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EXHIBIT 4.9
Loan Agreement
Boeing 737-3Q8QC MSN 23766
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of September 26, 1997, is entered into
between IAI IV, INC., a Nevada corporation ("BORROWER"), and INTERNATIONAL
LEASE FINANCE CORPORATION, a California corporation ("LENDER"), in light of the
following facts:
WHEREAS, Borrower and Lender have previously entered or are
contemporaneously herewith entering into that certain Aircraft Purchase and
Sale Agreement, dated as of September 26, 1997 (the "AIRCRAFT SALE AGREEMENT"),
pursuant to which Borrower agreed to purchase from Lender one (1) Boeing
737-3Q8QC aircraft bearing manufacturer's serial number 23766 and Belgium
registration mark OO-ILK with two (2) CFM International CFM56-3B2 engines
bearing manufacturer's serial numbers 720458 and 721731 or any replacement
engines for either of the foregoing engines) (the "AIRCRAFT") which is
currently being leased to AIR BELGIUM INTERNATIONAL, N.V., a Belgium
corporation ("LESSEE");
WHEREAS, Borrower has requested that Lender provide Borrower with a
senior loan in the amount of Eighteen Million U.S. Dollars (US$ 18,000,000) and
a junior loan of Two Million U.S. Dollars (US$ 2,000,000) to finance a portion
of the purchase price in connection with Borrower's purchase of the Aircraft
from Lender; and
WHEREAS, on the terms and conditions contained herein, Lender has
agreed to provide Borrower with a with a senior loan in the amount of Eighteen
Million U.S. Dollars (US$ 18,000,000) and a junior loan of Two Million U.S.
Dollars (US$ 2,000,000) to finance a portion of the purchase price of the
Aircraft.
NOW THEREFORE, in consideration of the foregoing, mutual covenants
and conditions contained herein and other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the parties hereto agree
as follows:
1. DEFINITIONS; CONSTRUCTION
1.1 Definitions. For purposes of this Agreement,
the following capitalized terms shall have the following meanings:
"Agreement" shall mean this Loan Agreement between Borrower
and Lender, together with all of the exhibits and schedules hereto.
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Loan Agreement
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"Aircraft" shall have the meaning ascribed to such term in
the recitals to this Agreement.
"Aircraft Sale Agreement" shall have the meaning ascribed
to such term in the recitals to this Agreement.
"Aircraft Original Sale Price" shall mean Twenty-Two
Million Six Hundred Twenty-Five Thousand U.S. Dollars (US$ 22,625,000).
"Aircraft Sale Agreement" shall have the meaning ascribed
to such term in the recitals to this Agreement.
"Note" shall have the meaning ascribed to such term in
Section 2.3 hereof.
"Asset" shall mean any interest of a Person in any kind of
property or asset, whether real, personal, or mixed real and personal, or
whether tangible or intangible.
"Borrower" shall have the meaning set forth in the
introduction to this Agreement.
"Borrowing" shall mean the borrowing under the Loan made by
Lender to Borrower for the purchase of the Aircraft.
"Business Day" shall mean a day (other than a Saturday or
Sunday) upon which banks are open for the transaction of business of the kind
contemplated by this Agreement in New York, New York, United States of America
and Los Angeles, California.
"Contractual Obligation" shall mean, as applied to any
Person, any provision of any security agreement entered into by that Person or
of any material indenture, mortgage, deed of trust, contract, undertaking,
agreement, or other material instrument to which that Person is a party or by
which it or any of its owned Assets is bound or to which it or any of its owned
Assets is subject.
"Debt" shall mean, with respect to any Person, the
aggregate amount of, without duplication: (a) all obligations of such Person
for borrowed money; (b) all obligations of such Person evidenced by bonds,
debentures, letters of credit, notes, or other similar instruments and all
reimbursement or other obligations of such Person in respect of letters of
credit, bankers acceptances, interest rate swaps, or other financial products;
(c) all capitalized lease obligations of such Person; (d) all obligations or
liabilities of others secured by a Lien on any Asset owned by such Person
whether or not such obligation or liability is assumed; (e) all
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Loan Agreement
Boeing 737-3Q8QC MSN 23766
obligations guarantied by such Person or in respect of which such Person acts
as surety; and (f) all obligations of such Person to pay the deferred purchase
price of Assets or services, exclusive of trade payables which are incurred in
the ordinary course of such Person's business consistent with past practices.
"Event of Default" shall have the meaning ascribed to such
term in Section 11.1 hereof.
"FAA" shall mean the Federal Aviation Administration of the
Department of Transportation or any successor thereto under the Laws of the
U.S.
"First Monthly Payment Date" shall have the meaning
ascribed to such term in Section 4.1, 4.2 hereof.
"Highest Lawful Rate" shall mean, the maximum non-usurious
interest rate, as in effect from time to time, which may be charged, contracted
for, reserved, received, or collected by Lender in connection with this
Agreement, the Note, or any other document executed in connection herewith or
therewith.
"Indemnified Liabilities" shall have the meaning ascribed
to such term in Section 12.2 hereof.
"Indemnitee" shall have the meaning ascribed to such term
in Section 12.2 hereof.
"Investment" shall mean, as applied to any Person, any
direct or indirect purchase or other acquisition by that Person of, or
beneficial interest in, stock, instruments, bonds, debentures or other
securities of any other Person, or any direct or indirect loan, advance (other
than advances to employees for expenditures in the ordinary course of such
Person's business), or capital contribution by such Person to any other Person,
including all indebtedness and accounts receivable from that other Person which
did not arise from sales or the rendition of services to that other Person in
the ordinary and usual course of such Person's business, and deposit accounts
(including certificates of deposit).
"Lease Assignment" shall mean that certain Lease Assignment
entered into between Borrower and Lender, pursuant to which Borrower granted
Lender a first priority security interest in the Lease.
"Lien" shall mean any lien, mortgage, assignment (including
any assignment of rights to receive payments of money), pledge, security
interest, charge or encumbrance of any
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Loan Agreement
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kind (including any conditional sale or other title retention agreement, any
lease in the nature thereof, and any agreement to give any security interest).
"Loan A" shall have the meaning ascribed to such term in
Section 2.1(a) hereof.
"Loan A Amount" means (a) on the Loan Date, the amount set
forth in Section 2.1(a) hereof, and (b) thereafter, the outstanding principal
balance of Loan A and any and all accrued and unpaid interest on Loan A from
time to time.
"Loan A Maturity Date" shall mean December 31, 1999.
"Loan A Interest Rate" shall have the meaning ascribed to
such term in Section 3.1(a) hereof.
"Loan B" shall have the meaning ascribed to such term in
Section 2.1(b) hereof.
"Loan B Amount" means (a) on the Loan Date, the amount set
forth in Section 2.1(b) hereof, and (b) thereafter, the outstanding principal
balance of Loan B and any and all accrued and unpaid interest on Loan B from
time to time.
"Loan B Interest Rate" shall have the meaning ascribed to
such term in Section 3.1(b) hereof.
"Loan B Maturity Date" shall mean September 30, 2002.
"Loan Date" shall mean the date on which the Borrowing of
the Loans is advanced by Lender to Borrower.
"Loans" shall mean the loans made by the Lender to the
Borrower pursuant to Section 2.1 hereof.
"Material Adverse Effect" shall mean a material and adverse
effect on the business, operations, Assets, or condition (financial or
otherwise) of a Person.
"Overdue Rate" shall have the meaning ascribed to such term
in Section 3.2 hereof.
"Parent" means International Aircraft Investors, a
California corporation.
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"Parts" means all appliances, parts, components, modules,
instruments, appurtenances, accessories, furnishings and other equipment of
whatever nature (other than complete engines) whether now owned or hereafter
acquired which may from time to time be incorporated in the Aircraft or any
engine on any Aircraft (and "Part" means any of the foregoing) and, after
removal therefrom, so long as such Part is considered a Part associated with
the Aircraft or an engine on such Aircraft.
"Permitted Liens" shall mean any of the following Liens:
(a) Liens in favor of Lender arising by reason of
this Agreement;
(b) Liens for taxes, assessments or other
governmental charges or levies not at the time delinquent or
thereafter payable without penalty or being contested in good faith;
(c) Liens of carriers, warehousemen, mechanics,
materialmen and landlords incurred in the ordinary course of business
for sums not overdue or being contested in good faith;
(d) Liens incurred in the ordinary course of
business in connection with workmen's compensation, unemployment
insurance or other forms of governmental insurance or benefits, or to
secure performance of tenders and statutory obligations entered into
in the ordinary course of business or to secure obligations on surety
or appeal bonds;
(e) judgment Liens in existence less than thirty
(30) days after the entry thereof or with respect to which execution
has been stayed or the payment of which is covered in full by
insurance;
(f) Liens on the Aircraft in favor of the lessee
of such Aircraft which result from the leases on such Aircraft; and
(g) Liens on the Aircraft which are "Permitted
Liens" under the leases for the Aircraft; provided, however, that
such leases are approved by Lender.
"Person" shall mean natural persons, corporations, limited
partnerships, partnerships, joint stock companies, joint ventures,
associations, companies, trusts, banks, trust companies, land trusts, vehicle
trusts, business trusts or other organizations irrespective of whether they are
legal entities, and governments and agencies and political subdivisions
thereof.
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"Pledge Agreement" means that certain Pledge Agreement
entered into between Lender and Borrower, pursuant to which Borrower granted
Lender a first priority security interest in the Aircraft.
"Prime Rate" means the variable rate of interest charged by
Bank of America Illinois ("B of A") to its customers as its prime rate (with
the understanding that any such rate may not necessarily represent the lowest
or best rate actually charged to any customer by B of A).
"Monthly Payment Date" shall have the meaning ascribed to
such term in Section 4.1, 4.2 hereof.
"Related Documents" shall mean the Aircraft Sale Agreement,
the Lease Assignment, the Pledge Agreement, the Stock Pledge Agreement and all
other agreements, documents, or instruments other than this Agreement and the
Note, delivered from time to time in connection with the transactions
contemplated by this Agreement.
"Stock Pledge Agreement" shall mean that certain Stock
Pledge Agreement entered into between Lender, on the one hand, and, on the
other hand, the Parent, pursuant to which the Parent of Borrower grants Lender
a first priority perfected security interest on its ownership interests in
Borrower.
"Subsidiary" shall mean any corporation a majority of whose
securities having ordinary voting power for the election of directors (other
than securities having such power only by reason of the happening of a
contingency) is, as of the date any determination thereof is to be made, owned
by a Person or one or more of such Person's Subsidiaries.
"Taxes" shall mean any taxes, charges, fees, levies or
other assessments based upon or measured by net or gross income, gross
receipts, sales, use, ad valorem, transfer, franchise, withholding, payroll,
employment, excise, occupation, premium, property or conduct of business,
together with any interest and penalties, additions to tax and additional
amounts imposed by any federal, state, local or foreign taxing authority.
"Transaction Documents" shall mean this Agreement, the
Note, the Related Documents, and all other agreements or instruments executed
and delivered or to be executed and delivered pursuant hereto or thereto or in
connection herewith or therewith, or in connection with any of the transactions
contemplated hereby or thereby.
"Unmatured Event of Default" shall mean an event, act, or
occurrence which, with the giving of notice or the lapse of time (or both),
would become an Event of Default.
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1.2 Construction. Unless the context of this
Agreement clearly requires otherwise, references to the plural include the
singular and to the singular include the plural, the part includes the whole,
the terms "include" and "including" are not limiting, and the term "or" has,
except where otherwise indicated, the inclusive meaning represented by the
phrase "and/or". The words "hereof," "herein," "hereby," "hereunder" and
similar terms in this Agreement refer to this Agreement as a whole and not to
any particular provision of this Agreement. Article, section, subsection,
clause, exhibit and schedule references are to this Agreement unless otherwise
specified. Any reference herein to this Agreement, the Note, or any of the
Related Documents includes any and all alterations, amendments, changes,
extensions, modifications, renewals, or supplements thereto or thereof, as
applicable.
1.3 Exhibits. All of the exhibits or schedules
attached hereto shall be deemed incorporated herein by reference.
2. AMOUNT OF LOAN
2.1 Loans
(a) Loan A. Subject to the terms and conditions
contained herein, Lender agrees to make a loan to Borrower in one
Borrowing and in the principal amount equal to Eighteen Million U.S.
Dollars (US$ 18,000,000) ("Loan A"). The Loan A Amount will be
advanced to Borrower on the date of purchase of the Aircraft agreed
upon by Borrower and Lender. Any amount repaid on Loan A may not be
reborrowed by Borrower.
(b) Loan B. Subject to the terms and conditions
contained herein, Lender agrees to make a loan to Borrower in one
Borrowing and in the principal amount equal to Two Million U.S.
Dollars (US$ 2,000,000) ("Loan B"). The Loan B Amount will be
advanced to Borrower on the date of purchase of the Aircraft agreed
upon by Borrower and Lender. Any amount repaid on Loan B may not be
reborrowed by Borrower.
(c) Advancement of Loans. Unless agreed to
otherwise, Borrower will provide Lender with notice of the date of
purchase of the Aircraft on which Borrower wants the Loans for the
Aircraft extended to it on the Business Day prior to the date set
forth in such notice. The Loans for the purchase of such Aircraft
will be extended to Borrower on the date set forth in such notice.
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2.2 Purpose of Loans. The proceeds of the Loans
will be used by Borrower solely to purchase the Aircraft from Lender.
2.3 Note. The Loans will be evidenced by a
secured promissory note (the "Note"). The form of such Note is attached hereto
as Exhibit A. The Note shall evidence the aggregate outstanding principal
balance of the Loans together with any and all accrued and unpaid interest
thereon.
3. INTEREST AND FEES
3.1 Interest Rate.
(a) Interest on Loan A. Loan A shall accrue
interest at the following per annum interest rates (the "Loan A
Interest Rate") for the following periods:
Period Interest Rate
------- -------------
Loan Date - March 31, 1998 6.3%
April 1, 1998 - June 30, 1998 6.5%
July 1, 1998 - Loan A Maturity Date 6.75%
Loan A will accrue interest at the Loan A Interest Rate from the Loan
Date until the outstanding balance of Loan A and all of the accrued
and unpaid interest thereon is repaid in full (whether on the
Maturity Date or on an earlier date by a voluntary prepayment or a
mandatory prepayment or an acceleration of the entire outstanding
principal and interest of Loan A as the result of an occurrence of an
Event of Default) and with interest on any overdue portion of the
balance due hereunder according to the provisions for late payment
hereunder.
(b) Interest on Loan B. Loan B shall accrue
interest at the following per annum interest rates (the "Loan B
Interest Rate") for the following periods:
Period Interest Rate
------- -------------
Loan Date - December 31, 1998 6.6%
January 1, 1999 - December 31, 1999 6.75%
January 1, 2000 - Loan B Maturity Date 6.90%
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Loan Agreement
Boeing 737-3Q8QC MSN 23766
Loan B will accrue interest at the Loan B Interest Rate from the Loan
Date until the outstanding balance of Loan B and all of the accrued
and unpaid interest thereon is repaid in full (whether on the
Maturity Date or on an earlier date by a voluntary prepayment or a
mandatory prepayment or an acceleration of the entire outstanding
principal and interest of Loan B as the result of an occurrence of an
Event of Default) and with interest on any overdue portion of the
balance due hereunder according to the provisions for late payment
hereunder.
3.2 Overdue Rate. Any payments of principal,
interest (to the extent permitted by law both before and after judgment) with
respect to the Loans, fees, expenses, or other amounts payable to Borrower
which are not paid when due hereunder or declared due, whether at maturity, by
acceleration, by lapse of time or otherwise, shall bear interest thereafter, at
a per annum interest rate (the "Overdue Rate") which is equal to the Loan B
Interest Rate plus three percent (3.0%).
3.3 Computation of Interest. All computations of
interest with respect to the Loans and all computations of interest due under
Section 3.2 hereof for any period shall be calculated on the basis of a year of
three hundred sixty (360) days for the actual number of days elapsed in such
period. Interest shall accrue from the Loan Date (or the date on which
interest or other payments are due, if applicable), to the date of repayment of
such Loan (or the date of the payment of interest or fees or other payments, if
applicable) in accordance with the provisions hereof.
3.4 Maximum Interest Rate. Notwithstanding
anything to the contrary contained in this Agreement, Borrower shall not be
obligated to pay, and Lender shall not be entitled to charge, collect, or
receive, interest (it being understood that interest shall be calculated as the
aggregate of all charges which constitute interest under applicable law that
are contracted for, charged, reserved, received, or paid) in excess of the
Highest Lawful Rate. During any period of time in which the interest rate
specified herein exceeds the Highest Lawful Rate, interest shall accrue and be
payable at such maximum rate; provided, however, that, if the interest rate
declines below the Highest Lawful Rate, then interest shall continue to accrue
and be payable at the Highest Lawful Rate (so long as there remains any unpaid
principal balance with respect to the Loans) until the interest that has been
paid hereunder and under the Note equals the amount of interest that would have
been paid if interest had at all times accrued and been payable at the
applicable interest rate specified in this Agreement.
For purposes of this Section 3.4, the term
"applicable law" shall mean that law in effect from time to time and applicable
to this loan transaction between Borrower and Lender which lawfully permits the
charging and collection of the highest permissible, lawful, non-usurious rate
of interest on such loan transaction and this Agreement,
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including laws of the State of California and, to the extent controlling, laws
of the United States of America.
4. TERMS OF LOAN
4.1 Payment of Interest on Loan A. Principal and
interest with respect to Loan A shall be due and payable monthly in arrears,
commencing on October 31, 1997 (the "First Monthly Payment Date") and
continuing on the same day of each month thereafter (each a "Monthly Payment
Date") until and including the Loan A Maturity Date, on which date the entire
outstanding principal balance of Loan A and all accrued and unpaid interest
shall be due and payable. The amount of the payments of principal and interest
on Loan A shall be as set forth in the amortization schedule titled "Loan A"
set forth in Exhibit B attached hereto and incorporated herein by this
reference.
4.2 Payment of Interest on Loan B. Principal and
interest with respect to Loan B shall be due and payable monthly in arrears,
commencing on the First Monthly Payment Date and continuing on each Monthly
Payment Date thereafter until and including the Loan B Maturity Date, on which
date the entire outstanding principal balance of Loan B and all accrued and
unpaid interest shall be due and payable. The amount of the payments of
principal and interest on Loan B shall be as set forth in the amortization
schedule titled "Loan B" set forth in Exhibit B attached hereto and
incorporated herein by this reference.
4.3 Exhibit B. Exhibit B contains the
amortization schedules which set forth the aggregate monthly payments of
principal and interest due hereunder for the Loans. Exhibit B shall be signed
by the authorized officers of both Borrower and Lender. In case of any dispute
regarding the repayment of principal or interest on the Loans, the payment
schedules titled "Loan A" and "Loan B" set forth in Exhibit B shall control
the repayment.
4.4 Voluntary Prepayments. At any time, Borrower
may, upon at least one (1) Business Day prior written notice, prepay the Loans
in whole or in part without penalty or premium.
5. MANDATORY PREPAYMENTS FROM THE PROCEEDS FROM THE SALE OR TOTAL LOSS
OF AN AIRCRAFT
5.1 Payment of Proceeds of Sale or Total Loss.
Upon the sale or total loss (as defined in the Lease) of the Aircraft, Borrower
will repay in full the outstanding principal balance of the Loans and any and
all accrued and unpaid interest thereon.
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6. PLACE AND MANNER OF BORROWING AND PAYMENT
6.1 Manner and Time of Payment. All payments of
principal and interest in respect of the Loans payable to Lender shall be made
without condition or reservation of right in United States Dollars and in
immediately available funds to the following bank account or to such other bank
account as Lender may designate:
International Lease Finance Corporation
Account No. 74-45164
Bank of America Illinois
231 South LaSalle Street
Chicago, Illinois 60697
ABA# 071000039
6.2 Payments on Non-Business Days. Whenever any
payment to be made by Borrower hereunder shall be stated to be due on a day
which is not a Business Day, then such payment shall be due and payable on the
immediately preceding Business Day.
6.3 No Deductions or Withholdings. All payments
by Borrower hereunder or under the Note, including, without limitation,
principal and interest, will be made in full without any deduction or
withholding whether in respect of set-off, counterclaim, duties, or taxes
imposed in the United States of America or any jurisdiction from which such
payments are made unless Borrower is prohibited by law from doing so, in which
event Borrower will gross up the payment amount such that the net payment
received by Lender after any deduction or withholding equals the amounts called
for hereunder or under the Note. Borrower will also do all of the following:
(a) Ensure that the deduction or withholding does
not exceed the minimum amount legally required.
(b) Pay to the relevant government entities
within the period for payment permitted by applicable law the full
amount of the deduction or withholding (including the full amount of
any deduction or withholding from any additional amount paid pursuant
hereto).
(c) Furnish to Lender within thirty (30) days
after each payment an official receipt of the relevant government
entities involved for all amounts so deducted or withheld.
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6.4 Value Added Taxes. The principal, interest
and fees payable by Borrower hereunder or under the Note are exclusive of any
value added tax, turnover tax or similar tax or duty. If a value added tax or
any similar tax or duty is payable in any jurisdiction in respect of any
principal, interest, fee or other amounts as aforesaid, Borrower will pay all
such tax or duty and indemnify Lender against any claims for the same and any
related claims, losses or liabilities.
7. CONDITIONS TO THE LOAN
7.1 Conditions Precedent to the Loan. The
obligation of Lender to make the Loans specified in Section 2.1 hereof is
subject, in addition to the conditions set forth in Sections 7.2 and 7.3
hereof, to the fulfillment and satisfaction of the each of the following
conditions precedent on or before the Loan Date:
(a) The Loan Date shall occur on or before
September 30, 1997;
(b) Lender shall have received the Note duly
executed by Borrower to the order of Lender;
(c) The Note shall be in full force and effect;
(d) Borrower shall have executed and delivered
the Lease Assignment;
(e) Borrower shall have caused the Parent to have
pledged its ownership interest in Borrower to Lender pursuant to the
terms and conditions of the Stock Pledge Agreement;
(f) Lender shall have received the articles of
incorporation (and any amendments thereto) of the Borrower;
(g) Lender shall have received a certificate from
the Secretary of the Borrower attesting to the resolutions of the
Borrower's board of directors, authorizing the execution, delivery,
and performance of this Agreement, the Related Documents, and the
other documents contemplated herein or therein, and the issuance of
the Note, and authorizing specific officers of the Borrower to
execute same;
(h) Lender shall have received a signature and
incumbency certificate for the officers of Borrower who will execute
this Agreement, the Note, the Related
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Documents, and the other documents contemplated herein or therein to
which Borrower is a party, which certificate has been certified by
the secretary of Borrower;
(i) Lender shall have received the written
opinion of the Legal Counsel for Borrower, in form and substance
satisfactory to Lender and its counsel, covering the matters set
forth in the form of opinion contained in Exhibit C attached hereto;
(j) No Event of Default or Unmatured Event of
Default shall have occurred and be continuing on the date of the
Borrowing of the Loans nor shall either result from the making of the
Borrowing of the Loans;
(k) Except as set forth in Exhibit D attached
hereto and incorporated herein by this reference, there is no
litigation or proceeding pending or threatened against or affecting
Borrower, the result of which might materially affect the financial
condition, business or operations of Borrower, and there has been no
materially adverse change in the financial condition of Borrower
since the date of execution of this Agreement;
(l) The representations and warranties contained
in Section 8 of this Agreement are true and correct as of the date of
the Borrowing of the Loans; provided, however, that the
representations and warranties contained herein with respect to the
accuracy of financial statements shall be deemed to be made with
respect to the financial statements most recently delivered to the
Lender; and
(m) An officer of Borrower shall have delivered
to Lender an officers' certificate setting forth that the Borrower
has complied with the statements set forth in clauses (j), (k), and
(l) of this Section 7.2.
7.2 Conditions Subsequent to the Loan. The
obligation of Lender to make the Loans specified in Section 2.1 hereof is
subject, in addition to the conditions set forth in Sections 7.1, 7.2 hereof,
to the fulfillment and satisfaction of the each of the following conditions
subsequent within thirty (30) days after the Loan Date:
(a) Borrower shall have executed and delivered
the Pledge Agreement; and
(b) Borrower shall have taken whatever reasonable
action is necessary to grant Lender the security interest provided by
the Pledge Agreement.
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8. REPRESENTATIONS AND WARRANTIES OF BORROWER
In order to induce Lender to enter into this Agreement,
Borrower makes the following representations and warranties which shall be true
and correct in all material respects as of the Loan Date and such
representations and warranties shall survive the execution and delivery of this
Agreement and the Note and the making of the Loans:
8.1 Organization.
(a) Borrower (1) is a corporation duly organized,
validly existing and in good standing under the laws of Nevada and
(2) has all requisite power and authority to own, operate, and
encumber its Assets and to conduct its business as presently
conducted and as proposed to be conducted in connection with the
consummation of the transactions contemplated by this Agreement and
the Related Documents.
(b) Parent (1) is a company duly organized,
validly existing and in good standing under the laws of California
and (2) has all requisite power and authority to own, operate, and
encumber its assets and property and to conduct its business as
presently conducted and as proposed to be conducted in connection
with the consummation of the transactions contemplated by this
Agreement and the Related Documents.
8.2 Authority.
(a) Each of Borrower and Parent have the
requisite power and authority to execute, deliver, and perform each
of the Transaction Documents executed by it, or to be executed by it.
(b) The execution, delivery, and performance of
each of the Transaction Documents to which each of Borrower and
Parent is a party and the consummation of the transactions
contemplated thereby, have been duly approved by the board of
directors of Borrower and Parent, as applicable, and no other
proceedings on the part of Borrower or Parent are necessary to
consummate such transactions.
(c) Each of the Transaction Documents to which
each of Borrower and Parent is a party has been duly executed and
delivered by Borrower and Parent, as applicable, constitutes its
legal, valid and binding obligation, enforceable against it in
accordance with its terms, and is in full force and effect except as
the enforceability hereof or thereof may be affected by: (a)
bankruptcy, insolvency, moratorium, or other similar laws affecting
the enforcement of creditors' rights generally; (b) the limitation
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of certain remedies by certain equitable principles of general
applicability; and (c) the fact that the rights to indemnification
thereunder or hereunder may be limited by securities laws.
8.3 No Conflict. The execution, delivery, and
performance of each of the Transaction Documents to which each of Borrower and
Parent is a party and each of the transactions contemplated thereby do not and
will not (a) conflict with or violate Borrower's or Parent's Articles of
Incorporation, or (b) conflict with, result in a breach of, constitute (with or
without notice or lapse of time) a default under, or require termination of,
any of the Transaction Documents, any material indenture, mortgage or other
agreement or instrument to which Borrower or Parent is a party or by which any
of their properties may be bound, or (c) result in or require the creation or
imposition of any Lien upon any of the Assets of Borrower or Parent (other than
Liens in favor of Lender arising pursuant to the Transaction Documents), or (d)
require any approval of the stockholders or any approval or consent of any
Person under any other Contractual Obligations to which Borrower is a party
which approval or consent, as the case may be has not already been obtained
prior to the date hereof.
8.4 Government Consent. The execution, delivery,
and performance of each Transaction Document to which each of Borrower or the
Parent is a party and the transactions contemplated thereby do not and will not
require any registration with, consent or approval of, or notice to, or other
action to, with or by any regulatory body or authority in the United States of
America, Nevada or California.
8.5 Payment of Taxes. All tax returns and
reports of each of Borrower and Parent required to be filed, have been timely
filed (inclusive of any permitted extensions), and all taxes, assessments,
fees, and other governmental charges thereupon and upon its assets, income, and
franchises which are shown on such returns or reports as being due and payable,
have been paid when due and payable, except such taxes, if any, that are
reserved against in accordance with generally accepted accounting principals in
the United States of America and are being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted. Each of
Borrower and Parent has no knowledge of any proposed tax assessment against it
which is not either going to be paid prior to it becoming delinquent or being
contested in good faith by appropriate proceedings promptly instituted and
diligently conducted by such Person with appropriate reserves made for such
assessment in accordance with generally accepted accounting principals.
8.6 Litigation; Adverse Facts. Except as
previously disclosed to Lender in writing: (a) there is no action, suit,
proceeding, or arbitration (whether purportedly on behalf of Borrower or
Parent) at law or in equity or before or by any federal, state, municipal, or
other governmental department, commission, board, bureau, agency or
instrumentality, domestic or
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foreign, pending or, to the knowledge of Borrower, threatened against or
directly affecting Borrower or Parent which is reasonably likely to result in a
Material Adverse Effect on Borrower or Parent or may reasonably be expected to
materially adversely affect Borrower's ability to perform its obligations
hereunder or under the Note; or (b) Borrower and Parent are not subject to or
in default with respect to any final judgment, writ, injunction, decree, rule,
or regulation of any court or federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, in a manner which would have a Material Adverse Effect on Borrower or
Parent; and (c) (i) as of the date hereof or on the Loan Date, there is no
action, suit, proceeding or, to the best of Borrower's knowledge or belief,
investigation pending or, to the best of Borrower's knowledge or belief,
threatened against or directly affecting Borrower or Parent, which questions
the validity or the enforceability of this Agreement, the Related Documents, or
the Note; and (ii) after the Loan Date, there is no action, suit or proceeding
pending against or affecting Borrower or Parent, pursuant to which, on the date
of the making of any Loans hereunder, there is in effect a binding injunction
materially and adversely affecting the validity or the enforceability of the
sale of the Aircraft, this Agreement, the Related Documents, or the Note.
8.7 Consents. Other than such as may have
previously been obtained, no consent, license, permit, approval or
authorization of, exemption by, notice to, report to, or registration, filing
or declaration with, any governmental authority or agency is required in
connection with the execution, delivery, and performance by Borrower of this
Agreement, the Related Documents, or the Note and by Parent of the Transaction
Documents (to which it is a party).
8.8 Title to Properties; Liens. Except for
Permitted Liens, all of the Assets of Borrower are free from all Liens of any
nature whatsoever. Borrower has good and sufficient title to all of the
material Assets reflected in its books and records as being owned by it.
8.9 Debt. Borrower has no Debt outstanding on
the Loan Date of this Agreement.
8.10 Licenses, Patents, Trademarks, and
Intellectual Property. Borrower has all necessary patents, patent rights,
license agreements, trademarks, trademark rights, trade names, trade name
rights, copyrights, and franchise agreements in order for it to conduct its
businesses and to operate its Assets substantially as now operated, as the case
may be, without known conflict, other than as previously disclosed in writing,
with the rights of third Persons, except where the failure to obtain the same
could not reasonably be expected to have a Material Adverse Effect on Borrower
and all of same are valid and subsisting, except where such lack of validity or
subsistence could not reasonably be expected to have a Material Adverse Effect
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on Borrower. The consummation of the transactions contemplated by this
Agreement will not alter or impair any of such rights of Borrower. Except as
previously disclosed in writing, Borrower has not been charged or, to
Borrower's knowledge, is threatened to be charged with any infringement of, nor
has it infringed on any unexpired registered domestic trademark, trademark
registration, trade name, patent, copyright, copyright registration, or other
proprietary right of any Person, which charge or threat could reasonably be
expected to have a Material Adverse Effect on Borrower.
8.11 Burdensome Agreements. Except as previously
disclosed in writing, Borrower is not a party to any unusual or unduly
burdensome agreement or undertaking which could reasonably be expected to have
a Material Adverse Effect on Borrower. Borrower is not subject to any unusual
or unduly burdensome court order, writ, injunction, or decree of any court or
government instrumentality, domestic or foreign, which could reasonably be
expected to have a Material Adverse Effect on Borrower.
8.12 Existing Defaults. Except as previously
disclosed in writing, Borrower is not in default under any Contractual
Obligation, the effect of which would be a Material Adverse Effect on Borrower.
Except as previously disclosed in writing, Borrower is not in violation of any
law, ordinance, rule or regulation to which it or any of its Assets is subject,
the failure to comply with which would have a Material Adverse Effect on
Borrower.
8.13 Foreign National. Borrower is not a
"national" of a "designated foreign country" (or a person defined as a
"designated national" or a "specially designated national") within the
definitions in the Foreign or the Cuban Assets Control Regulations of the
United States Treasury Department, 31 CFR, Subtitle B, Chapter V, as amended,
or any regulation or ruling issued thereunder.
9. AFFIRMATIVE COVENANTS
Borrower and Lender covenant and agree, so long as the
Loans hereunder shall be outstanding and until the full and final payment of
the Loans and the performance of all obligations of Borrower, as follows:
9.1 Payment of Principal and Interest. Borrower
will duly and punctually pay all principal and interest due hereunder at the
time and place and in the manner specified herein.
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9.2 Accounting Records and Inspection. Borrower
shall maintain adequate financial and accounting books and records in
accordance with sound business practices and generally accepted accounting
principles consistently applied, and permit any representative of Lender, upon
reasonable written notice to Borrower, at any time during usual business hours,
to inspect, audit, and examine such books and records and to make copies and
take extracts therefrom, and discuss its affairs, financing, and accounts with
its officers and independent public accountants. Borrower shall furnish Lender
with any information reasonably requested regarding Borrower's business or
finances promptly upon such entity's request. Borrower shall permit those
Persons designated by Lender to visit and inspect, during Borrower's normal
business hours, any of the Assets of Borrower upon reasonable notice and as
often as may be reasonably requested.
9.3 Financial Statements. Borrower shall furnish
Lender:
(a) as soon as practicable after the end of each
fiscal year, but in no event later than one hundred twenty (120) days
after the end of such fiscal year, balance sheets of Borrower as of
the end of such year, profit and loss statements and statements of
cash flow (which cash flow statement need not be certified) of
Borrower for such year, setting forth in each case in comparative
form, figures for the previous fiscal year, all in reasonable detail
and certified by the Chief Financial Officer of Borrower. Further,
Borrower will provide Lender with copies of such other financial
statements delivered by Borrower to the Parent.
(b) as soon as possible and, in any event, within
five (5) days after Borrower has knowledge, of: (1) the occurrence
of any Event of Default or event which with the giving of notice or
lapse of time, or both, would result in an Event of Default; or (2)
any default or event of default as defined in any evidence of Debt of
Borrower or under any agreement, indenture, or other instrument under
which such Debt has been issued, irrespective of whether such Debt is
accelerated or such default is waived.
(c) with prompt written notice of: (1) a
Material Adverse Effect on Borrower's consolidated condition
(financial or otherwise) or operations; (2) a material breach of or
noncompliance with any term, condition or covenant contained in this
Agreement, the Note, or the other Transaction Documents; or (3) a
material breach of or noncompliance with any material term,
condition, or covenant of any material contract to which Borrower is
a party or by which any of its Assets may be bound;
(d) with prompt written notice of any claims,
proceedings, or disputes against, or to the knowledge or belief of
Borrower, threatened or directly affecting
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Borrower, which involve monetary amounts of Five Hundred Thousand
U.S. Dollars (US$ 500,000) or more or which are reasonably likely to
have a Material Adverse Effect on Borrower or any material labor
controversy resulting in or threatening to result in a strike against
Borrower which could have a Material Adverse Effect on Borrower or
any proposal by any public authority of which Borrower has knowledge
to acquire any of the material Assets or businesses of Borrower.
(e) promptly upon becoming aware of any Person's
overtly seeking to obtain or overtly threatening to seek to obtain an
order for relief with respect to Borrower in an involuntary case
under any applicable bankruptcy, insolvency, or other similar law now
or hereafter in effect, a written notice thereof specifying what
action Borrower is taking or proposes to take with respect thereto;
(f) prompt notice of: (1) all legal or arbitral
proceedings, and all proceedings by or before any governmental
regulatory authority or agency, directly affecting Borrower which
involve monetary amounts of Five Hundred Thousand U.S. Dollars (US$
500,000) or more, or which are reasonably likely to have a Material
Adverse Effect on Borrower, or on the timely payment of the principal
of or interest on the Loans, or the enforceability of this Agreement,
the Related Documents, or the Note, or the rights and remedies of
Lender hereunder or thereunder, as applicable; (2) any information
coming to the attention of Borrower relating to any action taken or
proposed to be taken by any Person which is reasonably likely to have
a material adverse effect on the ability of Borrower to perform its
obligations under this Agreement, the Related Documents, or the Note,
as applicable; and
(g) upon demand, furnish Lender with such
information as it may reasonably request with respect to the
financial condition and affairs of Borrower.
9.4 Pledge of Partnership Interest. Borrower
shall cause the Parent to pledge all of its ownership interests in Borrower to
Lender pursuant to the terms and conditions of the Stock Pledge Agreement and
other documents entered into between Lender and the Parent in order to evidence
such pledge.
9.5 Other Debt. Borrower will promptly pay and
discharge any and all indebtedness whether for borrowed money or otherwise,
liens, charges or obligations when due, including all Taxes and assessments,
except such as may in good faith be contested or disputed or for which
arrangements for deferred payment have been made, provided provision is made to
the satisfaction of Lender for the eventual payment thereof in the event it is
found that such indebtedness, obligation or tax is an indebtedness, obligation
or tax payable by Borrower and when such dispute or contest is settled and
determined, will promptly pay the full
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amount then due; provided, however, that Borrower shall not be in breach of
this covenant unless: (a) Borrower fails to pay when due or declared due
installments on debt which installments in the aggregate are equal to or
greater than Two Hundred Thousand U.S. Dollars (US $200,000); or (b) Borrower
fails to pay when due two (2) or more payments to more than one (1) lender on
Debt.
9.6 Conduct of Business. Borrower will maintain
and preserve its existence, conduct its business in an orderly, efficient
manner, without voluntary interruption; keep its properties useful or necessary
in its business in good working order and condition, and from time to time make
all needed repairs, renewals and replacements thereto, so that the efficiency
of its properties shall be fully preserved; will comply with all applicable
laws and regulations of governmental agencies; and will duly qualify to do
business and maintain such qualification in each jurisdiction where its
ownership of property or conduct of business requires such qualification.
9.7 Insurance. Borrower shall, at no cost to
Lender, maintain or cause to be maintained with insurers and through recognized
brokers, in full force and effect during the term of the Loans until two (2)
years after the date of full repayment, full liability insurance in respect of
the Aircraft with Lender as an additional insured, and otherwise subject to all
the terms and conditions set out below. If the Aircraft is sold, transferred,
leased or operated by a third party during such two (2) year period, Borrower
and/or the lessee of the Aircraft (the "Insured") will cause such subsequent
owner, lessee or operator to obtain the insurance referred to below so that
Lender is fully protected by such insurance for the entire two (2) year period.
Such insurance shall include the following provisions:
(a) The Insurers agree that Lender shall not be liable for, nor
have any obligation to pay, any premium due hereunder, and
the Insurers further agree that they shall not offset or
counter-claim any unpaid premium against the interest of
Lender.
(b) The Insurers agree to waive all of their rights of
subrogation against Lender.
(c) The policy shall contain a cross liability clause to the
effect that this insurance, except for the limits of
liability, shall operate to give Lender and Insureds the
same protection as if there was a separate policy issued to
each of them.
(d) The Insurers agree that this insurance shall be primary
insurance without any right of contribution from any other
insurance which is carried by Lender or by the Insured and
the Insurer's liability shall not be affected by any other
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insurance of which any of Lender or Insured have the
benefit so as to reduce the amount payable to Lender under
the policy.
(e) The Insurers agree that as respects the interest of Lender
this insurance shall in accordance with Lloyds Aviation 28
Breach of Warranty Endorsement not be invalidated by any
action or inaction of the Insured and shall insure Lender
and its directors, officers, agents, and employees
regardless of any breach or violation of any warranty,
declaration or condition contained in the policy by the
Insured or by the omission or neglect, or by the
performance of any act in violation or any terms or
conditions of the policy or because of the subjection of
the property to any conditions, uses or operations not
permitted by the policy or because of a use or operation of
the property which is, by the terms of the policy,
specifically excluded from coverage or because of any false
statement concerning this policy or the subject thereof, by
the Insured or the Insured's employees, agents or
representatives, whether occurring before or after
attachment of this Agreement, or whether before or after
the loss.
(f) The Insurers shall promptly notify Lender in the event of
cancellation or of any change whatsoever of a restrictive
nature affecting the insurance certified hereunder or in
the event that any premium or installment of premium shall
not be paid when due. The Insurance shall continue
unaltered for the benefit of Lender and its officers,
agents, and employees for at least thirty (30) days after
written notice by registered mail of such cancellation
change or non-payment of premium or installment thereof
shall have been received by Lender except in the case of
war risk for which seven (7) days notice will be given.
(g) Irrespective of any war, Hi-Jacking, Confiscation and other
related perils exclusion clause(s) (e.g. London endorsement
form AVN 48B or wording of similar intent) the Insurers
agree that coverage afforded shall apply for the benefit of
Lender to the same extent as would have applied had such
exclusion clause(s) not been made a part of any such
policy.
9.8 Compliance with Laws. Borrower shall
exercise all due diligence in order to comply with the requirements of all
applicable laws, rules, regulations and orders of any governmental authority,
noncompliance with which would have a Material Adverse Effect on Borrower.
9.9 Subsequent Leases. Borrower will obtain
Lender's prior written approval, not to be unreasonably withheld, with respect
to the lease of the Aircraft to any new
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lessee. Borrower will provide a copy of the proposed lease agreement with such
new lessee. Lender will have the right to approve the form and substance
thereof with respect to those terms and provisions relevant to Lender's
interest such as insurance, registration, maintenance and return condition.
With respect to other terms and provisions of the lease, Borrower will use its
best efforts to negotiate with the new lessee such terms and conditions as
Lender reasonably may request. In order to secure, among other things, its
obligations hereunder, Borrower will assign all of its rights under such lease
to Lender pursuant to a written assignment agreement acceptable to Lender.
9.10 Preservation of Existence. Each of Borrower
and Parent will maintain its existence and all of its material rights,
privileges, and franchises in every jurisdiction in which the character of the
property owned or the nature of the business transacted by it or its
obligations and duties arising under or pursuant to any of the Transaction
Documents requires such qualification.
9.11 Further Assurances. At any time or from time
to time upon the reasonable request of Lender, Borrower shall and shall cause
the appropriate person to execute, acknowledge, deliver, and cause to be
recorded or registered (if so requested) all such additional instruments, and
documents and further assurances of title and shall do or cause to be done all
such further acts and things as may reasonably be necessary to effectuate fully
the intent and purposes of this Agreement, the Note, the Related Documents, and
any other agreement entered into in connection with Lender's extension of the
Loans to Borrower and to provide for payment of the Loans made hereunder with
interest thereon in accordance with the terms of this Agreement and the Note.
10. NEGATIVE COVENANTS
Borrower covenants and agrees that from the date
hereof, and so long as the Loans hereunder shall be outstanding and until the
full and final payment of the Loans and the performance of all obligations of
Borrower hereunder, without the prior written consent of Lender first having
been obtained, to perform each and all of the covenants applicable to it:
10.1 Debt. Borrower shall not create, incur,
assume, permit, guarantee, or otherwise become, or remain, directly or
indirectly, liable with respect to any Debt, except:
(a) Borrower may become and remain liable with
respect to the Debt evidenced by the Note and this Agreement;
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(b) Borrower may remain liable with respect to
Debt disclosed to Lender in writing prior to the date of execution of
this Agreement, and any refundings, refinancings, or extensions
thereof;
(c) Borrower may become and remain liable with
respect to Debt secured by Permitted Liens;
(d) Borrower may become and remain liable with
respect to Debt which is used at the time of its incurrence to repay
in full the outstanding principal balance on the Loans and any and
all accrued and unpaid interest thereon;
(e) Borrower may become and remain liable with
respect to Debt incurred in connection with any liability under the
lease for the Aircraft which liability was the responsibility of the
"lessor" of the Aircraft pursuant to an agreement between Lender and
such lessee prior to the date of the Borrowing of the Loans for the
Aircraft;
(f) Borrower may become liable with respect to
Debt incurred in the ordinary and usual course of business in an
amount outstanding not to exceed, in the aggregate, Two Hundred
Thousand U.S. Dollars (US$ 200,000).
10.2 Restriction on Fundamental Changes. Borrower
shall not change its name, materially change the nature of its business, enter
into any merger, consolidation, reorganization or recapitalization or
reclassify its interests or liquidate, wind up or dissolve itself (or suffer
any liquidation or dissolution), or convey, sell, assign, lease, transfer, or
otherwise dispose of, in one transaction or a series of transactions, all or
substantially all of its businesses or Assets, whether now owned or hereafter
acquired, or acquire by purchase or otherwise all or substantially all the
businesses or Assets of, or stock or other evidence of beneficial ownership of,
any Person, except:
(a) Borrower may sell, assign, transfer, convey,
or otherwise dispose of businesses or Assets in accordance with the
provisions of Section 10.3 hereof; and
(b) Upon thirty (30) calendar days prior written
notice to Lender, Borrower may change its name.
10.3 Sale of Assets. Borrower shall not sell,
assign, transfer, convey, or otherwise dispose of its Assets, whether now owned
or hereafter acquired, except for:
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(a) the sale or other disposition by Borrower of
Assets in the ordinary and usual course of business, in accordance
with its past practices, for a reasonably equivalent value;
(b) the involuntary sales or other dispositions
of any of the Assets of Borrower; and
(c) the sale of the Aircraft by Borrower to any
Person; provided, however, that the proceeds from such sale are at
least equal to the outstanding principal balance of the Loans and any
and all accrued and unpaid interest on the Loans. The proceeds of
any sale of the Aircraft will be applied to the Loans and otherwise
as set forth in Article 5 hereof.
10.4 Liens. Borrower will not create, incur,
assume or suffer to exist any Lien (including any encumbrance or security
interest) of any kind upon any of its Assets, whether now owned or hereafter
acquired, except for Permitted Liens.
10.5 Investments. Borrower shall not make or own
any Investment, directly or indirectly, in any Person, except (a) cash
equivalents, (b) Borrower may maintain any Investment existing on the date
hereof or in any Person previously disclosed to Lender in writing, and (c)
Borrower may maintain any Investment which Lender has approved of in writing
prior to Borrower making or committing to make such Investment.
10.6 Restrictions on Distributions and Dividends.
Borrower shall not directly or indirectly, make or declare, any dividend (in
cash, return of capital, or any other form of Assets) on, or make any other
payment or distribution on account of, or set aside Assets for a sinking or
other similar fund for the purchase, redemption, retirement of, or redeem,
purchase, retire, or otherwise acquire any shares or interests of any of
Borrower's partnership interests, whether now or hereafter outstanding directly
or indirectly, whether in cash or property or in obligations, except:
(a) Borrower may pay dividends or make payment
distributions, so long as no Event of Default or Unmatured Event of Default has
occurred and is continuing; and
(b) Borrower may pay dividends or make payment
distributions with the amounts received by Borrower pursuant to the terms and
conditions of Section 5.1, so long as no Event of Default or Unmatured Event of
Default has occurred and is continuing.
10.7 Preservation of Lender's Security Interest
and Title to the Aircraft. Borrower shall not, without the prior written
consent of Lender, knowingly do or take or omit
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to take any acts or things which might prejudice the rights and remedies of
Lender's valid security interest in the Aircraft or the Lease, irrespective of
whether such is in effect from time to time.
10.8 Capital Expenditures. Other than the
acquisition of the Aircraft or the acquisition of any parts, components,
accessories, or equipment necessary for the operation or lease of the Aircraft,
Borrower shall not make any capital expenditure during any fiscal year during
the term of this Agreement, if, any after giving effect thereto, the aggregate
amount of all capital expenditures incurred by Borrower during such fiscal year
would exceed Two Hundred Thousand U.S. Dollars (US$ 200,000); provided,
however, that (a) the acquisition of the Aircraft and the acquisition of any
Parts, necessary for the operation or lease of the Aircraft is not considered a
capital expenditure for purposes of this Section 10.8, and (b) the acquisition
of any Parts in order to comply with an airworthiness directive of the FAA or
the aviation authority where the Aircraft is registered is not considered a
capital expenditure for purposes of this Section 10.8.
10.9 Conduct of Business. Except as may be
permitted by the other provisions of this Section 10, Borrower shall not engage
in any business other than the businesses which Borrower is engaged in as of
the date hereof, or any business activities related thereto (such business
activities include the leasing of the Aircraft to various Persons).
10.10 Amendment of Lease. Without Lender's
consent, not to be unreasonably withheld, Borrower will not enter into an
agreement with the lessee of the Aircraft to amend the lease for the Aircraft.
11. EVENTS OF DEFAULT
11.1 Events of Default. The occurrence of any one
or more of the following described events (each, an "Event of Default") shall
constitute a default hereunder:
(a) Failure to Make Payments When due. Borrower
shall fail to pay when due, any amount owing hereunder or under the
Note with respect to the principal and interest on the Loans when
such amount is due, whether at stated maturity, as a result of a
mandatory repayment requirement, by acceleration, by notice of
prepayment, or otherwise and such failure is not cured within three
(3) Business Days after written notice from Lender of the occurrence
thereof; or
(b) Default in Other Agreements. (i) Borrower
shall default (as principal or guarantor or other surety) in the
payment when due (subject to any
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applicable notice or grace period), whether at stated maturity or
otherwise, of any monetary obligation with respect to (howsoever
designated) any Debt, whether such Debt now exists or shall hereafter
be created; or (ii) An event of default, as defined in any mortgage,
indenture, interest rate swap agreement, or instrument under which
there may be issued, or by which there may be secured or evidenced,
any Debt of, or Debt guaranteed by, Borrower whether such Debt now
exists or shall hereafter be created, shall occur and Borrower shall
permit such Debt to become due and payable prior to its stated
maturity or due date;
(c) Breach of Certain Covenants. (i) Borrower
shall fail to perform or comply fully with any covenant, term, or
condition contained in Article 10 hereof; or (ii) Borrower shall
default in the performance of or compliance with any term contained
in this Agreement other than those referred to in Sections 11.1(a),
11.1(c)(i), and 11.1(d) and such default shall not have been remedied
or waived within ten (10) calendar days after receipt of notice from
Lender of such default (if Borrower is using diligent and best
efforts to cure such default, then Borrower will have the reasonable
number of days necessary to cure such default (not to exceed thirty
(30) days));
(d) Breach of Representation or Warranty. Any
financial statement, representation, warranty, or certification made
or furnished by Borrower under this Agreement shall, at any time,
prove to have been materially false, incorrect, or incomplete when
made, effective, or reaffirmed, as the case may be; or
(e) Bankruptcy; Assignment for the benefit of
Creditors. Borrower makes an assignment for the benefit of
creditors, or admits in writing its inability to pay its debts as
they become due, or files a voluntary petition in bankruptcy, or is
adjudicated a bankrupt or insolvent, or files any petition or answer
seeking for itself any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any
present or future statute, law or regulation, or files any answer
admitting or not contesting the material allegations of a petition
filed against Borrower in any such proceeding, or seeks or consents
to or acquiesces in the appointment of any trustee, receiver or
liquidator of Borrower or of all or any substantial part of the
Assets of Borrower or if Borrower or its limited partners, as
applicable, takes any action looking to the dissolution or
liquidation of Borrower; or
(f) Appointment of Receiver. Within sixty (60)
days after the commencement of an action against Borrower seeking any
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future statute,
law or regulation, such action is not dismissed or all orders or
proceedings thereunder affecting the operations or the business of
Borrower stayed, or
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if stayed such stay order is thereafter set aside, or if, within
sixty (60) days after the appointment without the consent of Borrower
as applicable, the receiver, or the liquidator of Borrower or all or
any substantial part of the Assets of Borrower or, such appointment
is not vacated; or
(g) Judgments and Attachments.
(i) A final judgment for money, the
uninsured portion of which is in excess of Five Hundred
Thousand U.S. Dollars (US $500,000) is rendered against
Borrower and within thirty (30) days after the entry
thereof, such judgment is not discharged or execution
thereof stayed pending appeal, or within thirty (30) days
after the expiration of any such stay, such judgment is not
discharged; or
(ii) a judgment creditor shall obtain
possession of any material portion of the Assets of
Borrower by any means, including without limitation, levy,
distraint, replevin, or self-help; or
(h) Default Under Related Documents, etc.
Borrower or Parent shall fail to observe or perform any term,
covenant, condition, agreement, or obligation to be observed or
performed by it under the Related Documents, and: (i) such failure
arises out of the granting by Borrower or Parent, as applicable, of a
Lien upon any of the Assets of Borrower in favor of any Person,
except for Permitted Liens; or (ii) such failure arises out of any
other act or failure to act of Borrower or Parent, as applicable,
which act adversely affects the Liens granted in favor of Lender by
Borrower or Parent, as applicable; or (iii) such failure arises other
than under the circumstances set forth in clauses (i) and (ii) above
and continues for fifteen (15) calendar days after notice of such
failure from Lender (if Borrower or Parent, as applicable, is using
diligent and best efforts to cure such default, then Borrower or
Parent, as applicable, will have the reasonable number of days
necessary to cure such default (not to exceed thirty (30) days)); or
(iv) such failure arises other than under the circumstances set forth
in clauses (i) and (ii) above and continues for thirty (30) calendar
days after Lender is notified of such failure by Borrower.
(i) Insurance. Borrower fails or has failed to
cause Lessee or any subsequent lessee to obtain or maintain the
insurance required by this Agreement.
11.2 Remedies. Upon the occurrence of an Event of
Default:
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(a) If such Event of Default arises under
Sections 11.1(e) or 11.1(f), then the unpaid principal amount of and
any accrued interest on the Loans and any other amounts owing
hereunder, under the Note or under the other Transaction Documents
shall automatically become immediately due and payable, without
presentment, demand, protest, notice, or other requirements of any
kind, all of which are hereby expressly waived by Borrower; and
(b) In the case of any other Event of Default,
Lender, by written notice to Borrower, shall declare all of the Loans
to be, and the same shall forthwith become, due and payable, together
with any and all accrued interest thereon, and any other amounts
owing hereunder, under the Note or under the other Transaction
Documents.
Upon acceleration, Lender, without notice to or
demand upon Borrower, which are expressly waived by Borrower, to the fullest
extent permitted by law, may proceed to protect, exercise, and enforce its
rights and remedies hereunder and under the Note, the Pledge Agreement and the
Related Documents, and any other rights and remedies as are provided by law or
equity. Lender may determine, in its sole discretion, the order and manner in
which Lender's rights and remedies are to be exercised, and all payments
received by Lender, or any one or more of them, shall be applied as follows
(regardless of how Lender may treat the payments for the purpose of its own
accounting): first, to all out-of-pocket expenses (including reasonable
attorneys' fees) incurred by Lender in enforcing any Debt of Borrower
hereunder, or in collecting any payments due hereunder or under the Note;
second, to accrued and unpaid interest on Loan A; third, to the outstanding
principal balance of Loan A, fourth, to accrued and unpaid interest on Loan B;
fifth, to the outstanding principal balance of Loan B, sixth, to any other Debt
of Borrower owing to Lender; and seventh, any remainder to Borrower.
12. EXPENSES AND INDEMNITIES
12.1 Expenses. Irrespective of whether the
transactions contemplated hereby shall be consummated, Borrower hereby agrees
to pay on demand: (a) the reasonable fees, expenses and disbursements of
counsel to Lender in connection with the negotiation, preparation,
reproduction, execution, delivery, and administration of the Pledge Agreement
and the Lease Assignment and all other agreements, instruments and documents
contemplated thereby, and any amendments, modifications, restatements, or
waivers or thereto; (b) filing, recording, publication, search and title fees
paid or incurred by or on behalf of Lender in connection with the transactions
contemplated by, and the administration of this Agreement, the Note, and the
Related Documents; (c) the reasonable out-of-pocket costs and expenses
(including reasonable attorneys' fees and expenses) incurred by Lender to
correct any default or to enforce any provision of this Agreement, the Note,
any of the Related Documents, or any other
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document or instrument contemplated hereby or thereby against Borrower; and (d)
the reasonable out-of-pocket costs and expenses (including reasonable
attorneys' fees and expenses) incurred by Lender in connection with any
bankruptcy or other insolvency proceeding, reorganization, workout,
composition, or other credit arrangement of Borrower.
12.2 Indemnity. In addition to the payment of
expenses pursuant to Section 12.1 hereof, and irrespective of whether the
transactions contemplated hereby shall be consummated, Borrower hereby agrees
to indemnify, exonerate, pay, and hold harmless Lender, and the officers,
directors, employees, and agents of and counsel to Lender (collectively, the
"Indemnitees" and individually, an "Indemnitee") from and against any and all
liabilities, obligations, losses, damages, penalties, actions, causes of
action, judgments, suits, claims, costs, expenses, of any kind or nature
whatsoever, including the reasonable fees and expenses of counsel to
Indemnitees, in connection with any investigative, administrative, or judicial
proceeding, irrespective of whether such Indemnitee shall be designated a party
thereto, which may be imposed on, incurred by, or asserted against such
Indemnitee, in any manner relating to or arising out of this Agreement, any
Loans hereunder, the use or intended use of the proceeds of the Loans, or the
consummation of the transactions contemplated by this Agreement (the
"Indemnified Liabilities"); provided, however, that Borrower's obligations to
indemnify shall not extend to any losses, damages, liabilities, actions, or
claims against any Indemnitee arising as a result of the gross negligence or
willful misconduct of such Indemnitee. Each Indemnitee shall promptly notify
Borrower of each event of which it has knowledge which may give rise to a claim
under the indemnification provisions of this Section 12.2. If any
investigative, judicial, or administrative proceeding arising from any of the
foregoing is brought against any Indemnitee, Borrower, to the extent directed
by such Indemnitee, will resist and defend such action, suit, or proceeding or
cause the same to be resisted and defended by counsel designated by Borrower
(which counsel shall be reasonably satisfactory to such Indemnitee); provided,
however, that Borrower's obligation to so resist or defend any such action,
suit, or proceeding shall exist if and only if Borrower is directed to do so by
the Indemnitee. Such Indemnitee will use its best efforts to cooperate in the
defense of any such action, suit, or proceeding. In the event that the
Indemnitee does not direct Borrower to resist or defend any action, suit,
proceeding or cause and Borrower desires to resist or defend such action, suit,
proceeding or cause, then Borrower and such Indemnitee will discuss and
establish the terms and conditions on which Borrower may defend such action,
suit, proceeding or cause. To the extent that the undertaking to indemnify,
exonerate, pay, and hold harmless set forth in this Section 12.2 may be
unenforceable because it is violative of any law or public policy as determined
by a final judgment of a court of competent jurisdiction, Borrower shall make
the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law. The
obligations of Borrower under this Section 12.2 shall survive the termination
of this Agreement and the discharge of Borrower's other obligations hereunder.
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12.3 Currency Indemnity. If under any applicable
law, whether as a result of judgment against Borrower or the liquidation of
Borrower or for any other reason, any payment hereunder is made or recovered in
a currency other than United States Dollars then, to the extent that the
payment (when converted into United States Dollars at the "rate of exchange" on
the date of payment or, in the case of a liquidation, the latest date for the
determination of liabilities permitted by the applicable law) falls short of
the amount unpaid under this Agreement, Borrower will as a separate and
independent obligation, fully indemnify Lender against the amount of the
shortfall. If the payment exceeds the amount unpaid under this Agreement,
Lender will remit such excess to Borrower. For the purposes of this paragraph
"rate of exchange" means the rate at which Lender is able on the relevant date
to purchase United States Dollars in New York or London (at Lender's option)
with such other currency.
13. MISCELLANEOUS
13.1 Setoffs. Nothing in this Agreement shall be
deemed to constitute a waiver or prohibition of Lender's right of setoff and
Borrower hereby expressly acknowledges that Lender has such rights.
13.2 Entire Agreement. This Agreement and the
documents and agreements referred to and incorporated herein embody the entire
agreement and understanding between the parties hereto and supersede all prior
agreements and understandings relating to the subject matter hereof and the
transactions contemplated hereby.
13.3 Successors and Assigns. This Agreement shall
be binding upon, and inure to the benefit of, the parties hereto and their
respective successors and assigns; provided, however, that Borrower and Lender
may not assign or transfer any interest or rights hereunder without the prior
written consent of the other party (which consent will not be unreasonably
withheld) and any such prohibited assignment shall be absolutely void.
13.4 No Waiver. No failure to exercise, and no
delay in exercising any right, power or remedy hereunder or under any document
delivered pursuant hereto shall impair any right, power or remedy which Lender
may have, nor shall any such delay be construed to be a waiver of any such
rights, powers or remedies, or an acquiescence in any breach or default under
this Agreement or any document delivered pursuant hereto nor shall any waiver
of any breach or default of Borrower hereunder be deemed a waiver of any
subsequent default or breach. The rights and remedies of Lender specified
herein are cumulative and not exclusive of any rights or remedies which Lender
would otherwise have either at law or in equity.
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13.5 Survival. All representations, warranties
and agreements contained herein on the part of Borrower shall survive the
making of the Loans hereunder and all such representations, warranties and
agreements shall be effective so long as any portion of the principal of the
Loans or any interest thereon is unpaid.
13.6 Notices. Any notice, request or information
required or permissible under this Agreement will be in writing and in English.
Notices will be delivered in person or sent by fax, letter (mailed airmail,
certified and return receipt requested), or by expedited delivery addressed to
the parties as set forth below in this Section. In the case of a fax, notice
will be deemed received upon actual receipt which will be the date set forth on
the confirmation of receipt produced by the sender's fax machine immediately
after the fax is sent. In the case of a mailed letter, notice will be deemed
received on the tenth (10th) day after mailing. In the case of a notice sent
by expedited delivery, notice will be deemed received on the date of delivery
set forth in the records of the Person which accomplished the delivery. If any
notice is sent by more than one of the above listed methods, notice will be
deemed received on the earliest possible date in accordance with the above
provisions. Notices will be addressed as follows:
Lender:
INTERNATIONAL LEASE FINANCE CORPORATION
1999 Avenue of the Stars, 39th Floor
Los Angeles, California 90067
United States of America
Telecopier: 310-788-1990
Telephone: 310-788-1999
ATTENTION: Legal Department
Borrower:
IAI IV, INC.
c/o Sklar Warren & Sylvester
221 N. Buffalo Drive
Suite A
Las Vegas, Nevada 89128
Telecopier: 702-360-6000
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Telephone: 702-360-0000
ATTENTION: President
With a copy to:
INTERNATIONAL AIRCRAFT INVESTORS
3655 Torrance Boulevard, Suite 410
Torrance, California 90503
Telecopier: 310-316-8145
Telephone: 310-316-3080
ATTENTION: President
13.7 Termination. This Agreement shall terminate
when all obligations of Borrower incurred hereunder, under the Note, any
Transaction Document, or under any other agreement executed and delivered in
connection herewith have been discharged in full.
13.8 Waivers and Amendments. No amendment,
modification, restatement, supplement, termination, or waiver of or to, or
consent to any departure from, any provision of this Agreement, the Note, or
the Related Documents, shall be effective unless the same shall be in writing
and signed by Lender and Borrower.
13.9 Execution in Counterparts. This Agreement
may be executed in any number of counterparts and by different parties on
separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same Agreement. This
Agreement shall become effective upon the execution of a counterpart hereof by
each of the parties hereto.
13.10 Severability of Provisions. Any provision of
this Agreement, the Note, or the Related Documents which is illegal, invalid,
prohibited, or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such illegality, invalidity,
prohibition, or unenforceability without invalidating or impairing the
remaining provisions hereof or affecting the validity or enforceability of such
provision in any other jurisdiction.
13.11 GOVERNING LAW. EXCEPT AS SPECIFICALLY SET
FORTH IN ANY OTHER TRANSACTION DOCUMENT: (A) THIS AGREEMENT, THE NOTE, AND THE
OTHER TRANSACTION DOCUMENTS SHALL BE DEEMED TO HAVE BEEN MADE IN THE STATE OF
CALIFORNIA; AND (B) THE VALIDITY OF THIS
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AGREEMENT, THE NOTE, AND THE OTHER TRANSACTION DOCUMENTS, AND THE CONSTRUCTION,
INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE
PARTIES THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.
13.12 JURISDICTION AND VENUE. TO THE EXTENT
PERMITTED BY LAW, THE PARTIES HERETO AGREE THAT ALL ACTIONS OR PROCEEDINGS
ARISING IN CONNECTION WITH THIS AGREEMENT, THE NOTE, OR THE OTHER TRANSACTION
DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS
LOCATED IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA OR, AT THE SOLE
OPTION OF LENDER, IN ANY OTHER COURT IN WHICH LENDER SHALL INITIATE LEGAL OR
EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER JURISDICTION OVER THE MATTER
IN CONTROVERSY. LENDER AND BORROWER, TO THE EXTENT THEY MAY LEGALLY DO SO,
HEREBY WAIVE ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON
CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN
ACCORDANCE WITH THIS SECTION 13.12 AND STIPULATE THAT THE STATE AND FEDERAL
COURTS LOCATED IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA SHALL HAVE IN
PERSONAM JURISDICTION AND VENUE OVER SUCH PARTY FOR THE PURPOSE OF LITIGATING
ANY SUCH DISPUTE, CONTROVERSY, OR PROCEEDING ARISING OUT OF OR RELATED TO THIS
AGREEMENT, THE NOTE, OR THE OTHER TRANSACTION DOCUMENTS. TO THE EXTENT
PERMITTED BY LAW, SERVICE OF PROCESS SUFFICIENT FOR PERSONAL JURISDICTION IN
ANY ACTION AGAINST BORROWER OR LENDER MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL, RETURN RECEIPT REQUESTED, TO ITS ADDRESS INDICATED IN SECTION 13.6
ATTACHED HERETO. BORROWER AGREES THAT ANY FINAL JUDGMENT RENDERED AGAINST IT
IN ANY ACTION OR PROCEEDING SHALL BE CONCLUSIVE AS TO THE SUBJECT OF SUCH FINAL
JUDGMENT AND MAY BE ENFORCED IN OTHER JURISDICTIONS IN ANY MANNER PROVIDED BY
LAW.
13.13 WAIVER OF TRIAL BY JURY. BORROWER AND LENDER,
TO THE EXTENT THEY MAY LEGALLY DO SO, HEREBY EXPRESSLY WAIVE ANY RIGHT TO TRIAL
BY JURY OF ANY CLAIM, DEMAND, ACTION, CAUSE OF ACTION, OR PROCEEDING ARISING
UNDER OR WITH RESPECT TO THIS AGREEMENT, THE NOTE, OR THE OTHER TRANSACTION
DOCUMENTS, OR IN ANY WAY CONNECTED WITH, OR RELATED TO, OR INCIDENTAL TO, THE
DEALINGS OF THE PARTIES HERETO WITH RESPECT TO THIS AGREEMENT, THE NOTE, OR THE
OTHER TRANSACTION DOCUMENTS, OR THE TRANSACTIONS RELATED HERETO OR
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THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
IRRESPECTIVE OF WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE. TO THE
EXTENT THEY MAY LEGALLY DO SO, BORROWER AND LENDER HEREBY AGREE THAT ANY SUCH
CLAIM, DEMAND, ACTION, CAUSE OF ACTION, OR PROCEEDING SHALL BE DECIDED BY A
COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION 13.13 WITH ANY COURT AS WRITTEN EVIDENCE
OF THE CONSENT OF THE OTHER PARTY OR PARTIES HERETO TO WAIVER OF ITS OR THEIR
RIGHT TO TRIAL BY JURY.
13.14 Headings. Article and Section headings used in
this Agreement and the table of contents preceding this Agreement are for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose or affect the construction of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed the day and year first above written.
INTERNATIONAL LEASE FINANCE CORPORATION, IAI IV, INC.
a California corporation a Nevada corporation
By: Alan Lund By: Richard Hammond
----------------------------------- -----------------------
Its: Executive Vice President Its: Vice President
----------------------------------- -----------------------
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EXHIBIT A
AIRCRAFT SECURED PROMISSORY NOTE
ORIGINAL PRINCIPAL AMOUNT: US$ 20,000,000
MAKER: IAI IV, INC., a Nevada corporation
DATED AS OF: September 26, 1997
1. PROMISE TO REPAY. FOR VALUE RECEIVED, IAI IV, INC.,
a Nevada corporation ("Maker"), promises to pay to INTERNATIONAL LEASE FINANCE
CORPORATION, a California corporation ("Lender"), or order, the principal sum
of Twenty Million U.S. Dollars (US$ 20,000,000) or such lesser amount as shall
equal the outstanding amount of the Loans made by Lender to Maker pursuant to
Section 2.1 of that certain Loan Agreement, dated as of September 26, 1997 (the
"Loan Agreement"), entered into between Maker and Lender.
2. DEFINED TERMS. Any and all initially capitalized
terms used herein shall have the meanings ascribed thereto in the Loan
Agreement, unless specifically defined herein. The term "or" as used in this
Aircraft Secured Promissory Note has, except where otherwise indicated, the
inclusive meaning represented by the phrase "and/or". This Aircraft Secured
Promissory Note (this "Note") is the promissory note defined in the Loan
Agreement as the "Note" and is subject to, and entitled to the benefits of, the
terms and provisions of the Loan Agreement.
3. PAYMENTS OF PRINCIPAL AND INTEREST.
(a) Maker hereby promises to make payments of
principal and interest, with respect to the Loans, evidenced hereby at the
rates and times, and in the amounts, and in all other respects in the manner as
provided in the Loan Agreement.
(b) As more fully set forth in the Loan
Agreement, Maker shall not be obligated to pay, and the holder of this Note
shall not be obligated to charge, collect, receive, reserve, or take interest
(it being understood that interest shall be calculated as the aggregate of all
charges which constitute interest under applicable law that are contracted for,
charged, reserved, received, or paid) in excess of the maximum non-usurious
interest rate, as in effect from time to time, which may be charged, contracted
for, reserved, received, or collected by Lender in connection with the Loan
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Agreement, this Note, the other Transaction Documents, or any other documents
executed in connection herewith or therewith.
4. PREPAYMENTS. Maker may prepay the principal balance
due under this Note, in whole or in part, only in accordance with the
provisions of the Loan Agreement.
5. APPLICATION OF PAYMENTS. All payments (including
prepayments) made hereunder shall be applied as set forth in the Loan
Agreement.
6. TIME AND PLACE OF PAYMENTS. All principal and
interest due hereunder is payable in immediately available United States
Dollars at Lender's bank account number 74-45164 at Bank of America Illinois,
231 South LaSalle Street, Chicago, Illinois 60697, ABA #071000039 (or at such
other office as may be designated from time to time by Lender), not later than
1:00 p.m., Chicago time, on the day of payment.
7. WAIVERS. Maker, for itself and its legal
representatives, successors, and assigns, expressly waives presentment, demand,
protest, notice (except as required by the Loan Agreement), and all other
requirements of any kind, in connection with the enforcement or collection of
this Note.
8. ACCELERATION AND WAIVER. IT IS EXPRESSLY AGREED
THAT, UPON THE OCCURRENCE OF AN EVENT OF DEFAULT, THE UNPAID PRINCIPAL BALANCE
OF AND ANY ACCRUED AND UNPAID INTEREST UNDER THIS NOTE MAY BE DECLARED TO BE,
OR SHALL IMMEDIATELY BECOME, DUE AND PAYABLE PURSUANT TO THE TERMS OF THE LOAN
AGREEMENT, WITHOUT PRESENTMENT, DEMAND, PROTEST, NOTICE (EXCEPT AS REQUIRED BY
THE LOAN AGREEMENT) OR OTHER REQUIREMENTS OF ANY KIND, ALL OF WHICH ARE HEREBY
EXPRESSLY WAIVED BY MAKER.
9. ATTORNEYS' FEES. In the event it should become
necessary to employ counsel to collect or enforce this Note, Maker agrees to
pay the reasonable attorneys' fees and costs of the holder hereof, irrespective
of whether suit is brought, to the extent and as provided in the Loan
Agreement.
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10. AMENDMENTS. This Note may not be changed, modified,
amended, or terminated except by a writing duly executed by Maker and the
holder hereof.
11. HEADINGS. Section headings used in this Note are
solely for convenience of reference, shall not constitute a part of this Note
for any other purpose, and shall not affect the construction of this Note.
12. GOVERNING LAW. EXCEPT AS OTHERWISE PROVIDED IN THE
LOAN AGREEMENT: (A) THIS NOTE SHALL BE DEEMED TO HAVE BEEN MADE IN THE STATE OF
CALIFORNIA; AND (B) THE VALIDITY OF THIS NOTE AND THE CONSTRUCTION,
INTERPRETATION, AND ENFORCEMENT HEREOF, AND THE RIGHTS OF THE PARTIES HERETO
SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUCTED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF CALIFORNIA.
13. JURISDICTION AND VENUE. TO THE EXTENT PERMITTED BY
LAW, MAKER AGREES THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH
THIS NOTE SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS
LOCATED IN THE COUNTY OF LOS ANGELES, CALIFORNIA. MAKER, TO THE EXTENT IT MAY
LEGALLY DO SO, HEREBY WAIVES ANY RIGHT IT MAY HAVE TO ASSERT THE DOCTRINE OF
FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS
BROUGHT IN ACCORDANCE WITH THIS SECTION AND STIPULATES THAT THE STATE AND
FEDERAL COURTS LOCATED IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA SHALL
HAVE IN PERSONAM JURISDICTION AND VENUE OVER MAKER FOR THE PURPOSE OF
LITIGATING ANY SUCH DISPUTE, CONTROVERSY, OR PROCEEDING ARISING OUT OF OR
RELATED TO THIS NOTE. TO THE EXTENT PERMITTED BY LAW, SERVICE OF PROCESS
SUFFICIENT FOR PERSONAL JURISDICTION IN ANY ACTION AGAINST MAKER MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO ITS ADDRESS
INDICATED IN SECTION 13.6 OF THE LOAN AGREEMENT. MAKER AGREES THAT ANY FINAL
JUDGMENT RENDERED AGAINST IT IN ANY ACTION OR PROCEEDING SHALL BE CONCLUSIVE AS
TO THE SUBJECT OF SUCH FINAL JUDGMENT AND MAY BE ENFORCED IN OTHER
JURISDICTIONS IN ANY MANNER PROVIDED BY LAW.
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IAI IV, INC., a Nevada corporation
By: __________________________________
Its: _________________________________
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EXHIBIT B
AMORTIZATION SCHEDULE
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EXHIBIT C
OPINION OF COUNSEL FOR BORROWER
September 26, 1997
International Lease Finance Corporation
1999 Avenue of the Stars, 39th floor
Los Angeles, California 90067
Loan Agreement dated as of September 26, 1997
Dear Sirs:
In my capacity as legal counsel to IAI IV, INC., a Nevada corporation
("Borrower"), I am issuing the legal opinion required under Section 7.1(i) of
the Loan Agreement, dated as of September 26, 1997 (the "Loan Agreement"),
between Borrower and International Lease Finance Corporation, a California
corporation ("Lender"), pursuant to which Lender will provide loans to Borrower
for the purchase of one (1) Boeing 737-3Q8QC aircraft bearing manufacturer's
serial number 23766 and Belgium registration mark OO-ILK with two CFM
International CFM56-3B2 engines attached thereto bearing manufacturer's serial
numbers 720458 and 721731 (the "Aircraft") which is currently being leased to
Air Belgium International N.V., a Belgium corporation ("Lessee"). Any and all
initially capitalized terms used in this opinion, which are defined in the Loan
Agreement, have the same meanings herein, except as otherwise defined herein.
I am of the opinion that:
(a) Parent (1) is a company duly organized,
validly existing and in good standing under the laws of California and (2) has
all requisite power and authority to own, operate, and encumber its Assets and
to conduct its business as presently conducted and as proposed to be conducted
in connection with the consummation of the transactions contemplated by the
Loan Agreement and the Related Documents.
(b) Borrower (1) is a corporation duly organized,
validly existing and in good standing under the laws of Nevada and (2) has all
requisite power and authority to own, operate, and encumber its Assets and to
conduct its business as presently conducted and as proposed to be conducted in
connection with the consummation of the transactions contemplated by the Loan
Agreement, the Note and the Related Documents.
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(c) Each of Borrower and Parent has the requisite
power and authority to execute, deliver, and perform each of the Transaction
Documents executed by it, or to be executed by it.
(d) The execution, delivery, and performance of
each of the Transaction Documents to which each of Borrower or Parent is a
party and the consummation of the transactions contemplated thereby, have been
duly approved by its board of directors, as applicable, and no other
proceedings are necessary to consummate such transactions.
(e) Each of the Transaction Documents to which it
is a party has been duly executed and delivered by Parent and Borrower, as
applicable, and constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms, and is in full force and
effect except as the enforceability hereof or thereof may be affected by: (a)
bankruptcy, insolvency, moratorium, or other similar laws affecting the
enforcement of creditors' rights generally; (b) the limitation of certain
remedies by certain equitable principles of general applicability; and (c) the
fact that the rights to indemnification thereunder or hereunder may be limited
by securities laws.
(f) The execution, delivery, and performance of
each of the Transaction Documents to which each of Borrower or Parent is a
party by each of Borrower or Parent and each of the transactions contemplated
thereby do not and will not (1) conflict with or violate Borrower's or Parent's
articles of incorporation, or (2) to the best of my knowledge, conflict with,
result in a breach of, constitute (with or without notice or lapse of time) a
default under, or require termination of, any of the Transaction Documents, any
material indenture, mortgage or other agreement or instrument to which Borrower
or Parent is a party or by which any of their Assets may be bound, (3) to the
best of my knowledge, result in or require the creation or imposition of any
Lien upon any of the Assets of Borrower or Parent (other than Liens in favor of
Lender arising pursuant to the Transaction Documents), or (4) require any
approval of stockholders or any approval or consent of any Person under any
other Contractual Obligations to which Borrower or Parent is a party which
approval or consent, as the case may be has not already been obtained prior to
the date hereof.
(g) The execution, delivery, and performance of
each Transaction Document to which each of Borrower and Parent is a party and
the transactions contemplated thereby do not and will not require any
registration with, consent or approval of, or notice to, or other action to,
with or by any regulatory body or authority in the United States of America,
Nevada or California, as applicable.
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(h) each and every public notice, filing or
recording that may be required under the laws of the United States of America,
Nevada or California, as applicable, have been duly effected in order for the
Stock Pledge Agreement entered into with the Parent to constitute a valid and
perfected Stock Pledge Agreement, of record relating to the ownership interest
in Borrower.
(i) I have no knowledge of any proposed tax
assessment against Borrower or Parent which is not being contested in good
faith by appropriate proceedings promptly instituted and diligently conducted
by such Person with appropriate reserves made for such assessment in accordance
with generally accepted accounting principals.
(j) To the best of my knowledge, (1) there is no
action, suit, proceeding, or arbitration (whether purportedly on behalf of
Borrower or Parent) at law or in equity or before or by any federal, state,
municipal, or other governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign, pending or, threatened against or
directly affecting Borrower or Parent, which is reasonably likely to result in
a Material Adverse Effect on Borrower or Parent or may reasonably be expected
to materially adversely affect Borrower's ability to perform its obligations
under the Loan Agreement or under the Note; or (2) Borrower and Parent are not
subject to or in default with respect to any final judgment, writ, injunction,
decree, rule, or regulation of any court or federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, in a manner which would have a Material Adverse Effect on
Borrower or Parent, as applicable; and (3) as of the date hereof there is no
action, suit, proceeding or, to the best of my knowledge or belief,
investigation pending or, to the best of my knowledge or belief, threatened
against or directly affecting Borrower or Parent which questions the validity
or the enforceability of the Loan Agreement, the Related Documents, or the
Note.
(k) No consent, license, permit, approval or
authorization of, exemption by, notice to, report to, or registration, filing
or declaration with, any governmental authority or agency is required in
connection with the execution, delivery, and performance by Borrower of the
Loan Agreement or the Note, or by Borrower or Parent of the Transaction
Documents (to the extent that the Parent is a party thereto).
(l) To the best of my knowledge, except for
Permitted Liens, all of the Assets of Borrower are free from all Liens of any
nature whatsoever. To the best of my knowledge, Borrower has good and
sufficient title to all of the material Assets reflected in their books and
records as being owned by it.
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Loan Agreement
Boeing 737-3Q8QC MSN 23766
(m) Borrower holds all licenses, certificates,
concessions and permits from applicable governmental authorities in the United
States of America for the conduct of its business.
Sincerely yours,
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Loan Agreement
Boeing 737-3Q8QC MSN 23766
EXHIBIT D
LITIGATION AND PROCEEDINGS
None
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