or principal on
the Subordinated Debt so long as at the time of such payment, or after
giving effect thereto, no Default or event which, with notice or lapse
of time or both, would constitute a Default has occurred and is
continuing or would occur after giving effect thereto.
3. HGC will not assert, collect or enforce the Subordinated Debt or any
part thereof or take any action to foreclose or realize upon the
Subordinated Debt or any part thereof or enforce any of the documents
evidencing the Subordinated Debt except (a) in each such case as
necessary, so long as no Default or event which, with notice or lapse
of time or both, would constitute a Default has occurred and is then
continuing or would occur after giving effect thereto, to collect any
sums expressly permitted to be paid by the Company to HGC or (b) to the
extent that the commencement of a legal action may be required to toll
the running of any applicable statute of limitation. Until the Senior
Debt has been finally paid in full in cash, HGC will not have any right
of subrogation, reimbursement, restitution, contribution or indemnity
whatsoever from any assets of the Company or any guarantor of or
provider of collateral security for the Senior Debt. HGC will also
waive any and all rights with respect to marshalling.
4. At any meeting of creditors of the Company or in the event of any case
or proceeding, voluntary or involuntary, for the distribution, division
or application of all or part of the assets of the Company or the
proceeds thereof, whether such case or proceeding be for the
liquidation, dissolution or winding up of the Company or its business,
a receivership, insolvency or bankruptcy case or proceeding, an
assignment for the benefit of creditors or a proceeding by or against
the Company for relief under the federal Bankruptcy Code or any other
145
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bankruptcy, reorganization or insolvency law or any other law relating
to the relief of debtors, readjustment of indebtedness, reorganization,
arrangement, composition or extension or marshalling of assets or
otherwise, the Agent will be irrevocably authorized at any such meeting
or in any such proceeding to receive or collect any cash or other
assets of the Company distributed, divided or applied by way of
dividend or payment, or any securities issued on account of any
Subordinated Debt, and apply such cash to or to hold such other assets
or securities as collateral for the Senior Debt, and to apply to the
Senior Debt any cash proceeds of any realization upon such other assets
or securities that the Agent in its discretion elects to effect, until
all of the Senior Debt shall have been paid in full in cash, rendering
to HGC any surplus to which HGC is then entitled.
At any such meeting of creditors or in the event of any such case or
proceeding, HGC shall retain the right to vote and otherwise act with
respect to the Subordinated Debt (including, without limitation, the
right to vote to accept or reject any plan of partial or complete
liquidation, reorganization, arrangement, composition or extension),
provided that HGC, in its capacity as a subordinated creditor of the
Company, shall not vote with respect to any such plan or take any other
action in any way so as to contest (i) the validity of any Senior Debt
or any collateral therefor or guaranties thereof, (ii) the relative
rights and duties of any holders of any Senior Debt established in any
instruments or agreements creating or evidencing any of the Senior Debt
with respect to any of such collateral or guaranties or (iii) the
Company's obligations and agreements set forth in the Credit Agreement
and the other Loan Documents.
5. HGC will hold in trust and immediately pay over to the Agent in the
same form of payment received, with appropriate endorsements, for
application to the Senior Debt, any cash amount that the Company pays
to HGC with respect to the Subordinated Debt, or as collateral for the
Senior Debt any other assets of the Company that HGC may receive with
respect to the Subordinated Debt, in each case except with respect to
payments expressly permitted hereunder.
146
HUDSON GENERAL LLC
SCHEDULE OF LIENS
SCHEDULE 5.13
Pursuant to a certain agreement with the Port Authority of New York and New
Jersey, the Port Authority has the right to purchase certain motor coaches
(buses) upon the conditions set forth in such agreements.
Pursuant to certain agreements with USAir, America West and Southwest Airlines
(the "Airlines"), the Airlines have the right to purchase certain hydrant
fueling carts upon the conditions set forth in such agreements.
147
HUDSON GENERAL LLC
SCHEDULE OF INVESTMENTS AND CONTINGENT LIABILITIES
SCHEDULE 5.15
Note receivable related to the sale of certain
property in Fort Lauderdale, Florida...................... $ 212,000 (1)
Note receivable related to the sale of the FBO
located at Long Island MacArthur Airport.................. $2,458,368 (1)
Letter of Credit drawn on Royal Bank of Canada in
favor of Vancouver Airport Authority...................... $ 100,000 (2)
On the Books of:
(1) Hudson General LLC
(2) Hudson General Aviation Services Inc. - in Canadian dollars.